SCHEDULE 13D AMENDMENT NO. 10
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 10
to
SCHEDULE 13D
Under the Securities Exchange Act of 1934
The Leslie Fay Company Inc.
(Name of Issuer)
Common Stock, $.01 par value
(Title of Class of Securities)
527016109
(CUSIP Number)
Abbe L. Dienstag, Esq.
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
(212) 715-9100
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
May 12, 1999
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d- 1(b)(3) or (4), check the following box: /_/
Check the following box if a fee is being paid with this statement: /_/
Page 1 of 14 pages
<PAGE>
SCHEDULE 13D
CUSIP No. 527016109 Page 2 of 14 Pages
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
DICKSTEIN & CO., L.P. 13-3321472
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) /_/
(b) SEE ITEM 5
3) SEC USE ONLY
4) SOURCE OF FUNDS
WC
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
/_/
6) CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
7) SOLE VOTING POWER
Not Applicable
NUMBER
OF 8) SHARED VOTING POWER
SHARES 550,736 (See Item 5)
BENEFICIALLY
OWNED BY 9) SOLE DISPOSITIVE POWER
EACH Not Applicable
REPORTING
PERSON 10) SHARED DISPOSITIVE POWER
WITH 550,736 (See Item 5)
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
550,736 (See Item 5)
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
/_/
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.1% (See Item 5)
14) TYPE OF REPORTING PERSON
PN
<PAGE>
SCHEDULE 13D
CUSIP No. 527016109 Page 3 of 14 Pages
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
DICKSTEIN FOCUS FUND L.P. 13-3746015
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) /_/
(b) SEE ITEM 5
3) SEC USE ONLY
4) SOURCE OF FUNDS
WC
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
/_/
6) CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
7) SOLE VOTING POWER
Not Applicable
NUMBER
OF 8) SHARED VOTING POWER
SHARES 0 (See Item 5)
BENEFICIALLY
OWNED BY 9) SOLE DISPOSITIVE POWER
EACH Not Applicable
REPORTING
PERSON 10) SHARED DISPOSITIVE POWER
WITH 0 (See Item 5)
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0 (See Item 5)
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
/_/
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.0% (See Item 5)
14) TYPE OF REPORTING PERSON
PN
<PAGE>
SCHEDULE 13D
CUSIP No. 527016109 Page 4 of 14 Pages
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
DICKSTEIN INTERNATIONAL LIMITED
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) /_/
(b) SEE ITEM 5
3) SEC USE ONLY
4) SOURCE OF FUNDS
WC
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
/_/
6) CITIZENSHIP OR PLACE OF ORGANIZATION
BRITISH VIRGIN ISLANDS
7) SOLE VOTING POWER
Not Applicable
NUMBER
OF 8) SHARED VOTING POWER
SHARES 91,000 (See Item 5)
BENEFICIALLY
OWNED BY 9) SOLE DISPOSITIVE POWER
EACH Not Applicable
REPORTING
PERSON 10) SHARED DISPOSITIVE POWER
WITH 91,000 (See Item 5)
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
91,000 (See Item 5)
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
/_/
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.5% (See Item 5)
14) TYPE OF REPORTING PERSON
CO
<PAGE>
SCHEDULE 13D
CUSIP No. 527016109 Page 5 of 14 Pages
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
DICKSTEIN PARTNERS, L.P. 13-3544838
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) /_/
(b) SEE ITEM 5
3) SEC USE ONLY
4) SOURCE OF FUNDS
AF
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
/_/
6) CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
7) SOLE VOTING POWER
Not Applicable
NUMBER
OF 8) SHARED VOTING POWER
SHARES 550,736 (See Item 5)
BENEFICIALLY
OWNED BY 9) SOLE DISPOSITIVE POWER
EACH Not Applicable
REPORTING
PERSON 10) SHARED DISPOSITIVE POWER
WITH 550,736 (See Item 5)
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
550,736 (See Item 5)
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
/_/
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.1% (See Item 5)
14) TYPE OF REPORTING PERSON
PN
<PAGE>
SCHEDULE 13D
CUSIP No. 527016109 Page 6 of 14 Pages
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
DICKSTEIN PARTNERS INC. 13-3537972
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) /_/
(b) SEE ITEM 5
3) SEC USE ONLY
4) SOURCE OF FUNDS
AF
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
/_/
6) CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
7) SOLE VOTING POWER
Not Applicable
NUMBER
OF 8) SHARED VOTING POWER
SHARES 641,736 (See Item 5)
BENEFICIALLY
OWNED BY 9) SOLE DISPOSITIVE POWER
EACH Not Applicable
REPORTING
PERSON 10) SHARED DISPOSITIVE POWER
WITH 641,736 (See Item 5)
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
641,736 (See Item 5)
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
/_/
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.6% (See Item 5)
14) TYPE OF REPORTING PERSON
CO
<PAGE>
SCHEDULE 13D
CUSIP No. 527016109 Page 7 of 14 Pages
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
MARK DICKSTEIN
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) /_/
(b) SEE ITEM 5
3) SEC USE ONLY
4) SOURCE OF FUNDS
PF, AF
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
/_/
6) CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
7) SOLE VOTING POWER
10,000(1)
NUMBER
OF 8) SHARED VOTING POWER
SHARES 641,736 (See Item 5)
BENEFICIALLY
OWNED BY 9) SOLE DISPOSITIVE POWER
EACH 10,000(1)
REPORTING
PERSON 10) SHARED DISPOSITIVE POWER
WITH 641,736 (See Item 5)
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
651,736 (See Item 5)
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
/_/
- ----------
(1) Consists of 10,000 shares of Common Stock issuable upon exercise of options
held by the reporting person.
<PAGE>
SCHEDULE 13D
CUSIP No. 527016109 Page 8 of 14 Pages
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.8% (See Item 5)
14) TYPE OF REPORTING PERSON
IN
<PAGE>
SCHEDULE 13D
CUSIP No. 527016109 Page 9 of 14 Pages
Amendment No. 10 to Schedule 13D
This amends the Schedule 13D dated August 15, 1997 (the "Schedule 13D"), as
amended by Amendment No. 1 dated August 21, 1997, Amendment No. 2 dated August
28, 1997, Amendment No. 3 dated September 5, 1997, Amendment No. 4 dated
September 10, 1997, Amendment No. 5 dated September 19, 1997, Amendment No. 6
dated September 24, 1997, Amendment No. 7 dated November 10, 1997, Amendment No.
8 filed March 10, 1999, and Amendment No. 9 filed on March 25, 1999 by Dickstein
& Co., L.P. ("Dickstein & Co."), Dickstein Focus Fund L.P. ("Dickstein Focus"),
Dickstein International Limited ("Dickstein International"), Dickstein Partners,
L.P. ("Dickstein Partners"), Dickstein Partners Inc. ("Dickstein Inc.") and Mark
Dickstein with respect to the Common Stock, $.01 par value (the "Common Stock"),
of The Leslie Fay Company, Inc., a Delaware corporation (the "Company").
Notwithstanding this Amendment No. 10, the Schedule 13D speaks as of its
respective dates. Capitalized terms used without definition have the meanings
ascribed to them in the Schedule 13D.
I. Item 4 of the Schedule 13D "Purpose of Transaction" is amended by adding
the following paragraphs:
"On May 12, 1999, Dickstein & Co., Dickstein International, Dickstein Focus
and Mark Dickstein (the "Dickstein Sellers") sold a total of 2,158,000 shares of
Common Stock to two investment funds advised by Three Cities Research, Inc. (the
"Three Cities Buyers") at a price of $6.95 per share. At the same time, the
Three Cities Buyers and the Company entered into a merger agreement (the "Merger
Agreement") pursuant to which the Company will merge (the "Merger") with an
entity owned by Three Cities Buyers, stockholders will have the opportunity to
elect to receive from the Company $7.00 in cash in exchange for up to 2,111,966
shares of Common Stock in the aggregate and the Company's charter will be
amended to modify certain provisions regarding the approval of business
combination transactions. Depending upon the number of shares whose holders
elect to receive cash, the cash election mechanism will be funded through
financing obtained by the Company and/or through the purchase by the Three
Cities Buyers in the Merger of Common Stock at a price of $7.00 per share. If
holders of more than 2,111,966 shares elect to have their shares purchased by
the Company in the Merger, a customary proration procedure will be applied.
<PAGE>
SCHEDULE 13D
CUSIP No. 527016109 Page 10 of 14 Pages
The Dickstein Sellers are not a party to the Merger Agreement, and the
foregoing description of the terms of the Merger Agreement does not purport to
be complete. It is the current intention of the Dickstein Sellers to make a cash
election in the Merger with respect to 250,000 of their remaining shares of
Common Stock.
In connection with the sale by the Dickstein Sellers of their shares to the
Three Cities Buyers, Mark Dickstein and another person who may be deemed to be a
representative of the Reporting Persons on the Company's Board resigned as
directors."
II. Items 5(a) and 5(c) of the Schedule 13D "Interest in Securities of the
Issuer" are amended and restated in their entirety as follows:
"(a) The Reporting Persons beneficially own an aggregate of 651,736 shares
of Common Stock, representing approximately 10.8% of the Common Stock
outstanding. Dickstein & Co. owns 550,736 of such shares, representing
approximately 9.1% of the Common Stock outstanding, Dickstein International owns
91,000 of such shares, representing approximately 1.5% of the Common Stock
outstanding, and Mark Dickstein owns 10,000 of such shares, which are issuable
pursuant to currently exercisable options and which represent approximately 0.2%
of the Common Stock outstanding.2
(c) Except for the transactions described in Item 4 or as disclosed in a
prior amendment to the Schedule 13D, none of the persons identified in Item 2
has effected any transactions in the Common Stock during the past 60 days.
III. Item 6 of the Schedule 13D "Contracts, Arrangements, Understandings or
Relationships with respect to Securities of the Issuer" is amended by adding the
following paragraphs:
"In connection with the sale of Common Stock to Three Cities Buyers, the
Dickstein Sellers entered into a Stock Purchase Agreement with the Three Cities
Buyers (the "Stock Purchase Agreement") and an agreement with the Company (the
"Company
- ----------
(2) Percentages are based upon 6,041,138 shares of Common Stock reported
outstanding as of May 1, 1999 in the Company's press release issued May 6,
1999. All share amounts and related data reflect a two-for-one split of the
Common Stock distributed on July 1, 1998,
<PAGE>
SCHEDULE 13D
CUSIP No. 527016109 Page 11 of 14 Pages
Agreement"). In addition to the sale of Common Stock to the Three Cities Buyers,
the Stock Purchase Agreement provides that the Dickstein Sellers will vote their
remaining shares of Common Stock in favor of the Merger and will not vote in
favor of a transaction that is inconsistent with the Merger, and that the Three
Cities Buyers will vote their shares in favor of one nominee of the Dickstein
Sellers for election as director of the Company, so long as the Dickstein
Sellers own at least 5% of the outstanding Common Stock. The Stock Purchase
Agreement also provides that, if prior to the Merger any person enters into
discussions or negotiations with the Company or the Three Cities Buyers, or
makes an offer, with respect to the acquisition of the Company, substantially
all of the assets of the Company or at least a majority of the outstanding
voting shares of the Company (an "Alternative Transaction"), and such third
party consummates an Alternative Transaction within 12 months of the date of the
Stock Purchase Agreement, the Three Cities Buyers will make further payment to
the Dickstein Sellers. The additional consideration will equal, in the
aggregate, the difference between the per share price paid in the Alternative
Transaction and $6.95 multiplied by 650,000, less an imputed cost of capital of
1% per month, except that if the Alternative Transaction is for less than all
outstanding voting shares, the additional consideration will be prorated
according to the percentage of shares purchased in the Alternative Transaction.
The Stock Purchase Agreement is annexed to this Schedule as Exhibit 3, and the
forgoing description of the document is qualified by reference to that Exhibit.
The Company Agreement contains a number of agreements between the Company
and the Dickstein Sellers, including that the Company will maintain the
effectiveness and currency of a shelf registration statement for the resale by
the Dickstein Sellers of their remaining shares so long as the Dickstein Sellers
own at least 5% of the outstanding shares of Common Stock or have a designee on
the Company's Board; that unvested options and any restricted stock of the
directors of the Company representing the Dickstein Sellers who resigned in
connection with the Three Cities transaction or, in the case of a continuing
Dickstein nominee, who ceases in the future to be a director, will vest upon
termination of their office and, in the case of options, will remain outstanding
for the balance of the option term; that so long as the Dickstein Sellers own at
least 5% of the outstanding Common Stock they will be entitled to nominate one
director to the Company's Board; that neither the Company nor the Dickstein
Sellers has any claims against the other; and that the Company will reimburse
the Dickstein Sellers for certain expenses. The Company Agreement is
<PAGE>
SCHEDULE 13D
CUSIP No. 527016109 Page 12 of 14 Pages
annexed to this Schedule as Exhibit 4, and the foregoing description of the
document is qualified by reference to that Exhibit."
IV. Item 7 of the Schedule 13D "Materials to be filed as Exhibits" shall be
amended by adding the following Exhibits:
Exhibit 3: Stock Purchase Agreement by and among Three Cities Offshore II,
C.V., Three Cities Fund II L.P. and Dickstein & Co., L.P., Dickstein Focus Fund
L.P., Dickstein International Limited and Mark Dickstein dated as of May 12,
1999.
Exhibit 4: Agreement dated as of May 12, 1999 by and among The Leslie Fay
Company, Inc. and Dickstein & Co., L.P., Dickstein Focus Fund L.P., Dickstein
International Limited and Mark B. Dickstein.
<PAGE>
SCHEDULE 13D
CUSIP No. 527016109 Page 13 of 14 Pages
SIGNATURE
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certifies that the information set forth in this
Statement is true, complete and correct.
Date: May 13, 1999
DICKSTEIN & CO., L.P.
By: Alan Cooper,
as Vice President of Dickstein Partners Inc.,
the general partner of
Dickstein Partners, L.P.,
the general partner of Dickstein & Co., L.P.
/s/ Alan Cooper
-----------------------------------
Name: Alan Cooper
DICKSTEIN INTERNATIONAL LIMITED
By: Alan Cooper,
as Vice President of Dickstein Partners Inc.,
the agent of Dickstein International Limited
/s/ Alan Cooper
-----------------------------------
Name: Alan Cooper
DICKSTEIN FOCUS FUND L.P.
By: Alan Cooper,
as Vice President of Dickstein Partners Inc.,
the general partner of
Dickstein Partners, L.P.,
the general partner of
Dickstein Focus Fund L.P.
/s/ Alan Cooper
-----------------------------------
Name: Alan Cooper
<PAGE>
SCHEDULE 13D
CUSIP No. 527016109 Page 14 of 14 Pages
DICKSTEIN PARTNERS, L.P.
By: Alan Cooper, as Vice President
of Dickstein Partners Inc., the
general partner of Dickstein Partners, L.P.
/s/ Alan Cooper
-----------------------------------
Name: Alan Cooper
DICKSTEIN PARTNERS INC.
By: Alan Cooper, as Vice President
/s/ Alan Cooper
-----------------------------------
Name: Alan Cooper
/s/ Mark Dickstein
-----------------------------------
Name: Mark Dickstein
- --------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
by and among
THREE CITIES OFFSHORE II C.V.,
THREE CITIES FUND II, L.P.
and
DICKSTEIN & CO., L.P.,
DICKSTEIN FOCUS FUND L.P.,
DICKSTEIN INTERNATIONAL LIMITED,
MARK B. DICKSTEIN
--------------------------
Dated as of May 12, 1999
---------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
1. Sale and Purchase of Shares............................................3
1.1 Sale and Purchase of Shares.....................................3
1.2 Purchase Price..................................................3
2. The Closing............................................................4
3. Representations and Warranties of Sellers..............................4
3.1 Title to the Shares.............................................4
3.2 Authority to Execute and Perform Agreement......................4
3.3 Governmental Approvals..........................................5
4. Representations and Warranties of the Buyers...........................5
4.1 Due Organization and Authority..................................5
4.2 Authority to Execute and Perform Agreements.....................6
4.3 Government Approvals............................................6
4.4 Private Placement...............................................7
4.5 Share Ownership.................................................7
5. Covenants and Agreements...............................................8
5.1 Proxy Statement.................................................8
5.2 Sellers' Representative.........................................8
5.3 Voting Agreement................................................8
5.4 Price Protection...............................................10
5.5 Notice of Negotiations.........................................11
6. Survival of Representations and Warranties of the Buyers
and the Sellers After Closing.........................................12
7. Miscellaneous.........................................................12
7.1 Certain Definitions............................................12
7.2 Publicity......................................................13
7.3 Notices........................................................14
7.4 Entire Agreement...............................................15
7.5 Waivers and Amendments.........................................15
7.6 GOVERNING LAW..................................................16
7.7 Binding Effect; No Assignment..................................16
7.8 Variations in Pronouns.........................................16
7.9 Counterparts...................................................16
7.10 Headings.......................................................16
7.11 Severability of Provisions.....................................16
i
<PAGE>
Exhibits
Exhibit A Share Ownership
Exhibit B Form of Merger Agreement
Exhibit C Form of Company Agreement
Exhibit D Book Entry Account
Exhibit E Wire Instructions
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of May 12, 1999 (the
"Agreement"), is made by and among THREE CITIES OFFSHORE II C.V., a Netherlands
Antilles limited partnership ("TCO"), and THREE CITIES FUND II, L.P. ("TCF II"
and, together with TCO, the "Buyers") and Dickstein & Co., L.P., Dickstein Focus
Fund L.P., Dickstein International Limited and Mark B. Dickstein (each, a
"Seller," and collectively, the "Sellers"). Capitalized terms used herein but
not otherwise defined shall have the meanings given them in Section 7.1 of the
Agreement.
WHEREAS, the Sellers are the beneficial owners of an aggregate of
2,799,736 shares (the "Aggregate Shares") of common stock, par value $0.01 per
share ("Company Common Stock"), of The Leslie Fay Company, Inc., a Delaware
corporation (the "Company"), and the holders of options for an aggregate of
10,000 shares of Company Common Stock of which options to purchase 3,333 shares
of Company Common Stock are currently exercisable;
WHEREAS, each Seller agrees to sell the shares set forth on
Exhibit A hereto and the Buyers agree to purchase such shares, aggregating to
2,158,000 Shares (the "Shares"), upon the terms and subject to the conditions of
this Agreement;
WHEREAS, concurrently with the execution of this Agreement, the
Buyers, TCR Acquisition Sub Co., a Delaware corporation owned by the Buyers
("Merger Sub"), and the Company are entering into an Agreement and Plan of
Merger (the "Merger Agreement") substantially in the form of Exhibit B, pursuant
to which,
<PAGE>
2
subject to the terms and conditions contained therein, Merger Sub will merge
with and into the Company (the "Merger");
WHEREAS, concurrently with the execution of this Agreement, the
Company and the Buyers are entering into a registration rights agreement,
pursuant to which the Company is agreeing to provide to the Buyers certain
registration rights upon the terms and subject to the conditions set forth
therein;
WHEREAS, concurrently with or prior to the execution hereof, each
of the Company and the Buyers have received copies of the resignation letters of
Mark B. Dickstein and Chaim Y. Edelstein resigning from their positions as
directors effective upon the Closing (as defined herein);
WHEREAS, concurrently with or prior to the execution hereof, the
Buyers have received a copy of the resolution by the Company's continuing
directors to appoint H. Whitney Wagner and Thomas G. Weld to fill the vacancies
on the Board created by the resignations referred to in the preceding paragraph,
effective at the Closing;
WHEREAS, concurrently with or prior to the execution hereof, the
Buyers have received a copy of the resolution of the Company's Board authorizing
all appropriate and necessary actions such that the restrictions on business
combinations in Section 203 of the Delaware General Corporation Law will not
have any effect on the purchase of Shares contemplated herein, the Merger or the
other transactions contemplated by the Merger Agreement; and
<PAGE>
3
WHEREAS, concurrently with or prior to the execution of this
Agreement, the Sellers and the Company are entering into an agreement
substantially in the form of Exhibit C.
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants and for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Buyers and the Sellers
agree as follows:
1. Sale and Purchase of Shares.
1.1 Sale and Purchase of Shares. (i) The Sellers are
hereby selling, and the Buyers are hereby purchasing, all of the Shares, (ii)
the Sellers are either (A) delivering or causing to be delivered to the Buyers
certificates representing the Shares, accompanied by stock powers duly executed
in blank, in proper form for transfer, and with all appropriate stock transfer
tax stamps affixed or (B) causing to be made a book entry transfer with "free
delivery" of the Shares sold by such member to an account designated by the
Buyers maintained at the Depository Trust Company, as set forth on Exhibit D
(the "Book Entry Account") and (iii) upon delivery of the Shares as provided in
clause (ii) above, the Buyers shall deliver the Purchase Price (as hereinafter
defined) by wire transfer of immediately available funds to the accounts of the
Sellers set forth on Exhibit E.
1.2 Purchase Price. The purchase price for the Shares (the
"Purchase Price") is an amount equal to $6.95 per share.
<PAGE>
4
2. The Closing. The closing (the "Closing") of the sale and
purchase of the Shares is taking place simultaneously with the execution and
delivery of this Agreement at the offices of Paul, Weiss, Rifkind, Wharton &
Garrison, 1285 Avenue of the Americas, New York, NY.
3. Representations and Warranties of Sellers. Each Seller,
severally, but not jointly, represents and warrants to the Buyers as follows:
3.1 Title to the Shares. The Sellers are the beneficial
holders of all of the Shares, free and clear of any Liens and, upon delivery of
and payment for the Shares as herein provided, the Sellers will convey to the
Buyers ownership of the Shares by book-entry transfer or certificates
representing Shares, accompanied by stock powers duly executed in blank, in each
case, free and clear of any Liens.
3.2 Authority to Execute and Perform Agreement. Each
Seller has, as applicable, all personal, limited partnership or company right,
power and authority required to enter into, execute and deliver this Agreement
and to perform fully their obligations hereunder. This Agreement has been duly
executed and delivered by the Sellers and (assuming the due authorization,
execution and delivery hereof by the Buyers) is a legal, valid and binding
obligation of the Sellers enforceable in accordance with its terms and
conditions, subject, as to enforcement, to bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or other similar
laws affecting creditors' rights and to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity). Assuming
<PAGE>
5
the accuracy of and in reliance upon the representations and warranties of the
Buyers set forth in Section 4.4, the execution and delivery of this Agreement,
the sale of the Shares contemplated hereby, and the performance by the Sellers
of this Agreement in accordance with its terms and conditions will not: (i)
conflict with or result in any breach or violation of any of the terms and
conditions of, or constitute (or with notice or lapse of time or both
constitute) a default under, any statute, regulation, order, judgment or decree
applicable to the Sellers or to their Shares, or any instrument, contract or
other agreement to which the Sellers are party or by or to which the Sellers are
or their Shares are bound or subject; or (ii) result in the creation of any Lien
on the Shares, other than as contemplated by this Agreement.
3.3 Governmental Approvals. Except for filings required to
be made in compliance with applicable provisions of the Exchange Act and the
rules and regulations thereunder, and in reliance upon the representations and
warranties of the Buyers made pursuant to Section 4.4, no authorization or
approval or other action by, and no notice to or filing with, any Governmental
or Regulatory Body or court of law or any other Person is required to be made or
obtained by the Sellers for (i) the consummation of the transactions
contemplated by this Agreement or (ii) the due execution, delivery and
performance by the Sellers of this Agreement.
4. Representations and Warranties of the Buyers. Each Buyer,
severally but not jointly, represents and warrants to the Sellers as follows:
<PAGE>
6
4.1 Due Organization and Authority. Such Buyer is a
limited partnership duly organized, validly existing and in good standing in the
jurisdiction of its organization.
4.2 Authority to Execute and Perform Agreements. Each
Buyer has all necessary limited partnership right, power and authority and
approval required to enter into, execute and deliver this Agreement and to
perform fully its obligations hereunder. This Agreement has been duly executed
and delivered by the Buyers and (assuming the due authorization, execution and
delivery hereof by the Sellers) is a legal, valid and binding obligation of the
Buyers enforceable in accordance with its terms and conditions, subject, as to
enforcement, to bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium or other similar laws affecting creditors' rights and to
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity). The execution and delivery of this Agreement,
the sale of the Shares contemplated hereby, and the performance by the Buyers of
this Agreement in accordance with its terms and conditions will not conflict
with or result in any breach or violation of any of the terms and conditions of,
or constitute (or with notice or lapse of time or both constitute) a default
under, any statute, regulation, order, judgment or decree applicable to the
Buyers, or any instrument, contract or other agreement to which the Buyers are a
party or by or to which the Buyers are bound or subject.
4.3 Government Approvals. Except for filings required to
be made in compliance with applicable provisions of the Exchange Act and the
rules
<PAGE>
7
and regulations thereunder, no authorization or approval or other action by, and
no notice to or filing with, any Governmental or Regulatory Body or court of law
or any other Person, is required to be made or obtained by the Buyers for (i)
the consummation of the transactions contemplated by this Agreement (other than
the Merger as to which no representation is made) or (ii) the due execution,
delivery and performance by the Buyers of this Agreement.
4.4 Private Placement. The Buyers acknowledge that, other
than as expressly set forth herein, no Seller or any Affiliate of a Seller has
made any representation or warranty, either express or implied, as to the
accuracy or completeness of any of the information provided or made available to
the Buyers or their agents or representatives. The Buyers, to the extent
believed necessary, have discussed the agreements which the Buyers make by
signing this Agreement, and the applicable limitations upon the Buyers' transfer
or resale of the Shares, with its legal advisors. The Buyers understand that no
United States federal or state agency has made any finding or determination
regarding the fairness of the sale of the Shares for investment or any
recommendation or endorsement of the sale of the Shares. The Buyers are not
purchasing the Shares with a view to a distribution or resale of any of such
securities in violation of any applicable securities laws. The Company or its
agents has provided or made available to the Buyers documentary information
concerning the Company, including the Company's filings under the Exchange Act
and recent press releases of the Company. The Buyers have such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of an investment in
<PAGE>
8
the Shares. The Buyers are financially able to bear the economic risk of this
investment, including the ability to afford holding the Shares for an indefinite
period or to afford a complete loss of such investment.
4.5 Share Ownership. The Buyers do not own any shares of
Company Common Stock.
5. Covenants and Agreements. The parties covenant and agree as
follows:
5.1 Proxy Statement. The Buyers agree, after the public
announcement of the execution and delivery of the Merger Agreement, to use all
reasonable efforts to cooperate with the Company to file the Proxy Statement (as
defined in the Merger Agreement), subject to the terms and conditions of the
Merger Agreement, as soon as reasonably practicable after the date hereof.
5.2 Sellers' Representative. For as long as the Sellers
Beneficially Own in the aggregate more than five percent of the outstanding
shares of Company Common Stock, the Buyers agree to vote their shares of Company
Common Stock in favor of one nominee to the Board designated by the Sellers;
provided that such nominee is reasonably satisfactory to the Buyers. The Buyers
acknowledge and agree that Mark Kaufman is reasonably satisfactory to them.
5.3 Voting Agreement. From the date hereof until the date
following the earliest to occur of (a) the disapproval of the Merger Agreement
by the Company's stockholders, (b) the termination of the Merger Agreement in
accordance
<PAGE>
9
with its terms or (c) the consummation of the Merger, the Sellers hereby agree
as follows:
(a) to appear, or cause the holder of record (the
"Record Holder") of any of the Aggregate Shares then Beneficially Owned by the
Sellers (the "Remaining Shares") on any applicable record date to appear, for
the purpose of obtaining a quorum at any annual or special meeting of
stockholders of the Company and at any adjournment thereof, at which matters
relating to the Merger, the Merger Agreement or any transaction contemplated
thereby are considered;
(b) at any meeting of the stockholders of the
Company, however called, and in any action by consent of the stockholders of the
Company, to vote, or cause to be voted by the Record Holder, the Remaining
Shares:
(A) in favor of the adoption of the Merger
Agreement; and (B) against any proposal for any extraordinary corporate
transaction, such as a recapitalization, dissolution, liquidation or sale of
assets of the Company, or any merger, consolidation or other business
combination (other than the Merger) between the Company and any Person or any
other action or agreement that is intended or which reasonably could be expected
to (x) result in a breach of any representation or warranty, covenant or any
other obligation or agreement of the Company under the Merger Agreement, (y)
result in any of the conditions to the Company's obligations under the Merger
Agreement not being fulfilled or (z) impede, interfere with, delay, postpone or
materially adversely affect the Merger and the transactions contemplated by the
Merger Agreement;
<PAGE>
10
(c) not to sell, assign or otherwise transfer the
Remaining Shares, directly or indirectly, to any Person unless such Person has
previously agreed in writing, in a form reasonably satisfactory to the Buyers,
to be bound with respect to such Shares by the provisions of this Section 5.3;
and
(d) not to enter into any agreement inconsistent
with this Section 5.3.
5.4 Price Protection. If at any time after the date hereof
and before the consummation of the Merger (x) a third party enters into
negotiations or discussions with the Company or either or both of the Buyers
for, or makes an offer with respect to the acquisition of, the Company,
substantially all of the assets of the Company or at least a majority of the
outstanding voting shares of the Company (an "Alternative Transaction"), in each
case, at a higher price per share than the Purchase Price and (y) within 12
months after the date hereof, such third party consummates an Alternative
Transaction at a higher price per share than the Purchase Price, the Buyers
shall pay by wire transfer of immediately available funds to the Sellers,
promptly after the consummation of the Alternative Transaction, an aggregate
amount equal to the product of (x) the Protected Shares (as defined below); and
(y) the Price Differential (as defined below). All references herein to the
price of shares or number of shares shall be subject to appropriate adjustment
for any stock split, subdivision of shares, reverse stock split, combination of
shares, stock dividend or similar transaction.
"Protected Shares" means 650,000 or, if the Alternative
Transaction is an offer to acquire less than all of the outstanding voting
shares of the Company, the
<PAGE>
11
product of (i) the percentage of outstanding shares (expressed as a decimal)
offered to be acquired and (ii) 650,000.
"Price Differential" means the excess, if any, of (i) the price
per share payable in the Alternative Transaction (provided that if the
consideration payable in the Alternative Transaction is other than cash, the
value of such consideration shall be determined in good faith by the Company's
Board of Directors); over (ii) the sum of (x) the Purchase Price and (y) the
Cost of Capital (as defined below).
The "Cost of Capital" means the product of (i) the Purchase
Price, (ii) 12% and (iii) a fraction, the numerator of which is equal to the
number of days from (and including) the date hereof to (but excluding) the date
of the consummation of the Alternative Transaction, and the denominator of which
is 360.
5.5 Notice of Negotiations. Each Buyer agrees that in the
event that during the period from the date hereof until the date following the
earliest to occur of (a) the disapproval of the Merger Agreement by the
Company's stockholders, (b) the termination of the Merger Agreement in
accordance with its terms or (c) the consummation of the Merger, it, any of its
subsidiaries, or its or their respective officers, directors, or representatives
engage in any negotiations or substantive discussions with any Person with
respect to any Alternative Transaction, it will, as promptly as reasonably
practicable, notify Mark Dickstein as representative of the Sellers of the
existence of such negotiations or discussions; provided, however, that the
failure to give such notice promptly shall not constitute a breach of this
Section 5.5 except to the extent that the Sellers are materially prejudiced
thereby. Each Seller acknowledges that it is aware, and that it will advise its
representatives who become aware of the information referred to in the prior
sentence, that the United States securities laws prohibit any Person who has
material, non-public information concerning an issuer such as the Company from
purchasing or selling securities of such issuer or from communicating such
information to any other Person under circumstances in which it is reasonably
foreseeable that such Person may purchase or sell such securities. Each Seller
agrees to keep such information confidential and not to use, or allow the use by
any of its representatives and agents of, any portion of such information for
any purpose other than monitoring a possible Alternative Transaction for the
applicability of the price protection covenant contained herein.
<PAGE>
12
6. Survival of Representations and Warranties of the Buyers and
the Sellers After Closing. Notwithstanding any right of the Buyers, on the one
hand, or the Sellers, on the other, to investigate and notwithstanding any
knowledge of facts determined or determinable by the Buyers or the Sellers
pursuant to such investigation or right of investigation, the Buyers and the
Sellers have the right to rely fully upon the representations of the other party
contained in this Agreement. The rights and remedies at law or equity of the
Buyers and the Sellers shall not be diminished or otherwise affected by the
knowledge of such party at any time of any facts relating to the matters
represented or warranted by the other party in this Agreement.
7. Miscellaneous.
7.1 Certain Definitions. (a) As used in this Agreement,
the following terms have the following meanings:
(i) "Affiliate" means, with respect to any Person,
any other Person controlling, controlled by or under common control with, or the
spouse or lineal descendants or beneficiaries of, such Person.
(ii) "Beneficial Ownership." For purposes of this
Agreement, "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean "beneficial ownership" of such securities (as determined
pursuant to Rule 13d-3 under the Exchange Act).
<PAGE>
13
(iii) "Exchange Act" means the Securities Exchange
Act of 1934, as amended.
(iv) "Governmental or Regulatory Body" means any
government or political subdivision thereof, whether federal, state, local or
foreign, or any agency or instrumentality of any such government or political
subdivision.
(v) "Lien" means any lien, pledge, mortgage,
security interest, claim, lease, charge, option, right of first refusal,
easement, servitude, transfer restriction under any shareholder or similar
agreement, encumbrance or any other restriction or limitation whatsoever, other
than restrictions arising under federal or state securities laws.
(vi) "Order" means any order, judgment, injunction,
award, decision, determination, decree or writ.
(vii) "Person" means any individual, corporation,
limited liability company, partnership, firm, joint venture, association,
joint-stock company, trust, unincorporated organization, Governmental Body or
other entity.
7.2 Publicity. The Buyers and the Sellers shall not issue
any press release or public announcement concerning this Agreement, the Merger
or the transactions contemplated hereby or thereby without the prior written
consent of the other party, which consent shall not be unreasonably withheld or
delayed, except where such release or announcement is required by applicable
law, including without limitation, any filing obligations under any state or
federal securities laws, in which
<PAGE>
14
case the party will use its reasonable best efforts to provide a copy to the
other party prior to any release or public announcement.
7.3 Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally, sent
by facsimile transmission or sent by certified, registered or express mail,
postage prepaid. Any such notice shall be deemed given when so delivered
personally or sent by facsimile transmission or, if mailed, five days after the
date of deposit in the United States mails, as follows:
(i) if to the Buyers, to:
Three Cities Research, Inc.
650 Madison Avenue
24th Floor
New York, NY 10022
Attention: Willem F. P. de Vogel
Telephone: (212) 838-9660
Facsimile: (212) 980-1142
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Judith R. Thoyer, Esq.
Telephone: (212) 373-3000
Facsimile: (212) 757-3990
<PAGE>
15
(ii) if to the Sellers, to:
Dickstein Partners Inc.
660 Madison Avenue, 16th Floor
New York, New York 10021
Attention: Alan S. Cooper
Telephone: (212) 754-5424
Facsimile: (212) 980-7132
with a copy to:
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
Attention: Abbe L. Dienstag, Esq.
Telephone: (212) 715-9100
Facsimile: (212) 715-8000
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
7.4 Entire Agreement. This Agreement contains the entire
agreement among the parties with respect to the purchase of the Shares and
supersedes all prior agreements, written or oral, with respect thereto.
7.5 Waivers and Amendments. This Agreement may be amended,
superseded, canceled, renewed or extended, and the terms hereof may be waived,
only by a written instrument signed by the Buyers and the Sellers or, in the
case of a waiver, by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any such right,
power or privilege, nor
<PAGE>
16
any single or partial exercise of any such right, power or privilege, preclude
any further exercise thereof or the exercise of any other such right, power or
privilege.
7.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
7.7 Binding Effect; No Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and legal representatives. This Agreement is not assignable, except
that the Buyers may assign their rights hereunder to any of their Affiliates.
7.8 Variations in Pronouns. All pronouns and any
variations thereof refer to the masculine, feminine or neuter, singular or
plural, as the context may require.
7.9 Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument.
7.10 Headings. The headings in this Agreement are for
reference only, and shall not affect the interpretation of this Agreement.
7.11 Severability of Provisions. If any provision or any
portion of any provision of this Agreement, or the application of any such
provision or any portion thereof to any Person or circumstance, shall be held
invalid or unenforce-
<PAGE>
17
able, the remaining portion of such provision and the remaining provisions of
this Agreement, and the application of such provision or portion of such
provision as is held invalid or unenforceable to Persons or circumstances other
than those as to which it is held invalid or unenforceable, shall not be
affected thereby so long as the economic or legal substance of the transaction
contemplated hereby is not affected in any manner adverse to any party. Upon a
determination that any term or other provision is invalid or unenforceable, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the fullest extent possible.
<PAGE>
18
IN WITNESS WHEREOF, the parties have executed this Agreement on
the date first above written.
THREE CITIES OFFSHORE II C.V.
By: THREE CITIES ASSOCIATES N.V.,
its general partner
By: _______________________________
J. William Uhrig
Managing Director
THREE CITIES FUND II, L.P.
By: TCR ASSOCIATES, L.P.,
its general partner
By: _______________________________
Willem F. P. de Vogel
General Partner
<PAGE>
19
DICKSTEIN & CO., L.P.
By: DICKSTEIN PARTNERS L.P.,
its general partner
By: DICKSTEIN PARTNERS INC.,
its general partner
By: _______________________________________
Name:
Title:
DICKSTEIN FOCUS FUND L.P.
By: DICKSTEIN PARTNERS L.P.,
its general partner
By: DICKSTEIN PARTNERS INC.,
its general partner
By: _______________________________________
Name:
Title:
DICKSTEIN INTERNATIONAL LIMITED
By: DICKSTEIN PARTNERS INC.,
its advisor
By: _______________________________________
Name:
Title:
___________________________________________
Mark B. Dickstein
<PAGE>
20
EXHIBIT A
Seller Number of Shares
- ------ ----------------
Dickstein & Co., LP 1,464,924
Dickstein International Limited 270,476
Dickstein Focus Fund L.P. 340,600
Mark Dickstein 82,000
<PAGE>
21
EXHIBIT B
[Form of Merger Agreement to be attached]
<PAGE>
22
EXHIBIT C
[Form of Company Agreement to be attached]
<PAGE>
23
EXHIBIT D
- --------------------------------------------------------------------------------
A. 2000 certificated Shares delivered at the Closing
- --------------------------------------------------------------------------------
B. Merrill Lynch (DTC # 0161)
(a) 1,354,120 shares for the benefit of
Three Cities Offshore II C.V.
Account No. 46130043; and
(b) 801,880 shares for the benefit of
Three Cities Fund II, L.P.
Account No. 46107269
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
24
EXHIBIT E
A. For the 2000 Certificated Shares:
To Mark Dickstein
Chase Manhattan Bank
ABA# 021-000021
A/c Mark Dickstein
A/c# 024-256609
B. For the 2,156,000 Shares held in the Depository Trust Company:
Merrill Lynch, on behalf of the Buyers, pays to Spear Leeds & Kellog
(DTC Account # 501), on account of the Sellers.
ii
AGREEMENT
This Agreement dated as of May 12, 1999 (the "Agreement") is made by
and among The Leslie Fay Company, Inc., a Delaware corporation (the "Company"),
and Dickstein & Co., L.P., Dickstein Focus Fund L.P., Dickstein International
Limited and Mark B. Dickstein (collectively, the "Dickstein Group").
WHEREAS, the Dickstein Group has simultaneously herewith entered into a
Stock Purchase Agreement (the "Stock Purchase Agreement") with Three Cities
Offshore II C.V., a Netherlands Antilles limited partnership, and Three Cities
Fund II, L.P., a Delaware limited partnership (collectively, the "Buyers"),
pursuant to which the Dickstein Group is selling to the Buyer an aggregate of
2,158,000 of common stock, par value $0.01 per share, of the Company ("Common
Stock");
WHEREAS, the Company has simultaneously herewith entered into an
Agreement and Plan of Merger (the "Merger Agreement") with Buyers and a
wholly-owned subsidiary of Buyers ("Merger Sub") providing for the merger of
Merger Sub into the Company (the "Merger");
WHEREAS, the Dickstein Group is the beneficial owner of an aggregate of
2,799,736 shares of Common Stock of the Company;
NOW, THEREFORE, in consideration of mutual representations, warranties
and covenants and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Dickstein
Group agree as follows:
<PAGE>
1. As long as the Dickstein Group beneficially owns (within the meaning
of Rule 13d- 3 under the Securities Exchange Act of 1934) at least 5% of the
outstanding shares of Common Stock of the Company or has a representative on the
Board of Directors of the Company, the Company will use its best efforts to
maintain the effectiveness of the Registration Statement on Form S-1 (file no.
333-68569) with respect to the resale of shares of Common Stock owned by members
of the Dickstein Group (as such registration statement may be amended from time
to time, including by amendment on any other permitted form, the "Registration
Statement") and the compliance of the Registration Statement with the provisions
of the Securities Act of 1933, as amended, and the regulations promulgated
thereunder (the "Act") to permit the resale thereunder from time to time and at
any time of the shares of Common Stock owned by the Dickstein Group (other than
shares of Common Stock hereafter acquired by the Dickstein Group), including,
without limitation, by amending the Registration Statement or supplementing the
prospectus contained in the Registration Statement or supplementing the
prospectus contained in the Registration Statement to the extent required by the
Act; provided, however, that the Company may delay filing any such amendment or
supplement during such period of time if in the reasonable judgment of the chief
executive officer of the Company (certified in writing to the Dickstein Group,
if so requested) disclosure of then non-public information required to be
contained in the amendment or supplement would not be in the best interests of
the Company and in such event the Dickstein Group shall be required during such
period of time to discontinue disposition of any shares of Common Stock of the
Company pursuant to such Registration Statement and any disposition during such
period shall be made pursuant to applicable law; provided further that the
Company shall make any filing required
-2-
<PAGE>
pursuant to this Section 1 as promptly as practicable after the basis for
delaying such filing ceases to apply, and in no event shall the period during
which the Dickstein Group cannot sell under the Registration Statement on
account of the preceding proviso exceed 75 days in the aggregate during any 365
day period. Notwithstanding the foregoing, in the event that outside counsel for
the Company having recognized expertise in securities law matters (which may be
Parker Chapin Flattau & Klimpl, LLP) renders its written opinion to the
Company's transfer agent that all of the shares of Common Stock owned by the
Dickstein Group may be sold without registration under the Act without volume
limitations or any other restrictions, the obligations of the Company under this
paragraph 1 shall cease.
2. The Company will take all action required to accelerate the vesting
of stock options and any restricted stock currently held by Mark Dickstein and
Chaim Edelstein and, at such time as he is no longer director of the Company,
Mark Kaufman and to provide that following such acceleration such options shall
remain exercisable for the duration of their term notwithstanding that the
optionholder has ceased to be a director. The Company acknowledges that Messrs.
Edelstein and Kaufman are intended to be third party beneficiaries of the
foregoing obligation of the Company, and they may enforce the obligation of the
Company pursuant thereto as if they were parties to this Agreement.
3. As long as the Dickstein Group beneficially owns at least 5% of the
outstanding shares of Common Stock of the Company, they shall have the right to
designate one nominee, reasonably satisfactory to the Company, as a director of
the Company. The Company acknowledges that Mark Kaufman is reasonably
satisfactory to the Company.
-3-
<PAGE>
4. The Company agrees to reimburse up to $100,000 of expenses
(including reasonable legal fees) incurred by the Dickstein Group in connection
with the transactions contemplated by this Agreement, subject to the furnishing
of reasonable documentation thereof.
5. The Company, on the one hand, and each member of the Dickstein
Group, on the other hand, mutually acknowledge, represent and warrant that each
has no claim, demand, cause of action, obligation, damage or liability
whatsoever of every kind and nature, at law or in equity, against the other for
any period prior to the date of this Agreement.
6. The Company agrees that in the event that during the period from the
date hereof until the date following the earliest to occur of (a) the
disapproval of the Merger Agreement, (b) the termination of the Merger Agreement
in accordance with its terms or (c) the consummation of the Merger, it, any of
its subsidiaries, or its or their respective officers, directors or
representatives engage in any negotiations or substantive discussions with any
person with respect to any merger, consolidation or other business combination
involving the Company or any of its subsidiaries or the acquisition of more that
50% of the capital stock of the Company or substantially all of the assets of
the Company and its subsidiaries, taken as a whole, it will, as promptly as
reasonably practicable, notify Mark Dickstein as representative of the Dickstein
Group of the existence of such negotiations or discussions; provided, however,
that the failure to give such notice promptly shall not constitute a breach of
this Section 6 except to the extent that the Dickstein Group is materially
prejudiced thereby. The Dickstein Group acknowledges that it is aware, and that
it will advise its representatives who become aware of the information referred
to in the prior sentence, that the United States securities laws prohibit any
person who has material, non-public information concerning an issuer such as the
Company from purchasing or
-4-
<PAGE>
selling securities of such issuer or from communicating such information to any
other person under circumstances in which it is reasonably foreseeable that such
person may purchase or sell such securities. The Dickstein Group agrees to keep
such information confidential and not to use, or allow the use by any of its
representatives and agents of, any portion of such information for any purpose
other than monitoring the potential applicability of Section 5.4 of the Stock
Purchase Agreement.
7. Any notice or other communication required or permitted hereunder
shall be in writing and shall be delivered personally, sent by facsimile
transmission or sent by certified, registered or express mail, postage prepaid.
Any such notice shall be deemed given when so delivered personally or sent by
facsimile transmission or, if mailed, five days after the date of deposit in the
United States mails, as follows:
If to the Company, to
The Leslie Fay Company, Inc.
1412 Broadway
New York, New York 10018
Attention: John J. Pomerantz
Telephone No.: (212) 221-4141
Facsimile No.: (212) 221-4287
with a copy to:
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
Attention: Michael J. Shef, Esq.
Telephone: (212) 704-6140
Facsimile: (212) 704-6288
If to any member of the Dickstein Group, to it c/o:
Dickstein Partners Inc.
-5-
<PAGE>
660 Madison Avenue, 16th Floor
New York, New York 10021
Attention: Alan S. Cooper
Telephone No.: (212) 754-5424
Facsimile No.: (212) 980-7132
with a copy to:
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
Attention: Abbe L. Dienstag, Esq.
Telephone: (212) 715-9100
Facsimile: (212) 715-8000
8. This Agreement contains the entire agreement among the parties with
respect to the subject matter hereof and supersedes all prior agreements,
written or oral, with respect thereto.
9. This Agreement may be amended, superseded, cancelled, renewed or
extended, and the terms hereof may be waived, only by a written instrument
signed by the Company and the Dickstein Group or, in the case of a waiver, by
the party waiving compliance. No delay on the part of any party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any waiver on the part of any party of any such right, power or privilege,
nor any single or partial exercise of any such right, power or privilege,
preclude any further exercise thereof or the exercise of any other such right,
power or privilege.
10. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHOUT SUCH STATE.
11. This Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors and legal representatives. This
Agreement is not assignable.
-6-
<PAGE>
12. This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute one and the same instrument.
13. The headings in this Agreement are for reference only, and shall
not affect the interpretation of this Agreement.
14. If any provision or any portion of any provision of this Agreement,
or the application of any such provision or any portion thereof to any person or
circumstance, shall be held invalid or unenforceable, the remaining portion of
such provision and the remaining provisions of this Agreement, and the
application of such provision or portion of such provision, shall not be
affected thereby so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any party. Upon a
determination that any term or other provision is invalid or unenforceable, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled
-7-
<PAGE>
to the fullest extent possible.
THE LESLIE FAY COMPANY, INC.
By: ___________________________________
Name:
Title:
DICKSTEIN & CO., L.P.
By: DICKSTEIN PARTNERS L.P.,
its general partner
By: DICKSTEIN PARTNERS INC.,
its general partner
By: ___________________________________
Name:
Title:
DICKSTEIN FOCUS FUND L.P.
By: DICKSTEIN PARTNERS L.P.,
its general partner
By: DICKSTEIN PARTNERS INC.,
its general partner
By: ___________________________________
Name:
Title:
DICKSTEIN INTERNATIONAL LIMITED
By: DICKSTEIN PARTNERS INC.,
its advisor
By: ___________________________________
Name:
Title:
_______________________________________
Mark B. Dickstein
