-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ACNQn4uPV+6mGoAjMBZknzOnNmgXeCaobAnn4dIW2YmW6fcnOvl2RiLnyvrIcGiX VzQO1W5/I0h9ffThyjvfZw== 0000930661-97-001038.txt : 19970425 0000930661-97-001038.hdr.sgml : 19970425 ACCESSION NUMBER: 0000930661-97-001038 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19970424 SROS: AMEX GROUP MEMBERS: JEAN-CLAUDE MATHOT GROUP MEMBERS: TREMAIN ALAN SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: BUFFTON CORP CENTRAL INDEX KEY: 0000351220 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS, NEC [3679] IRS NUMBER: 751732794 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-35264 FILM NUMBER: 97586516 BUSINESS ADDRESS: STREET 1: 226 BAILEY AVE STE 101 CITY: FORT WORTH STATE: TX ZIP: 76107 BUSINESS PHONE: 8173324761 MAIL ADDRESS: STREET 1: 226 BAILEY AVE STE 101 CITY: FORT WORTH STATE: TX ZIP: 76107 FORMER COMPANY: FORMER CONFORMED NAME: BUFFTON OIL & GAS INC DATE OF NAME CHANGE: 19830405 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: TREMAIN ALAN CENTRAL INDEX KEY: 0001038189 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: O STREET 2: 11250 ISLEBROOK COURT CITY: WELLINGTON STATE: FL ZIP: 33414 MAIL ADDRESS: STREET 2: 11250 ISLEBROOK COURT CITY: WELLINGTON STATE: FL ZIP: 33414 SC 13D 1 SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 BUFFTON CORPORATION --------------------------------------------------------- (Name of Issuer) COMMON STOCK, $.05 par value --------------------------------------------------------- (Title of Class of Securities) 119885200 --------------------------------------------------------- (CUSIP Number) Andrew C. Culbert, Esquire Masterman, Culbert & Tully One Lewis Wharf Boston, MA 02110 (617) 227-8010 --------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) April 11, 1997 ---------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [_]. Check the following box if a fee is being paid with the statement [_]. 1 SCHEDULE 13-D 1. Names of Reporting persons: Alan Tremain - SS No. or IRS Identification No. of above persons -------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (a) ________ (b) X * -------- * Messrs Tremain and Mathot are filing jointly solely because each entered into an agreement with Issuer, following joint negotiations with the Issuer, which resulted in the acquisition of the Common Stock which is the subject of this filing. -------------------------------------------------------------- 3. SEC Use Only -------------------------------------------------------------- 4. Source of Funds SC -------------------------------------------------------------- 5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) ______ -------------------------------------------------------------- 6. Citizenship of Place of Organization Mr. Tremain is a citizen of the United Kingdom. -------------------------------------------------------------- 7. Sole Voting Power Number of Shares 430,000 Owned -------------------------------------------------------------- By Each 8. Shared Voting Power Reporting Person -0- With -------------------------------------------------------------- 9. Sole Dispositive Power 2 430,000 ----------------------------------------------------------- 10. Shared Dispositive Power -0- ----------------------------------------------------------- 11. Aggregate Amount Beneficially owned by Reporting Persons 180,000 Actual Ownership 250,000 Stock Option -------- 430,000 ----------------------------------------------------------- 12. Check Box if the Aggregate Amount of (11) Excludes ______ Certain Shares ----------------------------------------------------------- 13. Percent of Class Represented by Amount of Row (11) 5.4% (fully diluted), based on 7,713,928 Shares outstanding as of April 11, 1997, plus the 250,000 shares represented by the Stock Option currently exercisable by Mr. Tremain. ----------------------------------------------------------- 14. Type of Reporting Person IN 3 SCHEDULE 13-D 1. Name of Reporting persons: Jean-Claude Mathot - SS No. or IRS Identification No. of above person. -------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (a) ________ (b) X * -------- * Messrs Tremain and Mathot are filing jointly solely because each entered into an agreement with Issuer, following joint negotiations with the Issuer, which resulted in the acquisition of the Common Stock which is the subject of this filing. -------------------------------------------------------------- 3. SEC Use Only -------------------------------------------------------------- 4. Source of Funds SC -------------------------------------------------------------- 5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) ______ -------------------------------------------------------------- 6. Citizenship of Place of Organization Mr. Mathot is a citizen of the United States of America. -------------------------------------------------------------- 7. Sole Voting Power Number of Shares 385,000 Owned -------------------------------------------------------------- By Each 8. Shared Voting Power Reporting Person -0- With -------------------------------------------------------------- 9. Sole Dispositive Power 4 385,000 -------------------------------------------------------------- 10. Shared Dispositive Power -0- -------------------------------------------------------------- 11. Aggregate Amount Beneficially owned by Reporting Persons 135,000 Actual Ownership 250,000 Stock Option ------- 385,000 -------------------------------------------------------------- 12. Check Box if the Aggregate Amount of (11) Excludes ______ Certain Shares -------------------------------------------------------------- 13. Percent of Class Represented by Amount of Row (11) 4.83% (fully diluted), based on 7,713,928 Shares outstanding as of April 11, 1997, plus the 250,000 shares represented by the Stock Option currently exercisable by Mr. Mathot. -------------------------------------------------------------- 14. Type of Reporting Person IN CUSIP No. 119885200 STATEMENT FOR SCHEDULE 13D -------------------------- 5 Item 1. SECURITY AND ISSUER. The class of equity securities to which this Statement relates is the common stock, $.05 par value (the "Common Stock"), of Buffton Corporation, a Delaware corporation (the "Issuer"), whose principal executive office is located at 226 Bailey Avenue, Suite 101, Fort Worth, Texas 76107. ITEM 2. IDENTITY AND BACKGROUND. (a) The reporting persons are Alan Tremain and Jean-Claude Mathot. (b) Mr. Tremain's and Mr Mathot's business address is 380 South County Road, Suite 200, Palm Beach, Florida 33480. (c) Mr. Tremain is employed as Chairman of the Board of the Issuer. Mr Mathot is employed as President and Chief Operating Officer of the Issuer. The Issuer's address is 226 Bailey Avenue, Suite 101, Fort Worth, Texas 76107. (d) Neither Mr. Tremain nor Mr. Mathot have, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). 6 (e) Neither Mr. Tremain nor Mr. Mathot have, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction, which proceeding resulted in a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) Mr. Tremain is a citizen of the United Kingdom. Mr. Mathot is a citizen of the United States. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. On April 11, 1997, Mr. Tremain and Mr. Mathot received 180,000 shares and 120,000 shares, respectively, of the Issuer's Common Stock from the Issuer in connection with its acquisition of all of the outstanding stock of Hotels of Distinction, Inc. a Florida corporation, pursuant to the terms of a certain Stock Exchange Agreement among the Issuer and Messrs. Tremain and Mathot dated April 11, 1997 (the "Stock Agreement"), a copy of which is attached to this filing as Exhibit 1. In addition, pursuant to Non-Qualified Stock Option Agreements (the " Stock Option Agreement or Agreements") entered into by the Issuer and each of Messrs. Tremain and Mathot dated April 11, 1997, a copy of each of which is attached to this filing as Exhibits 2A and 2B, respectively, Messrs. Tremain and Mathot each received an option to acquire 250,000 shares of the Issuer's Common Stock. These stock options, (the "Stock Options"), issued in connection with the employment by Issuer of Messrs. Tremain and Mathot, are immediately exercisable, in whole or in part, at $3.00 per 7 share, $.25 higher than the market price quoted at the close on the American Stock Exchange on the date of grant, and expire in five years. ITEM 4. PURPOSE OF TRANSACTION. The acquisitions of the Common Stock of the Issuer by Mr. Tremain and Mr. Mathot are for investment purposes of each. (a) The Stock Agreement requires each of Messrs Tremain and Mathot to acquire an additional 100,000 shares of the Issuer's Common Stock (85,000 in fact for Mathot as he previously had acquired 15,000) in the market within 120 days of the consummation of the sale of the assets of Current Technology, Inc., the Issuer's power quality products business, to Danaher Corporation previously announced by Issuer and reported by it on Current Report on Form 8-K/A filed on April 14, 1997, provided that Messrs. Tremain and Mathot are able to purchase such shares at a market price of $3.00 per share or less. Although Messrs Tremain and Mathot have no specific plan or proposal to acquire any additional securities of the Issuer (except as required by the Stock Agreement), or dispose of any securities of the Issuer, either of them may acquire additional securities of the Issuer, or dispose of additional securities of the Issuer, depending upon then existing market conditions and usual and customary investment considerations and decisions. 8 (b)-(j) Messrs. Tremain and Mathot are not considering any plans or proposals which would relate to or result in any of the matters set forth in subparagraph (b) through (j) of Item 4 of Schedule 13D. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) The Reporting Persons beneficially own in the aggregate a total of 315,000 shares of the Common Stock of the Issuer, or approximately 4.08% of all the issued and outstanding shares of Common Stock of the Issuer as of April 11, 1997. The Reporting Persons have immediately exercisable Stock Options, exercisable for up to 500,000 shares of Common Stock in the aggregate for five years at an exercise price of $3.00 per share, so that on a fully diluted basis, the Reporting Persons own or have the right to own in the aggregate 815,000 shares of the Common Stock, or approximately 9.92% of the issued and outstanding shares of the Common Stock of the Issuer as of April 11, 1997 plus the 500,000 shares which would have been issued on exercise of their Stock Options. As of April 21, the market price of the Common Stock at the close on the American Stock Exchange was $2.69. (b) Mr. Tremain has the sole power to vote or direct the vote of 180,000 shares of the issuer's Common Stock or, on a fully diluted basis on exercise of his Stock Option, 430,000 shares of the Issuer's Common Stock, and the sole power to dispose or direct the disposition of 430,000 shares of such Common Stock on a fully diluted basis, subject, however, to the terms of the following Agreements. The Stock Option Agreement provides that Mr. Tremain's Stock Option terminates upon resignation from employment by Mr. Tremain or upon termination by the Issuer of employment of Mr. Tremain for cause. Additionally, the Stock Option Agreement does not permit transfer of the Stock Option by will or by the laws of descent and distribution. It does permit 9 exercise of the Stock Option by his estate for 180 days following his death. Finally, certain provisions contained in an Employment Agreement dated as of April 11, 1997 between Mr. Tremain and the Issuer (the "Tremain Employment Agreement"), attached as Exhibit 3A and incorporated herein by reference, requires that Mr. Tremain sell to the Issuer, in the event he should resign prior to the first anniversary of his employment by the Issuer, the 180,000 shares of Common Stock which he acquired as consideration for his stock in Hotels of Distinction, Inc. ("Hotels") at 50% of the then market value of the Common Stock, any shares of Common Stock obtained by Mr. Tremain upon exercise of any of his Stock Option and those shares of Common Stock required to be purchased by him under the Stock Agreement, all as more specifically described in the second paragraph of Section 7.E. of the Tremain Employment Agreement, Exhibit 3A, which paragraph is incorporated herein by reference. Upon termination of the Tremain Employment Agreement by the Issuer without cause, the Tremain Employment Agreement provides that Mr. Tremain may require the Issuer to purchase certain of the shares of Common Stock beneficially owned by him as described more specifically in Section 7.A. of the Tremain Employment Agreement, Exhibit 3A, which Section is incorporated herein by reference. Mr. Mathot has the sole power to vote or direct the vote of 135,000 shares of the Issuer's Common Stock, or 385,000 shares on a fully diluted basis upon his exercise of his Stock Option, and the sole power to dispose or direct the disposition of 385,000 shares of the Issuer's Common Stock on a fully diluted basis, subject to the Stock Option Agreement, Exhibit 3B, on the same terms as those applicable to Mr. Tremain and as further limited by an Employment Agreement dated as of April 11, 1997 entered into by Mr. Mathot and the Issuer (the "Mathot Employment Agreement"), attached as Exhibit 3B and incorporated herein by reference. The same restrictions and terms with respect to his interest in the Common Stock are contained in the same paragraph and/or Sections in the Mathot Employment Agreement as are contained in the Tremain Employment Agreement. 10 (c) During the sixty (60) days preceding the date hereof, Messrs.. Tremain and Mathot or their affiliate, Hotels of Distinction, Inc., ("Hotels"), entered into the following transactions on behalf of themselves or their affiliate as indicated: 02/21/97 Hotels sold 10,000 shares at $2.6875 02/21/97 Hotels sold 40,000 shares at $2.625 02/21/97 Mr. Tremain sold 2,000 shares at $2.875 03/31/97 Mr. Mathot purchased 20,000 shares at $2.75 04/09/97 Mr. Mathot sold 5,000 shares at $2.625 (d) None. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. The Reporting Persons entered into the Stock Agreement (Exhibit 1) with the Issuer by which they acquired, in the aggregate, 300,000 shares of the Issuer's Common Stock. The Stock Agreement obligates the Reporting Persons to acquire an additional 200,000 shares (100,000 each) of Common Stock within 120 days following consummation of the sale of Current Technology, Inc. referred to in Item 4(a) above, provided that the market price does not exceed $3.00 per share (less any shares which either of the Reporting Persons may have acquired in the market prior to such time). 11 The Stock Agreement grants the Reporting Persons certain registration rights with respect to the shares of Common Stock which are owned or may be owned by them. The Reporting Persons together are entitled to one demand registration right at the Issuer's expense for no fewer than 100,000 shares and each Reporting Person has unlimited "piggy-back" registration rights at the Issuer's expense, in any case for any and all shares of Common Stock of the Issuer held by either of the Reporting Persons at the time of such registration. The specific terms and conditions of such registration rights are contained in the Stock Agreement (Exhibit 1) at Section 8 which Section is incorporated herein by reference. Messrs. Tremain and Mathot have each entered into an Employment Agreement with the Issuer (Exhibits 3A and 3B, respectively), and into a Stock Option Agreement with the Issuer (Exhibits 2A and 2B, respectively), which contain contractual rights and obligations relating to the Common Stock of the Issuer as set forth in the Items above. Such Agreements are herein incorporated by reference. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. (a) Exhibit 1 - Stock Exchange Agreement dated April 11, 1997. (b) Exhibit 2A - Non-Qualified Stock Option Agreement dated April 11, 1997 (Tremain). 12 (c) Exhibit 2B - Non-Qualified Stock Option Agreement dated April 11, 1997 (Mathot). (d) Exhibit 3A - Employment Agreement dated April 11, 1997 (Tremain). (e) Exhibit 3B - Employment Agreement dated April 11, 1997 (Mathot). (c) Exhibit 4 - Joint Filing Agreement. SIGNATURES ---------- After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: April 23, 1997 /S/ Alan Tremain ---------------------------- ALAN TREMAIN After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: April 23, 1997 13 /S/ Jean-Claude Mathtot ----------------------------------- JEAN-CLAUDE MATHOT 14 EX-1 2 STOCK EXCHANGE AGREEMENT EXHIBIT 1 STOCK EXCHANGE AGREEMENT By and Among BUFFTON CORPORATION, and ALAN TREMAIN and JEAN-CLAUDE MATHOT and HOTELS OF DISTINCTION, INC. Dated as of April 11, 1997 TABLE OF CONTENTS
PAGE ---- TABLE OF CONTENTS........................................................... i TABLE OF DEFINED TERMS...................................................... iii
================================================================================ TABLE OF CONTENTS =================
1. Exchange of Stock...................................................................... 1 ----------------- 2. Closing........................................................................... 1 ------- 3. Certain Definitions............................................................... 1 ------------------- 4. Representations and Warranties of Buffton......................................... 3 ----------------------------------------- a. Organization................................................................. 3 ------------ b. Capitalization............................................................... 3 -------------- c. Authorization and Validity of Agreement...................................... 3 --------------------------------------- d. No Approvals or Notices Required; No Conflict with Instruments to which Buffton ------------------------------------------------------------------------------- is a Party.................................................................. 4 ---------- e. SEC Filings; Financial Statements........................................... 4 --------------------------------- f. Litigation.................................................................. 4 ---------- g. Voting Requirements......................................................... 5 -------------------
i 5. Representations and Warranties of Tremain and Mathot................................ 5 ---------------------------------------------------- a. Organization and Compliance with Law........................................... 5 ------------------------------------ b. Capitalization................................................................. 5 -------------- c. Authorization and Validity of Agreement........................................ 5 --------------------------------------- d. No Approvals or Notices Required; No Conflict with Instruments to which Hotels ------------------------------------------------------------------------------ is a Party..................................................................... 6 ---------- e. Financial Statements; Material Contracts; Liabilities.......................... 6 ----------------------------------------------------- f. Conduct of Business in the Ordinary Course; Absence of Certain Changes and -------------------------------------------------------------------------- Events......................................................................... 6 ------ g. Certain Fees................................................................... 7 ------------ h. Litigation..................................................................... 7 ---------- i. Employee Liabilities........................................................... 7 -------------------- j. Taxes.......................................................................... 7 ----- k. Environmental.................................................................. 7 ------------- l. No Severance Payments.......................................................... 8 --------------------- m. Insurance..................................................................... 8 --------- n. Title to Property............................................................. 8 ----------------- 6. Investment and Other Representations by Tremain and Mathot......................... 8 ---------------------------------------------------------- 7. Tax Treatment...................................................................... 10 ------------- 8. Registration Rights................................................................ 10 ------------------- a. Demand Registration Right (Registration of Buffton Common Stock on Request) --------------------------------------------------------------------------- .............................................................................. 10
ii b. Piggyback Registration Rights................................................. 12 ----------------------------- c. Registration Procedures....................................................... 12 ----------------------- d. Seller's Information.......................................................... 13 -------------------- e. Preparation; Reasonable Investigation......................................... 13 ------------------------------------- 9. Release of Claims by Tremain and Mathot............................................ 13 --------------------------------------- 10. Sale of Current Technology; Buffton Name Change.................................... 13 ----------------------------------------------- 11. Purchase of Buffton Common Stock by Tremain and Mathot............................. 13 ------------------------------------------------------ 12. Cooperation in Litigation.......................................................... 13 ------------------------- 13. Expenses........................................................................... 13 -------- 14. Further Assurances................................................................. 14 ------------------ 15. Public Announcements............................................................... 14 -------------------- 16. Survival of Representations and Warranties......................................... 14 ------------------------------------------ 17. Amendments......................................................................... 14 ---------- 18. Entire Agreement................................................................... 14 ---------------- 19. Notices............................................................................ 14 ------- 20. Counterparts....................................................................... 15 ------------ 21. Governing Law...................................................................... 15 ------------- 22. Severability....................................................................... 15 ------------ 23. Headings 15 -------- 24. Entire Agreement; Third Party Beneficiaries........................................ 15 ------------------------------------------- SIGNATURE PAGE.......................................................................... 16
iii TABLE OF DEFINED TERMS ----------------------
DEFINED TERM PAGE - ------------ ---- Agreement................................................................ 1 Buffton.................................................................. 1 Buffton Common Stock..................................................... 1 Buffton SEC Filings...................................................... 4 Buffton Subsidiaries..................................................... 3 CERCLA................................................................... 2 Closing.................................................................. 1 Disadvantageous Condition................................................ 1 Hotels................................................................... 1 Entity................................................................... 1 Environmental Laws....................................................... 2 Exchange Act............................................................. 2 Existing Stockholders Agreement.......................................... 5 Governmental Authority................................................... 2 Hotels Financial Statements.............................................. 6 Hotels Disclosure Letter................................................. 5 Hotels Stock............................................................. 1 Knowledge................................................................ 2
v Laws..................................................................... 2 Material Adverse Change.................................................. 2 Material Adverse Effect.................................................. 2 Mathot................................................................... 1 Permitted Liens.......................................................... 2 Registrable Securities................................................... 2 Registration Expenses.................................................... 2 Registration Rights Holders.............................................. 10 Requesting Holder........................................................ 10 SEC...................................................................... 4 Securities Act........................................................... 3 Stock Exchange........................................................... 1 Tax or Taxes............................................................. 3 Tax Return............................................................... 3 Tremain.................................................................. 1
vi STOCK EXCHANGE AGREEMENT - -------------------------------------------------------------------------------- THIS STOCK EXCHANGE AGREEMENT (this "Agreement"), dated as of April 11, --------- 1997, is entered into by and among Alan Tremain ("Tremain"), Jean-Claude Mathot ------- ("Mathot"), Hotels of Distinction, Inc., a Florida corporation ("Hotels"), and ------ ------ Buffton Corporation, a Delaware corporation ("Buffton"). ------- W I T N E S S E T H : --------------------- WHEREAS, Tremain and Mathot own 100 shares of the Common Stock, par value $1.00 per share, of Hotels (the "Hotels Stock"), being all of the issued and ------------ outstanding capital stock of Hotels; and WHEREAS, Buffton desires to acquire from Tremain and Mathot, all of the Hotels Stock, solely in exchange for 300,000 shares of newly issued Common Stock, par value $.05 per share, of Buffton (the "Buffton Common Stock"); -------------------- NOW, THEREFORE, in consideration of the premises and the mutual covenants, representations and warranties herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and upon the terms and subject to the conditions contained herein, the parties hereto agree as follows: STOCK EXCHANGE AGREEMENT 1. Exchange of Stock. Upon and subject to the terms and conditions of ----------------- this Agreement, contemporaneously with the execution of this Agreement, (a) Tremain and Mathot shall assign, transfer and deliver to Buffton all of the Hotels Stock free and clear of any and all liens, equities, claims, prior assignments, mortgages, charges, security interests, pledges, restrictions or encumbrances whatsoever, and, (b) in exchange therefor, Buffton shall assign, transfer and deliver to Tremain 180,000 shares of Buffton Common Stock and to Mathot 120,000 shares of Buffton Common Stock, free and clear of any and all liens, equities, claims, prior assignments, mortgages, charges, security interests, pledges, restrictions or encumbrances whatsoever (the foregoing being herein called the "Stock Exchange"). -------------- 2. Closing. At or prior to the closing of the Stock Exchange (the ------- "Closing"): ------- a. Buffton has delivered to Tremain and Mathot the items and documents listed on Schedule 2.a hereto, including the employment ------------ agreements and stock options described therein and certificates representing the shares of Buffton Common Stock issued to Tremain and Mathot. b. Tremain, Mathot and Hotels have delivered to Buffton the items and documents listed on Schedule 2.b hereto, including stock powers executed by ------------ Tremain and Mathot transferring to Buffton the certificates representing all of the shares of issued and outstanding Hotels Stock, and Tremain and Mathot will hold such certificates in trust for Buffton and will deliver them to Buffton at or promptly after the Closing. STOCK EXCHANGE AGREEMENT PAGE 2 3. Certain Definitions. As used in this Agreement, the following terms ------------------- shall have the meanings ascribed to them below: a. A "Disadvantageous Condition" shall exist for purposes of this ------------------------- Agreement if Buffton shall furnish to the Requesting Holders a certified resolution of Buffton's Board of Directors stating that in the good faith judgment of such Board of Directors it would (because of the existence of, or in anticipation of, any acquisition or financing activity, or the inability for reasons beyond Buffton's control to provide any required financial statements, or any other event or condition of similar significance to Buffton) be significantly disadvantageous to Buffton for a registration statement to be maintained effective, or to be filed and become effective. b. "Entity" means a corporation, limited liability company, ------ association, partnership of any kind, organization, trust, joint venture or other legal entity. c. "Environmental Laws" shall mean all Laws relating to (i) the ------------------ control of any potential pollutant or protection of the air, water or land, (ii) solid, gaseous or liquid waste generation, handling, treatment, storage, disposal or transportation, and (iii) exposure to hazardous, toxic or other substances alleged to be harmful. The term "Environmental Laws" ------------------ shall include, but not be limited to, the Clean Air Act, 42 U.S.C. (S) 7401 et seq., the Clean Water Act, 33 U.S.C. (S) 1251 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. (S) 6901, et seq., the Toxic Substances Control Act, 15 U.S.C. (S) 2601 et seq., the Safe Drinking Water Act, 42 U.S.C. (S) 300f et seq. and STOCK EXCHANGE AGREEMENT PAGE 3 the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. (S) 9601 et seq. ------ d. "Exchange Act" means the Securities Exchange Act of 1934, as ------------ amended (the "Exchange Act"). ------------ e. "Governmental Authority" means any federal, state, local or ---------------------- foreign government or governmental entity or municipality or subdivision thereof or any authority, department, commission, panel, board, bureau, agency, court or instrumentality. f. "Knowledge" of any party shall mean the collective knowledge of --------- such party's officers, directors and employees who in the normal scope of their employment would know, or would reasonably be expected to have knowledge of, the matters in question. g. "Laws" means all applicable codes, statutes, laws, permits, rules, ---- regulations, ordinances, orders, policies, determinations, judgments, writs, injunctions, decrees and common law and equitable rules, causes of action, remedies and principles of any applicable state, commonwealth, nation, territory, possession, province, county, parish, town, township, village, municipality, court, judicial body, administrative agency, or other Governmental Authority, as may be amended, modified, supplemented or superseded from time to time. STOCK EXCHANGE AGREEMENT PAGE 4 h. "Material Adverse Change" with respect to any party shall mean a ----------------------- material adverse change in the business, financial condition or results of operations of such party and its subsidiaries, taken as a whole; provided, however, that in no event shall the term "Material Adverse Change" be ----------------------- deemed to include (a) changes in national economic conditions or industry conditions generally, (b) changes, or possible changes, in federal, state or local statutes and regulations applicable to both Buffton and Hotels, or (c) with respect to Hotels, the loss of employees, customers or suppliers by Hotels as a direct or indirect consequence of any announcement relating to the Stock Exchange. i. "Material Adverse Effect" on any Entity or person shall mean any ----------------------- material adverse effect on the business, financial condition or results of operations of such person or Entity and its subsidiaries, taken as a whole; j. "Permitted Liens" shall mean (A) liens for taxes not due and --------------- payable or which are being contested in good faith, (B) mechanics', warehousemen's and other statutory liens incurred in the ordinary course of business, and (C) defects and irregularities in title and encumbrances which are not substantial in character or amount and do not materially impair the use of the property or asset in question. k. "Registrable Securities" means the Buffton Common Stock received ---------------------- by Tremain and Mathot pursuant hereto. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (a) a registration statement with respect to the sale of such securities STOCK EXCHANGE AGREEMENT PAGE 5 shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, (b) such securities have been transferred pursuant to Rule 144 or Rule 144A (or any successor provisions) under the Securities Act, or (c) such securities have ceased to be outstanding. l. "Registration Expenses" means all expenses incident to Buffton's --------------------- performance of or compliance with Section 8 including (without limitation) --------- all registration, filing and American Stock Exchange fees, all fees and expenses of complying with securities or blue sky laws, all word processing, duplicating and printing expenses, messenger and delivery expenses, the reasonable fees and disbursements of counsel for Buffton and of its independent public accountants, including the expenses of any special audits or "cold comfort" letters required by or incident to such performance and compliance, but excluding underwriting discounts and commissions and transfer taxes, if any, relating to the Registrable Securities being registered. m. "Securities Act" means the Securities Act of 1933, as amended. -------------- n. "Tax" or "Taxes" means any and all federal, state, local or --- ----- foreign taxes of any kind or character whatever imposed under any Law or by any Governmental Authority, including without limitation franchise, income, sales, withholding, property and other taxes. STOCK EXCHANGE AGREEMENT PAGE 6 o. "Tax Return" means a Tax return, declaration, report, claim for ---------- refund, information statement or other form required to be filed pursuant to any Law or by any Governmental Authority. 4. Representations and Warranties of Buffton. Buffton represents and ----------------------------------------- warrants to Tremain and Mathot that on the date hereof and as of the Closing Date: a. Organization. Buffton and each of its corporate subsidiaries (the ------------ "Buffton Subsidiaries") is a corporation duly organized, validly existing -------------------- and in good standing under the Laws of the jurisdiction in which it is organized and has all requisite corporate power and authority and all necessary permits, licenses, consents, and authorizations from Governmental Authorities to own, lease and operate all of its properties and assets and to carry on its business as now being conducted, except where the failure to have such Governmental Authority would not, either individually or in the aggregate, have a Material Adverse Effect. Buffton and each Buffton Subsidiary is in compliance with all applicable Laws, except where failure to be in such compliance would not, either individually or in the aggregate, have a Material Adverse Effect. Buffton has heretofore delivered to Hotels true and complete copies of the Articles of Incorporation and Bylaws, as in existence on the date hereof, of Buffton. b. Capitalization. The authorized capital stock of Buffton consists -------------- of 30,000,000 shares of Buffton Common Stock, par value $.05 per share, and 5,000,000 shares of preferred stock, par value $.01 per share. As of March 31, 1997, there were issued and outstanding STOCK EXCHANGE AGREEMENT PAGE 7 6,672,328 shares of Buffton Common Stock and no shares of preferred stock, and 54,550 shares of Buffton Common Stock were held as treasury shares. All issued shares of Buffton Common Stock are validly issued, fully paid and nonassessable and no holder thereof is entitled to preemptive rights. All shares of Buffton Common Stock issued pursuant to this Agreement are validly issued, fully paid and nonassessable and do not violate the preemptive rights of any Entity or person. c. Authorization and Validity of Agreement. Buffton has all --------------------------------------- requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder. The execution and delivery by Buffton of this Agreement and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary corporate action. This Agreement has been duly executed and delivered by Buffton and is the valid and binding obligation of Buffton, enforceable against Buffton in accordance with its terms, except as such enforceability may be limited or affected by (i) bankruptcy, insolvency, reorganization, moratorium, liquidation, arrangement, fraudulent transfer, fraudulent conveyance and other similar Laws (including court decisions) now or hereafter in effect and affecting the rights and remedies of creditors generally or providing for the relief of debtors, (ii) the refusal of a particular court to grant equitable remedies, including, without limitation, specific performance and injunctive relief, and (iii) general principles of equity (regardless of whether such remedies are sought in a proceeding in equity or at law) and except as the enforceability of any indemnification provision contained in this Agreement may be limited by applicable federal or state securities or other Laws. STOCK EXCHANGE AGREEMENT PAGE 8 d. No Approvals or Notices Required; No Conflict with Instruments to ----------------------------------------------------------------- which Buffton is a Party. Neither the execution and delivery of this ------------------------ Agreement nor the performance by Buffton of its obligations hereunder, nor the consummation of the transactions contemplated hereby by Buffton, will (i) conflict with the Articles of Incorporation or Bylaws of Buffton; (ii) assuming satisfaction of the requirements set forth in clause (iii) below, violate any provision of Law applicable to Buffton; (iii) except for (A) requirements of federal and state securities Law, and (B) requirements of notice filings in such foreign jurisdictions as may be applicable, require any consent or approval of, or filing with or notice to, any Governmental Authority under any provision of Law applicable to Buffton; or (iv) require any consent, approval or notice under, or violate, breach, be in conflict with or constitute a default (or an event that, with notice or lapse of time or both, would constitute a default) under, or permit the termination of any provision of, or result in the creation or imposition of any lien upon any properties, assets or business of Buffton under, any note, bond, indenture, mortgage, deed of trust, lease, franchise, permit, authorization, license, contract, instrument or other agreement or commitment or any order, judgment or decree to which Buffton is a party or by which Buffton or any of its assets or properties is bound or encumbered, except those that have already been given, obtained or filed and except in any of the cases enumerated in clauses (ii) through (iv), those that, in the aggregate, would not have a Material Adverse Effect. e. SEC Filings; Financial Statements. Buffton and each Buffton --------------------------------- Subsidiary have filed all reports, registration statements, proxy statements and other filings, together with any amendments required to be made with respect thereto, that they have been required to file with the STOCK EXCHANGE AGREEMENT PAGE 9 Securities and Exchange Commission (the "SEC") under the Securities Act and --- the Exchange Act, except where failure to file will not have a Material Adverse Effect. All reports, registration statements, proxy statements and other filings (including all notes, exhibits and schedules thereto and documents incorporated by reference therein) filed by Buffton with the SEC since January 1, 1996 through the date of this Agreement, together with any amendments thereto, including those filings listed on Schedule 2.a hereof, ------------ are sometimes collectively referred to as the "Buffton SEC Filings". ------------------- Buffton has heretofore delivered to Tremain and Mathot copies of the Buffton SEC Filings. As of the respective dates of its filing with the SEC, the Buffton SEC Filings complied in all material respects with the Securities Act, the Exchange Act and the rules and regulations of the SEC promulgated thereunder, and did not or will not, as the case may be, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. Each of the consolidated financial statements (including any related notes or schedules) included in the Buffton SEC Filings was prepared in accordance with generally accepted accounting principles applied on a consistent basis (except as may be noted therein or in the notes or schedules thereto), and fairly present, in all material respects, the consolidated financial position of Buffton and the Buffton Subsidiaries as of the dates thereof and the statements of income for the periods then ended (subject, in the case of the unaudited interim financial statements, to normal year-end audit adjustments on a basis comparable with past periods). STOCK EXCHANGE AGREEMENT PAGE 10 There has been no Material Adverse Change in the consolidated financial condition of Buffton and the Buffton Subsidiaries, or any material event which is likely to result in such a Material Adverse Change, since the date of the last financial statements included in the Buffton SEC Filings. f. Litigation. Except as disclosed in the Buffton SEC Filings, ---------- there are no claims, actions, suits, investigations or proceedings pending or, to the Knowledge of Buffton, threatened against or affecting Buffton or any of the Buffton Subsidiaries or any of its or their respective properties at law or in equity, or any of its or their respective employee benefit plans or fiduciaries of such plans, or before or by any Governmental Authority, wherever located, that individually or in the aggregate if adversely determined would have a Material Adverse Effect, or that involve the risk of criminal liability. g. Voting Requirements. No vote of the holders of any class or ------------------- series of the capital stock of Buffton is necessary to approve this Agreement and the Stock Exchange. 5. Representations and Warranties of Hotels. Hotels represents and ---------------------------------------- warrants to Buffton that, except as set forth in the disclosure letter delivered by Hotels to Buffton on the date hereof (the "Hotels Disclosure Letter"): ------------------------ a. Organization and Compliance with Law. Hotels is a corporation ------------------------------------ duly organized, validly existing and in good standing under the Laws of the jurisdiction in which it is organized and STOCK EXCHANGE AGREEMENT PAGE 11 has all requisite corporate power and authority and all necessary permits, licenses, consents, and authorizations from Governmental Authorities to own, lease and operate all of its properties and assets and to carry on its business as now being conducted, except where the failure to have such Governmental Authority would not, either individually or in the aggregate, have a Material Adverse Effect. Hotels is duly qualified as a foreign corporation to do business, and is in good standing, in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification necessary, except in such jurisdictions where the failure to be duly qualified does not and would not, either individually or in the aggregate, have a Material Adverse Effect. Hotels is in compliance with all applicable Laws, except where failure to be in such compliance would not, either individually or in the aggregate, have a Material Adverse Effect and has all necessary permits, licenses, consents and authorizations from Governmental Authorities which are necessary to operate its business. Hotels has heretofore delivered to Buffton true and complete copies of the Articles of Incorporation and Bylaws, as in existence on the date hereof, of Hotels. b. Capitalization. -------------- (1) The authorized capital stock of Hotels consists of 1,000 shares of Hotels Common Stock, par value $1.00 per share. As of the date of execution of this Agreement, there were issued and outstanding 100 shares of Hotels Common Stock (60 shares held by Tremain and 40 shares held by Mathot), and no shares of Hotels Common Stock were held as treasury shares. All issued shares of Hotels Common Stock are validly issued, fully paid STOCK EXCHANGE AGREEMENT PAGE 12 and nonassessable, and no holder thereof is entitled to, or has waived, preemptive rights. Except for that certain Stockholders' Agreement dated as of June 30, 1990, among Hotels, Tremain and Mathot (the "Existing Stockholders Agreement"), Hotels is not a party to, and ------------------------------- has no Knowledge of, any voting agreement, voting trust or similar agreement or arrangement relating to any class or series of its capital stock, or any agreement or arrangement providing for registration rights with respect to any capital stock or other securities of Hotels. The Existing Stockholders Agreement is being cancelled and terminated hereby, without continuing liability of Hotels. (2) There are (A) no shares of capital stock or other equity securities of Hotels outstanding (other than the 100 shares outstanding as stated in Section 5(b)(i)) and (B) no outstanding options, warrants, scrip, rights to subscribe for, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable for, shares of any class of capital stock of Hotels, or contracts, understandings or arrangements to which Hotels or any Hotels stockholder is a party, or by which it is or may be bound, to issue additional shares of its capital stock or options, warrants, scrip or rights to subscribe for, or securities or rights convertible into or exchangeable for, any additional shares of capital stock of Hotels. (3) Hotels does not own any stock, partnership, equity or other interest in any Entity. STOCK EXCHANGE AGREEMENT PAGE 13 c. Authorization and Validity of Agreement. Hotels has all --------------------------------------- requisite corporate power and authority to enter into this Agreement, to make the representations made herein and to perform its obligations hereunder. This Agreement has been duly executed and delivered by Hotels and is the valid and binding obligation of Hotels, enforceable against it in accordance with its terms, except as such enforceability may be limited or affected by (i) bankruptcy, insolvency, reorganization, moratorium, liquidation, arrangement, fraudulent transfer, fraudulent conveyance and other similar Laws (including court decisions) now or hereafter in effect and affecting the rights and remedies of creditors generally or providing for the relief of debtors, (ii) the refusal of a particular court to grant equitable remedies, including, without limitation, specific performance and injunctive relief, and (iii) general principles of equity (regardless of whether such remedies are sought in a proceeding in equity or at law) and except as the enforceability of any indemnification provision contained in this Agreement may be limited by applicable federal or state securities or other Laws. d. No Approvals or Notices Required; No Conflict with Instruments to ----------------------------------------------------------------- which Hotels is a Party. Neither the execution and delivery of this ----------------------- Agreement nor the performance by Tremain and Mathot of their obligations hereunder, nor the consummation of the transactions contemplated hereby by Tremain and Mathot, will (i) conflict with the Articles of Incorporation or Bylaws of Hotels; (ii) assuming satisfaction of the requirements set forth in clause (iii) below, violate any provision of Law applicable to Hotels, Tremain or Mathot; (iii) except for (A) requirements of federal and state securities Law, and (B) requirements of notice filings in such foreign jurisdictions as may be applicable, require any consent or approval of, or filing with or notice to, any STOCK EXCHANGE COMMISSION PAGE 14 Governmental Authority, under any provision of Law applicable to Hotels, Tremain or Mathot; or (iv) require any consent, approval or notice under, or violate, breach, be in conflict with or constitute a default (or an event that, with notice or lapse of time or both, would constitute a default) under, or result in any loss of any material benefit under, or permit the termination of any provision of, or result in the creation or imposition of any lien upon any properties, assets or business of Hotels under, any note, bond, indenture, mortgage, deed of trust, lease, franchise, permit, authorization, license, contract, instrument or other agreement or commitment or any order, judgment or decree to which Hotels is a party or by which Hotels or any of its assets or properties is bound or encumbered, except those that have already been given, obtained or filed and except in any of the cases enumerated in clauses (ii) through (iv), those that, in the aggregate, would not have a Material Adverse Effect. e. Financial Statements; Material Contracts; Liabilities. Hotels ----------------------------------------------------- has no written or verbal contracts, obligations, agreements or understandings enforceable against it or any of its assets other than those described in the Hotels Disclosure Letter. The December 31, 1996 financial statements and all other financial statements of Hotels (including any related notes or schedules) provided by or at the direction of Tremain and/or Mathot to Buffton (the "Hotels ------ Financial Statements") fairly and accurately present in all material -------------------- respects the financial position of Hotels as of the dates thereof and the statements of income and cash flows for the periods then ended. As of the date hereof, Hotels has no material liabilities, absolute or STOCK EXCHANGE AGREEMENT PAGE 15 contingent, which are not reflected in the Hotels Disclosure Letter or the Hotels Financial Statements. Hotels has records that accurately and validly reflect its transactions and accounting controls sufficient to insure that such transactions are accurately recorded and, with respect to accounting and financial matters, recorded in conformity with generally accepted accounting principles. f. Conduct of Business in the Ordinary Course; Absence of Certain -------------------------------------------------------------- Changes and Events. Since January 1, 1997, except as contemplated by this ------------------ Agreement or disclosed in the Hotels Disclosure Letter, Hotels has conducted its business only in the ordinary and usual course, and there has not been (i) any Material Adverse Change in Hotels or any condition, event or development that reasonably may be expected to result in any such Material Adverse Change; (ii) any change by Hotels in its accounting methods, principles or practices; (iii) any revaluation by Hotels of any of its assets, including, without limitation, writing down the value of inventory or writing off notes or accounts receivable other than in the ordinary course of business; (iv) any entry by Hotels into any commitment or transaction material to Hotels, taken as a whole; (v) any declaration, setting aside or payment of any dividends or distributions in respect of the Hotels Common Stock; (vi) any damage, destruction or loss (whether or not covered by insurance) adversely affecting the properties or business of Hotels, taken as a whole; (vii) any increase in excess of $5,000 in indebtedness for borrowed money; (viii) any granting of a security interest or lien on any property or assets of Hotels, taken as a whole, other than Permitted Liens; or (ix) any STOCK EXCHANGE AGREEMENT PAGE 16 increase in or establishment of any bonus, insurance, severance, deferred compensation, pension, retirement, profit sharing, stock option (including, without limitation, the granting of stock options, stock appreciation rights, performance awards or restricted stock awards), stock purchase or other employee benefit plan or any other increase in the compensation payable or to become payable to any officers or key employees of Hotels. g. Certain Fees. Neither Hotels nor any of its officers, directors ------------ or employees, on behalf of Hotels or its Board of Directors (or any committee thereof), has employed any financial advisor, broker or finder or incurred any liability for any financial advisory, brokerage or finders' fees or commissions in connection with the transactions contemplated hereby. h. Litigation. Except as disclosed in the Hotels Disclosure Letter, ---------- there are no claims, actions, suits, investigations or proceedings pending or, to the Knowledge of Hotels, threatened against or affecting Hotels or any of its respective properties at law or in equity, or any of its employee benefit plans or fiduciaries of such plans, or before or by any Governmental Authority, wherever located. i. Employee Liability. To its Knowledge, Hotels has no material ------------------ undisclosed liability to any present or former employee, any Governmental Authority or any other person or Entity under ERISA or any other Laws involving the rights and/or remedies of employees. STOCK EXCHANGE AGREEMENT PAGE 17 j. Taxes. All Tax Returns of or relating to any Taxes that are ----- required to be filed on or before the date hereof by or with respect to Hotels, or any other corporation that is or was a member of an affiliated group (within the meaning of Section 1504(a) of the Code) of corporations of which Hotels was a member for any period ending on or prior to the date hereof, have been duly and timely filed, and all Taxes, including interest and penalties, due and payable pursuant to such Tax Returns have been paid or adequately provided for in reserves established by Hotels. All Tax Returns of or with respect to Hotels have been audited by the applicable Governmental Authority, or the applicable statute of limitations has expired, for all periods up to and including the tax year ended December 31, 19___. There is no material claim against Hotels with respect to any Taxes, and no material assessment, deficiency or adjustment has been asserted or proposed with respect to any Tax Return of or with respect to Hotels that has not been adequately provided for in reserves established by Hotels. The total amounts set up as liabilities for current and deferred Taxes in the Hotels Financial Statements have been established in accordance with generally accepted accounting principles and are sufficient to cover the payment of all Taxes, including any penalties or interest thereon and whether or not assessed or disputed, that are, or are hereafter found to be, or to have been, due with respect to the operations of Hotels through the periods covered thereby. k. Environmental. Except as disclosed in the Hotels Disclosure ------------- Letter, to the Knowledge of Hotels: (1) Hotels has not caused or permitted the release or disposal of Hazardous Materials onto, at or near any property owned, managed, leased or operated by Hotels. STOCK EXCHANGE AGREEMENT PAGE 18 (2) Hotels has not caused or allowed the generation, use, treatment, storage or disposal of Hazardous Materials in connection with any business or other operations managed or conducted by Hotels except in accordance with all applicable Environmental Laws. (3) Hotels has filed all reports required by Environmental Laws. (4) There are no facts, conditions or circumstances that could cause Hotels to incur any loss, liability, damage, costs or expenses, with respect to any individual event, in excess of $25,000, for (A) violations of Environmental Laws, (B) failure to obtain an Environmental Permit, (C) response or remedial costs under any Environmental Law or (D) personal injury or property damage resulting from exposure to or releases of Hazardous Materials. (5) Hotels has not received any inquiry or notice, nor does Hotels have any reason to suspect or believe any of them will receive any inquiry or notice, of any actual or potential proceeding, claim, lawsuit or loss that arises under or relates to any Environmental Law. (6) No underground storage tanks are present on the properties owned or operated by Hotels, and any underground storage tanks previously removed from any STOCK EXCHANGE AGREEMENT PAGE 19 properties owned, managed, leased or operated by Hotels were removed in accordance with applicable Environmental Laws. (7) The business or any other current or prior operations conducted or managed by Hotels have been conducted in compliance with all applicable limitations, restrictions, conditions, standards, prohibitions, requirements and obligations established under applicable Environmental Laws, except where the failure to be in compliance would not, either individually or in the aggregate, have a Material Adverse Effect. l. No Severance Payments. Hotels will not owe a severance payment --------------------- or similar obligation to any of its employees, officers or directors as a result of the Stock Exchange or the transactions contemplated by this Agreement, nor will any of such persons be entitled to an increase in severance payments or other benefits as a result of the Stock Exchange or the transactions contemplated by this Agreement in the event of the subsequent termination of their employment. m. Insurance. The Hotels Disclosure Letter sets forth all policies --------- of insurance currently in effect relating to the business or operations of Hotels, and such insurance is adequate. n. Title to Property. Except as set forth in the Hotels Disclosure ----------------- Letter, Hotels has good and indefeasible title to all of its assets, free and clear of all mortgages, liens, charges and encumbrances other than Permitted Liens. STOCK EXCHANGE AGREEMENT PAGE 20 6. Investment and Other Representations by Tremain and Mathot. Tremain ---------------------------------------------------------- and Mathot jointly and severally represent and warrant to Buffton that: a. Each of Tremain and Mathot has such knowledge of finance, securities and investments generally and such experience and skill in investments based on actual participation that each is capable of evaluating the merits and risks of an investment in Buffton and the suitability of the Buffton Common Stock acquired hereunder as an investment for each of Tremain and Mathot. b. The Buffton Common Stock being acquired by Tremain and Mathot will be acquired by each of Tremain and Mathot for his own account for investment and not for the benefit of any other Entity or person or with a view towards resale or distribution, and neither Tremain nor Mathot presently has any reason to anticipate any change in either of their circumstances or other particular occasion or event that would cause either Tremain or Mathot to sell his Buffton Common Stock. c. Each of Tremain and Mathot has been furnished by Buffton with all information (or access to all information) regarding Buffton's business, operations and financial condition, the attributes of the Buffton Stock and the merits and risks of an investment in the Buffton Stock, that each of Tremain and Mathot deems appropriate and necessary for each of Tremain and Mathot's analysis of an investment in the Buffton Stock. STOCK EXCHANGE AGREEMENT PAGE 21 d. Each of Tremain and Mathot has had an opportunity to obtain any information from and ask questions of Buffton concerning any and all information that each of Tremain and Mathot believed was or might be material to an evaluation of the terms, conditions, merits and risks of an investment in the Buffton Common Stock, and all such questions have been satisfactorily answered, and all such information provided, to each of Tremain and Mathot's full and complete satisfaction. e. Each of Tremain and Mathot has adequate net worth and means of providing for each of Tremain and Mathot's current needs and all possible contingencies, and each of Tremain and Mathot has no need, and anticipates no need in the foreseeable future, to sell the Buffton Common Stock. f. Each of Tremain and Mathot is able to bear all of the economic risks of an investment in the Buffton Stock and, consequently, without limiting the generality of the foregoing, each of Tremain and Mathot is able to hold each of Tremain's and Mathot's Buffton Common Stock for an indefinite period of time and has a sufficient net worth to sustain a loss of each of Tremain's and Mathot's entire investment in the Buffton Common Stock in the event such loss should occur. g. Each of Tremain and Mathot understands that (i) his investment in the Buffton Common Stock is speculative and involves a high degree of risk of loss by him of his entire investment and that he must bear the economic risk of such investment for an indefinite period of time; and (ii) no assurances, representations or warranties, direct or indirect of any nature STOCK EXCHANGE AGREEMENT PAGE 22 whatsoever, have been made regarding (A) any economic advantages (including Tax) that may inure to the benefit of each of Tremain and Mathot, (B) the approximate length of time that each of Tremain and Mathot will be required to own each of Tremain's and Mathot's Buffton Stock or (C) any distributions of cash or property to the stockholders of Buffton. h. Except as provided herein or in the Employment Agreements and Nonqualified Stock Option Agreements referred to on Schedule 2.a hereto, ------------ neither Tremain nor Mathot has received any representation or warranty from Buffton or any stockholder or any director, officer, employee or agent, as applicable, of Buffton or any stockholder, in making their investment decision. i. All information made available to each of Tremain's and Mathot and each of Tremain and Mathot's personal advisors and representatives, if any, in connection with their investment in the Buffton Common Stock is confidential, shall be held in strict confidence in all respects and may not be reproduced, distributed in whole or in part, or otherwise divulged, or used for any other purpose, without the prior written consent of Buffton. j. Each of Tremain and Mathot is aware that there are substantial restrictions on the transferability of the Buffton Common Stock and that since the Buffton Common Stock may not be, and each of Tremain and Mathot has no right to require that it be, registered (except pursuant to the registration rights hereafter provided) under the Securities Act or any applicable state securities laws, the Buffton Common Stock may not be, and each of Tremain and Mathot agrees STOCK EXCHANGE AGREEMENT PAGE 23 that it shall not be, sold unless first registered thereunder or unless such sale is exempt from such registration under said Act and such laws. Each of Tremain and Mathot also acknowledges that he is responsible for compliance with all conditions on transfer imposed by any federal or state securities law or regulation and for any expenses incurred by Buffton for legal or accounting services in connection with reviewing any such proposed transfer except as provided in Section 8 hereof. k. Each of Tremain and Mathot is an "Accredited Investor" within the meaning of Regulation D of the General Rules and Regulations under the Securities Act. l. Each of Tremain and Mathot understands and agrees that a legend may be placed on each certificate evidencing the Buffton Common Stock in substantially the following form: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE SOLD, OR TRANSFERRED, EXCEPT UPON SUCH REGISTRATION OR UPON DELIVERY TO THE CORPORATION OF AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT REGISTRATION IS NOT REQUIRED FOR SUCH SALE OR TRANSFER. STOCK EXCHANGE AGREEMENT PAGE 24 m. To their Knowledge, there are no material misstatements, errors, misrepresentations or omissions in any Tax Return filed by Hotels. n. Except as disclosed in the Hotels Disclosure Letter, there are no claims, actions, suits, investigations or proceedings pending or, to the Knowledge of Tremain or Mathot, threatened against or affecting Hotels before or by any Governmental Authority or arbitrator, wherever located. o. Tremain and Mathot have all requisite capacity and authority to enter into this Agreement, to make the representations made herein and to perform their obligations hereunder. This Agreement has been duly executed and delivered by Tremain and Mathot and is the valid and binding obligation of Tremain and Mathot, enforceable against them in accordance with its terms, except as such enforceability may be limited or affected by (i) bankruptcy, insolvency, reorganization, moratorium, liquidation, arrangement, fraudulent transfer, fraudulent conveyance and other similar Laws (including court decisions) now or hereafter in effect and affecting the rights and remedies of creditors generally or providing for the relief of debtors, (ii) the refusal of a particular court to grant equitable remedies, including, without limitation, specific performance and injunctive relief, and (iii) general principles of equity (regardless of whether such remedies are sought in a proceeding in equity or at law) and except as the enforceability of any indemnification provision contained in this Agreement may be limited by applicable federal or state securities or other Laws. STOCK EXCHANGE AGREEMENT PAGE 25 7. Tax Treatment. Tremain and Mathot each acknowledge that neither ------------- Buffton nor any of its officers, directors, employees, attorneys, accountants or agents has made any representations or warranties of any nature whatsoever with respect to the consequences of the Stock Exchange or any of the other transactions contemplated hereby to either Tremain or Mathot under any Tax Law. 8. Registration Rights. ------------------- a. Demand Registration Right (Registration of Buffton Common --------------------------------------------------------- Stock on Request). ----------------- (1) Request. Upon the written request of either Tremain or ------- Mathot (the "Requesting Holder") that Buffton effect the registration ----------------- under the Securities Act of all of such Requesting Holder's Registrable Securities, Buffton shall promptly give written notice of such requested registration to the other if Tremain or Mathot and to any other person or Entity with demand or incidental registration rights granted by Buffton (the Requesting Holder, the other of Tremain or Mathot and all such other persons and Entities being herein called "Registration Rights Holders") and shall use Buffton's best efforts to --------------------------- effect, as expeditiously as possible, the registration under the Securities Act of: i) the Registrable Securities that Buffton has been so requested to register by such Requesting Holder; STOCK EXCHANGE AGREEMENT PAGE 26 ii) all other Registrable Securities that Buffton has been requested to register in such registration by the other of Tremain or Mathot who is not the Requesting Holder by written request to Buffton received within 15 days after the other of Tremain or Mathot receives notice of such pending registration; and iii) all other Buffton Common Stock which any other Registration Rights Holders may have requested be included in such pending registration. (2) Certain Limitations. The foregoing notwithstanding, Buffton ------------------- shall not be obligated to file or cause to become effective any registration statement pertaining to Registrable Securities of a Requesting Holder, (i) if less than 100,000 shares will be included in such registration statement or (ii) at any time during the existence of a Disadvantageous Condition. Except as provided in Section 2.7, ----------- Tremain and Mathot together may only require one demand registration pursuant to this Section 8.a. (i.e., if Tremain is a Requesting Holder ----------- ---- and Mathot does not elect to participate in such registration, Mathot shall have no further right to request registration pursuant to this Section 8.a. ----------- (3) Registration Statement Form. Registrations under this --------------------------- Section 8.a shall be on such appropriate registration form of the SEC ----------- as shall be selected by Buffton. STOCK EXCHANGE AGREEMENT PAGE 27 (4) Expenses. Buffton shall pay all Registration Expenses in -------- connection with the one registration which becomes effective pursuant to this Section 8.a. ----------- (5) Effective Registration Statement. A registration requested -------------------------------- pursuant to this Section 8.a shall not be deemed to have been effected ----------- unless a registration statement relating thereto has become effective under the Securities Act and the registration statement has remained effective for a period of at least 90 days (or such shorter period in which all Registrable Securities included in such registration have actually been sold thereunder). Buffton may discontinue any effective registration statement requested if and so long as a Disadvantageous Condition shall exist. (6) Underwriters. Tremain and Mathot shall have no right to ------------ require an underwritten public offering, but if any registration effected pursuant to this Section 8.a is an underwritten public ----------- offering, the managing underwriter or underwriters thereof and the price, terms and provisions of the offering shall be determined by the holders of 60% or more of the Registrable Securities and other Buffton Common Stock included in such registration, but any such underwriter must be reasonably acceptable to Buffton and may be selected by Buffton if the required 60% concurrence cannot be achieved. (7) Apportionment in Registrations Requested. If a registration ---------------------------------------- requested pursuant to this Section 8.a or pursuant to Section 8.b is ----------- ----------- an underwritten offering and the managing underwriter advises Buffton in writing (with a copy to the Requesting Holder and STOCK EXCHANGE AGREEMENT PAGE 28 any other stockholders who requested inclusion of Registrable Securities or other Buffton Common Stock in the registration) that, in its opinion, the number of Registrable Securities requested to be included in such registration exceeds the number that can be sold in such offering or would in any other manner adversely effect such offering, Buffton shall include in such registration all of such Registrable Securities that Buffton is advised can be sold in such offering. To the extent that such number is less than the total number of Registrable Securities and other Buffton Common Stock requested to be included in such registration, the number of Registrable Securities to be so included shall be reduced on a pro rata basis among all holders, whose Buffton Common Stock are included in such registration such that each holder whose Buffton Common Stock is so included shall be entitled to include such number of shares of Buffton Common Stock included in such offering, determined by multiplying the number of shares of Buffton Common Stock requested to be included by the Registration Rights Holders by a fraction the numerator of which is equal to the sum of the number of shares of Buffton Common Stock that such managing underwriter has advised may be included in such registration, and the denominator of which is the total number of shares of Buffton Common Stock requested to be included in such registration by all holders. Subject to the limitations on number of shares stated in Section 7.a.(2), in the event of any such reduction at the request of an underwriter, either pursuant to the initial demand registration by Tremain and/or Mathot or a subsequent one pursuant to this sentence, Tremain and Mathot, and if there is no other registration within the next 12 months pursuant to which the shares unsold because of such reduction can be sold STOCK EXCHANGE AGREEMENT PAGE 29 pursuant to Section 8.b, Tremain and Mathot shall be entitled to exercise one additional demand right pursuant to this Section 8.a in order to sell such unsold shares. b. Piggyback Registration Rights. If Buffton at any time proposes to ----------------------------- register any of its Common Stock under the Securities Act (other than a registration on Form S-4, Form S-8 or any successor or similar form, or in connection with a tender offer, merger or other acquisition), for sale for its own account in an underwritten offering or for sale pursuant to a registration for others, it shall each such time give prompt written notice to Tremain and Mathot of its intention to do so. Upon the written request of either Tremain or Mathot made within 15 days after the date of receipt of such notice, Buffton shall use its best efforts to effect the registration under the Securities Act of all Registrable Securities that Buffton has been so requested to register by Tremain and/or Mathot, to the extent requisite to permit the disposition of such Registrable Securities so to be registered, provided, that if, at any time after giving written notice of its intention to register any Buffton Common Stock and prior to the effective date of the registration statement filed in connection with such registration, Buffton shall determine for any reason not to register or to delay registration of such Buffton Common Stock, Buffton may, at its election, give written notice of such determination to Tremain and Mathot and, thereupon, (a) in the case of a determination not to register, Buffton shall be relieved of its obligation to register any Registrable Securities in connection with such registration (but not from its obligation to pay the Registration Expenses in connection therewith), without prejudice. Buffton shall pay all Registration Expenses in connection with each registration of Registrable Securities pursuant to this Section 8.b. ----------- STOCK EXCHANGE AGREEMENT PAGE 30 c. Registration Procedures. ----------------------- (1) Procedures. If and whenever Buffton is required to use its ---------- best efforts to effect the registration of any Registrable Securities under the Securities Act as provided in Articles II and III, Buffton ----------- --- shall as expeditiously as possible: i) prepare and as soon thereafter as is reasonably practicable file with the SEC the requisite registration statement to effect such registration and thereafter use commercially reasonable efforts to cause such registration statement to become effective; ii) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement until such time as all of such securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement or 90 days after the effective date of the registration statement, whichever is shorter; STOCK EXCHANGE AGREEMENT PAGE 31 iii) furnish without charge to each seller of Registrable Securities covered by such registration statement such number of conformed copies of such registration statement and of each such amendment and supplement thereto, such number of copies of the prospectus contained in such registration statement (including each preliminary prospectus and any summary prospectus) and any other prospectus filed under Rule 424 or Rule 430A under the Securities Act, conforming with the requirements of the Securities Act and such other documents as such seller may reasonably request; iv) use commercially reasonable efforts to register or qualify all securities under such other securities or blue sky laws of such jurisdictions in the United States as each seller thereof shall reasonably request, keep such registration or qualification in effect for so long as such registration statement remains in effect and take any other action that may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the securities owned by such seller, except that Buffton shall not for any such purpose be required to qualify generally to do business as a foreign entity in any jurisdiction wherein it would not but for the requirements of this Section 8.c be obligated to ----------- be so qualified or to consent to general service of process in any such jurisdiction; and STOCK EXCHANGE AGREEMENT PAGE 32 v) cause any shares registered pursuant hereto to be listed for trading on the American Stock Exchange. d. Seller's Information. Buffton may require each proposed seller of -------------------- Registrable Securities as to which any registration is being effected to promptly furnish Buffton, as a condition precedent to including such seller's Registrable Securities in any registration, such information regarding such seller and the intended method of distribution of such Registrable Securities by such seller as Buffton may from time to time reasonably request in writing. e. Preparation; Reasonable Investigation. In connection with the ------------------------------------- preparation and filing of each registration statement under the Securities Act pursuant to this Agreement, Buffton shall give the sellers of Registrable Securities, their underwriters, if any, and their respective counsel, a reasonable period of time prior to the filing thereof to review and comment upon such registration statement, each prospectus included therein, and each amendment thereof or supplement thereto, and shall give each of them such opportunities to discuss the business of Buffton with its officers and the independent public accountant who has certified its financial statements as shall be necessary, in the opinion of each such seller's and each such underwriter's respective counsel, to conduct a reasonable investigation within the meaning of the Securities Act. 9. Release of Claims by Tremain and Mathot. Tremain and Mathot, jointly --------------------------------------- and severally, hereby waive, release, cancel and discharge any and all contractual, legal and other claims and rights of every kind or nature whatsoever which they or either of them may have against Hotels as an officer, STOCK EXCHANGE AGREEMENT PAGE 33 director, shareholder, employee or otherwise and agree to, and do hereby, cancel and terminate the Existing Stockholders Agreement. 10. Sale of Current Technology; Buffton Name Change. Buffton has provided ----------------------------------------------- to Tremain and Mathot a copy of the draft proxy statement filed with the SEC describing the proposed sale of substantially all of the assets of Current Technology, Inc. ("CTI"), a subsidiary of Buffton, to a subsidiary of Danaher --- Corporation, pursuant to a February 17, 1997 Asset Purchase Agreement, subject to shareholder approval and the satisfaction of the conditions stated in such Asset Purchase Agreement (the "CTI Sale"). Buffton agrees that it will use -------- commercially reasonable best efforts to consummate the CTI Sale, and, after such consummation, change the name of Buffton to BFX Hospitality Group, Inc. In the event Buffton is successful in consummating the CTI sale, it agrees to redeploy the proceeds from the CTI Sale together with other cash and assets of Buffton and the Buffton Subsidiaries into the hospitality industry, in implementation of a business plan approved by the Buffton board of directors. 11. Purchase of Buffton Common Stock by Tremain and Mathot. Tremain and ------------------------------------------------------ Mathot severally agree that each of them will, within 120 days after the closing of the CTI Sale, purchase 100,000 shares of Buffton Common Stock in the open market at market prices so long as they are able to make such purchases at a price of $3.00 per share or less. 12. Cooperation in Litigation. In the event that a claim is asserted ------------------------- against Buffton, or any of its direct or indirect subsidiaries, relating to, based in whole or in part on events or conditions occurring STOCK EXCHANGE AGREEMENT PAGE 34 or existing in connection with, or arising out of, Hotels or its business or operations, each of Tremain and Mathot agrees to cooperate with Buffton in the defense of any such claim at Buffton's expense. 13. Expenses. Each party hereto shall bear the legal, accounting and -------- other expenses incurred by such party in connection with the Stock Exchange and this Agreement, and the other agreements and transactions contemplated hereby. 14. Preparation of Pre-Closing Tax Returns. With respect to each Tax -------------------------------------- Return covering a taxable period ending on or before the date hereof that is required to be filed after the date hereof for, by or with respect to Hotels, Tremain and Mathot shall cause such Tax Return to be prepared, shall cause to be included in such Tax Return allitems of income, gain, loss, deduction and credit or other items required to be included therein, and shall deliver the original of each such Tax Return to Buffton at least 30 days prior to the due date (including extensions) of such Tax Return. If the amount of Tax shown due on any such Tax Return exceeds the amount reflected as a current liability for such Tax on the Hotels Financial Statements, Tremain and Mathot shall pay to Buffton the amount of such excess not less than five (5) days prior to the due date of such Tax Return. Buffton shall grant to Tremain and Mathot (or their designees) access at all reasonable times to all the information, books and records relating to Hotels within the possession of Hotels or Buffton to the extent reasonably necessary to permit Tremain and Mathot (or their designees) to prepare the Tax Return described in this Section 13. 15. Further Assurances. From time to time after the closing, upon request ------------------- of Buffton and without further consideration, Tremain and Mathot agree to execute, acknowledge and deliver all such STOCK EXCHANGE AGREEMENT PAGE 35 other instruments of sale, assignment, conveyance and transfer and shall take all such other commercially reasonable action required to effectively transfer to and vest in Buffton, and to put Buffton in possession of, all of the Hotels Stock and any assets of Hotels. 16. Public Announcements. Except for public statements or press releases --------------------- which the management or board of directors of Buffton in good faith believe to be required by law, Buffton, Tremain and Mathot will not make, or permit any agent or affiliate to make, any public statement or press release, with respect to the Stock Exchange or this Agreement without the prior written consent of the other parties hereto, which shall not be unreasonably withheld, conditioned or delayed. 17. Survival of Representations and Warranties. The representations and ------------------------------------------ warranties of the parties hereto made herein shall not be affected by any information furnished to, or any investigation conducted by, any of them or its representatives in connection with the subject matter of this Agreement, and such representations and warranties shall survive the Closing. 18. Amendments. This Agreement may be amended only by a writing executed ---------- by all of the parties hereto. 19. Entire Agreement. This Agreement and the other agreements expressly ---------------- provided for herein set forth the entire understanding of the parties hereto and supersede all prior contracts, agreements, arrangements, communications, discussions, representations and warranties, whether oral or written, STOCK EXCHANGE AGREEMENT PAGE 36 between the parties. Hotels is executing this Agreement solely for the purpose of making the representations and warranties in Section 5. 20. Notices. Any notice, request or other communication required or ------- permitted hereunder shall be in writing and shall be deemed to have been duly given (a) upon receipt if personally delivered or by overnight courier, (b) on the date sent if made by facsimile transmission to the party to whom such notice or communication is directed to the facsimile number of such person stated below (or as otherwise provided to or obtained by the sending party) and if followed by a telephone call to such person at the same time to the telephone number stated below (or otherwise provided to or obtained by the sending party) advising such person (or leaving a voice mail for such person) that the facsimile transmission has been sent and a general statement about the contents thereof, or (c) on the fifth business day after being sent by registered or certified mail, return receipt requested, postage prepaid, to the parties at its respective addresses set forth below. if to Hotels: Hotel of Distinction, Inc. 380 South County Road Palm Beach, Florida 33480 Attention: Alan Tremain Telephone: (407) 835-9500 Facsimile: (407) 835-9558 STOCK EXCHANGE AGREEMENT PAGE 37 with a copy to: Jean-Claude Mathot at the same address and a copy to: Andrew Culbert Masterman, Culbert & Tully LLP One Lewis Wharf Boston, Massachusetts 02110 Telephone: (617) 227-8010 Facsimile: (617) 227-2630 if to Buffton: Buffton Corporation 226 Bailey Avenue, Suite 101 Fort Worth, Texas 76107-1220 Attention: Robert H. McLean Telephone: (817) 332-2461 Facsimile: (817) 877-0420 with a copy to: Fulbright & Jaworski L.L.P. 2200 Ross Avenue, Suite 2800 Dallas, Texas 75201 Attention: Linton E. Barbee Telephone: (214) 855-8119 STOCK EXCHANGE AGREEMENT PAGE 38 Facsimile: (214) 855-8200 Any party by written notice to the other may change the address or the persons to whom notices or copies thereof shall be directed. 21. Counterparts. This Agreement may be executed in any number of ------------ counterparts, each of which shall be deemed to be an original, and all of which together shall constitute one and the same instrument. 22. Governing Law. This Agreement shall be governed by and construed in ------------- accordance with the substantive Laws of the State of Texas without giving effect to the principles of conflicts of law thereof. 23. Severability. If any term, provision, covenant or restriction of this ------------ Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall continue in full force and effect and shall in no way be affected, impaired or invalidated. 24. Headings. The Section heading herein are for convenience only and -------- shall not affect the construction hereof. STOCK EXCHANGE AGREEMENT PAGE 39 25. Entire Agreement; Third Party Beneficiaries. This Agreement ------------------------------------------- constitutes the entire agreement and supersedes all other prior agreements and understandings, both oral and written, among the parties or any of them, with respect to the subject matter hereof and neither this nor any documents delivered in connection with this Agreement confers upon any Governmental Authority, Entity or person not a party hereto any rights or remedies hereunder. 26. Election to Board of Directors. The Board of Directors of Buffton ------------------------------ have approved the election of Tremain and Mathot as members of such Board of Directors promptly after the Stock Exchange has been completed. STOCK EXCHANGE AGREEMENT PAGE 40 IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed on its behalf by its officers thereunto duly authorized, all as of the date first above written. BUFFTON CORPORATION By /S/ Robert H. McLean ---------------------------------- Robert H. McLean Chairman of the Board, President and Chief Executive Officer /S/ Alan Tremain /S/ Jean-Claude Mathot - --------------------------------------- -------------------------------------- ALAN TREMAIN JEAN-CLAUDE MATHOT HOTELS OF DISTINCTION, INC. By /S/Alan Tremain ------------------------------------- Alan Tremain, Chief Executive Officer SCHEDULE 2.a ITEMS AND DOCUMENTS DELIVERED BY BUFFTON AT OR BEFORE CLOSING ------------------------------------------------------------- Form of Employment Agreement to be entered into between Buffton and Tremain. Form of Employment Agreement to be entered into between Buffton and Mathot. Form of Non Qualified Stock Option Agreement to be entered into between Buffton and Tremain. Form of Non Qualified Stock Option Agreement to be entered into between Buffton and Mathot. Buffton Annual Reports for 1994, 1995 and 1996. Buffton form 10-Q for first quarter ending December 31, 1996. Buffton proxy statement for 1996. Buffton draft proxy statement filed with the SEC describing the proposed sale of substantially all of the assets of Current Technology, Inc., a subsidiary of Buffton, to a subsidiary of Danaher Corporation, pursuant to a February 17, 1997 Asset Purchase Agreement. Buffton press releases for the period October 1, 1995 through April 7, 1997. Projected balance sheet for Buffton at September 30, 1997, assuming the sale of Current Technology has been completed. Business Plan Summary as prepared by Tremain and reviewed by Robert McLean. Stock Certificate issued by Buffton to Tremain for 180,000 shares of Buffton Common Stock. Stock Certificate issued by Buffton to Mathot for 120,000 shares of Buffton Common Stock. SCHEDULE 2.b ITEMS AND DOCUMENTS DELIVERED BY TREMAIN AND MATHOT AT OR BEFORE CLOSING ------------------------------------------------------------------------ EX-2.A 3 NON-QUALIFIED STOCK OPTION AGREEMENT EXHIBIT 2A NON-QUALIFIED STOCK OPTION AGREEMENT ------------------------------------ This Option Agreement (the "Agreement") made and effective as of the 11th day of April, 1997, between BUFFTON CORPORATION, a Delaware corporation (the "Corporation"), and ALAN TREMAIN, an employee of the Corporation or one or more of its Subsidiaries (the "Employee"). WHEREAS, pursuant to Employee becoming employed by Corporation as the Corporation's Chairman of the Board pursuant to that certain Employment Agreement between Corporation and Employee of even date herewith (the "Employment Agreement"), the Corporation desires to afford Employee the opportunity to purchase shares of Corporation's $.05 par value common stock as an incentive for future performance to the Corporation. NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties hereto agree as follows: 1. Grant of Option. The Corporation hereby grants to the Employee the ---------------- right and option (the "Option") to purchase an aggregate of 250,000 shares of Corporation's $.05 par value common stock (the "Shares"), such Shares being subject to adjustment as provided in paragraph 7 hereof, and on the terms and conditions herein set forth. 2. Purchase Price. The purchase price of the Shares covered by the --------------- Option shall be $3.00 per Share. 3. Term of Option. The term of the Option shall be for a period of five --------------- (5) years from the date hereof subject to earlier termination pursuant to paragraph 5 hereof. 4. Exercise of Option. From and after the date hereof, the Option shall ------------------- be fully exercisable, in whole or in part, for the remaining term of the Option. The Option granted herein shall be exercisable only by the Employee, the Administrator or Executor of the Estate of the Employee, the heirs of the Employee taking title to the Option pursuant to the Employee's Will or the laws of descent and distribution, a court appointed guardian of the Employee, or by power of attorney duly appointed by the Employee. 5. Termination of Employment. In the event Employee's employment with ------------------------- the Corporation (which term includes subsidiaries of the Corporation) is terminated "for cause', as hereinafter defined, by the Corporation or terminated for any reason by Employee (except if terminated by Employee for failure of the sale of substantially all of the assets of Corporation's wholly owned subsidiary Current Technology, Inc., to close prior to August 31, 1997) then the Option granted under this Agreement, or any unexercised portion thereof, shall terminate and be unexercisable as of the effective date of such termination of employment if by Corporation or the date notice of termination is given, if by Employee. For purposes of this provision, the term "for cause" shall mean (a) the failure or refusal to perform diligently the duties of Employee's employment after written notice of such failure or refusal and a reasonable opportunity to remedy such has been provided, (b) the conviction of an offense involving moral turpitude which, in the judgment of the Board of Directors of EMPLOYER might bring discredit on EMPLOYER. In addition, if Employee violates any noncompete, nondisclosure, or nonsolicitation of Corporation's employees covenants in any written employment agreement with Corporation, or any subsidiary or affiliate of Corporation, then this Option shall terminate upon date of such breach. The determination of whether or not Employee has breached any noncompete, nondisclosure, or nonsolicitation of Corporation's employees covenants and the date of such breach shall be made by Corporation and such determination shall be binding upon Employee unless, within thirty (30) days after the Corporation notifies Employee of such determination, Employee invokes the mandatory arbitration provisions in Section 12 hereof, in which case, the decision of the arbitrator shall control. Employee shall not exercise any options hereunder between the date Employee is notified of termination and the date, if any, on which Employee invokes the arbitration provisions. If Employee invokes the arbitration provisions, and if Employee exercises any options hereunder after such invocation, Employee will deliver the stock (or proceeds from the sale of the stock) to the arbitrator to be held in escrow pending a final decision by the arbitrator, with the stock and proceeds to be delivered to Corporation by the arbitrator if the arbitrator makes the determination that the termination by Corporation was proper. 6. Transferability of Option. This Option may not be transferred by -------------------------- Employee by Will, by the laws of descent and distribution, or otherwise. Upon the death of Employee, Employee's estate shall have 180 days from the date of Employee's death to exercise the Option. If Employee's estate fails to exercise the Option within this time period, the Option shall terminate. 7. Anti-Dilution Provisions. ------------------------- (a) In case at any time or from time to time after the date of this Option, the holders of common stock of the Corporation shall have received or shall have become legally entitled to receive, (i) other or additional stock or other securities or property (other than cash) by way of a dividend or other distribution, or (ii) other or additional (or less) stock or other securities or property (including cash) by way of stock-split, spin-off, split-up, reclassification, combination of shares or similar corporate rearrangements, then and in each such case the holder of this Option, upon the exercise hereof as provided herein, shall be entitled to receive, in lieu of (or in addition to, as the case may be) the Shares theretofore receivable upon the exercise of this Option, the amount of stock and other securities and property (including cash in the case referred to in clause (ii) above) which such holder would have held on the date of such exercise if on the date such dividend, distribution, corporate rearrangement or such other event as described in clause (ii) above such holder had been the holder of record of the number of Shares receivable upon the exercise of this Option and had thereafter, during the period from the date thereof to and including the date of such exercise, obtained such Shares and all other or additional (or less) stock and other securities and property (including cash in the case referred to in clause (ii) above) receivable by him as aforesaid during such period, giving effect to all adjustments called for during such period by the following subparagraph. (b) In case of any reorganization of the Corporation (or any other corporation the stock or other securities of which are at the time receivable on the exercise of this Option) after the date hereof, or in case, after such date, the Corporation (or any such other corporation) shall consolidate, amalgamate or merge with or into or enter into a mandatory share exchange with another entity, then and in each such case the holder of this Option, upon the exercise hereof as provided herein at any time after the consummation of such reorganization, consolidation, amalgamation, merger, mandatory share exchange, or conveyance, shall be entitled to receive, and any third parties participating in such transaction shall acknowledge in writing that the holder is entitled to receive, in lieu of the Shares, stock or other securities and property receivable upon the exercise of this Option prior to such consummation, the stock or other securities or property to which such holder would have been entitled upon such consummation if such holder had exercised this Option immediately prior thereto, all subject to further adjustment as provided in the preceding subparagraph (a). (c) So long as this Option shall be outstanding and unexercised, if the Corporation shall enter into any transactions referred to in this Section 7, which effects a change in the securities, other property or cash distribution to which the holder is entitled upon exercise of this Option, then, in any such case, the Corporation shall cause to be sent to the holder a brief statement of the event giving rise to such effect, and a description thereof, together with advance notice of the record date relevant to any such transaction. 8. Rights as a Shareholder. The Employee or Employee's permitted ------------------------ transferee shall have no rights as a stockholder with respect to any Shares covered by the Option until the date of issuance of a stock certificate for such Shares. No adjustments, other than as provided in paragraph 6 above, shall be made for dividends (ordinary or extraordinary, whether in cash, securities, or other property) or distributions for which the record date is prior to the date such stock certificate is issued. 9. Conditions to Issue. The Option granted herein is subject to the -------------------- requirement that, if at any time the listing, registration, or qualification of Shares issuable upon exercise of the Option is required by any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body is necessary as a condition of, or in connection with the issuance of any Shares, no Shares shall be issued in whole or in part, unless such listing, registration, qualification, consent or approval has been obtained. The Corporation agrees, at its own expense, to take all action necessary to obtain such listing, registration, qualification, consent or approval so the Corporation can perform its contractual obligation to issue the Shares covered by this Option. 10. Method of Exercising Option. Subject to the terms and conditions of ---------------------------- this Agreement, the Option may be exercised by written notice delivered in person or by first class mail to the Secretary of the Corporation at its offices which are presently located at 226 Bailey Avenue, Suite 101, Fort Worth, Texas 76107. Such notice shall state the election to exercise the Option and the number of Shares in respect of which it is being exercised, and shall be signed by the person or persons so exercising the Option. Such notice shall be accompanied by payment of the full purchase price of such Shares, in which event the Corporation shall deliver a certificate or certificates representing such Shares as soon as practicable after the notice shall be received. Payment of such purchase price shall, in either case, be made in cash or cashier's, certified or personal check payable to the order of the Corporation. The certificate or certificates for the Shares as to which the Option shall have been so exercised shall be registered in the name of the person or persons so exercising the Option; or if the Option shall be exercised by the Employee, and if the Employee shall so request in the notice exercising the Option, such Option shall be registered in the name of the Employee and another person, as joint tenants with right of survivorship, and shall be delivered as provided above to or upon the written order of the person or persons other than the Employee, such notice shall be accompanied by appropriate proof satisfactory to the Corporation of the right of such person or persons to exercise the Option. All shares that shall be purchased upon the exercise of the Option as provided herein shall be fully paid and non-assessable. Upon the exercise of less than all of the Options hereunder, the Corporation shall promptly execute and deliver a new Option Agreement in the form hereof covering the balance of unexercised Options. The Corporation shall pay all expenses incurred by it in connection with the preparation, issuance and delivery of such new Option Agreements. 11. Non-Qualified Options. The Options granted hereunder are not part of ---------------------- or authorized pursuant to any plan or arrangement which is qualified or created incident to any provision of the Internal Revenue Code of 1986, as amended. 12. Arbitration. In the event of a dispute arising out of or relating to ------------ this Agreement, or relating to any claim or cause of action which may arise or be asserted under any federal, state or local statutory, regulatory or common law, including, without limitation, claims of discrimination, breach of contract or tort, such as intentional infliction of emotional distress, then, upon notice by any party to the other party (an "Arbitration Notice") and to American Arbitration Association ("AAA"), 140 West 51st Street, New York, New York 10020-1203 [telephone (212) 484-3266; fax (212) 307-4387], the controversy or dispute shall be submitted to a sole arbitrator who is independent and impartial, for binding arbitration in Fort Worth, Texas, in accordance with AAA's Commercial Arbitration Rules (the "Rules"). The parties agree that they will faithfully observe this agreement and the Rules and that they will abide by and perform any award rendered by the arbitrator. The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. Section 1-16 (or by the same principles enunciated by such Act in the event it may not be technically applicable). The award or judgment of the arbitrator shall be final and binding on all parties and enforced by any court having jurisdiction. If any party becomes the subject of a bankruptcy, receivership or other similar proceeding under the laws of the United States of America, any state or commonwealth or any other nation or political subdivision thereof, then, to the extent permitted or not prohibited by applicable law, any factual or substantive legal issues arising in or during the pendency of any such proceeding shall be subject to all of the foregoing mandatory arbitration provisions and shall be resolved in accordance therewith. The agreements contained herein have been given for valuable consideration, are coupled with an interest and are not intended to be executory contracts. The fees and expenses of the arbitrator will be shared equitably and ratably (as determined by the arbitrator) by all parties engaged in the dispute or controversy. Promptly after the Arbitration Notice is given, AAA will select five possible arbitrators, to whom AAA will give the identities of the parties and the general nature of the controversy. If any of those arbitrators disqualifies himself or declines to serve, AAA shall continue to designate potential arbitrators until the parties have five to select from. After the panel of five potential arbitrators has been completed, a two page summary of each of the potential arbitrators will be given to each of the parties, and the parties will have a period of 10 days after receiving the summaries in which to attempt to agree upon the arbitrator to conduct the arbitration. If the parties are unable to agree upon an arbitrator, then one of the parties shall notify AAA, and AAA shall select the arbitrator from one of the five. The decision of AAA with respect to the selection of the arbitrator will be final and binding. Within 10 days after the selection of the arbitrator, the parties and their council will appear before the arbitrator at a price an time designated by the arbitrator for the purpose of each party making a one hour or less presentation and summary of the case. Thereafter, the arbitrator will set dates and times for additional hearings until the proceeding is concluded. The desire and goal of the parties is, and the arbitrator will be advised that his goal should be, to conduct and conclude the arbitration proceeding as expeditiously as possible. If any party or his council fails to appear at any hearing, the arbitrator shall be entitled to reach a decision based on the evidence which has been presented to him by the parties who did appear. 13. Subsidiary. As used herein, the term "Subsidiary" shall mean any ----------- present or future corporation in which the Corporation shall own 50% or more of its accrued voting stock. 14. Severability. Each provision of this Agreement is intended to be ------------ severable from the others so that if any provision or term hereof is illegal or invalid (Pounds)or any reason whatsoever, such illegality or invalidity shall not affect the validity of the remaining provisions and terms hereof. 15. Binding Effect. This Agreement shall be binding upon and inure to the --------------- benefit of the respective heirs, executors, administrators and successors of the parties hereto. 16. Governing Law. This Agreement shall be construed and interpreted in -------------- accordance with the laws of the State of Delaware. 17. Headings. Headings are for the convenience of the parties and are not --------- deemed to be part of this Agreement. EXECUTED as of the day and year first written above. EMPLOYER: BUFFTON CORPORATION: By: /S/Robert McLean --------------------------------------------- Chairman of the Board and President EMPLOYEE: /S/Alan Tremain -------------------------------------------- ALAN TREMAIN, Individually EX-2.B 4 NON-QUALIFIED STOCK OPTION AGREEMENT EXHIBIT 2B NON-QUALIFIED STOCK OPTION AGREEMENT ------------------------------------ This Option Agreement (the "Agreement") made and effective as of the 11th day of April, 1997, between BUFFTON CORPORATION, a Delaware corporation (the "Corporation"), and JEAN-CLAUDE MATHOT, an employee of the Corporation or one or more of its Subsidiaries (the "Employee"). WHEREAS, pursuant to Employee becoming employed by Corporation as the Corporation's President and Chief Operating Officer pursuant to that certain Employment Agreement between Corporation and Employee of even date herewith (the "Employment Agreement"), the Corporation desires to afford Employee the opportunity to purchase shares of Corporation's $.05 par value common stock as an incentive for future performance to the Corporation. NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties hereto agree as follows: 1. Grant of Option. The Corporation hereby grants to the Employee the ---------------- right and option (the "Option") to purchase an aggregate of 250,000 shares of Corporation's $.05 par value common stock (the "Shares"), such Shares being subject to adjustment as provided in paragraph 7 hereof, and on the terms and conditions herein set forth. 2. Purchase Price. The purchase price of the Shares covered by the --------------- Option shall be $3.00 per Share. 3. Term of Option. The term of the Option shall be for a period of five --------------- (5) years from the date hereof subject to earlier termination pursuant to paragraph 5 hereof. 4. Exercise of Option. From and after the date hereof, the Option shall ------------------- be fully exercisable, in whole or in part, for the remaining term of the Option. The Option granted herein shall be exercisable only by the Employee, the Administrator or Executor of the Estate of the Employee, the heirs of the Employee taking title to the Option pursuant to the Employee's Will or the laws of descent and distribution, a court appointed guardian of the Employee, or by power of attorney duly appointed by the Employee. 5. Termination of Employment. In the event Employee's employment with ------------------------- the Corporation (which term includes subsidiaries of the Corporation) is terminated "for cause', as hereinafter defined, by the Corporation or is terminated for any reason by Employee (except if terminated by Employee for failure of the sale of substantially all of the assets of Corporation's wholly owned subsidiary Current Technology, Inc., to close prior to August 31, 1997) then the Option granted under this Agreement, or any unexercised portion thereof, shall terminate and be unexercisable as of the effective date of such termination of employment if by Corporation or the date notice of termination is given, if by Employee. For purposes of this provision, the term "for cause" shall mean (a) the failure or refusal to perform diligently the duties of Employee's employment after written notice of such failure or refusal and a reasonable opportunity to remedy such has been provided, (b) the conviction of an offense involving moral turpitude which, in the judgment of the Board of Directors of EMPLOYER might bring discredit on EMPLOYER. In addition, if Employee violates any noncompete, nondisclosure, or nonsolicitation of Corporation's employees covenants in any written employment agreement with Corporation, or any subsidiary or affiliate of Corporation, then this Option shall terminate upon date of such breach. The determination of whether or not Employee has breached any noncompete, nondisclosure, or nonsolicitation of Corporation's employees covenants and the date of such breach shall be made by Corporation and such determination shall be binding upon Employee unless, within thirty (30) days after the Corporation notifies Employee of such determination, Employee invokes the mandatory arbitration provisions in Section 12 hereof, in which case, the decision of the arbitrator shall control. Employee shall not exercise any options hereunder between the date Employee is notified of termination and the date, if any, on which Employee invokes the arbitration provisions. If Employee invokes the arbitration provisions, and if Employee exercises any options hereunder after such invocation, Employee will deliver the stock (or proceeds from the sale of the stock) to the arbitrator to be held in escrow pending a final decision by the arbitrator, with the stock and proceeds to be delivered to Corporation by the arbitrator if the arbitrator makes the determination that the termination by Corporation was proper. 6. Transferability of Option. This Option may not be transferred by -------------------------- Employee by Will, by the laws of descent and distribution, or otherwise. Upon the death of Employee, Employee's estate shall have 180 days from the date of Employee's death to exercise the Option. If Employee's estate fails to exercise the Option within this time period, the Option shall terminate. 7. Anti-Dilution Provisions. ------------------------- (a) In case at any time or from time to time after the date of this Option, the holders of common stock of the Corporation shall have received or shall have become legally entitled to receive, (i) other or additional stock or other securities or property (other than cash) by way of a dividend or other distribution, or (ii) other or additional (or less) stock or other securities or property (including cash) by way of stock-split, spin-off, split-up, reclassification, combination of shares or similar corporate rearrangements, then and in each such case the holder of this Option, upon the exercise hereof as provided herein, shall be entitled to receive, in lieu of (or in addition to, as the case may be) the Shares theretofore receivable upon the exercise of this Option, the amount of stock and other securities and property (including cash in the case referred to in clause (ii) above) which such holder would have held on the date of such exercise if on the date such dividend, distribution, corporate rearrangement or such other event as described in clause (ii) above such holder had been the holder of record of the number of Shares receivable upon the exercise of this Option and had thereafter, during the period from the date thereof to and including the date of such exercise, obtained such Shares and all other or additional (or less) stock and other securities and property (including cash in the case referred to in clause (ii) above) receivable by him as aforesaid during such period, giving effect to all adjustments called for during such period by the following subparagraph. (b) In case of any reorganization of the Corporation (or any other corporation the stock or other securities of which are at the time receivable on the exercise of this Option) after the date hereof, or in case, after such date, the Corporation (or any such other corporation) shall consolidate, amalgamate or merge with or into or enter into a mandatory share exchange with another entity, then and in each such case the holder of this Option, upon the exercise hereof as provided herein at any time after the consummation of such reorganization, consolidation, amalgamation, merger, mandatory share exchange, or conveyance, shall be entitled to receive, and any third parties participating in such transaction shall acknowledge in writing that the holder is entitled to receive, in lieu of the Shares, stock or other securities and property receivable upon the exercise of this Option prior to such consummation, the stock or other securities or property to which such holder would have been entitled upon such consummation if such holder had exercised this Option immediately prior thereto, all subject to further adjustment as provided in the preceding subparagraph (a). (c) So long as this Option shall be outstanding and unexercised, if the Corporation shall enter into any transactions referred to in this Section 7, which effects a change in the securities, other property or any cash distribution to which the holder is entitled upon exercise of this Option, then, in any such case, the Corporation shall cause to be sent to the holder a brief statement of the event giving rise to such effect, and a description thereof, together with advance notice of the record date relevant to any such transaction. 8. Rights as a Shareholder. The Employee or Employee's permitted ------------------------ transferee shall have no rights as a stockholder with respect to any Shares covered by the Option until the date of issuance of a stock certificate for such Shares. No adjustments, other than as provided in paragraph 6 above, shall be made for dividends (ordinary or extraordinary, whether in cash, securities, or other property) or distributions for which the record date is prior to the date such stock certificate is issued. 9. Conditions to Issue. The Option granted herein is subject to the -------------------- requirement that, if at any time the listing, registration, or qualification of Shares issuable upon exercise of the Option is required by any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body is necessary as a condition of, or in connection with the issuance of any Shares, no Shares shall be issued in whole or in part, unless such listing, registration, qualification, consent or approval has been obtained. The Corporation agrees, at its own expense, to take all action necessary to obtain such listing, registration, qualification, consent or approval so the Corporation can perform its contractual obligation to issue the Shares covered by this Option. 10. Method of Exercising Option. Subject to the terms and conditions of ---------------------------- this Agreement, the Option may be exercised by written notice delivered in person or by first class mail to the Secretary of the Corporation at its offices which are presently located at 226 Bailey Avenue, Suite 101, Fort Worth, Texas 76107. Such notice shall state the election to exercise the Option and the number of Shares in respect of which it is being exercised, and shall be signed by the person or persons so exercising the Option. Such notice shall be accompanied by payment of the full purchase price of such Shares, in which event the Corporation shall deliver a certificate or certificates representing such Shares as soon as practicable after the notice shall be received. Payment of such purchase price shall, in either case, be made in cash or cashier's, certified or personal check payable to the order of the Corporation. The certificate or certificates for the Shares as to which the Option shall have been so exercised shall be registered in the name of the person or persons so exercising the Option; or if the Option shall be exercised by the Employee, and if the Employee shall so request in the notice exercising the Option, such Option shall be registered in the name of the Employee and another person, as joint tenants with right of survivorship, and shall be delivered as provided above to or upon the written order of the person or persons other than the Employee, such notice shall be accompanied by appropriate proof satisfactory to the Corporation of the right of such person or persons to exercise the Option. All shares that shall be purchased upon the exercise of the Option as provided herein shall be fully paid and non-assessable. Upon the exercise of less than all of the Options hereunder, the Corporation shall promptly execute and deliver a new Option Agreement in the form hereof covering the balance of unexercised Options. The Corporation shall pay all expenses incurred by it in connection with the preparation, issuance and delivery of such new Option Agreements. 11. Non-Qualified Options. The Options granted hereunder are not part of ---------------------- or authorized pursuant to any plan or arrangement which is qualified or created incident to any provision of the Internal Revenue Code of 1986, as amended. 12. Arbitration. In the event of a dispute arising out of or relating to ------------ this Agreement, or relating to any claim or cause of action which may arise or be asserted under any federal, state or local statutory, regulatory or common law, including, without limitation, claims of discrimination, breach of contract or tort, such as intentional infliction of emotional distress, then, upon notice by any party to the other party (an "Arbitration Notice") and to American Arbitration Association ("AAA"), 140 West 51st Street, New York, New York 10020-1203 [telephone (212) 484-3266; fax (212) 307-4387], the controversy or dispute shall be submitted to a sole arbitrator who is independent and impartial, for binding arbitration in Fort Worth, Texas, in accordance with AAA's Commercial Arbitration Rules (the "Rules"). The parties agree that they will faithfully observe this agreement and the Rules and that they will abide by and perform any award rendered by the arbitrator. The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. Section 1-16 (or by the same principles enunciated by such Act in the event it may not be technically applicable). The award or judgment of the arbitrator shall be final and binding on all parties and enforced by any court having jurisdiction. If any party becomes the subject of a bankruptcy, receivership or other similar proceeding under the laws of the United States of America, any state or commonwealth or any other nation or political subdivision thereof, then, to the extent permitted or not prohibited by applicable law, any factual or substantive legal issues arising in or during the pendency of any such proceeding shall be subject to all of the foregoing mandatory arbitration provisions and shall be resolved in accordance therewith. The agreements contained herein have been given for valuable consideration, are coupled with an interest and are not intended to be executory contracts. The fees and expenses of the arbitrator will be shared equitably and ratably (as determined by the arbitrator) by all parties engaged in the dispute or controversy. Promptly after the Arbitration Notice is given, AAA will select five possible arbitrators, to whom AAA will give the identities of the parties and the general nature of the controversy. If any of those arbitrators disqualifies himself or declines to serve, AAA shall continue to designate potential arbitrators until the parties have five to select from. After the panel of five potential arbitrators has been completed, a two page summary of each of the potential arbitrators will be given to each of the parties, and the parties will have a period of 10 days after receiving the summaries in which to attempt to agree upon the arbitrator to conduct the arbitration. If the parties are unable to agree upon an arbitrator, then one of the parties shall notify AAA, and AAA shall select the arbitrator from one of the five. The decision of AAA with respect to the selection of the arbitrator will be final and binding. Within 10 days after the selection of the arbitrator, the parties and their council will appear before the arbitrator at a price an time designated by the arbitrator for the purpose of each party making a one hour or less presentation and summary of the case. Thereafter, the arbitrator will set dates and times for additional hearings until the proceeding is concluded. The desire and goal of the parties is, and the arbitrator will be advised that his goal should be, to conduct and conclude the arbitration proceeding as expeditiously as possible. If any party or his council fails to appear at any hearing, the arbitrator shall be entitled to reach a decision based on the evidence which has been presented to him by the parties who did appear. 13. Subsidiary. As used herein, the term "Subsidiary" shall mean any ----------- present or future corporation in which the Corporation shall own 50% or more of its accrued voting stock. 14. Severability. Each provision of this Agreement is intended to be ------------ severable from the others so that if any provision or term hereof is illegal or invalid (Pounds)or any reason whatsoever, such illegality or invalidity shall not affect the validity of the remaining provisions and terms hereof. 15. Binding Effect. This Agreement shall be binding upon and inure to the --------------- benefit of the respective heirs, executors, administrators and successors of the parties hereto. 16. Governing Law. This Agreement shall be construed and interpreted in -------------- accordance with the laws of the State of Delaware. 17. Headings. Headings are for the convenience of the parties and are not --------- deemed to be part of this Agreement. EXECUTED as of the day and year first written above. EMPLOYER: BUFFTON CORPORATION: By: /S/ Robert McLean -------------------------------------------- Chairman of the Board and President EMPLOYEE: /S/Jean-Claude Mathot ---------------------------------------------- JEAN-CLAUDE MATHOT, Individually EX-3.A 5 EMPLOYMENT AGREEMENT DATED 4-11-97 (TREMAIN) EXHIBIT 3A EMPLOYMENT AGREEMENT THIS AGREEMENT made as of the 11th day of April, 1997, by and between BUFFTON CORPORATION, a Delaware corporation (EMPLOYER"), and ALAN TREMAIN (hereinafter called the "EMPLOYEE"). W I T N E S W E T H : ------------------- WHEREAS, the EMPLOYER wishes to employ EMPLOYEE, and EMPLOYEE wishes to accept such employment on the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the premises and the mutual agreements hereinafter set forth, the parties hereto hereby agree as follows: 1. Employment. The EMPLOYER hereby employs EMPLOYEE, and EMPLOYEE hereby ---------- accepts employment with EMPLOYER on the terms and conditions herein contained. EMPLOYEE shall initially report to the Chief Executive Officer and Board of Directors of EMPLOYER. The titles, powers and the person to whom EMPLOYEE reports may be, from time to time, changed and/or determined by the Board of Directors or Chief Executive Officer of EMPLOYER. EMPLOYEE will have the title of "Chairman of the Board" and agrees to fully and faithfully perform the duties and responsibilities as might be assigned and delegated to EMPLOYEE from time to time by the Chief Executive Officer or Board of Directors of EMPLOYER, for so long as this Agreement is in effect. 2. Term of Employment Agreement. The term of this Agreement shall be for ---------------------------- an indefinite period beginning April 11, 1997 (the "Employment Agreement Term"). 3. Compensation. ------------ A. Salary. For all services rendered by EMPLOYEE under this ------ Agreement, EMPLOYER shall pay to EMPLOYEE a fixed annual gross salary of One Hundred Thousand and No/100 Dollars ($100,000.00), subject to deductions and withholding mandated by law, payable in installments according to the then prevailing payroll practices of the EMPLOYER with respect to its employees. The Board of Directors of EMPLOYER may from time to time grant EMPLOYEE compensation in excess of the salary set forth hereinabove; provided, however, EMPLOYER'S contractual obligation to pay salary to EMPLOYEE under this Agreement shall be the fixed annual gross salary specified in this Paragraph 3.A, plus any such approved increases in salary. B. Benefits. EMPLOYEE, through the effective date of a termination -------- of this Agreement, shall be entitled to participate in all present and future employee benefit plans, policies and programs that are available generally to EMPLOYER'S full-time employees and senior executives. C. Bonus. EMPLOYER shall adopt a bonus plan for each fiscal year ----- during the Employment Agreement Term covering EMPLOYER'S employees, and EMPLOYEE shall be paid on or before December 31, of each year during the Employment Agreement Term the bonuses established for EMPLOYEE in such bonus plan. D. Restricted Stock Grants. The Board of Directors of EMPLOYER may, ----------------------- in its sole discretion, grant restricted stock bonuses to EMPLOYEE from time to time, in such amounts as the Board of Directors may determine. 4. Reimbursement for Expenses. EMPLOYER shall reimburse EMPLOYEE for all -------------------------- reasonable and necessary expenses incurred by EMPLOYEE in the performance of EMPLOYEE'S duties contemplated hereby. 5. Vacations. For so long as this Agreement is in effect, EMPLOYEE shall --------- receive twenty business days paid vacation each fiscal year beginning with the October 1, 1997. Such twenty business days paid vacation shall be deemed earned for a given fiscal year on October 1 of each year. Any earned vacation not taken by EMPLOYEE prior to September 30 of each fiscal year shall lapse. Upon a termination of this Agreement for any reason, except for cause (other than for cause following a Change in Control as hereinafter defined), EMPLOYEE shall be entitled to receive the sum of $ 273.97 for each business day of earned but untaken vacation days remaining for the then current fiscal year of termination of this Agreement, payable in accordance with the terms of this Agreement. 6. Location of Services. It is understood that the EMPLOYER presently -------------------- expects to maintain its principal place of business in the Dallas/Fort Worth Metroplex area, but that EMPLOYEE is not required to locate in this area. 7. Termination. ----------- A. Without Cause. Notwithstanding the Employment Agreement Term, ------------- EMPLOYER shall have the right to terminate this Agreement without cause upon sixty (60) days written notice to EMPLOYEE to such effect, with such termination to be effective upon the expiration of such sixty (60) day notice period. Upon a termination of this Agreement without cause pursuant to this provision, the noncompetition provisions set forth in Section 8 hereof shall terminate, and EMPLOYEE shall be entitled to receive (i) any bonuses accrued through the effective date of a termination of the Agreement by EMPLOYEE pursuant to the terms of the bonus plan referenced in Paragraph 3.C. hereof, (ii) any earned but untaken vacation under the terms and conditions of Paragraph 5 hereof, and (iii) $100,000, which amount shall be paid in one lump sum (with both such bonuses, salary and vacation being payable in full on the effective date of such termination of this Agreement). Upon a termination by EMPLOYER without cause, EMPLOYER agrees to purchase from EMPLOYEE, at the request of EMPLOYEE, any and all shares of stock of EMPLOYER owned by EMPLOYEE as of the date of the termination, with the purchase price to be equal to the greater of EMPLOYEE'S cost of said shares or the fair market value of said shares as reported in the Wall Street Journal on the date of termination. EMPLOYEE shall notify EMPLOYER of EMPLOYEE'S desire to sell EMPLOYEE'S shares of EMPLOYER to EMPLOYER within thirty (30) days of the effective date of termination without cause by delivering written notice to EMPLOYER to such effect. Said notice must be received by EMPLOYER and such receipt acknowledged by EMPLOYER. If EMPLOYEE fails to deliver said notice to EMPLOYER, EMPLOYER shall have no obligation to purchase any of its shares from EMPLOYEE. EMPLOYEE shall have no duty to mitigate, nor shall any sums earned by EMPLOYEE from other sources after a termination of this Agreement pursuant to this provision be credited or offset against any sums due to EMPLOYEE. B. With Cause. EMPLOYER shall have the right to terminate this ---------- Agreement at any time for cause, upon written notice to EMPLOYEE to such effect, with such termination to be effective upon delivery of such notice to EMPLOYEE. Upon a termination of this Agreement pursuant to this provision, EMPLOYEE shall be entitled to receive only such salary payable through the effective date of termination, payable in full on the effective date of such termination of this Agreement. For purposes of this provision, the term "for cause" shall mean (a) the failure or refusal to perform diligently the duties of EMPLOYEE's employment after written notice of such failure or refusal and a reasonable opportunity to remedy such has been provided, (b) the conviction of an offense involving moral turpitude which, in the judgment of the Board of Directors of EMPLOYER might bring discredit on EMPLOYER. C. Disability. If, as a result of EMPLOYEE'S incapacity due to ---------- physical or mental illness, EMPLOYEE shall have been absent from his duties hereunder on a full-time basis for the entire period of six consecutive months, and within thirty (30) days after written notice of intention to termination of this Agreement is given by EMPLOYER (which may occur thirty days before or at any time after the end of such six month period) EMPLOYEE shall not have returned to the performance of his duties hereunder on a full-time basis, this Agreement shall terminate effective upon the expiration of the thirty (30) day notice period. Upon a termination of this Agreement pursuant to this provision, EMPLOYEE shall be entitled to receive (i) any bonuses accrued through the effective date of a termination of the Agreement by EMPLOYEE pursuant to the terms of the bonus plan referenced in Paragraph 3.C. hereof, (ii) any earned but untaken vacation under the terms and conditions of Paragraph 5 hereof, and (iii) $100,000, which amount shall be paid in one lump sum (with both such bonuses, salary and vacation being payable in full on the effective date of such termination of this Agreement). If EMPLOYEE shall receive any disability payments from any insurance policies provided by EMPLOYER, the payments by EMPLOYER to EMPLOYEE during any period of disability shall be reduced by the amount of disability payments received by EMPLOYEE under any such insurance policy or policies. D. Death. In the event of the death of EMPLOYEE, this Agreement ----- shall terminate effective upon the date of death, and EMPLOYEE'S estate shall be entitled to receive (i) any bonuses accrued through the effective date of a termination of the Agreement by EMPLOYEE pursuant to the terms of the bonus plan referenced in Paragraph 3.C. hereof, (ii) any earned but untaken vacation under the terms and conditions of Paragraph 5 hereof, and (iii) $100,000, which amount shall be paid in one lump sum (with both such bonuses, salary and vacation being payable in full on the effective date of such termination of this Agreement). E. By EMPLOYEE. EMPLOYEE shall have the right to terminate this ----------- Agreement upon sixty (60) days written notice to EMPLOYER to such effect, with such termination to be effective upon the expiration of such sixty (60) day notice period. Upon a termination of this Agreement by EMPLOYEE pursuant to this provision, EMPLOYEE shall be entitled to receive (i) any bonuses accrued by EMPLOYEE pursuant to the terms of the bonus plan referenced in Paragraph 3.C. hereof through the effective date of a termination of this Agreement, (ii) any earned but untaken vacation under the terms and conditions of Paragraph 5 hereof, and (iii) such salary payable through the effective date of such termination, all payable in full on the effective date of such termination of this Agreement, unless such termination occurs within twenty-four (24) months following a Change in Control as defined in Paragraph 7.F. hereof, and then EMPLOYEE shall additionally be entitled to receive the compensation described in Paragraph 7.F. hereof and any earned but untaken vacation pursuant to Paragraph 5 hereof. If EMPLOYEE terminates this Agreement prior to the first annual anniversary hereof, EMPLOYER shall be entitled to purchase from EMPLOYEE (a) all of the Buffton Common Stock (the "Section 11 Stock") purchased by EMPLOYEE pursuant to Section 11 of the Stock Exchange Agreement dated as of April 11, 1997 between EMPLOYER, EMPLOYEE and the other stockholder of Hotels of Distinction, Inc., a Florida corporation, (the "Stock Exchange Agreement") and still owned by EMPLOYEE on the termination date, (b) EMPLOYEE's 120,000 shares of Buffton Common Stock (the "Exchange Stock") which EMPLOYEE received for his Hotels of Distinction, Inc. Common Stock pursuant to Section 1 of the Stock Exchange Agreement and still owned by Employee on the termination date, (c) the Non Qualified Stock Option Agreement of even date herewith between EMPLOYER and EMPLOYEE pursuant to which EMPLOYER granted EMPLOYEE an option to purchase 250,000 shares of Buffton Common Stock, and all rights and benefits of EMPLOYEE thereunder (the "Stock Options") and (d) all Buffton Common Stock purchased by EMPLOYEE by exercise of all or a part of the Stock Options (the "Exercised Option Stock") and still owned by EMPLOYEE on the termination date. The aggregate purchase price payable by EMPLOYER for the Section 11 Stock, the Exchange Stock, the Stock Options and the Exercised Option Stock purchased pursuant to the foregoing sentence will be the sum of (1) the average price per share paid by EMPLOYEE for the Section 11 Stock times the number of shares of Section 11 Stock sold to EMPLOYER pursuant to the foregoing, (2) 50% of the market value of a freely tradeable share of Buffton Common Stock on the termination date times the number of shares of Exchange Stock sold to EMPLOYER pursuant to the foregoing and (3) the price paid by EMPLOYEE for the Exercised Option Stock sold to EMPLOYER pursuant to the foregoing. F. Termination Following a Change in Control. If within twenty-four ----------------------------------------- (24) months after a Change in Control (as hereinafter defined), EMPLOYEE shall voluntarily terminate this Agreement, or this Agreement is terminated by EMPLOYER without cause, EMPLOYEE shall be entitled to receive (i) any earned but untaken vacation pursuant to the terms and conditions of Paragraph 5 hereof; and (ii) $300,000.. Upon a termination by EMPLOYER within twenty-four months after a Change in Control (as hereinafter defined), EMPLOYER agrees to purchase from EMPLOYEE, at the request of EMPLOYEE, any and all shares of stock of EMPLOYER owned by EMPLOYEE as of the date of the termination, with the purchase price to be equal to the greater of EMPLOYEE'S cost of said shares or the fair market value of said shares as reported in the Wall Street Journal on the date of the Change in Control (as hereinafter defined). EMPLOYEE shall notify EMPLOYER of EMPLOYEE'S desire to sell EMPLOYEE'S shares of EMPLOYER to EMPLOYER within thirty (30) days of the effective date of termination without cause by delivering written notice to EMPLOYER to such effect. Said notice must be received by EMPLOYER and such receipt acknowledged by EMPLOYER. If EMPLOYEE fails to deliver said notice to EMPLOYER, EMPLOYER shall have no obligation to purchase any of its shares from EMPLOYEE. EMPLOYEE shall have no duty to mitigate, nor shall any sums earned by EMPLOYEE from other sources after a termination of this Agreement pursuant to this provision be credited or offset against any sums due to EMPLOYEE. It is the intention of EMPLOYER and EMPLOYEE that EMPLOYEE not be paid an amount which would be deemed an "excess parachute payment" under Section 280G of the Code, and accordingly, the amounts payable pursuant to this provision shall be reduced in an amount necessary to eliminate the payment of any excess parachute payment. The amounts payable pursuant to this provision shall be paid in a lump sum within fifteen (15) days following the effective date of termination of employment. If within twenty-four (24) months after a Change in Control (as hereinafter defined) EMPLOYER terminates this Agreement without cause, EMPLOYEE'S duties, obligations, covenants, and promises contained in Paragraphs 8, 9, and 10 hereof shall terminate and have no further effect. For the purposes of this Agreement, a "Change in Control" shall be deemed to have occurred upon any of the following events: (i) the acquisition directly or indirectly, by any person (as such terms are used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended), other than EMPLOYER or any of its subsidiaries or any employee benefit plan maintained by EMPLOYER or any such subsidiary, of beneficial ownership of securities of EMPLOYER representing fifteen percent (15%) or more of the combined voting power of EMPLOYER'S then outstanding securities (with the terms used herein and in Sections 13(d) and/or 14(d) of the Securities Exchange Act of 1934, as amended, having the meanings of such terms in such Sections); (ii) if the stockholders of EMPLOYER approve a merger or consolidation, a sale or disposition of all or substantially all of EMPLOYER'S assets or a plan of liquidation or dissolution of EMPLOYER; (iii) the election during any period of twenty-four (24) months or less of a member or members of EMPLOYER'S Board of Directors without the approval of the election or nomination for election of such new member or members by a majority of the members of the Board who were members at the beginning of the period, or members of the Board thereafter recommended to succeed such original members (or their successors hereunder) by a majority of the members of the Board who were members at the beginning of the period (or their successors hereunder); or (iv) any person (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) other than EMPLOYER, any of its subsidiaries or any employee benefit plan maintained by EMPLOYER or any such subsidiary, makes a tender or exchange offer for any shares of EMPLOYER'S outstanding voting securities at any point in time, pursuant to which any such shares are purchased. Unless the Continuing Board of Directors of EMPLOYER (as hereinafter defined) determines that the happening of any of the foregoing events in a particular case should not be deemed a Change in Control. The "Continuing Board of Directors of EMPLOYER" shall mean (i) the members of EMPLOYER'S Board of Directors in office immediately prior to the Change in Control, excluding any who initiate a Change in Control or are affiliated with one who initiates a Change in Control, and (ii) any subsequent directors who may be selected, nominated or approved by a majority of the other Continuing Board of Directors of EMPLOYER. It is specifically agreed by EMPLOYER and EMPLOYEE that a sale of all or a part of the stock or assets of EMPLOYER, that has been approved by the Continuing Board of Directors of EMPLOYER, shall not be deemed a Change in Control for purposes of this Agreement. G. Failure to Close on Sale of Current Technology. EMPLOYER has ---------------------------------------------- contracted to sell substantially all of the assets of one of its wholly owned subsidiary, Current Technology, Inc, a Delaware corporation, . In the event this sale does not close by August 31, 1997, EMPLOYEE shall have a right to terminate this Agreement effective upon delivery of written notice to EMPLOYER to such effect. In the event EMPLOYEE terminates this Agreement pursuant to the provisions of this Paragraph 7.G., EMPLOYEE'S duties, obligations, covenants, and promises contained in Paragraph 8 hereof shall terminate and EMPLOYER shall have the option to purchase at the fair market value any and all shares of EMPLOYER owned by EMPLOYEE as of the effective date of the termination by EMPLOYEE pursuant this Paragraph 7.G. Upon a termination of this Agreement pursuant to this provision, EMPLOYEE shall be entitled to receive (i) any bonuses accrued by EMPLOYEE pursuant to the terms of the Bonus Plan referenced in Paragraph 3.C. hereof to the effective date of the termination of this Agreement, (ii) any earned by untaken vacation under the terms and conditions of Paragraph 5 hereof, and (iii) such salary payable pursuant to Paragraph 3.A. hereof accrued to the effective date of the termination of this Agreement. H. Provisions Surviving Termination. Except as set forth above, -------------------------------- notwithstanding a termination of this Agreement, EMPLOYER's obligations to EMPLOYEE pursuant to this Paragraph 7 shall remain in full force and effect, and EMPLOYEE's duties, obligations, covenants and promises contained in Paragraphs 8, 9, 10 and 11 hereof shall remain in full force and effect; and such Paragraphs shall survive a termination of this Agreement and remain fully enforceable by EMPLOYER or EMPLOYEE, as applicable. 8. Noncompetition. -------------- A. EMPLOYEE acknowledges that EMPLOYER has agreed to provide him, and he shall receive from the EMPLOYER, special training and knowledge specific to EMPLOYER's business. EMPLOYEE acknowledges that included in the special knowledge received is confidential and proprietary information including the Confidential Information defined in Paragraph 9 below which EMPLOYER invested extensive time and resources in developing and creating . EMPLOYEE acknowledges that this Confidential Information is valuable to EMPLOYER, and therefore, its protection and maintenance constitutes a legitimate interest to be protected by EMPLOYER by the enforcement of this covenant not to compete. Therefore, as an inducement to EMPLOYER to enter into this agreement, to invest time in training and educating EMPLOYEE and to disclose to EMPLOYEE confidential and proprietary information, EMPLOYEE agrees that prior to a termination of this Agreement and for a period of thirty- six months following the effective date of a termination of this Agreement (specifically excluding a termination of this Agreement by EMPLOYER without cause pursuant to Paragraph 7.A. hereof and specifically excluding a termination of this Agreement by EMPLOYEE following a Change in Control, as defined in Paragraph 7.F. hereof), EMPLOYEE will not, directly as a principal (whether individually or in any form of entity) or as an employee or consultant, engage in, consult with or participate in or with, any business reasonably competitive with and within a five mile radius of any hotel or restaurant owned, operated, managed or under construction by EMPLOYER, or any "affiliate", as hereinafter defined, of EMPLOYER, during the Employment Agreement Term or at the time this Agreement is terminated. For purposes of this Agreement, "affiliates" means any person or entity that is directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, EMPLOYER. EMPLOYEE represents to EMPLOYER that the enforcement of the restriction contained in this Paragraph 8.A. would not be unduly burdensome to EMPLOYEE and that in order to induce EMPLOYER to pay EMPLOYEE'S compensation during the Employment Agreement Term, to train EMPLOYEE and to divulge Confidential Information to EMPLOYEE, EMPLOYEE further represents and acknowledges that EMPLOYEE is willing and able to compete in other geographical areas not prohibited by this Section 8.A. B. EMPLOYEE agrees that a breach or violation by EMPLOYEE of the covenants contained in this Paragraph 8 shall entitle EMPLOYER, as a matter of right, to an injunction issued by any court of competent jurisdiction, restraining any further or continued breach or violation of this covenant. Such right to an injunction shall be cumulative and in addition to, and not in lieu of, any other remedies to which the EMPLOYER may show itself justly entitled including without limitation EMPLOYEE'S forfeiture of any sums then owed to EMPLOYEE pursuant to Paragraph 7 hereof and/or the obligation by EMPLOYEE to repay EMPLOYER for any sums previously paid to EMPLOYEE pursuant to Paragraph 7 hereof. C. The representations and covenants contained in this Paragraph 8 on the part of EMPLOYEE will be construed as ancillary to and independent of any other provision of this agreement and the existence of any claim or cause of action of EMPLOYEE against EMPLOYER or any officer or director of EMPLOYER, whether predicated on a disagreement or otherwise, shall not constitute a defense to the enforcement by EMPLOYER of the covenants of EMPLOYEE contained in this Paragraph 8. D. The parties to this agreement agree that the limitations contained in this Paragraph 8 with respect to geographic area, duration and scope of activity are reasonable. However, if any court shall determine that the geographic area, duration or scope of activity of any restriction contained in this Paragraph 8 is unenforceable, it is the intention of the parties that such restrictive covenant set forth herein shall not thereby be terminated but shall be deemed amended to the extent required to render it valid and enforceable. 9. Disclosure of Confidential Information. -------------------------------------- A. EMPLOYEE will disclose to the EMPLOYER all ideas and business plans developed by EMPLOYEE through the effective date of a termination of this Agreement that relate directly to the business of the EMPLOYER. B. The EMPLOYEE recognizes and acknowledges that by virtue of EMPLOYEE'S position with EMPLOYER that EMPLOYER will provide EMPLOYEE with access to certain Confidential Information (as hereinafter defined) of the EMPLOYER, and that all such information constitutes valuable, special and unique property of the EMPLOYER that is not generally known or readily ascertainable by independent investigation. The EMPLOYEE agrees that, prior to a termination of this Agreement, and for a period of thirty-six (36) months after the effective date of a termination of this Agreement, EMPLOYEE will not, without the prior written consent of the EMPLOYER, disclose or authorize disclosure or permit anyone under his direction to disclose to anyone not properly entitled thereto any of such Confidential Information. For purposes of this immediately preceding sentence, persons properly entitled to such information shall be the Board of Directors of the EMPLOYER and such officers, employees and agents of the EMPLOYER or any affiliate thereof to whom such information is furnished in the normal course of business under established policies approved by the EMPLOYER. For purpose of this Agreement, the term "Confidential Information" shall mean such information which has been clearly marked or identified as Confidential by EMPLOYER, or any affiliate of EMPLOYER, any documents, contracts, written information, procedural or technical manuals, training manuals, customer lists, customer account analysis, price books, computer files, operating manuals, raw material costing information, product cost information, food recipes, recipe books, concept profiles, accounting papers, work papers, corporate records and any other information which is understood to be of a confidential character and which has not been published or otherwise become a matter of general public knowledge through no fault of EMPLOYEE, all of which is owned or possessed by or relates to the business of EMPLOYER or any affiliate of EMPLOYER. The restrictions on EMPLOYEE set forth herein shall not limit or restrict the protection of any Confidential Information provided to EMPLOYER pursuant to law, but are cumulative to those rights. Further, the restrictions set forth herein shall not be interpreted to grant to EMPLOYEE any right at the expiration of the thirty-six (36) month period to use, disclose or authorize a third party to use any Confidential Information. C. The EMPLOYEE further agrees that (i) at all times prior to a termination of this Agreement, and (ii) upon the termination of this Agreement, he will not copy, remove from EMPLOYER'S or any affiliate of EMPLOYER'S premises, take with him or retain, without the prior written authorization of the EMPLOYER, any Confidential Information or any documents or copies thereof belonging to the EMPLOYER or any affiliate of EMPLOYER, or any other information of any kind belonging to the EMPLOYER (collectively "EMPLOYER'S Information). EMPLOYEE represents and warrants that prior to the execution of this Agreement he has returned to EMPLOYER any and all EMPLOYER'S Information which may previously have come into his possession except for EMPLOYER'S Information with respect to which EMPLOYER has consented to EMPLOYEE'S possession thereof. In the event of a breach or threatened breach by the EMPLOYEE of the provisions of this Paragraph 9, the EMPLOYER and the EMPLOYEE agree that the remedy at law available to the EMPLOYER would be inadequate and that the EMPLOYER shall be entitled to an injunction, without the necessity of posting bond therefor, restraining the EMPLOYEE from disclosing, in whole or in part, the Confidential Information. Nothing herein shall be construed as prohibiting the EMPLOYER from pursuing any other remedies, in addition to the injunctive relief available under this Paragraph 9, for such breach or threatened breach, including the recovery of damages from the EMPLOYEE. 10. Intellectual Property. EMPLOYEE hereby assigns to EMPLOYER all of --------------------- EMPLOYEE'S right, titles and interest in and to all patents, formulae, inventions, processes, copyrights, proprietary information, trademarks or trade names, or future improvements to patents, formulae, inventions, processes, copyrights, proprietary information, trademarks or trade names, developed or completed by the EMPLOYEE, which relate to the business of EMPLOYER, at any time prior to a termination of this Agreement (collectively the "Items); and the Items shall be promptly disclosed to the EMPLOYER, and the EMPLOYEE shall execute such instruments of assignment of the Items to the EMPLOYER as the EMPLOYER shall request. The EMPLOYEE acknowledges that a remedy at law for any breach by him of the provisions in this Paragraph 10 would be inadequate, and the EMPLOYEE hereby agrees that the EMPLOYER shall be entitled to injunctive relief in case of any such breach. 11. Non-Solicitation of Employees. The EMPLOYEE agrees that prior to a ----------------------------- termination of this Agreement, and for a period of thirty-six (36) months after the effective date of a termination of this Agreement, Employee shall not, directly or indirectly, hire, offer to hire, entice, solicit or in any other manner persuade or attempt to persuade any employee of EMPLOYER, or any affiliate of EMPLOYER, to discontinue or alter such employee's employment relationship with EMPLOYER, or any affiliate of EMPLOYER. The EMPLOYEE acknowledges that a remedy at law for any breach by him of the provisions in this Paragraph 11 would be inadequate, and the EMPLOYEE hereby agrees that the EMPLOYER shall be entitled to injunctive relief in case of any such breach. 12. Assignment. The services to be rendered and obligations to be ---------- performed by EMPLOYEE hereunder are special and unique, and all such services and obligations and all of EMPLOYEE'S rights hereunder are personal to EMPLOYEE and shall not be assignable by EMPLOYEE and any purported assignment thereof by EMPLOYEE shall not be valid or binding upon the EMPLOYER. However, in the event of EMPLOYEE'S death during the term of this Agreement, EMPLOYEE'S personal representative shall be entitled to the rights as specified in Paragraph 7.D. of this Agreement and shall be obligated to execute any documents and perform any other acts necessary to carry out and give effect to the terms and provisions of this Agreement. EMPLOYER may assign this Agreement and all of its rights hereunder to any person, firm or corporation succeeding to the business of the EMPLOYER, provided said company shall assume (by contract or operation of law) the EMPLOYER'S obligations hereunder. In the event this Agreement is assumed by any person, firm or corporation succeeding to the business of EMPLOYER, then EMPLOYER shall be released and discharged from any and all obligations to EMPLOYEE under this Agreement. 13. Arbitration. In the event of a dispute arising out of or relating to ------------ this Agreement, or relating to any claim or cause of action which may arise or be asserted under any federal, state or local statutory, regulatory or common law, including, without limitation, claims of discrimination, breach of contract or tort, such as intentional infliction of emotional distress, then, upon notice by any party to the other party (an "Arbitration Notice") and to American Arbitration Association ("AAA"), 140 West 51st Street, New York, New York 10020- 1203 [telephone (212) 484-3266; fax (212) 307-4387], the controversy or dispute shall be submitted to a sole arbitrator who is independent and impartial, for binding arbitration in Fort Worth, Texas, in accordance with AAA's Commercial Arbitration Rules (the "Rules"). The parties agree that they will faithfully observe this agreement and the Rules and that they will abide by and perform any award rendered by the arbitrator. The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. Section 1-16 (or by the same principles enunciated by such Act in the event it may not be technically applicable). The award or judgment of the arbitrator shall be final and binding on all parties and enforced by any court having jurisdiction. If any party becomes the subject of a bankruptcy, receivership or other similar proceeding under the laws of the United States of America, any state or commonwealth or any other nation or political subdivision thereof, then, to the extent permitted or not prohibited by applicable law, any factual or substantive legal issues arising in or during the pendency of any such proceeding shall be subject to all of the foregoing mandatory arbitration provisions and shall be resolved in accordance therewith. The agreements contained herein have been given for valuable consideration, are coupled with an interest and are not intended to be executory contracts. The fees and expenses of the arbitrator will be shared equitably and ratably (as determined by the arbitrator) by all parties engaged in the dispute or controversy. Promptly after the Arbitration Notice is given, AAA will select five possible arbitrators, to whom AAA will give the identities of the parties and the general nature of the controversy. If any of those arbitrators disqualifies himself or declines to serve, AAA shall continue to designate potential arbitrators until the parties have five to select from. After the panel of five potential arbitrators has been completed, a two page summary of each of the potential arbitrators will be given to each of the parties, and the parties will have a period of 10 days after receiving the summaries in which to attempt to agree upon the arbitrator to conduct the arbitration. If the parties are unable to agree upon an arbitrator, then one of the parties shall notify AAA, and AAA shall select the arbitrator from one of the five. The decision of AAA with respect to the selection of the arbitrator will be final and binding. Within 10 days after the selection of the arbitrator, the parties and their council will appear before the arbitrator at a price an time designated by the arbitrator for the purpose of each party making a one hour or less presentation and summary of the case. Thereafter, the arbitrator will set dates and times for additional hearings until the proceeding is concluded. The desire and goal of the parties is, and the arbitrator will be advised that his goal should be, to conduct and conclude the arbitration proceeding as expeditiously as possible. If any party or his council fails to appear at any hearing, the arbitrator shall be entitled to reach a decision based on the evidence which has been presented to him by the parties who did appear. 14. Entire Agreement. This Agreement constitutes the whole agreement ---------------- between the parties hereto and there are no terms other than those contained herein. This Agreement supersedes any prior contract or understanding relating to employment of EMPLOYEE by EMPLOYER. 15. Amendment. No variation hereof shall be deemed valid unless in --------- writing and signed by the parties hereto, and no discharge of the terms hereof shall be deemed valid unless by full performance by the parties hereto or by a writing signed by the parties hereto. 16. Governing Law. This Agreement shall be construed and enforced in ------------- accordance with the laws of the State of Texas. 17. Severability. Each provision of this Agreement is intended to be ------------ severable from the others so that if any provision or term hereof is illegal or invalid (Pounds)or any reason whatsoever, such illegality or invalidity shall not affect the validity of the remaining provisions and terms hereof. 18. Captions. Captions used in this Agreement are used for convenience -------- only and are not intended to, nor are they to be construed to, have any substantive meaning or control in the construction of this Agreement. 19. Notice. Any notice hereunder to the parties hereto shall be in ------ writing and shall be sufficient in all respects if personally delivered or mailed by registered or certified United States mail, postage prepaid, and addressed to such party at the address shown below, or at such other address as such party may, by written notice received by the other party to this Agreement, have designated as the address of such party for such purpose. Any notice required under this Agreement shall be effective on receipt. EMPLOYER: BUFFTON CORPORATION 226 Bailey Avenue, Suite 101 Fort Worth, Texas 76107 EMPLOYEE: ALAN TREMAIN ______________________________ ______________________________ 20. No Third Party Benefits. Except as otherwise provided by law, ----------------------- EMPLOYEE shall not have any power in any manner to alienate, anticipate, charge or encumber any payments contemplated by this Agreement, and all rights and benefits of EMPLOYEE shall be for the sole personal benefit of EMPLOYEE, and no other person shall acquire any right, title or interest hereunder by reason of any sale, assignment, transfer, claim or judgment or bankruptcy proceedings against EMPLOYEE. EXECUTED as of the day and year first written above. EMPLOYER: BUFFTON CORPORATION By:/S/Robert McLean ---------------------------- Name: Robert McLean -------------------------- Title:CEO ------------------------- EMPLOYEE /S/ Alan Tremain ------------------------------- ALAN TREMAIN EX-3.B 6 EMPLOYMENT AGREEMENT DATED 4-11-97 (MATHOT) EXHIBIT 3B EMPLOYMENT AGREEMENT THIS AGREEMENT made as of the 11th day of April, 1997, by and between BUFFTON CORPORATION, a Delaware corporation (EMPLOYER"), and JEAN-CLAUDE MATHOT (hereinafter called the "EMPLOYEE"). W I T N E S S E T H : ------------------- WHEREAS, the EMPLOYER wishes to employ EMPLOYEE, and EMPLOYEE wishes to accept such employment on the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the premises and the mutual agreements hereinafter set forth, the parties hereto hereby agree as follows: 1. Employment. The EMPLOYER hereby employs EMPLOYEE, and EMPLOYEE hereby ---------- accepts employment with EMPLOYER currently as President and Chief Operating Officer of EMPLOYER, on the terms and conditions herein contained. EMPLOYEE shall initially report to the Chief Executive Officer of EMPLOYER. The titles, powers and the person to whom EMPLOYEE reports may be, from time to time, changed and/or determined by the Board of Directors or Chief Executive Officer of EMPLOYER; provided, however, EMPLOYEE'S duties and responsibilities shall at all times include those customarily performed by a President and Chief Operating Officer of a company comparable to EMPLOYER (the "Specific Duties"). EMPLOYEE agrees to fully and faithfully perform the Specific Duties and such additional duties and responsibilities as might be assigned and delegated to EMPLOYEE from time to time by the Chief Executive Officer or Board of Directors of EMPLOYER, for so long as this Agreement is in effect. 2. Term of Employment Agreement. The term of this Agreement shall be for ---------------------------- an indefinite period beginning April 11, 1997 (the "Employment Agreement Term"). 3. Compensation. ------------ A. Salary. For all services rendered by EMPLOYEE under this ------ Agreement, EMPLOYER shall pay to EMPLOYEE a fixed annual gross salary of One Hundred Fifty Thousand and No/100 Dollars ($150,000.00), subject to deductions and withholding mandated by law, payable in installments according to the then prevailing payroll practices of the EMPLOYER with respect to its employees. The Board of Directors of EMPLOYER may from time to time grant EMPLOYEE compensation in excess of the salary set forth hereinabove; provided, however, EMPLOYER'S contractual obligation to pay salary to EMPLOYEE under this Agreement shall be the fixed annual gross salary specified in this Paragraph 3.A, plus any such approved increases in salary. B. Benefits. EMPLOYEE, through the effective date of a termination -------- of this Agreement, shall be entitled to participate in all present and future employee benefit plans, policies and programs that are available generally to EMPLOYER'S full-time employees and senior executives. C. Bonus. EMPLOYER shall adopt a bonus plan for each fiscal year ----- during the Employment Agreement Term covering EMPLOYER'S employees, and EMPLOYEE shall be paid on or before December 31, of each year during the Employment Agreement Term the bonuses established for EMPLOYEE in such bonus plan. D. Restricted Stock Grants. The Board of Directors of EMPLOYER may, ----------------------- in its sole discretion, grant restricted stock bonuses to EMPLOYEE from time to time, in such amounts as the Board of Directors may determine. 4. Reimbursement for Expenses. EMPLOYER shall reimburse EMPLOYEE for all -------------------------- reasonable and necessary expenses incurred by EMPLOYEE in the performance of EMPLOYEE'S duties contemplated hereby. 5. Vacations. For so long as this Agreement is in effect, EMPLOYEE shall --------- receive twenty business days paid vacation each fiscal year beginning with October 1, 1997. Such twenty business days paid vacation shall be deemed earned for a given fiscal year on October 1 of each year. Any earned vacation not taken by EMPLOYEE prior to September 30 of each fiscal year shall lapse. Upon a termination of this Agreement for any reason, except for cause (other than for cause following a Change in Control as hereinafter defined), EMPLOYEE shall be entitled to receive the sum of $ 410.96 for each business day of earned but untaken vacation days remaining for the then current fiscal year of termination of this Agreement, payable in accordance with the terms of this Agreement. 6. Location of Services. It is understood that the EMPLOYER presently -------------------- expects to maintain its principal place of business in the Dallas/Fort Worth Metroplex area, but that EMPLOYEE is not required to locate in this area. EMPLOYEE will spend as much time at the principal place of business as may be requested by the Chief Executive Officer, which requests will not be for an amount of time in excess of three weeks per month. 7. Termination. ----------- A. Without Cause. Notwithstanding the Employment Agreement Term, ------------- EMPLOYER shall have the right to terminate this Agreement without cause upon sixty (60) days written notice to EMPLOYEE to such effect, with such termination to be effective upon the expiration of such sixty (60) day notice period. Upon a termination of this Agreement without cause pursuant to this provision, the noncompetition provisions set forth in Section 8 hereof shall terminate, and EMPLOYEE shall be entitled to receive (i) any bonuses accrued through the effective date of a termination of the Agreement by EMPLOYEE pursuant to the terms of the bonus plan referenced in Paragraph 3.C. hereof, (ii) any earned but untaken vacation under the terms and conditions of Paragraph 5 hereof, and (iii) $150,000 which amount shall be paid to EMPLOYEE in one lump sum (with both such bonuses, salary and vacation being payable in full on the effective date of such termination of this Agreement). Upon a termination by EMPLOYER without cause, EMPLOYER agrees to purchase from EMPLOYEE, at the request of EMPLOYEE, any and all shares of stock of EMPLOYER owned by EMPLOYEE as of the date of the termination, with the purchase price to be equal to the greater of EMPLOYEE'S cost of said shares or the fair market value of said shares as reported in the Wall Street Journal on the date of termination. EMPLOYEE shall notify EMPLOYER of EMPLOYEE'S desire to sell EMPLOYEE'S shares of EMPLOYER to EMPLOYER within thirty (30) days of the effective date of termination without cause by delivering written notice to EMPLOYER to such effect. Said notice must be received by EMPLOYER and such receipt acknowledged by EMPLOYER. If EMPLOYEE fails to deliver said notice to EMPLOYER, EMPLOYER shall have no obligation to purchase any of its shares from EMPLOYEE. EMPLOYEE shall have no duty to mitigate, nor shall any sums earned by EMPLOYEE from other sources after a termination of this Agreement pursuant to this provision be credited or offset against any sums due to EMPLOYEE. B. With Cause. EMPLOYER shall have the right to terminate this ---------- Agreement at any time for cause, upon written notice to EMPLOYEE to such effect, with such termination to be effective upon delivery of such notice to EMPLOYEE. Upon a termination of this Agreement pursuant to this provision, EMPLOYEE shall be entitled to receive only such salary payable through the effective date of termination, payable in full on the effective date of such termination of this Agreement. For purposes of this provision, the term "for cause" shall mean (a) the failure or refusal to perform diligently the duties of EMPLOYEE's employment after written notice of such failure or refusal and a reasonable opportunity to remedy such has been provided, (b) the conviction of an offense involving moral turpitude which, in the judgment of the Board of Directors of EMPLOYER might bring discredit on EMPLOYER. C. Disability. If, as a result of EMPLOYEE'S incapacity due to ---------- physical or mental illness, EMPLOYEE shall have been absent from his duties hereunder on a full-time basis for the entire period of six consecutive months, and within thirty (30) days after written notice of intention to termination of this Agreement is given by EMPLOYER (which may occur thirty days before or at any time after the end of such six month period) EMPLOYEE shall not have returned to the performance of his duties hereunder on a full-time basis, this Agreement shall terminate effective upon the expiration of the thirty (30) day notice period. Upon a termination of this Agreement pursuant to this provision, EMPLOYEE shall be entitled to receive (i) any bonuses accrued through the effective date of a termination of the Agreement by EMPLOYEE pursuant to the terms of the bonus plan referenced in Paragraph 3.C. hereof, (ii) any earned but untaken vacation under the terms and conditions of Paragraph 5 hereof, and (iii) $150,000 which amount shall be paid to EMPLOYEE in one lump sum (with both such bonuses, salary and vacation being payable in full on the effective date of such termination of this Agreement). If EMPLOYEE shall receive any disability payments from any insurance policies provided by EMPLOYER, the payments by EMPLOYER to EMPLOYEE during any period of disability shall be reduced by the amount of disability payments received by EMPLOYEE under any such insurance policy or policies. D. Death. In the event of the death of EMPLOYEE, this Agreement ----- shall terminate effective upon the date of death, and EMPLOYEE'S estate shall be entitled to receive (i) any bonuses accrued through the effective date of a termination of the Agreement by EMPLOYEE pursuant to the terms of the bonus plan referenced in Paragraph 3.C. hereof, (ii) any earned but untaken vacation under the terms and conditions of Paragraph 5 hereof, and (iii) $150,000 which amount shall be paid to EMPLOYEE in one lump sum (with both such bonuses, salary and vacation being payable in full on the effective date of such termination of this Agreement). E. By EMPLOYEE. EMPLOYEE shall have the right to terminate this ----------- Agreement upon sixty (60) days written notice to EMPLOYER to such effect, with such termination to be effective upon the expiration of such sixty (60) day notice period. Upon a termination of this Agreement by EMPLOYEE pursuant to this provision, EMPLOYEE shall be entitled to receive (i) any bonuses accrued by EMPLOYEE pursuant to the terms of the bonus plan referenced in Paragraph 3.C. hereof through the effective date of a termination of this Agreement, (ii) any earned but untaken vacation under the terms and conditions of Paragraph 5 hereof, and (iii) such salary payable through the effective date of such termination, all payable in full on the effective date of such termination of this Agreement, unless such termination occurs within twenty-four (24) months following a Change in Control as defined in Paragraph 7.F. hereof, and then EMPLOYEE shall additionally be entitled to receive the compensation described in Paragraph 7.F. hereof and any earned but untaken vacation pursuant to Paragraph 5 hereof. If EMPLOYEE terminates this Agreement prior to the first annual anniversary hereof, EMPLOYER shall be entitled to purchase from EMPLOYEE (a) all of the Buffton Common Stock (the "Section 11 Stock") purchased by EMPLOYEE pursuant to Section 11 of the Stock Exchange Agreement dated as of April 11, 1997 between EMPLOYER, EMPLOYEE and the other stockholder of Hotels of Distinction, Inc., a Florida corporation, (the "Stock Exchange Agreement") and still owned by EMPLOYEE on the termination date, (b) EMPLOYEE's 120,000 shares of Buffton Common Stock (the "Exchange Stock") which EMPLOYEE received for his Hotels of Distinction, Inc. Common Stock pursuant to Section 1 of the Stock Exchange Agreement and still owned by Employee on the termination date, (c) the Non Qualified Stock Option Agreement of even date herewith between EMPLOYER and EMPLOYEE pursuant to which EMPLOYER granted EMPLOYEE an option to purchase 250,000 shares of Buffton Common Stock, and all rights and benefits of EMPLOYEE thereunder (the "Stock Options") and (d) all Buffton Common Stock purchased by EMPLOYEE by exercise of all or a part of the Stock Options (the "Exercised Option Stock") and still owned by EMPLOYEE on the termination date. The aggregate purchase price payable by EMPLOYER for the Section 11 Stock, the Exchange Stock, the Stock Options and the Exercised Option Stock purchased pursuant to the foregoing sentence will be the sum of (1) the average price per share paid by EMPLOYEE for the Section 11 Stock times the number of shares of Section 11 Stock sold to EMPLOYER pursuant to the foregoing, (2) 50% of the market value of a freely tradeable share of Buffton Common Stock on the termination date times the number of shares of Exchange Stock sold to EMPLOYER pursuant to the foregoing and (3) the price paid by EMPLOYEE for the Exercised Option Stock sold to EMPLOYER pursuant to the foregoing. F. Termination Following a Change in Control. If within twenty-four ----------------------------------------- (24) months after a Change in Control (as hereinafter defined), EMPLOYEE shall voluntarily terminate this Agreement, or this Agreement is terminated by EMPLOYER without cause, EMPLOYEE shall be entitled to receive (i) any earned but untaken vacation pursuant to the terms and conditions of Paragraph 5 hereof; and (ii) $450,000. Upon a termination by EMPLOYER within twenty-four months after a Change in Control (as hereinafter defined), EMPLOYER agrees to purchase from EMPLOYEE, at the request of EMPLOYEE, any and all shares of stock of EMPLOYER owned by EMPLOYEE as of the date of the termination, with the purchase price to be equal to the greater of EMPLOYEE'S cost of said shares or the fair market value of said shares as reported in the Wall Street Journal on the date of the Change in Control (as hereinafter defined). EMPLOYEE shall notify EMPLOYER of EMPLOYEE'S desire to sell EMPLOYEE'S shares of EMPLOYER to EMPLOYER within thirty (30) days of the effective date of termination without cause by delivering written notice to EMPLOYER to such effect. Said notice must be received by EMPLOYER and such receipt acknowledged by EMPLOYER. If EMPLOYEE fails to deliver said notice to EMPLOYER, EMPLOYER shall have no obligation to purchase any of its shares from EMPLOYEE. EMPLOYEE shall have no duty to mitigate, nor shall any sums earned by EMPLOYEE from other sources after a termination of this Agreement pursuant to this provision be credited or offset against any sums due to EMPLOYEE. It is the intention of EMPLOYER and EMPLOYEE that EMPLOYEE not be paid an amount which would be deemed an "excess parachute payment" under Section 280G of the Code, and accordingly, the amounts payable pursuant to this provision shall be reduced in an amount necessary to eliminate the payment of any excess parachute payment. The amounts payable pursuant to this provision shall be paid in a lump sum within fifteen (15) days following the effective date of termination of employment. If within twenty-four (24) months after a Change in Control (as hereinafter defined) EMPLOYER terminates this Agreement without cause, EMPLOYEE'S duties, obligations, covenants, and promises contained in Paragraphs 8, 9, and 10 hereof shall terminate and have no further effect. For the purposes of this Agreement, a "Change in Control" shall be deemed to have occurred upon any of the following events: (i) the acquisition directly or indirectly, by any person (as such terms are used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended), other than EMPLOYER or any of its subsidiaries or any employee benefit plan maintained by EMPLOYER or any such subsidiary, of beneficial ownership of securities of EMPLOYER representing fifteen percent (15%) or more of the combined voting power of EMPLOYER'S then outstanding securities (with the terms used herein and in Sections 13(d) and/or 14(d) of the Securities Exchange Act of 1934, as amended, having the meanings of such terms in such Sections); (ii) if the stockholders of EMPLOYER approve a merger or consolidation, a sale or disposition of all or substantially all of EMPLOYER'S assets or a plan of liquidation or dissolution of EMPLOYER; (iii) the election during any period of twenty-four (24) months or less of a member or members of EMPLOYER'S Board of Directors without the approval of the election or nomination for election of such new member or members by a majority of the members of the Board who were members at the beginning of the period, or members of the Board thereafter recommended to succeed such original members (or their successors hereunder) by a majority of the members of the Board who were members at the beginning of the period (or their successors hereunder); or (iv) any person (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) other than EMPLOYER, any of its subsidiaries or any employee benefit plan maintained by EMPLOYER or any such subsidiary, makes a tender or exchange offer for any shares of EMPLOYER'S outstanding voting securities at any point in time, pursuant to which any such shares are purchased. Unless the Continuing Board of Directors of EMPLOYER (as hereinafter defined) determines that the happening of any of the foregoing events in a particular case should not be deemed a Change in Control. The "Continuing Board of Directors of EMPLOYER" shall mean (i) the members of EMPLOYER'S Board of Directors in office immediately prior to the Change in Control, excluding any who initiate a Change in Control or are affiliated with one who initiates a Change in Control, and (ii) any subsequent directors who may be selected, nominated or approved by a majority of the other Continuing Board of Directors of EMPLOYER. It is specifically agreed by EMPLOYER and EMPLOYEE that a sale of all or a part of the stock or assets of EMPLOYER, that has been approved by the Continuing Board of Directors of EMPLOYER, shall not be deemed a Change in Control for purposes of this Agreement. G. Failure to Close on Sale of Current Technology. EMPLOYER has ---------------------------------------------- contracted to sell substantially all of the assets of one of its wholly owned subsidiary, Current Technology, Inc, a Delaware corporation, . In the event this sale does not close by August 31, 1997, EMPLOYEE shall have a right to terminate this Agreement effective upon delivery of written notice to EMPLOYER to such effect. In the event EMPLOYEE terminates this Agreement pursuant to the provisions of this Paragraph 7.G., EMPLOYEE'S duties, obligations, covenants, and promises contained in Paragraph 8 hereof shall terminate and EMPLOYER shall havethe option to purchase at the fair market value any and all shares of EMPLOYER owned by EMPLOYEE as of the effective date of the termination by EMPLOYEE pursuant this Paragraph 7.G. Upon a termination of this Agreement pursuant to this provision, EMPLOYEE shall be entitled to receive (i) any bonuses accrued by EMPLOYEE pursuant to the terms of the Bonus Plan referenced in Paragraph 3.C. hereof to the effective date of the termination of this Agreement, (ii) any earned by untaken vacation under the terms and conditions of Paragraph 5 hereof, and (iii) such salary payable pursuant to Paragraph 3.A. hereof accrued to the effective date of the termination of this Agreement. H. Provisions Surviving Termination. Except as set forth above, -------------------------------- notwithstanding a termination of this Agreement, EMPLOYER's obligations to EMPLOYEE pursuant to this Paragraph 7 shall remain in full force and effect, and EMPLOYEE's duties, obligations, covenants and promises contained in Paragraphs 8, 9, 10 and 11 hereof shall remain in full force and effect; and such Paragraphs shall survive a termination of this Agreement and remain fully enforceable by EMPLOYER or EMPLOYEE, as applicable. 8. Noncompetition. -------------- A. EMPLOYEE acknowledges that EMPLOYER has agreed to provide him, and he shall receive from the EMPLOYER, special training and knowledge specific to EMPLOYER's business. EMPLOYEE acknowledges that included in the special knowledge received is confidential and proprietary information including the Confidential Information defined in Paragraph 9 below which EMPLOYER invested extensive time and resources in developing and creating . EMPLOYEE acknowledges that this Confidential Information is valuable to EMPLOYER, and therefore, its protection and maintenance constitutes a legitimate interest to be protected by EMPLOYER by the enforcement of this covenant not to compete. Therefore, as an inducement to EMPLOYER to enter into this agreement, to invest time in training and educating EMPLOYEE and to disclose to EMPLOYEE confidential and proprietary information, EMPLOYEE agrees that prior to a termination of this Agreement and for a period of thirty-six months following the effective date of a termination of this Agreement (specifically excluding a termination of this Agreement by EMPLOYER without cause pursuant to Paragraph 7.A. hereof and specifically excluding a termination of this Agreement by EMPLOYEE following a Change in Control, as defined in Paragraph 7.F. hereof), EMPLOYEE will not, directly as a principal (whether individually or in any form of entity) or as an employee or consultant, engage in, consult with or participate in or with, any business reasonably competitive with and within a five mile radius of any hotel or restaurant owned, operated, managed or under construction by EMPLOYER, or any "affiliate", as hereinafter defined, of EMPLOYER, during the Employment Agreement Term or at the time this Agreement is terminated. For purposes of this Agreement, "affiliates" means any person or entity that is directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, EMPLOYER. EMPLOYEE represents to EMPLOYER that the enforcement of the restriction contained in this Paragraph 8.A. would not be unduly burdensome to EMPLOYEE and that in order to induce EMPLOYER to pay EMPLOYEE'S compensation during the Employment Agreement Term, to train EMPLOYEE and to divulge Confidential Information to EMPLOYEE, EMPLOYEE further represents and acknowledges that EMPLOYEE is willing and able to compete in other geographical areas not prohibited by this Section 8.A. B. EMPLOYEE agrees that a breach or violation by EMPLOYEE of the covenants contained in this Paragraph 8 shall entitle EMPLOYER, as a matter of right, to an injunction issued by any court of competent jurisdiction, restraining any further or continued breach or violation of this covenant. Such right to an injunction shall be cumulative and in addition to, and not in lieu of, any other remedies to which the EMPLOYER may show itself justly entitled including without limitation EMPLOYEE'S forfeiture of any sums then owed to EMPLOYEE pursuant to Paragraph 7 hereof and/or the obligation by EMPLOYEE to repay EMPLOYER for any sums previously paid to EMPLOYEE pursuant to Paragraph 7 hereof. C. The representations and covenants contained in this Paragraph 8 on the part of EMPLOYEE will be construed as ancillary to and independent of any other provision of this agreement and the existence of any claim or cause of action of EMPLOYEE against EMPLOYER or any officer or director of EMPLOYER, whether predicated on a disagreement or otherwise, shall not constitute a defense to the enforcement by EMPLOYER of the covenants of EMPLOYEE contained in this Paragraph 8. D. The parties to this agreement agree that the limitations contained in this Paragraph 8 with respect to geographic area, duration and scope of activity are reasonable. However, if any court shall determine that the geographic area, duration or scope of activity of any restriction contained in this Paragraph 8 is unenforceable, it is the intention of the parties that such restrictive covenant set forth herein shall not thereby be terminated but shall be deemed amended to the extent required to render it valid and enforceable. 9. Disclosure of Confidential Information. -------------------------------------- A. EMPLOYEE will disclose to the EMPLOYER all ideas and business plans developed by EMPLOYEE through the effective date of a termination of this Agreement that relate directly to the business of the EMPLOYER. B. The EMPLOYEE recognizes and acknowledges that by virtue of EMPLOYEE'S position with EMPLOYER that EMPLOYER will provide EMPLOYEE with access to certain Confidential Information (as hereinafter defined) of the EMPLOYER, and that all such information constitutes valuable, special and unique property of the EMPLOYER that is not generally known or readily ascertainable by independent investigation. The EMPLOYEE agrees that, prior to a termination of this Agreement, and for a period of thirty-six (36) months after the effective date of a termination of this Agreement, EMPLOYEE will not, without the prior written consent of the EMPLOYER, disclose or authorize disclosure or permit anyone under his direction to disclose to anyone not properly entitled thereto any of such Confidential Information. For purposes of this immediately preceding sentence, persons properly entitled to such information shall be the Board of Directors of the EMPLOYER and such officers, employees and agents of the EMPLOYER or any affiliate thereof to whom such information is furnished in the normal course of business under established policies approved by the EMPLOYER. For purpose of this Agreement, the term "Confidential Information" shall mean such information which has been clearly marked or identified as Confidential by EMPLOYER, or any affiliate of EMPLOYER, any documents, contracts, written information, procedural or technical manuals, training manuals, customer lists, customer account analysis, price books, computer files, operating manuals, raw material costing information, product cost information, food recipes, recipe books, concept profiles, accounting papers, work papers, corporate records and any other information which is understood to be of a confidential character and which has not been published or otherwise become a matter of general public knowledge through no fault of EMPLOYEE, all of which is owned or possessed by or relates to the business of EMPLOYER or any affiliate of EMPLOYER. The restrictions on EMPLOYEE set forth herein shall not limit or restrict the protection of any Confidential Information provided to EMPLOYER pursuant to law, but are cumulative to those rights. Further, the restrictions set forth herein shall not be interpreted to grant to EMPLOYEE any right at the expiration of the thirty-six (36) month period to use, disclose or authorize a third party to use any Confidential Information. C. The EMPLOYEE further agrees that (i) at all times prior to a termination of this Agreement, and (ii) upon the termination of this Agreement, he will not copy, remove from EMPLOYER'S or any affiliate of EMPLOYER'S premises, take with him or retain, without the prior written authorization of the EMPLOYER, any Confidential Information or any documents or copies thereof belonging to the EMPLOYER or any affiliate of EMPLOYER, or any other information of any kind belonging to the EMPLOYER (collectively "EMPLOYER'S Information). EMPLOYEE represents and warrants that prior to the execution of this Agreement he has returned to EMPLOYER any and all EMPLOYER'S Information which may previously have come into his possession except for EMPLOYER'S Information with respect to which EMPLOYER has consented to EMPLOYEE'S possession thereof. In the event of a breach or threatened breach by the EMPLOYEE of the provisions of this Paragraph 9, the EMPLOYER and the EMPLOYEE agree that the remedy at law available to the EMPLOYER would be inadequate and that the EMPLOYER shall be entitled to an injunction, without the necessity of posting bond therefor, restraining the EMPLOYEE from disclosing, in whole or in part, the Confidential Information. Nothing herein shall be construed as prohibiting the EMPLOYER from pursuing any other remedies, in addition to the injunctive relief available under this Paragraph 9, for such breach or threatened breach, including the recovery of damages from the EMPLOYEE. 10. Intellectual Property. EMPLOYEE hereby assigns to EMPLOYER all of --------------------- EMPLOYEE'S right, titles and interest in and to all patents, formulae, inventions, processes, copyrights, recipes, concepts and concept profiles, proprietary information, trademarks or trade names, or future improvements to patents, formulae, inventions, processes, copyrights, recipes, concepts and concept profiles, proprietary information, trademarks or trade names, developed or completed by the EMPLOYEE, which relate to the business of EMPLOYER, at any time prior to a termination of this Agreement (collectively the "Items); and the Items shall be promptly disclosed to the EMPLOYER, and the EMPLOYEE shall execute such instruments of assignment of the Items to the EMPLOYER as the EMPLOYER shall request. The EMPLOYEE acknowledges that a remedy at law for any breach by him of the provisions in this Paragraph 10 would be inadequate, and the EMPLOYEE hereby agrees that the EMPLOYER shall be entitled to injunctive relief in case of any such breach. 11. Non-Solicitation of Employees. The EMPLOYEE agrees that prior to a ----------------------------- termination of this Agreement, and for a period of thirty-six (36) months after the effective date of a termination of this Agreement, Employee shall not, directly or indirectly, hire, offer to hire, entice, solicit or in any other manner persuade or attempt to persuade any employee of EMPLOYER, or any affiliate of EMPLOYER, to discontinue or alter such employee's employment relationship with EMPLOYER, or any affiliate of EMPLOYER. The EMPLOYEE acknowledges that a remedy at law for any breach by him of the provisions in this Paragraph 11 would be inadequate, and the EMPLOYEE hereby agrees that the EMPLOYER shall be entitled to injunctive relief in case of any such breach. 12. Assignment. The services to be rendered and obligations to be ---------- performed by EMPLOYEE hereunder are special and unique, and all such services and obligations and all of EMPLOYEE'S rights hereunder are personal to EMPLOYEE and shall not be assignable by EMPLOYEE and any purported assignment thereof by EMPLOYEE shall not be valid or binding upon the EMPLOYER. However, in the event of EMPLOYEE'S death during the term of this Agreement, EMPLOYEE'S personal representative shall be entitled to the rights as specified in Paragraph 7.D. of this Agreement and shall be obligated to execute any documents and perform any other acts necessary to carry out and give effect to the terms and provisions of this Agreement. EMPLOYER may assign this Agreement and all of its rights hereunder to any person, firm or corporation succeeding to the business of the EMPLOYER, provided said company shall assume (by contract or operation of law) the EMPLOYER'S obligations hereunder. In the event this Agreement is assumed by any person, firm or corporation succeeding to the business of EMPLOYER, then EMPLOYER shall be released and discharged from any and all obligations to EMPLOYEE under this Agreement. 13. Arbitration. In the event of a dispute arising out of or relating to ----------- this Agreement, or relating to any claim or cause of action which may arise or be asserted under any federal, state or local statutory, regulatory or common law, including, without limitation, claims of discrimination, breach of contract or tort, such as intentional infliction of emotional distress, then, upon notice by any party to the other party (an "Arbitration Notice") and to American Arbitration Association ("AAA"), 140 West 51st Street, New York, New York 10020-1203 [telephone (212) 484-3266; fax (212) 307-4387], the controversy or dispute shall be submitted to a sole arbitrator who is independent and impartial, for binding arbitration in Fort Worth, Texas, in accordance with AAA's Commercial Arbitration Rules (the "Rules"). The parties agree that they will faithfully observe this agreement and the Rules and that they will abide by and perform any award rendered by the arbitrator. The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. Section 1-16 (or by the same principles enunciated by such Act in the event it may not be technically applicable). The award or judgment of the arbitrator shall be final and binding on all parties and enforced by any court having jurisdiction. If any party becomes the subject of a bankruptcy, receivership or other similar proceeding under the laws of the United States of America, any state or commonwealth or any other nation or political subdivision thereof, then, to the extent permitted or not prohibited by applicable law, any factual or substantive legal issues arising in or during the pendency of any such proceeding shall be subject to all of the foregoing mandatory arbitration provisions and shall be resolved in accordance therewith. The agreements contained herein have been given for valuable consideration, are coupled with an interest and are not intended to be executory contracts. The fees and expenses of the arbitrator will be shared equitably and ratably (as determined by the arbitrator) by all parties engaged in the dispute or controversy. Promptly after the Arbitration Notice is given, AAA will select five possible arbitrators, to whom AAA will give the identities of the parties and the general nature of the controversy. If any of those arbitrators disqualifies himself or declines to serve, AAA shall continue to designate potential arbitrators until the parties have five to select from. After the panel of five potential arbitrators has been completed, a two page summary of each of the potential arbitrators will be given to each of the parties, and the parties will have a period of 10 days after receiving the summaries in which to attempt to agree upon the arbitrator to conduct the arbitration. If the parties are unable to agree upon an arbitrator, then one of the parties shall notify AAA, and AAA shall select the arbitrator from one of the five. The decision of AAA with respect to the selection of the arbitrator will be final and binding. Within 10 days after the selection of the arbitrator, the parties and their council will appear before the arbitrator at a price an time designated by the arbitrator for the purpose of each party making a one hour or less presentation and summary of the case. Thereafter, the arbitrator will set dates and times for additional hearings until the proceeding is concluded. The desire and goal of the parties is, and the arbitrator will be advised that his goal should be, to conduct and conclude the arbitration proceeding as expeditiously as possible. If any party or his council fails to appear at any hearing, the arbitrator shall be entitled to reach a decision based on the evidence which has been presented to him by the parties who did appear. 14. Entire Agreement. This Agreement constitutes the whole agreement ---------------- between the parties hereto and there are no terms other than those contained herein. This Agreement supersedes any prior contract or understanding relating to employment of EMPLOYEE by EMPLOYER. 15. Amendment. No variation hereof shall be deemed valid unless in --------- writing and signed by the parties hereto, and no discharge of the terms hereof shall be deemed valid unless by full performance by the parties hereto or by a writing signed by the parties hereto. 16. Governing Law. This Agreement shall be construed and enforced in ------------- accordance with the laws of the State of Texas. 17. Severability. Each provision of this Agreement is intended to be ------------ severable from the others so that if any provision or term hereof is illegal or invalid (Pounds)or any reason whatsoever, such illegality or invalidity shall not affect the validity of the remaining provisions and terms hereof. 18. Captions. Captions used in this Agreement are used for convenience -------- only and are not intended to, nor are they to be construed to, have any substantive meaning or control in the construction of this Agreement. 19. Notice. Any notice hereunder to the parties hereto shall be in ------ writing and shall be sufficient in all respects if personally delivered or mailed by registered or certified United States mail, postage prepaid, and addressed to such party at the address shown below, or at such other address as such party may, by written notice received by the other party to this Agreement, have designated as the address of such party for such purpose. Any notice required under this Agreement shall be effective on receipt. EMPLOYER: BUFFTON CORPORATION 226 Bailey Avenue, Suite 101 Fort Worth, Texas 76107 EMPLOYEE: JEAN-CLAUDE MATHOT _____________________________ _____________________________ 20. No Third Party Benefits. Except as otherwise provided by law, ----------------------- EMPLOYEE shall not have any power in any manner to alienate, anticipate, charge or encumber any payments contemplated by this Agreement, and all rights and benefits of EMPLOYEE shall be for the sole personal benefit of EMPLOYEE, and no other person shall acquire any right, title or interest hereunder by reason of any sale, assignment, transfer, claim or judgment or bankruptcy proceedings against EMPLOYEE. EXECUTED as of the day and year first written above. EMPLOYER: BUFFTON CORPORATION By: /S/ Robert McLean ------------------------------------- Name: Robert McLean -------------------------- Title: CEO -------------------------- EMPLOYEE /S/Jean-Claude Mathot --------------------------------- JEAN-CLAUDE MATHOT EX-4 7 JOINT FILING AGREEMENT EXHIBIT 4 JOINT FILING AGREEMENT ---------------------- In accordance with Rule 13d-1(f) promulgated under the Securities Exchange Act of 1934, as amended, the undersigned hereby agree to the joint filing with all other Reporting Persons (as such term as defined in the Schedule 13D referred to below) on behalf of each of them of a Statement on Schedule 13D (including any amendments thereto) with respect to the common stock, par value $.05 per share, of Buffton Corporation, a Delaware corporation. The undersigned further consent and agree to the inclusion of this Agreement as an Exhibit to such Schedule 13D. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument. IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the 23rd day of April, 1997. /s/ ALAN TREMAIN Alan Tremain /s/ JEAN-CLAUDE MATHOT Jean-Claude Mathot 13891 -----END PRIVACY-ENHANCED MESSAGE-----