SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
--------------------
FORM 10-K/A
(MARK ONE)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _________________
Commission file number 0-22206
NIAGARA CORPORATION
----------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 59-3182820
------------------------------- -------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
667 MADISON AVENUE, NEW YORK, NEW YORK 10021
-------------------------------------- --------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) ZIP CODE
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 317-1000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, PAR VALUE $.001 PER SHARE
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL
REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER
PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS
BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES _X_ NO __.
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS
PURSUANT TO ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN.
YES _X_ NO ___.
AS OF APRIL 24, 1998, THE AGGREGATE MARKET VALUE OF THE VOTING
STOCK HELD BY NON-AFFILIATES OF THE REGISTRANT WAS APPROXIMATELY
$84,270,939 (ASSUMES OFFICERS, DIRECTORS AND ALL STOCKHOLDERS HOLDING 5% OF
THE OUTSTANDING SHARES ARE AFFILIATES).
THERE WERE 9,997,455 SHARES OF THE REGISTRANT'S COMMON STOCK
OUTSTANDING AS OF APRIL 24, 1998.
DOCUMENTS INCORPORATED BY REFERENCE: NONE.
This filing amends the previously filed Annual Report on Form 10-K of
Niagara Corporation ("Niagara") for the fiscal year ended December 31, 1997
(the "From 10-K"). As stated in the Form 10-K, the Items comprising Part
III thereof would be filed by amendment or incorporated by reference from
Niagara's Proxy Statement for its 1998 Annual Meeting of Stockholders.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
DIRECTORS
Certain information with respect to the directors of Niagara is set
forth below.
MICHAEL J. SCHARF, 55, has been Chairman of the Board, President and
Chief Executive Officer of Niagara since its inception in 1993. He has also
served as Chairman of the Board of Niagara LaSalle Corporation, formerly
Niagara Cold Drawn Corp. ("Niagara LaSalle"), and LaSalle Steel Company
("LaSalle"), since the dates of their acquisition by Niagara and Niagara
LaSalle, respectively, and currently holds various other positions with
such subsidiaries. Since August 1994, Mr. Scharf has been a director of
Maxcor (see below), and until August 1997, was also Vice President,
Secretary and Treasurer of Maxcor. Since August 1989, Mr. Scharf also has
been a private investor. From October 1983 to August 1989, he was the
Chairman and Chief Executive Officer of Edgcomb Steel of New England, Inc.
and its successor corporation, Edgcomb Corporation, one of the largest
independent metals service center and distribution companies in the United
States. Mr. Scharf received an A.B. degree from Princeton University and an
M.B.A. from the Harvard Business School. He is a Chairman of the Board's
Audit Committee.
GILBERT D. SCHARF, 49, has been Secretary and a director of Niagara
since its inception, and until March 1998, was also a Vice President and
the Treasurer of Niagara. He has also served as a director of Niagara
LaSalle and LaSalle since the dates of their acquisition by Niagara and
Niagara LaSalle, respectively. Since August 1994, Mr. Scharf has been
Chairman of the Board, President and Chief Executive Officer of Maxcor
Financial Group Inc., a holding company with operating subsidiaries in the
financial services industry ("Maxcor"), and, currently holds the same
positions with Euro Brokers Investment Corporation, a financial services
company and wholly owned subsidiary of Maxcor, as well as of a number of
its subsidiaries. Since 1989, Mr. Scharf also has been a private investor
and Chairman of Scharf Advisors, Inc. Mr. Scharf received a B.A. degree
from Duke University.
GERALD L. COHN, 69, has been a director of Niagara since its
inception. Mr. Cohn is a private investor who, since 1968, has been
involved in the financing and acquisition of companies, including AgMet,
Inc., a refiner of precious metals and a recycler of ferrous and
non-ferrous metals, Cadillac Cable Corp., a multi-plant manufacturer of
copper and aluminum building wire, Pepco, Inc., a ferrous and non-ferrous
metal recycler and ferrous stevedoring and shipping company, and DVI, Inc.,
a health service finance company for which Mr. Cohn currently serves as a
financial advisory consultant and a director. He is also a director of
Diametrics Medical, Inc. and Frazier Healthcare Investments, L.P. Mr. Cohn
attended Penn State University. He is a member of the Board's Audit
Committee and Chairman of its Compensation Committee.
ANDREW R. HEYER, 40, has been a director of Niagara since its
inception. Between February 1990 and August 1995, Mr. Heyer was a Managing
Director and co-head of the Argosy Group L.P., a financial advisory firm.
Since August 1995, Mr. Heyer has been a Managing Director of CIBC
Oppenheimer Corp. (formerly CIBC Wood Gundy Securities Corp.) ("CIBC"), an
investment banking firm. He is also the Chairman of Hain Food Group, Inc.
and a director of Hayes Lemmerz International, Inc. Mr. Heyer received a
B.S. degree and an M.B.A. from the Wharton School of the University of
Pennsylvania. He is a member of the Board's Audit Committee.
DOUGLAS T. TANSILL, 59, has been a director of Niagara since March
1998. Since December 1994, Mr. Tansill has been a Managing Director in the
Investment Banking Division at Paine Webber Incorporated, an independent
national securities firm. Prior thereto, he was a Managing Director of
Kidder, Peabody and Co. Incorporated and from May 1987 to December 1994 was
a member of the Board of Directors of such firm. Mr. Tansill received a
B.A. degree from Trinity College and an M.B.A. from the Harvard Business
School. He is a member of the Board's Compensation Committee.
EXECUTIVE OFFICERS
Set forth below is certain information with respect to each of the
executive officers of Niagara who is not also a director of Niagara.
FRANK ARCHER, 61, has been President and a director of Niagara
LaSalle since its formation in 1986 and President and a director of LaSalle
since April 1997 when it was acquired by Niagara LaSalle. Although he holds
no position with Niagara, Mr. Archer nonetheless has been considered to be
an executive officer of Niagara pursuant to Rule 3b-7 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") since March 1998. Mr.
Archer received a Certificate in Tool and Die Design from the Cleveland
Engineering Institute and an Associates degree from John Carroll
University. He also attended the Advanced Management Program at the Harvard
Business School.
RAYMOND ROZANSKI, 52, has been a Vice President and the Treasurer of
Niagara since March 1998, Executive Vice President, Secretary, Treasurer
and a director of Niagara LaSalle since its formation and Executive Vice
President, Treasurer and a director of LaSalle since it was acquired by
Niagara LaSalle. Mr. Rozanski received a B.S. degree in Business
Administration from the State University of New York at Buffalo.
MARC J. SEGALMAN, 39, has been Vice President and General Counsel of
Niagara since September 1997. From October 1987 to August 1997, Mr.
Segalman was an attorney in the mergers and acquisitions group of the law
firm of Skadden, Arps, Slate, Meagher & Flom LLP. Mr. Segalman received an
A.B. degree from Dartmouth College and a J.D. degree from the Boston
University School of Law.
Michael J. Scharf and Gilbert D. Scharf are brothers. There are no
other family relationships among Niagara's directors or executive officers.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Niagara's directors,
officers and persons who beneficially own more than 10% of a registered
class of Niagara's equity securities ("10% stockholders") to file with the
Securities and Exchange Commission (the "Commission") initial reports of
ownership and changes in ownership in Niagara's equity securities and to
furnish Niagara with copies of all such forms. Based solely on its review
of copies of such forms received by it, and written representations that no
other reports were required, Niagara believes that all such Section 16(a)
filing requirements applicable to its directors, officers and 10%
stockholders with respect to Niagara's fiscal year ended December 31, 1997
and its prior fiscal years were complied with on a timely basis.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes compensation paid by Niagara and its
subsidiaries during each of the last three fiscal years to its Chief
Executive Officer and its other executive officers as of and for the year
ended December 31, 1997 (collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
Long-Term
Compensation
-------------
Securities
Executive Officer Year Annual Compensation (1) Underlying
- ----------------- ---- ---------------------- Options All Other
Base Salary Bonus(2) (No. of Shares) Compensation(3)
----------- -------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Michael J. Scharf 1997 $ 400,000(4) $ 200,000 100,000 $ 2,270
Chairman, Chief 1996 $ 240,000 $ 100,000 200,000 1,634
Executive 1995 $ 90,000(5) -- -- (6)
Officer and
President
Marc J. Segalman(7) 1997 $ 75,000 -- 50,000 406
Vice President
and General
Counsel
Gilbert D. Scharf(8) 1997 -- -- 10,000 (9) --
Vice President, 1996 -- -- 15,000 (9) --
Secretary and 1995 -- -- -- (10)
Treasurer
</TABLE>
------------
(1) Prior to Niagara's acquisition of Niagara LaSalle on August 16, 1995,
none of Niagara's executive officers received any compensation for
services rendered, but were reimbursed for out-of pocket expenses
incurred in connection with Niagara's business.
(2) Awarded in respect of prior calendar year.
(3) Amounts for each of Messrs. Michael Scharf and Segalman include
annual premiums ranging from $406 to $1,624 paid by the company on
life insurance policies providing coverage for such officers of two
times annual salary, up to a maximum of $250,000. Amounts for Mr.
Scharf also include annual premiums ranging from $329 to $646 on
long-term disability policies providing for, in the event of
disability, two-thirds of monthly earnings, up to a maximum of $4,500
per month. Certain perquisites and other personal benefits that
aggregate in each case less than 10% of the Named Executive Officers'
annual salary and bonus have been omitted pursuant to item
402(b)(2)(iii)(C)(1) of Regulation S-K.
(4) Based on an annual salary of $480,000 set by the Compensation Committee
in April 1997, effective May 1, 1997.
(5) Based on an annual salary of $240,000 set by the Compensation
Committee in January 1996, effective as of August 16, 1995.
(6) Through August 1995, Niagara paid $5,000 per month to MGS Corporation
for office space and certain office and secretarial services. MGS
Corporation was wholly owned by Michael Scharf.
(7) Mr. Segalman did not join Niagara until September 1997. His
compensation disclosed for 1997 relates only to a partial year
(reflecting an annual base salary of $225,000).
(8) Gilbert Scharf resigned as a Vice President and the Treasurer of
Niagara on March 12, 1998. Under the Commission's disclosure
requirements, Mr. Scharf nonetheless is considered an executive
officer of Niagara for purposes of this Amendment because he was
serving in such capacity for a portion of Niagara's last fiscal year.
(9) Granted as compensation for services as a director.
STOCK OPTION GRANT TABLE
The following table sets forth certain information concerning stock
options granted during 1997 to each Named Executive Officer.
STOCK OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
Potential Realizable
Value at
Number of % of Total Assumed Annual
Shares Options Exercise Rates of
Underlying Granted to All Price Stock Price
Executive Options Employees in Per Expiration Appreciation
Officer Granted 1997 (1) Share Date for Option Term
- --------- ---------- -------------- -------- ---------- --------------------
5% 10%
-- ---
<S> <C> <C> <C> <C> <C> <C>
Michael J. Scharf 100,000 (2) 28.2 $5.50 4/27/07(3) $346,000 $877,000
Marc J. Segalman 25,000 (4) 7.0 5.75 7/29/07(4) 90,500 229,000
25,000 (5) 7.0 8.50 9/08/07(5) 133,750 338,750
Gilbert D. Scharf 10,000 (6) 2.8 5.50 4/27/07(7) 34,600 87,700
</TABLE>
(1) Includes option granted to Gilbert Scharf as compensation for his
service as a director, but excludes options granted to other directors
for such service.
(2) On April 27, 1997, Michael Scharf was granted a non-qualified stock
option to purchase an aggregate of 100,000 shares of Common Stock.
Such option becomes exercisable as to 20% of the underlying shares on
each of the first through fifth anniversaries of the date of grant,
provided that Mr. Scharf is then employed by Niagara or one of its
subsidiaries. Upon the occurrence of a "change in control" of Niagara
(as defined in Niagara's 1995 Stock Option Plan (the "Option Plan")),
such option will become exercisable in full.
(3) Expires on the earlier of April 27, 2007 and 90 days after the
termination of Michael Scharf's employment with Niagara and its
subsidiaries.
(4) On July 29, 1997, Mr. Segalman was granted a non-qualified stock
option to purchase an aggregate of 25,000 shares of Common Stock. Such
option became exercisable as to 5,000 of the underlying shares on
September 8, 1997 (concurrent with the commencement of his employment
with Niagara) and will become exercisable as to an additional 5,000 of
the underlying shares on each of the next four anniversaries of the
date of grant, provided that Mr. Segalman is then employed by Niagara
or one of it subsidiaries. Upon the occurrence of a "change in
control" of Niagara, such option will become exercisable in full. This
option expires on the earlier of July 29, 2007 and 90 days after the
termination of Mr. Segalman's employment with Niagara and its
subsidiaries.
(5) On September 8, 1997, Mr. Segalman was granted an incentive stock
option to purchase an aggregate of 25,000 shares of Common Stock. Such
option became exercisable as to 5,000 of the underlying shares on the
date of grant and will become exercisable as to an additional 5,000 of
the underlying shares on each of the next four anniversaries of the
date of grant, provided that Mr. Segalman is then employed by Niagara
or one of its subsidiaries. Upon the occurrence of a "change in
control" of Niagara, such option will become exercisable in full. This
option expires on the earlier of September 8, 2007 and 90 days after
the termination of Mr. Segalman's employment with Niagara and its
subsidiaries.
(6) Granted as compensation for Gilbert Scharf's service as a director.
Such option became exercisable as to 2,000 of the underlying shares of
Common Stock on the date of grant and becomes exercisable as to an
additional 2,000 of the underlying shares on each of the first through
fourth anniversaries of the date of grant, provided Mr. Scharf is then
serving as a director of Niagara. Upon the occurrence of a "change in
control" of Niagara, such option will become exercisable in full.
(7) Expires on the earlier of April 27, 2007 and 90 days after the date on
which Gilbert Scharf ceases to serve as a director of Niagara.
STOCK OPTION EXERCISES AND FISCAL YEAR END VALUES
No options were exercised by any of the Named Executive Officers
during 1997.
The following table sets forth, for each Named Executive Officer,
the number of shares of Common Stock underlying the total number of stock
options held by him at Niagara's December 31, 1997 fiscal year end, and the
aggregate dollar value of the in-the-money unexercised stock options as of
such date, with those options that were then exercisable and those that
were then unexercisable seperately identified.
<TABLE>
<CAPTION>
EXERCISABLE/UNEXERCISABLE STOCK OPTIONS AT
FISCAL YEAR END AND FISCAL YEAR END VALUES
Number of Shares Underlying Value of Unexercised
Options at 1997 Fiscal Year End In-the-Money Options (1)
Name Exercisable Unexercisable Excercisable Unexercisable
- ---- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Michael J. Scharf 40,000 260,000 $ 175,000 $ 1,137,500
Marc J. Segalman 10,000 40,000 27,500 110,000
Gilbert D. Scharf 17,000 8,000 74,375 35,000
</TABLE>
(1) Based on the December 31, 1997 closing sale price for the Common Stock
of $9 7/8 per share.
COMPENSATION OF DIRECTORS
The members of the Board of Directors are compensated in a manner and
at a rate determined from time to time by the full Board. Each member of
the Board of Directors, other than Michael Scharf and Douglas Tansill
(whose service as a director did not commence until March 1998), received
as compensation for his service as a director (i) on September 13, 1996, a
non-qualified stock option (collectively, the "1996 Director Options") to
purchase 15,000 shares of Common Stock and (ii) on April 27, 1997, a
non-qualified stock option (collectively, the "1997 Director Options," and
together with the 1996 Director Options, the "Director Options") to
purchase 10,000 shares of Common Stock. Each Director Option is exercisable
at $5.50 per share. Each 1996 Director Option became exercisable as to
10,000 of the underlying shares of Common Stock as of the date of grant and
5,000 of the underlying shares on September 13, 1997. Each 1997 Director
Option became exercisable as to 2,000 of the underlying shares on the date
of grant and becomes exercisable as to an additional 2,000 of the
underlying shares on each of the first through fourth anniversaries of the
date of grant, provided the holder is then serving as a director of
Niagara. Upon a "change in control" of Niagara, each 1997 Director Option
will become exercisable in full.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1997, the Compensation Committee of the Board of Directors was
comprised of Gerald Cohn and Andrew Heyer. Mr. Heyer is a Managing Director
of CIBC, which rendered investment banking and financial advisory services
to Niagara and Niagara LaSalle in 1997. In April 1997, CIBC served as
placement agent in connection with the issuance of (i) $20 million
aggregate principal amount of 12.5% senior subordinated notes of Niagara
LaSalle and (ii) 285,715 shares of Common Stock, the proceeds of which were
used to finance Niagara LaSalle's acquisition of LaSalle. Niagara and
Niagara LaSalle paid CIBC $790,081 in fees and reimbursement of expenses as
consideration for such services.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth below is certain information concerning beneficial
ownership of Common Stock as of April 24, 1998 by (i) persons known by
Niagara to be the beneficial owners of 5% or more of the outstanding shares
of Common Stock, (ii) each director of Niagara, (iii) each Named Executive
Officer and (iv) all directors and executive officers of Niagara as a
group.
PERCENTAGE
BENEFICIALLY
NAME(1) NUMBER OF SHARES (2) OWNED(3)
------- -------------------- ------------
Michael J. Scharf........................ 1,274,200(4) 12.7%
Gilbert D. Scharf........................ 560,700(5) 5.6%
Gerald L. Cohn........................... 29,000 *
Andrew R. Heyer.......................... 29,000 *
Marc J. Segalman ........................ 10,000 *
Douglas T. Tansill....................... 0 *
All directors and executive officers as
a group (eight persons).................. 2,182,900 21.0%
* Less than 1%
(1) The address of each stockholder is c/o Niagara Corporation, 667
Madison Avenue, 11th Floor, New York, New York 10021.
(2) Includes shares of Common Stock issuable upon the exercise of stock
options held by the stockholder that are currently exercisable or
exercisable within 60 days ("Exercisable Options"). Beneficial
Ownership of Exercisable Options is as follows: Michael J. Scharf --
60,000; Gilbert D. Scharf -- 19,000; Gerald L. Cohn -- 19,000; Andrew
R. Heyer -- 19,000; Marc J. Segalman -- 10,000; and all directors and
executive officers as a group -- 407,000.
(3) Based upon 9,997,455 shares of Common Stock outstanding as of April
24, 1998, plus any shares of Common Stock issuable upon the exercise
of Exercisable Options held by the stockholder (but not by any other
stockholder).
(4) Includes 205,000 shares of Common Stock held by the Michael J. Scharf
1987 Grantor Income Trust and 194,500 shares of Common Stock held by
the Scharf Family 1989 Trust. Michael Scharf is trustee of both of
these trusts.
(5) Includes 238,700 shares of Common Stock held by the Gilbert D. Scharf
Living Trust, of which Gilbert Scharf is the sole trustee.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As discussed under "Compensation Committee Interlocks and Insider
Participation," in April 1997, CIBC served as placement agent in connection
with the issuance of certain securities of Niagara and Niagara LaSalle, the
proceeds of which were used to finance Niagara LaSalle's acquisition of
LaSalle. Niagara and Niagara LaSalle paid CIBC $790,081 in fees and
reimbursement of expenses as consideration for such services. Andrew R.
Heyer, a director of Niagara, is a Managing Director of CIBC.
On December 5, 1997, Niagara loaned Gilbert D. Scharf $600,000, the
proceeds of which were used by Mr. Scharf to exercise Redeemable Common
Stock Purchase Warrants of Niagara, which, having been called for
redemption, were not exercisable after December 11, 1997. The loan was
evidenced by a Promissory Note (the "Note") executed by Mr. Scharf in favor
of Niagara. Interest on the unpaid principal amount of the Note accrues at
5.68% per annum. Principal and interest on the Note are payable in full on
December 4, 1998, provided that Mr. Scharf may prepay all or part of the
unpaid principal amount of the Note without premium or penalty. The Note
requires installment payments of principal following the sale of shares of
Common Stock by Mr. Scharf in amounts equal to the proceeds from such
sales. Mr. Scharf is the Secretary and a director of Niagara and, until
March 1998, was a Vice President of Niagara and its Treasurer.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, AND REPORTS ON FORM 8-K.
(c) Exhibits
4.1 Promissory Note, dated December 5, 1997, made by Gilbert D.
Scharf in favor of Niagara Corporation.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, on the
30th day of April, 1998.
NIAGARA CORPORATION
By:/s/ Michael J. Scharf
-----------------------------------
Michael J. Scharf
Chairman of the Board
Chief Executive Officer and President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Chairman of the Board,
/s/Michael J. Scharf President and Chief April 30, 1998
- ----------------------- Executive Officer
Michael J. Scharf
Vice President,
/s/Raymond Rozanski Chief Financial and
- ----------------------- Principal Accounting April 30, 1998
Raymond Rozanski Officer
/s/Gilbert D. Scharf Secretary and Director April 30, 1998
- -----------------------
Gilbert D. Scharf
/s/Gerald L. Cohn Director April 30, 1998
- -----------------------
Gerald L. Cohn
/s/Andrew R. Heyer Director April 30, 1998
- -----------------------
Andrew R. Heyer
/s/Douglas T. Tansill Director April 30, 1998
- -----------------------
Douglas T. Tansill
EXHIBIT INDEX
4.1 Promissory Note, dated December 5, 1997, made by Gilbert D.
Scharf in favor of Niagara Corporation.
EXHIBIT 4.1
PROMISSORY NOTE
$600,000 December 5, 1997
FOR VALUE RECEIVED, the undersigned, Gilbert D. Scharf (the
"Maker"), hereby promises to pay to the order of Niagara Corporation (the
"Payee"), the principal amount of Six Hundred Thousand Dollars ($600,000),
together with interest thereon as provided herein, payable at such location
and on such dates as are set forth below.
Interest on the unpaid principal amount hereof shall accrue at
the rate of five and 68/100 percent (5.68%) per annum from and after the
date hereof. Interest shall be payable, with respect to any principal
amounts paid or prepaid, at the time of such payment or prepayment.
The principal and interest on this Promissory Note are payable
in full on December 4, 1998, provided, however, that the Maker may, at any
time, prepay all or part of the unpaid principal amount hereof without
premium or penalty.
The Maker shall make installment payments of principal within
five (5) days following the sale of any shares of Niagara Common Stock
owned by him (including through living trusts) made from and after the date
hereof until this Note shall have been paid in full, in amounts equal to
the proceeds from such sales.
Payments of principal and interest are to be made in lawful
money of the United States of America to 667 Madison Avenue, 11th Floor,
New York, New York 10021 or as the Payee may designate in writing to the
Maker.
If any voluntary or involuntary proceeding shall be commenced
seeking to have an order for relief entered against the Maker as a debtor
or to adjudicate the Maker a bankrupt or insolvent, or seeking
reorganization, adjustment, liquidation, dissolution or composition of the
Maker or the Maker's debts under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, or seeking appointment of
a receiver or trustee for the Maker, and such proceeding shall remain
undismissed and unstayed for a period of sixty (60) days after the Maker
has received notice thereof, then the unpaid principal amount of this
Promissory Note and all interest accrued to such date shall become
immediately due and payable without the necessity of any presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived by the Maker.
This Promissory Note shall bind the Maker and his successors
and assigns and shall inure to the benefit of the Payee and its successors
and assigns.
No delay, omission or waiver on the part of the Payee in
exercising any right hereunder shall operate as a waiver of such right or
any other right of the Payee at the same or at any prior or subsequent
time.
No amendment, modification or waiver of this Promissory Note,
nor consent to any departure therefrom, shall be effective unless in
writing and signed by the Payee.
This Promissory Note shall be construed in accordance with and
governed by the laws of the State of New York without regard to its
conflicts of law principles.
IN WITNESS WHEREOF, this Promissory Note has been duly executed
and delivered by the undersigned on the date first written above.
/s/Gilbert D. Scharf
-----------------------------
Gilbert D. Scharf
