-----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, PDtUpm1/5hTnJPo5aKNq/gxMm1ULnhAo2vhdWXm+BDWYkdGW5AkbIes21qEgSbyz 0omRnDqiYQtSg5aKUC7JXg== 0000930661-97-001325.txt : 19970520 0000930661-97-001325.hdr.sgml : 19970520 ACCESSION NUMBER: 0000930661-97-001325 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: AMEX FILER: 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: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09822 FILM NUMBER: 97606654 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 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange - --- Act of 1934 For the quarterly period ended March 31, 1997 or Transition report pursuant to Section 13 or 15(d) of the Securities - --- Exchange Act of 1934 For the transition period from ________ to _____________ Commission file number 1-9822 BUFFTON CORPORATION ------------------------------------------------------ (Exact Name of Registrant as Specified in its Charter) Delaware 75-1732794 - ------------------------------- --------------------------------- (State or Other Jurisdiction of (IRS Employer Identification No.) Incorporation or Organization) 226 Bailey Avenue, Suite 101, Fort Worth, Texas 76107 ----------------------------------------------------- (Address and zip code of principal executive offices) (817) 332-4761 ---------------------------------------------------- (Registrant's Telephone Number, Including Area Code) ---------------------------------------------------- (Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No --- --- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Number of shares outstanding at: Class April 14, 1997 - ---------------------------- -------------------------------- Common stock, $.05 par value 7,713,928 1 BUFFTON CORPORATION Index ----- Page ---- Part I - Financial Information............................................ 3 Item 1 - Financial Statements............................................. 3 Consolidated Condensed Balance Sheets March 31, 1997 (Unaudited) and September 30, 1996.................................................. 3 Consolidated Condensed Statements of Operations (Unaudited) Three Months Ended March 31, 1997 and 1996.............................. 4 Consolidated Condensed Statements of Operations (Unaudited) Six Months Ended March 31, 1997 and 1996................................ 5 Consolidated Condensed Statements of Cash Flow (Unaudited) Six Months Ended March 31, 1997 and 1996................................ 6 Supplemental Disclosures of Cash Flow Information (Unaudited)............. 6 Notes to Consolidated Condensed Financial Statements (Unaudited).......... 7 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations................................................... 11 Part II - Other Information............................................... 15 Signatures................................................................ 16 2 BUFFTON CORPORATION Consolidated Condensed Balance Sheets -------------------------------------
March 31, September 30, 1997 1996 ----------- -------------- (Unaudited) (In thousands) Assets ------ Current assets: Cash and cash equivalents $ 1,672 $ 1,659 Accounts receivable, net of allowance for doubtful accounts of $29,000 and $35,000, respectively.................................................... 2,867 3,370 Inventories....................................................... 1,518 1,396 Prepaid and other current assets.................................. 987 492 ------- ------- Total current assets............................................ 7,044 6,917 ------- ------- Property, plant and equipment, at cost: Land, building and improvements................................... 12,834 12,257 Less: Accumulated depreciation and amortization.................. (3,026) (2,626) ------- ------- Net property, plant and equipment................................ 9,808 9,631 ------- ------- Patents, net of accumulated amortization of $1,609,000 and $1,529,000, respectively.......................... 1,371 1,451 Goodwill, net of amortization of $1,025,000 and $845,000, respectively........................................... 3,939 4,120 Long-term note receivable........................................... 430 540 Other assets........................................................ 1,132 505 ------- ------- $23,724 $23,164 ======= ======= Liabilities and Stockholders' Equity ------------------------------------ Current liabilities: Current portion of long-term debt................................. $ 187 $ 187 Accounts payable.................................................. 956 1,152 Accrued liabilities............................................... 1,074 1,524 Income taxes...................................................... 638 311 ------- ------- Total current liabilities........................................ 2,855 3,174 Long - term debt.................................................... 2,400 2,493 Deferred income taxes............................................... 4 4 ------- ------- Total liabilities................................................ 5,259 5,671 ------- ------- Stockholders' equity: Preferred stock $.01 par value; 5,000,000 shares authorized; no shares issued and outstanding.................... - - Common stock $.05 par value; 30,000,000 shares authorized; 6,726,878 shares outstanding..................................... 337 337 Additional paid-in capital........................................ 14,365 14,354 Retained earnings................................................. 3,872 3,158 Treasury stock, at cost, 54,550 and 183,350, shares respectively.. (109) (356) ------- ------- Total stockholders' equity....................................... 18,465 17,493 ------- ------- $23,724 $23,164 ======= =======
See accompanying notes to unaudited Consolidated Condensed Financial Statements. 3 BUFFTON CORPORATION Consolidated Condensed Statements of Operations (Unaudited) -----------------------------------------------------------
Three Months Ended March 31, --------------------- 1997 1996 ------ ------ (In thousands, except per share amounts) Net revenues..................................... $7,326 $5,972 ------ ------ Costs and expenses: Cost of goods sold (exclusive of depreciation).. 2,395 2,018 Selling, general and administrative............. 3,532 3,227 Depreciation and amortization................... 341 378 Interest........................................ 56 60 ------ ------ Total costs and expenses....................... 6,324 5,683 ------ ------ Income before income taxes....................... 1,002 289 Income tax provision............................. 401 80 ------ ------ Net income....................................... $ 601 $ 209 ====== ====== Primary income per average common share.......... $ .09 $ .03 ====== ====== Weighted average common shares outstanding....... 6,679 6,675 ====== ====== Fully diluted income per common share............ $ .09 $ .03 ====== ====== Fully diluted shares outstanding................. 6,679 6,675 ====== ======
See accompanying notes to unaudited Consolidated Condensed Financial Statements. 4 BUFFTON CORPORATION Consolidated Condensed Statements of Operations (Unaudited) -----------------------------------------------------------
Six Months Ended March 31, --------------------- 1997 1996 ------- ------- (In thousands, except per share amounts) Net revenues..................................... $13,295 $11,308 ------- ------- Costs and expenses: Cost of goods sold (exclusive of depreciation).. 4,375 3,907 Selling, general and administrative............. 6,947 5,920 Depreciation and amortization................... 672 655 Interest........................................ 111 95 ------- ------- Total costs and expenses....................... 12,105 10,577 ------- ------- Income before income taxes....................... 1,190 731 Income tax provision............................. 476 205 ------- ------- Net income....................................... $ 714 $ 526 ======= ======= Primary income per average common share.......... $ .11 $ .09 ======= ======= Weighted average common shares outstanding....... 6,635 6,178 ======= ======= Fully diluted income per common share............ $ .10 $ .09 ======= ======= Fully diluted shares outstanding................. 6,999 6,178 ======= =======
See accompanying notes to unaudited Consolidated Condensed Financial Statements. 5 BUFFTON CORPORATION ------------------- Consolidated Condensed Statements of Cash Flow (Unaudited) ----------------------------------------------------------
Six Months Ended March 31, -------------------- 1997 1996 ------ ------ (In thousands) Net cash provided by operating activities..... $1,052 $ 621 ------ ------- Cash flows from investing activities: Additions to property, plant and equipment.. (577) (683) Additions to other assets................... (354) (19) Acquisitions, net of cash acquired.......... - (1,007) ------ ------- Net cash provided by investing activities..... (931) (1,709) ------ ------- Cash flows from financing activities: Additions to long-term debt................. - 1,200 Repayments of long-term debt................ (93) (26) Treasury stock purchases.................... (15) - ------ ------- Net cash provided by financing activities..... (108) 1,174 ------ ------- Net increase in cash.......................... 13 86 Cash and cash equivalents at beginning of period................................... 1,659 7 ------ ------- Cash and cash equivalents at end of period.... $1,672 $ 93 ====== =======
Supplemental Disclosures of Cash Flow Information -------------------------------------------------
Supplemental cash flow information (unaudited): Six Months Ended March 31, -------------------- 1997 1996 ------ ------ (In thousands) Cash paid for: Interest................................... $ 56 $ 40 Income taxes............................... 164 5 Noncash investing and financing activities: Fair value of assets acquired.............. $4,660 Liabilities assumed........................ 1,754 Stock issued............................... 1,804 ------ Cash paid.................................. 1,102 Less: Cash acquired....................... 95 ------ Net cash paid for acquisitions............. $1,007 ======
See accompanying notes to unaudited Consolidated Condensed Financial Statements. 6 BUFFTON CORPORATION Notes to Consolidated Condensed Financial Statements (Unaudited) ---------------------------------------------------------------- Note A - ------ In the opinion of management, the accompanying consolidated condensed financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of Buffton Corporation (the Company), as of March 31, 1997, the results of its operations for the three and six month periods ended March 31, 1997 and 1996 and its cash flows for the six month periods ended March 31, 1997 and 1996. The accounting policies followed by the Company are set forth in Note 1 to the Company's financial statements in the 1996 Buffton Corporation Annual Report on Form 10-K/A. Note B - ------ The results of operations for the three and six month periods ended March 31, 1997 are not necessarily indicative of the results to be expected for the full year. Note C - ------ Net income per share has been computed on the basis of the weighted average number of common shares outstanding. In February 1997, the Financial Accounting Standards Board ("FASB") issued Financial Accounting Standard No. 128, Earnings per Share ("FAS 128"), which is effective for financial statements issued for periods ending after December 15, 1997, including interim periods. Effective December 31, 1997, the Company will adopt FAS 128, which establishes standards for computing and presenting earnings per share ("EPS"). The statement requires dual presentations of basic and diluted EPS on the face of the income statement for entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS calculation to the numerator and denominator of the dilutited EPS calculation. Basic EPS excludes the effect of potentially dilutive securities while diluted EPS reflects the potential dilution that would have occured if securities or other contracts to issue common stock had been exercised, converted or resulted in the issuance of common stock that would have then shared in the earnings of the entity. Had the Company already adopted the provision of this statement, there would have been no impact on the EPS amounts presented. 7 Note D - ------ Inventories are as follows:
March 31, September 30, 1997 1996 --------- ------------- (In thousands) Raw materials $ 917 $1,140 Work in process 321 86 Finished goods 280 170 ------ ------ $1,518 $1,396 ====== ======
Note E - ------ Effective January 1, 1996, the Company entered into an agreement to purchase the assets of Cabo Tacobar One, Ltd., a Mexican restaurant concept with Central and South American influences located in Houston, Texas, for $589,000 in cash, 375,000 shares of the Company's common stock (with an estimated fair market value of $656,000), and a one year option to purchase an additional 150,000 shares of the Company's common stock at a price of $2.00 per share. Additionally, the Company issued 76,500 shares of its common stock for commissions incurred in connection with the acquisition which resulted in increased acquisition costs of $153,000. Excess of purchase price over fair value of net tangible assets acquired, recorded as Goodwill, approximates $1,300,000 and is being amortized on a straight line basis over 15 years. Effective January 1, 1996, the Company also entered into an agreement to purchase the assets and assume certain liabilities of the Stockyards Hotel, located in Fort Worth, Texas, for $500,000 in cash, 450,000 shares of the Company's common stock (with an estimated fair market value of $788,000) and the refinancing of a $1,600,000 bank term loan. Under this agreement, the Company guaranteed, until March 15, 1997, a sales price of $2.05 per share for any of this stock that may be sold. No liability was incurred under the guarantee agreement. These acquisitions were accounted for under purchase accounting and are included in the Company's results of operations beginning on the acquisitions' effective date of January 1, 1996. Unaudited proforma results from continuing operations, as if the acquisitions had occurred at the beginning of fiscal 1996 are as follows:
Six Months Ended March 31, 1996 ------------------ Revenues................................. $12,106 Net income from operations............... 569 Primary income per average common share.. .09
8 Note F - ------ During March 1992, the United States Environmental Protection Agency (EPA), issued a Record of Decision (ROD) with respect to the Company's Superfund Site in Vestal, New York. An Administrative Order for Remedial Design and Remedial Action was issued on October 1, 1992. The ROD requires the Company to construct a water treatment facility at the site and to pump contaminated ground water from bedrock and overburden extraction wells for 15 to 30 years until remediation goals were met. In December 1992, the Company's environmental consultants prepared and submitted a Remedial Design Work Plan (RDWP) to the EPA. The EPA issued comments on the RDWP on October 1, 1993, and a revised RDWP was submitted to the EPA on October 21, 1993. During February 1994, the Company received comments from the EPA with respect to the revised RDWP and the Company's environmental consultants submitted a response. The EPA approved the revised RDWP in October 1994. On November 14, 1994, engineering design and related fieldwork was begun in order to meet the specifications of the revised RDWP. During the six months ended March 31, 1997 and 1996, $199,000 and $229,000, respectively, were incurred for work related to the engineering design. These costs were capitalized when incurred because the remedy would prevent further environmental contamination with respect to the contaminated ground water being pumped from the extraction wells and improve the property compared with its condition when acquired by the Company. Due to concerns about the correctness of the remedy provided for in the ROD, additional fieldwork was performed and in June 1995, an RDWP Addendum was prepared and submitted to the EPA. The Company received comments from the EPA regarding this Addendum, and the Company's environmental consultants submitted a response shortly thereafter. On August 24, 1995, the Company and its legal and environmental consultants met with officials of the EPA and agreed on additional fieldwork deemed necessary by the EPA to support the Company's position regarding the RDWP Addendum. At this meeting, officials of the EPA agreed the remedy needed to be modified and that certain requirements under the existing ROD needed to be eliminated or reduced in scope. Additional fieldwork provided for in the RDWP Addendum was conducted at the site and resulted in the formulation of a revised remedy. On December 19, 1995, the Company and its legal and environmental consultants presented to the EPA the RDWP Addendum and the recommended changes to the ROD in the form of a revised remedy. On July 16, 1996, the Company and its legal and environmental representatives met with the EPA to review the EPA's written response to this revised remedy. The revised remedy would eliminate certain requirements of the existing ROD and would primarily include removing and treating contaminated soil, significantly reducing the time period for remediation. In April 1997, the EPA issued a proposed plan setting forth the expedited remedy discussed above. The proposed plan allows 30 days for public comment. If the EPA issues an amended ROD that is consistent with the proposed plan, the Company would, at the date of amendment, expense approximately $3,000,000, the estimated net present value of the future costs of implementing this alternative. Additionally, all prior costs incurred, approximating $870,000 through March 31, 1997, associated with the implementation of the original ROD would be expensed. As a result, the Company expects to expense $3,870,000 during the quarter ending June 30, 1997. 9 Note G - ------ The Company is a party to various legal actions which are in the aggregate immaterial, and due to the nature of the Company's business, it could be a party in other legal or administrative proceedings arising in the ordinary course of business. While occasional adverse settlements or resolutions may occur and negatively impact earnings in the year of settlement, it is the opinion of management that their ultimate resolution will not have a material adverse effect on the Company's financial position. Note H - ------ One of the Company's subsidiaries has a financing agreement with a bank which consists of a $2,000,000 revolving line of credit, all of which was available for borrowing at March 31, 1997, and is secured by the accounts receivable and inventory of the subsidiary. The terms of the finance agreement provide for interest to be paid monthly at a floating rate equal to the established prime rate. The agreement also provides for a commitment fee of 0.25% per annum of the unused portion of the facility. Note I - ------ In April 1997, the Company acquired all of the outstanding stock of Hotels of Distinction (HOD), a hotel management company, from Alan Tremain, O.B.E. and Jean-Claude Mathot in exchange for 300,000 shares of the Company's common stock. In addition, Mr. Tremain will become Chairman of the Board of the Company and Jean-Claude Mathot will become President and Chief Operating Officer of the Company. Because HOD has no assets or management contracts at the date of purchase, the transaction, in substance, represents payment for employment services. As a result, the Company will expense $875,000, the estimated fair market value of the stock, during the quarter ending June 30, 1997. 10 BUFFTON CORPORATION PART I - FINANCIAL INFORMATION - ------------------------------ Item 2. - Management's Discussion and Analysis of Financial Condition and Results of Operations GENERAL INFORMATION At March 31, 1997, the Company consists of operations in two principal segments, electrical products and hospitality group. During the year ended September 30, 1996 and the six months ended March 31, 1997, the Company entered into the following acquisition and disposition transactions. Effective January 1, 1996, the Company entered into agreements to purchase the assets of Cabo Tacobar One, Ltd. (Cabo), located in Houston, Texas and to purchase the assets and assume certain liabilities related to the Stockyards Hotel (SYH), located in Fort Worth, Texas. See Note E of Notes to Consolidated Condensed Financial Statements for details of the acquisitions. FACTORS THAT MAY AFFECT FUTURE RESULTS Certain matters discussed herein are forward-looking statements about the business, financial condition and prospects of the Company. The actual results could differ materially from those indicated by such forward-looking statements because of various risks and uncertainties. Such risks and uncertainties may include, but are not limited to regional and national economic conditions, changes in customer demand for products offered by the Company, and other matters that may adversely affect the availability of products and pricing, state and federal regulatory environment, possible future acquisitions or dispositions, amendments to the Record of Decision issued by the Environmental Protection Agency (see Liquidity and Capital Resources) and other risks indicated in the Company's previous filings with the Securities and Exchange Commission. The Company cannot control these risks and uncertainties, and in many cases, cannot predict the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. RESULTS OF OPERATIONS Consolidated net revenues in the 1997 three and six month periods increased 23% and 18%, respectively, compared to 1996. Electrical products revenues for the 1997 three and six month periods increased 36% and 14%, respectively, due to increased shipments made under contract, of power distribution modules incorporating surge suppression for integration into a customer's sorter equipment and to a new product introduction in its power siftor line. Hospitality revenues for the 1997 three month period increased 7% compared to 1996 due to increased revenues at Cat's Meow (primarily due to increased major tourist events in New Orleans and higher sales during Mardi Gras, as well as a menu price increase of approximately 6%) and Cabo (due to expansion in May 1996) offset by reduction in revenues by sale of River Rat's in July 1996. Hospitality Division revenues for the 1997 six month period increased 23%, due to the inclusion of the results of operations of Cabo and SYH effective January 1, 1996. 11 Consolidated total costs and expenses during the 1997 three and six month periods increased 11% and 14%, respectively, compared to 1996. Consolidated costs of sales increased 19% and 12% during the 1997 three and six month periods versus 1996. As a percent of related revenue, these costs were 33% during the 1997 three month period versus 34% a year earlier and were 33% during the 1997 six month period versus 35% a year earlier. Electrical products cost of sales during the 1997 three and six month periods increased 26% and 11% compared to 1996. These costs as a percent of revenue were 41% in the 1997 three month period compared to 44% in 1996 and 41% in the 1997 six month period compared to 42% in 1996. The increase in absolute dollars was due to increased sales and the decrease in costs as a percent of revenue is due to increased manufacturing efficiencies. Cost of sales related to the Hospitality Division during the 1997 three and six month periods increased 1% and 16%, respectively. This increase is due to the increase in sales as previously discussed. Cost of sales as a percentage of revenue approximated prior year amounts. Consolidated selling, general and administrative expenses for the 1997 three and six month periods increased 9% and 17%, respectively, compared to 1996. The absolute dollar increase in these expenses is due to increased sales levels incurred during 1997. As a percent of revenue, these expenses were 48% for the 1997 three month period versus 54% in 1996 and were 52% for the 1997 and 1996 six month periods. Electrical products selling, general and administrative expenses increased 12% and 11% for the 1997 three and six month periods, respectively, versus 1996. The increases associated with the electrical products segment are due to the 1996 results including the reversal of reserves in the amount of $146,000 related to favorable developments of certain state sales tax claims and to higher salaries and commissions incurred as a result of increased sales. The expenses associated with the Hospitality Division for the 1997 three month period approximated the 1996 amount. The expenses associated with the Hospitality Division for the 1997 six month period increased 7% , compared to 1996. This increase is due to the inclusion of the results of operations of Cabo and SYH effective January 1, 1996. The increase in interest expense to $111,000 for the 1997 six month period from $95,000 in 1996 is primarily due to the refinancing of a $1,600,000 bank term loan assumed in connection with the acquisition of SYH offset by the reduction of debt outstanding under a line of credit with a bank. Interest expense for the 1997 three month period approximated the 1996 amount. During the three months ended March 31, 1997, the Company reported income from continuing operations before income taxes of $1,002,000 versus $289,000 in 1996. This increase is due to increased operating income at the electrical products division and hospitality division of approximately $650,000 and $350,000, respectively, offset in part by increased corporate expenses related to concept development and additional management salaries incurred to develop the hospitality operations for future growth. During the six months ended March 31, 1997, the Company reported income from continuing operations before income taxes of $1,190,000 versus $731,000 in 1996. This increase is due to increased operating income at the electrical products division and hospitality division of approximately $450,000 and $580,000, respectively, offset in part by increased corporate expenses related to concept development and additional management salaries incurred to develop the hospitality operations for future growth. 12 LIQUIDITY AND CAPITAL RESOURCES During March 1992, the United States Environmental Protection Agency (EPA), issued a Record of Decision (ROD) with respect to the Company's Superfund Site in Vestal, New York. An Administrative Order for Remedial Design and Remedial Action was issued on October 1, 1992. The ROD requires the Company to construct a water treatment facility at the site and to pump contaminated ground water from bedrock and overburden extraction wells for 15 to 30 years until remediation goals were met. In December 1992, the Company's environmental consultants prepared and submitted a Remedial Design Work Plan (RDWP) to the EPA. The EPA issued comments on the RDWP on October 1, 1993, and a revised RDWP was submitted to the EPA on October 21, 1993. During February 1994, the Company received comments from the EPA with respect to the revised RDWP and the Company's environmental consultants submitted a response. The EPA approved the revised RDWP in October 1994. On November 14, 1994, engineering design and related fieldwork was begun in order to meet the specifications of the revised RDWP. During the six months ended March 31, 1997 and 1996, $199,000 and $229,000, respectively, were incurred for work related to the engineering design. These costs were capitalized when incurred because the remedy would prevent further environmental contamination with respect to the contaminated ground water being pumped from the extraction wells and improve the property compared with its condition when acquired by the Company. Due to concerns about the correctness of the remedy provided for in the ROD, additional fieldwork was performed and in June 1995, an RDWP Addendum was prepared and submitted to the EPA. The Company received comments from the EPA regarding this Addendum, and the Company's environmental consultants submitted a response shortly thereafter. On August 24, 1995, the Company and its legal and environmental consultants met with officials of the EPA and agreed on additional fieldwork deemed necessary by the EPA to support the Company's position regarding the RDWP Addendum. At this meeting, officials of the EPA agreed the remedy needed to be modified and that certain requirements under the existing ROD needed to be eliminated or reduced in scope. Additional fieldwork provided for in the RDWP Addendum was conducted at the site and resulted in the formulation of a revised remedy. On December 19, 1995, the Company and its legal and environmental consultants presented to the EPA the RDWP Addendum and the recommended changes to the ROD in the form of a revised remedy. On July 16, 1996, the Company and its legal and environmental representatives met with the EPA to review the EPA's written response to this revised remedy. The revised remedy would eliminate certain requirements of the existing ROD and would primarily include removing and treating contaminated soil, significantly reducing the time period for remediation. In April 1997, the EPA issued a proposed plan setting forth the expedited remedy discussed above. The proposed plan allows 30 days for public comment. If the EPA issues an amended ROD that is consistent with the proposed plan, the Company would, at the date of amendment, expense approximately $3,000,000, the estimated net present value of the future costs of implementing this alternative. Additionally, all prior costs incurred, approximating $870,000 through March 31, 1997, associated with the implementation of the original ROD would be expensed. As a result, the Company expects to expense $3,870,000 during the quarter ending June 30, 1997. In April 1997, the Company acquired all of the outstanding stock of Hotels of Distinction (HOD), a hotel management company, from Alan Tremain, O.B.E. and Jean-Claude Mathot in exchange for 300,000 shares of the Company's common stock. In addition, Mr. Tremain will become Chairman of the Board of the Company and Jean-Claude Mathot will become President and Chief Operating Officer of the Company. Because HOD has no assets or management contracts at the date of purchase, the transaction, in substance, represents payment for employment services. As a result, the Company will expense $875,000, the estimated fair market value of the stock, during the quarter ending June 30, 1997. 13 In February 1997, the Company began construction on a second Cabo unit to be located in the historical district of downtown Houston, Texas. The unit is expected to open during the fourth quarter of fiscal 1997. Plans for a new restaurant are being finalized and it is expected to open during the fourth quarter of fiscal 1997. Capital expenditures for these two projects are expected to approximate $1,750,000 and are expected to be funded from existing cash and operating cash flow. 14 BUFFTON CORPORATION PART II - OTHER INFORMATION - --------------------------- Item 1. - Legal Proceedings None Item 6. - Exhibits and Reports on Form 8-K (a) Exhibits 2.1 Asset Purchase Agreement dated February 14, 1997 incorporated herein by reference to the Definitive Proxy Statement dated April 23, 1997. 3.1 Restated by-laws of Buffton Corporation dated April 7, 1997 (b) Reports on Form 8-K Report dated February 21, 1997 reporting Asset Purchase Agreement of Current Technology, Inc. 15 BUFFTON CORPORATION SIGNATURES ---------- Pursuant to the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BUFFTON CORPORATION (Registrant) By: /s/ Robert H. McLean ------------------------------------- Chairman of the Board and President May 14, 1997 - ------------ By: /s/ Robert Korman ------------------------------------- Vice President and Chief Financial Officer May 14, 1997 - ------------ 16 EX-3.1 2 RESTATED BY-LAWS OF BUFFTON CORPORATION EXHIBIT 3.1 RESTATED BYLAWS OF BUFFTON CORPORATION APRIL 7, 1997 -------------------------------------------------- ARTICLE I --------- MEETINGS OF STOCKHOLDERS ------------------------ Section 1.1 Annual Meetings. --------------- (a) The annual meeting of stockholders shall be held for the election of directors and for the transaction of such other business as properly may come before such meeting at such date, time and place, within or without the State of Delaware, as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. (b) Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be transacted by the stockholders may be made at an annual meeting of stockholders (i) pursuant to the Corporation's notice with respect to such meeting, (ii) by or at the direction of the Board of Directors or (iii) by any stockholder of the Corporation who was a stockholder of record at the time of giving of the notice provided for in this Section 1.1, who is entitled to vote at the meeting and who has complied with the notice procedures set forth in this Section 1.1. (c) For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of Section 1.1(b), the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and such business must be a proper matter for stockholder action under the General Corporation Law of the State of Delaware. To be timely, a stockholder's notice shall be delivered to the Secretary at the principal executive offices of the Corporation not less than 120 days nor more than 180 days prior to the first anniversary of the date of the Corporation's proxy statement released to stockholders in connection with the previous year's annual meeting of stockholders or as otherwise provided in such proxy statement; provided, however, that in the event that the date of the annual meeting is more than 30 days prior to or more than 60 days after the anniversary date of the preceding year's annual meeting of stockholders, notice by the stockholder to be timely must be so delivered a reasonable time before the proxy materials are prepared and distributed to stockholders. Such stockholder's notice shall set forth (i) as to each person whom the stockholder proposes to nominate for election or reelection as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (ii) as to any other business that the stockholder proposes to bring before the meeting, a brief description of such business, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (iii) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (A) the name and address of such stockholder, as they appear on the Corporation's books, and of such beneficial owner and (B) the class and number of shares of the Corporation that are owned beneficially and of record by such stockholder and such beneficial owner. (d) Only persons nominated in accordance with the procedures set forth in this Section 1.1 shall be eligible to serve as directors and only such business shall be conducted at an annual meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 1.1. The chairman of the meeting shall determine whether a nomination or any business proposed to be transacted by the stockholders has been properly brought before the meeting and, if any proposed nomination or business has not been properly brought before the meeting, the chairman shall declare that such proposed business or nomination shall not be presented for stockholder action at the meeting. (e) Nothing in this Section 1.1 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act. Section 1.2 Special Meetings. Special meetings of the stockholders of ---------------- the Corporation may be called only by the Chairman of the Board of Directors or the President or the Board of Directors pursuant to a resolution adopted by the entire Board of Directors. Notwithstanding any other provision of the Corporation's Certificate of Incorporation, Bylaws or any provision of law which might otherwise permit a lesser vote or no vote, the affirmative vote of the holders of at least 80% of the then outstanding shares of each class of stock of the Corporation having voting power for the election of directors shall be required to alter, amend or repeal this Section 1.2. Section 1.3 Notice of Meeting. Written notice, signed by the Chairman ----------------- of the Board, the President, any Vice President, the Secretary or any Assistant Secretary, of every meeting of stockholders stating the purpose or purposes for which the meeting is called, and the date and time when, and the place where, it is to be held shall be delivered either personally or by mail, to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the meeting, except as otherwise provided by statute. If mailed, such notice shall be directed to a stockholder at his address as it shall appear on the stock books of the Corporation, unless he shall have filed with the Secretary a written request that notices intended for him be mailed to some other address, in which case it shall be mailed to the address designated in such request. - 2 - Section 1.4 Quorum. The presence at any meeting, in person or by proxy, ------ of the holders of record of a majority of the shares then issued and outstanding and entitled to vote shall be necessary and sufficient to constitute a quorum for the transaction of business, except where provided otherwise by statute. Section 1.5 Adjournments. In the absence of a quorum, a majority in ------------ interest of the stockholders entitled to vote, present in person or by proxy, or, if no stockholder entitled to vote is present in person or by proxy, any officer entitled to preside or act as secretary of such meeting, may adjourn the meeting from time to time until a quorum shall be present. Section 1.6 Voting. Directors shall be chosen by a plurality of the ------ votes cast at the election, and, except where otherwise provided by statute, all other questions shall be determined by a majority of the votes cast on such question. Section 1.7 Proxies. Any stockholder entitled to vote may vote by ------- proxy, provided that the instrument authorizing such proxy to act shall have been executed in writing (which shall include telegraphing or cabling) by the stockholder himself or by his duly authorized attorney. Section 1.8 Judges of Election. The Board of Directors may appoint ------------------ judges of election to serve at any election of directors and at balloting on any other matter that may properly come before a meeting of stockholders. If no such appointment shall be made, or if any of the judges so appointed shall fail to attend, or refuse or be unable to serve, then such appointment may be made by the presiding officer at the meeting. Section 1.9 Stock List. The officer who has charge of the stock ledger ---------- of the Corporation shall prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. The list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them. Section 1.10 Stockholder Action Without Meeting. Any action required by ---------------------------------- the Delaware General Corporation Law to be taken at any annual or special meeting of stockholders of the Corporation, or any action which may be taken at any annual or special meeting of stockholders of the Corporation, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Notice of any such action shall be given in accordance with the requirements of the Delaware General Corporation Law. - 3 - In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary, request the Board of Directors to fix a record date. The Board of Directors shall within ten (10) days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors within ten (10) days of the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of stockholders meetings are recorded, to the attention of the Secretary of the Corporation. Delivery shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the Board of Directors adopts the resolution taking such prior action. In the event of the delivery of a written consent or consents purporting to authorize or take corporate action and/or related revocations (each such written consent and related revocation is referred to in this Section 1.10 as a "Consent"), the Secretary shall provide for the safekeeping of such Consent and shall immediately appoint duly qualified and objective inspectors to conduct, as promptly as practical, such reasonable ministerial review as the Corporation shall deem necessary or appropriate for the purpose of ascertaining the sufficiency and validity of such Consent and all matters incident thereto, including, without limitation, whether holders of shares having the requisite voting power to authorize or take the action specified in the Consent have given consent. If after such investigation the Secretary shall determine that the Consent is valid, that fact shall be certified on the records of the corporation kept for the purpose of recording the proceedings of meetings of stockholders, and the consent shall be filed in such records, at which time the Consent shall become effective as stockholder action. - 4 - ARTICLE II ---------- BOARD OF DIRECTORS ------------------ Section 2.1 Number. The number of directors shall not be less than ------ three. The number of directors shall be fixed from time to time exclusively by a vote of a majority of the Board of Directors, except as otherwise fixed by or pursuant to the provisions of Article IV of the Certificate of Incorporation relating to the rights of the holders of the Preferred Stock. Section 2.2 Election and Term of Office. The Board of Directors shall be --------------------------- divided into three classes, Class I, Class II and Class III, which shall be as nearly equal in number as possible. At the annual meeting of stockholders to be held in 1989, Class I directors shall be elected for a term expiring at the annual meeting of stockholders to be held in 1990, Class II directors shall be elected for a term expiring at the annual meeting of stockholders to be held in 1991, and Class III directors shall be elected for a term expiring at the annual meeting of stockholders to be held in 1992, with each director to hold office until his successor is elected and qualified. At each annual meeting of stockholders subsequent to 1989, the successors of the class of directors whose term expires at that annual meeting shall be elected to hold office for a term expiring at the annual meeting of stockholders to be held in the third year following the year of their election. The election of directors need not be by written ballot unless so provided elsewhere by these Bylaws. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. Any newly created or eliminated directorship resulting from an increase or decrease in the Board of Directors shall be apportioned by the Board of Directors among the three classes of directors so as to maintain such classes as nearly equal as possible. Section 2.3 Vacancies and Additional Directorships. Except as otherwise -------------------------------------- provided for or fixed by or pursuant to the provisions of Article IV of the Corporation's Certificate of Incorporation relating to the rights of the holders of the Preferred Stock, newly created directorships resulting from any increase in the number of directors and any vacancies on the Board of Directors resulting from death, resignation, removal or other cause shall be filled only by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the Board of Directors, or by a sole remaining director. Any director elected in accordance with the preceding sentence of this Section 2.3 shall hold office for the remainder of the full term of the class of directors in which the new directorship was created or the vacancy occurred and until such director's successor shall have been elected and qualified. Section 2.4 Removal. Except as otherwise provided for or fixed by or ------- pursuant to the provisions of Article IV of the Corporation's Certificate of Incorporation relating to the rights of the holders of the Preferred Stock, any director may be removed from office only for cause and only by the affirmative vote of the holders of 80% of the then outstanding shares of each class of stock of the Corporation having voting power for the election of directors. - 5 - Section 2.5 Amendment or Repeal. Notwithstanding any provisions of the ------------------- Corporation's Certificate of Incorporation, Bylaws or any other provision of law which might otherwise permit a lesser vote or no vote, the affirmative vote of the holders of at least 80% of the then outstanding shares of each class of stock of the Corporation having voting power for the election of directors shall be required to alter, amend or repeal Sections 2.1, 2.2, 2.3 and 2.4 hereof, except as otherwise provided for or fixed by or pursuant to the provisions of Article IV of the Corporation's Certificate of Incorporation relating to the rights of the holders of the Preferred Stock. Section 2.6 Meetings. A meeting of the Board of Directors shall be -------- held for organization, for the election of officers and for the transaction of such other business as may prop erly come before the meeting, within thirty (30) days after each annual election of directors. The Board of Directors by resolution may provide for the holding of regular meetings and may fix the times and places at which such meetings shall be held. Notice of regular meetings shall not be required to be given, provided that whenever the time or place of regular meetings shall be fixed or changed, notice of such action shall be mailed promptly to each director who shall not have been present at the meeting at which such action was taken, addressed to him at his residence or usual place of business. Special meetings of the Board of Directors may be called by one-third (1/3) of the directors then in office or by the Chairman of the Board or the President. Except as otherwise required by statute, notice of each special meeting shall be mailed to each director, addressed to him at his residence or usual place of business, or shall be sent to him at such place by telegram, radio or cable, or telephoned or delivered to him personally, not later than two (2) days before the day on which the meeting is to be held. Such notice shall state the time and place of such meeting, but unless otherwise required by statute, the Certificate of Incorporation of the Corporation or these Bylaws, need not state the purposes thereof. Notice of any meeting need not be given to any director who shall attend such meeting in person or who shall waive notice thereof, before or after such meeting, in writing or by telegram, radio or cable. Section 2.7 Quorum. A majority of the total number of members of the ------ Board of Directors as constituted from time to time, but not less than two, shall be necessary and sufficient to constitute a quorum for the transaction of business, except that when the Board consists of one director pursuant to Section 2.1, then the one director shall constitute a quorum. In the absence of a quorum, a majority of those present at the time and place of any meeting may adjourn the meeting from time to time until a quorum shall be present and the meeting may be held as adjourned without further notice or waiver. A majority of those present at any meeting at which a quorum is present may decide any question brought before such meeting, except as otherwise provided by law, the Certificate of Incorporation or by these Bylaws. - 6 - Section 2.8 Resignation of Directors. Any director may resign at any ------------------------ time by giving written notice of such resignation to the Board of Directors, the Chairman of the Board, the President, any Vice President or the Secretary. Any such resignation shall take effect at the time specified therein or, if no time be specified, upon receipt thereof by the Board of Directors or one of the above named officers; and, unless specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 2.9 Participation in Meeting. At any meeting of the Board of ------------------------ Directors, or of any Committee designated by the Board of Directors, a director or committee member may participate in a meeting of such board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting in this manner shall constitute presence in person at such meeting. Section 2.10 Compensation of Directors. Directors shall receive such ------------------------- reasonable compensation for their services as such, whether in the form of salary or a fixed fee for attendance at meetings, with expenses, if any, as the Board of Directors may from time to time determine. Nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. ARTICLE III ----------- COMMITTEES OF THE BOARD ----------------------- Section 3.1 Designation, Power. Alternate Members and Term of Office. -------------------------------------------------------- The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of two or more of the directors of the Corporation. Any such committee, to the extent provided in such resolution, shall have and may exercise the power of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. The Board may designate one or more directors as alternate members of any committee, who, in the order specified by the Board, may replace any absent or disqualified member at any meeting of the committee. If at a meeting of any committee one or more of the members thereof should be absent or disqualified, and if either the Board of Directors has not so designated any alternate member or members, or the number of absent or disqualified members exceeds the number of alternate members who are present at such meeting, then the member or members of such committee (including alternates) present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another director to act at the meeting in the place of any such absent or disqualified member. The term of office of the members of each committee shall be fixed from time to time by the Board, subject to these Bylaws; provided, however, that any committee member who ceases to be a -------- member of the Board shall ipso facto cease to be a committee member. Each committee shall appoint a secretary, who may be the Secretary of the Corporation or any Assistant Secretary thereof. - 7 - Section 3.2 Meetings, Notices and Records. Each committee may provide ----------------------------- for the holding of regular meetings, with or without notice, and may fix the time and place at which such meetings shall be held. Special meetings of each committee shall be held upon call by or at the direction of its chairman, or, if there is no chairman, by or at the direction of any two of its members, at the time and place specified in the respective notices or waivers of notice thereof. Notice of each special meeting of a committee shall be mailed to each member of such committee, addressed to him at his residence or usual place of business, at least two days before the day on which the meeting is to be held, or shall be sent by telegram, radio or cable, addressed to him at such place, or telephoned or delivered to him personally, not later than the day before the day on which the meeting is to be held. Notice of any meeting of a committee need not be given to any member thereof who shall attend the meeting in person or who shall waive notice thereof by telegram, radio, cable or other writing. Notice of any adjourned meeting need not be given. Each committee shall keep a record of its proceedings. Section 3.3 Quorum and Manner of Acting. At each meeting of any --------------------------- committee the presence of a majority, but not less than two, of its members then in office shall be necessary and sufficient to constitute a quorum for the transaction of business, and the act of a majority of the members present at any meeting at which a quorum is present shall be the act of such committee; in the absence of a quorum, a majority of the members present at the time and place of any meeting may adjourn the meeting from time to time until a quorum is present. Subject to the foregoing and other provisions of these Bylaws and except as otherwise determined by the Board of Directors, each committee may make rules for the conduct of its business. Any determination made in writing and signed by all the members of such committee shall be as effective as if made by such committee at a meeting. Section 3.4 Resignations. Any member of a committee may resign at any ------------ time by giving written notice of such resignation to the Board of Directors, the Chairman of the Board, the President or the Secretary of the Corporation. Unless otherwise specified in such notice, such resignation shall take effect upon receipt thereof by the Board or any such officer. Section 3.5 Removal. Any member of any committee may be removed at any ------- time by the Board of Directors with or without cause. Section 3.6 Vacancies. If any vacancy shall occur in any committee by --------- reason of death, resignation, disqualification, removal or otherwise, the remaining members of such committee, though less than a quorum, shall continue to act until such vacancy is filled by the Board of Directors. Section 3.7 Compensation. Committee members shall receive such ------------ reasonable compensation for their services as such, whether in the form of salary or a fixed fee for attendance - 8 - at meetings, with expenses, if any, as the Board of Directors may from time to time determine. Nothing herein contained shall be construed to preclude any committee member from serving the Corporation in any other capacity and receiving compensation therefor. ARTICLE IV ---------- OFFICERS -------- Section 4.1 Number. The officers of the Corporation shall be a ------ President, one or more Vice Presidents, a Secretary, a Treasurer and, if the Board of Directors so determines, a Chairman of the Board, and such other officers as may be appointed in accordance with the provisions of Section 4.3. Section 4.2 Election, Term of Office and Qualifications. Each officer ------------------------------------------- (except such officers as may be appointed in accordance with the provisions of Section 4.3) shall be elected by the Board of Directors. Each officer (whether elected at the first meeting of the Board of Directors after the annual meeting of stockholders or to fill a vacancy or otherwise) shall hold his office until the first meeting of the Board of Directors after the next annual meeting of stockholders and until his successor shall have been elected, or until his death, or until he shall have resigned in the manner provided in Section 4.4 or shall have been removed in the manner provided in Section 4.5. Section 4.3 Subordinate Officers and Agents. The Board of Directors ------------------------------- from time to time may appoint other officers or agents (including one or more Assistant Vice Presidents, one or more Assistant Secretaries and one or more Assistant Treasurers), to hold office for such period, have such authority and perform such duties as are provided in these Bylaws or as may be provided in the resolutions appointing them. The Board of Directors may delegate to any officer or agent the power to appoint any such subordinate officers or agents and to prescribe their respective terms of office, authorities and duties. Section 4.4 Resignations. Any officers may resign at any time by giving ------------ written notice of such resignation to the Board of Directors, the President, a Vice President or the Secretary. Unless otherwise specified in such written notice, such resignation shall take effect upon receipt thereof by the Board of Directors or any such officer. Section 4.5 Removal. Any officer specifically designated in Section 4.1 ------- may be removed at any time, either with or without cause, at any meeting of the Board of Directors by the vote of a majority of all the directors then in office. Any officer or agent appointed in accordance with the provisions of Section 4.3 may be removed, either with or without cause, by the Board of Directors at any meeting, by the vote of a majority of the directors at such meeting, or by any superior officer or agent upon whom such power of removal shall have been conferred by the Board of Directors. - 9 - Section 4.6 Vacancies. A vacancy in any office by reason of death, --------- resignation, removal, disqualification or any other cause shall be filled for the unexpired portion of the term in the manner prescribed by these Bylaws for regular election or appointment to such office. Section 4.7 Chief Executive Officer. The Chief Executive Officer of the ----------------------- Corporation must be a member of the Board of Directors, and subject to the direction of the Board of Directors, shall have general charge of business, affairs and property of the Corporation and general supervision over its officers and agents. As such Chief Executive Officer, if present, he shall preside at all meetings of stockholders and directors and he shall see that all orders and resolutions of the Board of Directors are carried into effect. He may sign, with any other officer thereunto duly authorized, certificates of stock of the Corporation, the issuance of which shall have been duly authorized (the signature to which may be a facsimile signature), and may sign and execute in the name of the Corporation deeds, mortgages, bonds, contracts, agreements or other instruments duly authorized by the Board of Directors except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent. From time to time he shall report to the Board of Directors all matters within his knowledge which the interest of the Corporation may require to be brought to their attention. He shall also perform such other duties as are given to him by these Bylaws or as from time to time may be assigned to him by the Board of Directors. The Chief Executive Officer shall be a member, ex officio, of all committees appointed by the Board. Section 4.8 The Chairman of the Board. The Chairman of the Board, if ------------------------- one is appointed, shall have such powers and duties as shall be prescribed by the Board of Directors. The Chairman of the Board shall be a member, ex officio, of all committees appointed by the Board. Section 4.9 The President. The President shall have such power as may ------------- be by statute exclusively conferred upon the President and he shall have such other powers and duties as shall be prescribed by the Board of Directors. Section 4.10 The Vice Presidents. At the request of the President or in ------------------- his absence or disability, the Vice President designated by the President (or in the absence of such designation, the Vice President designated by the Board of Directors) shall perform all duties of the President and, when so acting, shall have all the powers of and be subject to all restrictions upon the President. Any Vice President may also sign, with any other officer thereunto duly authorized, certificates of stock of the Corporation, the issuance of which shall have been duly authorized (the signature to which may be a facsimile signature), and may sign and execute in the name of the Corporation deeds, mortgages, bonds and other instruments duly authorized by the Board of Directors, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent. Each Vice President shall perform such other duties as are given to him by these Bylaws or as from time to time may be assigned to him by the Board of Directors or the Chief Executive Officer. - 10 - Section 4.11 The Secretary. The Secretary shall ------------- (a) record all the proceedings of the meetings of the stockholders, the Board of Directors, and any committees in a book or books to be kept for that purpose; (b) cause all notices to be duly given in accordance with the provisions of these Bylaws and as required by statute; (c) whenever any committee shall be appointed in pursuance of a resolution of the Board of Directors, furnish the chairman of such committee with a copy of such resolution; (d) be custodian of the records and of the seal of the Corporation, and cause such seal to be affixed to all certificates representing stock of the Corporation prior to the issuance thereof and to all instruments, the execution of which on behalf of the Corporation under its seal shall have been duly authorized; (e) see that the lists, books, reports, statements, certificates and other documents and records required by statute are properly kept and filed; (f) have charge of the stock and transfer books of the Corporation, and exhibit such stock book at all reasonable times to such persons as are entitled by statute to have access thereto; (g) sign (unless the Treasurer or an Assistant Secretary or an Assistant Treasurer shall sign) certificates representing stock of the Corporation, the issuance of which shall have been duly authorized (the signature to which may be a facsimile signature); and (h) in general, perform all duties incident to the office of Secretary and such other duties as are given to him by these Bylaws or as from time to time may be assigned to him by the Board of Directors or the Chief Executive Officer. Section 4.12 Assistant Secretaries. At the request of the Secretary or --------------------- in his absence or disability, the Assistant Secretary designated by him (or in the absence of such designation, the Assistant Secretary designated by the Board of Directors or the Chief Executive Officer) shall perform all the duties of the Secretary, and, when so acting, shall have all the powers of and be subject to all restrictions upon the Secretary. The Assistant Secretaries shall perform such other duties as from time to time may be assigned to them respectively by the Board of Directors, the Chief Executive Officer or the Secretary. - 11 - Section 4.13 The Treasurer. The Treasurer shall ------------- (a) have charge of and supervision over and be responsible for the funds, securities, receipts and disbursements of the Corporation; (b) cause the moneys and other valuable effects of the Corporation to be deposited in the name and to the credit of the Corporation in such banks or trust companies or with such bankers or other depositaries as shall be selected in accor dance with Section 5.3 of these Bylaws or to be otherwise dealt with in such manner as the Board of Directors may direct; (c) cause the funds of the Corporation to be disbursed by checks or drafts upon the authorized depositaries of the Corporation, and cause to be taken and preserved proper vouchers for all moneys disbursed; (d) render to the Board of Directors or the Chief Executive Officer, whenever requested, a statement of the financial condition of the Corporation and of all his transactions as Treasurer; (e) cause to be kept at the Corporation's principal office correct books of account of all its business and transactions and such duplicate books of account as he shall determine and upon application cause such books or duplicates thereof to be exhibited to any director; (f) be empowered, from time to time, to require from the officers or agents of the Corporation reports or statements giving such information as he may desire with respect to any and all financial transactions of the Corporation; (g) sign (unless the Secretary or an Assistant Secretary or an Assistant Treasurer shall sign) certificates representing stock of the Corporation the issuance of which shall have been duly authorized (the signature to which may be a facsimile signature); and (h) in general, perform all duties incident to the office of Treasurer and such other duties as are given to him by these Bylaws or as from time to time may be assigned to him by the Board of Directors or the Chief Executive Officer. Section 4.14 Assistant Treasurers. At the request of the Treasurer or in -------------------- his absence or disability, the Assistant Treasurer designated by him (or in the absence of such designation, the Assistant Treasurer designated by the Board of Directors or the Chief Executive Officer) shall perform all the duties of the Treasurer, and, when so acting, shall have all the powers and be subject to all restrictions upon the Treasurer. The Assistant Treasurers shall perform such other duties as from time to time may be assigned to them respectively by the Board of Directors, the Chief Executive Officer or the Treasurer. - 12 - Section 4.15 Salaries. The salaries of the officers of the Corporation -------- shall be fixed from time to time by the Board of Directors, except that the Board of Directors may delegate to any person the power to fix the salaries or other compensation of any officers or agents appointed in accordance with the provisions of Section 4.3. No officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the Corporation. Section 4.16 Surety Bonds. If the Board of Directors shall so require, ------------ any officer or agent of the Corporation shall execute to the Corporation a bond in such sum and with such surety or sureties as the Board of Directors may direct, conditioned upon the faithful discharge of his duties, including responsibility for negligence and for the accounting for all property, funds or securities of the Corporation which may come into his hands. ARTICLE V --------- EXECUTION OF INSTRUMENT AND DEPOSIT OF CORPORATE FUNDS -------------------------- Section 5.1 Execution of Instruments Generally. The Chief Executive ---------------------------------- Officer, Chairman of the Board, President, any Vice President, the Secretary or the Treasure, subject to the approval of the Board of Directors, may enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation. The Board of Directors may authorize any officer or officers, or agent or agents, to enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation, and such authorization may be general or confined to specific instances. Section 5.2 Borrowing. No loans or advances shall be obtained by or --------- contracted for, by or on behalf of the Corporation and no negotiate paper shall be issued in its name, unless and except as authorized by the Board of Directors. Such authorization may be general or confined to specific instances. Any officer or agent of the Corporation thereunto so authorized may obtain loans and advances for the Corporation, and for such loans and advances may make, execute and deliver promissory notes, bonds or other evidences of indebtedness of the Corporation. Any officer or agent of the Corporation thereunto so authorized may pledge, hypothecate or transfer as security for the payment of any and all loans, advances, indebtedness and liabilities of the Corporation, any and all stocks, bonds, other securities and other personal property at any time held by the Corporation, and to that end may endorse, assign and deliver the same and do every act and thing necessary or proper in connection therewith. Section 5.3 Deposits. All funds of the Corporation not otherwise -------- employed shall be deposited from time to time to its credit in such banks or trust companies or with such bankers or other depositaries as the Board of Directors may select, and as may be selected by any officer or officers or agent or agents authorized so to do by the Board of Directors. Endorsements for deposit to the Corporation in any of its duly authorized depositaries shall be made in such manner as the Board of Directors from time to time may determine. - 13 - Section 5.4 Checks. Drafts. etc. All checks, drafts or other orders for ------------------- the payment of money, and all notes or other evidences of indebtedness issued in the name of the Corporation, shall be signed by such officer or officers or agent or agents of the Corporation, and in such manner, as from time to time shall be determined by the Board of Directors. Section 5.5 Proxies. Proxies to vote with respect to shares of stock of ------- other corporations owned by or standing in the name of the Corporation may be executed and delivered from time to time on behalf of the Corporation by the Chief Executive Officer or by any other person or persons thereunto authorized by the Board of Directors. ARTICLE VI ---------- RECORD DATES ------------ Section 6.1 In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall be not more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. Only those stockholders of record on the date so fixed shall be entitled to any of the foregoing rights, notwithstanding the transfer of any such stock on the books of the Corporation after any such record date fixed by the Board of Directors. ARTICLE VII ----------- CORPORATE SEAL -------------- Section 7.1 The corporate seal shall be circular in form and shall bear the name of the Corporation and words and figures denoting its organization under the laws of the State of Delaware and the year thereof and otherwise shall be in such form as shall be approved from time to time by the Board of Directors. - 14 - ARTICLE VIII ------------ AMENDMENTS ---------- Section 8.1 Except as otherwise provided in Sections 1.2 and 2.5 hereof, the Bylaws of the Corporation may be amended, altered or repealed, and new Bylaws may be made by the affirma tive vote of the holders of record of a majority of the outstanding shares of stock of the Corporation entitled to vote cast at any annual or special meeting, or by the affirmative vote of a majority of the directors cast at any regular or special meeting at which a quorum is present. ARTICLE IX ---------- INDEMNIFICATION --------------- Section 9.1 The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened pending, or completed action, suit, or proceeding, whether civil, criminal, administrative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees), judgments incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Section 9.2 The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation except that no indemnification shall be made in respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. - 15 - Section 9.3 To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections 9.1 or 9.2 or in defense of any claim, issue or matter therein, he shall be indemnified against expense (including attorneys' fees) actually and reasonably incurred by him in connection therewith. Section 9.4 Any indemnification under subsections 9.1 or 9.2 (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in subsections 9.1 and 9.2. Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by stockholders. Section 9.5 Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of any undertaking by or on behalf of the director, officer, employee or agent to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in this Article. Section 9.6 The indemnification and advancement of expenses provided by or granted pursuant to the other subsections of this Article shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. Section 9.7 The Corporation shall have power but may not be required to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article. Section 9.8 The indemnification and advancement of expenses provided by or granted pursuant to this Article shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such person. - 16 - ARTICLE X --------- BUSINESS OPPORTUNITY -------------------- Section 10.1 All business opportunities within areas of interest determined from time to time by the Board of Directors, as evidenced by resolutions appearing in the Corporation's minutes, which come to the attention of the officers, directors and other members of management of the Corporation, either individually or in their corporate capacity, shall be disclosed promptly to the Corporation and made available to it. The Board of Directors may accept or reject any business opportunity. Until such time as the Board of Directors has designated an area of interest by resolution appearing in the Corporation's minutes, the officers, directors and other members of management of the Corporation are free to engage in any undesignated areas of interest on their own and shall be free to continue a business existing prior to the time that such area of interest is designated by the Corporation. ARTICLE XI ---------- FISCAL YEAR ----------- Section 11.1 The fiscal year may be changed from time to time by resolution of the Board of Directors. Until a resolution of the directors is adopted fixing the fiscal year, the fiscal year of the Corporation shall end on September 30 of each year. ATTEST: /s/Robert Korman - ---------------------------------------- Secretary - 17 - EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS SEP-30-1997 OCT-01-1997 MAR-31-1997 1,672 0 2,867 29 1,518 7,044 12,834 3,026 23,724 2,855 0 0 0 337 18,128 23,724 13,295 13,295 4,375 12,105 0 0 111 1,190 476 714 0 0 0 714 0.11 0.10
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