<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ___)
Siebert Financial Corp.
(Name of Issuer)
Common Stock, $.01 par value
(Title of Class of Securities)
826176 10 9
(CUSIP Number)
With a copy to:
Mr. T. K. Flatley Sarah Hewitt, Esq.
Siebert Financial Corp. Brown Raysman Millstein Felder
885 Third Avenue, Suite 1720 & Steiner LLP
New York, New York 10022 120 West 45th Street
(212) 644-2400 New York, New York 10036
(212) 944-1515
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
November 8, 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 this
statement. [ ]
(Continued on following page(s))
Page 1 of 7 Pages
Exhibit Index Appears on Page 7
<PAGE> 2
Page 2 of 7 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Muriel F. Siebert (no Social Security No.)
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER
OF A GROUP (a) [ ]
(b) [ ]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS not applicable
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [ ]
IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
- -------------------------------------------------------------------------------
NUMBER 7 SOLE VOTING POWER 5,105,000**
OF SHARES ---------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER None**
OWNED BY ---------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER 5,105,000**
REPORTING ---------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER None**
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON 5,105,000 shares**
- -------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES [ ]
CERTAIN SHARES
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 97.5%**
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON IN
_______________________________________________________________________________
**See Item 5 hereof.
<PAGE> 3
Page 3 of 7 Pages
Item 1. Security and Issuer.
This Statement on Schedule 13D relates to shares of Common Stock, par
value $.01 per share (the "Common Stock"), of Siebert Financial Corp., a New
York corporation (the "Issuer"), whose principal executive offices are located
885 Third Avenue, Suite 1720, New York, New York 10022.
Item 2. Identity and Background.
This Statement is filed by the person listed in Exhibit A attached
hereto (the "Reporting Person"). Exhibit A also sets forth the name,
citizenship, principal business address, present principal occupation or
employment of the Reporting Person, and other information with respect to, the
Reporting Person.
During the five years prior to the date hereof, the Reporting Person
(i) has not been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) has not been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction, as a
result of which such person was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, Federal or state securities laws or finding any violation with
respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
The 5,105,000 shares of Common Stock of the Issuer, held by the
Reporting Person, constituting 97.5% of the issued and outstanding shares of
Common Stock, were acquired by the Reporting Person on November 8, 1996 through
the merger (the "Merger") of Muriel Siebert Capital Markets Group, Inc.
("MSCMG"), the sole shareholder of Muriel Siebert & Co., Inc. ("Siebert"), with
and into J. Michaels, Inc. ("JMI") which changed its name to Seibert Financial
Corp., on the terms and conditions contained in the Plan and Agreement of
Merger, dated as of April 24, 1996, as amended, between MSCMG and JMI (the
"Merger Agreement"). The Reporting Person was the sole shareholder of MSCMG,
holding 1,500 shares of Common Stock, no par value ("MSCMG Common Stock"). Each
share of MSCMG Common Stock owned by the Reporting Person as of the effective
date of the Merger was converted into 23,823.33 shares of JMI Common Stock, par
value $1.00 per share ("JMI Common Stock"). The number of shares of JMI Common
Stock was fixed so that the Reporting Person, the sole shareholder of MSCMG,
received an aggregate of 97.5% of the issued and outstanding shares of JMI
Common Stock. No additional consideration was paid by the Reporting Person for
the shares.
<PAGE> 4
Page 4 of 7 Pages
Item 4. Purpose of Transaction.
The purpose of the Merger was so that MSCMG could merge with and into a
publicly-owned company. Although JMI had been in the retail furniture business
for more than 100 years, the last few years had witnessed an overall decline in
the strength of its core retail furniture business in Brooklyn, New York.
Management of JMI felt that it would be in the best interests of the
shareholders of JMI to sell JMI's assets, and distribute the net proceeds,
after payment of all liabilities, to the shareholders of JMI. In connection
with the Merger, after an initial distribution concurrently with the
consummation of the Merger of $11.50 per share to JMI's shareholders at the
effective time of the Merger, all of JMI's remaining assets were transferred
to a liquidating trust pursuant to the Merger Agreement at the effective time
of the Merger and are to be sold and the proceeds thereof distributed from time
to time to JMI's shareholders after the effective date of the Merger. The
Issuer will continue the business of MSCMG, providing discount brokerage and
investment banking services. The Reporting Person, with 97.5% ownership of the
Issuer, will be the controlling shareholder of the Issuer. Immediately after
the Merger, the Issuer effected a reverse split of the shares of JMI Common
Stock outstanding on a one for seven basis.
In connection with the Merger, the Issuer's Certificate of
Incorporation was amended and restated to increase the authorized shares from
583,718 to 49,000,000, and to reduce the par value of the Common Stock from
$1.00 to $.01 per share.
Except as indicated in this Schedule 13D, the Reporting Person
currently has no specific plans or proposals that relate to or would result in
any of the matters described in subparagraphs (a) through (j) of Item 4 of
Schedule 13D.
Item 5. Interest in Securities of the Issuer.
The Reporting Person may be deemed to own beneficially 5,105,000 shares
of Common Stock, constituting 97.5% of the Issuer's total outstanding shares of
Common Stock, as determined in accordance with Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Reporting Person has
sole power to vote or to direct the vote, and to dispose or to direct the
disposition of, all of such shares.
Except as set forth in the immediately preceding paragraph, the
Reporting Person does not own any shares of Common Stock of the Issuer and is
not the "beneficial owner" of any such shares, as such term is defined in the
Exchange Act or the rules and regulations thereunder.
<PAGE> 5
Page 5 of 7 Pages
Except as set forth herein, the Reporting Person does not beneficially
own any shares of Common Stock of the Issuer or has not engaged in any
transaction in any such shares during the sixty day period immediately
preceding the date hereof.
(d) & (e) Inapplicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with respect to Securities
Of the Issuer.
Reference is hereby made to item 3 hereof for a description of the
Merger Agreement. Except as described therein, the Reporting Person does not
have any contract, arrangement, understanding or relations with one or more
security holders of the Issuer or others, with respect to the purchase,
holding, voting or disposition of shares of Common Stock or other securities of
the Issuer which are convertible or exercisable into such shares. The Reporting
Person reserves the right to enter into any such contract, arrangement,
understanding or relations in the future.
Item 7. Material to be Filed as Exhibits.
Exhibit A: Information concerning Reporting Person.
(Filing as Exhibit 99.1)
Exhibit B: Plan and Agreement of Merger, dated as of
April 24, 1996, as amended, between Muriel Siebert
Capital Markets Group, Inc. and J. Michaels, Inc.
(Filing as Exhibit 99.2)
<PAGE> 6
Page 6 of 7 Pages
SIGNATURE
After reasonable inquiry and to the best of her knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
Date: November 26, 1996
/s/ Muriel F. Siebert
------------------------------------
Muriel F. Siebert
<PAGE> 7
Page 7 of 7 Pages
EXHIBIT INDEX
Exhibit A: Information concerning Reporting Person.
(Filing as Exhibit 99.1)
Exhibit B: Plan and Agreement of Merger, dated as of
April 24, 1996, as amended, between Muriel Siebert
Capital Markets Group, Inc. and J. Michaels, Inc.
(Filing as Exhibit 99.2)
<PAGE> 1
EXHIBIT A
---------
Name: Muriel F. Siebert
- ----
Citizenship: United States
- -----------
Principal Occupation: Chair, President and Director of the
- -------------------- Issuer
Address of Principal Siebert Financial Corp.
Business: 885 Third Avenue, Suite 1720
- -------------------- New York, NY 10022
Address of Principal Siebert Financial Corp.
Office: 885 Third Avenue, Suite 1720
- -------------------- New York, NY 10022
<PAGE> 1
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EXHIBIT B
---------
PLAN AND AGREEMENT OF MERGER
BETWEEN
J. MICHAELS, INC.,
A NEW YORK CORPORATION,
AND
MURIEL SIEBERT CAPITAL MARKETS GROUP INC.,
A DELAWARE CORPORATION
------------------------
DATED AS OF APRIL 24, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
PLAN AND AGREEMENT OF MERGER
This PLAN AND AGREEMENT OF MERGER (this "Merger Agreement") is made as of
April 24, 1996 between J. MICHAELS, INC., a New York corporation (the
"Company"), and MURIEL SIEBERT CAPITAL MARKETS GROUP INC., a Delaware
corporation wholly-owned by Muriel Siebert ("MSCMG"). The Company and MSCMG are
sometimes referred to herein as the "Constituent Corporations", and the Company
is sometimes referred to herein as the "Surviving Corporation."
RECITALS
A. The Company was incorporated in the State of New York on April 9, 1934.
Its principal executive offices are located at 182 Smith Street, Brooklyn, New
York 11201. The authorized capital stock of the Company consists of 1,500,000
shares of common stock, par value $1.00 per share (the "Company Common Stock"),
of which 891,282 shares were outstanding and entitled to vote as of April 24,
1996. The number of such outstanding shares of the Company Common Stock is
subject to change prior to the effective time of the merger herein provided for
pursuant to the exercise of current outstanding employee stock options.
B. MSCMG was incorporated in the State of Delaware on November 29, 1993.
Its principal executive offices are located at 885 Third Avenue, Suite 1720, New
York, New York 10022. The authorized capital stock of MSCMG consists of 1,500
shares of common stock, no par value (the "MSCMG Common Stock"), all of which
are outstanding and entitled to vote as of the date hereof.
C. The Boards of Directors of the Company and MSCMG have approved this
Merger Agreement and deem it advisable and for the benefit of their respective
corporations and their stockholders that MSCMG merge with and into the Company
on the terms and conditions herein set forth (the "Merger").
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto agree as follows:
ARTICLE I
MERGER OF THE COMPANY INTO MSCMG
SECTION 1.1. MERGER. Upon the approval and adoption of this Merger
Agreement by the stockholders of each of the Constituent Corporations in
accordance with the laws of the States of New York and Delaware, as appropriate,
and the satisfaction or waiver of the conditions set forth herein to the
obligations of the parties hereto, a certificate of merger shall, subject to the
rights of termination and abandonment hereinafter set forth, be filed with the
Department of State of the State of New York in accordance with the law of the
State of New York and the Secretary of State of the State of Delaware in
accordance with the law of the State of Delaware. Effective as of the close of
business on the date on which the filing of such certificate of merger is made,
MSCMG shall merge with and into the Company, which as the Surviving Corporation
shall continue its corporate existence under the laws of the State of New York
under the name of Siebert Financial Corp. The date and time of such filing is
herein referred to as the "Effective Time of the Merger".
SECTION 1.2. FURTHER ASSURANCES. From time to time as and when requested
by the Surviving Corporation, or by its successors or assigns, the officers and
directors of MSCMG last in office shall execute and deliver such deeds and other
instruments of transfer and shall take or cause to be taken such further or
other act as shall be necessary or advisable in order to vest or perfect in the
Surviving Corporation, or to confirm of record or otherwise to the Surviving
Corporation, title to and possession of all the property, interests, assets,
rights, privileges, immunities, powers and purposes of each of the Constituent
Corporations.
<PAGE> 3
ARTICLE II
CERTIFICATE OF INCORPORATION, BY-LAWS,
DIRECTORS AND OFFICERS, AND STOCK OPTIONS
SECTION 2.1. CHARTER AMENDMENT. At or immediately prior to the Effective
Time of the Merger, the Company shall amend its Certificate of Incorporation to
increase the number of authorized shares of Company Common Stock from 1,500,000
to 49,000,000 (the "Charter Amendment").
SECTION 2.2. CERTIFICATE OF INCORPORATION. Except for the change of name
of the Company as provided herein, the Certificate of Incorporation of the
Company in effect at the Effective Time of the Merger (as amended by the Charter
Amendment) shall be the Certificate of Incorporation of the Surviving
Corporation until amended as provided by law.
SECTION 2.3. BY-LAWS. The by-laws of the Company in effect at the
Effective Time of the Merger shall be the by-laws of the Surviving Corporation
until amended or repealed as provided by law.
SECTION 2.4. DIRECTORS AND OFFICERS. The directors of MSCMG at the
Effective Time of the Merger shall be the directors of the Surviving Corporation
and shall hold office as provided in the by-laws of the Surviving Corporation.
The officers of MSCMG at the Effective Time of the Merger shall be the officers
of the Surviving Corporation and shall hold office as provided in the by-laws of
the Surviving Corporation.
SECTION 2.5. STOCK OPTIONS. The Company's Incentive Stock Option Plan and
the 1987 Stock Option Plan shall be terminated on the date of the Effective Time
of the Merger and any options issued pursuant to such plans not exercised prior
to the Effective Time of the Merger shall be canceled.
ARTICLE III
CONVERSION AND EXCHANGE OF SHARES
AND LIQUIDATION OF THE COMPANY
SECTION 3.1. CONVERSION OF SHARES. The manner and basis of converting the
shares of each Constituent Corporation shall be as follows:
(a) Subject to the provisions of paragraph (b), each share of MSCMG
Common Stock outstanding immediately prior to the Effective Time of the
Merger (other than shares of MSCMG Common Stock held in the treasury of
MSCMG) shall, by virtue of the Merger and without any action on the part of
the holder thereof, be entitled to receive as of the Effective Time of the
Merger 23,823.33 shares of Company Common Stock for each share of MSCMG
Common Stock owned as of the Effective Time of the Merger, such number of
shares of Company Common Stock to be fixed so that the stockholders of
MSCMG as of the Effective Time of the Merger receive an aggregate of 97.5%
of the issued and outstanding shares of Company Common Stock as of the
Effective Time of the Merger.
(b) No certificates for fractions of shares of Company Common Stock
and no scrip or other certificates evidencing fractional interests in such
shares shall be issuable and any such fractional share which would
otherwise be issued shall be canceled without the payment of any amount
therefor. No such stockholder shall be entitled to any voting, dividend or
other rights as a stockholder of the Company with respect to any fractional
share.
(c) The holders of Company Common Stock immediately prior to the
Effective Time of the Merger other than the Dissenting Holders (as defined
below) (such holders other than the Dissenting Holders, the "Existing
Holders") shall at the Effective Time of the Merger receive a cash payment
equal to the Effective Date Payment (as hereinafter defined), and the right
to receive distributions from the liquidating trust to be established by
the Company pursuant to Section 3.2 for the benefit of the Existing Holders
(the "Liquidating Trust"). The Effective Date Payment shall be an amount
equal to the available cash proceeds from the liquidation referred to in
Section 3.2 below (including in such proceeds the net after-tax proceeds of
any assets sold, after payment of all expenses and liabilities of the
Company (including tax liabilities relating to the liquidation), and the
cash and cash equivalents of the Company in
<PAGE> 4
hand immediately prior to the Effective Time of the Merger), less (i)
$500,000 to be placed in escrow pursuant to Section 3.2 below, (ii)
$500,000 to be held by the Liquidating Trust to pay liabilities, if any,
pursuant to the proviso in Section 3.2 below, and (iii) such amount as the
trustees of the Liquidating Trust (the "Trustees") determine in good faith
to retain in the Liquidating Trust to enable the Liquidating Trust to (x)
liquidate the assets in the Liquidating Trust in an orderly fashion and (y)
maintain an adequate reserve for liabilities assumed by the Liquidating
Trust.
(d) Each share of MSCMG Common Stock issued and held in the treasury
of MSCMG immediately prior to the Effective Time of the Merger shall be
canceled and retired, and no shares or other securities of the Company
shall be issuable, and no cash shall be exchangeable, with respect thereto.
(e) The Merger shall effect no change in any of the shares of Company
Common Stock outstanding at the Effective Time of the Merger and no such
shares shall be converted as a result of the Merger.
SECTION 3.2. LIQUIDATION OF THE COMPANY ASSETS. Prior to the date hereof,
the Company commenced to liquidate the assets relating to the existing business
of the Company. At the Effective Time of the Merger, (i) the Existing Holders
(other than those who have elected to enforce their right to receive payment for
their shares pursuant to Section 623 of the New York Business Corporation Law)
(such electing holders, the "Dissenting Holders") shall receive the Effective
Date Payment, (ii) $500,000 shall be placed in escrow pursuant to an escrow
agreement substantially in the form of Exhibit A hereto (the "Escrow Agreement")
for one year from the Effective Time of the Merger and (iii) the Surviving
Corporation shall receive the Effective Date Payment for the Dissenting Holders.
Subject to Section 3.3 below, any and all assets of the Company immediately
prior to the Effective Time of the Merger not so disbursed to the Existing
Holders or placed in escrow pursuant to this Section 3.2 or disbursed to the
Surviving Corporation pursuant to clause (iii) above, including without
limitation any and all cash or cash equivalents not placed in escrow or included
in the Effective Date Payment or the payment to the Surviving Corporation, shall
be transferred to the Liquidating Trust for the exclusive benefit of the
Existing Holders; provided, however, that on or immediately after the
liquidation of the last of the material assets of the Company transferred to the
Liquidating Trust (other than accounts receivable), an additional $500,000 shall
be reserved by the Liquidating Trust for a period of one year from the date
thereof to be used to pay all amounts due to MSCMG (or the Surviving Corporation
as the successor in interest thereto) pursuant to Section 11.1 hereto or to pay
liabilities other than liabilities set forth in Schedule 4.17. Without limiting
the generality of the foregoing, the assets of the Company immediately prior to
the Effective Time of the Merger which are to be transferred to the Liquidating
Trust shall include all cash and cash equivalents, all real and personal
property, all rights to tax or other refunds and all rights of any kind or
nature whatsoever, whether choate or inchoate.
SECTION 3.3. OPTION TO LEAVE ASSETS IN COMPANY. At the option of the
Trustees and with the consent of the Surviving Corporation which shall not be
unreasonably withheld, assets of the Company immediately prior to the Effective
Time of the Merger which would otherwise have been transferred to the
Liquidating Trust and which constitute an active business shall, instead, be
held by the Company pending their sale or other disposition. During the period
in which any such assets are held by the Company, the Company irrevocably
designates the Trustees as its agents to manage any such assets pending their
sale or other disposition and to arrange in all respects for their sale or other
disposition, provided that the Company shall have no liability with respect to
such assets or in connection with such disposition, and any liability in
connection with such assets or such disposition shall be a liability to be
assumed by the Liquidating Trust. Such assets, and any after-tax revenues
generated by such assets (including without limitation any revenues generated
from the operation of such assets or their sale or other disposition) and after
payment of all expenses incurred as a result directly, or in any way indirectly,
of the operation or retention of such assets, shall be held in trust by the
Company for the benefit of the Liquidating Trust, and any such after-tax
revenues upon sale or disposition shall immediately be transferred to the
Liquidating Trust. The determination of after-tax revenues for purposes of this
Section 3.3 shall be made in accordance with the procedures contained in Section
6.11(d) hereof.
<PAGE> 5
SECTION 3.4. EXCHANGE OF CERTIFICATES.
(a) Each holder of record at the Effective Time of the Merger of shares of
MSCMG Common Stock shall be entitled, upon the surrender to the Company or its
transfer agent of the certificate for its shares of MSCMG Common Stock for
cancellation, to receive a certificate or certificates representing the number
of shares of Company Common Stock into which the holder's shares of MSCMG Common
Stock shall have been converted in the Merger under Section 3.1(a).
(b) Until so presented and surrendered in exchange for a certificate or
certificates representing shares of Company Common Stock, each certificate which
represented issued and outstanding shares of MSCMG Common Stock which were
converted at the Effective Time of the Merger into the right to receive shares
of Company Common Stock shall be deemed for all corporate purposes, except as
set forth below, to evidence the ownership of the number of shares of Company
Common Stock into which the holder's shares shall have been converted in the
Merger. Unless and until any such certificates shall be so surrendered, the
holder of such certificate shall not be entitled to receive any dividend or
other distribution payable to holders of shares of Company Common Stock.
Following such surrender, there shall be paid to the record holder of the
certificate representing shares of Company Common Stock issued upon such
surrender the amount of dividends (without interest thereon) which shall have
become payable with respect to the number of shares of Company Common Stock
represented by the certificate issued in exchange upon such surrender; provided
that such record holder shall not be entitled to receive the Effective Date
Payment, or any other distributions from or in respect of the Liquidating Trust,
after the Effective Time of the Merger or any other proceeds of the liquidation
referred to in Section 3.2 above.
SECTION 3.5. COMPANY COMMON STOCK. Except for the issuance of shares of
Company Common Stock upon conversion of shares of MSCMG Common Stock pursuant to
Section 3.1, the Merger shall effect no change in the shares of the Company's
capital stock and none of its shares shall be converted as a result of the
Merger.
SECTION 3.6. NO FURTHER TRANSFERS. After the Effective Time of the Merger,
there shall be no registration of transfers on the stock transfer books of MSCMG
of the shares which were outstanding immediately prior to the Effective Time of
the Merger.
SECTION 3.7. LEGENDED CERTIFICATES. Certificates representing shares of
Company Common Stock issued to each holder of securities of MSCMG shall bear a
legend substantially as follows:
"The shares represented by this certificate have not been registered,
under the Securities Act of 1933. The shares may not be sold or transferred
in the absence of a current prospectus or an exemption therefrom under the
Securities Act of 1933."
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants as follows:
SECTION 4.1. ORGANIZATION; AUTHORITY. The Company is a corporation
organized and existing in good standing under the laws of the State of New York.
The Company is not required to be qualified or licensed to do business as a
foreign corporation in any jurisdiction by reason of the ownership or leasing of
real property, the maintenance of offices, the warehousing of goods, the conduct
of its business activities, the nature of its business or otherwise, except
where the failure to be so qualified or licensed would be curable by subsequent
qualification without such failure having a material adverse effect on the
Company or would not have a material adverse effect on the Company. The Company
would not be subject to material penalties, taxes or other burdens based on its
past conduct if it chose to qualify in any jurisdiction in which it is not now
qualified. No jurisdiction in the United States in which the Company is not now
qualified has asserted to the Company that the Company is required to be
qualified to do business therein.
<PAGE> 6
The Company has all necessary power and authority to own or to lease, and
to operate, its properties and assets and to carry on its business as it is now
being conducted.
SECTION 4.2. SUBSIDIARIES. Set forth on Schedule 4.2 are the only
corporations (the "Company Subsidiaries") with respect to which the Company
beneficially owns, directly or indirectly, in excess of 50% of the outstanding
stock or other equity interests, the holders of which are entitled to vote for
election of a majority of the board of directors or other governing body
thereof, except for corporations, if any, which have no material assets or
liabilities and have not conducted any operations for the past three years
("Inactive Subsidiaries"). The Company is not aware of any Inactive
Subsidiaries. The other entities listed on Schedule 4.2 are the only entities
with respect to which (i) the Company beneficially owns directly or indirectly
in excess of 5% but not in excess of 50% of the outstanding stock or other
interests, the holders of which are entitled to vote for election of a majority
of the board of directors or other governing body thereof, (ii) the Company may
be deemed to be in control because of factors or relationships other than the
quantity of stock or other interests owned, or (iii) the Company's investment in
which is accounted for by the equity method. Each Company Subsidiary is
organized and existing and in good standing under the laws of its jurisdiction
of incorporation, which jurisdiction is set forth on Schedule 4.2. Each Company
Subsidiary has all necessary power and authority to own or to lease, and to
operate, its properties and assets and to carry on its business as it is now
being conducted. Each Subsidiary is duly licensed or qualified to do business as
a foreign corporation and in good standing in every jurisdiction in which (i)
the ownership or leasing of real property, the maintenance of offices, the
warehousing of goods, the conduct of its business activities or the nature of
its business makes such qualification necessary and (ii) failure so to qualify
or to become licensed would, if not remedied, impair title to its properties or
its rights to enforce contracts against others or expose it to material
liability in such jurisdictions.
SECTION 4.3. CAPITALIZATION OF THE COMPANY. The authorized capital stock
of the Company consists of 1,500,000 shares of common stock, par value $1.00 per
share, of which 891,282 shares are outstanding and have been duly authorized and
validly issued and are fully paid and nonassessable. No shares of the Company's
capital stock are held by the Company or any of the Company Subsidiaries. There
are no options, warrants, rights, calls, commitments or agreements of any
character obligating the Company or any of the Company Subsidiaries to issue any
shares of capital stock or any security representing the right to purchase or
otherwise receive any such shares, except for options to purchase 25,000 shares
of the Company Common Stock pursuant to employee stock options granted under the
Company Incentive Stock Option Plan. Schedule 4.3 contains a complete and
accurate list of the following with respect to each employee stock option
outstanding under the Company Incentive Stock Option Plan and the 1987 Stock
Option Plan: the name of the holder of such option, the date such option was
granted, became or will become exercisable and will expire, the number of shares
of Company Common Stock covered by such option and the exercise price of such
option. Except for restrictions on transfer arising under applicable Federal and
state securities laws, there are no existing restrictions imposed by the Company
or by its affiliates on the transfer of any outstanding shares of capital stock
of the Company and there are no registration covenants with respect thereto.
None of the outstanding shares of the Company or any of the Company Subsidiaries
was issued in violation of the preemptive rights of any present or former
stockholder.
SECTION 4.4. CHARTER DOCUMENTS. The copies of the certificates of
incorporation and by-laws of the Company and each of the Company Subsidiaries
which have previously been delivered to MSCMG are complete and correct.
SECTION 4.5. SUBSIDIARY CAPITALIZATION. Except as set forth on Schedule
4.5, (i) the authorized capital stock of the Company Subsidiaries consists
solely of shares of common stock; (ii) there are no options, warrants, rights,
calls, commitments or agreements of any kind obligating the Company or any of
the Company Subsidiaries to issue any shares of the capital stock of such
Company Subsidiary or any security representing the right to purchase or
otherwise receive any such capital stock or to transfer any issued shares of
such capital stock; and (iii) the Company is the record and beneficial owner of
all the outstanding shares of capital stock of the Company Subsidiaries, free
and clear of all mortgages, security interests, liens, claims and encumbrances.
All such shares of common stock which are outstanding have been validly issued
and are fully paid and nonassessable.
<PAGE> 7
SECTION 4.6. BINDING OBLIGATION; CONSENTS; LITIGATION. The execution and
delivery of this Merger Agreement by the Company do not, and the consummation of
the transactions contemplated hereby will not, violate (i) any provision of the
certificate of incorporation or by-laws of the Company or any of the Company
Subsidiaries or (ii) any provision of, or result in a breach of any of the terms
or provisions of, or result in the acceleration of any obligation under, or
constitute a default under, any mortgage, lien, lease, agreement, instrument,
order, arbitration award, judgment or decree to which the Company or any of the
Company Subsidiaries is a party, or to which the Company or any of the Company
Subsidiaries is, or the assets, properties or business of the Company or any of
the Company Subsidiaries are, subject, which would have a material adverse
effect on the Company or any of its assets (provided that neither a material
adverse change in the operations of the Company, nor the liquidation of the
Company's assets, shall be deemed to have a material adverse effect on the
Company or its assets) (any such included material adverse effect, a "Material
Adverse Effect"). The Board of Directors of the Company has approved this Merger
Agreement, has authorized the execution and delivery hereof and has directed
that this Merger Agreement be submitted to the stockholders of the Company for
adoption at a special meeting of such stockholders. The Company has full power,
authority and legal right to enter into this Merger Agreement and, upon
appropriate vote of its stockholders in accordance with the law, to consummate
the transactions contemplated hereby. Except for the approval of its
stockholders, the Company has taken all action required by law, its certificate
of incorporation, its by-laws or otherwise to authorize and to approve the
execution and delivery of this Merger Agreement and the documents, agreements
and certificates executed and delivered by the Company in connection herewith
and the consummation by the Company of the transactions contemplated hereby.
This Merger Agreement has been duly executed and delivered by the Company and
constitutes a valid and legally binding obligation of the Company, enforceable
against the Company in accordance with its terms. No consent, action, approval
or authorization of, or registration, declaration or filing with, any
governmental authority arising from the Company's obligations prior to the
Merger is required to be obtained by the Company in order to authorize the
execution and delivery by the Company of this Merger Agreement or the
consummation by the Company of the Merger.
SECTION 4.7. FINANCIAL STATEMENTS. The Company has furnished MSCMG with
complete copies of the financial statements of the Company for each of the three
fiscal years ended March 31, 1995 (as restated in the case of the fiscal years
ended March 31, 1994 and 1993), including in each case a balance sheet, the
related statements of income and of changes in financial position for the period
then ended, the accompanying notes, and the report thereon of Richard A. Eisner
& Company, LLP, independent (of the Company) certified public accountants with
respect to the fiscal year ended March 31, 1995 ("Eisner & Co.") and the report
thereon of Ernst & Young LLP, independent (of the Company) certified public
accountants with respect to the two fiscal years ended March 31, 1994 and the
unaudited financial statements of the Company for the nine-month period from
March 31, 1995 to December 31, 1995, including a balance sheet and the related
statements of income and of changes in financial position for the nine-month
period then ended (the consolidated balance sheet therein and the notes thereto
as at December 31, 1995 being called the "Company Balance Sheet"). All such
financial statements (i) reflect and provide adequate reserves in respect of all
known liabilities of the Company and the Company Subsidiaries in accordance with
GAAP, including all known contingent liabilities as of their respective dates,
and (ii) present fairly the financial condition of the Company and the Company
Subsidiaries at such dates except that a diminution in the value of the
Company's assets from that reflected on the Company Balance Sheet shall not be a
breach of the representation so long as such diminution shall not result in the
Company's being rendered insolvent at any time from the date hereof through the
Effective Time of the Merger.
SECTION 4.8. REAL PROPERTY. Except as set forth on Schedule 4.8, neither
the Company nor the Company Subsidiaries owns, has legal or equitable title in,
or has a leasehold interest in, any real property (the "Real Property").
SECTION 4.9. BANKING FACILITIES. Schedule 4.9 sets forth the name of each
bank with which the Company has an account or safe deposit box, the identifying
numbers or symbols thereof and the name of each person authorized to draw
thereon or to have access thereto.
<PAGE> 8
SECTION 4.10. POWERS OF ATTORNEY AND SURETYSHIPS. The Company has set
forth on Schedule 4.10 the name of each person, if any, holding any power of
attorney from the Company and the Company Subsidiaries and a summary statement
of the terms thereof. The Company and the Company Subsidiaries have no material
obligation or material liability, either actual, accrued, accruing or
contingent, as guarantor, surety, co-signer, endorser, co-maker, indemnitor or
otherwise in respect of the obligation of any person, corporation, partnership,
joint venture, association, organization or other entity.
SECTION 4.11. EMPLOYEE BENEFITS.
(a) Set forth on Schedule 4.11 is a correct and complete list of all funded
or unfunded, written or oral, employee benefit plans, contracts, agreements,
incentives, salary, wages or other compensation plans or arrangements, including
but not limited to all pension and profit sharing plans, savings plans, bonus,
deferred compensation, incentive compensation, stock purchase, supplemental
retirement, severance or termination pay, stock option, hospitalization,
medical, life insurance, dental, disability, salary continuation, vacation, or
supplemental unemployment benefit programs, policies, plans, or arrangements,
union contracts, employment contracts, consulting agreements, retiree benefits
and agreements, severance agreements and each other employee benefit program,
plan, policy or arrangement, at any time maintained since January 1, 1990,
contributed to, or required to be contributed to, by the Company or an ERISA
Affiliate for the benefit of present or former employees, directors, agents or
consultants, or for which the Company may be responsible or with respect to
which it may have any liability, whether or not subject to ERISA and whether
legally binding or not (each a "Plan"); provided, however, Schedule 4.11 shall
set forth only those hospitalization, medical, life insurance, dental,
disability, salary continuation and vacation programs, policies, plans or
arrangements and only those union contracts to which the Company or an ERISA
Affiliate is currently contributing. "ERISA Affiliate" means any trade or
business, whether or not incorporated, that together with the Company would be
deemed a single employer under Section 414(b), (c), (m), (n) or (o) of the Code
or Section 4001 of ERISA. Each Plan intended to be qualified under Section
401(a) of the Code (a "Tax-Qualified Plan", which term shall exclude any
multiemployer plan (as defined in Section 3(37) of ERISA to which the Company or
any of its subsidiaries contribute and which is the subject of a collective
bargaining agreement ("Multiemployer Plans")) is identified as a Tax-Qualified
Plan in such Schedule 4.11 and is so qualified.
(b) The Company has heretofore delivered to MSCMG true and complete copies
of the following:
(i) each Plan listed on Schedule 4.11 and all amendments thereto to
the date hereof;
(ii) each trust agreement and annuity contract (or any other funding
instruments) pertaining to any Plan, including all amendments to such
documents to the date hereof;
(iii) the most recent determination letter issued by the Internal
Revenue Service with respect to each of the Tax-Qualified Plans;
(iv) the most recent actuarial valuation report for each Plan for
which an actuarial valuation report is required to be prepared; and
(v) the most recent Annual Report (IRS Forms 5500 series), including
Schedules A and B and plan audits, if applicable, required to be filed with
respect to each Plan.
(c) The status as of the date hereof of each Plan and Multiemployer Plan is
set forth in Schedule 4.11, including (i) the amount of the Company's or the
ERISA Affiliates contribution to such Plan for each of the past three fiscal
years and the plan year in which the Effective Time of the Merger occurs, (ii)
the amount of any liability of the Company and the ERISA Affiliates' for
payments or contributions past due with respect to such Plan as of the last day
of its most recent plan year and as of the end of any subsequent month ending
prior to the Effective Time of the Merger, and the date any such amounts were
paid, (iii) any contribution to such Plan in a form other than in cash and (iv)
whether such Plan has been terminated. Except as set forth on Schedule 4.11,
neither the Company nor the ERISA Affiliates has obligations or liabilities with
respect to any Plan or liabilities relating to any Plan under any collective
bargaining agreement to which they are a party or by which they are bound.
<PAGE> 9
(d) To the knowledge of the Company or any officer of the Company, each
Tax-Qualified Plan and any related trust agreements or annuity contracts (and
any other funding instruments) currently comply, and have complied in the past,
both as to form and operation, including compliance with all reporting and
disclosure requirements, with the provisions of ERISA and the Code, as well as
the provisions of any applicable collective bargaining agreement. The IRS has
issued a favorable determination letter with respect to the qualification under
Sections 401(a) and 501(a) of the Code, including compliance with the
requirements of the Tax Reform Act of 1986, of each Tax-Qualified Plan and
related trust, if any, and has not taken any action to revoke such letters. In
addition, all necessary governmental approvals for the Tax-Qualified Plans have
been obtained.
(e) With respect to each Tax-Qualified Plan that is subject to Title I,
Subtitle B, Part 3 of ERISA (a "Pension Plan") the present value, on a
termination basis, of all accrued benefits (vested and nonvested) of each such
Plan as of the Effective Time of the Merger, determined on the basis of the
actuarial assumptions set forth on Schedule 4.11(e), will not exceed the fair
market value of the assets of each such Plan as of the Effective Time of the
Merger.
(f) With respect to all Pension Plans, except as set forth on Schedule
4.11, (i) the Company and ERISA Affiliates have paid all premiums (and interest
charges and penalties for late payment, if applicable) due the PBGC with respect
to each plan year thereof for which such premiums are required; (ii) on and
after September 2, 1974, there has been no "reportable event" (as defined in
Section 4043(b) of ERISA and the regulations of the PBGC under that Section)
subject to Title IV of ERISA; (iii) no liability to the PBGC has been incurred
by the Company ERISA Affiliates on account of any termination subject to Title
IV of ERISA; (iv) on and after September 2, 1974, no filing has been made by the
Company ERISA Affiliates with the PBGC, and no proceeding has been commenced by
the PBGC, to terminate any Pension Plan subject to Title IV of ERISA maintained,
or wholly or partially funded, by the Company and ERISA Affiliates, and (v)
neither the Company and the ERISA Affiliates have (A) ceased operations at a
facility so as to become subject to the provisions of Section 4062(f) of ERISA,
(B) withdrawn as a substantial employer so as to become subject to the
provisions of Section 4063 of ERISA, (C) ceased making contributions so as to
become subject to Section 4064(a) of ERISA to a Pension Plan to which the
Company or any ERISA Affiliates made contributions during the five years prior
to the Closing Date, or (D) made a complete or partial withdrawal from a
Multiemployer Plan.
(g) In addition, with respect to all Plans, except as set forth on Schedule
4.11, (i) other than routine claims for benefits, there are no material actions,
suits or claims pending or threatened against any Plan or the fiduciaries
thereof, or against the assets of any Plan and (ii) on and after January 1,
1975, neither the Company nor any ERISA Affiliate, any plan fiduciary of any
Plan has engaged in any prohibited transaction within the meaning of Title I of
ERISA or Section 4975 of the Code and no imposition of excise tax penalties has
occurred with respect thereto.
(h) At the Effective Time of the Merger, the Company will have no employees
except to the extent that a portion of the business is left in the Company as
contemplated by Section 3.3.
(i) To the knowledge of the Company or any officer of the Company, each
"group health plan" (within the meaning of Section 4980B of the Code) maintained
by the Company has been administered in compliance with the coverage
continuation requirements contained in the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") and any regulations promulgated or proposed
under the Code.
(j) The Company shall terminate or cause to be terminated, on or prior to
the Effective Time of the Merger, and without any liability to the Surviving
Corporation or MSCMG, all Plans described in Schedule 4.11, so that to the
extent permitted by applicable law the Company no longer maintains, contributes
to or participates in such plans after the Effective Time of the Merger, all in
accordance with the applicable requirements of ERISA, the Code, and the terms of
such plans or related instruments; provided, however, that any plan required to
be maintained by applicable law shall be terminated as soon as permitted by
applicable law. The Company shall promptly provide MSCMG with copies of all
documents filed with any governmental agencies and any other documents relating
to the amendment of such plans.
<PAGE> 10
(k) Without limiting the generality of Section 3.2 of this Agreement, the
parties hereto hereby further agree that the Liquidating Trust, on or prior to
the Effective Time, expressly assumes all obligations and responsibilities under
the Plans currently maintained or contributed to by the Company on behalf of the
employees or former employees, including, without limitation, all obligations
and liabilities with respect to the termination of and withdrawal from the
Plans, all obligations and responsibilities to provide retiree health coverage
and continuation coverage and appropriate notices under COBRA, and all
obligations and responsibilities under all severance and termination pay plans
and programs, and shall indemnify MSCMG and the Surviving Corporation for and
hold them harmless from and against all liabilities, costs, and expenses arising
in connection with such Plans, continuation coverage requirements and
termination obligations. The Surviving Corporation shall cooperate fully with
the Liquidating Trust by making available records, books of account or other
materials, or taking such other reasonable actions, as may be necessary or
helpful for the Liquidating Trust to fulfill its obligations under this Section
4.11(k).
(l) The Corporation does not maintain, sponsor or contribute to any plan or
program providing retiree medical or life insurance benefits.
SECTION 4.12. COMPLIANCE WITH LAW; PERMITS. Except as set forth in
Schedule 4.12, and except in all cases for non-compliance which would not have a
Material Adverse Effect, the Company and each Company Subsidiary have complied
with all applicable federal, state, local or foreign laws, regulations,
ordinances, orders, injunctions, or decrees, or administrative decisions or
directives (the "Requirements of Law"), relating to its securities, property,
employees, former employees or applicants for employment ("Employees") or
business, including, without limitation, Title VII of the Civil Rights Act of
1964, as amended ("Title VII"), OSHA, the Age Discrimination in Employment Act
of 1967, as amended ("ADEA"), the Equal Pay Act of 1963, as amended ("EPA"), the
NLRA, the Foreign Corrupt Practices Act of 1977, as amended, the Foreign Agents
Registration Act of 1938, as amended, the Federal Regulation of Lobbying Act, as
amended, and the Ethics in Government Act of 1978, as amended, and all
applicable statutes, regulations, orders and restrictions relating to
environmental standards or controls.
SECTION 4.13. LITIGATION. (a) Except as set forth in Schedule 4.13, there
is no (i) action, suit, claim, proceeding or investigation pending or, to the
knowledge of the Company or any officer of the Company, threatened against or
affecting the Company or any of the Company Subsidiaries or their assets,
Employees or properties, at law or in equity, or before or by any court or
governmental authority, (ii) arbitration proceeding relating to the Company or
any of the Company's Subsidiaries or their assets, Employees or properties or
(iii) governmental inquiry pending or, to the knowledge of the Company or any
officer of the Company, threatened relating to or involving the Company, any of
the Company Subsidiaries, their assets or properties or the businesses of the
Company or any of the Company Subsidiaries or the transactions contemplated by
this Merger Agreement (including inquiries as to the qualification of the
Company or any of the Company Subsidiaries to hold or receive any permit) and
the Company does not know of any basis for any of the foregoing. Except for
actions brought to collect accounts receivable in the ordinary course of the
Company's business, there are no pending actions, suits, claims or proceedings
brought by the Company or any of the Company Subsidiaries against others.
(b) Except as set forth in Schedule 4.13, neither the Company nor any of
the Company Subsidiaries has received any written opinion, memorandum, legal
advice or notice from legal counsel to the effect that they are exposed, from a
legal standpoint, to any liability or disadvantage which may be material to
their respective businesses and which would continue past the Effective Time of
the Merger. Neither the Company nor any of the Company Subsidiaries is in
default with respect to any order, writ, injunction or decree known to or served
upon the Company or any of the Company Subsidiaries of any court or of any
governmental authority.
SECTION 4.14. MATERIAL CONTRACTS AND AGREEMENTS. The Company has described
all material contracts of the Company now in effect to which the Company or any
of the Company Subsidiaries is a party or by which it or its properties or
assets may be bound or affected, under which the total obligation of the Company
or any of the Company Subsidiaries is in excess of $100,000 or which is
otherwise material to the Company on Schedule 4.14 (the "Material Contracts").
No default, alleged default or anticipatory breach exists on the part of the
Company or any of the Company Subsidiaries or, to the best knowledge of the
Company or any of its
<PAGE> 11
officers, on the part of any other party, under any Material Contract, and there
are no material agreements of the parties relating to any Material Contract that
have not been disclosed to MSCMG. All Material Contracts will be either (i)
terminated as of the Effective Time of the Merger and evidence of such
termination shall be given to MSCMG or (ii) assumed by the Liquidating Trust. As
of the Effective Time of the Merger, neither the Company nor any of the Company
Subsidiaries will be a party to any transaction with any officer or director of
the Company or any of the Company Subsidiaries, any member of the family of any
such officer or director or any corporation, partnership, trust (except the
Liquidating Trust) or other entity in which any such officer or director has a
substantial interest or is an officer, director, trustee or partner.
SECTION 4.15. LABOR MATTERS. Except as set forth on Schedule 4.15, neither
the Company nor any of the Company Subsidiaries is a party to any collective
bargaining agreement with any labor organization. All such collective bargaining
agreements shall be terminated as of the Effective Time of the Merger. There is
not pending, or to the knowledge of the Company threatened, any labor dispute,
strike or work stoppage involving the employees of the Company or any Company
Subsidiaries.
SECTION 4.16. TAX MATTERS.
(a) Each of the Company and each of the Company Subsidiaries has filed all
tax returns required to be filed by it under the laws of the United States of
America, the jurisdiction of its incorporation, and each state or other
jurisdiction in which it conducts business activities and is required to file.
The Company has paid or set up an adequate reserve in respect of all taxes for
the periods covered by such returns. Neither the Company nor any of the Company
Subsidiaries has any tax liability for which no tax reserve has been made in
respect of any jurisdiction in which the Company has business activities and is
required to file. The Company has set up as provisions for taxes on the Company
Balance Sheet amounts sufficient for all accrued and unpaid federal, state,
county and local taxes of the Company and the Company Subsidiaries, whether or
not disputed, including any interest and penalties in connection therewith, for
all fiscal periods ending on or before the date of the Company Balance Sheet.
(b) The Company's federal income tax returns have been examined by the
United States Internal Revenue Service (or closed by applicable statutes) for
all years to and including the fiscal year ended March 31, 1992 and no such
examinations are in progress. Any deficiencies proposed as a result of said
audits have been paid or finally settled and no issue has been raised in any
such examinations which, by application of similar principles, reasonably can be
expected to result in the assertion of a deficiency for any other year not so
examined. The results of any settlements and any necessary adjustments in state
income tax resulting therefrom are properly reflected in the Company's financial
statements referred to in Section 4.7. The Company is not aware of any fact
which would constitute grounds for any further tax liability with respect to the
years which have not been examined. No agreements or waivers have been made by
or on behalf of the Company for the extension of time for the assessment of any
tax or for any applicable statute of limitations.
(c) Except for taxes for the payment of which an adequate reserve has been
established on the Company Balance Sheet, there are no tax liens, whether
imposed by any federal, state or local taxing authority, outstanding against any
of the assets, properties or business of the Company.
(d) All taxes and assessments that the Company is required to withhold or
to collect have been duly withheld or collected and all withholdings and
collections have either been duly and timely paid over to the appropriate
governmental authority or are, together with the payments due or to become due
in connection therewith, duly reflected on the Company Balance Sheet in
accordance with GAAP.
For purposes of this Section 4.16, the term "the Company" includes each
other corporation with which the Company files consolidated or combined income
tax returns or reports.
SECTION 4.17. ABSENCE OF UNDISCLOSED LIABILITIES. Neither the Company nor
any Company Subsidiary has any material indebtedness, liability or obligation of
any character whatsoever, whether or not accrued and whether or not fixed or
contingent, other than (i) liabilities reflected in the Company Balance Sheet,
(ii) liabilities incurred in the ordinary course of business (or pursuant to the
liquidation) of the Company and the Company Subsidiaries since the date of the
Company Balance Sheet, (iii) indebtedness, liabilities and obligations listed on
Schedule 4.17 hereto, and (iv) liabilities incurred in connection with the
performance of
<PAGE> 12
this Merger Agreement. The Company has described all material indebtedness,
liabilities or obligations of the Company and the Company Subsidiaries known to
it on Schedule 4.17 (the "Scheduled Liabilities").
SECTION 4.18. INSURANCE. All significant policies of insurance, together
with the premiums currently paid thereon, providing for business interruption,
personal, Employee, product or public liability coverage with respect to the
business of the Company and the Company Subsidiaries are described on Schedule
4.18. The copies of such policies which have previously been delivered to MSCMG
are complete and correct. All such policies will be outstanding and in full
force and effect at the Effective Time of the Merger and thereafter, as
applicable, until the complete liquidation of the Company's business; provided,
that as of the Effective Time of the Merger, some or all of such policies will
be terminated and the balance (if any) of such policies will be assigned to, and
be for the benefit of, the Liquidating Trust (and the Surviving Corporation to
the extent that the Company is named as a party in any suit covered by such
policies). Except as set forth on Schedule 4.18, there are no claims, actions,
suits or proceedings arising out of or based upon any of such policies of
insurance, and, so far as is known to the Company or any of its officers, no
basis for any such claim, action, suit or proceeding exists. There are no
notices of any pending or threatened terminations with respect to any of such
policies and each of the Company and the Company Subsidiaries is in compliance
with all conditions contained therein.
SECTION 4.19. NO MATERIAL ADVERSE CHANGE. Since the date of the Company
Balance Sheet, the Company has not experienced any damage, destruction or loss
(whether or not covered by insurance) or adverse change in the value of the
Company such that the Company has been or would be rendered insolvent.
SECTION 4.20. REQUIRED CONSENTS. There have been or will be timely filed,
given, obtained or taken all applications, notices, consents, approvals, orders,
registrations, qualifications, waivers or other actions of any kind required by
virtue of the execution and delivery of this Merger Agreement by the Company or
the consummation by the Company of any of the transactions contemplated hereby.
SECTION 4.21. PROXY STATEMENT. When the Proxy Statement (the "Proxy
Statement") to be distributed to stockholders in connection with the Merger
shall first be mailed or distributed to such stockholders (the "Mailing Date"),
the information with respect to the Company and the Company Subsidiaries set
forth in the Proxy Statement (a) will comply in all material respects with the
provisions of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the General Rules and Regulations of the Securities and Exchange
Commission (the "Commission") thereunder and (b) will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading, except that no representation is hereby made as to any statements or
omissions as described in this clause (b) with respect to which, prior to the
Mailing Date, the Company shall have requested in writing any addition or
modification to the Proxy Statement which shall be necessary in order to make
the Proxy Statement not untrue or misleading in any material respect, unless
such addition or modification shall have been made by the Company prior to the
Mailing Date. At all times subsequent to the Mailing Date up to and including
the Effective Time of the Merger, the information with respect to the Company
and the Company Subsidiaries set forth in the Proxy Statement and all amendments
and supplements thereto (i) will comply in all material respects with the
provisions of the Exchange Act and the General Rules and Regulations of the
Commission thereunder and (ii) will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein not misleading, except that
no representation is hereby made as to any statements or omissions as described
in this clause (ii) with respect to which, after the Mailing Date and prior to
the Effective Time of the Merger, the Company shall have requested in writing
any supplement to or amendment of the Proxy Statement, which shall be necessary
in order to make the Proxy Statement not untrue or misleading in any material
respect, unless such supplement or amendment shall have been made by the Company
prior to the Effective Time of the Merger.
SECTION 4.22. COMMISSION FILINGS. The Company has previously delivered to
MSCMG a copy of the Company's Annual Reports on Form 10-K for the fiscal years
ended March 31, 1994 and 1995, the Company's annual reports to stockholders for
the fiscal years ended March 31, 1994 and 1995, the Company's proxy statements
in connection with its annual meetings of stockholders held on September 1, 1994
and
<PAGE> 13
September 15, 1995 and its Quarterly Reports on Form 10-Q for the fiscal
quarters ended June 30, 1995, September 30, 1995 and December 31, 1995. The
Company has heretofore made public disclosure of such additional material
information since the date of the Company's report on Form 10-K for the fiscal
year ended March 31, 1995 as it was required to disclose pursuant to the
requirements of applicable federal and state securities and other laws and has
furnished copies of such disclosures to MSCMG. Such Annual Reports on Form 10-K,
annual reports to stockholders, proxy statements, Quarterly Reports on Form
10-Q, and other public disclosures of the dates thereof or the dates made, and
such other documents or information with respect to the Company and the Company
Subsidiaries required to be supplied to MSCMG pursuant to this Merger Agreement
or supplied to MSCMG at its request by the Company or on its behalf, taken as a
whole, were or are true, correct and complete and did not or do not contain any
statement which is false or misleading with respect to a material fact, and did
not or do not omit to state a material fact necessary in order to make the
statements therein not false or misleading.
SECTION 4.23. TRANSFER OF ASSETS AND LIABILITIES TO LIQUIDATING
TRUST. Except for those assets and liabilities referred to in Section 3.3 or
listed on Schedule 4.23, the Company will have transferred to the Liquidating
Trust immediately prior to the Effective Time of the Merger each and every one
of its assets and the Liquidating Trust will have assumed all of the Company's
liabilities and obligations now existing or hereafter arising out of the
business and operations of the Company through the period ending immediately
prior to the Effective Time of the Merger.
SECTION 4.24. DISCLOSURE; REPRESENTATIONS AND WARRANTIES. The Company has
made true and complete responses to all MSCMG's requests for information,
documents, contracts, agreements and records of the Company and the Company
Subsidiaries relating to the business of the Company and the Company
Subsidiaries. Neither this Merger Agreement nor any statement, certificate,
writing or document furnished to MSCMG by the Company in connection with this
Merger Agreement contains, as of the dates of such documents, any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained therein not misleading.
SECTION 4.25. FINDERS OR BROKERS. The Company has not utilized the
services of any investment banker, broker, finder or intermediary in connection
with the transactions contemplated hereby who might be entitled to a fee or
commission in connection with this Merger Agreement or upon consummation of the
transactions contemplated hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF MSCMG
MSCMG represents and warrants that:
SECTION 5.1. ORGANIZATION. MSCMG is a corporation organized and existing
in good standing under the laws of the State of Delaware.
SECTION 5.2. AUTHORITY; CONSENTS. MSCMG has the corporate power and
authority to execute, deliver and perform its obligations under this Merger
Agreement and the other documents, agreements and certificates executed and
delivered by MSCMG in connection herewith. The execution and delivery of this
Merger Agreement do not, and the consummation of the transactions contemplated
hereby will not, violate any provision of the certificate of incorporation or
by-laws of MSCMG, or any provision of, or result in a breach of any of the terms
or provisions of, or result in the acceleration of any obligation under, or
constitute a default under, any mortgage, lien, lease, agreement, instrument,
order, arbitration award, judgment or decree, to which MSCMG is a party, or to
which MSCMG is, or the assets, properties or business of MSCMG are, subject.
MSCMG has taken all action required by law, its certificate of incorporation,
its by-laws or otherwise, to authorize and to approve the execution and delivery
of this Merger Agreement and the documents, agreements and certificates executed
and delivered by MSCMG in connection herewith by MSCMG and the consummation by
MSCMG of the transactions contemplated hereby. This Merger Agreement has been
duly executed and delivered by MSCMG and constitutes a valid and legally binding
obligation of MSCMG, enforceable against MSCMG in accordance with its terms.
<PAGE> 14
SECTION 5.3. SUBSIDIARIES. Immediately prior to the Effective Time of the
Merger, Muriel Siebert & Co., Inc., a New York corporation ("MS&Co."), will be
the only corporation with respect to which MSCMG beneficially owns, directly or
indirectly, in excess of 50% of the outstanding stock or other equity interests,
the holders of which are entitled to vote for election of a majority of the
board of directors or other governing body thereof. The authorized capital stock
of MS&Co. will consist solely of shares of common stock; (ii) there will be no
options, warrants, rights, calls, commitments or agreements of any kind
obligating MSCMG or MS&Co. to issue any shares of the capital stock of MS&Co. or
any security representing the right to purchase or otherwise receive any such
capital stock or to transfer any issued shares of such capital stock; and (iii)
MSCMG will be the record and beneficial owner of all the outstanding shares of
capital stock of MS&Co., free and clear of all mortgages, security interests,
liens, claims and encumbrances. All such shares of common stock which are
outstanding have been validly issued and are fully paid and nonassessable.
SECTION 5.4. CAPITALIZATION OF MSCMG. The authorized capital stock of
MSCMG consists of 1,500 shares of common stock, no par value, all of which
shares are issued and outstanding and owned by Muriel Siebert. There are no
options, warrants, rights, calls, commitments or agreements of any character
obligating the Company or any of the Company Subsidiaries to issue any shares of
capital stock or any security representing the right to purchase or otherwise
receive any such shares.
SECTION 5.5. BINDING OBLIGATION; CONSENTS; LITIGATION. The execution and
delivery of this Merger Agreement by MSCMG do not, and the consummation of the
transactions contemplated hereby will not, violate (i) any provision of the
certificate of incorporation or by-laws of MSCMG or MS&Co. or (ii) any provision
of, or result in a breach of any of the terms or provisions of, or result in the
acceleration of any obligation under, or constitute a default under, any
mortgage, lien, lease, agreement, instrument, order, arbitration award, judgment
or decree to which MSCMG or MS&Co. is a party, or to which MSCMG or MS&Co. is,
or the assets, properties or business of MSCMG or MS&Co. are, subject, which
would have a Material Adverse Effect on MSCMG or any of its assets. The Board of
Directors and the sole stockholder of MSCMG have approved this Merger Agreement
and authorized the execution and delivery hereof. MSCMG has full power,
authority and legal right to enter into this Merger Agreement and to consummate
the transactions contemplated hereby. MSCMG has taken all action required by
law, its certificate of incorporation, its by-laws or otherwise to authorize and
to approve the execution and delivery of this Merger Agreement and the
documents, agreements and certificates executed and delivered by MSCMG in
connection herewith and the consummation by MSCMG of the transactions
contemplated hereby. This Merger Agreement has been duly executed and delivered
by MSCMG and constitutes a valid and legally binding obligation of MSCMG,
enforceable against MSCMG in accordance with its terms. No consent, action,
approval or authorization of, or registration, declaration or filing with, any
governmental authority arising from MSCMG's obligations prior to the Merger is
required to be obtained by MSCMG in order to authorize the execution and
delivery by MSCMG of this Merger Agreement or the consummation by MSCMG of the
Merger.
SECTION 5.6. FINANCIAL STATEMENTS. MSCMG has furnished the Company with
complete copies of the financial statements of MS&Co. for each of the three
fiscal years ended December 31, 1995, including in each case a balance sheet
(the consolidated balance sheet therein and the notes thereto as at December 31,
1995 being called the "MS&Co. Balance Sheet"), the related statements of income
and of changes in financial position for the period then ended, the accompanying
notes, and the report thereon of Eisner & Co., independent (of MS&Co.) certified
public accountants with respect to the two fiscal years ended December 31, 1995
and the report thereon of Shulman, Jacobson & Co., independent (of MS&Co.)
certified public accountants with respect to the fiscal year ended December 31,
1993. All such financial statements (i) reflect and provide adequate reserves in
respect of all known liabilities of MS&Co. in accordance with GAAP, including
all known contingent liabilities as of their respective dates, and (ii) present
fairly the financial condition of MS&Co. at such dates.
SECTION 5.7. COMPLIANCE WITH LAW; PERMITS. Except in all cases for
non-compliance which would not have a Material Adverse Effect, MSCMG and MS&Co.
have complied with all Requirements of Law relating to its securities, property,
Employees or business, including, without limitation, Title VII, OSHA, the ADEA,
the EPA, the NLRA, the Foreign Corrupt Practices Act of 1977, as amended, the
Foreign Agents Registration Act of 1938, as amended, the Federal Regulation of
Lobbying Act, as amended, and the Ethics in
<PAGE> 15
Government Act of 1978, as amended, and all applicable statutes, regulations,
orders and restrictions relating to environmental standards or controls.
SECTION 5.8. LITIGATION. (a) There is no (i) action, suit, claim,
proceeding or investigation pending or, to the knowledge of MSCMG or any officer
of MSCMG, threatened against or affecting MSCMG or MS&Co. or their assets,
Employees or properties, at law or in equity, or before or by any court or
governmental authority, (ii) arbitration proceeding relating to MSCMG or MS&Co.
or their assets, Employees or properties or (iii) governmental inquiry pending
or, to the knowledge of MSCMG or any officer of MSCMG, threatened relating to or
involving MSCMG, MS&Co., their assets or properties or the businesses of MSCMG
or MS&Co. or the transactions contemplated by this Merger Agreement (including
inquiries as to the qualification of MSCMG or MS&Co. to hold or receive any
permit) and MSCMG does not know of any basis for any of the foregoing. There are
no pending actions, suits, claims or proceedings brought by MSCMG or MS&Co.
against others.
(b) Neither MSCMG nor MS&Co. has received any written opinion, memorandum,
legal advice or notice from legal counsel to the effect that they are exposed,
from a legal standpoint, to any liability or disadvantage which may be material
to their respective businesses and which would continue past the Effective Time
of the Merger. Neither MSCMG nor MS&Co. is in default with respect to any order,
writ, injunction or decree known to or served upon MSCMG or MS&Co. of any court
or of any governmental authority.
SECTION 5.9. LITIGATION. MSCMG knows of no pending or threatened action,
suit, proceeding, investigation, order or injunction before or by any court or
governmental body that seeks to restrain or to prevent the consummation of the
transactions contemplated by this Merger Agreement.
SECTION 5.10. CONSENTS. Except as otherwise referred to herein, no
consent, action, approval or authorization of, or registration, declaration or
filing with, any governmental authority having jurisdiction over MSCMG is
required to be obtained by MSCMG in order to authorize the execution and
delivery by MSCMG of this Merger Agreement or the performance by MSCMG of its
terms (except for filings and consents required pursuant to New York Stock
Exchange requirements).
SECTION 5.11. NO MATERIAL ADVERSE CHANGE. Since the date of the MS&Co.
Balance Sheet, MS&Co. has not experienced any material damage, destruction or
loss (whether or not covered by insurance) to its assets or material adverse
change in the value of MS&Co.
SECTION 5.12. PROXY STATEMENT. On the Mailing Date, the information with
respect to MSCMG and MS&Co. set forth in the Proxy Statement (a) will comply in
all material respects with the provisions of the Exchange Act, and the General
Rules and Regulations of the Commission thereunder and (b) will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements contained therein not
misleading, except that no representation is hereby made as to any statements or
omissions as described in this clause (b) with respect to which, prior to the
Mailing Date, MSCMG shall have requested in writing any addition or modification
to the Proxy Statement which shall be necessary in order to make the Proxy
Statement not untrue or misleading in any material respect, unless such addition
or modification shall have been made by the Company prior to the Mailing Date.
At all times subsequent to the Mailing Date up to and including the Effective
Time of the Merger, the information with respect to MSCMG and MS&Co. set forth
in the Proxy Statement and all amendments and supplements thereto (i) will
comply in all material respects with the provisions of the Exchange Act and the
General Rules and Regulations of the Commission thereunder and (ii) will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements contained
therein not misleading, except that no representation is hereby made as to any
statements or omissions as described in this clause (ii) with respect to which,
after the Mailing Date and prior to the Effective Time of the Merger, MSCMG
shall have requested in writing any supplement to or amendment of the Proxy
Statement which shall be necessary in order to make the Proxy Statement not
untrue or misleading in any material respect, unless such supplement or
amendment shall have been made by the Company prior to the Effective Time of the
Merger.
<PAGE> 16
SECTION 5.13. DISCLOSURE; REPRESENTATIONS AND WARRANTIES. MSCMG has made
true and complete responses to all the Company's requests for information,
documents, contracts, agreements and records of MSCMG and MS&Co. relating to the
business of MSCMG and MS&Co. Neither this Merger Agreement nor any statement,
certificate, writing or document furnished to the Company by MSCMG in connection
with this Merger Agreement contains, as of the dates of such documents, any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained therein not misleading.
SECTION 5.14. FINDERS OR BROKERS. MSCMG has not utilized the services of
any investment banker, broker, finder or intermediary in connection with the
transactions contemplated hereby who might be entitled to a fee or commission in
connection with this Merger Agreement or upon consummation of the transactions
contemplated hereby.
ARTICLE VI
TRANSACTIONS PRIOR TO THE EFFECTIVE TIME OF THE MERGER
SECTION 6.1. STOCKHOLDERS' MEETING. (a) Subject to its fiduciary
responsibilities, the Board of Directors of the Company will submit (i) this
Merger Agreement, (ii) the Charter Amendment, and (iii) the proposal to transfer
substantially all of its assets to the Liquidating Trust as required by Section
909 of the New York Business Corporation Law (the "Plan of Liquidation") to its
stockholders for their adoption and will solicit proxies in favor of and
recommend to its stockholders such adoption at a meeting thereof to be duly
called and held as soon as practicable. In connection therewith, the Company
shall prepare and file with the Commission, as soon as practicable, the required
proxy material and shall use its best efforts promptly to obtain clearance by
the staff of the Commission of the mailing of such material to its stockholders.
Subject to its fiduciary responsibilities, the Company will use its best efforts
to obtain the necessary approval of this Merger Agreement, the Charter Amendment
and the Plan of Liquidation by its stockholders and will take as soon as
practicable such other and further actions as may be required by this Merger
Agreement and as may be required by law to effectuate the Merger, the Charter
Amendment and the Plan of Liquidation. In obtaining the authorization and
approval of its stockholders, the Company shall comply with all applicable
Federal and state securities and other laws in connection with the transactions
to be effected hereunder. Without limiting the generality of the foregoing, the
Company agrees that the information contained in its proxy statement (other than
information as to MSCMG furnished to the Company in writing by MSCMG) (i) will
comply in all respects with the provisions of the Exchange Act and the rules and
regulations promulgated thereunder, and (ii) will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case when first mailed to the Company's stockholders and at all times
thereafter through the Effective Date of the Merger. The Company shall not
distribute any material to its stockholders in connection with this Merger
Agreement, the Charter Amendment, the Plan of Liquidation and the transactions
contemplated hereby other than materials contained in its proxy statement
cleared by the staff of the Commission, except such additional material cleared
by the staff of the Commission.
(b) Without limiting the generality of the foregoing, MSCMG agrees that the
information as to MSCMG furnished to the Company in writing by MSCMG for use in
the Proxy Statement (i) will comply in all respects with the provisions of the
Exchange Act and the rules and regulations promulgated thereunder, and (ii) will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case on the Mailing Date and at all times thereafter
through the Effective Date of the Merger.
SECTION 6.2. APPROVALS; CONSENTS. The Company will obtain or cause to be
obtained all consents, approvals and authorizations required by any applicable
requirement of law or by any contract or agreement to be obtained by the Company
in connection with the consummation of the Merger and the Plan of Liquidation.
MSCMG will obtain or cause to be obtained all consents, approvals and
authorizations required by any applicable requirement of law or by any contract
or agreement to be obtained by MSCMG in connection with the consummation of the
Merger.
<PAGE> 17
SECTION 6.3. CONDUCT AND LIQUIDATION OF BUSINESS PRIOR TO EFFECTIVE TIME OF
THE MERGER. (a) The Company agrees that from and after the date hereof, the
Company will continue to use its best efforts to liquidate the assets relating
to the businesses of the Company and the Company Subsidiaries and to satisfy and
fully discharge the Scheduled Liabilities.
(b) The Company agrees that from the date hereof to the Effective Time of
the Merger, and except as otherwise consented to or approved by an officer of
MSCMG in writing or required by this Merger Agreement:
(i) No change shall be made in the number of shares of authorized or
issued capital stock of the Company or any of the Company Subsidiaries,
except pursuant to the exercise of the employee stock options referred to
in the third sentence of Section 4.3; nor shall any option, warrant, call,
commitment, right or agreement of any character be granted or made by the
Company or any of the Company Subsidiaries relating to their respective
authorized or issued capital stock.
(ii) No dividend shall be declared or paid or other distribution or
payment declared, made or paid in respect of the Company Common Stock.
(iii) No powers of attorney shall be granted by the Company or any of
the Company Subsidiaries except as may be necessary for the conduct of
meetings of stockholders or directors of the Company Subsidiaries.
(iv) The Company shall use all reasonable efforts to terminate all
contracts, agreements, commitments, understandings or instruments of the
Company or any of the Company Subsidiaries, including the Material
Contracts, except for those to be assumed by the Liquidating Trust, and to
deliver evidence of such termination to MSCMG prior to the Effective Time
of the Merger.
(v) Except as agreed pursuant to Section 3.3, prior to the Effective
Time of the Merger, the Company will terminate the employment of all of its
employees, and shall give any notices required to be given, and provide any
benefit required to be paid or continued, pursuant to the Worker Adjustment
and Retraining Notification Act ("WARN"), COBRA or any other applicable
federal, state or local laws, regulations, ordinances, orders, injunctions,
or decrees, or administrative decisions or directives, with respect to such
termination of employment.
SECTION 6.4. ACCESS TO INFORMATION AND DOCUMENTS. (a) From the date hereof
to the Effective Time of the Merger, the Company shall give to, or cause to be
made available for, MSCMG and MSCMG shall give to, or cause to be made available
for, the Company and their respective counsels, accountants and other
representatives full access during normal business hours to all properties,
documents, contracts, employees and records of the Company and the Company
Subsidiaries or MSCMG and furnish the other party with copies of such documents
and with such information as such party from time to time reasonably may
request; provided, however, that nothing herein shall be deemed to obligate the
Company or MSCMG to provide the other party access to information or operations
the access to which is restricted for statutory or other governmental security
purposes. The Company will make available to MSCMG for examination correct and
complete copies of all Federal, state, local and foreign tax returns filed by
the Company and the Company Subsidiaries, together with all available revenue
agents' reports, all other reports, notices and correspondence concerning tax
audits or examinations and analyses of all provisions for reserves or accruals
of taxes including deferred taxes.
(b) Until the Effective Time of the Merger (and, if this Merger Agreement
is terminated prior to the Effective Time of the Merger, at all times after such
termination), the Company and MSCMG will not disclose or use any confidential
information obtained in the course of their respective investigations, except to
the extent that any such confidential information subsequently becomes public
knowledge.
(c) If the Merger is not consummated and this Merger Agreement is
terminated, then MSCMG promptly shall return all documents, contracts, records
or properties of the Company furnished by the Company to MSCMG, and all copies
thereof, and the Company promptly shall return all documents, contracts, records
or properties of MSCMG furnished by MSCMG to the Company, and all copies
thereof.
<PAGE> 18
SECTION 6.5. PERIODIC INFORMATION. (a) From the date hereof to the
Effective Date of the Merger, the Company shall furnish MSCMG with such
additional financial and operating data and other information regarding its or
the Company Subsidiaries' business, reasonably available to the Company, as
MSCMG shall from time to time reasonably request.
(b) From the date hereof to the Effective Date of the Merger, the Company
shall, promptly and in a timely manner, notify MSCMG of any of the occurrence of
any event, or the failure of any event to occur, that results in a
misrepresentation by the Company or the breach of any warranty by the Company,
or any failure by the Company to comply with any covenant, condition or
agreement contained herein.
(c) From the date hereof to the Effective Date of the Merger, MSCMG shall
furnish the Company with such additional financial and operating data and other
information regarding its business, reasonably available to MSCMG, as the
Company shall from time to time reasonably request.
(d) From the date hereof to the Effective Date of the Merger, MSCMG shall,
promptly and in a timely manner, notify the Company of the occurrence of any
event, or the failure of any event to occur, that results in a misrepresentation
by MSCMG or the breach of any warranty by MSCMG, or any failure by MSCMG to
comply with any covenant, condition or agreement contained herein.
SECTION 6.6. REPRESENTATIONS. The Company and MSCMG (a) will take and, in
the case of the Company, cause the Company Subsidiaries to take all action
necessary to render accurate as of the Effective Time of the Merger their
respective representations and warranties contained herein, (b) will refrain
from taking any action which would render any such representation or warranty
inaccurate in any material respect as of such time, and (c) will perform or
cause to be satisfied each covenant or condition to be performed or satisfied by
them under this Merger Agreement.
SECTION 6.7. MAILING DATE. (a) On or prior to the Mailing Date, MSCMG
shall have received the following:
(i) A letter from Eisner & Co., dated the Mailing Date and addressed
to MSCMG and the Company, in form and substance satisfactory to MSCMG, to
the effect that:
(A) they are independent certified public accountants with respect
to the Company and the Company Subsidiaries within the meaning of the
Exchange Act and the applicable published rules and regulations
thereunder;
(B) in their opinion the consolidated financial statements of the
Company and the Company Subsidiaries examined by them and included in
the Proxy Statement comply as to form in all material respects with the
accounting requirements of the Exchange Act, and of the published rules
and regulations issued by the Commission thereunder;
(C) at the request of MSCMG they have carried out procedures to a
specified date not more than five business days prior to the Mailing
Date, which do not constitute an examination in accordance with
generally accepted auditing standards of the consolidated financial
statements of the Company and the Company Subsidiaries, as follows: (1)
read the unaudited consolidated financial statements, if any, of the
Company and the Company Subsidiaries included in the Proxy Statement,
(2) read the unaudited consolidated financial statements of the Company
and the Company Subsidiaries for the period from the date of the most
recent financial statements included in the Proxy Statement through the
date of the most recent interim financial statements available in the
ordinary course of business, (3) read the minutes of the meetings of
stockholders and boards of directors of the Company and the Company
Subsidiaries from March 31, 1994 to said date not more than five
business days prior to the Mailing Date, and (4) made inquiries of
certain officers and employees of the Company who have responsibility
for financial and accounting matters as to (i) whether the unaudited
financial statements, if any, of the Company and the Company
Subsidiaries included in the Proxy Statement comply as to form in all
material respects with the applicable accounting requirements of the
Exchange Act, and the published rules and regulations issued by the
Commission thereunder; (ii) whether said financial statements are fairly
presented in
<PAGE> 19
conformity with generally accepted accounting principles applied on a
basis substantially consistent with that of the audited financial
statements; and (iii) whether there has been any change in capital stock
or long term debt or any decrease in consolidated net current assets,
stockholders' equity, revenues, income before income taxes or in the
total or per share amounts of consolidated net income of the Company and
the Company Subsidiaries; and, based on such procedures, nothing has
come to their attention which would cause them to believe that (1) the
unaudited financial statements, if any, of the Company and the Company
Subsidiaries included in the Proxy Statement do not comply as to form in
all material respects with the applicable accounting requirements of the
Exchange Act, and the published rules and regulations issued by the
Commission thereunder; (2) said financial statements are not fairly
presented in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the audited
financial statements; (3) as of said date not more than five business
days prior to the Mailing Date there was, except as set forth in the
Proxy Statement, any (x) material change in capital stock or long term
debt of the Company and the Company Subsidiaries or (y) material
decrease in consolidated net current assets or stockholders' equity of
the Company and the Company Subsidiaries in each case as compared with
the amounts shown in the consolidated balance sheet of the Company and
the Company Subsidiaries at the date of the most recent financial
statements included in the Proxy Statement; or (4) for the period from
the date of the most recent financial statements included in the Proxy
Statement to said date not more than five business days prior to the
Mailing Date, there were, except as set forth in the Proxy Statement,
any decreases as compared with the corresponding portion of the
preceding 12-month period in consolidated revenues; and
(D) at the request of MSCMG they have carried out described
procedures acceptable to MSCMG to a specified date not more than five
business days prior to the Mailing Date (which procedures do not
constitute an examination in accordance with generally accepted auditing
standards of the consolidated financial statements of the Company and
the Company Subsidiaries) with respect to such tabular, percentage,
statistical and financial information relating to the Company set forth
in the Proxy Statement as MSCMG shall have reasonably requested.
(ii) An opinion, dated the Mailing Date, of Moses & Singer LLP,
counsel to the Company, to the effect that, while such counsel assumes no
responsibility for any events, occurrences or statements of fact relating
to the Company or the Company Subsidiaries, or for the accuracy,
completeness or fairness of any statements contained in the Proxy
Statement, and while such counsel expresses no opinion as to the financial
statements or other financial or statistical data contained therein, with
respect to the information in the Proxy Statement relating to the Company
and the Company Subsidiaries, such counsel has no reason to believe that
the Proxy Statement, as amended or supplemented to the date of such
opinion, contains any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading.
(iii) A certificate of the Company's President and its chief financial
officer, dated the Mailing Date, in form and substance satisfactory to
MSCMG, stating that (A) the Company has complied in all material respects
with the agreements contained herein on its part to be performed on or
prior to such date, and (B) the representations and warranties of the
Company contained herein are true and correct in all material respects at
and as of the date of such certificate, except to the extent affected by
the transactions contemplated hereby and by the liquidation of the Company
as permitted by the provisions of Section 6.3 prior to the Mailing Date,
with the same effect as though such representations and warranties had been
made at and as of such date.
(iv) A certificate of the Company's President and its chief financial
officer, dated the Mailing Date, in form and substance satisfactory to
MSCMG, stating that all approvals, consents and waivers required by Section
4.6 have been obtained, specifically identifying such consents, waivers and
attaching copies thereof to such certificate.
(v) A voting agreement having the terms and provisions set forth in
Exhibit B attached hereto (the "Voting Agreement") dated the Mailing Date
shall have been signed by James H. Michaels (both
<PAGE> 20
individually and as the trustee for the trust for the benefit of Richard H.
Michaels and as a co-trustee for the trust under the will of Jules
Michaels) agreeing to vote all of his shares of Company Common Stock in
favor of the Merger Agreement, the Charter Amendment and the Plan of
Liquidation subject to the conditions set forth therein.
(vi) A complete set of Schedules to this Agreement shall have been
delivered by the Company to MSCMG and the form and content of such
Schedules shall be satisfactory to MSCMG in its sole and complete
discretion.
(b) On or prior to the Mailing Date, the Company shall have received the
following:
(i) A letter from Eisner & Co., dated the Mailing Date and addressed
to the Company and MSCMG, in form and substance satisfactory to the
Company, to the effect that:
(A) they are independent certified public accountants with respect
to MSCMG and MS&Co. within the meaning of the Exchange Act and the
applicable published rules and regulations thereunder;
(B) in their opinion the financial statements of MS&Co. examined by
them and included in the Proxy Statement comply as to form in all
material respects with the applicable accounting requirements of the
Exchange Act, and of the published rules and regulations issued by the
Commission thereunder;
(C) at the request of the Company they have carried out procedures
to a specified date not more than five business days prior to the
Mailing Date, which do not constitute an examination in accordance with
generally accepted auditing standards of the financial statements of
MS&Co., as follows: (1) read the unaudited consolidated financial
statements, if any, of MS&Co. included in the Proxy Statement, (2) read
the unaudited consolidated financial statements of MS&Co. for the period
from the date of the most recent financial statements included in the
Proxy Statement through the date of the most recent interim financial
statements available in the ordinary course of business, (3) read the
minutes of the meetings of stockholders and boards of directors of
MS&Co. from December 31, 1995 to said date not more than five business
days prior to the Mailing Date, and (4) made inquiries of certain
officers and employees of MS&Co. who have responsibility for financial
and accounting matters as to (i) whether the unaudited financial
statements, if any, of MS&Co. included in the Proxy Statement comply as
to form in all material respects with the applicable accounting
requirements of the Exchange Act, and the published rules and
regulations issued by the Commission thereunder; (ii) whether said
financial statements are fairly presented in conformity with generally
accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements; and (iii)
whether there has been any change in capital stock or long term debt or
any decrease in net current assets, stockholders' equity, revenues,
income before taxes or in the total or per share amounts of net income
of MS&Co.; and, based on such procedures, nothing has come to their
attention which would cause them to believe that (1) the unaudited
financial statements, if any, of MS&Co. included in the Proxy Statement
do not comply as to form in all material respects with the applicable
accounting requirements of the Exchange Act, and the published rules and
regulations issued by the Commission thereunder; (2) said financial
statements are not fairly presented in conformity with generally
accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements; (3) as of said
date not more than five business days prior to the Mailing Date there
was, except as set forth in the Proxy Statement, any (x) change in
capital stock or long term debt of MS&Co. or (y) decrease in net current
assets or stockholders' equity of MS&Co. in each case as compared with
the amounts shown in the balance sheet of MS&Co. at the date of the most
recent financial statements included in the Proxy Statement; or (4) for
the period from the date of the most recent financial statements
included in the Proxy Statement to said date not more than five business
days prior to the Mailing Date, there were, except as set forth in the
Proxy Statement, any decreases as compared with the corresponding
portion of the preceding 12-month period in revenues or income before
taxes or in the total or per share amounts of net income; and
<PAGE> 21
(D) at the request of the Company they have carried out described
procedures acceptable to the Company to a specified date not more than
five business days prior to the Mailing Date (which procedures do not
constitute an examination in accordance with generally accepted auditing
standards of the financial statements of MS&Co.) with respect to such
tabular, percentage, statistical and financial information relating to
MS&Co. set forth in the Proxy Statement as the Company shall have
reasonably requested.
(ii) An opinion, dated the Mailing Date, of Whitman Breed Abbott &
Morgan, counsel to MSCMG, to the effect that, while such counsel assumes no
responsibility for any events, occurrences or statements of fact relating
to MSCMG or MS&Co., or for the accuracy, completeness or fairness of any
statements contained in the Proxy Statement, and while such counsel
expresses no opinion as to the financial statements or other financial or
statistical data contained therein, with respect to the information in the
Proxy Statement relating to MSCMG and MS&Co., such counsel has no reason to
believe that the Proxy Statement, as amended or supplemented to the date of
such opinion, contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading.
(iii) A certificate of the President of MSCMG, dated the Mailing Date,
in form and substance satisfactory to the Company, stating that (A) MSCMG
has complied in all material respects with the agreements contained herein
on its part to be performed on or prior to such date, and (B) the
representations and warranties of MSCMG contained herein are true and
correct in all material respects at and as of the date of such certificate,
except to the extent affected by the transactions contemplated hereby, with
the same effect as though such representations and warranties had been made
at and as of such date.
(iv) A certificate of MSCMG's President and its chief financial
officer, dated the Mailing Date, in form and substance satisfactory to the
Company, stating that all approvals, consents and waivers required by
Section 5.10 have been obtained, specifically identifying such consents,
waivers and attaching copies thereof to such certificate.
SECTION 6.8. INFORMATION. (a) The Company will furnish MSCMG with all
information concerning the Company reasonably required for inclusion in any
application made by MSCMG to any stock exchange or any governmental or
regulatory body in connection with the transactions contemplated by this Merger
Agreement.
(b) MSCMG will furnish the Company with all information concerning MSCMG
and MS&Co. reasonably required for inclusion in the Proxy Statement or any
application made by the Company to the Commission, any stock exchange or any
governmental or regulatory body in connection with the transactions contemplated
by this Merger Agreement.
SECTION 6.9. NOTICE OF BREACH. (a) MSCMG will immediately give notice to
the Company of the occurrence of any event or the failure of any event to occur
that results in a breach of any representation or warranty by MSCMG or a failure
by MSCMG to comply with any covenant, condition or agreement contained herein.
(b) The Company will immediately give notice to MSCMG of the occurrence of
any event or the failure of any event to occur that results in a breach of any
representation or warranty by the Company or a failure by the Company to comply
with any covenant, condition or agreement contained herein.
SECTION 6.10. NEGOTIATIONS WITH THIRD PARTIES. The Company will not,
without the prior written approval of MSCMG, initiate, solicit or encourage
(including by way of furnishing information or assistance), or take any other
action to facilitate, any inquiries or the making of any proposal relating to,
or that may reasonably be expected to lead to, any Competing Transaction (as
defined below), or enter into discussions or negotiate with any person or entity
in furtherance of such inquiries or to obtain a Competing Transaction, or agree
to or endorse any Competing Transaction, or authorize or permit any of the
officers, directors or employees of the Company or any of the Company
Subsidiaries or any investment banker, financial advisor, attorney, accountant
or other representative retained by the Company or any of the Company
Subsidiaries to take any such action, and the Company shall promptly notify
MSCMG of all relevant terms of any such
<PAGE> 22
inquiries and proposals received by the Company or any of the Company
Subsidiaries or by any such officer, director, investment banker, financial
advisor, attorney, accountant or other representative relating to any of such
matters and if such inquiry or proposal is in writing, the Company shall
promptly deliver or cause to be delivered to MSCMG a copy of such inquiry or
proposal; provided, however, that nothing contained in this Section 6.10 shall
prohibit the Board of Directors of the Company from (i) furnishing information
to, or entering into discussions or negotiations with, any person or entity in
connection with an unsolicited bona fide written proposal, which proposal is at
a materially higher value, by such person or entity to acquire the Company
pursuant to a merger, consolidation, share exchange, business combination or
other similar transaction or to acquire a substantial portion of the assets of
the Company if the Board of Directors of the Company, after consultation with
and based upon the advice of independent legal counsel (who may be the Company's
regularly engaged independent legal counsel), determines in good faith that such
action is appropriate for such Board of Directors to comply with its fiduciary
duties to stockholders under applicable law; (ii) complying with Rule 14e-2
promulgated under the Exchange Act with regard to a Competing Transaction; or
(iii) failing to make or withdrawing or modifying its recommendation referred to
in Section 6.1 if the Board of Directors of the Company, after consultation with
and based upon the advice of independent legal counsel (who may be the Company's
regularly engaged independent legal counsel), determines in good faith that such
action is necessary for such Board of Directors to comply with its fiduciary
duties to stockholders under applicable law; provided, further, however, that in
consideration of MSCMG's willingness to incur the expenses and devote the time
and resources necessary to seek to consummate the transactions contemplated
hereby, if the transactions contemplated hereby fail to be consummated because
the Company has taken any of the actions contemplated in clauses (i) through
(iii) above and the Competing Transaction is consummated, the Company shall pay
to MSCMG, by bank check or wire transfer of immediately available funds, an
amount equal to $750,000. For purposes of this Merger Agreement, "Competing
Transaction" shall mean any of the following (other than the transactions
contemplated by this Merger Agreement, including the Liquidation) involving the
Company or any of the Company Subsidiaries: (I) any merger, consolidation, share
exchange, business combination or similar transaction; (II) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of 20% or more of the
assets of the Company and the Company Subsidiaries, taken as a whole; (III) any
tender offer or exchange offer for 20% or more of the outstanding shares of
capital stock of the Company or the filing of a registration statement under the
Securities Act in connection therewith; (iv) any person having acquired
beneficial ownership of, or any group (as such term is used in Section 13(d) of
the Exchange Act and the rules and regulations promulgated thereunder) having
been formed which beneficially owns, or has the right to acquire beneficial
ownership of, 20% or more of the outstanding shares of capital stock of the
Company; or (v) any public announcement of a proposal, plan or intention to do
any of the foregoing or any agreement to engage in any of the foregoing.
SECTION 6.11. TAX MATTERS. (a) (i) Subject to the limitations of Section
11.1(c), the Liquidating Trust shall be responsible for the payment of all taxes
of the Company and each Company Subsidiary attributable to taxable periods
ending on or before the date of the Effective Time of the Merger (the "Pre-ETM
Period") to the extent that payment of such taxes (through payment of estimated
taxes, withholding or in any other manner) has not been made prior to the
Effective Time of the Merger including any taxes resulting from the transfer of
assets by the Company to the Liquidating Trust. The term "Taxes" shall mean all
taxes, charges, fees, interest, penalties, additions to tax or other
assessments, including but not limited to income (whether net or gross), excise,
property, sales, transfer, use, value added, franchise taxes, payroll, wage,
unemployment, worker's compensation, social security, capital, occupation,
estimated, and customs duties imposed by any Tax Authority. The term "Tax
Authority" as used in this Section 6.11 shall mean any domestic or foreign
national, state or municipal or other local government, any subdivision, agency,
commission or authority thereof, or any quasi-governmental body exercising any
regulatory or taxing authority.
(ii) In the case of any taxable period that includes (but does not end
on) the date of the Effective Time of the Merger, the Taxes of the Company and
each of the Company Subsidiaries which shall be considered attributable to the
pre-ETM Period shall be computed as if such taxable period had in fact ended at
the Effective Time of the Merger and such Taxes as so computed shall be the
responsibility of the Liquidating Trust to the extent that payment of such Taxes
has not been made prior to the Effective Time of the Merger.
<PAGE> 23
(b) If the amount of Taxes paid by the Company and any of the Company
Subsidiaries or by the Liquidating Trust with respect to a Pre-ETM Period
exceeds the amount of Taxes for which the Company, any of the Company
Subsidiaries or the Liquidating Trust are responsible under this Agreement, the
Surviving Corporation shall pay to the Liquidating Trust the amount of such
excess after the final liability for such Taxes has been determined; provided,
however, that the Surviving Corporation shall in any event immediately pay such
excess to the Liquidating Trust in the event that such excess is used by any
Company Subsidiary or by the Surviving Corporation to reduce or eliminate taxes
that would otherwise be payable with respect to any taxable period subsequent to
a Pre-ETM Period.
(c) The amount of any Taxes attributable to any taxable period that
includes (but does not end on) the date of the Effective Time of the Merger
shall be determined on the basis of the permanent books and records (including
workpapers) of the Company and the Company Subsidiaries by assuming that the
Company and each Subsidiary had a taxable year which ended at the Effective Time
of the Merger, except that exemptions, allowances or deductions that are
calculated on an annual basis shall be apportioned on a time basis.
(d) The Surviving Corporation shall compute or cause (i) Eisner & Co. or
(ii) such national accounting firm as shall be approved by the Liquidating Trust
(which approval shall not be unreasonably withheld) to compute the Taxes for all
Pre-ETM Periods for which the Liquidating Trust is responsible for Taxes under
subsection (a) of this Section 6.11 including any taxes determined under
subsection (c) above (each a "Pre-ETM Return Calculation"). The Surviving
Corporation shall pay the fees of Eisner & Co. or the national accounting firm
for computing taxes under this Section 6.11(d). The Surviving Corporation shall
submit the Pre-ETM Return Calculation to the Liquidating Trust at least 60 days
prior to the due date, including extensions actually obtained (the "Due Date"),
of any tax return on which such Taxes are returnable. The Pre-ETM Return
Calculation shall include a statement of any Taxes paid by the Company prior to
the Effective Time of the Merger and the Liquidating Trust shall have 25 days in
which to object to the Pre-ETM Return Calculation. In the event of a dispute as
to any Pre-ETM Return Calculation, the dispute shall be referred to such firm of
independent certified public accountants mutually agreed to by the Company and
the Liquidating Trust (the "Independent Accountants"). Such Independent
Accountants shall finally determine the Pre-ETM Return Calculation at least ten
(10) business days prior to the Due Date of any such return. The Company and the
Liquidating Trust shall each pay one-half of the fees of such Independent
Accountants relating to such determination. The Liquidating Trust shall pay the
Pre-ETM Return Calculation as finally determined (less any Taxes paid prior to
the Effective Time of the Merger as set forth in the Pre-ETM Return
Calculation).
(e) The Company shall prepare and timely file or shall cause the
preparation and timely filing of all tax returns required to be filed prior to
the Effective Time of the Merger. The Surviving Corporation shall have the sole
responsibility for the preparation and filing of all other tax returns of the
Company and any Company Subsidiary; provided that any returns with respect to
which the Liquidating Trust shall have liability under Section 6.11(a) shall be
prepared by (i) Eisner & Co. or (ii) such national accounting firm as shall be
approved by the Liquidating Trust (which approval shall not be unreasonably
withheld).
(f) (i) The Surviving Corporation and the Company Subsidiaries shall elect,
where permitted by law, to carry forward any net operating loss, net capital
loss, charitable contribution or other item arising on or after the date of the
Effective Time of the Merger that could, absent such election, be carried back
to a Pre-ETM Period. Neither any Company Subsidiary nor the Surviving
Corporation shall amend, without the prior written consent of the Liquidating
Trust, any tax returns relating to a Pre-ETM Period.
(ii) If the Company and the Company Subsidiaries shall have a net operating
loss for any Pre-ETM Period, the Surviving Corporation shall carryback such net
operating loss to the extent permitted under Section 172 of the Internal Revenue
Code (the "Code") and shall apply, for the benefit of the Liquidating Trust, for
a tentative carryback adjustment of the tax pursuant to Section 6411 of the Code
for any prior taxable year affected by such net operating loss carryback and,
upon receipt of such Section 6411 refund or any other refund of tax with respect
to a Pre-ETM Period, shall promptly remit any such refund to the Liquidating
Trust.
<PAGE> 24
(g) The Liquidating Trust and its duly appointed representatives shall have
the sole right, at its sole expense, to supervise or otherwise coordinate any
examination process and to negotiate, resolve, settle or contest any asserted
tax deficiencies or to assert any claim for a tax refund (collectively a "Tax
Claim") with respect to any Pre-ETM Period and neither the Surviving Corporation
nor any Company Subsidiary shall negotiate, resolve, settle or contest any such
Tax Claim without the prior written consent of the Liquidating Trust.
(h) The Surviving Corporation agrees to give prompt notice to the
Liquidating Trust of the assertion of any claim, or the commencement of any
suit, action, proceeding, investigation or audit with respect to any tax for a
Pre-ETM Period, which notice shall describe in reasonable detail the facts
pertaining thereto and the amount or an estimate of the amount of the liability
arising therefrom. The Company shall cooperate fully in any such action by
furnishing or making available records, books of account or other materials or
taking such other actions (including the granting of a power of attorney to the
Liquidating Trust) as may be necessary or helpful for the defense against the
assertions of any taxing authority as to any return for such periods to the
extent that the Liquidating Trust has responsibility therefor pursuant to
Section 6.11(a).
(i) The Company and each Company Subsidiary shall retain its records
relating to all tax periods which remain subject to audit by action or statute
or waiver for all Pre-ETM Periods. To the extent that such records are currently
maintained in both a hard copy and an electronic media format, both such types
of records that pertain to the income or operations of the Company and each
Company Subsidiary prior to the close of business on the date of the Effective
Time of the Merger will be retained by the Company and will not be destroyed
without the prior written approval of the Liquidating Trust prior to the
expiration of the applicable statute of limitations.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE PARTIES
The obligations of the parties under this Merger Agreement are subject to
the fulfillment and satisfaction of each of the following conditions, any one or
more of which may be waived by MSCMG and the Company.
SECTION 7.1. STOCKHOLDER APPROVALS. On or before the Effective Time of the
Merger, the stockholders of the Company and the stockholders of MSCMG shall have
adopted this Merger Agreement by the affirmative vote of at least two-thirds of
the outstanding shares of stock and the stockholders of the Company shall have
approved the Charter Amendment and the Plan of Liquidation. Stockholders owning
no more than 45,814 shares shall have elected to enforce their right to receive
payment for their shares of Company Common Stock pursuant to Section 623 of the
New York Business Corporation Law.
SECTION 7.2. FILING OF CHARTER AMENDMENT. Before the Effective Time of the
Merger the Company shall have filed the Charter Amendment with the New York
Department of State.
SECTION 7.3. LISTING. On or before the Effective Time of the Merger, The
Nasdaq Stock Market shall have approved the listing, upon official notice of
issuance, of the shares of Company Common Stock to be issued pursuant to the
Merger as contemplated by Article Three.
SECTION 7.4. MAILING DATE DOCUMENTS. MSCMG and the Company shall each have
received on the Mailing Date the documents which they are to receive under
Section 6.4.
SECTION 7.5. REGULATORY APPROVALS. On or before the Effective Time of the
Merger, all applicable approvals of governmental regulatory authorities of the
United States of America or of any state or political subdivision thereof
required to consummate the Merger shall have been obtained.
SECTION 7.6. ESCROW AGREEMENT. The Company and a person or entity
acceptable to the Company and MSCMG, as escrow agent, shall have executed and
delivered to MSCMG the Escrow Agreement and placed $500,000 in escrow in
accordance with the terms thereof.
SECTION 7.7. TRUST AGREEMENT. (a) The Company and the Trustees shall have
executed and delivered a trust agreement substantially in the form of Exhibit E
hereto creating the Liquidating Trust and the Company
<PAGE> 25
shall have transferred all of its business and assets (other than the escrow
amount) to the Liquidating Trust (except as otherwise provided in Section 3.3)
and the Liquidating Trust shall have assumed all the Company's obligations and
liabilities (including the Scheduled Liabilities and all tax liabilities
resulting from the transfer of the owned Real Property to the Liquidating Trust)
by executing an assignment and assumption agreement substantially in the form of
Exhibit F hereto.
(b) In furtherance of the Company's transfer of its business and assets to
the Liquidating Trust, prior to the Effective Time of the Merger, the Company
shall execute a deed whereby it transfers title to all owned Real Property to
the Liquidating Trust, and a bill of sale and assignment whereby it transfers
title to all of its personal property, inventory, accounts receivable, bank
accounts and all other assets of the Company to the Liquidating Trust. Further,
the Company and the Liquidating Trustee shall enter into the assignment and
assumption agreement described above.
ARTICLE VIII
CONDITIONS TO MSCMG'S OBLIGATIONS
The obligations of MSCMG hereunder are subject to the satisfaction, at or
before the Effective Time of the Merger, of the following conditions (any of
which may be waived, in whole or in part, by MSCMG):
SECTION 8.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in this Merger Agreement (including the
Schedules and Exhibits hereto), or in any certificate or document delivered to
MSCMG in connection herewith, shall be true in all material respects at the
Effective Time of the Merger as if made again on and as of the Effective Time of
the Merger. The Company shall have duly performed and complied with all
agreements and conditions required by this Merger Agreement to be performed or
complied with by the Company at or before the Effective Time of the Merger.
MSCMG shall have been furnished with certificates of appropriate officers of the
Company, dated the Effective Time of the Merger, certifying in such detail as
MSCMG may reasonably request to the fulfillment of the foregoing conditions.
SECTION 8.2. THE COMPANY'S PERFORMANCE. Each of the obligations of the
Company to be performed by it on or before the Effective Time of the Merger
pursuant to the terms of this Merger Agreement shall have been duly performed in
all material respects at the Effective Time of the Merger, and at the Effective
Time of the Merger the Company shall have delivered to MSCMG a certificate to
such effect signed by the President of the Company.
SECTION 8.3. AUTHORITY. All action required to be taken by, or on the part
of, the Company to authorize the execution, delivery and performance of this
Merger Agreement by the Company and the consummation of the transactions
contemplated hereby shall have been duly and validly taken by the Board of
Directors and stockholders of the Company.
SECTION 8.4. OPINION OF THE COMPANY'S COUNSEL. Moses & Singer LLP, special
counsel to the Company, shall have delivered to MSCMG an opinion, dated the
Effective Time of the Merger and addressed to MSCMG, in form and substance
satisfactory to MSCMG.
SECTION 8.5. LEGAL MATTERS SATISFACTORY. All legal matters, and the form
and substance of all documents to be delivered by the Company to MSCMG at the
Effective Time of the Merger, shall have been approved by, and shall be
satisfactory to, MSCMG. The Trust shall have become a party to this Agreement by
executing an amendment hereto.
<PAGE> 26
ARTICLE IX
CONDITIONS TO THE COMPANY'S OBLIGATIONS
The obligations of the Company hereunder are subject to the satisfaction,
at or before the Effective Time of the Merger, of the following conditions (any
of which may be waived, in whole or in part, by the Company):
SECTION 9.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of MSCMG contained in this Merger Agreement, or in any certificate or
document delivered to the Company in connection herewith, shall be true in all
material respects at the Effective Time of the Merger as if made again on and as
of the Effective Time of the Merger. MSCMG shall have duly performed and
complied with all agreements and conditions required by this Merger Agreement to
be performed or complied with by MSCMG at or before the Effective Time of the
Merger. The Company shall have been furnished with certificates of appropriate
officers of MSCMG, dated the Effective Time of the Merger, certifying in such
detail as the Company may reasonably request to the fulfillment of the foregoing
conditions.
SECTION 9.2. MSCMG'S PERFORMANCE. Each of the obligations of MSCMG to be
performed by it on or before the Effective Time of the Merger pursuant to the
terms of this Merger Agreement shall have been duly performed in all material
respects at the Effective Time of the Merger, and at the Effective Time of the
Merger MSCMG shall have delivered to the Company a certificate to such effect
signed by the President of MSCMG.
SECTION 9.3. AUTHORITY. All action required to be taken by, or on the part
of, MSCMG to authorize the execution, delivery and performance of this Merger
Agreement and the consummation of the transactions contemplated hereby shall
have been duly and validly taken by the Board of Directors and the sole
stockholder of MSCMG.
SECTION 9.4. OPINION OF MSCMG'S COUNSEL. Whitman Breed Abbott & Morgan,
special counsel to MSCMG, shall have delivered to the Company an opinion, dated
the Closing Date and addressed to the Company, substantially in the form of
Exhibit D.
SECTION 9.5. LEGAL MATTERS SATISFACTORY. All legal matters, and the form
and substance of all documents to be delivered by MSCMG to the Company at the
Closing, shall have been approved by, and shall be satisfactory to, the Company.
ARTICLE X
TERMINATION
SECTION 10.1. TERMINATION.
This Merger Agreement may be terminated and the Merger abandoned at any
time before the Effective Time of the Merger:
(a) by the written consent of the Company and MSCMG;
(b) by MSCMG, if there has been a material misrepresentation in this
Merger Agreement by the Company, or a material breach by the Company of any
of its warranties or covenants set forth herein, or a failure of any
condition to which the obligations of MSCMG hereunder are subject;
(c) by the Company, if there has been a material misrepresentation in
this Merger Agreement by MSCMG, or a material breach by MSCMG of any of the
warranties or covenants of MSCMG set forth herein, or a failure of any
condition to which the obligations of the Company hereunder are subject;
(d) by either the Company or MSCMG if the Effective Time of the Merger
shall not have occurred before July 30, 1996, for any reason other than the
failure of the party seeking to terminate this Merger Agreement to perform
its obligations hereunder or a misrepresentation or breach of warranty by
such party herein;
<PAGE> 27
(e) by the Company or MSCMG if the Company shall not have received at
the stockholder meeting called to approve the Merger the favorable vote of
at least two-thirds of its stockholders to approve the Merger; or
(f) by the Company or MSCMG if the Board of Directors of the Company
(i) fails to make or withdraws or modifies its recommendation to the
stockholders of the Company to vote in favor of the Merger, or (ii)
recommends to the Company's stockholders approval or acceptance of a
Competing Transaction, in each case only if the Board of Directors of the
Company, after consultation with and based upon the advice of independent
legal counsel (who may be the Company's regularly engaged independent legal
counsel), determines in good faith that such action is appropriate for such
Board of Directors to comply with its fiduciary duties to shareholders
under applicable law.
ARTICLE XI
INDEMNIFICATION
SECTION 11.1. INDEMNIFICATION BY THE COMPANY.
(a) The Company (through the Liquidating Trust) shall be liable for, shall
indemnify MSCMG (or the Surviving Corporation as the successor in interest
thereto) for, shall hold harmless, protect and defend MSCMG (or the Surviving
Corporation as the successor in interest thereto) from and against, and shall
reimburse MSCMG (or the Surviving Corporation as the successor in interest
thereto) for, any and all MSCMG Damages (as defined in Section 11.1(b)) in the
manner and to the extent set forth in this Section 11.1, and subject in all
cases to the limitation on the scope of the Company's obligation to indemnify
set forth in Section 11.1(c).
(b) The term "MSCMG Damages" means any and all damages, losses,
liabilities, obligations, penalties, excise taxes, income taxes, fines, actions,
claims, litigation, demands, defenses, judgments, suits, proceedings, equitable
relief, costs, sums paid in settlement of the foregoing, disbursements or
expenses (including, without limitation, attorneys' and experts' fees and
disbursements) of any kind or of any nature whatsoever (whether based in common
law, statute or contract; fixed or contingent; known or unknown) suffered or
incurred by MSCMG, its officers, directors, employees, affiliates, successors or
assigns (including the Surviving Corporation) resulting from or arising in
connection with:
(i) any misrepresentation by the Company contained in or made pursuant
to this Merger Agreement or in any certificate, instrument or agreement
delivered to MSCMG pursuant to or in connection with this Merger Agreement;
(ii) any breach of warranty or any default in the performance of any
covenant or obligation of the Company under or in connection with this
Merger Agreement;
(iii) any obligations and liabilities of the Company to be assumed by
the Liquidating Trust pursuant to Section 6, including, without limitation,
the Scheduled Liabilities;
(iv) any Taxes for which the Liquidating Trust is liable under Section
6.11(a);
(v) any pension, severance, health and other employee benefit,
including severance or vacation pay, supplemental unemployment benefits or
any similar benefit, that became payable to any employees of the Company in
connection with a Shutdown (as hereinbelow defined) and any other costs,
expenses or payments paid or payable by the Company in connection with the
transactions contemplated by this Merger Agreement that would not otherwise
have been paid or become payable but for the liquidation of the Company,
the Merger or the transactions contemplated by this Merger Agreement. The
term "Shutdown" means the closure or deemed closure of any plant or the
discontinuance or deemed discontinuance of any department or business, in
any case related to the Company or the Company Subsidiaries or their
respective businesses or operations; and
<PAGE> 28
(vi) the employment, termination of employment or application for
employment of any Employee of the Company prior to the Effective Time of
the Merger or at any time in connection with Section 6.3(b)(viii); and
(vii) all obligations and liabilities with respect to the termination
of and withdrawal from the Plans, all obligations and responsibilities to
provide retiree health coverage and continuation coverage and appropriate
notices under COBRA, and all obligations and responsibilities under all
severance and termination pay plans and programs.
(c) MSCMG Damages shall only include actual liability or cost incurred and
paid by MSCMG (or the Surviving Corporation as the successor in interest
thereto) to a third party, and shall not include any claim for any diminution in
the value of any assets of the Company or MSCMG or the Surviving Corporation, or
any other damages, direct or indirect, other than in an actual cost or expense
paid by MSCMG (or the Surviving Corporation as the successor in interest
thereto) to a third party. Notwithstanding anything in this Agreement, under law
or otherwise, the maximum liability of the Company (through the Liquidating
Trust) to MSCMG (or the Surviving Corporation as the successor in interest
thereto) for MSCMG Damages shall be limited as follows:
(i) the Company shall not be liable for more than an amount equal to
$1,000,000 in the aggregate for all claims for such MSCMG Damages
(excluding, however, liabilities with respect to the non-payment of the
Scheduled Liabilities which shall be satisfied by the Liquidating Trust and
excluding any Taxes resulting from the sale or transfer to the Liquidating
Trust of assets in connection with the liquidation of assets relating to
the existing businesses of the Company) which liability shall be satisfied
in full from funds deposited in escrow pursuant to the Escrow Agreement;
and
(ii) the obligation of the Company (through the Liquidating Trust) to
indemnify MSCMG for, and to hold MSCMG harmless from, MSCMG Damages shall
survive the Effective Time of the Merger until the first anniversary date
of the Effective Time of the Merger, and no claim with respect to such
MSCMG Damages under this Section 11.1 shall be valid unless asserted in
writing prior to the expiration of such period, specifying in reasonable
detail the basis for such MSCMG Damages, as provided in the Escrow
Agreement.
The right of MSCMG (or the Surviving Corporation as the successor in
interest thereto) to be indemnified pursuant to this Section 11.1 up to the
maximum amount of $1,000,000 in the aggregate (consisting of $500,000 held
pursuant to the Escrow Agreement and $500,000 reserved by the Liquidating Trust
in accordance with the provisions of Section 3.2) is the sole and exclusive
right of MSCMG for any breach of this Agreement or any of the documents executed
in connection herewith, or otherwise in connection with any of the transactions
contemplated hereby, including without limitation the Merger, and neither MSCMG
nor any of its affiliates shall have the right to assert any claim against the
Company, any controlling person of the Company or any of the Company's
affiliates, directors, officers, employees or stockholders, whether such claim
is based on tort (including fraud), contract or otherwise, and whether arising
under statute, common law or otherwise, arising out of this Agreement, the
Merger or any of the transactions contemplated hereby or thereby, except for
claims relating to the non-payment of the Scheduled Liabilities.
In addition, no claim, whether such claim is based on tort (including
fraud), contract or otherwise, and whether arising under statute, common law or
otherwise, shall be asserted by the Company, MSCMG or any of their affiliates
against the Trustees or the beneficiaries of the Liquidating Trust. No claim
shall be asserted by the Company, MSCMG or any of their affiliates against the
Liquidating Trust after the first anniversary date of the Effective Time of the
Merger, or in excess of an aggregate of $1,000,000 (consisting of $500,000 held
pursuant to the Escrow Agreement and $500,000 reserved by the Liquidating Trust
in accordance with the provisions of Section 3.2), except for claims relating to
the non-payment of the Scheduled Liabilities.
SECTION 11.2. INDEMNIFICATION BY THE COMPANY.
(a) MSCMG (through the Surviving Corporation) shall be liable for, shall
indemnify the Company (or the Liquidating Trust as the successor in interest
thereto) for, shall hold harmless, protect and defend the Company (or the
Liquidating Trust as the successor in interest thereto) from and against, and
shall reimburse
<PAGE> 29
the Company (or the Liquidating Trust as the successor in interest thereto) for,
any and all Company Damages (as defined in Section 11.2(b)) in the manner and to
the extent set forth in this Section 11.2, and subject in all cases to the
limitation on the scope of MSCMG's obligation to indemnify set forth in Section
11.2(c).
(b) The term "Company Damages" means any and all damages, losses,
liabilities, obligations, penalties, excise taxes, income taxes, fines, actions,
claims, litigation, demands, defenses, judgments, suits, proceedings, equitable
relief, costs, sums paid in settlement of the foregoing, disbursements or
expenses (including, without limitation, attorneys' and experts' fees and
disbursements) of any kind or of any nature whatsoever (whether based in common
law, statute or contract; fixed or contingent; known or unknown) suffered or
incurred by the Company, its officers, directors, employees, affiliates,
successors or assigns (including the Liquidating Trust) resulting from or
arising in connection with:
(i) any misrepresentation by MSCMG contained in or made pursuant to
this Merger Agreement or in any certificate, instrument or agreement
delivered to the Company pursuant to or in connection with this Merger
Agreement;
(ii) any breach of warranty or any default in the performance of any
covenant or obligation of MSCMG under or in connection with this Merger
Agreement; and
(iii) any Taxes for which the Surviving Corporation is liable under
Section 6.11(e);
(c) Company Damages shall only include actual liability or cost incurred
and paid by the Company (or the Liquidating Trust as the successor in interest
thereto) to a third party, and shall not include any claim for any diminution in
the value of any assets of the Company or the Liquidating Trust, or any other
damages, direct or indirect, other than in an actual cost or expense paid by the
Company (or the Liquidating Trust as the successor in interest thereto) to a
third party. Notwithstanding anything in this Agreement, under law or otherwise,
the maximum liability of MSCMG (through the Surviving Corporation) to the
Company (or the Liquidating Trust as the successor in interest thereto) for
Company Damages shall be limited as follows:
(i) MSCMG shall not be liable for more than an amount equal to
$1,000,000 in the aggregate for all claims for such Company Damages; and
(ii) the obligation of MSCMG (through the Surviving Corporation) to
indemnify the Company for, and to hold the Company harmless from, Company
Damages shall survive the Effective Time of the Merger until the first
anniversary date of the Effective Time of the Merger, and no claim with
respect to such Company Damages under this Section 11.2 shall be valid
unless asserted in writing prior to the expiration of such period,
specifying in reasonable detail the basis for such Company Damages.
The right of the Company (or the Liquidating Trust as the successor in interest
thereto) to be indemnified up to the maximum amount of $1,000,000 pursuant to
this Section 11.2 is the sole and exclusive right of the Company for any breach
of this Agreement or any of the documents executed in connection herewith, or
otherwise in connection with any of the transactions contemplated hereby,
including without limitation the Merger, and neither the Company nor any of its
affiliates shall have the right to assert any claim against MSCMG, any
controlling person of MSCMG or any of MSCMG's affiliates, directors, officers,
employees or stockholders, whether such claim is based on tort (including
fraud), contract or otherwise, and whether arising under statute, common law or
otherwise, arising out of this Agreement, the Merger or any of the transactions
contemplated hereby or thereby. In addition, (i) no claim, whether such claim is
based on tort (including fraud), contract or otherwise, and whether arising
under statute, common law or otherwise, shall be asserted by the Company, the
Liquidating Trust or any of their affiliates against MSCMG or the Surviving
Corporation and (ii) no claim shall be asserted by the Company, the Liquidating
Trust or any of their affiliates against MSCMG or the Surviving Corporation
after the first anniversary date of the Effective Time of the Merger, in excess
of the $1,000,000.
SECTION 11.3. LEGAL PROCEEDINGS.
(a) If any legal proceeding shall be instituted, or any claim or demand
made, against an indemnified party or a party which proposes to assert that the
provisions of this Article XI apply (the "Indemnified Party")
<PAGE> 30
such Indemnified Party shall give prompt notice of the claim to the party
obliged or alleged to be so obliged so to indemnify such Indemnified Party (the
"Indemnitor"). The omission so to notify such Indemnitor, however, shall not
relieve such Indemnitor from any duty to indemnify which otherwise might exist
with regard to such claim unless (and only to the extent that) the omission to
notify materially prejudices the ability of the Indemnitor to assume the defense
of such claim. After any Indemnitor has received notice from an Indemnified
Party that a claim has been asserted against such Indemnified Party, the
Indemnitor shall have the right, upon giving written notice to the Indemnified
Party, to participate in the defense of such claim and to elect to assume the
defense against the claim, at its own expense, through the Indemnified Party's
attorney or an attorney selected by the Indemnitor and approved by the
Indemnified Party, which approval shall not be unreasonably withheld. If the
Indemnitor fails to give prompt notice of such election, then the Indemnitor
shall be deemed to have elected not to assume the defense of such claim and the
Indemnified Party may defend against the claim with its own attorney.
(b) If the Indemnitor so elects to participate in the defense of such claim
or to assume the defense against a claim, then the Indemnified Party will
cooperate and make available to the Indemnitor (and its representatives) all
employees, information, books and records in its possession or under its control
which are reasonably necessary or useful in connection with such defense; and if
the Indemnitor shall have elected to assume the defense of a claim, then the
Indemnitor shall have the sole right to compromise and settle in good faith any
such claim. If the Indemnitor shall elect to defend or to agree in writing to
compromise or to settle any such claim, then it shall be bound by any ultimate
judgment or settlement as to the existence and amount of the claim, and the
amount of said judgment or settlement shall be conclusively deemed for all
purposes of this Merger Agreement to be a liability on account of which the
Indemnified Party is entitled to be indemnified hereunder.
(c) If the Indemnitor does not elect to assume, or is deemed to have
elected not to assume, the defense of a claim then:
(i) the Indemnified Party alone shall have the right to conduct such
defense;
(ii) the Indemnified Party shall have the right to compromise and to
settle, in good faith, the claim without the prior consent of the
Indemnitor; and
(iii) if it is ultimately determined that the claim of loss which
shall form the basis of such judgment or settlement is one that is validly
an obligation of the Indemnitor that elected not to assume the defense,
then such Indemnitor shall be bound by any ultimate judgment or settlement
as to the existence and the amount of the claim and the amount of said
judgment or settlement shall be conclusively deemed for all purposes of
this Merger Agreement to be a liability on account of which the Indemnified
Party is entitled to be indemnified hereunder.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. EXPENSES. Except as otherwise provided herein, MSCMG shall
pay all of the expenses of the Company and MSCMG, in connection with the
preparation and performance of the terms of this Merger Agreement and the
transactions contemplated hereby (other than those incurred in association with
the liquidation of the Company, which expenses shall be paid solely by the
Company), including all fees and expenses of each party's investment bankers,
counsel, accountants and actuaries. MSCMG shall pay up to $25,000 of the fees
and expenses of the Company for investment bankers, counsel, accountants and
actuaries in connection with the negotiation and preparation of any letters of
intent between the parties related to the transactions contemplated hereby.
SECTION 12.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. (a) Except as
provided below, the representations and warranties of the Company contained in
Article 4 and the representations and warranties of MSCMG contained in Article 5
shall terminate upon (i) the first anniversary date of the Effective Time of the
Merger, or (ii) the termination of this Merger Agreement and abandonment of the
Merger pursuant to the
<PAGE> 31
provisions of Section 10.1(a) or 10.1(d) (except for the agreements as to
confidentiality contained in Section 6.4 and as to expenses contained in Section
12.1), and the parties hereto shall have no continuing obligations or
liabilities with respect thereto.
(b) If either MSCMG or the Company shall have the right to terminate this
Merger Agreement and abandon the Merger pursuant to the provisions of Section
10.1(b) or Section 10.1(c), then the party which does not have the right so to
terminate this Merger Agreement will use its reasonable efforts to cure the
condition giving rise to such right. If such party is unable to cure the
condition giving rise to such right, the other may exercise its right under
Section 10.1(b) or Section 10.1(c) to terminate the Merger Agreement and abandon
the Merger, or may waive such right and proceed to consummate the Merger. In any
such event, the representations, warranties, covenants and agreements (except
for the agreements as to confidentiality contained in Section 6.4 and as to
expenses contained in Section 12.1) of the parties shall terminate, and the
parties hereto shall have no continuing obligations or liabilities with respect
thereto, except as set forth in this Section 12.2(b).
SECTION 12.3. GOVERNING LAW. THIS MERGER AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WITHIN SUCH STATE.
SECTION 12.4. NOTICES. All notices, consents, requests, instructions,
approvals and other communications provided for herein shall be deemed validly
given, made or served if in writing and delivered personally (as of such
delivery) or sent by certified mail (as of two days after deposit in a United
States post office), or sent by overnight courier service (as of two days after
delivery to an internationally recognized courier service), or by telex,
facsimile or telegraph (upon receipt), in any case, postage and charges prepaid,
(a) if to MSCMG, addressed to:
Muriel Siebert Capital Markets Group Inc.
885 Third Avenue, Suite 1720
New York, New York 10022
Telephone: (212) 644-2418
Facsimile: (212) 486-2784
Attention: Muriel Siebert
with a copy to:
Whitman Breed Abbott & Morgan
200 Park Avenue
New York, New York 10166
Telephone: (212) 351-3000
Facsimile: (212) 351-3131
Attention: Monte E. Wetzler, Esq.
(b) if to the Company, addressed to:
J. Michaels, Inc.
182 Smith Street
Brooklyn, New York 11201
Telephone: (718) 852-6100
Facsimile: (718) 858-0396
Attention: James H. Michaels
<PAGE> 32
with a copy to:
Moses & Singer LLP
1301 Avenue of the Americas
New York, NY 10019-6076
Telephone: (212) 554-7800
Facsimile: (212) 554-7700
Attention: Irving Sitnick, Esq.
or such other address as shall be furnished in writing by either party to the
other.
SECTION 12.5. JURISDICTION; AGENT FOR SERVICE.
(a) Legal proceedings commenced by the Company or MSCMG arising out of any
of the transactions or obligations contemplated by this Merger Agreement shall
be brought exclusively in the Federal courts or, in the absence of Federal
jurisdiction, state courts, in either case in New York, New York. The Company
and MSCMG irrevocably and unconditionally submit to the jurisdiction of such
courts and agree to take any and all future action necessary to submit to the
jurisdiction of such courts. Each of MSCMG and the Company irrevocably waives
any objection that it may now or hereafter have to the laying of venue of any
suit, action or proceeding brought in any Federal or state court in New York,
New York and further irrevocably waives any claims that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
Final judgment against the Company or MSCMG, as the case may be, in any such
suit shall be conclusive and may be enforced in other jurisdictions by suit on
the judgment, a certified or true copy of which shall be conclusive evidence of
the fact and of the amount of any indebtedness or liability of the Company or
MSCMG, as the case may be, therein described, or by appropriate proceedings
under any applicable treaty or otherwise.
(b) The Company consents to service of process in any suit, action or other
proceeding arising out of this Merger Agreement or the subject matter hereof or
any of the transactions contemplated hereby in such Federal or state courts by
registered mail addressed to the Company at the address provided in Section 12.4
or to the Company's Agent (defined below). The Company hereby irrevocably
designates and appoints Moses & Singer LLP, with offices on the date hereof at
1301 Avenue of the Americas, New York, New York 10019-6076 (herein referred to
as the "Company's Agent"), as its attorney-in-fact to receive service of process
in such action, suit or proceeding, it being agreed that service upon such
attorney-in-fact shall constitute valid service upon the Company and its
successors and assigns. The Company's submission to jurisdiction is made for the
express benefit of MSCMG and its successors, subrogees and assigns. Nothing in
this Section shall affect the right of MSCMG, or its successors, subrogees or
assigns to serve legal process in any other manner permitted by law or shall
affect the right of MSCMG or its successors, subrogees or assigns to bring any
action or proceeding against the Company or its property in the courts of other
jurisdictions. So long as this Merger Agreement shall be in effect, the Company
shall maintain a duly appointed agent for the service of summonses and other
legal processes in New York, New York and shall give MSCMG written notice prior
to any change of the identity of or of the address for such agent.
(c) MSCMG consents to service of process in any suit, action or other
proceeding arising out of this Merger Agreement or the subject matter hereof or
any of the transactions contemplated hereby in such Federal or state courts by
registered mail addressed to MSCMG at the address provided in Section 12.4 or to
MSCMG's Agent (defined below). MSCMG hereby irrevocably designates and appoints
Whitman Breed Abbott & Morgan, with offices on the date hereof at 200 Park
Avenue, New York, New York 10166 (herein referred to as "MSCMG's Agent"), as its
attorney-in-fact to receive service of process in such action, suit or
proceeding, it being agreed that service upon such attorney-in-fact shall
constitute valid service upon MSCMG and its successors and assigns. MSCMG's
submission to jurisdiction is made for the express benefit of the Company and
its successors, subrogees and assigns. Nothing in this Section shall affect the
right of the Company, or its successors, subrogees or assigns to serve legal
process in any other manner permitted by law or shall affect the right of the
Company or its successors, subrogees or assigns to bring any action or
proceeding against MSCMG or its property in the courts of other jurisdictions.
So long as this Merger Agreement shall be in effect, MSCMG shall maintain a duly
appointed agent for the service of summonses
<PAGE> 33
and other legal processes in New York, New York and shall give the Company
written notice prior to any change of the identity of or of the address for such
agent.
SECTION 12.6. PRESS RELEASES. MSCMG and the Company will consult and
cooperate in the issuance, form, content and timing of any press releases issued
in connection with the transactions contemplated by this Merger Agreement.
SECTION 12.7. ASSIGNMENT; AMENDMENTS, WAIVERS.
(a) Neither MSCMG nor the Company shall assign any of its rights or
obligations under this Merger Agreement without the prior written consent of the
other, except that the Company shall have the right to assign all of its rights
together with but not separate from all of its obligations under this Agreement
and the Escrow Agreement to the Liquidating Trust; provided that the Liquidating
Trust shall have no right to further assign such rights or obligations which
shall terminate upon the termination of the Liquidating Trust except as
otherwise provided in this Agreement.
(b) This Merger Agreement shall be binding upon and shall inure to the
benefit of the parties and their respective successors and permitted assigns,
and no other person shall acquire or have any right under or by virtue of this
Merger Agreement.
(c) No provision of this Merger Agreement may be amended, modified or
waived except by written agreement duly executed by each of the parties. No
waiver by either party of any breach of any provision hereof shall be deemed to
be a continuing waiver thereof in the future or a waiver of any other provision
hereof; nor shall any delay or omission of either party to exercise any right
hereunder in any manner impair the exercise of any such right accruing to it
thereafter.
SECTION 12.8. ENTIRE AGREEMENT. This Merger Agreement represents the
entire agreement between the parties and supersedes and cancels any prior oral
or written agreement, letter of intent or understanding related to the subject
matter hereof.
SECTION 12.9. SEVERABILITY. If any term, provision, covenant or
restriction of this Merger Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, then the remainder of the
terms, provisions, covenants and restrictions of this Merger Agreement shall
remain in full force and effect, unless such action would substantially impair
the benefits to either party of the remaining provisions of this Merger
Agreement.
SECTION 12.10. HEADINGS. The headings herein are for convenience only, do
not constitute a part of this Merger Agreement, and shall not be deemed to limit
or affect any of the provisions hereof.
SECTION 12.11. COUNTERPARTS. This Merger Agreement may be executed in one
or more counterparts which, taken together, shall constitute one and the same
instrument, and this Merger Agreement shall become effective when one or more
counterparts have been signed by each of the parties.
IN WITNESS WHEREOF, this Merger Agreement has been duly executed by the
parties hereto on the day and year first above written.
<TABLE>
<S> <C>
J. MICHAELS, INC. MURIEL SIEBERT CAPITAL MARKETS
GROUP INC.
By: /s/ JAMES H. MICHAELS By: /s/ MURIEL SIEBERT
- --------------------------------------------- ---------------------------------------------
Name: James H. Michaels Name: Muriel Siebert
Title: President Title: President
</TABLE>
<PAGE> 34
AMENDMENT TO PLAN AND AGREEMENT OF MERGER
AMENDMENT, made and entered into as of June 28, 1996 (this "Amendment"), to
the PLAN AND AGREEMENT OF MERGER, dated as of April 24, 1996 (the "Merger
Agreement"), by and between J. MICHAELS, INC., a New York corporation (the
"Company"), and MURIEL SIEBERT CAPITAL MARKETS GROUP INC., a Delaware
corporation wholly-owned by Muriel Siebert ("MSCMG").
W I T N E S S E T H:
WHEREAS, the Company and MSCMG have entered into the Merger Agreement; and
WHEREAS, the Company and MSCMG desire to amend the Merger Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. Amendment to the Merger Agreement. Section 10.1(d) of the Merger
Agreement shall be amended by deleting reference to "July 30, 1996" appearing in
the third line thereof and substituting in its place "September 30, 1996."
2. Approval of this Amendment. All authorizations, approvals and consents
(including consents of the Boards of Directors) necessary for the execution and
delivery by the Company and MSCMG of this Amendment have been given or made.
3. Governing Law. This Amendment shall be construed and enforced in
accordance with and governed by the laws of the State of New York applicable to
contracts executed in and to be performed solely within such state.
4. Status of the Merger Agreement. All other terms and conditions of the
Merger Agreement shall remain in full force and effect, as amended hereby.
5. Miscellaneous. (a) Headings. All headings in this Amendment are for
convenience of reference only and are not intended to limit or affect the
meaning of any provision hereof.
(b) Counterparts. This Amendment may be executed in one or more
counterparts with the same effect as if the signatures to all such counterparts
were upon the same instrument, and all such counterparts shall constitute but
one instrument.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
by a duly authorized officer and to become effective as of the day and year
first above written.
<TABLE>
<S> <C>
J. MICHAELS, INC. MURIEL SIEBERT CAPITAL MARKETS
GROUP INC.
By: /s/ JAMES H. MICHAELS By: /s/ MURIEL SIEBERT
- --------------------------------------------- ---------------------------------------------
Name: James H. Michaels Name: Muriel Siebert
Title: President Title: President
</TABLE>
<PAGE> 35
AMENDMENT NO. 2 TO PLAN AND AGREEMENT OF MERGER
AMENDMENT NO. 2, made and entered into as of September 30, 1996 (this
"Amendment"), to the PLAN AND AGREEMENT OF MERGER, dated as of April 24, 1996,
as amended by Amendment No. 1 made and entered into as of June 28, 1996 (as so
amended, the "Merger Agreement"), by and between J. MICHAELS, INC., a New York
corporation (the "Company"), and MURIEL SIEBERT CAPITAL MARKETS GROUP INC., a
Delaware corporation wholly-owned by Muriel Siebert ("MSCMG").
W I T N E S S E T H:
WHEREAS, the Company and MSCMG have entered into the Merger Agreement; and
WHEREAS, the Company and MSCMG desire to amend the Merger Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. Termination. Section 10.1(d) of the Merger Agreement shall be amended
by (a) deleting the reference to "September 30, 1996" appearing in the third
line thereof and substituting in its place "January 6, 1997" and (b) inserting
after the word "herein" appearing in the fourth line thereof the following
clause:
", provided, however, that if the Company has not implemented a
one-for-seven reverse stock split of its common stock (the "Reverse
Stock Split") on or prior to November 15, 1996, then, at the option of
the Company, the Effective Time of the Merger may be deferred until
either the third or sixth day of January, 1997"
2. Reverse Stock Split. The Company shall, immediately following execution
of this Amendment, take all actions necessary to allow it to amend its
certificate of incorporation to cause its Common Stock, par value $1.00 per
share, to be reverse split on a one-for-seven basis, including making such
filings with the Securities and Exchange Commission, The Nasdaq Stock Market and
the State of New York as may be required and mailing an information statement to
its stockholders. In connection with such Reverse Stock Split, fractional shares
shall be rounded upwards to the next largest whole share. Such Reverse Stock
Split shall become effective immediately after the Effective Time of the Merger.
MSCMG shall indemnify the Company and its officers, directors, employees,
affiliates, successors or assigns (the "Indemnified Parties") for, and shall
hold the Indemnified Parties harmless from and against, and shall reimburse the
Indemnified Parties for, any and all damages, losses, liabilities, penalties or
expenses of any kind or of any nature whatsoever incurred by the Indemnified
Parties in connection with the Reverse Stock Split.
3. Expenses. Section 12.1 of the Merger Agreement shall be amended by
inserting the following paragraph after the first paragraph thereof:
"Further, MSCMG shall pay all additional third party expenses (including,
but not limited to, reasonable attorneys' fees, accountants' fees and filing
fees and excluding expenses relating to the liquidation of the Company's assets
(including, but not limited to, salaries and all other costs relating to the
Company's employees)) of the Company incurred in connection with (i) the Reverse
Stock Split and (ii) the continued affairs of the Company until the Effective
Time of the Merger which would not have been incurred had the Closing occurred
on September 20, 1996."
4. Legal Fees. Promptly following the execution of this Amendment, MSCMG
shall reimburse the Company in the amount of $5,000 for legal fees previously
paid by it in connection with the transactions contemplated by the Merger
Agreement. Further, MSCMG shall similarly pay all outstanding invoices for legal
fees for services rendered by Moses & Singer LLP, special counsel to the
Company, to the Company pursuant to the Merger Agreement.
5. Approval of this Amendment. All authorizations, approvals and consents
(including consents of the Boards of Directors) necessary for the execution and
delivery by the Company and MSCMG of this Amendment have been given or made.
<PAGE> 36
6. Governing Law. This Amendment shall be construed and enforced in
accordance with and governed by the laws of the State of New York applicable to
contracts executed in and to be performed solely within such state.
7. Status of the Merger Agreement. All other terms and conditions of the
Merger Agreement shall remain in full force and effect, as amended hereby.
8. Miscellaneous. (a) Headings. All headings in this Amendment are for
convenience of reference only and are not intended to limit or affect the
meaning of any provision hereof.
(b) Counterparts. This Amendment may be executed in one or more
counterparts with the same effect as if the signatures to all such counterparts
were upon the same instrument, and all such counterparts shall constitute but
one instrument.
(c) Capitalized Terms. All capitalized terms used in this Amendment,
unless otherwise defined herein, shall have the same meaning as such terms have
in the Merger Agreement.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
by a duly authorized officer and to become effective as of the day and year
first above written.
J. MICHAELS, INC.
By: /s/ JAMES H. MICHAELS
------------------------------------
Name: James H. Michaels
Title: President
MURIEL SIEBERT CAPITAL MARKETS GROUP
INC.
By: /s/ MURIEL F. SIEBERT
------------------------------------
Name: Muriel F. Siebert
Title: President
2
<PAGE> 37
AMENDMENT NO. 3 TO PLAN AND AGREEMENT OF MERGER
AMENDMENT NO. 3, made and entered into as of November 7, 1996 (the
"Amendment"), to the PLAN AND AGREEMENT OF MERGER, dated as of April 24, 1996,
as amended by Amendment No. 1 and Amendment No. 2 made and entered into as of
June 28, 1996 and September 30, 1996, respectively (as so amended, the "Merger
Agreement"), by and between J. MICHAELS, INC., a New York corporation (the
"Company"), J. MICHAELS, INC. TRUST, a New York trust (the "Trust") and MURIEL
SIEBERT CAPITAL MARKETS GROUP INC., a Delaware corporation wholly-owned by
Muriel Siebert ("MSCMG").
W I T N E S S E T H:
WHEREAS, the Company and MSCMG have entered into the Merger Agreement;
and
WHEREAS, the Company and MSCMG desire to amend the Merger Agreement to
add the Trust as a party thereto.
NOW, THEREFORE, the parties hereto agree as follows:
1. Trust as a Party to the Merger Agreement. By its execution
hereof, the Trust does hereby agree to become a party to, and by its execution
hereof shall become a party to, the Merger Agreement effective upon the
Effective Time of the Merger. On and after the Effective Time of the Merger,
the Trust shall succeed to the rights and obligations of the Company under the
Merger Agreement.
2. Approval of this Amendment. All authorizations, approvals and
consents (including consents of the Board of Directors) necessary for the
execution and delivery by the Company, the Trust and MSCMG of this Amendment
have been given or made.
3. Governing Law. This Amendment shall be construed and enforced
in accordance with and governed by the laws of the State of New York applicable
to contracts executed in and to be performed solely within such state.
4. Status of the Merger Agreement. All other terms and
conditions of the Merger Agreement shall remain in full force and effect, as
amended hereby.
5. Miscellaneous. (a) Headings. All headings in this Amendment
are for convenience of reference only and are not intended to limit or affect
the meaning of any provision hereof.
(b) Counterparts. This Amendment may be executed in one or more
counterparts with the same effect as if the signatures to all such counterparts
were upon the same
<PAGE> 38
instrument, and all such counterparts shall constitute but one instrument.
(c) Capitalized Terms. All capitalized terms used in this
Amendment, unless otherwise defined herein, shall have the same meaning as such
terms have in the Merger Agreement.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by a duly authorized officer and to become effective as of the day and
year first above written.
J. MICHAELS, INC.
By:/s/ James H. Michaels
--------------------------
Name: James H. Michaels
Title: President
J. MICHAELS, INC. TRUST
By:/s/ James H. Michaels
----------------------------
Name: James H. Michaels
Title: Trustee
MURIEL SIEBERT CAPITAL MARKETS
GROUP INC.
By:/s/ Muriel F. Siebert
--------------------------
Name: Muriel F. Siebert
Title: President
-2-
