SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 4)*
EMPIRE OF CAROLINA, INC.
(Name of Issuer)
Common Stock, Par Value $.10 Per Share
(Title of Class of Securities)
292007-10-1
(CUSIP Number)
Robin B. Shanus
Weiss Peck & Greer
One New York Plaza
New York, NY 10004
(212) 908-9500
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 24, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement
on Schedule 13G to report the acquisition which is the
subject of this Schedule 13D, and is filing this
Schedule because of Rule 13d-1(b)(3) or (4), check the
following box.
Check the following box if a fee is being paid with the
statement. (A fee is not required only if the
Reporting Person: (1) has a previous statement on file
reporting beneficial ownership of more than five
percent of the class of securities described in Item 1;
and (2) has filed no amendment subsequent thereto
reporting beneficial ownership of five percent or less
of such class.) (See Rule 13d-7.)
Note. Six copies of this statement, including all
exhibits, should be filed with the Commission. See
Rule 13d-1 (a) for other parties to whom copies are to
be sent.<PAGE>
<PAGE>
*The remainder of this cover page shall be filled out
for a reporting person's initial filing on this form
with respect to the subject class of securities, and
for any subsequent amendment containing information
which would alter disclosures provided in a prior cover
page.
The information required on the remainder of this
cover page shall not be deemed to be "filed" for
the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject
to the liabilities of that section of the Act but
shall be subject to all other provisions of the
Act (however, see the Notes).
** The total number of shares of common stock
reported herein as beneficially owned by the
Reporting Persons (assuming the consummation of
transactions contemplated by the Underwriting
Agreement (as disclosed in Item 4 herein)) is
3,019,021 (including the 2,531,929 shares of
common stock which the Reporting Persons shall
have the right to acquire upon the conversion of
the securities described herein) which constitutes
approximately 31.8% of the total number of shares
outstanding, based on 9,493,229 shares of common
stock of the issuer outstanding (including the
2,531,929 shares of common stock which the
Reporting Persons shall have the right to acquire
upon the conversion of the securities described
herein). If the Reporting Parties are deemed to
be a group with Steven E. Geller, Neil Saul,
Marvin Smollar and Champ Enterprises Limited
Partnership, such group shall be deemed to
beneficially own 5,539,140 shares of common stock
(including 3,148,128 shares of common stock which
the Reporting Persons and the Geller Group (as
defined herein) have the right to acquire in the
next 60 days upon exercise of warrants or options
on conversion of securities), which constitutes
approximately 54.8% of the total number of shares
outstanding based on 10,109,428 shares of common
stock outstanding. See Item 2. See Item 5 of
this Statement regarding how the total number of
outstanding shares is determined.<PAGE>
<PAGE>
1. Name of Reporting Person:
WPG Corporate Development Associates IV, L.P.
2. Check the Appropriate Box if a Member of a Group:
(a)
(b) x
3. SEC Use Only
4. Source of Funds: WC
5. Check box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f):
6. Citizenship or Place of Organization: Delaware
Number of 7. Sole Voting Power: 2,328,918 (1)
Shares (3) (4)
Beneficially
Owned By 8. Shared Voting Power: 128,523
Each (2)(4)
Reporting
Person 9. Sole Dispositive Power: 2,328,918
With (1) (3) (4)
10. Shared Dispositive Power: -0-
11. Aggregate Amount Beneficially Owned by Each
Reporting Person: 2,457,441 (3) (4)
12. Check Box if the Aggregate Amount in Row (11)
Excludes Certain Shares: x
13. Percent of Class Represented by Amount in Row
(11): 27.2% (4)
(see item 5)
14. Type of Reporting Person: PN
(1) Power is exercised through its sole general
partner, WPG Private Equity Partners, L.P.
(2) Represents shares owned by the Individual
Investors (as herein defined) which are subject to
a certain Shareholders' Agreement, pursuant to
which the Reporting Person has the right to vote
such shares and certain other rights. See item 4.
(3) Does not include shares owned or controlled by
certain other stockholders of the issuer who are
parties with the Reporting Person to the
Shareholders' Agreement, which shares the<PAGE>
<PAGE>
Reporting Person may be deemed to beneficially own
pursuant to Rule 13d-3 of the Act because of the
voting agreement and other provisions contained
therein. Also does not include shares of Halco
Industries, Inc. which WPG Corporate Development
Associates IV, L.P. may have the right to purchase
pursuant to the terms of a certain Stock Purchase
Agreement. Pursuant to Rule 13d-4, the Reporting
Person disclaims beneficial ownership of all such
shares. See item 4 and item 5.
(4) Assumes the consummation of the transactions
contemplated by the Underwriting Agreement (as
herein defined). See Item 4.
<PAGE>
1. Name of Reporting Person:
WPG Private Equity Partners, L.P.
2. Check the Appropriate Box if a Member of a Group:
(a)
(b) x
3. SEC Use Only
4. Source of Funds: N/A
5. Check box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f):
6. Citizenship or Place of Organization: Delaware
Number of 7. Sole Voting Power: 2,328,918 (1)
Shares (2) (4) (5)
Beneficially
Owned By 8. Shared Voting Power: 128,523 (3)
Each (5)
Reporting
Person 9. Sole Dispositive Power:
With 2,328,918 (1) (2) (4) (5)
10. Shared Dispositive Power: -0-
11. Aggregate Amount Beneficially Owned by Each
Reporting Person: 2,457,441 (4) (5)
12. Check Box if the Aggregate Amount in Row (11)
Excludes Certain Shares: x
13. Percent of Class Represented by Amount in Row
(11): 27.2% (5) (see item 5)
14. Type of Reporting Person: PN<PAGE>
<PAGE>
(1) Solely in its capacity as the sole general partner
of WPG Corporate Development Associates IV, L.P.
(2) Power is executed through its two managing general
partners, Steven N. Hutchinson and Wesley W. Lang,
Jr.
(3) Represents shares owned by the Individual
Investors which are subject to the Shareholders'
Agreement, pursuant to which WPG Corporate
Development Associates IV, L.P. has the right to
vote such shares and certain other rights. See
item 4.
(4) Does not include shares owned or controlled by
certain other stockholders of the issuer who are
parties with the Reporting Person to a certain
Shareholders' Agreement, which shares the
Reporting Person may be deemed to beneficially own
pursuant to Rule 13d-3 of the Act because of the
voting agreement and other provisions contained
therein. Also does not include shares of Halco
Industries, Inc. which WPG Corporate Development
Associates IV, L.P. may have the right to acquire
pursuant to the terms of a certain Stock Purchase
Agreement. Pursuant to Rule 13d-4, the Reporting
Person disclaims beneficial ownership of all such
shares. See item 4 and item 5.
(5) Assumes the consummation of the transactions
contemplated by the Underwriting Agreement (as
herein defined). See Item 4.
<PAGE>
1. Name of Reporting Person:
WPG Corporate Development Associates IV
(Overseas), L.P.
2. Check the Appropriate Box if a Member of a Group:
(a)
(b) x
3. SEC Use Only
4. Source of Funds: WC
5. Check box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f):
6. Citizenship or Place of Organization: Cayman
Islands
Number of 7. Sole Voting Power: 542,151 (1) (2)
Shares (3)
Beneficially
Owned By 8. Shared Voting Power: -0-
Each
Reporting 9. Sole Dispositive Power: 542,151 (1)
Person (2) (3)
With
10. Shared Dispositive Power: -0-
11. Aggregate Amount Beneficially Owned by Each
Reporting Person: 542,151 (2) (3)
12. Check Box if the Aggregate Amount in Row (11)
Excludes Certain Shares: x
13. Percent of Class Represented by Amount in Row
(11): 7.3% (3) (see item 5)
14. Type of Reporting Person: PN
(1) Power is exercised through its two general
partners, WPG Private Equity Partners (Overseas),
L.P. and WPG CDA IV (Overseas), Ltd.
(2) Does not include shares owned or controlled by
certain other stockholders of the issuer who are
parties with the Reporting Person to a certain
Shareholders' Agreement, which shares the
Reporting Person may be deemed to beneficially own
pursuant to Rule 13d-3 of the Act because of the
voting agreement and other provisions contained
therein. Pursuant to Rule 13d-4, the Reporting
Person disclaims beneficial ownership of all such
shares. See item 4 and item 5.
(3) Assumes the consummation of the transactions
contemplated by the Underwriting Agreement (as
herein defined). See Item 4.
<PAGE>
1. Name of Reporting Person:
WPG CDA IV (Overseas), Ltd.
2. Check the Appropriate Box if a Member of a Group:
(a)
(b) x
3. SEC Use Only
4. Source of Funds: N/A
5. Check box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f):
6. Citizenship or Place of Organization: Cayman
Islands
Number of 7. Sole Voting Power: -0-
Shares Bene-
ficially 8. Shared Voting Power: 542,151 (1)
Owned By (2) (3)
Each
Reporting 9. Sole Dispositive Power: -0-
Person
With 10. Shared Dispositive Power:
542,151 (1)(2)(3)
11. Aggregate Amount Beneficially Owned by Each
Reporting Person: 542,151 (2)(3) (see item 5)
12. Check Box if the Aggregate Amount in Row (11)
Excludes Certain Shares: x
13. Percent of Class Represented by Amount in Row
(11): 7.3% (3) (see item 5)
14. Type of Reporting Person: CO
(1) Solely through its capacity as a general partner
of WPG Corporate Development Associates IV
(Overseas), L.P.
(2) Does not include shares owned or controlled by
certain other stockholders of the issuer who are
parties with the Reporting Person to a certain
Shareholders' Agreement, which shares the
Reporting Person may be deemed to beneficially own
pursuant to Rule 13d-3 of the Act because of the
voting agreement and other provisions contained
therein. Pursuant to Rule 13d-4, the Reporting
Person disclaims beneficial ownership of all such
shares. See item 4 and item 5.
(3) Assumes the consummation of the transactions
contemplated by the Underwriting Agreement (as
herein defined). See Item 4.
<PAGE>
1. Name of Reporting Person:
WPG Private Equity Partners (Overseas), L.P.
2. Check the Appropriate Box if a Member of a Group:
(a)
(b) x
3. SEC Use Only
4. Source of Funds: N/A
5. Check box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f):
6. Citizenship or Place of Organization: Delaware
Number of 7. Sole Voting Power: 19,429 (2)
Shares Bene-
ficially 8. Shared Voting Power: 542,151 (1)
Owned By (2) (3) (4)
Each
Reporting 9. Sole Dispositive Power: 19,429 (2)
Person
With 10. Shared Dispositive Power:
542,151 (1) (2) (3) (4)
11. Aggregate Amount Beneficially Owned by Each
Reporting Person: 561,580 (3) (4) (see item 5)
12. Check Box if the Aggregate Amount in Row (11)
Excludes Certain Shares: x
13. Percent of Class Represented by Amount in Row
(11): 7.6% (4) (see item 5)
14. Type of Reporting Person: PN
(1) Solely in its capacity as a general partner of WPG
Corporate Development Associates IV (Overseas),
L.P.
(2) Power is exercised through its two managing
general partners, Steven N. Hutchinson and Wesley
W. Lang, Jr.
(3) Does not include shares owned or controlled by
certain other stockholders of the issuer who are
parties with the Reporting Person to a certain
Shareholders' Agreement, which shares the
Reporting Person may be deemed to beneficially own
pursuant to Rule 13d-3 of the Act because of the
voting agreement and other provisions contained
therein. Pursuant to Rule 13d-4, the Reporting
Person disclaims beneficial ownership of all such
shares. See item 4 and item 5.
(4) Assumes the consummation of the transactions
contemplated by the Underwriting Agreement (as
herein defined). See Item 4.<PAGE>
<PAGE>
1. Name of Reporting Person:
Steven N. Hutchinson
2. Check the Appropriate Box if a Member of a Group:
(a)
(b) x
3. SEC Use Only
4. Source of Funds: N/A
5. Check box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f):
6. Citizenship or Place of Organization: United
States
Number of 7. Sole Voting Power: -0-
Shares Bene
ficially 8. Shared Voting Power: 3,019,021
Owned By (1)(2)(3)
Each
Reporting 9. Sole Dispositive Power: -0-
Person
With 10. Shared Dispositive Power:
3,019,021 (1)(2)(3)
11. Aggregate Amount Beneficially Owned by Each
Reporting Person: 3,019,021 (1)(2)(3)
12. Check Box if the Aggregate Amount in Row (11)
Excludes Certain Shares: x
13. Percent of Class Represented by Amount in Row
(11): 31.8% (3) (see item 5)
14. Type of Reporting Person: IN
(1) Solely in his capacity as one of the two managing
general partners of WPG Private Equity Partners
IV, L.P., the sole general partner of WPG
Corporate Development Associates IV, L.P., and in
his capacity as one of the two managing general
partners of WPG Private Equity Partners IV
(Overseas), L.P., a general partner of WPG
Corporate Development Associates IV (Overseas),
L.P. See item 5.
(2) Does not include shares owned or controlled by
certain other stockholders of the issuer who are
parties with the Reporting Person to a certain
Shareholders' Agreement, which shares the
Reporting Person may be deemed to beneficially own
pursuant to Rule 13d-3 of the Act because of the
voting agreement and other provisions contained
therein. Pursuant to Rule 13d-4, the Reporting
Person disclaims beneficial ownership of all such
shares. See item 4 and item 5.
(3) Assumes the consummation of the transactions
contemplated by the Underwriting Agreement (as
herein defined). See Item 4.
<PAGE>
1. Name of Reporting Person:
Wesley W. Lang, Jr.
2. Check the Appropriate Box if a Member of a Group:
(a)
(b) x
3. SEC Use Only
4. Source of Funds: N/A
5. Check box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f):
6. Citizenship or Place of Organization: United
States
Number of 7. Sole Voting Power: -0-
Shares Bene
ficially 8. Shared Voting Power: 3,019,021
Owned By (1)(2)(3)
Each
Reporting 9. Sole Dispositive Power: -0-
Person
With 10. Shared Dispositive Power:
3,019,021 (1)(2)(3)
11. Aggregate Amount Beneficially Owned by Each
Reporting Person: 3,019,021 (1)(2)(3)
12. Check Box if the Aggregate Amount in Row (11)
Excludes Certain Shares: x
13. Percent of Class Represented by Amount in Row
(11): 31.8% (3) (see item 5)
14. Type of Reporting Person: IN
(1) Solely in his capacity as one of the two managing
general partners of WPG Private Equity Partners
IV, L.P., the sole general partner of WPG
Corporate Development Associates IV, L.P., and in
his capacity as one of the two managing general
partners of WPG Private Equity Partners IV
(Overseas), L.P., a general partner of WPG
Corporate Development Associates IV (Overseas),
L.P. See item 5.
(2) Does not include shares owned or controlled by
certain other stockholders of the issuer who are
parties with the Reporting Person to a certain
Shareholders' Agreement, which shares the
Reporting Person may be deemed to beneficially own
pursuant to Rule 13d-3 of the Act because of the
voting agreement and other provisions contained
therein. Pursuant to Rule 13d-4, the Reporting
Person disclaims beneficial ownership of all such
shares. See item 4 and item 5.
(3) Assumes the consummation of the transactions
contemplated by the Underwriting Agreement (as
herein defined). See Item 4.
<PAGE>
1. Name of Reporting Person:
Peter B. Pfister
2. Check the Appropriate Box if a Member of a Group:
(a)
(b) x
3. SEC Use Only
4. Source of Funds: PF
5. Check box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f):
6. Citizenship or Place of Organization: United
States
Number of 7. Sole Voting Power: -0-
Shares Bene
ficially 8. Shared Voting Power: 3,041 (1)
Owned By
Each 9. Sole Dispositive Power: 3,041
Reporting
Person 10. Shared Dispositive Power: -0-
With
11. Aggregate Amount Beneficially Owned by Each
Reporting Person: 3,041
12. Check Box if the Aggregate Amount in Row (11)
Excludes Certain Shares: x
13. Percent of Class Represented by Amount in Row
(11): < 0.1% (see item 5)
14. Type of Reporting Person: IN
(1) Voting power is shared with WPG Corporate
Development Associates IV, L.P., pursuant to the
terms of a certain Shareholders' Agreement. See
item 4.
<PAGE>
1. Name of Reporting Person:
Craig S. Whiting
2. Check the Appropriate Box if a Member of a Group:
(a)
(b) x
3. SEC Use Only
4. Source of Funds: PF
5. Check box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f):
6. Citizenship or Place of Organization: United
States
Number of 7. Sole Voting Power: -0-
Shares Bene
ficially 8. Shared Voting Power: 3,041 (1)(2)
Owned By
Each 9. Sole Dispositive Power: 3,041 (2)
Reporting
Person 10. Shared Dispositive Power: -0-
With
11. Aggregate Amount Beneficially Owned by Each
Reporting Person: 3,041
12. Check Box if the Aggregate Amount in Row (11)
Excludes Certain Shares: x
13. Percent of Class Represented by Amount in Row
(11): < 0.1% (see item 5)
14. Type of Reporting Person: IN
(1) Voting power is shared with WPG Corporate
Development Associates IV, L.P., pursuant to the
terms of a certain Shareholders' Agreement. See
item 4.
(2) Power is exercised through an Individual
Retirement Account and a 401(k) account the
trustee of which is Weiss, Peck & Greer. Mr.
Whiting makes all investment decisions involving
securities held in such account.
<PAGE>
1. Name of Reporting Person:
Nora E. Kerppola
2. Check the Appropriate Box if a Member of a Group:
(a)
(b) x
3. SEC Use Only
4. Source of Funds: PF
5. Check box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f):
6. Citizenship or Place of Organization: United
States
Number of 7. Sole Voting Power: -0-
Shares Bene
ficially 8. Shared Voting Power: 3,041 (1)(2)
Owned By
Each 9. Sole Dispositive Power: 3,041 (2)
Reporting
Person 10. Shared Dispositive Power: -0-
With
11. Aggregate Amount Beneficially Owned by Each
Reporting Person: 3,041
12. Check Box if the Aggregate Amount in Row (11)
Excludes Certain Shares: x
13. Percent of Class Represented by Amount in Row
(11): < 0.1% (see item 5)
14. Type of Reporting Person: IN
(1) Voting power is shared with WPG Corporate
Development Associates IV, L.P., pursuant to the
terms of a Shareholders' Agreement. See item 4.
(2) Power is exercised with respect to 2,041 shares
through an Individual Retirement Account the
trustee of which is Weiss, Peck & Greer. Ms.
Kerppola makes all investment decisions involving
securities held in such account.
<PAGE>
1. Name of Reporting Person:
Glenbrook Partners, L.P.
2. Check the Appropriate Box if a Member of a Group:
(a)
(b) x
3. SEC Use Only
4. Source of Funds: WC
5. Check box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f):
6. Citizenship or Place of Organization: Nevada
Number of 7. Sole Voting Power: -0-
Shares Bene
ficially 8. Shared Voting Power: 42,457
Owned By (1)(2)(3)
Each
Reporting 9. Sole Dispositive Power: 42,457 (2)
Person (3)
With
10. Shared Dispositive Power: -0-
11. Aggregate Amount Beneficially Owned by Each
Reporting Person: 42,457(2)(3)
12. Check Box if the Aggregate Amount in Row (11)
Excludes Certain Shares: x
13. Percent of Class Represented by Amount in Row
(11): 0.6% (3) (see item 5)
14. Type of Reporting Person: PN
(1) Voting power is shared with WPG Corporate
Development Associates IV, L.P., pursuant to the
terms of a Shareholders' Agreement. See item 4.
(2) Power is exercised through its sole general
partner, Prim Ventures, Inc.
(3) Assumes the consummation of the transactions
contemplated by the Underwriting Agreement (as
herein defined). See Item 4.
<PAGE>
1. Name of Reporting Person:
Prim Ventures, Inc.
2. Check the Appropriate Box if a Member of a Group:
(a)
(b) x
3. SEC Use Only
4. Source of Funds: N/A
5. Check box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f):
6. Citizenship or Place of Organization: Nevada
Number of 7. Sole Voting Power: -0-
Shares Bene
ficially 8. Shared Voting Power: 42,457
Owned By (1)(2)(3)
Each
Reporting 9. Sole Dispositive Power:
Person 42,457(2)(3)
With
10. Shared Dispositive Power: -0-
11. Aggregate Amount Beneficially Owned by Each
Reporting Person: 42,457(2)(3)
12. Check Box if the Aggregate Amount in Row (11)
Excludes Certain Shares: x
13. Percent of Class Represented by Amount in Row
(11): 0.6% (3) (see item 5)
14. Type of Reporting Person: PN
(1) Voting power is shared with WPG Corporate
Development Associates IV, L.P., pursuant to the
terms of a Shareholders' Agreement. See item 4.
(2) Solely in its capacity as the sole general partner
of Glenbrook Partners, L.P.
(3) Assumes the consummation of the transactions
contemplated by the Underwriting Agreement (as
herein defined). See Item 4.
<PAGE>
1. Name of Reporting Person:
Westpool Investment Trust PLC
2. Check the Appropriate Box if a Member of a Group:
(a)
(b) x
3. SEC Use Only
4. Source of Funds: WC
5. Check box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f):
6. Citizenship or Place of Organization: United
Kingdom
Number of 7. Sole Voting Power: -0-
Shares Bene
ficially 8. Shared Voting Power: 76,943 (1)(2)
Owned By
Each 9. Sole Dispositive Power: 76,943 (2)
Reporting
Person 10. Shared Dispositive Power: -0-
With
11. Aggregate Amount Beneficially Owned by Each
Reporting Person: 76,943 (2)
12. Check Box if the Aggregate Amount in Row (11)
Excludes Certain Shares: x
13. Percent of Class Represented by Amount in Row
(11): 1.1% (2) (see item 5)
14. Type of Reporting Person: CO
(1) Voting power is shared with WPG Corporate
Development Associates IV, L.P., pursuant to the
terms of a Shareholders' Agreement. See item 4.
(2) Assumes the consummation of the transactions
contemplated by the Underwriting Agreement (as
herein defined). See Item 4.
<PAGE>
Item 1. Securities and Issuer.
This Statement relates to the Common Stock, par
value $.10 (the "Shares") of Empire of Carolina, Inc., a
Delaware corporation (the "Company"). The principal
executive offices of the Company are located at 441 South
Federal Highway, Deerfield Beach, Florida 33441.
Pursuant to Rule 13-2(a) of Regulation 13D-G of the
General Rules and Regulations under the Act, the
undersigned hereby amend their Statement on Schedule 13D,
dated September 29, 1994, as amended on December 23,
1994, March 13, 1995 and July 7, 1995 (the "Schedule
13D"), relating to Shares of the Company. This Statement
constitutes Amendment No. 4 to the Schedule 13D.
Pursuant to Item 101(a)(2)(ii) of Regulation S-T, the<PAGE>
<PAGE>
entire text of the Schedule 13D is hereby amended and
restated as set forth below. Exhibits 1-29 hereto, which
have been previously filed in paper format, are not
restated electronically herein. Unless otherwise
indicated herein, all capitalized terms used herein shall
have the same meanings respectively ascribed to them in
the Schedule 13D. Unless otherwise indicated herein,
there are no material changes to the information set
forth in the Schedule 13D.
Item 2. Identity and Background.
(a) Pursuant to Rules 13d-1(f)(1) and (2)
promulgated under the Securities Exchange Act of 1934, as
amended (the "Act"), the undersigned hereby file this
Statement on Schedule 13D on behalf of WPG Corporate
Development Associates IV, L.P., a Delaware limited
partnership ("CDA IV"), WPG Private Equity Partners,
L.P., a Delaware limited partnership ("WPG PEP"), WPG
Corporate Development Associates IV (Overseas), L.P., a
Cayman Islands exempted limited partnership ("CDA IV
Overseas"), WPG CDA IV (Overseas), Ltd., a Cayman Islands
corporation ("CDA Overseas Ltd"), WPG Private Equity
Partners (Overseas), L.P., a Delaware limited partnership
("WPG PEP Overseas"), Steven N. Hutchinson ("Mr.
Hutchinson"), Wesley W. Lang, Jr. ("Mr. Lang"), Peter B.
Pfister ("Mr. Pfister"), Craig S. Whiting ("Mr.
Whiting"), Nora E. Kerppola ("Ms. Kerppola"), Glenbrook
Partners, L.P., a Nevada limited partnership
("Glenbrook"), Prim Ventures, Inc., a Nevada corporation
("Prim"), and Westpool Investment Trust PLC, a United
Kingdom public limited corporation ("Westpool"). The
foregoing persons are sometimes hereinafter referred to
collectively as the "Reporting Persons". The Reporting
Persons are making this single, joint filing because they
may be deemed to constitute a "group" within the meaning
of Section 13(d)(3) of the Act, although neither the fact
of this filing nor anything contained herein shall be
deemed to be an admission by any of the Reporting Persons
that such a "group" exists.
The Reporting Persons may also be deemed to be
members of a "group" with one or more or all of the
following persons: Steven E. Geller ("Mr. Geller"), Neil
Saul ("Mr. Saul"), Marvin Smollar ("Mr. Smollar"), Champ
Enterprises Limited Partnership ("Champ"), a limited
partnership of which Mr. Smollar is the sole general
partner, and certain trusts affiliated with Champ. Mr.
Geller is a party to certain agreements with Maurice A.
Halperin, individually and as custodian for the benefit
of Brian Clouse ("Maurice Halperin"), Barry S. Halperin,
individually and as custodian for the benefit of Lauren
Halperin and Heather Halperin ("Barry Halperin"), Carol
A. Minkin, individually and as custodian for the benefit<PAGE>
<PAGE>
of Joshua Minkin and Rebecca Minkin ("Ms. Minkin") and
Halco Industries, Inc., a Massachusetts corporation
("Halco", and Maurice Halperin, Barry Halperin, Ms.
Minkin and Halco collectively as the "Halperin Group").
Neither the fact of this filing nor anything contained
herein shall be deemed an admission by any of the
Reporting Persons that such a "group" exists. Pursuant
to Rule 13d-4 under the Act, the Reporting Persons hereby
disclaim the beneficial ownership of Shares beneficially
owned by Mr. Geller (including, without limitation, those
Shares beneficially owned by the Halperin Group), Mr.
Saul, Mr. Smollar and Champ.
CDA IV
(b)-(c) CDA IV is a Delaware limited
partnership whose principal business is that of a private
investment partnership. CDA IV's principal business
address (which also serves as its principal office) is
One New York Plaza, New York, New York 10004. The sole
general partner of CDA IV is WPG PEP. Pursuant to
Instruction C to Schedule 13D under the Act, the business
address and principal occupation of WPG PEP is listed
below.
CDA IV Overseas
(b)-(c) CDA IV Overseas is a Cayman Islands
exempted limited partnership. The principal business of
CDA IV Overseas is that of a private investment company.
CDA IV Overseas' business address (which also serves as
its principal office) is c/o BankAmerica Trust & Banking
Corporation (Cayman) Limited, Anchorage Centre, Fort
Street, P.O. Box 1092, George Town, Grand Cayman, Cayman
Islands, British West Indies. The general partners of
CDA IV Overseas are WPG PEP Overseas and CDA IV Overseas
Ltd. Pursuant to General Instruction C to Schedule 13D
under the Act, the respective business addresses and
principal occupations of the general partners are listed
below.
WPG PEP and WPG PEP Overseas
(b)-(c) WPG PEP and WPG PEP Overseas are each
a Delaware limited partnership. The principal business
of WPG PEP is serving as the sole general partner of
CDA IV, and the principal business of WPG PEP Overseas is
serving as a general partner in charge of investment
management of CDA IV Overseas. WPG PEP's and WPG PEP
Overseas's principal business address (which also serves
as their principal office) is One New York Plaza, New
York, New York 10004. The managing general partners of
both WPG PEP and WPG PEP Overseas are Mr. Hutchinson and
Mr. Lang. Pursuant to Instruction C to Schedule 13D<PAGE>
<PAGE>
under the Act, the general partners of both WPG PEP and
WPG PEP Overseas and their respective business addresses
and present principal occupations are as follows:
General Partners Address Occupation
Philip Greer One New York Plaza Member,
New York, NY 10004 Weiss, Peck
& Greer,
L.L.C.("WPG")
Steven N. One New York Plaza Member, WPG
Hutchinson New York, NY 10004
Wesley W. Lang, Jr. One New York Plaza Member, WPG
New York, NY 10004
Peter B. Pfister One New York Plaza Member, WPG
New York, NY 10004
Craig S. Whiting One New York Plaza General Partner,
New York, NY 10004 WPG PEP
Nora E. Kerppola One New York Plaza General Partner,
New York, NY 10004 WPG PEP
CDA IV Overseas Ltd.
(b)-(c) CDA IV Overseas Ltd. is a Cayman Islands
corporation. The principal business of CDA IV Overseas
Ltd. is serving as a general partner to CDA IV Overseas.
CDA IV Overseas' Ltd. principal business address (which
also serves as its principal office) is c/o W.S. Walker &
Company, Caledonian House, Grand Cayman, Cayman Islands,
British West Indies. Pursuant to Instruction C to
Schedule 13D under the Act, the directors and executive
officers of CDA IV Overseas Ltd. and their respective
business addresses and present principal occupations are
as follows:
Directors Address Occupation
Philip Greer One New York Plaza Member, WPG
New York, NY 10004
Wesley W. One New York Plaza Member, WPG
Lang, Jr. New York, NY 10004
Steven N. One New York Plaza Member, WPG
Hutchinson New York, NY 10004
Robin L. Jarvis P. O. Box 1092, Manager of
George Town Mutual
Grand Cayman, Funds for
Cayman Islands BankAmerica
British West Indies Cayman
Brent R.W. P. O. Box 1092, Senior Trust
Thomas Georgetown Officer
Grand Cayman of Mutual Funds
Cayman Islands for BankAmerica
British West Indies Cayman
Officers Address Office
BankAmerica Anchorage Centre Secretary
Trust & Harbour, George Town,
Banking Grand Cayman,
Corporation British West Indies
(Cayman) Limited
Mr. Hutchinson
(b)-(c) Mr. Hutchinson's business address is One
New York Plaza, New York, New York 10004, and his present
principal occupation or employment at such address is as
a member of WPG.
Mr. Lang
(b)-(c) Mr. Lang's business address is One New
York Plaza, New York, New York 10004, and his present
principal occupation or employment at such address is as
a member of WPG.
Mr. Pfister
(b)-(c) Mr. Pfister's business address is One
New York Plaza, New York, New York 10004, and his present
principal employment at such address is as a member of
WPG.
Mr. Whiting
(b)-(c) Mr. Whiting's business address is One
New York Plaza, New York, New York 10004, and his present
principal employment at such address is as a general
partner of WPG PEP.
Ms. Kerppola
(b)-(c) Ms. Kerppola's business address is One
New York Plaza, New York, New York 10004, and her present
principal employment at such address is as a general
partner of WPG PEP.
Glenbrook<PAGE>
<PAGE>
(b)-(c) Glenbrook is a Nevada limited
partnership whose principal business is that of a private
investment partnership. Glenbrook's business address
(which also serves as its principal office) is 308 Dorla
Court, Zephyr Cove, Nevada 89448. The sole general
partner of Glenbrook is Prim. Pursuant to General
Instruction C to Schedule 13D under the Act, the
directors and executive officers of Prim and its
respective business address and present principal
occupation is given below.
Prim
(b)-(c) Prim is a Nevada corporation whose
principal business is that of investments and real
estate. Prim's business address (which also serves as
its principal office) is 308 Dorla Court, Zephyr Cove,
Nevada 89448. Pursuant to General Instruction C to
Schedule 13D under the Act, the directors and executive
officers of Prim and their business addresses and present
principal occupations are as follows:
Directors Address Occupation
Wayne L. P. O. Box 12219 Chairman
Prim, Sr. Zephyr Cove, NV 89448
Wayne L. P.O. Box 12219 President,
Prim, Jr. Zephyr Cove, Prim
NV 89448
Peter R. P.O. Box 12219 Executive Vice
Knapp Zephyr Cove, President,
NV 89448 Prim
Officers Address Office(s) Occupation
Wayne L. P.O. Box 12219 President President,
Prim, Jr. Zephyr Cove, Prim
NV 89448
Peter R. P.O. Box 12219 Executive Executive
Knapp Zephyr Cove, V.P., President,
NV 89448 Secretary, Prim
Treasurer
Westpool
(b)-(c) Westpool is a United Kingdom public
limited company whose principal business is that of an
investment holding company. Westpool's business address<PAGE>
<PAGE>
(which also serves as its principal office) is 33 Robert
Adam Street, London W1M 5AH, United Kingdom. Pursuant to
General Instruction C to Schedule 13D under the Act, the
directors and executive officers of Westpool and their
respective business addresses and present principal
occupations are given below:
Directors Address Occupation
Lord Rayne 33 Robert Director, Westpool
Adam Street
London,
UK W1M 5AH
Robert Rayne 33 Robert Director, Westpool
Adam Street
London,
UK W1M 5AH
Lord Remnant 33 Robert Chartered Accountant,
Adam Street Westpool
London,
UK W1M 5AH
Robert Spier 33 Robert Chartered Accountant,
Adam Street Westpool
London,
UK W1M 5AH
Michael Waldron 33 Robert Chartered Accountant,
Adam Street Westpool
London,
UK W1M 5AH
Officer Address Office Occupation
Michael 33 Robert Secretary Chartered
Waldron Adam Street Accountant,
London, Westpool
UK W1M 5AH
(d) None of the entities or persons identified in
this Item 2 has, during the last five years, been
convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
(e) None of the entities or persons identified in
this Item 2 has during the last five years been a party
to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal<PAGE>
<PAGE>
or state securities laws or finding any violation with
respect to such laws.
(f) All of such persons identified in this Item 2
are citizens of the United States of America, except for
Lord Rayne, Robert Rayne, Lord Remnant, Robert Spier and
Michael Waldron, who are citizens of the United Kingdom,
Ms. Kerppola, who is a citizen of Finland and Brent
Thomas, who is a citizen of New Zealand.
Item 3. Source and Amount of Funds or Other
Consideration.
The source and amount of funds or other consideration
used by the Reporting Persons to purchase Shares and
Convertible Debentures (see below) with respect to the
transactions which occurred on December 22, 1994
consisted of working capital by CDA IV, CDA IV Overseas,
Glenbrook and Westpool (consisting of funds invested by
partners, stockholders and the above individuals,
respectively) and personal funds by Mr. Pfister, Mr.
Whiting and Ms. Kerppola for an aggregate purchase price
of $17,175,000.
The source and amount of funds or other consideration
used by the Reporting Persons to purchase the Shares,
Preferred Shares (see below) and warrants disclosed
herein consisted of working capital by CDA IV, CDA IV
Overseas, Glenbrook and Westpool (consisting of funds
invested by partners, stockholders and the above
individuals, respectively) and personal funds of Mr.
Pfister, Mr. Whiting and Ms. Kerppola for an aggregate
purchase price of $5,030,006.
Item 4. Purpose of Transaction.
Contemplated Transaction of the Reporting Persons
In connection with its consideration of an investment
in the Company, representatives of CDA IV conducted a due
diligence review of the Company (including the Company's
acquisition of Marchon, Inc. ("Marchon") more fully
discussed below). As a result, CDA IV entered into a
Commitment Letter with the Company (the "Commitment
Letter") which was accepted by the Company on September
29, 1994. Pursuant to the Commitment Letter, upon the
fulfillment of several conditions more fully described
below, CDA IV, CDA IV Overseas and certain other persons
who were to be designated by CDA IV (the "Designated
Parties") would purchase from the Company $15.0 million
of Company convertible debentures which are convertible
into 2 million newly issued Shares at a conversion price<PAGE>
<PAGE>
of $7.50 per share (the "Convertible Debentures"). The
Convertible Debentures were to bear interest at a rate of
9% per year, payable quarterly and would not be callable
by the Company for a period of five years from the date
of issuance. Proceeds from the Convertible Debentures
were to be used by the Company to repay the Halperin Line
of Credit discussed below, with any balance to be used as
working capital.
The Commitment Letter also contemplated CDA IV, CDA IV
Overseas and the Designated Parties purchasing, at the
time of the closing of the purchase of the Convertible
Debentures, 300,000 Shares from Mr. Geller at a price of
$6.50 per share. The purchase of Convertible Debentures
and Shares by CDA IV, CDA IV Overseas and the Designated
Parties (the "Purchase") was to occur, if at all, no
later than November 30, 1994 (the "Closing Date").
The Purchase was conditioned upon the negotiation,
execution and delivery of a Debenture Purchase Agreement
between CDA IV, CDA IV Overseas, the Designated Parties
and the Company (which contains customary representations
and warranties, anti-dilution provisions and affirmative
and financial covenants); negotiation, execution and
delivery of a Stock Purchase Agreement between CDA IV,
CDA IV Overseas, the Designated Parties and Mr. Geller;
negotiation, completion and delivery of the Stockholders
Agreement (see below); negotiation, completion and
delivery of a Registration Rights Agreement; and the
execution and delivery of employment agreements between
the Company and each of Mr. Geller, Mr. Saul and Mr.
Smollar in forms acceptable to CDA IV. The Purchase was
also contingent upon, among other things, the
consummation of the Redemption (which has already
occurred, see below) and the Merger, the issuance of a
fairness opinion to the Special Committee of the
Company's Board of Directors with regard to the
Redemption and the Purchase (which the Reporting Persons
understand has already occurred), confirmation as to the
solvency of the Company as of the Closing Date, the
absence of any material adverse change to the Company
since December 31, 1993, the absence of any event of
default under the Company's Credit Agreement with
Wachovia Bank of North Carolina, N.A. ("Wachovia") and
the receipt of customary legal opinions for a transaction
of this type.
As a condition precedent to the Purchase, Mr. Geller,
Mr. Saul, Mr. Smollar, CDA IV, CDA IV Overseas and the
Designated Parties were to negotiate and enter into a
stockholders agreement (the "Stockholders Agreement")
pursuant to which the parties would agree to expand the
board of directors to six members and to vote for a board
of directors consisting of two persons designated by Mr.<PAGE>
<PAGE>
Geller, Mr. Saul and Mr. Smollar, two persons designated
by CDA IV, CDA IV Overseas and the Designated Parties and
two independent directors (subject to limited
circumstances under which CDA IV, CDA IV Overseas and the
Designated Parties may either designate a majority of the
directors or designate fewer than two persons as
directors). Preliminary discussions contemplated that
the CDA IV, CDA IV Overseas and the Designated Purchasers
designated directors and the independent directors would
serve on the Company's compensation and audit board
committees. The Reporting Persons planned to propose Mr.
Hutchinson and Peter B. Pfister as directors of the
Company following the Purchase.
Pursuant to an Advisory Agreement dated as of March 11,
1994 (the "Advisory Agreement"), between CDA IV Overseas
and WPG PEP Overseas, CDA IV Overseas engaged WPG PEP
Overseas to present to CDA IV Overseas a continuing
investment program consistent with the investment
policies and objectives of CDA IV Overseas. Pursuant to
the Advisory Agreement, WPG PEP Overseas recommended that
CDA IV Overseas consider an investment in the Convertible
Debentures and Shares. In this connection, CDA IV
Overseas determined to participate in the transactions
described herein.
The Geller Stock Purchase
The Reporting Persons have been advised that the
Halperin Group sold 200,040 Shares at $6.50 per share to
Mr. Geller on July 15, 1994, pursuant to a Stock Purchase
Agreement dated as of July 15, 1994 (the "Stock Purchase
Agreement"). Following the execution of the Commitment
Letter, but prior to the Redemption, and also pursuant to
and as contemplated by the Stock Purchase Agreement, the
Halperin Group sold 299,960 Shares to Mr. Geller, at a
price of $6.50 per share.
The Halperin Group and Mr. Geller had also previously
entered into an Option Agreement (the "Halperin Option
Agreement") which granted Mr. Geller an immediately
exercisable option to purchase up to 500,000 Shares from
the Halperin Group. The option expired on January 15,
1996 with respect to 166,667 of the Shares, and will
expire on July 15, 1996 with respect to 333,334 of the
Shares, and July 15, 1997 with respect to all of the
Shares. Prices for the Shares exercised under the option
increase with time, and range from $6.50 to $7.78 per
share.
Mr. Geller financed a portion of the purchase price
of the Shares he purchased pursuant to the Stock Purchase
Agreement by means of a promissory note ("Note") and loan
agreement and certain other documents made in connection<PAGE>
<PAGE>
therewith (collectively, the "Loan Documents") with
Wachovia. The Wachovia loan is secured by the Shares
owned by Mr. Geller. Pursuant to a Note Purchase
Agreement, dated September 28, 1994 between CDA IV and
Wachovia (the "Note Purchase Agreement"), CDA IV agreed
to purchase the Note from Wachovia, at Wachovia's option,
upon, among other things, the occurrence of an event of
default under the Loan Documents, Mr. Geller becoming
bankrupt, insolvent, or generally unable to pay his debts
as they become due or Wachovia providing Mr. Geller with
a written notification of demand for repayment of the
loan pursuant to the terms of the Note. Upon such
purchase, CDA IV will succeed to all of Wachovia's rights
under the Loan Documents, including, without limitation,
those pertaining to the pledge of Mr. Geller's Shares.
The Halperin Group Redemption
Following execution of the Commitment Letter and Mr.
Geller's purchase of the Shares pursuant to the Stock
Purchase Agreement, on September 30, 1994 the Company
redeemed 11,766,634 Shares held by members of the
Halperin Group at a price of $6.50 per share (the
"Redemption") pursuant to the terms of a Redemption
Agreement dated as of September 30, 1994 (the "Redemption
Agreement").
The Reporting Persons understand that the Company also
entered into a line of credit for up to $15 million with
Maurice Halperin (the "Halperin Line of Credit") pursuant
to a Loan Agreement dated as of September 30, 1994 (the
"Line of Credit Agreement"). The terms of the Halperin
Line of Credit provide that it shall be repaid upon the
later of the Closing Date, the closing of another
subordinated financing agreement (in lieu of that
contemplated by the Commitment Letter) or the third
anniversary of the Halperin Line of Credit Agreement.
The Reporting Persons have also been advised that, also
in connection with the Redemption, Halco and Mr. Geller
entered into a Voting Agreement dated as of September 30,
1994 (the "Voting Agreement"). The Reporting Persons
understand that Halco currently owns 1,499,872 Shares
(including the 500,000 Shares granted to Mr. Geller
pursuant to the Halperin Option Agreement), which are all
the Shares currently owned by the Halperin Group. All of
Halco's Shares are subject to the Voting Agreement.
Pursuant to the Voting Agreement, all of the Shares owned
by Halco shall be voted at the direction of Mr. Geller.
Mr. Geller, however, agreed to refrain from electing a
majority of the board of directors of the Company until
ten days after the Company files with the Securities and
Exchange Commission an Information Statement pursuant to
Section 14f-1 of the Act and Rule 14f-1 of the rules<PAGE>
<PAGE>
promulgated thereunder. The Voting Agreement gives Mr.
Geller a right of first refusal with respect to any sale
by Halco in an aggregate amount at any one time in excess
of 18,000 Shares. The Voting Agreement will expire on
September 30, 2004 or, if sooner, the date of a default
under the terms of the Halperin Line of Credit.
Also concurrently with the Redemption, the Reporting
Persons understand that Mr. Geller was named Chairman of
the Board and Chief Executive Officer of the Company
(pursuant to the terms of Mr. Geller's Employment
Agreement (discussed below)), Maurice Halperin and Barry
Halperin have resigned from all positions as directors
and officers of the Company and its subsidiaries and Ms.
Minkin has resigned as a director of the Company. The
current board of directors of the Company consists of Mr.
Geller, Carl Derman and Jeff Swersky.
The Merger of Marchon into the Company
Also following the execution of the Commitment Letter,
the Reporting Persons understand that Mr. Geller entered
into an agreement with Marchon and Mr. Smollar, who at
that time was the president of and owns 90 percent of the
outstanding common stock of Marchon, Inc. ("Marchon")
dated September 30, 1994 (the "Formation Agreement"),
whereby Mr. Smollar and Mr. Geller agreed to use their
best efforts to effect the merger of Marchon into a
wholly-owned subsidiary of the Company (the "Merger") in
exchange for 1,076,923 newly issued Shares, $3.25 million
in cash and notes payable one year from the date of the
Merger in the aggregate amount of $3.25 million. The
Reporting Persons understand that on October 13, 1994,
the Company and Marchon consummated the Merger, pursuant
to an Agreement and Plan of Reorganization dated October
13, 1994 (the "Agreement and Plan of Reorganization")
under which Marchon was merged with and into a wholly-
owned subsidiary of the Company (which subsequently
changed its name to Marchon, Inc.) in exchange for
1,076,923 newly issued Shares, $3.25 million in cash and
notes payable one year from the date of the Merger in the
aggregate amount of $3.25 million. Also in connection
with the consummation of the Merger, Mr. Geller, Mr. Saul
and Mr. Smollar entered into an agreement (the "Marchon
Stockholders Agreement") setting forth restrictions on
their rights to sell, transfer, pledge or otherwise
dispose of their Shares, as well as certain customary
rights and obligations. In addition, pursuant to the
Marchon Stockholders Agreement, the parties agreed to
vote their shares to cause each of them to become a
member of the board of directors of the Company (the
"Board of Directors") under certain circumstances. It is
also understood that, in connection with the Merger, Mr.
Smollar was appointed to the Board of Directors and<PAGE>
<PAGE>
became President and Chief Operating Officer of the
Company. The Reporting Persons understand that the
Board of Directors as of the Merger consisted of Mr.
Geller, Mr. Smollar, Carl Derman and Jeffrey Swersky.
The Reporting Persons were advised that Mr. Smollar
transferred his interest in the Shares to Champ.
Agreements between the Company and Mr. Geller and the
Company and Mr. Saul
It is understood by the Reporting Persons that under
the terms of an employment agreement between Mr. Geller
and Carolina Enterprises, Inc. ("Carolina"), a wholly-
owned subsidiary of the Company, dated July 15, 1994
("Mr. Geller's Employment Agreement"), Mr. Geller was
named chairman and chief executive officer of Carolina
and was to become, and became, the chairman of the board
of directors and chief executive officer of the Company
upon the closing of the Redemption. Under the terms of
an Employment Agreement also dated July 15, 1994 with Mr.
Saul ("Mr. Saul's Employment Agreement"), Mr. Saul was
named the president of Carolina. Under their respective
employment agreements, Mr. Geller and Mr. Saul were each
granted options to purchase up to 500,000 Shares at
either $6.50 or $6.625 per share. The options become
exercisable quarterly, with options for 41,666 Shares
becoming exercisable for Mr. Geller and Mr. Saul on
October 18, 1994. It is also understood by the Reporting
Persons that the Company has also approved the issuance
to Mr. Geller and Mr. Saul of warrants to purchase
1,000,000 Shares at an exercise price of $7.50 per share.
The warrants are to be issued on the Closing Date.
The foregoing description of each of the Commitment
Letter, Stock Purchase Agreement, Redemption Agreement,
Halperin Option Agreement, Voting Agreement, Mr. Geller's
Employment Agreement, Mr. Saul's Employment Agreement,
the Formation Agreement, the Advisory Agreement and the
Note Purchase Agreement is qualified in its entirety by
reference to the texts of such agreements, respectively,
which are filed as Exhibits 1 through 10, respectively,
and incorporated herein by reference.
The Finn Stock Purchase
On December 22, 1994, Alvan Finn ("Mr. Finn"), sold
50,000 Shares at $6.50 per Share to CDA IV and CDA IV
Overseas, pursuant to the terms of a Stock Purchase
Agreement of even date therewith (the "Finn Stock
Purchase Agreement"). Prior to Mr. Finn's entry into the
Finn Stock Purchase Agreement, Mr. Finn entered into a
letter agreement with CDA IV dated November 15, 1994 (the
"Finn Letter Agreement") and was given access to certain<PAGE>
<PAGE>
information in CDA IV's possession which was obtained or
generated by CDA IV in the course of its due diligence
investigation of the Company and Marchon. The Finn
Letter Agreement requires Mr. Finn to, among other
things, refrain from (i) disclosing certain of the
information made available to him by CDA IV and (ii)
purchasing, selling or otherwise trading any Shares until
March 15, 1995 without CDA IV's prior written consent.
Consummation of the Purchase
On December 22, 1994, CDA IV, CDA IV Overseas, Mr.
Pfister, Mr. Whiting, Ms. Kerppola, Glenbrook and
Westpool (collectively the "Purchasing Parties")
purchased 300,000 Shares from Mr. Geller for $1.95
million, pursuant to the terms of a Stock Purchase
Agreement of even date therewith (the "Geller Stock
Purchase Agreement"). Part of the proceeds of the
purchase of Shares from Mr. Geller were used to pay in
full the Note. Under the terms of the Geller Stock
Purchase Agreement, CDA IV has the right, under certain
circumstances, to cause Mr. Geller to exercise his right
of first refusal under the Voting Agreement to acquire
shares owned by Halco for the benefit of CDA and its
designees.
On December 22, 1994, pursuant to the terms of a
Debenture Purchase Agreement of even date therewith (the
"Debenture Purchase Agreement) between the Company, as
borrower, the Purchasing Parties, Eugene M. Matalene, Jr.
("Mr. Matalene") and Richard Hochman ("Mr. Hochman"), as
purchasers, and CDA IV as agent, the Purchasing Parties
purchased in the aggregate $14.9 million in principal
amount of Convertible Debentures from the Company and Mr.
Matalene and Mr. Hochman each purchased $50,000 in
principal amount of Convertible Debentures from the
Company. The Convertible Debentures bear interest at a
rate of 9%, payable quarterly and are not callable by the
Company for a period of five years from the date of
issuance, unless redeemed by the Company pursuant to the
Company's right of first offer which arises upon certain
transfers of the Convertible Debentures. The Convertible
Debentures are convertible at any time into newly issued
Shares at a conversion price of $7.50 per share, subject
to adjustment upon the occurrence of certain events which
may have a dilutive effect on the Shares or the
conversion price. The Company also made customary
representations, warranties and financial covenants in
the Debenture Purchase Agreement. Proceeds from the
Debenture Purchase Agreement were used to repay the
Halperin Line of Credit. Until the effectiveness of the
Charter Amendment specified in the Shareholders'
Agreement (see below), the consent of the holders of the<PAGE>
<PAGE>
majority of the principal amount of the Convertible
Debentures will be required in order for the Company to
take the corporate actions that are to be subject to a
vote of a supermajority of the Company's Board of
Directors pursuant to the Shareholders' Agreement.
In connection with the Geller Stock Purchase Agreement
and the Debenture Purchase Agreement, the Purchasing
Parties and the Company entered into a Registration
Rights Agreement dated as of December 22, 1994 (the
"Registration Rights Agreement"). Pursuant to the
Registration Rights Agreement, the Purchasing Parties
have two rights to require the Company to register the
Shares held by the Purchasing Parties as well as
unlimited "piggyback" rights to register Shares upon
certain public offerings by the Company of Shares.
Also, in connection with the Geller Stock Purchase
Agreement and the Debenture Purchase Agreement, on
December 22, 1994, the Purchasing Parties, Mr. Geller,
Mr. Saul, Mr. Smollar and Champ entered into a
Shareholders' Agreement of even date therewith (the
"Shareholders' Agreement"). So long as it is in effect,
the Shareholders' Agreement takes precedence over the
Marchon Stockholders Agreement. Under the Shareholders'
Agreement, the parties have been granted rights of first
refusal and co-sale rights upon certain transfers of
Shares. In addition, the Purchasing Parties, for a one
year period commencing on the fifth anniversary of the
date of the Shareholders' Agreement, have one right (the
"Put Right"), subject to certain conditions, to cause Mr.
Geller, Mr. Saul, Mr. Smollar and Champ to either (i)
purchase the Shares held by the Purchasing Parties at
either an agreed to or appraised value or, (ii) use their
best efforts (including, but not limited to, voting their
Shares) to effectuate a sale of the Company's stock or
assets on terms reasonably acceptable to the Purchasing
Parties, Mr. Geller, Mr. Saul, Mr. Smollar and Champ.
The Parties to the Shareholders' Agreement have agreed
that the Put Right has since lapsed.
The Shareholders' Agreement also contains provisions
regarding the composition of the Company's Board of
Directors. The parties to the Shareholders' Agreement
agreed to take all action (including voting their shares)
to see that the By-Laws of the Company call for the
Company to have a five person Board of Directors. The
parties agreed to vote all of their Shares for a Board of
Directors which is made up of two persons designated by
the Purchasing Parties, one person designated by Mr.
Geller, one person designated by Mr. Smollar (which
person shall be designated by Mr. Geller, Mr. Saul, Mr.
Smollar and Champ any time after which Mr. Smollar, his
permitted transferees and his affiliates own less than 5%<PAGE>
<PAGE>
of the Shares on a fully diluted basis and Mr. Smollar is
not an employee of the Company) and one director
agreeable to the parties who is not an affiliate of the
parties to the Shareholders' Agreement or the Company (an
"Independent Director"), and to use their best efforts to
see that the Independent Director and one of the
directors designated by the Purchasing Parties are named
as the sole members of the Compensation Committee of the
Board of Directors ("Compensation Committee") and the
Audit Committee of the Board of Directors ("Audit
Committee"). Mr. Pfister and Mr. Hutchinson have been
designated by the Purchasing Parties to serve as members
of the Board of Directors. It is anticipated that Mr.
Pfister and Mr. Hutchinson will be named to the Board of
Directors as soon as the Company complies with Section
14(f) and Rule 14f-1 of the Act. Upon the passage of an
amendment to the Company's Certificate of Incorporation
to, among other things, enlarge the Company's Board of
Directors and to provide for the supermajority rights
described below (the "Charter Amendment"), the parties
agreed to have a Board of Directors consisting of eight
(8) people, subject to increase as specified below. Upon
the expansion of the Company's Board of Directors, one
additional director will be designated by the Purchasing
Parties, one additional director will be designated by
Mr. Geller, Mr. Saul, Mr. Smollar and Champ, there shall
be an additional Independent Director, and two of the
directors designated by the Purchasing Parties and the
two Independent Directors shall serve on the Compensation
Committee and the Audit Committee. If, at any time the
percentage of Shares held by the Purchasing Parties and
certain of their transferees decline below 10% of the
Shares on a fully diluted basis, the Purchasing Parties
shall have the right to designate one less director and
one of the members of the Board of Directors, Audit
Committee and Compensation Committee previously
designated by the Purchasing Parties would be replaced by
a person selected by the other members of the Board of
Directors. If, at any time the percentage of Shares held
by the Purchasing Parties and certain of their
transferees declines below 5% of the Shares on a fully
diluted basis, the Purchasing Parties would have no right
to designate members of the Board of Directors. Upon the
occurrence of certain events (so long as the percentage
of Shares held by the Purchasing Parties and certain of
their transferees did not decline below certain levels
prior to the occurrence of such events), the Purchasing
Parties would have the right to designate all of the
members of the Board of Directors (provided, that so long
as Mr. Smollar, his permitted transferees and his
affiliates own at least 5% of the Shares on a fully
diluted basis, the Purchasing Parties will designate Mr.
Smollar or his designee as one of the members of the
Board of Directors).<PAGE>
<PAGE>
Pursuant to the Shareholders' Agreement, the Company's
By-Laws are to require the approval of at least three-
quarters of the members of the Board of Directors in
order for the Company or its subsidiaries to carry out
(a) any merger, consolidation or other business
combination of the Company or any of its subsidiaries;
(b) sales of assets (other than sales solely of inventory
in the ordinary course of business) of the Company or its
subsidiaries (including assets consisting of shares of
stock of a subsidiary of the Company) where the gross
proceeds of sale (exclusive of assumption of liabilities)
are, in the aggregate, in excess of $7,000,000 in any
calendar year; (c) any amendment to the Certificate of
Incorporation or By-laws of the Company or its
subsidiaries (except as provided for in the Shareholders'
Agreement), including an amendment to increase the size
of the Company's Board of Directors upon passage of the
Charter Amendment; (d) any payment (other than employee
compensation and other ordinary incidents of employment)
to any director, officer, stockholder or affiliate of the
Company or any of its subsidiaries or any present or
former known spouse, ancestor or descendant of any of
such persons or a trust or other similar entity for the
benefit of the persons; (e) any declaration or payment
of dividends or similar distributions on securities of
the Company; (f) any public or private offering of
convertible debt or equity securities of the Company or
its subsidiaries, other than the offering of Shares
pursuant to an employee stock option plan for the benefit
of the Company or the Subsidiaries and certain other
issuances of securities; (g) incurrence of indebtedness
(other than indebtedness under the Company's loan with
Wachovia (or certain replacements thereof) and the
Debenture Purchase Agreement, or the Note issued to the
former Marchon shareholders) by the Company and its
subsidiaries or guaranties of indebtedness which would
cause the aggregated indebtedness of the Company (other
than those items noted above) to exceed $10,000,000; (h)
any adoption of a plan of liquidation of the Company; or
(i) any acquisition of assets and/or stock or related
series of acquisitions of assets and/or stock (other than
purchases of inventory and capital expenditures in the
ordinary course of business) which would cause the amount
expended (or committed to be expended) by the Company and
its subsidiaries for the acquisition of such assets
and/or stock during a calendar year to exceed
$10,000,000. The requirement referred to in this
paragraph will expire on the earlier of (i) the time the
percentage of Shares held by the Purchasing Parties and
certain transferees decline below certain levels or
certain other events, or (ii) the later of (x) the sixth
anniversary of the date of the Shareholders' Agreement
and (y) the date on which Mr. Geller, Mr. Saul, Mr.<PAGE>
<PAGE>
Smollar and Champ have satisfied all of their obligations
with respect to the Put Right.
Pursuant to the terms of the Shareholders' Agreement,
the parties to the Shareholders' Agreement and their
permitted transferees are subject to a voting agreement
under which they and their permitted transferees agree to
vote their Shares in order to carry out the corporate
governance provisions and the Put Right contained in the
Shareholders' Agreement. In addition, Mr. Pfister, Ms.
Kerppola, Mr. Whiting, Glenbrook and Westpool
(collectively, the "Individual Purchasers") granted a
proxy to CDA IV to vote all Shares owned by them on all
matters requiring a vote of shareholders of the Company,
and granted CDA IV full power and authority to take such
actions and refrain from taking such actions under the
Shareholders' Agreement as CDA IV deems necessary or
appropriate. The Shareholders' Agreement shall terminate
upon the earlier of the sixth anniversary following the
Shareholders' Agreement (subject to the satisfaction of
the Put Right) or earlier upon certain events.
In connection with the Debenture Purchase Agreement,
the Company, Carolina, the Purchasing Parties, Mr.
Matalene, Mr. Hochman, and Wachovia entered into an
Intercreditor Agreement dated December 22, 1994 (the
"Intercreditor Agreement"). The Intercreditor Agreement
subordinates the right to payment under the Convertible
Debentures and payment of the Notes issued in the Merger
to Wachovia's right of payment under its Credit Agreement
with Carolina. Nothing in the Intercreditor Agreement
impairs the rights or ability of a holder of a
Convertible Debenture to convert its Convertible
Debenture into Shares.
The foregoing description of each of the Finn Stock
Purchase Agreement, the Finn Letter Agreement, the
Agreement and Plan of Reorganization, the Marchon
Stockholders Agreement, the Geller Stock Purchase
Agreement, the Debenture Purchase Agreement, the
Registration Rights Agreement, the Shareholders'
Agreement and the Intercreditor Agreement is qualified in
its entirety by reference to the texts of such
agreements, respectively, which are filed as Exhibits 12
through 20, respectively, and incorporated herein by
reference.
Management Agreement
On March 13, 1995, the Company, CDA IV and WPG PEP
Overseas entered into a Management Agreement of even date
therewith to memorialize an oral agreement between the
parties which they have indicated was reached on
December 28, 1994 (the "Management Agreement"). Under<PAGE>
<PAGE>
the terms of the Management Agreement, for a term
expiring on December 31, 1995, CDA IV and WPG PEP
Overseas agreed to provide the Company certain managerial
services set forth in the Management Agreement. As
consideration for CDA IV's and WPG PEP Overseas's
agreement to provide such services, the Company issued to
CDA IV warrants to purchase 80,571 Shares and issued to
WPG PEP Overseas warrants to purchase 19,429 Shares, in
each case at an exercise price of $7.50 per Share,
subject to adjustment upon the occurrence of certain
events which may have a dilutive effect on the Shares or
the exercise price of the warrants (collectively, the
"WPG Warrants").
The foregoing description of the Management Agreement
and the WPG Warrants are qualified in their entirety by
reference to the text of the Management Agreement and the
WPG Warrants, which are filed as Exhibits 21 through 23,
respectively, and incorporated herein by reference.
Buddy L Acquisition
On May 23, 1995, CDA IV Overseas Ltd. contributed its
assets, including its holdings of Convertible Debentures
and Shares, for all of the limited partnership interests
in, and became a general partner of, CDA IV Overseas.
To facilitate the Company's acquisition of assets and
certain liabilities of Buddy L., Inc. (the "Buddy L
Acquisition"), on July 7, 1995, CDA IV, CDA IV Overseas,
Glenbrook and Westpool, pursuant to individual
Subscription Agreements (collectively the "Subscription
Agreements"), purchased Common Stock and Series A
Cumulative Convertible Preferred Stock, par value $.01 of
the Company (the "Preferred Shares"), in the amounts and
for the consideration set forth below:
<TABLE>
<CAPTION>
Common Common Preferred Preferred
Stock Stock Shares Shares
Name Purchased Purchase Purchased Purchase
Price Price
<S> <C> <C> <C> <C>
CDA IV 190,955 $1,384,423.75 341,372 $2,474,947.00
CDA IV 46,046 333,833.50 82,317 596,798.25
Overseas
Glenbrook 3,711 26,904.75 6,634 48,096.50
Westpool 6,680 48,430.00 11,941 86,572.25
TOTAL 247,392 $1,793,592.00 442,264 $3,206,414.00<PAGE>
</TABLE>
<PAGE>
Under the terms of the Preferred Shares, each of the
Preferred Shares will automatically convert into a share
of Common Stock upon the affirmative vote with respect
thereto by the holders of a majority of outstanding
Shares at or before the Company's next annual meeting of
stockholders (the "Annual Meeting"). If the Preferred
Shares are not so converted at or prior to the Annual
Meeting, a preferential cumulative dividend of 15% per
year shall thereafter be payable by the Company to the
holders of Preferred Shares payable quarterly, until
their conversion.
As an inducement for the parties to enter into the
Subscription Agreements and the purchase of Shares and
Preferred Shares discussed above (collectively, the "New
Securities"), the Shareholders' Agreement and the
Registration Rights Agreement were amended by the parties
thereto. The amendment to the Shareholders' Agreement
(the "Shareholders' Agreement Amendment") provided, among
other things, that the New Securities and Shares into
which the Preferred Shares may convert are to be treated
as "Shares" for purposes of the Shareholders' Agreement.
In addition, the parties thereto agreed to vote their
Shares in favor of the conversion of the Preferred Shares
into Shares at or before the Annual Meeting. The
amendment to the Registration Rights Agreement provided
that the New Securities or Shares resulting from the
conversion of the Preferred Shares be included as
"Registrable Securities" for purposes of the Registration
Rights Agreement.
Also in connection with the Buddy L Acquisition, the
Company entered into a $7,580,000 Senior Subordinated
Term Loan Agreement dated July 6, 1995 (the "Loan
Agreement"). Pursuant to the Loan Agreement, Mr.
Pfister, a 401(k) account established for the benefit of
Mr. Whiting and Ms. Kerppola each purchased a promissory
note of the Company (a "Note") in the principal amount of
$10,000 and warrants to purchase 1,000 Shares at a price
of $9.00 per Share. Under the terms of the Loan
Agreement, each Note bears interest at a rate of 12%,
payable semi-annually, the Company has the right to
redeem the Notes and warrants at a premium on the first
anniversary of the Loan Agreement and the lenders under
the Loan Agreement have the right to cause the Company to
redeem the Notes and warrants at a premium upon the
second anniversary of the Loan Agreement. In connection
with the Loan Agreement, the parties to the Intercreditor
Agreement amended and restated the agreement in order to,
among other things, subordinate certain rights of the
holders of the Convertible Debentures to holders of the
Notes.<PAGE>
<PAGE>
The foregoing descriptions of each of the Form of
Subscription Agreement, the Shareholders' Agreement
Amendment, the Amendment to Registration Rights
Agreement, the Loan Agreement and the Amendment to
Intercreditor Agreement are qualified in their entirety
by reference to the text of such agreements,
respectively, which are filed as Exhibits 24 through 28,
respectively, and incorporated herein by reference.
Underwriting Agreement
On June 24, 1996, CDA IV, CDA IV Overseas, Glenbrook
and Westpool (the "Selling Parties") each entered into a
Custody Agreement and Power of Attorney (the "Custody
Agreement"). Pursuant to the terms of the Custody
Agreement, each of the Selling Parties appointed Mr.
Geller and Mr. Smollar as their attorney-in-fact to enter
into the Underwriting Agreement discussed below and to
take certain actions related to the transactions set
forth in the Underwriting Agreement. Pursuant to the
terms of the Custody Agreement, each of the Selling
Parties also deposited with American Stock Transfer &
Trust Company the number of Shares set forth in the
following paragraph.
Pursuant to the terms of the Underwriting Agreement,
dated June 24, 1996 among the Company, the Selling
Parties, among others, as Selling Shareholders, and the
Underwriters (as listed therein) (the "Underwriting
Agreement"), the Company is to sell 1,400,000 newly
issued Shares and the other Selling Shareholders are to
sell 1,723,908 Shares (including 671,933 newly issued
Shares as a result of the exercise of existing options or
warrants) to the Underwriters at a price of $12.00 per
Share less a discount of $0.84 per Share; the net price
per Share being $11.16. The Selling Parties are to sell
the number of Shares listed below, and are each to
receive the amount listed below:
<TABLE>
<CAPTION>
Name Shares Sold Aggregate Sales Price
<S> <C> <C>
CDA IV 85,000 $ 948,600
CDA IV 20,500 228,780
Overseas
Glenbrook 1,900 21,204
Westpool 2,900 32,364
Total 110,300 $1,230,948
</TABLE>
In connection with the Underwriting Agreement, the
Underwriters have an option to purchase up to 468,586
additional Shares at the price se forth above, of which
128,586 Shares are to be newly issued by the Company, to
cover over-allotments by the Underwriters (the "Over
Allotment Option"). The following Shares of each of the<PAGE>
<PAGE>
Reporting Persons is subject to the Over Allotment
Option:
Name Shares Subject to
Over Allotment Option
CDA IV 69,540
CDA IV Overseas 16,775
Glenbrook 1,310
Westpool 2,375
Total 90,000
All Shares purchased by the Underwriters are to be
resold by the Underwriters pursuant to a registration
statement of the Company. The Company and the Selling
Shareholders (including the Selling Parties) made
customary representations, warranties and covenants, and
the closing of the purchase by the Underwriters is
subject to certain conditions, each as more fully
described in the Underwriting Agreement.
The foregoing description of the Custody Agreement and
the Underwriting Agreement are qualified in their
entirety by reference to the text of the form of Custody
Agreement and Underwriting Agreement, which are filed as
Exhibits 30 and 31, respectively, and are incorporated
herein by reference.
Purposes of the Acquisition of Securities by the
Reporting Persons
The Shares to which this Statement relates will be
acquired for the purpose of influencing the direction and
management of the Company. Under the Shareholers'
Agreement, CDA IV, CDA IV Overseas and the Designated
Purchasers initially and generally have the right to
designate two of the Company's directors.
The Reporting Persons intend to obtain additional
information about the Company and to conduct a detailed
and continuous review of their investment in the Company.
Each of the Reporting Persons expressly reserves the
right to dispose of all or any part of its investment in
the Shares and/or the Convertible Debentures by public or
private sale, merger or otherwise (subject to applicable
restrictions of the Securities Act of 1933, as amended
and the Stockholders Agreement, if any) or to continue to
hold the Shares and/or the Convertible Debentures or to
acquire additional Shares or other securities of the
Company at such prices and on such terms as such
Reporting Person deems advisable.
Except as described herein, none of the Reporting
Persons has any plans or proposals that relate to or<PAGE>
<PAGE>
would result in any of the actions specified in clauses
(a) through (j) of Item 4 of Schedule 13D.
Item 5. Interests in Securities of the Issuer.
The following information provided in response to this
Statement is based on a total of 6,961,300 Shares
outstanding, as disclosed in the final prospectus set
forth in the Company's Registration Statement on Form S-1
(Registration No. 333-4440) (the "Registration
Statement"), dated June 24, 1996, and assumes the
consummation of the transactions described in the
Registration Statement and in the Underwriting Agreement,
but does not assume the exercise of the Over Allotment
Option. The following also assumes the conversion of
all Convertible Debentures and the exercise of the WPG
Warrants at a price of $7.50 per share.
Pursuant to Rule 13d-3(d)(1)(i) under the Act, for
purposes of determining the percentage of beneficial
ownership, reportable securities which a Reporting Person
has the right to acquire upon a conversion of securities
within 60 days are deemed to be reportable securities
beneficially owned with respect to that person and
reportable securities issued and outstanding with respect
to the issuer. Accordingly, ownership percentages with
respect to Shares which CDA IV has a right to acquire
upon a conversion of the Convertible Debentures, WPG
Warrants and the Preferred Shares assume that there are a
total of 9,022,245 Shares issued and outstanding,
ownership percentages with respect to Shares which CDA IV
Overseas and CDA IV Overseas Ltd. have a right to acquire
upon a conversion of the Convertible Debentures and the
Preferred Shares assume that there are 7,412,855 Shares
issued and outstanding, ownership percentages with
respect to Shares which WPG PEP Overseas has a right to
acquire upon a conversion of the Convertible Debentures,
the WPG Warrants and the Preferred Shares assume that
there are 7,432,284 Shares issued and outstanding,
ownership percentages with respect to Shares which each
of Mr. Pfister, Ms. Kerppola or Mr. Whiting has a right
to acquire upon a conversion of the Convertible
Debentures assume that there are 6,964,035 Shares issued
and outstanding, ownership percentages with respect to
Shares which Glenbrook and Prim have a right to acquire
upon a conversion of the Convertible Debentures and
Preferred Shares assume that there are 6,996,852 Shares
issued and outstanding, ownership percentages with
respect to Shares which Westpool has a right to acquire
upon a conversion of the Convertible Debentures and
Preferred Shares assume that there are 7,025,293 Shares
issued and outstanding, and ownership percentages with
respect to Shares which both CDA IV and WPG PEP Overseas
have a right to acquire upon a conversion of the<PAGE>
<PAGE>
Convertible Debentures, Preferred Shares and WPG Warrants
assume that there are 9,493,229 Shares issued and
outstanding.
(a) CDA IV
CDA IV beneficially owns 2,457,441 Shares (which
includes, pursuant to Rule 13d-3(d)(1)(i) under the Act,
the 1,953,195 Shares which CDA IV has the right to
acquire upon conversion of the Convertible Debentures and
Preferred Shares and the exercise of the WPG Warrants and
the 128,523 Shares beneficially owned by the Individual
Purchasers (including the 107,750 Shares for which the
Individual Purchasers have the right to acquire upon
conversion of their Convertible Debentures, Preferred
Shares and Warrants) subject to the Shareholders'
Agreement), constituting approximately 27.2% of the
Shares outstanding. CDA IV disclaims beneficial
ownership of the 128,523 Shares owned by the Individual
Purchasers.
WPG PEP
As the sole general partner of CDA IV, WPG PEP may be
deemed, pursuant to Rule 13d-3 promulgated under the Act,
to own beneficially the 2,457,441 Shares beneficially
owned by CDA IV (which includes, pursuant to Rule 13d-
3(d)(1)(i) under the Act, the 1,953,195 Shares which CDA
IV has the right to acquire upon conversion of the
Convertible Debentures and Preferred Shares and the
exercise of the WPG Warrants held by CDA IV and the
128,523 Shares beneficially owned by the Individual
Purchasers (including the 107,750 Shares for which the
Individual Purchasers have the right to acquire upon
conversion of their Convertible Debentures, Preferred
Shares and warrants) subject to the Shareholders'
Agreement), constituting approximately 27.2% of the
Shares outstanding. WPG PEP disclaims beneficial
ownership of the 128,523 Shares owned by the Individual
Purchasers.
CDA IV Overseas
CDA IV Overseas beneficially owns 542,151 Shares (which
includes, pursuant to Rule 13d-3(d)(1)(i) under the Act,
the 451,555 Shares which CDA IV Overseas has the right to
acquire upon conversion of the Convertible Debentures and
Preferred Shares), constituting approximately 7.3% of the
Shares outstanding.
CDA IV Overseas Ltd.
As a general partner of CDA IV Overseas, CDA IV
Overseas Ltd. may be deemed, pursuant to Rule 13d-3<PAGE>
<PAGE>
promulgated under the Act, to own beneficially the
542,151 Shares beneficially owned by CDA IV Overseas
(which includes, pursuant to Rule 13d-3(d)(1)(i) under
the Act, the 451,555 Shares which CDA IV Overseas has the
right to acquire upon conversion of the Convertible
Debentures and Convertible Shares held by CDA IV)
constituting approximately 7.3% of the Shares
outstanding.
WPG PEP Overseas
As general partner of CDA IV Overseas, WPG PEP Overseas
may be deemed, pursuant to Rule 13d-3 promulgated under
the Act, to own beneficially the 542,151 Shares
beneficially owned by CDA IV Overseas (which includes,
pursuant to Rule 13d-3(d)(1)(i) under the Act, the
451,555 Shares which CDA IV Overseas has the right to
acquire upon conversion of the Convertible Debentures and
Preferred Shares). WPG PEP Overseas may also be deemed
to own the 19,429 Shares which WPG PEP Overseas may
acquire through the exercise of the WPG Warrants. Thus,
WPG PEP Overseas may be deemed to beneficially own a
total of 561,580 Shares, constituting approximately 7.6%
of the Shares outstanding.
Mr. Hutchinson
By reason of his status as one of the two managing
general partners of WPG PEP, which is the sole general
partner of CDA IV, Mr. Hutchinson may be deemed to be the
beneficial owner, within the meaning of Rule 13d-3
promulgated under the Act, of the 2,457,441 Shares held
by CDA IV (which includes, pursuant to Rule 13d-
3(d)(1)(i) under the Act, the 1,953,195 Shares which CDA
IV has the right to acquire upon conversion of the
Convertible Debentures and the Preferred Shares and the
exercise of the WPG Warrants held by CDA IV and the
128,523 Shares beneficially owned by the Individual
Purchasers (including the 107,750 Shares for which the
Individual Purchasers have the right to acquire upon
conversion of their Convertible Debentures, Preferred
Shares and warrants) subject to the Shareholders'
Agreement). By reason of his status as one of the two
managing general partners of WPG PEP Overseas, which is
the general partner to CDA IV Overseas in charge of
investment management and as a director of CDA IV
Overseas Ltd., the other General Partner of CDA IV
Overseas, Mr. Hutchinson may also, within the meaning of
Rule 13d-3 promulgated under the Act, be deemed to be the
beneficial owner of the 542,151 Shares held by CDA IV
Overseas (which, pursuant to Rule 13d-3(d)(1)(i) under
the Act, includes the 451,555 Shares which CDA IV
Overseas has the right to acquire upon conversion of the
Convertible Debentures and Preferred Shares) and the<PAGE>
<PAGE>
19,429 Shares which WPG PEP Overseas may acquire through
the exercise of the WPG Warrants. Accordingly, Mr.
Hutchinson may be deemed to be the beneficial owner of
3,019,021 Shares (which, pursuant to Rule 13d-3(d)(1)(i)
under the Act, includes the 2,531,929 Shares which
CDA IV, CDA IV Overseas, WPG PEP Overseas and the
Individual Purchasers have the right to acquire upon
conversion of the Convertible Debentures and Preferred
Shares and the exercise of the WPG Warrants and
warrants), constituting approximately 31.8% of the Shares
outstanding. Mr. Hutchinson disclaims beneficial
ownership of all such Shares, except to the extent of his
indirect beneficial interest as a managing general
partner of WPG PEP and WPG PEP Overseas in Shares held by
CDA IV and CDA IV Overseas, respectively.
Mr. Lang
By reason of his status as one of the two managing
general partners of WPG PEP, which is the sole general
partner of CDA IV, Mr. Lang may be deemed to be the
beneficial owner, within the meaning of Rule 13d-3
promulgated under the Act, of the 2,457,441 Shares held
by CDA IV (which includes, pursuant to Rule 13d-
3(d)(1)(i) under the Act, the 1,953,195 Shares which CDA
IV has the right to acquire upon conversion of the
Convertible Debentures and Preferred Shares and the
exercise of the WPG Warrants held by CDA IV and the
128,523 Shares beneficially owned by the Individual
Purchasers (including the 107,750 Shares for which the
Individual Purchasers have the right to acquire upon
conversion of their Convertible Debentures, Preferred
Shares and warrants) subject to the Shareholders'
Agreement). By reason of his status as one of the two
managing general partners of WPG PEP Overseas, which is
the general partner of CDA IV Overseas in charge of
investment management and as director of CDA IV Overseas
Ltd., the other general partner of CDA IV Overseas, Mr.
Lang may also, within the meaning of Rule 13d-3
promulgated under the Act, be deemed to be the beneficial
owner of the 542,151 Shares held by CDA IV Overseas
(which, pursuant to Rule 13d-3(d)(1)(i) under the Act,
includes the 451,555 Shares which CDA IV Overseas has the
right to acquire upon conversion of the Convertible
Debentures and Preferred Shares) and the 19,429 Shares
which WPG PEP Overseas may acquire through the exercise
of the WPG Warrants. Accordingly, Mr. Lang may be deemed
to be the beneficial owner of 3,019,021 Shares (which,
pursuant to Rule 13d-3(d)(1)(i) under the Act, includes
the 2,531,929 Shares which CDA IV, CDA IV Overseas, WPG
PEP Overseas and the Individual Purchasers have the right
to acquire upon conversion of the Convertible Debentures
and Preferred Shares and the exercise of the WPG Warrants
and warrants), constituting approximately 31.8% of the<PAGE>
<PAGE>
Shares outstanding. Mr. Lang disclaims beneficial
ownership of all such Shares, except to the extent of his
indirect beneficial interest as a managing general
partner of WPG PEP and WPG PEP Overseas in Shares held by
CDA IV and CDA IV Overseas, respectively.
Mr. Pfister
Mr. Pfister beneficially owns 3,041 Shares (which
includes, pursuant to Rule 13d-3(d)(1)(i) under the Act,
the 2,735 Shares which Mr. Pfister has the right to
acquire upon conversion of the Convertible Debentures and
warrants), constituting less than 0.1% of the Shares
outstanding.
Mr. Whiting
Mr. Whiting beneficially owns 3,041 Shares (which
includes, pursuant to Rule 13d-3(d)(1)(i) under the Act,
the 2,735 Shares which Mr. Whiting has the right to
acquire upon conversion of the Convertible Debentures and
warrants), constituting less than 0.1% of the Shares
outstanding.
Ms. Kerppola
Ms. Kerppola beneficially owns 3,041 Shares (which
includes, pursuant to Rule 13d-3(d)(1)(i) under the Act,
the 2,735 Shares which Ms. Kerppola has the right to
acquire upon conversion of the Convertible Debentures and
warrants), constituting less than 0.1% of the Shares
outstanding.
Glenbrook
Glenbrook beneficially owns 42,457 Shares (which
includes, pursuant to Rule 13d-3(d)(1)(i) under the Act,
the 35,552 Shares which Glenbrook has the right to
acquire upon conversion of the Convertible Debentures and
Preferred Shares), constituting approximately 0.6% of the
Shares outstanding.
Prim
As the sole general partner of Glenbrook, Prim may be
deemed, pursuant to Rule 13d-3 promulgated under the Act,
to own beneficially the 42,457 Shares (which includes,
pursuant to Rule 13d-3(d)(1)(i) under the Act, the 35,552
Shares which Glenbrook has the right to acquire upon
conversion of the Convertible Debentures), constituting
approximately 0.6% of the Shares outstanding.
Westpool<PAGE>
<PAGE>
Westpool beneficially owns 76,943 Shares (which
includes, pursuant to Rule 13d-3(d)(1)(i) under the Act,
the 63,993 Shares which Westpool has the right to acquire
upon conversion of the Convertible Debentures and
Preferred Shares), constituting approximately 1.1% of the
Shares outstanding.
Other
If the Reporting Persons are deemed, pursuant to
Section 13(d)(3) under the Act, to be members of a
"group" with Mr. Geller, Mr. Saul, Mr. Smollar and Champ,
such group would beneficially own in the aggregate
5,539,140 Shares (including 3,148,128 Shares which the
parties would have the right to acquire within 60 days of
the date of this Statement by conversion of the
Convertible Debentures and Preferred Shares or the
exercise of options or warrants), constituting
approximately 54.8% of the Shares outstanding. All
information regarding the share ownership of Mr. Geller,
Mr. Saul, Mr. Smollar and Champ in this Schedule 13D is based
upon the information provided in the Registration Statement.
The Reporting Persons disclaim all such beneficial ownership
of all shares held or controlled by Mr. Geller, Mr. Saul,
Mr. Smollar and Champ.
If the Over Allotment Option is exercised in full, the
number and percentage of Shares beneficially owned by
such Reporting Persons would decline to the following
(due to the issuance of an additional 128,586 Shares by
the Company to persons other than the Reporting Persons
and the sale of Shares pursuant to the Over Allotment
Option by the Reporting Persons and in the amounts set
forth above): CDA IV, 2,384,216, 26.1%; CDA IV Overseas
and CDA IV Overseas Ltd., 525,376, 7.0%; WPG PEP
Overseas, 544,805, 7.2%; each of Mr. Pfister, Ms.
Kerppola and Mr. Whiting, 3,041, less than 0.1%;
Glenbrook and Prim, 41,147, 0.6%; Westpool, 74,568, 1.0%;
and each of Mr. Lang and Mr. Hutchinson, 2,929,021,
30.4%.
(b) CDA IV
Acting through its sole general partner, WPG PEP, CDA
IV has the sole power to vote or direct the vote of and
the sole power to dispose or direct the disposition of
2,328,918 Shares (which includes the 1,953,195 Shares
which CDA IV has the right to acquire upon conversion of
the Convertible Debentures and Preferred Shares and the
exercise of the WPG Warrants). CDA IV has the shared
power to vote or direct the vote (pursuant to the terms
of the Shareholders' Agreement) of the 128,523 Shares
held by the Individual Purchasers (which includes the
107,750 Shares which the Individual Purchasers have the<PAGE>
<PAGE>
right to acquire upon conversion of the Convertible
Debentures, Preferred Shares and warrants).
WPG PEP
Acting through its two managing general partners, Mr.
Hutchinson and Mr. Lang, WPG PEP, as the sole general
partner of CDA IV, has the sole power to vote or direct
the vote of and the sole power to dispose or direct the
disposition of 2,328,918 Shares (which includes the
1,953,195 Shares which CDA IV has the right to acquire
upon conversion of the Convertible Debentures and
Preferred Shares and the exercise of the WPG Warrants).
WPG PEP has the shared power to vote or direct the vote
(pursuant to the terms of the Shareholders' Agreement) of
the 128,523 Shares held by the Individual Purchasers
(which includes the 107,750 Shares which the Individual
Purchasers have the right to acquire upon conversion of
the Convertible Debentures, Preferred Shares and
warrants).
CDA IV Overseas
Acting through WPG PEP Overseas, which is its general
partner in charge of investment management for CDA IV
Overseas and through CDA IV Overseas Ltd., CDA IV
Overseas has the sole power to vote or direct the vote of
and the sole power to dispose of or direct the
disposition of 542,151 Shares (which includes the 451,555
Shares which CDA IV Overseas has the right to acquire
upon conversion of the Convertible Debentures and
Preferred Shares).
WPG PEP Overseas
WPG PEP Overseas may be deemed to have the sole power
to vote or direct the vote and the sole power to dispose
of or direct the disposition of the 19,429 Shares which
it has the right to acquire upon the exercise of the WPG
Warrants. As one of the two general partners of CDA IV
Overseas and as the general partner in charge of
investment management, WPG PEP Overseas may be deemed to
have the shared power to vote or direct the vote of and
the shared power to dispose of or direct the disposition
of 542,151 Shares (which includes the 451,555 Shares
which CDA IV Overseas has the right to acquire upon
conversion of the Convertible Debentures and Preferred
Shares).
CDA IV Overseas Ltd.
As a general partner of CDA IV Overseas, CDA IV
Overseas Ltd. may be deemed to have the shared power to
vote or direct the vote of and the shared power to<PAGE>
<PAGE>
dispose of or direct the disposition of 542,151 Shares
(which includes the 451,555 Shares which CDA IV Overseas
has the right to acquire upon conversion of the
Convertible Debentures).
Mr. Hutchinson
As one of the two managing general partners of WPG PEP,
the sole general partner of CDA IV, Mr. Hutchinson has
the shared power to vote or direct the vote and the
shared power to dispose or direct the disposition of
2,328,918 Shares (which includes the 1,953,195 Shares
which CDA IV has the right to acquire upon conversion of
the Convertible Debentures and Preferred Shares and the
exercise of the WPG Warrants) held by CDA IV, and the
shared power to vote or direct the vote (pursuant to the
terms of the Shareholders' Agreement) of the 128,523
Shares held by the Individual Purchasers (which includes
the 107,750 Shares which the Individual Purchasers have
the right to acquire upon conversion of the Convertible
Debentures, Preferred Shares and warrants).
Additionally, as one of the two managing general partners
of WPG PEP Overseas, the general partner in charge of
investment management to CDA IV Overseas, and as a
director of CDA IV Overseas Ltd., the other general
partner of CDA IV Overseas, Mr. Hutchinson may be deemed
to have the shared power to vote or direct the vote and
the shared power to dispose or direct the disposition of
561,580 Shares (which includes the 451,555 Shares which
CDA IV Overseas has the right to acquire upon conversion
of the Convertible Debentures and Preferred Shares and
the 19,429 Shares WPG PEP Overseas has the right to
acquire upon the exercise of the WPG Warrants).
Accordingly, Mr. Hutchinson may be deemed to have the
shared power to vote or direct the vote and the shared
power to dispose or direct the disposition of 3,019,021
Shares (which includes the 2,531,929 Shares which CDA IV,
CDA IV Overseas, WPG PEP Overseas and the Individual
Purchasers have the right to acquire upon conversion of
the Convertible Debentures and Preferred Shares and the
exercise of the WPG Warrants and warrants). Mr.
Hutchinson disclaims beneficial ownership of such shares
except to the extent of his indirect pro rata interest in
such shares.
Mr. Lang
As one of the two managing general partners of WPG PEP,
the sole general partner of CDA IV, Mr. Lang has the
shared power to vote or direct the vote and the shared
power to dispose or direct the disposition of 2,328,918
Shares held by CDA IV (which includes the 1,953,195
Shares which CDA IV has the right to acquire upon
conversion of the Convertible Debentures and Preferred<PAGE>
<PAGE>
Shares and the exercise of the WPG Warrants), and the
shared power to vote or direct the vote (pursuant to the
terms of the Shareholders' Agreement) of the 128,523
Shares held by the Individual Purchasers (which includes
the 107,750 Shares which the Individual Purchasers have
the right to convert upon conversion of the Convertible
Debentures, Preferred Shares and warrants).
Additionally, as one of the two managing general partners
of WPG PEP Overseas, the general partner in charge of the
investment management to CDA IV Overseas and as a
director of CDA IV Overseas Ltd., the other general
partner of CDA IV Overseas, Mr. Lang may be deemed to
have the shared power to vote or direct the vote and the
shared power to dispose of and direct the disposition of
561,580 Shares (which includes 451,555 Shares which CDA
IV Overseas has the right to acquire upon conversion of
the Convertible Debentures and Preferred Shares and the
19,429 Shares which WPG PEP Overseas has the right to
acquire upon the exercise of the WPG Warrants).
Accordingly, Mr. Lang may be deemed to have the shared
power to vote or direct the vote and the shared power to
dispose or direct the disposition of 3,019,021 Shares
(which includes the 2,531,929 Shares which CDA IV, CDA IV
Overseas, and WPG PEP Overseas and the Individual
Purchasers have the right to acquire upon conversion of
the Convertible Debentures and Preferred Shares and the
exercise of the WPG Warrants and warrants). Mr. Lang
disclaims beneficial ownership of such shares except to
the extent of his indirect pro rata interest in such
shares.
Mr. Pfister
Mr. Pfister has the shared power (with CDA IV, pursuant
to the Shareholders' Agreement) to vote or direct the
vote of and the sole power to dispose of or direct the
disposition of 3,041 Shares (which includes the 2,735
Shares which Mr. Pfister has the right to acquire upon
conversion of the Convertible Debentures).
Mr. Whiting
Through his holdings of one-half of his Shares and
Convertible Debentures in a self directed Individual
Retirement Account, his holdings of the other half of his
Shares and Convertible Debentures in his name and his
holdings of the warrants in a self directed 401(k)
account, Mr. Whiting has the shared power (with CDA IV,
pursuant to the Shareholders' Agreement) to vote or
direct the vote of and the sole power to dispose of or
direct the disposition of an aggregate of 3,041 Shares
(which includes the 2,735 Shares which Mr. Whiting has
the right to acquire upon conversion of the Convertible
Debentures and warrants).<PAGE>
<PAGE>
Ms. Kerppola
Through a self directed Individual Retirement Account
and through her personal holdings, Ms. Kerppola has the
shared power (with CDA IV, pursuant to the terms of the
Shareholders' Agreement) to vote or direct the vote of
and the sole power to dispose of or direct the
disposition of 3,041 Shares (which includes the 2,735
Shares which Ms. Kerppola has the right to acquire upon
conversion of the Convertible Debentures and warrants).
Glenbrook
Acting through its sole general partner, Prim,
Glenbrook has the shared power (with CDA IV, pursuant to
the terms of the Shareholders' Agreement) to vote or
direct the vote of and the sole power to dispose of or
direct the disposition of 42,457 Shares (which includes
the 35,552 Shares which Glenbrook has the right to
acquire upon conversion of the Convertible Debentures and
Preferred Shares).
Prim
As the sole general partner of Glenbrook, Prim has the
shared power (with CDA IV, pursuant to the terms of the
Shareholders' Agreement) to vote or direct the vote of
and the sole power to dispose of or direct the
disposition of 42,457 Shares (which includes the 35,552
Shares which Glenbrook has the right to acquire upon
conversion of the Convertible Debentures and Preferred
Shares).
Westpool
Westpool has the shared power (with CDA IV, pursuant to
the terms of the Shareholders' Agreement) to vote or
direct the vote of and the sole power to dispose of or
direct the disposition of 76,943 Shares (which includes
the 63,993 Shares which Westpool has the right to acquire
upon conversion of the Convertible Debentures and
Preferred Shares).
Other
If the Reporting Persons are deemed, pursuant to
Section 13(d)(3) under the Act, to be members of a
"group" with Mr. Geller, Mr. Saul, Mr. Smollar and Champ,
such group would possess sole voting control over
5,539,140 Shares (including 3,148,128 Shares which the
parties would have the right to acquire within 60 days of
the date of this Statement by conversion of the
Convertible Debentures and Preferred Shares or the
exercise of options or warrants). If the Reporting<PAGE>
<PAGE>
Persons are deemed, pursuant to Section 13(d)(3) under
the Act, to be members of a "group" with Mr. Geller, Mr.
Saul, Mr. Smollar and Champ, such group would possess
sole dispositive control over 4,822,601 Shares (including
3,148,128 Shares which the parties would have the right
to acquire within 60 days of the date of this Statement
by conversion of the Convertible Debentures and Preferred
Shares or the exercise of options or warrants, including,
without limitation, Shares subject to the Halperin Option
Agreement, but not including Shares owned by Halco, to
which Mr. Geller has the right of first refusal under the
Voting Agreement). The Reporting Persons disclaim all
such voting or dispositive power over shares held or
controlled by Mr. Geller, Mr. Saul, Mr. Smollar and
Champ.
(c) Except as set forth above, none of the Reporting
Persons beneficially owns any Shares or has effected any
transactions in Shares during the preceding 60 days.
Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to Securities of
the Issuer.
Except as set forth below and in Item 4 above, none of
the Reporting Persons nor, to the best of their
knowledge, any other person listed herein, has any
contract, arrangement, understanding or relationship
(legal or otherwise) with any person with respect to any
securities of the Company, including but not limited to,
transfer or voting of any of the securities, finder's
fees, joint ventures, loan or option arrangements, puts
or calls, guarantees of profits, division of profits or
loss, or the giving or withholding of proxies.
Mr. Hutchinson and Mr. Lang are co-managing general
partners of WPG PEP and WPG PEP Overseas. In their
capacity as co-managing general partners of those
entities, Mr. Hutchinson and Mr. Lang direct the
investment decisions of CDA IV and determine the
investment recommendations to be made to CDA IV Overseas,
and when necessary, determine the allocation of
investment opportunities among those entities.
Item 7. Material to be filed as Exhibits.
Exhibit Agreement pursuant to Rule 13d-1(f)(1)(iii)*
A
Exhibit Agreement pursuant to Rule
A-1 13d-1(f)(1)(iii)*
Exhibit Agreement pursuant to Rule 13d-1(f)(1)(iii)*
A-2<PAGE>
<PAGE>
Exhibit Agreement pursuant to Rule 13d-1(f)(1)(iii)*
A-3
Exhibit Agreement pursuant to Rule 13d-1(f)(1)(iii)
A-4
Exhibit Commitment Letter*
1
Exhibit Stock Purchase Agreement*
2
Exhibit Redemption Agreement*
3
Exhibit Halperin Option Agreement*
4
Exhibit Voting Agreement*
5
Exhibit Mr. Geller's Employment Agreement*
6
Exhibit Mr. Saul's Employment Agreement*
7
Exhibit Formation Agreement*
8
Exhibit Advisory Agreement*
9
Exhibit Note Purchase Agreement*
10
Exhibit Power of Attorney of Steven N.
11 Hutchinson*
Exhibit Finn Stock Purchase Agreement*
12
Exhibit Finn Letter Agreement*
13
Exhibit Agreement and Plan of Reorganization *
14
Exhibit Marchon Stockholders Agreement*
15
Exhibit Geller Stock Purchase Agreement*
16
Exhibit Debenture Purchase Agreement*
17<PAGE>
<PAGE>
Exhibit Registration Rights Agreement*
18
Exhibit Shareholders' Agreement*
19
Exhibit Intercreditor Agreement*
20
Exhibit Management Agreement*
21
Exhibit Warrant Certificate issued to CDA IV*
22
Exhibit Warrant Certificate issued to WPG PEP*
23 Overseas*
Exhibit Form of Subscription Agreement*
24
Exhibit Shareholders' Agreement Amendment*
25
Exhibit Amendment to Registration Rights
26 Agreement*
Exhibit Loan Agreement*
27
Exhibit Amendment to Intercreditor Agreement*
28
Exhibit Power of Attorney of Wesley W. Lang,
29 Jr.*
Exhibit Custody Agreement
30
Exhibit Underwriting Agreement
31
*Previously filed as an exhibit to the Schedule 13D
<PAGE>
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set
forth in this statement is true, complete and correct.
Dated: June 26, 1996
WPG CORPORATE DEVELOPMENT ASSOCIATES IV, L.P.
By: WPG PRIVATE EQUITY
PARTNERS, L.P.,<PAGE>
its sole general partner
By:/s/ Wesley W. Lang, Jr.
Wesley W. Lang, Jr.,
Managing General Partner
<PAGE>
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set
forth in this statement is true, complete and correct.
Dated: June 26, 1996
WPG PRIVATE EQUITY
PARTNERS, L.P.
By:/s/ Wesley W. Lang, Jr.
Wesley W. Lang, Jr.,
Managing General Partner
<PAGE>
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set
forth in this statement is true, complete and correct.
Dated: June 26, 1996
WPG CORPORATE DEVELOPMENT
ASSOCIATES IV (OVERSEAS), L.P.
By: WPG CDA IV (Overseas), Ltd. a
general partner
By:/s/ Brent R.W. Thomas
Brent R.W. Thomas, Director
<PAGE>
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set
forth in this statement is true, complete and correct.
Dated: June 26, 1996
WPG CDA IV (OVERSEAS), LTD
By:/s/ Brent R.W. Thomas
Brent R.W. Thomas,
Director
<PAGE>
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set
forth in this statement is true, complete and correct.
Dated: June 26, 1996
WPG PRIVATE EQUITY PARTNERS
(OVERSEAS), L.P.
By:/s/ Wesley W. Lang, Jr.
Wesley W. Lang, Jr.,
Managing General Partner
<PAGE>
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set
forth in this statement is true, complete and correct.
Dated: June 26, 1996
/s/ Wesley W. Lang, Jr.
Wesley W. Lang, Jr.,
as attorney-in-fact
for Steven N. Hutchinson
<PAGE>
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set
forth in this statement is true, complete and correct.
Dated: June 26, 1996
By: /s/ Wesley W. Lang, Jr.
Wesley W. Lang, Jr.
<PAGE>
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set
forth in this statement is true, complete and correct.
Dated: June 26, 1996
By: /s/ Peter B. Pfister
Peter B. Pfister
<PAGE>
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set
forth in this statement is true, complete and correct.
Dated: June 26, 1996
By: /s/ Craig S. Whiting
Craig S. Whiting
<PAGE>
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set
forth in this statement is true, complete and correct.
Dated: June 26, 1996
By: /s/ Nora Kerppola
Nora Kerppola
<PAGE>
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set
forth in this statement is true, complete and correct.
Dated: June 26, 1996
GLENBROOK PARTNERS, L.P.
By: Prim Ventures, Inc., its
General Partner
By:/s/ Peter Knapp
Peter Knapp,
Executive Vice President
<PAGE>
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set
forth in this statement is true, complete and correct.
Dated: June 26, 1996
PRIM VENTURES, INC.
By:/s/ Peter Knapp
Peter Knapp,
Executive Vice President
<PAGE>
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set
forth in this statement is true, complete and correct.
Dated: June 26, 1996
WESTPOOL INVESTMENT TRUST PLC
By:/s/ Robert Rayne
Robert Rayne, Director
EXHIBIT A-4
Pursuant to Rule 13d-1(f)(1)(iii) of Regulation 13D-G
of the General Rules and Regulations of the Securities
and Exchange Commission under the Securities Exchange Act
of 1934, as amended, the undersigned agree that the
statement to which this Exhibit is attached is filed on
behalf of each of them in the capacities set forth herein
below.
Dated: June 26, 1996
WPG CORPORATE DEVELOPMENT WPG PRIVATE EQUITY PARTNERS
ASSOCIATES IV, L.P. (OVERSEAS), L.P.
By: WPG PRIVATE EQUITY By: /s/ Wesley W. Lang, Jr.
PARTNERS, L.P. Wesley W. Lang, Jr.,
its sole general partner Managing General Partner
By: /s/ Wesley W. Lang, Jr.
Wesley W. Lang, Jr.,
Managing General Partner
WPG PRIVATE EQUITY PARTNERS, L.P.
By: /s/ Wesley W. Lang, Jr. /s/ Wesley W. Lang, Jr.
Wesley W. Lang, Jr. Wesley W. Lang, Jr.
Managing General Partner as attorney-in-fact
for Steven N. Hutchinson
WPG CORPORATE DEVELOPMENT /s/ Wesley W. Lang, Jr.
ASSOCIATES IV Wesley W. Lang, Jr.
(OVERSEAS), L.P.
By WPG CDA IV (Overseas), Ltd.,
general partner
WPG CDA IV (OVERSEAS), LTD.
By:
Brent R.W. Thomas, Director
By:
Brent R.W. Thomas,
Director
<PAGE>
EXHIBIT A-4
Pursuant to Rule 13d-1(f)(1)(iii) of Regulation 13D-G
of the General Rules and Regulations of the Securities
and Exchange Commission under the Securities Exchange Act
of 1934, as amended, the undersigned agree that the
statement to which this Exhibit is attached is filed on
behalf of each of them in the capacities set forth herein
below.
Dated: June 26, 1996
WPG CORPORATE DEVELOPMENT WPG PRIVATE EQUITY PARTNERS
ASSOCIATES IV, L.P. (OVERSEAS), L.P.
By: WPG PRIVATE EQUITY By:
PARTNERS, L.P. Wesley W. Lang, Jr.,
its sole general partner Managing General Partner
By:
Wesley W. Lang, Jr.,
Managing General Partner
WPG PRIVATE EQUITY PARTNERS, L.P.
By:
Wesley W. Lang, Jr. Wesley W. Lang, Jr.
Managing General Partner as attorney-in-fact
for Steven N. Hutchinson
WPG CORPORATE DEVELOPMENT
ASSOCIATES IV
(OVERSEAS), L.P.
By WPG CDA IV (Overseas), Ltd.,
general partner
WPG CDA IV (OVERSEAS), LTD.
By: /s/ Brent R.W. Thomas
Brent R.W. Thomas, Director
By: /s/ Brent R.W. Thomas
Brent R.W. Thomas,
Director
<PAGE>
EXHIBIT A-4
Pursuant to Rule 13d-1(f)(1)(iii) of Regulation 13D-G
of the General Rules and Regulations of the Securities
and Exchange Commission under the Securities Exchange Act
of 1934, as amended, the undersigned agree that the
statement to which this Exhibit is attached is filed on
behalf of each of them in the capacities set forth herein
below.
Dated: June 26, 1996
/s/ Peter B. Pfister
Peter B. Pfister
/s/ Craig S. Whiting
Craig S. Whiting
/s/ Nora Kerppola
Nora Kerppola
<PAGE>
EXHIBIT A-4
Pursuant to Rule 13d-1(f)(1)(iii) of Regulation 13D-G
of the General Rules and Regulations of the Securities
and Exchange Commission under the Securities Exchange Act
of 1934, as amended, the undersigned agree that the
statement to which this Exhibit is attached is filed on
behalf of each of them in the capacities set forth herein
below.
Dated: June 26, 1996
GLENBROOK PARTNERS, L.P.
By: Prim Ventures, Inc.,
its General Partner
By:/s/ Peter Knapp
Peter Knapp, Executive Vice President
PRIM VENTURES, INC.
By:/s/ Peter Knapp
Peter Knapp, Executive Vice President
<PAGE>
EXHIBIT A-4
Pursuant to Rule 13d-1(f)(1)(iii) of Regulation 13D-G
of the General Rules and Regulations of the Securities
and Exchange Commission under the Securities Exchange Act
of 1934, as amended, the undersigned agree that the
statement to which this Exhibit is attached is filed on
behalf of each of them in the capacities set forth herein
below.
Dated: June 26, 1996
WESTPOOL INVESTMENT TRUST PLC
By:/s/ Robert Rayne
Robert Rayne, a Director<PAGE>
(Name of Selling Stockholder)
CUSTODY AGREEMENT AND POWER OF ATTORNEY
for Sale of Common Stock of
Empire of Carolina, Inc.
Steven E. Geller
Marvin Smollar
As Attorneys-in-Fact
c/o Empire of Carolina, Inc.
5150 Linton Boulevard
Delray Beach, Florida 33484
American Stock Transfer & Trust Company
40 Wall Street
46th Floor
New York, New York 10005
As Custodian
Ladies and Gentlemen:
Empire of Carolina, Inc., a Delaware
corporation (the "Company"), proposes to issue and sell
an aggregate of 1,500,000 shares of its common stock, par
value $0.10 per share (the "Common Stock"), and the
undersigned and certain other stockholders and/or
warrantholders and optionholders of the Company (the
undersigned and such other stockholders and/or
warrantholders and optionholders being hereinafter
referred to as the "Selling Stockholders") propose to
sell an aggregate of 1,413,639 shares of the Company s
currently issued and outstanding Common Stock, 444,000
shares of the Company s Common Stock that will be issued
to the Selling Stockholders on the date of such sale upon
exercise of currently outstanding options and warrants
and an outstanding option (the "Halco Option") to
purchase an aggregate of 333,333 shares from another
Selling Stockholder (the "Halco Option Shares") to a
group of underwriters, for whom William Blair & Company,
L.L.C. and Gerard Klauer Mattison & Co., LLC are acting
as representatives (the "Underwriters") for distribution
to the public, as contemplated by a Registration
Statement on Form S-1, File No. 333-4440 (the
"Registration Statement") at a price and on terms to be
hereafter determined. In addition, solely for the
purpose of covering over-allotments, if any, the Company<PAGE>
<PAGE>
and certain of the Selling Stockholders propose to sell
to the Underwriters upon terms to be hereafter
determined, up to an additional 297,595 and 250,000
shares of Common Stock, respectively.
It is understood that at this time there is no
commitment on the part of the Underwriters to purchase
any shares of Common Stock and there are no assurances
that an offering of Common Stock will take place. The
maximum number of shares of Common Stock which the
undersigned proposes to sell to the Underwriters as set
forth on Schedule I hereto pursuant to the Halco Option
or the Underwriting Agreement to be entered into by and
among the Company, the Selling Stockholders and the
Underwriters (the "Underwriting Agreement"), as the case
may be, are referred to herein as the "Shares."
I.Appointment and Powers of Attorneys-in-Fact
A.The undersigned hereby irrevocably constitutes and
appoints Steven E. Geller and Marvin Smollar (the
"Attorneys-in-Fact"), and each of them, his agent and
attorney-in-fact, with full power of substitution, with
respect to all matters arising in connection with the
public offering and sale of the Shares (subject to the
limitations set forth below), including, but not limited
to, the power and authority on behalf of the undersigned
to do or cause to be done any of the following things:
1.negotiate, determine and agree upon (a) the price at
which the Shares will be initially offered to the public
by the Underwriters pursuant to the Underwriting
Agreement, (b) the underwriting discount with respect to
the Shares; provided that such discount does not exceed
7% of the price at which the Shares will be initially
offered to the public, and (c) subject to the preceding
clauses (a) and (b), the price at which the Shares or the
Halco Option, as the case may be, will be sold to the
Underwriters by the Selling Stockholders pursuant to the
Underwriting Agreement, it being acknowledged and agreed
that any such underwriting discount and price at which
the Shares will be sold to the Underwriters shall be the
same with respect to the Shares and shares of Common
Stock to be sold to the Underwriters by the Company, that
the price at which the Halco Option will be sold to the
Underwriters shall be the price at which the other Shares
are sold to the Underwriters less the exercise price of
the Halco Option as provided in the Halco Option and that
the price at which the Halco Option Shares will be sold
to the Underwriters shall be such exercise price;
2.execute and deliver the Underwriting Agreement,
substantially in the form of the draft delivered to the
undersigned herewith (dated June 13, 1996), receipt of<PAGE>
<PAGE>
which is acknowledged, but with such insertions, changes,
additions or deletions as the Attorneys-in-Fact shall
approve as not materially adverse to the undersigned
(which may include a decrease (not to exceed 10% of the
Shares), but not an increase, in the number of Shares to
be sold by the undersigned and may not include any
adverse change to the indemnity and contribution
provisions included in the Underwriting Agreement), such
approval to be conclusively evidenced by the execution
and delivery of the Underwriting Agreement by an
Attorney-in Fact, including the making of all
representations and agreements provided in the
Underwriting Agreement to be made by, and the exercise of
all authority thereunder vested in, the undersigned;
3.sell, assign, transfer and deliver the Halco Option and
the Shares to the Underwriters pursuant to the
Underwriting Agreement and the Halco Option Shares to the
Underwriters pursuant to the Halco Option and deliver to
the Underwriters (or instruct the Custodian to deliver)
certificates for the Shares so sold;
4.take any and all steps deemed necessary or desirable by
the Attorneys-in-Fact in connection with the registration
of the Shares under the Securities Act of 1933, as
amended (the "Securities Act"), the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and under
the securities or "blue sky" laws of various states and
jurisdictions, including, without limitation, requesting
acceleration of the effective date of any such
registration and the giving or making of such
undertakings, representations and agreements and the
taking of such other steps as the Attorneys-in-Fact may
deem necessary or advisable;
5.instruct the Company and the Custodian, as hereinafter
defined, on all matters pertaining to the sale of the
Shares and delivery of certificates therefor;
6.provide, in accordance with the Underwriting Agreement,
for the payment of underwriting discounts and commissions
and transfer taxes, if any, and any other costs or
expenses allocable to or payable by the undersigned in
connection with the offering and sale of the
undersigned's Shares covered by the Registration
Statement; provided that this Custody Agreement and Power
of Attorney shall not create any obligation to pay any
such other costs or expenses; and further provided that
this clause (vi) shall not affect any agreement which the
Company and the Selling Stockholders may make for the
allocation or sharing of such costs or expenses; and
7.subject to clause (i) above, otherwise take all actions
and do all things necessary or proper, required,<PAGE>
<PAGE>
contemplated or deemed advisable or desirable by the
Attorneys-in-Fact in their discretion in connection with
the registration of the Shares, including the execution
and delivery of any documents, and generally act for and
in the name of the undersigned with respect to the sale
of the Shares to the Underwriters and the reoffering of
the Shares by the Underwriters as fully as could the
undersigned if then personally present and acting.
B.Each Attorney-in-Fact may act alone in exercising the
rights and powers conferred on the Attorneys-in-Fact by
this Custody Agreement and Power of Attorney, and the act
of any Attorney-in-Fact shall be the act of the
Attorneys-in-Fact. Each Attorney-in-Fact is hereby
empowered to determine, in his sole and absolute
discretion, the time or times when, the purposes for
which, and the manner in which, any power herein
conferred upon the Attorneys-in-Fact shall be exercised.
C.The Custodian, the Underwriters, the Company and all
other persons dealing with the Attorneys-in-Fact as such
may rely and act upon any writing believed in good faith
to be signed by one or more of the Attorneys-in-Fact.
D.The Attorneys-in-Fact shall not receive any
compensation for their services rendered hereunder.
E.The undersigned acknowledges that the powers of
attorney granted pursuant to this Agreement are granted
to secure the undersigned's performance of this Agreement
and the Underwriting Agreement and therefore are coupled
with an interest and, subject to Section 5 below, are
irrevocable.
II.Appointment of Custodian; Deposit of Shares or
Warrants
A.In connection with and to facilitate the sale of the
Shares to the Underwriters, the undersigned hereby
appoints the American Stock Transfer & Trust Company, as
custodian (the "Custodian"), and herewith deposits with
the Custodian one or more certificates for Common Stock
and certificates representing warrants and/or options (if
separately certificated) which are being exercised by the
undersigned listed in Schedule II hereto which
collectively represent not less than the maximum number
of Shares to be sold by the undersigned to the
Underwriters, which number is set forth on Schedule I
hereto. Each such certificate so deposited is in
negotiable and proper deliverable form accompanied by two
or more duly executed stock powers in blank, bearing the
signature of the undersigned thereon and a medallion
guarantee of such signature by a commercial bank or trust
company in the United States or by a member firm of the<PAGE>
<PAGE>
New York Stock Exchange. The Custodian is hereby
authorized and directed, subject to the instructions of
the Attorneys-in-Fact, (a) to hold in custody the
certificate or certificates deposited herewith and any
related stock powers, (b) to deliver the certificate or
certificates and any related stock powers deposited
hereunder to or at the direction of the Attorneys-in-Fact
in accordance with the terms of the Underwriting
Agreement or the Halco Option, as the case may be, and
(c) to return to the undersigned new certificate(s) for
the shares of Common Stock, warrants and/or options, as
the case may be, represented by any certificate deposited
hereunder which are not sold or exercised pursuant to the
Underwriting Agreement or the Halco Option, as the case
may be.
B.Until the Shares have been delivered to the Underwriter
against payment therefor in accordance with the
Underwriting Agreement or the Halco Option, as the case
may be, the undersigned shall retain all rights of
ownership with respect to the Shares deposited hereunder,
including the right to vote and to receive all dividends
and payment thereon, except the right to retain custody
of or dispose of such Shares, which right is subject to
this Agreement and, from and after its execution, the
Underwriting Agreement.
III.Sale of Shares and Remitting Net Proceeds
The Attorneys-in-Fact are hereby authorized and
directed to deliver or cause the Custodian to deliver
certificates for the Shares to the Underwriters as
provided in the Underwriting Agreement or the Halco
Option, as the case may be, against delivery to the
Attorneys-in-Fact for the account of the undersigned of
the purchase price of the Shares, at the time and in the
funds specified in the Underwriting Agreement or the
Halco Option, as the case may be, subject to the
provisions of paragraph 1(a)(I) above. The Attorneys-in-
Fact are authorized, on behalf of the undersigned, to
accept and acknowledge receipt of the payment of the
purchase price for the Shares and shall promptly deposit
such proceeds with the Custodian. After reserving an
amount of such proceeds for underwriting discounts and
commissions and transfer taxes, if any, and any other
costs or expenses allocable to or payable by the
undersigned, the Custodian shall promptly remit to the
undersigned his proportionate share of the proceeds.
IV.Representations, Warranties and Agreements. The
undersigned represents and warrants to, and agrees with,
the other Selling Stockholders, the Company, the
Attorneys-in-Fact, the Custodian, the Underwriters and<PAGE>
<PAGE>
counsel for the Company and such Selling Stockholder, as
follows:
A.The undersigned has full legal right, power and
authority to enter into and perform this Agreement and
the Underwriting Agreement.
B.The undersigned has reviewed the representations and
warranties to be made by the undersigned as a Selling
Stockholder contained in the Underwriting Agreement, and
hereby represents, warrants and covenants as to itself
that each of such representations and warranties is true
and correct as of the date hereof and, except as the
undersigned shall have notified the Attorneys-in-Fact
pursuant to paragraph F of the attached instructions,
will be true and correct at all times from the date
hereof through and including the time of the closing of
the sale of the Shares to the Underwriters. The
undersigned will promptly notify the Attorneys-in-Fact of
any development that would make any such representation
and warranty untrue.
C.The information contained in the Registration Statement
relating solely to the undersigned is true and correct.
D.The undersigned has completed the information called
for in Schedule I hereto and such information with
respect to the undersigned is complete and correct.
E.Except as otherwise disclosed in Schedule III hereto,
the undersigned is not a member of or directly or
indirectly an affiliate of or associated with any member
of the National Association of Securities Dealers, Inc.
F.Upon execution and delivery of the Underwriting
Agreement by the Attorneys-in-Fact on behalf of the
undersigned in accordance with this Power of Attorney and
Custody Agreement, the undersigned agrees to be bound by
and to perform each of the covenants and agreements of
the undersigned as a Selling Stockholder in the
Underwriting Agreement including without limitation, the
indemnification and contribution obligations thereunder.
G.The undersigned agrees to deliver to the Attorneys-in-
Fact such documentation as the Attorneys-in-Fact, the
Company or the Underwriters or any of their respective
counsel may reasonably request in order to effectuate any
of the provisions hereof or of the Underwriting
Agreement, all of the foregoing to be in form and
substance reasonably satisfactory in all respects to the
Attorneys-in-Fact including, without limitation, if
requested by the Company or counsel for the Company, or
the Underwriters or counsel for the Underwriters, as the
case may be, an opinion of counsel, in form and substance<PAGE>
<PAGE>
reasonably satisfactory to the Company and its counsel,
or the Underwriters and their counsel, as the case may
be, covering the representations, warranties and
agreements of the undersigned to be contained in the
Underwriting Agreement and such other matters as the
Company or its counsel, or the Underwriters or their
counsel, as the case may be, shall reasonably request.
The foregoing representations, warranties and agreements
are made for the benefit of, and may be relied upon by,
the other Selling Stockholders, the Attorneys-in-Fact,
the Company, the Custodian, the Underwriters and their
respective representatives, agents and counsel and are in
addition to, and not in limitation of, the
representations, warranties and agreements of the Selling
Stockholders in the Underwriting Agreement.
V.Irrevocability of Instruments; Termination of this
Agreement.
A.This Agreement, the deposit of Shares, warrants and/or
options pursuant hereto and all authority hereby
conferred, is granted, made and conferred subject to and
in consideration of (I) the interests of the Attorneys-
in-Fact, the Underwriters, the Company and the other
Selling Stockholders who may become parties to the
Underwriting Agreement in and for the purpose of
completing the transaction contemplated hereunder and by
the Underwriting Agreement and (ii) the completion of the
registration of Common Stock pursuant to the Registration
Statement and the other acts of the above-mentioned
parties from the date thereof to and including the
execution and delivery of the Underwriting Agreement in
anticipation of the sale of Common Stock, including the
Shares, to the Underwriters; and the Attorneys-in-Fact
are hereby further vested with an estate, right, title
and interest in and to the Shares deposited herewith for
the purpose of irrevocably empowering and securing to
them authority sufficient to consummate said
transactions. Accordingly, this Agreement shall be
irrevocable prior to August 31, 1996, and shall remain in
full force and effect until that date. The undersigned
further agrees that this Agreement shall not be
terminated by operation of law or upon the occurrence of
any event whatsoever, including the death, disability or
incompetence of the undersigned or any other Selling
Stockholder or, if the undersigned or any other Selling
Stockholder is not a natural person, upon any
dissolution, winding up, distribution of assets or other
event affecting the legal existence of the undersigned or
such Selling Stockholder. If any event referred to in
the preceding sentence shall occur, whether with or
without notice thereof to the Attorneys-in-Fact, any of
the Underwriters or any other person, the Attorneys-in-<PAGE>
<PAGE>
Fact shall nevertheless be authorized and empowered to
deliver the Shares deposited under this Agreement by the
undersigned in accordance with the terms and provisions
of this Agreement and the Underwriting Agreement or the
Halco Option, as the case may be, and provide for the
distribution of the proceeds therefrom as if such event
has not occurred.
B.Notwithstanding anything to the contrary contained in
Section 5(a) above, if the sale of all of the Shares
contemplated by this Agreement is not completed by August
31, 1996 or if the offering is terminated or abandoned
prior to that date, this Agreement shall terminate as of
such date (without affecting any lawful action of the
Attorneys-in-Fact or the Custodian prior to such
termination), and the Attorneys-in-Fact shall cause the
Custodian to return promptly to the undersigned all
certificates for the Shares, warrants and/or options
deposited hereunder not purchased by the Underwriters on
or prior to such date.
VI.Liability and Indemnification of the Attorneys-in-Fact
and Custodian.
The Attorneys-in-Fact and the Custodian assume
no responsibility or liability to the undersigned or to
any other person, other than to hold and dispose of the
Shares, and to remit promptly to the undersigned the
proceeds from the sale of the Shares and to return to the
undersigned any other shares of Common Stock deposited
with the Custodian pursuant to the terms of this
Agreement in accordance with the provisions hereof and to
otherwise comply with this Agreement. The undersigned
hereby agrees to indemnify and hold harmless the
Attorneys-in-Fact and the Custodian, and their respective
officers, agents, successors, assigns and personal
representatives with respect to any act or omission of or
by any of them in good faith in connection with any and
all matters contemplated by this Agreement or the
Underwriting Agreement, but only to the extent arising
out of their rights, responsibilities or actions as
Attorneys-in-Fact or custodians, in accordance with the
terms of this Power of Attorney and Custody Agreement.
VII.Interpretation.
A.The representations, warranties and agreements of the
undersigned contained herein and in the Underwriting
Agreement shall survive the sale and delivery of the
Shares and the termination of this Agreement.
B.This Custody Agreement and Power of Attorney shall be
governed by and construed in accordance with the laws of
the State of Illinois, without giving effect to any<PAGE>
<PAGE>
choice of law or conflict of laws rules that would cause
the application of laws of other jurisdictions other than
Illinois, except that the corporate law of the State of
Delaware shall govern all issues and questions concerning
the relative rights of the Company and its stockholders,
in their capacity as stockholders.
C.Wherever possible each provision of this Agreement
shall be interpreted in such manner as to be effective
and valid under applicable law, but if any such provision
shall be prohibited by or invalid under applicable law,
it shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions
of this Agreement.
D.The use of the masculine gender in this Agreement
includes the feminine and neuter, and the use of the
singular includes the plural, wherever appropriate.
E.This Agreement may be executed in separate
counterparts, each of which shall constitute an original,
but all of which together shall constitute one
instrument.
* * * * *<PAGE>
<PAGE>
IN WITNESS WHEREOF, the undersigned has
executed this Custody Agreement and Power of Attorney
this ___ day of June, 1996.
(Please sign exactly as your
Stockholder name appears on your
stock certificate(s).)
Signature of Selling
Stockholder Guaranteed by:
Name and address to which notices and
funds shall be sent.
______________________________
(Name)
______________________________
(Street)
______________________________
(City) (State) (Zip)
______________________________
(Telephone and Contact)
(NOTE: The signature must bear a medallion guarantee by
a commercial bank or trust company in the United States
or by a member of the New York Stock Exchange.)
ACCEPTED by the ACCEPTED by the Custodian as of
Attorneys-in-Fact the date above set forth:
as of the date above
set forth:
AMERICAN STOCK TRANSFER
_______________________ & TRUST COMPANY
Name: Steven E. Geller
_______________________ By:_____________________
Name: Marvin Smollar Its:
SEE THE ATTACHED INSTRUCTIONS<PAGE>
<PAGE>
INSTRUCTIONS
(For completing the Custody Agreement
and Power of Attorney)
A. You have been sent three copies of the Custody
Agreement and Power of Attorney (the "Agreement").
Please complete and return two copies of the
Agreement and stock certificates(s) as set forth in
paragraph D below. One completed copy of the
Agreement and your stock certificate(s) will be
retained by the Custodian and one completed copy of
the Agreement will be delivered to the Attorneys-in-
Fact.
B. Complete the information required by Schedules I, II
and III attached hereto.
C. Each copy of the Agreement and each stock, warrant
or option certificate or stock power deposited
hereunder must be executed by you with your
signature on the Agreement and the stock, warrant or
option certificate(s) or the accompanying stock
power and such signature must bear a medallion
guarantee by a commercial bank or trust company in
the United Sates or any broker which is a member
firm of the New York Stock Exchange. Please sign
the stock, warrant or option certificate(s) or stock
power and the Agreement exactly as your name appears
on your stock, warrant or option certificate(s).
D. Endorsed stock, warrant or option certificate(s) or
stock certificate(s) with at least two stock powers
attached along with all six executed copies of the
completed Agreement should be promptly returned by
hand delivery or certified mail appropriately
insured to:
American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, New York 10005
If sent through the mail, it is recommended that the
executed stock powers be sent under separate cover
from the certificate(s).
E. If any certificate that you submit represents a
greater number than the Shares to be sold by you,
the Custodian will cause to be delivered to you a
certificate for the excess number of shares as soon
as practicable after the expiration of the over-
allotment option, such certificate to be registered
in the name of the deposited certificate.<PAGE>
<PAGE>
F. Please contact Steven E. Geller or Marvin Smollar if
any information or representation included in the
foregoing Agreement should change at any time prior
to termination of a thirty-one (31) day period
commencing on the date of the final Prospectus for
the offering.<PAGE>
<PAGE>
SCHEDULE I
Name:______________________________
Indicate the nature of any position, office or other
material relationship which you have had within the past
three years with the Company or any of its predecessors
or affiliates (if none, please so indicate):
___________________________________
___________________________________
___________________________________
Number of shares of Common Stock beneficially owned by
you: ________
Maximum number of shares of Common Stock proposed to be
offered:
___________________________________<PAGE>
<PAGE>
SCHEDULE II
Certificate(s) for Shares of Common Stock
Empire of Carolina, Inc.
deposited under
Custody Agreement and Power of Attorney
Number of Shares
Number of Shares of Common Stock
of Common Stock from the
Certificate Represented Certificate to
Number by Certificate be Sold
Total:<PAGE>
<PAGE>
SCHEDULE III
Name:___________________________
Describe any direct or indirect affiliation or
association with any member of the National Association
of Securities Dealers, Inc.
__________________________________
__________________________________
__________________________________<PAGE>
EXECUTION COPY
Empire of Carolina, Inc.
3,123,908 Shares Common Stock 1
Underwriting Agreement
June 24, 1996
William Blair & Company, L.L.C.
Gerard Klauer Mattison & Co., LLC
As Representatives of the Several
Underwriters Named in Schedule A
c/o William Blair & Company, L.L.C.
222 West Adams Street
Chicago, Illinois 60606
Ladies and Gentlemen:
Section 1. Introductory. Empire of
Carolina, Inc. ("Company"), a Delaware corporation, has
an authorized capital stock consisting of 5,000,000
shares of preferred stock, $.01 par value, issuable in
series, of which 442,264 shares have been designated
Series A Cumulative Convertible Preferred Stock and all
of which shares are outstanding as of the date hereof,
and 30,000,000 shares, $.10 par value, of Common Stock
("Common Stock"), of which 5,205,200 shares were
outstanding as of May 31, 1996. The Company proposes to
issue and sell 1,400,000 shares of its authorized but
unissued Common Stock (the "Company Firm Shares"), and
certain stockholders of the Company named in Schedule B
(collectively referred to as the "Selling Stockholders")
propose to sell 1,051,975 shares of the Company's
currently issued and outstanding Common Stock, 356,100
shares of the Company's Common Stock that will be issued
to the Selling Stockholders on the First Closing Date (as
hereinafter defined) upon exercise of currently
outstanding options and warrants (collectively, the
"Selling Stockholder Firm Shares") and an outstanding
option (the "Halco Option") to purchase an aggregate of
315,833 shares from another Selling Stockholder (the
"Halco Option Firm Shares") to the several underwriters
named in Schedule A as it may be amended by the Pricing
Agreement hereinafter defined ("Underwriters"), who are
acting severally and not jointly. Collectively, such
total of 3,123,908 shares of Common Stock represented by
1 Plus an option to acquire up to 468,586 additional
shares to cover overallotments.<PAGE>
<PAGE>
the Company Firm Shares, the Selling Stockholder Firm
Shares and the Halco Option Firm Shares is hereinafter
referred to as the "Firm Shares." In addition, the
Company and certain Selling Stockholders propose to grant
to the Underwriters an option to purchase up to an
aggregate of 468,586 additional shares of Common Stock
("Option Shares") as provided in Section 5 hereof. The
Firm Shares and, to the extent such option is exercised,
the Option Shares, are hereinafter collectively referred
to as the "Shares."
You have advised the Company and the Selling
Stockholders that the Underwriters propose to make a
public offering of their respective portions of the
Shares as soon as you deem advisable after the
registration statement hereinafter referred to becomes
effective, if it has not yet become effective, and the
Pricing Agreement hereinafter defined has been executed
and delivered.
Prior to the purchase and public offering of
the Shares by the several Underwriters, the Company, the
Selling Stockholders and the Representatives, acting on
behalf of the several Underwriters, shall enter into an
agreement substantially in the form of Exhibit A hereto
("Pricing Agreement"). The Pricing Agreement may take
the form of an exchange of any standard form of written
telecommunication between the Company, the Selling
Stockholders and the Representatives and shall specify
such applicable information as is indicated in Exhibit A
hereto. The offering of the Shares will be governed by
this Agreement, as supplemented by the Pricing Agreement.
From and after the date of the execution and delivery of
the Pricing Agreement, this Agreement shall be deemed to
incorporate the Pricing Agreement.
The Company and each of the Selling
Stockholders hereby confirm their agreements with the
Underwriters as follows:
Section 2. Representations and Warranties
of the Company. The Company represents and warrants to
the several Underwriters that:
(a) A registration statement on Form S-1 (File
No. 333-4440) with respect to the Shares has been
prepared and filed with the Securities and Exchange
Commission ("Commission") by the Company in conformity
with the requirements of the Securities Act of 1933, as
amended, and the rules and regulations of the Commission
thereunder (collectively, the "1933 Act;" unless
indicated to the contrary, all references herein to
specific rules are rules promulgated under the 1933 Act);
and the Company has so prepared and has filed such<PAGE>
<PAGE>
amendments thereto, if any, as may have been required to
the date hereof and will file such additional amendments
thereto as may hereafter be required. There have been or
will promptly be delivered to you three signed copies of
such registration statement and amendments, three copies
of each exhibit filed therewith, and conformed copies of
such registration statement and amendments (but without
exhibits) and final forms of prospectus for each of the
Underwriters.
Such registration statement (as amended, if
applicable) at the time it becomes effective and the
prospectus constituting a part thereof (including the
information, if any, deemed to be part thereof pursuant
to Rule 430A(b) and/or Rule 434), as from time to time
amended or supplemented, are hereinafter referred to as
the "Registration Statement," and the "Prospectus,"
respectively, except that if any revised prospectus shall
be provided to the Underwriters by the Company for use in
connection with the offering of the Shares which differs
from the Prospectus on file at the Commission at the time
the Registration Statement became or becomes effective
(whether or not such revised prospectus is required to be
filed by the Company pursuant to Rule 424(b)), the term
Prospectus shall refer to such revised prospectus from
and after the time it was provided to the Underwriters
for such use. If the Company elects to rely on Rule 434
of the 1933 Act, all references to "Prospectus" shall be
deemed to include, without limitation, the form of
prospectus and the term sheet, taken together, provided
to the Underwriters by the Company in accordance with
Rule 434 of the 1933 Act ("Rule 434 Prospectus"). Any
registration statement (including any amendment or
supplement thereto or information which is deemed part
thereof) filed by the Company under Rule 462(b) ("Rule
462(b) Registration Statement") shall be deemed to be
part of the "Registration Statement" as defined herein,
and any prospectus (including any amendment or supplement
thereto or information which is deemed part thereof)
included in such registration statement shall be deemed
to be part of the "Prospectus", as defined herein, as
appropriate. The Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission
thereunder are hereinafter collectively referred to as
the "Exchange Act."
(b) When the Registration Statement became or
becomes effective, and at all times subsequent thereto,
up to the First Closing Date or the Second Closing Date
hereinafter defined, as the case may be, the Registration
Statement, including the information deemed to be part of
the Registration Statement at the time of effectiveness
pursuant to Rule 430A(b), if applicable, and the
Prospectus and any amendments or supplements thereto,<PAGE>
<PAGE>
contained or will contain all statements that are
required to be stated therein in accordance with the 1933
Act and in all material respects conformed or will in all
material respects conform to the requirements of the 1933
Act, and neither the Registration Statement nor the
Prospectus, nor any amendment or supplement thereto,
included or will include any untrue statement of a
material fact or omitted or will omit to state a material
fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however,
that the Company makes no representation or warranty as
to information contained in or omitted from the
Registration Statement, the Prospectus or any such
amendment or supplement in reliance upon and in
conformity with written information furnished to the
Company by or on behalf of any Underwriter through the
Representatives specifically for use in the preparation
thereof.
(c) Each of the Company and its subsidiaries
has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its state
of incorporation, with corporate power and authority to
own its properties and conduct its business as described
in the Prospectus; each of the Company and its
subsidiaries is duly qualified to do business as a
foreign corporation under the corporation law of, and is
in good standing as such in, each jurisdiction in which
it owns or leases substantial properties, has an office,
or in which substantial business is conducted and such
qualification is required except in any such case where
the failure to so qualify or be in good standing would
not have a material adverse effect upon the Company and
its subsidiaries taken as a whole; and no proceeding of
which the Company has knowledge has been instituted in
any such jurisdiction, revoking, limiting or curtailing,
or seeking to revoke, limit or curtail, such power and
authority or qualification.
(d) Except as disclosed in the Registration
Statement, the Company owns directly or indirectly 100
percent of the issued and outstanding capital stock of
each of its subsidiaries, free and clear of any claims,
liens, encumbrances or security interests and all of such
capital stock has been duly authorized and validly issued
and is fully paid and nonassessable.
(e) The issued and outstanding shares of
capital stock of the Company as set forth in the
Prospectus have been duly authorized and validly issued,
are fully paid and nonassessable, and conform to the
description thereof contained in the Prospectus. The
Shares to be sold by the Company to the Selling
Stockholders upon the exercise of outstanding options and<PAGE>
<PAGE>
warrants on the First Closing Date have been duly
authorized and, when issued, delivered and paid for
pursuant to the terms of the related option or warrant
agreement, will be validly issued, fully paid and
nonassessable and will conform to the description thereof
contained in the Prospectus.
(f) The Shares to be sold by the Company to
the Underwriters have been duly authorized and, when
issued, delivered and paid for pursuant to this
Agreement, will be validly issued, fully paid and
nonassessable, and will conform to the description
thereof contained in the Prospectus.
(g) The making and performance by the Company
of this Agreement and the Pricing Agreement have been
duly authorized by all necessary corporate action and
will not violate any provision of the Company's charter
or bylaws and will not result in the breach, or be in
contravention, of any provision of any agreement,
franchise, license, indenture, mortgage, deed of trust,
or other instrument to which the Company or any
subsidiary is a party or by which the Company, any
subsidiary or the property of any of them may be bound or
affected, or any order, rule or regulation applicable to
the Company or any subsidiary of any court or regulatory
body, administrative agency or other governmental body
having jurisdiction over the Company or any subsidiary or
any of their respective properties, or any order of any
court or governmental agency or authority entered in any
proceeding to which the Company or any subsidiary was or
is now a party or by which it is bound. No consent,
approval, authorization or other order of any court,
regulatory body, administrative agency or other
governmental body is required for the execution and
delivery of this Agreement or the Pricing Agreement or
the consummation of the transactions contemplated herein
or therein, except for compliance with the 1933 Act and
blue sky laws applicable to the public offering of the
Shares by the several Underwriters and clearance of such
offering with the National Association of Securities
Dealers, Inc. ("NASD"). This Agreement has been duly
executed and delivered by the Company.
(h) The accountants who have expressed their
opinions with respect to certain of the financial
statements and schedules included in the Registration
Statement are independent accountants as required by the
1933 Act.
(i) The consolidated financial statements and
schedules of the Company included in the Registration
Statement present fairly the consolidated financial
position of the Company as of the respective dates of
such financial statements, and the consolidated results<PAGE>
<PAGE>
of operations and cash flows of the Company for the
respective periods covered thereby, all in conformity
with generally accepted accounting principles
consistently applied throughout the periods involved,
except as disclosed in the Prospectus; and the supporting
schedules included in the Registration Statement present
fairly the information required to be stated therein.
The financial information set forth in the Prospectus
under "Selected Consolidated Financial Data" presents
fairly on the basis stated in the Prospectus, the
information set forth therein.
The pro forma financial statements and other
pro forma information included in the Prospectus present
fairly the information shown therein, have been prepared
in accordance with generally accepted accounting
principles and the Commission's rules and guidelines with
respect to pro forma financial statements and other pro
forma information, have been properly compiled on the pro
forma basis described therein, and, in the opinion of the
Company, the assumptions used in the preparation thereof
are reasonable and the adjustments used therein are
appropriate under the circumstances.
(j) Neither the Company nor any subsidiary is
in violation of its charter or in default under any
consent decree, or in default with respect to any
material provision of any lease, loan agreement,
franchise, license, permit or other contract obligation
to which it is a party; and there does not exist any
state of facts which constitutes an event of default as
defined in such documents or which, with notice or lapse
of time or both, would constitute such an event of
default, in each case, except for defaults which neither
singly nor in the aggregate are material to the Company
and its subsidiaries taken as a whole.
(k) There are no material legal or
governmental proceedings pending, or to the Company's
knowledge, threatened to which the Company or any
subsidiary is or may be a party or of which material
property owned or leased by the Company or any subsidiary
is or may be the subject, or related to environmental or
discrimination matters which are not disclosed in the
Prospectus, or which question the validity of this
Agreement or the Pricing Agreement or any action taken or
to be taken pursuant hereto or thereto.
(l) There are no holders of securities of the
Company having rights to registration thereof or
preemptive rights to purchase Common Stock except as
disclosed in the Prospectus. Holders of registration
rights who are not Selling Stockholders (or who are
Selling Stockholders, but who are not selling in<PAGE>
<PAGE>
accordance with such rights) have waived such rights with
respect to the offering being made by the Prospectus.
(m) The Company and each of its subsidiaries
have good and marketable title to all the properties and
assets reflected as owned in the financial statements
hereinabove described (or elsewhere in the Prospectus),
subject to no lien, mortgage, pledge, charge or
encumbrance of any kind except those, if any, reflected
in such financial statements (or elsewhere in the
Prospectus) or which are not material to the Company and
its subsidiaries taken as a whole. The Company and each
of its subsidiaries hold their respective leased
properties which are material to the Company and its
subsidiaries taken as a whole under valid and binding
leases.
(n) The Company has not taken and will not
take, directly or indirectly, any action designed to or
which has constituted or which might reasonably be
expected to cause or result, under the Exchange Act or
otherwise, in stabilization or manipulation of the price
of any security of the Company to facilitate the sale or
resale of the Shares.
(o) Subsequent to the respective dates as of
which information is given in the Registration Statement
and Prospectus, and except as contemplated by the
Prospectus, the Company and its subsidiaries, taken as a
whole, have not incurred any material liabilities or
obligations, direct or contingent, nor entered into any
material transactions not in the ordinary course of
business and there has not been any material adverse
change in their condition (financial or otherwise) or
results of operations nor any material change in their
capital stock, short-term debt or long-term debt.
(p) The Company agrees not to sell, contract
to sell or otherwise dispose of any Common Stock or
securities convertible into Common Stock (except Common
Stock issued upon exercise of currently outstanding
options, warrants or convertible securities in accordance
with their terms) for a period of 180 days after this
Agreement becomes effective without the prior written
consent of the Representatives. The Company has obtained
similar agreements from each of its officers and
directors.
(q) There is no document of a character
required to be described in the Registration Statement or
the Prospectus or to be filed as an exhibit to the
Registration Statement which is not described or filed as
required.<PAGE>
<PAGE>
(r) The Company together with its subsidiaries
owns and possesses all right, title and interest in and
to, or has duly licensed from third parties, all patents,
patent rights, trade secrets, inventions, know-how,
trademarks, trade names, copyrights, service marks and
other proprietary rights ("Trade Rights") material to the
business of the Company and each of its subsidiaries
taken as a whole. Neither the Company nor any of its
subsidiaries has received any notice of infringement,
misappropriation or conflict from any third party as to
such material Trade Rights which has not been resolved or
disposed of and neither the Company nor any of its
subsidiaries has infringed, misappropriated or otherwise
conflicted with material Trade Rights of any third
parties, which infringement, misappropriation or conflict
would have a material adverse effect upon the condition
(financial or otherwise) or results of operations of the
Company and its subsidiaries taken as a whole.
(s) The conduct of the business of the Company
and each of its subsidiaries is in compliance in all
respects with applicable federal, state, local and
foreign laws and regulations, except where the failure to
be in compliance would not have a material adverse effect
upon the condition (financial or otherwise) or results of
operations of the Company and its subsidiaries taken as a
whole.
(t) All offers and sales of the Company's
capital stock prior to the date hereof were duly
registered with or the subject of an available exemption
from the registration requirements of the 1933 Act and
the applicable state securities or blue sky laws.
(u) The Company has filed all necessary
federal and state income and franchise tax returns and
has paid all taxes shown as due thereon, and there is no
tax deficiency that has been, or to the knowledge of the
Company might be, asserted against the Company or any of
its properties or assets that would or could be expected
to have a material adverse affect upon the condition
(financial or otherwise) or results of operations of the
Company and its subsidiaries taken as a whole.
(v) A registration statement relating to the
Common Stock has been declared effective by the
Commission pursuant to the Exchange Act and the Common
Stock is duly registered thereunder.
(w) The Company is not, and does not intend to
conduct its business in a manner in which it would
become, an "investment company" as defined in Section
3(a) of the Investment Company Act of 1940, as amended
("Investment Company Act").<PAGE>
<PAGE>
(x) The Company confirms as of the date hereof
that it is in compliance with all provisions of Section 1
of Laws of Florida, Chapter 92-198, An Act Relating to
Disclosure of Doing Business with Cuba, and the Company
further agrees that if it commences engaging in business
with the government of Cuba or with any person or
affiliate located in Cuba after the date the Registration
Statement becomes or has become effective with the
Commission or with the Florida Department of Banking and
Finance ("Department"), whichever date is later, or if
the information reported in the Prospectus, if any,
concerning the Company's business with Cuba or with any
person or affiliate located in Cuba changes in any
material way, the Company will provide the Department
notice of such business or change, as appropriate, in a
form acceptable to the Department.
(y) The Company's board of directors has
approved the proposed conversion of all outstanding
shares Series A Cumulative Convertible Preferred Stock
into shares Common Stock on a share-for-share basis at
the next annual meeting of the Company and has authorized
the Company's officers to take all other steps required
to complete such conversion.
Section 3. Representations, Warranties and
Covenants of the Selling Stockholders.
(a) Each Selling Stockholder severally and not
jointly represents and warrants to, and agrees with, the
Company and the Underwriters that:
(i) Such Selling Stockholder (other than
Jericho State Capital Corp., SBK Investment Partners and
Messrs. H. Klaris, G. Chwatt, R. Chwatt, W. Forster and
A. LaSorte, who as of the date of this Agreement have
good and valid title to the warrants exercisable for
Shares to be sold by them, other than Olin Corporation,
in respect of Shares to be sold by it subject to option,
which as of the date of this Agreement has good and valid
title to the option exercisable for such Shares and other
than Steven E. Geller, in respect of the Shares
underlying the Halco Option) has, and on the First
Closing Date or the Second Closing Date hereinafter
defined, as the case may be, such Selling Stockholder
will have, good and valid title to the Shares proposed to
be sold by such Selling Stockholder hereunder on such
date, free and clear of all voting trust arrangements,
liens, encumbrances, equities, claims and community
property rights (other than any created by the Custody
Agreement and Power of Attorney (as defined)) and full
right, power and authority to enter into this Agreement
and the Pricing Agreement and to sell, assign, transfer
and deliver such Shares hereunder, and upon delivery of<PAGE>
<PAGE>
and payment for such Shares hereunder, the Underwriters
will acquire good and valid title thereto, free and clear
of all voting trust arrangements, liens, encumbrances,
equities, claims and community property rights (assuming
the Underwriters are bona fide purchasers) other than any
arising as a result of the Underwriters' actions.
(ii) The making and performance by such
Selling Stockholder, if it is not an individual, of this
Agreement have been duly authorized by all necessary
action (corporate or otherwise) and (A) will not violate
any provision of such Selling Stockholder's charter,
bylaws, partnership agreement, or trust agreement, as the
case may be, and (B) will not result in the breach, or be
in contravention, of any provision of any agreement,
franchise, license, indenture, mortgage, deed of trust,
or other instrument to which such Selling Stockholder or
any subsidiary thereof is a party or by which such
Selling Stockholder, any subsidiary thereof or the
property of any of them may be bound or affected, or any
order, rule or regulation applicable to such Selling
Stockholder or any such subsidiary of any court or
regulatory body, administrative agency or other
governmental body having jurisdiction over such Selling
Stockholder or any such subsidiary or any of their
respective properties, or any order of any court or
governmental agency or authority entered in any
proceeding to which such Selling Stockholder or any such
subsidiary was or is now a party or by which it is bound,
and which, in the case of clause (B) above, would have a
material adverse effect on such Selling Stockholder's
ability to perform its obligations under this Agreement.
No consent, approval, authorization or other order of any
court, regulatory body, administrative agency or other
governmental body is required for the execution and
delivery of this Agreement or the Pricing Agreement by
such Selling Stockholder or the consummation of the
transactions contemplated herein or therein by such
Selling Stockholder, except for compliance with the 1933
Act and blue sky laws applicable to the public offering
of the Shares by the several Underwriters and clearance
of such offering with the NASD. This Agreement has been
duly executed and delivered by such Selling Stockholder.
(iii) Such Selling Stockholder has not
taken and will not take, directly or indirectly, any
action designed to or which might be reasonably expected
to cause or result, under the Exchange Act or otherwise,
in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale
of the Shares.
(iv) Such Selling Stockholder has executed
and delivered a Custody Agreement and Power of Attorney<PAGE>
<PAGE>
("Custody Agreement and Power of Attorney") among the
Selling Stockholder, American Stock Transfer & Trust
Company, as custodian ( Custodian ), Steven E. Geller,
and Marvin Smollar (collectively, the "Agents"), naming
the Agents as such Selling Stockholder's
attorneys-in-fact (and, by the execution by any Agent of
this Agreement, such Agent hereby represents and warrants
that he has been duly appointed as attorney-in-fact by
the Selling Stockholders pursuant to the Custody
Agreement and Power of Attorney) for the purpose of
entering into and carrying out this Agreement and the
Pricing Agreement, and the Custody Agreement and Power of
Attorney has been duly executed by such Selling
Stockholder and a copy thereof has been delivered to you.
(v) Such Selling Stockholder (other than
Jericho State Capital Corp., SBK Investment Partners and
Messrs. H. Klaris, G. Chwatt, R. Chwatt, W. Forster and
A. LaSorte, and other than Olin Corporation, in respect
of Shares to be sold by it subject to option) further
represents, warrants and agrees that such Selling
Stockholder has deposited in custody with the Custodian
under the Custody Agreement and Power of Attorney
certificates in negotiable form for the Shares to be sold
hereunder by such Selling Stockholder for the purpose of
further delivery pursuant to this Agreement. Each of
Olin Corporation, in respect of Shares to be sold by it
subject to option, and Jericho State Capital Corp., SBK
Investment Partners and Messrs. H. Klaris, G. Chwatt, R.
Chwatt, W. Forster and A. LaSorte further represents,
warrants and agrees that it has delivered to the Company
an irrevocable exercise notice to subscribe for the full
number of Shares subject to the option or warrant (as the
case may be) currently owned by such person to acquire
Shares from the Company (or, if less, the total number of
Shares to be sold by such person to the Underwriters as
set forth on Schedule B), with such subscription to be
effective on the First Closing Date immediately prior to
the purchase of the Firm Shares by the Underwriters
hereunder, and each such person has deposited in custody
with the Custodian under the Custody Agreement and Power
of Attorney certificates in negotiable form for the
warrants so exercised by it, for the purpose of further
delivery pursuant to this Agreement.
(vi) Such Selling Stockholder agrees that
the Shares to be sold by such Selling Stockholder on
deposit with the Custodian (or issuable upon exercise of
the warrants on deposit with the Custodian), including
the Halco Option, are subject to the interests of the
Company, the Underwriters and the other Selling
Stockholders, that the arrangements made for such
custody, and the appointment of the Agents pursuant to
the Custody Agreement and Power of Attorney, are to that<PAGE>
<PAGE>
extent irrevocable, and that the obligations of such
Selling Stockholder hereunder and under the Custody
Agreement and Power of Attorney shall not be terminated
except as provided in this Agreement or the Custody
Agreement and Power of Attorney by any act of such
Selling Stockholder, by operation of law, whether, in the
case of an individual Selling Stockholder, by the death
or incapacity of such Selling Stockholder or, in the case
of a trust or estate, by the death of the trustee or
trustees or the executor or executors or the termination
of such trust or estate, or, in the case of a partnership
or corporation, by the dissolution, winding-up or other
event affecting the legal life of such entity, or by the
occurrence of any other event. If any individual Selling
Stockholder, trustee or executor should die or become
incapacitated, or any such trust, estate, partnership or
corporation should be terminated, or if any other event
should occur before the delivery of the Shares hereunder,
the documents evidencing Shares then on deposit with the
Custodian (or issuable upon exercise of the option or
warrants on deposit with the Custodian) shall be
delivered by the Custodian in accordance with the terms
and conditions of this Agreement as if such death,
incapacity, termination or other event had not occurred,
regardless of whether or not the Custodian shall have
received notice thereof. Each Agent has been authorized
by such Selling Stockholder to execute and deliver this
Agreement and the Pricing Agreement and the Custodian has
been authorized to receive and acknowledge receipt of the
proceeds of sale of the Shares to be sold by such Selling
Stockholder against delivery thereof and otherwise act on
behalf of such Selling Stockholder as provided in the
Custody Agreement and Power of Attorney.
(vii) Such Selling Stockholder agrees
with the Company and the Underwriters not to sell,
contract to sell or otherwise dispose of any Common Stock
for a period of 180 days after this Agreement becomes
effective without the prior written consent of the
Representatives, except that Smedley Industries, Inc. may
transfer, pursuant to a plan of reorganization under the
United States Bankruptcy Code, all Common Stock held by
it to a liquidating trust which agrees to be bound by the
terms of this Section 3(a)(vii).
(b) Each Selling Stockholder listed on
Schedule B-1 severally represents and warrants to, and
agrees with, the Company and the Underwriters that at the
time of effectiveness, and at all times subsequent
thereto, up to the First Closing Date or the Second
Closing Date hereinafter defined, as the case may be, (i)
such parts of the Registration Statement and the
Prospectus and any amendments or supplements thereto as
relate to such Selling Stockholder, and the Registration<PAGE>
<PAGE>
Statement and the Prospectus and any amendments or
supplements thereto, to the knowledge of such Selling
Stockholder in all other respects, contained or will
contain all statements that are required to be stated
therein in accordance with the 1933 Act and in all
material respects conformed or will in all material
respects conform to the requirements of the 1933 Act, and
(ii) neither the Registration Statement nor the
Prospectus, nor any amendment or supplement thereto, as
it relates to such Selling Stockholder, and, to the
knowledge of such Selling Stockholder in all other
respects, included or will include any untrue statement
of a material fact or omitted or will omit to state any
material fact required to be stated therein or necessary
to make the statements therein not misleading; provided
that neither clause (i) nor (ii) shall have any effect if
information has been given by such Selling Stockholder to
the Company and the Representatives in writing which
would eliminate or remedy any such untrue statement or
omission.
(c) Each Selling Stockholder listed on
Schedule B-2 severally represents and warrants to, and
agrees with, the Company and the Underwriters that at the
time of effectiveness, and at all times subsequent
thereto, up to the First Closing Date or the Second
Closing Date hereinafter defined, as the case may be,
neither the Registration Statement nor the Prospectus,
nor any amendment or supplement thereto, solely as it
relates to information regarding such Selling Stockholder
included under the caption "Principal and Selling
Stockholders" or other information relating to such
Selling Stockholder furnished in writing to the Company
or the Underwriters by such Selling Stockholder (or by
its agents or attorneys) specifically for use in the
preparation of the Registration Statement, the Prospectus
or any amendment or supplement thereto, included or will
include any untrue statement of a material fact or
omitted or will omit to state any material fact required
to be stated therein or necessary to make the statements
therein not misleading; provided that the foregoing shall
have no effect if information has been given by such
Selling Stockholder to the Company and the
Representatives in writing which would eliminate or
remedy any such untrue statement or omission.
(d) Steven Geller represents and warrants to,
and agrees with, the Underwriters that he has, and on the
First Closing Date will have, good and valid title to the
Halco Option proposed to be sold by such Selling
Stockholder hereunder on such date, free and clear of all
voting trust arrangements, liens, encumbrances, equities,
claims and community property rights (other than any
created by the Custody Agreement and Power of Attorney)<PAGE>
<PAGE>
and full right, power and authority to enter into this
Agreement and to sell, assign, transfer and deliver the
Halco Option hereunder, and upon delivery of and payment
for the Halco Option hereunder, the Underwriters will
acquire good and valid title thereto, free and clear of
all voting trust arrangements, liens, encumbrances,
equities, claims and community property rights (assuming
the Underwriters are bona fide purchasers) other than any
arising as a result of the Underwriters' actions.
(e) To the best of his or its knowledge, each
of Steven Geller and The Iridium Trust severally
represents and warrants to the Underwriters to the same
effect as the representations and warranties of the
Company set forth in Section 2 of this Agreement.
(f) To the best of his knowledge, Marvin
Smollar represents and warrants to the Underwriters to
the same effect as the representations and warranties of
the Company set forth in Section 2 of this Agreement and
to the same effect as the representations and warranties
of The Iridium Trust set forth in Section 3 of this
Agreement.
In order to document the Underwriter's
compliance with the reporting and withholding provisions
of the Internal Revenue Code of 1986, as amended, with
respect to the transactions herein contemplated, each of
the Selling Stockholders agrees to deliver to you prior
to or on the First Closing Date, as hereinafter defined,
a properly completed and executed United States Treasury
Department Form W-8 or W-9 (or other applicable form of
statement specified by Treasury Department regulations in
lieu thereof).
Section 4. Representations and Warranties
of the Underwriters. The Representatives, on behalf of
the several Underwriters, represent and warrant to the
Company and the Selling Stockholders that the information
set forth (a) on the cover page of the Prospectus with
respect to price, underwriting discount and terms of the
offering and (b) under "Underwriting" in the Prospectus
was furnished to the Company by and on behalf of the
Underwriters for use in connection with the preparation
of the Registration Statement and is correct and complete
in all material respects.
Section 5. Purchase, Sale and Delivery of
Shares and Halco Option. On the basis of the
representations, warranties and agreements herein
contained, but subject to the terms and conditions herein
set forth, the Company and the Selling Stockholders,
severally and not jointly, agree to sell to the
Underwriters named in Schedule A hereto, and the<PAGE>
<PAGE>
Underwriters agree, severally and not jointly, to
purchase from the Company and the Selling Stockholders,
respectively, 1,400,000 Firm Shares from the Company and
the respective number of Firm Shares or the Halco Option
to purchase the number of Halco Option Firm Shares set
forth opposite the names of the Selling Stockholders in
Schedule B hereto at the price per Share set forth in the
Pricing Agreement or the price per Halco Option Firm
Share (in the case of the Halco Option) set forth in the
Pricing Agreement, as the case may be. The obligation of
each Underwriter to the Company shall be to purchase from
the Company that number of full Shares which (as nearly
as practicable, as determined by you) bears to 1,400,000,
the same proportion as the number of Shares set forth
opposite the name of such Underwriter in Schedule A
hereto bears to the total number of Firm Shares to be
purchased by all Underwriters under this Agreement. The
obligation of each Underwriter to each Selling
Stockholder shall be to purchase from such Selling
Stockholder the number of full Shares or that portion of
the Halco Option to purchase the number of Halco Option
Firm Shares which (as nearly as practicable, as
determined by you) bears to that number of Firm Shares
set forth opposite the name of such Selling Stockholder
in Schedule B hereto, the same proportion as the number
of Shares set forth opposite the name of such Underwriter
in Schedule A hereto bears to the total number of Firm
Shares to be purchased by all Underwriters under this
Agreement. The initial public offering price and the
purchase price shall be set forth in the Pricing
Agreement.
At 9:00 A.M., Chicago Time, on the fourth
business day, if permitted under Rule 15c6-1 under the
Exchange Act, (or the third business day if required
under Rule 15c6-1 under the Exchange Act or unless
postponed in accordance with the provisions of Section
12) following the date the Registration Statement becomes
effective (or, if the Company has elected to rely upon
Rule 430A, the fourth business day, if permitted under
Rule 15c6-1 under the Exchange Act, (or the third
business day if required under Rule 15c6-1 under the
Exchange Act) after execution of the Pricing Agreement),
or such other time not later than ten business days after
such date as shall be agreed upon by the Representatives
and the Company, the Company and the Custodian will
deliver to you at the offices of counsel for the
Underwriters or through the facilities of The Depository
Trust Company for the accounts of the several
Underwriters, certificates representing the Firm Shares
to be sold by the Company and the Firm Shares to be sold
by the Selling Stockholders, against payment of the
purchase price therefor by delivery of federal or other
immediately available funds, by wire transfer or<PAGE>
<PAGE>
otherwise, to the Company and the Custodian. Such time
of delivery and payment is herein referred to as the
"First Closing Date." The certificates for the Firm
Shares so to be delivered will be in such denominations
and registered in such names as you request by notice to
the Company and the Custodian prior to 10:00 A.M.,
Chicago Time, on the second business day preceding the
First Closing Date, and will be made available at the
Company's expense for checking and packaging by the
Representatives at 10:00 A.M., Chicago Time, on the
business day preceding the First Closing Date. Payment
for the Firm Shares so to be delivered shall be made at
the time and in the manner described above at the offices
of counsel for the Underwriters.
In addition, on the basis of the
representations, warranties and agreements herein
contained, but subject to the terms and conditions herein
set forth, the Company and certain of the Selling
Stockholders hereby grant an option to the several
Underwriters to purchase, severally and not jointly, up
to an aggregate of 128,586 Option Shares and 340,000
Option Shares, respectively, at the same purchase price
per share to be paid for the Firm Shares, for use solely
in covering any overallotments made by the Underwriters
in the sale and distribution of the Firm Shares. The
option granted hereunder may be exercised at any time
(but not more than once) within 30 days after the date of
the initial public offering upon notice by you to the
Company and the Agents setting forth the aggregate number
of Option Shares as to which the Underwriters are
exercising the option, the names and denominations in
which the certificates for such shares are to be
registered and the time and place at which such
certificates will be delivered. Such time of delivery
(which may not be earlier than the First Closing Date),
being herein referred to as the "Second Closing Date,"
shall be determined by you, but if at any time other than
the First Closing Date, shall not be earlier than three
nor later than 10 full business days after delivery of
such notice of exercise. The number of Option Shares to
be purchased from each such Selling Stockholder is set
forth in Schedule B hereto. The Option Shares to be
purchased by the Underwriters from the Company and each
Selling Stockholder as set forth on Schedule B, if less
than all Option Shares are purchased, shall be purchased
in the following order: the first 100,000 of such Option
Shares shall be purchased from The Iridium Trust; the
next 40,000 aggregate number of such Option Shares shall
be purchased from WPG Corporate Development Associates
IV, L.P., WPG Corporate Development Associates IV
(Overseas), L.P., Westpool plc and Glenbrook Partners in
the same proportion that the total number of Option
Shares proposed to be sold by such person bears to the<PAGE>
<PAGE>
total number of Option Shares to be purchased by all such
persons; the next 100,000 of such Option Shares shall be
purchased from Steven E. Geller; the next 50,000
aggregate number of such Option Shares shall be purchased
from WPG Corporate Development Associates IV, L.P., WPG
Corporate Development Associates IV (Overseas), L.P.,
Westpool plc and Glenbrook Partners in the same
proportion that the total number of Option Shares
proposed to be sold by such person bears to the total
number of Option Shares to be purchased by all such
persons; the next 50,000 of such Option Shares shall be
purchased from The Iridium Trust; and the remaining
128,586 of such Option Shares shall be purchased from the
Company. The number of Option Shares to be purchased by
each Underwriter shall be determined by multiplying the
number of Option Shares to be sold by the Company and the
Selling Stockholders pursuant to such notice of exercise
by a fraction, the numerator of which is the number of
Firm Shares to be purchased by such Underwriter as set
forth opposite its name in Schedule A and the denominator
of which is the total number of Firm Shares (subject to
such adjustments to eliminate any fractional share
purchases as you in your absolute discretion may make).
Certificates for the Option Shares will be made available
at the Company's expense for checking and packaging at
10:00 A.M., Chicago Time, on the business day preceding
the Second Closing Date. The manner of payment for and
delivery of the Option Shares shall be the same as for
the Firm Shares as specified in the preceding paragraph.
You have advised the Company and the Selling
Stockholders that each Underwriter has authorized you to
accept delivery of its Shares, to make payment and to
receipt therefor. You, individually and not as the
Representatives of the Underwriters, may make payment for
any Shares to be purchased by any Underwriter whose funds
shall not have been received by you by the First Closing
Date or the Second Closing Date, as the case may be, for
the account of such Underwriter, but any such payment
shall not relieve such Underwriter from any obligation
hereunder.
Section 6. Covenants of the Company. The
Company covenants and agrees that:
(a) The Company will advise you and the
Selling Stockholders promptly of the issuance by the
Commission of any stop order suspending the effectiveness
of the Registration Statement or of the institution of
any proceedings for that purpose, or of any notification
of the suspension of qualification of the Shares for sale
in any jurisdiction or the initiation or threatening of
any proceedings for that purpose, and will also advise
you and the Selling Stockholders promptly of any request<PAGE>
<PAGE>
of the Commission for amendment or supplement of the
Registration Statement or of the Prospectus, or for
additional information.
(b) The Company will give you and the Selling
Stockholders notice of its intention to file or prepare
any amendment to the Registration Statement (including
any post-effective amendment) or any Rule 462(b)
Registration Statement or any amendment or supplement to
the Prospectus (including any revised prospectus which
the Company proposes for use by the Underwriters in
connection with the offering of the Shares which differs
from the prospectus on file at the Commission at the time
the Registration Statement became or becomes effective,
whether or not such revised prospectus is required to be
filed pursuant to Rule 424(b) and any term sheet as
contemplated by Rule 434) and will furnish you and the
Selling Stockholders with copies of any such amendment or
supplement a reasonable amount of time prior to such
proposed filing or use, as the case may be, and will not
file any such amendment or supplement or use any such
prospectus to which you or counsel for the Underwriters
shall reasonably object.
(c) If the Company elects to rely on Rule 434
of the 1933 Act, the Company will prepare a term sheet
that complies with the requirements of Rule 434. If the
Company elects not to rely on Rule 434, the Company will
provide the Underwriters with copies of the form of
prospectus, in such numbers as the Underwriters may
reasonably request, and file with the Commission such
prospectus in accordance with Rule 424(b) of the 1933 Act
by the close of business in New York City on the second
business day immediately succeeding the date of the
Pricing Agreement. If the Company elects to rely on Rule
434, the Company will provide the Underwriters with
copies of the form of Rule 434 Prospectus, in such
numbers as the Underwriters may reasonably request, by
the close of business in New York on the business day
immediately succeeding the date of the Pricing Agreement.
(d) If at any time when a prospectus relating
to the Shares is required to be delivered under the 1933
Act any event occurs as a result of which the Prospectus,
including any amendments or supplements, would include an
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, in the light of the
circumstances under which they were made, not misleading,
or if it is necessary at any time to amend the
Prospectus, including any amendments or supplements
thereto and including any revised prospectus which the
Company proposes for use by the Underwriters in
connection with the offering of the Shares which differs<PAGE>
<PAGE>
from the prospectus on file with the Commission at the
time of effectiveness of the Registration Statement,
whether or not such revised prospectus is required to be
filed pursuant to Rule 424(b) to comply with the 1933
Act, the Company promptly will advise you thereof and
will promptly prepare and file with the Commission an
amendment or supplement which will correct such statement
or omission or an amendment which will effect such
compliance; and, in case any Underwriter is required to
deliver a prospectus nine months or more after the
effective date of the Registration Statement, the Company
upon request, but at the expense of such Underwriter,
will prepare promptly such prospectus or prospectuses as
may be necessary to permit compliance with the
requirements of Section 10(a)(3) of the 1933 Act.
(e) Neither the Company nor any of its
subsidiaries will, prior to the earlier of the Second
Closing Date or termination or expiration of the related
option, incur any liability or obligation, direct or
contingent, or enter into any material transaction, other
than in the ordinary course of business, except as
contemplated by the Prospectus.
(f) Neither the Company nor any of its
subsidiaries will acquire any capital stock of the
Company prior to the earlier of the Second Closing Date
or termination or expiration of the related option nor
will the Company declare or pay any dividend or make any
other distribution upon the Common Stock payable to
stockholders of record on a date prior to the earlier of
the Second Closing Date or termination or expiration of
the related option, except in either case as contemplated
by the Prospectus.
(g) As soon as practicable, the Company will
make generally available to its security holders an
earnings statement (which need not be audited) covering a
period of at least 12 months beginning after the
effective date of the Registration Statement, which will
satisfy the provisions of the last paragraph of Section
11(a) of the 1933 Act.
(h) During such period as a prospectus is
required by law to be delivered in connection with offers
and sales of the Shares by an Underwriter or dealer, the
Company will furnish to you at its expense, subject to
the provisions of subsection (d) hereof, copies of the
Registration Statement, the Prospectus and all amendments
and supplements to any such documents in each case as
soon as available and in such quantities as you may
reasonably request, for the purposes contemplated by the
1933 Act.<PAGE>
<PAGE>
(i) The Company will cooperate with the
Underwriters in qualifying or registering the Shares for
sale under the blue sky laws of such jurisdictions as you
designate, and will continue such qualifications in
effect so long as reasonably required for the
distribution of the Shares. The Company shall not be
required to qualify as a foreign corporation or to file a
general consent to service of process in any such
jurisdiction where it is not currently qualified or where
it would be subject to taxation as a foreign corporation.
(j) During the period of five years hereafter,
the Company will furnish you, as representatives of the
Underwriters, with a copy (i) as soon as practicable
after the filing thereof, of each report filed by the
Company with the Commission; (ii) as soon as practicable
after the release thereof, of each material press release
in respect of the Company; and (iii) as soon as
available, of each report of the Company mailed to
stockholders.
(k) The Company will use the net proceeds
received by it from the sale of the Shares being sold by
it in the manner specified in the Prospectus.
(l) If, at the time of effectiveness of the
Registration Statement, any information shall have been
omitted therefrom in reliance upon Rule 430A and/or Rule
434, then immediately following the execution of the
Pricing Agreement, the Company will prepare, and file or
transmit for filing with the Commission in accordance
with such Rule 430A, Rule 424(b) and/or Rule 434, copies
of an amended Prospectus, or, if required by such Rule
430A and/or Rule 434, a post-effective amendment to the
Registration Statement (including an amended Prospectus),
containing all information so omitted. If required, the
Company will prepare and file, or transmit for filing, a
Rule 462(b) Registration Statement not later than the
date of the execution of the Pricing Agreement. If a
Rule 462(b) Registration Statement is filed, the Company
shall make payment of, or arrange for payment of, the
additional registration fee owing to the Commission
required by Rule 111.
(m) The Company will comply with all
registration, filing and reporting requirements of the
American Stock Exchange or any other exchange or market
on which the Shares are listed for trading.
(n) The Company will use its best efforts to
cause the conversion of the outstanding shares of its
Series A Cumulative Convertible Preferred Stock into
shares of Common Stock on a share-for-share basis at the
next annual meeting of the Company.<PAGE>
<PAGE>
(o) The Company will issue and deliver on the
First Closing Date the Shares to be sold by the Company
to the Selling Stockholders upon the exercise of
outstanding options and warrants on the First Closing
Date.
Section 7. Payment of Expenses. Whether or
not the transactions contemplated hereunder are
consummated or this Agreement becomes effective as to all
of its provisions or is terminated, the Company agrees to
pay (i) all costs, fees and expenses (other than legal
fees and disbursements of counsel for the Underwriters
and the expenses incurred by the Underwriters) incurred
in connection with the performance of the Company's
obligations hereunder, including without limiting the
generality of the foregoing, all fees and expenses of
legal counsel for the Company and of the Company's
independent accountants, all costs and expenses incurred
in connection with the preparation, printing, filing and
distribution of the Registration Statement and the
Prospectus (including all exhibits and financial
statements) and all amendments and supplements provided
for herein, this Agreement, the Pricing Agreement and the
Blue Sky Memorandum, (ii) all costs, fees and expenses
(including legal fees not to exceed $15,000 and
disbursements of counsel for the Underwriters) incurred
by the Underwriters in connection with qualifying or
registering all or any part of the Shares for offer and
sale under blue sky laws, including the preparation of a
blue sky memorandum relating to the Shares and clearance
of such offering with the NASD; and (iii) all fees and
expenses of the Company's transfer agent, printing of the
certificates for the Shares and all transfer taxes, if
any, with respect to the sale and delivery of the Shares
to the several Underwriters.
The provisions of this Section shall not affect
any agreement which the Company and the Selling
Stockholders may make for the allocation or sharing of
such expenses and costs.
Section 8. Conditions of the Obligations of
the Underwriters. The obligations of the several
Underwriters to purchase and pay for the Firm Shares and
the Halco Option on the First Closing Date and the Option
Shares on the Second Closing Date shall be subject to the
accuracy of the representations and warranties on the
part of the Company and the Selling Stockholders herein
set forth as of the date hereof and as of the First
Closing Date or the Second Closing Date, as the case may
be, to the accuracy of the statements of officers of the
Company made pursuant to the provisions hereof, to the
performance by the Company and the Selling Stockholders
of their respective obligations hereunder, and to the<PAGE>
<PAGE>
following additional conditions:
(a) The Registration Statement shall have
become effective either prior to the execution of this
Agreement or not later than 8:30 A.M., Chicago Time, on
the first full business day after the date of this
Agreement, or such later time as shall have been
consented to by you but in no event later than 1:00 P.M.,
Chicago Time, on the third full business day following
the date hereof; and prior to the First Closing Date or
the Second Closing Date, as the case may be, no stop
order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for
that purpose shall have been instituted or shall be
pending or, to the knowledge of the Company, the Selling
Stockholders or you, shall be contemplated by the
Commission. If the Company has elected to rely upon Rule
430A and/or Rule 434, the information concerning the
initial public offering price of the Shares and
price-related information shall have been transmitted to
the Commission for filing pursuant to Rule 424(b) within
the prescribed period and the Company will provide
evidence satisfactory to the Representatives of such
timely filing (or a post-effective amendment providing
such information shall have been filed and declared
effective in accordance with the requirements of Rules
430A and 424(b)). If a Rule 462(b) Registration
Statement is required, such Registration Statement shall
have been transmitted to the Commission for filing and
become effective within the prescribed time period and,
prior to the First Closing Date, the Company shall have
provided evidence of such filing and effectiveness in
accordance with Rule 462(b).
(b) The Shares shall have been qualified for
sale under the blue sky laws of such states as shall have
been specified by the Representatives.
(c) The legality and sufficiency of the
authorization, issuance and sale or transfer and sale of
the Shares hereunder, the validity and form of the
certificates representing the Shares, the execution and
delivery of this Agreement and the Pricing Agreement, and
all corporate proceedings and other legal matters
incident thereto, and the form of the Registration
Statement and the Prospectus (except financial
statements) shall have been approved by counsel for the
Underwriters exercising reasonable judgment.
(d) You shall not have advised the Company
that the Registration Statement or the Prospectus or any
amendment or supplement thereto, contains an untrue
statement of fact, which, in the opinion of counsel for
the Underwriters, is material or omits to state a fact<PAGE>
<PAGE>
which, in the opinion of such counsel, is material and is
required to be stated therein or necessary to make the
statements therein not misleading.
(e) Subsequent to the execution and delivery
of this Agreement, there shall not have occurred any
change, or any development involving a prospective
change, in or affecting particularly the business or
properties of the Company or its subsidiaries, whether or
not arising in the ordinary course of business, which, in
the judgment of the Representatives, makes it impractical
or inadvisable to proceed with the public offering or
purchase of the Shares as contemplated hereby.
(f) There shall have been furnished to you, as
Representatives of the Underwriters, on the First Closing
Date or the Second Closing Date, as the case may be,
except as otherwise expressly provided below:
(i) An opinion of Schwartz & Freeman, counsel
for the Company and for Messrs. Geller, Young, Bulkley
and Katz, addressed to the Underwriters and dated the
First Closing Date or the Second Closing Date, as the
case may be, to the effect that:
(1) the Company has been duly incorporated and
is validly existing as a corporation in good standing
under the laws of the State of Delaware with corporate
power and authority to own its properties and conduct its
business as described in the Prospectus; and the Company
has been duly qualified to do business as a foreign
corporation under the corporation law of, and is in good
standing as such in, every jurisdiction where the
ownership or leasing of property, or the conduct of its
business requires such qualification except where the
failure so to qualify would not have a material adverse
effect upon the condition (financial or otherwise) or
results of operations of the Company and its subsidiaries
taken as a whole;
(2) an opinion to the same general effect as
clause (1) of this subparagraph (i) in respect of each
significant subsidiary of the Company (other than Marchon
Toys Limited, as to which no opinion need be given);
(3) all of the issued and outstanding capital
stock of each significant subsidiary of the Company
(other than Marchon Toys Limited, as to which no opinion
need be given) has been duly authorized, validly issued
and is fully paid and nonassessable, and, except as
disclosed in the Registration Statement, the Company owns
directly or indirectly 100 percent of the outstanding
capital stock of each subsidiary, and to the best
knowledge of such counsel, such stock is owned free and<PAGE>
<PAGE>
clear of any claims, liens, encumbrances or security
interests;
(4) the authorized capital stock of the
Company, of which there is outstanding the amount set
forth in the Registration Statement and Prospectus
(except for subsequent issuances, if any, pursuant to
stock options or other rights referred to in the
Prospectus), conforms as to legal matters in all material
respects to the description thereof in the Registration
Statement and Prospectus;
(5) the issued and outstanding capital stock
of the Company (including the Shares acquired by the
Selling Stockholders on the First Closing Date upon
exercise of outstanding options or warrants and including
the Halco Option Firm Shares) has been duly authorized
and validly issued and is fully paid and nonassessable;
(6) the certificates for the Shares to be
delivered hereunder and the Halco Option Firm Shares are
in due and proper form, and when duly countersigned by
the Company's transfer agent and delivered to you or upon
your order against payment of the agreed consideration
therefor in accordance with the provisions of this
Agreement and the Pricing Agreement, the Shares
represented thereby will be duly authorized and validly
issued, fully paid and nonassessable;
(7) the Registration Statement has become
effective under the 1933 Act, and, to the best knowledge
of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the 1933
Act, and the Registration Statement (including the
information deemed to be part of the Registration
Statement at the time of effectiveness pursuant to Rule
430A(b) and/or Rule 434, if applicable), the Prospectus
and each amendment or supplement thereto (except for the
financial statements and other statistical or financial
data included therein as to which such counsel need
express no opinion) comply as to form in all material
respects with the requirements of the 1933 Act; such
counsel have no reason to believe that either the
Registration Statement (including the information deemed
to be part of the Registration Statement at the time of
effectiveness pursuant to Rule 430A(b) and/or Rule 434,
if applicable) or the Prospectus, or the Registration
Statement or the Prospectus as amended or supplemented
(except as aforesaid), as of their respective effective
or issue dates, contained any untrue statement of a
material fact or omitted to state a material fact
required to be stated therein or necessary to make the<PAGE>
<PAGE>
statements therein not misleading or that the Prospectus
as amended or supplemented, if applicable, as of the
First Closing Date or the Second Closing Date, as the
case may be, contained any untrue statement of a material
fact or omitted to state any material fact necessary to
make the statements therein not misleading in light of
the circumstances under which they were made; and such
counsel does not know of any legal or governmental
proceedings pending or threatened required to be
described in the Prospectus which are not described as
required, nor of any contracts or documents of a
character required to be described in the Registration
Statement or Prospectus or to be filed as exhibits to the
Registration Statement which are not described or filed,
as required;
(8) the statements in the Registration
Statement and the Prospectus summarizing statutes, rules
and regulations are accurate and fairly and correctly
present the information required to be presented by the
1933 Act or the rules and regulations thereunder, in all
material respects and such counsel does not know of any
statutes, rules and regulations required to be described
or referred to in the Registration Statement or the
Prospectus that are not described or referred to therein
as required; the statements under the captions
"Management - Executive Compensation," "Certain
Transactions," "Principal and Selling Stockholders,"
"Description of Capital Stock" and "Shares Eligible for
Future Sale" in the Prospectus, insofar as such
statements constitute a summary of documents referred to
therein or matters of law, are accurate summaries and
fairly and correctly present, in all material respects,
the information called for with respect to such documents
and matters;
(9) this Agreement and the Pricing Agreement
and the performance of the Company's obligations
hereunder have been duly authorized by all necessary
corporate action and this Agreement and the Pricing
Agreement have been duly executed and delivered by and on
behalf of the Company, and are legal, valid and binding
agreements of the Company, except as enforceability of
the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws
affecting creditor's rights and by the exercise of
judicial discretion in accordance with general principles
applicable to equitable and similar remedies and except
as to those provisions relating to indemnities for
liabilities arising under the 1933 Act as to which no
opinion need be expressed; and no approval, authorization
or consent of any public board, agency, or
instrumentality of the United States or of any state or
other jurisdiction is necessary in connection with the<PAGE>
<PAGE>
issue or sale of the Shares by the Company pursuant to
this Agreement (other than under the 1933 Act, applicable
blue sky laws and the rules of the NASD) or the
consummation by the Company of any other transactions
contemplated hereby;
(10) the execution and performance of this
Agreement will not contravene any of the provisions of,
or result in a default under, any agreement, franchise,
license, indenture, mortgage, deed of trust, or other
instrument known to such counsel, of the Company or any
of its subsidiaries or by which the property of any of
them is bound and which contravention or default would be
material to the Company and its subsidiaries taken as a
whole; or violate any of the provisions of the charter or
bylaws of the Company or any of its subsidiaries or, so
far as is known to such counsel, violate any statute,
order, rule or regulation of any regulatory or
governmental body having jurisdiction over the Company or
any of its subsidiaries;
(11) to such counsel's knowledge, all offers
and sales of the Company's capital stock since September
30, 1994 were at all relevant times duly registered or
the subject of an available exemption from the
registration requirements of the 1933 Act and the
applicable state securities or blue sky laws;
(12) to such counsel s knowledge, no
Stockholders of the Company have rights to registration
with respect to Common Stock or preemptive rights to
purchase Common Stock except as disclosed in the
Prospectus, and holders of registration rights who are
not Selling Stockholders (or who are Selling
Stockholders, but who are not selling in accordance with
such rights) have waived such rights with respect to the
offering being made by the Prospectus;
(13) the Company is not an "investment company"
or a person "controlled by" an "investment company" within the
meaning of the Investment Company Act.
(14) with respect to each Selling Stockholder,
this Agreement and the Pricing Agreement have been duly
authorized, executed and delivered by or on behalf of
each such Selling Stockholder; the Agents and the
Custodian for each such Selling Stockholder have been
duly and validly authorized to carry out all transactions
contemplated herein on behalf of each such Selling
Stockholder; and the performance of this Agreement and
the Pricing Agreement and the consummation of the
transactions herein contemplated by such Selling
Stockholders will not result in a breach or violation of<PAGE>
<PAGE>
any of the terms and provisions of, or constitute a
default under, any statute, any indenture, mortgage, deed
of trust, note agreement or other agreement or instrument
known to such counsel to which any of such Selling
Stockholders is a party or by which any are bound or to
which any of the property of such Selling Stockholders is
subject, or any order, rule or regulation known to such
counsel of any court or governmental agency or body
having jurisdiction over any of such Selling Stockholders
or any of their properties; and no consent, approval,
authorization or order of any court or governmental
agency or body is required for the consummation of the
transactions contemplated by this Agreement and the
Pricing Agreement in connection with the sale of Shares
to be sold by such Selling Stockholders hereunder, except
such as may be (or, in the case of counsel to the
Company, have been) obtained under the 1933 Act and such
as may be required under applicable blue sky laws in
connection with the purchase and distribution of such
Shares by the Underwriters and the clearance of such
offering with the NASD;
(15) each Selling Stockholder has full right,
power and authority to enter into this Agreement and the
Pricing Agreement and to sell, transfer and deliver the
Shares or the Halco Option to be sold on the First
Closing Date or the Second Closing Date, as the case may
be, by such Selling Stockholder hereunder and good and
valid title to such Shares or Halco Option so sold, free
and clear of all voting trust arrangements, liens,
encumbrances, equities, claims and community property
rights whatsoever, has been transferred to the
Underwriters (who counsel may assume to be bona fide
purchasers) who have purchased such Shares or Halco
Option hereunder; and
(16) this Agreement and the Pricing Agreement are
legal, valid and binding agreements of each Selling
Stockholder except as enforceability of the same may be
limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditor's
rights and by the exercise of judicial discretion in
accordance with general principles applicable to
equitable and similar remedies and except with respect to
those provisions relating to indemnities for liabilities
arising under the 1933 Act, as to which no opinion need
be expressed.
(ii) An opinion of Sonnenschein Nath & Rosenthal,
special transaction counsel for the Company, addressed to
the Underwriters and dated the First Closing Date or the
Second Closing Date, as the case may be, to the effect
set forth in clauses (6), (7) and (9) of Section 8(f)(i)
above.<PAGE>
<PAGE>
(iii) An opinion of Choate, Hall & Stewart or
Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan
L.L.P., counsel for Halco Industries, Inc., addressed to
the Underwriters and dated the First Closing Date to the
effect set forth in clauses (14) through (16) of Section
8(f)(i) above, including in the case of clause (15) the
shares of Common Stock to be sold upon exercise of the
Halco Option.
(iv) An opinion of Altheimer & Gray, counsel for WPG
Corporate Development Associates IV, L.P., addressed to
the Underwriters and dated the First Closing Date to the
effect set forth in clauses (14) through (16) of Section
8(f)(i) above.
(v) An opinion of Maples & Calder, counsel for WPG
Corporate Development Associates IV (Overseas), L.P.,
addressed to the Underwriters and dated the First Closing
Date to the effect set forth in clauses (14) through (16)
of Section 8(f)(i) above.
(vi) An opinion of Pinsent Curtis, counsel for
Westpool Investment Trust plc, addressed to the
Underwriters and dated the First Closing Date to the
effect set forth in clauses (14) through (16) of Section
8(f)(i) above.
(vii) An opinion of Peter Knapp, Esq., counsel
for Glenbrook Partners, L.P., addressed to the
Underwriters and dated the First Closing Date to the
effect set forth in clauses (14) through (16) of Section
8(f)(i) above.
(viii) An opinion of the Vice President and
General Counsel of Olin Corporation, counsel for Olin
Corporation, addressed to the Underwriters and dated the
First Closing Date to the effect set forth in clauses
(14) through (16) of Section 8(f)(i) above.
(ix) An opinion of Kasowitz, Benson, Torres &
Friedman LLP or Morgan, Lewis & Bockius, counsel for
Smedley Industries, Inc., addressed to the Underwriters
and dated the First Closing Date to the effect set forth
in clauses (14) through (16) of Section 8(f)(i) above.
(x) An opinion of Snow Becker Krauss P.C., counsel
for Jericho State Capital Corp., Harvey Klaris, Glenn
Chwatt and Richard Chwatt, addressed to the Underwriters
and dated the First Closing Date to the effect set forth
in clauses (14) through (16) of Section 8(f)(i) above.
(xi) An opinion of Keith James, Esq., counsel for
William Forster and Alfred A. LaSorte, Jr., addressed to
the Underwriters and dated the First Closing Date to the<PAGE>
<PAGE>
effect set forth in clauses (14) through (16) of Section
8(f)(i) above.
(xii) An opinion of Snow Becker Krauss P.C.,
counsel for SBK Investment Partners, addressed to the
Underwriters and dated the First Closing Date to the
effect set forth in clauses (14) through (16) of Section
8(f)(i) above.
(xiii) An opinion of Jeffrey L. Goldberg &
Associates, counsel for The Iridium Trust, addressed to
the Underwriters and dated the Second Closing Date to the
effect set forth in clauses (14) through (16) of Section
8(f)(i) above.
In rendering such opinions, such counsel may,
if applicable, state that they are relying upon the
certificate of American Stock Transfer & Trust Company,
the transfer agent for the Common Stock, as to the number
of shares of Common Stock at any time or times
outstanding, and that insofar as their opinion under
clause (7) above relates to the accuracy and completeness
of the Prospectus and Registration Statement, it is based
upon a general review with the Company's representatives
and independent accountants of the information contained
therein, without independent verification by such counsel
of the accuracy or completeness of such information.
Such counsel may also rely upon the opinions of other
competent counsel and, as to factual matters, on
certificates of the Selling Stockholders and of officers
of the Company and of state officials, in which case
their opinion is to state that they are so doing and
copies of said opinions or certificates are to be
attached to the opinion unless said opinions or
certificates (or, in the case of certificates, the
information therein) have been otherwise furnished to the
Representatives.
(xiv) Such opinion or opinions of Kirkland &
Ellis, counsel for the Underwriters, dated the First
Closing Date or the Second Closing Date, as the case may
be, with respect to the incorporation of the Company, the
validity of the Shares to be sold by the Company, the
Registration Statement and the Prospectus and other
related matters as you may reasonably require, and the
Company shall have furnished to such counsel such
documents and shall have exhibited to them such papers
and records as they request for the purpose of enabling
them to pass upon such matters.
(xv) A certificate of the chief executive officer
and the principal financial officer of the Company, dated
the First Closing Date or the Second Closing Date, as the
case may be, to the effect that:<PAGE>
<PAGE>
(1) the representations and warranties of the
Company set forth in Section 2 of this Agreement are true
and correct as of the date of this Agreement and as of
the First Closing Date or the Second Closing Date, as the
case may be, and the Company has complied with all the
agreements and satisfied all the conditions on its part
to be performed or satisfied at or prior to such Closing
Date; and
(2) the Commission has not issued an order
preventing or suspending the use of the Prospectus or any
amendment thereto; no stop order suspending the
effectiveness of the Registration Statement has been
issued; and to the best knowledge of the respective
signers, no proceedings for that purpose have been
instituted or are pending or contemplated under the 1933
Act.
The delivery of the certificate provided for in
this subparagraph shall be and constitute a
representation and warranty of the Company as to the
facts required in the immediately foregoing clauses (1)
and (2) of this subparagraph to be set forth in said
certificate.
(xvi) A certificate of each Selling Stockholder
dated the First Closing Date or the Second Closing Date,
as the case may be, to the effect that the
representations and warranties of such Selling
Stockholder set forth in Section 3 of this Agreement are
true and correct as of such date and the Selling
Stockholder has complied with all the agreements and
satisfied all the conditions on the part of such Selling
Stockholder to be performed or satisfied at or prior to
such date.
(xvii) At the time the Pricing Agreement is
executed and also on the First Closing Date or the Second
Closing Date, as the case may be, there shall be
delivered to you a letter addressed to you, as
Representatives of the Underwriters, from Deloitte &
Touche LLP, independent auditors, the first one to be
dated the date of the Pricing Agreement, the second one
to be dated the First Closing Date and the third one (in
the event of a second closing) to be dated the Second
Closing Date, to the effect set forth in Schedule C.
There shall not have been any change or decrease
specified in the letters referred to in this subparagraph
which makes it impractical or inadvisable in the judgment
of the Representatives to proceed with the public
offering or purchase of the Shares as contemplated
hereby.
(xviii) At the time the Pricing Agreement is<PAGE>
<PAGE>
executed, there shall be delivered to you a letter
addressed to you, as Representatives of the Underwriters,
from Coopers & Lybrand, LLP, independent auditors, to the
effect set forth in Schedule D.
(xvi) Such further certificates and documents as
you may reasonably request.
All such opinions, certificates, letters and
documents shall be in compliance with the provisions
hereof only if they are satisfactory to you and to
Kirkland & Ellis, counsel for the Underwriters, which
approval shall not be unreasonably withheld. The Company
shall furnish you with such manually signed or conformed
copies of such opinions, certificates, letters and
documents as you request.
If any condition to the Underwriters'
obligations hereunder to be satisfied prior to or at the
First Closing Date is not so satisfied, this Agreement at
your election will terminate upon notification to the
Company and the Selling Stockholders without liability on
the part of any Underwriter or the Company or any Selling
Stockholder, except for the expenses to be paid or
reimbursed by the Company pursuant to Sections 7 and 9
hereof and except to the extent provided in Section 11
hereof.
Section 9. Reimbursement of Underwriters'
Expenses. If the sale to the Underwriters of the Shares
on the First Closing Date is not consummated because any
condition of the Underwriters' obligations hereunder is
not satisfied or because of any refusal, inability or
failure on the part of the Company or the Selling
Stockholders to perform any agreement herein or to comply
with any provision hereof, unless such failure to satisfy
such condition or to comply with any provision hereof is
due to the default or omission of any Underwriter, the
Company agrees to reimburse you and the other
Underwriters upon demand for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel)
that shall have been reasonably incurred by you and them
in connection with the proposed purchase and the sale of
the Shares. Any such termination shall be without
liability of any party to any other party except that the
provisions of this Section, Section 7 and Section 11
shall at all times be effective and shall apply.
Section 10. Effectiveness of Registration
Statement. You, the Company and the Selling Stockholders
listed on Schedule B-1 will use your, its and their best
efforts to cause the Registration Statement to become
effective, if it has not yet become effective, and to
prevent the issuance of any stop order suspending the<PAGE>
<PAGE>
effectiveness of the Registration Statement and, if such
stop order be issued, to obtain as soon as possible the
lifting thereof.
Section 11. Indemnification. (a) The
Company and each Selling Stockholder listed on Schedule
B-1, jointly and severally, agree to indemnify and hold
harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of the 1933
Act or the Exchange Act against any losses, claims,
damages or liabilities, joint or several, to which such
Underwriter or such controlling person may become subject
under the 1933 Act, the Exchange Act or other federal or
state statutory law or regulation, at common law or
otherwise (including in settlement of any litigation if
such settlement is effected with the written consent of
the Company and/or such Selling Stockholders, as the case
may be), insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the
Registration Statement, including the information deemed
to be part of the Registration Statement at the time of
effectiveness pursuant to Rule 430A and/or Rule 434, if
applicable, the Prospectus, or any amendment or
supplement 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 to make
the statements therein not misleading; and will reimburse
each Underwriter and each such controlling person for any
legal or other expenses reasonably incurred by such
Underwriter or such controlling person in connection with
investigating or defending any such loss, claim, damage,
liability or action; provided, however, that neither the
Company nor any such Selling Stockholder will be liable
in any such case to the extent that (i) any such loss,
claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement or
omission or alleged omission made in the Registration
Statement, the Prospectus or any amendment or supplement
thereto in reliance upon and in conformity with written
information furnished to the Company by or on behalf of
any Underwriter through the Representatives, specifically
for use therein or (ii) such statement or omission was
contained or made in any preliminary prospectus and
corrected in the Prospectus and (1) any such loss, claim,
damage or liability suffered or incurred by any
Underwriter (or any person who controls any Underwriter)
resulted from an action, claim or suit by any person who
purchased Shares which are the subject thereof from such
Underwriter in the offering and (2) such Underwriter
failed to deliver or provide a copy of the Prospectus to
such person at or prior to the confirmation of the sale
of such Shares in any case where such delivery is<PAGE>
<PAGE>
required by the 1933 Act. In addition to their other
obligations under this Section 11(a), the Company and
such Selling Stockholders agree that, as an interim
measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of
or based upon any statement or omission, or any alleged
statement or omission, described in this Section 11(a),
they will reimburse the Underwriters on a monthly basis
for all reasonable legal and other expenses incurred in
connection with investigating or defending any such
claim, action, investigation, inquiry or other
proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of
the Company's and such Selling Stockholders' obligation
to reimburse the Underwriters for such expenses and the
possibility that such payments might later be held to
have been improper by a court of competent jurisdiction.
This indemnity agreement will be in addition to any
liability which the Company and the Selling Stockholders
may otherwise have.
Each Selling Stockholder listed on Schedule B-2
severally and not jointly agrees to indemnify and hold
harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of the 1933
Act or the Exchange Act, to the same extent as the
foregoing indemnity to each Underwriter set forth in the
immediately preceding paragraph, but only with reference
to information relating to such Selling Stockholder
furnished in writing to the Company or such Underwriter
by such Selling Stockholder or by its agents or attorneys
on behalf of such Selling Stockholder specifically for
use in the preparation of the Registration Statement, the
Prospectus or any amendment or supplement thereto
referred to in the foregoing indemnity.
Without limiting the full extent of the
Company's agreement to indemnify each Underwriter, as
herein provided, each Selling Stockholder shall be liable
under the indemnity agreements contained in paragraph (a)
of this Section only for an amount not exceeding the
proceeds received by such Selling Stockholder from the
sale of Shares hereunder; provided that the amount of
such proceeds received by Steven Geller shall be deemed
to include for this purpose the purchase price payable to
him for the Halco Option and the exercise price payable
by the Underwriters to Halco Industries, Inc. upon
exercise of the Halco Option; and, provided further, that
the amount of such proceeds received by Halco Industries,
Inc. shall not be deemed to include for this purpose the
exercise price payable by the Underwriters to it upon
exercise of the Halco Option.
(b) Each Underwriter will severally indemnify<PAGE>
<PAGE>
and hold harmless the Company, each of its directors,
each of its officers who signed the Registration
Statement, and each Selling Stockholder and each person,
if any, who controls the Company within the meaning of
the 1933 Act or the Exchange Act, against any losses,
claims, damages or liabilities to which the Company, or
any such director, officer, Selling Stockholder or
controlling person may become subject under the 1933 Act,
the Exchange Act or other federal or state statutory law
or regulation, at common law or otherwise (including in
settlement of any litigation, if such settlement is
effected with the written consent of such Underwriter),
insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based
upon any untrue or alleged untrue statement of any
material fact contained in the Registration Statement,
the Prospectus, or any amendment or supplement 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 to make the statements
therein not misleading, in each case to the extent, but
only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made
in the Registration Statement, the Prospectus, or any
amendment or supplement thereto in reliance upon and in
conformity with Section 4 of this Agreement or any other
written information furnished to the Company by such
Underwriter through the Representatives specifically for
use in the preparation thereof; and will reimburse any
legal or other expenses reasonably incurred by the
Company, or any such director, officer, Selling
Stockholder or controlling person in connection with
investigating or defending any such loss, claim, damage,
liability or action. In addition to their other
obligations under this Section 11(b), the Underwriters
agree that, as an interim measure during the pendency of
any claim, action, investigation, inquiry or other
proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission, described
in this Section 11(b), they will reimburse the Company
and the Selling Stockholders on a monthly basis for all
reasonable legal and other expenses incurred in
connection with investigating or defending any such
claim, action, investigation, inquiry or other
proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of
the Underwriters' obligation to reimburse the Company and
the Selling Stockholders for such expenses and the
possibility that such payments might later be held to
have been improper by a court of competent jurisdiction.
This indemnity agreement will be in addition to any
liability which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified<PAGE>
<PAGE>
party under this Section of notice of the commencement of
any action, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying
party under this Section, notify the indemnifying party
of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party
except to the extent that the indemnifying party was
prejudiced by such failure to notify. In case any such
action is brought against any indemnified party, and it
notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to
participate in, and, to the extent that it may wish,
jointly with all other indemnifying parties similarly
notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party; provided,
however, if the defendants in any such action include
both the indemnified party and the indemnifying party and
the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or
other indemnified parties which are different from or
additional to those available to the indemnifying party,
or the indemnified and indemnifying parties may have
conflicting interests which would make it inappropriate
for the same counsel to represent both of them, the
indemnified party or parties shall have the right to
select separate counsel to assume such legal defense and
otherwise to participate in the defense of such action on
behalf of such indemnified party or parties. Upon
receipt of notice from the indemnifying party to such
indemnified party of its election so to assume the
defense of such action and approval by the indemnified
party of counsel, the indemnifying party will not be
liable to such indemnified party under this Section for
any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof
unless (i) the indemnified party shall have employed such
counsel in connection with the assumption of legal
defense in accordance with the proviso to the next
preceding sentence (it being understood, however, that
the indemnifying party shall not be liable for the
expenses of more than one separate counsel, approved by
the Representatives in the case of paragraph (a)
representing all indemnified parties not having different
or additional defenses or potential conflicting interest
among themselves who are parties to such action), (ii)
the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice
of commencement of the action or (iii) the indemnifying
party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying
party. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any<PAGE>
<PAGE>
settlement of any pending or threatened proceeding in
respect of which any indemnified party is or could have
been a party and indemnity could have been sought
hereunder by such indemnified party, unless such
settlement includes an unconditional release of such
indemnified party from all liability arising out of such
proceeding.
(d) If the indemnification provided for in
this Section is unavailable to an indemnified party under
paragraphs (a) or (b) hereof in respect of any losses,
claims, damages or liabilities referred to therein, then
each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to
the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (i)
in such proportion as is appropriate to reflect the
relative benefits received by the Company, the Selling
Stockholders and the Underwriters from the offering of
the Shares or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but
also the relative fault of the Company, the Selling
Stockholders and the Underwriters in connection with the
statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other
relevant equitable considerations. The respective
relative benefits received by the Company, the Selling
Stockholders and the Underwriters shall be deemed to be
in the same proportion in the case of the Company and the
Selling Stockholders, as the total price paid to the
Company and the Selling Stockholders for the Shares by
the Underwriters (net of underwriting discount but before
deducting expenses), and in the case of the Underwriters
as the underwriting discount received by them bears to
the total of such amounts paid to the Company and the
Selling Stockholders and received by the Underwriters as
underwriting discount in each case as contemplated by the
Prospectus. The relative fault of the Company and the
Selling Stockholders and the Underwriters shall be
determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to
information supplied by the Company or by the Selling
Stockholders or by the Underwriters and the parties'
relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a
result of the losses, claims, damages and liabilities
referred to above shall be deemed to include any legal or
other fees or expenses reasonably incurred by such party
in connection with investigating or defending any action
or claim.<PAGE>
<PAGE>
The Company, the Selling Stockholders and the
Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section were
determined by pro rata allocation or by any other method
of allocation which does not take account of the
equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of
this Section, no Underwriter shall be required to
contribute any amount in excess of the amount by which
the total price at which the Shares underwritten by it
and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section are several in
proportion to their respective underwriting commitments
and not joint. The obligations of the Selling
Stockholders listed in Schedule B-2 to contribute
pursuant to this Section are several and not joint.
Without limiting the full extent of the
Company's agreement to contribute to amount required to
be paid by any Underwriter, as herein provided, each
Selling Stockholder shall be liable under the
contribution agreements contained in paragraph (d) of
this Section only for an amount not exceeding the
proceeds received by such Selling Stockholder from the
sale of Shares hereunder; provided that the amount of
such proceeds received by Steven Geller shall be deemed
to include for this purpose the purchase price payable to
him for the Halco Option and the exercise price payable
by the Underwriters to Halco Industries, Inc. upon
exercise of the Halco Option; and, provided further, that
the amount of such proceeds received by Halco Industries,
Inc. shall not be deemed to include for this purpose the
exercise price payable by the Underwriters to it upon
exercise of the Halco Option.
(e) The provisions of this Section shall
survive any termination of this Agreement.
(f) Marvin Smollar agrees to indemnify and
hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of the
1933 Act or the Exchange Act (or to contribute to any
amounts paid or payable by each Underwriter and such
controlling persons) to the same extent that The Iridium
Trust is obligated to indemnify and hold harmless (or to
contribute to amounts paid or payable to) such persons<PAGE>
<PAGE>
under this Section 11; provided, however, that Marvin
Smollar and The Iridium Trust will in no event
collectively pay or contribute under this Section 11 any
amount exceeding the proceeds received by The Iridium
Trust from the sale of Shares hereunder.
Section 12. Default of Underwriters. It
shall be a condition to the agreement and obligation of
the Company and the Selling Stockholders to sell and
deliver the Shares and Halco Option hereunder, and of
each Underwriter to purchase the Shares hereunder, that,
except as hereinafter in this paragraph provided, each of
the Underwriters shall purchase and pay for all Shares
agreed to be purchased by such Underwriter hereunder upon
tender to the Representatives of all such Shares in
accordance with the terms hereof. If any Underwriter or
Underwriters default in their obligations to purchase
Shares hereunder on the First Closing Date and the
aggregate number of Shares which such defaulting
Underwriter or Underwriters agreed but failed to purchase
does not exceed 10 percent of the total number of Shares
which the Underwriters are obligated to purchase on the
First Closing Date, the Representatives may make
arrangements satisfactory to the Company and the Selling
Stockholders for the purchase of such Shares by other
persons, including any of the Underwriters, but if no
such arrangements are made by such date the nondefaulting
Underwriters shall be obligated severally, in proportion
to their respective commitments hereunder, to purchase
the Shares which such defaulting Underwriters agreed but
failed to purchase on such date. If any Underwriter or
Underwriters so default and the aggregate number of
Shares with respect to which such default or defaults
occur is more than the above percentage and arrangements
satisfactory to the Representatives and the Company and
the Selling Stockholders for the purchase of such Shares
by other persons are not made within 36 hours after such
default, this Agreement will terminate without liability
on the part of any nondefaulting Underwriter or the
Company or the Selling Stockholders, except for the
expenses to be paid by the Company pursuant to Section 7
hereof and except to the extent provided in Section 11
hereof.
In the event that Shares to which a default
relates are to be purchased by the nondefaulting
Underwriters or by another party or parties, the
Representatives or the Company shall have the right to
postpone the First Closing Date for not more than seven
business days in order that the necessary changes in the
Registration Statement, Prospectus and any other
documents, as well as any other arrangements, may be
effected. As used in this Agreement, the term
"Underwriter" includes any person substituted for an<PAGE>
<PAGE>
Underwriter under this Section. Nothing herein will
relieve a defaulting Underwriter from liability for its
default.
Section 13. Effective Date. This Agreement
shall become effective immediately as to Sections 7, 9,
11 and 14 and as to all other provisions at 10:00 A.M.,
Chicago Time, on the day following the date upon which
the Pricing Agreement is executed and delivered, unless
such a day is a Saturday, Sunday or holiday (and in that
event this Agreement shall become effective at such hour
on the business day next succeeding such Saturday, Sunday
or holiday); but this Agreement shall nevertheless become
effective at such earlier time after the Pricing
Agreement is executed and delivered as you may determine
on and by notice to the Company and the Selling
Stockholders or by release of any Shares for sale to the
public. For the purposes of this Section, the Shares
shall be deemed to have been so released upon the release
for publication of any newspaper advertisement relating
to the Shares or upon the release by you of telegrams (i)
advising Underwriters that the Shares are released for
public offering, or (ii) offering the Shares for sale to
securities dealers, whichever may occur first.
Section 14. Termination. Without limiting
the right to terminate this Agreement pursuant to any
other provision hereof:
(a) This Agreement may be terminated by the
Company by notice to you and the Selling Stockholders or
by you by notice to the Company and the Selling
Stockholders at any time prior to the time this Agreement
shall become effective as to all its provisions, and any
such termination shall be without liability on the part
of the Company or the Selling Stockholders to any
Underwriter (except for the expenses to be paid or
reimbursed pursuant to Section 7 hereof and except to the
extent provided in Section 11 hereof) or of any
Underwriter to the Company or the Selling Stockholders.
(b) This Agreement may also be terminated by
you prior to the First Closing Date, and the option
referred to in Section 5, if exercised, may be canceled
at any time prior to the Second Closing Date, if (i)
trading in securities on the New York Stock Exchange
shall have been suspended or minimum prices shall have
been established on such exchange, or (ii) a banking
moratorium shall have been declared by Illinois, New
York, or United States authorities, or (iii) there shall
have been any change in financial markets or in
political, economic or financial conditions which, in the
opinion of the Representatives, either renders it
impracticable or inadvisable to proceed with the offering<PAGE>
<PAGE>
and sale of the Shares on the terms set forth in the
Prospectus or materially and adversely affects the market
for the Shares, or (iv) there shall have been an outbreak
of major armed hostilities between the United States and
any foreign power which in the opinion of the
Representatives makes it impractical or inadvisable to
offer or sell the Shares. Any termination pursuant to
this paragraph (b) shall be without liability on the part
of any Underwriter to the Company or the Selling
Stockholders or on the part of the Company to any
Underwriter or the Selling Stockholders (except for
expenses to be paid or reimbursed pursuant to Section 7
hereof and except to the extent provided in Section 11
hereof).
Section 15. Representations and Indemnities
to Survive Delivery. The respective indemnities,
agreements, representations, warranties and other
statements of the Company, of its officers, of the
Selling Stockholders and of the several Underwriters set
forth in or made pursuant to this Agreement will remain
in full force and effect, regardless of any investigation
made by or on behalf of any Underwriter or the Company or
any of its or their partners, principals, members,
officers or directors or any controlling person, or the
Selling Stockholders as the case may be, and will survive
delivery of and payment for the Shares sold hereunder.
Section 16. Notices. All communications
hereunder will be in writing and, if sent to the
Underwriters will be mailed, delivered or telegraphed and
confirmed to you c/o William Blair & Company, L.L.C., 222
West Adams Street, Chicago, Illinois 60606, Attn: John L.
Carton, with a copy to Kirkland & Ellis, 200 East
Randolph Street, Chicago, Illinois 60601, Attn: Alan G.
Berkshire, Esq.; if sent to the Company will be mailed,
delivered or telegraphed and confirmed to the Company at
its corporate headquarters with copies to Sonnenschein
Nath & Rosenthal, 8000 Sears Tower, Chicago, Illinois
60606, Attn: Michael M. Froy, Esq., and to Schwartz &
Freeman, 401 North Michigan Avenue, Suite 1900, Chicago,
Illinois 60611, Attn: Kenneth G. Kolmin, Esq.; and if
sent to the Selling Stockholders will be mailed,
delivered or telegraphed and confirmed to the Agents and
the Custodian at such address as they have previously
furnished to the Company and the Representatives.
Section 17. Successors. This Agreement and
the Pricing Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective
successors, personal representatives and assigns, and to
the benefit of the officers and directors and controlling
persons referred to in Section 11, and no other person
will have any right or obligation hereunder. The term<PAGE>
<PAGE>
"successors" shall not include any purchaser of the
Shares as such from any of the Underwriters merely by
reason of such purchase.
Section 18. Representation of Underwriters.
You will act as Representatives for the several
Underwriters in connection with this financing, and any
action under or in respect of this Agreement taken by you
will be binding upon all the Underwriters.
Section 19. Partial Unenforceability. If
any section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable,
such determination shall not affect the validity or
enforceability of any other section, paragraph or
provision hereof.
Section 20. Applicable Law. This Agreement
and the Pricing Agreement shall be governed by and
construed in accordance with the laws of the State of
Illinois.
* * * * * * * * *<PAGE>
<PAGE>
If the foregoing is in accordance with your
understanding of our agreement, kindly sign and return to
us the enclosed duplicates hereof, whereupon it will
become a binding agreement among the Company, the Selling
Stockholders and the several Underwriters including you,
all in accordance with its terms.
Very truly yours,
Empire of Carolina, Inc.
By /s/ Steven Geller
The Selling Stockholders named
in Schedule B
By /s/ Steven Geller
Agent and Attorney-in-Fact
/s/ Marvin Smollar
Marvin Smollar
The foregoing Agreement is hereby
confirmed and accepted as of
the date first above written.
William Blair & Company, L.L.C.
Gerard Klauer Mattison & Co., LLC
Acting as Representatives of the
several Underwriters named in
Schedule A.
By William Blair & Company, L.L.C.
By /s/ John Carton
Principal<PAGE>
<PAGE>
Schedule A
Underwriter Number of
Firm Shares
to be Purchased
William Blair & Company, L.L.C. 1,119,454
Gerard Klauer Mattison & Co., LLC 1,119,454
Dillon, Read & Co. Inc. 130,000
Donaldson, Lufkin & Jenrette
Securities Corporation 130,000
PaineWebber Incorporated 130,000
Advest, Inc. 55,000
Arcadia Investment Corporation 55,000
Burnham Securities Inc. 55,000
Cowen & Company 55,000
Furman Selz LLC 55,000
Jefferies & Company, Inc. 55,000
Pennsylvania Merchant Group Ltd. 55,000
Principal Financial
Securities, Inc. 55,000
Sutro & Co. Incorporated 55,000
Total 3,123,908<PAGE>
<PAGE>
Schedule B
Number of Number of
Schedule B-1 Firm Shares Option Shares
Selling Stockholders: to be Sold to be Sold
Steven E. Geller 315,833 (1) 100,000
WPG Corporate
Development Associates
IV, L.P. 85,000 69,540
WPG Corporate
Development Associates
IV (Overseas), L.P. 20,500 16,775
Westpool plc 2,900 2,375
Glenbrook Partners 1,600 1,310
Harvey Katz 13,500 --
Tyler Bulkley 18,000 --
Kar Ye Yeung 3,875 --
The Iridium Trust -- 150,000
(1) Represents the Halco Option Firm Shares underlying
the Halco Option, a portion of which option will be sold
by such Selling Stockholder.
(2) All of such shares will be issued to the Selling
Stockholder upon exercise of a related warrant or option
on the First Closing Date, immediately prior to the sale
of such shares to the Underwriters.<PAGE>
<PAGE>
Number of Number of
Schedule B-2 Firm Shares Option Shares
Selling Stockholders: to be Sold to be Sold
Halco Industries, Inc. 450,000 --
Olin Corporation 116,400
240,000 (1) --
Smedley Industries, Inc. 340,200 --
Jericho State
Capital Corp. 12,420 (1) --
Glenn Chwatt 16,560 (1) --
Richard Chwatt 16,560 (1) --
Harvey Klaris 16,560 (1) --
William Forster 4,500 (1) --
Alfred LaSorte, Jr. 4,500 (1) --
SBK Investment Partners 45,000 (1) --
(1) All of such shares will be issued to the Selling
Stockholder upon exercise of a related warrant or option
on the First Closing Date, immediately prior to the sale
of such shares to the Underwriters.<PAGE>
<PAGE>
Schedule C
Comfort Letter of Deloitte & Touche LLP
(1) They are independent public accountants with
respect to the Company and its subsidiaries within the
meaning of the 1933 Act.
(2) In their opinion the consolidated financial
statements and schedules of the Company and its
subsidiaries included in the Registration Statement and
the consolidated financial statements of the Company from
which the information presented under the captions
"Summary Consolidated Financial Data" and "Selected
Consolidated Financial Data" has been derived which are
stated therein to have been examined by them comply as to
form in all material respects with the applicable
accounting requirements of the 1933 Act.
(3) On the basis of specified procedures (but not
an audit conducted in accordance with generally accepted
auditing standards), including inquiries of certain
officers of the Company and its subsidiaries responsible
for financial and accounting matters as to transactions
and events subsequent to December 31, 1995, a reading of
minutes of meetings of the stockholders and directors of
the Company and its subsidiaries since December 31, 1995,
a reading of the latest available interim unaudited
consolidated financial statements of the Company and its
subsidiaries (with an indication of the date thereof) and
other procedures as specified in such letter, nothing
came to their attention which caused them to believe that
(i) the unaudited financial statements of the Company and
its subsidiaries included in the Registration Statement
do not comply as to form in all material respects with
the applicable accounting requirements of the 1933 Act or
that such unaudited financial statements are not fairly
presented in accordance with generally accepted
accounting principles applied on a basis substantially
consistent with that of the audited financial statements
included in the Registration Statement, (ii) any
unaudited pro forma financial statements included in the
Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of
the 1933 Act or the pro forma adjustments have not been
properly applied to the historical amounts in the
compilation of those statements, and (iii) at a specified
date not more than five days prior to the date thereof in
the case of the first letter and not more than two
business days prior to the date thereof in the case of
the second and third letters, there was any change in the
capital stock or long-term debt or short-term debt (other
than normal payments) of the Company and its subsidiaries<PAGE>
<PAGE>
on a consolidated basis or any decrease in consolidated
net current assets or consolidated Stockholders' equity
as compared with amounts shown on the latest unaudited
balance sheet of the Company included in the Registration
Statement or for the period from the date of such balance
sheet to a date not more than five days prior to the date
thereof in the case of the first letter and not more than
two business days prior to the date thereof in the case
of the second and third letters, there were any
decreases, as compared with the corresponding period of
the prior year, in consolidated net sales, consolidated
income before income taxes or in the total or per share
amounts of consolidated net income except, in all
instances, for changes or decreases which the Prospectus
discloses have occurred or may occur or which are set
forth in such letter.
(4) They are independent public accountants with
respect to the Toy Business of Buddy L Inc. and
subsidiaries within the meaning of the 1933 Act.
(5) In their opinion the consolidated financial
statements of the Toy Business of Buddy L Inc. included
in the Registration Statement which are stated therein to
have been examined by them comply as to form in all
material respects with the applicable accounting
requirements of the 1933 Act.
(6) On the basis of specified procedures (but not
an audit conducted in accordance with generally accepted
auditing standards), including inquiries of certain
officers of Marchon and its subsidiaries responsible for
financial and accounting matters as to transactions and
events subsequent to December 31, 1993, a reading of
minutes of meetings of the stockholders and directors of
Marchon and its subsidiaries since December 31, 1993, a
reading of the latest available interim unaudited
consolidated financial statements of Marchon and its
subsidiaries (with an indication of the date thereof) and
other procedures as specified in such letter, nothing
came to their attention which caused them to believe that
the unaudited financial statements of Marchon and its
subsidiaries included in the Registration Statement do
not comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act or
that such unaudited financial statements are not fairly
presented in accordance with generally accepted
accounting principles applied on a basis substantially
consistent with that of the audited financial statements
of Marchon and its subsidiaries included in the
Registration Statement.
(7) They have carried out specified procedures,
which have been agreed to by the Representatives, with<PAGE>
<PAGE>
respect to certain information in the Prospectus, or in
Part II of, or in exhibits or schedules to, the
Registration Statement specified by the Representatives,
and on the basis of such procedures, they have found such
information to be in agreement with the consolidated
financial statements or the general accounting records of
the Company and its subsidiaries.<PAGE>
<PAGE>
Schedule D
Comfort Letter of Coopers & Lybrand, LLP
(1) They are independent public accountants with
respect to Marchon and its subsidiaries within the
meaning of the 1933 Act.
(2) In their opinion the consolidated financial
statements and schedules of Marchon and its subsidiaries
included in the Registration Statement which are stated
therein to have been examined by them comply as to form
in all material respects with the applicable accounting
requirements of the 1933 Act.<PAGE>
<PAGE>
Exhibit A
Empire of Carolina, Inc.
3,123,908 Shares Common Stock 2
Pricing Agreement
June 24, 1996
William Blair & Company, L.L.C.
Gerard Klauer Mattison & Co. LLC
As Representatives of the Several
Underwriters
c/o William Blair & Company, L.L.C.
222 West Adams Street
Chicago, Illinois 60606
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement
dated June 24, 1996 (the "Underwriting Agreement")
relating to the sale by the Company and the Selling
Stockholders and the purchase by the several Underwriters
for whom William Blair & Company, L.L.C. and Gerard
Klauer Mattison & Co., L.L.C. are acting as
representatives (the "Representatives"), of the above
Shares. All terms herein shall have the definitions
contained in the Underwriting Agreement except as
otherwise defined herein.
Pursuant to Section 5 of the Underwriting
Agreement, the Company and each of the Selling
Stockholders agree with the Representatives as follows:
1. The initial public offering price per
share for the Shares shall be $12.00.
2. The purchase price per share for the
Company Firm Shares, the Selling Stockholder Firm Shares
and the Option Shares to be paid by the several
Underwriters shall be $11.16, being an amount equal to
the initial public offering price set forth above less
$0.84 per share.
3. The purchase price for the Halco Option
shall be $3.98 per underlying Halco Option Firm Share,
being an amount equal to the purchase price per share for
the Company Firm Shares, the Selling Stockholder Firm<PAGE>
<PAGE>
Shares and the Option Shares set forth above less the
Halco Option exercise price of $7.18 per share.
* * * * * * *<PAGE>
<PAGE>
If the foregoing is in accordance with your
understanding of our agreement, kindly sign and return to
us the enclosed duplicates hereof, whereupon it will
become a binding agreement among the Company, the Selling
Stockholders and the several Underwriters, including you,
all in accordance with its terms.
Very truly yours,
Empire of Carolina, Inc.
By /s/ Steven E. Geller
Chief Executive Officer
The Selling Stockholders
By /s/ Steven E. Geller
Agent and Attorney-in-Fact
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
William Blair & Company, L.L.C.
Gerard Klauer Mattison & Co., LLC
Acting as Representatives of the
several Underwriters
By William Blair & Company, L.L.C.
By /s/ John Carton
Principal<PAGE>
