<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(AMENDMENT NO. __)
Under the Securities Exchange Act of 1934
SPECIALTY CATALOG CORP.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $0.01 per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
84748Q-10-3
- --------------------------------------------------------------------------------
(CUSIP Number)
Jeffrey S. Tullman, Esq.
1350 Avenue of the Americas
New York, New York 10019
(212) 541-6222
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
December 2, 1999
- --------------------------------------------------------------------------------
(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 ss.ss. 240.13d-1(e), 240.13d- 1(f) or 240.13d-1(g), check
the following box / x /.
*The remainder of this cover page shall be filed out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
- --------------------- ------------------
CUSIP NO. 84748Q-10-3 Page 2 of 16 Pages
- --------------------- ------------------
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1 First Global Holdings Limited
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
N/A (b)[ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(E) [ ]
- --------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Organized under the laws of the British Virgin Islands
- --------------------------------------------------------------------------------
SOLE VOTING POWER
7
0
-------------------------------------------------------------------
NUMBER OF SHARED VOTING POWER
SHARES 8
BENEFICIALLY 244,655
OWNED BY -------------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
REPORTING
PERSON 9 244,655 (subject to the restrictions contained in a
WITH stockholders' agreement more fully described herein)
-------------------------------------------------------------------
SHARED DISPOSITIVE POWER
10
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
733,966
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
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CUSIP NO. 84748Q-10-3 Page 3 of 16 Pages
- --------------------- ------------------
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1 Oracle Investments & Holdings Limited
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
N/A (b)[ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(E) [ ]
- --------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Organized under the laws of the British Virgin Islands
- --------------------------------------------------------------------------------
SOLE VOTING POWER
7
0
-------------------------------------------------------------------
NUMBER OF SHARED VOTING POWER
SHARES 8
BENEFICIALLY 244,656
OWNED BY -------------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
REPORTING
PERSON 9 244,656 (subject to the restrictions contained in a
WITH stockholders' agreement more fully described herein)
-------------------------------------------------------------------
SHARED DISPOSITIVE POWER
10
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
733,966
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
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CUSIP NO. 84748Q-10-3 Page 4 of 16 Pages
- --------------------- ------------------
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1 Ionic Holdings LDC
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
N/A (b)[ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(E) [ ]
- --------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Organized under the laws of the Cayman Islands
- --------------------------------------------------------------------------------
SOLE VOTING POWER
7
0
-------------------------------------------------------------------
NUMBER OF SHARED VOTING POWER
SHARES 8
BENEFICIALLY 244,655
OWNED BY -------------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
REPORTING
PERSON 9 244,655 (subject to the restrictions contained in a
WITH stockholders' agreement more fully described herein)
-------------------------------------------------------------------
SHARED DISPOSITIVE POWER
10
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
733,966
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
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CUSIP NO. 84748Q-10-3 Page 5 of 16 Pages
- --------------------- ------------------
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1 Marion Naggar's Children Settlement Trust
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
N/A (b)[ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(E) [ ]
- --------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Organized under the laws of England and Wales
- --------------------------------------------------------------------------------
SOLE VOTING POWER
7
0
-------------------------------------------------------------------
NUMBER OF SHARED VOTING POWER
SHARES 8
BENEFICIALLY 733,966
OWNED BY -------------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
REPORTING
PERSON 9 0
WITH -------------------------------------------------------------------
SHARED DISPOSITIVE POWER
10
733,966
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
733,966
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
- --------------------- ------------------
CUSIP NO. 84748Q-10-3 Page 6 of 16 Pages
- --------------------- ------------------
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1 Abacus (CI) Limited
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
N/A (b)[ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
N/A
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(E) [ ]
- --------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Organized under the laws of Jersey
- --------------------------------------------------------------------------------
SOLE VOTING POWER
7
0
-------------------------------------------------------------------
NUMBER OF SHARED VOTING POWER
SHARES 8
BENEFICIALLY 733,966
OWNED BY -------------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
REPORTING
PERSON 9 0
WITH -------------------------------------------------------------------
SHARED DISPOSITIVE POWER
10
733,966
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
733,966
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
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CUSIP NO. 84748Q-10-3 Page 7 of 16 Pages
- --------------------- ------------------
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
- --------------------------------------------------------------------------------
1 Abacus Trustees (Jersey) Limited
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
N/A (b)[ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
N/A
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(E) [ ]
- --------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Organized under the laws of Jersey
- --------------------------------------------------------------------------------
SOLE VOTING POWER
7
0
-------------------------------------------------------------------
NUMBER OF SHARED VOTING POWER
SHARES 8
BENEFICIALLY 733,966
OWNED BY -------------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
REPORTING
PERSON 9 0
WITH -------------------------------------------------------------------
SHARED DISPOSITIVE POWER
10
733,966
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
733,966
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Information contained in this statement on Schedule 13D is as of the date
hereof, unless otherwise expressly provided herein.
Item 1. Security and Issuer.
(i) Name and Issuer: Specialty Catalog Corp.
(ii) Address of the Principal Executive Offices of Issuer: 31
Bristol Drive, South Easton, MA 02375.
(iii) Title of Class of Equity Securities to which this Statement
relates: Common Stock, $0.01 par value (the "Common Stock").
Item 2. Identity and Background.
(a) This statement is being filed on behalf of First Global
Holdings Limited ("First Global"), Oracle Investments &
Holdings Limited ("Oracle"), Ionic Holdings LDC ("Ionic"),
Marion Naggar's Children Settlement Trust (the "Trust"),
Abacus (CI) Limited, in its capacity as trustee of the Trust
and Abacus Trustees (Jersey) Limited, in its capacity as
trustee of the Trust (collectively the "Reporting Persons").
(b) The address of First Global, Oracle, and the Trust is:
Geneva Place
2nd Floor
Wickham's Cay
P.O. Box 3339
Road Town
Tortola
British Virgin Islands
The address of Ionic is:
Butterfield House
Fort Street
Box 219
George Town, Grand Cayman
Cayman Islands
The address of Abacus (CI) Limited and Abacus Trustees
(Jersey) Limited is:
La Motte Chambers
St Helier
Jersey Channel Islands
JE1 1BJ
(c) The Trust was formed for the benefit of Marion Naggar's
children. Marian is not a beneficiary or trustee of the Trust.
First Global, Oracle and Ionic are investment vehicles for the
Trust. Abacus (CI) Limited and Abacus Trustees (Jersey)
Limited
<PAGE>
are the trustees of the Trust.
(d)(e) During the last five years, the Reporting Persons (i) have not
been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) and (ii) have not been a
party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such
proceeding was or is subject to 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) Each of Oracle and First Global were organized under the laws
of the British Virgin Islands. Ionic was organized under the
laws of the Cayman Islands. The Trust was organized under the
laws of England and Wales. Abacus (CI) Limited and Abacus
Trustees (Jersey) Limited are organized under the laws of
Jersey.
Item 3. Source and Amount of Funds or Other Consideration.
This filing does not relate to a purchase of the Company's Common
Stock. The Reporting Persons shareholdings were previously reported on a
Schedule 13G filed on February 17, 1999. The purpose of this filing is report
the existence of a stockholders' agreement and the existence of a proposed
extraordinary corporate transaction, in which certain of the Reporting Persons
may participate.
Item 4. Purpose of Transaction.
As indicated, this filing does not relate to a purchase of the
Company's Common Stock. The Reporting Persons have initially held their shares
of Common Stock for investment purposes. More recently, Golub Associates
Incorporated ("GAI") and certain related parties have engaged in discussion with
the Company, its management and Board of Directors concerning alternative
transactions that could result in a change of ownership or structure of the
Company. On December 2, 1999, GAI and the Company entered into a letter
agreement (the "Letter Agreement") pursuant to which an entity to be formed by
GAI, its affiliates and certain other participants would acquire the Company in
a merger or similar transaction (the "Acquisition"), whereby the Issuer's
shareholders would receive cash consideration of $5.00 per share upon the
consummation of the Acquisition. The Acquisition would result in the Company
becoming privately owned, and its Common Stock no longer being publicly traded.
The Acquisition is expected to result in substantial changes in the composition
of the Board of Directors.
First Global, Oracle and Ionic entered into a stockholders' agreement
(the "Stockholders' Agreement") with GAI pursuant to which each of the Reporting
Persons has agreed, among other things, to vote its shares of Common Stock in
favor of the Acquisition and not to transfer its shares of Common Stock during
the term of the Stockholders' Agreement. First Global and Oracle expect to
participate with GAI in the Acquisition. Ionic does not expect to participate in
the Acquisition and will sell its shares of Common Stock for cash if the
Acquisition is consummated
Item 5. Interest in Securities of the Issuer.
<PAGE>
(a) The Reporting Persons beneficially own an aggregate of 733,966
shares of the Company's Common Stock, or 16.9% based on
4,351,386 shares of Common Stock outstanding as disclosed in
the Company's Form 10-Q for the quarter ended September 30,
1999 as filed with the Securities and Exchange Commission.
(b) First Global has shared voting power (pursuant to the terms of
the Stockholders' Agreement) to vote 244,655 shares of Common
Stock and sold dispositive power subject to the terms of the
Stockholders' Agreement. Oracle has shared voting power
(pursuant to the terms of the Stockholders' Agreement) to vote
244,656 shares of Common Stock and sold dispositive power
subject to the terms of the Stockholders' Agreement. Ionic has
shared voting power (pursuant to the terms of the
Stockholders' Agreement) to vote 244,655 shares of Common
Stock and sold dispositive power subject to the terms of the
Stockholders' Agreement. The Trust may be deemed to have
shared voting and dispositive power because it is the sole
shareholder of First Global, Oracle and Ionic. Abacus (CI)
Limited and Abacus Trustees (Jersey) Limited may be deemed to
have shared voting and dispositive power in their capacity as
the trustees of the Trust.
(c) None.
(d) None.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with respect
to Securities of the Issuer.
In connection with the execution of the Letter Agreement, Steven L.
Bock ("Bock"), Samuel L. Katz ("Katz"), Martin E. Franklin, Guy Naggar
("Naggar"), First Global Holdings Limited ("First Global"), Oracle Investments &
Holdings Limited ("Oracle") and Ionic Holdings LDC ("Ionic") (collectively, the
"Stockholders", and each singly, a "Stockholder") each entered into a
Stockholders Agreement with Golub. Such Stockholders Agreement provides,
generally, that the Reporting Person and each of the other Stockholders will
vote and otherwise commit his or its shares to support the Acquisition,
including to approve any definitive merger agreement, or similar definitive
purchase agreement, pursuant to which the Acquisition will be accomplished.
Pursuant to the Stockholders Agreement, the Reporting Persons also agreed not to
dispose of their shares of Common Stock during the pendency of the Acquisition,
and have agreed that, once the definitive merger agreement is entered into, it
will not support any alternative acquisition proposal. All of the shares held by
the reporting person are subject to the terms of the Stockholder's Agreement. A
copy of the Stockholder's Agreement is attached hereto as Exhibit A. A copy of
the Letter Agreement is annexed as Exhibit B.
It is expected that Oracle and First Holdings will participate with
Golub in the Acquisition of the Company, by directly or indirectly contributing
a portion of their current ownership interests or the proceeds thereof to the
acquiring company, or otherwise obtaining an equity interest the surviving
company. The terms and conditions of such arrangements are the subject of
ongoing
<PAGE>
discussions and negotiations. Ionic does not expect to participate with Golub in
the Acquisition.
Item 7. Material to Be Filed as Exhibits
Stockholders Agreement, dated December 2, 1999, among Steven L. Bock,
Samuel L. Katz , Martin E. Franklin, First Global Holdings Limited, Oracle
Investments & Holdings Limited and Ionic Holdings LDC, is annexed hereto as
Exhibit A. Letter Agreement dated December, 2, 1999 between the Company and
Golub Associates Incorporated, is annexed hereto as Exhibit B.
<PAGE>
SIGNATURE
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.
Date: December 7, 1999
First Global Holdings Limited
By: /s/ W. T. Wilson
-----------------------------
Name: W. T. Wilson
Title: Director
<PAGE>
SIGNATURE
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.
Date: December 7, 1999
Ionic Holdings LDC
By: /s/ W. T. Wilson
-----------------------------
Name: W. T. Wilson
Title: Director
<PAGE>
SIGNATURE
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.
Date: December 7, 1999
Oracle Investments & Holdings Limited
By: /s/ W. T. Wilson
------------------------------------
Name: W. T. Wilson
Title: Director
<PAGE>
SIGNATURE
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.
Date: December 7, 1999
Marion Naggar's Children Settlement Trust
By: /s/ W. T. Wilson
-------------------------------------------
Name: W. T. Wilson
Title: Director,
Abacus (CI) Limited and
Abacus Trustees (Jersey) Limited
<PAGE>
SIGNATURE
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.
Date: December 7, 1999 Abacus Trustees (Jersey) Limited
By: /s/ W. T. Wilson
---------------------------------
Name: W. T. Wilson
Title: Director
#67113.1
<PAGE>
SIGNATURE
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.
Date: December 7, 1999 Abacus (CI) Limited
By: /s/ W. T. Wilson
------------------------------
Name: W. T. Wilson
Title: Director
<PAGE>
EXHIBIT A
<PAGE>
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDER AGREEMENT (this "Agreement") is made and entered into
as of December 2, 1999, by and among Golub Associates Incorporated, a Delaware
corporation and Steven L. Bock, Samuel L. Katz, Martin Franklin, Guy Naggar,
First Global Holdings Limited, Oracle Investments & Holdings Limited, and Ionic
Holdings LDC (collectively the "Stockholders," and each singly, a
"Stockholder").
WHEREAS, the Stockholders desire that a corporation ("Newco") formed by
Golub Associates Incorporated ("GAI"), its affiliates and certain other
participants (Newco, and the parties organizing Newco, are herein individually
and collectively referred to as the "Buyer") and Specialty Catalog Corp., a
Delaware corporation (the "Company"), enter into a Letter Agreement dated
December1, 1999 (as the same may be amended or supplemented, the "Letter
Agreement") with respect to the acquisition of the Company by Newco in a merger
or by other means (the "Acquisition"); and
WHEREAS, the Stockholders are executing this Agreement as an inducement
to GAI, on behalf of the Buyer, to enter into and execute the Letter Agreement;
NOW, THEREFORE, in consideration of the execution and delivery by GAI
of the Letter Agreement, and the mutual covenants, conditions and agreements
contained herein and therein, the parties agree as follows:
1. Representations and Warranties. Each Stockholder represents and
warrants to Buyer, as and with respect to such Stockholder and only such
Stockholder (the Stockholder making such representations and warranties being
sometimes referred to herein as, the "Stockholder"), as follows:
(a) The Stockholder is the record and beneficial owner of the number of
shares (the "Stockholder's Shares") of capital stock, $0.01 par value of the
Company ("Company Capital Stock") set forth below such Stockholder's name on
Schedule 1 attached hereto. This Agreement has been duly authorized, executed
and delivered by, and constitutes a valid and binding agreement of, the
Stockholder, enforceable in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws of general application respecting creditors' rights and by
general equitable principles.
(b) Neither the execution and delivery of this Agreement nor the
consummation by the Stockholder of the transactions contemplated hereby will
result in a violation of, or a default under, or conflict with, any contract,
trust, commitment, agreement, understanding, arrangement or restriction of any
kind to which the Stockholder is a party or bound or to which the Stockholder's
Shares are subject. If the Stockholder is married and the Stockholder's Shares
constitute community property, this Agreement has been duly authorized, executed
and delivered by, and constitutes a valid and binding agreement of, the
Stockholder's spouse, enforceable against such person in accordance with its
terms. To the knowledge of the Stockholder,
<PAGE>
consummation by the Stockholder of the transactions contemplated hereby will not
violate, or require any consent, approval, or notice under, any provision of any
judgment, order, decree, statute, law, rule or regulation applicable to the
Stockholder or the Stockholder's Shares, excepting only certain disclosures and
filings required under applicable securities laws.
(c) The Stockholder Shares and the certificates representing the
Stockholder's Shares are now, and at all times during the term hereof will be,
held by the Stockholder, or by a nominee or custodian for the benefit of such
Stockholder, free and clear of all liens, security interests, proxies, voting
trusts or voting agreements or any other encumbrances whatsoever, except for any
such encumbrances or proxies arising hereunder or under securities laws.
(d) To the knowledge of the Stockholder, no broker, investment banker,
financial adviser or other person is entitled to any broker's, finder's,
financial adviser's or similar fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
the Stockholder.
(e) The Stockholder understands and acknowledges that GAI, on behalf of
itself, Newco and Buyer, is entering into the Letter Agreement in reliance upon
the Stockholder's execution and delivery of this Agreement. The Stockholder
acknowledges that the irrevocable proxy set forth in Section 4 is granted in
consideration for the execution and delivery of the Letter Agreement by GAI on
behalf of itself, Newco and the Buyer.
2. Voting Agreements. Each Stockholder agrees with, and covenants to
Buyer that, from and after the time that any Definitive Merger Agreement or
similar definitive acquisition agreement is agreed to or recommended by the
Board of Directors, at any meeting of stockholders of the Company called to vote
upon the Acquisition contemplated by the Letter Agreement, or at any adjournment
thereof, or in any other circumstances upon which a vote, consent or other
approval with respect to the Acquisition, or approval of the Definitive Merger
Agreement or any other agreement or action related to the Acquisition, is sought
(the "Stockholders' Meeting"), the Stockholder shall vote (or cause to be voted)
the Stockholder's Shares (including any shares subject to exercisable options)
in favor of the Acquisition, the execution and delivery by Company of the
Definitive Merger Agreement or similar agreement or action necessary to
consummate the Acquisition, and approval of each and any other action or
transaction necessary or helpful to consummate the Acquisition or which may be
contemplated by the Letter Agreement, and Stockholder agrees that no Stockholder
Shares shall be voted in favor, tendered into, or otherwise used or committed in
any way to any action, vote or transaction that is competitive to the
Acquisition or which would hinder the consummation of the Acquisition in any
way. In the event that the Acquisition is to be consummated by a tender offer
commenced by the Buyer, or by a means other than merger as set forth in the
Letter Agreement, the Stockholder shall tender the Stockholder's Shares in favor
of Buyer, or to take such other action requested by Newco as reasonably
necessary to consummate the Acquisition.
3. Restrictions on Transfer.
Each Stockholder agrees with, and covenants to, Buyer that during the
term hereof such Stockholder shall not (i) transfer (which term shall include,
without limitation, for the purposes
2
<PAGE>
of this Agreement, any sale, gift, pledge or other disposition), or consent to
any transfer of, any or all of the Stockholder's Shares or any interest therein,
except pursuant to the Acquisition; (ii) enter into any contract, option or
other agreement or understanding with respect to any transfer of any or all of
the Stockholder's Shares or any interest therein; (iii) grant any proxy, power
of attorney or other authorization in or with respect to such shares, except for
as set forth in this Agreement; (iv) deposit such shares into a voting trust or
enter into a voting agreement or arrangement with respect to such shares; (v)
initiate, solicit or request, or take any action to facilitate the making of,
any offer or proposal which constitutes or is reasonably likely to lead to a
Business Combination other than the transactions contemplated by the Letter
Agreement, or (vi) engage in negotiations or discussions with any other party
relating to the acquisition or voting of the Stockholder Shares in connection
with any competing proposal for a Business Combination other than the
Acquisition, provided that subsections ((v) and (vi) hereof shall not be
construed to limit the Stockholder in the performance of his fiduciary duties as
an officer, Director or employee of the Company; and further, provided, that the
Stockholder may transfer (as defined above) any of the Stockholder's Shares to
any other person or entity who is on the date hereof, or to any family member of
a person or to any charitable institution which prior to the Stockholders
Meeting and prior to such transfer becomes, a party to this Agreement bound by
all the obligations of the "Stockholder" hereunder. This Section 3 shall not
apply to sales of Company shares in the open market, or in privately negotiated
transactions with respect to Stockholder Shares beneficially owned by Samuel L.
Katz, so long as such sale is not to a party known to have made or to be
actively considering a Business Combination which is competitive to the
Acquisition.
4. Grant of Irrevocable Proxy; Appointment of Proxy.
(a) Effective upon execution of a definitive Merger Agreement, or
similar definitive acquisition agreement with the Company, each Stockholder
hereby irrevocably grants to, and appoints, GAI, Lawrence E. Golub ("Golub") in
his capacity as President of GAI, and any individual who is designated by GAI,
the Stockholder's proxy and attorney-in-fact (with full power of substitution),
for and in the name, place and stead of the Stockholder, to vote the
Stockholder's Shares, or grant a consent or approval in respect of the
Stockholder's Shares in favor of the Acquisition, the execution and delivery of
the Letter Agreement and the Definitive Merger Agreement, or any other matter
necessary to consummate the Acquisition, the approval of the terms thereof and
each of the other transactions contemplated by such agreements and any other
actions required to consummate the Acquisition, the approval of the terms
thereof and each of the other transactions contemplated by such agreements and
any other actions reasonably deemed necessary by Buyer to consummate the
Acquisition, and to otherwise effectuate the agreements set forth herein.
(b) Each Stockholder represents that any proxies heretofore given in
respect of the Stockholder's Shares are not irrevocable, and that any such
proxies are hereby revoked.
(c) Each Stockholder hereby affirms that the irrevocable proxy set
forth in this Section 4 is given in connection with the execution of the Letter
Agreement, and that such irrevocable proxy is coupled with an interest
sufficient in law to support an irrevocable power of attorney and except as
permitted herein may under no circumstances be revoked. Each
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Stockholder hereby ratifies and confirms all that such irrevocable proxy may
lawfully do or cause to be done by virtue hereof. Such irrevocable proxy is
executed and intended to be irrevocable in accordance with the provisions of
Section 212 of the Delaware Business Corporation Law.
5. Certain Events. Each Stockholder agrees that this Agreement and the
obligations hereunder shall attach to the Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of any
or all of the Stockholder's Shares shall pass, whether by operation of law or
otherwise, including without limitation the Stockholder's successors or assigns.
In the event of any stock split, stock dividends, merger, reorganization,
recapitalization or other change in the capital structure of the Company
affecting the Company Capital Stock, or the acquisition of additional shares of
Company Capital Stock or other voting securities of the Company by any
Stockholder, the number of the Stockholder's Shares subject to the terms of this
Agreement shall be adjusted appropriately and this Agreement and the obligations
hereunder shall attach to any additional shares of Company Capital Stock or
other voting securities of Company issued to or acquired by the Stockholder.
6. Legends. Each Stockholder (other than Katz) agrees that at the
request of the Buyer such Stockholder will place a legend, referring to this
Agreement and in a form reasonably satisfactory to the Buyer, or the
certificates representing such Stockholder's Shares.
7. Further Assurances. Each Stockholder shall, upon request of Buyer,
execute and deliver any additional documents and take such further actions as
may reasonably be deemed by Buyer to be necessary or desirable to carry out the
provisions hereof and to vest the power to vote the Stockholder's Shares as
contemplated by Section 4 in Buyer and the other irrevocable proxies described
therein at the expense of Buyer.
8. Termination. Unless earlier terminated by mutual consent of the
parties hereto, this Agreement shall expire (the "Termination Date"), and all
obligations of the Stockholders shall terminate, upon the later of (i) the
termination of the Letter Agreement, and (ii) as of the date of termination of
the Definitive Merger Agreement, or similar definitive agreement pursuant to
which the Acquisition is to be accomplished. Unless earlier terminated by mutual
consent of the parties hereto or otherwise as set forth in the preceding
sentence, this Agreement shall expire with respect to Steven L. Bock ("Bock")
and all obligations of Bock hereunder shall terminate in the event that (a)
Buyer and Bock shall not have entered into a definitive employment agreement
respecting Bock's employment on or prior to the date that Buyer and Company
shall enter into a Definitive Merger Agreement, or (b) this Agreement shall
expire or terminate for any reason with any other signatory to this Agreement
(other than Samuel L. Katz) as a Stockholder.
9. Costs. If any party institutes an action for the enforcement of this
Agreement, the prevailing party shall be entitled to reimbursement on demand of
all costs and expenses of such action including reasonable legal fees. Buyer
acknowledges that the Company shall pay all of Stockholders' expenses related to
the negotiation and execution of this Agreement.
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<PAGE>
10. Miscellaneous.
(a) Capitalized terms used and not otherwise defined in this Agreement
shall have the respective meanings assigned to them in the Letter Agreement.
(b) All notices, requests, claims, demands and other communications
under this Agreement shall be in writing and shall be deemed given if delivered
personally or sent by overnight courier (providing proof of delivery) to the
parties at the following addresses (or at such other address for any party as
shall be specified by like notice); (i) if to Buyer, to the address provided in
the Letter Agreement; and (ii) if to a Stockholder, to its address shown below
its signature on the last page hereof.
(c) The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
(d) This Agreement may be executed in two or more counterparts, each of
which shall be considered an original hereof and one and the same agreement.
(e) This Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement, and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof.
(f) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.
(g) Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise, by any of the parties without the prior written
consent of the other parties, except as expressly contemplated by the proviso to
Section 3. Any assignment in violation of the foregoing shall be void.
(h) Each Stockholder agrees that irreparable damage would occur and
that Buyer would not have any adequate remedy at law in the event that any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that Buyer
shall be entitled to an injunction or injunctions to prevent breaches by any
Stockholder of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any court, this being in addition to any other
remedy to which Buyer is entitled at law or in equity. In addition, each of the
parties hereto (i) consents to submit such party to the personal jurisdiction of
any Federal court located in the State of Delaware or any Delaware state court
in the event any dispute arises out of this Agreement or any of the transactions
contemplated hereby, (ii) agrees that such party will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court and (iii) agrees that such party will not bring any action relating
to this Agreement or any of the transactions contemplated hereby in any court
other than a Federal court sitting in the State of Delaware or a Delaware state
court, unless the party against whom such action is being brought
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<PAGE>
is unavailable for service of process in the State of Delaware or such party
attempts to deny or defeat such personal jurisdiction. The foregoing remedies
are in addition to, and not in lieu of, any payment required to be made by the
Company pursuant to the terms of the Letter Agreement.
(i) If any term, provision, covenant or restriction herein, or the
application thereof to any circumstances, shall, to any extent, be held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions herein and the
application thereof to any other circumstances, shall remain in full force and
effect, shall not in any way be affected, impaired or invalidated, and shall be
enforced to the fullest extent permitted by law.
(j) No amendment, modification or waiver in respect of this Agreement
shall be effective against any party unless it shall be in writing and signed by
such party.
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IN WITNESS WHEREOF, the undersigned parties have executed and delivered
this Agreement as of the day and year first above written.
GOLUB ASSOCIATES INCORPORATED
By:
------------------------------
Name: Lawrence E. Golub
Title: President
Golub Associates Incorporated
230 Park Avenue, 19th Floor
New York, NY 10169
STOCKHOLDERS:
MARION NAGGAR CHILDREN
SETTLEMENT TRUST ------------------------------
Steven L. Bock, individually
By: c/o Specialty Catalog
---------------------------- 21 Bristol Drive
Name: South Easton, Massachusetts 02375
Title:
FIRST HOLDINGS GLOBAL ------------------------------
LIMITED Guy Naggar, individually
c/o Dawnay, Day & Co. Ltd.
15 Grosvenor Gardens
By: London, England SW1W0BD
-----------------------------
Name:
Title:
------------------------------
ORACLE INVESTMENTS & Samuel L. Katz, individually
HOLDINGS LIMITED c/o Cendant Corporation
9 West 57th Street
New York, New York 10019
By:
-----------------------------
Name:
Title: ------------------------------
Martin E. Franklin, individually
IONIC HOLDINGS LDC c/o Lumen Technologies, Inc.
555 Theodore Fremd Ave.
By: Rye, New York 10580
-----------------------------
Name:
Title:
AGREED TO AS TO PARAGRAPH 9:
Specialty Catalog Corp.
By:
-----------------------------
Name:
Title:
7
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SCHEDULE 1
STOCKHOLDERS
Steven L. Bock 472,160(1)
Guy Naggar 404,700(2)
First Global Holdings Limited 244,655(3)
Oracle Investments & Holdings Limited 244,656(3)
Ionic Holdings LDC 244,655(3)
Samuel L. Katz 93,608(4)
Martin E. Franklin 231,221(5)
(1) Includes 310,226 shares of common Stock underlying stock options which
became exercisable upon the consummation of the Company's initial public
offering at a price of $.3056 per share; 30,000 shares of Common Stock
underlying stock options which are exercisable at a price of $5.33 per share;
and 32,000 shares of Common Stock underlying stock options under the 1996 Stock
Incentive Plan (the "Plan") which are exercisable at a price of $6.50 per share.
(2) Includes 401,667 shares of Common Stock which was the amount attributed to
the shareholder and received by him upon dissolution of Viking Holdings Limited,
includes 3,033 shares of Common Stock underlying stock options issued under the
Plan which are issued under the Plan which are exercisable at a price of $6.50
per share.
(3) The Marion Naggar's Children Settlement Trust is the sole shareholder of
each of Oracle Investments & Holdings Limited, First Global Holdings Limited and
Ionic Holdings LDC, and may be deemed the beneficial owner of the aggregate
733,966 shares.
(4) Includes 3,033 shares of Common Stock underlying stock options issued under
the Plan which are exercisable at a price of $6.50 per share.
(5) Includes 3,033 shares of Common Stock underlying stock options issued under
the plan which are exercisable at an exercise price of $6.50 per share.
8
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EXHIBIT B
<PAGE>
Golub Associates Incorporated
230 Park Avenue
New York, N.Y. 10069
December 2, 1999
Board of Directors of
Specialty Catalog Corp.
21 Bristol Drive
South Easton, MA
Dear Members of the Board:
We are pleased to submit a proposal to Specialty Catalog Corp. (the
"Company") and its shareholders pursuant to which a corporation ("Newco") formed
by Golub Associates Incorporated, its affiliates and certain other participants
will acquire the Company in a merger (the "Acquisition"). Newco, and the parties
organizing Newco, are herein individually and collectively referred to as the
"Buyer." The cash consideration payable to the shareholders at the closing of
the Acquisition (the "Closing") would be $5.00 per share. Outstanding options
with an exercise price of less than $5.00 per share will be purchased at their
net value, computed as an amount equal to the cash consideration minus the
exercise price per share. We have set forth below the essential structure and
conditions of our proposal.
1. Structure and Merger Agreement. The transaction would be consummated
pursuant to a Definitive Merger Agreement which would contain standard
representations and warranties, conditions to closing, and customary exclusivity
and similar provisions including but not limited to expense reimbursement and
break-up provisions comparable to those set forth in Paragraph 5 hereof. In the
Acquisition, Newco and the Company would merge, and all Company Common Stock
held by non-continuing stockholders would be converted into the right to receive
cash in the amount of the cash consideration. Simultaneously with execution of
the Definitive Merger Agreement, the Company would grant to Newco an option to
purchase shares of Common Stock at a price equal to the cash consideration.
Filing of proxy material and other required SEC and governmental filings would
be made promptly after execution of the Definitive Merger Agreement.
2. Financing. Funds necessary to consummate the Acquisition and to pay
related transaction expenses will be provided from (a) senior bank and
subordinated debt facilities made available to us by one or more lenders with
which we have already discussed this transaction, and (b) equity contributions
to Newco from the Buyer. Based on our experience and on our continuing
discussions with potential lenders, we are comfortable in our ability to obtain
the necessary financing to consummate the Acquisition. Letters evidencing the
availability of such financing will be provided prior to execution of the
Definitive Merger Agreement.
<PAGE>
3. Management and Participation. The retention of key senior management
will be an essential ingredient to the completion of the Acquisition, and we
require the commitment of Steven L. Bock, the current Chief Executive Officer,
to remain with the Company until and after the Closing. We believe that the
Acquisition offers management the opportunity to provide enhanced value to
Company shareholders, and thereafter play a substantial role in growing the
business and executing the Company's long-term strategic plans. The precise
terms and level of management participation will be defined in discussions with
Steven L. Bock and certain other members of management, which we would expect to
be concluded prior to execution of the Definitive Merger Agreement.
4. Conditions. Completion of the Acquisition is subject to the
satisfaction of the following principal conditions:
(a) the negotiation and execution of a Definitive Merger Agreement,
satisfactory in form and substance to Newco and the Company, and the
satisfaction or waiver of all conditions precedent contained therein, including
that Steven L. Bock is able and willing to fulfill his agreement with Buyer to
remain with the Company after the Acquisition;
(b) the satisfactory completion prior to execution of the Definitive
Merger Agreement of Buyer's and its advisors' legal, business and accounting due
diligence investigations;
(c) the successful consummation of the financing transactions
referred to above on terms and conditions satisfactory to Buyer, and the receipt
by the surviving corporation of the proceeds thereof;
(d) the receipt of all necessary governmental approvals and receipt
by the Company of all necessary third party approvals, including, without
limitation, shareholder and board approvals; and
(e) the absence of any material adverse change in the business,
assets, condition (financial or otherwise) or prospects of the Company since
December 31, 1998, other than as may already be disclosed in the Company's SEC
reports or in schedules to the Definitive Merger Agreement.
5. Negotiations and Exclusivity. (a) In consideration of the
substantial expenditure of time, effort and expense to be undertaken by the
Buyer, Newco and their respective representatives following the execution and
delivery of this Letter Agreement, the Company hereby undertakes and agrees that
without the prior written consent of Buyer, during the period ending as of the
close of business on the thirtieth (30th) day following the execution of the
Letter Agreement by both parties hereto, as such period may be extended by the
parties' written agreement (the "Termination Date"), the Company will not, and
will not authorize or permit any of its affiliates or representatives to, take,
directly or indirectly, any action to initiate, assist,
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<PAGE>
solicit, negotiate, encourage, accept, provide information to, or otherwise
purse any offer or inquiry from any person or entity (a) to engage in any
Business Combination (as defined below) other than the transactions contemplated
hereby or (b) to negotiate, discuss or reach any agreement or understanding
(whether or not such agreement or understanding is absolute, revocable,
contingent or conditional) for, or otherwise attempt to consummate, any Business
Combination other than the transactions contemplated hereby; provided, however,
that the foregoing shall not prohibit the Company, after giving advance written
notice to the Buyer, from furnishing information concerning the Company or its
properties or assets pursuant to any appropriate and customary confidentiality
agreement to a third party who has made an unsolicited written proposal for a
Business Combination after the date hereof, or engaging in discussions or
negotiations with a third party who has made any such unsolicited proposal after
the date hereof but only if and to the extent that the Board of Directors of the
Company shall have concluded in good faith, after consulting with financial
advisors and considering the advice of outside counsel, that such action is
required by the Board of Directors of the Company in the exercise of its
fiduciary duties to the shareholders of the Company.
(b) In the event that the Company agrees to any Business Combination
with any party, or an affiliate of any party, with which the Company has contact
during the term of this Letter Agreement, whether or not under the authority of
this Paragraph 5, or any Business Combination which directly or indirectly
results from such contact (so long as it is agreed to within 180 days after the
Termination Date), then Buyer shall be entitled to (x) reimbursement of any and
all of its reasonable out of pocket expenses of any and all kinds that may have
been incurred by Buyer (whether before or after the date hereof) in connection
with this Letter Agreement or the anticipated transaction, and (y) a break-up
fee equal to five percent (5%) of the total enterprise value of such Business
Combination. Such expenses and break-up fee shall be paid by the Company to the
Buyer within five (5) business days following the later of the Termination Date,
or the date on which the Company agrees to enter into such other Business
Combination. Without limiting the foregoing, it is understood that any violation
of the restrictions set forth in this Paragraph 5 by any director or executive
officer of the Company or by any investment banker, financial advisor, attorney,
accountant, or other representative of the Company (whether or not an
alternative Business Combination is agreed to or consummated) shall be deemed to
be a breach of this paragraph 5 by the Company.
For purposes hereof, "Business Combination" means (i) any merger,
consolidation, business combination or similar transaction to which the Company
or any subsidiary thereof is a party or relating to the Company, any such
subsidiary or any assets of or interest in the Company or any such subsidiary or
any assets of or interest in the Company or any such subsidiary, or (ii) any
sale or other disposition of capital stock of, or other equity interests in, the
Company, in one or a series of transactions by the Company or by any other party
with the Company's approval or consent, pursuant to which any party becomes,
directly or indirectly the beneficial owner of at least 33% of the total issued
and outstanding Common Stock of the Company as of the date hereof, or any sale
or other disposition of capital stock of or other equity interests in any
subsidiary thereof or any sale, dividend or other disposition of all or any
material
3
<PAGE>
portion of the assets and properties of the Company or any such subsidiary.
6. Expenses.
(a) Except as set forth in Paragraph 5 above, or as set forth below,
each of the Buyer and the Company shall be responsible for their own expenses
incurred in connection with the transactions contemplated hereby; provided,
however, that in order to induce Buyer to engage in negotiations and due
diligence for the purpose of consummating the Acquisition, the Company agrees
that in the event the Acquisition is not consummated as a result of (i) a
material adverse event having occurred in the business, prospects or condition
of the Company which either (x) occurs after the execution hereof, or (y)
occurred prior hereto and was not either described in SEC reports filed as of
the date hereof or previously disclosed to Buyer in writing, or (ii) the refusal
of the Company to enter into a Definitive Merger Agreement generally on the
terms set forth herein and consistent with material terms customarily included
in agreements for the purchase of a public company, then the Company shall
reimburse the Buyer for Buyer's actual reasonable out of pocket expenses
(whether incurred before or after the date hereof), up to a maximum
reimbursement under this subsection (a) of $150,000.
(b) Each of the Buyer and the Company represents and warrants to the
other that (a) neither it nor any of its affiliates or representatives has
entered into any agreement or has had any discussion with any third party
regarding any transaction involving the Company or any subsidiary thereof that
could result in the other party hereto (or any of its affiliates or
representatives) having any liability to such third party as a result of
entering into this letter agreement or consummating the transactions
contemplated hereby, and (ii) no third party agent, broker, finder, investment
banker, financial advisor or other similar person or entity is entitled to any
fee, commission or other compensation in connection with the entering into of
this letter agreement. Each of Buyer and the Company shall indemnify, defend,
save and hold harmless the other (and its affiliates and representatives) from
and against any and all claims or liabilities resulting from any breach of the
foregoing representations and warranties, including any legal or other expenses
incurred in connection with the defense of any such claims.
7. Termination. Except for the expense reimbursement and break-up fee
provisions of Paragraph 5(b) and Paragraphs 6 and 9, this letter agreement will
automatically terminate and be of no further force or effect upon the earliest
of (a) the execution and delivery of the Definitive Merger Agreement, (b) the
mutual agreement of Buyer and the Company, and (c) the Termination Date.
Notwithstanding the immediately preceding sentence, the termination of this
letter agreement shall not affect any rights any party has with respect to the
breach of this letter agreement by another party prior to such termination.
8. Access to Information. Pursuant to appropriate confidentiality
agreements, the Company shall afford, and shall cause its affiliates, officers
and representatives to afford to Buyer, Newco and their prospective providers of
financing and each of their respective representatives, full and complete access
to the Company's properties, business, personnel and
4
<PAGE>
financial, legal, tax and other data and information as any of them may
reasonably request.
9. Legal Effect. This letter agreement is intended to constitute an
expression of the Company's and Buyer's mutual intent regarding the subject
matter hereof. Except as referred to or set forth in Paragraphs 5, 6, 7, 8, and
this Paragraph 9, neither Buyer nor the Company (nor any of their respective
affiliates or representatives) shall have any legally binding obligations,
rights or liabilities of any nature whatsoever to each other or to any other
persons or entities, whether pursuant to this letter agreement or relating to in
any manner to the transactions contemplated hereby or the consideration thereof.
Neither this letter agreement nor any party's execution hereof shall constitute
an obligation or commitment of any party to enter into the Definitive Merger
Agreement or give any party any rights or claims against another in the event
any party for any reason terminates negotiations to effect the transactions
contemplated hereby, other than in respect of claimed breaches of Paragraphs 5,
6, 7 , 8 and this Paragraph 9. All obligations or commitments to proceed with
the transactions contemplated hereby shall be contained only in the Definitive
Merger Agreement. This Letter Agreement shall be governed by the laws of the
State of Delaware without giving effect to any conflict of laws principles which
might indicate the applicability of the laws of any other State.
10. Public Disclosure. Except for such disclosure as may be necessary
for each party hereto to comply with the applicable securities or other law, as
reasonably determined by such party, neither party shall make any public
announcement, disclosure or press release relating to or disclosing the contents
hereof without providing the other party a copy of such proposed announcement or
press release a reasonable time prior to its dissemination, and obtaining the
consent of the other party, which consent shall not be unreasonably withheld.
The company and the Buyer agree that the press release attached hereto is
acceptable to both parties.
11. Process and Contacts. In order to complete this Letter Agreement
and proceed to the next steps toward the Acquisition, we would require the
Company's countersignature on this Letter Agreement, and, executed voting
agreements (the "Stockholders Agreement") from certain significant stockholders
assuring that their personal shareholdings will be committed and available to
support the Acquisition. Such Stockholders Agreement is attached hereto, and the
Company has informed us that the Board has authorized this Letter Agreement and
out entry into the Stockholders Agreement for purposes of complying with
Delaware Business Corporation Law Section 203, and similar statutory or other
provisions otherwise directly or indirectly limiting Buyer's beneficial
ownership. We propose that immediately following your agreement to proceed, we
will undertake due diligence, including due diligence necessary for financing
sources. As you know, since we are already familiar with the Company, we believe
that this part of the process can be completed quickly and with minimal
distraction to your management team. At the same time, our counsel and other
advisors will begin to work with the company to identify any other issues or
procedural steps necessary to complete the transaction as expeditiously as
possible.
Any questions related to this letter agreement may be directed to
the undersigned, or to
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our counsel, Joseph F. Mazzella, Esq. of Lanc Altman & Owens LLP, Boston,
Massachusetts. We look forward to working with you and the Company's management.
Very truly yours,
Golub Associates Incorporated
By:
-----------------------------------
Name: Lawrence E. Golub
Title: President
Accepted:
Specialty Catalog Corp.
By:
----------------------------
Name:
Title:
Dated: December 1, 1999
6
