<PAGE>
As filed with the Securities and Exchange Commission on , 1996
Registration No. _________
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
EASTCO INDUSTRIAL SAFETY CORP.
(Exact name of registrant as specified in its charter)
New York 5098 11-1874010
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification Number)
incorporation or Code Number)
organization)
130 West 10th Street
Huntington Station, New York 11746
(516) 427-1802
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive office)
Mr. Alan E. Densen
President
130 West 10th Street
Huntington Station, New York 11746
(516) 427-1802
(Name, address, including zip code, and telephone number
including area code, of agent for service)
Copies To:
Herbert W. Solomon, Esq. Lester Morse, Esq.
Seth I. Rubin, Esq. Steve Morse, Esq.
Hollenberg Levin Solomon Ross Lester Morse, P.C.
Belsky & Daniels, LLP 111 Great Neck Road
585 Stewart Avenue Great Neck, New York 11021
Garden City, New York 11530
(516) 745-6000 (516) 487-1446
fax (516) 745-6642 fax (516) 487-1452
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933 check the following box. [X]
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Maximum Maximum
Title of Each Class Amount Offering Aggregate Amount of
of Securities to to be Price Per Offering Registration
be Registered Registered(1) Unit (1) Price(1) Fee
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Rights, each right ("Right")
consisting of one share of
common stock (the "Common
Stock") and one class B
redeemable Common Stock
purchase warrant (the Class B
Warrants")(2)............ 703,591 ---- ---- ----
Common Stock issuable
upon exercise of Rights(2) 703,591 $5.00 $3,517,955.00 $1,231.28
Class B Warrants issuable
upon exercise of Rights(2)(3) 703,591 ---- ---- ----
Common Stock issuable
upon exercise of Class B
Warrants (3)............. 703,591 $6.25 $4,397,443.70 $1,539.11
Underwriter's Warrants... 70,359 $.0001 $7.04 $ 1.00
Common Stock and Class B
Warrants issuable
upon exercise of
Underwriter's Warrants(3) 70,359 $6.00 $ 422,154.00 $ 147.15
Class B Warrants issuable
upon exercise of Class B
Warrants................. 70,359 $6.25 $ 439,743.75 $ 153.91
Common Stock sellable by
Selling Stockholders..... 513,000 $8.00 $4,104,000.00 $1,436.40
Optional Units........... 300,000 $5.00 $1,500,000.00 $ 525.00
Common Stock issuable upon
exercise of Optional Units(3) 300,000 ---- ---- ----
Warrants issuable upon
exercise of Optional Units 300,000 ---- ---- ----
Common Stock issuable upon
exercise of Warrants
contained in Optional Units(3) 300,000 $6.25 $1,875,000.00 $ 656.25
------
Total ................................................................................................ $5,690.10
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
<PAGE>
(2) Includes unsubscribed Rights and Common Stock and Class B Warrants
which may be sold to Royce Investment Group, Inc. under the Standby
Agreement.
(3) Includes such undetermined additional shares as may become issuable
pursuant to the anti-dilution provisions of the Class B Warrants and
Underwriter's warrants and Optional Units.
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE>
EASTCO INDUSTRIAL SAFETY CORP.
Cross Reference Sheet Showing Location
in Prospectus of Information
Required by Items of Form SB-2
Item and Heading Location in Prospectus
1. Front of the Registration Cover Page of Prospectus
Statement and Outside Front
Cover Page of Prospectus
2. Inside Front and Outside Back Inside Front and Outside
Cover Pages of Prospectus Back Cover Pages of Prospectus
3. Summary Information and Prospectus Summary;
Risk Factors Risk Factors
4. Use of Proceeds Prospectus Summary;
Use of Proceeds
5. Determination of Offering Price Underwriting; Plan of Distribution(*)
6. Dilution Dilution
7. Selling Security Holders Concurrent Registration of Common
Stock; Selling Stockholders(*)
8. Plan of Distribution Plan of Distribution(*)
9. Legal Proceedings Business - Legal Proceedings
10. Directors, Executive Officers, Management
Promoters and Control Persons
11. Security Ownership of Certain Principal Shareholders
Beneficial Owners and Management
12. Description of Securities Description of Securities
13. Interest of Named Experts Legal Matters; Experts
and Counsel
14. Disclosure of Commission Management -
Position on Indemnification Indemnification of
for Securities Act Liabilities Directors and Executive Officers
15. Organization Within Last Five Not Applicable
Years
16. Description of Business Prospectus Summary; Business
17. Management's Discussion and Management's Discussion
Analysis or Plan of Operation and Analysis of Financial
Condition and Results of
Operations
18. Description of Property Business - Properties
19. Certain Relationships and Certain Transactions
Related Transactions
20. Market for Common Equity and Market Information;
Related Stockholder Matters Dividend Policy
21. Executive Compensation Management-Executive Compensation
22. Financial Statements Financial Statements
23. Changes in and Disagreements Not Applicable
with Accountants on Accounting
and Financial Disclosure
- ----------------------------------
* Selling Shareholders Prospectus Only
<PAGE>
EXPLANATORY NOTE
This Registration Statement contains two forms of prospectus: one to
be used in connection with an offering by the Company of Units, each
consisting of one share of Common Stock and one Class B Redeemable Common
Stock Purchase Warrant (the "Prospectus") and one to be used in connection
with the sale of Common Stock by certain selling shareholders (the "Selling
Shareholders Prospectus"). The Prospectus and the Selling Shareholders
Prospectus will be identical in all respects except for the alternate pages
for the Selling Shareholders Prospectus included herein which are labeled
"Alternate Page for Selling Shareholders Prospectus". [This Registration
Statement assumes: (i) a Subscription Price of $5.00 and an Exercise Price of
$6.25 per Warrant; (ii) the effectiveness of the Company's one-for-ten reverse
split being submitted to the shareholders of the Company for approval on
August 12, 1996; (iii) approval and authorization of the issuance of preferred
stock by the shareholders of the Company for approval on August 12, 1996; and
(iv) the approval of the 1996 Incentive Stock Option Plan and the 1996
Non-Qualified Stock Option Plan being submitted to the shareholders of the
Company for approval on August 12, 1996.]
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with
the Securities and Exchange Commission. These securities may not be sold
nor may offers to buy be accepted prior to the time the registration
statement becomes effective. This Prospectus shall not constitute an
offer to sell or the solicitation of an offer to buy nor shall there
be any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.
Subject to Completion Dated , 1996
703,591 Units
$5.00 per Unit
EASTCO INDUSTRIAL SAFETY CORP.
Each unit ("Unit") consists of one share of common stock $0.12 par
value ("Common Stock") and one Class B Redeemable Common Stock Purchase
Warrant ("Class B Warrant"). [This Registration Statement assumes a
Subscription Price of $5.00 and an Exercise Price of $6.25 per Warrant and
also the effectiveness of the Company's one-for-ten reverse split being
submitted to the shareholders of the Company for approval on August 12, 1996.]
Eastco Industrial Safety Corp. (the "Company") is granting to all
holders of its outstanding common stock of record on ____________ ("Record
Date"), in those states where qualified, or exempt from qualification, (see
page ____ for list of such states), the nontransferable right ("Rights") to
subscribe for Units, at the subscription price set below on the basis of 4
Units for every 5 shares of Common Stock owned on the Record Date. No
fractional Rights or Units will be issued. Rights and Units will be rounded to
the nearest lower whole number. Inasmuch as the Rights are not transferable,
there will be no market for the Rights, nor will Royce Investment Group, Inc.
(the "Underwriter") be purchasing any Rights.
The subscription period for the Rights will expire at 5:00 p.m. New
York Time on _________, 1996 ("Expiration Date"). Any Units not subscribed for
pursuant to the exercise of Rights will be sold to the Underwriter ("Standby
Offering") at a Subscription Price under a Standby Agreement between the
Company and the Underwriter which is identical to the price under the offering
for the Rights. The term "Offering" as hereinafter utilized in this Prospectus
includes the offering in connection with the Rights, the Standby Offering and
the offering of the Optional Units as hereinafter defined. The Underwriter
will offer to sell the components of the Units to the public at prices which
may exceed the highest asked price as reported on the NASDAQ Small-Cap Market.
No Units and/or components thereof will be offered by the Underwriter to the
public until at least two business days after the Expiration Date of the
Rights Offering. See "The Offering" and "Underwriting".
Each Class B Warrant entitles the holder to purchase one share of
Common Stock commencing eighteen months after the date of this Prospectus (the
date of the
(continued on following page)
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND SUBSTANTIAL DILUTION AS
DESCRIBED HEREIN. FOR A DISCUSSION OF CERTAIN MATERIAL FACTORS THAT SHOULD BE
CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE SECURITIES. SEE "RISK
FACTORS" BEGINNING ON PAGE __ AND "DILUTION" BEGINNING ON PAGE __.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
=============================================================================
Subscription Price Standby Proceeds to
and Price to Public Fees(1)(2) Company(1)(2)(3)
- -----------------------------------------------------------------------------
Per Share..... $5.00 $.50 $4.50
Total......... $3,517,955 $351,795.50 $3,166,159,50
=============================================================================
ROYCE INVESTMENT GROUP, INC.
The date of this Prospectus is __________, 1996
<PAGE>
Prospectus is sometimes referred to herein as the "Effective Date") until the
close of business on the third year after the date of this Prospectus at an
exercise price of $6.25 per share subject to adjustment in certain
circumstances pursuant to anti-dilution provisions therein. The Common Stock
and Class B Warrants are immediately detachable from the Units and separately
tradeable. See "Description of Securities - Class B Warrants" for a discussion
of the Company's right to redeem the Class B Warrants.
- ----------------------------
(1) Represents a 10% standby fee of $351,795.50 ($.50 per share) but does
not include a 3% nonaccountable expense allowance of $105,538.65
($.15 per share) payable to the Underwriter in connection with this
Offering unless the Standby Offering is terminated pursuant to the
terms of the Standby Agreement. Before deducting approximately
$350,000 for printing, legal fees, accounting and other related
expenses of the Offering. See "Underwriting".
(2) Does not include additional compensation to the Underwriter
consisting of (i) an option (the "Underwriter's Warrant" or
"Underwriter's Purchase Option"), sold to the Underwriter for nominal
consideration, entitling the Underwriter to purchase one Unit for
each ten Units sold in the Offering, at a price of $6.00 per Unit,
subject to the anti-dilution provisions thereof, for a period of four
years commencing one year after the Effective Date; and (ii) a one
year financial consulting agreement providing for fees totaling 2% of
the proceeds of the Offering, payable on the closing of the Offering
(the "Closing") and the Optional Units. The Company has also agreed
to pay the Underwriter a warrant solicitation fee of 7% of the
exercise price for each Class B Warrant exercised during the period
commencing one year after the Effective Date, and to indemnify the
Underwriter against certain liabilities, including those arising
under the Securities Act of 1933, as amended (the "Securities Act").
See "Underwriting".
(3) In the event that the number of unsubscribed Units to be purchased by
the Underwriter is less than 300,000 Units, the Underwriter will have
the right but not the obligation to purchase a minimum of 300,000
Units at the Subscription Price less a 10% discount and 3%
nonaccountable expense allowance within 30 days of the Closing. Such
additional Units are herein referred to as the "Optional Units".
The Company's Common Stock is traded on the over-the-counter market
on NASDAQ Small-Cap Market under the symbol ESTO. Upon completion of this
Offering, the Class B Warrants will be listed on NASDAQ Small-Cap Market under
the symbol ESTOZ. The Company will not apply for listing of the Units on
NASDAQ. However, it is possible that members of the NASD will seek to have the
Units listed on the NASD Electronic Bulletin Board, or if in existence in the
National Quotation Bureau's pink sheets at some time in the future. On
__________, 1996, the reported closing sale price for the Common Stock as
reported on such system was $______ per share. The purchase price of the Units
and the Exercise Price of the Class B Warrants for each of the offerings have
been arbitrarily determined through negotiation between the Company and the
Underwriter, was set at approximately 60-70% of the average closing price as
reported by NASDAQ for the ten business days preceding the Effective Date, and
may bear no relationship to current market price, earnings, assets or other
recognized criteria of value applicable to the Company. The Company is unable
to predict the impact of the Offering upon the market price of the stock.
There can be no assurances that shareholders who purchase Units under the
Rights Offering and/or investors who purchase shares under the Standby
Offering will be able to sell such shares at the price they purchased the
shares or at any price. See "Underwriting" and "Market Information".
-------------------------------------------
2
<PAGE>
It is expected that certificates for such shares will be ready for
delivery on or about the seventh calendar day following the Expiration Date.
The issuance of the Common Stock at below-market price will have the effect of
adding to the number of shares issuable under certain outstanding options and
warrants. See "Management".
RESTRICTIONS IN CERTAIN STATES
THIS OFFERING WITH RESPECT TO THE SHARES TO BE ISSUED UPON THE EXERCISE OF THE
RIGHTS HAS BEEN QUALIFIED OR IS BELIEVED TO BE EXEMPT FROM QUALIFICATION IN THE
FOLLOWING JURISDICTIONS:__________________________________________________
RESIDENTS OF OTHER JURISDICTIONS MAY NOT PURCHASE THE COMMON STOCK OFFERED
HEREBY UNLESS THEY CAN DEMONSTRATE TO THE SATISFACTION OF THE COMPANY THAT
THEY SATISFY CERTAIN SPECIFIC CRITERIA FOR EXEMPTION SET FORTH IN THE
APPLICABLE STATES SECURITIES LAWS. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER OTHER THAN THOSE TO WHICH IT SPECIFICALLY RELATES, OR A SOLICITATION OF
AN OFFER TO BUY FROM ANY PERSON OR ENTITY IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS UNLAWFUL.
3
<PAGE>
STATEMENT OF AVAILABLE INFORMATION
The Company is subject to the information requirements of the
Securities and Exchange Act of 1934 and in accordance therewith files reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission") under the File No. 0-8027. Such reports, proxy
statements and other information filed by the Company can be inspected at the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates, and at the following Regional Offices of the Commission, Chicago
Regional Office, 219 South Dearborn Street, Chicago, Illinois and New York
Regional Office, 7 World Trade Center, New York, New York 10007.
The Company currently files its reports electronically by EDGAR. The
Company distributes annual reports containing audited financial statements to
its shareholders.
4
<PAGE>
PROSPECTUS SUMMARY
The following is a summary as of the date hereof of certain information
contained in this Prospectus and is qualified in its entirety by the more
detailed information and Consolidated Financial Statements, including the
Notes thereto, appearing elsewhere in this Prospectus. All shares and shares
issuable under outstanding warrants and options in this Prospectus have been
adjusted for a one-for-ten reverse stock split approved by the shareholders of
the Company on August 12, 1996.
The Company
Eastco Industrial Safety Corp. (the "Company" and sometimes "Eastco")
is a corporation organized and existing under the laws of the State of New
York, having been incorporated on May 15, 1958. The Company, through its
wholly-owned subsidiaries, Disposable Safety Wear, Inc. ("Disposable"), Safety
Wear Corp. ("Safety Wear"), Puerto Rico Safety Equipment Corporation ("Puerto
Rico Safety Equipment"), and Puerto Rico Safety Corp. ("Puerto Rico Safety"),
manufactures industrial protective clothing products and distributes a wide
range of industrial safety products. The Company's Manufacturing Operations
sells its products to distributors. The Company's Distribution Operations
sells its products to "end users," including manufacturing companies and
service businesses, public utilities, fisheries, pharmaceutical plants, the
transportation industry and companies engaged in hazardous materials
abatement. The Company's executive offices are located at 130 West 10th
Street, Huntington Station, New York 11746 and its telephone number is (516)
427-1802.
Manufacturing Operations
Manufactured products are sold under the "Charkate / Worksafe",
"Charkate", "Worksafe" and "Cover-up" trade names. The Company, through
Disposable, Safety Wear and Puerto Rico Safety Equipment, manufactures
disposable and reusable industrial protective apparel. Disposable protective
products items include coveralls, shirts, pants, hats, hoods, aprons, smocks,
lab coats, hazardous material handler suits, examination gowns, sleeves, shoe
covers and related items. Disposable clothing is designed to protect the user
from, among other things, splash, dirt, contamination and against a wide range
of hazardous substances. Disposable clothing is made primarily of a spun
bonded polyolefin produced solely by Dupont under the trade name Tyvek(R).
Reusable industrial protective clothing consists of items for the protection
of various parts of the body which are designed to shield the user from, among
other things, splash, dirt, contamination, heat, fire, cold and the outside
environment. Specific products manufactured include coveralls, gloves, mitts,
shirts, thermal underwear, sleeves, coats, pants, leggings, spats, bibs,
safety vests and a variety of other kinds of protective clothing and uniforms.
The Company also manufactures welding blankets, curtains and screens.
The Company's Manufacturing Operations and warehousing are located in
Puerto Rico, Alabama, Texas and California and are primarily directed from the
Company's offices in New York. The Company's products are sold primarily in
the United States and Puerto Rico. In addition, manufactured products are sold
to "end-users" through the Company's Distribution Operations (the "Eastco
Division") in the Northeastern region of the United States and Puerto Rico.
Distribution Operations
The Company, primarily through its Eastco Division, distributes
industrial
5
<PAGE>
safety products to "end-users" made by the Charkate / Worksafe division as
well as by non-affiliated companies. These products include hard hats,
protective glasses, ear muffs, ear plugs, respirators, goggles, face shields,
rainwear, protective footwear, first-aid kits, monitoring devices, signs and
related products. These products are sold to manufacturing companies and
service businesses, including public utilities, fisheries, hospitals,
pharmaceutical plants, the transportation industry and companies engaged in
hazardous materials abatement.
The Company supplies a variety of items which may be used during the
removal and/or encapsulation of hazardous materials in office buildings,
chemical plants, refineries, electric generating plants and schools. Abatement
products sold by the Company include in the largest part, items made by other
companies, such as negative air machines, respirators, air filtration
equipment, vacuums, polybags and sheetings, decontamination showers, signs,
tools, pumps, sprayers and related equipment. The Company does not engage in
the removal or encapsulation of hazardous materials.
The Company's Distribution Operations are primarily directed from the
Company's offices in New York. The Company also has facilities for warehousing
and distribution of its non-manufactured products in Puerto Rico, Connecticut
and Florida. Items distributed are sold primarily in the Northeastern region
of the United States.
The Offering
Securities Offered 703,591 Units. Each Unit consist of
one share of Common Stock and one
Class B Warrant. See "Description of
Securities".
Subscription Price $5.00 per Unit (the "Subscription
Price").
Common Stock Outstanding
Prior to the Offering(1) 879,488 shares of Common Stock.
Common Stock Outstanding
After the Offering(1) 1,583,079 shares of Common Stock.
Terms of Rights Offering(3) Holders of record on ___________ of the
outstanding Common Stock may subscribe to
purchase Units on the basis of 4 Units for
each 5 shares of Common Stock owned on the
Record Date.
Expiration of Offering ________ at 5:00 p.m. New York Time.
Payment must be received by American
Stock Transfer & Trust Co. (the
"Subscription Agent") by this time.
Standby Offering(3) The Underwriter will offer to sell the
components of the Units at a price
which may exceed the highest asked
price as reflected on NASDAQ. No
Units and/or components thereof will
be offered by the Underwriter to the
public until at least two business
days after the Expiration Date of the
6
<PAGE>
Rights Offering. See "The Offering" and
"Underwriting".
Class B Warrants to be
Issued in the Offering (2) 703,591 Class B Warrants.
Exercise Terms........ Each Class B Warrant entitles the
holder thereof to purchase one share
of Common Stock for $6.25 (the
"Exercise Price"), during the period
commencing eighteen months after the
Effective Date, subject to adjustment
in certain circumstances. See
"Description of Securities - Class B
Warrants".
Expiration Date........ __________, 1999 (three years after
the Effective Date).
Redemption............. Redeemable by the Company, in whole or
in part, at a price of $.01 per Class
B Warrant commencing eighteen months
after the Effective Date (or sooner
with the consent of the Underwriter);
provided that: (i)prior notice of not
less than 30 days is given to the
Class B Warrantholders; and (ii)the
closing high bid price of the
Company's Common Stock, for the 15
consecutive trading days ending on the
third day prior to the date on which
the Company gives notice, has been at
least $9.375 per share (to be adjusted
for any stock dividends and stock
splits, and which may be adjusted to
150% of the exercise price of the
Class B Warrants, if such exercise
price is changed). See "Description
of Securities - Class B Warrants".
Use of Proceeds The Company intends to use the net
proceeds of this Offering, amounting
to approximately $2,710,000 for paydown
of the amount outstanding on its line
of credit thereby increasing the
amount available under such line of
credit for future working capital and
other needs such as acquisitions. See
"Use of Proceeds".
Risk Factors The securities offered hereby involve
a high degree of risk and immediate
substantial dilution. See "Risk
Factors" and "Dilution".
NASDAQ Symbols Common Stock: ESTO
Class B Warrants: ESTOZ
- ------------
(1) Does not include Common Stock which may be issued upon the exercise
of any
7
<PAGE>
options or warrants currently outstanding. The Company currently has
outstanding options and warrants to purchase 633,935 shares of Common
Stock exercisable at prices between $5.168 and $30.00 per share.
(2) Does not include Common Stock which may be issued upon exercise of
Underwriter's Purchase Option and Optional Units.
(3) Since the Company's shares are to a large extent in the names of
brokers, banks, and trust companies who may not be the beneficial
holders of such securities and/or nominees, the Company is unable to
determine the number of beneficial holders (and the amount of shares
owned by such persons) that reside in states where this Offering is
being made. Accordingly, there can be no assurances given that any of
the Units offered hereby will be subscribed for by shareholders and
in this event absent the market-out provision, the Underwriter will
be obligated to purchase all unsubscribed Units. Should the
Underwriter not purchase the unsold Units in accordance with the
market-out provision, shareholders who have exercised the Rights will
not have a right to cancel their subscription and under such
circumstances, the Company will retain the monies from the Rights
subscribed for. See "Underwriting".
8
<PAGE>
SUMMARY FINANCIAL INFORMATION
SELECTED CONSOLIDATED FINANCIAL DATA
The following is a summary of the Company's financial information
extracted from the indicated year end Consolidated Financial Statements of the
Company, and is qualified in its entirety by the detailed financial
information appearing in the Consolidated Financial Statements and the Notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations." The unaudited Consolidated Financial Statements of the
Company for the interim periods ended March 31, 1996 and 1995, have been
prepared by management from the books and records of the Company and reflect,
in the opinion of management, all adjustments (consisting of normally
occurring accruals), necessary for a fair presentation of the financial
position, results of operations, and changes in the financial position of the
Company, as at the periods indicated therein. Results from interim periods are
not necessarily indicative of results which can be expected for the entire
year.
Statement of Operations Data:
<TABLE>
<CAPTION>
Year Ended June 30, Nine Months Ended March 31,
------------------- ---------------------------
1995 1994 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $24,024,897 $20,745,809 $19,739,719 $17,365,091
Cost of sales 19,254,571 17,372,063 15,624,922 13,887,720
----------- ----------- ----------- -----------
Gross profit 4,770,326 3,373,746 4,114,797 3,477,371
----------- ----------- ----------- -----------
Selling, general
and administrative
expenses 4,148,517 4,709,037 3,431,369 3,183,097
Interest 583,665 1,391,777 599,496 405,081
Other income (NET) (39,793) (15,690) (52,822) (96,654)
Settlement with
former underwriter - - 78,000 -
----------- ----------- ----------- -----------
Total expenses 4,692,389 6,085,124 4,056,043 3,491,524
----------- ----------- ----------- -----------
Net income (loss) $ 77,937 $(2,711,378) $ 58,754 $ (14,153)
========== ========== ========== ==========
Net income (loss) per
share(1):
Primary $ .20 $ (20.76) $ .13 $ (.04)
========== ========== ========== =========
Assuming full dilution $ .17 $ (20.76) $ .13 $ (.04)
========== ========== ========== =========
Average number of shares
used in computing per share
amounts:
Primary 392,529 130,585 447,343 347,738
========== ========== ========== =========
Assuming full dilution 471,698 130,585 447,343 347,738
========== ========== ========== =========
</TABLE>
9
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA (Cont'd)
Consolidated Balance Sheet Data:
<TABLE>
<CAPTION>
As at June 30, As at March 31, 1996
-------------- --------------------
(Unaudited)
Pro- As
1993 1994 1995 Actual Forma(2) Adjusted(3)
---- ---- ---- ------ -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Current
Assets $ 8,645,332 $7,557,319 $ 9,265,149 $10,729,579 $11,065,649 $11,065,649
Current
Liabilities 8,688,765 6,515,503 8,200,620 9,513,617 9,263,617 6,552,996
Working Capital
(Deficiency) (43,433) 1,041,816 1,064,529 1,215,962 1,802,032 4,512,653
Total
Assets 10,297,088 9,001,756 10,716,048 12,167,280 12,463,982 12,463,982
Long-
Term Debt 909,246 538,544 489,782 448,488 448,488 448,488
Total
Liabilities 9,663,011 7,054,047 8,690,402 9,962,105 9,712,105 7,001,484
Shareholders'
Equity 634,077 1,947,709 2,025,646 2,205,175 2,751,877 5,462,498
</TABLE>
(1) Adjusted to give retroactive effect to a 1 for 10 reverse stock split
effective August 12, 1996.
(2) Adjusted to give effect to 26,174 shares issued on the conversion of
$150,000 of the convertible subordinated debenture payable and the
buyback and retirement of 21,374 shares for $180,000; payment of
$120,000 for the remaining balance of the debenture with the
additional $20,000 plus $15,573 of deferred financing costs being
charged to earnings; and the issuance of 513,000 shares in a private
placement with net proceeds of approximately $666,695.
(3) Adjusted to give effect to shares issued in the Rights Offering and
the sale of units offered and the receipt of $2,710,621 in net proceeds
and their initial application.
10
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RISK FACTORS
The securities offered hereby are highly speculative and should be
purchased only by persons who can afford to lose their entire investment in
the Company. Each prospective investor should carefully consider the following
risk factors, as well as all other information set forth elsewhere in this
Memorandum:
History of Previous Significant Losses. Although for the fiscal year
ended June 30, 1995, the Company had net income of $77,937, the Company
incurred losses of $2,711,378, $858,326, $1,362,761 and $1,388,831,
respectively, for the fiscal years ended June 30, 1994, 1993, 1992 and 1991.
For the nine months ended March 31, 1996, the Company had a net income of
$58,754 compared to a net loss of $14,153 for the nine months ended March 31,
1995. Other than for the fiscal year ended June 30, 1995, the Company has not
had a profitable fiscal year since its fiscal year ended June 30, 1989. There
can be no assurances that the Company will be profitable or will not incur
losses in the future. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Consolidated Financial Statements".
Lending Arrangements; Liens on the Company's Assets. The Company is
dependent upon its revolving line of credit with Congress Financial
Corporation ("Congress"), which as revised during July, 1996, expires October
1, 1999, except that Congress at its sole option may extend the termination
date to October 1, 2000. The line of credit was increased from $6,000,000 to
$9,000,000 as of July, 1996. Interest is payable monthly at 1.25% (previously
2.25%) over the prime rate, with provision to further reduce such rate to 1%
over the prime rate upon consummation of this Offering no later than December
31, 1996. Borrowings are currently limited to 55% of the Company's eligible
inventory and 85% of the Company's eligible accounts receivable. The amounts
outstanding under the line of credit at June 30, 1995 and June 30, 1994, were
$4,829,000 and $3,184,000, respectively. As of June 30, 1996, the amount
outstanding on the line of credit was $5,558,000, with an availability of
borrowing $51,000 based upon accounts receivable and inventory at that date.
The loan is subject to certain working capital and net worth covenants and is
collateralized by all of the Company's assets not previously pledged under
other loan agreements. Although the Company will use substantially all of the
net proceeds of this offering to reduce outstanding indebtedness under its
credit facility (See "Use of Proceeds"), the Company will, in all likelihood,
draw down funds under such facility in the future in order to continue to
finance its operations. In the event that the Company is unable to obtain
financing from its principal lender or alternative sources of financing, or if
able to do so but not on favorable terms, the Company's ability to operate
profitably could be materially adversely affected. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
In September 1993, the Company received an overadvance of $500,000 from
Congress. In connection therewith, Messrs. A. Densen, L. Densen and A. Towell,
directors and executive officers of the Company, obtained a $250,000 junior
participation in the loans made to the Company from Congress by advancing
$250,000 of their funds to Congress. $250,000 of this overadvance has been
repaid to Congress. $35,000 has been repaid to L. Densen. The balance of
$215,000 will be repaid by Congress, at its option, to Messrs. A. Densen and A.
Towell, subject to the availability of funds under the revolving line of credit.
The effect of the application of the proceeds of this Offering to the reduction
of the monies owed to Congress should have the effect of enabling the balance
of the overadvance of $215,000 to be repaid to Messrs. A.Densen and A. Towell.
In addition, 130 West 10th Street Associates, LLC ("Associates"), a New
York limited liability Company consisting of a group of investors (including
wives
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of two directors and officers of the Company and a present director of the
Company), holds a first mortgage on the property containing the Company's
executive offices and warehouse located in Huntington Station, New York, as
well as a secondary lien on all of the Company's assets. This mortgage comes
due on June 30, 1997 in the amount of $433,737.35 and the Company at such time
will be required to either satisfy, extend or obtain a replacement for this
mortgage. Although there can be no assurances, the Company believes that it
will be able to extend or replace this mortgage.
In the event that the Company fails to comply with its obligations, the
Company's indebtedness could be declared immediately due and payable and, in
certain cases, the Company's assets could be foreclosed upon. Moreover, to the
extent that all of the Company's assets continue to be pledged to secure
outstanding indebtedness, such assets are unavailable to secure additional
debt financing, which may adversely affect the Company's ability to borrow in
the future.
Asbestos Litigation Against the Company. The Company, in the past,
manufactured certain products made of asbestos. Such use was terminated by the
Company in the mid-1980's. It has been alleged that asbestos is a cause of
cancer, such as asbestosis, mesothelioma, and other related diseases, the
symptoms of which may not appear for twenty or more years. Since the early
1980's, numerous lawsuits have been instituted against the Company by persons
who have been exposed to asbestos and asbestos products.
As of June 30, 1996, the Company estimates that it is a party to
approximately 280 cases with respect to exposure to asbestos involving
approximately 1300 plaintiffs. All of the actions against the Company to date
have been brought by non-employees of the Company and are based upon personal
injury claims.
These actions are pending in the states of New York, New Jersey, and
Pennsylvania. The number of first-party plaintiffs include, in various
instances, spouses of said plaintiffs. The actions, with the exception of one
pending action, involve a multitude of defendants. The complaints allege
exposure to asbestos and asbestos products over various periods of time. Each
seeks varying amounts of damages, usually unlimited, or for each plaintiff as
high as $10,000,000 for compensatory damages and $20,000,000 for punitive
damages.
From 1981 through June 30, 1996, the Company estimates that approximately
900 actions on behalf of approximately 7500 first-party plaintiffs have been
instituted against it concerning asbestos-related claims, and that the claims
of approximately 6200 plaintiffs have been terminated against the Company. The
Company estimates that, with the exception of defense costs, a total of
approximately $1,500,000 has been paid, or agreed to be paid, in settlements
to date with regard to the terminated actions, of which all but approximately
$45,000 has been or will be paid by the Company's insurance carriers. Through
June 30, 1996, the Company has paid less than approximately $35,000 for legal
and defense costs to counsel appointed by the insurance carriers to defend it.
Past results of settlements and defense costs are not necessarily indicative
of future settlements and defense costs which the Company is unable to
predict.
The existence of the asbestos litigation may have an adverse effect upon
the financial liquidity of the Company in the future. The Company is unable to
predict the outcome of this uncertainty or the total extent to which its
insurance carriers will provide coverage. Based upon prior experience, the
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Company believes that additional claims will be filed in the future. Further,
the Company's independent auditors report emphasizes the uncertainties of
these matters. See "Legal Proceedings" for a description of asbestos and other
litigation pending against the Company.
Insurance Coverage Applicable to Asbestos Litigation. For the period
commencing April 1, 1968 to April 1, 1969 and March 11, 1971 to November 27,
1985, the Company believes that it has various policies of primary insurance
in different amounts which would protect it against liability for
asbestos-made, product-related personal injuries. The policies range in
amounts from $50,000 to $1,000,000 on an annual basis. The Company also
believes that since August 10, 1972 to on or about August 11, 1986 it has had
various policies for excess coverage applicable to asbestos claims on an
annual basis. These policies range in amounts from $500,000 to $10,000,000 for
excess coverage. There are gaps of approximately six weeks in the primary
coverage between March 11, 1971 to November 27, 1985 and approximately
thirty-six months in the excess coverage between August 10, 1972 and August
11, 1986. The policies of insurance are not applicable to all of the
subsidiaries of the Company, which have varying coverage, and such
subsidiaries may also be without coverage for various times of their doing
business. Not all of these policies are in the possession of the Company.
Effective June 26, 1990, an agreement between Eastco and its primary
insurance carriers dated March 26, 1990 became effective. Eastco entered into
this agreement in an effort to resolve uncertainties as to its insurance
coverage which will cover asbestos claims against the parent Company, Eastco,
where any exposure to asbestos is alleged during the period 1971 to 1985,
inclusive. Pursuant to this agreement, the Company is obligated to share in
the payment of asbestos-related claims against Eastco. Pursuant to the
agreement, the Company is obligated to pay 12% of all attorneys' fees incurred
on its behalf and 17% of indemnity costs (which include judgment and
settlement amounts). The balance of these costs are to be paid by the
insurance carriers, which are parties to the agreement. The agreement is
subject to policy limitations of each insurance policy. The agreement may be
terminated at any time upon ninety (90) days' notice by any of the parties
provided that termination may not be effective as to any asbestos action that
has already been placed on the trial calendar, unless it has a scheduled trial
date more than twelve (12) months from the date the notice of termination is
given. The Company is aware of only one case pending against it which is on
the trial calendar.
Effective during May, 1991, the Company entered into a Settlement
Agreement and Release with Mount Vernon Fire Insurance Company. The Company
discontinued its action against Mount Vernon, which agreed that, subject to
the terms of the agreement, Mount Vernon would reimburse the Company (where
applicable) for 6.25% of attorneys' fees (52.08% of the Company's 12% share
referred to in the agreement in the previous paragraph) and 6.25% of
indemnification costs (36.76% of the Company's 17% share referred to in the
agreement in the previous paragraph). The agreement is not applicable to any
asbestos actions against the Company where no exposure is alleged to products
manufactured or distributed by Eastco between April 1, 1968 and April 1, 1969.
The agreement may be terminated at any time upon 90 days' notice, but such
notice is not applicable to asbestos actions placed on a trial calendar,
unless such has a trial date more than twelve months from the date the notice
of termination is given. The agreement provides that the limit available under
the policy is $100,000 plus attorneys' fees while the agreement is in effect
and is applicable only to the parent Company, Eastco. Approximately $25,000
has been reimbursed by Mount Vernon Fire Insurance Company as of June 30, 1996
for indemnification.
The Company is unable to ascertain the total extent of insurance
applicable to asbestos claims against it or the extent to which its insurance
carriers will
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provide coverage. The two agreements referred to above between the Company and
the insurance carriers may not be applicable to Puerto Rico Safety Equipment,
which is covered by other insurance. To date, the claims settled by Puerto
Rico Safety Equipment have been paid in full by insurance. No agreement has
been reached with the insurance companies confirming all of these policies,
which range from $100,000 to $500,000 for primary coverage and $1,000,000 to
$5,000,000 for excess coverage. The policies for Puerto Rico Safety Equipment
cover the period March 11, 1971 to July 23, 1986 with various gaps.
The Company's insurance may not provide coverage for punitive damages
where such damages are sought against it in pending litigation. Punitive
damages are allowable in addition to compensatory damages and are awarded as a
punishment to the defendant for wrongs in a particular case as well as for the
protection of the public against similar acts, to deter the defendant from a
repetition of the wrongful act and to serve as a warning to others. Usually a
wrong, aggravated by an evil or wrongful motive or a willful and intentional
misdoing or a reckless indifference equivalent thereto, is required for a
court to award punitive damages. The Company is unable to specify whether its
actions would give rise to punitive damages. It believes that its actions
should not give rise to punitive damages. There, however, can be no assurance
that this will be the case. See "Legal Proceedings".
Government Regulation; No Assurance Of Compliance with OSHA. The
Company's manufacturing facilities are subject to regulation and inspection
standards established by the Occupational Safety and Health Administration
("OSHA"), which were enacted, in part, to require employers to supply
protective clothing in certain work environments. To date, the Company's
manufacturing facilities have not been inspected for compliance with the
standards established by OSHA. Although the Company believes that it is in
material compliance with current standards, there can be no assurance that any
inspection will not reveal that the Company has failed to comply with the
standards established by OSHA and that, as a result, the Company may be
required to expend sums, which can be costly, to assure compliance with OSHA
regulations.
Need for Substantial Inventories. The Company is required to maintain
substantial inventories for both its Manufacturing Operations and its
Distribution Operations in order to meet the immediate requirements of its
customers who require products on short notice and who do not maintain an
inventory of such products. The Company had inventory of approximately
$5,391,000, $4,364,000 and $3,166,000 as of March 31, 1996, June 30, 1995 and
June 30, 1994, respectively. Although the Company believes it currently
maintains sufficient inventories, prior to a 1994 public offering (the "1994
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Offering"), the Company experienced periods where it did not have sufficient
working capital to maintain its inventories to meet the demands of certain of
its customers. There can be no assurance that the Company will be able to
maintain sufficient inventories or the Company will not return to periods
where there is insufficient working capital to maintain its inventories to
meet the needs of its customers.
Dependence Upon DuPont For Supply of Tyvek(R). The Company is not
dependent upon any one company for a source of supply of raw materials for its
manufacturing operations other than DuPont, which supplies the Company with
Tyvek(R), a raw material which is used in various lines of its disposable
products. Products utilizing Tyvek(R) accounted for approximately 35% and 29%
of consolidated sales for the fiscal years ended June 30, 1995 and June 30,
1994, respectively and approximately 42% for the nine months ended March 31,
1996. Management believes that its current relationship with DuPont is
satisfactory. The Company has no contract with DuPont for the supply of such
raw material; therefore, DuPont could terminate its relationship with the
Company at any time. The Company does not believe that an alternative source
exists for the supply of Tyvek(R). Accordingly, the loss of DuPont as a
supplier of Tyvek(R) would have a material adverse effect on the Company's
operations.
No Dividends. The Company intends to retain future earnings to finance
future growth. Accordingly, any potential investor who anticipates the need
for dividends for his investment should not purchase any of the securities
offered hereby. In addition, the Company's agreement with Congress contains
restrictions which prohibit the Company from paying cash dividends.
Competition. The market for industrial protective clothing products and
industrial safety products is extremely competitive. The Company faces
competition in all of its product markets from large, established companies
that have greater financial, managerial, sales and technical resources than
the Company, and some of the Company's product markets are dominated by such
larger companies. Where larger competitors offer products that are directly
competitive with the Company's products, particularly as part of an
established line of products, there can be no assurance that the Company can
successfully compete for sales and customers. Larger competitors also may be
able to benefit from economies of scale or to introduce new products that
compete with the Company's products. There can be no assurance that the
Company can successfully compete in any of its product markets.
Limitation on Net Operating Loss Carryforwards. As of June 30, 1995, the
Company had Federal net operating loss carryforwards for income tax purposes
of approximately $5,410,000 which expire through the year 2009. These
carryforwards are subject to limitations on the amount that can be utilized by
the Company in a fiscal year due to "change of ownership" rules as defined by
applicable Federal tax statutes. The amount of income which may be offset
after an ownership change is determined by multiplying the fair market value
of the Company at the time of the ownership change by the long-term tax exempt
rate. To the extent that such annual limitation is not utilized, it may be
further carried forward until the carryforward would have otherwise expired. A
"change in ownership" occurred upon the completion of the 1994 Offering. Based
upon the number of shares offered in the 1994 Offering and the applicable
long-term tax exempt rate, the Company's ability to utilize its net operating
carryforward losses in future years was limited to approximately $380,000 per
year. The carryforwards available to be utilized for the year ending June 30,
1996 approximate $1,584,000. A change in ownership may also occur upon the
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completion of this Offering and the Company's ability to utilize its net
operating loss carryforwards could be further limited.
Reliance on Current Management. The Company's current operations and
future success is greatly dependent upon the services of Mr. Alan Densen, its
President, Lawrence Densen, its Senior Vice President and Anthony P. Towell,
its Vice President of Finance. The loss of services of any of the foregoing,
who are each employed under written agreements for five year terms, could have
a material adverse effect on the Company.
Control By Management. As of the date of this Prospectus, the Company's
executive officers and directors own of record and beneficially, an aggregate
of approximately 23% of the Company's outstanding Common Stock and may be in a
position to have significant influence over the outcome of all matters
submitted to stockholders for approval, including the election of directors of
the Company, as a result of their control of such shares which will vote on
all matters. The Company's Board of Directors is divided into two classes,
each of which generally serves for a term of two years, with only one class of
directors being elected in each year. A classified board under certain
circumstances could discourage, prevent or delay a change in control of the
Company, which could have the effect of discouraging bids for the Company and
thereby prevent shareholders from receiving the maximum value for their
shares. In addition, there are provisions in the employment agreements with
Messrs. A. Densen, A. Towell and L. Densen, that provide for them to receive
immediately a lump sum payment of three years' compensation as well as
severance pay should a "Change in Control" occur, which also could have a
similar effect of deterring bids for the Company. Messrs. A. Densen, L.
Densen, and A. Towell, in modification agreements to their employment
agreements, have waived: (i) their right to bonuses based upon the Company's
earnings or sales for the fiscal years ended June 30, 1996 and June 30, 1997;
(ii) their exercise rights on options and warrants and repayment of their junior
participation interests with Congress and compensation payable in the event of
a Change in Control with respect to the Offerings; and (iii) their right to
terminate their relationship with the Company, as per the terms of their
respective employment agreements. The modification agreements provide that their
right to terminate their employment agreements shall not be waived in the event
that there is a material breach of such agreements by the Company. See
"Management".
Outstanding Options and Warrants. As of the date hereof, there are
633,935 shares of Common Stock subject to issuance upon currently outstanding
options and warrants at exercise prices between $5.168 and $30.00 per share. To
the extent that outstanding options and warrants are exercised, additional
equity investment funds will be paid into the Company at the expense of
dilution to the interests of the Company's shareholders. Moreover, the terms
upon which the Company will be able to obtain additional equity capital may be
adversely affected since the holders of outstanding options and warrants can
be expected to exercise or convert them at a time when the Company would, in
all likelihood, be able to obtain any needed capital on terms more favorable
to the Company than those provided in such securities.
Non-Registration in Certain Jurisdictions of Shares Underlying the Class
B Warrants. Although the Units will not knowingly be sold to purchasers in
jurisdictions in which they are not registered or otherwise qualified for
sale, purchasers may buy Units or Class B Warrants in the aftermarket or may
move to jurisdictions in which the shares of Common Stock issuable upon
exercise of the Class B Warrants are not so registered or qualified during the
period that the
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Class B Warrants are exercisable. In such event, the Company would be unable
to issue shares to those persons desiring to exercise their Class B Warrants
unless and until the shares could be registered or qualified for sale in the
jurisdiction in which such purchasers reside, or an exemption to such
qualification exists in such jurisdiction. If the Company were unable to
register or qualify the shares in a particular state and no exemption to such
registration or qualification was available in such jurisdiction, in order to
realize any economic benefit from purchase of the Class B Warrants, a holder
might have to sell the Class B Warrants rather exercise them. No assurance can
be given, however, as to the ability of the Company to effect any required
registration or qualification of the Units, Common Stock or Class B Warrants
in any jurisdiction in which qualification of registration has not already
become effective. See "Description of Securities - Class B Warrants."
Current Prospectus and State Blue Sky Registration Required to Exercise
Class B Warrants. Holders of the Class B Warrants will have the right to
exercise the Class B Warrants for the purchase of shares of Common Stock only
if a current prospectus relating to such shares is then in effect and only if
the shares are qualified for sale under the securities laws of the applicable
state or states. The Company has undertaken and intends to file and keep
current the Prospectus which will permit the purchase and sale of the Common
Stock underlying the Class B Warrants, but there can be no assurance that the
Company will be able to do so. Although the Company intends to seek to qualify
for sale the shares of Common Stock underlying the Class B Warrants in those
states in which the securities are to be offered, no assurance can be given
that such qualification will occur. The Class B Warrants may be deprived of
any underlying shares which are not, or cannot be, registered in the
applicable states. See "Description of Securities - Class B Warrants."
Penny Stock Regulation. The Commission has adopted rules that regulate
broker-dealer practices in connection with transactions in "penny stocks."
Penny stocks generally are equity securities with a price of less than $5.00
(other than securities registered on certain national securities exchanges or
quoted on the NASDAQ system, provided that current price and volume
information with respect to transactions in such securities is provided by the
exchange or system). The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules to deliver a
standardized risk disclosure document prepared by the Commission that provides
information about penny stocks and the nature and level risks in the penny
stock market. The broker-dealer must also provide the customer with current
bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction, and monthly account
statements showing the market value of each penny stock held in the customer's
account. The bid and offer quotations, and broker-dealer and salesperson
compensation information must be given to the customer orally or in writing
prior to effecting the transaction and must be given in writing before or with
the customer's confirmation. In addition, the penny stock rules require that
prior to a transaction of a penny stock not otherwise exempt from such rules,
the broker-dealer must make a special written determination that the penny
stock is a suitable investment for the purchaser and receive the purchaser's
written agreement to the transaction. These disclosure requirements may have
the effect
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of reducing the level of trading activity in the secondary market for a stock
that becomes subject to the penny stock rules. If the Company's securities
become subject to the penny stock rules, investors in this offering may find
it more difficult to sell such securities.
Although the Company believes that its securities will, as of the date of
this Prospectus, be outside the definitional scope of a penny stock, as it
will be listed on NASDAQ, in the event the Common Stock were subsequently to
become characterized as a penny stock, the market liquidity for the Company's
securities could be severely affected. In such event, the regulations on penny
stocks could limit the ability of broker-dealers to sell the Company's
securities, and thus, the ability of purchasers in this offering to sell their
securities in the secondary market.
Relationship of Underwriter to Trading. The Underwriter may act in a
brokerage capacity with respect to the purchase or sale of the Units, Common
Stock or Class B Warrants in the over-the-counter market where each will
trade. The Underwriter also has the right to act as the Company's exclusive
agent in connection with any future solicitation of warrantholders to exercise
their Class B Warrants. Unless granted an exemption by the Commission from
Rule 10b-6 promulgated under the Exchange Act, the Underwriter and any
soliciting broker-dealers will be prohibited from engaging in any
market-making activities or solicited brokerage activities with regard to the
Company's securities during a period beginning two or nine business days,
whichever is applicable, prior to the commencement of any such solicitation
and ending on the later of the termination of such solicitation activity or
the termination (by waiver or otherwise) of any right that the Underwriter and
soliciting broker-dealers may have to receive a fee for soliciting the
exercise of the Class B Warrants. As a result, the Underwriter and soliciting
broker-dealers may be unable to continue to make a market for the Company's
securities during certain periods while the Class B Warrants are exercisable.
Such a limitation, while in effect, could impair the liquidity and market
price of the Company's securities. See "Underwriting."
No Public Market for the Company's Units and Warrants; Possible
Volatility of Stock Price; Arbitrary Determination of Subscription Price. The
Common Stock and Class B Warrants are immediately detachable from the Units
and separately tradeable. The Company will not apply for a listing of the
Units on NASDAQ and as a result, such Units are not likely to be tradeable,
although it is possible that members of the NASD will seek to have the Units
listed on the NASD Electronic Bulletin Board or, if in existence, in the
National Quotation Bureau's pink sheets at some time in the future. Prior to
this Offering, there has been no public market for the Class B Warrants, and
there can be no assurance that a market will develop at the conclusion of the
Offering, or if developed, that it will be sustained. In addition, if any
market does develop, the market price of these securities might be volatile.
Factors such as announcements by the Company or its competitors concerning
proposed plans, procedures and proposed government regulations, losses and
litigation may have a significant effect on the market price of the Company's
securities. Changes in the market price of the Company's securities may have
no connection with the Company's actual financial results.
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In addition, the stock market has experienced extreme price and volume
fluctuations which have particularly affected the market prices for many
companies and which have often been unrelated to the operating performance of
the specific companies. These broad market fluctuations may adversely affect
the market price of the Company's securities. The Underwriter has the right to
request the de-listing from NASDAQ of the Warrants which will likely have an
adverse effect upon their trading.
Underwriter's Warrants, Optional Units, and Registration Rights. The
Company will sell to the Underwriter, for nominal consideration, Underwriter's
Warrants to purchase one Unit for each ten actually sold in the Offering at an
exercise price of $6.00, regardless of the number of Units purchased by the
Underwriter. The Underwriter's Warrants may not be sold, transferred, assigned
or hypothecated for a period of one year from the Effective Date, except to
officers of the Underwriter and members of the selling group, as well as their
officers and partners. Exercise of the Underwriter's Warrants, which may be
effected at any time, either in whole or in part, beginning 12 months after
the Effective Date and not more than four years thereafter, may dilute the
value of the Common Stock, may adversely affect the Company's ability to
obtain equity capital, and, if the Common Stock issuable upon the exercise of
the Underwriter's Warrants is sold in the public market, may adversely affect
the market price of the Common Stock. The Units issuable upon exercise of the
Underwriter's Warrants, the Common Stock and Class B Warrants comprising such
Units, and the Common Stock issuable upon exercise of the Class B Warrants,
have been included in the Registration Statement of which this Prospectus
forms a part. The Company has an obligation to keep such registration
statement current, which could result in substantial expense to the Company.
This obligation is in addition to the demand registration rights granted to
the Underwriter in connection with the Offering. In the event that the number of
the unsubscribed Units to be purchased by the Underwriter is less than 300,000
Units, the Underwriter will have the right but not the obligation to purchase a
minimum of 300,000 of these Optional Units. Any profit received by the
Underwriter either from the sale of the Underwriter's Warrants or from the
sale of the shares of Common Stock purchasable upon exercise of the
Underwriter's Warrant may be deemed additional underwriting compensation. See
"Underwriting" with respect to these and other rights to compensation that the
Underwriter has.
State Securities Laws. The Offering with respect to the exercise of
Rights has been qualified or is exempt from qualification in the following
jurisdictions: __________________________________________. Residents of other
jurisdictions may not purchase Units or exercise Class B Warrants unless they
can demonstrate to the Company that under the particular state's securities
laws, an exemption is available for their transaction. This Prospectus does
not constitute an offer other than those to which it specifically relates, or
a solicitation of an offer to buy from any person or entity in any
jurisdiction in which such offer or solicitation is unlawful. See "The
Offering Restrictions in Certain States."
Firm Commitment by Underwriter. In the event that all of the shares
offered hereby are not sold pursuant to the exercise of Rights, the
Underwriter has agreed, on a firm commitment basis, to take and pay for all of
the unsold shares, except if, in the reasonable judgment of the Underwriter,
it is impracticable to consummate the Standby Offering under normal "market
out"
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conditions, such as (i) the Company having sustained a material loss of
whatsoever nature, which, in the sole and absolute opinion of the Underwriter,
substantially affects the value of the property of the Company or materially
interferes with the operation of the business of the Company, (ii) any
material adverse change in the business, property or financial condition of
the Company, (iii) trading in securities on the New York Stock Exchange, the
American Stock Exchange or NASDAQ System having been suspended or limited or
minimum prices having been established on either such Exchange or System, (iv)
a banking moratorium having been declared by either federal or state
authorities, (v) an outbreak of major hostilities or other national or
international calamity having occurred, (vi) any action having been taken by
any government in respect of its monetary affairs which, in the reasonable
opinion of the Underwriter, has a material adverse effect on the United States
securities markets; (vii) any action, suit or proceeding at law or in equity
against the Company, or by any Federal, State or other Commission, board or
agency wherein any unfavorable decision would materially adversely effect the
business, property, financial condition or income of the Company; or (viii)
due to conditions arising subsequent to the execution hereof, the Underwriter
reasonably believes that, as a result of material and adverse events affecting
the market for the Company's Common Stock or the securities markets in
general, it is impracticable or inadvisable to proceed with the Standby
Offering. Accordingly should the Underwriter not purchase the unsold shares in
accordance with the market out conditions, shareholders who have exercised the
Rights will not have a right to cancel their subscription and under such
circumstances, the Company will retain the monies from the Rights subscribed
for. The Rights Offering is distinct and separate from the Standby Offering
under which the Underwriter has a "market out" right of cancellation as
described above. In such event, investors may be vulnerable to illiquidity
and/or a loss of their entire investment. See "The Offering" and
"Underwriting".
Tax Incentives. Puerto Rico Safety Equipment and Disposable have elected
to apply Section 936 of the Internal Revenue Code, effective July 1, 1979. The
provisions of Section 936 are effective until revoked by the Company. If the
conditions of Section 936(a)(2) are satisfied, the Section 936 credit equals
the portion of the United States income tax that is attributable to taxable
income from sources outside the United States derived from the active conduct
of a trade or business within a United States possession, or the sale or
exchange of substantially all of the qualified possession source investment
income. Dividends payable by each subsidiary to the Company from operations
are entitled to a 100% dividends received deduction but are subject to a 10%
withholding tax in Puerto Rico. The Omnibus Budget Reconciliation Act of 1993
(the "Omnibus Act") imposes new limitations on computing the Possession Tax
Credit under Section 936 for tax years beginning after 1993. There are two
methods for determining the credit under the new law. Under the first method,
the amount of the credit may be determined by using the so-called economic
activity limit. This attempts to limit the credit by applying various
percentages to possession-based compensation, depreciation and taxes paid or
accrued. Alternatively, the Company may make an irrevocable election when it
files its June 30, 1996 federal income tax return to have present rules apply,
but to phase out the credit to 60% of the 1994 level, and further phase down
by 5% per year to 40% in 1998 and years thereafter. Since the credit is a
function of future earnings, if any, the effect of such limitations cannot be
determined at the present time. In addition, the Omnibus Act makes the 100%
dividends received deduction subject to the Alternative Minimum Tax
Calculation. No dividends have been declared on the aggregate undistributed
earnings of Puerto Rico Safety Equipment and Disposable (which through June
30, 1995, aggregates approximately $2,458,000) and none are intended to be
declared because it is management's intention to reinvest the earnings from
such subsidiaries indefinitely. The Company believes that based upon current
operations, the
20
<PAGE>
Omnibus Act will not have a material effect on the Company for the foreseeable
future.
As Puerto Rico tax exemptions are reduced or expire, the Company may be
required to pay taxes on income earned in Puerto Rico. The Company is unable
to predict the amount of such impact after such exemptions are reduced or
expire. See "Management's Discussion of Analysis of Financial Condition and
Results of Operations."
Shares Eligible for Future Sale. Of the 879,488 shares of Common Stock of
the Company outstanding as of the Effective Date, which includes the 513,000
shares to be registered and sold herewith, ____ shares are restricted
securities, as that term is defined in Rule 144 promulgated under the
Securities Act of 1933 (the "Securities Act"). 399,000 shares have been
registered for sale concurrently herewith subject to an agreement with the
Underwriter not to sell such shares for a period of three months without the
prior written consent of the Underwriter, and 114,000 shares have been
registered for sale concurrently herewith subject to an agreement with the
Underwriter not to sell such shares for a period of nine months without the
prior written consent of the Underwriter. Of the 879,488 shares, ________
shares are owned by affiliates of the Company, as that term is defined under
the Securities Act. Absent registration under the Securities Act, the sale of
such shares is subject to Rule 144, as promulgated under the Securities Act.
In general, under Rule 144, subject to satisfaction of certain other
conditions, a person, including an affiliate of the Company, who has
beneficially owned restricted shares of Common Stock for at least two years is
entitled to sell, within any three-month period, a number of shares that does
not exceed the greater of 1% of the total number of outstanding shares of the
same class, or if the Common Stock is quoted on NASDAQ, the average weekly
trading volume during the four calendar weeks preceding the sale. A person who
has not been an affiliate of the Company for at least three months immediately
preceding the sale and who has beneficially owned the shares of Common Stock
for at least three years is entitled to sell such shares under Rule 144
without regard to any of the volume limitations described above. The Company's
executive officers and directors have agreed not to sell their shares for a
period of eighteen months from the Effective Date without the prior consent of
the Underwriter. The Underwriter may consent to the sale of such shares at any
time, in its sole discretion, upon the request of the holder. The
Underwriter's decision to consent will be based upon the current market
conditions, liquidity of the Common Stock, as well as such other factors the
Underwriter deems appropriate. No public announcement will be made with
respect to the foregoing. See "Shares Eligible for Future Sale".
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<PAGE>
USE OF PROCEEDS
The net proceeds from the sale of the Units will be approximately
$2,710,621. The Company intends to use the net proceeds of this Offering for
paydown of the amount outstanding on its line of credit thereby increasing the
amount available under such line of credit for future working capital and
other needs such as acquisitions. Although the Company may use substantially
all of the net proceeds of this offering to reduce outstanding indebtedness
under its credit facility, the Company will, in all likelihood, draw down
funds under such facility in the future in order to continue to finance its
operations. The proceeds of the Company's line of credit with Congress are
used for working capital and general corporate purposes which includes
salaries, purchase of inventory, marketing, and other applicable corporate
expenses. The effect of the application of the proceeds of this Offering to
the reduction of the monies owed to Congress should have the effect of
enabling the balance of the overadvance of $215,000 to be repaid to Messrs.
A.Densen and A. Towell.
DILUTION
As of March 31, 1996, the Company had a pro forma net tangible book value
of $2,741,942 or $3.12 per share. The pro-forma net tangible book value per
share as of March 31, 1996 represents the Company's tangible pro-forma assets
less the total pro-forma liabilities. The pro-forma net tangible book value
gives effect to the 513,000 shares issued in the private placement and the
5,000 shares issued, as well as the additional charges to earnings related to
the settlement of the subordinated convertible debentures payable. See
"Certain Relationships and Related Transactions" and Note 12 to Notes to
Consolidated Financial Statements. After giving effect to the 703,591 shares
issued in the Rights Offering and sale of Units offered hereby, the pro-forma
net tangible book value, as adjusted, as of March 31, 1996 would have been
$5,452,563 or $3.44 per share after the receipt of the net
proceeds. This represents an immediate increase in the pro-forma net tangible
book value of $.32 per share to existing stockholders and an immediate
dilution of $1.56 per share to new stockholders purchasing shares of common
22
<PAGE>
stock offered hereby, as illustrated in the following table:
Offering Price $5.00
Pro-forma net tangible value as
of March 31, 1996 $3.12
Increase in pro-forma net tangible
book value attributable to new
stockholders .32
-----
Pro-forma net tangible book value 3.44
after the offering -----
Dilution of new stockholders $1.56
=====
23
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 31, 1996: (i) on an historical basis; (ii) on a pro-forma basis giving
effect to the settlement of the convertible subordinated debenture payable and
the sale of 513,000 shares in a private placement; and (iii) on such pro-forma
basis as adjusted giving effect to the Rights Offering and the sale of Units
and the application of the proceeds therefrom. This table should be read in
conjunction with the Company's consolidated financial statements and notes
thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
As of March 31, 1996
--------------------
Pro-Forma
Actual Pro-Forma (1) As Adjusted (2)
------ ------------- -----------
<S> <C> <C> <C>
Current Liabilities:
Convertible Subordinated
Debenture Payable $ 250,000 $ - $ -
Loans Payable 5,991,587 5,991,587 3,280,966
---------- ---------- -----------
Total $6,241,587 $5,991,587 $ 3,280,966
========== ========== ===========
Long-Term Debt $ 448,488 $ 448,488 $ 448,488
---------- ---------- -----------
Stockholders' Equity:
Common Stock, $.12 par value;
authorized 20,000,000 shares;
issued and outstanding;
361,488 actual outstanding, 43,379
879,488 pro-forma outstanding, 105,539
1,583,079 pro-forma as
adjusted outstanding 189,970
Additional paid-in capital 6,343,634 6,869,502 9,495,692
Accumulated Deficit (4,181,838) (4,223,164) ( 4,223,164)
---------- --------- ----------
Total Stockholders'
Equity 2,205,175 2,751,877 5,462,498
---------- --------- ----------
Total Capitalization $2,653,663 $3,200,365 $ 5,910,986
========== =========== ===========
</TABLE>
- ----------------------
(1) Adjusted to give effect to the $150,000 conversion of the convertible
subordinated debenture into 26,374 shares of common stock and the
repurchase and retirement of 21,374 shares for $180,000; payment of
$120,000 for the balance remaining with the additional $20,000 plus
$15,573 of deferred financing costs being charged to earnings and the
issuance of 513,000 shares in a private placement with net proceeds
of approximately $666,695. See Note 12 in the "Consolidated
Financial Statements" and "Certain Relationships and Related
Transactions".
(2) Adjusted to give the effect to shares issued in the rights offering
and the sale of units offered hereby and the receipt of
$2,710,621 in net proceeds and their initial application.
24
<PAGE>
MARKET INFORMATION
The principal market on which the Common Stock of the Company is traded
is the over-the-counter market. The Common Stock is traded on NASDAQ on the
Small-Cap Market and its symbol is ESTO. The following chart sets forth the
high and low sales price as determined from NASDAQ for the Common Stock for
the periods indicated as adjusted for its reverse 1 for 10 stock split
effective August 12, 1996:
High Low
---- ---
Fiscal Year Ended June 30,
1995
----
First Quarter $ 17.50 $ 8.75
Second Quarter 14.38 5.63
Third Quarter 16.25 7.50
Fourth Quarter 17.50 10.00
1996
----
First Quarter $ 20.00 $15.00
Second Quarter 20.63 11.25
Third Quarter 14.38 7.50
Fourth Quarter 14.38 6.25
1997
----
First Quarter (July 1, $ 10.00 $ 6.88
1996 through July 29,
1996)
The approximate number of holders of record of the Common Stock, as of
July 23, 1996 was 229. The Company believes there are in excess of 1,500
beneficial holders of the Common Stock. On July 29, 1996, the closing price of
the Common Stock was $8.125.
DIVIDEND POLICY
The payment by the Company of dividends, if any, rests within the
discretion of the Board of Directors and, among other things, will depend upon
the Company's earnings, capital requirements and financial condition, as well
as other relevant factors. The Company has not declared any dividends since
inception, and has no present intention of paying any dividends on its Common
Stock in the foreseeable future, as it intends to reinvest its earnings, if
any, in the Company's business. In addition, the Company's lending arrangement
with Congress prohibits the payment of dividends without their consent.
25
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Nine Months Ended March 31, 1996 Compared to Nine Months Ended March 31, 1995
The Company's net income for the nine months ended March 31, 1996 was
$58,754 compared to a net loss of $14,153 for the nine months ended March 31,
1995.
Consolidated net sales for the nine months ended March 31, 1996 were
$19,739,719, an increase of 13.7% from the comparable sales for the period
ended March 31, 1995 of $17,365,091. In the nine months ended March 31, 1996
distribution sales were $6,654,000, a decrease of $19,000 (or 0.3%) compared
to the same nine months in the prior year, while the manufacturing sales
increased 22.4% to $13,086,000 from $10,692,000 for the same period in the
prior year. The overall increase in sales is due to the improvement in the
Company's inventory position, as well as the continued improvement in overall
industry conditions.
The Company's gross profit margin for the nine months ended March 31,
1996 rose to 20.8% from 20.0% for the similar period in the prior year. The
Company believes that the continued increase in gross profit is primarily the
result of efficiencies in production, improved purchasing and improved
industry conditions.
Selling, general and administrative expenses for the nine months ended
March 31, 1996 were $3,431,369 (or 17.4% of sales) as compared to $3,183,097
(or 18.3% of sales) for the same period in the prior year. This decrease in
selling, general and administrative expenses as a percentage of sales was due
to the increase in sales volume, as well as the effect of the Company's
continuing cost reductions.
Interest expense was $599,496 for the nine months ended March 31, 1996
compared to $405,081 in the same period in the prior year. This increase was
due to increased borrowings during the current period for working capital.
Fiscal Year 1995 Compared to Fiscal Year 1994
The Company's net income for fiscal 1995 was $78,000 compared to a net
loss of $2,711,000 for fiscal 1994. Fiscal 1995 was the first profitable year
for the Company since fiscal 1989.
Consolidated net sales during fiscal 1995 increased by 15.8% to
$24,025,000 from $20,746,000 during fiscal 1994. In fiscal 1995, Distribution
Operations revenues increased 6.7% to $9,233,000 from $8,654,000 and
Manufacturing Operations revenues increased 22.3% to $14,792,000 from
$12,092,000. The Company believes that the increase in sales was due to
improved industry conditions in both segments. In addition, the net proceeds
from the 1994 Offering allowed the Company to establish increased credit lines
with its vendors.
The Company's gross profit margin increased to 19.9% in fiscal 1995 as
compared to 16.3% in fiscal 1994. The Company believes that this increase was
primarily due to continued manufacturing efficiencies and targeting sales that
produce higher gross profits.
Selling, general and administrative expenses for fiscal 1995 decreased by
26
<PAGE>
11.9% to $4,149,000 or 17.3% of sales, from $4,709,000 or 22.7% of sales in
fiscal 1994. The decrease was principally due to a reduction in bad debt
expenses of $177,000, a reduction in consulting fees and salaries to former
officers of $245,000, as well as advertising incentives and purchase discounts
of $97,000.
Interest expense was $584,000 for fiscal 1995 as compared to $1,392,000
in the prior year. This decrease was principally due to debt financing charges
of $812,000 on convertible debt and bridge-loan financing in fiscal 1994 which
did not reoccur in fiscal 1995.
The increase in the number of shares used to calculate per share amounts
in 1995 results from the number of shares sold in the 1994 Offering.
Outstanding options and warrants did not materially dilute earnings per share
in 1995, but could do so in the future if there is a significant increase in
the spread between their exercise price and the quoted market price of the
Company's Common Stock.
Adoption of New Accounting Standards
Under Financial Accounting Standards Statement No. 123 (FASB 123),
"Accounting for Stock-Based Compensation", companies are required to provide
new disclosures about stock options based upon their fair value at the date of
grant. This new rule becomes effective for fiscal years beginning after
December 15, 1995. FASB 123 provides for an option to disclose the pro-forma
effects of stock compensation on net income and earnings per share or charge
stock compensation to earnings. The Company intends to adopt the pro-forma
disclosure method in its June 30, 1997 consolidated financial statements.
Liquidity and Capital Resources
The Company had working capital as of March 31, 1996 of approximately
$1,216,000 as compared to working capital of $1,065,000 as of June 30, 1995. A
substantial portion of the Company's working capital consists of inventory,
which was $5,391,000, $4,364,000, and $3,166,000 as of March 31, 1996, June
30, 1995 and 1994, respectively. The Company is required to maintain
substantial inventories of its numerous products to meet the immediate
requirements of its customers who need products on short notice and who do not
maintain an inventory of such products.
The Company is dependent upon its revolving line of credit with Congress,
which as revised during July, 1996, expires October 1, 1999, except that
Congress at its sole option may extend the termination date to October 1,
2000. The line of credit is in an amount which was increased from $6,000,000
to $9,000,000 in July, 1996. Interest is payable monthly at 1.25% (previously
2.25%) over the prime rate, with provision to further reduce such rate to 1%
over the prime rate upon consummation of this Offering no later than December
31, 1996. Borrowings are currently limited to 55% of the Company's eligible
inventory and 85% of the Company's eligible accounts receivable. The amounts
outstanding under the line of credit at June 30, 1995 and June 30, 1994, were
$4,829,000 and $3,184,000, respectively. As of June 30, 1996, the amount
outstanding on the line of credit was $5,558,000, with an availability of
borrowing $51,000 based upon accounts receivable and inventory at that date.
The loan is subject to certain working capital and net worth covenants and is
collateralized by all of the Company's assets not previously pledged under
other loan agreements. Although the Company may use substantially all of the
net proceeds of this offering to reduce outstanding indebtedness under its
credit facility (See "Use of Proceeds"), the Company will, in all likelihood,
draw down funds under such facility in the future in order to continue to
finance its
27
<PAGE>
operations. In the event that the Company is unable to obtain financing from
its principal lender or alternative sources of financing, or if able to do so
but not on favorable terms, the Company's ability to operate profitably could
be materially adversely affected.
The Company's loan covenants with Congress were amended in July, 1996 to
provide that the Company will maintain Consolidated Tangible Net Worth (as
defined in the revised agreement) of not less than $2,100,000 from July 31,
1996 to the day immediately prior to the consummation of this Offering, and
thereafter shall not be less than $2,100,000 plus the net proceeds from this
Offering. The Company will maintain a Consolidated Working Capital (as defined
in the revised agreement) of not less than $6,100,000 from July 31, 1996 to
the day immediately prior to the consummation of this Offering, and thereafter
shall not be less than $6,100,000 plus 40% of the net proceeds from this
Offering. Congress agreed from time to time to make New Equipment Term Loans
to the Company not to exceed $1,000,000 in the aggregate, of up to: (i) 70% of
the Cost of Eligible New Equipment; or (ii) 80% of the orderly liquidation
value of such Eligible New Equipment.
In the event that the Company fails to comply with its obligations, the
Company's indebtedness could be declared immediately due and payable and, in
certain cases, the Company's assets could be foreclosed upon. Moreover, to the
extent that all of the Company's assets continue to be pledged to secure
outstanding indebtedness, such assets are unavailable to secure additional
debt financing, which may adversely affect the Company's ability to borrow in
the future.
The Company believes that its current working capital position, line of
credit and operations will be sufficient to satisfy its cash needs during the
next 12 months.
The Company has no material commitments for capital expenditures.
At the present time, the Company, together with a variety of defendants,
is a party to various asbestos-related lawsuits involving a number of
plaintiffs alleging damages from exposure to asbestos products sold by the
Company. The Company may become a party to additional asbestos-related actions
in the future. The Company is also party to a non-asbestos product liability
action. While as indicated, legal and settlement costs to the Company have not
been material to date, the Company cannot, at this time, determine the outcome
of these uncertainties which may have an adverse effect upon the liquidity of
the Company in the future.
From time to time, information provided by the Company or statements made
by its employees, or information provided in its filings with the Securities
and Exchange Commission (including this Prospectus) may contain forward
looking information. The Company's actual future results may differ materially
from those projections or statements made in such forward looking information
as a result of various risks and uncertainties, including each of those risks
set forth in the Risk Factors contained in this Prospectus. See "Risk
Factors". The market price of the Company's Common Stock may be volatile at
times in response to fluctuations in the Company's quarterly operating
results, changes in analyst earnings estimates, market conditions, as well as
general conditions and other factors general to the Company.
28
<PAGE>
BUSINESS
General
Eastco Industrial Safety Corp. is a corporation organized and existing
under the laws of the State of New York, having been incorporated on May 15,
1958. The Company, through its wholly-owned subsidiaries, Disposable, Safety
Wear, Puerto Rico Safety Equipment, and Puerto Rico Safety, manufactures
industrial protective clothing products and distributes a wide range of
industrial safety products. The Company's Manufacturing Operations sells its
products to distributors. The Company's Distribution Operations sells products
to "end users," including manufacturing companies and service businesses,
public utilities, fisheries, pharmaceutical plants, the transportation
industry and companies engaged in hazardous materials abatement.
Manufacturing Operations
Manufactured products are sold under the "Charkate / Worksafe",
"Charkate", "Worksafe" and "COVER-UP" trade names. The Company, through
Disposable, Safety Wear and Puerto Rico Safety Equipment, manufactures
disposable and reusable industrial protective apparel. Disposable protective
products items include coveralls, shirts, pants, hats, hoods, aprons, smocks,
lab coats, hazardous material handler suits, examination gowns, sleeves, shoe
covers and related items. Disposable clothing is designed to protect the user
from, among other things, splash, dirt, contamination and against a wide range
of hazardous substances. Disposable clothing is made primarily of a spun
bonded polyolefin produced solely by Dupont under the trade name Tyvek(R).
Reusable industrial protective clothing consists of items for the protection
of various parts of the body which are designed to shield the user from, among
other things, splash, dirt, contamination, heat, fire, cold and the outside
environment. Specific products manufactured include coveralls, gloves, mitts,
shirts, thermal underwear, sleeves, coats, pants, leggings, spats, bibs,
safety vests and a variety of other kinds of protective clothing and uniforms.
The Company also manufactures welding blankets, curtains and screens.
The Company's Manufacturing Operations and warehousing are located in
Puerto Rico, Alabama, Texas and California and are primarily directed from New
York. The Company's products are sold primarily in the United States and
Puerto Rico. The Company sells its manufactured products through sales
representatives. In addition, manufactured products are sold through the
Company's Distribution Operations in the Northeastern region of the United
States and Puerto Rico to "end users."
Distribution Operations
The Company, primarily through Eastco, distributes to "end users"
industrial safety products made by the Charkate / Worksafe division as well as
by non-affiliated companies. These products include hard hats, protective
glasses, ear muffs, ear plugs, respirators, goggles, face shields, rainwear,
protective footwear, first-aid kits, monitoring devices, signs and related
products. These products are sold to manufacturing companies and service
businesses, including public utilities, fisheries, hospitals, pharmaceutical
plants, the transportation industry and companies engaged in hazardous
materials abatement.
The Company's Distribution Operations are primarily directed from the
Company's offices in New York. The Company also has facilities for warehousing
and distribution of its non-manufactured products in Puerto Rico, Connecticut
and Florida. The Company sells a variety of safety products from independent
manufacturers, including, but not limited to, 3M, Racal Health and Safety,
Inc.
29
<PAGE>
and Willson Safety Products, a division of WGM Safety Corporation. Items
distributed are sold primarily in the Northeastern region of the United
States.
Sales and Marketing
The Company utilizes catalogs and telemarketing to aid in its sales
efforts; however, the Company does not engage in any mail-order business nor
sell on a retail basis. Sales are also promoted through trade shows, mailings
and advertising in directories and trade magazines. Sales are primarily to
"end users" comprised of industrial, commercial and governmental accounts. The
Company considers industrial accounts to be those businesses which are
primarily based upon manufacturing and production, while commercial accounts
are considered by the Company to be service businesses. The Company also
believes that standards established by OSHA have resulted in a need by others
to purchase the Company's products. The Company employs 10 full-time salesmen
in its Distribution Operations who sell products distributed by the Company,
and on a more limited basis, products manufactured by the Company.
Customers
For the nine months ended March 31, 1996 and the previous two fiscal
years, no one customer accounted for more than 10% of the Company's sales.
Accordingly, the Company believes it is not dependent upon any single
customer, the loss of any one of which would not have an adverse effect on the
business of the Company.
Competition
The market for industrial protective clothing and industrial safety
products is extremely competitive. The Company faces competition in all of its
product markets from large, established companies that have greater financial,
managerial, sales and technical resources than the Company, and some of the
Company's product markets are dominated by such larger companies. Larger
competitors also may be able to benefit from economies of scale and introduce
new products that compete with the Company's products.
The Company's primary competitors in its Manufacturing Operations are
Kappler Inc. and Lakeland Industries, Inc., in disposable clothing sales, and
P.G.I., Incorporated; Red Kap, a subsidiary of VF Industries Inc.; Topps Mfg.
Co. and Workrite Uniform Co. in the sale of reusable clothing. Primary
competitors in the manufacture of reusable gloves are Chicago Protective
Apparel, Inc. and Steel Grip, Inc. The Company's major competitors in its
Distribution Operations are Balco Industries, Inc. and Freemont Safety Corp.
in industrial sales, and Insulation Distributions Company, Industrial
Productions Company and Aramsco Company in abatement sales.
Suppliers
The Company is not dependent upon any one Company for a source of supply
of raw materials for its manufacturing operations other than DuPont which
supplies the Company with Tyvek(R), a raw material which is used in various
lines of its disposable products. Products utilizing Tyvek(R) accounted for
approximately 42% for the nine months ended March 31, 1996, and 35% and 29% of
consolidated sales for the fiscal years ended June 30, 1995 and June 30, 1994,
respectively. Management believes that its current relationship with DuPont is
satisfactory.
30
<PAGE>
Government Regulation
The Company's manufacturing facilities are subject to regulation and
inspection standards established by OSHA. Such facilities have not yet been
inspected for compliance with OSHA. Although the Company believes it is in
material compliance with required standards, there can be no assurance that
any inspection will not reveal that the Company has failed to comply with OSHA
and that, as a result, the Company may be required to expend sums, which can
be costly, to assure compliance with OSHA regulations.
Special Tax Considerations
Puerto Rico Safety Equipment is engaged in manufacturing in Puerto Rico
and was granted an exemption for seventeen (17) years under the Puerto Rico
Industrial Tax Exemption Act of 1963 (the "Industrial Tax Act") with respect
to Puerto Rico income taxes on the production of such items as safety
clothing, protective sleeves, coats, pants, hoods and jackets for the period
commencing January 1, 1970. On July 1, 1989 Puerto Rico Safety Equipment was
granted an extension of its exemption and has a 90% exemption from Puerto Rico
income taxes for the ten-year period ending on June 30, 1999. During this
period, Puerto Rico Safety Equipment has a 75% exemption from Puerto Rico
municipal taxes on its real and personal property utilized in its operations.
Disposable has been granted a fifteen-year exemption under the Industrial
Tax Act with respect to Puerto Rico income taxes on its operations covering
the production of disposable clothing and with respect to the property used in
its operations for the period commencing June 4, 1977, subject to the terms of
the grant. The Company was advised on September 14, 1995, that this exemption
has been extended until 2006 on the basis of a 90% exemption on Puerto Rico
income taxes and personal property taxes and a 60% exemption on municipal
license taxes.
Puerto Rico Safety Equipment and Disposable have elected to apply Section
936 of the Internal Revenue Code, effective July 1, 1979. The provisions of
Section 936 are effective until revoked by the Company. If the conditions of
Section 936(a)(2) are satisfied, the Section 936 credit equals the portion of
the United States income tax that is attributable to taxable income from
sources outside the United States derived from the active conduct of a trade
or business within a United States possession, or the sale or exchange of
substantially all of the qualified possession source investment income.
Dividends payable by each subsidiary to the Company from operations are
entitled to a 100% dividends received deduction but are subject to a 10%
withholding tax in Puerto Rico. The Omnibus Budget Reconciliation Act of 1993
(the "Omnibus Act") imposes new limitations on computing the Possession Tax
Credit under Section 936 for tax years beginning after 1993. There are two
methods for determining the credit under the new law. Under the first method,
the amount of the credit may be determined by using the so-called economic
activity limit. This attempts to limit the credit by applying various
percentages to possession-based compensation, depreciation and taxes paid or
accrued. Alternatively, the Company may make an irrevocable election when it
files its June 30, 1996 federal income tax return to have present rules apply,
but to phase out the credit to 60% of the 1994 level, and further phase down
by 5% per year to 40% in 1998 and years thereafter. Since the credit is a
function of future earnings, if any, the effect of such limitations cannot be
determined at the present time. In addition, the Omnibus Act makes the 100%
dividends received deduction subject to the Alternative Minimum Tax
Calculation. No dividends have been declared on the aggregate undistributed
earnings of Puerto Rico Safety Equipment and Disposable (which through June
30, 1995, aggregates approximately $2,458,000) and none are intended to be
declared because it is management's intention to
31
<PAGE>
reinvest the earnings from such subsidiaries indefinitely. The Company
believes that based upon current operations, the Omnibus Act will not have a
material effect on the Company for the foreseeable future.
As Puerto Rico tax exemptions are reduced or expire, the Company may be
required to pay taxes on income earned in Puerto Rico. The Company is unable
to predict the amount of such impact if such exemptions are reduced or
expire.
Employees
As of June 30, 1996, the Company has 179 employees in its Manufacturing
Operations and 14 in its Distribution Operations. In addition, there are 4
executive management employees, and 17 clerical and administrative personnel.
None of the Company's employees are covered by a collective bargaining
agreement and the Company considers its relations with its employees to be
satisfactory.
Properties
The executive offices of the Company are located at 130 West 10th Street,
Huntington Station, New York (the "Huntington Property"), which building is
owned by the Company. The Huntington Property is also used for warehousing and
distributing and contains approximately 25,000 square feet of warehouse space
and 5,000 square feet of office space. As of June 30, 1996, the Huntington
Property was subject to a first mortgage due to Associates in the amount of
$489,782. The wives of Messrs. Alan Densen and Anthony P. Towell, executive
officers and directors of the Company, and Herbert Schneiderman, a director,
are members of Associates.
The Company's wholly owned subsidiary, Disposable, leases a building in
Aguadilla, Puerto Rico, consisting of approximately 45,000 square feet, from
the Puerto Rico Industrial Development Company which is used for manufacturing
and warehousing. A lease was entered into for these premises on February 21,
1995, effective for the ten year period commencing September 1, 1993. Monthly
rent for the two-year period ending August 31, 1996 is at the rate of $7,079,
and escalates to $13,041 monthly in the final year of the lease.
The Company's wholly owned subsidiary, Safety Wear, occupies
approximately 30,000 square feet in Decatur, Alabama. The premises are
utilized for the cutting and warehousing of coveralls and the manufacturing of
disposable products. The Company pays $6,450 rent per month. The premises are
leased on a month-to-month basis. Should these facilities not be available to
the Company, the Company believes that alternative sites are available at a
comparative cost.
Legal Proceedings
The Company, in the past, manufactured certain products made of asbestos.
Such use was terminated by the Company in the mid-1980's. It has been alleged
that asbestos is a cause of cancer, such as asbestosis, mesothelioma, and
other related diseases, the symptoms of which may not appear for twenty or
more years. Since the early 1980's, numerous lawsuits have been instituted
against the Company by persons who have been exposed to asbestos and asbestos
products. Such legal proceedings, for the most part, are covered by the
Company's insurance policies.
As of June 30, 1996, the Company estimates that it is a party to
approximately 280 cases with respect to exposure to asbestos involving
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<PAGE>
approximately 1300 plaintiffs, of which no cases pertain to Puerto Rico Safety
Equipment. During the twelve months ended June 30, 1996, approximately 30 new
actions involving approximately 630 plaintiffs were commenced against the
Company. During the same period, approximately 30 actions involving
approximately 1300 plaintiffs were settled, for which the Company's
obligations on these settlements were approximately $5,500. All of the actions
against the Company to date have been brought by non-employees of the Company
and are based upon personal injury claims. The pending actions are in the
Supreme Court of the State of New York, County of New York; Superior Court of
New Jersey, Middlesex County, Law Division; and Court of Common Pleas of
Luzerne County, Trial Division of Pennsylvania. The number of first-party
plaintiffs include, in various instances, spouses of said plaintiffs. The
actions, with the exception of one pending action, involve a multitude of
defendants. The complaints allege exposure to asbestos and asbestos products
over various periods of time. Each seeks varying amounts of damages, usually
unlimited, or for each plaintiff as high as $10,000,000 for compensatory
damages and $20,000,000 for punitive damages. The Company may become a party
to additional asbestos actions in the future.
From 1981 through June 30, 1996, the Company estimates that approximately
900 actions on behalf of approximately 7500 first-party plaintiffs have been
instituted against it concerning asbestos-related claims and that
approximately 600 actions and the claims of approximately 6200 plaintiffs have
been terminated against the Company. The Company estimates that as of June 30,
1996, with the exception of defense costs, a total of approximately $1,500,000
has been paid, or agreed to be paid, in settlements to date with regard to the
terminated actions (inclusive of actions against Puerto Rico Safety Equipment)
of which all but approximately $45,000 has been paid by the Company's
insurance carriers. The foregoing is based upon information available to the
Company to date and assumes certain settlements in the process of being made
and payments to be made thereunder by insurance companies awaiting
documentation from plaintiffs. Through June 30, 1996, the Company has paid
less than $35,000 for legal and defense costs to counsel appointed by the
insurance carriers to defend it. Past results of settlements and defense costs
are not necessarily indicative of future settlements and defense costs, which
the Company is unable to predict.
For the period commencing April 1, 1968 to April 1, 1969 and March 11,
1971 to November 27, 1985, the Company believes that it has various policies
of primary insurance in different amounts which would protect it against
liability for asbestos-made, product-related personal injuries. The policies
range in amounts from $50,000 to $1,000,000 on an annual basis. The Company
also believes that since August 10, 1972 to on or about August 11, 1986 it has
had various policies for excess coverage applicable to asbestos claims on an
annual basis. These policies range in amounts from $500,000 to $10,000,000 for
excess coverage. There are gaps of approximately six weeks in the primary
coverage between March 11, 1971 to November 27, 1985 and approximately
thirty-six months in the excess coverage between August 10, 1972 and August
11, 1986. The policies of insurance are not applicable to all of the
subsidiaries of the Company, which have varying coverage, and such
subsidiaries may also be without coverage for various times of their doing
business. Not all of these policies are in the possession of the Company.
Reference is made to "Risk Factors" regarding the liquidation of certain of
the Company's insurance carriers with respect to excess product liability
coverage.
During fiscal 1994, the Company reached a settlement (the "1994
Settlement") pertaining to all pending and future cases against it in the
State of New York brought by one firm of plaintiffs' attorneys, which firm has
been primarily responsible for bringing asbestos actions against the Company
in the State of
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New York. The settlement does not apply to Puerto Rico Safety Equipment and is
only applicable to cases brought by the same law firm against the Company in
the State of New York. The Company is to be dismissed without any payment in
cases not involving any exposure to a power generating station in the State of
New York ("Powerhouse"). Where there is Powerhouse exposure, a payment of $100
is to be made for each alleged nonmalignant case and $300 for each malignant
case. Where plaintiffs consist of two spouses, such is deemed one case.
Payment is to await appropriate documentation of exposure, releases from the
plaintiffs and the agreement of each plaintiff whose case is settled.
Effective June 26, 1990, an agreement between Eastco and its primary
insurance carriers dated March 26, 1990 became effective. Eastco entered into
this agreement in an effort to resolve uncertainties as to its insurance
coverage which will cover asbestos claims against the parent Company where any
exposure to asbestos is alleged during the period 1971 to 1985, inclusive.
Pursuant to this agreement, the Company is obligated to share in the payment
of asbestos-related claims against Eastco. Pursuant to the agreement, the
Company is obligated to pay 12% of all attorneys' fees incurred on its behalf
and 17% of indemnity costs (which include judgment and settlement amounts).
The balance of these costs are to be paid by the insurance carriers, which are
parties to the agreement. The agreement is subject to policy limitations of
each insurance policy. The agreement may be terminated at any time upon ninety
(90) days' notice by any of the parties provided that termination may not be
effective as to any asbestos action that has already been placed on the trial
calendar, unless it has a scheduled trial date more than twelve (12) months
from the date the notice of termination is given. The Company has been advised
that no pending cases are on the trial calendar.
Effective during May, 1991, the Company entered into a Settlement
Agreement and Release with Mount Vernon Fire Insurance Company. Pursuant to
this Agreement, the Company discontinued its action against Mount Vernon,
which agreed that, subject to the terms of the Agreement, Mount Vernon would
reimburse the Company (where applicable) for 6.25% of attorneys' fees (52.08%
of the Company's 12% share referred to in the agreement in the previous
paragraph) and 6.25% of indemnification costs (36.76% of the Company's 17%
share referred to in the agreement in the previous paragraph). The Agreement
is not applicable to any asbestos actions against the Company where no
exposure is alleged to products manufactured or distributed by Eastco between
April 1, 1968 and April 1, 1969. The Agreement may be terminated at any time
upon 90 days' notice, but such notice is not applicable to asbestos actions
placed on a trial calendar, unless such has a trial date more than twelve
months from the date the notice of termination is given. The agreement
provides that the limit available under the policy is $100,000 plus attorneys'
fees while the agreement is in effect and is applicable only to Eastco.
Approximately $25,000 has been reimbursed by Mount Vernon Fire Insurance
Company as of June 30, 1996 for indemnification.
The Company is unable to ascertain the total extent of insurance
applicable to asbestos claims against it or the extent to which its insurance
carriers will provide coverage. The two agreements referred to above between
the Company and the insurance carriers may not be applicable to Puerto Rico
Safety Equipment, which is covered by other insurance. To date, the claims
settled by Puerto Rico Safety Equipment have been paid in full by insurance.
No agreement has been reached with the insurance companies confirming all of
these policies, which range from $100,000 to $500,000 for primary coverage and
$1,000,000 to $5,000,000 for excess coverage. The policies for Puerto Rico
Safety Equipment cover the period March 11, 1971 to July 23, 1986 with various
gaps.
An action entitled Michael F. Cilone and Marie Cilone v. Willson Safety
Products, Inc., Standard Coating Corporation, National Paint Co., Inc., E.I.
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<PAGE>
Dupont De Nemours & Co Inc., Orb Industries, Inc., PPG Industries Inc., Olde
England Paint & Varnish Corp., Oatey Co., d/b/a Bond Tight Products, Eastco
Industrial Safety Corp. was instituted on September 19, 1988 in the Supreme
Court of the State of New York, County of Kings. The Company has referred this
matter to its insurance carriers applicable to the period 1984 to 1986 and who
have provided primary insurance on an annual basis of $1,000,000 per year in
addition to applicable excess carriers. The complaint alleges four causes of
action, including one for punitive damages on behalf of Michael F. Cilone,
against the Company in the amount of $5,000,000 each and one cause of action
for $500,000 on behalf of Marie Cilone. The complaint alleges that the Company
sold respirators made by Willson Safety Products and other safety equipment to
Michael F. Cilone's employer, the New York City Transit Authority, between
1984 and 1986 and that he sustained injuries as a result of chemicals and
various materials made by the other defendants. The Company has been advised
by counsel, designated by its insurance carriers to defend it, that any
settlement and/or verdict potential should be within the policy limits of the
Company's insurance. This is based upon the present status of the case and the
fact that depositions have not yet all been completed.
The Company's insurance may not provide coverage for punitive damages
where such damages are sought against it in pending litigation. Punitive
damages are allowable in addition to compensatory damages and are awarded as a
punishment to the defendant for wrongs in a particular case as well as for the
protection of the public against similar acts, to deter the defendant from a
repetition of the wrongful act and to serve as a warning to others. Usually a
wrong, aggravated by an evil or wrongful motive or a willful and intentional
misdoing or a reckless indifference equivalent thereto, is required for a
court to award punitive damages. The Company is unable to specify whether its
actions would give rise to punitive damages. It believes that its actions
should not give rise to punitive damages. There, however, can be no assurance
that this will be the case.
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<PAGE>
MANAGEMENT
Directors and Officers
The Board of Directors is separated into two classes. All directors hold
office until the second annual meeting of shareholders of the Company
following their election or until their successors are duly elected and
qualified officers are appointed by the Board of Directors and serve at its
discretion. The directors and executive officers of the Company are as
follows:
Name Age Position
- ---------------- --- -------------------------
Alan E. Densen 61 President, Chief Executive
Officer, and Director
Lawrence Densen 38 Senior Vice President and
Director
Anthony P. Towell 64 Vice President of Finance,
Secretary, Treasurer, Chief
Financial Officer and
Director
Dr. Martin Fleisher 59 Director
James Favia 61 Director
Herbert Schneiderman 64 Director
The term of office of Alan E. Densen, Lawrence Densen, and Anthony P.
Towell does not expire until the Company's next annual meeting and when their
successors are chosen. The remaining directors' term does not expire until the
following year's annual meeting and when their successors are chosen.
Alan E. Densen has been President, Chief Executive Officer and a director
of the Company since 1958 (except for the period September 1993 to January
1994, when he served as its Senior Vice President). He was also Treasurer and
Chief Financial Officer of the Company through 1992.
Lawrence Densen, Senior Vice President and director of the Company, has
been a Vice President and a director of the Company since 1986.
Anthony P. Towell has been the Company's Vice President of Finance,
Treasurer, and Chief Financial Officer since 1992, its Secretary since 1993,
and from 1989 to 1992 its Vice President. He has been a director of the
Company since 1989. He was a director of New York Testing Laboratories, Inc.
("NYT"), a laboratory testing Company and manufacturer of automotive
accessories, from 1988 to 1995. In addition, he has been a director since 1988
of Nytest Environmental Inc. ("Nytest"), a hazardous waste testing Company.
Mr. Towell was a director of Ameridata Technologies, Inc. ("Ameridata"), a
provider of computer products and services from 1991 through 1996. The common
stock of Nytest is registered, and the common stock of Ameridata was
registered, under Section 12(g) and (b), respectively, of the Securities
Exchange Act of 1934.
Dr. Martin Fleisher, who holds a Ph.D. in biochemistry from New York
University, has been attending clinical chemist at Memorial Sloan-Kettering
Cancer Center since 1967. He has been a director of the Company since 1989.
He devotes only a limited portion of his time to the business of the Company.
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<PAGE>
James Favia has been a consultant during the past five years to Donald &
Co., which acts as the Company's investment advisor. He is a chartered
financial analyst and has an MBA in finance which he obtained from New York
University in 1959. He became a director of the Company on July 26, 1995. He
was a director of T.J. Systems until November, 1994. The common stock of T.J.
Systems is registered under Section 12(g) of the Securities Exchange Act of
1934. He devotes only a limited portion of his time to the business of the
Company.
Herbert Schneiderman has been President of the Casablanca Group, L.P.
during the past five years, a manufacturer of diversified women's sportswear.
He became a director of the Company on July 26, 1995. He devotes only a
limited portion of his time to the business of the Company.
Committees of the Board of Directors
The Board of Directors has established a Compensation Committee, a Stock
Option Committee and an Audit Committee. The Compensation Committee consists
of Messrs. Fleisher, Favia and Schneiderman. The purpose of the Compensation
Committee is to review the Company's compensation of its executives, to make
determinations relative thereto and to submit recommendations to the Board of
Directors with respect thereto.
The Stock Option Committee consists of Messrs. Fleisher, Favia and
Schneiderman. The purpose of the Stock Option Committee is to select the
persons to whom options to purchase shares of the Company's Common Stock under
the 1994 Incentive Stock Option Plan and to make various other determinations
with respect to such plans.
The Company has an Audit Committee consisting of Messrs. Towell, Favia and
Schneiderman. The purpose of the Audit Committee is to provide general oversight
of audit, legal compliance and potential conflict of interest matters.
Each of the foregoing committees met once during the fiscal year ended
June 30, 1996.
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<PAGE>
EXECUTIVE COMPENSATION
Summary
The following describes the components of the total compensation of the CEO
and each other executive officer of the Company whose total annual salary and
bonus exceeds $100,000.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long term compensation
------------------------ -----------------------------------------------
Awards Payouts
------------------------- -----------------
Other Securities All
Name and annual Restricted underlying LTIP other
principal Salary Bonus compen- stock options / payouts compen-
position Year ($) ($) sation($) award(s)($) SARs(#)(5) ($) sation($)
- -------- ---- ------ ----- ---------- --------- ---------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alan E. 1996 121,000 -0- 35,672(3) -0- 8,875(4) -0- -0-
Densen, 1995 107,930 -0- 32,875(3) -0- 84,236(2) -0- -0-
CEO 1994(1) 117,154 -0- 30,078(3) -0- -0- -0- -0-
Lawrence 1996 105,000 -0- 4,200 -0- 8,875(4) -0- -0-
Densen, 1995 89,130 -0- 4,200 -0- 84,236(2) -0- -0-
Senior VP 1994 86,936 -0- 4,200 -0- -0- -0- -0-
</TABLE>
(1) From September, 1993 to January, 1994, Mr. Densen was not CEO; he
served as Senior Vice President.
(2) Includes incentive stock options granted January 20, 1995 to acquire
2,000 shares at $10.625 as well as non-qualified stock options to
acquire 41,118 shares exercisable at $5.168 per share, each
exercisable until January 19, 2005. The non-qualified options can not
be exercised during the first five years unless (a) the audited
pre-tax profit for fiscal 1995 is greater than $50,000, then options
to acquire 41,118 shares of Common Stock may be exercised and (b) the
audited pre-tax profit for fiscal 1996 is greater than $250,000, then
options to purchase the remaining 41,118 shares of Common Stock may
be exercised. It was determined in September 1995 that the
non-qualified options can now be exercised for 41,118 shares of
Common Stock, which options provide for adjustment in the event of
anti-dilution as a result of sales of securities at less than the
exercise price and have been adjusted to and inclusive of this
Offering.
(3) Primarily life insurance premiums on the life of Alan E. Densen owned
by Mr. Densen's wife and paid for by the Company.
(4) Non-qualified options to acquire 8,875 shares of Common Stock at
$5.428 granted February 23, 1996 until February 22, 2001, in
consideration of the guaranty of overadvances by Congress to the
Company. These options provide for adjustment in the event of
anti-dilution and have been adjusted to and inclusive of this
Offering.
(5) Each person's options including only options directly held by such
person.
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<PAGE>
Stock Options
OPTION/SAR GRANTS IN LAST FISCAL YEAR
[Individual Grants]
Number of Percent of
securities total options /
underlying SARs granted Exercise
Options/SARs in fiscal or base Expiration
Name granted (#)(1) year (1) price ($/Sh) Date
- ----- -------------- -------------- ------------- -----------
Alan E. 8,875 33.3% $5.428 2/22/2001
Densen,
CEO
Lawrence 8,875 33.3% $5.428 2/22/2001
Densen,
Senior V.P.
(1) See note (4) above in the Summary Compensation Table.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Number
of securities Value
underlying unexercised in-
unexercised the-money options
Shares SARs at FY-end (#) SARs at FY-end($)
acquired on Value exercisable / exercisable /
Name exercise (#) realized ($) unexercisable(2) unexercisable
- ----- -------------- ----------- ------------- ----------------
Alan E. 0 0 51,993/41,118 129,888/108,737
Densen,
CEO (1)
Lawrence 0 0 52,674/41,118 129,888/108,737
Densen,
Senior V.P.
(1) See footnotes (2) and (4) above in the Summary Compensation Table.
Does not include warrants to acquire 1,667 shares described in Note
(1) under Principal Shareholders or options held by Lawrence Densen.
(2) Each person's options include only options directly held by such
person.
Employment Agreements and Change in Control Features
As of July 1, 1995, Alan E. Densen entered into a new employment agreement
which provides for him to serve as the Company's President for a term of five
years and Lawrence Densen also entered into a new employment agreement to
serve as Senior Vice-President for a term of five years. At the end of each
fiscal year during the term of the agreement, the agreements are automatically
extended for one additional year to be added at the end of the then current
term of the agreements, unless the Board of Directors determines not to extend
the agreements. The base annual salaries for each Alan E. Densen and Lawrence
Densen were $121,000
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<PAGE>
and $105,000, respectively, for fiscal 1996 which is to be increased at the
beginning of each fiscal year commencing July 1, 1996, at the discretion of
the Board of Directors but not less than 10% of the minimum compensation paid
to the employees in the prior fiscal year. For fiscal 1997, their base fiscal
salaries are $133,100 and $115,500, respectively. Each is entitled to receive
an annual bonus equal to 3 1/3% of the Company's earnings before interest and
taxes for the fiscal year ended June 30, 1996 and each fiscal year thereafter
during the term of the agreement, and Lawrence Densen is entitled to .75% of
the Company's revenues in excess of $20.5 million. Bonuses are to be paid
within 30 days after the completion of the Company's audited financial
statements for each fiscal year and is to be paid in cash or registered shares
of common stock of the Company. In addition, each, in accordance with Company
policy, is entitled to receive reimbursement of ordinary and necessary
business expenses, a monthly automobile allowance of $700 and disability,
medical and hospitalization insurance.
The employment agreements entered into by Messrs. Alan E. Densen and Lawrence
Densen include provisions that provide for their right to terminate the
agreements and thereby receive additional compensation, as provided below, in
the event that they are not elected or retained as President and Senior
Vice-President, respectively, or as a director of the Company; the Company
acts to materially reduce their duties and responsibilities under the
agreement; the Company changes the geographic location of their duties to a
location from the New York metropolitan area; their base compensation is
reduced by 10% or more; any successor to the Company fails to assume the
agreements; any other material breach of the agreements which is not cured by
the Company within 30 days; and a "Change of Control" by which a person, other
than a person who is an officer and/or director of the Company as of the
effective date of the agreements, or a "group" as defined in Section 13(d)(3)
of the Securities Exchange Act of 1934, becomes the beneficial owner of 20% or
more of the combined voting power of the then outstanding securities of the
Company.
In the event that Messrs. Alan E. Densen or Lawrence Densen terminate their
positions because of any of the aforesaid reasons other than a "Change of
Control", or if the Company terminates their employment in any way that is a
breach of the agreement by the employer, Messrs. Alan E. Densen and Lawrence
Densen shall be entitled to receive, in addition to their salary continuation,
as a bonus, a cash payment equal to their total base salary plus projected
expenses and bonuses for the remainder of the term thereof, payable within 30
days of termination and all stock options, warrants and other stock
appreciation rights granted by the Company to them shall become immediately
exercisable at an exercise price of $0.10 per share. In the event that either
owns or is entitled to receive any unregistered securities of the Company,
than the Company shall register such securities within 120 days of the their
termination.
In the event that there is a "Change of Control", Messrs. Alan E. Densen and
Lawrence Densen shall be paid within 30 days thereof a one-time bonus equal to
their total minimum base salary for the next three years and they shall be
immediately reimbursed for all amounts not yet received for their
participation in the $250,000 junior participation in the loans made to the
Company from Congress Financial Corporation ("Congress") during September
1993, without regard to whether such amount is currently due pursuant to the
terms thereof. Similar provisions are contained in the employment agreement
with Anthony Towell.
Messrs. A. Densen, L. Densen, and A. Towell, in modification agreements
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<PAGE>
to their employment agreements, have waived: (i) their right to bonuses based
upon the Company's earnings or sales for the fiscal years ended June 30, 1996
and June 30, 1997; (ii) their exercise rights on options and warrants and
repayment of their junior participation interests with Congress and
compensation payable in the event of a Change in Control with respect to the
Private Placement and this Rights Offering; and (iii) their right to terminate
their relationship with the Company, as per the terms of their respective
employment agreements. The modification agreements provide that their right to
terminate their employment agreements shall not be waived in the event that
there is a material breach of such agreements by the Company. Further
modifications to the above-referenced employment agreements may result from
negotiations between the Company and the Underwriter.
During February 1996, Messrs. A. Densen, L. Densen, and A. Towell
guaranteed to Congress overadvances to the Company of up to $500,000 in
excess of the Company's eligible borrowings. The Company issued warrants
for a term of five years in consideration for their guaranty to each
Messrs. A. Densen, L. Densen, and A. Towell to purchase 8,875 shares of
Common Stock at an exercise price of $5.428 per share commencing February
23, 1996. The overadvances have since been repaid and their guarantees
are no longer in effect.
Compensation to Directors
No compensation is paid to officers who also serve as directors for their
serving solely as a director. Outside directors are compensated at the rate of
$500 for each board of directors meeting which they attend in person.
Indemnification of Directors and Executive Officers
The Company's Certificate of Incorporation provides that the Company
shall, to the fullest extent permitted by Section 722 of the Business
Corporation Law of the State of New York, as the same may be amended and
supplemented, indemnify any and all persons whom it shall have power to
indemnify under said section from and against any and all of the expenses,
liabilities or other matters referred to in or covered by said section, and
the indemnification provided for herein shall not be deemed exclusive of any
other rights to which those indemnified may be entitled under any By-Law,
agreement, vote of stockholders or disinterested Directors or otherwise.
Section 722 of the Business Corporation Law of the State of New York contains
provisions entitling directors and officers of the Company to indemnification
from judgments, fines, amounts paid in settlement and reasonable expenses,
including attorney's fees, as the result of an action or proceeding in which
they may be involved by reason of being or having been a director or officer
of the Company provided said officers or directors acted in good faith, the
acts were not the result of deliberate dishonesty, and that the indemnitee
does not personally gain or profit where not legally entitled to do so.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, or otherwise, the Company has been
informed that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is therefor
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer or
41
<PAGE>
controlling person of the Company in the successful defense of any action,
suit or proceeding) is asserted by such director, officer of controlling
person in connection with the securities being registered, the Company will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and is therefore unenforceable and will be
governed by the final adjudication of such issue.
1996 Incentive Stock Option Plans
At a special meeting of shareholders held on August 12, 1996, the
shareholders approved: (i) an incentive stock option plan (the "1996 Incentive
Plan"); and (ii) a non-qualified stock option plan (the "1996 Non-Qualified
Plan").
1996 Incentive Stock Option Plan
The 1996 Incentive Plan authorizes the grant of 300,000 shares of Common
Stock, subject to adjustment as provided in the plan. Eligibility to
participate in the 1996 Incentive Plan is limited to key employees of the
Company and its subsidiaries. The 1996 Incentive Plan terminates May 12, 2006.
The term of each option may not exceed ten years. Options will not be
transferable except upon death and, in such event, transferability will be
effected by will or by the laws of descent and distribution. An option granted
under the 1996 Incentive Plan may not be exercised unless, at the time of
exercise, the optionee is then in the Company's employ and has completed at
least twelve (12) months of continuous employment with the Company from the
date of grant of the option. Incentive Stock Options may not be granted at
less than 100% of fair market value at the time of the grant. Options granted
to employees who own more than 10% of the Company's outstanding Common Stock
will be granted at not less than 110% of fair market value for a term of five
years. The aggregate market value of stock for which Incentive Stock Options
are exercisable during any calendar year by an individual is limited to
$100,000, but the value may exceed $100,000 for which options may be granted
to an individual. Payment of the exercise price for options under the 1996
Incentive Plan are to be made in cash or by the exchange of Common Stock
having equivalent value.
No options have been granted under this Plan.
1996 Non-Qualified Stock Option Plan
The 1996 Non-Qualified Plan authorizes stock options to key employees,
consultants and others to acquire shares of the Company's Common Stock. The
1996 Non-Qualified Plan terminates ten (10) years after stockholder approval.
Options granted shall specify the exercise price, the duration of the option,
the number of shares to which the option applies and such other terms and
conditions not inconsistent with the 1996 Non-Qualified Plan as the committee,
or other legally permissible entity, administering the 1996 Non-Qualified Plan
shall determine provided that the option price shall not be less than 100% of
the fair market value at the time the option is granted and no option may be
exercisable for more than ten (10) years after the date on which it is
granted. Payment of the exercise price for options under the 1996
Non-Qualified Plan is to be made in cash, by the exchange of Common Stock
having equivalent value or through a "Cashless Exchange". If a Participant
elects to utilize a
42
<PAGE>
"Cashless Exercise" (as defined in the Plan), he shall be entitled to a credit
equal to the amount of that equity by which the current Fair Market Value
exceeds the option price on that number of options surrendered and to utilize
that credit to exercise additional options held by him that such equity could
purchase. There shall be canceled that number of options utilized for the
credit and for the options exercised with such credit.
No options have been granted under this Plan.
43
<PAGE>
PRINCIPAL SHAREHOLDERS
The following are known by the Company, as of the date hereof, to be the
beneficial owners of more than five percent of Common Stock:
<TABLE>
<CAPTION>
Percent Percent
of Class of Class
Name and Address Amount and Nature Before After
Title of Class of Beneficial Owner of Beneficial Owner Offering Offering
- -------------- ------------------- ------------------- -------- -------
<S> <C> <C> <C>
Common Stock Alan E. Densen 59,396(1)(4)(5) 6.4% 3.7%
$.12 par value 130 West 10th Street shares direct and
Huntington Station, NY beneficial
Common Stock Lawrence Densen 53,608(2)(4)(5) 5.8% 3.4%
$.12 par value 130 West 10th Street shares direct and
Huntington Station, NY beneficial
Common Stock Anthony P. Towell 138,739(3)(4)(5) 13.7% 8.6%
$.12 par value 130 West 10th Street shares direct and
Huntington Station, NY beneficial
Common Stock George Schiavoni 76,000 8.6% 0%(6)
$.12 par value 46 Bayview Avenue shares direct and
Sag Harbor, NY beneficial
</TABLE>
- ------------------
(1) Includes warrants, held by Mr. Densen's wife, to acquire 1,667 shares
of Common Stock, exercisable at $13.00 per share which expire April
11, 1999. Also includes incentive stock options granted under the
1994 Plan to acquire 2,000 shares of Common Stock, exercisable at
$10.625 which expire January 19, 2005. Amount indicated does not
include shares beneficially owned by Lawrence Densen, son of Alan E.
Densen.
(2) Does not include shares beneficially owned by Alan E. Densen, father
of Lawrence Densen. Includes 700 Class A Warrants; incentive stock
options granted under the 1983 Incentive Stock Option Plan (the
"1983 Plan") to acquire 625 shares which expire December 17, 1996
and are exercisable at $26.664 per share; incentive stock options
granted under the 1983 Plan to acquire 56 shares of Common Stock
which expire May 31, 1998 and are exercisable at $30.00 per share;
and incentive stock options granted under the 1994 Plan to acquire
2,000 shares of Common Stock , which expire January 19, 2005 and are
exercisable at $10.625.
(3) Includes 1,500 Class A Warrants; warrants, held by Mr. Towell's wife,
to acquire 1,667 shares of Common Stock, exercisable at $13.00 per
share which expire April 11, 1999; and incentive stock options
granted under the 1994 Plan to acquire 2,000 shares of Common Stock,
exercisable at $10.625 which expire January 19, 2005. Also includes
warrants to acquire 90,941 shares of Common Stock exercisable at
$5.718 per share which expire April 11, 1999, which warrants provide
for an anti-dilution adjustment as a result of sales of securities at
less than the exercise price and have been adjusted for this
Offering. Prior to this Offering, the number of shares under the
Towell Warrant was 88,645 at an exercise price of $6.292.
(4) Includes non-qualified options to acquire 41,118 shares to each
Messrs. A. Densen, A. Towell and L. Densen exercisable until January
19, 2005 at an exercise price of $5.168. Does not include options
to acquire an additional 41,118 shares to each Messrs. A. Densen, A.
Towell and L. Densen which cannot be exercised until January 20,
2000 unless the pre-tax profit for fiscal 1996 is greater than
44
<PAGE>
$250,000. These options provide for an anti-dilution adjustment as a
result of sales of securities at less than the exercise price and
have been adjusted for this Offering. Prior to this Offering, the
number of shares under these options was 80,158 at an exercise price
of $5.302. See "Certain Relationships and Related Transactions".
(5) Includes warrants to acquire 8,875 shares of Common Stock exercisable
at $5.428 per share, which expire February 22, 2001. These warrants
provide for an adjustment anti-dilution adjustment as a result of
sales of securities at less than the exercise price and have been
adjusted for this Offering. Prior to this Offering, the number of
shares under these warrants was 8,348 at an exercise price of $5.771.
See "Certain Relationships and Related Transactions".
(6) Mr. Schiavoni is a selling shareholder and this Prospectus assumes
the sale of his shares of Common Stock.
The following table sets forth as of August 12, 1996, the number of
shares of Common Stock owned by each of the present directors of the Company,
together with certain information with respect to each:
Percent Percent
of Class of Class
Amount and Nature Before After
Name and Address of Beneficial Owner Offering Offering
- ---------------- ------------------- -------- --------
Alan E. Densen 59,396(1) 6.4% 3.7%
130 West 10th Street shares direct
Huntington Station, NY and beneficial
Anthony P. Towell 138,739(2) 13.7% 8.6%
130 West 10th Street shares direct
Huntington Station, NY and beneficial
Lawrence Densen 53,608(3) 5.8% 3.4%
130 West 10th Street shares direct
Huntington Station, NY and beneficial
Dr. Martin Fleisher 1,000(4) * *
130 West 10th Street shares direct
Huntington Station, NY and beneficial
James Favia 2,000(5) * *
130 West 10th Street shares direct
Huntington Station, NY and beneficial
Herbert Schneiderman 3,833(6) * *
130 West 10th Street shares direct
Huntington Station, NY and beneficial
All executive officers
and directors
as a group
(6 persons) 258,576 23.0% 14.8%
- -------------------
* Less than 1%
(1) See footnotes (1), (4), and (5) in the preceding chart.
(2) See footnotes (3), (4), and (5) in the preceding chart.
(3) See footnotes (2), (4), and (5) in the preceding chart.
(4) Includes stock options to acquire 1,000 shares of Common Stock.
(5) Includes stock options to acquire 1,000 shares of Common Stock.
(6) Includes warrants and stock options to acquire 1,833 shares of
Common Stock.
The foregoing reflects the outstanding options and warrants held by each of
such persons, and reflects all adjustments for anti-dilution rights through
this Offering.
45
<PAGE>
DESCRIPTION OF SECURITIES
Rights
The Rights offered hereby to the Company's existing stockholders consist
of the right to acquire one Unit of the Company's Common Stock at a price of
$5.00 per Unit on the basis of 4 Rights for each 5 shares of Common Stock
currently owned by such holder. No fractional Rights will be issued. Rights
will be rounded to the nearest lower whole number. The Rights are
nontransferable and expire upon the Expiration Date of the Offering unless
exercised by the holder thereof.
Units
The Units offered in the Offering each consist of one share of Common Stock
and one Class B Warrant.
The Class B Warrants are immediately detachable, transferable and
separately tradeable from the Common Stock with which they are issued. The
Units will be evidenced by separate certificates for the Common Stock and the
Class B Warrants which comprise the Units.
Common Stock
The authorized capital stock of the Company is 20,000,000 shares of
Common Stock, $0.12 par value per share. The holders of Common Stock (i) have
equal ratable rights to dividends from funds legally available, therefore,
when, as and if declared by the Board of Directors of the Company; (ii) are
entitled to share ratably in all of the assets of the Company available for
distribution to holders of Common Stock upon liquidation, dissolution or
winding up of the affairs of the Company; (iii) do not have preemptive,
subscription or conversion rights and there are no redemption or sinking fund
provisions applicable thereto; and (iv) are entitled to one vote per share on
all matters on which shareholders may vote at all meetings of shareholders.
The holders of shares of Common Stock of the Company do not have
cumulative voting rights, which means that the holders of more than 51% of
such outstanding shares voting for the election of Directors can elect all of
the Directors to be elected, if they so choose, and, in such event, the
holders of the remaining shares will not be able to elect any of the Company's
Directors.
Class B Warrants
The Class B Warrants will be issued pursuant to the Warrant Agreement
between the Company and American Stock Transfer and Trust Co., as warrant
agent (the "Warrant Agent"). None of the Class B Warrants have been issued
prior to the Offering. The following discussion of certain terms and
provisions of the Class B Warrants is qualified in its entirety by reference
to the detailed provisions of the Class B Warrant Agreement and the Class B
Warrant certificates, the forms of which have been filed as an exhibit to the
Registration Statement of which this Prospectus forms a part.
46
<PAGE>
Each Class B Warrant entitles its holder to purchase one share of Common
Stock at an exercise price of $6.25 per share. The Class B Warrants expire on
_______________________ (three years after the Effective Date). The Class B
Warrants may be redeemed by the Company at any time, commencing eighteen
months after the Effective Date, or sooner with the sole consent of the
Underwriter (but no sooner than nine months from the date of this Prospectus)
at a redemption price of $.01 per Warrant upon 10 days prior written notice,
provided the closing high bid price of the Common Stock for the 15 consecutive
trading days ending on the third day prior to the date of notice of redemption
is in excess of $9.375 (or 150% of the exercise price of the Class B Warrants
to be proportionately adjusted for any stock dividends and stock splits
occurring after the Effective Date and which may be adjusted to 150% of the
current exercise price of the Class B Warrants, if such exercise price is
changed) per share. Warrantholders shall exercise rights until the close of
business on the day preceding the date fixed for redemption.
In order for a holder to exercise a Class B Warrant, and as required in
the Warrant Agreement, there must be a current registration statement on file
with the Commission pertaining to the shares of Common Stock underlying the
Class B Warrants, and such shares must be registered or qualified for sale
under securities laws of the state in which such warrantholder resides or such
exercise must be exempt from registration in such state. The Company will be
required to file post-effective amendments to the Registration Statement of
which this Prospectus forms a part during the nine month period from the date
hereof, when events require such amendments. In addition, the Company has
agreed with the Underwriter to use its best efforts to keep the Registration
Statement covering the shares underlying the Class B Warrants current and
effective. There can be no assurance however, that such Registration Statement
(or any other Registration Statement filed by the Company to cover shares of
Common Stock underlying the Class B Warrants) can be kept current. If a
Registration Statement covering the shares of Common Stock is not kept current
for any reason, or if the shares underlying the Class B Warrants are not
registered in the state in which a holder resides, the Class B Warrants will
not be exercisable and will be deprived of any value.
Holders of the Class B Warrants will be protected against dilution upon
the occurrence of certain events, including, but not limited to stock
dividends, stock splits, reclassifications, mergers, and sales of Common Stock
below the Exercise Price or then-current market value. However, holders of
Class B Warrants will have no voting rights and are not entitled to dividends.
In the event of liquidation, dissolution or winding up of the Company, holders
of Class B Warrants will not be entitled to participate in any distribution of
the Company's assets.
The purchase price payable upon exercise of the Class B Warrants is to be
paid in lawful money of the United States. The Company is not required to
issue certificates representing fractions of shares of Common Stock upon the
exercise of Class B Warrants, but with respect to any fraction of a share, it
will make payment in cash based upon the market price of the Common Stock as
determined by the Warrant Agent.
47
<PAGE>
Transfer Agent, Warrant Agent and Registrar
The Transfer Agent and Warrant Agent for the Common Stock and the Class
B Warrants is American Stock Transfer and Trust Co., 40 Wall Street, New
York, New York 10005.
Other Publicly Held Securities and Preferred Stock
Class A Warrants
The Company has issued and outstanding 2,262,500 Class A Warrants,
exercisable for 226,250 shares of Common Stock, which are publicly tradeable
and are exercisable at a price of $13.00 per share until April 11, 1999. Such
holders are protected against dilution upon the occurrence of certain events
including but not limited to stock dividends, stock splits, reclassifications,
and mergers, but have no voting rights and are not entitled to dividends. In
the event of liquidation, dissolution, or winding up of the Company, holders
of Class A Warrants are not entitled to participate in the distribution of any
of the Company's assets.
Preferred Stock
Pursuant to shareholder approval at the August 12, 1996 Special
Shareholders' Meeting, the Company is authorized to issue 1,000,000 shares of
preferred stock par value $.01. The Board of Directors has the express
authority, without further action of the stockholders, to issue shares of
Preferred Stock from time to time in one or more series and to fix before
issuance with respect to each series: (a) the designation and the number of
shares to constitute each series, (b) the liquidation rights, if any, (c) the
dividend rights and rates, if any, (d) the rights and terms of redemption, if
any, (e) whether the shares will be subject to the operation of a sinking or
retirement fund, if any, (f) whether the shares are to be convertible or
exchangeable into other securities of the Company, and the rates thereof, if
any, (g) any limitation on the payment of dividends on the Common Stock while
any such series is outstanding, if any, (h) the voting power, if any, in
addition to the voting rights provided by law, of the shares, which voting
powers may be general or special, and (i) such other provisions as shall not
be inconsistent with the certificate of incorporation. All the shares of any
one series of the Preferred Stock shall be identical in all respects. No
preferred shares are currently outstanding.
48
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Of the 879,488 shares of Common Stock of the Company outstanding as of the
Effective Date, _____ shares are restricted securities, as that term is
defined in Rule 144 promulgated under the Securities Act of 1933 (the
"Securities Act"). 399,000 shares have been registered for sale concurrently
herewith subject to an agreement with the Underwriter not to sell such shares
for a period of three months without the prior written consent of the
Underwriter, and 114,000 shares have been registered for sale concurrently
herewith subject to an agreement with the Underwriter not to sell such shares
for a period of nine months without the prior written consent of the
Underwriter. Of the 879,488 shares, _____ shares are owned by affiliates of
the Company, as that term is defined under the Securities Act, Absent
registration under the Securities Act, the sale of such shares is subject to
Rule 144, as promulgated under the Securities Act. In general, under Rule 144,
subject to satisfaction of certain other conditions, a person, including an
affiliate of the Company, who has beneficially owned restricted shares of
Common Stock for at least two years is entitled to sell, within any
three-month period, a number of shares that does not exceed the greater of 1%
of the total number of outstanding shares of the same class, or if the Common
Stock is quoted on NASDAQ, the average weekly trading volume during the four
calendar weeks preceding the sale. A person who has not been an affiliate of
the Company for at least three months immediately preceding the sale and who
has beneficially owned the shares of Common Stock for at least three years is
entitled to sell such shares under Rule 144 without regard to any of the
volume limitations described above. The Company's executive officers and
directors have agreed not to sell their shares for a period of eighteen months
from the Effective Date without the prior consent of the Underwriter. The
Underwriter may consent to the sale of such shares at any time, in its sole
discretion, upon the request of the holder. The Underwriter's decision to
consent will be based upon the current market conditions, liquidity of the
Common Stock, as well as such other factors the Underwriter deems appropriate.
No public announcement will be made with respect to the foregoing.
49
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During September 1993, the Company's lender, Congress, agreed to provide
an overadvance to the Company of $500,000. In connection therewith,
Messrs. A. Densen, L. Densen and A. Towell obtained a junior
participation interest from Congress by advancing $250,000 of their funds
to Congress. $250,000 of this overadvance was repaid to Congress during
fiscal 1994. Mr. L. Densen was repaid $35,000 of the previous balance in
full by Congress during May, 1996. The remaining balance of $215,000
will be repaid by Congress, at its option, to Messrs. A. Densen and A.
Towell, subject to the availability of funds.
A group of investors (the "Associates") holds a first mortgage on the
Company's executive offices and warehouse facility in the principal amount of
$489,782 as of June 30, 1996. The wives of Alan E. Densen and Anthony P.
Towell, executive officers and directors of the Company, and Herbert
Schneiderman, a director of the Company, are members of Associates.
On January 20, 1995, the Company granted non-qualified options to acquire
41,118 shares of Common Stock to each Messrs. A. Densen, A. Towell, and L.
Densen. These options are exercisable until January 19, 2005 at an exercise
price of $5.168, are subject to anti-dilution provisions, and cannot be
exercised during the first five years unless pre-tax profit for fiscal year
1995 is greater than $50,000. It was determined in September 1995 that these
options can now be exercised for 41,118 shares of Common Stock. An additional
41,118 options were granted on January 20, 1995, which are exercisable until
January 19, 2005, at an exercise price of $5.168 but which cannot be exercised
during the first five years unless pre-tax profit for fiscal year 1996 is
greater than $250,000. All of the options granted on January 20, 1995 were
granted in consideration of previous sacrifices including reduction in
salaries, cancellation of options, and other surrendered benefits by executive
officers as well as the turnaround performance achieved by the Company. The
turnaround achieved by the Company in its performance can be directly related
to the efforts of Messrs. A. Densen, A. Towell, and L. Densen.
On January 31, 1995, the Company's board of directors reduced the exercise
price of the 2.3 million outstanding Class A Warrants issued in connection
with the 1994 Public Offering to $13.00 per share. At the same time, the board
of directors also reduced the exercise price to $13.00 per share with regard
to the 10,833 warrants ("Associate Warrants") issued to a group of investors,
including the spouses of Alan Densen (1,667 Associate Warrants owned by her)
and Anthony P. Towell (1,667 Associate Warrants owned by her), and Herbert
Schneiderman (833 Associate Warrants owned by him), in connection with a
reduction of indebtedness regarding the Company's premises; 90,941 warrants
purchased by Anthony P. Towell, the Company's Chief Financial Officer, from
Scorpio Partners, L.P.; 4,078 Royce warrants issued in connection with a 1991
public offering to the same Underwriter herein; and 833 warrants in
connection with a 1991 bridge loan. All these warrants have also been extended
to April 11, 1999. These warrants
50
<PAGE>
were all adjusted as indicated so as to treat them on an equal basis and to
provide incentives for them to be exercised.
The Company had employment agreements with Messrs. A. Densen, A. Towell and L.
Densen, which commenced as of the effective date of the Company's 1994 public
offering in April, 1994. As of July 1, 1995, these executive officers entered
into new agreements. See "Executive Compensation Employment Agreements and
Change in Control Features" with regards to provisions contained in the
employment agreement of Alan E. Densen, the Company's President and CEO, and
Lawrence Densen, the Company's Senior Vice-President. Similar provisions are
contained in the employment agreement with Anthony P. Towell. Messrs. A.
Densen, L. Densen, and A. Towell, in modification agreements to their
employment agreements, have waived: (i) their right to bonuses based upon the
Company's earnings or sales for the fiscal years ended June 30, 1996 and June
30, 1997; (ii) their exercise rights on options and warrants and repayment for
their junior participation interests with Congress and compensation payable in
the event of a Change in Control with respect to the Private Placement and
this Rights Offering; and (iii) their right to terminate their relationship
with the Company, as per the terms of their respective employment agreements.
The modification agreements provide that their right to terminate their
employment agreements shall not be waived in the event that there is a
material breach of such agreements by the Company.
On April 18, 1995, the Company entered into an agreement with Donald to act as
its investment adviser for a term of three years at a retainer of $3,000 per
month. The agreement may be terminated for cause at any time and after
eighteen (18) months by either party upon forty-five days notice. Donald was
also granted a five year warrant to purchase 12,500 shares exercisable at
$12.50 per share, the closing market price on the date of grant. James Favia,
a director of the Company, serves as a consultant to Donald.
On July 10, 1995 the Company terminated its relationship with Lew Lieberbaum &
Co., Inc. ("Lew Lieberbaum"), the Company's underwriter in its 1994 public
offering. Pursuant to an agreement dated July 10, 1995, the Company canceled
all of Lew Lieberbaum's rights under the Underwriting Agreement (the
"Underwriting Agreement"), including, but not limited to, the right of first
refusal to act on behalf of the Company in future transactions, the
cancellation of all Underwriter's Warrants held by Lew Lieberbaum or its
affiliates, their right to representation on the Company's board of directors
and the termination of any obligation by holders of securities subject to a
"lock-up" to obtain the permission of Lew Lieberbaum prior to sale or other
disposition of said securities. At the same time, Leonard A. Neuhaus and
Sheldon Lieberbaum, who are affiliated with Lew Lieberbaum, resigned as
directors of the Company. In exchange, the Company issued 10,000 shares of
common stock to Lew Lieberbaum.
During February 1996, Messrs. A. Densen, A. Towell and L. Densen,
executive officers and directors of the Company, guaranteed to Congress
overadvances to the Company of up to $500,000 in excess of the Company's
eligible borrowings. The Company issued warrants for a term of five
years in consideration for their guaranty to each Messrs. A. Densen, A.
51
<PAGE>
Towell, and L. Densen to purchase 8,875 shares of Common Stock at $5.428 per
share which expire on February 22, 2001, and are subject to anti-dilution
provisions. The overadvance has since been repaid and their guarantees have
been returned to them.
On June 28, 1996, the Company completed the Private Placement Offering,
pursuant to which it issued 399,000 shares at $1.50 per share to 20 investors,
pursuant to provisions for exemption from registration under the Securities
Act of 1933 as amended. The terms of the Private Placement Offering were
established by negotiation between the Company and Royce Investment Group,
Inc., a registered broker/dealer (the "Private Placement Agent"). Under the
terms of the Private Placement Offering, 10 1/2 units (the "Units") were
offered, and sold, in multiples of $57,000 per Unit. Each full Unit consists
of 38,000 shares of the Company's Common Stock, par value $0.12 per share. The
Company used net proceeds from the Private Placement Offering to pay off a
short-term loan in the amount of $500,000 from Elono Portfolio S.A., which had
been used to reduce the amount due to Congress. Gross proceeds from the
Private Placement Offering were $598,500. The Underwriter acted as Placement
Agent and received a commission of 10% and a 3% non-accountable expense
allowance. On July 9, 1996, the Company completed an additional private
placement offering for 114,000 shares at $1.50 per share to 5 investors,
pursuant to provisions for exemption from registration under the Securities
Act of 1933 as amended. The shares sold in the foregoing private placements
are being registered concurrently herewith.
THE OFFERING
The Rights
The Company is granting to holders of all its outstanding Common Stock of
record on ____________ ("Record Date"), in those states where qualified, or
exempt from qualification, (see page ____ for list of such states), the
nontransferable Rights to subscribe for Units, each of which consists of one
share of common stock $0.12 par value (the "Common Stock") of the Company and
one Class B Redeemable Common Stock Purchase Warrant (the "Class B Warrants")
of the Company on the basis of 4 Rights for each 5 shares of Common Stock
owned on the Record Date. Inasmuch as the Rights are not transferable, there
will be no market for the Rights, nor will Royce Investment Group, Inc. (the
"Underwriter") be purchasing any Rights.
52
<PAGE>
Expiration Date
The Rights Offering will terminate, and the Rights will expire, at 5:00
p.m. New York Time, on __________________, 1996 (the "Expiration Date").
Method of Exercising Rights
Rights may be exercised by completing and signing a rights certificate.
The completed and signed subscription form, accompanied by payment in full of
the Subscription Price for all Units purchased, must be received by the
Subscription Agent before the Expiration Date.
The executed rights certificate and payment should be mailed or delivered
to the Subscription Agent at the following address:
American Stock Transfer & Trust Co.
40 Wall Street
New York, New York 10005
Payment of the Subscription Price must be made by certified check, bank
check or money order payable to American Stock Transfer & Trust Co.
A subscription also will be in acceptable form if a properly completed
and signed subscription form has been deposited with a bank, trust company, or
member firm of the New York or American Stock Exchange, or the National
Association of Securities Dealers, provided that, before the Expiration Date,
the Subscription Agent has received a letter or telegraphic notice from the
bank, trust company, or member firm setting forth the subscriber's name and
the number of shares subscribed for, guaranteeing payment of the full
Subscription Price (which must be received by the Subscription Agent within
five calendar days after the Expiration Date), and stating that the
rights certificate has been properly completed and signed and has been or
will be forwarded to the Subscription Agent by the bank, trust company, or
member firm. Acceptance of subscriptions in the foregoing manner will be
subject to withholding delivery of the shares subscribed for until receipt of
the duly executed rights certificate and payment of the aggregate Subscription
Price. No formal arrangements for the deposit of rights certificate have been
made with any bank, trust company, or member firm.
Certificates representing the Units purchased by exercising Rights will
be issued as soon as practicable after acceptance, provided that the
Subscription Agent has received a properly completed subscription agreement
accompanied by proper payment in full of the Subscription Price. The sale of
the unsubscribed Units to the Underwriter is expected to occur on the seventh
calendar day after the Expiration Date. All funds received by the Subscription
Agent will, upon its acceptance of subscriptions and its authorization of the
issuance of certificates representing the Common Stock, be placed in the
Subscription Agent's escrow account.
All questions as to the validity, form, eligibility (including times of
receipt and beneficial ownership) and the acceptance of rights certificates and
the Subscription Price will be jointly determined by the
53
<PAGE>
Company and the Underwriter, whose determinations will be final and binding.
Once made, subscriptions are irrevocable, and no alternative, conditional or
contingent subscriptions will be accepted. The Company reserves the absolute
right to reject any or all subscriptions not properly submitted or the
acceptance of which would, in the opinion of the Company's counsel, be
unlawful. The Company also reserves the right to waive any irregularities or
conditions, and the Company's and the Underwriter's joint interpretations of
the terms and conditions of the Offering shall be final and binding. Any
irregularities in connection with subscriptions must be cured within such time
as the Company shall determine unless waived. The Company and the Underwriter
are not under any duty to give notification of defects in such subscriptions
and will not have any liability for failure to give such notifications.
Subscriptions will not be deemed to have been made until such irregularities
have been cured or waived and, if rejected, will be returned to the holder of
the Rights as soon as practicable.
Standby Commitment
In accordance with a standby underwriting agreement (the "Standby
Agreement") entered into on the date of this Prospectus and pursuant thereto
the Underwriter shall be obligated to purchase all of the Units subject to the
Rights Offering which are not subscribed for in said offering on the second
business day following the Expiration Date of such offering and commence the
distribution of such securities on or after said time. The Underwriter will
pay for the securities on the seventh calendar day after the Expiration Date,
at the subscription price set forth on the cover page of the Prospectus. If
all of the Rights are exercised, the Underwriter will not, subject to the
following, purchase any of the Units pursuant to the Standby Agreement.
In the event that the unsubscribed Units to be purchased by the
Underwriter is less than 300,000 Units, the Underwriter will have the right
but not the obligation to purchase a minimum of 300,000 of these Optional
Units at the Subscription Price less a 10% discount and 3% nonaccountable
expense allowance.
The Underwriter will offer to sell to the public all of the components of
the Units it acquires from the Company pursuant to the Standby Agreement (the
"Standby Offering") at prices which may exceed the highest asked price as
reported on NASDAQ. If any of the Company's affiliated stockholders acquire
Units or components thereof directly from the Underwriter in the Standby
Offering, such purchases, if any, will not exceed 10% of the shares being
offered hereby. Any securities acquired by affiliates in the Offering or the
Standby Offering will be acquired for investment purposes only and made
subject to a "lock-up" agreement for eighteen (18) months from the date of
this Prospectus with the Underwriter. See "Description of Securities-Potential
Future Sales of Common Stock pursuant to Rule 144."
The Underwriter may terminate its obligations under the Standby Agreement
if there is a material adverse change in the condition of the Company, or if
certain other events occur. In such event investors will not have the right to
cancel their subscriptions. The Company has the
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<PAGE>
right to retain the monies from Rights subscribed for. The Rights Offering is
distinct and separate from the Standby Offering under which the Underwriter
has a market out right of cancellation as described herein.
Tax Consequences of the Offering
Investors and stockholders are urged to consult with their independent
tax advisors for the tax consequences of this Offering for the following
reasons.
Individual shareholders may be subject to federal and/or state
inheritance or estate taxes. A shareholder's evaluation of the federal and/or
state income tax consequences of this Offering may depend on his federal
and/or state tax situation. The Company is unable to determine the federal
and/or state income tax consequences to investors and stockholders of the
Company with regard to their subscribing, or failing to subscribe, for the
Rights.
55
<PAGE>
UNDERWRITING
Pursuant to a Standby Underwriting Agreement between the Underwriter and
the Company dated as of the date of this Prospectus (the "Standby Agreement"),
the Underwriter has participated in establishing the terms and structure of
the Offering. Pursuant to the Standby Agreement, the Company will pay to the
Underwriter a 10% standby fee of $351,795.50 ($.50 per share)in consideration
of its agreement to enter into the standby commitment and also will pay the
expenses of the Underwriter, on a 3% nonaccountable basis, in the amount of
$105,538.65 ($.15 per share). In the event that the number of unsubscribed
Units to be purchased by the Underwriter is less than 300,000 Units, the
Underwriter will have the right but not the obligation to purchase a minimum
of 300,000 Units at the Subscription Price less a 10% discount and 3%
nonaccountable expense allowance to be purchased within 30 days of the date of
the Closing. These amounts will be paid by the Company to the Underwriter
whether or not all of the Rights are exercised and the Underwriter actually
purchases any Units under the Standby Agreement, unless the Standby Offering
is terminated pursuant to the terms of the Standby Agreement. In addition, the
Company has agreed to pay to the Underwriter for its agreement to act as a
financial consultant for a term of one year from the Effective Date, a fee
totaling 2% of the proceeds of the Offering (including the Optional Units)
payable on the Closing and the sale of the Optional Units.
The Offering is not being underwritten. However, as described above under
"The Offering-Standby Commitment," subject to the terms and conditions of the
Standby Agreement, the Underwriter has committed to purchase, at the
Subscription Price, all of the Units not subscribed for in the Offering. The
Underwriter's commitment to the Company in this regard is made on a "firm
commitment" basis except if, in the reasonable judgment of the Underwriter, it
is impracticable to consummate the Standby Offering under normal "market out"
conditions, such as (i) any material adverse change in the business, property
or financial condition of the Company; (ii) trading in securities on the New
York Stock Exchange, the American Stock Exchange or NASDAQ System having been
suspended or limited or minimum prices having been established on either such
Exchange or System; (iii) a banking moratorium having been declared by either
federal or state authorities; (iv) an outbreak of major hostilities or other
national or international calamity having occurred; (v) any action having been
taken by any government in respect of its monetary affairs which, in the
reasonable opinion of the Underwriter, has a material adverse effect on the
United States securities markets; (vi) any action, suit or proceeding at law
or in equity against the Company, or by any Federal, State of other
Commission, board or agency wherein any unfavorable decision would materially
adversely effect the business, property, financial condition or income of the
Company; or (vii) due to conditions arising subsequent to the execution
hereof, the Underwriter reasonably believes that, as a result of material and
adverse events affecting the market for the Company's Common Stock or the
securities markets in general, it is impracticable or inadvisable to proceed
with the Standby Offering. Accordingly, should the Underwriter not purchase
the unsold Units in accordance with the market out conditions, shareholders
who have exercised the Rights will not have a right to
56
<PAGE>
cancel their subscription. In addition, in the event that all of the Units
offered hereby are not sold pursuant to the exercise of Rights, and the
Underwriter fails to purchase the unsold Units pursuant to its Standby
Agreement, the Company will elect not to return payment received on the Rights
subscribed for, and investors may be vulnerable to illiquidity and/or a loss
of their entire investment. The Subscription Price has been arbitrarily
determined through negotiation between the Company and the Underwriter, was
set at approximately 60-70% of the average closing bid price as reported by
NASDAQ for the ten business days preceding the Effective Date, and may bear no
relationship to current market price, earnings, assets or other recognized
criteria of value applicable to the Company. Factors considered in determining
such prices, in addition to prevailing market conditions, included the history
of and the prospects for the industry in which the Company competes, an
assessment of the Company's management, the prospects of the Company, its
capital structure and such other factors as were determined relevant.
Reference is made to the Standby Agreement, which is annexed as an exhibit to
the Registration Statement, of which this Prospectus forms a part, for its
complete terms and provisions.
On or after the second business day following the Expiration Date of the
Offering, the Underwriter proposes initially to offer from time to time, the
components of the Units, acquired by it pursuant to its standby commitment
directly to the public at prices which may exceed the highest available asked
price then existing on NASDAQ. The Underwriter presently does not make a
market in the Company's securities and in connection with any sales, does not
intend to stabilize prices. In addition, the Underwriter will not purchase or
make a market in any securities of the Company until it has completed its
distribution of the components of the Units acquired in the Standby Offering.
As a portion of the consideration for its standby commitment and the
investment banking services rendered by the Underwriter, the Company has
agreed to sell to the Underwriter for its own account, at a price of $.0001
per Unit covered thereby, warrants ("Underwriter's Warrants") to purchase 10%
of the Units offered pursuant to its standby commitment. The Underwriter's
Warrants may not be exercised for a period of twelve (12) months from the date
of this Prospectus. The Underwriter's Warrants will be exercisable in whole or
in part for a period of four (4) years thereafter at a price of $6 per Unit
which is equal to 120% of the Subscription Price. The exercise price and the
number of shares of Common Stock issuable under the Underwriter's Warrants and
underlying warrants are subject to adjustment to protect the holder against
dilution in certain events. The Underwriter's Warrants are not transferable by
the Underwriter during the initial twelve (12) months except to one or more of
its officers. The holders of the Underwriter's Warrants have no voting,
dividend or other rights of shareholder of the Company with respect to the
shares underlying such Underwriter's Warrants unless such Warrants have been
exercised.
Moreover, in the event that the Underwriter elects to register securities
underlying the Underwriter's Warrants and commence a distribution of such
securities, it will comply with SEC Rule 10b-6 in that, among other things, it
will not make a market or continue to make
57
<PAGE>
a market if it should be a market maker in any of the Company's securities
until such time as the distribution of such securities is completed. Any sale
of Units and/or the components thereof at a price in excess of the
Underwriter's purchase price pursuant to the standby commitment will result in
realization by the Underwriter of additional underwriting compensation. It
should be noted that the Underwriter is acting as a principal in the Standby
Offering, and not as agent for the Company.
The Company has agreed, for a period of six(6) years commencing one (1)
year following the date of this Prospectus, that on any occasion that it files
a new registration statement or Regulation A offering within such period
(except on Form S-8 or any other appropriate form) it will include in each
such filing the Underwriter's Warrants and/or underlying securities to the
extent permitted by the then applicable rules and regulations of the
Commission, at the request of any holder or holders of such Underwriter's
Warrants and/or underlying securities at no expense to them.
Further, the Company has agreed to qualify or register the Underwriter's
Warrants and/or the underlying securities once at its own expense during the
four (4) year period commencing one (1) year after the date of this
Prospectus, upon request of the Underwriter or its specific duly authorized
designee or the holders of a least 40% of the Underwriter's Warrants and/or
underlying Securities together with the consent of the Underwriter or its
specific duly authorized designee. Any profit received by the Underwriter
either from the sale of the Underwriter's Warrants or from the sale of the
shares of Common Stock purchasable upon exercise of the Underwriter's Warrants
may be deemed additional underwriting compensation. The Company has agreed to
pay the Underwriter a warrant solicitation fee of 7% of the exercise price for
each Class B Warrant exercised during the period commencing eighteen months
after the Effective Date or sooner if the Class B Warrants become exercisable,
but in no event sooner than one year after the Effective Date, and to
indemnify the Underwriter against certain liabilities, including those arising
under the Securities Act. A portion of the 7% solicitation fee the Underwriter
shall receive may be allowed by the Underwriter to the dealer who solicited
the exercise (which may also be the Underwriter) provided: (1) the market
price of the Common Stock on the date the Warrant was exercised was greater
than the Warrant exercise price on that date; (2) exercise of the Warrant was
solicited by a member of the NASD; (3) the Warrant was not held in a
discretionary account; (4) disclosure of compensation arrangements were made
both a the time of the Offering and at the time of exercise of the Warrant;
and (5) the solicitation of the exercise of the Warrant was not in violation
of Rule 10b-6 promulgated under the Securities and Exchange Act of 1934.
The Company has agreed that the Underwriter shall have a right of first
refusal with respect to the public sale of any of the Company's securities to
be made by the Company, its principal stockholders or subsidiaries during the
three (3) year period commencing with the consummation of the Standby
Agreement, subject to certain exceptions.
The Standby Agreement provides that the Underwriter shall have the
58
<PAGE>
right to designate a director and/or non-voting advisor to the Company's board
of directors for a period of sixty (60) months after the consummation of the
Standby Agreement and that the Company shall use its best efforts to cause the
election of said member. Said designee shall receive no more or less
compensation than is paid to other non-management directors of the Company and
shall be entitled to receive reimbursement for all reasonable costs incurred
in attending such meetings, including but not limited to food, lodging and
transportation. Moreover, to the extent permitted by law, the Company will
agree to indemnify the Underwriter and its designee(s) for the actions of such
designee(s) as director and/or as advisor of the Company. In the event the
Company maintains a liability insurance policy affording coverage for the acts
of its officers and/or directors, it will agree, to the extent permitted by
under such policy, to include each of the Underwriter and its designee(s) as
an insured under such policy. The Underwriter has no present intent to
exercise this right.
The Standby Agreement provides that if the Company shall within 5 years
from the Effective Date, enter into any agreement or understanding with any
person or entity introduced by the Underwriter involving (i) the sale of all
or substantially all of the assets and properties of the Company, (ii) the
merger or consolidation of the Company (other than a merger or consolidation
effected for the purpose of changing the Company's domicile) or (iii) the
acquisition by the Company of the assets or stock of another business entity,
which agreement or understanding is thereafter consummated, whether or not
during such 5 year period, the Company, upon such consummation, shall pay to
the Underwriter an amount equal to the following percentages of the
consideration paid by the Company in connection with such transaction: 5% of
the first $1,000,000 or portion thereof, of such consideration; 4% of the
second $1,000,000 or portion thereof, of such consideration; and 3% of such
consideration in excess of the first $2,000,000 of such consideration.
The Company, for a period of one year from the Effective Date, shall not
file a Registration Statement for the benefit of officers, directors,
employees, consultants and/or affiliates of the Company without the prior
written consent of the Underwriter. For a period of one year from the
Effective Date, without the consent of the Underwriter, the Company will not
place or sell any of its securities other than in connection with mergers,
acquisitions or the exercise of currently outstanding options and warrants.
The Company will maintain a current Registration Statement for the Underwriter
to offer and sell the securities purchased by it for a period of at least nine
months from the Effective Date or such reasonable further period as the
Underwriter may request. Nevertheless, the Underwriter agrees to notify the
Company when its distribution has been completed. Neither the Company nor any
officer or director thereof shall for a period of 5 years from the Effective
Date offer to sell any securities of the Company in a Regulation S offering
without the prior written consent of the Underwriter.
59
<PAGE>
CONCURRENT REGISTRATION OF COMMON STOCK
Concurrently with this Offering, 513,000 shares of Common Stock have been
registered under the Securities Act of 1933 for immediate resale
simultaneously with the Offering. The holders of 399,000 such shares have agreed
not to sell any shares for a period of three months from the Effective Date
without the prior written consent of the Underwriter. The holders of the
remaining 114,000 shares have agreed not to sell any shares for a period of
nine months from the Effective Date without the prior written consent of the
Underwriter.
LEGAL MATTERS
Certain legal matters with respect to the issuance of securities offered
hereby will be passed upon for the Company by Hollenberg Levin Solomon Ross
Belsky & Daniels, LLP, 585 Stewart Avenue, Garden City, New York 11530.
Members of the firm of Hollenberg Levin Solomon Ross Belsky & Daniels, LLP own
988 shares of Common Stock. Lester Morse, P.C., 111 Great Neck Road, Great
Neck, New York 11021, is acting as counsel for the Underwriter in connection
with certain legal matters relating to the Units of Common Stock and Warrants
offered hereby.
EXPERTS
The Consolidated Financial Statements included in the Registration
Statement, of which this Prospectus forms a part, have been audited by
Cornick, Garber & Sandler, LLP, independent public accountants, to the extent
and for the periods indicated in their report with respect thereto and were
included herein in reliance upon the authority of said firm as experts in
giving said report. Reference is made to said report which contains an
explanatory paragraph regarding the Company's litigation uncertainties.
ADDITIONAL INFORMATION
The Company has filed with the Commission, a Registration Statement on
Form SB-2 with respect to the securities being offered hereby. This Prospectus
does not contain all the information set forth in such Registration Statement,
as permitted by the Rules and Regulations of the Commission. For further
information with respect to the Company and such securities, reference is made
to the Registration Statement and to the exhibits and schedules filed
therewith. Each statement made in this Prospectus referring to a document
field as an exhibit to the Registration Statement is qualified by reference to
the exhibit for a complete statement of its terms and conditions. The
Registration Statement, including exhibits thereto, may be inspected without
charge, by anyone at the principal office of the Commission in Washington D.C.
and copies of all or any part of thereof may be obtained from the Commission's
office in Washington D.C. upon payment of the Commission's charge for copying.
60
<PAGE>
EASTCO INDUSTRIAL SAFETY CORP. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
INDEX
INDEPENDENT AUDITORS' REPORT.......................................... F-2
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheets........................................ F-3
Consolidated Statements of Operations.............................. F-4
Consolidated Statements of Changes in Shareholders' Equity......... F-5
Consolidated Statements of Cash Flows.............................. F-6
Notes to Consolidated Financial Statements......................... F-8
F-1
<PAGE>
Independent Auditors' Report
Board of Directors and Shareholders
Eastco Industrial Safety Corp.
Huntington Station, New York
We have audited the accompanying consolidated balance sheet
of EASTCO INDUSTRIAL SAFETY CORP. AND SUBSIDIARIES as at June 30, 1995 and the
related consolidated statements of operations, changes in shareholders' equity
and cash flows for each of the two years in the period ended June 30, 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements
present fairly, in all material respects, the consolidated financial position
of Eastco Industrial Safety Corp. and Subsidiaries as at June 30, 1995 and the
results of their operations and their cash flows for each of the two years in
the period ended June 30, 1995, in conformity with generally accepted
accounting principles.
As discussed in Note 11 to the consolidated financial
statements, the Company is a defendant in various lawsuits, together with a
multitude of other defendants, in actions alleging exposure by plaintiffs to
asbestos and products containing asbestos sold by the Company over unspecified
periods of time. The Company is also a defendant in a non-asbestos related
product liability lawsuit. While the Company has entered into an agreement
with its primary insurance companies which limits its liability with respect
to certain asbestos litigation, the ultimate outcome or range of liability, if
any, resulting from the various lawsuits cannot presently be determined.
Accordingly, no provision for any liability that may result has been made in
the accompanying consolidated financial statements.
/s/ Cornick, Garber & Sandler, LLP
----------------------------------
CERTIFIED PUBLIC ACCOUNTANTS
Uniondale, New York
September 8, 1995
F-2
<PAGE>
EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS June 30, 1995 March 31, 1996
------ ------------- --------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents (Note 1) $ 521,210 $ 348,571
Accounts receivable, net of allowance for
doubtful accounts of $304,000 and $170,000
at June 30, 1995 and March 31, 1996,
respectively (Note 5) 3,898,173 4,679,597
Inventories (Notes 1, 2 and 5) 4,363,898 5,391,061
Other 481,868 310,350
----------- -----------
Total current assets 9,265,149 10,729,579
Property, plant and equipment, net
(Notes 1, 3, 5 and 6) 1,319,111 1,243,809
Other assets 131,788 193,892
----------- -----------
TOTAL $10,716,048 $12,167,280
=========== ===========
LIABILITIES
-----------
Current liabilities:
Convertible subordinated debenture payable
(Notes 6 and 12) $ 250,000
Loans payable (Note 5) $ 4,928,908 5,991,587
Current maturities of long-term debt (Note 6) 48,762 54,128
Accounts payable 2,891,043 2,973,588
Accrued expenses 331,907 244,314
----------- -----------
Total current liabilities 8,200,620 9,513,617
Long-term debt, less current maturities (Note 6) 489,782 448,488
----------- -----------
Total liabilities 8,690,402 9,962,105
----------- -----------
Commitments and contingencies (Notes 9, 10 and 11)
SHAREHOLDERS' EQUITY
--------------------
(Notes 1, 5, 6, 7 and 12)
Common stock, $.12 par value; authorized 20,000,000
shares; outstanding 347,738 and 361,488 shares at
June 30, 1995 and March 31, 1996, respectively 41,729 43,379
Additional paid-in capital 6,224,509 6,343,634
(Deficit) (statement attached) (4,240,592) (4,181,838)
----------- -----------
2,025,646 2,205,175
----------- -----------
TOTAL $10,716,048 $12,167,280
=========== ===========
</TABLE>
The notes to consolidated financial statements are made a part hereof.
F-3
<PAGE>
EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended June 30, Nine Months Ended March 31,
---------------------- ---------------------------
1995 1994 1996 1995
----------- ----------- ------------ -----------
(Unaudited)
<S> <C> <C> <C> <C>
Net sales $24,024,897 $20,745,809 $19,739,719 $17,365,091
----------- ----------- ----------- -----------
Costs and expenses:
Cost of sales (Note 1) 19,254,571 17,372,063 15,624,922 13,887,720
Selling, general and
administrative (Note 1) 4,148,517 4,709,037 3,431,369 3,183,097
Interest (including approximately
$812,000 of debt finance costs
and common stock issued to note
holders in 1994) (Notes 5 and 6) 583,665 1,391,777 599,496 405,081
Other income (net) (39,793) (15,690) (52,822) (96,654)
Settlement with former underwriter (Note 7) 78,000
----------- ----------- ----------- -----------
Total costs and expenses 23,946,960 23,457,187 19,680,965 17,379,244
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 77,937 $(2,711,378) $ 58,754 $ (14,153)
=========== =========== =========== ===========
Income (loss) per share (Note 1):
Primary $.20 $(20.76) $.13 $(.04)
==== ======= ==== =====
Assuming full dilution $.17 $(20.76) $.13 $(.04)
==== ======= ==== =====
Average number of shares used
in computing per share amounts:
Primary 392,529 130,585 447,343 347,738
======= ======= ======= =======
Assuming full dilution 471,698 130,585 447,343 347,738
======= ======= ======= =======
</TABLE>
The notes to consolidated financial statements are made a part hereof.
F-4
<PAGE>
EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(NOTES 1, 5, 6, 7 and 12)
FOR THE YEARS ENDED JUNE 30, 1994 AND 1995 AND FOR THE
NINE MONTHS ENDED MARCH 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
Common Stock* Treasury Stock*
----------------- -----------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
BALANCE - JULY 1, 1993 80,031 $ 9,604 (17) $(5,500)
Net proceeds of public offering 230,000 27,600
Shares issued to Scorpio Partners
to reacquire warrant 8,750 1,050
Shares issued in connection with
bridge loan financing 28,750 3,450
Sale of warrant to underwriter
Retirement of treasury stock (17) (2) 17 5,500
Shares issued for services 224 27
Net (loss) for the year ended
June 30, 1994
------- ------- ---- -------
BALANCE - JUNE 30, 1994 347,738 41,729 -- --
Net income for the year ended
June 30, 1995
------- -------
BALANCE - JUNE 30, 1995 347,738 41,729
Shares issued on settlement with
former underwriter 10,000 1,200
Exercise of Class A warrants 3,750 450
Net income for the nine months ended
March 31, 1996
------- ------- ---- -------
BALANCE - MARCH 31, 1996 (UNAUDITED) 361,488 $43,379 -- $ --
======= ======= ==== =======
</TABLE>
<TABLE>
<CAPTION>
Additional
Paid-in
Capital (Deficit) Total
---------- ----------- ----------
<S> <C> <C> <C>
BALANCE - JULY 1, 1993 $2,237,124 $(1,607,151) $ 634,077
Net proceeds of public offering 3,417,920 3,445,520
Shares issued to Scorpio Partners
to reacquire warrant (1,050)
Shares issued in connection with
bridge loan financing 571,550 575,000
Sale of warrant to underwriter 10 10
Retirement of treasury stock (5,498)
Shares issued for services 4,453 4,480
Net (loss) for the year ended
June 30, 1994 (2,711,378) (2,711,378)
---------- ----------- -----------
BALANCE - JUNE 30, 1994 6,224,509 (4,318,529) 1,947,709
Net income for the year ended
June 30, 1995 77,937 77,937
---------- ----------- -----------
BALANCE - JUNE 30, 1995 6,224,509 (4,240,592) 2,025,646
Shares issued on settlement with
former underwriter 70,825 72,025
Exercise of Class A warrants 48,300 48,750
Net income for the nine months ended
March 31, 1996 58,754 58,754
---------- ----------- -----------
BALANCE - MARCH 31, 1996 (UNAUDITED) $6,343,634 $(4,181,838) $ 2,205,175
========== =========== ===========
</TABLE>
*As restated to give retroactive effect of 1-for-10 reverse stock split
(see Notes 1 and 12).
The notes to consolidated financial statements are made a part hereof.
F-5
<PAGE>
EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended June 30, Nine Months Ended March 31,
--------------------------------- --------------------------------
1995 1994 1996 1995
----------- ----------- -------------- ---------
(Unaudited)
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
Cash flows from operating activities:
Net income (loss) $ 77,937 $(2,711,378) $ 58,754 $ (14,153)
----------- ----------- ----------- ---------
Adjustments to reconcile results of
operations to net cash effect of
operating activities:
Depreciation and amortization 164,533 172,870 112,910 140,523
(Reduction of) provision for losses on
accounts receivable (38,655) 138,843 50,000 8,929
Shares issued in connection with
bridge loan financing 575,000
Shares issued for services and settlement
with former underwriter 4,480 72,025
Net changes in assets and liabilities:
Accounts receivable (430,003) 1,120,727 (831,424) 56,833
Inventories (1,197,860) 371,746 (1,027,163) (979,350)
Other current assets (37,608) (25,797) 171,518 171,686
Other assets 20,247 59,107 (62,104) 1,070
Accounts payable 401,146 (1,262,624) 82,545 414,156
Accrued expenses (102,136) 134,982 (87,593) (155,853)
Deferred compensation (65,000)
----------- ----------- ----------- ---------
Total adjustments (1,220,336) 1,224,334 (1,519,286) (342,006)
----------- ----------- ----------- ---------
Net cash used for operating
activities (1,142,399) (1,487,044) (1,460,532) (356,159)
----------- ----------- ----------- ---------
Cash flows from investing activities:
Acquisition of property, plant and
equipment (191,242) (24,658) (37,608) (136,291)
----------- ----------- ----------- ---------
</TABLE>
(Continued)
F-6
<PAGE>
EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
-2-
<TABLE>
<CAPTION>
Year Ended June 30, Nine Months Ended March 31,
--------------------------------- --------------------------------
1995 1994 1996 1995
----------- ----------- -------------- ---------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Cash flows from financing activities:
Repayments of long-term debt $ (42,426) $ (361,913) $ (35,928) $ (31,260)
Borrowings under line of credit
agreements 25,789,531 22,159,610 20,553,406 18,709,316
Repayments under line of credit
agreements (24,044,483) (23,363,860) (19,490,727) (17,810,205)
Net proceeds from public offering
of common stock and warrants 3,445,520
Proceeds from sale of warrants 10
Proceeds from convertible subordinated
debt 250,000
Proceeds from excercise of warrants 48,750
(Decrease) increase in bank
overdrafts (365,277) 149,841 (365,277)
------------ ------------ ------------ ------------
Net cash provided by
financing activities 1,337,345 2,029,208 1,325,501 502,574
------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 3,704 517,506 (172,639) 10,124
Cash and cash equivalents - beginning 517,506 521,210 517,506
------------ ------------ ------------ ------------
CASH AND CASH EQUIVALENTS - end $ 521,210 $ 517,506 $ 348,571 $ 527,630
============ ============ ============ ============
Supplemental disclosure of cash paid for:
Interest $ 583,665 $ 548,702 $ 607,131 $ 428,219
============ ============ ============ ============
Taxes $ 5,179 $ 2,572
============ ============
Supplemental disclosure of noncash
financing activities:
Repurchase of warrant for issuance of stock $ 175,000
============
</TABLE>
The notes to consolidated financial statements are made a part hereof.
F-7
<PAGE>
EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED MARCH 31, 1995
AND THE PERIOD SUBSEQUENT TO JUNE 30, 1995 IS UNAUDITED)
NOTE 1 - Summary of Significant Accounting Policies:
Operations:
The Company operates in two industry segments. The first is the
manufacture and sale of disposable clothing, industrial protective
clothing and protective products to distributors throughout the
United States and in Puerto Rico. The second is the distribution and
sale of industrial protective clothing and protective products
directly to "end users" located primarily in the Northeast United
States.
The Company's manufacturing division uses Tyvek(R) to produce
disposable clothing which is produced solely by E.I. Dupont
Industries, Inc. Products made of Tyvek(R) accounted for
approximately 35%, 29% and 42% of consolidated sales for the years
ended June 30, 1995 and 1994 and for the nine months ended March 31,
1996, respectively.
Principles of Consolidation:
The consolidated financial statements include the accounts of Eastco
Industrial Safety Corp. and its subsidiaries, all of which are
wholly-owned. All significant intercompany balances and transactions
have been eliminated in consolidation.
Interim Financial Statements:
The consolidated financial statements as at March 31, 1996 and for
the nine months ended March 31, 1996 and 1995 are unaudited.
Management believes they contain all adjustments (consisting of
normal recurring accruals) necessary to present fairly these
financial statements for the periods presented. Interim results are
not necessarily indicative of results or cash flows to be expected
for a full fiscal year.
(Continued)
F-8
<PAGE>
EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED MARCH 31, 1995
AND THE PERIOD SUBSEQUENT TO JUNE 30, 1995 IS UNAUDITED)
NOTE 1 - Summary of Significant Accounting Policies (Continued):
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Cash:
Cash includes certificates of deposit of approximately $500,000 at
June 30, 1995 and $300,000 at March 31, 1996 which are considered
cash equivalents on the statement of cash flows. A $300,000
certificate has been pledged as collateral for a bank loan to the
extent of such loan (see Note 5).
Inventories:
Inventories are stated at the lower of cost (determined on a
first-in, first-out basis) or market, which represents estimated net
realizable value.
Depreciation and Amortization:
Property, plant and equipment are depreciated on a straight-line
basis over the estimated useful lives of the related assets.
Leasehold improvements are amortized on a straight-line basis over
the shorter of their estimated useful lives or the remaining term of
the lease.
Income Taxes:
In 1987, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 96. Financial Accounting Standards Statement
No. 109 (FASB 109), which superseded FASB 96, was adopted for the
fiscal year ended June 30, 1994. However, because of the similarity
of these two statements as they affect the Company, the adoption of
FASB 109 did not affect the consolidated financial statements.
(Continued)
F-9
<PAGE>
EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED MARCH 31, 1995
AND THE PERIOD SUBSEQUENT TO JUNE 30, 1995 IS UNAUDITED)
NOTE 1 - Summary of Significant Accounting Policies (Continued):
Per Share Amounts:
Primary earnings per share amounts have been computed utilizing the
weighted average number of common and, if material, common equivalent
shares outstanding during the period. Fully diluted earnings per
share is based upon the weighted average number of common and common
equivalent shares outstanding. Computation of loss per share amounts
do not include common equivalent shares because their inclusion would
be anti-dilutive. Per share amounts give effect to the retroactive
adjustment for the 1 for 10 reverse stock split in August 1996 (see
Note 12).
All other per share amounts and information set forth in the attached
financial statements and the notes thereto have also been adusted to
give effect to the reverse stock split.
NOTE 2 - Inventories:
Inventories consist of the following:
June 30, March 31,
1995 1996
---------- ----------
Raw materials $1,688,881 $1,605,259
Work-in-process 440,164 300,107
Finished goods 2,234,853 3,485,695
---------- ----------
Total $4,363,898 $5,391,061
========== ==========
NOTE 3 - Property, Plant and Equipment:
Property, plant and equipment is comprised of the following:
Estimated
June 30, March 31, Useful Life
1995 1996 (Years)
---------- ---------- ----------
Cost:
Land $ 382,000 $ 382,000
Building and leasehold
improvements 827,451 827,451 5 - 40
Machinery and equipment 1,160,416 1,198,024 3 - 10
Furniture and fixtures 192,948 192,948 7 - 10
---------- ----------
Total 2,562,815 2,600,423
Less accumulated depreciation
and amortization 1,243,704 1,356,614
---------- ----------
Balance $1,319,111 $1,243,809
========== ==========
(Continued)
F-10
<PAGE>
EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED MARCH 31, 1995 AND
THE PERIOD SUBSEQUENT TO JUNE 30, 1995 IS UNAUDITED)
NOTE 4 - Income Taxes:
Effective July 1, 1993, Statement of Financial Accounting Standards
No. 109 (SFAS 109) became effective for the Company. The adoption of
SFAS 109 had no effect on the financial statements as at June 30,
1994 and for the year then ended. While SFAS 109 requires the
recognition of a deferred tax asset for the benefit of net operating
loss carryforwards, it also requires the recognition of a valuation
allowance when it is more likely than not that such benefit will not
be realized. As a result of the Company's past history of losses, it
has recorded a valuation allowances equal to the net deferred tax
asset account at June 30, 1995 and March 31, 1996.
Deferred income taxes relate to the following temporary differences
and carryforwards as of:
June 30, March 31,
1995 1996
---------- -----------
Deferred tax assets:
Net operating loss carryforwards $2,056,000 $ 2,037,000
Allowance for doubtful accounts
and credits 124,000 70,000
Tax basis adjustments to inventory 60,000 74,000
---------- -----------
Total 2,240,000 2,181,000
Less deferred tax liability:
Accelerated depreciation of
property and equipment (3,000) (8,000)
---------- -----------
Balance 2,237,000 2,173,000
Less valuation allowance (2,237,000) (2,173,000)
----------- -----------
Net deferred income taxes after
valuation allowance $ -- $ --
=========== ===========
(Continued)
F-11
<PAGE>
EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED MARCH 31, 1995
AND THE PERIOD SUBSEQUENT TO JUNE 30, 1995 IS UNAUDITED)
NOTE 4 - Income Taxes (Continued):
Two wholly-owned Puerto Rico based subsidiaries have been granted
exemptions from paying Puerto Rico income taxes under provisions of
the Puerto Rico Industrial Tax Exemption Act of 1963, provided such
subsidiaries continue to meet the terms and conditions of their
grants. One subsidiary's exemption expires June 30, 1999. The
subsidiary has received a 90% exemption from Puerto Rico income taxes
and a 75% exemption from Puerto Rico municipal and property taxes.
The second subsidiary has received a 90% exemption from Puerto Rico
income and property taxes and a 60% exemption from Puerto Rico
municipal income taxes to June 2006. These subsidiaries have elected,
pursuant to Section 936 of the Internal Revenue Code, to receive
credits equivalent to the amount of Federal income taxes which would
otherwise be due on their income. The Omnibus Budget Reconciliation
Act of 1993 imposes new limitations on computing the Possession Tax
Credit under Section 936 for tax years beginning after 1993. In
addition, the Act makes the 100% dividends received deduction subject
to the Alternative Minimum Tax calculation.
Dividends, if paid by the Puerto Rico based subsidiaries, are subject
to a withholding tax of 10%; however, no taxes have been provided on
their aggregate undistributed earnings (of approximately $2,458,000
at June 30, 1995) because it is management's intention to reinvest
such earnings indefinitely.
A reconciliation between the expected tax expense at the statutory
federal income tax rate and the Company's actual income tax expense
is as follows:
<TABLE>
<CAPTION>
June 30, March 31,
------------------------ -----------------------
1995 1994 1996 1995
-------- --------- -------- -------
<S> <C> <C> <C> <C>
Income tax expense (benefit)
at the statutory rate $ 26,000 $(922,000) $ 20,000 $(4,800)
Effect of net operating loss of
Puerto Rican subsidiaries for
which there is no current tax
benefit 106,000
Effect of domestic net operating
loss for which there is no
current tax benefit 816,000 4,800
Benefit of utilization of net
operating loss carryforwards (26,000) (20,000)
-------- --------- -------- -------
Actual income tax expense $ -- $ -- $ -- $ --
======== ========= ======== =======
</TABLE>
(Continued)
F-12
<PAGE>
EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED MARCH 31, 1995
AND THE PERIOD SUBSEQUENT TO JUNE 30, 1995 IS UNAUDITED)
NOTE 4 - Income Taxes (Continued):
At June 30, 1995, the Company has net operating loss carryforwards of
approximately $5,410,000 for federal income tax purposes. Such
carryforwards expire in 2005 through 2009. As a result of the public
stock offering in April 1994 (Note 7), the amount of the loss
carryforwards which can be utilized to offset future taxable income
will be limited to approximately $380,000 a year, plus any loss
carryforwards incurred after April 19, 1994. However, to the extent
such annual limitation is not utilized in any year, it may be further
carried forward until the carryforward would have otherwise expired.
Accordingly, carryforwards available to be utilized for the year
ending June 30, 1996 approximate $1,584,000.
The annual limitation of the Company's net operating loss deductions
may be further reduced as a result of the private placement and the
proposed additional public offering (see Note 12).
NOTE 5 - Loans Payable:
Loans payable are comprised of short-term bank borrowings of $100,000
at June 30, 1995 and $295,000 at March 31, 1996 and borrowings under
the Company's line of credit agreement with Congress Financial
Corporation ("Congress"). Short-term bank borrowings (which usually
have 30 day terms) are renewable at the bank's option and bear
interest at 1% above the bank's prime rate.
The Company's line of credit agreement with Congress, which was to
expire in October 1996, provided for borrowings up to $6,000,000 with
interest payable monthly at 2 1/4% above the prime rate, plus an
unused line fee of 1/4% a year. Borrowings were limited to 80% of
eligible accounts receivable and 50% of eligible inventory up to a
maximum inventory of $2,875,000. As further described in Note 12, in
July 1996 the line of credit was amended and extended. The loans are
subject to certain working capital and net worth requirements and are
collateralized by all assets of the Company not previously pledged
under other loan agreements. The loan agreement prohibits the payment
of dividends by the Company. In September 1993, Congress sold to
three individuals, who are officers and directors of the Company, a
$250,000 junior participation in the loans made to the Company. The
Company had an informal agreement with Congress, whereby Congress
agreed to provide the Company an additional $500,000 in borrowing
(Continued)
F-13
<PAGE>
EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED MARCH 31, 1995
AND THE PERIOD SUBSEQUENT TO JUNE 30, 1995 IS UNAUDITED)
NOTE 5 - Loans Payable (Continued):
availability which was repaid at $11,250 a week beginning November 1,
1993 until $250,000 of additional borrowings was repaid. Congress
can, at its option, repurchase the junior participation if the
Company has at least $250,000 in availability under the financing
agreement. In May 1996, participations of $35,000 were repurchased.
The participants' interest in the obligations, collateral and
collections is subordinated to Congress.
In December 1993, the Company received a non-interest bearing loan of
$400,000 from an underwriter as an advance against a $750,000 private
placement bridge loan which was completed in January 1994. Additional
bridge loans of $375,000 and $25,000 were received in March and April
1994, respectively. The loans were repaid in April 1994 on the
closing of a public offering (Note 7). The interest on these loans
was at 5% a year, plus the issuance of $575,000 of the Company's
common stock upon the closing of the public offering. The costs
incurred in connection with the issuance of the notes of
approximately $160,000, together with the $575,000 value of the
28,750 shares of the Company's common stock issued to the note
holders,was charged to operations and included with interest expense
during the year ended June 30, 1994.
NOTE 6 - Long-Term Debt:
Long-term debt consists of a mortgage payable, collateralized by
land, building, accounts receivable and personal property, with
interest at 14.0%. In June 1992, a group of investors, including a
director and the spouses of certain officers and directors of the
Company, acquired the mortgage on the Company's building with a
balance of approximately $962,000 and $500,000 of subordinated debt
from a bank for $650,000. The group entered into a modification of
indebtedness agreement which reduced the mortgage to $650,000 and
forgave the balance, which, after the write off of related deferred
financing costs, resulted in a gain of $722,000 in fiscal 1992. In
connection with this transaction, the Company also issued five-year
warrants to acquire 10,833 shares of common stock at $30.00 a share.
In January 1995, the Company reduced the exercise price to $13.00 and
extended the expiration date until April 1999. The mortgage is
payable in monthly installments of $10,092, including interest, with
the remaining balance of approximately $434,000 due in July 1997.
Interest on the mortgage was $78,682 and $84,195 for the years ended
June 30, 1995 and 1994, respectively, approximately 38% of which is
applicable to a director and the spouses of the officers and
directors of the Company.
(Continued)
F-14
<PAGE>
EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED MARCH 31, 1995
AND THE PERIOD SUBSEQUENT TO JUNE 30, 1995 IS UNAUDITED)
NOTE 6 - Long-Term Debt (Continued):
In June 1993, the Company borrowed $325,000 from Scorpio Partners
L.P. ("Scorpio") in the form of a convertible subordinated note
payable in June 1997. In connection with the note, the Company also
sold to Scorpio for $25,000 and $15,000, respectively, warrants to
purchase 82,645 shares of the Company's common stock at $6.29 a share
and 25,000 shares of common stock at $30.00 a share.
In January 1994, the Scorpio loan was renegotiated (whereby the first
warrant was purchased by a corporate officer/director and extended to
March 31, 1997 and the second warrant was purchased by the Company
and canceled) in consideration for the issuance of common stock
having a total value of $175,000 on the effective date of a public
offering. In April 1994, the Scorpio loan was repaid upon the closing
of the public offering. The $1,050 par value of the shares issued to
repurchase the warrants was charged against additional paid-in
capital in the year ended June 30, 1994. The finance costs of
approximately $77,000 incurred in connection with these loans were
charged to operations during the year ended June 30, 1994 and are
included with interest expense on the statement of operations. Two
partners of Scorpio were officer/directors of the Company from June
29, 1993 until January 1994 and June 1994. Interest paid on the note
during the year ended June 30, 1994 was $20,346.
NOTE 7 - Shareholders' Equity:
Common Stock:
In April 1991, the Company sold, pursuant to a rights offering,
48,007 shares of common stock. In this connection, the underwriter
was sold a warrant to purchase 4,078 shares of common stock at $53.30
per share, which was exercisable until February 28, 1996. The Company
also had borrowed $200,000 with interest at 17% per annum during
February 1991 from five unrelated parties. These loans were repaid
out of the proceeds of the rights offering, including interest. In
connection with these loans, the Company issued warrants to purchase
833 shares of common stock, exercisable at $30.00 per share until May
13, 1996. In January 1995, the Company reduced the exercise price of
the above warrants to $13.00 and extended their expiration dates
until April 1999.
(Continued)
F-15
<PAGE>
EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED MARCH 31, 1995
AND THE PERIOD SUBSEQUENT TO JUNE 30, 1995 IS UNAUDITED)
NOTE 7 - Shareholders' Equity (Continued):
Common Stock (Continued):
On April 19, 1994, the Company sold in a public offering 200,000
units at $20.00 per unit. Each unit consists of one share of the
Company's common stock and one Class A warrant. Each warrant entitled
the holder to purchase one tenth of one share of common stock at an
exercise price of $24.00 a share from April 12, 1995 through April
12, 1999. In January 1995, the Company reduced the exercise price to
$13.00 a share. These warrants are redeemable by the Company
commencing April 12, 1995 at $1.00 a warrant, provided that the high
bid price of its stock is at least $19.50 for the required number of
days prior to the Notice of Redemption. The Company also granted to
the underwriter an option to purchase, at the same price, 30,000
units to cover over-allotments. This option was exercised in May
1994. The net proceeds to the Company of these sales were $3,445,520.
Out of these proceeds, the bridge loans (Note 5) of $1,150,000 plus
interest and the Scorpio loan (Note 6) of $325,000 plus interest were
repaid. In addition, the Company sold to the underwriter for $10 an
option, exercisable from April 12, 1995 to April 12, 1999, to
purchase 23,000 additional units at $29.00 a unit and entered into a
two year consulting agreement with the underwriter at a total cost of
$72,000. Subsequent to the public offering, two officers of the
underwriter became directors of the Company until their resignations
on July 10, 1995.
On July 10, 1995, the Company issued 10,000 shares of common stock to
the underwriter of its 1994 public stock offering in exchange for the
cancellation of all of its rights under the Underwriting Agreement.
The $78,000 cost thereof, based on the market value of the shares
issued and legal expenses incurred, is separately reflected on the
consolidated statement of operations for the nine months ended March
31, 1996.
Warrants:
On July 26, 1995, the Company issued to a consulting firm, which is
the employer of a new director of the Company, a five year warrant to
purchase 12,500 shares of the Company for $12.50 a share.
(Continued)
F-16
<PAGE>
EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED MARCH 31, 1995
AND THE PERIOD SUBSEQUENT TO JUNE 30, 1995 IS UNAUDITED)
NOTE 7 - Shareholders' Equity (Continued):
Incentive Stock Option Plans:
Under the Company's 1983 Incentive Stock Option Plan, options could
be granted to June 23, 1993 for a maximum of 5,625 shares of the
Company's common stock. At June 30, 1995, options to purchase 865
shares at $26.70 to $30.00 a share are outstanding; no further
options may be granted under this plan.
The Company's 1992 Incentive Stock Option Plan provides for the
granting of options for 20,000 shares of the Company's common stock
to December 20, 2002.
The Company's 1994 Incentive Stock Option Plan provides for the
granting of options for 10,000 shares of the Company's common stock
to January 2004.
Options granted under the incentive stock option plans must be
exercised within such period as stated in the plans and, in any
event, must be exercised no later than ten years after the date they
are granted. The plans provide that the exercise price of the options
may not be less than 100% of the fair market value of common stock at
the date of grant or 110% in the case of an incentive stock option
granted to any employee owning more than 10% of the voting power of
all classes of stock of the Company.
Transactions under the above plans are summarized as follows:
Shares Option Price Per Share
------- ----------------------
Outstanding - July 1, 1993 26, 503 $26.40 to $396.00
Expired (825)
Canceled (24,500)* $27.50 to $ 51.30
-------
Outstanding - June 30, 1994 1,178 $26.40 to $27.50
Granted 8,500 $10.63
Expired (13)
-------
Outstanding - June 30, 1995
and March 31, 1996 9,665 $10.63 to $27.50
=======
*In connection with the public offering in 1994, holders of incentive
and nonqualified stock options for 25,421 shares at prices of $27.50
to $440.40 a share agreed to the cancellation of their options.
(Continued)
F-17
<PAGE>
EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED MARCH 31, 1995
AND THE PERIOD SUBSEQUENT TO JUNE 30, 1995 IS UNAUDITED)
NOTE 7 - Shareholders' Equity (Continued):
On November 28, 1990, the Board of Directors granted to the Company's
president and vice president options to purchase 7,917 shares
exercisable at $30.00 per share from June 1992 through December 1996,
contingent upon the earnings per share of the Company during this
period. No options became exercisable through June 30, 1995.
Compensation expense will be recognized with respect to these options
to the extent that the fair market value of the stock exceeds the
option price when they become exercisable. All other outstanding
options are noncompensatory.
1995 Stock Options:
On January 20, 1995, the Board of Directors granted to the Company's
president and two vice-presidents ten-year nonqualified options to
purchase 80,158 shares each at $5.30 per share. The options are
exercisable after five years but may become exercisable sooner upon
the Company achieving pretax earnings targets. Based on the earnings
for the year ended June 30, 1995, options for 120,237 shares are now
exercisable; options for the remaining shares will become exercisable
if the Company's pretax earnings for the year ending June 30, 1996
exceeds the $250,000 target.
Other nonqualified options outstanding at March 31, 1996, under prior
years' grants, aggregate 108 shares at $30.00 a share.
The following summarizes shares reserved at March 31, 1996 under
options and warrants outstanding:
Price Per
Number Share or Unit
-------- ---------------
Stock options:
Incentive stock option plans 9,665 $10.63 - $30.00
Nonqualified options 123,000 $ 5.30 - $16.87
Warrants:
Class A 226,250 $13.00
Other 68,244 $12.50 - $13.00
(Continued)
F-18
<PAGE>
EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED MARCH 31, 1995
AND THE PERIOD SUBSEQUENT TO JUNE 30, 1995 IS UNAUDITED)
NOTE 8 - Commitments and Contingencies:
Rent:
The Company is obligated through August 2003 under several
noncancellable long-term operating leases covering office, factory
and warehouse facilities. Minimum annual rentals under these leases
are:
Year ending June 30:
1996 $ 109,000
1997 116,000
1998 127,000
1999 137,000
2000 157,000
Thereafter 474,000
----------
Total $1,120,000
==========
Rent expense, including month-to-month rentals, was $219,000,
$221,000, and $167,000 in the fiscal years ended June 30, 1995 and
1994 and the nine months ended March 31, 1996, respectively.
Employment Agreements:
The Company had employment agreements, which commenced as of the
effective date of the April 1994 public offering, with three of its
officers. These agreements provided for combined annual salaries of
$247,000. On July 1, 1995, these officers entered into new agreements
which provide for the following:
Officer Period Annual Salary
---------------- ------- -------------
President (a) 5 years $121,000
Senior Vice-President (b) 5 years $105,000
Vice-President of Finance
and Treasurer (c) 5 years $ 55,000
(Continued)
F-19
<PAGE>
EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED MARCH 31, 1995
AND THE PERIOD SUBSEQUENT TO JUNE 30, 1995 IS UNAUDITED)
NOTE 8 - Commitments and Contingencies (Continued):
Employment Agreements (Continued):
(a) This officer is entitled to a bonus of 3 1/3% of the Company's
income before taxes and interest.
(b) This officer is entitled to a bonus of 3 1/3% of the Company's
income before taxes and interest and a bonus of 3/4 of 1% of net
sales in excess of $20,500,000.
(c) This officer is entitled to a bonus of 3 1/3% of the Company's
income before taxes and interest.
The above officers are also entitled to annual increases of not less
than 10% of the prior year's compensation. In addition, should an
unrelated party obtain more than 20% of the Company's then
outstanding stock, other than by transactions initiated by the
Company, the following will occur:
(a) Each will be paid a bonus equal to their minimum base salary for
the next three years.
(b) Each will be repaid their junior participation in loans made to
the Company (see Note 5).
(c) All rights (options, warrants, etc.) will become immediately
vested and exercisable.
These officers have waived their right to bonuses for the years ended
June 30, 1996 and 1997 and to compensation payable in the event of a
change in control due to the private placement and the proposed
public offering (see Note 12).
NOTE 9 - Profit Sharing Plan:
The Company's qualified profit sharing plan covering all eligible
full-time employees provides for discretionary (i.e., no minimum
contributions are required) contributions as approved by the
Company's Board of Directors. The profit sharing plan includes a
401(k) plan. There were no contributions made for the fiscal years
ended June 30, 1995 and 1994 or for the nine months ended March 31,
1996.
(Continued)
F-20
<PAGE>
EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED MARCH 31, 1995
AND THE PERIOD SUBSEQUENT TO JUNE 30, 1995 IS UNAUDITED)
NOTE 10 - Industry Segment Information:
Information for the Company's distribution and manufacturing segments
for the years ended June 30, 1995 and 1994 is summarized as follows:
1995 Distribution Manufacturing Total
---- ------------ ------------- -----------
Net sales $ 9,233,456 $14,791,441 $24,024,897
=========== =========== ===========
Operating profit $ 156,199 $ 1,666,331 $ 1,822,530
=========== ===========
General corporate expenses (1,160,928)
Interest expense (583,665)
-----------
Income before provision for
income taxes $ 77,937
===========
Identifiable assets $ 4,291,806 $ 6,424,242 $10,716,048
=========== =========== ===========
Capital expenditures $ 27,882 $ 163,360 $ 191,242
=========== =========== ===========
Depreciation and
amortization expense $ 37,462 $ 127,071 $ 164,533
=========== =========== ===========
1994
----
Net sales $ 8,653,738 $12,092,071 $20,745,809
=========== =========== ===========
Operating profit $ 80,839 $ 235,564 $ 316,403
=========== ===========
General corporate expenses (1,636,004)
Interest expense (1,391,777)
-----------
Loss before provision for
income taxes $(2,711,378)
===========
Identifiable assets $ 4,035,140 $ 4,966,616 $ 9,001,756
=========== =========== ===========
Capital expenditures $ 13,850 $ 10,808 $ 24,658
=========== =========== ===========
Depreciation and
amortization expense $ 35,620 $ 137,250 $ 172,870
=========== =========== ===========
(Continued)
F-21
<PAGE>
EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED MARCH 31, 1995
AND THE PERIOD SUBSEQUENT TO JUNE 30, 1995 IS UNAUDITED)
NOTE 11 - Litigation:
At June 30, 1996, the Company is a defendant in approximately 280
lawsuits, together with a multitude of other defendants, in actions
alleging exposure by approximately 1,300 first party plaintiffs to
asbestos and products containing asbestos sold by the Company over
unspecified periods of time.
To June 30, 1996 and since 1981, the Company estimates approximately
900 actions on behalf of approximately 7,500 first party plaintiffs
have been instituted against it concerning asbestos related claims
and that claims of approximately 6,200 plaintiffs have been
terminated. The foregoing numbers assume the consummation of pending
settlements. The Company estimates that with the exception of defense
costs, a total of approximately $1,500,000 has been agreed to in
settlements to date with regard to the terminated actions of which
all but $45,000 has been paid by the Company's insurance carriers. To
June 30, 1996, the Company has paid less than $35,000 for legal and
defense costs to counsel appointed by the insurance companies to
defend it. The Company entered into an agreement with its primary
insurance companies, wherein its liability is limited to 12% of the
cost of the defense liability and 17% of the settlement claim of
certain litigation. The agreement, which is subject to policy
limitations on each insurance policy, may be terminated at any time
upon 90 days notice by any of the parties provided that termination
may not be effective as to any asbestos action that has already been
placed on the trial calendar, unless it has a scheduled trial date
more than 12 months from the date the notice is given. In May 1991,
the Company reached an agreement with Mount Vernon Fire Insurance
Company, one of its primary insurance carriers, with respect to its
pending and future asbestos litigation. Mount Vernon agreed to
contribute 6.25% to the Company's defense costs and 6.25% to its
indemnity costs for so long a period of time as $100,000 in aggregate
has not been paid for indemnity costs. This agreement applied only
during the period Mount Vernon provided insurance coverage, which is
between April 1, 1968 to April 1, 1969. However, because past results
of settlements and defense costs are not necessarily indicative of
future settlements and defense costs and because, as of this date,
management is still unable to fully ascertain the extent of
(Continued)
F-22
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EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED MARCH 31, 1995
AND THE PERIOD SUBSEQUENT TO JUNE 30, 1995 IS UNAUDITED)
NOTE 11 - Litigation (Continued):
insurance coverage applicable to asbestos claims against the Company
or the extent to which insurance carriers will provide coverage,
neither management nor counsel is able to predict the outcome of
these matters or the range of any potential liability that might
result. In addition, based on past history, management believes it is
likely that there will be additional asbestos action instituted
against the Company.
The Company is party to other product liability litigation arising in
the ordinary course of business. After consultation with counsel, the
Company considers that its ultimate liability, if any, after
available insurance coverage, in the majority of these matters, would
not have a material adverse effect upon the Company's financial
position. However, there can be no assurances that the Company's
insurance coverage will adequately cover these cases or whether the
Company's insurance will provide coverage for punitive damages should
they be awarded.
NOTE 12 - Subsequent Events:
Convertible Subordinated Debenture:
During April 1996, the holder of a $250,000 convertible subordinated
debenture, issued in February 1996, converted $150,000 of the
debenture into 26,374 shares of the Company's common stock. The
Company repurchased 21,374 of these shares for $180,000 and retired
the stock. The remaining $100,000 balance of the debenture was
repurchased for $120,000.
Bridge Loan:
On May 17, 1996, the Company received a $500,000 bridge loan, through
the underwriter, as an advance against a private placement. Interest
was payable at 10% per annum. The bridge loan was repaid on June 28,
1996 with the proceeds of the private placement. In connection with
the foregoing, the Company issued warrants, which expire
June 30, 1999, to purchase 2,500 shares of common at $1.00 per share.
F-23
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EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED MARCH 31, 1995
AND THE PERIOD SUBSEQUENT TO JUNE 30, 1995 IS UNAUDITED)
NOTE 12 - Subsequent Events (Continued):
Reverse Stock Split, Preferred Stock, Stock Option Plans and Stock
Options:
On May 13, 1996, the Board of Directors approved the following
proposals [which are all subject to shareholder approval at a special
meeting of shareholders to be held on August 12, 1996] which were
approved by the shareholders at a special meeting on August 12, 1996.
1. A 1-for-10 reverse stock split of all outstanding shares of the
Company. The acompanying financial statements and notes thereto give
retroactive effect to this split.
2. Amendment of the certificate of incorporation to authorize a class
of preferred stock consisting of 1,000,000 shares.
3. Adoption of the 1996 incentive stock option plan for the issuance
of 300,000 shares to key employees.
4. Adoption of the 1996 nonqualified stock option plan for the
issuance of 300,000 shares to key employees.
In addition, the Board of Directors authorized the issuance of
warrants to purchase 8,348 shares each to the Company's president and
two of the vice presidents for their guarantees of advances by
Congress. The warrants are exercisable for five years commencing
February 23, 1996 at $5.77 per share.
(Continued)
F-24
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EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED MARCH 31, 1995
AND THE PERIOD SUBSEQUENT TO JUNE 30, 1995 IS UNAUDITED)
NOTE 12 - Subsequent Events (Continued):
Private Placements:
On June 28, 1996, the Company issued, in a private placement, 10 1/2
units at $57,000 a unit. Each unit consists of 38,000 shares of the
Company's common stock. The net proceeds to the Company were
approximately $501,000 after fees to the placement agent and other
expenses. The proceeds were used to repay the bridge loan. On July 9,
1996, an additional 3 units were sold for net proceeds of
approximately $165,000. No fees were paid to the placement agent for
these units. The 513,000 shares issued will be registered in the
proposed public offering. However, the 10 1/2 units and the 3 units
cannot be sold until three months and nine months, respectively,
after the effective date of the proposed public offering without the
consent of the underwriter.
Proposed Public Offering:
The Company has signed a letter of intent with an underwriter for a
rights offering and for the sale of units. Each holder of 5 shares of
the Company's common stock will be allowed to purchase 4 units at $ .
per unit. Each unit is comprised of one share of common stock and a
Class B warrant to purchase one share of common stock at $ . . The
warrants expire three years from the effective date of the offering.
These warrants are redeemable by the Company eighteen months after
the effective date (no earlier than nine months with the
underwriter's consent) at $.01 a warrant provided the high bid price
of its stock is at least 150% in excess of the exercise price of the
warrants for the required number of days prior to the redemption
notice. The Company entered into a standby agreement with the
underwriter whereby any units not sold pursuant to the exercise of
rights will be sold to the underwriter at the same price. In the
event the unsubscribed units to be purchased by the underwriter is
less than 300,000 units, the underwriter will have the right, but not
the obligation, to purchase a minimum of 300,000 units. The Company
also granted to the underwriter, for $7, an option to purchase one
unit for each 10 units sold in the offering at $ per unit. The
Company will also enter into a one year financial consulting
agreement at a cost of 2% of the gross proceeds of the offering. The
Company also agreed to pay the underwriter a warrant solicitation fee
of 7% of the exercise price of each Class B warrant.
(Continued)
F-25
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EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED MARCH 31, 1995
AND THE PERIOD SUBSEQUENT TO JUNE 30, 1995 IS UNAUDITED)
NOTE 12 - Subsequent Events (Continued):
Amendment to the Company's Line of Credit Agreement:
On July 23, 1996, the Company and Congress amended their loan
agreement effective August 1, 1996. The line was increased to
$9,000,000 with interest at 1.25% above the prime rate and was
extended to October 1, 1999 with an option of Congress to extend the
loan for one year. If the proposed public offering is consummated no
later than December 31, 1996 and the net proceeds are at least
$2,500,000, the interest will be reduced to prime plus 1%. The limit
on borrowings was increased to 85% of eligible accounts receivable
and 55% of eligible inventory.
The loan is subject to certain revised working capital and net worth
requirements and contains certain prepayment penalties. Congress also
agreed to make new equipment term loans to the Company from time to
time not to exceed $1,000,000. The Company paid a $20,000 loan
extension fee to Congress.
F-26
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Until ____, 1996 all dealers effecting transactions in the registered
securities, whether or not participating in this distribution, may be required
to deliver a Prospectus. This is in addition to the obligation of dealers to
deliver a Prospectus when acting as soliciting dealer.
TABLE OF CONTENTS Page
---
Restrictions in Certain States
Statement of Available Information
Prospectus Summary
Summary Financial
Information
Risk Factors 703,591 Units
Use of Proceeds
Dilution EASTCO INDUSTRIAL
Capitalization SAFETY CORP.
Market Information
Dividend Policy -----------
Management's Discussion
and Analysis of Results PROSPECTUS
of Operations and
Financial Condition
Business
Management
Principal Shareholders
Description of Securities
Shares Eligible for
Future Sale
Plan of Distribution
Certain Relationships and Related
Transactions
The Offering
Underwriting
Concurrent Registration of Common
Stock
Legal Matters
Experts
Additional Information
Consolidated Financial
Statements
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and, if given or made, such information or representations must
not be relied on as having been authorized by the Company. This Prospectus
does not constitute an offer to sell or a solicitation of an offer to buy, by
any person in any jurisdiction in which it is unlawful for such person to make
such offer or solicitation.
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SUBJECT TO COMPLETION, DATED ________, 1996
EASTCO INDUSTRIAL SAFETY CORP.
513,000 Shares of Common Stock
This Prospectus relates to the sale by certain selling stockholders (the
"Selling Stockholders") of 513,000 shares of common stock, $0.12 par value per
share (the "Common Stock") offered hereby (the "Offering"), of Eastco
Industrial Safety Corp., a New York corporation (the "Company" and sometimes
"Eastco" when referring to the parent company only). None of the proceeds from
the sale of the Common Stock by the Selling Stockholders will be received by
the Company. By agreement, 399,000 shares are restricted from being sold until
3 months from the date hereof. By agreement, 114,000 shares are restricted from
being sold until 9 months from the date hereof. The Company will bear all
expenses (other than selling commissions and fees and expenses of counsel or
other advisors to the Selling Stockholders) in connection with the registration
and sale of the Common Stock being offered by the Selling Stockholders.
See "Selling Stockholders".
The Common Stock will be offered by the Selling Stockholders in
transactions in the over-the counter market, in negotiated transactions or a
combination of such methods of sale, at prices related to such prevailing
market prices, or at negotiated prices. The Selling Stockholders may effect
such transactions by selling the Common Stock to or through broker/dealers,
and such broker/dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Stockholders and/or the purchasers
of the Common Stock for whom such broker/dealers may act as agent or to whom
they sell as principal, or both. The Selling Stockholders may be deemed to be
"underwriters" as defined in the Securities Act of 1933, as amended (the
"Securities Act"). If any broker/dealers are used by the Selling Stockholders,
any commissions paid to broker/dealers and, if broker/dealers purchase any
shares of Common Stock as principals, any profits received by such
broker/dealers on the resales of the shares of Common Stock may be deemed to
be underwriting discounts or commissions under the Securities Act. In
addition, any profits realized by the Selling Stockholders may be deemed
underwriting commissions. All costs, expenses and fees in connection with the
registration of the shares offered by the Selling Stockholders will be borne
by the Company. Brokerage commissions, if any, attributable to the sale of
Common Stock will be borne by the Selling Stockholders. See "Selling
Stockholders" and "Plan of Distribution".
The Company's Common Stock is traded on the NASDAQ Stock Market
("NASDAQ") under the symbol "ESTO".
Concurrently with the commencement of this offering, the Company offered
by separate Prospectus, 703,591 units (the "Units") each Unit consisting of
one share of Common Stock and one Common Stock purchase warrant (the
"Warrants"). The Company's offering (the "Unit Offering") is being offered
through Royce Investment Group, Inc. (the "Underwriter").
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND SUBSTANTIAL DILUTION AS
DESCRIBED HEREIN. FOR A DISCUSSION OF CERTAIN MATERIAL FACTORS THAT SHOULD BE
CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE SECURITIES. SEE "RISK
FACTORS" BEGINNING ON PAGE ____ AND "DILUTION" BEGINNING ON PAGE ____.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is____________, 1996.
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safety products to "end-users" made by the Charkate / Worksafe division as
well as by non-affiliated companies. These products include hard hats,
protective glasses, ear muffs, ear plugs, respirators, goggles, face shields,
rainwear, protective footwear, first-aid kits, monitoring devices, signs and
related products. These products are sold to manufacturing companies and
service businesses, including public utilities, fisheries, hospitals,
pharmaceutical plants, the transportation industry and companies engaged in
hazardous materials abatement.
The Company supplies a variety of items which may be used during the
removal and/or encapsulation of hazardous materials in office buildings,
chemical plants, refineries, electric generating plants and schools. Abatement
products sold by the Company include in the largest part, items made by other
companies, such as negative air machines, respirators, air filtration
equipment, vacuums, polybags and sheetings, decontamination showers, signs,
tools, pumps, sprayers and related equipment. The Company does not engage in
the removal or encapsulation of hazardous materials.
The Company's Distribution Operations are primarily directed from the
Company's offices in New York. The Company also has facilities for warehousing
and distribution of its non- manufactured products in Puerto Rico, Connecticut
and Florida. Items distributed are sold primarily in the Northeastern region
of the United States.
The Offering
Securities Offered 513,000 shares of Common Stock
Common Stock outstanding prior to
the Offering(1)(2) 1,583,079 shares of Common Stock
Common Stock to be outstanding
after the Offering(1)(2)(3) 1,583,079 shares of Common Stock
Risk Factors The securities offered hereby involve
a high degree of risk and immediate
substantial dilution. See "Risk
Factors" and "Dilution."
NASDAQ Symbol Common Stock -- ESTO
- ---------------------
(1) All shares and shares issuable under outstanding warrants and options
in this Prospectus have been adjusted for a one-for-ten reverse stock
split approved by the shareholders of the Company on August 12, 1996.
(2) Does not include Common Stock which may be issued upon the exercise
of any options or warrants currently outstanding. The Company
currently has outstanding options and warrants to purchase 633,935
shares of Common Stock exercisable at prices between $5.168 and $30.00
per share. The foregoing may be subject to adjustment with respect to
anti-dilution rights as a result of Units issued in this Offering.
(3) Does not include Common Stock which may be issued upon exercise of
Underwriter's Purchase Option and Optional Units.
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completion of this Offering and the Company's ability to utilize its net
operating loss carryforwards could be further limited.
Reliance on Current Management. The Company's current operations and
future success is greatly dependent upon the services of Mr. Alan Densen, its
President, Lawrence Densen, its Senior Vice President and Anthony P. Towell,
its Vice President of Finance. The loss of services of any of the foregoing,
who are each employed under written agreements for five year terms, could have
a material adverse effect on the Company.
Control By Management. As of the date of this Prospectus, the Company's
executive officers and directors own of record and beneficially, an aggregate
of approximately 23% of the Company's outstanding Common Stock and may be in a
position to have significant influence over the outcome of all matters
submitted to stockholders for approval, including the election of directors of
the Company, as a result of their control of such shares which will vote on
all matters. The Company's Board of Directors is divided into two classes,
each of which generally serves for a term of two years, with only one class of
directors being elected in each year. A classified board under certain
circumstances could discourage, prevent or delay a change in control of the
Company, which could have the effect of discouraging bids for the Company and
thereby prevent shareholders from receiving the maximum value for their
shares. In addition, there are provisions in the employment agreements with
Messrs. A. Densen, A. Towell and L. Densen, that provide for them to receive
immediately a lump sum payment of three years' compensation as well as
severance pay should a "Change in Control" occur, which also could have a
similar effect of deterring bids for the Company. Messrs. A. Densen, L.
Densen, and A. Towell, in modification agreements to their employment
agreements, have waived: (i) their right to bonuses based upon the Company's
earnings or sales for the fiscal years ended June 30, 1996 and June 30, 1997;
(ii) exercise rights on options and warrants and repayment for their junior
participation interests with Congress and compensation payable in the event of
a Change in Control with respect to the Offerings; and (iii) their right to
terminate their relationship with the Company, as per the terms of their
respective employment agreements. See "Management".
Outstanding Options and Warrants. As of the date hereof, there are
633,935 shares of Common Stock subject to issuance upon currently outstanding
options and warrants at exercise prices between $5.168 and $30.00 per share. To
the extent that outstanding options and warrants are exercised, additional
equity investment funds will be paid into the Company at the expense of
dilution to the interests of the Company's shareholders. Moreover, the terms
upon which the Company will be able to obtain additional equity capital may be
adversely affected since the holders of outstanding options and warrants can
be expected to exercise or convert them at a time when the Company would, in
all likelihood, be able to obtain any needed capital on terms more favorable
to the Company than those provided in such securities.
Penny Stock Regulation. The Commission has adopted rules that regulate
broker-dealer practices in connection with transactions in "penny stocks."
Penny stocks generally are equity securities with a price of less than $5.00
(other than securities registered on certain national securities exchanges or
quoted on the NASDAQ system, provided that current price and volume
information with respect to transactions in such securities is provided by the
exchange or system). The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules to deliver a
standardized risk disclosure document prepared by the Commission that provides
information
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(Alternate Page for Common Prospectus)
about penny stocks and the nature and level risks in the penny stock market.
The broker-dealer must also provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction, and monthly account statements showing the
market value of each penny stock held in the customer's account. The bid and
offer quotations, and broker-dealer and salesperson compensation information
must be given to the customer orally or in writing prior to effecting the
transaction and must be given in writing before or with the customer's
confirmation. In addition, the penny stock rules require that prior to a
transaction of a penny stock not otherwise exempt from such rules, the
broker-dealer must make a special written determination that the penny stock
is a suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction. These disclosure requirements may have the
effect of reducing the level of trading activity in the secondary market for a
stock that becomes subject to the penny stock rules. If the Company's securities
become subject to the penny stock rules, investors in this offering may find
it more difficult to sell such securities.
Although the Company believes that its securities will, as of the date of
this Prospectus, be outside the definitional scope of a penny stock, as it
will be listed on NASDAQ, in the event the Common Stock were subsequently to
become characterized as a penny stock the market liquidity for the Company's
securities could be severely affected. In such event, the regulations on penny
stocks could limit the ability of broker-dealers to sell the Company's
securities, and thus, the ability of purchasers in this offering to sell their
securities in the secondary market.
Tax Incentives. Puerto Rico Safety Equipment and Disposable have elected
to apply Section 936 of the Internal Revenue Code, effective July 1, 1979. The
provisions of Section 936 are effective until revoked by the Company. If the
conditions of Section 936(a)(2) are satisfied, the Section 936 credit equals
the portion of the United States income tax that is attributable to taxable
income from sources outside the United States derived from the active conduct
of a trade or business within a United States possession, or the sale or
exchange of substantially all of the qualified possession source investment
income. Dividends payable by each subsidiary to the Company from operations
are entitled to a 100% dividends received deduction but are subject to a 10%
withholding tax in Puerto Rico. The Omnibus Budget Reconciliation Act of 1993
(the "Omnibus Act") imposes new limitations on computing the Possession Tax
Credit under Section 936 for tax years beginning after 1993. There are two
methods for determining the credit under the new law. Under the first method,
the amount of the credit may be determined by using the so-called economic
activity limit. This attempts to limit the credit by applying various
percentages to possession-based compensation, depreciation and taxes paid or
accrued. Alternatively, the Company may make an irrevocable election when it
files its June 30, 1996 federal income tax return to have present rules apply,
but to phase out the credit to 60% of the 1994 level, and further phase down
by 5% per year to 40% in 1998 and years thereafter. Since the credit is a
function of future earnings, if any, the effect of such limitations cannot be
determined at the present time. In addition, the Omnibus Act makes the 100%
dividends received deduction subject to the Alternative Minimum Tax
Calculation. No dividends have been declared on the aggregate undistributed
earnings of Puerto Rico Safety Equipment and Disposable (which through June
30, 1995, aggregates approximately $2,458,000) and none are intended to be
declared because it is management's intention to reinvest the earnings from
such subsidiaries indefinitely. The Company believes that based upon current
operations, the
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Omnibus Act will not have a material effect on the Company for the forseeable
future.
As Puerto Rico tax exemptions are reduced or expire, the Company may be
required to pay taxes on income earned in Puerto Rico. the Company is unable
to predict the amount of such impact after such exemptions are reduced or
expire. See "Management's Discussion of Analysis of Financial Condition and
Results of Operations."
Shares Eligible for Future Sale. Of the 879,488 shares of Common Stock of
the Company outstanding as of the Effective Date, ____ shares are restricted
securities, as that term is defined in Rule 144 promulgated under the
Securities Act of 1933 (the "Securities Act"), 399,000 shares are being
registered for sale herewith subject to an agreement with the Underwriter not
to sell such shares for a period of three months without the prior written
consent of the Underwriter, and 114,000 shares are being registered for sale
herewith subject to an agreement with the Underwriter not to sell such shares
for a period of nine months without the prior written consent of the
Underwriter. Of the _____ shares, _____ shares are owned by an affiliate of
the Company, as that term is defined under the Securities Act. Absent
registration under the Securities Act, the sale of such shares is subject to
Rule 144, as promulgated under the Securities Act. In general, under Rule 144,
subject to satisfaction of certain other conditions, a person, including an
affiliate of the Company, who has beneficially owned restricted shares of Common
Stock for at least two years is entitled to sell, within any three-month period,
a number of shares that does not exceed the greater of 1% of the total number of
outstanding shares of the same class, or if the Common Stock is quoted on
NASDAQ, the average weekly trading volume during the four calendar weeks
preceding the sale. A person who has not been an affiliate of the Company for
at least three months immediately preceding the sale and who has beneficially
owned the shares of Common Stock for at least three years is entitled to sell
such shares under Rule 144 without regard to any of the volume limitations
described above. The Company's executive officers and directors have agreed
not to sell their shares for a period of eighteen months from the Effective
Date without the prior consent of the Underwriter. The Underwriter may consent
to the sale of such shares at any time, in its sole discretion, upon the
request of the holder. The Underwriter's decision to consent will be based
upon the current market conditions, liquidity of the Common Stock, as well as
such other factors the Underwriter deems appropriate. No public announcement
will be made with respect to the foregoing.
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USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common Stock
in the Selling Stockholder Offering.
DILUTION
As of March 31, 1996, the Company had a pro forma net tangible book value
of $2,741,942 or $3.12 per share. The pro-forma net tangible book value per
share as of March 31, 1996 represents the Company's tangible pro-forma assets
less the total pro-forma liabilities. The pro-forma net tangible book value
gives effect to the 513,000 shares issued in the private placement and the
5,000 shares issued, as well as the additional charges to earnings related to
the settlement of the subordinated convertible debentures payable. See
"Certain Relationships and Related Transactions" and Note 12 in the
"Consolidated Financial Statements." After giving effect to the 703,591 shares
issued in the Rights Offering and sale of Units offered hereby, the pro-forma
net tangible book value, as adjusted, as of March 31, 1996 would have been
approximately $5,452,563 or $3.44 per share after the receipt of the net
proceeds. This represents an immediate increase in the pro-forma net tangible
book value of $.32 per share to existing stockholders and an immediate
dilution of $1.56 per share to new stockholders purchasing shares of common
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DESCRIPTION OF SECURITIES
Common Stock
The authorized capital stock of the Company is 20,000,000 shares of
Common Stock, $0.12 par value per share. The holders of Common Stock (i) have
equal ratable rights to dividends from funds legally available, therefore,
when, as and if declared by the Board of Directors of the Company; (ii) are
entitled to share ratably in all of the assets of the Company available for
distribution to holders of Common Stock upon liquidation, dissolution or
winding up of the affairs of the Company; (iii) do not have preemptive,
subscription or conversion rights and there are no redemption or sinking fund
provisions applicable thereto; and (iv) are entitled to one vote per share on
all matters on which shareholders may vote at all meetings of shareholders.
The holders of shares of Common Stock of the Company do not have
cumulative voting rights, which means that the holders of more than 51% of
such outstanding shares voting for the election of Directors can elect all of
the Directors to be elected, if they so choose, and, in such event, the
holders of the remaining shares will not be able to elect any of the Company's
Directors.
Transfer Agent
The Transfer Agent for the Common Stock is American Stock Transfer and Trust
Co., 40 Wall Street, New York, New York 10005.
Other Publicly Held Securities and Preferred Stock
Class A Warrants
The Company has issued and outstanding 2,262,500 Class A Warrants,
exercisable for 226,250 shares of Common Stock, which are publicly tradeable
and are exercisable at a price of $13.00 per share until April 11, 1999. Such
holders are protected against dilution upon the occurrence of certain events
including but not limited to stock dividends, stock splits, reclassifications,
and mergers, but have no voting rights and are not entitled to dividends. In
the event of liquidation, dissolution, or winding up of the Company, holders
of Class A Warrants are not entitled to participate in the distribution of any
of the Company's assets.
Class B Warrants
The Company will issue 703,591 Class B Warrants as part of its Rights
Offering for Units which also includes 703,591 shares of Common Stock.
Each Class B Warrant entitles its holder to purchase one share of Common
Stock at an exercise price of $6.25 per share. The Class B Warrants expire on
_______________________ (three years after the Effective Date). The Class B
Warrants may be redeemed by the Company at any time, commencing eighteen
months after the Effective Date, or sooner with the sole consent of the
Underwriter (but no sooner than nine months from the date of this Prospectus)
at a redemption price of $.01 per Warrant upon 10 days prior written notice,
provided the closing high bid price of the Common Stock for the 15 consecutive
trading days ending on the third day prior to the date of notice of redemption
is in excess of $9.375 (or 150% of the exercise price of the Class B Warrants
to be proportionately adjusted for any stock dividends and stock splits
occurring after the Effective Date and which may be adjusted to 150% of the
current exercise price of the Class B Warrants, if such exercise price is
changed) per share. Warrantholders shall exercise rights until the close of
business on the day preceding the date fixed for redemption.
46
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(Alternate Page for Common Prospectus)
Holders of the Class B Warrants will be protected against dilution upon
the occurrence of certain events, including, but not limited to stock
dividends, stock splits, reclassifications, mergers, and sales of Common Stock
below the Exercise Price or then-current market value. However, holders of
Class B Warrants will have no voting rights and are not entitled to dividends.
In the event of liquidation, dissolution or winding up of the Company, holders
of Class B Warrants will not be entitled to participate in any distribution of
the Company's assets.
Preferred Stock
Pursuant to shareholder approval at the August 12, 1996 Special
Shareholders' Meeting, the Company is authorized to issue 1,000,000 shares of
preferred stock par value $.01. The Board of Directors has the express
authority, without further action of the stockholders, to issue shares of
Preferred Stock from time to time in one or more series and to fix before
issuance with respect to each series: (a) the designation and the number of
shares to constitute each series, (b) the liquidation rights, if any, (c) the
dividend rights and rates, if any, (d) the rights and terms of redemption, if
any, (e) whether the shares will be subject to the operation of a sinking or
retirement fund, if any, (f) whether the shares are to be convertible or
exchangeable into other securities of the Company, and the rates thereof, if
any, (g) any limitation on the payment of dividends on the Common Stock while
any such series is outstanding, if any, (h) the voting power, if any, in
addition to the voting rights provided by law, of the shares, which voting
powers may be general or special, and (i) such other provisions as shall not
be inconsistent with the certificate of incorporation. All the shares of any
one series of the Preferred Stock shall be identical in all respects. No
preferred shares are currently outstanding.
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48
<PAGE>
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SHARES ELIGIBLE FOR FUTURE SALE
Of the 879,488 shares of Common Stock of the Company outstanding as of the
Effective Date, _____ shares are restricted securities, as that term is
defined in Rule 144 promulgated under the Securities Act of 1933 (the
"Securities Act"). 399,000 shares are being registered for sale
herewith subject to an agreement with the Underwriter not to sell such shares
for a period of three months without the prior written consent of the
Underwriter, and 114,000 shares are being registered for sale
herewith subject to an agreement with the Underwriter not to sell such shares
for a period of nine months without the prior written consent of the
Underwriter. Of the _____ shares, _____ shares are owned by affiliates of
the Company, as that term is defined under the Securities Act. Absent
registration under the Securities Act, the sale of such shares is subject to
Rule 144, as promulgated under the Securities Act. In general, under Rule 144,
subject to satisfaction of certain other conditions, a person, including an
affiliate of the Company, who has beneficially owned restricted shares of
Common Stock for at least two years is entitled to sell, within any
three-month period, a number of shares that does not exceed the greater of 1%
of the total number of outstanding shares of the same class, or if the Common
Stock is quoted on NASDAQ, the average weekly trading volume during the four
calendar weeks preceding the sale. A person who has not been an affiliate of
the Company for at least three months immediately preceding the sale and who
has beneficially owned the shares of Common Stock for at least three years is
entitled to sell such shares under Rule 144 without regard to any of the
volume limitations described above. The Company's executive officers and
directors have agreed not to sell their shares for a period of eighteen months
from the Effective Date without the prior consent of the Underwriter. The
Underwriter may consent to the sale of such shares at any time, in its sole
discretion, upon the request of the holder. The Underwriter's decision to
consent will be based upon the current market conditions, liquidity of the
Common Stock, as well as such other factors the Underwriter deems appropriate.
No public announcement will be made with respect to the foregoing. In addition
to the foregoing, 703,591 Units, each Unit consisting of one share of Common
Stock and one Class B Warrant, are being registered simultaneously herewith.
See "Concurrent Registration of Common Stock."
49
<PAGE>
(Alternate Page for Common Prospectus)
Towell, and L. Densen to purchase 8,875 shares of Common Stock at $5.428 per
share which expire on February 22, 2001, and are subject to anti-dilution
provisions. The overadvance has since been repaid and their guarantees have
been returned to them.
On June 28, 1996, the Company completed the Private Placement Offering,
pursuant to which it issued 399,000 shares at $1.50 per share to 20 investors,
pursuant to provisions for exemption from registration under the Securities
Act of 1933 as amended. The terms of the Private Placement Offering were
established by negotiation between the Company and Royce Investment Group,
Inc., a registered broker/dealer (the "Private Placement Agent"). Under the
terms of the Private Placement Offering, 10 1/2 units (the "Units") were
offered, and sold, in multiples of $57,000 per Unit. Each full Unit consists
of 38,000 shares of the Company's Common Stock, par value $0.12 per share. The
Company used net proceeds from the Private Placement Offering to pay off a
short-term loan in the amount of $500,000 from Elono Portfolio S.A., which had
been used to reduce the amount due to Congress. The Private Placement Offering
is part of a letter of intent, dated May 14, 1996, pursuant to which the
Company is filing this registration statement. On July 9, 1996, the Company
completed an additional private placement offering for 114,000 shares at $1.50
per share to 5 investors, pursuant to provisions for exemption from
registration under the Securities Act of 1933 as amended.
52
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53
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54
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55
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56
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(Alternate Page for Common Prospectus)
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57
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(Alternate Page for Common Prospectus)
CONCURRENT REGISTRATION OF COMMON STOCK
Concurrently with the commencement of this Offering, the Company has
offered by separate prospectus 703,591 Units at $5.00 per Unit. Each Unit
consists of one share of Common Stock and one Class B Warrant. The Unit
Offering is being offered through the Underwriter.
SELLING STOCKHOLDERS
The following table sets forth the number of shares of Common Stock of
the Company owned by each Selling Stockholder and the number of shares of
Common Stock included for sale in this Prospectus.
Beneficial Ownership Beneficial Ownership
of shares of Common of shares of Common
Selling Stockholders Stock prior to Sale(1) Stock after Sale
- -------------------- ---------------------- --------------------
RONALD SPINELLI &
RICHARD SPINELLI (A) 9,500 0
RAMESH PATEL (A) 9,500 0
BRENDA FURINO (A) 19,000 0
CINDY DOLGIN (A) 9,500 0
JOHN CZINGER (A) 9,500 0
LEONARD MOSKOWITZ &
VICKIE MOSKOWITZ (A) 9,500 0
ALOYSIUS G. FREEMAN
& MARY FREEMAN (A) 9,500 0
RAYMOND KAYAL (A) 9,500 0
DAVID COHEN (A) 9,500 0
JOANN WEAN &
CHARLES WEAN III (A) 9,500 0
ASHDOWN HOLDINGS LIMITED (A) 38,000 0
BLAISE FINANCIAL CORP. (A) 38,000 0
ELLIOT S. SCHLISSEL (A)
& LOIS C. SCHLISSEL (A) 19,000 0
GLOBALSIDE LIMITED (A) 38,000 0
CORNELIA COMPANY LIMITED (A) 38,000 0
WAAL INVESTMENTS LTD (A) 38,000 0
HARRIET REUTER (A) 19,000 0
EDMOND O'DONNELL (A) 19,000 0
DOMINICK LELIA &
ALICE LELIA (A) 9,500 0
MELINDA N. TYRWHITT (A) 38,000 0
GEORGE SHIAVONI (B) 76,000 0
ANTHONY C. SALVO (B) 5,000 0
ANDREW J. FINKLESTEIN (B) 6,667 0
HEATHER REISER (B) 21,667 0
ROBERT W. BURKE (B) 4,666 0
- ------------------
(A) Has agreed not to sell their shares for 3 months from the date hereof.
(B) Has agreed not to sell their shares for 9 months from the date hereof.
58
<PAGE>
(Alternate Page for Common Prospectus)
PLAN OF DISTRIBUTION
Each Selling Stockholder is free to offer and sell his or her shares of
Common Stock at such times, in such manner and at such prices as he or she
shall determine. Such shares may be offered by the Selling Stockholders in one
or more types of transactions, which may or may not involve brokers, dealers
or cash transactions. The Selling Stockholders may also use Rule 144 under the
Securities Act, to sell such securities, if they meet the criteria and conform
to the requirements of such Rule. There is no underwriter or coordinating
broker acting in connection with the proposed sale of Common Stock to the
Selling Stockholders.
The Selling Stockholders have advised the Company that sales of Common
Stock may be effected from time to time in transactions (which may include
block transactions) in the over-the-counter market, in negotiated
transactions, through the writing of options on the Common Stock, or a
combination of such methods of sale, at fixed prices which may be changed, at
market prices prevailing at the time of sale, or at negotiated prices. The
Selling Stockholders have advised the Company that they have not entered into
any agreements, understandings or arrangements with any underwriters or
broker/dealers regarding the sale of their securities. The Selling
Stockholders may effect such transactions by selling Common Stock directly to
purchasers or to or through broker/dealers which may act as agents or
principals. Such broker/dealers may receive compensation in the form of
discounts, concessions, or commissions from the Selling Stockholders and/or
purchasers of Common Stock for whom such broker/dealers may act as agents or
to whom they sell as principal, or both (which compensation as to a particular
broker/dealer might be in excess of customary commissions). The Selling
Stockholders and any broker/dealers that act in connection with the sale of
the Common Stock might be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act, and any commissions received by them and
any profit on the resale of the shares of Common Stock as principal might be
deemed to be underwriting discounts and commissions under the Securities Act.
The Selling Stockholders may agree to indemnify any agent, dealer or
broker/dealer that participates in transactions involving sales of the shares
against certain liabilities, including liabilities arising under the
Securities Act.
Because Selling Stockholders may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act, the Selling Stockholders
will be subject to prospectus delivery requirements under the Securities Act.
Furthermore, in the event of a "distribution" of his or her shares, any
Selling Stockholder, any selling broker or dealer and any "affiliated
purchasers" may be subject to Rule 10b-7 under the Exchange Act which
prohibits any "stabilizing bid" or "stabilizing purchase" for the purpose of
pegging, fixing or stabilizing the price of Common Stock in connection with
this Offering.
59
<PAGE>
(Alternate Page for Common Prospectus)
LEGAL MATTERS
Certain legal matters with respect to the issuance of securities offered
hereby will be passed upon for the Company by Hollenberg Levin Solomon Ross
Belsky & Daniels, LLP, 585 Stewart Avenue, Garden City, New York 11530.
Members of the firm of Hollenberg Levin Solomon Ross Belsky & Daniels, LLP own
988 shares of Common Stock. Lester Morse, P.C., 111 Great Neck Road,
Great Neck, New York 11021, is acting as counsel for the Underwriter in
connection with certain legal matters relating to the Units of Common Stock
and Warrants offered hereby.
EXPERTS
The Consolidated Financial Statements included in the Registration
Statement, of which this Prospectus forms a part, have been audited by
Cornick, Garber & Sandler, LLP, independent public accountants, to the extent
and for the periods indicated in their report with respect thereto and were
included herein in reliance upon the authority of said firm as experts in
giving said report. Reference is made to said report which contains an
explanatory paragraph regarding the Company's litigation uncertainties.
ADDITIONAL INFORMATION
The Company has filed with the Commission, a Registration Statement on
Form SB-2 with respect to the securities being offered hereby. This Prospectus
does not contain all the information set forth in such Registration Statement,
as permitted by the Rules and Regulations of the Commission. For further
information with respect to the Company and such securities, reference is made
to the Registration Statement and to the exhibits and schedules filed
therewith. Each statement made in this Prospectus referring to a document
field as an exhibit to the Registration Statement is qualified by reference to
the exhibit for a complete statement of its terms and conditions. The
Registration Statement, including exhibits thereto, may be inspected without
charge, by anyone at the principal office of the Commission in Washington D.C.
and copies of all or any part of thereof may be obtained from the Commission's
office in Washington D.C. upon payment of the Commission's charge for copying.
60
<PAGE>
(Alternate Page for Common Prospectus)
Until ____, 1996 all dealers
effecting transactions in the
registered securities, whether or not
participating in this distribution,
may be required to deliver a
Prospectus. This is in addition to
the obligation of dealers to deliver
a Prospectus when acting as
soliciting dealer.
TABLE OF CONTENTS Page
---
Restrictions in Certain States
Statement of Available Information
Prospectus Summary
Summary Financial
Information
Risk Factors
Use of Proceeds
Dilution
Capitalization
Market Information
Dividend Policy EASTCO INDUSTRIAL
Management's Discussion SAFETY CORP.
and Analysis of Results
of Operations and
Financial Condition
Business -----------
Management
Principal Shareholders PROSPECTUS
Description of Securities
Shares Eligible for
Future Sale
Selling Stockholders
Plan of Distribution
Certain Relationships and Related
Transactions
The Offering
Underwriting
Concurrent Registration of Common
Stock
Legal Matters
Experts
Additional Information
Consolidated Financial
Statements
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and, if given or made, such information or representations must
not be relied on as having been authorized by the Company. This Prospectus
does not constitute an offer to sell or a solicitation of an offer to buy, by
any person in any jurisdiction in which it is unlawful for such person to make
such offer or solicitation.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers
Indemnification Undertaking In Accordance with Item 512(i) of Regulation S-K
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been informed that in the opinion of the Commission such indemnification
is against public policy as expressed in the Securities Act and is therefore
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer of controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and is therefore
unenforceable and will be governed by the final adjudication of such issue.
Item 25. Other Expenses of Issuance and Distribution
SEC Registration Fee 5,690.10
NASD Filing Fee 2,125.63
Transfer Agent Fee* 5,000.00
Printing Costs* 75,000.00
Legal Fees and Expenses* 120,000.00
Accounting Fees and Expenses* 75,000.00
Blue Sky Fees and Expenses* 60,000.00
Miscellaneous Expenses* 7,184.27
----------
TOTAL 350,000.00
- ------
*Indicates expenses that have been estimated for the purpose of filing.
Item 26. Recent Sales of Unregistered Securities
Except as set forth below, there were no sales of unregistered securities
by the Company during the past three years:
A. In January through April 1994, the Company issued 2,875 shares in
connection with bridge loans in the aggregate principal amount of $1,150,000.
Such offering was made to the following purchasers in compliance with Rule 506
of Regulation D of the Act in that the offering was made to no more than 35
persons who were not "accredited" (as defined in Rule 501 of Regulation D),
any of such non-accredited persons possessing sufficient knowledge and
experience of similar investments, the information to be required to be
delivered pursuant to Rule 502 of Regulation D was delivered; the offering was
made without general solicitation or advertising; and limitations were imposed
upon the resale of securities purchased. Such shares were then registered as
part of the Company's public offering on April 12, 1994. The following were
participants of such offering:
WILLIAM C. ALBERT TRUST VERNARD MARRIN
CHRISTOPHER ALF DAN PERONE
MICHAEL BUTLER SIMEON SCHREIBER
RONALD COHEN ADAM SEGAN
HERBERT CYRLIN FRANK TEDESCO
MARSHALL N.CYRLIN TIMOTHY TEUFEL
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<PAGE>
GEOFFROY De BELLOY WILLIAM WELLING
ISAAC DWECK PERRY WEITZ
JONATHAN S. ELIAS IRA-SEP. KENNETH WINTER
KARL EVERTZ RUTH ZALAZNICK
JEROME GIANGRASSO JOEL KANTOR
DR. HARVEY GLIKER VINCENT BARONE
EDWARD HOGAN MICHAEL KERSCH
GREGORY A. JONES & TAWORN JONES JAMES LUSTIG
K & K REALTY CO. THOMAS PEACOCK
DR. DAVID J. KATZ JONATHAN ELIAS
DONALD KOLLMAR RONALD OLSEN
ALBERT KULA ARTHUR LUXENBERG
MOSHE LEVY & DAN LEVY JTWROS MICHAEL LUXENBERG
The sales set forth above are claimed to be exempt from registration with
the Securities and Exchange Commission pursuant to Sections 4(2) of the Act,
as transactions by an issuer not involving any public offeriing.
B. In June 1996, the Company issued and sold 399,000 shares in connection
with a private placement in the aggregate principal amount of $598,500. Such
offering was made to the following purchasers in reliance upon exemptions
under Sections 4(2) and 3(b) of the Act, Section 4(6) of the Act or the
provisions of Regulation D promulgated thereunder. The Units were sold only to
accredited investors as such term is defined in the Act and Regulation D
thereunder. Such shares are being registered in the concurrent registration.
The following were participants of such offering:
RONALD SPINELLI & RICHARD SPINELLI ASHDOWN HOLDINGS LIMITED
RAMESH PATEL BLAISE FINANCIAL CORP.
BRENDA FURINO ELLIOT S. & LOIS C. SCHLISSEL
CINDY DOLGIN GLOBALSIDE LIMITED
JOHN CZINGER CORNELIA COMPANY LIMITED
LEONARD MOSKOWITZ & VICKIE MOSKOWITZ WAAL INVESTMENTS LTD
ALOYSIUS G. FREEMAN & MARY FREEMAN HARRIET REUTER
RAYMOND KAYAL EDMOND O'DONNELL
DAVID COHEN DOMINICK LELIA & ALICE LELIA
JOANN WEAN & CHARLES WEAN III MELINDA N. TYRWHITT
C. In July 1996, the Company issued 114,000 shares in connection with a
private placement in the aggregate principal amount of $171,000. Such offering
was made to the following purchasers in reliance upon exemptions under
Sections 4(2) and 3(b) of the Act, Section 4(6) of the Act or the provisions
of Regulation D promulgated thereunder. It is the intention to offer the Units
only to accredited investors as such term is defined in the Act and Regulation
D thereunder. Such shares are being registered in the concurrent registration.
The following were participants of such offering:
GEORGE SCHIAVONI HEATHER REISER
ANTHONY C. SALVO ROBERT W. BURKE
ANDREW J. FINKLESTEIN
Item 27. List of Exhibits
Exhibit Description of Exhibit
- ------- ----------------------
1.01 Form of Standby Agreement
1.02 Warrant Exercise Fee Agreement
1.03 Financial Advisory Services Agreement
3.01 Certificate of Incorporation, as amended***
3.02 By-Laws
4.01 Form of Common Stock Certificate**(A)
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<PAGE>
4.02 Form of Rights Certificate*
4.03 Form of Subscription Agreement for
Rights between the Registrant and
American Stock Transfer & Trust Co.*
4.04 Form of Class B Warrant Certificate*
4.05 Form of Warrant Agency Agreement for Class
B Warrants between the Registrant and
American Stock Transfer & Trust Co.*
4.06 Form of Underwriter's Warrant
5.01 Opinion of Hollenberg Levin Solomon Ross
Belsky & Daniels, LLP *
10.01 Employment Agreement with Alan Densen,
dated as of July 1, 1995
10.02 Employment Agreement with Lawrence Densen,
dated as of July 1, 1995
10.03 Employment Agreement with Anthony Towell,
dated as of July 1, 1995
10.04 Accounts Financing Agreement (Security
Agreement), Covenants Supplement to
Accounts Financing Agreement (Security
Agreement), Inventory Loan Agreement
and Inventory and Equipment Security
Agreement Supplement to Accounts Financing
Agreement (Security Agreement) executed as
of October 1, 1991 with Congress**(B)
10.05 Amendment to Financing Agreements with
Congress dated July, 1996*
10.06 Exemption of Puerto Rico Safety Corporation
with respect to Puerto Rico taxes as
amended to date**(C)
10.07 Exemption of Disposable with respect to
Puerto Rico taxes as amended to date*
10.08 Form of Modification Agreement to
Employment Agreements with Alan Densen,
Lawrence Densen and Anthony Towell*
11.01 Statement re: Computation of per share
earnings
21.01 Subsidiaries of the Registrant*
23.01 Consent of Cornick Garber & Sandler, LLP
23.02 Consent of Hollenberg Levin Solomon Ross
Belsky & Daniels, LLP
99.01 1996 Incentive Stock Option Plan
as amended to date
99.02 1996 Non-Qualified Stock Option Plan
as amended to date
99.03 Form of Warrants held by Anthony Towell dated
January 31, 1994 (and whose exercise date
has been extended to April 30, 1999)
99.04 Form of Option Agreements Granted as of
January 20, 1995 with Alan Densen, Anthony
Towell and Lawrence Densen
99.05 Asbestos Litigation as of June 30, 1996
99.06 Product liability primary insurance
coverage for asbestos
99.07 Product liability excess insurance
coverage for asbestos
99.08 Insurance coverage for Puerto Rico
Safety Equipment Corporation for asbestos
99.09 Defense and indemnity agreement dated March 26, 1990
99.10 Defense and indemnity agreement dated May, 1991
99.11 Letters between L'Abbate & Balkan, counsel for Eastco
and Wilentz, Goldman & Spitzer, counsel for plaintiffs'
attorneys, dated February 3, 1994 and March 14, 1994,
II-3
<PAGE>
respectively, with respect to settlement of New York cases
- ------------------------------------------------------------
* To be filed by amendment
** Previously filed
***Certificate of amendment for reverse split to be filed on amendment
(A) Filed as part of Registration Statement on Form S-1 (No. 33-34988)
as amended, effective April 12, 1994 and incorporated by reference.
(B) Incorporated by reference to Form 10K for June 30, 1991.
(C) Incorporated by reference to Form 10K for June 30, 1993.
Schedules to be filed:
Item 28. Undertakings.
A. Certificates
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement to: (i)
include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) reflect in the Prospectus any facts or events arising after the effective
date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or together, represent a fundamental
change in the information in the registration statement; and (iii) include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(2) For the purpose of determining liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of the securities at that time to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) To file a post-effective amendment to the registration statement
to include any financial statements required by Rule 3-19 of Regulation S-X at
the start of any delay offering or throughout a continuous offering.
(5) To supplement the Prospectus after the end of the Subscription
Period to include the results of the Subscription Offer, the transactions by
the Underwriter during the Subscription Period, the amount of securities that
the Underwriter will purchase and the terms of any later reoffering. If the
Underwriter makes any public offering of the securities on terms different
from those on the Cover Page of the Prospectus, the registrant will file a
post-effective amendement to state the terms of such offering.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the
Registrant pursuant to the foregoing provisions, or otherwise, the Company has
been informed that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
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<PAGE>
In the event that a claim for indemnification against such liabilities
(other than the payment by the Company of expenses incurred or paid by a
director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer of controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and is therefore unenforceable and
will be governed by the final adjudication of such issue.
II-5
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements of filing on Form SB-2 and authorized this
Registration Statement to be signed on its behalf by the undersigned, in
Huntington Station, New York on July 31, 1996.
EASTCO INDUSTRIAL SAFETY CORP.
By: /S/ Alan E. Densen
-------------------
ALAN E. DENSEN, President
/s/ Alan E. Densen Date: July 31, 1996
- ----------------------------
ALAN E. DENSEN, President,
and Director
/s/ Anthony P. Towell Date: July 31, 1996
- -----------------------------
ANTHONY P. TOWELL
Vice President of Finance, Secretary,
Treasurer, and Chief Financial Officer
/s/ Lawrence Densen Date: July 31, 1996
- -----------------------------
LAWRENCE DENSEN
Executive Vice-President and
Director
/s/ Herbert Schneiderman Date: July 31, 1996
- ------------------------------
HERBERT SCHNEIDERMAN
Director
/s/ Martin Fleisher Date: July 31, 1996
- ------------------------------
MARTIN FLEISHER
Director
/s/ James A. Favia Date: July 31, 1996
- ------------------------------
JAMES A. FAVIA
Director
II-6
<PAGE>
EXHIBIT INDEX
Exhibit Description of Exhibit
- ------- ----------------------
1.01 Form of Standby Agreement
1.02 Warrant Exercise Fee Agreement
1.03 Financial Advisory Services Agreement
3.01 Certificate of Incorporation, as amended***
3.02 By-Laws
4.01 Form of Common Stock Certificate**(A)
4.02 Form of Rights Certificate*
4.03 Form of Subscription Agreement for
Rights between the Registrant and
American Stock Transfer & Trust Co.*
4.04 Form of Class B Warrant Certificate*
4.05 Form of Warrant Agency Agreement for Class
B Warrants between the Registrant and
American Stock Transfer & Trust Co.*
4.06 Form of Underwriter's Warrant
5.01 Opinion of Hollenberg Levin Solomon Ross
Belsky & Daniels, LLP *
10.01 Employment Agreement with Alan Densen,
dated as of July 1, 1995
10.02 Employment Agreement with Lawrence Densen,
dated as of July 1, 1995
10.03 Employment Agreement with Anthony Towell,
dated as of July 1, 1995
10.04 Accounts Financing Agreement (Security
Agreement), Covenants Supplement to
Accounts Financing Agreement (Security
Agreement), Inventory Loan Agreement
and Inventory and Equipment Security
Agreement Supplement to Accounts Financing
Agreement (Security Agreement) executed as
of October 1, 1991 with Congress**(B)
10.05 Amendment to Financing Agreements with
Congress dated July, 1996*
10.06 Exemption of Puerto Rico Safety Corporation
with respect to Puerto Rico taxes as
amended to date**(C)
10.07 Exemption of Disposable with respect to
Puerto Rico taxes as amended to date*
10.08 Form of Modification Agreement to
Employment Agreements with Alan Densen,
Lawrence Densen and Anthony Towell*
11.01 Statement re: Computation of per share
earnings
21.01 Subsidiaries of the Registrant*
23.01 Consent of Cornick Garber & Sandler, LLP
23.02 Consent of Hollenberg Levin Solomon Ross
Belsky & Daniels, LLP
99.01 1996 Incentive Stock Option Plan
as amended to date
99.02 1996 Non-Qualified Stock Option Plan
as amended to date
99.03 Form of Warrants held by Anthony Towell dated
January 31, 1994 (and whose exercise date
has been extended to April 30, 1999)
99.04 Form of Option Agreements Granted as of
January 20, 1995 with Alan Densen, Anthony
Towell and Lawrence Densen
99.05 Asbestos Litigation as of June 30, 1996
99.06 Product liability primary insurance
coverage for asbestos
99.07 Product liability excess insurance
coverage for asbestos
99.08 Insurance coverage for Puerto Rico
Safety Equipment Corporation for asbestos
99.09 Defense and indemnity agreement dated March 26, 1990
99.10 Defense and indemnity agreement dated May, 1991
99.11 Letters between L'Abbate & Balkan, counsel for Eastco
and Wilentz, Goldman & Spitzer, counsel for plaintiffs'
attorneys, dated February 3, 1994 and March 14, 1994,
respectively, with respect to settlement of New York cases
- ------------------------------------------------------------
* To be filed by amendment
** Previously filed
***Certificate of amendment for reverse split to be filed on amendment
(A) Filed as part of Registration Statement on Form S-1 (No. 33-34988)
as amended, effective April 12, 1994 and incorporated by reference.
(B) Incorporated by reference to Form 10K for June 30, 1991.
(C) Incorporated by reference to Form 10K for June 30, 1993.
<PAGE>
Exhibit 1.01
ROYCE INVESTMENT GROUP, INC.
199 Crossways Park Drive
Woodbury, NY 11797
with
EASTCO INDUSTRIAL SAFETY CORP.
STANDBY AGREEMENT
Eastco Industrial Safety Corp.
130 West 10th Street
Huntington Station, New York 11746
Gentlemen:
Eastco Industrial Safety Corp., a New York corporation (the
"Company"), with principal offices located at 130 West 10th Street, Huntington
Station, New York 11746, has an authorized capitalization as set forth in the
Prospectus. The Company has offered to its shareholders the non-transferable
right to purchase Units, each Unit consisting of one share of Common Stock and
one Class B Redeemable Common Stock Purchase Warrant (the "Class B Warrants")
on the basis of four rights for each five shares of Common Stock owned by each
shareholder at a price of $5.00 per Unit.
The Company has issued and outstanding 879,488 shares of its Common
Stock after giving effect to the reverse stock split which is to be approved
by shareholders in August 1996. The Company by this Agreement will have
entered into a Stand-by Agreement with Royce Investment Group, Inc. ("Royce"),
the terms of which are set forth hereinafter, for the purpose of effectuating
the exercise of all of the rights. The exercise of the such rights and the
terms of this Stand-by Agreement will be set forth in a Registration
Statement, effective __________, 1996, as hereinafter more fully referred to.
1. Certain Definitions.
The following shall constitute the definitions of certain
additional terms used in this Agreement.
(a) "Act" shall refer to the Securities Act of 1933, as
Amended.
(b) "Closing Date" shall be the seventh calendar day
after the expiration of the Rights.
(c) "Commission" shall refer to the Securities and
Exchange Commission.
(d) "Common Stock" shall refer to the Common Stock, $.12
par value, of the Company.
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(e) "Company" shall refer to Eastco Industrial Safety
Corp and its subsidiaries.
(f) "Effective Date" shall be the date upon which the
Registration Statement becomes effective pursuant to notice from the
Commission and/or the passage of time in accordance with the Act.
(g) "Exercise Price" shall mean the exercise price of
the Rights ($5.00 per Unit).
(h) "Prospectus" shall refer to the Prospectus filed as part
of the Registration Statement filed by the Company, as finally amended and
revised prior to the Effective Date.
(i) "Regulations" shall refer to the rules and regulations
of the Commission.
(j) "Rights" shall mean each Right offered pursuant to the
Registration Statement to the shareholders of the Company to purchase one Unit
at $5.00 per Unit with each shareholder receiving four Rights for each five
shares owned by the shareholder. No fractional Rights will be issued and all
rights will be rounded down to the nearest whole number.
(k) "Share" shall mean one (1) share of Common Stock, $.12
par value, of the Company.
(l) Class B Warrant shall mean the right to purchase one
share of Common Stock, $.12 par value, at an exercise price of $6.25 per share
(125% of the Exercise Price) commencing ________, 199__ (18 months from the
Effective Date) and expiring _______, ____ (36 months from the Effective
Date). The Class B Warrants shall be redeemable commencing _______, 199__
(18 months from the Effective Date), at a redemption price of $.01 per Warrant
provided that the closing high bid price of the Company's Common Stock for the
fifteen consecutive trading days ending on the third day prior to the date on
which the Company gives notice, has been at least $9.375 per share (150% of
the exercise price of the Class B Warrants to be proportionately adjusted for
any stock dividends and stock splits occurring after the Effective Date and
which may be adjusted to 150% of the then current exercise price of the Class
B Warrants, if such exercise price is changed.
(m) "Royce" shall refer to Royce Investment Group, Inc.
(n) "Registration Statement" shall refer to the Registration
Statement filed by the Company, including exhibits and financial statement,
under Commission File Number 333-_____ as amended through the Effective Date.
(o) "Royce's Warrant" shall mean the Warrants referred
to in Section 2(d) hereof.
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(p) "Termination Date" shall refer to the date upon which
this Agreement shall terminate for whatever reason.
(q) Subscription Agency Agreement shall refer to an
agreement between the Company and American Stock Transfer & Trust Company with
respect to the Rights.
(r) Warrant Agreement shall refer to the agreement
between the Company and American Stock Transfer & Trust Company with respect to
the Class B Warrants.
2. Terms of the Stand-by Agreement.
(a) On the Closing Date, subject to all the terms and
conditions set forth herein, (i) the Company hereby agrees to sell to Royce
the number of Units determined as hereinafter provided, and (ii) on the basis
of the representations and warranties and agreements of the Company herein
contained, Royce agrees to purchase from the Company the Units determined as
hereinafter provided, at a price of $5.00 per Unit. All references herein to
the 703,591 Units that may be purchased by Royce shall be referred to as the
"Standby Units." The precise number of Units to be issued and sold by the
Company to Royce shall be the difference between 703,591 Units and the number
of Units sold pursuant to the exercise of the Rights to buy Units offered by
the Company that have been exercised on or before 30 days from the Effective
Date (the "Unsubscribed Units"). The determination of the number of Units to
be purchased by Royce shall be made by American Stock Transfer and Trust
Company, acting as Subscription Agent, pursuant to the Subscription Agency
Agreement.
In the event that the Unsubscribed Units to be purchased by Royce is
less than 300,000 Units, certain additional Units (hereinafter referred to as
the "Optional Units") will be sold to Royce at Royce's option so that it will
have the right but not the obligation to purchase a minimum of 300,000 Units
within 30 days of the Closing Date at the subscription price paid by the
public of $5.00 per Unit less a 10% discount and 3% non-accountable expense
allowance so that at closing of the Optional Units, Royce will pay $4.35 per
Unit for the Optional Units.
(b) The Company shall pay to Royce at Closing its stand-by
fee in the sum of $351,795.50 (i.e. an amount equal to 10% of the gross
proceeds from the sale of the Standby Units), which fee is payable
irrespective of any amount required to be paid by Royce pursuant to its
stand-by commitment hereunder.
(c) As and for its non-accountable expense allowance , the
Company shall pay to Royce at Closing the sum of $105,538.65 (i.e. an amount
equal to 3% of the gross proceeds from the sale of the Standby Units).
(d) At the Closing of this offering the Company shall sell
and deliver to Royce warrants ("Royce's Warrant") at a price of $.0001 per
warrant, for the purchase of 70,359 Units equal to ten (10%) percent of the
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amount of Units purchasable by shareholders pursuant to this Standby Agreement,
which shall be exercisable only during a term of 4 years commencing 12 months
after the Effective Date, at an exercise price of 120% of the public offering
price of the Units. The sale and delivery to Royce of Royce's Warrants will
take place at the Closing Date. Royce represents that for a period of not less
than 12 months commencing from the Effective Date of the offering Royce will
not sell, transfer, assign or hypothecate any of the said Royce's Warrants or
the securities underlying said Royce's Warrants except to officers of Royce and
that upon the purchase by Royce of the said Royce's Warrants, Royce will not
thereafter resell any of the said Royce's Warrants or the underlying securities
thereof, except in conformity with the applicable provisions of the Act and all
applicable "Blue Sky" laws.
The Company agrees that solely upon the written request of
Royce or its specific authorized designee or, together with Royce's or its
specific authorized designee's consent, the holders of at least 40% of Royce's
Warrants and/or the holders of the underlying securities made at any time
after 12 months following the Effective Date (and during Royce's exercise
period) but, in any event for a period not to exceed five (5) years following
the Effective Date, the Company will file no more than one Registration
Statement under the Act registering Royce's Warrants and/or the securities
underlying Royce's Warrants, and the Company agrees to use its best efforts to
cause the above filing to become effective. The expenses of such registration,
including but not limited to printing charges (including sufficient number of
Prospectuses to permit the sale of the securities), all legal fees and
disbursements of the Company's counsel and all accounting fees, and all filing
and miscellaneous expenses, will be borne by the Company. The Company agrees
that if at any time during the period when Royce has the right to exercise its
Warrants but in any event for a period not to exceed seven (7) years following
the Effective Date it should file a Registration Statement or Notification
with the Commission pursuant to the Act regardless of whether Royce or Royce's
authorized designees shall have theretofore availed themselves of the right
hereinabove provided, the Company, at its own expense, will offer to Royce or
its specific authorized designee the opportunity to register Royce's Warrants
and/or securities underlying Royce's Warrants, but unless such registration
includes all of Royce's Warrants and/or underlying securities it will not
relieve the Company of such foregoing obligation to qualify the same. In
addition to the rights hereinabove provided, the Company will cooperate with
Royce or its specific authorized designee in preparing any additional
Registration Statement required to sell or transfer the underlying securities
and will supply information required therefore, but such additional
Registration Statement shall be at the expense of the holders of the Warrants
and/or securities issuable thereunder, and not at the expense of the Company.
Moreover, the Company represents that, except as described in the
Prospectus, no existing shareholders, option holders, warrant holders nor
4
<PAGE>
any other existing holder of any right or interest in the Company, as of the
date hereof as well as the Effective Date, have or will have any registration
rights with respect to their holdings or interest and that such rights, if
subsequently granted, will be subordinate to the registration rights contained
in Royce's Warrants. It being understood that such rights, if granted without
Royce's prior written consent, shall only become operative when the registration
rights contained in Royce's Warrants have been exercised and six (6) months
after such Warrants and/or underlying securities have been effectively
registered with the Securities and Exchange Commission and the appropriate
regulatory authority of states in which said securities are to be distributed.
(e) If at any time any condition of the obligations of the
Company hereunder shall not have been met or shall cease to be met and Royce
shall have given the Company notice of the desire of Royce to terminate this
Agreement on account of the non-fulfillment of any such condition or
obligation, then upon such notice, the within Agreement shall terminate,
saving all such rights as the respective parties may then by law possess. Any
such notice must be in writing.
(f) The Company shall be obligated to pay to Royce the
compensation set forth in this paragraph 2 irrespective of how many Units are
actually required to be purchased by Royce pursuant to this Agreement unless
Royce (i) terminates this Agreement pursuant to the provisions contained
herein or (ii) fails to make payment for the Unsubscribed Units.
3. Representations and Warranties of the Company.
(a) A Registration Statement with respect to the within
transaction, copies of which have heretofore been delivered by the Company to
Royce, has been carefully prepared by the Company in conformity with the
requirements of the Act, and such Registration Statement has been filed with
the Commission, and one or more amendments to said Registration Statement,
copies of which have heretofore been delivered to Royce, has or have been
filed; and the Company may file on or prior to the Effective Date an
additional amendment to said Registration Statement.
(b) The Commission has not issued any order preventing or
suspending the use of any Prospectus with respect to the within transaction
and each Prospectus has conformed in all material respects with the
requirements of the Act and the Regulations and has not included any fact
required to be stated therein or necessary to make the statements therein not
misleading. When the Registration Statement becomes effective and on the
Closing Date hereinafter mentioned, it will conform in all material respects
with the requirements of the Act and the applicable Regulations, and the
Registration Statement and any further amendments or supplements thereto will
contain all statements which are required to be stated therein or necessary to
make the statements therein not misleading; provided, however, the Company
does not make any representations or warranties as to information contained in
or omitted from the Registration Statement or Prospectus in reliance upon
5
<PAGE>
written information furnished on behalf of Royce or by Royce, specifically for
use therein or in any amendments or supplements thereto.
(c) The financial statements of the Company together with
the related schedules and notes as set forth in the Registration Statement and
Prospectus or incorporated therein by reference, as reported upon by an
independent certified public accountant, fairly present the financial position
of the Company at the respective dates or for the respective periods to which
they apply; such financial statements have been prepared in accordance with
generally accepted principles of accounting consistently applied throughout
the periods concerned except as otherwise stated therein.
(d) Except as may be reflected in or contemplated by the
Registration Statement or the Prospectus, subsequent to the dates as of which
information is given in the Registration Statement and the Prospectus, and
prior to the Closing Date (i) there shall not be any material adverse change
in the condition, financial or otherwise, or in the results of operations or
the general affairs of the Company or in its business taken as a whole; (ii)
there shall not have been any material transaction entered into by the Company
other than transactions in the ordinary course of business; (iii) the Company
shall not have incurred any material obligations, contingent or otherwise,
which are not disclosed in the Prospectus; and (iv) there shall not have been,
nor will there be, any change in the common stock or long term debt (except
current payments) of the Company.
(e) Except as may be set forth in the Registration Statement
or Prospectus, the Company is not in violation of any term or provision of its
Charter or By-laws, or of any material agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to the
Company.
(f) The execution and delivery of this Agreement by the
Company has been duly authorized by all necessary corporate action, and this
Agreement is the valid, binding and legally enforceable obligation of the
Company; the execution and delivery of, and compliance with, this Agreement,
and the consummation of the transaction hereunder do not conflict with or
constitute a breach of or default under the Certificate of Incorporation or
By-laws of the Company, any indenture, agreement, or other instrument by which
the Company is, or on the Closing Date will be, bound, or any order, rule or
regulation applicable to the Company of any court or any law, administrative
regulation or court decree.
(g) The Company is, and at the Closing Date will be, duly
incorporated and validly existing in good standing as a corporation under the
laws of its jurisdiction of incorporation, with an authorized and outstanding
common stock as set forth in the Registration Statement and the Prospectus,
and with full power and authority (corporate and other) to own its property
and conduct its business, present and proposed, as described in the Registration
6
<PAGE>
Statement and Prospectus; the Company has full power and authority to enter
into this Agreement; the Company has subsidiaries; and the Company including
its subsidiaries is duly qualified and in good standing as a foreign
corporation in each jurisdiction, other than its jurisdiction of
incorporation, in which qualification is required by the laws of such
jurisdiction except where failure to qualify shall not have an adverse
material effect on the Company's business.
(h) The Company has an authorized and outstanding
capitalization as set forth in the Registration Statement and Prospectus; all
of the outstanding securities of the Company have been validly authorized and
issued and are fully paid and non-assessable; no sales of securities have been
made by the Company in violation of the Act; the transaction hereunder has
been validly authorized; Royce's Warrant will represent the binding
obligations of the Company; and the holders of Royce's Warrant and/or
underlying shares thereof will not be subject to any liability as
shareholders.
(i) The securities referred to hereunder conform to the
description thereof contained in the Prospectus.
(j) No consent, approval, authorization or other order of
any governmental authority is required in connection with the consummation of
the transaction set forth herein, except such as may be required under the Act
or state securities laws.
(k) Except as set forth in the Registration Statement and
Prospectus, there is, and at the Closing Date there will be, no action, suit
or proceeding before any court or governmental agency, authority or body
pending or, to the knowledge of the Company, threatened, which might result in
judgments against the Company not adequately covered by insurance or which
collectively might result in any material change in the condition (financial
or otherwise), business or prospects of the Company or would materially affect
its properties or assets.
(l) Upon delivery of any payment required by Royce for the
purchase of Units hereunder and for Royce's Warrant to be sold by the Company
set forth herein, Royce will receive good and marketable title thereto free
and clear of any and all liens, encumbrances, charges and claims whatsoever;
and the Company will have, on the Effective Date and at the time of delivery
of such securities, full legal right and power and all authorization and
approval required by law to sell, transfer and deliver such securities in the
manner provided hereunder.
(m) The Company knows of no outstanding claims for services
in the nature of a finder's fee or origination fee with respect to the
transaction hereunder resulting from its acts for which Royce may be
responsible.
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<PAGE>
(n) Each contract to which the Company is a party and to
which reference is made in the Registration Statement and Prospectus has been
duly and validly executed, is in full force and effect in all material
respects in accordance with their respective terms, and none of such contracts
have been assigned by the Company and the Company knows of no present
situation or condition or fact which would prevent compliance with the terms
of such contracts, as amended to date. The Company has no intention of
exercising any right which it may have to cancel any of its rights or
obligations under any of such contracts and has no knowledge that any other
party to any of such contracts has any intention not to render full
performance under such contracts.
(o) The Company has filed all federal and state tax returns
which are required to be filed, and will pay all taxes shown due on such
returns and all assessments received by it to the extent such taxes have
become due. All taxes with respect to which the Company is obligated have been
paid or adequate accruals have been set up to cover any such unpaid taxes.
(p) Except as otherwise set forth in the Prospectus, (i) the
Company has good and marketable title, free and clear of all liens,
encumbrances and defects, except liens for current taxes not due and payable,
to all property and assets which are described in the Registration Statement
and the Prospectus as being owned by the Company, subject only to such
exceptions as are not material and do not adversely affect the present or
prospective business of the Company; and (ii) the properties, including any
equipment, referred to in the Registration Statement and the Prospectus as
being held under lease by the Company are held under valid, subsisting and
enforceable leases with only such exceptions which collectively are not
material and do not adversely affect the present or prospective business of
the Company.
(q) The Company's Common Stock is currently listed for
trading in the NASDAQ Small Cap Market under the symbol ESTO.
(r) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or that has constituted
or that might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate the sale
or resale of the Units.
(s) Except persons who invested in the Company's May through
July 1996 private placements covering 513,000 shares, none of the Company's
holders of restrictive shares of Common Stock own three percent or greater of
the Company's outstanding shares.
4. The Closing Date.
The Closing Date will take place at a place to be designated
by Royce in writing in the Metropolitan New York area at 10:00 A.M. in the
forenoon of the seventh calendar day after the expiration of the Rights. At
such Closing Royce will make payment to the Company by a certified or a bank
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<PAGE>
check or wire transfer for any Units required to be purchased by Royce under
this Agreement upon delivery of the Units to be purchased by the Company to
Royce in such names and denominations as may be required by Royce, as set
forth in a written notice delivered to the Company at least 48 hours prior to
Closing. At Closing the Company will pay to Royce the standby fee,
non-accountable expense allowance and financial consulting fee.
5. Covenants of the Company.
The Company covenants and agrees with Royce as follows:
(a) The Company will use its best efforts to cause the
Registration Statement to become effective and will advise Royce immediately
and, if requested by Royce, will confirm such advice in writing (i) when the
Registration Statement has become effective and when any amendment thereto
becomes effective, or when any supplement to the Prospectus or any amended
Prospectus has been filed; (ii) of any request by the Commission for any
amendments or supplements to the Registration Statement or the Prospectus or
for additional information; (iii) of the issuance by the Commission of any
order suspending the effectiveness of the Registration Statement or of any
order preventing or suspending the use of any Prospectus or the institution of
any proceedings for any such purposes; and (iv) of the happening of any event
which in the judgment of the Company makes any statement in the Registration
Statement or the Prospectus untrue or which requires the making of any changes
in the Registration Statement or the Prospectus in order to make the
statements therein not misleading. The Company will use its best efforts to
prevent the issuance of any such order or of any order preventing or
suspending such use, to prevent any such refusal to qualify or any such
suspension, and to obtain as soon as possible a lifting of any such order, the
reversal of any such refusal and the termination of any such suspension.
(b) The Company will not at any time, whether before, after
or on the Effective Date, file any amendment to the Registration Statement or
supplement the Prospectus of which Royce shall not previously have been
advised and furnished with copies and to which Royce and its counsel shall
have approved (which approval shall not be unreasonably withheld) in writing
or which is not in compliance with the Act and the Regulations. It is
understood that no such approval shall make Royce or its counsel responsible
in any way for misstatements or omissions therefrom, except to the extent, if
any, such misstatements or omissions are in conformity with written
information furnished by Royce or its counsel for use in the Registration
Statement or the Prospectus.
(c) To deliver to Royce, without charge, three (3) signed
copies of the Registration Statement, including all financial statements and
exhibits filed therewith and any amendments or supplements thereto, and to
deliver, without charge, to Royce three (3) conformed copies of the
Registration Statement and any amendment or supplement thereto, including
financial statements and exhibits.
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(d) Prior to the Effective Date of the Registration
Statement, the Company will have delivered to Royce, without charge, in such
quantities as Royce may reasonably request, copies of each form of Preliminary
Prospectus.
(e) To deliver to Royce, without charge, as soon as
practicable after the Effective Date of the Registration Statement and
thereafter from time to time as many copies as it may request of the
Prospectus and of any amended or supplemented Prospectus as Royce may
reasonably request.
(f) If, during such period of time as in the opinion of
Royce or its counsel, a Prospectus relating to this transaction is required to
be delivered, any event occurs as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a material fact,
or omit to state any material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
or if it is necessary at any time after the Effective Date of the Registration
Statement to amend or supplement the Prospectus to comply with the Act, the
Company will forthwith notify Royce thereof and prepare and file with the
Commission and furnish and deliver to Royce and to others whose names and
addresses are designated by Royce, all at the cost of the Company, a
reasonable number of the amended or supplemented Prospectus which as so
amended or supplemented will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
Prospectus not misleading in light of the circumstances when it is delivered
to a purchaser or prospective purchaser, and which will comply in all respects
with the Act; and, in the event Royce is required to deliver a Prospectus
twenty-five (25) days or more after the Effective Date, upon request, to
prepare promptly such Prospectus as may be necessary to permit compliance with
the requirements of the Act.
(g) The Company will at its own expense, for a period of
five (5) years from the Closing Date: (i) furnish to Royce and to the
Company's shareholders annual financial statements; (ii) furnish to Royce
quarterly unaudited financial statements including both a balance sheet and
statement of income; (iii) distribute an annual report to all shareholders
setting forth clearly the financial position of the Company; (iv) furnish
Royce with a duplicated copy of the daily transfer sheets prepared by the
transfer agent a duplicated copy of the transfer sheets prepared by Depository
Trust Company and a duplicate copy of a list of shareholders; and (v) list the
Company's securities on regional or other stock exchange if requested by
Royce.
(h) The Company will deliver to Royce true and correct
copies of its Articles of Incorporation and all amendments thereto, such
copies to be certified by the Secretary of the Company; true and correct
copies of the By-laws of the Company and of the minutes of all meetings of the
directors and stockholders of the Company held during the twenty-four (24)
month period immediately prior to the Closing Date; and true and correct
copies of all material contracts to which the Company is a party.
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(i) Prior to the Effective Date, the Company will make such
necessary registration or qualification under the Securities or Blue Sky laws
of such states as Royce may designate and will file such consents to service
of process or other documents as may be necessary in order to effect such
registration or qualification. The Company shall bear the expenses incurred in
such registration or qualification under the Securities or Blue Sky laws of
such states including the fees and charges of the various states, the cost of
a printed memorandum with respect thereto, and reasonable legal fees and
expenses as set forth in sub-paragraph 5(j), below. The Company shall not be
required, however, to sign a general consent to service of process in any
jurisdiction where it is not now subject to such service.
(j) The Company will pay and bear, whether or not the
transactions contemplated hereunder are consummated or this Agreement is
prevented from becoming effective, or is terminated all costs and expenses
incident to the performance of its obligations under this Agreement, including
all expenses incident to this transaction; the fees and expenses of the
Company's counsel and accountants, the costs and expenses incident to the
issuance, sale and delivery of Royce's Warrant to Royce, the costs and
expenses incident to the preparation, printing and filing under the Act, the
Registration Statement (including financial statements), any Preliminary
Prospectus and the Prospectus and any amendments or supplements thereto; the
reproduction and distribution of this Agreement, the filing fees of the
Commission and the National Association of Securities Dealers, Inc., and any
state regulatory agencies, the cost of preparing and filing all exhibits to
the Registration Statement; the cost of furnishing the Underwriter copies of
the Registration Statement and Prospectus as herein provided; the cost and
fees of qualifying the Registration Statement under the Securities or Blue Sky
laws as herein provided, legal fees of $20,000 to the Underwriter's counsel
for filing in up to twenty (20) states ($750 for each additional state) and
disbursements incurred by said counsel, in connection with the Blue Sky filing
of this transaction.
(k) If the transaction pursuant to this Standby Agreement is
not completed because (i) of any reason solely within the control of the
Company or its stockholders, (ii) the Company does not permit the Registration
Statement to become effective for any reason whatsoever, or (iii) of any
material discrepancy in any representation by the Company and/or its officers,
directors, shareholders, agents, advisers or representatives, made in writing,
including but not limited to the Registration Statement, to Royce Investment
Group, Inc., then the Company will be obligated to reimburse Royce Investment
Group, Inc. for all of its out-of-pocket expenses incurred in connection
herewith less credit for monies paid on account. It is understood and agreed
by the parties hereto that any expense incurred by the Underwriter shall be
deemed to be reasonable and unobjectionable upon a reasonable showing by the
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Underwriter that such expenses were incurred, directly or indirectly, in
connection with the proposed transaction and/or relationship of the parties
hereto, as described herein.
Furthermore, if the Company should fail to pay the agreed
upon amounts set forth above to Royce, its successors or assigns, said Company
shall, furthermore, be liable to Royce for attorney's fees and costs incurred
in the collection of said amounts.
(l) Royce may offer components of the Units it acquires
pursuant to the Standby Agreement, to investors at prices set from time to
time by it. Such prices may exceed the highest asked price for the securities
reported on NASDAQ (or in the over-the-counter market).
(m) The Company represents that its Common Stock is,and its
Class B Warrants will be, registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended ("1934 Act") and will promptly
furnish Royce with all materials filed with the SEC pursuant to the 1934 Act.
(n) The Company shall use its best efforts to obtain no
later than three (3) months subsequent to the date of the consummation of this
Standby Agreement a "Key Man" life insurance policy in the amount of $500,000
each on the lives of its President, Alan E. Densen and Vice-President,
Lawrence Densen, provided each is insurable, and the Company shall pay the
premiums therefor for a period of not less than five (5) years from the
Closing Date.
(o) Provided this Standby Agreement is consummated, the
Company shall enter into a one year Financial Consulting Agreement with us
pursuant to which we shall receive a consulting fee in an amount equal to 2%
of the gross proceeds of the Offering (including the Optional Units) Such
consulting fee shall be paid in full in advance at closing.
(p) Provided this Standby Agreement is consummated, unless
waived by Royce, Royce shall have the right to designate a director and/or a
non-voting advisor to the Board for a period of five years after the Effective
Date. Said designee(s), shall attend meetings of the Board and receive no more
or less compensation than is paid to other non-management directors of the
Company and shall be entitled to receive reimbursement for all reasonable
costs incurred in attending such meetings, including but not limited to, food,
lodging and transportation. Moreover,to the extent permitted by law, the
Company will agree to indemnify the Underwriter and its designee(s) for the
actions of such designee(s) as director and/or as advisor of the Company. In
the event the Company maintains a liability insurance policy affording
coverage for the acts of its officers and/or directors, it will agree, to the
extent permitted under such policy, to include each of the Underwriter and its
designee(s) as an insured under such policy.
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(q) The Company represents that its shares of Common Stock
are currently listed on NASDAQ Small Cap system and further represents that it
shall use its best reasonable efforts at its cost and expense to take all
necessary and appropriate action such that its Common Stock continue to be
listed and its Class B Warrants be listed for trading in the NASDAQ Small Cap
System for at least ten years from the date of consummation of this Standby
Agreement provided that the Company otherwise complies with the prevailing
requirements of NASDAQ. In the case of the Class B Warrants, the Company
agrees to maintain such listing for the life of the Warrants unless the
Underwriter requests the Company to delist such Warrants. The Company agrees
to list its Common Stock and Class B Warrants on NASDAQ/NMS as soon as
practicable after the Company is eligible to do same in lieu of the Small Cap
Market. Further, the Company agrees not to list the Units for trading on
NASDAQ without the prior written consent of the Underwriter.
(r) Provided this Standby Agreement is consummated, all
officers and directors and their relatives who own securities of the Company
(including but not limited to stock, options and warrants to purchase stock,
and securities convertible into stock), shall agree not to sell, transfer or
convey any of such securities by registration or otherwise for a period of
eighteen (18) months from the date the Standby Agreement is consummated
without the prior written consent of Royce or any greater period required by
any state in which the offering of the securities is to be registered. An
appropriate legend shall be marked on the face of stock certificates
representing all of such securities.
(s) Until such time as the securities of the Company are
listed on the National Market System of NASDAQ, the Company shall cause its
legal counsel or an independent firm acceptable to the Representative to
provide the Representative with a survey, to be updated at least
semi-annually, of those states in which the securities of the Company may be
traded in non-issuer transactions under the Blue Sky laws of the states and
the basis for such authority. The first such survey shall be delivered by
Company's counsel at closing and, thereafter, on a semi-annual basis on April
30 and October 31 of each year.
(t) Prior to the Effective Date, the Company shall apply for
listing in Standard and Poor's Corporation Reports and shall use its best
efforts to have the Company listed in such reports for a period of not less
than ten (10) years thereafter.
(u) The Company has appointed or shall promptly hereafter
appoint American Stock Transfer & Trust Company as Transfer Agent, which
entity shall agree to provisions of Royce's Warrant, for the securities being
offered and for a period of five (5) years following the Closing Date the
Company will not change or terminate any such appointment without the written
consent of Royce, which consent shall not be unreasonably withheld.
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(v) The Company will deliver to Royce and its counsel two
(2) bound volumes of copies of all documents and appropriate correspondence
filed or received from the Commission and the NASD and all closing documents.
(w) The Company will use the net proceeds to be received by
it from the sale of the securities being offered in the manner and for the
purposes set forth in the Prospectus and will comply with all reporting and
other requirements of the Act respecting the use of the proceeds.
(x) The Company will comply with the Act and Regulations and
the Securities Exchange Act of 1934 and the rules and regulations of the
Commission thereunder so as to permit the continuance of sales of and dealings
in the securities being offered under the Act and the Securities Exchange Act
of 1934, as and if required under said Act.
(y) Prior to the Closing time the Company will not issue
directly or indirectly without Royce's prior written consent any press release
or other communication or hold any press conference with respect to the
Company or its activities or the offering of the securities.
(z) Provided this Standby Agreement is consummated and for a
period of five (5) years commencing from the Closing Date, the Company shall
continue to employ the services of a firm of independent certified public
accountants reasonably acceptable to Royce in connection with the preparation
of the financial statements to be included in any Registration Statement to be
filed by the Company hereunder, or any amendment or supplement thereto. For
the purposes of the foregoing, Cornick, Garber & Sandler LLP, and any
"Regional" accounting firm shall be deemed to be acceptable to Royce.
(aa) Notwithstanding any provision contained to the
contrary, if the Company shall within five (5) years from the Effective Date,
enter into any agreement or understanding with any person or entity introduced
by the Underwriter involving (i) the sale of all or substantially all of the
assets and properties of the Company, (ii) the merger or consolidation of the
Company (other than a merger or consolidation effected for the purpose of
changing the Company's domicile) or (iii) the acquisition by the Company of
the assets or stock of another business entity, which agreement or
understanding is thereafter consummated, whether or not during such five (5)
year period, the Company, upon such consummation, shall pay to the Underwriter
an amount equal to the following percentages of the consideration paid by the
Company in connection with such transaction: 5% of the first $1,000,000 or
portio thereof, of such consideration; 4% of the second $1,000,000 or portion
thereof, of such consideration; and 3% of such consideration in excess of the
first $2,000,000 of such consideration.
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(bb) The Company will pay the Underwriter a fee of 7% of the
aggregate exercise price of each Warrant exercised commencing one year after
the Effective Date, of which a portion of which may be allowed by the
Underwriter to the dealer who solicited the exercise (which may also be the
Underwriter); provided: (1) the market price of the Common Stock on the date
the Warrant was exercised was greater than the Warrant exercise price on that
date; (2) exercise of the Class B Warrant was solicited by a member of the
NASD; (3) the Class B Warrant was not held in a discretionary account; (4)
disclosure of compensation arrangements was made both at the time of the
offering and at the time of exercise of the Class B Warrant; and (5) the
solicitation of the exercise of the Class B Warrant was not in violation of
Rule 10b-6 promulgated under the Securities Exchange Act of 1934.
(cc) The Company, for a period of one year from the
Effective Date, shall not file a registration statement for the benefit of
officers, directors, employees, consultants and/or affiliates of the Company
without the prior written consent of the Underwriter.
(dd) For a period of one year from the Effective Date,
without the consent of Royce, the Company will not place or sell any of its
securities other than in connection with mergers, acquisitions or the exercise
of currently outstanding options and warrants.
(ee) The Company will maintain a current Registration
Statement for the Underwriter to offer and sell the Units and the components
thereof purchased by it for a period of at least nine months from the
Effective Date or such reasonable further period as Royce may request.
Nevertheless, Royce agrees to notify the Company when its distribution has
been completed.
(ff) Neither the Company nor any officer or director thereof
shall for a period of five years from the Effective Date offer to sell any
securities of the Company in a Regulation S offering without the prior written
consent of Royce.
6. Conditions of Royce's Obligations.
Royce's obligations to perform its obligations pursuant to
this Agreement and the purchase of securities of the Company required
hereunder on the Closing Date is subject to the accuracy of and compliance
with the representations and warranties on the part of the Company herein as
of the date hereof and as of the Closing Date, to the performance by the
Company of its obligations and covenants hereunder, to the accuracy of
certificates of the Company and officers of the Company to be delivered
pursuant to this Agreement, all as of the Closing Date, and to the following
further conditions:
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(a) The Registration Statement shall become effective on or
at such reasonable date as Royce may agree to. No stop order or order
suspending the effectiveness of the Registration Statement shall have been
issued at or before the Closing Date and no proceedings for that purpose shall
have been instituted or shall be pending or, to the knowledge of the Company,
contemplated by the Commission, and any request for additional information on
the part of the Commission to be included in the Registration Statement or the
Prospectus or otherwise shall have been complied with, and no amendments to
the Registration Statement or the Prospectus shall have been filed to which
Royce and its counsel have not given their consent in writing.
(b) All corporate action taken and all legal opinions and
proceedings relating to the transaction and Royce's Warrant, the Registration
Statement and Prospectus and all other matters incident thereto and to the
transaction to which this Agreement relates shall be satisfactory in all
respects to Lester Morse P.C., counsel for Royce, and they shall have been
furnished with such certificates, documents and information as they may
request in this connection.
(c) On the Closing Date, (i) the Registration Statement and
Prospectus and any amendments or supplements thereto shall contain all
statements which are required to be stated therein in accordance with the Act
and shall in all material respects conform to the requirements of the Act and
neither the Registration Statement nor the Prospectus nor any amendment or
supplement thereto shall contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, (ii) there shall have been no
material adverse change in the business, properties or financial condition of
the Company from that set forth in the Registration Statement and Prospectus
and there shall not have been any material transaction, contract or agreement
entered into by the Company which is not referred to in the Registration
Statement, (iii) no action, suit or proceeding at law or in equity shall be
pending or, to the knowledge of the Company, threatened against the Company
which would be required to be set forth in the Registration Statement other
than as set forth therein, and no proceedings shall be pending or, to the
knowledge of the Company, threatened against the Company before or by any
federal, state or other commission, board or administrative agency wherein an
unfavorable decision, ruling or finding would have a material adverse effect
upon the business, property, financial condition or income of the Company, and
(iv) the Company shall not have declared dividends or made any payments or
made any acquisitions or capital stock or made any other distribution on
outstanding shares of capital stock other than as set forth in the
Registration Statement.
(d) Prior to the Closing Date, the Company shall not
have sustained a loss on account of fire, flood, accident or other
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calamity which, in the judgment of Royce materially and adversely affects the
Company, regardless of whether or not such loss shall have been insured.
(e) Royce shall receive on and as of the Closing Date an
opinion of Hollenberg Levin Solomon Ross Belsky & Daniels, counsel for the
Company, to the effect that (i) the Company is a corporation in good standing,
duly organized and validly existing under the laws of the state of
incorporation, and is authorized by its Certificate of Incorporation to own
its properties and to conduct its business, present and proposed, as set forth
in the Prospectus; (ii) the Company is duly qualified to transact the business
in which it is engaged and is in good standing in each jurisdiction in which
its ownership of property or its conduct of business requires such
qualification or registration (naming such jurisdictions); (iii) the Company
has an authorized and outstanding capitalization as set forth in the
Prospectus; all of the outstanding securities of the Company have been validly
authorized and issued; and are fully paid and non-assessable; the Common Stock
issuable upon exercise of the Class B Warrant, Royce Warrant and underlying
warrants have been validly authorized and reserved for issuance and when
issued, will be fully paid validly issued and will fully paid and
non-assessable; there are no options, warrants, agreements or similar rights
calling for the issuance by the Company of any of its securities except as
described in the Registration Statement and the Prospectus; (iv) this
Agreement has been duly authorized, executed and delivered by the Company and
is a valid and binding agreement of the Company in accordance with its terms;
to the best of such counsel's knowledge, (1) the execution, performance and
delivery of this Agreement and the consummation of the transactions
contemplated hereby will not result in any material breach or violation (a) of
any of the terms or provisions of, or constitute a default under, any statute,
indenture, mortgage, deed or trust, note, material agreement or other
agreement or instrument known to counsel to which the Company is a party or by
which it is bound or of which any of its property is the subject, and (b) the
Company's Certificate of Incorporation, as amended, or By-laws, or any order,
rule or regulation known to counsel of any court or governmental agency or
body having jurisdiction over the Company or any of their activities or
properties, and, (2) no consent, approval, authorization or order of any court
or governmental agency or body is required for the consummation of the
transactions contemplated hereby except such as have been obtained under the
Act or Regulations or under state securities laws; (v) the Registration
Statement has become effective under the Act and the transaction hereunder is
made pursuant to such effective Registration Statement and, to the best
knowledge of such counsel, no order suspending the effectiveness of such
Registration Statement has been issued and no proceedings for such purposes
have been instituted or are pending or contemplated by the Commission and to
such counsel's knowledge and belief no grounds exist for the suspension of
such Registration Statement and Prospectus and any supplement of amendment
thereto (except as to the financial statements and schedules included
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therein as to which counsel need not express an opinion) comply as to form in
all material respects with the Act and such counsel has received no
information which would indicate that the Registration Statement or Prospectus
or any supplement or amendment thereto contains any untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary in order to make the statements therein not misleading; (vi) such
counsel does not know of any legal or government proceedings required to
described in the Registration Statement or Prospectus or of any contract or
document of a character required to be described in the Registration Statement
or Prospectus or required to be filed as an exhibit thereto which is not
described or filed as required; (vii) the Company, to the best knowledge of
such counsel, has good marketable title in fee simple, except as stated in the
Registration Statement or Prospectus, to all of the real property described
therein as being owned by it, free and clear of all liens and encumbrances
other than mortgages as more fully described in the Registration Statement and
Prospectus, except liens and encumbrances, if any, which in the opinion of
such counsel, are not material and do not interfere with the use made and
proposed to be made of such property, and holds such valid leases, property
rights and easements as are set forth in the Registration Statement or the
Prospectus, are necessary to the operations and proposed operations of the
Company (such counsel being entitled to rely with respect to the opinions
called for by this subdivision on certificates of the Company as to the use or
proposed use of properties and as to the materiality and non-interference of
liens and encumbrances on opinions of local counsel or on abstracts of title
and certificates, reports or title policies of title insurance companies); and
(viii) Royce's Warrant to be sold by the Company have been duly authorized and
constitute valid and binding obligations of the Company; the Company had at
the date of this Agreement and has at the Closing Date full legal right and
authority to sell and deliver in the manner provided in this Agreement,
Royce's Warrant sold by it hereunder; and the delivery by the Company as
described in the Registration Statement or certificates for Royce's Warrant
sold hereunder, will pass good and marketable title to such Royce's Warrant,
free and clear of all liens, encumbrances, charges and claims whatsoever,
except as may be provided by federal and state securities laws. The opinion
referred to in this subdivision shall also cover such other legal matters
relating to this Agreement and the transactions contemplated hereby as Royce
or its counsel may reasonably request.
In expressing their opinion on the matters set forth in this
paragraph 6(e), said counsel shall be entitled to rely, as to any questions of
fact upon which such opinion is predicated, on the representations of the
officers of the Company or opinions of other counsel.
(f) Royce shall have received on the Closing Date
certificates dated as of the Closing Date, signed by the President, Treasurer
and Secretary of the Company certifying that:
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(i) No order suspending the effectiveness of the
Registration Statement or stop order is in effect and no proceeding for such
purpose are pending or are, to their knowledge, threatened by the Commission;
(ii) They do not know of any litigation instituted or
threatened against the Company of a character required to be disclosed in the
Post Effective amendment to the Registration Statement which are not disclosed
therein; they do not know of any contracts which are required to be summarized
in the Prospectus which are not so summarized; and they do not know of any
material contracts required to be filed as exhibits to the Registration
Statement which are not so filed;
(iii) They have each carefully examined the Registration
Statement and the Prospectus and, to the best of their knowledge, neither the
Registration Statement nor the Prospectus nor any amendment or supplement to
either of the foregoing contains an untrue statement of any material fact or
omits to state any material fact required to be so stated therein or necessary
to make the statement therein not misleading; and since the Effective Date, to
the best of their knowledge, there has occurred no event required to be set
forth in an amended or supplemented Prospectus which has not been so set
forth;
(iv) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not been any
material adverse change in the condition of the Company, financial or
otherwise, or in the results of its operations, except as reflected in or
contemplated by the Registration Statement and the Prospectus, and except as
so reflected or contemplated since such date, there has not been any material
transaction entered into by the Company;
(v) The representations and warranties set forth in this
Agreement are true and correct and the Company has complied with all of its
agreements herein contained;
(vi) The Company is not delinquent in the filing of any
federal, state and municipal taxes return or the payment of any federal, state
or municipal taxes; they known of no proposed redetermination or re-assessment
of taxes, adverse to the Company, and the Company has paid or provided by
adequate reserves for all known tax liabilities;
(vii) They know of no material obligation or liability of
the Company, contingent or otherwise, not disclosed in the
Registration Statement and Prospectus;
(viii) This Agreement, the consummation of the
transactions herein contemplated, and the fulfillment of the terms hereof,
will not result in a breach by the Company of any terms or constitute a default
under its Certificate of Incorporation or By-laws, any indenture, mortgage,
lease, deed or trust, bank loan or credit agreement or any other agreement or
19
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undertaking of the Company including, by way of specification but not by way
of limitation, any agreement or instrument to which the Company is now a party
or pursuant to which the Company has acquired any right and/or obligations by
succession or otherwise;
(ix) The financial statements and schedules filed with and
as part of the Registration Statement present fairly the financial position of
the Company as of the dates thereof all in conformity with generally accepted
principles of accounting applied on a consistent basis throughout the periods
involved. Since the respective dates of such financial statements, there has
been no material adverse change in the condition or general affairs of the
Company, financial or otherwise, other than as referred to in the Prospectus;
and
(x) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus, except as
may otherwise be indicated therein, the Company has not prior to the Closing
Date, either (i) issued any securities or incurred any liability or
obligation, direct or contingent, or borrowed money, or (ii) entered into any
material transaction other than in the ordinary course of business. The
Company has not declared , paid or made any dividend or distribution of any
kind on its capital stock.
(g) The Company shall have performed all agreements herein
contained to be performed on its part at or before the Closing Date and all
other covenants and conditions set forth in paragraph 5 shall have been
performed.
(h) At the time that this Agreement is executed by the
Company and at the Closing Date, Royce shall have received a letter from
Cornick, Garber & Sandler, LLP, dated as of the date this Agreement is
executed by the Company and as of the Closing Date, confirming that it is an
independent public accountant within the meaning of the Securities Act and the
published Rules and Regulations and the answer to item 11 of Registration
Statement is correct insofar as it related to it and stating in effect that:
(i) They are independent public accountants with respect
to the Company within the meaning of the Act and the applicable published Rules
and Regulations of the Commission;
(ii) In their opinion, the financial statements and
related schedules of the Company included in the Registration Statement and
Prospectus and covered by their reports comply as to form in all material
respects with the applicable accounting requirements of the Act and the
published Rules and Regulations of the Commission issued thereunder;
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(iii) On the basis of limited procedures, not
constituting an audit, including a review of the latest interim unaudited
financial statements of the Company on the basis specified by the American
Institute of Certified Public Accountants for a review of interim financial
information, a reading of the minutes of meetings of the boards of directors,
and stockholders of the Company, inquiries of officials of the Company
responsible for financial and accounting matters and such other inquiries and
procedures as may be specified in such letter, nothing came to their attention
which caused them to believe:
(A) that at the date of the latest balance sheet
read by them and at a subsequent specified date not more than five business
days prior to the date of such letter, there was any change in the capital
stock or increase in long-term debt of the Company as compared with amounts
shown in the most recent balance sheet included in the Prospectus, except for
changes which the Prospectus discloses have occurred or may occur or which are
described in such letter;
(B) that at the date of the latest balance sheet
read by them and at a subsequent specified date not more than five business
days prior to the date of such letter, there were any decreases, as compared
with amounts shown in the most recent balance sheet included in the
Prospectus, in total assets, net current assets or stockholder's equity of the
Company except for decreases which the Prospectus discloses have occurred or
may occur or which are described in such letter; or
(C) that for the period from the date of the most
recent financial statements in the Registration Statement to a subsequent
specified date not more than five business days prior to the date of such
letter, there were any decreases, as compared with the corresponding period of
the preceding year, in gross profit or the total or per share amounts of net
income of the Company except for decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter.
(iv) In addition to the audit referred to in their
report included in the Registration Statement and the Prospectus and the
limited procedures referred to in clause (iii) above, they have carried out
certain specified procedures, not constituting an audit, with respect to
certain amounts, percentages and financial information which are derived from
the general accounting records of the Company which appear in the Prospectus
under the captions "Summary Financial Information," "Capitalization",
"Management", "Management's Discussion and Analysis of Financial Condition and
Results of Operations", "Certain Transactions", "Dilution" and "Risk Factors,"
as well as such other financial information as may be specified by the
Representative, and that they have compared such amounts, percentages and
financial information with the accounting records of the Company and have
found them to be in agreement.
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(i) The transaction herein shall be qualified under the
Securities and Blue Sky laws of such states as Royce may request and each such
qualification shall be in effect and not subject to any stop order or other
proceeding on the Effective Date, and Closing Date.
(j) The Company shall have furnished to Royce such other and
further certificates, documents, and opinions as Royce may reasonably request
or its counsel may request (including certificates of officers) as to the
accuracy, at and as of the Closing Date, of the representations and warranties
of the Company herein, to the performance by the Company of its obligations
hereunder as to other conditions concurrent and precedent to its obligations
hereunder.
All opinions, affidavits, letters, evidence and certificates
specified in this paragraph 6 or elsewhere in this Agreement shall be deemed
to be in compliance with the provisions hereof only if they are in form
reasonable satisfactory to Royce and its counsel.
Any certification signed by an officer of the Company and
delivered to Royce or to its counsel will be deemed a representation and
warranty of the Company to Royce as to the Statements made therein.
In the event that any of the conditions specified in this
paragraph 6 shall not have been fulfilled, Royce shall have the right, upon
written notice to the Company, and upon the Company's failure to cure the
condition within ten (10) days from the date of such notice, to terminate the
obligations of Royce under this Agreement.
7. Termination.
This Agreement shall be terminated at any time prior to the
Closing Date, by Royce by written notice to the Company if in the reasonable
judgment of Royce it is impracticable to consummate this transaction, by
reason of (i) the Company having sustained a material loss of whatsoever
nature, except losses which occur as result of litigations solely and
unequivocally based 1) upon asbestos provided that the Company remains and/or
would remain a viable entity, and 2) upon product liability provided such
litigation is covered under the Company's basic product liability insurance
coverage and to the extent that the losses in excess of such insurance
coverage do not cause the Company to be and/or result in it becoming an
inviable entity, whether or not insured, which, in the sole and absolute
opinion of Royce, substantially affects the value of the property of the
Company or materially interferes with the operation of the business of the
Company, (ii) any material adverse change in the business, property or
financial condition of the Company; (iii) trading in securities on the New
York Stock Exchange, the American Stock Exchange or NASDAQ System having been
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suspended or limited or minimum prices having been established on either such
Exchange or System, (iv) a banking moratorium having been declared by either
federal or state authorities, (v) an outbreak of major hostilities or other
national or international calamity having occurred, (vi) any action having
been taken by any government in respect of its monetary affairs which, in the
reasonable opinion of Royce, has a material adverse effect on the United
States securities markets; (vii) any action, suit or proceeding at law or in
equity against the Company, or by any Federal, Sate or other Commission, board
or agency wherein any unfavorable decision would materially adversely effect
the business, property, financial condition or income of the Company; or
(viii) due to conditions arising subsequent to the execution hereof, Royce
reasonably believes that, as a result of material and adverse events affecting
the market for the Company's Common Stock or the securities markets in
general, it is impracticable or inadvisable to proceed with the offering.
Any notice under this section 7 may be given by telephone,
or telegraph, but shall be subsequently confirmed by letter within three (3)
days of such notification.
8. Registration of Units to be Purchased by Royce.
The Registration Statement will include registration of up
to a maximum of 703,591 Units that may be purchased by Royce pursuant to this
Standby Agreement and provide for the distribution of such Units and the
components therein by Royce from time to time.
9. Indemnification.
(a) The Company will indemnify and hold harmless Royce and
each person who controls Royce within the meaning of Section 15 of the Act
from and against any and all losses, claims, damages, expenses or liabilities,
joint or several to which they or any of them may become subject under the Act
or under any other statute or at common law or otherwise and will reimburse
Royce and each such person specified as above for any legal or other expenses
(including the cost of any investigation and preparation) reasonably incurred
by them or any one them in connection with investigating or defending any
litigation or claim whether or not resulting in any liability, only insofar as
such losses, claims, damages, expenses, liabilities or actions arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or any amendment thereto or in
any Blue Sky application or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein necessary to make the statements therein not misleading, all as of the
date when the Registration Statement or any amendment thereto, the filing of
any such Blue Sky application as the case may be, becomes effective or any
untrue statement or alleged untrue statement of a material fact contained
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in the Preliminary Prospectus or Prospectus (as amended or as supplemented
thereto), or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary in
order to make the statements therein, not misleading; provided, however, that
the indemnity agreement contained in this subsection (a) shall not apply to
amounts paid in settlement of any such litigation if such settlement is
effected without the consent of the Company, nor shall it extend to Royce or
any person controlling Royce in respect of any such losses, claims, damages,
expenses, liabilities, or actions arising out of, or based upon any such
untrue statement or alleged untrue statement, or any such omission, if such
statement or omission was made in reliance upon and in conformity with,
written information furnished to the Company by Royce on its behalf
specifically for use in connection with the preparation of the Registration
Statement, the Prospectus, or any such amendment thereof or supplement thereto
or Blue Sky Application.
Royce and each controlling person of Royce agree after their
receipt of written notice of the commencement of any action against Royce or
against any such person controlling Royce as aforesaid, in respect of which
indemnity may be sought from the Company on account of the Indemnity agreement
contained in this subsection (a), to notify the Company within ten (10) days
in writing of the commencement thereof and to supply a copy of any legal
documents served upon such Underwriter or such controlling person in
connection with such action. The omission of Royce or such controlling person
of Royce to so notify the Company of any such action shall relieve the Company
from any liability which it may have to Royce or such controlling persons as
to any such action on account of the indemnity agreement contained in this
subsection (a), but shall not relieve the Company from any other liability
which it may have to Royce, to such controlling person. In case any such
action shall be brought against Royce or any controlling person, Royce or such
controlling person shall promptly notify the Company of the commencement
thereof and the Company shall be entitled to participate in (and, to the
extent it shall wish, to direct) the defense thereof at its own expense but
such defense shall be conducted by counsel of recognized standing and
reasonably satisfactory to Royce and to such controlling person or persons who
are defendant or defendants in such litigation. Royce or any such controlling
person shall have the right to employ separate counsel in any such action and
to participate in the defense thereof subject to the Company's reasonable
right to approve such counsel which will not be unreasonably withheld, but the
fees and expenses of such counsel shall not be at the expense of the Company
unless (i) the employment of such counsel has been specifically authorized by
the Company, or (ii) the Company shall not have employed counsel to have
charge of the defense of such action,. or (iii) there is a conflict of
interest which would prevent counsel for the Company from representing both
the Company and Royce or such controlling person, in any of which cases the
Company shall not have the right to direct the defense of such action on
behalf of Royce or such controlling person. It is understood that, regardless
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of whether such counsel is representing all of the parties entitled to
indemnification under this subsection (a), the Company shall not be liable,
under clause (iii) above, for the fees and expenses of more than one separate
counsel who shall be approved by Royce. The Company agrees to notify each
Underwriter promptly of the commencement of any litigation or proceeding
against it or against any of the officers or directors of the Company of which
it may be advised, in connection with the issue and sale of any of its
securities, and to furnish Royce, at the Royce's request, with copies of all
pleadings therein and to permit Royce to be an observer therein and to apprise
it of all of the developments therein, all at the Company's expense. The
provisions of this paragraph 9(a) shall also apply to the subsequent
registration of Royce's Warrants and/or the securities underlying Royce's
Warrants.
(b) Royce will indemnify and hold harmless the Company, the
directors of the Company, the officers of the Company who shall have signed
the Registration Statement and each person, if any, who controls the Company
within the meaning of Section 15 of the Act, from and against any and all
losses, claims, damages, expenses or liabilities, joint or several, to which
they or any of them may become subject under the Act or under any other
statute or at common law or otherwise and, except as hereinafter provided,
will reimburse the Company and such officers or controlling person indemnified
for as above for any legal or other expenses (including the cost of any
investigation and preparation) reasonably incurred by them or any of them in
connection with investigating or defending any litigation or claims whether or
not resulting in any liability, only insofar as such losses, claims, damages,
expenses, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any amendment thereto or in any Blue Sky application
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, all as of the date when the Registration
Statement or such amendment thereto, or the date the filing of any such Blue
Sky application as the case may be, becomes effective, or any untrue statement
or alleged untrue statement of a material fact contained in the Preliminary
Prospectus or the Prospectus (as amended or as supplemented if the Company
shall have filed with the Commission any amendments thereof or supplements
thereto), or the omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but only if insofar
as such statement or omission was made in reliance upon information furnished
in writing to the Company by Royce specifically for use in connection with the
preparation of the Registration Statement, the Preliminary Prospectus or the
Prospectus, or any such amendment thereof or supplement thereto or Blue Sky
application. This indemnity agreement is in addition to any other liability
which Royce may have to the Company. Royce shall not be liable for amounts
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paid in settlement of any such litigation, if such settlement was effected
without its consent. In case of the commencement of any action, respect of
which indemnity may be sought from Royce on account of its indemnity agreement
contained in this subsection (b), the Company and each person agreed to be
indemnified by Royce shall have the same obligation to notify Royce and Royce
shall have the same right to participate in (and, to the extent that it shall
wish, to direct), as set forth in subsection (a) above, the defense of such
action at its own expense but such defense shall be conducted by counsel of
recognized standing and reasonably satisfactory to the Company or such other
person agreed to be indemnified by Royce. Royce agrees to notify the Company
promptly of the commencement of any litigation or proceeding against it or
against any such controlling person of which it may be advised in connection
with the issue or sale of any of the securities of the Company. The provisions
of this subparagraph shall also apply to the subsequent registration of
Royce's Warrants and/or securities underlying Royce's Warrants.
(c) The respective indemnity agreements of the Company, and
Royce contained in subsections (a) and (b) above, and the representations and
warranties of the Company set forth in this Agreement, shall remain operative
and in full force and effect, regardless of any investigation made by Royce or
on its behalf or by or on behalf of any person who controls Royce or the
Company or any controlling person of the Company or any director or any
officer of the Company,, and shall survive the delivery of the Units, and any
successor of Royce, or the Company or of any controlling person of Royce or
the Company, as the case may be, shall be entitled to the benefit of these
respective indemnity agreements.
10. Contribution.
In order to provide for just and equitable contribution under
the Act in any case in which (i) Royce makes claims for indemnification pursuant
to Section 9 hereto but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case, notwithstanding the fact
that the express provisions of Section 9 provide for indemnification in such
case, or (ii) contribution under the Act may be required on the part of Royce,
then the Company and each person who controls the Company, in the aggregate,
and Royce shall contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (which shall, for all purposes of
this Agreement, include, but not be limited to, all reasonable costs of
defense and investigation and all reasonable attorneys' fees) in either such
case (after contribution from others) in such proportions that Royce is
responsible in the aggregate for that portion of such losses, claims, damages
or liabilities represented by the lower of the percentage that a) the standby
fee set forth in the Prospectus bears to the total gross sum received by the
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<PAGE>
Company without deduction of any nature whatsoever thereon, or b) the dollar
amount of the securities acquired by Royce pursuant to this Standby Agreement
bears to the total gross sum received by the Company without deduction of any
nature whatsoever thereon, and the Company shall be responsible for the
remaining portion, provided, however, that (a) if such allocation is not
permitted by applicable law, then the relative fault of the Company and Royce
and controlling persons, in the aggregate, in connection with the statements
or omissions which resulted in such damages and other relevant equitable
considerations shall also be considered. The relative fault shall be
determined by reference to, among other things, whether in the case of an
untrue statement of a material fact or the omission to state a material fact,
such statement or omission relates to information supplied by the Company or
Royce, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The
Company and Royce agree that it would not be just and equitable if the
representative obligations of the Company and Royce to contribute pursuant to
this Section 10 were to be determined by pro rata or per capita allocation of
the aggregate damages or by any other method of allocation that does not take
account of the equitable considerations referred to in the first sentence of
this Section 10; and, (b) the contribution of Royce shall not be in excess of
its proportionate share of the portion of such losses, claims, damages or
liabilities for which Royce is responsible. No person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. As used in this paragraph, the word "Company" includes any
officer, director, or person who controls the Company within the meaning of
Section 15 of the Act. If the full amount of the contribution specified in
this paragraph is not permitted by law, then Royce and each person who
controls any Underwriter shall be entitled to contribution from the Company to
the full extent permitted by law. The foregoing contribution agreement shall
in no way affect the contribution liabilities of any persons having liability
under Section 11 of the Act other than the Company and Royce. No contribution
shall be requested with regard to the settlement of any matter from any party
who did not consent to the settlement; provided, however, that such consent
not be unreasonably withheld in light of all factors of importance to such
party.
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11. Finders.
(a) The Company knows of no claims for services in the
nature of a finder's fee or origination fee with respect to this transaction
resulting from the respective acts of its officers, directors or employees,
for which Royce may be responsible, and the Company agrees to indemnify and
hold Royce free and harmless from any claims for any services of such nature
arising from any act of the Company or its employees, officers or directors
and will reimburse Royce for any counsel fees, legal or other expense
reasonable incurred by Royce in investigating or defending against any such
claim.
(b) Royce knows of no claims for services in the nature of a
finder's fee or origination fee with respect to this transaction resulting
from the respective acts of its officers, directors or employees, for which
the Company may be responsible, and Royce agrees to indemnify and hold the
Company free and harmless from any claims for any services of such nature
arising from any act of Royce or its employees, officers or directors and will
reimburse the Company for any legal or other expenses reasonable incurred by
the Company in investigating or defending against any such claim.
12. Royce's Covenant.
Royce covenants and agrees with the Company as follows:
(a) Royce is registered as a broker-dealer with the
Commission and is a member in good standing with the National
Association of Securities Dealers, Inc. ("NASD").
(b) There is not now pending or threatened or to the best
knowledge of Royce or its counsel, contemplated against Royce any action or
proceeding, either in any court of competent jurisdiction or before the
Commission or any state securities commission, or administrative body or
tribunal, except as fully disclosed or required to be disclosed in the
Prospectus.
(c) In the event of any action or proceeding of the type
referred to in subparagraph (b) above shall be instituted or threatened
against Royce at any time prior to the Effective Date, or in the event that
Royce shall cease to be a member in good standing of the NASD, or in the event
there shall be filed by or against Royce in any court pursuant to any federal,
state, local or municipal statute, a petition in bankruptcy or insolvency or
for reorganization or for the appointment of a receiver or trustee of its
assets or if Royce makes an assignment for the benefit of creditors, Royce
shall give written notice of the occurrence of such event or events to the
Company, and the Company shall have the right on three (3) days written notice
to Royce to terminate this Agreement without any liability to Royce of any
kind.
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13. Survival of Representations, Warranties and Agreements.
The respective indemnities, agreements, representations,
warranties and other statements of the Company or its officers as set forth in
or made pursuant to this Agreement and the respective indemnities, agreements,
representations, warranties, covenants and other statements of Royce or its
officers as set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, regardless of any investigation made
by or on behalf of the Company or Royce or any controlling person, and will
survive termination of this Agreement and the delivery of any payment for the
consummation of this transaction, on the Closing Date.
14. Benefits and Assignment.
This Agreement has been made solely for the benefit of the
Company and its legal representatives and may not be assigned by the Company
or Royce to any other entity and no other person shall qualify or have any
right in or by virtue of this Agreement.
15. Other Agreements
The Registration Statement shall also cover 513,000 shares
of the Company's Common Stock for sale by certain selling security holders.
However, the Company has entered into agreements with certain Selling Security
Holders who own (i) 399,000 shares of the Company's Common Stock which
prohibits them from making any sales until three months after the Effective
Date without the prior written consent of the Underwriter and (ii) an
additional 114,000 shares of the Company's Common Stock which prohibit them
from making any sales until nine months after the Effective Date without the
consent of the Company. The Company agrees not to give such consent without
the prior written consent of the Underwriter. The 513,000 shares being sold by
the selling security holders are not covered by this Standby Agreement except
for the aforementioned restrictions against sale.
16. New York Law.
This Agreement shall be construed in accordance with the
laws of the State of New York.
17. Notices.
All communications hereunder shall be in writing and, if to
Royce, shall be mailed by certified mail or delivered to Royce at its address
appearing on page 1 hereof, or if to the Company, shall be mailed by certified
mail or delivered to it at its address appearing on page 1 hereof, or sent to
counsel to such parties named in the Prospectus at the respective addresses
indicated therein.
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If a party signs this Agreement and transmits an electronic
facsimile of the signature page to the other party, the party who receives the
transmission may rely upon the electronic facsimile as a signed original of
this Agreement.
If the foregoing correctly states and sets forth in full the
Agreement between us, please indicate by signing this letter in the space
provided below for that purpose. The within Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed the
original, but all of which together shall constitute one and the same
instrument and shall be valid and binding between us.
Very truly yours,
ROYCE INVESTMENT GROUP, INC.
By:__________________________________
ROYCE KANOFSKY, President
Dated: Woodbury, New York
_____________, 1996
Accepted and Agreed:
EASTCO INDUSTRIAL SAFETY CORP.
By:____________________________
ALAN E. DENSEN, President
30
<PAGE>
WARRANT EXERCISE FEE AGREEMENT
AGREEMENT dated as of the ___ of ______, 1996, by and among Royce
Investment Group, Inc. ("Royce"), Eastco Industrial Safety Corp. (the
"Company") and American Stock Transfer & Trust Company (the "Warrant Agent").
W I T N E S S E T H:
WHEREAS, on __________________ 1996, the Company entered into a
Standby Agreement with Royce pursuant to which the Company has distributed to
its stockholders non-transferable Rights to purchase 703,591 Units (as
defined below) and Royce has agreed to purchase the Unsubscribed Units; and
WHEREAS, in connection with the Rights offering each stockholder has
received Rights on the basis of four Rights for every five shares of Common
Stock owned by them; and
WHEREAS, each Right allows the stockholder to purchase one Unit at a
price of $5.00 per Unit with each Unit consisting of one share of the
Company's Common Stock ("Common Stock"), and one Class B Common Stock Purchase
Warrant (the "Class B Warrants"); and
WHEREAS, the Company has entered into an agreement dated as of
__________________, 1996 by and between the Company and the Warrant Agent (the
"Warrant Agreement"), covering 703,591 Class B Warrants (plus an additional
70,359 Class B Warrants that may be issued upon exercise of the Underwriter's
Warrants); and
WHEREAS, each Class B Warrant entitles the holder to purchase one
share of Common Stock at an exercise price of $6.25 per share commencing on
___________(18 months from the effective date of the Registration Statement)
and expiring on the close of business on _____________ (36 months from the
effective date of the Registration Statement; and
WHEREAS, the parties hereto wish to provide Royce, a member of the
National Association of Securities Dealers, Inc. ("NASD") with certain rights
on an exclusive basis in connection with the exercise of the Class B Warrants
during the exercise period.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto agree as follows:
Section 1. Description of the Class B Warrants. The Company's Class B
Warrants may be exercised on or after _______________________, 199_ and expire
at 5:00 p.m. New York time on _____________________, _________ (the
"Expiration Date"), subject to (i) the Company's right to extend the
Expiration Date, at which time all rights evidenced by the Class B Warrants
shall cease and the Class B Warrants shall become void and (ii) certain
redemption rights commencing on or after ___________, ________ (18 months from
<PAGE>
the effective date of the Registration Statement). In accordance with
the provisions of the Warrant Agreement, the holder of each Class B Warrant
shall have the right to purchase from the Company, and the Company shall issue
and sell to such holders of Class B Warrants, one fully paid and
non-assessable share of the Company's Common Stock for every Class B Warrant
exercised at an Exercise Price of $6.25 per share, subject to adjustment as
provided in the Warrant Agreement.
Section 2. Notification of Exercise. Within five (5) days of the last
day of each month commencing ____________, 199_ (18 months from the date of
the Company's Prospectus or sooner if the Company shall permit the exercise of
Class B Warrants at an earlier date with the consent of Royce), the Warrant
Agent or the Company will notify Royce of each Class B Warrant certificate
which has been properly completed and delivered for exercise by holders of
Class B Warrants during each such month, the determination of the proper
completion to be in the sole and absolute reasonable discretion of the Company
and the Warrant Agent. The Company or the Warrant Agent will provide Royce
with such information, in connection with the exercise of each Class B
Warrant, as Royce shall reasonably request.
Section 3. Payment to Royce. The Company hereby agrees to pay to
Royce an amount equal to seven (7%) percent of the then exercise price (i.e.
$.4375 per share based on the initial exercise price of the Class B Warrants
which is $6.25 per share) for each Class B Warrant exercised (the "Exercise
Fee") a portion of which may be allowed by Royce to the dealer who solicited
the exercise (which may also be Royce) provided that:
(a) such Class B Warrant is exercised no earlier than one year from
the effective date of the Company's Registration Statement;
(b) at the time of exercise, the market price of the Company's Common
Stock is higher than the applicable Exercise Price of the Class B Warrant
being exercised;
(c) the holders of Class B Warrants being exercised have indicated in
writing, either in the Form of Election contained on the specimen Class B
Warrant Certificate attached hereto as Exhibit A, or by written documents
signed and dated by the holders and specifically stating that the exercise of
such Class B Warrants were solicited by Royce or another member of the NASD;
and
(d) Royce, and/or the member of the NASD which solicited the exercise
of Class B Warrants delivers a certificate to the Company within five (5)
business days of receipt of information relating to such exercised Class B
Warrants from the Company or the Warrant Agent in the form attached hereto as
Exhibit B, stating that:
(1) the Class B Warrants exercised were not held in a
discretionary account;
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<PAGE>
(2) Royce or the member of the NASD which solicited the exercise of
Class B Warrants did not, (unless granted an exemption by the Securities and
Exchange Commission from the provisions thereof), within the applicable number
of business days under Rule l0b-6 immediately preceding the date of exercise
of the Class B Warrant bid for or purchase the Common Stock of the Company or
any securities of the Company immediately convertible into or exchangeable for
the Common Stock (including the Class B Warrants) or otherwise engage in any
activity that would be prohibited by Rule 10b-6 under the Securities Exchange
Act of 1934, as amended, with one engaged in a distribution of the Company's
securities; and
(3) in connection with the solicitation, it disclosed the
compensation it would receive upon exercise of the Class B Warrant.
Section 4. Payment of the Exercise Fee. The Company hereby agrees to
pay over to Royce within two (2) business days after receipt by the Company of
the certificate described in Section 3(d) above, the Exercise Fee out of the
proceeds it received from the applicable Exercise Price paid for the Class B
Warrants to which the certificate relates.
Section 5. Inspection of Records. Royce may at any time during
business hours, at its expense, examine the records of the Company and the
Warrant Agent which relate to the exercise of the Class B Warrants.
Section 6. Termination. Royce shall be entitled to terminate this
Agreement prior to the exercise of all Class B Warrants at any time upon five
(5) business days, prior notice to the Company and the Warrant Agent.
Notwithstanding any such termination notice, Royce shall be entitled to
receive an Exercise Fee for the exercise of any Class B Warrant for which it
has already delivered to the Company prior to any such termination the
certificate required by Section 3(d) of this Agreement.
Section 7. Notices. Any notice or other communication required or
permitted to be given pursuant to this Agreement shall be in writing and shall
be deemed sufficiently given if sent by first class certified mail, return
receipt requested, postage prepaid, addressed as follows: if to the Company at
130 West 10th Street, Huntington Station, New York 11746, copy to Herbert W.
Solomon, Esq., Hollenberg Levin Solomon Ross Belsky & Daniels, LLP 585 Stewart
Avenue, Garden City, New York 11530-4732; if to Royce at 199 Crossways Park
Drive, Woodbury, NY 11797; and if to the Warrant Agent at American Stock
Transfer & Trust Company, 40 Wall Street, New York, N. Y. 10005, or such other
address as such party shall have given notice to other parties hereto in
accordance with this Section. All such notices or other communications shall
be deemed given three (3) business days after mailing, as aforesaid.
Section 8. Supplements and Amendments. The Company, the Warrant Agent
and Royce may from time-to-time supplement or amend this Agreement by a
written instrument signed by the party to be
3
<PAGE>
charged, without the approval of any holders of Class B Warrants in
order to cure any ambiguity or to correct or supplement any provisions
contained herein or to make any other provisions in regard to matters or
questions arising hereunder which the Company, the Warrant Agent and Royce may
deem necessary or desirable and which do not adversely affect the interests of
the holders of Class B Warrants.
Section 9. Assignment. This Agreement may not be assigned by any
party without the express written approval of all other parties, except that
Royce may assign this Agreement to its successors.
Section 10. Governing Law. This Agreement will be deemed made under
the laws of the State of New York with respect to matters of contract law and
for all purposes shall be governed by and construed in accordance with the
internal laws of said State, without regard to the conflicts of laws
provisions thereof.
Section 11. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give any person or corporation other than the Company,
the Warrant Agent and Royce any legal or equitable right, remedy or claim
under this Agreement; and this Agreement shall be for the sole and exclusive
benefit of, and be binding upon, the Company, the Warrant Agent and Royce and
their respective successors and permitted assigns.
Section 12. Descriptive Headings. The descriptive headings of the
sections of this Agreement are inserted for convenience only and shall not
control or affect the meanings or construction of any of the provisions
hereof.
Section 13. Superseding Agreement. This Agreement supersedes any and
all prior agreements between the parties with respect to the subject matter
hereof.
Section 14. Exclusive Agreement. It is understood that this
agreement is on an exclusive basis to solicit the exercise of the Class B
Warrants and that the Company may not engage other broker-dealers to solicit
the exercise of Class B Warrants without the consent of Royce.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
EASTCO INDUSTRIAL SAFETY CORP.
By:____________________________________
ROYCE INVESTMENT GROUP, INC.
By:____________________________________
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: ____________________________________
5
<PAGE>
CERTIFICATE
The undersigned, being the _______________________________ of Royce Investment
Group, Inc. ("Royce") pursuant to Section 3(d) of the Warrant Exercise Fee
Agreement relating to the exercise of Warrants dated ____________________,
1996 between Eastco Industrial Safety Corp. (the "Company") and American Stock
Transfer & Trust Company (the "Warrant Agent") hereby certifies that:
1. The Company or the Warrant Agent has notified Royce that
_________________________ Class B Warrants (as defined in the Agreement) have
been exercised during ________________ 199_.
2. The exercise of ____________________ of such Class B Warrants was
solicited by Royce.
3. Such Class B Warrants were not held in a discretionary account.
4. _______________ did not, within _____ business days immediately
preceding ________ 199_, bid for or purchase the Common Stock of the Company
or any securities of the Company immediately convertible into or exchangeable
for the Common Stock (including Class B Warrants) or otherwise engage in any
activity that would be prohibited by Rule l0b-6 under the Securities Exchange
Act of 1934, as amended, to one engaged in a distribution of the Company's
securities.
5. In connection with the solicitation of the exercise of the Class B
Warrants, ___________________ disclosed the compensation it will receive to
holders of the Class B Warrants.
DATED: ___________________, 199_
ROYCE INVESTMENT GROUP, INC.
By:_____________________________
6
<PAGE>
Exhibit 1.03
Eastco Industrial Safety Corp.
130 West 10th Street
Huntington Station, New York 11746
_________, 1996
Royce Investment Group, Inc.
199 Crossways Park Drive
Woodbury, NY 11797
Gentlemen:
The following sets forth our understanding with respect to your
providing financial advisory services for this corporation.
l. For a period of one (1) year commencing on the date hereof, you
will render financial consulting services to this corporation as such services
shall be required but in no event shall such services require more than two
business days per month.
Your services shall include the following:
(a) to advise and assist in matters pertaining to the
financial requirements of our corporation and to assist, as and when required,
in formulating plans and methods of financing;
(b) to prepare and present financial reports required by us
and to analyze proposals relating to obtaining funds for our business, mergers
and/or acquisitions;
(c) to assist in our general relationship with the financial
community including brokers, stockholders, financial analysts, investment
bankers, and institutions; and
(d) to assist in obtaining financial management, and
technical and advisory services, and financial and corporate publicrelations,
as may be requested or advisable.
2. All services required to be performed hereunder shall be requested
by us in writing and upon not less than seven business days notice, unless
such notice is waived by you. Such notice shall be to the address specified
above or to such other place as you shall designate to us in writing.
3. For the services to be performed hereunder, and for your continued
availability to perform such services, we will pay you a fee equal to 2% of
the total proceeds of the Rights and Standby Offerings (including proceeds of
the Optional Units) realized by the Company from the Standby Agreement dated
______, 1996, which sum is payable in full in advance on the closing date of
such offering, and, in the case of the Optional Units, on each closing date on
such option. Further, we will reimburse you for such
<PAGE>
Royce Investment Group, Inc.
Page 2
reasonable out-of-pocket expenses as may be incurred by you on our behalf, but
only to the extent authorized by us.
4. This Agreement has been duly approved by our Board of Directors.
5. You shall have no authority to bind this corporation to any
contract or commitment, inasmuch as your services hereunder are advisory in
nature.
6. You will maintain in confidence all proprietary, non-published
information obtained by you with respect to our corporation during the course
of the performance of your services hereunder and you shall not use any of the
same for your own benefit or disclose any of the same to any third party,
without our prior written consent, both during and after the term of this
Agreement.
7. This Agreement shall not be assignable by either of us without the
other party's prior written consent.
8. This Agreement shall be binding upon, and shall inure to the
benefit of, our respective successors and permitted assigns.
9. The foregoing represents the sole and entire agreement between us
with respect to the subject matter hereof and supersedes any prior agreements
between us with respect thereto. This Agreement may not be modified, amended
or waived except by a written instrument signed by the party to be charged.
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York, without regard to the principles of
conflicts of laws of such State.
Please signify your agreement to the foregoing by signing and
returning to us the enclosed copy of this Agreement which will thereupon
constitute an agreement between us.
Very truly yours,
EASTCO INDUSTRIAL SAFETY CORP.
BY__________________________
Agreed and Consented to:
ROYCE INVESTMENT GROUP, INC.
BY________________________________
<PAGE>
Exhibit 3.01
CERTIFICATE OF INCORPORATION
of
GLOFANE CO, INC.
Pursuant to Article Two of the Stock Corporation Law,
WE, the undersigned, for the purpose of forming a corporation pursuant to
Article Two of the Stock Corporation Law of the State of New York, certify:
1. The name of the proposed corporation shall be GLOFANE CO. INC.
2. The purposes for which it is formed are:
a) to buy, sell, import, export, manufacture, design, distribute, job,
convert, and generally deal in industrial supplies, abrasives,
chemicals, tools, cloth, rubber, coated and synthetic products and
materials of all nature, land and description.
b) to acquire by purchase or otherwise, domestic or foreign patents,
patent rights, trademarks, copyrights, formulae, processes and
licenses to manufacture of sell patented, copyrighted or trademarked
articles or articles made under such formulae or processes, and to
sell, lease or license the use of such patents, trademarks,
copyrights, formulae or processes or otherwise dispose of the same.
c) to act as agent or representative of corporations, firms and
individuals, and as such to develop, manage, extend and assist
financially the business and other interests of such firms,
corporations and individuals.
d) to subscribe for, purchase or otherwise acquire and hold the
shares, bonds and obligations of any corporation organized under the
laws of any state, territory, or district or colony of the United
States, or of any foreign country, or of the United States of America
or any political subdivision thereof.
<PAGE>
e) to acquire by purchase, lease or otherwise improve and develop real
property; to erect buildings of all kinds and to sell and rent the
same; to buy, sell, mortgage, exchange, lease, let, hold for
investment or otherwise use and operate real estate of all kinds,
improved or unimproved, and any right or interest therein.
f) to buy, hold, own, manufacture, purchase, adapt, prepare, trade in,
deal in, sell and otherwise dispose of all kinds of personal property
whatsoever, without limits as to amount and to mortgage the same.
g) This corporation shall have the power to conduct its business in
all its branches in the State of New York and throughout the world,
and to do all acts and things and to exercise all the powers now or
hereafter authorized by law necessary to carry on the business of said
corporation or to procure any of the objects for which the corporation
is formed.
h) The foregoing enumeration of specific powers shall not be held to
limit or restrict in any manner the general powers of the corporation
and the enjoyment thereof, as conferred by the laws of the State of
New York upon corporations.
3. The total number of shares that may be issued is two hundred, all of
which are to be without par value.
The capital of the corporation shall be at least equal to the sum of the
aggregate par value of all issued shares having par value, plus the aggregate
amount of the consideration received by the corporation for the issuance of
shares without par value, plus such amounts as from time to time, by resolution
of the Board of Directors, may be transferred thereto.
4. The shares shall be all common.
5. The office of the corporation shall be located in the Borough of Queens,
County of Queens, City and State of New York and No. 1021 Clintonville Street,
Whitestone, Queens, City and State of New York, is the address to which the
-2-
<PAGE>
Secretary of State shall mail a copy of process in any action or proceeding
against the corporation which may be served upon him.
6. The duration of the corporation shall be perpetual.
7. The number of directors shall be not less than three nor more than
seven.
8. The names and post office addresses of the directors until the first
annual of stockholders are:
Names Post Office Addresses
----- ---------------------
Marshall H. Rosett 570 Seventh Avenue, New York 18, N.Y.
Nathan Weinstein 570 Seventh Avenue, New York 18, N.Y.
Sidney F. Looker 570 Seventh Avenue, New York 18, N.Y.
9. The names and post office addresses of each subscriber of the number of
shares which each agrees to take in the corporation are as follows:
Names Post Office Addresses No. of Shares
- ----- --------------------- -------------
Marshall H. Rosett 570 Seventh Avenue, NY 18, N.Y. 1
Nathan Weinstein 570 Seventh Avenue, NY 18, N.Y. 1
Sidney F. Looker 570 Seventh Avenue, NY 18, N.Y. 1
10. That all of the subscribers of this Certificate of Incorporation are of
full age, at least two-thirds of them are citizens of the United States, at
least one of them is a resident of the State of New York, and at least one of
the persons names as a director is a citizen of the United States and a resident
of the State of New York.
-3-
<PAGE>
11. The Secretary of State is hereby designated as the agent of the
corporation upon whom process in any action or proceeding against it may be
served.
12. The directors need not be stockholders.
IN WITNESS WHEREOF, we have hereunto made and subscribed this Certificate
of Incorporation this 9th day of May, 1958
/s/ Nathan Weinstein
--------------------------------
/s/ Marshall H. Rosett
--------------------------------
/s/ Sidney F. Looker
--------------------------------
/s/ Morris Migden
Morris Migden
Notary Public, State of New York
Qualified in Kings County
No 24-7930400, Comm. Exp. 3/30/60
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK)
On this 9th day of May, 1958, before me personally appeared NATHAN
WEINSTEIN, MARSHALL H. ROSETT, and SIDNEY F. LOOKER, to me known to be the
persons described in and who executed the foregoing Certificate of Incorporation
and acknowledged that they executed the same.
-4-
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF GLOFANE CO. INC.
Under Section 805 of the Business Corporation Law:
The undersigned being the holder of all of the outstanding shares of GLOFANE CO.
INC. entitled to vote thereon hereby certifies:
FIRST: The name of the corporation is: GLOFANE CO. INC.
SECOND: The Certificate of Incorporation of the corporation as filed by the
Department of State on the 15th day of May 1958.
THIRD: The Certificate of Incorporation of the corporation is hereby
amended to affectuate the following changes. To change the name of the
corporation to increase the number of shares authorized and changing the shares
authorized from no par value to par value and to change the outstanding shares
authorized.
FOURTH: Article FIRST of the Certificate of Incorporation of the
corporation is hereby amended to read as follows:
The name of the corporation is EASTCO SAFETY EQUIPMENT INC.
FIFTH Article THIRD of the Certificate of Incorporation of the corporation
is hereby amended to read as follows:
The total number of shares that may be issued is one million all of
which are to be of one class and are to be one cent par value.
SIXTH: Article THIRTEENTH of the Certificate of Incorporation of the
corporation is added and reads as follows:
That each of the twenty outstanding and issued shares of common stock,
no par value which is currently outstanding is hereby converted to
five thousand shares, one cent par value stock, resulting in one
hundred thousand shares. The unissued 180 shares of the originally
authorized shares are to be eliminated.
SEVENTH: The foregoing amendments of the Certificate of Incorporation are
authorized by the unanimous written consent of the shareholders of all
outstanding shares entitled to vote thereon dated December 13, 1968.
<PAGE>
IN WITNESS WHEREOF, the undersigned has hereunto signed this Certificate
this 31st day of December, 1968.
/s/ Alan Densen
-------------------------
Alan Densen
<PAGE>
STATE OF NEW YORK)
)SS:
COUNTY OF NASSAU )
ALAN DENSEN being duly sworn deposes and says that he is the sole shareholder
of GLOFANE CO., INC. the corporation named in the foregoing Certificate of
Amendment, that he has read and signed the same and that the statements
contained thereto are true.
/s/ Alan Densen
-------------------------
Alan Densen
Sworn to before me this
31st day of December, 1968
/s/ Herbert Warren Solomon
- --------------------------
Notary Public
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
EASTCO SAFETY EQUIPMENT INC.
Under Section 805 of the Business Corporation Law.
The undersigned, being the President and Secretary of Eastco Safety
Equipment Inc. hereby certify that:
1. The name of the corporation is Eastco Safety Equipment Inc. The
corporation was originally incorporated under the name Glofane Co. Inc. The name
of the corporation was changed by Certificate of Amendment filed on January 9,
1969 to its present name Eastco Safety Equipment Inc.
2. The Certificate of Incorporation of the corporation was filed by the
Department of State on May 15, 1958. One Certificate of Amendment was filed on
January 9, 1969.
3. Article "FIRST" of the Certificate of Incorporation as amended is hereby
further amended to read as follows:
"FIRST: The name of the corporation is Eastco Industrial Safety
Corporation."
4. The foregoing amendment of the Certificate of Incorporation was
authorized by vote of the holders of a majority of all outstanding shares
entitled to vote thereon at the annual meeting of the shareholders called and
held for such purpose on the 22nd day of December, 1969.
IN WITNESS WHEREOF, the undersigned have hereunto
FILED DECEMBER 31, 1969
<PAGE>
signed the Certificate this 22nd day of December, 1969.
/s/ ALAN E. DENSEN
-------------------------
ALAN E. DENSEN, PRESIDENT
/s/ ALEX JANOWITZ
-------------------------
ALEX JANOWITZ, SECRETARY
AFFIRMATION
-----------
Pursuant to Section 104 (d) of the Business Corporation Law, the
undersigned hereby affirms under the penalties of perjury that the statements
contained in the above Certificate are true.
/s/ ALAN E. DENSEN
-------------------------
ALAN E. DENSEN
VERIFICATION OF CERTIFICATE OF AMENDMENT
----------------------------------------
STATE OF NEW YORK )
) SS.:
COUNTY OF NASSAU )
ALEX JANOWITZ, being duly sworn, deposes and says; That he is Secretary of
Eastco Safety Equipment Inc., the corporation named in the foregoing Certificate
of Amendment; that he has read and signed the same; and that the statements
contained therein are true.
/s/ ALEX JANOWITZ
-------------------------
ALEX JANOWITZ
Sworn to before me this /s/ Herbert Warren Solomon
22nd day of December, 1969 Herbert Warren Solomon
NOTARY PUBLIC, State of New York
No. 103587
Qualified Nassau County
Comm. expires March 30, 1970
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
EASTCO INDUSTRIAL SAFETY CORP.
Under Section 805 of the Business Corporation Law.
The undersigned, being the holders of all outstanding shares of EASTCO
INDUSTRIAL SAFETY CORP. entitled to vote thereon, certify:
FIRST: The name of the corporation is EASTCO INDUSTRIAL SAFETY CORP.
SECOND: The Certificate of Incorporation of the corporation was filed by
the Department of State on the 15th day of May, 1958 and was thereafter
subsequently amended by Certificate of Amendment filed on January 9, 1969.
THIRD: The Certificate of Incorporation of the corporation is hereby
amended to eliminate preemptive rights.
FOURTH: Article "FOURTEENTH" of the Certificate of Incorporation of the
corporation is hereby added and reads as follows:
"No holder of any shares of stock of the corporation of any
class now or hereafter authorized shall have any
preferential or pre-emptive rights, as such holder, to
purchase, subscribe for or otherwise acquire, any shares of
stock of the corporation of any class, or any securities or
obligations convertible into, or exchangeable for, or any
right, warrant or option to purchase, subscribe for or
otherwise acquire, any shares of stock of the corporation of
any class, which the corporation may at any time hereafter
issue, sell or offer for sale, whether now or hereafter
authorized."
FIFTH: The foregoing amendment to the Certificate of Incorporation was
authorized by the unanimous consent of
<PAGE>
the holders of all outstanding shares entitled to vote thereon dated March 5,
1969.
IN WITNESS WHEREOF, the undersigned have hereunto signed
this Certificate this 5th day of March, 1969.
/s/ ALAN DENSEN
-------------------------
ALAN DENSEN
/s/ ALEX JANOWITZ
-------------------------
ALEX JANOWITZ
/s/ CEFERINO NEGRON
-------------------------
CEFERINO NEGRON
/s/ HERBERT W. SOLOMON
-------------------------
HERBERT W. SOLOMON
/s/ EDWARD C. HOROWITZ
-------------------------
EDWARD C. HOROWITZ
STATE OF NEW YORK )
) SS.:
COUNTY OF NASSAU )
ALAN DENSEN, ALEX JANOWITZ, CEFERINO NEGRON, HERBERT WO. SOLOMON and EDWARD
C. HOROWITZ, being duly sworn, depose and say that they are the sole
shareholders of EASTCO INDUSTRIAL SAFETY CORP., the corporation named in the
foregoing Certificate of Amendment; that they have read and signed the same and
that the statements contained therein are true.
/s/ ALAN DENSEN
-------------------------
ALAN DENSEN
Sworn to before me this
5th day of March, 1969 /s/ ALEX JANOWITZ
-------------------------
/s/ Florence Bergmeister ALEX JANOWITZ
Notary Public, State of New York
No. 305229873 /s/ CEFERINO NEGRON
Qualified in Nassau County -------------------------
Commission Expires March 30, 1970 CEFERINO NEGRON
/s/ HERBERT W. SOLOMON
-------------------------
HERBERT W. SOLOMON
/s/ EDWARD C. HOROWITZ
-------------------------
EDWARD C. HOROWITZ
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
Under Section 805 of the Business Corporation Law.
The undersigned, being the President and Secretary of Eastco Industrial
Safety Corp., do hereby certify and set forth:
1. The name of the corporation is EASTCO INDUSTRIAL SAFETY CORP.
2. The date the Certificate of Incorporation of Eastco Industrial Safety
Corp. was filed by the Department of State is the 15th day of May, 1958.
3. The Certificate of Incorporation of Eastco Industrial Safety Corp. is
hereby amended to a) increase the number of shares authorized and b) change the
post office address to which the Secretary of State shall mail a copy of any
process against the corporation served upon him.
4. Article 3 of the Certificate of Incorporation of the corporation is
hereby amended to read as follows:
"The total number of shares that may be issued is two
million, all of which are to be of one class and are to be
one cent par value."
5. Article 5 of the Certificate of Incorporation of the corporation is
hereby amended to read as follows:
"The office of the corporation is to be located in the
Borough of Queens, County of Queens, City and State of New
York and the Secretary of State is designated as agent of
the corporation upon whom process against it may be sent.
The Post Office address to which the Secretary of State
shall mail a copy of any process served upon him is:
"Eastco Industrial Safety Corp.
c/o Hollenberg Levin Marlow & Solomon
170 Old Country Road
Mineola, NY 11501"
FILED APRIL 6, 1979 SECRETARY OF STATE OF NEW YORK.
<PAGE>
6. The amendment for Article 3 was authorized by a vote of the holders of a
majority of all outstanding shares entitled to vote thereon at a meeting of
shareholders duly called and held, a quorum being present on March 19, 1979. The
amendment for Article 5 was authorized by the Board of Directors at a meeting
duly called and held on March 19, 1979.
IN WITNESS WHEREOF, the parties hereto have signed their names and affirm
that the statements contained herein are true under the penalties of perjury
this 19th day of March, 1979.
/s/ ALAN DENSEN
-------------------------
ALAN DENSEN - PRESIDENT
/s/ ALEX JANOWITZ
-------------------------
ALEX JANOWITZ - SECRETARY
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
EASTCO INDUSTRIAL SAFETY CORPORATION
Under Section 805 of the Business Corporation Law.
The undersigned, being the President and Secretary of Eastco Industrial Safety
Corporation, do hereby certify and set forth:
FIRST: The name of the corporation is Eastco Industrial Safety
Corporation.
SECOND: The Certificate of Incorporation of the corporation was filed
by the Department of State on the 15th day of May, 1958, under the name
Glofane Co. Inc.
THIRD: The Certificate of Incorporation of the corporation is hereby
amended to effectuate the following changes: to increase the number of shares
authorized.
FOURTH: Article 3 of the Certificate of Incorporation of the
corporation is hereby amended to read as follows:
"The total number shares that may be issued is 10,000,000,
all of which are to be of one class and are to be one cent
par value."
FIFTH: This amendment of the Certificate of Incorporation was
authorized by the holders of a majority of all outstanding shares entitled to
vote thereon at a meeting of the shareholders duly held on the 10th day of
December, 1987. Said authorization was subsequent to the unanimous vote of the
Board of Directors.
IN WITNESS WHEREOF, the parties have signed their names and affirm
that the statements contained herein are true under the penalties of perjury
this 14th day of December, 1987.
/S/ALAN E. DENSEN
----------------------------
ALAN E. DENSEN - PRESIDENT
/S/MARK J. FREDERICKS
----------------------------
MARK J. FREDERICKS - Secretary
<PAGE>
CERTIFICATE OF CHANGE
OF THE
CERTIFICATE OF INCORPORATION
OF
EASTCO INDUSTRIAL SAFETY CORPORATION
Under Section 805-A of the Business Corporation Law.
The undersigned, being the President and Secretary of Eastco Industrial Safety
Corporation, do hereby certify and set forth:
FIRST: The name of the corporation is Eastco Industrial Safety
Corporation.
SECOND: The Certificate of Incorporation of the corporation was filed
by the Department of State on the 15th day of May, 1958, under the name
Glofane Co. Inc.
THIRD: The Certificate of Incorporation of the corporation is hereby
changed to effectuate the following changes: (a) to change the county in which
the office of the corporation is located and (b) to change the post office
address to which the Secretary of State shall mail a copy of any process
against the corporation served upon him.
FOURTH: Article 5 of the Certificate of Incorporation of the
corporation is hereby changed to read as follows:
"The office of the corporation is to be located in the County of
Suffolk, State of New York, and the Secretary of State is designated as
agent of the corporation upon whom process against it may be sent. The
Post Office address to which the Secretary of State shall mail a copy
of any process against the corporation served upon him is:
Eastco Industrial Safety Corporation
c/o Hollenberg Levin Solomon & Ross
585 Stewart Avenue
Garden City, New York 11530"
FIFTH: This change of the Certificate of Incorporation was authorized
by the unanimous vote of the Board of Directors at a meeting duly called and
held on December 14, 1987.
<PAGE>
IN WITNESS WHEREOF, the parties have signed their names and
affirm that the statements contained herein are true under the penalties of
perjury this 15th day of December, 1987.
/s ALAN E. DENSEN
----------------------------
ALAN E. DENSEN - PRESIDENT
/s MARK J. FREDERICKS
----------------------------
MARK J. FREDERICKS - SECRETARY
<PAGE>
CERTIFICATE OF AMENDMENT
OF
EASTCO INDUSTRIAL SAFETY CORP.
Under Section 805 of the Business Corporation Law
of the State of New York
The undersigned, being the president and the secretary of EASTCO
INDUSTRIAL SAFETY CORP., do hereby certify and set forth:
1. The name of the corporation is EASTCO INDUSTRIAL SAFETY CORP.
2. The date that the certificate of incorporation of the corporation
was filed by the Department of State is the 15th day of May, 1958 under the name
of Glofane Co., Inc.
3. The Certificate of Incorporation is hereby amended to change the
authorized shares from twenty million common shares, par value one cent per
share to twenty million common shares, par value twelve cents per share.
4. Paragraph "3" of the Certificate of Incorporation relating to
authorized shares is hereby amended to read in full as follows:
"3. The total number of shares of stock which the
corporation shall have authority to issue is Twenty
Million (20,000,000) common shares, twelve cents par
value per share."
5. The 9,603,300 issued shares of the Corporation's Common Stock, par
value one cent per share, are hereby changed, on the basis of one
twelve-cents-par share for twelve one-cent-par shares, into 800,275 issued
shares of the Corporation's Common Stock, par value twelve cents per share.
6. The 10,396,700 unissued shares of the Corporation's Common Stock,
par value one cent per share, are hereby changed, on the basis of one and
8803025/10396700ths twelve-cents-par shares for one one-cent-par share, into
19,199,725 unissued
<PAGE>
shares of the Corporation's Common Stock, par value twelve cents per share.
7. The manner in which this amendment to the certificate of
incorporation of the corporation was authorized was by the affirmative vote of
the board of directors, followed by the affirmative vote of the holders of a
majority of all outstanding shares entitled to vote thereon at a meeting of
shareholders.
IN WITNESS WHEREOF, the undersigned have signed this certificate this
21st day of December, 1992, and affirm that the statements made herein are
true under the penalties of perjury.
/s ALAN E. DENSEN
----------------------------
ALAN E. DENSEN
President
/s MARK J. FREDERICKS
----------------------------
MARK J. FREDERICKS
Secretary
<PAGE>
Exhibit 3.02
BY-LAWS
of
GLOFANE CO. INC.
Article 1.
MEETING OF STOCKHOLDERS
Sec. 1. ANNUAL MEETING. The annual meeting of Stockholders shall be
held at the principal office of the Corporation, in the County of Queens
or at such other places as the Board of Directors may from time to time
determine, on the 1st day of July of each year, at 10:00 o'clock in the
forenoon of that day. If the day so designated falls upon a Sunday or a legal
holiday, then the meeting shall be held upon the first business day thereafter.
The Secretary shall serve personally, or by mail a written notice thereof, not
less than ten nor more than forty days previous to such meeting addressed to
each stockholder at his address as it appears on the stock book; but at any
meeting at which all stockholders shall be present, or of which all stockholders
not present have waived notice in writing, the giving of notice as above
required may be dispensed with.
<PAGE>
BY-LAWS
of
GLOFANE CO. INC.
(Name changed to EASTCO INDUSTRIAL SAFETY CORP.)
Article 1.
MEETING OF STOCKHOLDERS
Sec. 1. ANNUAL MEETING. The annual meeting of Stockholders shall be
held at the principal office of the Corporation, in the County of Queens
or at such other places as the Board of Directors may from time to time
determine, on the 1st day of July of each year, at 10:00 o'clock in the
forenoon of that day. If the day so designated falls upon a Sunday or a legal
holiday, then the meeting shall be held upon the first business day
thereafter. The Secretary shall serve personally, or by mail a written notice
thereof, not less than ten nor more than forty days previous to such meeting
addressed to each stockholder at his address as it appears on the stock book;
but at any meeting at which all stockholders shall be present, or of which all
stockholders not present have waived notice in writing, the giving of notice
as above required may be dispensed with.
8
<PAGE>
Sec. 2. SPECIAL MEETINGS. Special Meetings of Stockholders other than
those regulated by statute, may be called at any time by a majority of the
Directors. Notice of such meeting stating the purpose for which it is called
shall be served personally or by mail, not less than 5 days before the date
set for such meeting. If mailed, it shall be directed to a stockholder at his
address as it appears on the stock book; but at any meeting at which all
stockholders shall be present, or of which stockholders not present have
waived notice in writing, the giving of notice as above described may be
dispensed with. The Board of Directors shall also, in like manner, call a
special meeting of stockholders whenever so requested in writing by
stockholders representing not less than one-half of the capital stock of the
company. The President may in his discretion call a special meeting of
stockholders upon ten days notice. No business other than that specified in
the call for the meeting, shall be transacted at any meeting of the
stockholders, except upon the unanimous consent of all the stockholders
entitled to notice thereof.
Sec. 3. VOTING. At all meetings of the Stockholders of record having
the right to vote, each stockholder of the Corporation is entitled to one vote
for each share of stock having voting power standing in the name of such
stockholder on the books of the company. Votes may be cast in person or by
written authorized proxy.
9
<PAGE>
Sec. 4. PROXY. Each proxy must be executed in writing by the
stockholder of the Corporation or his duly authorized attorney. No proxy shall
be valid after the expiration of eleven months from the date of its execution
unless it shall have specified therein its duration.
Every proxy shall be revocable at the discretion of the person
executing it or of his personal representative or assigns.
Sec. 5. QUORUM.
The number of shares of any class having voting power, the holders of
which shall be present in person or represented by proxy at any meeting of the
stockholders in order to constitute a quorum for the transaction of any
business or any specified item of business shall be majority outstanding.
If a quorum shall not be present or represented, the stockholders
entitled to a vote thereat, present in person or represented by proxy, shall
have power to adjourn from time to time the meeting until a quorum shall be
present or represented. At such adjourned meeting at which quorum shall be
present or represented any business or any specified item of business may be
transacted which might have been transacted at the meeting as originally
notified.
The number of votes or consents of the holder of any class of stock
having voting power which shall be necessary for the transaction of any
business or any specified item of business at any meeting of stockholders,
including amendments to the certificate of incorporation, or the giving of any
consent, shall be majority present.
10
<PAGE>
Article II.
DIRECTORS
Sec. 1. NUMBER. The affairs and business of this Corporation shall be
managed by a Board of Directors composed of 3 to 7 members who need not be
stockholders of record, and at least one of such Directors shall be a resident
of the State of New York and a citizen of the United States.
Sec. 2. HOW ELECTED. At the annual meeting of Stockholders, the 3 to
7 persons receiving a plurality of the votes cast shall be directors and shall
constitute the Board of Directors for the ensuing year.
Sec. 3. TERM OF OFFICE. The term of office of each of the Directors
shall be one year, and thereafter until his successor has been elected.
Sec. 4. DUTIES. The Board of Directors shall have the control and
general management of the affairs and business of the Corporation. Such
Directors shall in all cases act as a Board, regularly convened, by a
majority, and they may adopt such rules and regulations for the conduct of
their meetings and the management of the Company, as they may deem proper, not
inconsistent with these By-Laws and the Laws of the State of New York.
Sec. 5. DIRECTORS' MEETINGS. Regular meetings of the Board of
Directors shall be held immediately following the annual meeting of the
11
<PAGE>
Stockholders, and at such other times as the Board of Directors may determine.
Special meetings of the Board of Directors may be called by the President at
any time, and shall be called by the President or the Secretary upon the
written request of 2 directors.
Sec. 6. NOTICE OF MEETINGS. Notice of meetings, other than the
regular annual meeting shall be given by service upon each Director in person,
or by mailing to him at his last known post-office address, at least 5 days
before the date therein designated for such meeting, including the day of
mailing, of a written or printed notice thereof specifying the time and place
of such meeting, and the business to be brought before the meeting and no
business other than that specified in such notice shall be transacted at any
special meeting. At any meeting at which every member of the Board of
Directors shall be present, although held without notice, any business may be
transacted which might have been transacted if the meeting had been duly
called.
Sec. 7. VOTING. At all meetings of the Board of Directors, each
Director is to have one vote, irrespective of the number of shares of stock
that he may hold. The act of a majority of the directors present at a meeting
at which a quorum is present shall be the act of the Board of Directors.
12
<PAGE>
Sec. 8. VACANCIES. Vacancies in the Board occuring between annual
meetings shall be filled for the unexpired portion of the term by a majority
of the remaining Directors.
Sec. 9. REMOVAL OF DIRECTORS. Any one or more of the Directors may be
removed either with or without cause, at any time by a vote of the
stockholders holding a majority of the stock, at any special meeting called
for the purpose.
Sec. 10. WAIVER OF NOTICE. Whenever by statute, the provisions of the
certificate of incorporation or these by-laws the stockholders or the Board of
Directors are authorized to take any action after notice, such notice may be
waived, in writing, before or after the holding of the meeting, by the person
or persons entitled to such notice, or, in the case of a stockholder, by his
attorney thereunto authorized.
Sec. 11. QUORUM. The number of directors who shall be present at any
meeting of the Board of Directors in order to constitute a quorum for the
transaction of any business or any specified item of business shall be
majority.
The number of votes of directors that shall be necessary for the
transaction of any business or any specified item of business at any meeting
of the Board of Directors shall be majority present.
If a quorum shall not be present at any meeting of the Board of
Directors, those present may adjourn the meeting from time to time, until a
quorum shall be present.
13
<PAGE>
Article III.
OFFICERS.
Sec. 1. NUMBER. The officers of this Corporation shall be:-
President.
Vice-President.
Secretary.
Treasurer.
Any officer may hold more than one office.
Sec. 2. ELECTION. All officers of the Corporation shall be elected
annually by the Board of Directors at its meeting held immediately after the
meeting of stockholders, and shall hold office for the term of one year or
until their successors are duly elected. Officers need not be members of the
board.
The board may appoint such other officers, agent and employees as it
shall deem necessary who shall have such authority and shall perform such
duties as from time to time shall be prescribed by the board.
Sec. 3. DUTIES OF OFFICERS. The duties and powers of the officers of
the Company shall be as follows:
PRESIDENT
The President shall preside at all meetings of the Board of Directors
and Stockholders.
He shall present at each annual meeting of the Stockholders and
Directors a report of the condition of the business of the Company.
14
<PAGE>
He shall cause to be called regular and special meetings of the
Stockholders and Directors in accordance with these By-Laws.
He shall appoint and remove, employ and discharge, and fix the
compensation of all servants, agents, employees, clerks of the Corporation
other than the duly appointed officers, subject to the approval of the Board
of Directors.
He shall sign and make all contracts and agreements in the name of
the corporation.
He shall see that the books, reports, statements and certificates
required by the statutes are properly kept, made and filed according to law.
He shall sign all certificates of stock, notes, drafts or bills of
exchange, warrants or other orders for the payment of money duly drawn by the
Treasurer.
He shall enforce these By-Laws and perform all the duties incident to
the position and office, and which are required by Law.
VICE-PRESIDENT.
During the absence or inability of the President to render and
perform his duties or exercise his powers, as set forth in these By-Laws or in
the acts under which this Corporation is organized, the same shall be
performed and exercised by the Vice-President; and who so acting, he shall
have all the powers and be subject to all the responsibilities hereby given to
or imposed upon such President.
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SECRETARY
The Secretary shall keep the minutes of the meetings of the Board of
Directors and of the Stockholders in appropriate books.
He shall give and serve all notices of the Corporation.
He shall be custodian of the records and of the seal, and affix the
latter when required.
He shall keep the stock and transfer books in the manner prescribed
by law, so as to show at all times the amount of capital stock, the manner and
the time the same was paid in, the names of the owners thereof, alphabetically
arranged, their respective places of residence, their post-office addresses,
the number of shares owned by each, the time at which each person became such
owner, and the amount paid thereon; and keep such stock and transfer books
open daily during business hours at the office of the Corporation, subject to
the inspection of any Stockholder of the Corporation, and permit such
Stockholder to make extracts from said books to the extent and as prescribed
by law.
He shall sign all certificates of stock.
He shall present to the Board of Directors at their stated meetings
all communications addressed to him officially by the President or any officer
or shareholder of the Corporation.
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He shall attend to all correspondence and perform all the duties
incident to the office of the Secretary.
TREASURER.
The Treasurer shall have the care and custody of and be responsible
for all the funds and securities of the Corporation, and deposit all such
funds in the name of the Corporation in such bank or banks, trust company or
trust companies or safe deposit vaults as the Board of Directors may
designate.
He shall sign, make, and endorse in the name of the Corporation, all
checks, drafts, warrants and orders for the payment of money, and pay out and
dispose of same and receipt therefor, under the direction of the President or
the Board of Directors.
He shall exhibit at all reasonable times his books and accounts to
any director or stockholder of the Company upon application at the Corporation
during business hours.
He shall render a statement of the conditions of the finances of the
Corporation at each regular meeting of the Board of Directors, and at such
other times as shall be required of him, and a full financial report at the
annual meeting of the stockholders.
He shall keep at the office of the Corporation, correct books of
account of all its business and transactions and such other books of account
as the Board of Directors may require.
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He shall do and perform all duties appertaining to the office of
Treasurer.
Sec. 4. BOND. The Treasurer shall, if required by the Board of
Directors, give to the Corporation such security for the faithful discharge of
his duties as the Board may direct.
Sec. 5. VACANCIES, HOW FILLED. All vacancies in any office, shall be
filled by the Board of Directors without undue delay, at its regular meeting
or at a meeting specially called for that purpose. During the absence of any
officer of the Corporation, or for any reason that the Board of Directors may
deem sufficient, the Board may, except as specifically otherwise provided in
these By-Laws, delegate the powers or duties of such officers to any other
officer or director for the time being, provided a majority of the entire
Board concur therein.
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Sec. 6. COMPENSATION OF OFFICERS. The officers shall receive such
salary or compensation as may be determined by the Board of Directors.
Sec. 7. REMOVAL OF OFFICERS. The Board of Directors may remove any
officer, by a majority vote, at any time with or without cause.
Article IV.
CERTIFICATES OF STOCK.
Sec. 1. DESCRIPTION OF STOCK CERTIFICATES. The certificates of stock
shall be numbered and registered in the order in which they are issued. They
shall be bound in a book and shall be issued in consecutive order therefrom,
and in the margin thereof shall be entered the name of the person owning the
shares therein represented, with the number of shares and the date thereof.
Such certificates shall exhibit the holder's name and the number of shares.
They shall be signed by the President or Vice-President, and countersigned by
the Secretary or Treasurer and sealed with the seal of the Corporation. By
amendment approved April 25, 1973, certificates may be unbound.
Sec. 2. TRANSFER OF STOCK. The stock of the Corporation shall be
assignable and transferable on the books of the Corporation only by the person
in whose name it appears on said books, his legal representatives or by his
duly authorized agent. In case of transfer by attorney, the power of attorney,
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duly executed and acknowledged, shall be deposited with the Secretary. In all
cases of transfer, the former certificate must be surrendered up and canceled
before a new certificate be issued. No transfer shall be made upon the books of
the Corporation within ten days next preceding the annual meeting of the
shareholders. By amendment approved April 25, 1973, the last sentence is
deleted.
Sec. 3. LOST CERTIFICATES. If a stockholder shall claim to have lost
or destroyed a certificate or certificates of stock issued by the Corporation,
the Board of Directors may, at its discretion, direct that the new certificate
or certificates issued, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost or destroyed, and upon the
deposit of a bond or other indemnity in such form and with such sureties if
any as the Board may require.
Article V.
Sec. 1. SEAL. The seal of the corporation shall be as follows:
[SEAL]
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Article VI.
DIVIDENDS
Sec. 1. WHEN DECLARED. The Board of Directors shall by vote declare
dividends from the surplus profits of the Corporation whenever, in their
opinion, the condition of the Corporation's affairs will render it expedient
for such dividends to be declared.
Sec. 2. RESERVE. The Board of Directors may set aside out of the net
profits of the Corporation available for dividends such sum or sums, before
payment of any dividend, as the Board in their absolute discretion think
proper as a reserve fund, to meeting contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for such other purpose as the Directors shall think conducive to the interests
of the Corporation, and they may abolish or modify any such reserve in the
manner in which it was created.
Article VII.
BILLS, NOTES, ETC.
Sec. 1. HOW MADE. All bills payable, notes, checks, drafts, warrants
or other negotiable instruments of the Corporation shall be made in the name
of the Corporation, and shall be signed by the Secretary or Treasurer and
countersigned by the President or Vice-President. No officer or agent of the
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Corporation, either singly or jointly with others, shall have the power to
make any bill payable, note, check, draft or warrant or other negotiable
instrument, or endorse the same in the name of the Corporation, or contract or
cause to be contracted any debt or liability in the name or in behalf of the
Corporation, except as herein expressly prescribed and provided.
Article VIII.
AMENDMENTS.
Sec. 1. HOW AMENDED. These By-Laws may be altered, amended, repealed
or added to by the vote of the Board of Directors of this corporation at any
regular meeting of said Board, or at a special meeting of Directors called for
that purpose provided a quorum of the Directors as provided by law and by the
Certificate of Incorporation, are present at such regular or special meeting.
These By-Laws, and any amendments thereto and new By-Laws added by the
Directors may be amended, altered or replaced by the stockholders at any
annual or special meetings of the stockholders.
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Article IX.
FISCAL YEAR
Sec. 1. The Fiscal Year shall begin the 1st day of July.
Upon motion duly made and carried the principal office of the
Corporation was fixed at 10-21 Clintonville Street, Whitestone in the City of
New York, County of Queens, States of New York or at such other places as the
Board of Directors may from time to time determine.
/s/ Alice Densen
-------------------------
Secretary
Alice Densen
/s/ Alan Densen
- -----------------------------
Chairman
Alan Densen
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ARTICLE X
Amendment to By-Laws Approved by the
Board of Directors on September 8, 1988
Sec. 1. Indemnification of Directors and Officers. Any person made,
or threatened to be made, a party to an action or proceeding, whether civil or
criminal, by reason of the fact that he, his testator or intestate, is or was
a director or officer of the corporation or of any other corporation of any
type or kind, of any partnership, joint venture, trust employee benefit plan
or other enterprise, which he served as such at the request of the corporation
shall be indemnified by the corporation in the manner and to the fullest
extent permitted by law, as amended from time to time.
Sec. 2. Indemnification of Others. The corporation may indemnify any
other person whom the corporation is permitted to indemnify or to reimburse or
advance expenses to the fullest extent permitted by law, whether pursuant to
rights granted pursuant to or provided by the New York Business Corporation
Law or other rights created by (i) a resolution of shareholders, (ii) a
resolution of directors, or (iii) an agreement providing that this Article X
authorized the creation of other rights in any such manner.
Sec. 3. Reimbursement and Advances. The corporation shall, from time
to time, reimburse or advance to any person referred to in Sec. 1 the funds
necessary for payment of expenses (including attorneys' fees, costs and
charges) incurred in connection with any action or proceeding referred to in
Sec. 1 upon receipt of a written undertaking by or on behalf of such person to
repay such amount(s) if a judgment or other final adjudication adverse to such
person established that (i) his acts were committed in bad faith or were the
result of active and deliberate dishonesty and, in either case, were material
to the cause of action so adjudicated, or (ii) he personally gained in fact a
financial profit or other advantage to which he was not legally entitled.
Nothing contained in this Sec. 3 shall limit the right of the corporation,
from time to time, to reimburse or advance funds to any person referred to in
Sec. 2.
Sec. 4. Determination of Entitlement. Any person entitled to
indemnification or to the reimbursement or advancement of expenses as a matter
of right pursuant to this Article X may elect to have the right to
indemnification (or reimbursement or advancement of expenses) interpreted on
the basis of the applicable law in effect at the time of the occurrence of the
event or events giving rise to the action or proceeding, to the extent
permitted by law, or on the basis of the applicable law in effect at the time
indemnification is sought.
<PAGE>
Sec. 5. Contractual Right. The right to indemnification or to the
reimbursement or advancement of expenses pursuant to Secs. 1 or 3 of this
Article X or a resolution authorized pursuant to Sec. 2 of this Article X (i)
is a contract right pursuant to which the person entitled thereto may bring
suit as if the provisions hereof (or of any such resolution) were set forth in
a separate written contract between the corporation and such person, (ii) is
intended to be retroactive and shall to the extent permitted by law, be
available with respect to events occurring prior to the adoption hereof, and
(iii) shall continue to exist after the rescission or restrictive modification
hereof with respect to events occurring prior thereto. The corporation shall
not be obligated under this Article X (including any resolution or agreement
authorized by Sec. 2 of this Article X) to make any payment hereunder (or
under any such resolution or agreement) to the extent that person seeking
indemnification hereunder (or under any such resolution or agreement) has
actually received payment (under any insurance policy, resolution, agreement
or otherwise) of the amounts otherwise indemnifiable hereunder (or under any
such resolution or agreement).
Sec. 6. Judicial Claims. If a request for indemnification or for
reimbursement or advancement of expenses pursuant to Sec. 3 of this Article X
is not paid in full by the corporation within thirty days after a written
claim has been received by the corporation, the claimant may at any time
thereafter bring suit against the corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be
entitled also to be paid the expenses of prosecuting such claim. Neither the
failure of the corporation (including its Board of Directors, independent
legal counsel or shareholders) to have made a determination prior to the
commencement of such action that indemnification of or reimbursement or
advancement of expenses to the claimant is proper in the circumstances, nor an
actual determination by the corporation (including its Board of Directors,
independent legal counsel or shareholders) that the claimant is not entitled
to indemnification or to the reimbursement or advancement of expenses, shall
be a defense to the action or create a presumption that the claimant is not so
entitled.
Sec. 7. Successor Corporation. For purposes of this Article X, the
terms "the corporation" shall include any legal successor to the corporation,
including any corporation which acquires all or substantially all of the
assets of the corporation in one or more transactions.
Sec. 8. Nonexclusivity. The rights granted pursuant to or provided by
the foregoing provisions of this Article X shall be in addition to and shall
not be exclusive of any other rights to indemnification and expenses to which
such person may otherwise be entitled by law, contract or otherwise.
<PAGE>
ARTICLE X - INDEMNIFICATION
The corporation shall indemnify any person made a party to an action
by or in the right of the corporation to procure a judgement in its favor by
reason of his being or having been a director or officer of the corporation,
or of any other corporation which he served as such at the request of the
corporation, against the reasonable expenses including attorneys' fees,
actually and necessarily incurred by him in connection with an appeal therein,
except in relation to matters as to which such director or officer is adjudged
to have been guilty of negligence or misconduct in the performance of his duty
to the corporation.
The corporation shall indemnify any person made a party to an action,
suit or proceeding other than one by or in the right of the corporation to
procure a judgement in its favor, whether civil or criminal, brought to impose
a liability or penalty on such person for an act alleged to have been
committed by such person in his capacity of director or officer of the
corporation, or of any other corporation which he served as such at the
request of the corporation, against judgements, fines, amounts paid in
settlement and reasonable expenses, including attorneys' fees, actually
necessarily incurred as a result of such action, suit or proceeding, or any
appeal therein, if such director or officer acted in good faith in the
reasonable belief that such action was in the best interests of the
corporation, and in criminal actions or proceedings, without reasonable ground
for belief that such action was unlawful. The termination of any such civil or
criminal action, suit or proceeding by judgement, settlement, conviction or
upon a plea of nolo contendere shall not in itself create a presumption that
any such director or officer did not act in good faith in the reasonable
belief that such action was in the best interests of the corporation or that
he had reasonable ground for belief that such action was unlawful. Added to
By-Laws on January 31, 1985.
<PAGE>
EXHIBIT "1"
BYLAW AMENDMENT
Article II.
DIRECTORS
Sec. 2. CLASSIFICATION OF DIRECTORS. The directors shall be divided into two
classes with as nearly equal members in each class as possible. At
the annual meeting of Stockholders, nominees for directors receiving
a plurality of votes cast shall be elected as directors.
Sec. 3. TERM OF OFFICE. The term of office of the first class of director
shall expire at the first annual meeting of the Corporation after
their election. The term of office of the second class of directors
shall expire at the second succeeding annual meeting. At each annual
meeting after the election of the first classified board, directors
shall be elected for a term of two years to replace those whose terms
shall expire.
Sec. 9. REMOVAL OF DIRECTORS. Any one or more of the Directors may be
removed for cause at any time by a vote of the stockholders holding a
majority of the stock, at any special meeting called for the purpose.
<PAGE>
BYLAW AMENDMENT
Article II
DIRECTORS
Sec. 12. DIRECTOR AND COMMITTEE ACTION BY CONFERENCE TELEPHONE. Any
one or more members of the board of directors, or of any committee
thereof, may participate in a meeting of such board or committee by
means of a conference telephone or similar equipment which allows all
persons participating in the meeting to hear each other at the same
time. Participation by such means shall constitute presence at such
meeting.
<PAGE>
Exhibit 4.06
No sale, offer to sell or transfer of the securities represented by this
certificate or any interest therein shall be made unless a registration
statement under the Federal Securities Act of 1933, as amended (the "Act"),
with respect to such transaction is then in effect, or the issuer has received
an opinion of counsel satisfactory to it that such transfer does not require
registration under that Act.
This Warrant will be void after 5:00 p.m. New York time on
______________________, 2001 (i.e. five years from the effective date of the
Registration Statement).
Warrant No. 1
UNIT PURCHASE WARRANT
To Subscribe for and Purchase Units of
EASTCO INDUSTRIAL SAFETY CORP.
(Transferability Restricted as Provided in Paragraph 2 Below)
THIS CERTIFIES THAT, for value received, ROYCE INVESTMENT GROUP,
INC. or registered assigns, is entitled to subscribe for and purchase from
Eastco Industrial Safety Corp., incorporated under the laws of the State of
New York (the "Company"), up to 70,359 fully paid and non-assessable Units
(the "Underwriter's Warrant") consisting of one fully paid and non-assessable
share of Common Stock of the Company and one Class B Common Stock Purchase
Warrant (the "Underwriter's Class B Warrants") of the Company, as hereinafter
defined, at the "Unit Warrant Price" and during the period hereinafter set
forth, subject, however, to the provisions and upon the terms and conditions
hereinafter set forth. This Warrant is one of an issue of the Company's
Underwriter's Warrants identical in all respects except as to the names of the
holders thereof and the number of Units purchasable thereunder, representing
on the original issue thereof rights to purchase up to 70,359 Units.
1. As used herein:
(a) "Common Stock" or "Common Shares" shall initially refer
to the Company's common stock as more fully set forth in Section 5 hereof.
(b) The "Warrant Agreement" shall refer to the Warrant
Agreement dated as of ____________________, 1996 between American Stock
Transfer & Trust Co. and the Company.
(c) Class B Warrants shall refer to the Warrant(s) included
in the Units offered to the public by the Company pursuant to the Rights
Offering and Standby Agreement described in the Registration Statement, File
No. 333-_____, declared effective by the Securities and Exchange Commission
("SEC") on ___________, 1996 and issued or to be issued subject to terms and
conditions of the Standby Agreement and Warrant Agreement.
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(d) "Underwriter's Class B Warrants" shall refer to the
Class B Warrants issuable upon exercise of this Warrant to the holder thereof
and shall be identical in all respects to the Class B Warrants issued pursuant
to the Standby Agreement and Warrant Agreement.
(e) "Units" shall consist of one share of Common Stock and
one Class B Warrant. The Common Stock included in the Units and issuable upon
exercise of this Warrant are subject to adjustment pursuant to Section 4
hereof. The shares of Common Stock issuable upon exercise of the Class B
Warrants included in the Units and issuable upon exercise of this Warrant are
subject to adjustment pursuant to the anti-dilution provisions contained in
the Warrant Agreement.
(f) "Effective Date" shall mean the date that the Securities
and Exchange Commission declares effective form SB-2, File No. 333-_______.
(g) "Unit Warrant Price" shall be $6.00 which is subject to
adjustment pursuant to Section 4 hereof.
(h) "Underwriter" shall refer to ROYCE INVESTMENT GROUP,
INC.
(i) "Standby Agreement" shall refer to the Underwriting
Agreement dated ____________________, 1996 between the Company and the
Underwriter.
(j) "Underwriter's Warrants" shall refer to Warrants to
purchase an aggregate of up to 70,359 Units issued to the Underwriter or its
designees by the Company pursuant to the Standby Agreement (including the
Warrants represented by this Certificate), as such may be adjusted from time
to time pursuant to the terms of Section 4 hereof (and including any Warrants
represented by any certificate issued from time to time in connection with the
transfer, partial exercise, exchange of any Warrants or in connection with a
lost, stolen, mutilated or destroyed Warrant certificate, if any, or to
reflect an adjusted number of Units).
(k) "Underlying Securities" shall refer to and include the
Common Shares and Underwriter's Class B Warrants issuable or issued upon
exercise of the Underwriter's Warrants as well as any Common Shares issued
upon the exercise of the Underwriter's Class B Warrants.
(1) "Holders" shall mean the registered holder of the
Underwriter's Warrants or any issued Underlying Securities.
(m) "Underwriter's Class B Warrant Expiration Date" shall
refer to the expiration date of the Class B Warrants as, and if extended, by
the Board of Directors of the Company.
(n) "Underwriter's Class B Warrant Exercise Price" shall
refer to the exercise price of the Class B Warrants. Initially the
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exercise price shall be $6.25 per share subject to adjustment pursuant to the
Warrant Agreement. In the event the Company should voluntarily lower the
exercise price of the Class B Warrants, the exercise price of the
Underwriter's Class B warrants shall likewise be lowered, since the
Underwriter's Class B Warrant is identical to the Class B Warrant in all
respects.
2. The purchase rights represented by this Warrant may be exercised
by the holder hereof, in whole or in part at any time, and from time to time,
during the period commencing one year after the Effective Date and expiring
on ____________, 2001 (the "Expiration Date"), by the surrender of this
Warrant, with the purchase form attached duly executed, at the Company's
office (or such office or agency of the Company as it may designate in writing
to the Holder hereof by notice pursuant to Section 14 hereof), and upon
payment by the Holder to the Company in cash, or by certified check or bank
draft of the Unit Warrant Price for such Units. The Company agrees that the
Holder hereof shall be deemed the record owner of such Units as of the close
of business on the date on which this Warrant shall have been presented and
payment made for such Units as aforesaid. Certificates for the Units
consisting of shares of Common Stock and Class B Warrants (also referred to
herein as the "Underwriter's Class B Warrants") so purchased shall be
delivered to the Holder hereof within a reasonable time, not exceeding five
(5) days, after the rights represented by this Warrant shall have been so
exercised. If this Warrant shall be exercised in part only, the Company shall,
upon surrender of this Warrant for cancellation, deliver a new Underwriter's
Warrant evidencing the rights of the Holder hereof to purchase the balance of
the Units which such Holder is entitled to purchase hereunder. Exercise in
full of the rights represented by this Warrant shall not extinguish the rights
granted under Section 9 hereof.
The Underwriter's Class B Warrants shall be exercisable at the
Underwriter's Class B Warrant Exercise Price until the Underwriter's Class B
Warrant Expiration Date. In the event that the Underwriter's Class B Warrants
have expired, this Warrant will entitle the holder to purchase only the shares
of Common Stock included in the Units, subject to adjustment as provided for
herein.
3. Subject to the provisions of Section 8 hereof, (i) this Warrant is
exchangeable at the option of the Holder at the aforesaid office of the
Company for other Underwriter's Warrants of different denominations entitling
the Holder thereof to purchase in the aggregate the same number of Units as
are purchasable, hereunder; and (ii) this Warrant may be divided or combined
with other Underwriter's Warrants which carry the same rights, in either case,
upon presentation hereof at the aforesaid office of the Company together with
a written notice, signed by the Holder hereof, specifying the names and
denominations in which new Underwriter's Warrants are to be issued, and the
payment of any transfer tax due in connection therewith.
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4. The exercise price and number of shares of Common Stock issuable
upon exercise of the Class B Warrants (also referred to herein as the
"Underwriter's Class B Warrants") shall be governed by the anti-dilution
provisions contained in the Warrant Agreement. Subject and pursuant to the
provisions of this Section 4, the Unit Price and number of Common Shares
subject to this Warrant shall be subject to adjustment from time to time
as set forth hereinafter. The number of Class B Warrants included in the Units
shall not change unless the Company shall issue additional Class B Warrants to
the then holders of the Class B Warrants. In such event, the number of Class B
Warrants included in the Units shall be proportionately adjusted on the same
basis as the publicly held Class B Warrant holders.
(A) If the Company shall, at any time, subdivide its
outstanding Common Shares by recapitalization, reclassification, split up
thereof, or other such issuance without additional consideration, the
appropriate Unit Price immediately prior to such subdivision shall be
proportionately decreased, and if the Company shall at any time combine the
outstanding Common Shares by recapitalization, reclassification or combination
thereof, the Unit Price immediately prior to such combination shall be
proportionately increased. Any such adjustment to the Unit Price or the
corresponding adjustment to the Unit Price shall become effective at the close
of business on the record date for such subdivision or combination. No
adjustment to the Unit Price and the number of shares issuable upon exercise
of this Warrant shall be required if such adjustment provides the holders of
this Warrant with disproportionate rights, privileges and economic benefits
which are not provided to the public shareholders.
(B) In the event that prior to the Expiration Date of this
Warrant, the Company adopts a resolution to merge, consolidate, or sell
percentages in all of its assets, each Warrant holder upon the exercise of
this Warrant will be entitled to receive the same treatment as a holder of any
other share of Common Stock. In the event the Company adopts a resolution for
the liquidation, dissolution, or winding up of the Company's business, the
Company will give written notice of such adoption of a resolution to the
registered holders of the Underwriter's Warrants. Thereupon all liquidation
and dissolution rights under this Warrant will terminate at the end of thirty
(30) days from the date of the notice to the extent not exercised within those
thirty (30) days.
(C) If any capital reorganization or reclassification of
the capital stock of the Company or consolidation or merger of the Company
with another corporation, shall be effected in such a way that holders of
Common Stock shall be entitled to receive stock, securities, cash or assets
with respect to or in exchange for Common Stock, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, the Company
or such successor or purchasing corporation, as the case may be, shall execute
with the Warrant Agent a supplemental Warrant Agreement providing that each
registered holder of a Underwriter's Warrant shall have the right thereafter
and until the expiration date to
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exercise such Warrant for the kind and amount of stock, securities, cash or
assets receivable upon such reorganization, reclassification, consolidation,
merger or sale by a holder of the number of shares of Common Stock for the
purchase of which such Warrant might have been exercised immediately prior to
such reorganization, reclassification, consolidation, merger or sale, subject
to adjustments which shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section 4.
(D) In case at any time the Company shall declare a dividend
or make any other distribution upon any stock of the Company payable in Common
Stock, then such Common Stock issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without
consideration.
(E) Upon any adjustment of the appropriate respective Unit
Price as hereinabove provided, the number of Common Shares issuable upon
exercise of each class of Warrant shall be changed to the number of shares
determined by dividing (i) the aggregate Unit Price payable for the purchase
of all shares issuable upon exercise of that class of Warrant immediately
prior to such adjustment by (ii) the appropriate Unit Price per share in
effect immediately after such adjustment.
(F) No adjustment in the Unit Price shall be required under
Section 4 hereof unless such adjustment would require an increase or decrease
in such price of at least 1% provided, however, that any adjustments which by
reason of the foregoing are not required at the time to be made shall be
carried forward and taken into account and included in determining the amount
of any subsequent adjustment, and provided further, however, that in case the
Company shall at any time subdivide or combine the outstanding Common Shares
as a dividend, said amount of 1% per share shall forthwith be proportionately
increased in the case of a combination or decreased in the case of a
subdivision or stock dividend so as to appropriately reflect the same.
(G) On the effective date of any new Unit Price the number
of shares as to which this Warrant may be exercised shall be increased or
decreased so that the total sum payable to the Company on the exercise of this
Warrant shall remain constant.
(H) The form of Underwriter's Warrant need not be changed
because of any change pursuant to this Article, and Underwriter's Warrants
issued after such change may state the Unit Price and the same number of
shares and Class B Warrants as are stated in the Underwriter's Warrants
initially issued pursuant to this Warrant. However, the Company may at any
time in its sole discretion (which shall be conclusive) make any change in the
form of Underwriter's Warrant that the Company may deem appropriate and that
does not affect the substance thereof, and any Underwriter's Warrant
thereafter issued or countersigned, whether in exchange or substitution for an
outstanding Warrant or otherwise, may be in the form as so changed.
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5. For the purposes of this Warrant, the terms "Common Shares" or
"Common Stock" shall mean (i) the class of stock designated as the common
stock of the Company on the date set forth on the first page hereof or (ii)
any other class of stock resulting from successive changes or
re-classifications of such Common Stock consisting solely of changes in par
value, or from no par value to par value, or from par value to no par value.
If at any time, as a result of an adjustment made pursuant to Section 4, the
securities or other property obtainable upon exercise of this Warrant shall
include shares or other securities of the Company other than Common Shares or
securities of another corporation or other property, thereafter, the number of
such other shares or other securities or property so obtainable shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common Shares
contained in Section 4 and all other provisions of this Warrant with respect
to Common Shares shall apply on like terms to any such other shares or other
securities or property. Subject to the foregoing, and unless the context
requires otherwise, all references herein to Common Shares shall, in the event
of an adjustment pursuant to Section 4, be deemed to refer also to any other
securities or property then obtainable as a result of such adjustments.
6. The Company covenants and agrees that:
(a) During the period within which the rights represented by
this Warrant may be exercised, the Company shall, at all times, reserve and
keep available out of its authorized capital stock, solely for the purposes of
issuance upon exercise of this Warrant, such number of its Common Shares as
shall be issuable upon the exercise of this Warrant and the exercise of the
Underwriter's Class B Warrants and at its expense will obtain the listing
thereof on all national securities exchanges on which the Class B Warrants are
then listed; and if at any time the number of authorized Common Shares shall
not be sufficient to effect the exercise of this Warrant and the exercise
of the Underwriter's Class B Warrants included therein, the Company will take
such corporate action as may be necessary to increase its authorized but
unissued Common Shares to such number of shares as shall be sufficient for
such purpose; the Company shall have analogous obligations with respect to any
other securities or property issuable upon exercise of this Warrant.
(b) All Common Shares which may be issued upon exercise of
the rights represented by this Warrant or upon the exercise of the
Underwriter's Class B Warrants will, upon issuance and payment be validly
issued, fully paid, nonassessable and free from all taxes, liens and charges
with respect to the issuance thereof (except as may be concurrently discharged
by the Company or the Holder); and,
(c) All original issue taxes payable in respect of the
issuance of Common Shares upon the exercise of the rights represented by this
Warrant or the Underwriter's Class B Warrants shall be borne by the Company
but in no event shall the Company be
6
<PAGE>
responsible or liable for income taxes or transfer taxes upon the transfer of
any Underwriter's Warrants.
7. Until exercised, this Warrant shall not entitle the Holder hereof
to any voting rights or other rights as a shareholder of the Company, except
that the Holder of this Warrant shall be deemed to be a shareholder of this
Company for the purpose of bringing suit on the ground that the issuance of
shares of stock of the Company is improper under the laws of the Company's
state of incorporation.
8. This Warrant shall not be sold, transferred, assigned or
hypothecated for a period of twelve (12) months from the effective date of the
Company's public offering with respect to which this Warrant has been issued,
except to officers of the Underwriter. In no event shall this Warrant be sold,
transferred, assigned or hypothecated except in conformity with the applicable
provisions of the Securities Act of 1933, as then in force (the "Act"), or any
similar Federal statute then in force, and all applicable "Blue Sky" laws.
9. The Holder of this Warrant, by acceptance hereof, agrees that,
prior to the disposition of this Warrant or of any Underlying Securities
theretofore purchased upon the exercise hereof, under circumstances that might
require registration of such securities under the Act, or any similar Federal
statute then in force, such Holder will give written notice to the Company
expressing such Holder's intention of effecting such disposition, and
describing briefly such Holder's intention as to the disposition to be made
of this Warrant and/or the Underlying Securities theretofore issued upon
exercise hereof. Promptly upon receiving such notice, the Company shall
present copies thereof to its counsel and the provisions of the following
subdivisions shall apply:
(a) If, in the opinion of such counsel, the proposed
disposition does not require registration under the Act, or any similar
Federal statute then in force, of this Warrant and/or the securities issuable
or issued upon the exercise of this Warrant, the Company shall, as promptly as
practicable, notify the Holder hereof of such opinion, whereupon such holder
shall be entitled to dispose of this Warrant and/or such Underlying Securities
theretofore issued upon the exercise hereof, all in accordance with the terms
of the notice delivered by such Holder to the Company.
(b) If, in the opinion of such counsel, such proposed
disposition requires such registration or qualification under the Act, or
similar Federal statute then in effect, of this Warrant and/or the Underlying
Securities issuable or issued upon the exercise of this Warrant, the Company
shall promptly give written notice of such opinion to the Holder hereof and to
the then holders of the securities theretofore issued upon the exercise of
this Warrant at the respective addresses thereof shown on the books of the
Company. The second paragraph of Section 2(d) of the Standby Agreement is
incorporated by reference as if set forth herein in its entirety.
7
<PAGE>
10. Whenever, pursuant to Section 9 hereof, a registration statement
relating to the Underwriter's Warrant or Underlying Securities is filed under
the Act, the Company agrees to indemnify and hold harmless the holder of this
Warrant, or of securities issuable or issued upon the exercise hereof, from
and against any claims and liabilities arising out of or based upon any untrue
statement of a material fact, or omission to state a material fact required to
be stated, in any such registration statement or prospectus, except insofar as
such claims or liabilities are caused by any such untrue statement or omission
based on information furnished in writing to the Company by such holder, or
by any other such holder affiliated with the holder who seeks indemnification,
as to which the holder hereof, by acceptance hereof, agrees to indemnify and
hold harmless the Company, in the same manner as set forth herein.
11. If this Warrant, or any of the securities issuable pursuant
hereto, require qualification or registration with, or approval of, any
governmental official or authority (other than registration under the Act, or
any similar Federal statute at the time in force), before such shares may be
issued on the exercise hereof, the Company, at its expense, will take all
requisite action in connection with such qualification, and will use its best
efforts to cause such securities and/or this Warrant to be duly registered or
approved, as may be required.
12. This Warrant is exchangeable, upon its surrender by the
registered holder at such office or agency of the Company as may be designated
by the Company, for new Underwriter's Warrants of like tenor, representing, in
the aggregate, the right to subscribe for and purchase the number of Units or
Common Shares as the case may be that may be subscribed for and purchased
hereunder, each of such new Underwriter's Warrants to represent the right to
subscribe for and purchase such number of Units or Common Shares as the case
may be as shall be designated by the registered holder at the time of such
surrender. Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction or mutilation of this Warrant, and, in the case of any such
loss, theft or destruction, upon delivery of a bond of indemnity satisfactory
to the Company, or in the case of such mutilation, upon surrender or
cancellation of this Warrant, the Company will issue to the registered holder
a new Underwriter's Warrant of like tenor, in lieu of this Warrant,
representing the right to subscribe for and purchase the number of Units or
Common Shares as the case may be that may be subscribed for and purchased
hereunder. Nothing herein is intended to authorize the transfer of this
Warrant except as permitted under Section 8.
13. Every holder hereof, by accepting the same, agrees with any
subsequent holder hereof and with the Company that this Warrant and all rights
hereunder are issued and shall be held subject to all of the terms,
conditions, limitations and provisions set forth in this Warrant, and further
agrees that the Company and its transfer agent may deem and treat the
registered holder of this
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<PAGE>
Warrant as the absolute owner hereof for all purposes and shall not be affected
by any notice to the contrary.
14. All notices required hereunder shall be given by first-class
mail, postage prepaid; if given by the holder hereof, addressed to the Company
at 130 West 10th Street, Huntington Station, New York 11746; or such other
address as the Company may designate in writing to the holder hereof; and if
given by the Company, addressed to the holder at the address of the holder
shown on the books of the Company.
15. The Company will not merge or consolidate with or into any other
corporation, or sell or otherwise transfer its property assets and business
substantially as an entirety to another corporation, unless the corporation
resulting from such merger or consolidation (if not the Company), or such
transferee corporation, as the case may be, shall expressly assume, by
supplemental agreement satisfactory in form to the Underwriter, the due and
punctual performance and observance of each and every covenant and condition
of this Warrant to be performed and observed by the Company.
16. The validity, construction and enforcement of this Warrant shall
be governed by the laws of the State of New York without giving effect to the
conflict of laws provisions thereof and jurisdiction is hereby vested in the
Courts of said State in the event of the institution of any legal action under
this Warrant.
IN WITNESS WHEREOF, EASTCO INDUSTRIAL SAFETY CORP. has caused this
Warrant to be signed by its duly authorized officers under its corporate seal,
to be dated _________________, 1996.
EASTCO INDUSTRIAL SAFETY CORP.
By:_________________________________
Attest:
_____________________________
(Corporate Seal)
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<PAGE>
PURCHASE FORM
To Be Executed
Upon Exercise of Warrant
The undersigned hereby exercises the right to purchase ____________ Common
Shares and _________________ Underwriter's Class B Warrants evidenced by the
within Warrant, according to the terms and conditions thereof, and herewith
makes payment of the purchase price in full. The undersigned requests that
certificates for such shares and warrants shall be issued in the name set
forth below.
Dated: , 19 __________________________________
Signature
__________________________________
Print Name of Signatory
__________________________________
Name to whom certificates are to
be issued if different from above
Address:__________________________
__________________________
Social Security No.________________
or other identifying number
If said number of shares and warrants shall not be all the shares and
warrants purchasable under the within Warrant, the undersigned requests that a
new Warrant for the unexercised portion shall be registered in the name of:
__________________________________
(Please Print)
Address:__________________________
__________________________________
Social Security No._______________
or other identifying number
__________________________________
Signature
10
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED , hereby sells assigns and transfers
to , Soc. Sec. No. [ ] the within Warrant, together
with all rights, title and interest therein, and does hereby irrevocably
constitute and appoint attorney to transfer such
Warrant on the register of the within named company, with full power of
substitution.
__________________________________
Signature
Dated: , 19
Signature Guaranteed:
________________________________
<PAGE>
Exhibit 10.01
EASTCO INDUSTRIAL SAFETY CORP.
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of this 1st day of July, 1995
by and between EASTCO INDUSTRIAL SAFETY CORP., a New York corporation, having
an office at 130 West 10th Street, Huntington, New York 11746 (hereinafter
referred to as "Employer") and ALAN E. DENSEN, an individual residing at 325
Doral Court, Jericho, New York 11753 (hereinafter referred to as "Employee");
W I T N E S S E T H:
WHEREAS, Employer employs, and desires to continue to
employ, Employee as President; and
WHEREAS, Employee is willing to continue to be employed as
President in the manner provided for herein and to perform the duties of said
position upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein set forth it is agreed as follows:
1. Employment of President. Employer hereby employs Employee
as President of Employer.
2. Term.
a. Subject to Section 10 below and further subject
to Section 2(b) below, the term of this Agreement shall commence on July 1,
1995 and end on June 30, 2000. Each 12 month period from July 1 through June
30 during the term hereof shall be referred to as an "Annual Period." During
the term hereof, Employee shall devote substantially all of his business time
and efforts to Employer.
b. Subject to Section 10 below, unless the Board of
Directors (the "Board") of Employer shall determine to the contrary and shall
so notify Employee in writing on or before the end of any Annual Period, then
at the end of each Annual Period, the term of this Agreement shall be
automatically extended for one (1) additional Annual Period to be added at the
end of the then current term of this Agreement.
3. Duties. The Employee shall perform those functions
generally performed by persons of such title and position, shall attend
meetings of the stockholders and
<PAGE>
the Board, shall perform any and all related duties and shall have any and all
powers as may be reasonably prescribed by resolution of the Board, and shall
be available to confer and consult with and advise the officers and directors
of Employer at such times that may be required by Employer upon reasonable
notice and subject to Employee's reasonable availability. Employee shall
report directly and solely to the Board.
4. Compensation.
a. (i) Employee shall be paid a minimum of $125,000
through and including June 30, 1996. Employee's salary shall be increased
annually at the beginning of each Annual Period at the discretion of the
Board, but in no event shall said increase be less than 10% of the minimum
compensation paid Employee in the prior Annual Period. Employee shall be paid
periodically in accordance with the policies of the Employer during the term
of this Agreement, but not less than monthly.
(ii) Employee is eligible for annual bonuses
which shall be equal to 31/3% of the Company's earnings before interest and
taxes for the fiscal year just ended. Said bonuses shall be paid within 30
days of the completion of Employer's audited financial statement for each
fiscal year and shall be paid in cash or registered shares of common stock of
Employer, at the option of Employee.
b. Employer shall include Employee, his spouse and
minor children, if any, in its health insurance program available to
Employer's executive officers or such program having greater benefits
available to other Employees of Employer.
c. Employer shall maintain a life, accidental death
and dismemberment insurance policy or policies on Employee for the benefit of
a beneficiary named by Employee in a total amount not less than $750,000.
Ownership of the policy or policies shall be assigned to Employee upon
termination of Employee's employment under this Agreement without payment of
any consideration by Employee.
d. Employee shall receive $700 per month as an
automobile allowance, plus reimbursement for reasonable operating,
maintenance, insurance and repair expenses.
e. Employer shall institute, and Employee shall be
eligible to participate in, a Senior Management Performance-based Stock Option
Plan to motivate and reward Employee for his role in improving Employer's
earnings and shareholder value.
f. Employee shall be paid a one-time bonus equal to
his total minimum base salary for the next three years if there is a Change of
Control as hereinafter defined, said bonus to be paid within thirty (30) days
thereof.
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<PAGE>
g. If there is a Change of Control as hereinafter
defined, Employee shall be immediately compensated by Employer for all amounts
(including interest) not yet received by Employee as a result of his
participation in a total of $250,000 of junior participations with Congress
Financial Corporation in loans to the Company made during September 1993,
without regard to whether such amount is currently due pursuant to the terms
thereof.
h. All Rights as hereinafter defined which may
become exercisable for any reason during the term hereof shall be paid for (i)
in cash, (ii) by the transfer by Employee to Employer of so much of Employee's
Rights which, when valued at the highest trading price of the underlying
securities of Employer during the previous six months, will offset the total
exercise price or (iii) some combination of (i) and (ii) above, at the option
of Employee.
i. Employee shall have the right to participate in
any other employee benefit plans established by Employer.
5. Board of Directors. Employer agrees that so long as this
Agreement is in effect, Employee shall be nominated to the Board as part of
management's slate of Directors.
6. Expenses. Employee shall be reimbursed for all of his
actual out-of-pocket expenses incurred in the performance of his duties
hereunder, provided such expenses are acceptable to Employer, which approval
shall not be unreasonably withheld, for business related travel and
entertainment expenses, and that Employee shall submit to Employer reasonably
detailed receipts with respect thereto.
7. Vacation. Employee shall be entitled to receive six (6)
weeks paid vacation time after each year of employment upon dates reasonably
agreed upon by Employer. Upon each anniversary of this agreement and upon
separation of employment, for any reason, vacation time accrued and not used
shall be paid at the salary rate of Employee in effect at that time.
8. Secrecy. At no time shall Employee disclose to anyone any
confidential or secret information (not already constituting information
available to the public) concerning (a) internal affairs or proprietary
business operations of Employer or (b) any trade secrets, new product
developments or patents, especially unique processes or methods.
9. Covenant Not to Compete. Subject to, and limited by,
Section 11(b), Employee will not, at any time, anywhere in the world, during
the term of this Agreement, and for one (1) year thereafter, either directly
or indirectly, engage in, with or for any enterprise, institution, whether or
not for profit, business, or company, competitive with the business (as
identified herein) of Employer as such business may be conducted on the date
thereof, as a
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<PAGE>
creditor, guarantor, or financial backer, stockholder, director, officer,
consultant, advisor, employee, member, inventor, or otherwise of or through
any corporation, partnership, association, sole proprietorship or other
entity; provided, that an investment by Employee, his spouse or his children
is permitted if such investment is not more than five percent (5%) of the
total debt or equity capital of any such competitive enterprise or business
and further provided that said competitive enterprise or business is a
publicly held entity whose stock is listed and traded on a national stock
exchange or through the Nasdaq Stock Market. As used in this Agreement, the
business of Employer shall be deemed to include the manufacture and
distribution of industrial protective clothing and safety products.
10. Termination.
a. Termination by Employer
(i) Employer may terminate this Agreement
upon written notice for Cause. For purposes hereof, "Cause" shall mean (A)
engaging by the Employee in conduct that constitutes activity in competition
with Employer; (B) the conviction of Employee for the commission of a felony;
and/or (C) the habitual abuse of alcohol or controlled substances.
Notwithstanding anything to the contrary in this Section 10(a)(i), Employer
may not terminate Employee's employment under this Agreement for Cause unless
Employee shall have first received notice from the Board advising Employee of
the specific acts or omissions alleged to constitute Cause, and such acts or
omissions continue after Employee shall have had a reasonable opportunity (at
least 10 days from the date Employee receives the notice from the Board) to
correct the acts or omissions so complained of. In no event shall alleged
incompetence of Employee in the performance of Employee's duties be deemed
grounds for termination for Cause.
(ii) Employer may terminate Employee's
employment under this Agreement if, as a result of any physical or mental
disability, Employee shall fail or be unable to perform his duties under this
Agreement for any consecutive period of 120 days during any twelve-month
period. If Employee's employment is terminated under this Section 10(a)(ii):
(A) for the first six months after termination, Employee shall be paid 100% of
his full compensation under Section 4(a) of this Agreement at the rate in
effect on the date of termination, and in each successive 12 month period
thereafter Employee shall be paid an amount equal to 65% of his compensation
under Section 4(a) of this agreement at the rate in effect on the date of
termination, on an after-tax basis, which obligation Employer may fulfill in
whole or in part by purchasing disability insurance coverage; (B) Employer's
obligation to pay life insurance premiums on the policy referred to in Section
4(c) shall continue in effect until five years from the date of termination;
and (C) Employee shall continue to be entitled, insofar as is permitted under
applicable insurance policies or plans, to such general medical and employee
benefit plans (including profit sharing or pension plans) as Employee had been
entitled to on the date of termination. Employer shall purchase disability
insurance for the benefit of Employee and any
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<PAGE>
amounts payable by Employer to Employee under this paragraph shall be reduced
by the amount of any disability payments paid by said insurance and actually
received by Employee.
(iii) This agreement automatically shall
terminate upon the death of Employee, except that Employee's estate shall be
entitled to receive the pro-rata amount payable under any profit sharing plans
Employer may institute for the period prior to Employee's death and any other
amount to which Employee was entitled at the time of his death and Employee's
salary and all health, insurance and other benefits applicable to Employee's
family shall continue for 12 months from the date of Employee's death. In
addition upon the death of Employee all Rights, as hereinafter defined, shall
become vested, accelerate and become immediately exercisable for one year at
50% of their stated exercise price which may be paid for as described in
Section 4.h., above.
b. Termination by Employee
(i) Employee shall have the right to
terminate his employment under this Agreement upon 30 days' notice to Company
given within 90 days following the occurrence of any of the following events
(A) through (F) or within three (3) years following the occurrence of event
(G):
(A) Employee is not elected or
retained as President and a Director of Employer.
(B) Employer acts to materially
reduce Employee's duties and responsibilities hereunder.
(C) Employer acts to change the
geographic location of the performance of Employee's duties from the New York
Metropolitan area. For purposes of this Agreement, the New York Metropolitan
area shall be deemed to be the area within 30 road miles of Employer's present
offices.
(D) a Material Reduction (as
hereinafter defined) in Employee's rate of base compensation, or Employee's
other benefits. "Material Reduction" shall mean a ten percent (10%)
differential;
(E) a failure by Employer to
obtain the assumption of this Agreement by any successor;
(F) a material breach of this
Agreement by Employer, which is not cured within thirty (30) days of written
notice by Employee of such breach.
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<PAGE>
(G) a "Change of Control" by which
a person (other than a person who is an officer and a Director of Employer on
the effective date hereof), including a "group" as defined in Section 13(d)(3)
of the Securities Exchange Act of 1934, becomes, or obtains the right to
become, the beneficial owner of Employer securities having 20% or more of the
combined voting power of the then outstanding securities of the Employer that
may be cast for the election of directors of the Employer (other than as a
result of an issuance of securities initiated by the Employer in the ordinary
course of business) or the composition of the Board of Employer changes so
that officers of Employer no longer hold a majority of the seats; or
(ii) Anything herein to the contrary
notwithstanding, Employee may terminate this Agreement upon thirty (30) days
written notice.
c. If Employer shall terminate Employee's
employment other than due to his death or disability or for Cause (as defined
in Section 10(a)(i) of this Agreement), or if Employee shall terminate this
Agreement under Section 10(b)(i), Employer's obligations under Section 4 shall
be absolute and unconditional and not subject to any offset or counterclaim
and Employee shall continue to be entitled to receive all amounts provided for
by Section 4 and all additional employee benefits under Section 4 regardless
of the amount of compensation he may earn with respect to any other employment
he may obtain.
11. Consequences of Breach by Employer; Employment
Termination.
a. If this Agreement is terminated pursuant to
Section 10(b)(i)(A)-(F) hereof, or if Employer shall terminate Employee's
employment under this Agreement in any way that is a breach of this Agreement
by Employer, the following shall apply:
(i) Employee shall receive as a bonus, and
in addition to his salary continuation pursuant to Section 10(c), a cash
payment equal to Employee's total base salary plus projected expenses and
bonuses for the remainder of the term hereof, payable within 30 days of the
date of such termination.
(ii) Employee shall be entitled to payment
of any previously declared bonus as provided in Section 4 above.
(iii) All stock options, warrants and
stock appreciation rights ("Rights") granted by Employer to Employee under any
plan or otherwise prior to the date of termination shall become vested,
accelerate and become immediately exercisable; where relevant at an exercise
price of 10(cent) per share. In the event Employee owns or is entitled to
receive any unregistered securities of Employer, then Employer shall use its
best efforts to affect the registration of all such securities as soon as
practicable, but no later than 120 days after the effective date of
termination registration statement; provided, however, that such period may be
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<PAGE>
extended or delayed by Employer for one period of up to 60 days if, upon the
advice of counsel at the time such registration is required to be filed, or at
the time Employer is required to exercise its best efforts to cause such
registration statement to become effective, such delay is advisable and in the
best interests of Employer because of the existence of non-public material
information, or to allow Employer to complete any pending audit of its
financial statements.
b. In the event of termination of Employee's
employment by Employer, other than pursuant to Section 10(a) of this
Agreement, or by Employee pursuant to Section 10(b)(i) of this Agreement, or
in the event Employer delays for more than 15 days the making of any payment
hereunder, without in any way excusing Employer's obligations under this
Agreement, the provisions of Section 9 shall not apply to Employee.
12. Remedies
Employer recognizes that because of Employee's
special talents, stature and opportunities in the industry, in the event of
termination by Employer hereunder (except under Section 10(a)(i) or (iii), or
in the event of termination by Employee under Section 10(b)(i) before the end
of the agreed term, Company acknowledges and agrees that the provisions of
this Agreement regarding further payments of base salary, bonuses and the
exercisability of stock options, warrants and stock appreciation rights
constitute fair and reasonable provisions for the consequences of such
termination, do not constitute a penalty, and such payments and benefits shall
not be limited or reduced by amounts Employee might earn or be able to earn
from any other employment of ventures during the remainder of the agreed term
of this Agreement.
13. Excise Tax. In the event that any payment or benefit
received or to be received by Employee in connection with a termination of his
employment with Employer would constitute a "parachute payment" within the
meaning of Code Section 280G or any similar or successor provision to 280G
and/or would be subject to any excise tax imposed by Code Section 4999 of the
Code or any similar or successor provision then Employer shall assume all
liability for the payment of any such tax and Employer shall immediately
reimburse Employee on a "grossed-up" basis for any income taxes attributable
to Employee by reason of such Employer payment and reimbursements.
14. Arbitration. Any controversies between Employer and
Employee involving the construction or application of any of the terms,
provisions or conditions of this Agreement, save and except for any breaches
arising out of Sections 8 and 9 hereof, shall on the written request of either
party served on the other by submitted to arbitration. Such arbitration shall
comply with and be governed by the rules of the American Arbitration
Association. An arbitration demand must be made within one (1) year of the
date on which the party demanding arbitration first had notice of the
existence of the claim to be arbitrated, or the right to arbitration along
with such claim shall be considered to have been waived. An arbitrator shall
be selected according to the procedures of the American Arbitration
Association, the cost
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<PAGE>
of arbitration shall be born by the losing party or in such proportions as the
arbitrator shall decide. The arbitrator shall have no authority to add to,
subtract from or otherwise modify the provisions of this Agreement, or to
award punitive damages to either party.
15. Attorneys' Fees and Costs. If any action at law or in
equity is necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which he may be
entitled.
16. Entire Agreement; Survival.
a. This Agreement contains the entire agreement
between the parties with respect to the transactions contemplated herein and
supersedes, as of the effective date hereof any prior agreement or
understanding between Employer and Employee with respect to Employee's
employment by Employer. The unenforceability of any provision of this
Agreement shall not effect the enforceability of any other provision. This
Agreement may not be amended except by an agreement in writing signed by the
Employee and the Employer, or any waiver, change, discharge or modification as
sought. Waiver of or failure to exercise any rights provided by this Agreement
and in any respect shall not be deemed a waiver of any further or future
rights.
b. The provisions of Sections 4, 8, 9, 10(a)(ii),
10(c), 11, 12, 13, 14, 15, 18, 19 and 20 shall survive the termination of this
Agreement.
17. Assignment. This Agreement shall not be assigned to
other parties, but shall be binding upon any purported successors and assigns
of Employer.
18. Governing Law. This Agreement and all the amendments
hereof, and waivers and consents with respect thereto shall be governed by the
internal laws of the state of New York, without regard to the conflicts laws
principles thereof.
19. Notices. All notices, responses, demands or other
communications under this Agreement shall be in writing and shall be deemed to
have been given when
a. delivered by hand;
b. sent be telex or telefax, (with receipt
confirmed), provided that a copy is mailed by registered or certified mail,
return receipt requested; or
c. received by the addressee as sent be express
delivery service (receipt requested) in each case to the appropriate
addresses, telex numbers and telefax numbers as the party may designate to
itself by notice to the other parties:
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<PAGE>
(i) if to the Employer:
Eastco Industrial Safety Corp.
130 West 10th Street
Huntington, New York 11746
Attention: President
Telephone: 516-427-1802
Telefax: 516-427-1840
Gersten, Savage, Kaplowitz & Curtin
575 Lexington Avenue
27th Floor
New York, New York 10022
Attention: Jay M. Kaplowitz, Esq.
Telephone: 212-752-9700
Telefax: 212-980-5192
(ii) if to the Employee:
Alan E. Densen
14 Ormond Park Road
Brookville, New York 11545
20. Severability of Agreement. Should any part of this
Agreement for any reason be declared invalid by a court of competent
jurisdiction, such decision shall not affect the validity of any remaining
portion, which remaining provisions shall remain in full force and effect as
if this Agreement had been executed with the invalid portion thereof
eliminated, and it is hereby declared the intention of the parties that they
would have executed the remaining portions of this Agreement without including
any such part, parts or portions which may, for any reason, be hereafter
declared invalid.
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IN WITNESS WHEREOF, the undersigned have executed this
agreement as of the day and year first above written.
EASTCO INDUSTRIAL SAFETY CORP.
By: Anthony P. Towell
-----------------------------
Its: Vice President
/s/ ALAN E. DENSEN
-----------------------------
ALAN E. DENSEN
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Exhibit 10.02
EASTCO INDUSTRIAL SAFETY CORP.
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of this 1st day of July, 1995
by and between EASTCO INDUSTRIAL SAFETY CORP., a New York corporation, having
an office at 130 West 10th Street, Huntington, New York 11746 (hereinafter
referred to as "Employer") and LAWRENCE DENSEN, an individual residing at 3
Hyanis Court, Mt. Sinai, New York 11766 (hereinafter referred to as
"Employee");
W I T N E S S E T H:
WHEREAS, Employer employs, and desires to continue to
employ, Employee as Senior Vice-President; and
WHEREAS, Employee is willing to continue to be employed as
Senior Vice-President in the manner provided for herein and to perform the
duties of said position upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein set forth it is agreed as follows:
1. Employment of Senior Vice-President. Employer hereby
employs Employee as Senior Vice-President.
2. Term.
a. Subject to Section 10 below and further subject
to Section 2(b) below, the term of this Agreement shall commence on July 1,
1995 and end on June 30, 2000. Each 12 month period from July 1 through June
30 during the term hereof shall be referred to as an "Annual Period." During
the term hereof, Employee shall devote substantially all of his business time
and efforts to Employer.
b. Subject to Section 10 below, unless the Board of
Directors (the "Board") of Employer shall determine to the contrary and shall
so notify Employee in writing on or before the end of any Annual Period, then
at the end of each Annual Period, the term of this Agreement shall be
automatically extended for one (1) additional Annual Period to be added at the
end of the then current term of this Agreement.
3. Duties. The Employee shall perform those functions
generally performed by persons of such title and position, shall attend
meetings of the stockholders and
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the Board, shall perform any and all related duties and shall have any and all
powers as may be reasonably prescribed by resolution of the Board, and shall
be available to confer and consult with and advise the officers and directors
of Employer at such times that may be required by Employer upon reasonable
notice and subject to Employee's reasonable availability. Employee shall
report directly and solely to the President.
4. Compensation.
a. (i) Employee shall be paid a minimum of $105,000
through and including June 30, 1996. Employee's salary shall be increased
annually at the beginning of each Annual Period at the discretion of the
Board, but in no event shall said increase be less than 10% of the minimum
compensation paid Employee in the prior Annual Period. Employee shall be paid
periodically in accordance with the policies of the Employer during the term
of this Agreement, but not less than monthly.
(ii) Employee is eligible for annual bonuses
which shall be equal to 31/3% of the Company's earnings before interest and
taxes plus 0.75% of the Company's revenues in excess of $20.5 million, both
for the fiscal year just ended. Said bonuses shall be paid within 30 days of
the completion of Employer's audited financial statement for each fiscal year
and shall be paid in cash or registered shares of common stock of Employer, at
the option of Employee.
b. Employer shall include Employee, his spouse and
minor children, if any, in its health insurance program available to
Employer's executive officers or such program having greater benefits
available to other Employees of Employer.
c. Employer shall maintain a life, accidental death
and dismemberment insurance policy or policies on Employee for the benefit of
a beneficiary named by Employee in a total amount not less than $750,000.
Ownership of the policy or policies shall be assigned to Employee upon
termination of Employee's employment under this Agreement without payment of
any consideration by Employee.
d. Employee shall receive $700 per month as an
automobile allowance, plus reimbursement for reasonable operating,
maintenance, insurance and repair expenses.
e. Employer shall institute, and Employee shall be
eligible to participate in, a Senior Management Performance-based Stock Option
Plan to motivate and reward Employee for his role in improving Employer's
earnings and shareholder value.
f. Employee shall be paid a one-time bonus equal to
his total minimum base salary for the next three years if there is a Change of
Control as hereinafter defined, said bonus to be paid within thirty (30) days
thereof.
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g. If there is a Change of Control as hereinafter
defined, Employee shall be immediately compensated by Employer for all amounts
(including interest) not yet received by Employee as a result of his
participation in a total of $250,000 of junior participations with Congress
Financial Corporation in loans to the Company made during September 1993
without regard to whether such amount is currently due pursuant to the terms
thereof.
h. All Rights as hereinafter defined which may
become exercisable for any reason during the term hereof shall be paid for (i)
in cash, (ii) by the transfer by Employee to Employer of so much of Employee's
Rights which, when valued at the highest trading price of the underlying
securities of Employer during the previous six months, will offset the total
exercise price or (iii) some combination of (i) and (ii) above, at the option
of Employee.
i. Employee shall have the right to participate in
any other employee benefit plans established by Employer.
5. Board of Directors. Employer agrees that so long as this
Agreement is in effect, Employee shall be nominated to the Board as part of
management's slate of Directors.
6. Expenses. Employee shall be reimbursed for all of his
actual out-of-pocket expenses incurred in the performance of his duties
hereunder, provided such expenses are acceptable to Employer, which approval
shall not be unreasonably withheld, for business related travel and
entertainment expenses, and that Employee shall submit to Employer reasonably
detailed receipts with respect thereto.
7. Vacation. Employee shall be entitled to receive six (6)
weeks paid vacation time after each year of employment upon dates reasonably
agreed upon by Employer. Upon each anniversary of this agreement and upon
separation of employment, for any reason, vacation time accrued and not used
shall be paid at the salary rate of Employee in effect at that time.
8. Secrecy. At no time shall Employee disclose to anyone any
confidential or secret information (not already constituting information
available to the public) concerning (a) internal affairs or proprietary
business operations of Employer or (b) any trade secrets, new product
developments or patents, especially unique processes or methods.
9. Covenant Not to Compete. Subject to, and limited by,
Section 11(b), Employee will not, at any time, anywhere in the world, during
the term of this Agreement, and for one (1) year thereafter, either directly
or indirectly, engage in, with or for any enterprise, institution, whether or
not for profit, business, or company, competitive with the business (as
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identified herein) of Employer as such business may be conducted on the date
thereof, as a creditor, guarantor, or financial backer, stockholder, director,
officer, consultant, advisor, employee, member, inventor, or otherwise of or
through any corporation, partnership, association, sole proprietorship or
other entity; provided, that an investment by Employee, his spouse or his
children is permitted if such investment is not more than five percent (5%) of
the total debt or equity capital of any such competitive enterprise or
business and further provided that said competitive enterprise or business is
a publicly held entity whose stock is listed and traded on a national stock
exchange or through the Nasdaq Stock Market. As used in this Agreement, the
business of Employer shall be deemed to include the manufacture and
distribution of industrial protective clothing and safety products.
10. Termination.
a. Termination by Employer
(i) Employer may terminate this Agreement
upon written notice for Cause. For purposes hereof, "Cause" shall mean (A)
engaging by the Employee in conduct that constitutes activity in competition
with Employer; (B) the conviction of Employee for the commission of a felony;
and/or (C) the habitual abuse of alcohol or controlled substances.
Notwithstanding anything to the contrary in this Section 10(a)(i), Employer
may not terminate Employee's employment under this Agreement for Cause unless
Employee shall have first received notice from the Board advising Employee of
the specific acts or omissions alleged to constitute Cause, and such acts or
omissions continue after Employee shall have had a reasonable opportunity (at
least 10 days from the date Employee receives the notice from the Board) to
correct the acts or omissions so complained of. In no event shall alleged
incompetence of Employee in the performance of Employee's duties be deemed
grounds for termination for Cause.
(ii) Employer may terminate Employee's
employment under this Agreement if, as a result of any physical or mental
disability, Employee shall fail or be unable to perform his duties under this
Agreement for any consecutive period of 120 days during any twelve-month
period. If Employee's employment is terminated under this Section 10(a)(ii):
(A) for the first six months after termination, Employee shall be paid 100% of
his full compensation under Section 4(a) of this Agreement at the rate in
effect on the date of termination, and in each successive 12 month period
thereafter Employee shall be paid an amount equal to 65% of his compensation
under Section 4(a) of this agreement at the rate in effect on the date of
termination, on an after-tax basis, which obligation Employer may fulfill in
whole or in part by purchasing disability insurance coverage; (B) Employer's
obligation to pay life insurance premiums on the policy referred to in Section
4(c) shall continue in effect until five years from the date of termination;
and (C) Employee shall continue to be entitled, insofar as is permitted under
applicable insurance policies or plans, to such general medical and employee
benefit plans (including profit sharing or pension plans) as Employee had been
entitled to on the date of
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termination. Employer shall purchase disability insurance for the benefit of
Employee and any amounts payable by Employer to Employee under this paragraph
shall be reduced by the amount of any disability payments paid by said
insurance and actually received by Employee.
(iii) This agreement automatically shall
terminate upon the death f Employee, except that Employee's estate shall be
entitled to receive the pro-rata amount payable under any profit sharing plans
Employer may institute for the period prior to Employee's death and any other
amount to which Employee was entitled at the time of his death, and Employee's
salary and all health, insurance and other benefits applicable to Employee's
family shall continue for 12 months from the date of Employee's death. In
addition upon the death of Employee all Rights, as hereinafter defined, shall
become vested, accelerate and become immediately exercisable for one year at
50% of their stated exercise price which may be paid for as described in
Section 4.h., above.
b. Termination by Employee
(i) Employee shall have the right to
terminate his employment under this Agreement upon 30 days' notice to Company
given within 90 days following the occurrence of any of the following events
(A) through (F) or within three (3) years following the occurrence of event
(G):
(A) Employee is not elected or
retained as Senior Vice- President and a Director of Employer.
(B) Employer acts to materially
reduce Employee's duties and responsibilities hereunder.
(C) Employer acts to change the
geographic location of the performance of Employee's duties from the New York
Metropolitan area. For purposes of this Agreement, the New York Metropolitan
area shall be deemed to be the area within 30 road miles of Employer's present
offices.
(D) a Material Reduction (as
hereinafter defined) in Employee's rate of base compensation, or Employee's
other benefits. "Material Reduction" shall mean a ten percent (10%)
differential;
(E) a failure by Employer to
obtain the assumption of this Agreement by any successor;
(F) a material breach of this
Agreement by Employer, which is not cured within thirty (30) days of written
notice by Employee of such breach.
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(G) a "Change of Control" by which
a person (other than a person who is an officer and a Director of Employer on
the effective date hereof), including a "group" as defined in Section 13(d)(3)
of the Securities Exchange Act of 1934, becomes, or obtains the right to
become, the beneficial owner of Employer securities having 20% or more of the
combined voting power of the then outstanding securities of the Employer that
may be cast for the election of directors of the Employer (other than as a
result of an issuance of securities initiated by the Employer in the ordinary
course of business) or the composition of the Board of Employer changes so
that officers of Employer no longer hold a majority of the seats; or
(ii) Anything herein to the contrary
notwithstanding, Employee may terminate this Agreement upon thirty (30) days
written notice.
c. If Employer shall terminate Employee's
employment other than due to his death or disability or for Cause (as defined
in Section 10(a)(i) of this Agreement), or if Employee shall terminate this
Agreement under Section 10(b)(i), Employer's obligations under Section 4 shall
be absolute and unconditional and not subject to any offset or counterclaim
and Employee shall continue to be entitled to receive all amounts provided for
by Section 4 and all additional employee benefits under Section 4 regardless
of the amount of compensation he may earn with respect to any other employment
he may obtain.
11. Consequences of Breach by Employer; Employment
Termination.
a. If this Agreement is terminated pursuant to
Section 10(b)(i)(A)-(F) hereof, or if Employer shall terminate Employee's
employment under this Agreement in any way that is a breach of this Agreement
by Employer, the following shall apply:
(i) Employee shall receive as a bonus, and
in addition to his salary continuation pursuant to Section 10(c), a cash
payment equal to Employee's total base salary plus projected expenses and
bonuses for the remainder of the term hereof, payable within 30 days of the
date of such termination.
(ii) Employee shall be entitled to payment
of any previously declared bonus as provided in Section 4 above.
(iii) All stock options, warrants and
stock appreciation rights ("Rights") granted by Employer to Employee under any
plan or otherwise prior to the date of termination shall become vested,
accelerate and become immediately exercisable; where relevant at an exercise
price of 10(cent) per share. In the event Employee owns or is entitled to
receive any unregistered securities of Employer, then Employer shall use its
best efforts to affect the registration of all such securities as soon as
practicable, but no later than 120 days after the effective date of
termination registration statement; provided, however, that such period may be
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extended or delayed by Employer for one period of up to 60 days if, upon the
advice of counsel at the time such registration is required to be filed, or at
the time Employer is required to exercise its best efforts to cause such
registration statement to become effective, such delay is advisable and in the
best interests of Employer because of the existence of non-public material
information, or to allow Employer to complete any pending audit of its
financial statements.
b. In the event of termination of Employee's
employment by Employer, other than pursuant to Section 10(a) of this
Agreement, or by Employee pursuant to Section 10(b)(i) of this Agreement, or
in the event Employer delays for more than 15 days the making of any payment
hereunder, without in any way excusing Employer's obligations under this
Agreement, the provisions of Section 9 shall not apply to Employee.
12. Remedies
Employer recognizes that because of Employee's
special talents, stature and opportunities in the industry, in the event of
termination by Employer hereunder (except under Section 10(a)(i) or (iii), or
in the event of termination by Employee under Section 10(b)(i) before the end
of the agreed term, Company acknowledges and agrees that the provisions of
this Agreement regarding further payments of base salary, bonuses and the
exercisability of stock options, warrants and stock appreciation rights
constitute fair and reasonable provisions for the consequences of such
termination, do not constitute a penalty, and such payments and benefits shall
not be limited or reduced by amounts Employee might earn or be able to earn
from any other employment of ventures during the remainder of the agreed term
of this Agreement.
13. Excise Tax. In the event that any payment or benefit
received or to be received by Employee in connection with a termination of his
employment with Employer would constitute a "parachute payment" within the
meaning of Code Section 280G or any similar or successor provision to 280G
and/or would be subject to any excise tax imposed by Code Section 4999 of the
Code or any similar or successor provision then Employer shall assume all
liability for the payment of any such tax and Employer shall immediately
reimburse Employee on a "grossed-up" basis for any income taxes attributable
to Employee by reason of such Employer payment and reimbursements.
14. Arbitration. Any controversies between Employer and
Employee involving the construction or application of any of the terms,
provisions or conditions of this Agreement, save and except for any breaches
arising out of Sections 8 and 9 hereof, shall on the written request of either
party served on the other by submitted to arbitration. Such arbitration shall
comply with and be governed by the rules of the American Arbitration
Association. An arbitration demand must be made within one (1) year of the
date on which the party demanding arbitration first had notice of the
existence of the claim to be arbitrated, or the right to arbitration along
with such claim shall be considered to have been waived. An arbitrator shall
be selected according to the procedures of the American Arbitration
Association. the cost
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of arbitration shall be born by the losing party or in such proportions as the
arbitrator shall decide. The arbitrator shall have no authority to add to,
subtract from or otherwise modify the provisions of this Agreement, or to
award punitive damages to either party.
15. Attorneys' Fees and Costs. If any action at law or in
equity is necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which he may be
entitled.
16. Entire Agreement; Survival.
a. This Agreement contains the entire agreement
between the parties with respect to the transactions contemplated herein and
supersedes, as of the effective date hereof any prior agreement or
understanding between Employer and Employee with respect to Employee's
employment by Employer. The unenforceability of any provision of this
Agreement shall not effect the enforceability of any other provision. This
Agreement may not be amended except by an agreement in writing signed by the
Employee and the Employer, or any waiver, change, discharge or modification as
sought. Waiver of or failure to exercise any rights provided by this Agreement
and in any respect shall not be deemed a waiver of any further or future
rights.
b. The provisions of Sections 4, 8, 9, 10(a)(ii),
10(c), 11, 12, 13, 14, 15, 18, 19 and 20 shall survive the termination of this
Agreement.
17. Assignment. This Agreement shall not be assigned to
other parties, but shall be binding upon any purported successors and assigns
of Employer.
18. Governing Law. This Agreement and all the amendments
hereof, and waivers and consents with respect thereto shall be governed by the
internal laws of the state of New York, without regard to the conflicts laws
principles thereof.
19. Notices. All notices, responses, demands or other
communications under this Agreement shall be in writing and shall be deemed to
have been given when
a. delivered by hand;
b. sent be telex or telefax, (with receipt
confirmed), provided that a copy is mailed by registered or certified mail,
return receipt requested; or
c. received by the addressee as sent be express
delivery service (receipt requested) in each case to the appropriate
addresses, telex numbers and telefax numbers as the party may designate to
itself by notice to the other parties:
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(i) if to the Employer:
Eastco Industrial Safety Corp.
130 West 10th Street
Huntington, New York 11746
Attention: President
Telephone: 516-427-1802
Telefax: 516-427-1840
Gersten, Savage, Kaplowitz & Curtin
575 Lexington Avenue
27th Floor
New York, New York 10022
Attention: Jay M. Kaplowitz, Esq.
Telephone: 212-752-9700
Telefax: 212-980-5192
(ii) if to the Employee:
Lawrence Densen
3 Hyannis Court
Mt. Sinai, New York 11766
20. Severability of Agreement. Should any part of this
Agreement for any reason be declared invalid by a court of competent
jurisdiction, such decision shall not affect the validity of any remaining
portion, which remaining provisions shall remain in full force and effect as
if this Agreement had been executed with the invalid portion thereof
eliminated, and it is hereby declared the intention of the parties that they
would have executed the remaining portions of this Agreement without including
any such part, parts or portions which may, for any reason, be hereafter
declared invalid.
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IN WITNESS WHEREOF, the undersigned have executed this
agreement as of the day and year first above written.
EASTCO INDUSTRIAL SAFETY CORP.
By: /s/ Anthony P. Towell
-------------------------------
Its: V.P.
/s/Lawrence Densen
-------------------------------
LAWRENCE DENSEN
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Exhitit 10.03
EASTCO INDUSTRIAL SAFETY CORP.
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of this 1st day of July, 1995
by and between EASTCO INDUSTRIAL SAFETY CORP., a New York corporation, having
an office at 130 West 10th Street, Huntington, New York 11746 (hereinafter
referred to as "Employer") and ANTHONY P. TOWELL, an individual residing at
301 Centre Island Road, Oyster Bay, New York 11771 (hereinafter referred to as
"Employee");
W I T N E S S E T H:
WHEREAS, Employer employs, and desires to continue to
employ, Employee as Vice-President - Finance, Treasurer, Chief Financial
Officer and Secretary; and
WHEREAS, Employee is willing to continue to be employed as
Vice-President Finance, Treasurer, Chief Financial Officer and Secretary in
the manner provided for herein and to perform the duties of said position upon
the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein set forth it is agreed as follows:
1. Employment of Vice-President - Finance, Treasurer, Chief
Financial Officer and Secretary. Employer hereby employs Employee as
Vice-President - Finance, Treasurer, Chief Financial Officer and Secretary of
Employer.
2. Term.
a. Subject to Section 10 below and further subject
to Section 2(b) below, the term of this Agreement shall commence on July 1,
1995 and end on June 30, 2000. Each 12 month period from July 1 through June
30 during the term hereof shall be referred to as an "Annual Period." It is
understood that Employee shall be employed on a part-time basis.
b. Subject to Section 10 below, unless the Board of
Directors (the "Board") of Employer shall determine to the contrary and shall
so notify Employee in writing on or before the end of any Annual Period, then
at the end of each Annual Period, the term of this Agreement shall be
automatically extended for one (1) additional Annual Period to be added at the
end of the then current term of this Agreement.
3. Duties. The Employee shall perform those functions
generally performed by persons of such title and position, shall attend
meetings of the stockholders and the Board, shall perform any and all related
duties and shall have any and all powers as may be
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reasonably prescribed by resolution of the Board, and shall be available to
confer and consult with and advise the officers and directors of Employer at
such times that may be required by Employer upon reasonable notice and subject
to Employee's reasonable availability. Employee shall report directly and
solely to the President.
4. Compensation.
a. (i) Employee shall be paid a minimum of $55,000
through and including June 30, 1996. Employee's salary shall be increased
annually at the beginning of each Annual Period at the discretion of the
Board, but in no event shall said increase be less than 10% of the minimum
compensation paid Employee in the prior Annual Period. Employee shall be paid
periodically in accordance with the policies of the Employer during the term
of this Agreement, but not less than monthly.
(ii) Employee is eligible for annual
bonuses which shall be equal to 31/3% of the Company's earnings before
interest and taxes for the fiscal year just ended. Said bonuses shall be paid
within 30 days of the completion of Employer's audited financial statement for
each fiscal year and shall be paid in cash or registered shares of common
stock of Employer, at the option of Employee.
b. Employer shall include Employee, his spouse and
minor children, if any, in its health insurance program available to
Employer's executive officers or such program having greater benefits
available to other employees of employer.
c. Employer shall maintain a life, accidental death
and dismemberment insurance policy or policies on Employee for the benefit of
a beneficiary named by Employee in a total amount not less than $750,000.
Ownership of the policy or policies shall be assigned to Employee upon
termination of Employee's employment under this Agreement without payment of
any consideration by Employee.
d. Employee shall receive $700 per month as an
automobile allowance, plus reimbursement for reasonable operating,
maintenance, insurance and repair expenses.
e. Employer shall institute, and Employee shall be
eligible to participate in, a Senior Management Performance-based Stock Option
Plan to motivate and reward Employee for his role in improving Employer's
earnings and shareholder value.
f. Employee shall be paid a one-time bonus equal to
his total minimum base salary for the next three years if there is a Change of
Control as hereinafter defined, said bonus to be paid within thirty (30) days
thereof.
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g. If there is a Change of Control as hereinafter
defined, Employee shall be immediately compensated by Employer for all amounts
(including interest) not yet received by Employee as a result of his
participation in a total of $250,000 of junior participations with Congress
Financial Corporation in loans to the Company made during September 1993
without regard to whether such amount is currently due pursuant to the terms
thereof.
h. All Rights as hereinafter defined which may
become exercisable for any reason during the term hereof shall be paid for (i)
in cash, (ii) by the transfer by Employee to Employer of so much of Employee's
Rights which, when valued at the highest trading price of the underlying
securities of Employer during the previous six months, will offset the total
exercise price or (iii) some combination of (i) and (ii) above, at the option
of Employee.
i. Employee shall have the right to participate in
any other employee benefit plans established by Employer.
5. Board of Directors. Employer agrees that so long as this
Agreement is in effect, Employee shall be nominated to the Board as part of
management's slate of Directors.
6. Expenses. Employee shall be reimbursed for all of his
actual out-of-pocket expenses incurred in the performance of his duties
hereunder, provided such expenses are acceptable to Employer, which approval
shall not be unreasonably withheld, for business related travel and
entertainment expenses, and that Employee shall submit to Employer reasonably
detailed receipts with respect thereto.
7. Vacation. Employee shall be entitled to receive six (6)
weeks paid vacation time after each year of employment upon dates reasonably
agreed upon by Employer. Upon each anniversary of this agreement and upon
separation of employment, for any reason, vacation time accrued and not used
shall be paid at the salary rate of Employee in effect at that time.
8. Secrecy. At no time shall Employee disclose to anyone any
confidential or secret information (not already constituting information
available to the public) concerning (a) internal affairs or proprietary
business operations of Employer or (b) any trade secrets, new product
developments or patents, especially unique processes or methods.
9. Covenant Not to Compete. Subject to, and limited by,
Section 11(b), Employee will not, at any time, anywhere in the world, during
the term of this Agreement, and for one (1) year thereafter, either directly
or indirectly, engage in, with or for any enterprise, institution, whether or
not for profit, business, or company, competitive with the business (as
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identified herein) of Employer as such business may be conducted on the date
thereof, as a creditor, guarantor, or financial backer, stockholder, director,
officer, consultant, advisor, employee, member, inventor, or otherwise of or
through any corporation, partnership, association, sole proprietorship or
other entity; provided, that an investment by Employee, his spouse or his
children is permitted if such investment is not more than five percent (5%) of
the total debt or equity capital of any such competitive enterprise or
business and further provided that said competitive enterprise or business is
a publicly held entity whose stock is listed and traded on a national stock
exchange or through the Nasdaq Stock Market. As used in this Agreement, the
business of Employer shall be deemed to include the manufacture and
distribution of industrial protective clothing and safety products.
10. Termination.
a. Termination by Employer
(i) Employer may terminate this Agreement
upon written notice for Cause. For purposes hereof, "Cause" shall mean (A)
engaging by the Employee in conduct that constitutes activity in competition
with Employer; (B) the conviction of Employee for the commission of a felony;
and/or (C) the habitual abuse of alcohol or controlled substances.
Notwithstanding anything to the contrary in this Section 10(a)(i), Employer
may not terminate Employee's employment under this Agreement for Cause unless
Employee shall have first received notice from the Board advising Employee of
the specific acts or omissions alleged to constitute Cause, and such acts or
omissions continue after Employee shall have had a reasonable opportunity (at
least 10 days from the date Employee receives the notice from the Board) to
correct the acts or omissions so complained of. In no event shall alleged
incompetence of Employee in the performance of Employee's duties be deemed
grounds for termination for Cause.
(ii) Employer may terminate Employee's
employment under this Agreement if, as a result of any physical or mental
disability, Employee shall fail or be unable to perform his duties under this
Agreement for any consecutive period of 120 days during any twelve-month
period. If Employee's employment is terminated under this Section 10(a)(ii):
(A) for the first six months after termination, Employee shall be paid 100% of
his full compensation under Section 4(a) of this Agreement at the rate in
effect on the date of termination, and in each successive 12 month period
thereafter Employee shall be paid an amount equal to 65% of his compensation
under Section 4(a) of this agreement at the rate in effect on the date of
termination, on an after-tax basis, which obligation Employer may fulfill in
whole or in part by purchasing disability insurance coverage; (B) Employer's
obligation to pay life insurance premiums on the policy referred to in Section
4(c) shall continue in effect until five years from the date of termination;
and (C) Employee shall continue to be entitled, insofar as is permitted under
applicable insurance policies or plans, to such general medical and employee
benefit plans (including profit sharing or pension plans) as Employee had been
entitled to on the date of
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termination. Employer shall purchase disability insurance for the benefit of
Employee and any amounts payable by Employer to Employee under this paragraph
shall be reduced by the amount of any disability payments paid by said
insurance and actually received by Employee.
(iii) This agreement automatically shall
terminate upon the death of Employee, except that Employee's estate shall be
entitled to receive the pro-rata amount payable under any profit sharing plans
Employer may institute for the period prior to Employee's death and any other
amount to which Employee was entitled at the time of his death, and Employee's
salary and all health, insurance and other benefits applicable to Employee's
family shall continue for 12 months from the date of Employee's death. In
addition upon the death of Employee all Rights, as hereinafter defined, shall
become vested, accelerate and become immediately exercisable for one year at
50% of their stated exercise price which may be paid for as described in
Section 4.h., above.
b. Termination by Employee
(i) Employee shall have the right to
terminate his employment under this Agreement upon 30 days' notice to Company
given within 90 days following the occurrence of any of the following events
(A) through (F) or within three (3) years following the occurrence of event
(G):
(A) Employee is not elected or
retained as Vice-President - Finance, Treasurer, Chief Financial Officer and
Secretary and a Director of Employer.
(B) Employer acts to materially
reduce Employee's duties and responsibilities hereunder.
(C) Employer acts to change the
geographic location of the performance of Employee's duties from the New York
Metropolitan area. For purposes of this Agreement, the New York Metropolitan
area shall be deemed to be the area within 30 road miles of Employer's present
offices.
(D) a Material Reduction (as
hereinafter defined) in Employee's rate of base compensation, or Employee's
other benefits. "Material Reduction" shall mean a ten percent (10%)
differential;
(E) a failure by Employer to
obtain the assumption of this Agreement by any successor;
(F) a material breach of this
Agreement by Employer, which is not cured within thirty (30) days of written
notice by Employee of such breach.
-5-
<PAGE>
(G) a "Change of Control" by which
a person (other than a person who is an officer and a Director of Employer on
the effective date hereof), including a "group" as defined in Section 13(d)(3)
of the Securities Exchange Act of 1934, becomes, or obtains the right to
become, the beneficial owner of Employer securities having 20% or more of the
combined voting power of the then outstanding securities of the Employer that
may be cast for the election of directors of the Employer (other than as a
result of an issuance of securities initiated by the Employer in the ordinary
course of business) or the composition of the Board of Employer changes so
that officers of Employer no longer hold a majority of the seats; or
(ii) Anything herein to the contrary
notwithstanding, Employee may terminate this Agreement upon thirty (30) days
written notice.
c. If Employer shall terminate Employee's
employment other than due to his death or disability or for Cause (as defined
in Section 10(a)(i) of this Agreement), or if Employee shall terminate this
Agreement under Section 10(b)(i), Employer's obligations under Section 4 shall
be absolute and unconditional and not subject to any offset or counterclaim
and Employee shall continue to be entitled to receive all amounts provided for
by Section 4 and all additional employee benefits under Section 4 regardless
of the amount of compensation he may earn with respect to any other employment
he may obtain.
11. Consequences of Breach by Employer; Employment
Termination.
a. If this Agreement is terminated pursuant to
Section 10(b)(i)(A)-(F) hereof, or if Employer shall terminate Employee's
employment under this Agreement in any way that is a breach of this Agreement
by Employer, the following shall apply:
(i) Employee shall receive as a bonus, and
in addition to his salary continuation pursuant to Section 10(c), a cash
payment equal to Employee's total base salary plus projected expenses and
bonuses for the remainder of the term hereof, payable within 30 days of the
date of such termination.
(ii) Employee shall be entitled to payment
of any previously declared bonus as provided in Section 4 above.
(iii) All stock options, warrants and
stock appreciation rights ("Rights") granted by Employer to Employee under any
plan or otherwise prior to the date of termination shall become vested,
accelerate and become immediately exercisable; where relevant at an exercise
price of 10(cent) per share. In the event Employee owns or is entitled to
receive any unregistered securities of Employer, then Employer shall use its
best efforts to affect the registration of all such securities as soon as
practicable, but no later than 120 days after the effective date of
termination registration statement; provided, however, that such period may be
-6-
<PAGE>
extended or delayed by Employer for one period of up to 60 days if, upon the
advice of counsel at the time such registration is required to be filed, or at
the time Employer is required to exercise its best efforts to cause such
registration statement to become effective, such delay is advisable and in the
best interests of Employer because of the existence of non-public material
information, or to allow Employer to complete any pending audit of its
financial statements.
b. In the event of termination of Employee's
employment by Employer, other than pursuant to Section 10(a) of this
Agreement, or by Employee pursuant to Section 10(b)(i) of this Agreement, or
in the event Employer delays for more than 15 days the making of any payment
hereunder, without in any way excusing Employer's obligations under this
Agreement, the provisions of Section 9 shall not apply to Employee.
12. Remedies
Employer recognizes that because of Employee's
special talents, stature and opportunities in the industry, in the event of
termination by Employer hereunder (except under Section 10(a)(i) or (iii), or
in the event of termination by Employee under Section 10(b)(i) before the end
of the agreed term, Company acknowledges and agrees that the provisions of
this Agreement regarding further payments of base salary, bonuses and the
exercisability of stock options, warrants and stock appreciation rights
constitute fair and reasonable provisions for the consequences of such
termination, do not constitute a penalty, and such payments and benefits shall
not be limited or reduced by amounts Employee might earn or be able to earn
from any other employment of ventures during the remainder of the agreed term
of this Agreement.
13. Excise Tax. In the event that any payment or benefit
received or to be received by Employee in connection with a termination of his
employment with Employer would constitute a "parachute payment" within the
meaning of Code Section 280G or any similar or successor provision to 280G
and/or would be subject to any excise tax imposed by Code Section 4999 of the
Code or any similar or successor provision then Employer shall assume all
liability for the payment of any such tax and Employer shall immediately
reimburse Employee on a "grossed-up" basis for any income taxes attributable
to Employee by reason of such Employer payment and reimbursements.
14. Arbitration. Any controversies between Employer and
Employee involving the construction or application of any of the terms,
provisions or conditions of this Agreement, save and except for any breaches
arising out of Sections 8 and 9 hereof, shall on the written request of either
party served on the other by submitted to arbitration. Such arbitration shall
comply with and be governed by the rules of the American Arbitration
Association. An arbitration demand must be made within one (1) year of the
date on which the party demanding arbitration first had notice of the
existence of the claim to be arbitrated, or the right to arbitration along
with such claim shall be considered to have been waived. An arbitrator shall
be selected according to the procedures of the American Arbitration
Association. the cost
-7-
<PAGE>
of arbitration shall be born by the losing party or in such proportions as the
arbitrator shall decide. The arbitrator shall have no authority to add to,
subtract from or otherwise modify the provisions of this Agreement, or to
award punitive damages to either party.
15. Attorneys' Fees and Costs. If any action at law or in
equity is necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which he may be
entitled.
16. Entire Agreement; Survival.
a. This Agreement contains the entire agreement
between the parties with respect to the transactions contemplated herein and
supersedes, as of the effective date hereof any prior agreement or
understanding between Employer and Employee with respect to Employee's
employment by Employer. The unenforceability of any provision of this
Agreement shall not effect the enforceability of any other provision. This
Agreement may not be amended except by an agreement in writing signed by the
Employee and the Employer, or any waiver, change, discharge or modification as
sought. Waiver of or failure to exercise any rights provided by this Agreement
and in any respect shall not be deemed a waiver of any further or future
rights.
b. The provisions of Sections 4, 8, 9, 10(a)(ii),
10(c), 11, 12, 13, 14, 15, 18, 19 and 20 shall survive the termination of this
Agreement.
17. Assignment. This Agreement shall not be assigned to
other parties, but shall be binding upon any purported successors and assigns
of Employer.
18. Governing Law. This Agreement and all the amendments
hereof, and waivers and consents with respect thereto shall be governed by the
internal laws of the state of New York, without regard to the conflicts laws
principles thereof.
19. Notices. All notices, responses, demands or other
communications under this Agreement shall be in writing and shall be deemed to
have been given when
a. delivered by hand;
b. sent be telex or telefax, (with receipt
confirmed), provided that a copy is mailed by registered or certified mail,
return receipt requested; or
c. received by the addressee as sent be express
delivery service (receipt requested) in each case to the appropriate
addresses, telex numbers and telefax numbers as the party may designate to
itself by notice to the other parties:
-8-
<PAGE>
(i) if to the Employer:
Eastco Industrial Safety Corp.
130 West 10th Street
Huntington, New York 11746
Attention: President
Telephone: 516-427-1802
Telefax: 516-427-1840
Gersten, Savage, Kaplowitz & Curtin
575 Lexington Avenue
27th Floor
New York, New York 10022
Attention: Jay M. Kaplowitz, Esq.
Telephone: 212-752-9700
Telefax: 212-980-5192
(ii) if to the Employee:
Anthony P. Towell
1468 Ridge Road
Laurel Hollow
Syosset, New York 11791
20. Severability of Agreement. Should any part of this
Agreement for any reason be declared invalid by a court of competent
jurisdiction, such decision shall not affect the validity of any remaining
portion, which remaining provisions shall remain in full force and effect as
if this Agreement had been executed with the invalid portion thereof
eliminated, and it is hereby declared the intention of the parties that they
would have executed the remaining portions of this Agreement without including
any such part, parts or portions which may, for any reason, be hereafter
declared invalid.
-9-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this
agreement as of the day and year first above written.
EASTCO INDUSTRIAL SAFETY CORP.
By:
-----------------------------------
Its: President
-----------------------------------
ANTHONY P. TOWELL
-10-
<PAGE>
Exhibit 11.1
EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
June 30, 1995 March 31, 1996
------------- ------------------
<S> <C> <C>
Primary:
Net earnings $ 77,937 $ 58,754
Average common shares outstanding 347,738 3,593,493
Earnings per common share outstanding $ .224 $ .164
-------- ----------
Rounded $ .22 $ .16
======== ==========
Dilutive options and warrants outstanding 414,245 422,995
Less shares attributable to application
of treasury stock method at average
prices of $1.375 per share for the year ended
June 30, 1995 and $1.549 for the nine months
ended March 31, 1996 (369,454) (335,001)*
-------- ---------
Net incremental shares applicable
to common stock equivalents 44,791 87,994
======== =========
Earnings per common and common equivalent
shares outstanding $ .199 $ .131
======== ========
Rounded $ .20 $ .13
======== ========
Fully Diluted:
Dilutive options and warrants outstanding 414,245 422,995
Less shares applicable to application of
treasury stock method at June 30, 1995
closing price of $1.75 per share and average
price of $1.549 for the nine months ended
March 31, 1996 (290,285) (335,001)*
-------- ---------
Net incremental shares applicable to
common stock equivalents 123,960 87,994
======== ========
Earnings per fully diluted common and
common equivalent shares outstanding $ .165 $ .131
======== ========
Rounded $ .17 $ .13
======== ========
</TABLE>
*The limitation on shares subject to the treasury stock method, pursuant to
the provisions of Paragraph 38 of Accounting Principles Board Opinion
Number 15, is not applicable because the result thereof is anti-dilutive.
<PAGE>
Exhibit 21.01
Name of Subsidiary State of Incorporation
------------------ ----------------------
Disposable Safety Wear, Inc. Delaware
Puerto Rico Safety Corporation New York
Puerto Rico Safety Equipment Corporation Delaware
Safety Wear Corp. Delaware
<PAGE>
EXHIBIT 23.01
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of
the Registration Statement on Form SB-2 of our report dated September 8, 1995,
relating to the consolidated financial statements of Eastco Industrial Safety
Corp. and Subsidiaries as at June 30, 1995 and June 30, 1994 and for each of the
two years in the period ended June 30, 1995 and to the reference to our firm
under the heading "Experts" in such prospectus.
Dated: Uniondale, New York
July 31, 1996
/s/ CORNICK, GARBER & SANDLER, LLP
------------------------------------
CORNICK, GARBER & SANDLER, LLP
<PAGE>
EXHIBIT 23.02
CONSENT OF COUNSEL
We hereby consent to the use of the name wheresoever set forth in
this Registration Statement (SB-2).
Dated: Garden City, New York
July 31, 1996
/s/ HOLLENBERG LEVIN SOLOMON ROSS
BELSKY & DANIELS, LLP
-------------------------------------
HOLLENBERG LEVIN SOLOMON ROSS
BELSKY & DANIELS, LLP
<PAGE>
Exhibit 99.01
EASTCO INDUSTRIAL SAFETY CORP.
1996 INCENTIVE STOCK OPTION PLAN
1. Purpose. The purpose of the Plan is to provide additional
incentive for such Key Employees of the Company, its Subsidiaries and
divisions, as may be designated for participation in the Plan by granting
stock incentive options and thereby encouraging such Key Employees to invest
in such shares, thereby furthering their identity of interest with the
Company's shareholders, giving them a greater personal interest and increasing
their interest in and commitment to the future growth and prosperity of the
Company.
2. Definitions. Unless otherwise required by the context, the
following terms, when used in the Plan, shall have the meanings set forth in
this section 2. In addition to the definitions provided in this section 2,
certain words and phrases used in the Plan may be defined elsewhere in the
Plan.
Act: The Securities Exchange Act of 1934, as amended.
Board of Directors or Board: The Board of Directors of the
Company.
Change of Control: Any merger or consolidation of the
Company, any tender offer, exchange offer or other purchase
of any outstanding securities of the Company, or any sale of
assets of the Company, if, as a result of such event, the
members of the Company's Board of Directors prior to such
event shall thereafter constitute less than a majority of
the Board of Directors of the Company (or of the surviving
or resulting corporation, as the case may be).
Committee: (i) The Stock Option Committee of the Board of
Directors, which shall consist of not less than two (2)
directors of the Company; or (ii) such other entity as
authorized under Rule
<PAGE>
16b-3 promulgated under the Act, as the same may be amended
or supplemented from time to time. The members of the
Committee shall be "disinterested" persons within the
meaning of Rule 16b-3. No member of the Committee shall be
eligible to receive Incentive Stock Options unless permitted
by such Rule 16b-3.
Common Stock: The Common Stock of the Company, par value
$0.12 per share, or such other class of shares or other
securities as may be applicable pursuant to the provisions
of section 6. Company: Eastco Industrial Safety Corp. or
such amended name as utilized by the Company.
Fair Market Value: As applied to any date, the last price of
the Common Stock reported by NASDAQ, or if not applicable,
by the National Quotation Bureau or such stock exchange as
said common stock may be listed on.
Incentive Stock Option: A stock option that satisfies the
requirements of section 422 of the Internal Revenue Code.
Internal Revenue Code: The Internal Revenue Code of 1986, as
amended, and include the regulations promulgated pursuant
thereto.
Key Employee: An employee of the Company or of a
Subsidiary, including an officer or director who is an
employee, who in the opinion of the Committee can contribute
significantly to the growth and successful operations of the
Company or a Subsidiary. The grant or recommendation of the
grant of an Incentive Stock Option to an employee by the
Committee shall be deemed a determination by the Committee
that such employee is a Key Employee.
Plan: The Incentive Stock Option Plan herein set forth as
the same may from time to time be amended.
Restricted Shares: Shares of Common Stock issued or
transferred subject to restrictions as authorized by
paragraph (c) of Section
<PAGE>
9 of the Plan.
Subsidiary: A corporation or other form of business
association of which shares (or other ownership interests)
having 50% or more of the voting power are owned or
controlled, directly or indirectly, by the Company.
3. Administration of Plan.
(a) Committee. The Plan shall be administered by a stock
option committee, or other entity as may be authorized under Rule 16b-3 of the
Act. The members of the Committee shall be appointed by and shall serve at the
pleasure of the Board, which may from time to time change the Committee's
membership.
(b) Authority. The Committee shall have the sole and
complete authority to:
(i) determine the individuals to whom
Incentive Stock Options are granted, the
amounts of Incentive Stock Options to be
granted and the time of all such grants;
(ii) determine the terms, conditions and
provisions of, and restrictions relating
to, each Incentive Stock Option granted;
(iii) interpret and construe the Plan and all
Agreements;
(iv) prescribe, amend and rescind rules and
regulations relating to the Plan;
(v) determine the content and form of all
Agreements;
(vi) determine all questions relating to
Incentive Stock Options under the Plan;
(vii maintain accounts, records and ledgers
relating to Incentive Stock Options;
(viii) maintain records concerning its decisions
and proceedings;
<PAGE>
(ix) employ agents, attorneys, accountants or
other persons for such purposes as the
Committee considers necessary or
desirable;
(x) do and perform all acts which it may deem
necessary or appropriate for the
administration of the Plan and to carry
out the objectives of the Plan.
(c) Determinations. All determinations, interpretations, or
other actions made or taken by the Committee pursuant to the provisions of the
Plan shall be final, binding and conclusive for all purposes and upon all
persons.
(d) Delegation. Except as required by Rule 16b-3 promulgated
under the Act (and any successor to such rule) with respect to the grant of
Incentive Stock Options to Key Employees who are subject to Section 16 of the
Act, the Committee may delegate to appropriate senior officers of the Company
its duties under the Plan pursuant to such conditions and limitations as the
Committee may establish.
4. Grants of Incentive Stock Options.
Subject to the provisions of the Plan, the
Committee may at any time, or from time to time, grant Incentive Stock Options
under this Plan to, and only to, Key Employees.
5. Stock Subject to the Incentive Stock Options.
(a) Subject to the provisions of paragraph (c) of this
section 5 and of Section 7, the aggregate number of shares of Common Stock
which may be issued or transferred pursuant to Incentive Stock Options granted
under the Plan shall not exceed 300,000.
(b) Authorized but unissued shares of Common Stock and
shares of Common Stock held in the treasury, whether acquired by the Company
specifically for use under the Plan or otherwise, may be used, as the
Committee may from time to time determine, for purposes of the Plan, provided,
however, that any previously issued shares acquired or held by the Company for
the purposes of the Plan shall, unless and until transferred to
<PAGE>
a Key Employee in accordance with the Plan, be and at all times remain
treasury shares of the Company, irrespective of whether such shares are
entered in a special account for purposes of the Plan, and shall be available
for any corporate purposes and subject to the claims of creditors of the
Company.
(c) If any shares of Common Stock subject to an Incentive
Stock Option shall not be issued or transferred and shall cease to be issuable
or transferable for any reason or if any such shares shall, after issuance or
transfer, be reacquired or repurchased by the Company or Subsidiary, the
shares not so issued or transferred or the shares so reacquired or repurchased
by the Company or a Subsidiary may again be made subject to Incentive Stock
Options.
6. Provisions of Incentive Stock Options.
(a) All Incentive Stock Options shall be subject to the
following provisions:
(1) The purchase price per share shall be
determined by the Committee from time to
time and shall in no event be less than
100% of the Fair Market Value of such
share on the date of grant.
(2) Subject to the provisions of paragraphs
(a)(5) and (a)(7) of this section 6, an
Option granted under the Plan may not be
exercised unless, at the time of such
exercise, the optionee shall be in the
employ of the Company and shall have
completed at least twelve months of
continuous employment with the Company
from the date of the grant of his Option.
However, in the event there is a Change in
Control, an Option granted under the Plan
shall become immediately vested and
exercisable.
(3) Each Option shall expire at such time as
the Committee may determine, at the time
the Option shall be granted,
<PAGE>
but not later than ten years from the date
such Option shall have been granted.
(4) Any Option granted under the Plan may be
exercised solely by the person to whom
granted (or by his guardian or legal
representative), except as provided in
paragraph (a)(7) of this section 6 in the
case of such person's death.
(5) Absence on leave, approved by an officer
of the Company or a Subsidiary authorized
to give such approval, shall not be
considered an interruption or termination
of employment for any purpose of the Plan,
or Options granted thereunder, except that
no Option may be granted to an employee
while he is absent on leave.
(6) An Option may be exercised, in whole or in
part, at any time or from time to time
during the balance of the term of the
Option, except as limited by provisions
contained in the Option.
(7) The Option shall terminate if and when the
optionee shall cease to be an employee of
the Company and its Subsidiaries, except
as follows:
(i) If the optionee shall die while in
the employ of the Company or of a
Subsidiary, the Option shall be
exercisable, as and to the extent
exercisable by such person or
persons as shall have acquired the
optionee's rights under the Option
by will or the laws of descent and
distribution, but not later than
one year after the date of death
and not after the expiration of
the specific period fixed in the
Option grant.
(ii) If an optionee shall become
disabled (within the
<PAGE>
meaning of section 105(d)(4) of
the Internal Revenue Code) while
in the employ of the Company or of
a Subsidiary and such optionee's
employment shall terminate by
reason of such disability the
Option shall be exercisable, as
and to the extent exercisable at
the time of the termination of his
employment, within such period as
shall be set forth in the Option
grant, but only within one year
after the termination of the
optionee's employment and not
after the expiration of the
specific period fixed in the
Option grant as in effect at the
time of the termination of his
employment.
(8) Shares purchased upon exercise of an
Option shall be paid for in full by cash,
in the equivalent amount of the Company's
Common Stock or through a "Cashless
Exercise". If a Participant elects to
utilize a Cashless Exercise, he shall be
entitled to a credit equal to the amount
of that equity by which the current Fair
Market Value exceeds the option price on
that number of options surrendered and to
utilize that credit to exercise additional
options held by him that such equity could
purchase. There shall be canceled that
number of options utilized for the credit
and for the options exercised for such
credit. For example, if the Participant
has options to acquire 20,000 shares which
are exercisable, the Fair Market Value is
$2.00 per share, the exercise price is
$1.25 per share, and the participant
elects to utilize for a credit 10,000
options ($7,500), then upon a Cashless
exercise in connection therewith he shall
be
<PAGE>
entitled to acquire 6,000 shares of Common
Stock in exchange for the options for
10,000 shares for which a credit has been
received and options for 6,000 shares have
been exercised. The Participant will still
have exercisable options to acquire 4,000
shares of Common Stock.
(9) The Option agreements or Option grants
authorized by the Plan may contain such
other provisions as the Committee shall
deem advisable provided they do not
violate the provisions of Section 422 of
the Internal Revenue Code.
(10) The aggregate Fair Market Value
(determined as of the time of grant) of
stock for which Incentive Stock Options
are exercisable for the first time during
any calendar year by an optionee is to be
limited to $100,000, but the value may
exceed $100,000 for which options may be
granted to an optionee.
(11) In the event that any Incentive Stock
Option is granted under the Plan to any
individual who, at the time such Incentive
Stock Option is granted, owns stock
possessing more than ten percent of the
total combined voting power of all classes
of stock of the Company or of any
Subsidiary, the purchase price per share
under such Incentive Stock Option shall be
at least 110% of the fair market value of
such share at the time such Incentive
Stock Option is granted and such Incentive
Stock Option shall not be exercisable
after the expiration of five years from
the date it is granted.
(12) Upon the exercise of the Incentive Stock
Option, no disposition of such Common
Stock shall be made within two (2) years
from the date of the granting of the
Option
<PAGE>
nor within one (1) year after the transfer
of the Common Stock to him.
7. Adjustment Provisions. In the event that any recapitalization, or
reclassification, split-up or consolidation of shares of Common Stock shall be
affected, or the outstanding shares of Common Stock are, in connection with a
merger or consolidation of the Company or a sale by the Company of all or a
part of its assets, exchanged for a different number or class of shares of
stock or other securities of any other corporation, or new, different or
additional shares or other securities of the Company or of another corporation
are received by the holder of Common Stock or any distribution is made to the
holders of Common Stock other than a cash dividend, (a) the number and class
of shares or other securities that may be issued or transferred and (b) the
option price shall in each case be equitably adjusted as the Committee may, in
the reasonable exercise of its discretion, determine. In no event may any
change be made under this section 7 in any Incentive Stock Option which would
constitute a "modification" within the meaning of Section 425(h)(3) of the
Internal Revenue Code.
8. Term. The Plan shall be deemed adopted and shall become effective
upon: (i) approval and adoption by the shareholders at a Special Meeting of
Shareholders of the Company to be held on August 12, 1996 (the "Special
Meeting") of a one-for-ten reverse stock split of the Company's Common Stock
(the "Reverse Split"); (ii) completion of the Reverse Split; and (iii)
shareholder approval and adoption of the Plan at the Special Meeting. No Stock
Incentives shall be granted under the Plan on or after May 12, 2006.
9. General Provisions.
(a) The Committee may from time to time adopt such rules and
regulations, not inconsistent with the provisions of the Plan, as it deems
necessary to determine eligibility to participate in the Plan and for the
proper administration of the Plan, and may amend or revoke any rule or
regulation so established. The Committee may make such determinations and
<PAGE>
interpretations under or in connection with the Plan as it deems necessary or
advisable. All such rules, regulations, determinations and interpretations
shall be binding and conclusive upon the Company, its Subsidiaries, its
shareholders and all employees and upon their respective legal
representatives, beneficiaries, successors and assigns and upon all other
persons claiming under or through any of them.
(b) Any action required or permitted to be taken by the
Committee under the Plan shall require the affirmative vote of a majority of
all the members of the Committee.
(c) With respect to any shares of Common Stock issued or
transferred under the provision of the Plan, such shares may be issued or
transferred subject to such conditions, in addition to those specifically
provided in the Plan, as the Committee may direct and, without limiting the
generality of the foregoing, provision may be made in that shares issued or
transferred upon their grant or exercise shall be Restricted Shares subject to
forfeiture upon failure to comply with conditions and restrictions imposed in
the grant of such Stock Incentives.
(d) Nothing in the Plan nor in any instrument executed
pursuant thereto shall confer upon any employee any right to continue in the
employ of the Company or a Subsidiary or shall affect the right of the Company
or of a Subsidiary to terminate the employment of any employee with or without
cause.
(e) No shares of Common Stock shall be sold, issued or
transferred pursuant to an Incentive Stock Option unless and until there has
been compliance, in the opinion of counsel to the Company, with all legal
requirements, applicable to the sale, issuance or transfer of such shares. In
connection with any such sale, issuance or transfer, the person acquiring the
shares shall, if requested by the Company, give assurances satisfactory to
counsel to the Company that the shares are being acquired for investment and
not with a view to resale or distribution thereof and assurances in respect of
such other matters as the Company or a Subsidiary may deem
<PAGE>
desirable to assure compliance with all applicable legal requirements.
(f) No employee (individually or as a member of a group),
and no beneficiary or other person claiming under or through him, shall have
any right, title or interest in or to any shares of Common Stock allocated or
reserved for the purposes of the Plan except as to such shares of Common
Stock, if any, as shall have been issued or transferred to him.
(g) No Incentive Stock Option shall be assignable or subject
to any encumbrance, pledge or charge of any nature, shall be subject to
execution, attachment or similar process, or shall be transferable other than
by will or the laws of descent and distribution, and every Stock Incentive
Option and all rights under the Plan shall be exercisable during the
employee's lifetime only by him or his guardian or legal representative.
10. Amendment or Discontinuance of Plan.
(a) The Plan may be amended by the Committee at any time,
provided that, without the approval of the shareholders of the Company, no
amendment shall be made which (i) increases the aggregate number of shares of
Common Stock that may be issued or transferred pursuant to Stock Incentive
Options as provided in paragraph (a) of Section 5, (ii) materially increases
the benefits accruing to participants under the Plan, (iii) materially
modifies the requirements as to eligibility for participation in the Plan,
(iv) amends Section 8 to extend the term of the Plan, (v) amends this section
10 or which would otherwise invalidate this Plan under Section 422 of the
Internal Revenue Code.
(b) The Committee may, by resolution adopted by a majority
of the entire Committee, discontinue the Plan.
(c) No amendment or discontinuance of the Plan by the
Committee or the shareholders of the Company shall adversely affect, except
with the consent of the holder, any Incentive Stock Option theretofore
granted.
11. Compliance with Section 422 of the Internal Revenue Code. This
Plan is intended to comply with the provisions of Section 422 of the Internal
<PAGE>
Revenue Code and to the extent inconsistent or non-complying, the provisions
of said section shall be deemed applicable to this Plan.
12. No Guarantee of Employment by Participation.
Nothing in the Plan shall interfere with or limit in any way the
right of the Company to terminate any employee's employment at any time, nor
confer upon any employee any right to continue in the employment of the
Company.
<PAGE>
EASTCO INDUSTRIAL SAFETY CORP.
1996 NON-QUALIFIED STOCK OPTION PLAN
SECTION 1 - OBJECTIVE
The objective of the Eastco Industrial Safety Corp. 1996
Non-Qualified Stock Option Plan (the "Plan") is to attract and retain the best
available executive personnel, other key employees, consultants and others to
be responsible for the management, growth and success of the business, and to
provide an incentive for such individuals to exert their best efforts on
behalf of the Company and it shareholders.
SECTION 2 - DEFINITIONS
Unless otherwise required by the context, the following terms, when
used in the Plan, shall have the meanings set forth in section 2. In addition
to the definitions provided in this section 2, certain words and phrases used
in the Plan and any Agreement (as herein defined) may be defined elsewhere in
the Plan or in such Agreement.
Act: The Securities Exchange Act of 1934, as amended.
Agreement: The document which evidences the grant of any Award
under the Plan and which sets forth the terms, conditions, and
limitations relating to such Award.
Award: The grant of any stock option.
Board: The Board of Directors of Eastco Industrial Safety Corp.
Code: The Internal Revenue Code of 1986, as amended, and including
the regulations promulgated pursuant thereto.
Committee: (i) The Stock Option Committee of the Board of Directors
of the Company, which shall consist of two or more members; or (ii)
<PAGE>
such other entity as authorized under Rule 16b-3 promulgated under
the Act, as the same may be amended or supplemented from time to
time. The members of the Committee shall be "disinterested"
persons within the meaning of Rule 16b-3. No member of the
Committee shall be eligible to receive Awards under the Plan unless
permitted by such Rule 16b-3.
Common Stock: The present shares of Common Stock of the Company,
and any shares into which such shares are converted, changed or
reclassified.
Company: Eastco Industrial Safety Corp., a New York corporation,
and its groups, divisions and subsidiaries.
Employee: Any person employed by the Company as an employee.
Fair Market Value or "FMV": The fair market value of Common Stock
on a particular day shall be the closing price of the Common Stock
on NASDAQ, or if not applicable, by the National Quotations Bureau
or any other national stock exchange on which the Common Stock is
traded, on such date.
Option: The right to purchase Common Stock of the Company at a
stated price for a specified period of time. For purposes of the
Plan, the option is a Non-Qualified Stock Option.
Participant: Any Employee designated by the Committee to
participate in the Plan.
Shares: Shares of Common Stock.
SECTION 3 - COMMON STOCK
3.1 - Number of Shares. Subject to the provisions of Section 3.3, the
number of Shares which may be issued for Options granted under the Plan may
not exceed 300,000 Shares.
3.2 - Re-Usage. If an Option expires or is terminated, surrendered, or
<PAGE>
canceled without having been fully exercised, or if any other grant results in
any Shares not being issued, the Shares covered by such Option shall again be
immediately available for Awards under the Plan.
3.3 - Adjustments. In the event of any change in the outstanding
Common Stock by reason of a stock split, stock dividend, combination,
reclassification or exchange of Shares, recapitalization, merger,
consolidation or other similar event, the number of Shares available for
Options, and the number of Shares subject to outstanding Options, and the
price thereof, and the Fair Market Value, as applicable, shall be
proportionately adjusted by the Committee in its sole discretion and any such
adjustment shall be binding and conclusive on all parties. Any fractional
Shares resulting from any such adjustment shall be disregarded.
SECTION 4 - ELIGIBILITY AND PARTICIPATION
Participants in the Plan shall be those key employees, consultants,
and others selected by the Committee to participate in the Plan who hold
positions of responsibility and whose participation in the Plan the Committee
or management of the Company determines to be in the best interests of the
Company.
SECTION 5 - ADMINISTRATION
5.1 - Committee. The Plan shall be administered by a stock option
committee, or other entity as may be authorized under Rule 16b-3 of the Act.
The members of the Committee shall be appointed by and shall serve at the
pleasure of the Board, which may from time to time change the Committee's
membership.
5.2 - Authority. The Committee shall have the sole and complete
authority to:
(a) determine the individuals to whom awards are
granted, the amounts of the awards to be granted
and the time of all such grants;
<PAGE>
(b) determine the terms, conditions and provisions of,
and restrictions relating to, each Award granted;
(c) interpret and construe the Plan and all Agreements;
(d) prescribe, amend and rescind rules and regulations
relating to the Plan;
(e) determine the content and form of all Agreements;
(f) determine all questions relating to Awards under
the Plan;
(g) maintain accounts, records and ledgers relating to
Awards;
(h) maintain records concerning its decisions and
proceedings;
(i) employ agents, attorneys, accountants or other
persons for such purposes as the Committee
considers necessary or desirable;
(j) do and perform all acts which it may deem necessary
or appropriate for the administration of the Plan
and to carry out the objectives of the Plan.
5.3 - Determinations. All determinations, interpretations, or other
actions made or taken by the Committee pursuant to the provisions of the Plan
shall be final, binding and conclusive for all purposes and upon all persons.
5.4 - Delegation. Except as required by Rule 16b-3 promulgated under
the Act (and any successor to such rule) with respect to the grant of Awards
to Participants who are subject to Section 16 of the Act, the Committee may
delegate to appropriate senior officers of the Company its duties under the
Plan pursuant to such conditions and limitations as the Committee may
establish.
SECTION 6 - STOCK OPTIONS
6.1 - Type of Option. It is intended that only non-qualified stock
options may be granted by the Committee under the Plan.
6.2 - Grant of Option. An Option may be granted to Participants at
<PAGE>
such time or times as shall be determined by the Committee. Each Option shall be
evidenced by an Option Agreement that shall specify the exercise price, the
duration of the Option, the number of Shares to which the Option applies, and
such other terms and conditions not inconsistent with the Plan as the
Committee shall determine.
6.3 - Option Price. The per share option price shall be not less than
100% of the Fair Market Value at the time the Option is granted.
6.4 - Exercise of Options. Options awarded under the Plan shall be
exercisable at such times and shall be subject to such restrictions and
conditions, including the performance of a minimum period of service after the
grant, as the Committee may impose, which need not be uniform for all
participants; provided, however, that no Option shall be exercisable for more
than 10 years after the date on which it is granted.
6.5 - Payment. The Committee shall determine the procedures governing
the exercise of Options, and shall require that the per share option price be
paid in full at the time of the exercise. The Committee may, in its
discretion, permit a Participant to make payment in cash, in Shares already
owned by the Participant, valued at the Fair Market Value thereof, as partial
or full payment of the exercise price or through a "Cashless Exercise".
If a Participant elects to utilize a Cashless Exercise, he shall be
entitled to a credit equal to the amount of that equity by which the current
Fair Market Value exceeds the option price on that number of options
surrendered and to utilize that credit to exercise additional options held by
him that such equity could purchase. There shall be canceled that number of
options utilized for the credit and for the options exercised for such credit.
For example, if the Participant has options to acquire 20,000 shares which are
exercisable, the Fair Market Value is $2.00 per share, the exercise price is
$1.25 per share, and the Participant elects to utilize for a credit 10,000
options ($7,500), then upon a Cashless Exercise in connection therewith he
shall be entitled to acquire 6,000 shares of Common Stock in
<PAGE>
exchange for the options for 10,000 shares for which a credit has been
received and option for 6,000 shares have been exercised. The Participant will
still have exercisable options to acquire 4,000 shares of Common Stock.
As soon as practical after full payment of the exercise price, the
Company shall deliver to the Participant a certificate or certificates
representing the acquired shares.
6.6 - Rights of a Shareholder. Until the exercise of an Option and
the issuance of the Shares in respect thereof, a Participant shall have no
rights as a Shareholder with respect to the Shares covered by such Option.
SECTION 7 - AMENDMENT, MODIFICATION AND TERMINATION OF PLAN
The Board of Directors at any time may terminate or suspend the Plan,
and from time to time may amend or modify the Plan. No amendment,
modification, or termination of the Plan shall in any manner adversely affect
any Award theretofore granted under the Plan without the consent of the
Participant.
SECTION 8 - TERMINATION OF EMPLOYMENT
8.1 - Termination of Employment Due to Retirement. Unless otherwise
determined by the Committee at the time of grant, in the event a Participant's
employment terminates by reason of retirement, any Option granted to such
Participant which is then outstanding may be exercised by the Participant at
any time prior to the expiration of the term of the Option or within one (1)
year following the Participant's termination of employment, whichever period
is shorter.
8.2 - Termination of Employment Due to Death or Disability. Unless
otherwise determined by the Committee at the time of grant, in the event a
Participant's employment is terminated by reason of death or disability, any
Option granted to such Participant which is then outstanding may be exercised
by the Participant or the Participant's legal representative at any time
<PAGE>
prior to the expiration date of the term of the Option or within six (6)
months following Participant's termination of employment, whichever period is
shorter.
8.3 - Termination of Employment for Any Other Reason. Unless
otherwise determined by the Committee at the time of grant, in the event the
employment of the Participant shall terminate for any reason other than
misconduct or one described in Section 8.1 or 8.2, any Option granted to such
Participant which is then outstanding may be exercised by the Participant at
any time prior to the expiration date of the term of the Option or within
three (3) months following the Participant's termination of employment,
whichever period is shorter. If the employment of a Participant is terminated
by the Company by reason of the Participant's misconduct, any outstanding
Option shall cease to be exercisable on the date of the Participant's
termination of employment. As used herein, "misconduct" means that the
Participant has engaged, or intends to engage, in competition with the
Company, has induced any customer of the Company to breach any contract with
the Company, has made any unauthorized disclosure of any of the secrets or
confidential information of the Company, has committed an act of embezzlement,
fraud, or theft with respect to the property of the Company, or has
deliberately disregarded the rules of the Company in such manner as to cause
any loss, damage, or injury to, or otherwise endanger the property,
reputation, or employees of the Company or has otherwise failed to act in a
faithful or diligent manner on behalf of the Company. The Committee shall
determine whether a Participant's employment is terminated by reason of
misconduct.
8.4 - Accrual of Right at Date of Termination. The Participant shall
have the right to exercise an Option as indicated in Sections 8.1, 8.2 and 8.3
only to the extent the Participant's right to exercise such Option had accrued
at the date of termination of employment pursuant to the terms of the Option
Agreement and had not previously been exercised.
<PAGE>
SECTION 9 - MISCELLANEOUS PROVISIONS
9.1 - Non-Transferability of Awards. Unless otherwise determined by
the Committee at the time of grant, and except as provided in Section 8, no
Awards granted under the Plan shall be assignable, transferable, or payable to
or exercisable by anyone other than the Participant to whom it was granted.
9.2 - No Guarantee of Employment by Participation. Nothing in the
Plan shall interfere with or limit in any way the right of the Company to
terminate any Participant's employment at any time, nor confer upon any
Participant any right to continue in the employment of the Company. No
employee shall have a right to be selected as a Participant, or, having been
so selected, to receive any future Awards.
9.3 - Tax Withholding. The Company shall have the authority to
withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy federal, state and local withholding tax requirements on
any Award under the Plan, and the Company may defer payment of cash or
issuance of Shares until such requirements are satisfied. The Committee may,
in its discretion, permit a Participant to elect, subject to such conditions
are the Committee shall require, to have Shares otherwise issuable under the
Plan withheld by the Company and having a Fair Market Value sufficient to
satisfy all or part of the Participant's estimated total federal, state and
local tax obligation associated with the transaction.
9.4 - Governing Law. The Plan and all determinations made and actions
taken pursuant hereto, to the extent not otherwise governed by the Code or
Act, shall be governed by the laws of the State of New York and construed in
accordance therewith.
9.5 - Effective Date. The Plan shall be submitted to the Shareholders
of the Company for approval at the Special Meeting of Shareholders of the
Company scheduled to be held on August 12, 1996 (the "Special Meeting") and
shall be effective immediately upon: (i) such approval by the Shareholders
<PAGE>
of the Company, provided, however, that no Award requiring the issuance of
shares shall be exercised or paid out unless at the time of such exercise or
payout (a) such Shares are covered by a currently effective registration
statement filed under the Securities Act of 1933, as amended, if one is then
required, or in the sole opinion of the Company and its counsel such issuance
of Shares is otherwise exempt from the registration requirements of such Act,
and (b) such Shares are quoted on NASDAQ or on any other securities exchange
upon which the Common Stock of the Company is listed; (ii) shareholder
approval and adoption at the Special Meeting of a one-for-ten reverse stock
split of the Company's Common Stock (the "Reverse Split"); and (iii)
completion of the Reverse Split. The Plan shall terminate May 12, 2006.
9.6 - Provisions Relating to Section 16 Persons. Notwithstanding any
other provision herein, any Award granted hereunder to an Employee who is then
subject to Section 16 of the Act shall not be transferrable other than by will
or the laws of descent and distribution and shall be exercisable during the
Employee's lifetime only by him or by his guardian or legal representative.
<PAGE>
Exhibit 99.03
AMENDED WARRANT
---------------
No sale, offer to sell or transfer
of the securities represented by this
certificate or any interest therein
shall be made unless a registration
statement under the Securities Act of
1933, as amended, with respect to such
transaction is then in effect, or the
issuer has received an opinion of
counsel satisfactory to it that such
transfer does not require registration
under that Act.
This warrant will be void after 5:00 p.m. New York time on March 31, 1997.
AMENDED NON-REDEEMABLE COMMON STOCK PURCHASE WARRANT
To subscribe for the Purchase of up to 400,000 Shares of Common Stock of
EASTCO INDUSTRIAL SAFETY CORP.
(Transferability Restricted as Provided in Paragraphs 7 and 8 Below)
THIS CERTIFIES THAT, for value received, the Holder hereof or his
registered assigns, is entitled to subscribe for and purchase from Eastco
Industrial Safety Corp., incorporated under the laws of the State of New York
(the "Company"), up to 400,000 fully paid and non-assessable shares of Common
Stock, at the "Warrant Price" and during the period hereinafter set forth,
subject, however, to the provisions and upon the terms and conditions
hereinafter set forth.
1. DEFINITIONS. As used herein:
1.1 "Common Stock" or "Common Shares" shall refer to the Company's
common stock, $.12 par value per share.
1.2 "Holder" shall refer to the registered holder of
<PAGE>
this Warrant.
1.3 "Warrant Price" shall refer to the amount required to purchase
a share of Common Stock and shall be $2.00 which is subject
to adjustment pursuant to Section 3 hereof.
2. EXERCISE OF WARRANT.
2.1 Exercisability. The purchase rights represented by this
Warrant may be exercised by the Holder, in whole or in part, at any time and
from time to time, during the period commencing on the date hereof (the
"Commencement Date") until 5:00 p.m. New York Time on March 31, 1997 (the
"Expiration Date"), by the presentation of this Warrant, with the purchase
form attached duly executed, at the Company's office (or such office or agency
of the Company as it may designate in writing to the Holder hereof by notice
pursuant to Section 9 hereof), and upon payment by the Holder to the Company
in cash, by certified check or bank draft, or wire transfer of immediately
available funds of the Warrant Price for such Common shares. The Company
agrees that the Holder hereof shall be deemed on the date on which this
Warrant shall have been presented and payment made for such Common Shares as
aforesaid whether or not the Company or its transfer agent is open for
business. Certificates for the Common Shares so purchased shall be delivered
to the Holder hereof with a reasonable time, not exceeding fifteen (15) days,
after the rights represented by this Warrant shall have been so exercised. If
this Warrant shall be exercised in part only, the Company shall, upon
surrender of this Warrant for cancellation deliver a new Warrant evidencing
the rights of the Holder hereof to purchase the balance of the Common Shares
which such Holder is entitled to purchase under the terms and conditions
hereunder.
3. ANTIDILUTION PROVISIONS. Any and all of the shares of the Common stock
of the Company which may be acquired by the Holder or his registered assigns
as a result of the exercise, in whole or in part, of this Warrant, shall be
subject to the antidilution adjustments set forth below.
A. In case the Company shall (i) declare a dividend on its Common
Stock in shares of its capital stock, (ii) subdivide its outstanding
Common stock, (iii) combine its
2
<PAGE>
outstanding Common Stock into a smaller number of shares, or (iv) issue
any shares by reclassification of its Common Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing corporation), the Warrant Price in effect
at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification shall be
proportionally adjusted so that the Holder shall be entitled to receive
the kind and aggregate number of shares of Common Stock which it would
have owned or would have been entitled to receive after the happening of
any of the events described above on any record date with respect
thereto, if this Warrant had been exercised immediately prior to such
time such dividend, subdivision, combination or reclassification
occurred. Such adjustment shall be made successively whenever any event
listed above shall occur.
B. In case the Company shall fix a record date for the issuance of
rights of warrants to the holders of its Common Stock entitling them
(for a period expiring within 45 days after such record date) to
subscribe for or purchase shares of Common stock at a price per share
less than the current Warrant Price on such record date, the Warrant
Price shall be adjusted so that the same shall equal the price
determined by multiplying the Warrant Price in effect immediately prior
to such record date by a fraction, of which the numerator shall be the
number of shares of Common Stock outstanding on such record date plus
the number of additional shares of Common Stock which the aggregate
offering price of the total number of shares of Common Stock so offered
would purchase at the current Warrant Price, and of which the
denominator shall be the number of shares of Common Stock outstanding on
Stock offered for subscription or purchase. Such adjustment shall be
made successively whenever such a record date is fixed; and in the event
that such rights or warrants are not so issued, the Warrant Price shall
again be adjusted to be the Warrant Price which would then be in effect
if such record date has not been fixed.
C. In case the Company shall fix a record date for the making of a
distribution to the holders of its Common Stock (including any such
distribution made in connection
3
<PAGE>
with a consolidation or merger in which the Company is the continuing
corporation) of evidences of its indebtedness or assets (other than cash
dividends out of earned surplus) or subscription rights or warrants
(excluding those referred to in Paragraph B above), then in each such
case the Warrant Price in effect after such record date shall be
determined by multiplying the Warrant Price in effect immediately prior
to such record date by a fraction, of which the numerator shall be the
total number of outstanding shares of Common Stock multiplied by the
current Warrant Price, less the fair market value (as determined in good
faith by the Company's Board of Directors, whose determination shall be
conclusive) of the portion of the assets or evidences of indebtedness so
to be distributed or of such subscription rights or warrants, and of
which the denominator shall be the total number of outstanding shares of
Common Stock on such record date multiplied by the current Warrant
Price. Such adjustment shall be made successively whenever such a record
date is fixed.
D. In case the Company shall issue shares of its Common Stock,
excluding shares issued (i) in any of the transactions described in
Paragraph A above, (ii) upon conversion or exchange of securities
convertible into or exchangeable for Common Stock, (iii) upon exercise
of options granted under the Company's Stock Option Plans, as amended to
date, if such shares would otherwise be included in this Paragraph D, or
(iv) upon exercise of rights or warrants issued to the holders of the
Common Stock, but only if no adjustment is required pursuant to this
Section 3 (without regard to Paragraph I of this Section 3) with respect
to the transaction giving rise to such rights for a consideration per
share less than the current Warrant Price on the date the Company fixes
the offering price of such additional shares, the Warrant Price shall be
adjusted immediately thereafter so that it shall equal the price
determined by multiplying the Warrant Price in effect immediately prior
thereto by a fraction, of which the numerator shall be the total number
of shares of Common Stock outstanding immediately prior to the issuance
of such additional shares plus the number of shares of Common Stock
which the aggregate consideration received (determined as provided in
Paragraph G below) for the issuance of such additional
4
<PAGE>
shares would purchase at the current Warrant Price, and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately after the issuance of such additional shares. Such
adjustment shall be made successively whenever such an issuance is made.
E. In case the Company shall issue any securities convertible into
or exchangeable for its Common Stock (excluding securities issued in
transactions described in Paragraphs B and C above for a consideration
per share of Common Stock initially deliverable upon conversion or
exchange of such securities (determined as provided in Paragraph G
below) less than the current Warrant Price in effect immediately prior
to the issuance of such securities, the Warrant Price shall be adjusted
immediately thereafter so that it shall equal the price determined by
multiplying the Warrant Price in effect immediately prior thereto by a
fraction, of which the numerator shall be the number of shares of Common
Stock outstanding immediately prior to the issuance of such securities
plus the number of shares of Common Stock which the aggregate
consideration received (determined as provided in Paragraph G below) for
such securities would purchase at the current Warrant Price, and of
which the denominator shall be the number of shares of Common Stock
outstanding immediately prior to such issuance plus the maximum number
of shares of Common Stock of the Company deliverable upon conversion of
or in exchange for such securities at the initial conversion or exchange
price or rate. Such adjustment shall be made successively whenever such
an issuance is made.
F. Whenever the Warrant Price payable upon exercise of this Warrant
is adjusted pursuant to Paragraphs A, B, C, D or E above, the number of
shares of shares of Common Stock purchasable upon exercise of this
Warrant shall simultaneously be adjusted by multiplying the number of
shares of Common Stock initially issuable upon exercise of this Warrant
by the Warrant Price in effect on the date immediately preceding such
event and dividing the product so obtained by the Warrant Price, as
adjusted.
G. For purposes of any computation respecting consideration received
pursuant to Paragraphs D and E above, the following shall apply:
5
<PAGE>
(i) in the case of the issuance of shares of
Common Stock for cash, the consideration shall be
the amount of such cash, provided that in no case
shall any deduction be made for any commissions,
discounts or other expenses incurred by the
Company for any underwriting of the issue or
otherwise in connection therewith;
(ii) in the case of the issuance of shares of
Common Stock for a consideration in whole or in
part other than cash, the consideration other than
cash, shall be deemed to be the fair market value
thereof as determined in good faith by the Board
of Directors of the Company (irrespective of the
accounting treatment thereof), whose determination
shall be conclusive; and
(iii) in the case of the issuance of
securities convertible into or exchangeable for
shares of Common Stock, the aggregate
consideration received therefor shall be deemed to
be the consideration received by the Company for
the issuance of such securities plus the
additional minimum consideration, if any, to be
received by the Company upon the conversion or
exchange thereof (the consideration in each case
to be determined in the same manner as provided in
clauses (i) and (ii) of this Paragraph G).
H. No adjustment in the Warrant Price shall be required unless such
adjustment would require an increase or decrease of at least five
($0.05) cents in such price, provided, however, that any adjustments
which by reason of this Paragraph H are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 3 shall be made to the nearest cent or
to the nearest one-thousandth of a share, as the case may be. Anything
in this Section 3 to the contrary notwithstanding, to make such changes
in the Warrant Price, in addition to those required by this Section 3,
as it, in its discre-
6
<PAGE>
tion, shall determine to be advisable in order that any share dividend,
subdivision of Common Stock, distribution of rights or warrants to purchase
Common Stock or distribution of evidences of indebtedness or other assets
(other than distribution of cash) hereafter made by the Company to the
holders of its Common Stock shall not result in any tax to the holders of
its Common Stock or securities convertible into Common Stock.
I. Whenever the Warrant Price is adjusted, as herein provided, the
Company will promptly prepare a certificate signed by the President and
Chief Financial Officer of the Company setting forth (i) the Warrant
Price as so adjusted, (ii) the number of shares of Common Stock or other
securities purchasable upon exercise of this Warrant after such
adjustment, and (iii) a brief statement of the facts accounting for such
adjustment. The Company will promptly file such certificate with the
Warrant Agent and cause a brief summary thereof to be sent by ordinary
first class mail to the Holder, at his last address as it shall appear
in the Warrant Register. The affidavit of an officer of the Warrant
Agent or the Secretary of the Company that such notice has been mailed
shall, in the absence of fraud, be prima facie evidence of the facts
stated therein. The Company may retain a firm of independent public
accountants of recognized standing selected by the Board of Directors
(who may be the regular accountants employed by the Company) to make any
computation required by this Section 3, and a certificate signed by such
firm shall be conclusive evidence of the correctness of such adjustment.
J. In the event that at any time, as a result of an adjustment made
pursuant to Paragraph A above, the Holder thereafter shall become
entitled to receive any shares of the Company, other than Common Stock,
thereafter the number of such other shares so receivable upon exercise
of this Warrant shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in Paragraphs A to
H, inclusive, above.
4. EXCHANGE OF WARRANTS. Subject to the provisions of Section 7 hereof, (i)
this Warrant is exchangeable at the option of
7
<PAGE>
the Holder at the aforesaid office of the Company for other Warrants of
different denominations entitling the Holder thereof to purchase in the
aggregate the same number of Common Shares as are purchasable hereunder; and
(ii) this Warrant may be divided or combined with other Warrants which carry
the same rights, in either case, upon presentation hereof at the aforesaid
office of the Company together with a written notice, signed by the Holder
hereof, specifying the names and denominations in which new Warrants are to be
issued, and the payment of any transfer tax due in connection herewith.
5. COVENANTS BY THE COMPANY. The Company covenants and agrees that:
5.1 During the period within which the rights represented by this
Warrant may be exercised, the Company shall, at all times, reserve and keep
available out of its authorized capital stock, solely for the purposes of
issuance upon exercise of this Warrant, such number of its Common Shares as
shall be issuable upon the exercise of this Warrant; and if at any time the
number of authorized Common Shares shall not be sufficient to effect the
exercise of this Warrant included therein, the Company will take such
corporate action as may be necessary to increase its authorized by unissued
Common Shares to such number of shares as shall be sufficient for such
purpose; the Company shall have analogous obligations with respect to any
other securities or property issuable upon exercise of this Warrant.
5.2 All Common Shares which may be issued upon exercise of the
rights represented by this Warrant included herein will upon issuance be
validly issued, fully paid, non-assessable and free from all taxes, liens and
charges with respect to the issuance thereof.
5.3 All original issue taxes payable in respect to the issuance of
Common Shares upon the exercise of the rights represented by this Warrant
shall be borne by the Company, but in no event shall the Company be
responsible or liable for income taxes or transfer taxes upon the transfer of
this Warrant.
6. NO RIGHTS AS A SHAREHOLDER. Until exercised, this Warrant shall not
entitle the Holder hereof to any voting rights or any other rights as a
shareholder of the Company.
8
<PAGE>
7. RESTRICTIONS ON TRANSFERABILITY. This Warrant and the Common Stock
issuable hereunder shall not be sold, transferred, assigned or hypothecated
except in conformity with the applicable provisions of the Securities Act of
1933, as then in force )the "Act"), or any similar Federal statue then in
force, and all applicable "Blue Sky" laws. This Warrant and the Common Stock
issuable hereunder may not be issued, sold, transferred, assigned or
hypothecated unless and until there has been compliance, in the opinion of
counsel to the Company, with all legal requirements applicable to the sale,
transfer, assignment or hypothecation of such shares. In connection with any
such issuance, sale, transfer, assignment or hypothecation, the Holder, if
requested by the Company, shall give assurances satisfactory to counsel to the
Company that the Common Shares are being acquired for investment and not with
a view to resale or distribution thereof, and such other assurances as the
Company may deem desirable to assure compliance with all applicable legal
requirements, including but no limited to compliance with the Act.
8. LEGEND. This Warrant and the shares of Common Stock to be issued upon
exercise of this Warrant shall not be registered under the Act. All
certificates representing Common Stock issued upon exercise of this Warrant
shall bear a restrictive legend containing the following language:
NO SALE, OFFER TO SELL OR TRANSFER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE OR ANY
INTEREST THEREIN SHALL BE MADE UNLESS A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED, WITH RESPECT TO SUCH TRANSACTION
IS THEN IN EFFECT, OR THE ISSUER HAS RECEIVED AN
OPINION OF COUNSEL SATISFACTORY TO IT THAT SUCH
SALE, OFFER TO SELL OR TRANSFER DOES NOT REQUIRE
REGISTRATION UNDER THAT ACT.
9. REGISTRATION AND INDEMNIFICATION RIGHTS. The Company hereby covenants
to register this Warrant, and all of the shares which may be acquired as a
result of any exercise hereunder, at the Company's own expense, concurrently
with any registration or qualification of its Common Stock or the securities
(except on a Form S-8 or similar registration statement) in a manner
appropriate
9
<PAGE>
to permit the distribution of this Warrant and such shares at anytime within
seven (7) years of June 29, 1993. In connection with any offering by the
Holder, the Company agrees to enter into an agreement with the Holder, and any
person acting on behalf of the Holder, to indemnify the Holder and such
persons from any liability arising from any material misstatements or
omissions made by the Company in such Registration Statement. The Company
further covenants to use its best-efforts to keep such Registration Statement
in effect for the then balance of the life of this Warrant.
10. SUBSEQUENT HOLDERS. Every holder hereof, by accepting the same,
agrees with any subsequent holder hereof and with the Company that this
Warrant and all rights hereunder are issued and shall be held subject to all
of the terms, conditions, limitation and provisions set forth in this Warrant,
and further agrees that the Company and its transfer agent may deem and treat
the registered holder of this Warrant as the absolute owner hereof for all
purposes and shall not be affected by any notice to the contrary.
11. AMENDMENT TO FIRST NON-REDEEMABLE COMMON STOCK PURCHASE WARRANT. This
Amended Warrant amends the terms and provisions of the First Non-Redeemable
Common Stock Purchase Warrant, dated June 29, 1993, issued by the Company to
Scorpio Partners L.P.
12. NOTICES. All notices required hereunder shall be given by first-class
mail, postage prepaid, if given by the Holder, addressed to the Company at 130
West 10th Street, Huntington Station, New York 11746 or such other address as
the Company may designate in writing to the Holder; and if given by the
Company, addressed to the Holder at the address of the Holder shown on the
books of the Company.
13. GOVERNING LAW. The validity, construction and enforcement of this
Warrant shall be governed in all respects by the laws of the State of New
York, without giving effect to any principles of conflicts of laws thereunder,
and jurisdiction is hereby vested in the courts of said State in the event of
the institution of any legal action under this Warrant.
10
<PAGE>
IN WITNESS WHEREOF, EASTCO INDUSTRIAL SAFETY CORP. has caused this
Warrant to be amended, signed by its duly authorized officers under its
corporate seal, and to be dated as of January 31, 1994.
EASTCO INDUSTRIAL SAFETY CORP.
BY: /s/ Alan E. Densen
----------------------------
ALAN E. DENSEN, President
Attest:
/s/ Anthony P. Towell
- --------------------------
Secretary
(Corporate Seal)
11
<PAGE>
PURCHASE FORM
To Be Executed
Upon Exercise of Warrant
The undersigned hereby exercises the right to purchase
_________________________ shares of Common Stock, evidenced by the within
Warrant, according to the terms and conditions thereof, and herewith makes
payment of the purchase price in full. The undersigned requests that
certificates for such shares and warrants shall be issued in the name set
forth below.
Date: ,19
-----------------------------------
Signature
-----------------------------------
Print Name of Signatory
-----------------------------------
Name to whom certificates are to
be issued if different from above
Address:
-----------------------------------
-----------------------------------
Social Security No.
-----------------------------------
or other identifying number:
-----------------------------------
-----------------------------------
If said number of shares and warrants shall not be all the shares and
warrants purchasable under the within Warrant, the undersigned requests that a
new Warrant for the unexercised portion shall be registered in the name of:
-----------------------------------
Please Print
Address:
-----------------------------------
-----------------------------------
Social Security No.
-----------------------------------
or other identifying number:
-----------------------------------
-----------------------------------
-----------------------------------
Signature
12
<PAGE>
Exhibit 99.04
OPTION AGREEMENT granted as of the 20th day of January, 1995 between
EASTCO INDUSTRIAL SAFETY CORP., a New York corporation with offices at 130
West 10th Street, Huntington Station, New York 11746 (hereinafter the
"Company") (which includes its subsidiaries) and residing at c/o Eastco
Industrial Safety Corp., 130 W. 10th Street, Huntington Station, New York
11746 (hereinafter the "Optionee").
WHEREAS, the Company has begun to achieve a dramatic turnaround in
its financial condition,
WHEREAS, the Optionee has heretofore taken substantial reductions in
salary, given up options and made numerous sacrifices in order to achieve such
turnaround,
WHEREAS, the Company acknowledges that such financial turnaround can
be traced to the efforts and leadership of the Optionee,
WHEREAS, the Company desires to restore an option to the Optionee,
but only on the condition that the Company be profitable for fiscal 1995 and
1996, and
NOW THEREFORE, in consideration of the covenants contained herein it
is agreed as follows:
1. Grant. The Company hereby grants the Optionee an option to
purchase up to 400,000 shares of common stock of the Company, par value $0.12
per share ("Common Stock").
2. Exercise Price. The exercise price of the option shall be $1.0625
per share (the "Exercise Price" or "Option Price"), subject to adjustment as
provided hereunder. The purchase price may be paid for in cash, an exchange of
stock valued at the average closing price for the ten (10) day period ending
five (5) days prior to the exercise of the Option (the "Closing Price"). The
options hereunder may be exercised in whole or in part. It shall be a
condition to the obligation of the Company to issue shares of Common Stock
upon the exercise of an option, that the Optionee pay to the Company upon its
demand, such amount as may be requested by the Company for the purpose of
satisfying any liability to withhold federal, state, local and foreign income
or other taxes. If the amount requested is not paid, the Company may refuse to
issue shares of Common Stock.
3. Antidilution Provisions. Any and all of the shares of the Common
Stock of the Company which may be acquired by the Optionee or his registered
assigns as a result of the exercise, in whole or in part, of this Option,
shall be subject to the antidilution adjustment set forth below.
3.1 In case the Company shall (i) declare a dividend on its
Common Stock in shares of its capital stock, (ii) subdivide its outstanding
Common Stock, (iii) combine its outstanding Common Stock into a smaller number
of shares, or (iv) issue any shares by reclassification of its Common Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing corporation), the Option Price
in effect at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification
<PAGE>
shall be proportionally adjusted so that the Optionee shall be entitled to
receive the kind and aggregate number of shares of Common Stock which it would
have owned or would have been entitled to receive after the happening of any
of the events described above on any record date with respect thereto, if this
Option had been exercised immediately prior to such time such dividend,
subdivision, combination or reclassification occurred. Such adjustment shall
be made successively whenever any event listed above shall occur.
3.2. In case the Company shall fix a record date for the
issuance of rights or warrants to the holders of its Common Stock entitling
them (for a period expiring within 45 days after such record date) to
subscribe for or purchase shares of Common Stock at a price per share less
than the current Option Price on such record date, the Option Price shall be
adjusted so that the same shall equal the Price determined by multiplying the
Option Price in effect immediately prior to such record date by a fraction, of
which the numerator shall be the number of shares of Common Stock outstanding
on such record date plus the number of additional shares of Common Stock which
the aggregate offering price of the total number of shares of Common Stock so
offered would purchase at the current Option Price, and of which the
denominator shall be the number of shares of Common Stock outstanding on such
record date plus the number of shares of Common Stock offered for subscription
or purchase. Such adjustment shall be made successively whenever such a record
date is fixed; and in the event that such rights or warrants are not so
issued, the Option Price shall again be adjusted to be the Option Price which
would then be in effect if such record date has not been fixed.
3.3 In case the Company shall fix a record date for the
making of a distribution to the holders of its Common Stock (including any
such distribution made in connection with a consolidation or merger in which
the Company is the continuing corporation) of evidences of its indebtedness or
assets (other than cash dividends out of earned surplus) or subscription
rights or warrants (excluding those referred to in Paragraph 3.2 above), then
in each such case the Option Price in effect after such record date shall be
determined by multiplying the Option Price in effect immediately prior to such
record date by a fraction, of which the numerator shall be the total number of
outstanding shares of Common Stock multiplied by the current Option Price,
less the fair market value (as determined in good faith by the Company's Board
of Directors, whose determination shall be conclusive) of the portion of the
assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants, and of which the denominator shall be the
total number of outstanding shares of Common Stock on such record date
multiplied by the current Option Price. Such adjustment shall be made
successively whenever such a record date is fixed.
3.4. In case the Company shall issue shares of its Common
Stock, excluding shares issued (i) in any of the transactions described in
Paragraph 3.1 above, (ii) upon conversion or exchange of securities
convertible into or exchangeable for Common Stock, (iii) upon exercise of
options granted under the stock option plans of the Company, as amended to
date, if such shares would otherwise be included in this Paragraph 3.4, or
(iv) upon exercise of rights or warrants issued to the holders of the Common
Stock, but only if no adjustment is required pursuant to this Section 3
(without regard to Paragraph 3.9 of this Section 3) with respect to the
transaction giving rise to such rights for a consideration per share less than
the current Option Price on the date the Company
<PAGE>
fixes the offering price of such additional shares, the Option Price shall be
adjusted immediately thereafter so that it shall equal the price determined by
multiplying the Option Price in effect immediately prior thereto by a
fraction, of which the numerator shall be the total number of shares of Common
Stock outstanding immediately prior to the issuance of such additional shares
plus the number of shares of Common Stock which the aggregate consideration
received (determined as provided in Paragraph 3.7 below) for the issuance of
such additional shares would purchase at the current Option Price, and of
which the denominator shall be the number of shares of Common Stock
outstanding immediately after the issuance of such additional shares. Such
adjustment shall be made successively whenever such an issuance is made.
3.5 In case the Company shall issue any securities
convertible into or exchangeable for its Common Stock (excluding securities
issued in transactions described in Paragraphs 3.2 and 3.3 above) for a
consideration per share of Common Stock initially deliverable upon conversion
or exchange of such securities (determined as provided in Paragraph 3.7 below)
less than the current Option Price in effect immediately prior to the issuance
of such securities, the Option Price shall be adjusted immediately thereafter
so that it shall equal the Price determined by multiplying the Option Price in
effect immediately prior thereto by a fraction, of which the numerator shall
be the number of shares of Common Stock outstanding immediately prior to the
issuance of such securities plus the number of shares of Common Stock which
the aggregate consideration received (determined as provided in Paragraph 3.7
below) for such securities would purchase at the current Option Price, and of
which the denominator shall be the number of shares of Common Stock
outstanding immediately prior to such issuance plus the maximum number of
shares of Common Stock of the Company deliverable upon conversion of or in
exchange for such securities at the initial conversion or exchange price or
rate. Such adjustment shall be made successively whenever such an issuance is
made.
3.6. Whenever the Option Price payable upon exercise of this
Option is adjusted pursuant to Paragraphs 3.1, 3.2, 3.3, 3.4 or 3.5 above, the
number of shares of Common Stock purchasable upon exercise of this Option
shall simultaneously be adjusted by multiplying the number of shares of Common
Stock initially issuable upon exercise of this Option by the Option Price in
effect on the date immediately preceding such event and dividing the product
so obtained by the Option Price, as adjusted.
3.7. For purposes of any computation respecting
consideration received pursuant to Paragraphs 3.4 and 3.5 above, the following
shall apply: (i) in the case of the issuance of shares of Common Stock for
cash, the consideration shall be the amount of such cash, provided that in no
case shall any deduction be made for any commissions, discounts or other
expenses incurred by the Company for any underwriting of the issue or
otherwise in connection therewith; (ii) in the case of the issuance of shares
of Common Stock for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair market value
thereof as determined in good faith by the Board of Directors of the Company
(irrespective of the accounting treatment thereof), whose determination shall
be conclusive; and (iii) in the case of the issuance of securities convertible
or exchangeable for shares of Common Stock, the aggregate consideration
received therefor shall be deemed to be the consideration received by the
Company for the issuance of such securities plus the additional minimum
consideration, if any, to be received by the Company upon the
<PAGE>
conversion or exchange thereof (the consideration in each case to be
determined in the same manner as provided in clauses (i) and (ii) of this
Paragraph 3.7).
3.8. No adjustment in the Option Price shall be required
unless such adjustment would require an increase or decrease of at least five
($0.05) cents in such price, provided, however, that any adjustments which by
reason of this Paragraph 3.8 are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 3 shall be made to the nearest cent or to the nearest
one-thousandth of a share, as the case may be. Anything in this Section 3 to
the contrary notwithstanding, the Company shall be entitled, but shall not be
required, to make such changes in the Option Price, in addition to those
required by this Section 3, as it, in its discretion, shall determine to be
advisable in order that any share dividend, subdivision of Common Stock,
distribution of rights or warrants to be purchase Common Stock or distribution
of evidences of indebtedness or other assets (other than distributions of
cash) hereinafter made by the Company to the holders of its Common Stock shall
not result in any tax to the holders of its Common Stock or securities
convertible into Common Stock.
3.9. Whenever the Option Price is adjusted, as herein
provided, the Company will promptly prepare a certificate signed by the
President and Chief Financial Officer of the Company setting forth (i) the
Option Price as so adjusted, (ii) the number of shares of Common Stock or
other securities purchasable upon exercise of this Option after such
adjustment, and (iii) a brief statement of the facts accounting for such
adjustment. The Company will promptly file a certificate with its corporate
record agent and cause a brief summary thereof to be sent by ordinary first
class mail to the Optionee, at his last address as it shall appear on the
Company's option register. The affidavit of an officer of the Option Agent or
the Secretary or an Assistant Secretary of the Company that such notice has
been mailed shall, in the absence of fraud, be prima facie evidence of the
facts stated therein. The Company may retain a firm of independent public
accounts of recognized standing selected by the Board of Directors (who may be
the regular accountants employed by the Company) to make any computation
required by this Section 3, and a certificate signed by such firm shall be
conclusive evidence of the correctness of such adjustment.
3.10. In the event that at any time, as a result of an
adjustment made pursuant to Paragraph 3.1 above, the Optionee thereafter shall
become entitled to receive any shares of the Company, other than Common Stock,
thereafter the number of such other shares so receivable upon exercise of this
Option shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to
the Common Stock contained in Paragraphs 3.1 to 3.8, inclusive, above.
4. Term. The options shall be exercisable for a period of ten (10)
years commencing on January 20, 1995 and shall expire on January 19, 2005.
5 Exercisability. The options shall not be exercisable for a period
of five (5) years except as follows:
5.1 For the fiscal year ended June 30, 1995, should the
Company attain an audited
<PAGE>
annual pre-tax income of at least $50,000, options to purchase up to 200,000
shares of Common Stock shall then become immediately exercisable.
5.2 For the fiscal year ended June 30, 1996, should the
Company attain an audited annual pre-tax income of at least $250,000, options
to purchase up to 200,000 shares of Common Stock shall then become immediately
exercisable.
5.3 If the Company fails to attain the $50,000 plateau
during the fiscal year ended June 30, 1995, should the Company's combined
pre-tax income for the fiscal years ended June 30, 1995 and 1996 exceed
$300,000, then options to purchase up to 4000,000 shares of Common Stock shall
then become immediately exercisable.
5.4 Audited annual pre-tax income shall be as determined in
the Company's filing under form 10k or other comparable annual report to be
filed with the Securities and Exchange Commission for the Company or any
successor to the Company.
5.5 The option shall only be exercisable by the Optionee,
except in the event of the Optionee's death during the term of this option
grant, a duly authorized representative of the Optionee's estate may exercise
such option.
5.6 The Common Stock issued to the Optionee upon the
exercise of this option is deemed "restricted securities" as the term is
defined under the Securities Act of 1933, as amended (the "Act"), and may only
be sold pursuant to a registration under the Act, in compliance with Rule 144
under the Act, pursuant to another exemption therefrom or pursuant to an
opinion of counsel satisfactory to the Employer that registration under the
Act is not required.
6. Notices. All notices or demands required or given under this
Option Agreement shall be in writing and sent by registered mail or certified
mail, return receipt requested, to the addresses hereinabove set forth or to
such other addresses as any of the parties hereto may designate in writing,
transmitted by registered mail or certified mail, return receipt requested, to
the other.
7. Governing Law. This Option Agreement is intended to and shall be
governed in all respects by the laws of the State of New York, without
reference to principles of conflicts of laws.
8. Modifications. This Option Agreement contains the parties entire
understanding with respect to the subject matter hereof and may not be
modified except in writing signed by each of the parties hereto.
9. Binding Agreement. This Option Agreement shall be binding upon the
heirs, successors and assigns of the parties hereto.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year first above written.
EASTCO INDUSTRIAL SAFETY CORP.
By:
-------------------------------
ALAN E. DENSEN
President
By:
-------------------------------
ANTHONY P. TOWELL
Secretary
<PAGE>
PURCHASE FORM
Dated
-------------------------------
The undersigned hereby irrevocably elects to exercise the Option to
the extent of purchasing ________ shares of Common Stock of Eastco Industrial
Safety Corp., and hereby makes payment of $_______ in payment of the actual
excise price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name___________________________________________________________
(please typewrite or print in block letters)
Address________________________________________________________
Signature______________________________________________________
Social Security or Employer I.D. No.___________________________
<PAGE>
EXHIBIT 99.05
SCHEDULE OF PENDING ASBESTOS LITIGATION June 30, 1996
o The actions set forth below in New Jersey are in the Superior Court, Law
Division, Middlesex County.
o The actions set forth below in New York are in the Supreme Court, New York
County (unless otherwise indicated).
o The actions set forth below in Pennsylvania are in Luzerne County, Court of
Common Pleas.
o The actions set forth below in California are in the Superior Court of the
State of California, in and for the County of San Francisco.
** Various counts for unspecified damages including compensation and punitive.
*** Standard complaint as made available to the Company during October, 1989
pursuant to which 10 causes of action are alleged seeking $10,000,000 in
compensatory damages and $20,000,000 in punitive damages on behalf of each
plaintiff.
**** Incorporates standard complaint filed with Middlesex County Clerk in the
State of New Jersey pursuant to which various counts are alleged seeking
unspecified amounts of compensatory and punitive damages on behalf of each
plaintiff.
PLAINTIFFS Number of plaintiffs is as per inception of case or as
otherwise indicated.
DEFENDANTS Number of defendants excludes John Does and unnamed parties.
Certain named defendants are successors to other entities
not included in the count. No representation is made as to
whether the named defendants were all served or are still
party to the actions as to whether additional defendants
have been brought into the actions. No representation is
given as to whether or not all or any of the defendants are
still engaged in business, have insurance, or their ability
to pay any claim judgment against them.
DAMAGES No representation is given as to whether or not complaints
have been amended to reflect different claims or includes
additional plaintiffs. Each action also seeks costs.
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
JAMES 9/1/88 PA CHARKATE 1 16 Y
Action Comments Damages
- ------ -------- -------
James v Master Chemical The Company has been 6 counts each for damages
Products, Inc. et al v brought into this in excess of $20,000 for
Charkate Glove & action as an compensatory and damages
Specialty Company. additional defendant in excess of $20,000 for
by Master Chemical punitive damages.
Products Inc.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
GANDZYK 1/1/89 PA CHARKATE 2 14 Y
Action Comments Damages
- ------ -------- -------
Gandzyk, et al v Master The Company has been 6 counts each for damages
Chemical Products, Inc. brought into this in excess of $20,000 for
et al v Charkate Glove action as an compensatory and damages
& Specialty Company additional defendant in excess of $20,000 for
by Master Chemical punitive damages.
Products Inc.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
ARGENZIANO 2/1/89 NJ EASTCO 1 57 Y
Action Comments Damages
- ------ -------- -------
Argenziano v American The Company has been ****
Insulation Corporation, brought into this
et al and Pulmosan action as a third
Safetyd Equipment Corp. party defendant by
v Eastco Industrial Pulmosan Safety
Safety Corp. a/k/a Equipment Corp. The
Charkate Glove and Company has also
Specialty Co. been brought into
this action as a
third party
defendant by
Safeguard Industrial
Equipment Co.
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
PENTONY 6/1/87 NY EASTCO 2 1 Y
Action Comments Damages
- ------ -------- -------
Pentony, et al v The Company has been 1 cause of action for $10
Charkate & Eastco brought in this million in punitive
Industrial Safety action as a first damages, 1 cause of action
Corporation party defendant for $10 million
compensatory damages and 1
cause of action for
$5000,000 compensatory
damages.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
HORNACK 9/1/88 PA CHARKATE 2 14 Y
Action Comments Damages
- ------ -------- -------
Hornack, et al v Master The Company has been 6 counts each for damages
Chemical Products, brought into this in excess of $20,000 for
Inc., et al v Charkate action as an compensatory damages in
Glove & Specialty additional defendant excess of $20,000 for
Company by Master Chemical punitive damages
Products Inc.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
DANOWSKI 4/1/89 PA PA EASTCO 2 13 Y
Action Comments Damages
- ------ -------- -------
Danowski, et al v The Company has been 6 counts each for damages
Celotex Corporation, brought into this in excess of $20,000 for
Eastco, Inc. a Division action as a first compensatory and damages
of Charkate Glove party defendant. in excess of $20,000 for
Specialty Company punitive damages.
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
NOVAK 6/1/89 NJ CHARKATE 2 16 Y
Action Comments Damages
- ------ -------- -------
Novak, et al v Celotex The Company has been **
Corporation, et al and brought into this
Safeguard Industrial action as a third
Equipment Co. v. party defendant by
Charkate Glove & Safeguard Industrial
Specialty Co.and Rite Equipment Co.
Glove Corp., et al NOTE: During March,
1991 the Company was
brought into this
action as a first
party defendant
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
BEZKOROWAY 6/1/89 NJ CHARKATE 3 57 Y
Action Comments Damages
- ------ -------- -------
Bezkoroway, et al v The Company has been **
American Insulation brought into this
Co., et al and action as a third
Safeguard Industrial party defendant by
Equipment Co. v Safeguard Industrial
Charkate Glove and Equipment Co.
Specialty Co., Inc. and NOTE: During
Rite Glove Corp., et al February 1990 the
Company was brought
into this action as
a third party
defendant by
Pulmosan Safety
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
REALIN 6/1/89 NJ CHARKATE 2 16 Y
Action Comments Damages
- ------ -------- -------
Realin, et al v Celotex The Company has been **
Corporation, et al and brought into this
Safeguard Industrial action as a third
Equipment Co. v party defendant by
Charkate Glove and Safeguard Industrial
Specialty Co., Inc. and Equipment Co.
Rite Glove Co., et al
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
TOMAINE 9/1/89 PA EASTCO 2 16 Y
Action Comments Damages
- ------ -------- -------
Tomaine, et al v The Company has been 6 counts each for damages
Celotex Corporation, brought into this in excess of $20,000 for
Eastco, Inc. a Division action as a first compensatory and damages
of Charkate Glove party defendant. in excess of $20,000 for
Specialty Company punitive damages
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
PACELLI 9/1/89 PA EASTCO 2 16 Y
Action Comments Damages
- ------ -------- -------
Pacelli, et al v The Company has been 6 counts each for damages
Celotex Corporation, brought into this in excess of $20,000 for
Eastco, Inc. a Division action as a first compensatory and damages
of Charkate Glove party defendant. in excess of $20,000 for
Specialty Company punitive damages
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
PAWLSKI 9/1/89 PA EASTCO 2 18 Y
Action Comments Damages
- ------ -------- -------
Pawlski, et al v The Company has been 6 counts each for damages
Celotex Corporation, brought into this in excess of $20,000 for
Eastco, Inc. a Division action as a first compensatory and damages
of Charkate Glove party defendant. in excess of $20,000 for
Specialty Company NOTE: *Refusal to punitive damages
defend with respect
to Hartford
Insurance.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
LEARY 5/1/90 PA EASTCO 2 14 Y
Action Comments Damages
- ------ -------- -------
Leary, et al v Owens The Company has been 6 counts each in excess of
Illinois Glass Company, brought into this $20,000 for compensatory
Eastco, Inc., a action as a first and punitive damages.
Division of Charkate party defendant.
Glove Specialty Co., et
al
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
PETROSKY 6/1/90 PA CHARKATE 2 12 Y
Action Comments Damages
- ------ -------- -------
Petrosky, et al v Charkate has been 6 counts each in excess of
Celotex Corporation, brought into this $20,000 for compensatory
Charkate Glove & action as an and punitive damages.
Specialty Company, et al additional defendant
by Julius Kraft
Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
ZYMSKY 7/1/90 PA EASTCO 2 0 Y
Action Comments Damages
- ------ -------- -------
Zymsky, Theresa Appearance through Advised during August 1991
counsel without that attorneys for the
service upon the Company in Pennsylvania
Company filed an answer for the
Company.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
LEFKOWITZ 8/1/90 NJ EASTCO 1 58 Y
Action Comments Damages
- ------ -------- -------
Lefkowitz v Pulmosan The Company has been **
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety party defendant by
Corp., a/k/a Charkate Pulmosan Safety
Glove and Specialty Co. Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
JANUARY 9/1/90 NJ EASTCO 2 55 Y
Action Comments Damages
- ------ -------- -------
January, et al v Anchor The Company has been **
Packing Co., et al, brought into this
including Pulmosan action as a third
Safety Equipment Corp. party defendant by
v Eastco Industrial Pulmosan Equipment
Safety Corp., a/k/a Corp.
Charkate Glove and
Specialty Co.
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
BECKETT 9/1/90 NJ EASTCO 9 64 Y
Action Comments Damages
- ------ -------- -------
Beckett, et al v Anchor The Company has been **
Packing Co., et al, brought into this
including Pulmosan action as a third
Safety Equipment Corp. party defendant by
v Eastco Industrial Pulmosan Safety
Safety Corp., a/k/a Equipment Corp.
Charkate Glove and
Specialty Co.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MANNING 10/1/90 NJ Eastco 2 55 Y
Action Comments Damages
- ------ -------- -------
Manning, et al v Anchor The Company has been **
Packing Co., et al, brought into this
including Pulmosan action as a third
Safety Equipment Corp. party defendant by
v Eastco Industrial Pulmosan Safety
Safety Corp., a/k/a Equipment Corp.
Charkate Glove and
Specialty Co.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
RAHL 11/1/90 NJ Eastco 2 56 Y
Action Comments Damages
- ------ -------- -------
Rahl, et al v Anchor The Company has been **
Packing Co., et al, brought into this
including Pulmosan action as a third
Safety Equipment Corp. party defendant by
v Eastco Industrial Pulmosan Safety
Safety Corp., a/k/a Equipment Corp.
Charkate Glove and
Specialty Co.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
CZARNECKI 11/1/90 NJ Eastco 1 59 Y
Action Comments Damages
- ------ -------- -------
Czarnecki, et al v The Company has been **
Anchor Packing Co., et brought into this
al, including Pulmosan action as a third
Safety Equipment Corp. party defendant by
v Eastco Industrial Pulmosan Safety
Safety Corp., a/k/a Equipment Corp.
Charkate Glove and
Specialty Co.
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
ALESSI 12/1/90 NJ Eastco 2 55 Y
Action Comments Damages
- ------ -------- -------
Alessi, et al v Anchor The Company has been **
Packing Co., et al, brought into this
including Pulmosan action as a third
Safety Equipment Corp. party defendant by
v Eastco Industrial Pulmosan Safety
Safety Corp., a/k/a Equipment Corp.
Charkate Glove and
Specialty Co.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
CYR 12/1/90 NJ Eastco 2 53 Y
Action Comments Damages
- ------ -------- -------
Cyr, et al v Anchor The Company has been **
Packing Co., et al, brought into this
including Pulmosan action as a third
Safety Equipment Corp. party defendant by
v Eastco Industrial Pulmosan Safety
Safety Corp., a/k/a Equipment Corp.
Charkate Glove and
Specialty Co.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
LINDLAR 12/1/90 NJ Eastco 6 57 Y
Action Comments Damages
- ------ -------- -------
Lindlar, et al v Anchor The Company has been **
Packing Co., et al, brought into this
including Pulmosan action as a third
Safety Equipment Corp. party defendant by
v Eastco Industrial Pulmosan Safety
Safety Corp., a/k/a Equipment Corp.
Charkate Glove and
Specialty Co.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
SHJARBACK 1/1/91 NJ Eastco 3 61 Y
Action Comments Damages
- ------ -------- -------
Shjarback, et al v The Company has been **
Anchor Packing Co., et brought into this
al, including Pulmosan action as a third
Safety Equipment Corp. party defendant by
v Eastco Industrial Pulmosan Safety
Safety Corp., a/k/a Equipment Corp.
Charkate Glove and
Specialty Co.
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
TOMNEY 1/1/91 NJ Eastco 1 51 Y
Action Comments Damages
- ------ -------- -------
Tomney, et al v Anchor The Company has been **
Packing Co., et al, brought into this
including Pulmosan action as a third
Safety Equipment Corp. party defendant by
v Eastco Industrial Pulmosan Safety
Safety Corp., a/k/a Equipment Corp.
Charkate Glove and
Specialty Co.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
SPELLMAN 4/1/91 NJ Eastco 1 57 Y
Action Comments Damages
- ------ -------- -------
Spellman, et al v The Company has been **
Anchor Packing Co., et brought into this
al, including Pulmosan action as a third
Safety Equipment Corp. party defendant by
v Eastco Industrial Pulmosan Safety
Safety Corp., a/k/a Equipment Corp.
Charkate Glove and
Specialty Co.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
CARLUCCIO 4/1/91 NJ Eastco 5 58 Y
Action Comments Damages
- ------ -------- -------
Carluccio, et al v The Company has been **
Anchor Packing Co., et brought into this
al, including Pulmosan action as a third
Safety Equipment Corp. party defendant by
v Eastco Industrial Pulmosan Safety
Safety Corp., a/k/a Equipment Corp.
Charkate Glove and
Specialty Co.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
ENGLAND 4/1/91 NJ Eastco 2 55 Y
Action Comments Damages
- ------ -------- -------
England, et al v Anchor The Company has been **
Packing Co., et al, brought into this
including Pulmosan action as a third
Safety Equipment Corp. party defendant by
v Eastco Industrial Pulmosan Safety
Safety Corp., a/k/a Equipment Corp.
Charkate Glove and
Specialty Co.
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
SABO 4/1/91 NJ Eastco 2 55 Y
Action Comments Damages
- ------ -------- -------
Sabo, et al v Anchor The Company has been **
Packing Inc., et al, brought into this
including Pulmosan action as a third
Safety Equipment Corp. party defendant by
v Eastco Industrial Pulmosan Safety
Safety Corp., a/k/a Equipment Corp.
Charkate Glove and
Specialty Co.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MOLNAR 4/1/91 NJ Eastco 2 22 Y
Action Comments Damages
- ------ -------- -------
MOLNAR, et al v A. The Company was **
Pendleton Co., Inc., brought into this
Eastco Industrial action as a first
Safety Corp., a/k/a party defendant.
Charkate Glove and NOTE: Rite Glove
Specialty Co., Rite Corp. named but not
Glove Corp., et al served
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
NUNN 4/1/91 NJ Eastco 2 58 Y
Action Comments Damages
- ------ -------- -------
Nunn, et al v Anchor The Company has been **
Packing Co., et al, brought into this
including Pulmosan action as a third
Safety Equipment Corp. party defendant by
v Eastco Industrial Pulmosan Safety
Safety Corp., a/k/a Equipment Corp.
Charkate Glove and
Specialty Co.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
McGuinness 8/1/91 NJ 1 59 55 Y
Action Comments Damages
- ------ -------- -------
McGuiness, v Pulmosan The Company has been **
Safety Equipment Corp. brought into this
v Eastco Industrial action as a third
Safety Corp., a/k/a party defendant by
Charkate Glove and Pulmosan Safety
Specialty Co. Equipment Corp.
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
BUNDA 9/1/91 NJ EASTCO 1 60 Y
Action Comments Damages
- ------ -------- -------
Bunda, v Anchor Packing The Company was **
Co., et al, including brought into this
Pulmosan Safety action as a third
Equipment Corp. et al v party defendant by
Eastco Industrial Pulmosan Safety
Safety Corp., a/k/a Equipment Corp.
Charkate Glove and
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
SWEENEY 8/1/91 NJ EASTCO 10 61 Y
Action Comments Damages
- ------ -------- -------
Sweeney, et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
BROWN 2/1/92 NJ EASTCO 2 32 Y
Action Comments Damages
- ------ -------- -------
Brown, et al v The The Company has been **
Anchor Packing Co., brought into this
Eastco Industrial action as a first
Safety Corp., et al party defendant.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
PETERSON 9/1/92 NJ EASTCO 2 59 Y
Action Comments Damages
- ------ -------- -------
Peterson, et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MARCOGLIESE 10/1/92 NJ EASTCO 2 57 Y
Action Comments Damages
- ------ -------- -------
Marcogliese, et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp. et al v action as a third
Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
BEVILACQUA 11/1/92 NJ EASTCO 2 59 Y
Action Comments Damages
- ------ -------- -------
Bevilacqua, et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
BRANSON 11/1/92 NJ EASTCO 2 49 Y
Action Comments Damages
- ------ -------- -------
Branson, et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
PRATHER 1/1/93 NJ EASTCO 1 23 Y
Action Comments Damages
PRATHER V Pulmosan The Company was **
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
SZABO 1/1/93 NJ EASTCO 2 28 Y
Action Comments Damages
- ------ -------- -------
Szabo, et al v Pulmosan The Company was **
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
INGRAM 1/1/93 NJ EASTCO 1 60 Y
Action Comments Damages
- ------ -------- -------
Ingram v Pulmosan The Company was **
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
TEDESCO 1/1/93 NJ EASTCO 2 58 Y
Action Comments Damages
- ------ -------- -------
Tedesco, et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
McGRATH 1/1/93 NJ EASTCO 2 61 Y
Action Comments Damages
- ------ -------- -------
McGrath, et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
TIER 1/1/93 NJ EASTCO 2 58 Y
Action Comments Damages
- ------ -------- -------
Tier, et al v Pulmosan The Company was **
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety party defendant by
Corp., a/k/a Charkate Pulmosan Safety
Glove and Specialty Equipment Corp.
Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
IANDOLI 2/1/93 NJ EASTCO 2 58 Y
Action Comments Damages
- ------ -------- -------
Iandoli, et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
FLANAGAN 3/1/93 NJ EASTCO 1 57 Y
Action Comments Damages
Flanagan v Pulmosan The Company was **
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
BUTLER 4/1/93 NJ EASTCO 1 62 Y
Action Comments Damages
- ------ -------- -------
Butler v Pulmosan The Company was **
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
PENDLETON 4/1/93 NJ EASTCO 1 29 Y
Action Comments Damages
- ------ -------- -------
Pendleton v Pulmosan The Company was **
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
COFFEE 4/1/93 NJ EASTCO 1 38 Y
Action Comments Damages
- ------ -------- -------
Coffee v Pulmosan The Company was **
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
CASTAGNA 4/1/93 NJ EASTCO 1 58 Y
Action Comments Damages
- ------ -------- -------
Castagna v Pulmosan The Company was **
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MARGL 4/1/93 NJ EASTCO 2 49 Y
Action Comments Damages
- ------ -------- -------
Margl, et al v Pulmosan The Company was **
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MARTINEZ 6/1/93 NJ EASTCO 1 24 Y
Action Comments Damages
- ------ -------- -------
Martinez v Pulmosan The Company was **
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
TELFOR 6/1/93 NJ EASTCO 2 28 Y
Action Comments Damages
- ------ -------- -------
Telfor, et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
BAILEY 6/1/93 NJ EASTCO 2 21 Y
Action Comments Damages
- ------ -------- -------
Bailey, et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
SLECKMAN 6/1/93 NJ EASTCO 1 62 Y
Action Comments Damages
- ------ -------- -------
Sleckman v Pulmosan The Company was **
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
RACZYNSKY 7/1/93 NJ EASTCO 1 28 Y
Action Comments Damages
- ------ -------- -------
Raczynsky v Pulmosan The Company was **
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
AGLIATA 7/1/93 NJ EASTCO 2 77 Y
Action Comments Damages
- ------ -------- -------
Agliata, et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
GONZALEZ 8/1/93 NJ EASTCO 2 28 Y
Action Comments Damages
- ------ -------- -------
Gonzalez, et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
JANCSEK 8/1/93 NJ EASTCO 2 26 Y
Action Comments Damages
- ------ -------- -------
Jancsekl, et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
VAUGHN 8/1/93 NJ EASTCO 2 44 Y
Action Comments Damages
- ------ -------- -------
Vaughn, et al v The Company was ****
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
SCHWARZ 9/1/93 NJ EASTCO 1 58 Y
Action Comments Damages
- ------ -------- -------
Schwarz, et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
PODUBYNSKY 9/1/93 NJ EASTCO 2 29 Y
Action Comments Damages
- ------ -------- -------
Podubynsky, et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
ORAS 10/1/93 NJ EASTCO 2 52 Y
Action Comments Damages
- ------ -------- -------
Oras, et al v Pulmosan The Company was ****
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MUTH 10/1/93 NJ EASTCO 1 23 Y
Action Comments Damages
- ------ -------- -------
Muth, Albert v Pulmosan The Company was **
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
CHAPMAN 10/1/93 NJ EASTCO 2 26 Y
Action Comments Damages
- ------ -------- -------
Chapman, et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
HARRINGTON 10/1/93 NJ EASTCO 1 58 Y
Action Comments Damages
- ------ -------- -------
Harrington v Pulmosan The Company was **
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
CHEVALIER 12/1/93 NJ EASTCO 2 36 Y
Action Comments Damages
- ------ -------- -------
Chevalie, et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
JAGLOWSKI 12/1/93 NJ EASTCO 2 51 Y
Action Comments Damages
- ------ -------- -------
Jaglowski, et al v The Company was ****
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
D'APOLITO 12/1/93 NJ EASTCO 1 46 Y
Action Comments Damages
- ------ -------- -------
D'Apolito v Pulmosan The Company was **
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
CORNWELL 12/1/93 NJ EASTCO 1 46 Y
Action Comments Damages
- ------ -------- -------
Cornwell, John v The Company was ****
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
PAONE 12/1/93 NJ EASTCO 2 46 Y
Action Comments Damages
- ------ -------- -------
Paone, et al v Pulmosan The Company was ****
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
ROMERO 12/1/93 NJ EASTCO 1 51 Y
Action Comments Damages
- ------ -------- -------
Romero, Angelo v The Company was ****
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
JOHNSON 12/1/93 NJ EASTCO 2 40 Y
Action Comments Damages
- ------ -------- -------
Johnson, et al v The Company was ****
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MURPHY 1/1/94 NJ EASTCO 1 46 Y
Action Comments Damages
- ------ -------- -------
Murphy, Wm v Pulmosan The Company was ****
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
BEITZ 1/1/94 NJ EASTCO 1 46 Y
Action Comments Damages
- ------ -------- -------
Beitz v Pulmosan Safety The Company was ****
Equipment Corp., et al brought into this
v Eastco Industrial action as a third
Safety Corp. a/k/a party defendant by
Charkate Glove and Pulmosan Safety
Specialty Company Equipment Corp.
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
KOVACK 1/1/94 NJ EASTCO 1 46 Y
Action Comments Damages
- ------ -------- -------
Kovack v Pulmosan The Company was ****
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
SPIEWAK 1/1/94 NJ EASTCO 1 46 Y
Action Comments Damages
- ------ -------- -------
Spiewak v Pulmosan The Company was ****
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MITCHELL, 1/1/94 NJ EASTCO 1 46 Y
A.
Action Comments Damages
- ------ -------- -------
Mitchell, Arthur v The Company was ****
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
PEREZ, A. 1/1/94 NJ EASTCO 1 46 Y
Action Comments Damages
- ------ -------- -------
Perez, A. v Pulmosan The Company was ****
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
EGAN 1/1/94 NJ EASTCO 1 46 Y
Action Comments Damages
- ------ -------- -------
Egan, John v Pulmosan The Company was ****
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
SHINE, 1/1/94 NJ EASTCO 1 58 Y
Action Comments Damages
- ------ -------- -------
Shine, William v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
GRANT, S 1/1/94 NJ EASTCO 2 24 Y
Action Comments Damages
- ------ -------- -------
Grant, S., et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
THOMSON 1/1/94 NJ EASTCO 2 25 Y
Action Comments Damages
- ------ -------- -------
Thomson, et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
RING, 1/1/94 NJ EASTCO 1 26 Y
JOSEPH
Action Comments Damages
- ------ -------- -------
Ring, Joseph v Pulmosan The Company was **
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
JACKSON, L 1/1/94 NJ EASTCO 2 26 Y
Action Comments Damages
- ------ -------- -------
Jackson, Leroy, et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
BABISH, P. 1/1/94 NJ EASTCO 1 59 Y
Action Comments Damages
- ------ -------- -------
Babisn, Paula v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
SUTAK 1/1/94 NJ EASTCO 1 22 Y
Action Comments Damages
- ------ -------- -------
Sutak, Joseph v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
FARKAS 3/1/94 NJ EASTCO 2 27 Y
Action Comments Damages
- ------ -------- -------
Farkas, et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
CSAKI 3/1/94 NJ EASTCO 1 26 Y
Action Comments Damages
- ------ -------- -------
Csaki, Ronald v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
INFANTE 3/1/94 NJ EASTCO 2 35 Y
Action Comments Damages
- ------ -------- -------
Infante, et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
BROWN, O 3/1/94 NJ EASTCO 2 40 Y
Action Comments Damages
- ------ -------- -------
Brown, Oliver, et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
REZES 3/1/94 NJ EASTCO 2 40 Y
Action Comments Damages
- ------ -------- -------
Rezes, et al v Pulmosan The Company was **
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
GELATO 3/1/94 NJ EASTCO 1 41 Y
Action Comments Damages
- ------ -------- -------
Gelato, P. v Pulmosan The Company was **
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
HELFRICH 3/1/94 NJ EASTCO 2 61 Y
Action Comments Damages
- ------ -------- -------
Helfrich, et al v The Company was ****
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
SMITH 3/1/94 NJ EASTCO 2 20 Y
Action Comments Damages
- ------ -------- -------
Smith, et al v Pulmosan The Company was **
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
WILSON 3/1/94 NJ EASTCO 2 24 Y
Action Comments Damages
- ------ -------- -------
Wilson, et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
DANBREVILLE 4/1/94 NJ EASTCO 2 56 Y
Action Comments Damages
- ------ -------- -------
Danbreville, et al v The Company was ****
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
DANEKE 4/1/94 NJ EASTCO 2 55 Y
Action Comments Damages
- ------ -------- -------
Daneke, et al v The Company was ****
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
DeSIMMONEM 4/1/94 NJ EASTCO 2 55 Y
Action Comments Damages
- ------ -------- -------
DeSimmonem, et al v The Company was ****
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
FERNANDEZ, 4/1/94 NJ EASTCO 1 55 Y
Action Comments Damages
- ------ -------- -------
Fernandez, e. v The Company was ****
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MAHALCHICK 4/1/94 NJ EASTCO 2 53 Y
Action Comments Damages
- ------ -------- -------
Mahalchich, et al v The Company was ****
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
CERKA 4/1/94 NJ EASTCO 2 86 Y
Action Comments Damages
- ------ -------- -------
Cerka, et al v A.C.&S., The Company was ****
Inc., Eastco Industrial brought into this
Safety Corp. a/k/a action as a first
Charkate Glove and party defendant.
Specialty Company NOTE: During 5/94
the Company was
brought into this
action as a third
party defendant by
Pulmosan. During
8/94 the Company was
served as a first
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
YOUNG 4/1/94 NJ EASTCO 2 56 Y
Action Comments Damages
- ------ -------- -------
Young, et al v Pulmosan The Company was ****
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
WAGNER 4/1/94 NJ EASTCO 2 39 Y
Action Comments Damages
- ------ -------- -------
Wagner, et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
PAPA 4/1/94 NJ EASTCO 1 56 Y
Action Comments Damages
- ------ -------- -------
Papa, Dominick v The Company was ****
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
RICCI 4/1/94 NJ EASTCO 2 56 Y
Action Comments Damages
- ------ -------- -------
Ricci, et al v Pulmosan The Company was ****
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
OLDFIELD 4/1/94 NJ EASTCO 1 56 Y
Action Comments Damages
- ------ -------- -------
Oldfield, Richard v The Company was ****
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MOSS 4/1/94 NJ EASTCO 2 56 Y
Action Comments Damages
- ------ -------- -------
Moss, et al v Pulmosan The Company was ****
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MITE 4/1/94 NJ EASTCO 2 56 Y
Action Comments Damages
- ------ -------- -------
Mite, et al v Pulmosan The Company was ****
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MAROSI 4/1/94 NJ EASTCO 2 56 Y
Action Comments Damages
- ------ -------- -------
Marosi, et al v The Company was ****
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
HARVEY, P. 4/1/94 NJ EASTCO 1 56 Y
Action Comments Damages
- ------ -------- -------
Harvey, Patrick v The Company was ****
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
GNAPP 4/1/94 NJ EASTCO 2 56 Y
Action Comments Damages
- ------ -------- -------
Gnapp, et al v Pulmosan The Company was ****
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
BARAT 4/1/94 NJ EASTCO 1 41 Y
Action Comments Damages
- ------ -------- -------
Barat, James v Pulmosan The Company was **
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
ARLEQUIN, 4/1/94 NJ EASTCO 2 40 Y
I.
Action Comments Damages
- ------ -------- -------
Arlequin, Israel., et The Company was **
al v Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
BIONDO 5/1/94 NJ EASTCO 1 55 Y
Action Comments Damages
- ------ -------- -------
Biondo, et al v The Company was ****
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
BUTCHKO 5/1/94 NJ EASTCO 2 60 Y
Action Comments Damages
- ------ -------- -------
Butchko, et al v The Company was ****
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
GAYDOS 5/1/94 NJ EASTCO 1 36 Y
Action Comments Damages
- ------ -------- -------
Gaydos v Pulmosan The Company was **
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
ZUBER 5/1/94 NJ EASTCO 2 24 Y
Action Comments Damages
- ------ -------- -------
Zuber, et al v Pulmosan The Company was **
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
BRITTON 5/24/94 NJ EASTCO 2 24 Y
Action Comments Damages
- ------ -------- -------
Britton, et al. v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
DEMSKI 5/24/94 NJ EASTCO 2 30 Y
Action Comments Damages
- ------ -------- -------
Demski, et al v The The Company was ****
Anchor Packing Company, brought into this
v Eastco Industrial action as a first
Safety Corp. a/k/a party defendant.
Charkate Glove and
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
FULTZ 5/24/94 NJ EASTCO 2 33 Y
Action Comments Damages
- ------ -------- -------
Fultz, et al v Pulmosan The Company was **
Safety Equipment Corp., brought into this
et al v Eastco action as a third
Industrial Safety Corp. party defendant by
a/k/a Charkate Glove Pulmosan Safety
and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
CRAVEN 5/31/94 NJ EASTCO 2 24 Y
Action Comments Damages
- ------ -------- -------
Craven, et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
GRIFFIS 5/31/94 NJ EASTCO 2 23 Y
Action Comments Damages
- ------ -------- -------
Griffis, et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
LODATO 5/31/94 NJ EASTCO 2 40 Y
Action Comments Damages
- ------ -------- -------
Lodato, et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MENDES 5/31/94 NJ EASTCO 2 40 Y
Action Comments Damages
- ------ -------- -------
Mendes, et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MILLIAN 5/31/94 NJ EASTCO 2 40 Y
Action Comments Damages
- ------ -------- -------
Millian, et al v The Company was **
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
POLITES 5/31/94 NJ EASTCO 2 25 Y
Action Comments Damages
- ------ -------- -------
Polites, et al v The Company was ****
Pulmosan Safety brought into this
Equipment Corp., et al action as a third
v Eastco Industrial party defendant by
Safety Corp. a/k/a Pulmosan Safety
Charkate Glove and Equipment Corp.
Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
SALVAGGIO 5/31/94 NJ EASTCO 1 29 Y
Action Comments Damages
- ------ -------- -------
Salvaggio, Daniel v Pulmosan The Company was brought into **
Safety Equipment Corp., et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
WELCH 5/31/94 NJ EASTCO 1 25 Y
Action Comments Damages
- ------ -------- -------
Welch, William v Pulmosan The Company was brought into **
Safety Equipment Corp., et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
WOOD 5/31/94 NJ EASTCO 2 22 Y
Action Comments Damages
- ------ -------- -------
Wood, Isaac et al v Pulmosan The Company was brought into **
Safety Equipment Corp., et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
PERRINE 6/2/94 NJ EASTCO 2 41 Y
Action Comments Damages
- ------ -------- -------
Perrine, et al v Pulmosan The Company was brought into ****
Safety Equipment Corp., et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MURRAY 6/2/94 NJ EASTCO 2 21 Y
Action Comments Damages
- ------ -------- -------
Murray, et al v Pulmosan The Company was brought into ****
Safety Equipment Corp., et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MATUSEWSKI 6/2/94 NJ EASTCO 2 19 Y
Action Comments Damages
- ------ -------- -------
Matusewski, et al v Pulmosan The Company was brought into ****
Safety Equipment Corp., et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
LAMONT 6/2/94 NJ EASTCO 2 23 Y
Action Comments Damages
- ------ -------- -------
Lamont, et al v Pulmosan The Company was brought into ****
Safety Equipment Corp., et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
KARR 6/2/94 NJ EASTCO 2 38 Y
Action Comments Damages
- ------ -------- -------
Karr, et al v Pulmosan Safety The Company was brought into ****
Equipment Corp. et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
DONOGHUE 6/24/94 NJ EASTCO 2 59 Y
Action Comments Damages
- ------ -------- -------
Donoghue, et al v Pulmosan The Company was brought into ****
Safety Equipment Corp. et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
ESPOSITO 6/24/94 NJ EASTCO 2 41 Y
Action Comments Damages
- ------ -------- -------
Esposito, et al v Pulmosan The Company was brought into ****
Safety Equipment Corp. et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
HARVEY, T. 6/24/94 NJ EASTCO 1 37 Y
Action Comments Damages
- ------ -------- -------
Harvey, Thomas v Pulmosan The Company was brought into ****
Safety Equipment Corp. et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
KILCOMINS 6/24/94 NJ EASTCO 1 38 Y
Action Comments Damages
- ------ -------- -------
Kilcomins, Eugene v Pulmosan The Company was brought into ****
Safety Equipment Corp. et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
PARISI 6/24/94 NJ EASTCO 2 50 Y
Action Comments Damages
- ------ -------- -------
Parisi, et al v Pulmosan Safety The Company was brought into ****
Equipment Corp., et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
SATTERTHWAI 6/24/94 NJ EASTCO 2 24 Y
Action Comments Damages
- ------ -------- -------
Satterthwaite, et al v Pulmosan The Company was brought into ****
Safety Equipment Corp. et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
SHANAHAN 6/24/94 NJ EASTCO 2
41 Y
Action Comments Damages
- ------ -------- -------
Shanahan, et al v Pulmosan The Company was brought into ****
Safety Equipment Corp. et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
STILES 6/224/94 NJ EASTCO 2 57 Y
Action Comments Damages
- ------ -------- -------
Stiles, et al v Pulmosan Safety The Company was brought into ****
Equipment Corp., et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
WHITEHURST 6/24/94 NJ EASTCO 1 36 Y
Action Comments Damages
- ------ -------- -------
Whitehurst, Johnnie v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
YURKONIS 6/24/94 NJ EASTCO 2 38 Y
Action Comments Damages
- ------ -------- -------
Yurkonis, et al v Pulmosan The Company was brought into ****
Safety Equipment Corp. et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
BENJAMIN 7/20/94 NJ EASTCO 2 22 Y
Action Comments Damages
- ------ -------- -------
Benjamin, Nathaniel, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MASON 7/20/94 NJ EASTCO 2 25 Y
Action Comments Damages
- ------ -------- -------
Mason, Lawrence, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
SMITH 7/20/94 NJ EASTCO 1 22 Y
Action Comments Damages
- ------ -------- -------
Smith, Charles v Pulmosan The Company was brought into ****
Safety Equipment Corp. et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
BRICKMAN 7/22/94 NJ EASTCO 2 40 Y
Action Comments Damages
- ------ -------- -------
Brickman, William, at al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
CORDWELL 7/22/94 NJ EASTCO 2 23 Y
Action Comments Damages
- ------ -------- -------
Cordwell, George, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
KERNER, CHA 7/22/94 NJ EASTCO 2 40 Y
Action Comments Damages
- ------ -------- -------
Kerner, Charless, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MIRABELLI 7/22/94 NJ EASTCO 2 21 Y
Action Comments Damages
- ------ -------- -------
Mirabelli, Mane, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
SCHMIDLAPP 7/22/94 NJ EASTCO 2 40 Y
Action Comments Damages
- ------ -------- -------
Schmidlapp, Frank, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
CSONTOS 7/27/94 NJ EASTCO 2 25 Y
Action Comments Damages
- ------ -------- -------
Csontos, Steve, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
DIPIERRO 7/27/94 NJ EASTCO 1 23 Y
Action Comments Damages
- ------ -------- -------
DiPierro, Vincent, v Pulmosan The Company was brought into ****
Safety Equipment Corp. et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
HARTLAUB 7/27/94 NJ EASTCO 2 54 Y
Action Comments Damages
- ------ -------- -------
Hartlaub, Jay, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
RASIMOWICZ 7/27/94 NJ EASTCO 2 41 Y
Action Comments Damages
- ------ -------- -------
Rasimowicz, Steve, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
SCARPONE 7/27/94 NJ EASTCO 1 40 Y
Action Comments Damages
- ------ -------- -------
Scarpone, Robert v Pulmosan The Company was brought into ****
Safety Equipment Corp. et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
SIBONA, RALP 7/27/94 NJ EASTCO 2 55 Y
Action Comments Damages
- ------ -------- -------
Sibona, Ralph, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
SYPKO 7/27/94 NJ EASTCO 2 54 Y
Action Comments Damages
- ------ -------- -------
Sypko, Robert, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
BREURE, LEON 7/29/94 NJ EASTCO 2 41 Y
Action Comments Damages
- ------ -------- -------
Breure, Leonard, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
CZWALGA 7/29/94 NJ EASTCO 2 25 Y
Action Comments Damages
- ------ -------- -------
Czwalga, John, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
DONCSEC 7/29/94 NJ EASTCO 2 40 Y
Action Comments Damages
- ------ -------- -------
Doncsec, Jimmy, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
GUAY 7/29/94 NJ EASTCO 2 41 Y
Action Comments Damages
- ------ -------- -------
Guay, Richard, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
HAMILTON 7/29/94 NJ EASTCO 2 29 Y
Action Comments Damages
- ------ -------- -------
Hamilton, Esther, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MCKERNAN 7/29/94 NJ EASTCO 1 41 Y
Action Comments Damages
- ------ -------- -------
McKernan, Henry v Pulmosan The Company was brought into ****
Safety Equipment Corp. et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
NATALE JOSE 7/29/94 NJ EASTCO 2 40 Y
Action Comments Damages
- ------ -------- -------
Natale Joseph, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
PALLADINO 7/29/94 NJ EASTCO 1 41 Y
Action Comments Damages
- ------ -------- -------
Palladino, Carmen, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
SONNTAG 7/29/94 NJ EASTCO 2 41 Y
Action Comments Damages
- ------ -------- -------
Sonntag, Frederick, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
STAUDT, LOUI 7/29/94 NJ EASTCP 2 41 Y
Action Comments Damages
- ------ -------- -------
Staudt, Louis, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
BLONIARZ 8/18/94 NJ EASTCO 2 23 Y
Action Comments Damages
- ------ -------- -------
Bloniarz, John, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
BODNER, PAUL 8/18/94 NJ EASTCO 2 30 Y
Action Comments Damages
- ------ -------- -------
Bodner, Paul, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
DREXLER 8/18/94 NJ EASTCO 2 54 Y
Action Comments Damages
- ------ -------- -------
Drexler, Richard, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
NUCASO ALFR 8/18/94 NJ EASTCO 1 22 Y
Action Comments Damages
- ------ -------- -------
Nucaso, Alfred v Pulmosan The Company was brought into ****
Safety Equipment Corp. et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
BARA STELLA 8/29/94 NJ EASTCO 2 64 Y
Action Comments Damages
- ------ -------- -------
Bara, Stella, et al v Pulmosan The Company was brought into ****
Safety Equipment Corp. et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
CATANESE 8/29/94 NJ EASTCO 2 47 Y
Action Comments Damages
- ------ -------- -------
Catanese, Rocco, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
DANIELS 8/29/94 NJ EASTCO 1 53 Y
Action Comments Damages
- ------ -------- -------
Daniels, Jesse v Pulmosan The Company was brought into ****
Safety Equipment Corp. et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
FREDERICKS 8/29/94 NJ EASTCO 2 40 Y
Action Comments Damages
- ------ -------- -------
Fredericks, Lawrence, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
HELLER, JOHN 8/29/94 NJ EASTCO 2 41 Y
Action Comments Damages
- ------ -------- -------
Heller, John Lawrence et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
LIPKA 8/29/94 NJ EASTCO 1 42 Y
Action Comments Damages
- ------ -------- -------
Lipka, Chester v Pulmosan The Company was brought into ****
Safety Equipment Corp. et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
LISTO, LOUIS 8/29/94 NJ EASTCO 2 47 Y
Action Comments Damages
- ------ -------- -------
Listo, Louis, et al v Pulmosan The Company was brought into ****
Safety Equipment Corp. et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
POECZE, KALM 8/29/94 NJ EASTCO 2 19 Y
Action Comments Damages
- ------ -------- -------
Poecze, Kalman, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
VENEZIA 8/29/94 NJ EASTCO 2 41 Y
Action Comments Damages
- ------ -------- -------
Venezia, William, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
ZOLTANSKI 8/29/94 NJ EASTCO 2 22 Y
Action Comments Damages
- ------ -------- -------
Zoltanski, Frank, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
FOLK 8/29/94 NJ EASTCO 1 41 Y
Action Comments Damages
- ------ -------- -------
Folk, Charles v Pulmosan The Company was brought into ****
Safety Equipment Corp. et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
JONES 8/30/94 NJ EASTCO 1 23 Y
Action Comments Damages
- ------ -------- -------
Jones, Alfred v Pulmosan The Company was brought into ****
Safety Equipment Corp. et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
KEARNEY 8/30/94 NJ EASTCO ? 49 Y
Action Comments Damages
- ------ -------- -------
Kearney, William v Pulmosan The Company was brought into ****
Safety Equipment Corp. et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
LISTO, PATSY 8/30/94 NJ EASTCO 2 47 N
Action Comments Damages
- ------ -------- -------
Listo, Patsy, et al v Pulmosan The Company was brought into ****
Safety Equipment Corp. et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MEEKS 8/30/94 NJ EASTCO 2 29 Y
Action Comments Damages
- ------ -------- -------
Meeks, Lester et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
METALLO 8/30/94 NJ EASTCO 2 41 Y
Action Comments Damages
- ------ -------- -------
Metallo, Samuel, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MORAN 8/30/94 NJ EASTCO 2 42 Y
Action Comments Damages
- ------ -------- -------
Moran, Thomas, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
RAPPISI 8/30/94 NJ EASTCO 2 41 Y
Action Comments Damages
- ------ -------- -------
Rappisi, Raymond et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
WAGNER, FRE 8/30/94 NJ EASTCO 2 41 N
Action Comments Damages
- ------ -------- -------
Wagner, Frederick, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
ZAMORSKI 8/30/94 NJ EASTCO 2 38 Y
Action Comments Damages
- ------ -------- -------
Zamorski, Louis, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
DIVER 8/31/94 NJ EASTCO 2 54 Y
Action Comments Damages
- ------ -------- -------
Diver, Charles, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
DUNN 8/31/94 NJ EASTCO 2 54 Y
Action Comments Damages
- ------ -------- -------
Dunn, Thomas et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
GRESH 8/31/94 NJ EASTCO 2 40 Y
Action Comments Damages
- ------ -------- -------
Gresh, Edward et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
HOUCK 8/31/94 NJ EASTCO 2 49 Y
Action Comments Damages
- ------ -------- -------
Houck, Raymond, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
LUBAS 8/31/94 NJ EASTCO 2 40 Y
Action Comments Damages
- ------ -------- -------
Lubas, Richard, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
LaFASO, EDWA 8/31/94 NJ EASTCO 2 40 Y
Action Comments Damages
- ------ -------- -------
LaFaso, Edward, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
OSTOFF, JOHN 8/31/94 NJ EASTCO 2 48 Y
Action Comments Damages
- ------ -------- -------
Ostoff, John et al v Pulmosan The Company was brought into ****
Safety Equipment Corp. et al v this action as a third party
Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Equipment Corp.
Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
SINGLETARY 8/31/94 NJ EASTCO 2 22 Y
Action Comments Damages
- ------ -------- -------
Singletary, James, et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
SWISSTACK 8/31/94 NJ EASTCO 2 55 Y
Action Comments Damages
- ------ -------- -------
Swisstack, Richard et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
WARHOLICK 8/31/94 NJ EASTCO 2 41 Y
Action Comments Damages
- ------ -------- -------
Warholick, Albert et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
CHESSERE 9/12/94 NJ EASTCO 2 65 Y
Action Comments Damages
- ------ -------- -------
Chessere, Salvatore et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
CRUM 9/12/94 NJ EASTCO 1 12 Y
Action Comments Damages
- ------ -------- -------
Crum, Donald et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
DAVIS 9/12/94 NJ EASTCO 2 20 Y
Action Comments Damages
- ------ -------- -------
Davis, Donald et al v The Company was brought into ****
Pulmosan Safety Equipment this action as a third party
Corp., et al v Eastco Industrial defendant by Pulmosan Safety
Safety Corp. a/k/a Charkate Equipment Corp.
Glove and Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
FERRARA, 9/12/94 NJ EASTCO 2 46 Y
Action Comments Damages
- ------ -------- -------
Ferrara, Raymond, et al v Pulmosan The Company was brought into this ****
Safety Equipment Corp., et al v action as a third party defendant by
Eastco Industrial Safety Corp. a/k/a Pulmosan Safety Equipment Corp.
Charkate Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
FORD, 9/12/94 NJ EASTCO 2 48 Y
Action Comments Damages
- ------ -------- -------
Ford, Arthur, et al v Pulmosan The Company was brought into this ****
Safety Equipment Corp., et al v action as a third party defendant by
Eastco Industrial Safety Corp. a/k/a Pulmosan Safety Equipment Corp.
Charkate Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
GIBNEY, 9/12/94 NJ EASTCO 2 63 Y
SHEIL
Action Comments Damages
- ------ -------- -------
Gibney, Sheila, et al v Pulmosan The Company was brought into this ****
Safety Equipment Corp., et al v action as a third party defendant by
Eastco Industrial Safety Corp. a/k/a Pulmosan Safety Equipment Corp.
Charkate Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
HAMM, JAMES 9/12/94 NJ EASTCO 2 21 Y
Action Comments Damages
- ------ -------- -------
Hamm, James, et al v Pulmosan Safety The Company was brought into this ****
Equipment Corp., et al v Eastco action as a third party defendant by
Industrial Safety Corp. a/k/a Pulmosan Safety Equipment Corp.
Charkate Glove and Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
HECKMAN, 9/12/94 NJ EASTCO 2 41 Y
Action Comments Damages
- ------ -------- -------
Heckman, William, et al v Pulmosan The Company was brought into this ****
Safety Equipment Corp., et al v action as a third party defendant by
Eastco Industrial Safety Corp. a/k/a Pulmosan Safety Equipment Corp.
Charkate Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
HILAIRE, 9/12/94 NJ EASTCO 2 47 Y
Action Comments Damages
- ------ -------- -------
Hilaire, Thomas, et al v Pulmosan The Company was brought into this ****
Safety Equipment Corp., et al v action as a third party defendant by
Eastco Industrial Safety Corp. a/k/a Pulmosan Safety Equipment Corp.
Charkate Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
LAUDICINA, 9/12/94 NJ EASTCO 1 46 Y
Action Comments Damages
- ------ -------- -------
Laudicina, Daniel v Pulmosan Safety The Company was brought into this ****
Equipment Corp., et al v Eastco action as a third party defendant by
Industrial Safety Corp. a/k/a Pulmosan Safety Equipment Corp.
Charkate Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MADJESKI, 9/12/94 NJ EASTCO 2 47 Y
Action Comments Damages
- ------ -------- -------
Madjeski, Frank, et al v Pulmosan The Company was brought into this ****
Safety Equipment Corp., et al v action as a third party defendant by
Eastco Industrial Safety Corp. a/k/a Pulmosan Safety Equipment Corp.
Charkate Glove and Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MARTUCCI, 9/12/94 NJ EASTCO 2 47 Y
Action Comments Damages
- ------ -------- -------
Martucci, George, et al v Pulmosan The Company was brought into this ****
Safety Equipment Corp., et al v action as a third party defendant by
Eastco Industrial Safety Corp. a/k/a Pulmosan Safety Equipment Corp.
Charkate Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MAULBECK, 9/12/94 NJ EASTCO 2 48 Y
Action Comments Damages
- ------ -------- -------
Maulbeck, Norman, et al v Pulmosan The Company was brought into this ****
Safety Equipment Corp., et al v action as a third party defendant by
Eastco Industrial Safety Corp. a/k/a Pulmosan Safety Equipment Corp.
Charkate Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
SUOSSO, FLO 9/12/94 NJ EASTCO 2 21 Y
Action Comments Damages
- ------ -------- -------
Suosso, Florence, et al v Pulmosan The Company was brought into this ****
Safety Equipment Corp., et al v action as a third party defendant by
Eastco Industrial Safety Corp. a/k/a Pulmosan Safety Equipment Corp.
Charkate Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
BOCCHINI, 9/22/94 NJ EASTCO 2 30 Y
Action Comments Damages
- ------ -------- -------
Bocchini, Ezzio, et al v Pulmosan The Company was brought into this ****
Safety Equipment Corp., et al v action as a third party defendant by
Eastco Industrial Safety Corp. a/k/a Pulmosan Safety Equipment Corp.
Charkate Glove and Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
BOYLE, 9/22/94 NJ EASTCO 2 47 Y
DAVID
Action Comments Damages
- ------ -------- -------
Boyle, David, et al v Pulmosan The Company was brought into this ****
Safety Equipment Corp., et al v action as a third party defendant by
Eastco Industrial Safety Corp. a/k/a Pulmosan Safety Equipment Corp.
Charkate Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
BUCHITA, 9/22/94 NJ EASTCO 1 49 Y
WILL
Action Comments Damages
- ------ -------- -------
Buchita, William v Pulmosan Safety The Company was brought into this ****
Equipment Corp., et al v Eastco action as a third party defendant by
Industrial Safety Corp. a/k/a Pulmosan Safety Equipment Corp.
Charkate Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
CASTNER, 9/22/94 NJ EASTCO 2 47 Y
Action Comments Damages
- ------ -------- -------
Castner, Charles, et al v Pulmosan The Company was brought into this ****
Safety Equipment Corp., et al v action as a third party defendant by
Eastco Industrial Safety Corp. a/k/a Pulmosan Safety Equipment Corp.
Charkate Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
CEFALONI, 9/22/94 NJ EASTCO 2 33 Y
Action Comments Damages
- ------ -------- -------
Cefaloni, Libretorro, et al v The Company was brought into this ****
Pulmosan Safety Equipment Corp., et action as a third party defendant by
al v Eastco Industrial Safety Corp. Pulmosan Safety Equipment Corp.
a/k/a Charkate Glove and Specialty
Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
CHRISTIANSO 9/22/94 NJ EASTCO 2 47 Y
Action Comments Damages
- ------ -------- -------
Christianson, Sidney, et al v The Company was brought into this ****
Pulmosan Safety Equipment Corp., et action as a third party defendant by
al v Eastco Industrial Safety Corp. Pulmosan Safety Equipment Corp.
a/k/a Charkate Glove and Specialty
Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
FLECK, 9/22/94 NJ EASTCO 2 46 Y
Action Comments Damages
- ------ -------- -------
Fleck, Raymond, et al v Pulmosan The Company was brought into this ****
Safety Equipment Corp., et al v action as a third party defendant by
Eastco Industrial Safety Corp. a/k/a Pulmosan Safety Equipment Corp.
Charkate Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
FUSS, CARL 10/3/94 NJ EASTCO 2 30 Y
Action Comments Damages
- ------ -------- -------
Fuss, Carl, et al v Pulmosan Safety The Company was brought into this ****
Equipment Corp., et al v Eastco action as a third party defendant by
Industrial Safety Corp. a/k/a Pulmosan Safety Equipment Corp.
Charkate Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
GERDING, 10/3/94 NJ EASTCO 2 49 Y
Action Comments Damages
- ------ -------- -------
Gerding, Robert, et al v Pulmosan The Company was brought into this ****
Safety Equipment Corp., et al v action as a third party defendant by
Eastco Industrial Safety Corp. a/k/a Pulmosan Safety Equipment Corp.
Charkate Glove and Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
IANNACONE, 10/3/94 NJ EASTCO 2 49 Y
Action Comments Damages
- ------ -------- -------
Iannacone, Robert, et al v Pulmosan The Company was brought into this ****
Safety Equipment Corp., et al v action as a third party defendant by
Eastco Industrial Safety Corp. a/k/a Pulmosan Safety Equipment Corp.
Charkate Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
LEONARD, 10/3/94 NJ EASTCO 1 30 Y
Action Comments Damages
- ------ -------- -------
Leonard, Joseph v Pulmosan Safety The Company was brought into this ****
Equipment Corp., et al v Eastco action as a third party defendant by
Industrial Safety Corp. a/k/a Pulmosan Safety Equipment Corp.
Charkate Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
LIMONE, 10/3/94 NJ EASTCO 2 21 Y
MARI
Action Comments Damages
- ------ -------- -------
Limone, Mario, et al v Pulmosan The Company was brought into this ****
Safety Equipment Corp., et al v action as a third party defendant by
Eastco Industrial Safety Corp. a/k/a Pulmosan Safety Equipment Corp.
Charkate Glove and Specialty Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MARDRUS, 10/3/94 NJ EASTCO 2 47 Y
Action Comments Damages
- ------ -------- -------
Mardrus, Alfred, et al v Pulmosan The Company was brought into this ****
Safety Equipment Corp., et al v action as a third party defendant by
Eastco Industrial Safety Corp. a/k/a Pulmosan Safety Equipment Corp.
Charkate Glove and Specialty Company
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MARINO, 10/3/94 NJ EASTCO 2 47 Y
FRAN
Action Comments Damages
- ------ -------- -------
Marino, Frank, Jr., et al v Pulmosan The Company was brought into ****
Safety Equipment Corp., et al v this action as a third party
Eastco Industrial Safety Corp. a/k/a defendant by Pulmosan Safety
Charkate Glove and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MARRON, DON 10/6/94 NJ EASTCO 2 49 Y
Action Comments Damages
- ------ -------- -------
Marron, Donald, Jr., et al v The Company was brought into ****
Pulmosan Safety Equipment Corp., et this action as a third party
al v Eastco Industrial Safety Corp. defendant by Pulmosan Safety
a/k/a Charkate Glove and Specialty Equipment Corp.
Company
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MATHIASEN, 10/6/94 NJ EASTCO 2 87 Y
Action Comments Damages
- ------ -------- -------
Mathiasen, Harold, et al v Pulmosan The Company was brought into ****
Safety Equipment Corp., et al v this action as a third party
Eastco Industrial Safety Corp. a/k/a defendant by Pulmosan Safety
Charkate Glove and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
McARTHUR, 10/6/94 NJ EASTCO 2 52 Y
Action Comments Damages
- ------ -------- -------
McArthur, Donald, et al v Pulmosan The Company was brought into ****
Safety Equipment Corp., et al v this action as a third party
Eastco Industrial Safety Corp. a/k/a defendant by Pulmosan Safety
Charkate Glove and Specialty Company Equipment Corp.
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
REITER, 10/6/94 NJ EASTCO 1 47 Y
PAUL
Action Comments Damages
- ------ -------- -------
Reiter, Paul, Jr. v Pulmosan Safety The Company was brought into ****
Equipment Corp., et al v Eastco this action as a third party
Industrial Safety Corp. a/k/a defendant by Pulmosan Safety
Charkate Glove and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
SAMEK, 10/6/94 NJ EASTCO 2 60 Y
Action Comments Damages
- ------ -------- -------
Samek, Albina, et al v Pulmosan The Company was brought into ****
Safety Equipment Corp., et al v this action as a third party
Eastco Industrial Safety Corp. a/k/a defendant by Pulmosan Safety
Charkate Glove and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
SAXE, GARY 10/6/94 NJ EASTCO 2 48 Y
Action Comments Damages
- ------ -------- -------
Saxe, Gary, et al v Pulmosan Safety The Company was brought into ****
Equipment Corp., et al v Eastco this action as a third party
Industrial Safety Corp. a/k/a defendant by Pulmosan Safety
Charkate Glove and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
SONTAG, FRE 10/6/94 NJ EASTCO 1 46 N
Action Comments Damages
- ------ -------- -------
Sontag, Fred, Jr. v Pulmosan Safety The Company was brought into ****
Equipment Corp., et al v Eastco this action as a third party
Industrial Safety Corp. a/k/a defendant by Pulmosan Safety
Charkate Glove and Specialty Company Equipment Corp.
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
SZABO, 10/6/94 NJ EASTCO 2 47 N
LOUIS
Action Comments Damages
- ------ -------- -------
Szabo, Louis, et al v Pulmosan The Company was brought into ****
Safety Equipment Corp., et al v this action as a third party
Eastco Industrial Safety Corp. a/k/a defendant by Pulmosan Safety
Charkate Glove and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
DAVIS, 6/4/94 NJ EASTCO 2 41 Y
Action Comments Damages
- ------ -------- -------
Davis, Thomas, et al v Pulmosan The Company was brought into ****
Safety Equipment Corp., et al v this action as a third party
Eastco Industrial Safety Corp. a/k/a defendant by Pulmosan Safety
Charkate Glove and Specialty Company Equipment Corp.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
POTTER, 5/17/95 NJ EASTCO 1 47 Y
Action Comments Damages
- ------ -------- -------
Potter, Charles et al v A.C. & S., The Company was brought into ****
Inc., Eastco Industrial Safety Corp. this action as a first party
a/k/a Charkate Glove and Specialty defendant.
Company, et al
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
NUNEZ 6/5/95 NJ EASTCO 1 42 Y
Action Comments Damages
- ------ -------- -------
Nunez, Manuel v A.C. Safety Shoe The Company and Rite Glove Corp. ****
Co., Eastco Industrial Safety Corp., were brought into this action as
Rite Glove Corp., et al first party defendants.
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
HOGATE 4/1/94 NJ EASTCO 2 9 Y
Action Comments Damages
- ------ -------- -------
Hogate, et al v A.P. Green The Company and Puerto Rico ****
Industries, Inc., Eastco Industrial Safety Equipment Corporation
Safety Corp. a/k/a Charkate Glove were brought into this action as
and Specialty Company, Puerto Rico first party defendants.
Safety Equipment Corporation, et al NOTE No. 1: During 6/94 Eastco
was brought into this action as
a third party defendant by
Pulmosan.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
CLARK, JOAN 6/19/95 NJ EASTCO_PR 2 91 Y
Action Comments Damages
- ------ -------- -------
Joan A. Clark, Inc., et al v ABB The Company and Puerto Rico ****
Lummus Crest, Inc., Eastco Safety Equipment Corporation
Industrial Safety Corp. a/k/a were brought into this action as
Charkate Glove and Specialty first party defendants.
Company, Puerto Rico Safety NOTE: PR settled 9/95 E open
Equipment Corporation, et al
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
BADER, 9/21/95 NY EASTCO 1 60 N
Action Comments Damages
- ------ -------- -------
Richard Bader v A.C. & S., Inc., The Company was brought into ****
Eastco Industrial Safety Corp. a/k/a this action as a first party
Charkate Glove and Specialty defendant.
Company, et al
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
YATES, J. 6/30/96 NY EASTCO 6
Action Comments Damages
- ------ -------- -------
J. Yates v Eastco Industrial Safety This case to be settled as part ****
Corp., et al of global settlement in New
York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
BREWER, E. 6/30/96 NY EASTCO 3
Action Comments Damages
- ------ -------- -------
E. Brewer, et. al v Eastco This case to be settled as part ****
Industrial Safety Corp., et al of global settlement in New
York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
RAMBADT. H. 6/30/96 NY EASTCO 63
Action Comments Damages
- ------ -------- -------
H. Rambadt, et al v Eastco This case to be settled as part ****
Industrial Safety Corp., et al of global settlement in New
York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
PAVITT, R. 6/30/96 NY EASTCO 6
Action Comments Damages
- ------ -------- -------
R. Pavitt, et al v Eastco Industrial This case to be settled as part ****
Safety Corp., et al of global settlement in New
York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
LAGONIKOS 6/30/96 NY EASTCO 15
Action Comments Damages
- ------ -------- -------
D. Lagonikos, et al v Eastco This case to be settled as part ****
Industrial Safety Corp., et al of global settlement in New
York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
BARTHELMESS 6/30/96 NY EASTCO 24
Action Comments Damages
- ------ -------- -------
L. Barthelmess, et al v Eastco This case to be settled as part ****
Industrial Safety Corp., et al of global settlement in New
York.
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
IVERS, J. 6/30/96 NY EASTCO 11
Action Comments Damages
- ------ -------- -------
J. Ivers, et al v Eastco Industrial This case to be settled as part ****
Safety Corp., et al of global settlement in New
York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
DELLIGATTI, 6/30/96 NY EASTCO 61
E.
Action Comments Damages
- ------ -------- -------
E. Delligatti, et al v Eastco This case to be settled as part ****
Industrial Safety Corp., et al of global settlement in New
York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
PEREZ, P. 6/30/96 NY EASTCO 12
Action Comments Damages
- ------ -------- -------
P. Perez, et al v Eastco Industrial This case to be settled as part ****
Safety Corp., et al of global settlement in New
York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MORSE, G. 6/30/96 NY EASTCO 28
Action Comments Damages
- ------ -------- -------
G. Morse, et al v Eastco Industrial This case to be settled as part ****
Safety Corp., et al of global settlement in New
York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
CACIOPPO, 6/30/96 NY EASTCO 7
A.
Action Comments Damages
- ------ -------- -------
A. Cacioppo, et al v Eastco This case to be settled as part ****
Industrial Safety Corp., et al of global settlement in New
York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
JACKSON, A. 6/30/96 NY EASTCO 1
Action Comments Damages
- ------ -------- -------
A. Jackson, et al v Eastco This case to be settled as part ****
Industrial Safety Corp., et al of global settlement in New
York.
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
HEAPHY, M. 6/30/96 NY EASTCO 6
Action Comments Damages
- ------ -------- -------
M. Heaphy,, et al v Eastco This case to be settled as part ****
Industrial Safety Corp., et al of global settlement in New
York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
STOUT, D. 6/30/96 NY EASTCO 29
Action Comments Damages
- ------ -------- -------
D. Stout, et al v Eastco Industrial This case to be settled as part ****
Safety Corp., et al of global settlement in New
York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
KESTLER, G. 6/30/96 NY EASTCO 50
Action Comments Damages
- ------ -------- -------
G. Kestler, et al v Eastco This case to be settled as part ****
Industrial Safety Corp., et al of global settlement in New
York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
ACQUISTA, 6/30/96 NY EASTCO 52
R.
Action Comments Damages
- ------ -------- -------
R. Acquista, et al v Eastco This case to be settled as part ****
Industrial Safety Corp., et al of global settlement in New
York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
THIEL, E. 6/30/96 NY EASTCO 28
Action Comments Damages
- ------ -------- -------
E. Theil, et al v Eastco Industrial This case to be settled as part ****
Safety Corp., et al of global settlement in New
York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
GUZZETTI, 6/30/96 NY EASTCO 1
M.
Action Comments Damages
- ------ -------- -------
M. Guzzetti, et al v Eastco This case to be settled as part ****
Industrial Safety Corp., et al of global settlement in New
York.
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
FUSCO, A. 6/30/96 NY EASTCO 8
Action Comments Damages
- ------ -------- -------
A. Fusco, et al v Eastco Industrial This case to be settled as part ****
Safety Corp., et al of global settlement in New
York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
FRANCICA, 6/30/96 NY EASTCO 25
J.
Action Comments Damages
- ------ -------- -------
J. Francica, et al v Eastco This case to be settled as part ****
Industrial Safety Corp., et al of global settlement in New
York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
ELLIS, K. 6/30/96 NY EASTCO 2
Action Comments Damages
- ------ -------- -------
K. Ellis, et al v Eastco Industrial This case to be settled as part ****
Safety Corp., et al of global settlement in New
York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
BULLOCK, R. 6/30/96 NY EASTCO 20
Action Comments Damages
- ------ -------- -------
R. Bullock, et al v Eastco This case to be settled as part of ****
Industrial Safety Corp., et al global settlement in New York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
JAVORNICKY, 6/30/96 NY EASTCO 26
Action Comments Damages
- ------ -------- -------
L. Javornicky, et al v Eastco This case to be settled as part ****
Industrial Safety Corp., et al of global settlement in New
York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
PAJAK, E. 6/30/96 NY EASTCO 1
Action Comments Damages
- ------ -------- -------
E. Pajak, et al v Eastco Industrial This case to be settled as part ****
Safety Corp., et al of global settlement in New
York.
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
FENWICK, R. 6/30/96 NY EASTCO 40
Action Comments Damages
- ------ -------- -------
R. Fenwick, et al v Eastco This case to be settled as part ****
Industrial Safety Corp., et al of global settlement in New
York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
BROSNAN, V. 6/30/96 NY EASTCO 35
Action Comments Damages
- ------ -------- -------
V. Brosnan, et al v Eastco This case to be settled as part ****
Industrial Safety Corp., et al of global settlement in New
York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
COLABELLA, 6/30/96 NY EASTCO 2
D.
Action Comments Damages
- ------ -------- -------
D. Colabella, et al v Eastco This case to be settled as part ****
Industrial Safety Corp., et al of global settlement in New
York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
MASALIN, G. 6/30/96 NY EASTCO 39
Action Comments Damages
- ------ -------- -------
G. Masalin, et al v Eastco This case to be settled as part ****
Industrial Safety Corp., et al of global settlement in New
York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
PAGNOZZI, 6/30/96 NY EASTCO 1
C.
Action Comments Damages
- ------ -------- -------
C. Pagnozzi, et al v Eastco This case to be settled as part ****
Industrial Safety Corp., et al of global settlement in New
York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
DISTEFANO, 6/30/96 NY EASTCO 43
J.
Action Comments Damages
- ------ -------- -------
J. DiStefano, et al v Eastco This case to be settled as part ****
Industrial Safety Corp., et al of global settlement in New
York.
<PAGE>
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
JESTER, J. 6/30/96 NY EASTCO 36
Action Comments Damages
- ------ -------- -------
J. Jester, et al v Eastco Industrial This case to be settled as part ****
Safety Corp., et al of global settlement in New
York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
WIEGLEB, H. 6/30/96 NY EASTCO 29
Action Comments Damages
- ------ -------- -------
H. Wiegleb, et al v Eastco This case to be settled as part ****
Industrial Safety Corp., et al of global settlement in New
York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
ECUYER, K. 6/30/96 NY EASTCO 47
Action Comments Damages
- ------ -------- -------
K. Ecuyer, et al v Eastco Industrial This case to be settled as part ****
Safety Corp., et al of global settlement in New
York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
KERN, R. 6/30/96 NY EASTCO 7
Action Comments Damages
- ------ -------- -------
R. Kern, et al v Eastco Industrial This case to be settled as part ****
Safety Corp., et al of global settlement in New
York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
PEEK, J. 6/30/96 NY EASTCO 29
Action Comments Damages
- ------ -------- -------
J. Peek, et al v Eastco Industrial This case to be settled as part ****
Safety Corp., et al of global settlement in New
York.
Case Date State Company Plaintiffs Defendants Answer
- ---- ---- ----- ------- ---------- ---------- ------
CLINTON, M. 6/30/96 NY EASTCO 37
Action Comments Damages
- ------ -------- -------
M. Clinton, et al v Eastco This case to be settled as part ****
Industrial Safety Corp., et al of global settlement in New
York.
<PAGE>
Exhibit 99.06
SCHEDULE OF PRIMARY PRODUCT LIABILITY INSURANCE COVERAGE FOR ASBESTOS
Period Insurance Company Policy # Policy Coverage
- ------ ----------------- -------- ---------------
5/1/83 to American Casualty Co. GBP 00-2162917 $ 1,000,000.
11/27/85 of Reading, Pa.
7/30/81 to Hartford Insurance 10SMP164994 1,000,000.
4/30/83
7/30/78 to Hartford Insurance 13SMP139374 1,000,000.
7/30/81
7/30/77 to Home Insurance Co. BOP860668 1,000,000.
7/30/78
8/1/75 to Public Service Mutual 73-500412 300,000.
7/30/77
5/2/75 to Home Insurance Co. Binder 009939 300,000.
8/1/75
4/3/73 to Birmingham Fire SMP 1061065 300,000.
3/25/75 American Int'l Group
3/11/71 to Hartford Insurance 10SMP156343 100,000.
4/6/73
4/1/68 to Mount Vernon Fire GLA 2562 50,000.
4/1/69 Insurance Company
NOTE: The above upon best information of the Company is applicable to Eastco
Industrial Safety Corp. This schedule is not intended to be inclusive of
insurance coverage for all of the subsidiaries of the Company. These
subsidiaries may have different coverage, with gaps and at times no coverage
for periods of their doing business. No representation is made as to the
extent of coverage, the aggregate coverage of any of the policies or the
degree of protection available which the Company or its subsidiaries have on
any of their insurance with respect to asbestos actions previously or
subsequently instituted against the Company.
<PAGE>
Exhibit 99.07
SCHEDULE OF EXCESS PRODUCT LIABILITY INSURANCE COVERAGE FOR ASBESTOS
Period Insurance Company Policy # Policy Coverage
- ------ ----------------- -------- ---------------
10/22/85 to Public Service Mutual 05-35678 $ 10,000,000.
8/11/86
7/30/83 to Home Insurance Co. HEC 141 7960 10,000,000.
9/1/84
7/30/82 to Birmingham Fire UM 607 2477 5,000,000
7/30/83 American Int'l Group
7/30/81 to Birmingham Fire UM 607 2433 5,000,000.
7/30/82 American Int'l Group
7/30/82 to Firemen's Fund XLX 137-11-13 5,000,000.
7/30/83
8/26/81 to Firemen's Fund XLX 144-00-48 5,000,000.
7/30/82
7/30/80 to Firemen's Fund XLB 142-72-62 5,000,000.
7/30/81
7/30/79 to Firemen's Fund XLB 140-96-30 5,000,000.
7/30/80
12/12/78 to Firemen's Fund XLB 132-67-66 5,000,000.
7/30/79
5/11/78 to National Union SE 1234542 500,000.
12/12/78
8/10/75 to Public Service Mutual 05-11249 2,000,000.
8/10/77
8/10/72 to North River DCL008426 1,000,000.
6/1/73
NOTE: The above upon best information of the Company is
- ----- applicable to Eastco Industrial Safety Corp. This
schedule is not intended to be inclusive of insurance
coverage for all of the subsidiaries of the Company.
These subsidiaries may have different coverage, with gaps
and at times no coverage for periods of their doing
business. No representation is made as to the extent of
coverage, the aggregate coverage of any of the policies or
the degree of protection available which the Company or
its subsidiaries have on any of their insurance with
respect to asbestos actions previously or subsequently
instituted against the Company regarding the obligations
of the above insurance companies to provide a legal
defense and/or indemnification.
<PAGE>
Exhibit 99.08
PRIMARY INSURANCE COVERAGE FOR
PUERTO RICO SAFETY EQUIPMENT CORPORATION FOR ASBESTOS
POLICY
PERIOD INSURANCE COMPANY POLICY NUMBER COVERAGE
- ------ ----------------- ------------- --------
3/11/71 to Hartford Insurance 105MP156343 $100,000
4/6/73 Company
4/3/73 to Birmingham Fire SMP1061065 $300,000
3/25/75
5/15/76 to Federal Insurance Co. MP694-03-59 $500,000
7/23/86
EXCESS INSURANCE COVERAGE FOR
PUERTO RICO SAFETY EQUIPMENT CORPORATION FOR ASBESTOS
POLICY
PERIOD INSURANCE COMPANY POLICY NUMBER COVERAGE
- ------ ----------------- ------------- --------
8/10/72 to North River DCL008426 $1,000,000
8/10/75
8/10/75 to Public Service Mutual 05-11249 $2,000,000
4/22/77
5/16/79 to Great Northern 7925-04-45 $2,000,000
7/23/86
7/10/81 to Birmingham Fire UM6072433 $5,000,000
7/30/83 UM6072477
NOTE: The above upon best information of the Company is applicable to
Puerto Rico Safety Equipment Corporation. Not all of these
policies are available to the Company. The coverage set forth for
each policy has various aggregate, deductibles and other provisions
which may affect the amount of and periods of policy coverage. The
above policy coverage amounts may not be descriptive of the actual
amount of coverage and period of coverage. It is understood that
there are numerous uncertainties regarding the above insurance
coverage and the Company is unable to set forth the full extent to
which same apply to the Company.
<PAGE>
Exhibit 99.09
DEFENSE AND INDEMNITY AGREEMENT
AGREEMENT made this 26th day of March, 1990 by and among EASTCO
INDUSTRIAL SAFETY CORP. (p/k/a "Eastco Industrial Equipment Inc.", "Glofane
Co. Inc." and "R & R Safety Equipment Corp." and a/k/a "Charkate Glove and
Specialty Company" and "Rite Glove Corp.") with offices at 130 West 10th
Street, Huntington Station, New York 11746 (hereinafter collectively referred
to as "Eastco"), THE HARTFORD INSURANCE GROUP, with offices at Hartford Plaza,
Hartford, Connecticut 06115 ("Hartford"), THE HOME INSURANCE COMPANIES, with
offices at 59 Maiden Lane, New York, New York 10038 ("Home"), PUBLIC SERVICE
MUTUAL INSURANCE COMPANIES, with offices at 132 West 31st Street, New York,
New York 10001, ("Public"), BIRMINGHAM FIRE, with offices at 50 South Clinton
Street, East Orange, New Jersey 07018 ("Birmingham") and AMERICAN CASUALTY
COMPANY OF READING, PA., with offices at c/o CNA Insurance Companies, 2
Gannett Drive, White Plains, New York 10604 ("American") and all of the said
insurance companies hereinafter being collectively referred to as "Insurance
Companies" and each of which is sometimes hereinafter referred to as an
"Insurance Company."
WHEREAS the Insurance Companies have heretofore issued various
insurance policies to Eastco covering product liability, including exposure to
asbestos related products; and
WHEREAS Eastco has heretofore manufactured, distributed and/or sold
asbestos products ("Asbestos Products"); and
WHEREAS Eastco has been made a party to actions by numerous parties
in a multitude of lawsuits in different jurisdictions alleging personal
injuries, ailments or disease of any kind, or and/or death resulting
therefrom, allegedly resulting in whole or in part from exposure to Asbestos
Products allegedly manufactured, distributed or sold by Eastco; and
WHEREAS Eastco may be made party in the future to additional lawsuits
by parties alleging personal injuries, ailments or disease of any kind, and/or
death resulting therefrom, allegedly resulting
-1-
<PAGE>
in whole or in part from exposure to Asbestos Products allegedly manufactured,
distributed or sold by Eastco; and
WHEREAS disputes have occurred pertaining to the Insurance Companies'
obligation to defend Eastco and to indemnify Eastco in connection with the
actions heretofore commenced and which may be commenced in the future
regarding alleged personal injuries, ailments or disease of any kind, and/or
death resulting therefrom allegedly resulting in whole or in part from
exposure to Asbestos Products allegedly manufactured, distributed or sold by
Eastco, said lawsuits being hereinafter referred to as "Asbestos Actions"; and
WHEREAS the parties have entered into this Agreement in an effort to
resolve their disputes and to establish among the Insurance Companies an
apportionment of costs for defense and indemnification of Eastco relating to
the Asbestos Actions; and
WHEREAS it is the purpose of this Agreement to establish the
procedures to be followed with respect to the administration, defense, payment
and disposition of the Asbestos Actions and to do so without altering,
amending or waiving any of the terms, conditions, exclusions or provisions of
any applicable policy of insurance and without waiving any rights against
non-parties; and
WHEREAS this Agreement is a result of a compromise accord relating to
the resolution of disputed claims, is a product of arms-length negotiations,
is not intended to nor shall it be construed as the admission of the existence
of a policy or as a policy interpretation, and shall not be used in any Court
or arbitration to create, prove, or interpret any obligations under general
liability or other liability insurance policies.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein the parties agree as follows:
FIRST: Asbestos Insurance. Coverage of Eastco by the Insurance
Companies with respect to the Asbestos Actions, for purposes of this Agreement
only, shall be in accordance with the insurance policies set forth on Schedule
"1" annexed hereto. Coverage of Eastco shall also be
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<PAGE>
applicable to its affiliates and subsidiaries named in each scheduled
insurance policy.
SECOND: Applicability of this Agreement to Asbestos Actions.
A. Except as otherwise provided for herein, this
Agreement shall be applicable to all Asbestos Actions presently pending
against Eastco and to all Asbestos Actions instituted against Eastco
subsequent to the date of this Agreement and prior to the termination of this
Agreement.
B. Except as otherwise set forth herein, this
Agreement shall not be applicable to any Asbestos Actions heretofore
terminated and settled as to Eastco prior to the date of this Agreement
("Terminated Asbestos Actions").
C. This Agreement shall not be applicable to any
Asbestos Actions instituted against Eastco where no exposure to Asbestos
Products manufactured, distributed or sold by Eastco is alleged during the
period between 1971 to 1985 inclusive.
D. This Agreement shall not apply to any actions
instituted against Eastco with respect to Worker's Compensation.
THIRD: Defense of Claims.
A. American in New York, Public in New Jersey and
Hartford in Pennsylvania is hereby designated as the lead carrier ("Lead
Carrier") by the parties hereto and shall promptly appoint counsel to defend
Eastco with respect to all Asbestos Actions pending and subsequently
instituted against Eastco prior to the termination of this Agreement in the
jurisdictions designated for them. With respect to asbestos actions commenced
in any other jurisdiction, the Insurance Companies agree to designate a Lead
Carrier amongst themselves promptly after the institution of such Asbestos
Actions.
-3-
<PAGE>
B. Except as otherwise set forth herein, the cost
of the defense ("Legal Fees") of all Asbestos Actions for which this Agreement
is applicable, including attorneys' fees and all other applicable costs and
disbursements for unpaid bills rendered to date for Legal Fees for Asbestos
Actions pending and also for new Asbestos Actions, shall be paid in accordance
with the following schedule:
Hartford shall pay 41%
Home shall pay 7.5%
Public shall pay 12%
Birmingham shall pay 12%
American shall pay 15.5%
Eastco shall pay 12%
C. Counsel defending Eastco in the Asbestos Actions
pursuant to Article THIRD (B) above shall provide timely reports to Eastco and
the Insurance Companies setting forth defense and indemnification costs for
each Asbestos Action concluded. Eastco and each of the Insurance Companies
shall be billed for their respective shares for Legal Fees by such counsel and
each shall be responsible to pay their shares within thirty (30) days of
receipt of their bill.
D. After service of all new summons and complaints,
Eastco shall only be required to provide a copy of same to the Lead Carrier
and counsel defending Eastco, provided that Eastco shall provide a copy of a
letter of transmittal to each of the Insurance Companies at their addresses
herein set forth which letter shall include the name of the court where the
Asbestos Action was instituted, the period of exposure, and the approximate
number of first party plaintiffs and defendants named in such Asbestos Action
to the best information of Eastco.
FOURTH: Settlement and Payment of Judgments.
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<PAGE>
A. All of the litigation involving the Asbestos
Actions shall be managed in the best interests of Eastco as to strategy.
Settlement and disposition of any of the Asbestos Actions may be made with the
consent of Eastco and the Lead Carrier and such settlement shall be binding
upon all parties hereto providing that no Asbestos Action, regardless of the
number of plaintiffs, shall be settled in excess of $100,000 per Asbestos
Action or $50,000 per plaintiff, whichever is greater, without the consent of
Eastco, the Lead Carrier and two other Insurance Companies. A husband and
wife, including a legal representative of such person, shall collectively be
deemed one plaintiff.
B. The cost of a settlement of an Asbestos Action
or any verdict or judgment rendered in connection therewith ("Indemnity
Costs") of all Asbestos Actions for which this Agreement is applicable shall
be paid in accordance with the following schedule:
Hartford shall pay 38.67%
Home shall pay 7.07%
Public shall pay 11.32%
Birmingham shall pay 11.32%
American shall pay 14.62%
Eastco shall pay 17.00%
C. The Indemnity Costs payable in accordance with
Section B. above shall be paid by the Lead Carrier who shall bill Eastco and
each of the Insurance Companies separately for their share and each shall
reimburse the Lead Carrier within sixty (60) days after receipt of a bill for
their share.
FIFTH: Terminated Asbestos Actions - Pro Rata Sharing of Legal and
Indemnity Expenses by Insurance Companies.
-5-
<PAGE>
A. Notwithstanding anything to the contrary
contained herein, Legal Fees and indemnity payments for all Terminated
Asbestos Actions shall be borne in full solely by the Insurance Companies and
in proportion to their relative liability to each other under the following
schedule:
Hartford shall pay 46.59%
Home shall pay 8.52%
Public shall pay 13.64%
Birmingham shall pay 13.64%
American shall pay 17.61%
B. The Insurance Companies shall reimburse each
other for such Legal Fees and indemnity payments within sixty (60) days of the
execution of this Agreement so that each Insurance Company shall have paid
Legal Fees and Indemnity Costs for such Terminated Asbestos Actions in
proportion to their pro rata liability under Article Fifth A above.
C. All Legal Fees heretofore paid with respect to
Asbestos Actions still pending shall also be shared in accordance with the
provisions of this Article FIFTH.
SIXTH: Exhaustion of Limits
A. Payment of indemnification costs by the
Insurance Companies shall be credited towards the exhaustion of the policy
limits of their respective policies listed on Schedule "1."
B. Upon exhaustion of policy limits through payment
of indemnification costs, or payments of claims of a policy listed on Schedule
"1," the Insurance Company's obligations of defense and indemnity under the
policy, and further payments of defense costs and indemnification costs under
this Agreement, shall terminate for that policy. Upon the exhaustion of the
policy limits
-6-
<PAGE>
under all the policies listed on Schedule "1" for the respective Insurance
Companies, the obligations of defense and indemnity under the policies and
payment of defense costs and indemnification costs under this Agreement shall
terminate.
C. In the event of the exhaustion of a policy limit
by one of the Insurance Companies, the contribution percentage shall be
adjusted for all pending and future Asbestos Actions and Eastco shall assume
responsibility for the decreased contribution percentage as applicable, by
treating the exhausted policy limit as a self-insured layer. In the event of
the existence of excess liability insurance over the exhausted policy limit of
the Insurance Company, as applicable, Eastco will use its best efforts to have
such excess insurer become a signatory to this Agreement and assume its pro
rata share of indemnification costs. In addition, Eastco will use its best
efforts to have such excess insurer assume its pro rata share of Legal Fees if
the policy with the excess carrier so provides.
SEVENTH: Reservation of Rights
A. This Agreement does not alter the rights or
obligations of the parties hereto under the provisions of any applicable
binder or policy of insurance.
B. All questions respecting insurance coverage or
lack of insurance coverage for Eastco including but not limited to
establishing the existence of or the terms, conditions, exclusions, provisions
or obligations of insurance coverage or binder or policies of insurance that
were or may have been issued to Eastco or respecting the liability or
non-liability of any party thereunder or respecting the breach or fulfillment
of any term, conditions, exclusions, provision or obligation thereof are
expressly reserved as between the parties to this Agreement.
C. This Agreement or performance hereunder is not
intended to and shall not be construed to operate as a waiver or modification
of any of the terms, conditions, exclusions, provisions or obligations of any
insurance policy that has been or may have been issued to Eastco.
-7-
<PAGE>
All parties reserve all previously held positions regarding the proper
interpretation and application of terms, conditions, exclusions, provisions or
obligations of any insurance policy or binder that has been or may have been
issued to Eastco.
EIGHTH: Waiver of Bad Faith
Notwithstanding any other provision, each party, as to each other
party, hereby waives and forever relinquishes any claim, demand, right and
cause of action for breach of insurance contracts, non-contractual damages,
bad faith, failure to provide timely notice of an Asbestos Action, insurance
code violations, exemplary or punitive damages and for any other tort or
statutory liability, whether known or unknown, based upon, arising out of or
connected in any way with any acts or omissions by such other party occurring
prior to the effective date of this Agreement.
NINTH: Termination of Agreement.
A. This Agreement may be terminated at any time
upon ninety (90) days notice in the future by any party upon notice as herein
provided and upon such termination, this Agreement shall be terminated as to
all parties. Notwithstanding anything to the contrary contained in this
Agreement, notice of termination shall not be effective as to any asbestos
action that has already been placed on a trial calendar, unless at the time
notice is given, such trial date has a then scheduled date more than twelve
(12) months from the date notice of termination is given.
B. Notice of termination shall be deemed given upon
the date same is posted by the party giving such notice.
C. Should any party file a notice to terminate,
their participation in this Agreement as per Article NINTH A, each party shall
be liable for any indemnity and defense expenses incurred prior to the
effective date of the termination.
D. This Agreement shall not constitute a waiver of
any rights that a party
-8-
<PAGE>
may have against the other if this Agreement is terminated and action is
instituted by any party to determine the rights and obligations of any party
under any insurance policy or binder or any claim such party may have
regarding the defense and indemnity of Eastco for Asbestos Actions instituted
against Eastco after the termination of this Agreement.
TENTH: Effective Date of Agreement
This Agreement shall be effective as of the date hereof and shall
remain in effect until terminated.
ELEVENTH: Mount Vernon Fire Insurance Company. In the event that
Eastco is able to secure the participation of Mount Vernon Fire Insurance Co.
("Mount Vernon") in this Agreement or it is determined that Mount Vernon is
required to defend and indemnify Eastco, then the parties will endeavor to
reallocate the provisions contained in paragraphs THIRD, FOURTH B and FIFTH A
of this Agreement.
TWELFTH: Excess Coverage. The terms and provisions of this Agreement
shall not preclude or prohibit Eastco from any claims, rights or coverage it
may have against its excess insurance carriers.
THIRTEENTH: Notices. All notices shall be in writing and sent by
certified or registered mail, return receipt requested to the party at its
address above set forth with a copy to all other parties. A party may change
its address provided it gives notice to all other parties in accordance with
the terms of this Agreement.
FOURTEENTH: Governing Law. This Agreement shall be governed in all
respects by the laws of the State of New York.
FIFTEENTH: Entire Agreement. This Agreement represents the entire
agreement between the parties and may not be modified except in writing signed
by the party to be charged.
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<PAGE>
SIXTEENTH: Binding Agreement. This Agreement shall be binding upon
the successors and assigns of the parties hereto.
SEVENTEENTH: Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original and all of which taken together shall be deemed to be one and the
same instrument. This Agreement, however, shall not be binding on any party
hereto until signed by all parties.
IN WITNESS WHEREOF the parties hereto have set their hands and seals
on the day first above written.
EASTCO INDUSTRIAL SAFETY CORP.
By:
-------------------------
THE HARTFORD
By:
-------------------------
THE HOME INSURANCE COMPANIES
By:
-------------------------
PUBLIC SERVICE MUTUAL
INSURANCE COMPANIES
By:
-------------------------
BIRMINGHAM FIRE
By:
-------------------------
AMERICAN CASUALTY COMPANY OF
READING, PA.
By:
-------------------------
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<PAGE>
FIRST AMENDMENT to Defense and Indemnity Agreement dated March 26,
1990 by and among Eastco Industrial Safety Corp. ("Eastco"), The Hartford
Insurance Group ("Hartford"), The Home Insurance Company ("Home"), Public
Service Mutual Insurance Companies ("Public"), Birmingham Fire ("Birmingham")
and American Casualty Company of Reading, Pa. ("American").
1. Confidentiality. The parties agree that the terms of the Defense
and Indemnity Agreement dated March 26, 1990 (the "Agreement") will remain
confidential and will not be disclosed to a non-party, except as required in
the conduct of the disclosing parties' business, or to effectuate the
performance of this Agreement or as otherwise required by law, or in filings
with the Securities and Exchange Commission and communications with Eastco's
shareholders.
2. Minor Departures. The parties recognize that the implementation of
this Agreement will involve the handling of numerous claims and that minor
departures from the strict terms and conditions of the Agreement might occur
as a result. The parties intend that minor departures by one or more parties,
such as do not evince an intent to refuse to perform under the Agreement,
shall not be considered as such a material breach of this Agreement as to
confer upon the other parties the right to terminate this Agreement.
3. Counterpart. This amendment may be signed in counterpart and the
Agreement, including this amendment, shall not be binding upon any party until
each is signed by all of the parties hereto.
-11-
<PAGE>
Dated: May 30, 1990
EASTCO INDUSTRIAL SAFETY CORP.
By:
-------------------------
THE HARTFORD
By:
-------------------------
THE HOME INSURANCE COMPANIES
By:
-------------------------
PUBLIC SERVICE MUTUAL
INSURANCE COMPANIES
By:
-------------------------
BIRMINGHAM FIRE
By:
-------------------------
AMERICAN CASUALTY COMPANY OF
READING, PA.
By:
-------------------------
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<PAGE>
Exhibit 99.10
SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement And Release ("the Agreement") is entered into by
and between EASTCO INDUSTRIAL SAFETY CORP. (p/k/a/ "Eastco Industrial Equipment
Inc.", "Glofane Co. Inc." and "R & R Safety Equipment Corp." and a/k/a "Charkate
Glove and Specialty Company" and "Rite Glove Corp.") with offices at 130 West
10th Street, Huntington Station, New York 11746 (hereinafter collectively
referred to as "Eastco"), and MOUNT VERNON FIRE INSURANCE COMPANY, with offices
at 1030 Continental Drive, P.O. Box 1551, King of Prussia, Pennsylvania
19406-0951 ("Mount Vernon"), as of the date of the execution of this Agreement
by Eastco and Mount Vernon, and in accordance with the terms and conditions set
forth below.
WHEREAS, Eastco has alleged that Mount Vernon issued to it insurance
policies MCL-2-3184, purportedly in effect from April 1, 1968 to April 1, 1969,
and GLA 2562, purportedly in effect from September 12, 1969 to October 25, 1969,
allegedly covering products liability, including exposure to asbestos related
products liability, including exposure to asbestos related products (all such
policies of insurance which may have been issued by Mount Vernon to Eastco being
referred to herein, collectively, as "the Policies"); and
WHEREAS, Eastco has heretofore manufactured, distributed and/or sold
asbestos products ("Asbestos Products"); and
<PAGE>
WHEREAS, Eastco has been made a party to certain actions, and may be party
in the future to additional actions, by numerous parties in a multitude of
lawsuits in different jurisdictions alleging personal injuries, ailments or
disease of any kind, or and/or death resulting therefrom, allegedly resulting in
whole or in part from exposure to Asbestos Products allegedly manufactured,
distributed or sold by Eastco (all such lawsuits being referred to herein,
collectively, as "Asbestos Actions") and
WHEREAS, Eastco has asserted that Mount Vernon is obligated under the
Policies to defend and indemnify it in connection with the Asbestos Actions;
WHEREAS, Mount Vernon has denied any obligation under the policies to
defend or indemnify Eastco in connection with the Asbestos Actions;
WHEREAS, disputes have arisen between Eastco and Mount Vernon pertaining to
Mount Vernon's alleged obligation to defend and indemnify Eastco in connection
with the Asbestos Actions;
WHEREAS, Eastco has commenced an action against Mount Vernon, entitled
Eastco Industrial Safety Corp., et al. v. Mount Vernon Fire Insurance Company,
Index No. 19903/87, currently pending in the Supreme Court of the State of New
York, County Court of Suffolk ("the Declaratory Judgment Action"), in which
Eastco seeks a declaration of its rights under the Policies in connection with
Asbestos Actions;
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<PAGE>
WHEREAS, Mount Vernon has denied the allegations of Eastco's complaint in
the Declaratory Judgment Action;
WHEREAS, pursuant to a certain agreement previously made March 26, 1990
between Eastco and certain other insurance carriers (the "Defense and Indemnity
Agreement"), Eastco currently is bearing 12% of the "Legal Fees", and 17% of the
"Indemnity Costs", as those terms are defined in the Defense and Indemnity
Agreement, incurred with respect to pending and future Asbestos Actions, which
sums were derived from an allocation respecting the periods of time that Eastco
could not substantiate insurance coverage with such other insurance carriers
between 1968 and 1985;
WHEREAS, with respect to the Asbestos Actions, this Agreement is intended
by Eastco to take into account periods between 1968 and 1985 that Eastco could
not substantiate coverage under the Defense and Indemnity Agreement, so as to
reduce the amount of Legal Fees and Indemnity Costs that Eastco is required to
bear under the Defense and Indemnity Agreement;
WHEREAS, without prejudice to their respective rights and positions
concerning Eastco's claims for insurance coverage from Mount Vernon in
connection with the Asbestos Actions, and to avoid expensive and protracted
litigation, Eastco and Mount Vernon now desire to enter into this Agreement in
an effort to resolve their disputes, and to establish among Eastco and Mount
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<PAGE>
Vernon an apportionment of the costs for defense and settlement currently being
borne by Eastco relating to the Asbestos Actions; and
WHEREAS, it is the purpose of this Agreement to establish the procedures to
be followed with respect to the administration, defense, payment and disposition
of the Asbestos Actions and to do so without altering, amending or waiving any
of the terms, conditions, exclusions or provisions of any applicable policy of
insurance and without waiving any rights against non-parties; and
WHEREAS, this Agreement is a result of a compromise accord relating to the
resolution of disputed claims, is a product of arms-length negotiations, is not
intended to nor shall it be construed as the admission of the existence of any
policy, or as a policy interpretation, and shall not be used to create, prove,
or interpret any obligations under any general liability or the liability
insurance policy, and shall not be deemed a participation by Mount Vernon in the
Defense and Indemnity Agreement.
NOW THEREFORE, in consideration of the mutual covenants herein, the parties
hereby agree, as follows:
I. Defense and Settlement Expenses Incurred by Eastco Prior to the
Date of this Agreement
1. Upon due execution of this Agreement by the parties hereto,
Mount Vernon shall pay to Eastco the total sum of SIXTEEN THOUSAND FIVE HUNDRED
SIX and 42/100 dollars ($16,506.42)
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<PAGE>
in full and final settlement of any and all claims which have been or which
hereafter may be asserted by Eastco against Mount Vernon arising from, related
to, or as a result of any defense or settlement expenses paid by Eastco prior to
the date of this agreement in connection with the Asbestos Actions. Eastco
accepts the foregoing amount in full and complete settlement of any obligations
on the part of Mount Vernon to or on behalf of Eastco with respect thereto under
the Policies.
II. Future Defense and Settlement Expenses
A. Policy MCL 2-3184
2. For purposes of this Agreement only, and without prejudice to
its position concerning Eastco's entitlement to insurance coverage under the
Policies, reimbursement by Mount Vernon for defense and settlement expenses
incurred on behalf of Eastco in pending and future Asbestos Action shall be
provided, on the terms set forth hereinbelow, in accordance only with insurance
policy MCL 2-3184.
3. Except as otherwise provided for herein, this Agreement shall
be applicable to all Asbestos Actions presently pending against Eastco and to
all Asbestos Actions instituted against Eastco subsequent to the date of this
Agreement and prior to the termination of this Agreement. Except as otherwise
specifically set forth herein, this Agreement shall not be applicable to any
Asbestos Actions heretofore terminated and settled as to Eastco prior to the
effective date of this Agreement ("Terminated Asbestos Actions").
-5-
<PAGE>
4. This Agreement shall not be applicable to any Asbestos Actions
instituted against Eastco where no exposure to Asbestos Products manufactured,
distributed or sold by Eastco is alleged during the period between April 1, 1968
to April 1, 1969.
5. This Agreement shall not apply to any actions instituted
against Eastco with respect to Worker's Compensation.
6. This Agreement shall be applicable to, and limited to,
Eastco's affiliates and subsidiaries identified as named or additional insureds
in policy MCL 2-3184.
B. Participation by Mount Vernon in Legal Fees
7. Except as otherwise set forth herein, following the execution
of this Agreement by the parties hereto Mount Vernon shall reimburse Eastco for
6.25% of the reasonable and necessary costs, including all attorney's fees and
other applicable costs and disbursements (all such fees and costs being referred
to herein, collectively, as "Legal Fees") thereafter incurred by or behalf of
Eastco in its defense of all Asbestos Actions to which this Agreement is
applicable (i.e., 52.08% of Eastco's 12% share of those defense costs). Other
than as specifically set forth in Paragraph "1" of this Agreement, nothing
contained in this Agreement shall be construed to obligate Mount Vernon to
reimburse Eastco, or any of its other insurance carriers, for any Legal Fees
incurred in the defense of Eastco in any matter not encompassed in this
Agreement.
C. Reporting Requirements
8. After service of all new summonses and complaints, Eastco
shall provide to Mount Vernon a copy of the
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<PAGE>
letter of transmittal forwarding each new summons and complaint to defense
counsel, which letter shall include the name of the court where the Asbestos
Actions was instituted, the period of alleged asbestos exposure, and the
approximate number of first party plaintiffs and defendants named in such
Asbestos Action to the best information of Eastco. Upon request by Mount Vernon,
Eastco shall promptly forward to Mount Vernon a copy of any new summons and
complaint to Mount Vernon.
9. Eastco shall provide to Mount Vernon, on a timely basis,
copies of all reports received from counsel defending Eastco in the Asbestos
Actions pursuant to Paragraph "7" of this Agreement, setting forth defense and
indemnification costs for each Asbestos Action concluded.
D. Management of Asbestos Actions
10. All of the litigation involving the Asbestos Actions shall be
managed in the best interests of Eastco as to strategy. Settlement and
disposition of any of the Asbestos Actions may be made with the consent of
Eastco and the "Lead Carrier", as that term is defined in the Defense and
Indemnity Agreement, as such settlement shall be binding upon the parties hereto
providing that, as set forth more fully in the Defense and Indemnity Agreement,
no Asbestos Action, regardless of the number of plaintiffs, shall be settled for
an amount applicable to Eastco in excess of $100,00 per Asbestos Action or
$50,000 per
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<PAGE>
plaintiff, whichever is greater, without the consent of Eastco, the Lease
Carrier and two other Insurance Companies. A husband and wife, including a legal
representative of such person, shall collectively be deemed one plaintiff.
E. Reimbursement For Settlement Expenses
11. Mount Vernon shall reimburse Eastco for 6.25% of the costs of
settlement of any Asbestos Action or any verdict or judgment (i.e., 36.76% of
Eastco's 17% share of those costs) rendered in connection therewith ("Indemnity
Costs") of all Asbestos Actions to which this Agreement is applicable.
12. Payment of indemnification costs by Mount Vernon shall be
credited towards the exhaustion of the sum of $100,000, which solely for
purposes of this Agreement shall be deemed to be the policy limits applicable to
policy MCL 2-3184. With respect to Eastco's payment of the sum of $16,506.42
pursuant to paragraph "1" of this Agreement, the sum of $1,036 from that payment
shall be treated as Indemnity Costs, and shall be credited toward the exhaustion
of the policy limits, leaving a remaining balance of $98,964. Upon exhaustion of
the above policy limits applicable to policy MCL 2-3184 through payment of
Indemnity Costs, Mount Vernon's obligations of defense and indemnity under the
Policies, and further payments of defense costs and indemnification costs under
this Agreement, shall terminate, subject to the reservation of rights as
otherwise provided in this Agreement, including specifically Article V.A.
hereof.
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<PAGE>
III. Release by Eastco of Mount Vernon
A. Prior Claims
13. Upon Eastco's receipt from Mount Vernon of the foregoing sum
of $16,506.42, Eastco and all persons entities identified as named or additional
insureds under any policy of insurance which may have been issued to Eastco by
Mount Vernon shall fully release and forever discharge Mount Vernon, its
parents, subsidiaries, affiliated companies, and predecessor companies, and all
of the past and present officers, directors, employees, representatives and
attorneys of and from any and all claims, actions, causes of action, rights,
liabilities, obligations and demands of every kind and nature, known and
unknown, past present and future, including but not limited to any claims by
Eastco for damages, punitive damages, equitable relief, any claims to recover
expert or legal fees or other costs, or to recover for any alleged acts or
omissions, if any, constituting unfair defense or settlement practices,
insurance or other statutory code violations, bad faith, breach of fiduciary
duty fraud, malice or oppression arising out of any claims by or on behalf of
Eastco for insurance coverage from Mount Vernon in connection with any costs or
expenses which have been paid by Eastco to date relating to the Asbestos
Actions.
B. Future Claims
14. Upon the performance by Mount Vernon of its undertakings
pursuant to this Agreement to reimburse Eastco for Legal Fees and Indemnity
Costs with respect to pending and future Asbestos Actions, the release
provisions set forth in Paragraph
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15 of this Agreement shall be deemed to have been extended to encompass any
claims by Eastco relating to those actions.
C. Policy GLA 2562
15. In consideration of the undertakings by Mount Vernon under
this Agreement, Eastco hereby forever releases and discharges Mount Vernon, to
the same extent as set forth in Paragraph 13 of this Agreement, from any and all
claims of any nature under or arising from policy GLA 2562 and any other policy
of insurance, other than policy MCL 2-3184, which may have been issued to Eastco
by Mount Vernon. Eastco represents and warrants that it will not hereafter
tender to Mount Vernon, and will not hereafter assert in litigation against
Mount Vernon, any claims for insurance coverage under policy GLA 2562 in
connection with any Asbestos Actions or any terminated Asbestos Actions. Any
claims previously tendered by Eastco to Mount Vernon are hereby deemed
withdrawn.
IV. The Declaratory Judgment Action
16. Eastco hereby represents and warrants that upon this
Agreement becoming effective, Eastco shall execute and file with the court the
stipulations attached as Exhibit "A", dismissing without prejudice the claims
asserted by Eastco against Mount Vernon in the Declaratory Judgment Action
relating to policy MCL 2-3184, and dismissing with prejudice the claims at issue
therein relating to policy GLA 2562.
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<PAGE>
V. General Provisions
A. Reservations of Rights
17. This Agreement does not alter the rights or obligations of
the parties hereto under policy MCL 2-3184. Other than as set forth in this
Agreement, all questions respecting insurance coverage or lack of insurance
coverage thereunder for Eastco, including but not limited to establishing the
existence or meaning of or the terms, conditions, aggregates, exclusions,
provisions or obligations of said policy, or respecting the breach or
fulfillment of any term, conditions, exclusions, provision or obligation
thereof, are expressly reserved as between the parties to this Agreement.
18. Other than as set forth in this Agreement, this Agreement or
performance hereunder is not intended to and shall not be construed to operate
as a waiver or modification of any of the terms, conditions, exclusions,
provision or obligations of any insurance policy that has been or may have been
issued to Eastco by Mount Vernon. All parties reserve all previously held
positions regarding the issuance, proper interpretation, and application of
terms, conditions, exclusions, provisions or obligations of any insurance policy
or binder that has been or may have been issued to Eastco.
19. The terms and provisions of this Agreement shall not preclude
or prohibit Eastco from any claims, rights or coverage it may have against its
excess insurance carriers.
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<PAGE>
B. Terminations of Agreement
20. This Agreement may be terminated at any time in the future by
any party upon ninety (90) days notice as herein provided, and upon such
termination, this Agreement shall be terminated as to both parties. Notice of
termination shall be deemed given upon the date same is posted by the party
giving such notice.
21. Should any party file a notice to terminate their
participation in this Agreement pursuant to Paragraph 20 of this Agreement, each
party shall be liable to any indemnity and defense expenses incurred prior to
the effective date of the termination. Notwithstanding anything to the contrary
contained in this Agreement, notice of termination shall not be effective as to
any Asbestos Action that has already been placed on a trial calendar, unless at
the time notice is given, such trial date has a then-scheduled date more than
twelve (12) months from the date notice of termination is given. Notwithstanding
anything to the contrary herein, if Eastco is required to allocate or contribute
any portion of the 6.25% reimbursement being made under this Agreement to the
insurance carriers under the Defense and Indemnity Agreement or this Agreement
otherwise results in a reduction of the 83% Indemnity Costs and 88% Legal Fees
coverage for Eastco under the Defense and Indemnity Agreement, then Eastco may
terminate this Agreement immediately, and the termination shall be effective
regardless of whether any of the Asbestos Actions may at that time be on a trial
calendar.
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<PAGE>
22. This Agreement shall not constitute a waiver of any rights
that a party may have against the other if this Agreement is terminated and
action is instituted by any party to determine the rights and obligations of any
party under policy MCL 2-3184 regarding the defense and indemnity of Eastco
thereunder for Asbestos Actions instituted against Eastco after the termination
of this Agreement.
C. Notices
23. All notices shall be in writing and sent by certified or
registered mail, return receipt requested to the party at its address above set
forth with a copy to all other parties. A party may change its address provided
it gives notice to all other parties in accordance with the terms of this
Agreement.
D. Governing Law
24. This Agreement shall be governed in all respects by the laws
of the State of New York.
E. Entire Agreement
25. This Agreement represents the entire agreement between the
parties and may not be modified except in writing signed by the party to be
charged.
F. Binding Agreement
26. This Agreement shall be binding upon the successors and
assigns of the parties hereto.
G. Agreement Drafted By Counsel
27. This Agreement was drafted by counsel for the signatories
hereto, and shall not create a presumption, or be
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construed against any signatories hereto, each signatory expressly waiving the
doctrine of contra proferentum.
H. Rights and Benefits
28. This Agreement is intended to confer rights and benefits only
on the signatories hereto, and is not intended to confer any right or benefit
upon any other person or entity.
I. Warranties
29. The parties represent and warrant:
a. That they are corporations duly organized and validly
existing in good standing under the laws of one or more of
the states of the United States;
b. That they have taken all necessary corporate and legal
actions to duly approve the making and performance of this
Agreement and that no further corporate or other approval is
necessary;
c. That the making and performance of this Agreement will not
violate any provision of law or of their respective Articles
of Incorporation or Bylaws;
d. That they have read this Agreement and know the contents
hereof, that the terms hereof are contractual and not by way
of recital, and that they have signed this Agreement of
their own free acts; and
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e. That in making this Agreement, they have obtained the advice
of legal counsel.
30. Eastco represents and warrants that it has taken all
necessary and corporate and legal actions to bind to the terms of this Agreement
all persons and entities identified as named or additional insureds under the
Policies.
J. Confidentiality
31. The parties acknowledge and agree that the terms and
conditions of this Agreement shall remain confidential and shall not be
disclosed to any other person or other insurer of Eastco except as may be
required by law, provided, however, that either party may disclose the fact and
existence of this Agreement to any other insurer(s) which may have an interest
in the matters which are the subject of this Agreement. Additionally, nothing
contained herein shall preclude Eastco from filing a copy of this Agreement with
the Securities and Exchange Commission ("the SEC") if deemed necessary by Eastco
to comply with applicable SEC regulations. This Agreement shall not be admitted
to evidence in any proceeding except as may be required to effectuate or enforce
the terms of this Agreement.
K. Execution in Counterparts
32. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original and all of which taken together shall be
deemed to be one and the same instrument. This Agreement, however, shall not be
binding on any party hereto until signed by both parties.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands
and seals on the day first above written.
EASTCO INDUSTRIAL SAFETY CORP.
p/k/a "Eastco Industrial Equipment
Inc.", "Glofane Co. Inc.", and "R&R
Safety Equipment Corp." and a/k/a
"Charkate Glove and Specialty
Company" and "Rite Glove Corp."
By: /s/ Alan Densen
---------------------------------
Date: 5/8/91
---------------------------------
MOUNT VERNON FIRE INSURANCE CO.
By: /s/ Bernard Quinn, Vice President
---------------------------------
Date: May 2, 1991
---------------------------------
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<PAGE>
[LETTERHEAD OF L'ABBATE & BALKAN]
February 3, 1994
VIA TELECOPIER
Herbert W. Solomon, Esq. Mr. Frank Kellerman
Hollenberg, Levin, Solomon, Public Service Mutual
Ross & Belsky Liability Claims, 13th Floor
585 Stewart Avenue 132 West 31st St.
Garden City, NY 11530 New York, NY 10001
Mr. William Hattings Mr. Ray Gerapka
The Hartford Insurance American International
SEICO Claims Adjustment Company, Inc.
Hartford Plaza Toxic Tort Dept.
Hartford, CT 06115 6th Floor
80 Pine St.
Mr. Karl Zemgals New York, NY 10005
Home Insurance Company
4801 NW Loop 410 Ste 525 CNA Insurance Companies
San Antonio, TX 78229-5356 CNA Plaza
Chicago, IL 60685
Attn: Mr. Raymond Morrisroe
Re: Eastco Industrial Safety Corporation
Global Settlement - Amended Letter
-------------------------------------
Gentlemen:
As you know, we have been negotiating a settlement with the Wilentz,
Goldman & Spitzer ("Wilentz") firm for all pending cases and all future
filings against Eastco. Outlined below are the terms of the settlement for
both pending and future cases.
<PAGE>
PENDING CASES
Currently, Wilentz has 1343 claims pending against Eastco. Wilentz has
agreed to dismiss 195 cases, without payment, where there is no powerhouse
exposure. The remaining 1148 cases involve claimants who have worked in
powerhouses where Wilentz asserts they can implicate Eastco. Under the terms
of the settlement, Eastco would pay $100 for each of the 1105 non-malignancy
cases and $300 for each of the 43 malignancy cases. Thus, the payments would
be as follows:
1105 non-malignancy cases at $100/case = $110,500
43 malignancy cases at $300/case = 12,900
--------
Total Payment = $123,400
========
FUTURE FILINGS
All future filings by the Wilentz firm can be settled within the same
parameters. Wilentz would continue to serve complaints upon Eastco in the same
manner. Eastco, however, would not have to attend any depositions which would
provide a substantial cost savings. Wilentz would then discontinue all cases
where the claimant had no powerhouse exposure. Eastco would pay $100 for each
non-malignancy filed and $300 for each malignancy filed.
We highly recommend this settlement proposal for both pending and future
cases. This is an especially advantageous settlement for future cases as we
can expect Wilentz to focus more and more attention on "small" defendants such
as Eastco, as the larger, more traditional defendants file for bankruptcy or
otherwise leave the forefront of litigation. By resolving the future filings
now, we can maintain Eastco's position as a peripheral defendant in the
litigation.
<PAGE>
Mr. Morrisroe from CNA has already approved of the terms of this
settlement. We request that each of you notify us within ten days if you do
not wish to go forward with this proposal. If we do not hear from you, we will
assume there are no objections to the terms of the settlement and we will
finalize the settlement.
If you would like more information or would like to discuss this matter
further, please feel free to contact us.
Very truly yours,
L'ABBATE & BALKAN
/s/ Anna M. DiLonardo
--------------------------------
Anna M. DiLonardo
AMD:kk
<PAGE>
[LETTERHEAD OF WILENTZ, GOLDMAN & SPITZER]
March 14, 1994
Donald L'Abbate, Esq.
L'Abbate & Balkan
1050 Franklin Ave.
Garden City, NY 11530
Re: New York Asbestos Cases
Eastco Industrial Safety Corp. Settlement
-----------------------------------------------
Dear Mr. L'Abbate:
This will confirm settlement with Eastco Industrial Safety Corp. Of 1,191
asbestos related personal injury claims for the total sum of $128,900.
Set forth on the attached Exhibit A is a list of the cases which are the
subject of this agreement, the diseases of each individual claimant and the
amount of each claimant's settlement with Eastco. Also set forth are those
claims in which we will be dismissing Eastco.
It is understood that your obligation to forward settlement proceeds for
any claimant is subject to receipt of medical confirmation that said claimant
has a diagnosis of mesothelioma, lung cancer, GI cancer, pulmonary asbestosis,
pleural thickening or pleural scarring. If for some reason we cannot
substantiate disease as to a particular claimant, settlement proceeds relating
to the claimant as set forth on the attached Exhibit A will be deducted from the
$128,900 total settlement sum. Similarly, if the disease turns out to be other
than as set forth on Exhibit A (i.e., someone listed
<PAGE>
[LETTERHEAD OF WILENTZ, GOLDMAN & SPITZER -- 2ND PAGE]
Donald L'Abbate, Esq.
March 14, 1994
Page 2
as having cancer really has pleural thickening, and someone listed as having
pleural thickening really has cancer) the settlement amount for that person will
be adjusted to be in harmony with the amounts being paid to others with the same
disease.
Regarding Releases, our clients will execute the form of the Releases
attached hereto as Exhibit B.
We fully expect all plaintiffs to approve their settlement and to execute
Releases. It is understood, however, that if any plaintiff refuses to accept,
the total settlement amount will be reduced by the sum of money which was
negotiated for that claimant, as set forth in the attached Exhibit A. Again, we
anticipate no problems in this regard.
We plan to forward signed Releases and Stipulations of Dismissal by the end
of 1994. It is understood that we will expect to receive payment in full for
these cases within sixty days thereafter.
Regarding future cases in New York. In the event Wilentz is retained by
individuals who have a similar work exposure history to the plaintiffs in this
settlement, suit will be filed against Eastco but formal service of the
Complaint will not be made. Instead, we will mail a copy of the New York
Complaint to you. It is agreed that this will constitute full service upon
Eastco; however, no answer need be filed and no default will be entered.
Instead, on a six month basis, we shall confer and plaintiff shall present proof
of medical disease and resolve any questions regarding employment history.
Assuming similar work histories to current plaintiffs, and assuming further
that general conditions in asbestos litigation remain relatively static in terms
of bankruptcies and the like, Eastco agrees to offer and we agree to recommend
to plaintiffs acceptance of the sums listed on Exhibit A for a particular
disease and worksite. In the event a settlement is not consummated as to a
particular plaintiff, it is agreed that Eastco would then answer the Complaint,
raising no Statute of Limitations defense that could not have been raised at the
time the Complaint was filed with the Court.
<PAGE>
[LETTERHEAD OF WILENTZ, GOLDMAN & SPITZER -- 2ND PAGE]
Donald L'Abbate, Esq.
March 14, 1994
Page 3
Unless I hear from you within five days, I will assume you have no problem
with the foregoing.
Thank you for your cooperation and courtesy in helping to bring about an
amicable resolution of these matters.
Sincerely,
/s/ Philip A. Pahigian
----------------------------
Philip A. Pahigian
PAP/mjc/aws/sfg/kd/mbd
Enclosures
