SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
SCHEDULE 13E-3/A
Rule 13e-3 Transaction Statement
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
(Amendment No. 1)
Andal Corp.
(Name of the Issuer)
Andal Corp.
Cafco Holding Corporation
Andrew J. Frankel
Alan N. Cohen
(Name of Person(s) Filing Statement)
Common Stock, par value $20 per share
(Title of Class of Securities)
636632-10-1
(CUSIP Number of Class of Securities)
Roy M. Korins, Esq.
Esanu Katsky Korins & Siger, LLP
605 Third Avenue
New York, New York 10158
(212) 953-6000
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of Person(s) Filing Statement)
<PAGE>
This statement is filed in connection with (check the appropriate box):
a. [X] The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C, or Rule 13e-3(c) under the Securities
Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities Act
of 1933.
c. [ ] A tender offer.
d. [ ] None of the above.
Check the following box if the solicitation materials or information
statement referred to in checking box (a) are preliminary copies: |X|
Instruction: Eight copies of this statement, including all exhibits,
should be filed with the Commission.
[x] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount previously paid: $522.18
Form or Registration No.: Schedule 14C
Filing Party: Andal Corp.
Date Filed: Contemporaneously with this Schedule 13E-3.
Page 1 of 20 Pages
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Item 1. Issuer and Class of Security Subject to the Transaction.
(a) The transaction (the "Transaction") relates to the common stock,
par value $20.00 per share ("Common Stock"), of Andal Corp., a New York
corporation (the "Company"). The principal executive offices of the Company are
located at 909 Third Avenue, New York, New York 10022.
(b) As of April 28, 1998, there were 286,094 shares of Common Stock
outstanding and approximately 1,100 holders of record of Common Stock.
(c) There is no active market in the Common Stock and there has not
been an active market since September 1995. The Common Stock is not included in
the Nasdaq OTC Bulletin Board. Based on information provided by the National
Quotation Bureau, Inc. ("NQB"), there was no quoted bid price for the Common
Stock during the period from October 1, 1995 until November 3, 1997. During the
period from November 3, 1997 until June 30, 1998, there was minimal trading, and
there was no reported trading from July 1 through July 13, 1998. Set forth below
is information provided by NQB as to the trading volume and the high and low
closing bid prices for the Common Stock during the such period.
<TABLE>
<CAPTION>
Period Volume Closing High Bid Closing Low Bid
- ------ ------ ---------------- ---------------
<S> <C> <C> <C>
1997
Third quarter (from Nov. 3) 6,400 20.00 17.00
1998
First quarter 8,500 21.625 17.00
Second quarter 5,300 22.00 21.625
Third quarter (through July 13) -0- 22.00 22.00
</TABLE>
The above prices represent prices between dealers and do not include
retail markups, markdowns or commission and do not represent actual
transactions. Furthermore, the volume information may not reflect the actual
trading volume and may include both the purchase by a buyer and sale by a seller
as if there were two transactions.
(d) The Company has never paid any dividends on the Common Stock.
Although the Company has funds to enable it to pay dividends, the Company
proposes to use a portion of such funds to make the cash payment to shareholders
pursuant to the Transaction.
(e) During the past three years, the Company has not made an
underwritten public offering of its Common Stock which was either registered
with the Securities and Exchange Commission (the "Commission") pursuant to the
Securities Act of 1933, as amended (the "Securities Act") or was exempt from
such registration pursuant to Regulation A of the Commission under the
Securities Act.
Page 2 of 20 Pages
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(f) Since October 1, 1995, the Company has made the following purchases
of Common Stock.
<TABLE>
<CAPTION>
Shares Average Purchase Value of Average
Quarter Ending Purchased Price Per Shares Purchase Price Per Share
- -------------- --------- ---------------- ------------------------
<S> <C> <C> <C>
December 31, 1997 14,580 $25.00 $25.00
March 31, 1998 108,371 32.97 + noncash 35.18
consideration (1)
June 30, 1998 40,488 33.00 + noncash 36.79
consideration(1)
</TABLE>
- ---------------------
(1) In connection with the purchase by the Company of 107,371 shares of
Common Stock purchased during the quarter ended March 31, 1998 and all
of the shares purchased during the quarter ended June 30, 1998, the
Company paid $33.00 per share plus .8125 shares of Integrated Brands
common stock which was owned by the Company. Integrated Brands
subsequently merged into Yogen Fruz World-Wide Inc. ("Yogen Fruz"), as
a result of which the .8125 shares of Integrated Brands became .4754
shares of Yogen Fruz. Based on the average of the high and low closing
bid prices per share of Integrated Brands or Yogen Fruz on the date of
the contracts relating to the stock purchases, the value of the noncash
consideration was approximately $2.23 per share of Common Stock with
respect to the purchases during the March 31, 1998 quarter and $3.79
per share of Common Stock with respect to purchases made during the
June 30, 1998 quarter. Thus, the highest price paid per share of Common
Stock had a value of $36.79 per share, representing $33.00 cash and
noncash consideration valued at $3.79.
The shares purchased during the quarter ended March 31, 1998 included
100,232 shares of Common Stock purchased from Mr. Paul Milstein and other
shareholders who are affiliated with or otherwise related to Mr. Milstein who
together represented the second largest shareholder of the Company at the time
of the purchase.
Pursuant to a retirement agreement (the "Retirement Agreement") dated
August 31, 1996, among the Company and Andrew J. Frankel and Alan N. Cohen, the
Company issued 32,500 shares of Common Stock to each of Messrs. Frankel and
Cohen in September 1996. The Retirement Agreement is described in greater detail
under "Item 3. Past Contracts, Transactions or Negotiations."
See "Item 3. Past Contracts, Transactions or Negotiations" in
connection with certain other material transactions among the Company, Mr.
Cohen, a partnership of which Mr. Frankel is the managing general partner and
Mr. Paul Milstein, who was the Company's second largest stockholder.
Since October 1, 1995, except for the issuance of shares of Common
Stock to Messrs. Frankel and Cohen pursuant to the Retirement Agreement and to
Frankhill and Mr. Cohen pursuant to the Debt Cancellation Agreement, as
described in "Item 3. Past Contracts, Transactions or Negotiations," neither
Cafco Holding Corporation ("Cafco") nor any of its officers, directors or
shareholders, including Messrs. Frankel and Cohen, purchased any shares of the
Company's Common Stock.
Page 3 of 20 Pages
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The shares of Common Stock presently owned by Cafco were acquired by
Cafco in July 1998 for purposes of consummating the Transaction. At that time,
the shareholders of Cafco transferred to Cafco the 215,529 shares of Common
Stock owned by them in exchange for all of the capital stock of Cafco. As a
result, Cafco owns beneficially and of record 215,529 shares of Common Stock.
Because of their position as the only directors and officers of Cafco, Messrs.
Frankel and Cohen have joint power with respect to the voting and disposition of
the shares of Common Stock owned by Cafco.
The Transaction involves a transaction subject to Regulation 14C of the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). The information contained in the Company's Information
Statement (the "Information Statement") filed pursuant to said Regulation 14C is
incorporated by reference into this Schedule 13E-3. Appendix A to this Schedule
13E-3 sets forth the location in the Information Statement of the information
included in this Schedule 13E-3.
Item 2. Identity and Background.
This Statement is being filed jointly by the Company, Cafco and Messrs.
Andrew J. Frankel and Alan N. Cohen. Messrs. Frankel and Cohen are filing as
control persons of the Company and Cafco.
Cafco is a New York corporation with executive offices at 909 Third
Avenue, New York, New York 10022. Cafco was formed for the purpose of acquiring
all of the Company's Common Stock owned by its shareholders and engaging in the
Transaction. Cafco owns 215,529 shares of Common Stock, representing 75.3% of
the outstanding shares of Common Stock.
The officers and directors of Cafco are as follows:
<TABLE>
<CAPTION>
Name and Address Position with Cafco; Principal Occupation
- ---------------- -----------------------------------------
<S> <C>
Andrew J. Frankel Chairman of the board, chief executive officer and a
c/o Andal Corp. director of Cafco; chairman of the board and chief
909 Third Avenue executive officer of the Company
New York, New York 10022
Alan N. Cohen President and a director of Cafco; president of the
c/o Andal Corp. Company
909 Third Avenue
New York, New York 10022
</TABLE>
Andrew J. Frankel has been chairman of the board, chief executive
officer and a director of Cafco since its organization in July 1998. He has been
chairman of the board and chief executive officer of the Company since 1971
except for the period from September 1, 1996 through September 30, 1997, when he
served only as a director.
Alan N. Cohen has been president and a director of Cafco since its
organization in July 1998. He has been a director of the Company since 1979 and
president of the Company since 1981 except for the period from September 1, 1996
through September 30, 1997, when he served only as a director.
Page 4 of 20 Pages
<PAGE>
All of the shareholders of Cafco are related or otherwise affiliated
with either Mr. Frankel or Mr. Cohen.
During the past five years, neither Andal, Cafco, Mr. Frankel nor Mr.
Cohen (a) was convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors) or (b) was a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction resulting in, or is otherwise
subject to, a judgment, decree or final order enjoining further violations of,
or prohibiting activities subject to federal or state securities laws or finding
any violation of such laws.
Messrs. Frankel and Cohen are citizens of the United States of America.
Item 3. Past Contracts, Transactions or Negotiations.
The Retirement Agreement
On August 31, 1996, the board of directors effected a change in
management, and elected the individuals who were the executive officers of
Multi-Arc, Inc., a majority-owned subsidiary of the Company, as officers of the
Company, and the Company moved its executive offices to New Jersey, where
Multi-Arc maintained its executive offices. At that time, the Company's business
was conducted almost exclusively through Multi-Arc, and neither Mr. Frankel nor
Mr. Cohen was actively involved in the management of Multi-Arc.
As part of this management change, Mr. Andrew J. Frankel resigned as
chairman and chief executive officer of the Company, and Mr. Alan N. Cohen
resigned as president of the Company. Messrs. Frankel and Cohen continued to
serve as directors. In connection with their resignation as officers of the
Company, Messrs. Frankel and Cohen entered into an agreement (the "Retirement
Agreement"), pursuant to which the Company agreed to maintain the Company's New
York office and pay the compensation due to the employees at such office, and
Messrs. Frankel and Cohen agreed to reimburse the Company for such expenses. The
agreement also provided for the issuance of 32,500 shares of Common Stock to
each of Messrs. Frankel and Cohen and the continuation of health insurance
benefits for Messrs. Frankel and Cohen and members of their families at the
Company's expense. The Company's obligation to pay such insurance benefits is an
ongoing obligation of the Company.
In September 1997, following the sale of Multi-Arc, the Company
relocated its offices from New Jersey to New York City, and Messrs. Frankel and
Cohen were reelected as chairman of the board and chief executive officer and
president, respectively.
Loan Transactions with Related Parties
On July 5, 1990, the Company borrowed an aggregate of $5 million from
Mr. Alan N. Cohen, president and a director of the Company, Mr. Paul Milstein,
who was then a director of the Company, and Frankhill Associates, a limited
partnership of which Mr. Andrew J. Frankel, chairman of the board and a director
of the Company, is a general partner and the holder of a significant beneficial
interest (collectively, in such capacity, the "Option Lenders"). The proceeds of
the loan (the "Option Loan") were used by the Company to reduce then-outstanding
bank indebtedness and for general corporate and working capital purposes.
Page 5 of 20 Pages
<PAGE>
The Option Loan was secured by a pledge of the capital stock of UBC
Virginia Corp. ("UBC Corp."), a subsidiary of the Company which held an option
(the "Option") to purchase certain real estate in New York City (the "UBC
Property") for approximately $3.0 million in cash. The Option did not become
exercisable until the death of the second to die of the two principals of the
corporation that owned the UBC Property. The Option was exercisable during the
90 days following such death, after which time it expired. If exercised, the
Company was required to pay the purchase price for the UBC Property within 30
days of the date of exercise. The Option became exercisable in September 1995.
The closing date was postponed until May 1996. The Option Loan required the
Company to exercise the Option when it became exercisable. The failure of the
Company to exercise the Option would be a default under the terms of the Option
Loan, and the Option Lenders would have the right to exercise the Option on
behalf of the Company and declare the Option Loan to be due and payable.
UBC Corp. was merged into the Company in March 1996, as a result of
which the Option became an asset of the Company.
In connection with the Option Loan, the Company paid the Option Lenders
a $50,000 commitment fee and issued to them warrants to purchase an aggregate of
25,000 shares of Common Stock at $80.00 per share. The closing market price of
the Common Stock on July 5, 1990 was $65.00 per share. The warrants were
exercisable from December 31, 1990 until July 5, 1995, at which time they
expired unexercised. The Option Loan was due on the earlier of March 31, 1997 or
the day after the Company's bank loans have been paid in full.
In May 1992, the Company restructured the Option Loan, as well as its
loans with Chemical Bank and Fleet Bank. Most of the Company's bank obligations
had been incurred prior to 1976. Under the terms of such restructuring, (a) the
interest rate on all such loans was reduced to the prime rate, (b) accrued
interest on the Option Loan from October 1, 1991 through March 31, 1993, in the
amount of $571,285, was added to the principal, thereby increasing the principal
balance of the Option Loan to $5,571,285, and (c) the Company was required to
prepay the Option Loan (i) in the event of a sale of the Company's interest in
the UBC Property or (ii) in the event the Company obtains cash recoveries on
various claims relating to its discontinued construction contracting operations,
or (iii) if the Company's cash flow from operations exceeds a specified amount.
In connection with the 1992 restructuring, the banks consented to the
Company's grant to the Option Lenders of a second lien on those assets of the
Company which served as collateral for the bank loans, and the Option Lenders
consented to the Company's grant to the banks of a second lien on the stock of
UBC Corp.
In 1994, Fleet Bank advised the Company that it desired to dispose of
its portion of the bank loan. In March 1994, after discussions initiated by
Fleet Bank, Frankhill Associates, Alan N. Cohen, and Paul Milstein
(collectively, in such capacity, the "Fleet Assignees") each purchased a
one-third interest in the Company's indebtedness to Fleet Bank (the "Fleet
Indebtedness"), which indebtedness totaled $3,042,000. The terms of such
indebtedness did not change as a result of this purchase. In November 1994,
Peter D. Flood, who was then a director of the Company and chief executive
officer of Multi-Arc, purchased 6.4% of the Fleet Indebtedness from the Fleet
Assignees.
In September 1994, in order to facilitate the restructuring and
refinancing of Multi-Arc, the Fleet Assignees agreed to subordinate their lien
on Multi-Arc's assets and to defer the approximately $1.6 million payment to
which they would have otherwise been entitled. In consideration for the
Page 6 of 20 Pages
<PAGE>
concessions agreed to by the Fleet Assignees, the Company's board of directors,
with Messrs. Frankel and Cohen not voting, approved a payment of $255,000 by the
Company to the Fleet Assignees. The 1992 restructuring agreement was amended to
provide for principal payments on the Fleet Indebtedness at the rate of $250,000
per quarter beginning March 31, 1995, with the remaining principal balance
becoming due on March 31, 1997. Furthermore, the Company was required to make
prepayments to the extent that it sells any of its capital assets or receives
capital distributions from Multi-Arc.
In September 1994, Chemical Bank agreed to accept a $255,000 discount
for payment of the Company's outstanding debt to it. After such repayment, the
Company's remaining obligation to Chemical Bank was $941,000, representing
obligations due under outstanding letters of credit issued by Chemical Bank in
connection with an appeal bond and in connection with the Company's discontinued
real estate development activities. Because of the Company's inability to fund
the liabilities represented by the letters of credit, in order to secure the
release of collateral held by Chemical Bank so that Multi-Arc could obtain a
term loan and revolving credit facility from another bank, Messrs. Frankel,
Milstein, and Cohen each personally guaranteed one-third of the letter of credit
liabilities, for which the Company agreed to pay them an aggregate annual
guarantee fee equal to 2% of the letters of credit outstanding.
At September 30, 1996, the Company owed approximately $1.6 million to
the Fleet Assignees. At that time, the Company and the Fleet Assignees entered
into an agreement (the "Debt Cancellation Agreement") pursuant to which the
Company paid approximately $91,500 to each of the three Fleet Assignees and
issued 15,000 shares of Common Stock to each of the three Fleet Assignees in
full satisfaction of the Fleet Indebtedness.
As discussed above, the Option became exercisable in September 1995 and
the Company was obligated to exercise the Option. At the time the Option became
exercisable, the Company did not have the cash required to exercise the Option,
and it could not raise the necessary funds from unrelated parties or from the
sale of assets other than the Option. Since the Option Loan agreement required
the Company to exercise the Option, the Company exercised the Option in October
1995, and the Company purchased the Property on May 8, 1996. In order to make
the purchase, on May 7, 1996, the Company borrowed $3.3 million (the "Demand
Loan") from the Option Lenders and issued its 10% demand note, which was secured
by a mortgage on the UBC Property.
The Company's failure to exercise the Option and pay the purchase price
for the Property would have resulted in an event of default under the Option
Loan, which would have given the Option Lenders the right to exercise the Option
on the Company's behalf and to declare the Option Loan immediately due and
payable.
In 1984, the Company had entered into an agreement with a nonaffiliated
real estate developer pursuant to which such real estate developer agreed to
purchase the Option. The developer was unable to obtain financing to consummate
the purchase. As a result, the contract was terminated. Upon termination of the
agreement, the Company attempted to sell the Option to other nonaffiliated
parties. In addition, after the Company received notice that the Option had
become exercisable and the Company had 90 days to exercise the Option, the
Company made contact with several brokers who were not able to identify a buyer.
The Company's attempts to sell the Option did not result in any bona fide offer
from a third party to purchase the Option.
Page 7 of 20 Pages
<PAGE>
Once the Option became exercisable, the Option Lenders expressed an
interest in acquiring the UBC Property in satisfaction of the amount outstanding
on the Option Loan. The board of directors (with the Option Lenders not
participating), after considering the difficulties entailed in the Company's
exercise of the Option, including the Company's lack of cash flow, diminished
borrowing power, debt structure and difficulties in raising funds through a
private placement of Multi-Arc's securities, authorized the officers of the
Company to engage an independent appraiser to conduct an appraisal of the
Property and seek to negotiate a transaction with the Option Lenders.
On November 21, 1995, the Company received a report from the
independent appraiser it had retained which concluded that the range for the
market value of the UBC Property was between $9.9 million and $11.9 million
(before deducting the $3 million exercise price), depending on the ultimate cost
of complying with zoning restrictions and other costs that would be incurred in
the development of the Property. The appraiser's conclusion was based on a
number of assumptions, including the assumption that a sale would occur after a
reasonable exposure in a competitive market under all conditions requisite for a
fair sale, with the buyer and seller acting prudently, knowledgeably, for
self-interest, and not under undue duress.
On March 4, 1996, the Company's board of directors, with the Option
Lenders not participating, authorized the officers of the Company to engage in
negotiations with the Option Lenders to reach an agreement to sell the Option to
them. On July 10, 1996, the Company entered into a contract to sell the UBC
Property to FAM, LLC ("FAM"), a Delaware limited liability company owned by
Frankhill Associates, the Alan N. Cohen Family Company, LLC, a Delaware limited
liability company of which Alan N. Cohen is manager, and Builtland Associates, a
New York general partnership of which Paul Milstein is a general partner.
Builtland Associates is the managing director of FAM and, as such, controlled
its activities.
On August 1, 1996, FAM purchased the Property for approximately $9.4
million, paid for as follows:
(a) Cancellation of the principal balance of the Option Loan in the
amount of $5,571,285, which has been acquired by FAM from the Option Lenders.
(b) Cancellation of the Demand Loan of $3.3 million due Frankhill
Associates, the Alan N. Cohen Family Company, LLC, and Paul Milstein, which loan
has also been acquired by FAM.
(c) Forgiveness of interest in the amount of $283,000 due on the Option
Loan and the Demand Loan.
(d) Cash payment to the Company of $228,715.
FAM also assumed the cost of terminating then existing occupancy
arrangements at the UBC Property, the cost of which was estimated at
approximately $500,000. As a result the effective cost of the UBC Property was
approximately $9.9 million.
In addition, the Company was entitled to a contingent additional
payment if, within one year from the date of sale to FAM, all or any portion of
the Property is further transferred to a bona fide third party or if FAM enters
into an agreement to transfer all or any portion of the Property to a bona fide
third party and such transfer ultimately occurs. In either of such events, the
Company would have been entitled to 50% of the amount by which the net proceeds
of the sale, as defined, of all or
Page 8 of 20 Pages
<PAGE>
any portion of the Property exceeds $10 million. In no event can such additional
consideration exceed $3 million.
The Company reported a gain of approximately $6 million from the sale
of the UBC Property to FAM.
The Merger Agreement
On July 15, 1998, the Company and Cafco entered into an agreement (the
"Merger Agreement"), which set forth the terms of the Transaction. The terms of
the Merger Agreement are set forth in Item 4.
Item 4. Terms of the Transaction.
On July 15, 1998, the Company and Cafco entered into the Merger
Agreement. Pursuant to the Merger Agreement, Cafco agreed to merge (the
"Merger") with and into the Company, subject to the approval of the Merger
Agreement by the Company's shareholders. Under the New York Business Corporation
Law ("NYBCL"), the merger requires the votes of the holders of two-thirds of the
outstanding Common Stock. Cafco owns 75.3% of the outstanding Common Stock and
has the power to approve the Merger without the approval of any other
shareholders. The Company has scheduled a meeting of shareholders for October
1998. The Company does not intend to solicit proxies for such meeting, but will
provide shareholders with an information statement (the "Information Statement")
pursuant to Section 14(c) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). At the meeting, Cafco will vote to approve the Merger.
Pursuant to the Merger Agreement, at the effective time of the Merger:
(a) Each share of Common Stock, other than shares of Common Stock held
by Cafco and shareholders who exercise their rights of appraisal, would receive
the right to receive $37 (the "Merger Consideration").
(b) Each option to purchase one share of Common Stock shall become a
right to receive the difference between the Merger Consideration and the
exercise price of the option.
(c) Each share of common stock of Cafco would become and be converted
into one share of Common Stock of the Company.
Payment of the Merger Consideration to the shareholders of the Company,
other than Cafco and shareholders exercising dissenters' rights pursuant to
Sections 910 and 623 of the NYBCL, shall be made as soon as possible after the
effective time of the Merger, but not later than 15 business days after such
effective time. Payment shall be made to the record holders of Common Stock as
of the close of business on the day immediately preceding the date on which the
effective time of the Merger occurs.
Item 5. Plans or Proposals of the Issuer or Affiliate.
Following the completion of the Transaction, the Company will (a)
operate as a privately owned corporation, with the only shareholders being the
present shareholders of Cafco and (b) terminate the Company's registration under
the Exchange Act pursuant to Section 12(g)(4) of the
Page 9 of 20 Pages
<PAGE>
Exchange Act. Following the termination of the Company's registration under the
Exchange Act, the Company will not be required to file reports pursuant to
Section 12 or 15(d) of the Exchange Act.
Item 6. Sources and Amounts of Funds or Other Consideration.
All of the funds to be used to pay the Merger Consideration pursuant to
the Merger Agreement shall be provided by the Company. At June 30, 1998, the
Company had cash of approximately $12.3 million, as reflected in the Company's
Form 10-Q Quarterly Report for the quarter ended June 30, 1998. Substantially
all of the Company's cash at June 30, 1998, resulted from the sale by the
Company of its 84% interest in Multi-Arc, which generated net cash to the
Company of approximately $17.9 million.
At September 30, 1997, following completion of the Multi-Arc sale, the
Company had cash of $17,875,000. At June 30, 1998, the Company's cash position
was $12,281,000. The following table shows the use of cash during the nine
months ended June 30, 1998. Reference is made to the Statement of Cash Flows for
the nine months ended June 30, 1998, which is included in the Company's Form
10-Q for the quarter ended June 30, 1998.
(In thousands)
Cash at September 30, 1998 $17,875
Net cash used by operating activities (1,577)
Proceeds from sale of Yogen Fruz stock(1)
1,247
Purchase of Common Stock from shareholders(2) (5,264)
------
Cash at June 30, 1998 $12,281
=======
- -------------
(1) Following the transfer of shares of Integrated Brands (which
subsequently merged into Yogen Fruz) in connection with the purchase of
shares of Common Stock, the Company owned 136,078 shares of Yogen Fruz,
which were sold in May 1998 for approximately $1.2 million
(2) This amount reflects the cash consideration paid by the Company and the
value of the common stock of Integrated Brands that was transferred in
connection with the purchase by the Company of shares of Common Stock
during the nine months ended June 30, 1998.
Since June 30, 1998, the Company has continued to incur operating
expenses.
In addition, in connection with the sale of Multi-Arc, an aggregate of
$3.0 million is held in escrow (the "Multi-Arc Escrow") as security for certain
obligations under the agreement relating to the sale of Multi-Arc, including
obligations which may arise as a result of breaches of representations and
warranties and for taxes. Although the Company does not believe that its
liability for such breaches or such taxes will be material, there can be no
assurance that any of the funds held in escrow will be paid to the Company. The
possible recovery from the Multi-Arc Escrow is offset by a reserve in the same
amount in the Company's financial statements. See "Item 7. Purposes,
Alternatives, Reasons and Effects" for a description of the Multi-Arc Escrow and
certain reserves against any distribution to the Company from the Multi-Arc
Escrow.
Page 10 of 20 Pages
<PAGE>
The expenses for the Transaction will be paid by the Company. The
Company estimates that the expenses of the Transaction, including legal,
accounting and filing fees, printing expenses and other related expenses, will
be approximately $150,000.
None of the money required for either the payment of expenses or the
payment of the Merger Consideration will be borrowed by the Company.
Item 7. Purpose(s), Alternatives, Reasons and Effects.
Purposes, Alternatives, Reasons and Effects
(a) Existence of Pending Litigation
-------------------------------
Although the Company is not presently engaged in any business
activities, final resolution of issues involved in the Multi-Arc sale remain
open and could possibly result in litigation. In addition, the Company is a
defendant in at least three pending lawsuits arising from its discontinued
subcontracting business. Accordingly, the Company's directors believe that the
Company should continue in existence until such issues are resolved, and such
issues are likely to remain unresolved for up to four years and possibly longer.
(b) Absence of Market for Common Stock; Illiquid Nature of
--------------------------------------------------------------
Investment in Common Stock
--------------------------
The public float for the Common Stock (i.e., the shares of Common Stock
not owned by Cafco) is 70,565 shares, and there is no active market for the
Common Stock, as a result of which shareholders are not able sell their shares
of Common Stock. For these reasons, the Company and Cafco do not believe that it
is in the interest of either the Company or its shareholders for the Company to
continue to be a reporting company under the Exchange Act and for the
approximately 1,100 shareholders to have little or no liquidity for their stock.
Furthermore, more than 1,050 shareholders of record hold 100 or fewer shares,
including more than 940 shareholders of record who hold ten or fewer shares. The
purpose of the Transaction is to pay such shareholders a fair value for their
shares and to operate the Company as a privately-owned company, with the present
shareholders of Cafco as its only shareholders.
(c) Investment Company Act Considerations
--------------------------------------
Following the Multi-Arc sale in September 1997, the Company's board of
directors adopted a resolution which provided that, within one year from the
completion of the Multi-Arc sale, it would engage in a transaction such that the
Company is not engaged in the business of an investment company, as defined in
Section 3 of the Investment Company Act of 1940 (the "Investment Company Act").
As of June 30, 1998, the Company did not have any agreement with any
company or other entity pursuant to which the Company would acquire such company
or its business and assets, and no discussions were pending. Although the
Company has received an inquiry about the possibility of a merger or similar
corporate transaction, such discussions have not resulted in any formal or
informal agreement and no discussions are continuing. The board of directors did
not believe that, during the period between the date of this filing and
September 30, 1998, it was likely that the Company could negotiate an agreement,
conduct adequate due diligence, file proxy materials with
Page 11 of 20 Pages
<PAGE>
the Commission and hold a meeting of shareholders, all of which may, depending
on the structure of the transaction, be necessary in order to consummate such a
transaction.
As a result of the sale of Multi-Arc, the Company may come within the
technical definition of an investment company as defined in Section 3 of the
Investment Company Act. However, Rule 3a-2 of the Commission under the
Investment Company Act treats a so-called transient investment company as a
company which is not engaged in the business of an investment company. In order
for a corporation to be a transient investment company, it must have a bona fide
intent, during a period of time not to exceed one year, to be engaged primarily,
as soon as is possible, in a business other than that of investing, reinvesting,
owning, holding or trading in securities. Thus, the Company cannot be a
transient investment company subsequent to September 30, 1998.
If the Company has not completed a transaction which takes it out of
the definition of an investment company by September 30, 1998, the Company will
be treated as an investment company. The Company does not believe that it is in
the interests of the Company or its shareholders for the Company to become an
investment company. The operation of the Company as an investment company would
subject the Company to considerably greater expenses of operations as well as
increased regulation under the Investment Company Act. Considering the Company's
relatively modest cash position and the absence of an operating business, it is
possible that the expenses of operating an investment company, including the
engagement of additional staff and the increased regulatory burden, could
generate losses from operations, which would not be in the interest of the
Company or its shareholders. Although the definition of an investment company
under the Investment Company Act would permit the Company to own government
securities, the board of directors does not believe that it would be in the
interest of the Company or its stockholders for the Company's principal business
to be a holder of government securities.
Furthermore, the operation of the Company as an investment company or
as a holder of government securities would not solve the problems of an illiquid
stock, which is currently faced by the shareholders since the public float is
only 70,565 shares. Accordingly, the board of directors believes that it is in
the interest of the shareholders for the Company to consummate a transaction
which will eliminate the risk of the Company being treated as an investment
company and will provide cash to the nonaffiliated shareholders.
(d) Consideration of Liquidation; Tax Effects on Cafco
--------------------------------------------------------------
Shareholders and Other Shareholders
-----------------------------------
The Company considered the possibility of a liquidation of the Company
by a distribution of substantially all of the available cash to its
shareholders, including, the present shareholders of Cafco (the "Cafco
Shareholders") who owned 75.3% of the Common Stock which they transferred to
Cafco. Because of the open litigation issues described above and also because
such a distribution would have adverse tax consequences to the Cafco
Shareholders since it would result in a taxable distribution to such
shareholders, the directors felt that liquidation would not be appropriate. By
retaining their stock ownership in the Company instead of receiving the cash in
the form of a distribution, the Cafco Shareholders will continue to own their
stock in the Company and there would be no taxable transaction to them.
The economic effect and tax treatment to the other shareholders of the
Transaction is essentially the same as a liquidation distribution. In either
case, as long as the shares of the Company's Common Stock held by the other
shareholders constitute capital assets in their hands,
Page 12 of 20 Pages
<PAGE>
both the Transaction and a liquidation would result in a capital gain or loss.
Whether the gain or loss would be long-term or short-term would depend upon
their respective holding periods.
As discussed above, although the Company is a reporting company
pursuant to the Exchange Act, there is no active market for the Common Stock and
the public float consists of 70,565 shares of Common Stock, which are held by
approximately 1,100 shareholders of record, of which more than 1,050
shareholders hold 100 or fewer shares, including more than 940 shareholders who
hold ten or fewer shares.
Since September 30, 1997, the Company has purchased an aggregate of
164,039 shares of Common Stock in private transactions. The Company continues to
receive inquiries from shareholders who expressed an interest in selling their
shares of Common Stock to the Company. The Company believes that the Transaction
would benefit the nonaffiliated shareholders by providing them with cash now at
a fair value not obtainable in the market. The termination of the public market
for the Common Stock will not be disadvantageous to the nonaffiliated
shareholders, since there is no active public market and the shareholder will
receive more than the market price for the Common Stock, which, as reflected in
Item 1, has been both minimal and sporadic.
(e) Consideration of Multi-Arc Escrow; Anticipated Contingent
--------------------------------------------------------------
Obligation; Potential Premium to Cafco Shareholders
---------------------------------------------------
At June 30, 1998, there was $3.0 million in the Multi-Arc Escrow. At
such date the Company also had a reserve in the same amount, which is reflected
as deferred income on the balance sheet. The Multi-Arc Escrow was established to
protect the purchaser of Multi-Arc from any loss, liability, damage or expense,
including legal expense, it may incur as a result of any breaches by Multi-Arc
of its representations and warranties and to provide for payment for certain tax
liabilities. It is anticipated that a substantial portion of the Multi-Arc
Escrow may be made available to the Company in March 1999 provided that there
are no claims against the escrow at that time. The Company does not know of any
claims against the Multi-Arc Escrow as of the date of this Schedule 13E-3.
The Merger Consideration reflects the value of the Company's net liquid
assets, net of appropriate reserves set by the board of directors for ongoing
expenses, including potential future litigation, retirement benefits for
employees other than Messrs. Frankel and Cohen, the obligation to maintain
health insurance for Messrs. Frankel and Cohen and members of their families.
After analyzing the cost of such obligations and the ongoing cost of operations,
as of the date of this Schedule 13E-3, the Company anticipates that its
contingent obligations will be in the range of $1.5 million to $2 million.
Although a substantial portion of the Multi-Arc Escrow may be released
as early as March 1999, the balance of the Multi-Arc Escrow would not be
available until September 2002, and, accordingly, any distribution of such funds
to shareholders could not be made prior to October 2002.
If the Company receives the full $3.0 million from the Multi-Arc Escrow
in March 1999 and September 2002 and its contingent obligations and ongoing
expenses are $1.5 million, which is in the lower range of the presently
anticipated amount, the Cafco Shareholders would receive approximately $6.96, or
18.8%, more per share than the other shareholders of the Company. If such money
were paid pro rata to all shareholders of the Company, including the Cafco
Shareholders, the
Page 13 of 20 Pages
<PAGE>
unaffiliated shareholders would receive approximately $5.24, or approximately
15.8%, per share more, which would result in a total payment of $42.24.
As a result of the Transaction, the Company's book value will be
reduced by the amount of the Merger Consideration paid to the shareholders other
than Cafco, the expenses of the Transaction and any payments made to
shareholders exercising their rights of appraisal.
Relative Benefits and Detriments of the Transaction
The following is a discussion of the benefits and detriments of the
consummation of the Transaction to the Company, the Cafco Shareholders and the
unaffiliated shareholders.
(a) The Company
-----------
The Transaction will benefit the Company by eliminating the costs of
maintaining its status as a public company and complying with applicable
securities regulations. Such costs would be increased if the Company is required
to register under the Investment Company Act. Although the Company can continue
to operate as an owner of government securities without registering under the
Investment Company Act, the Company does not believe that it is in the interest
of the shareholders for its principal business to be the ownership of government
securities. The Company believes that the legal and accounting costs of
maintaining its status as a public company is approximately $100,000 per year in
addition to operating expenses such as rent, compensation and other
administrative expenses.
If the Transaction is consummated, the Company will be a private
company and will not have any value as a so-called public shell. Although the
board of directors does not believe that it is in the best interest of the
Company or its shareholders for it to maintain its status as a public company,
it is possible that, if the Company continued in existence as a public company,
it would be able to acquire a company seeking to become a public company through
a merger with the Company. However, the Company believes that the absence of any
significant public float or market for the Common Stock would have a material
adverse effect upon the terms on which a merger could be affected. Furthermore,
the Company would incur significant cost negotiating such a transaction with no
assurance that a transaction beneficial to the Company would be consummated. The
Company engaged in preliminary discussions with one unaffiliated party, and such
discussions did not result in any proposal.
(b) The Cafco Shareholders
----------------------
The Cafco Shareholders would benefit from the Transaction since, as a
result of the Transaction, they would own all of the issued and outstanding
Common Stock of the Company. Furthermore, to the extent that the Company
receives money from the escrow fund in excess of the Company's contingent
obligations, the Cafco Shareholders would receive all of such proceeds, and the
unaffiliated shareholders would receive no portion of such proceeds. If the
amount received by the Company from the escrow accounts, net of payments to be
made with respect to contingent obligations, is $1.5 million, the Cafco
Shareholders would receive approximately $6.96, or 15.8%, more per share than
the other shareholders of the Company. However, the Cafco Shareholders would
bear the responsibility for payment the ongoing expenses of the operation of the
Company. Furthermore, as a result of the Transaction, the Cafco Shareholders
would have 100% (rather than 75.3%) interest in the Company's net book value and
net earnings.
Page 14 of 20 Pages
<PAGE>
The Cafco Shareholders, as the holders of all of the outstanding stock
of the Company, would be adversely affected to the extent that the Company's
obligations, including its ultimate obligations with respect to contingent
liabilities, are greater than presently contemplated.
(c) Unaffiliated Shareholders
--------------------------
The unaffiliated shareholders (i.e., the shareholders other than the
Cafco shareholders) would benefit from receiving a fair price in cash for an
investment which is presently an illiquid investment. As discussed above, there
is no active market for the Company's Common Stock and there is no significant
float. The Company has received inquiries from shareholders who are interested
in obtaining cash for their shares but are unable to sell the shares in the
market
Because of the structure of the Transaction, the unaffiliated
shareholders will receive a price per share which may be less than they would
receive if the Company liquidated. If the Company liquidates and distributes
cash, net of reasonable reserves, to the shareholders, it is possible that the
price per share would be increased by approximately $5.24, or 12.4%, per share,
a significant portion of which would not be distributed until October 2002 or
later. In addition, the unaffiliated shareholders will no longer hold an equity
interest in the Company.
Item 8. Fairness of the Transaction.
The Company believes that the Transaction is fair to the nonaffiliated
shareholders. In determining the fairness of the Transaction, the Company
considered the following factors.
(a) The liquidation value per share of Common Stock was based on the
Company's most recent balance sheet at the time the Merger Agreement was
approved by the board of directors, which is the balance sheet as of March 31,
1998, as filed in the Company's Form 10-Q for the quarter ended March 31, 1998,
net of appropriate reserves set by the board of directors for ongoing expenses,
including potential future litigation and retirement benefits for employees
other than Messrs. Frankel and Cohen and insurance benefits for Messrs. Frankel
and Cohen. However, in accordance with generally accepted accounting principles,
the March 31, 1998 balance sheet reflected the value of the Company's stock
ownership of Yogen Fruz at its cost. The board of directors believed that, for
purposes of determining the liquidation value, the Yogen Fruz shares should be
valued at their then current value. After taking all such factors into
consideration, the liquidation value per share of Common Stock would be $37.00.
(b) The price at which the Company purchased shares of Common Stock in
recent transactions. Such purchases were made from knowledgeable investors,
including Mr. Paul Milstein and parties affiliated or otherwise related to him,
who were, in the aggregate, the second largest shareholder of the Company. The
purchase price paid resulted from negotiations with the sellers and reflected an
approximation at the time of the liquidation value of the Common Stock.
The Company does not believe that the market price of the Common Stock
represents any indicia of value, since there is a very thin market for the
Common Stock. However, the Merger Consideration exceeds the most recently
reported bid prices for the Common Stock prior to the execution of the Merger
Agreement.
Page 15 of 20 Pages
<PAGE>
The Company believes that, because the Company is not engaged in any
business activities, valuations based on a multiple of earnings are not
relevant. The Company's main asset is cash and cash equivalents.
Since the Company in not engaged in any business activities, the
Company does not believe that it has any value as a going concern.
In considering the various factors to determine fair value, the
directors gave the greatest weight to the price at which the stock was purchased
by the Company from shareholders, which approximated the liquidation value. In
February 1998, the Company purchased an aggregate of 107,370 shares, or
approximately 24.7% of the Company's Common Stock, of which an aggregate of
100,232 shares of Common Stock were owned by Messrs. Paul and Seymour Milstein
and related parties (collectively, the "Milstein group"). The price per share
was $33 in cash plus .8125 shares of Integrated Brands. The price was the result
of substantial arms length negotiation between the Company and the
representatives of Milstein group. Mr. Paul Milstein is a former director of the
Company and was one of the Fleet Assignees and Option Lenders. Messrs. Paul and
Seymour Milstein are experienced investors and were familiar with the Company
and its financial condition and the terms of the Multi-Arc sale, including the
Multi-Arc Escrow and the extent of the Company's contingent liabilities. In
April 1998, the Company purchased 40,488 shares of Common Stock from other
shareholders, including an investment banking firm, at the same price as had
been negotiated by the Milstein group. No event has occurred subsequent to the
purchase of the stock from the Milstein group and the other shareholders which
would affect the value of the Company's Common Stock either positively or
negatively.
Because the Company's assets are substantially all liquid assets and
the Company has no independent value as a going concern, the price paid to the
selling shareholders approximated the estimated liquidation value. The estimated
liquidation value being paid to the unaffiliated shareholders reflects a modest
premium over the amount paid to the Milstein group and other selling
shareholders.
The Transaction requires the approval of the holders of two-thirds of
the outstanding shares of Common Stock on the record date for determining
shareholders entitled to vote on the Merger. Since Cafco holds 75.3% of the
outstanding shares, it has the ability to approve the transaction without the
votes of any other shareholder. The agreement does not require the approval of
any specified percentage of non-affiliated shareholders.
Item 9. Reports, Opinions, Appraisals and Certain Negotiations.
The Company has not obtained a report, opinion or appraisal from any
outside party relating directly or indirectly to either the Transaction or
recent purchases by the Company from shareholders.
Item 10. Interest in Securities of the Issuer.
(a) Cafco presently owns 215,529 shares of Common Stock, representing
75.3% of the outstanding shares of Common Stock. Messrs. Andrew J. Frankel and
Alan N. Cohen, are affiliates of both the Company and Cafco, and they may be
deemed beneficial owners of such shares to the extent of their economic interest
in Cafco. The shareholders of Cafco are Messrs. Frankel and
Page 16 of 20 Pages
<PAGE>
Cohen, members of their families, including adult children, and entities,
including Frankhill, which are affiliated with either Mr. Frankel or Mr. Cohen.
(b) During the 60 days prior to the date of this Schedule 13E-3,
neither Cafco nor Messrs. Frankel and Cohen engaged in any transactions
involving the Common Stock.
Item 11. Contracts, Arrangements or Understandings with Respect to the Issuer's
Securities.
Neither the Company, Cafco or Messrs. Frankel or Cohen has any
agreement, understanding or relationship in connection with the Transaction,
other than the Merger Agreement, except that Cafco intends to vote its shares of
Common Stock in favor of the Transaction.
Item 12. Present Intention and Recommendation of Certain Persons with
Regard to the Transaction.
Cafco intends to vote its shares of Common Stock in favor of the
Transaction. Messrs. Frankel and Cohen, who are the only officers and directors
of Cafco and the only directors or the Company, will recommend that the
shareholders approve the Transaction for the reasons set forth in Item 8.
Item 13. Other Provisions of the Transaction.
Pursuant to Sections 910 and 623 of the NYBCL, holders of Common Stock
who object to the Merger may exercise their appraisal rights in the manner set
forth in said Sections 910 and 623.
No contractual provision has been made by the Company or Cafco to allow
unaffiliated shareholders to obtain access to corporate files of the Company or
to obtain counsel or appraisal services at the expense of the issuer. Section
624 of the NYBCL provides shareholders with certain rights of inspection. The
Company will permit any shareholder who complies with said Section 624 to
examine and make extracts from the corporate records covered by such section.
Item 14. Financial Information.
The financial statements and other financial information is
incorporated by reference to the Information Statement as follows:
<TABLE>
<CAPTION>
Description Location in Information Statement
----------- ---------------------------------
<S> <C>
(a) Audited financial statements for the fiscal Financial Statements
years ended September 30, 1997 and 1996
(b) Unaudited financial statements for the six Financial Statements
months ended March 31, 1998 and 1997
(c) Ratio of earnings to fixed charges Not Applicable
(d) Book value per share Selected Financial Data
</TABLE>
Item 15. Persons and Assets Employed, Retained or Utilized.
(a) The Company will pay the expenses of the Transaction, which are
estimated at $150,000.
Page 17 of 20 Pages
<PAGE>
(b) No persons have been engaged by the Company to make solicitations
or recommendations in connection with the Transaction.
Item 16. Additional Information.
Not Applicable
Item 17. Material to be Filed as Exhibits.
(a) None.
(b) None.
(c) (i) Agreement of merger dated July 15, 1998, by and
among Cafco and the Company, which is filed as
Appendix C to the Information Statement.
(ii) Stock Purchase Agreement, dated as of February 13,
1998, by and among the Company and Milstein Group.(1)
(iii) Stock Purchase Agreement, dated as of February 13,
1998, by and among the Company and SO Charitable
Trust.(1)
(iv) Stock Purchase Agreement, dated as of February 20,
1998, by and among the Company and Henry Benach and
Benhome Associates L.P.(1)
(v) Stock Purchase Agreement, dated as of April 17, 1998,
by and among the Company and Glenn F. Woo, Spear
Leeds & Kellogg and Jonathan Blaustein.
(d) The Information Statement.
(e) Rights of Appraisal, which is included under the caption
"Rights of Dissenting Shareholders" in the Information
Statement.
(f) None.
- --------
(1) Filed as an exhibit to the Company's Form 8-K Current Report, with a
report date of February 13, 1998, and incorporated hereby by reference.
Page 18 of 20 Pages
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
September 18, 1998 ANDAL CORP.
By:/s/Andrew J. Frankel
-----------------
Andrew J. Frankel
Chairman and CEO
CAFCO HOLDING CORPORATION
By:/s/Andrew J. Frankel
-----------------
Andrew J. Frankel
Chairman and CEO
/s/Andrew J. Frankel
-----------------
Andrew J. Frankel
/s/Alan N. Cohen
-------------
Alan N. Cohen
Page 19 of 20 Pages
<PAGE>
<TABLE>
<CAPTION>
Appendix A
Cross Reference Sheet
---------------------
<S> <C>
Caption in Schedule 13E-3 Caption in Information Statement
- ------------------------- --------------------------------
Issuer and Class of Security Subject to the Summary; Absence of Effective Market for
Transaction Common Stock; Effect of Absence of Effective
Market
Identity and Background Certain Relationships and Related Transactions
Past Contracts, Transactions and Negotiations Background
Terms of the Transaction Terms of the Merger
Plans or Proposals of the Issuer or Affiliate Not Applicable
Source and Amounts of Funds or Other Background; Available Cash
Consideration
Purpose(s), Alternatives, Reasons and Effects Absence of Active Market for Common Stock;
Effect of Absence of Active Market for
Common Stock; Background; Material Federal
Income Tax Consideration; Potential Premium
to Cafco shareholders; Funds Held in Escrow;
Reserves
Fairness of the Transaction Fairness of the Consideration
Reports, Opinions, Appraisals and Certain No Fairness Opinion
Negotiations
Interest in Securities of the Issuer Beneficial Ownership of Securities; Holdings
of Management
Contracts, Arrangements or Understandings Not Applicable
with Respect to the Issuer's Securities
Present Intention and Recommendation of Not Applicable
Certain Persons with Regard to the Transaction
Other Provisions of the Transaction Rights of Dissenting Shareholders
Financial Information Financial Statements
Persons and Assets Employed, Retained or Summary Financial Information
Utilized
Additional Information Not Applicable
Material to be Filed as Exhibits Not Applicable
</TABLE>
Page 20 of 20 Pages
<PAGE>
Exhibit
STOCK PURCHASE AGREEMENT
AGREEMENT, dated as of this 17th day of April 1998 (the "Agreement"),
by and among Andal Corp., a New York corporation (the "Company"), and each of
the persons and the entity named on Schedule A to this Agreement (each
individually sometimes referred to as a "Seller" and collectively as the
"Sellers")
Sellers collectively own the entire beneficial interest in 40,488
shares of common stock, par value twenty ($20.00) dollars a share, of the
Company (the "Shares"), each such Seller owning the number of Shares set forth
opposite his or its name on Schedule A hereto.
Upon the terms, and subject to the conditions hereinafter set forth,
Sellers desire to sell, and the Company desires to purchase, the Shares from the
Sellers.
NOW, THEREFORE, in consideration of the mutual agreements set forth
herein, and in reliance upon the representations and warranties made herein, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Terms.
The following terms as used in this Agreement shall have the meanings
as set forth below:
"Agreement" shall have the meaning set forth in the preamble.
"Closing" shall have the meaning set forth in Section 3.1
hereof.
"Closing Date" shall have the meaning set forth in 3.1 hereof.
"Company" shall have the meaning set forth in the preamble.
"Individual Sellers" shall mean Glenn F. Woo and Jonathan
Blaustein.
<PAGE>
"Purchase Price" shall have the meaning set forth in Section
2.2 hereof.
"Seller" and "Sellers" shall have the meaning set forth in the
preamble.
"Sellers' Representative" shall have the meaning set forth in
Section 3.4 hereof.
"Shares" shall have the meaning set forth in the preamble.
ARTICLE II
SALE AND PURCHASE OF SHARES
2.1 Purchase of Shares.
On the Closing Date (as hereinafter defined), the Sellers shall sell
assign, transfer, convey and deliver to Company, and Company shall purchase and
accept, the Shares.
2.2 Purchase Price.
The purchase price for the Shares shall be:
(A) The total number of Shares multiplied by $33.00 an
aggregate of $1,336,104 payable in cash at the Closing plus
(B) 19,249 shares of subordinated voting common stock of Yogen
Fruz WorldWide, Inc. (the "Yogen Shares") free and clear of any liens or
encumbrances whatsoever (such cash payment and such shares of common stock are
collectively referred to herein as the "Purchase Price").
ARTICLE III
CLOSING
3.1 The Closing.
The closing of the sale and purchase of the Shares (the "Closing")
shall take place at the offices of Esanu Katsky Korins & Siger, LLP, 605 Third
Avenue, New York, New York 10158 on April 17, 1998 or at such other place and
time as the Company and the Sellers may agree (the "Closing Date").
2
<PAGE>
3.2 Deliveries at Closing by Sellers.
At the Closing, the Sellers shall deliver to the Company certificates
representing all the Shares together with duly executed stock powers with
signatures guaranteed by a commercial bank or by a member firm of the New York
Stock Exchange, sufficient to transfer ownership of such Shares to the Company.
3.3 Deliveries at Closing by Company.
At the Closing, the Company shall cause the cash portion of the
Purchase Price to be delivered to each of the Sellers by wire transfer upon
instructions to be delivered by the Sellers to the Company, and the portion of
the Purchase Price consisting of the Yogen Shares by delivery to each of the
Sellers at the Closing or as soon thereafter as practicable of certificates
representing such Shares accompanied by duly executed stock powers with
signatures guaranteed endorsing transfer in blank.
3.4 Power of Attorney.
Each of the Individual Sellers' hereby appoints Carl H. Hewitt as their
respective attorney-in-fact (the "Sellers' Representatives") to execute and
deliver this Agreement and any other agreement, document or instrument required
hereby or to perform any act required of or permitted by the Individual Sellers
under this Agreement, including, without limitation, the making and accepting of
deliveries called for hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations, Warranties, and Covenants of the Company.
3
<PAGE>
The Company represents and warrants to the Sellers, and covenants that:
(A) Organization and Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New York. The Company has full corporate power and authority to own and
operate its properties and assets, and to carry on its business as presently
conducted. The authorized equity securities of the Company consist of 1,500,000
shares of common stock, par value twenty ($20.00) dollars per share, of which
326,708 shares are issued and outstanding as of March 23, 1998.
(B) Corporate Power. The Company has all requisite legal and
corporate power and authority to execute and deliver this Agreement and to
purchase the Shares hereunder and to carry out and perform its obligations under
the terms of this Agreement.
(C) Authorization. All corporate action on the part of the
Company necessary for the authorization, execution, delivery and performance of
this Agreement by the Company, including, without limitation, the ability to
purchase the Shares, has been taken or will be taken prior to the Closing. This
Agreement, when executed and delivered by it, will constitute a valid and
binding obligation of the Company, enforceable against it in accordance with its
terms.
(D) No Consent. Except as referred to in Section 4.I (C)
hereof, no consent, approval or authorization of any person or governmental
authority is required on the part of the Company in connection with the
execution and delivery of this Agreement, or the purchase of the Shares.
(E) Title To The Yogen Shares. It is the owner, beneficially
and of record, of 155,327 Yogen Shares, and on the Closing Date, upon the
consummation of the transactions contemplated hereby, will have delivered to the
Sellers the Yogen Shares, free and clear, subject to
4
<PAGE>
the requirements of Federal and state securities laws, of all liens and
encumbrances or rights of any other person whomsoever.
(F) Compliance, with Other Instruments. Neither the execution,
delivery, nor performance of this Agreement by the Company shall (1) violate any
order, judgment, or decree applicable to the Company; or (2) violate, conflict
with, result in a breach of any provision of, constitute a default (or an event
that, with notice or lapse of time or both, would constitute a default) under,
result in the termination of, accelerate the performance required by, or result
in a right of termination or acceleration, or the creation of any lien, security
interest, charge, or encumbrance upon any of the Yogen Shares under any of the
terms, conditions, or provisions of (a) its certificate of incorporation or
bylaws, or (b) any note, bond, mortgage, indenture, deed of trust, license, or
other contract or obligation to which the Company is a party, by which the
Company may be bound, or to which the Company, its properties or its assets may
be subject.
4.2 Representations and Warranties of the Sellers.
Each of the Sellers, severally, represents and warrants and
covenants to the Company that:
(A) Conveyance of Shares. Each of the Sellers has, and on the
Closing Date will have conveyed to the Company, the full beneficial ownership to
the number of Shares set opposite each Seller's name on Schedule A hereto, free
and clear, subject to the requirements of Federal and state securities laws, of
all liens and encumbrances or rights of any other person whomsoever.
(B) Access to Data. Each of the Sellers is (1) an "accredited
investor" (as such term is defined in Regulation D promulgated under the
Securities Act of 1933, as amended (the "Securities Act")) and (2) a
sophisticated investor with knowledge and experience in business matters who (a)
has had the opportunity to discuss the Company's business, management and
5
<PAGE>
financial affairs with the Company's management, (b) has had the opportunity to
review the Company's business affairs and (c) has had the opportunity to obtain
additional information as desired in order to evaluate the terms of the sale of
the Shares for the Purchase Price (including the receipt of the Yogen Shares).
The Purchase Price has been determined by arms-length negotiation between the
Company and the Sellers.
(C) Authorization. All action on each of the Seller's part
necessary for the authorization, execution, delivery and performance of this
Agreement by any of the Sellers or the Sellers' Representative, as the case may
be, and the performance of each of the Seller's obligations hereunder by any of
the Sellers or the Sellers' Representative, as the case may be, have been taken
or will be taken prior to the Closing Date. This Agreement, when executed and
delivered by the Sellers or the Sellers' Representative, as the case may be,
will constitute a valid and legally binding obligation of each of the Sellers,
enforceable in accordance with its terms and subject to laws of general
application relating to bankruptcy, insolvency, and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies.
(D) Appointment. The Sellers' Representative has been duly and
validly appointed by each of the Individual Sellers.
(E) Compliance with Other Instruments. Neither the execution,
delivery, nor performance of this Agreement by any of the Sellers or the
Sellers' Representative, as the case may be, shall (1) violate any provision of
the New York Partnership Law (to the extent applicable to any of the Sellers);
(2) violate any order, judgment, or decree applicable to any of the Sellers or
(3) violate, conflict with, result in a breach of any provision of, constitute a
default (or an event that, with notice or lapse of time or both, would
constitute a default) under, result in the termination of,
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accelerate the performance required by, or result in a right of termination or
acceleration, or the creation of any lien, security interest, charge, or
encumbrance upon any of the Shares or any other property of any of the Sellers
under any of the terms, conditions, or provisions of (a) the partnership
agreement or any other organizational document of the non-individual Seller, or
(b) any note, bond, mortgage, indenture, deed of trust, license, or other
contract or obligation to which any of the Sellers is a party, by which any of
the Sellers may be bound, or to which any of the Sellers, their respective
properties or their respective assets may be subject.
(F) No Consent. No notice to, filing with, authorization of,
exemption by, or consent or approval of any public body or authority or any
other third party is necessary for the Sellers' or the Sellers' Representative's
execution, delivery and performance of this Agreement or any other agreement or
document contemplated hereunder or the consummation by any of the Sellers or the
Sellers' Representative of the transactions contemplated herein.
(G) Valid Existence. The non-individual Seller is a
partnership duly organized, validly existing and in good standing under the laws
of the State of New York, and has full power and authority to carry on its
business and to own or lease all of its properties and assets as and in the
places such business is now conducted and such properties are now owned, leased
or operated.
(H) Investment Intent. Each of the Sellers is acquiring the
Yogen Shares, paid as part of the Purchase Price, for his or its own account and
not with a view to the distribution thereof within the meaning of the Securities
Act, any state securities law, or any regulation of any of the foregoing.
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ARTICLE V
CONDITIONS TO CLOSING
5.1 Conditions to Closing of Company.
The Company's obligations to purchase the Shares at the Closing are, at
the option of Company, subject to the fulfillment of the following conditions:
(A) Representations and Warranties Correct. The
representations and warranties made by each Seller, in Article IV hereof, shall
have been true and correct when made and shall be true and correct as of the
Closing Date.
(B) Conditions. All agreements and conditions contained in
this Agreement to be performed by the Sellers on or prior to the Closing Date
shall have been performed or complied with in all material respects.
5.2 Conditions to Closing of Seller.
The Sellers' obligations to sell and deliver the Shares on the Closing
Date are, at the option of the Sellers, subject to the fulfillment as of the
Closing Date of the following conditions:
(A) Representations. The representations and warranties made
by the Company in Article IV hereof shall have been true and correct when made,
and shall be true and correct on the Closing Date.
(B) Covenants. All agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the Closing Date shall
have been performed or complied with in all material respects.
ARTICLE VI
MISCELLANEOUS
6.1 Governing Law.
This Agreement shall be governed in all respects by the laws of the
State of New York,
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without regard to principles of conflicts of laws.
6.2 Survival.
All representations, warranties shall survive the Closing Date. Any
representation or warranty as to which a claim with respect to which specific
notice has been given is unresolved at the time of the expiration of the
applicable period shall survive such expiration until resolved.
6.3 Successors and Assigns.
Except as otherwise provided herein, the provisions hereof shall inure
to the benefit of, and be binding upon, the successors, assigns, heirs,
executors, and administrators of the parties hereto.
6.4 Entire Agreement; Amendment.
This Agreement and any other documents delivered pursuant hereto,
constitute the full and entire understanding and agreement between the parties
with regard to the subject matter hereof. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver or discharge or termination is sought.
6.5 Notices.
All notices and other communications required or permitted hereunder
shall be in writing and shall be mailed by registered or certified mail, postage
prepaid, or otherwise delivered by hand or by messenger addressed (a) if to a
Seller, at the Seller's address set forth on Schedule A, annexed hereto, or at
such other address as such Seller shall have furnished to the Company in writing
or (b) if to the Company, to Andal Corp., 909 Third Avenue, New York, New York
10022, and addressed to the attention of Alan N. Cohen and Andrew J. Frankel
with a copy to Roy M. Korins, Esq., Esanu
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Katsky Korins & Siger, LLP, 605 Third Avenue, New York, New York 10158, or to
such other address or addresses as a party may have been furnished by notice to
the other party. Each such notice or other communication shall for all purposes
of this Agreement be treated as effective or having been given when delivered
personally, or, if sent by mail, at the earlier of its receipt or five (5) days
after the same has been deposited in a of the United States mail, addressed and
mailed as aforesaid.
6.6 Counterparts.
This Agreement may be executed in counterparts, each of which shall be
enforceable against the party actually executing such counterparts, and all of
which together shall constitute one instrument.
6.7 Severability.
In the event that any provisions of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provisions provided that no such severability shall be effective if it
materially changes the economic benefit of this Agreement to any party.
6.8 Titles and Subtitles.
The titles and subtitles used in this Agreement are used for
convenience only and are not considered in construing or interpreting this
Agreement.
6.9 Further Assurances.
At any time and from time to time and after the Closing Date, each of
the Sellers will, at the request of the Company and without further
consideration, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, such instruments and other documents and
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perform or cause to be performed such acts and provide such information, as may
reasonable be required by the Company to evidence or effectuate the sale,
conveyance, transfer, assignment and delivery to the Company of the Shares or
for the performances by and of the Sellers or the Company of any of their
respective obligations under this Agreement.
6.10 Indemnification by Sellers.
(A) Each of the Sellers, severally, shall indemnify the Company and all
of its officers, directors, affiliates, employees and agents (the "Indemnified
Parties") against and agree to hold the Indemnified Parties harmless from any
and all claims, damage, loss, liability and expense (including, without
limitation, reasonable expenses of investigation and reasonable attorneys' fees
and expenses) (collectively, "Damages") incurred or suffered by the any of the
Indemnified Parties on or after the Closing Date arising out of any
misrepresentation, inaccuracy or breach of any representation, warranty,
covenant or promise by any such Seller contained in this Agreement (or in any
certificate, document, list or schedule delivered to the Company by such Seller
hereunder).
(B) If any Indemnified Party shall claim indemnification hereunder for
any claim other than a third party claim, the Indemnified Party shall promptly
give written notice to the other party from whom indemnification is sought (the
"Indemnifying Party") of the nature and amount of the claim. If an Indemnified
Party shall claim indemnification hereunder arising from any claim or demand of
a third party, the Indemnified Party shall promptly give written notice (a
"Third-Party Notice") to the Indemnifying Party of the basis for such claim or
demand, setting forth the nature of the claim or demand in detail. The
Indemnifying Party shall have the right to compromise or, if appropriate, defend
at its own cost and through counsel of its own choosing, reasonably acceptable
to the Indemnified Party, any claim or demand set forth in a Third-Party Notice
giving rise to such claim for indemnification. In the event the Indemnifying
Party undertakes to compromise or defend any such claim or demand, it shall
promptly (and in any event, no later than fifteen (15) days after receipt of the
Third-Party Notice) notify the Indemnified Party in writing of its intention to
do so and shall give
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the Indemnifying Party such security in that regard as the Indemnified Party
reasonably may request. The Indemnified Party shall fully cooperate with
reasonable requests of the Indemnifying Party and its counsel in the defense or
compromise of such claim or demand. After the assumption of the defense by the
Indemnifying Party, the Indemnified Party shall not be liable for any legal or
other expenses subsequently incurred by the Indemnifying Party, in connection
with such defense. The Indemnified Party will have the right to employ its own
counsel in any such action, but the fees and expenses of such counsel will be at
the expense of the Indemnified Party unless (1) the employment of counsel by the
Indemnified Party has been authorized in writing by the Indemnifying Party, (2)
the Indemnified Party has reasonably concluded that there may be legal defenses
available to it that are different from or in addition to those available to the
Indemnifying Party (in which case the Indemnifying Party will not have the right
to direct the defense of such action on behalf of the Indemnified Party) or (3)
the Indemnifying Party has not in fact employed counsel to assume the defense of
such action within a reasonable time after receiving the Third-Party Notice, in
each of which cases the reasonable fees and expenses of counsel will be at the
expense of the Indemnifying Party, and the Indemnifying Party shall reimburse or
pay such fees and expenses as they are incurred. No settlement of a third party
claim or demand defended by the Indemnifying Party shall be made without the
written consent of the Indemnified Party, such consent not to be unreasonably
withheld. The Indemnifying Party shall not, except with written consent of the
Indemnified Party, consent to the entry of a judgment or settlement which does
not include as an unconditional term thereof, the giving by the claimant or
plaintiff to the Indemnified Party of an unconditional release from all
liability in respect of such third party claim or demand.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
ANDAL CORP.
/s/ ANDAL CORP.
---------------
Name:
Title:
/s/ Glenn F. Woo
----------------
GLENN F. WOO
SPEAR, LEEDS & KELLOGG,
by: SLK LLC, the general partner
by: SLK Management, Inc., the
managing member
/s/Carl H. Hewitt
-----------------
Name: Carl H. Hewitt
Title: Vice President
/s/ Jonathan Blaustein
----------------------
JONATHAN BLAUSTEIN
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<TABLE>
<CAPTION>
ANDAL CORP
Schedule A
Name and Address of Seller Federal Certificate Number of Cash at $33 Shares of
ID/Social Number Shares Per Share Yogen Fruz
Security World-Wide,
Number Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Glenn F. Woo ###-##-#### A-710 15,819 $ 522,027 7,521
3 Hamden Road
Flemington, New Jersey 08822
Spear Leeds & Kellogg 13-5515160 A-705 20,244 $ 668,052 9,624
120 Broadway
New York, New York 10271
Jonathan Blaustein ###-##-#### A-708 4,425 $ 146,025 2,104
544 Asbury Street
New Milford, New Jersey 07646
Total for Shares Received 40,488 $1,336,104 19,249
====== ========== ======
</TABLE>
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