<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
RULE 13E-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(E) OF THE SECURITIES EXCHANGE ACT OF 1934)
(Amendment No. 5)
ARTISTIC GREETINGS INCORPORATED
(Name of Issuer)
ARTISTIC GREETINGS INCORPORATED
ARTISTIC DIRECT INCORPORATED
Mr. Thomas C. Wyckoff
(Name of Persons Filing Statement)
<TABLE>
<S> <C>
TITLE CUSIP NUMBER
- -------------------------------------------- --------------------------------------------
Common Stock
</TABLE>
(Title and CUSIP Number of Class of Securities)
ARTISTIC GREETINGS INCORPORATED
ONE KOMER CENTER
P.O. BOX 1999
ELMIRA, NEW YORK 14902-1999
(212) 735-4500
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications on Behalf of the Person Filing Statement)
This statement is filed in connection with (check the appropriate box):
<TABLE>
<S> <C> <C>
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.
</TABLE>
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies: /X/
CALCULATION OF FILING FEE
<TABLE>
<S> <C>
Transaction Amount of Filing Fee
Valuation*
$33,307,414 $6,662
</TABLE>
* Solely for purposes of calculating the filing fee and computed pursuant to
Section 13(e)(3) of the Securities Exchange Act of 1934, as amended, and
Rule 0-11(b)(1) thereunder, the transaction value equals the total amount of
funds required to purchase all shares of the class of Common Stock pursuant
to the merger described in the Proxy Statement.
/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: $6,662
Form or Registration No.: Schedule 14A Proxy Statement
Filing Party: Artistic Greetings Incorporated
Date Filed: January 26, 1998
<PAGE>
This Rule 13e-3 Transaction Statement (the "Statement") relates to the
merger and the asset sale by Artistic Greetings Incorporated, a Delaware
corporation (the "Company"), described in its proxy statement, dated April 24,
1998 (the "Proxy Statement"), whereby AGI Acquisition Co. ("Newco"), a Delaware
corporation and a wholly owned subsidiary of MDC Communications Corporation
("MDC"), an Ontario, Canada corporation, will merge with and into the Company,
pursuant to which (a) the Company will be the surviving corporation and will
become a wholly owned subsidiary of MDC and (b) each outstanding share of common
stock, par value $0.10 per share, of the Company (other than stock of the
Company owned by the Company, MDC or any of their respective subsidiaries) will
be converted into the right to receive $5.70 in cash, without interest.
Contemporaneously therewith, the Company will sell certain assets relating to
the personalized product and catalog businesses of the Company (the "P&C
Businesses") to Artistic Direct Incorporated, a New York corporation ("ADI").
This Amendment ("Amendment No. 5 to Schedule 13E-3") amends Amendment No. 4 to
Schedule 13E-3, dated April 22, 1998 (as hereby amended, the "Schedule 13E-3").
This Statement amends and restates in entirety all of the Items of Schedule
13E-3.
The following cross reference sheet below is being supplied pursuant to
General Instruction F to Schedule 13E-3 and shows the location of the
information required to be included in response to the items of this Statement
in the Preliminary Proxy Statement on Schedule 14A (the "Schedule 14A") filed by
the Company with the Securities and Exchange Commission (the "Commission") on
the date hereof. The information set forth in the Schedule 14A is hereby
expressly incorporated herein by reference and the responses to each item herein
are qualified in their entirety by the corresponding responses in the Schedule
14A.
<PAGE>
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
SCHEDULE 13E-3 ITEMS LOCATION OF SCHEDULE 13E-3 ITEMS IN SCHEDULE 14A
- -------------------- --------------------------------------------------------------------------------------------
<S> <C>
Item l(a) INTRODUCTION
Item l(b) SUMMARY
Item l(c) PRICE RANGE OF SHARES AND DIVIDENDS
Item l(d) PRICE RANGE OF SHARES AND DIVIDENDS
Item l(e) Not Applicable
Item l(f) *
Item 2(a)-(d),(g) INTRODUCTION; Schedule I
Item 2(e),(f) *
Item 3(a) SPECIAL FACTORS--Background of the Merger; THE ASSET PURCHASE AGREEMENT
Item 3(b) SPECIAL FACTORS--Background of the Merger; THE ASSET PURCHASE AGREEMENT; ANNEX II
Item 4(a) INTRODUCTION; SPECIAL FACTORS--Background of the Merger; SPECIAL FACTORS--Interests of
Certain Persons; THE MERGER AGREEMENT; THE ASSET PURCHASE AGREEMENT; THE STOCKHOLDERS
AGREEMENT; SPECIAL FACTORS--Plans for the Company after the Merger
Item 4(b) INTRODUCTION; SPECIAL FACTORS--Background of the Merger; SPECIAL FACTORS--Interests of
Certain Persons; THE MERGER AGREEMENT; THE ASSET PURCHASE AGREEMENT; THE STOCKHOLDERS
AGREEMENT; SPECIAL FACTORS--Plans for the Company after the Merger
Item 5(a) SPECIAL FACTORS--Plans for the Company after the Merger; SPECIAL FACTORS--Certain Effects of
the Asset Sale; THE MERGER AGREEMENT; THE ASSET PURCHASE AGREEMENT
Item 5(b) SPECIAL FACTORS--Plans for the Company after the Merger; SPECIAL FACTORS--CERTAIN EFFECTS OF
THE ASSET SALE; THE ASSET PURCHASE AGREEMENT
Item 5(c) Not Applicable
Item 5(d) Not Applicable
Item 5(e) Not Applicable
Item 5(f) Not Applicable
Item 5(g) Not Applicable
Item 6 SOURCE AND AMOUNTS OF FUNDS; EXPENSES
Item 7(a) SPECIAL FACTORS--Background of the Merger; SPECIAL FACTORS--Plans for the Company After the
Merger
Item 7(b) SPECIAL FACTORS--Background of the Merger
Item 7(c) SPECIAL FACTORS--Background of the Merger
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 13E-3 ITEMS LOCATION OF SCHEDULE 13E-3 ITEMS IN SCHEDULE 14A
- -------------------- --------------------------------------------------------------------------------------------
<S> <C>
Item 7(d) SPECIAL FACTORS--Plans for the Company After the Merger; SPECIAL FACTORS--Certain Effects of
the Consummation of the Merger; CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Item 8(a) SPECIAL FACTORS--Background of the Merger; SPECIAL FACTORS-- Recommendation of the Company's
Board of Directors; SPECIAL FACTORS-- Perspective of ADI and Mr. Wyckoff; SPECIAL
FACTORS--Opinion of Financial Advisor; SPECIAL FACTORS--Interests of Certain Persons
Item 8(b) SPECIAL FACTORS--Background of the Merger; SPECIAL FACTORS--Opinion of Financial Advisor;
SPECIAL FACTORS--Interests of Certain Persons
Item 8(c) INTRODUCTION--Voting at the Special Meeting; RIGHTS OF OBJECTING STOCKHOLDERS
Item 8(d) SPECIAL FACTORS--Background of the Merger; SPECIAL FACTORS--Certain Effects of the
Consummation of the Merger
Item 8(e) SPECIAL FACTORS--Background of the Merger; SPECIAL FACTORS--Certain Effects of the
Consummation of the Merger
Item 8(f) Not Applicable
Item 9 SPECIAL FACTORS--Opinion of Financial Advisor
Item 10 SPECIAL FACTORS--Interests of Certain Persons; SECURITY OWNERSHIP OF CERTAIN PERSONS
Item 11 THE MERGER AGREEMENT; THE STOCKHOLDERS AGREEMENT; THE ASSET PURCHASE AGREEMENT
Item 12(a) SPECIAL FACTORS--Interests of Certain Persons; THE STOCKHOLDERS AGREEMENT
Item 12(b) SUMMARY; SPECIAL FACTORS--Background of the Merger
Item 13(a) RIGHTS OF OBJECTING STOCKHOLDERS
Item 13(b) Not Applicable
Item 13(c) Not Applicable
Item 14(a) SELECTED CONSOLIDATED FINANCIAL DATA
Item 14(b) Not Applicable
Item 15(a) SPECIAL FACTORS--Interest of Certain Persons
Item 15(b) SPECIAL FACTORS--Background of the Merger; SPECIAL FACTORS--Interest of Certain Persons;
SOURCE AND AMOUNT OF FUNDS; EXPENSES
Item 16 THE PROXY STATEMENT
Item 17 *
</TABLE>
- ------------------------
* The Item is located in this Schedule 13E-3 only.
3
<PAGE>
ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION.
(a) Artistic Greetings Incorporated (the "Company") is a Delaware corporation
that has its principal executive offices at One Komer Center, P.O. Box 1999,
Elmira, New York 14902-1999.
(b) The Company's common stock, par value $0.10 per share (the "Shares"). The
Board of Directors of the Company has fixed the close of business on April 21,
1998 as the record date (the "Record Date") for the determination of
stockholders entitled to notice of, and to vote at, the special meeting of
stockholders (the "Special Meeting"). Accordingly, only holders of record of the
Shares at the close of business on the Record Date will be entitled to vote at
the Special Meeting. At the close of business on the Record Date, there were
6,538,802 Shares outstanding and entitled to vote, held by approximately 528
stockholders of record.
(c) The Shares are listed on The Nasdaq Stock Market ("Nasdaq"). The information
appearing under the caption "PRICE RANGE OF SHARES AND DIVIDENDS" in the Proxy
Statement is incorporated herein by reference.
(d) The information appearing under the caption "PRICE RANGE OF SHARES AND
DIVIDENDS" in the Proxy Statement is incorporated herein by reference.
(e) Not applicable.
(f) Since the commencement of the Company's second full fiscal year preceding
the date of this Schedule 13e-3, the Company has purchased 500,000 Shares on May
30, 1997 at a price of $5.00 per share, pursuant to the exercise of a previously
granted put right. Since the commencement of the Company's second full fiscal
year preceding the date of this Schedule 13E-3, Mr. Wyckoff purchased 1,000
Shares on February 1, 1996 at a price of $2.63 per share, 5,400 Shares on March
7, 1996 at a price of $2.88 per share and was granted 10,000 Shares on August 8,
1996 by the Company.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This statement is filed by the Company, who is the issuer of the
class of equity securities which is the subject of the Rule 13e-3 transaction,
Artist Direct Incorporated ("ADI") and Mr. Thomas C. Wyckoff (Chief Operating
Officer of the Company). The information set forth in Schedule I of the Revised
Proxy Statement is incorporated herein by reference.
(e), (f) During the last five years, none of the Company, ADI and, to the
best of their knowledge, any of their respective executive officers or
directors, including Mr. Wyckoff, has been (i) convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as result of such proceeding was or is subject to a judgment,
decree or final order enjoining further violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation of such laws.
ITEM 3. PAST CONTRACTS, TRANSACTIONS OR NEGOTIATIONS.
(a) The information appearing under the captions "SPECIAL FACTORS--Background of
the Merger," and "THE ASSET PURCHASE AGREEMENT" in the Proxy Statement is
incorporated herein by reference.
(b) The information appearing under the captions "SPECIAL FACTORS--Background of
the Merger," "THE ASSET PURCHASE AGREEMENT" and Annex II in the Proxy Statement
is incorporated herein by reference.
4
<PAGE>
ITEM 4. TERMS OF THE TRANSACTION.
(a) The information appearing under the captions "INTRODUCTION;" "SPECIAL
FACTORS--Background of the Merger," "SPECIAL FACTORS--Interests of Certain
Persons," "THE MERGER AGREEMENT," "THE ASSET PURCHASE AGREEMENT," "THE
STOCKHOLDERS AGREEMENT" and "SPECIAL FACTORS--Plans for the Company after the
Merger" in the Proxy Statement is incorporated herein by reference.
(b) The information appearing under the captions "INTRODUCTION," "SPECIAL
FACTORS--Background of the Merger," "SPECIAL FACTORS--Interests of Certain
Persons," "THE MERGER AGREEMENT," "THE ASSET PURCHASE AGREEMENT," "THE
STOCKHOLDERS AGREEMENT" and "SPECIAL FACTORS--Plans for the Company after the
Merger" in the Proxy Statement is incorporated herein by reference.
ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE.
(a) The information appearing under the captions "SPECIAL FACTORS--Plans for the
Company after the Merger," "SPECIAL FACTORS--Certain Effects of the Asset Sale,"
"THE MERGER AGREEMENT," and "THE ASSET PURCHASE AGREEMENT" in the Information
Statement is incorporated herein by reference.
(b) The information appearing under the captions "SPECIAL FACTORS--Plans for the
Company after the Merger," "SPECIAL FACTORS--Certain Effects of the Asset Sale"
and "THE ASSET PURCHASE AGREEMENT" in the Information Statement is incorporated
herein by reference.
(c)-(g) Not applicable.
ITEM 6. SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION.
(a)-(d) The information appearing under the caption "SOURCE AND AMOUNTS OF
FUNDS; EXPENSES" in the Proxy Statement is incorporated herein by reference.
ITEM 7. PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS.
(a) The information appearing under the captions "SPECIAL FACTORS--Background of
the Merger" and "SPECIAL FACTORS--Plans for the Company After the Merger" in the
Proxy Statement is incorporated herein.
(b) The information appearing under the caption "SPECIAL FACTORS--Background of
the Merger" in the Proxy Statement is incorporated herein by reference.
(c) The information appearing under the caption "SPECIAL FACTORS--Background of
the Merger" in the Proxy Statement is incorporated herein by reference.
(d) The information appearing under the captions "SPECIAL FACTORS--Plans for the
Company After the Merger," "SPECIAL FACTORS--Certain Effects of the Consummation
of the Merger," "SPECIAL FACTORS--Certain Effects of the Asset Sale" and
"CERTAIN FEDERAL INCOME TAX CONSEQUENCES" in the Proxy Statement is incorporated
herein by reference.
ITEM 8. FAIRNESS OF THE TRANSACTION.
(a)-(b) The information appearing under the captions "SPECIAL
FACTORS--Background of the Merger," "SPECIAL FACTORS--Recommendation of the
Company's Board of Directors," "SPECIAL FACTORS--Perspective of ADI and Mr.
Wyckoff," "SPECIAL FACTORS--Opinion of Financial Advisor" and "SPECIAL
FACTORS--Interests of Certain Persons" is incorporated herein by reference.
5
<PAGE>
(c) The information appearing under the captions "INTRODUCTION--Voting at the
Special Meeting" and "RIGHTS OF OBJECTING STOCKHOLDERS" in the Proxy Statement
is incorporated herein by reference.
(d)-(e) The information appearing under the captions "SPECIAL
FACTORS--Background of the Merger" and "SPECIAL FACTORS--Certain Effects of the
Consummation of the Merger" in the Proxy Statement is incorporated herein by
reference.
(f) Not applicable.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS.
(a)-(c) The information appearing under the caption "SPECIAL FACTORS--Opinion of
Financial Advisor" in the Proxy Statement is incorporated herein by reference.
ITEM 10. INTEREST IN SECURITIES OF THE ISSUER.
(a)-(b) The information appearing under the caption "SPECIAL FACTORS--Interests
of Certain Persons" and "SECURITY OWNERSHIP OF CERTAIN PERSONS" in the Proxy
Statement is incorporated herein by reference.
ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE ISSUER'S
SECURITIES.
The information appearing under the captions "THE MERGER AGREEMENT," "THE
STOCKHOLDERS AGREEMENT" and "THE ASSET PURCHASE AGREEMENT" in the Proxy
Statement is incorporated herein by reference.
ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD TO
THE TRANSACTION.
(a) The information appearing under the captions "SPECIAL FACTORS--Interests of
Certain Persons" and "THE STOCKHOLDERS AGREEMENT" in the Proxy Statement is
incorporated herein by reference.
(b) The information appearing under the captions "SUMMARY" and "SPECIAL FACTORS
- --Background of the Merger" in the Proxy Statement is incorporated herein by
reference.
ITEM 13. OTHER PROVISIONS OF THE TRANSACTION.
(a) The information appearing under the captions "RIGHTS OF OBJECTING
STOCKHOLDERS" in the Proxy Statement is incorporated herein by reference.
(b) Not applicable.
(c) Not applicable.
ITEM 14. FINANCIAL INFORMATION.
(a) The information appearing (i) under the caption "SELECTED CONSOLIDATED
FINANCIAL DATA" in the Proxy Statement and (ii) in the financial statements
included in the Annual Report on Form 10-K for the year ended December 31, 1997
to be attached as Annex VI to the Proxy Statement is incorporated herein by
reference.
(b) Not applicable.
6
<PAGE>
ITEM 15. PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED.
(a) The officers and employees of the Company will perform tasks which would be
expected to arise in connection with the transaction. The information appearing
under the caption "SPECIAL FACTORS-- Interest of Certain Persons" in the Proxy
Statement is incorporated herein by reference.
(b) The information appearing under the captions "SPECIAL FACTORS--Background of
the Merger," "SPECIAL FACTORS--Interest of Certain Persons" and "SOURCE AND
AMOUNT OF FUNDS; EXPENSES" in the Proxy Statement is incorporated herein by
reference.
ITEM 16. ADDITIONAL INFORMATION.
Reference is hereby made to the Proxy Statement, which is referenced hereto
as Exhibit (d), and incorporated in its entirety herein by reference.
ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) NationsCredit Commercial Corporation Commitment Letter.*
(a)(2) Empire State Economic Development Fund Resolutions.**
(a)(3) Chemung County Industrial Development Agency Letter.**
(a)(4) City of Elmira Industrial Loan Letter.**
(a)(5) Chemung Canal Trust Company Loan Agreement.****
(a)(6) Pledge Agreement.
(a)(7) Chemung Canal Trust Company Guaranty Security Agreement.
(a)(8) Chemung Canal Trust Company Commercial Continuing Guaranty (Limited).
(a)(9) Assignment Agreement.
(b) Opinion of PaineWebber Incorporated.
(c)(1) Agreement and Plan of Merger, dated December 21, 1997.*
(c)(2) Stockholders Agreement, dated December 21, 1997.*
(c)(3) Asset Purchase Agreement, dated December 21, 1997.*
(d) Proxy Statement, dated April 24, 1998, incorporated by reference to Schedule
13E-3.
(e) Text of Section 262 of the General Corporation Law of the State of
Delaware.***
- ------------------------
* Filed with the Schedule 13E-3, dated January 26, 1998.
** Filed with Amendment No. 1 to Schedule 13E-3, dated March 13, 1998.
*** Filed with Amendment No. 3 to Schedule 13E-3 dated April 16, 1998.
****Filed with Amendment No. 4 to Schedule 13E-3, dated April 22, 1998.
7
<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.
Dated: April 24, 1998
<TABLE>
<S> <C> <C>
ARTISTIC GREETINGS INCORPORATED
By: /s/ STUART KOMER
-----------------------------------------
Name: Stuart Komer
Title: Chairman of the Board
ARTISTIC DIRECT INCORPORATED
By: /s/ THOMAS C. WYCKOFF
-----------------------------------------
Name: Thomas C. Wyckoff
Title:
/s/ THOMAS C. WYCKOFF
-----------------------------------------
Thomas C. Wyckoff
</TABLE>
8
<PAGE>
Exhibit (a)(6)
PLEDGE AGREEMENT
THIS AGREEMENT is made and entered into as of the ___ day of April, 1998,
by and between Thomas C. Wyckoff ("Pledgor") and Stuart Komer ("Pledgee").
WITNESSETH
WHEREAS, Pledgor has executed and issued to Chemung Canal Bank (the
"Bank") a promissory note, of even date herewith, in the principal amount of
Five Hundred Thousand and 00/100 Dollars ($500,000) (the "Note") guaranteed by
Pledgee (the "Guaranty"), to evidence Pledgor's liability, indebtedness and
obligation to Bank to pay Five Hundred Thousand and 00/100 Dollars ($500,000)
which was incurred in connection with Pledgor's purchase of eighty per cent
(80%) of the shares of common stock of Artistic Direct Incorporated ("ADI")
pursuant to a stock purchase agreement of even date herewith among Pledgor, Ray
Mahar Jr. and ADI (the "Stock Purchase Agreement");
WHEREAS, the parties are mutually desirous of securing the payment and
performance of the Obligations (as hereinafter defined) now and hereafter
arising, all as more particularly provided hereinafter; and
NOW, THEREFORE, the parties mutually agree as follows:
1. Creation of Security Interest.
Pledgor hereby pledges and delivers to Pledgee the collateral more
particularly described in Section 2 of this Agreement to secure payment and
performance of all liabilities, obligations and indebtedness of Pledgor to
Pledgee under, arising out of, or relating to the Guaranty (the "Obligations").
2. The Collateral.
The collateral which is the subject of this Agreement consists of a
number of shares of stock of ADI which constitute 20% of the authorized and
outstanding shares of common stock as of the date hereof (hereinafter referred
to as the "Pledged Shares"), subject to adjustment as hereinafter provided. (All
references to "Collateral" in this Agreement shall be deemed to include any
additions or accretions to the Pledged Shares and any additional collateral
deposited pursuant to this Agreement.)
<PAGE>
3. Representations and Warranties.
Pledgor hereby represents and warrants to Pledgee as follows:
(a) Pledgor has exclusive, sole, fill and complete right, title and
interest, beneficially and of record, in and to all of the Pledged Shares free
and clear of any and all liens, charges, encumbrances, or claims of every nature
and sort.
(b) Pledgor has the full and unencumbered right and authority to
enter into and perform this Agreement and to consummate the transactions
contemplated hereby, and thereby will not breach any contract, obligation or
understanding by which Pledgor is bound or which may affect the Pledged Shares.
4. Delivery and Pledge of Collateral
Simultaneously with the execution and delivery of this Agreement,
Pledgor shall deliver to and deposit with Pledgee certificates evidencing all of
the Pledged Shares, accompanied by stock powers duly executed in blank or to
Pledgee, with signature by the Pledgor, in all respect in good and sufficient
form under applicable law for delivery and transfer. Pledgor consents to
retention by Pledgee of the Collateral until such time as the Note shall have
been paid in full. Pledgee shall hold the Collateral in a safe manner and
indemnify against any costs or damages with respect to any loss, damage to or
destruction of the Collateral. Upon full payment of the Note, Pledgee shall
immediately return the Collateral to Pledgor.
5. Covenants of Pledgor.
(a) Pledgor shall, at its sole cost and expense, defend its right,
title and interest in and to the Pledged Shares and shall defend the right of
Pledgee to the Pledged Shares under the terms of this Agreement against any
claims or demands of every nature and sort.
(b) The Collateral, or any part thereof, will not be sold, assigned,
transferred, disposed of or subjected to any subsequent interest of any party
created or suffered by Pledgor voluntarily or involuntarily without the written
consent of Pledgee (a "Lien").
(c) Pledgor, at its sole cost and expense, shall duly execute and
deliver or cause to be duly executed and delivered any and all instruments and
documents and do and cause to be done any and all other acts and things as
Pledgee may at any time reasonably request to enforce, perfect, and protect the
rights of Pledgee in and to the Collateral, as herein provided.
6. Right with Respect to the Collateral.
During the term of this Agreement and prior to the occurrence of any
Event of Default as hereinafter defined, Pledgor shall be entitled to receive
and retain all cash dividends and other distributions of property with respect
to the Pledged Shares on account of record ownership by Pledgor of the Pledged
Shares, except that an appropriate percentage of any
<PAGE>
distribution of new, substituted, and additional shares of ADI, or of any other
securities pursuant to a dividend, stock split, reclassification,
reorganization, readjustment, change in capital structure, merger, combination
or exchange of securities, on account of record ownership of Pledgor of the
Pledged Shares shall be additional Pledged Shares and additional Collateral
under this Agreement and shall be promptly delivered by Pledgor and deposited
with Pledgee, in good form for delivery and transfer, upon the same terms and
conditions applicable to the Pledged Shares. During the term of this Agreement
and prior to the occurrence of any Event of Default (as hereinafter defined),
Pledgor may vote the Pledged Shares on all matters submitted to a vote of
shareholders of ADI.
7. Events of Default.
Occurrence of any of the following events shall constitute an event
of default ("Event of Default") by Pledgor under this Agreement:
(a) the material breach of any representation, promise, warranty or
covenant by Pledgor contained in this Agreement or failure of Pledgor to perform
any material obligation or material undertaking in this Agreement; which such
default or failure to perform has not been cured within thirty (30) days after
written notice to Pledgor of such default or failure to perform; or
(b) the occurrence of any Event of Default under the Note in
accordance with its terms which results in a payment to the Bank by Pledgee
pursuant to the Guaranty.
8. Rights and Remedies of Pledgee Upon Default.
Upon occurrence of an Event of Default, Pledgee shall have and may
exercise any and all of the rights and remedies provided for and in effect in
the State of New York at the date of execution of this Agreement with respect to
the sale, assignment and delivery of the Pledged Shares or other Collateral at
public sale with notice and advertisement as provided by law. In addition
thereto, in conjunction therewith and/or in substitution therefor, in its
discretion, Pledgee shall have and may exercise the following rights and
remedies:
(a) Pledgee may, in its sole discretion, sell, assign or deliver all or
any part of the Pledged Shares or other Collateral at public or private sale,
for cash or for credit, with ten (10) days prior written notice to Pledgor and
Pledgee may bid and become a purchaser at any such sale.
(b) Pledgee may apply the proceeds of any disposition of the Collateral
available for reimbursement of its payments under the Guaranty in the order,
amounts and manner which Pledgee may determine in its sole discretion.
<PAGE>
9. Waiver.
Pledgee may waive or remedy any default in any reasonable manner
without waiving such default and without waiving any other prior or subsequent
default and Pledgee may waive or delay the exercise of any right or remedy under
this Agreement without waiving that right or remedy or any right or remedy
hereunder.
10. Assignment.
This Agreement shall be binding upon and shall inure to the benefit
of the Pledgor, Pledgee and their respective successors and assigns. Neither
party to this Agreement shall delegate or assign the performance of any
obligation hereunder to any third party without the written consent of the other
party hereto.
11. Waiver Regarding Additional Security.
Pledgor hereby waives, releases and discharges any right which it
has or may have at law, in equity or by statute to require Pledgee to pursue or
otherwise avail itself of any rights or remedies which Pledgee has or may have
against any other entity with respect to any other security at any time held by
Pledgee for or as security for payment of any of the Obligations secured hereby.
12. Survival of Representations.
Each of the agreements, covenants, warranties and representations by
Pledgor shall be deemed and construed to be given and made on a continuing basis
and shall survive execution and delivery of this Agreement until the full
repayment of the Note.
13. Notices.
(a) If to Pledgor, to:
Thomas C. Wyckoff
111 Drive A
Strathmont Park
Elmira, N.Y. 14905
With a copy to:
Wollmuth Maher & Deutsch, LLP
516 Fifth Avenue
12th Floor
New York, New York 10036
Attention: Rory M. Deutsch
Facsimile Number: (212) 382-0050
<PAGE>
(b) If to Pledgee, to:
Stuart Komer
850 Euclid Avenue
Elmira, N.Y. 14901
With a copy to:
Sayles, Evans, Brayton, Palmer & Tifft
One West Church Street
Elmira, N.Y. 14901
Attention: John R. Alexander
Facsimile Number: (607) 734-1754
or to such other address as may have been designated in a prior notice. Notices
may be sent by (a) overnight courier, (b) facsimile transmission (with immediate
telephonic confirmation thereafter), or (c) registered or certified mail,
postage prepaid, return receipt requested; and shall be deemed given (i) in the
case of overnight courier, the next business day after the day sent, (ii) in the
case of facsimile transmissions, on the date transmission is confirmed, and
(iii) in the case of mailing, three business days after being mailed, and
otherwise notices shall be deemed to have been given when received. If sent by
registered or certified mail, such notice shall be effective when mailed,
otherwise it shall be effective upon delivery to said address.
14. Entire Agreement.
This Agreement constitutes the entire understanding of the parties
with respect to the subject matter hereof, supersedes any and all oral
communications, discussions, and negotiations between the parties and may not be
altered, amended, modified or terminated except be a writing executed by all
parties hereto expressly referring to this Agreement.
15. Damages and Fees.
If any action is commenced by any party hereto against any other
party hereto to enforce or rescind any term of this Agreement or to secure
damages for breach of this Agreement, the prevailing party shall be entitled to
recover any and all damages, costs and reasonable attorneys' fees incurred in
any such action.
16. Binding Effect.
All of the rights of the parties hereunder shall inure to the
benefit of their successors and permitted assigns and all obligations of the
parties shall bind its successors and permitted assigns.
<PAGE>
17. Third Party Beneficiaries
Nothing in this Agreement is intended or shall be construed to
confer on any entity other than the parties any rights or benefits hereunder.
18. Counterparts.
This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original, and all of which together shall constitute
one and the same document.
19. Governing Law.
The construction, validity, enforceability and interpretation of
this Agreement shall be governed by and construed in accordance with the laws of
the State of New York, without giving effect to the conflict of laws provisions
thereof.
20. Term of Agreement.
This Agreement shall take effect upon execution and shall remain in
effect until all of the Collateral on deposit pursuant to this Agreement has
been returned to Pledgor in accordance with this Agreement.
21. Severability.
If any portion of this Agreement is declared to be null an void or
for any other reason is unenforceable, all other portions of this Agreement
shall nevertheless remain in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
PLEDGOR:
-------------------------
Thomas C. Wyckoff
PLEDGEE:
-------------------------
Stuart Komer
<PAGE>
Exhibit (a)(7)
OWNER OF COLLATERAL
[LETTERHEAD OF CHEMUNG ------------------------------------
CANAL TRUST COMPANY] Stuart Komer GUARANTY
SECURITY
ADDRESS AGREEMENT
------------------------------------
850 Euclid Ave.
Elmira, NY 14901-1950
TELEPHONE NO. IDENTIFICATION NO.
------------------------------------
734-0102
- --------------------------------------------------------------------------------
BORROWER LOCATION OF COLLATERAL
- --------------------------------------------------------------------------------
Thomas C. Wyckoff
Katherine B. Wyckoff
ADDRESS
- ------------------------------------
111 Drive A Strathmont Park
Elmira, NY 14905
TELEPHONE NO. IDENTIFICATION NO.
- ------------------------------------
735-4555
- --------------------------------------------------------------------------------
1. SECURITY INTEREST. For good and valuable consideration, Owner of
Collateral ("Owner") grants to lender identified above a continuing security
interest in the Collateral described below to secure the obligations described
in this Agreement.
2. OBLIGATIONS. The Collateral shall secure the payment and performance of
all present and future indebtedness, liabilities, obligations, and covenants of
Owner to Lender (collectively "Obligations") pursuant to:
a. this Security Agreement;
b. a continuing guaranty dated MAY 1, 1998 executed by Owner
guaranteeing the obligations and liabilities of the Borrower
described therein;
c. |_| If checked, all other present or future evidences of
indebtedness, agreements, instruments, guaranties or otherwise of
Owner to Lender (whether executed for the same or different purposes
than the foregoing); and
d. all repeated amendments, extensions, renewals, modifications,
replacements or substitutions to any of the foregoing.
3. COLLATERAL. The Collateral shall consist of all of the following
described property and Owner's rights, title and interest in such property
whether now or hereafter existing or now owned or hereafter acquired by Owner
and wheresoever located (collectively the "Collateral"):
|_| All accounts and contract rights including, but not limited to, the
accounts and contract rights described on Schedule A attached hereto and
incorporated herein by this reference;
|_| All chattel paper including, but not limited to, the chattel paper
described on Schedule A attached hereto and incorporated herein by this
reference;
|_| All documents including, but not limited to, the documents described on
Schedule A attached hereto and incorporated herein by this reference;
|_| All equipment, including, but not limited to, the equipment described on
Schedule A attached hereto and incorporated herein by this reference;
|_| All fixtures, including, but not limited to, the fixtures located or to be
located on the real property described on Schedule B attached hereto and
incorporated herein by this reference;
|_| All farm products, including, but not limited to:
All farm supplies including, but not limited to, __________________;
All ______________________________________________ and other crops
grown, growing, or to be grown in __________________________________
_______________________________ county(ies) in the state of
___________________________ and elsewhere including but not limited
to, the crops grown, growing or to be grown on the real property
described on Schedule B attached hereto and incorporated herein by
this reference;
All ________________________________________ and other livestock and
the born and unborn offspring thereof including, but not limited to,
the livestock described on Schedule A attached hereto and
incorporated herein by this reference; and
All inventory, equipment and fixtures
____________________________________ and other products from the
foregoing crops and livestock in their unmanufactured or
manufactured states;
|_| All payments or consideration of any kind or nature, or the right to
receive the same, which Owner may now or in the future receive or be
entitled to receive by virtue of the enrollment or participation by Owner,
by Owner's business, or any of Owner's real or personal property in any
program of any federal, state, or local government or agency, including,
without limitation, deficiency payments, payment-in-kind payments,
Commodity Credit Corporation loan payments, government entitlements, and
any other similar payments, rights or entitlements;
|_| All general intangibles including, but not limited to, the general
intangibles described on Schedule A attached hereto and incorporated
herein by this reference;
|_| All instruments including, but not limited to, the instruments described
on Schedule A attached hereto and incorporated herein by this reference;
|_| All inventory including, but not limited to, the inventory described on
Schedule A attached hereto and incorporated herein by this reference;
|_| All minerals or the like and accounts resulting from sales at the wellhead
or minehead located on or related to the real property described on
Schedule B attached hereto and incorporated by this reference;
|_| All standing timber which is to be cut and removed under a conveyance or
contract located on the real property described on Schedule B attached
hereto and incorporated herein by this reference;
|_| Other;
The property described on Schedule A,
All monies, instruments, and savings, checking or other deposit accounts that
are now or in the future in Lender's custody or control (excluding IRA, Keogh,
trust accounts, and deposit accounts subject to tax penalties if so assigned);
All monies or instruments pertaining to the Collateral described above;
All accessions, accessories, additions, amendments, attachments, modifications,
replacements and substitutions to any of the above;
All proceeds and products of any of the above;
All policies of insurance pertaining to any of the above as well as any proceeds
and unearned premiums pertaining to such policies; and
All books and records pertaining to any of the above.
<PAGE>
4. OWNER'S TAXPAYER IDENTIFICATION. Owner's social security or federal
taxpayer identification number is: ###-##-####.
5. RESIDENCY/LEGAL STATUS. Owner is an individual and a resident of the
state of: New York. Owner is a: |_| Corporation |_| Partnership |_| Non-Profit
Association duly organized, validly existing and in good standing under the laws
of the state of: n/a.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS. Owner represents, warrants
and covenants to Lender that:
(a) Owner is and shall remain the sole owner of the Collateral:
(b) Neither Owner nor, to the best of Owner's knowledge, any other party
has used, generated, released, discharged, stored, or disposed of
any hazardous waste, toxic substance, or related material
(cumulatively "Hazardous materials") or transported any Hazardous
Materials across the property. Owner shall not commit or permit such
actions to be taken in the future. The term "Hazardous Materials"
shall mean any substance, material, or waste which is or becomes
regulated by any governmental authority including, but not limited
to, (i) petroleum; (ii) asbestos; (iii) polychlorinated biphenyls;
(iv) those substances, materials or wastes designated as a
"hazardous substance" pursuant to Section 311 of the Clean Water
Act or listed pursuant to Section 307 of the Clean Water Act or any
amendments or replacements to these statutes; (v) those substances,
materials or wastes defined as a "hazardous waste" pursuant to
Section 1004 of the Resource Conservation and Recovery Act or any
amendments or replacements to that statute; or (vi) those
substances, materials or wastes defined as "hazardous substance"
pursuant to Section 101 of the Comprehensive Environmental Response,
Compensations and Liability Act, or any amendments or replacements
to that statute;
(c) Owner's chief executive office, chief place of business, office
where its business records relating to the Collateral and the
Collateral are located, or residence is the address identified above
and have been such during the four (4) month period prior to the
date hereof. Owner's other executive offices, places of business,
locations of its business records, or domiciles are described on
Schedule C attached hereto and incorporated herein by this
reference. Owner shall immediately advise Lender in writing of any
change in or addition to the foregoing address;
(d) Owner shall not become a party to any restructuring of its form of
business or participate in any consolidation, merger, liquidation or
dissolution without Lender's prior written consent;
(e) Owner shall notify Lender of the nature of any intended change of
Owner's name, or the use of any tradename, and the effective date of
such change;
(f) the Collateral is and shall at all times remain free of all tax and
other liens, security interests, encumbrances and claims of any kind
except for those belonging to Lender and those described on Schedule
D attached thereto and incorporated herein by this reference.
Without waiving the event of default as a result thereof, Owner
shall take any action and execute any document need to discharge the
foregoing liens, security interest, encumbrances and claims;
(g) Owner shall defend the Collateral against all claims and demands of
all persons at any time claiming any interest therein;
(h) All of the goods, fixtures, minerals or the like, and standing
timber constituting the Collateral is and shall be located at
Owner's executive offices.
(i) Owner shall provide Lender with possession of all chattel paper and
instruments constituting the Collateral, and Owner shall promptly
mark all chattel paper, instruments, and documents, constituting the
Collateral to show that the same are subject to Lender's security
interest;
(j) All of Owner's accounts or contract rights; chattel paper;
documents; general intangibles; instruments; and federal, state,
county, and municipal government and other permits and licenses;
trusts, liens, contracts, leases, and agreements constituting the
Collateral are and shall be valid, genuine and legally enforceable
obligations and rights belonging to Owner against one or more third
parties and not subject to any claim, defense, set-off or
counterclaim of any kind;
(k) Owner shall not amend, modify, replace or substitute any account or
contract right; chattel paper; document; general intangible; or
instrument constituting the Collateral without the prior written
consent of Lender;
(l) Owner has the right and is duly authorized to enter into and perform
its obligations under this Agreement. Owner's execution and
performance of these obligations do not and shall not conflict with
the provisions of any statute, regulation, ordinance, rule of law,
contract or other agreement which may now or hereafter be binding on
Owner;
(m) No action or proceeding is pending against Owner which might result
in any material or adverse change in its business operations or
financial condition or materially affect the Collateral;
(n) Owner has not violated and shall not violate any applicable federal,
state, county or municipal statute, regulation or ordinance
(including but not limited to those governing Hazardous Materials)
which may materially and adversely affect its business operations or
financial condition or the Collateral;
(o) Owner shall, upon Lender's request, deposit all proceeds of the
Collateral into an account or accounts maintained by Owner or Lender
at Lender's institution;
(p) Owner shall, upon receipt, deliver to Lender as additional
Collateral all securities distributed on account of the Collateral
such as stock dividends and securities resulting from stock splits,
reorganizations and recapitalizations; and
(q) This Agreement and the obligations described in this Agreement are
executed and incurred for business and not consumer purposes.
7. FARM PRODUCTS AFFIDAVITS. Owner shall provide Lender with a sworn
affidavit describing the names and addresses of each buyer, commission merchant
or selling agent who has purchased farm products from Owner during the last
three (3) years and the name and address of each buyer, commission merchant or
selling agent expected to purchase farm products from Owner during the next
eighteen (18) months upon the execution of this Agreement. Annual hereafter, and
immediately upon any material change in the information, Owner shall provide
Lender with a sworn affidavit describing the names and addresses of each buyer,
commission merchant or selling agent who are expected to purchase farm products
from Owner thereafter. Without limiting the foregoing, Owner shall provide
Lender with a sworn affadavit describing the names and addresses of each buyer,
commission merchant or selling agent who has purchased farm products from Owner
during the past year or who is expected to purchase farm products from Owner
within the next eighteen (18) months at the request of Lender on three (3) days
written notice.
8. SALE OF COLLATERAL. Owner shall not assign, convey, lease, sell or
transfer any of the Collateral to any third party without the prior written
consent of Lender except for sales of inventory of farm products to buyers in
the ordinary course of business. Notwithstanding the foregoing, Owner shall not
sell or otherwise dispose of any farm products and inventory constituting a
portion of the Collateral in the ordinary course of business without:
(a) Providing Lender with a detailed written description of the farm
products to be sold or otherwise disposed of, the consideration for
the sale or disposition, the date of the sale or disposition, and
the name and address of the buyer, commission merchant, or selling
agent at least seven (7) days prior to the sale or disposition date;
(b) Providing Lender with any other information and documents needed to
maintain its security interest in the farm products and its right to
receive the proceeds thereof under the Food Security Act of 1985,
National Wool Act of 1954, or other applicable law; and
(c) Preserving and assigning to Lender all of its trust and lien rights
under the Packers and Stockyard Act, Perishable Agricultural
Commodities Act and other applicable law.
9. NOTICES AND FILINGS. Owner authorizes Lender to provide oral or written
notice of its security interest in the farm products constituting a portion of
the Collateral to any potential buyer, commission merchant or selling agent of
the farm products or to any other person where Lender, in its sole discretion,
deems such notice to be reasonably necessary to protect its security interest
and to execute and record written notices of its security interest in the
Collateral in the recording system established by any state pursuant to the Food
Security Act of 1985 and in the recording system established by any state
pursuant to the Uniform Commercial Code.
10. FINANCING STATEMENTS AND OTHER DOCUMENTS. Owner shall at any time and
from time to time take all actions and execute all documents required by Lender
to attach, perfect and maintain its security interest in the Collateral and
establish and maintain its right to receive the payment of the proceeds of the
Collateral including, but not limited to, executing any financing statements,
fixture filings, continuation statements, notices of security interest and other
documents required by the Uniform Commercial Code and other applicable law.
Owner shall pay the costs of filing such documents in all offices wherever
filing or recording is deemed by Lender to be necessary or desirable. Lender
shall be entitled to perfect its security interest in the Collateral by filing
carbon, photographic or other reproductions of the aforementioned documents with
any authority required by the Uniform Commercial Code or other applicable law.
Owner authorizes Lender to execute and file any financing statements, as well as
extensions, renewals, and amendments of financing statements in such form as
Lender may require to perfect and maintain perfection of any security interest
granted in this Agreement.
11. INQUIRIES AND NOTIFICATION TO THIRD PARTIES. Owner hereby authorizes
Lender to contact any third party and make any inquiry pertaining to Owner's
financial condition or the Collateral. In addition, Lender is authorized to
provide oral or written notice of its security interest in the Collateral to any
third party and, following a default hereunder, to make payment to Lender.
<PAGE>
12. COLLECTION OF INDEBTEDNESS FROM THIRD PARTIES. Lender shall be
entitled to notify, and upon the request of Lender, Owner shall notify any
account debtor or other third party (including, but not limited to, insurance
companies) to pay any indebtedness or obligation owing to Owner and constituting
the Collateral (cumulatively "indebtedness") to Lender whether or not a default
exits under this Agreement. Owner shall diligently collect the indebtedness
owing to Owner from its account debtors and other third parties until the giving
of such notification. In the event that Owner possesses or receives possession
of the instruments and other remittances with respect to the indebtedness
following the giving of such notification or if the instruments or other
remittances constitute the prepayment of any indebtedness or the payment of any
insurance proceeds, Owner shall hold such instruments and other remittances in
trust for Lender apart from its property, endorse the instruments and other
remittances to Lender, and immediately provide Lender with possession of the
instruments and other remittances. Lender shall be entitled, but not required,
to collect (by legal proceedings or otherwise), extend the time for payment,
compromise, exchange or release any obligor or collateral upon, or otherwise
settle any of the indebtedness whether or not an event of default exists under
this Agreement. Lender shall not be liable to Owner for action, error, mistake,
omission or delay pertaining to the actions described in this paragraph or any
damages resulting therefrom.
13. POWER OF ATTORNEY. Owner hereby appoints Lender as its
attorney-in-fact to endorse Owner's name on all instruments and other
remittances payable to Owner with respect to the indebtedness or other documents
pertaining to Lender's actions in connection with the indebtedness. In addition
Lender shall be entitled, but not required, to perform any action or execute any
document required to be taken or executed by Owner under this Agreement.
Lender's performance of such action or execution of such documents shall not
relieve Owner from any obligation or cure any default under this Agreement. The
powers of attorney described in this paragraph are coupled with an interest and
are irrevocable.
14. USE AND MAINTENANCE OF COLLATERAL. Owner shall use the Collateral
solely in the ordinary course of its business, for the usual purposes intended
by the manufacturer (if applicable), with due care, and in compliance with the
laws, ordinances, regulations, requirements and rules of all federal, state,
county and municipal authorities including environmental laws and regulations
and insurance policies. Owner shall not make any alterations, additions or
improvements to the Collateral without the prior written consent of Lender.
Owner shall ensure that Collateral which is not now a fixture does not become a
fixture. Without limiting the foregoing, all alterations, additions and
improvements made to the Collateral shall be subject to the security interest
belonging to Lender, shall not be removed without the prior written consent of
Lender, and shall be made at Owners sole expense. Owner shall take all actions
and make any repairs or replacements needed to maintain the Collateral in good
condition and working order.
15. LOSS OR DAMAGE. Owner shall bear the entire risk of any loss, theft,
destruction or damage (cumulatively "Loss or Damage") to all or any part of the
Collateral. In the event of any Loss or Damage, Owner will either restore the
Collateral to its previous condition, replace the Collateral with similar
property acceptable to Lender in its sole discretion, or pay or cause to be paid
to Lender the decrease in the fair market value of the affected Collateral.
16. INSURANCE. The Collateral will be kept insured for its full value
against all hazards including loss or damage caused by fire, collision, theft or
other casualty. If the Collateral consists of a motor vehicle, Owner will obtain
comprehensive and collision coverage in amounts at least equal to the actual
cash value of the vehicles with deductibles not to exceed $ n/a insurance
coverage obtained by Owner shall be from a licensed insurer subject to Lender's
approval. Owner shall assign to Lender all rights to receive proceeds of
insurance not exceeding the amount owed under the Obligations described above,
and direct the insurer to pay all proceeds directly to Lender. The insurance
policies shall require the insurance company to provide Lender with at least 30
days written notice before such policies are altered or cancelled in any manner.
The insurance policies shall name Lender as a loss payee and provide that no
action or omission of Owner or any other person shall affect the right of Lender
to be paid the insurance proceeds pertaining to the loss or damage of the
Collateral. In the event Owner fails to acquire or maintain insurance, Lender
(after providing notice as may be required bylaw) may in its discretion procure
appropriate insurance coverage upon the Collateral and charge the insurance cost
as an advance of principal under the promissory note. Owner shall furnish Lender
with evidence of insurance indicating the required coverage. Lender may act as
attorney-in-fact for Owner in making and settling claims under insurance
policies, canceling any policy or endorsing Owner's name on any draft or
negotiable instrument drawn by any insurer.
17. INDEMNIFICATION. Lender shall not assume or be responsible for the
performance of any of Owner's Obligations with respect to the Collateral under
any circumstances. Owner shall immediately provide Lender with written notice of
and indemnify and hold Lender and its shareholders, directors, officers,
employees and agents harmless from all claims, damages, liabilities (including
attorney's fees and legal expenses to the extent permitted by applicable law),
causes of action; actions, suits and other legal proceedings (cumulatively
"Claims") pertaining to its business operations or the Collateral including, but
not limited to, those arising from Lender's performance of Owner's Obligations
with respect to the Collateral. Owner, upon the request of Lender, shall hire
legal counsel to defend Lender from such Claims, and pay the attorneys' fees,
legal expenses and other costs to the extent permitted by applicable law,
incurred in connection therewith. In the alternative, Lender shall be entitled
to employ its own legal counsel to defend such Claims at Owner's cost.
18. TAXES AND ASSESSMENTS. Owner shall execute and file all tax returns
and pay all taxes, licenses, fees and assessments relating to its business
operations and the Collateral (including, but not limited to, income taxes,
personal property taxes, withholding taxes, sales taxes, use taxes, excise taxes
and workers' compensation premiums) in a timely manner.
19. INSPECTION OF COLLATERAL AND BOOKS AND RECORDS. Owner shall allow
Lender or its agents to examine, inspect and make abstracts and copies of the
Collateral and Owner's books and records pertaining to Owner's business
operations and financial condition or the Collateral during normal business
hours. Owner shall provide any assistance required by Lender for these purposes.
All of the signatures and information pertaining to the Collateral or contained
in the books and records shall be genuine, true, accurate and complete in all
respects. Owner shall note the existence of Lender's security interest in its
books and records pertaining to the Collateral.
20. DEFAULT. Owner shall be in default under this Agreement in the event
that Owner:
(a) fails to make any payment under this Agreement any continuing
guarantee secured by this Agreement, or any other indebtedness to
Lender when due;
(b) seeks to revoke, terminate or otherwise limit its liability under
any continuing guarantee;
(c) fails to perform any obligation or breaches any warranty or covenant
to Lender contained in this Agreement or any other present or future
written agreement regarding this or any other indebtedness to
Lender;
(d) provides or causes any false or misleading signature or
representation to be provided to Lender;
(e) allows the Collateral to be destroyed, lost or stolen, damaged in
any material respect, or subjected to seizure or confiscation;
(f) permits the entry or service of any garnishment, judgment, tax levy,
attachment or lien against Owner, any guarantor, or any of their
property;
(g) dies, becomes legally incompetent, is dissolved or terminated,
ceases to operate its business, becomes insolvent, makes an
assignment for the benefit of creditors, or becomes the subject of
any bankruptcy, insolvency or debtor rehabilitation proceeding;
(h) allows the Collateral to be used by anyone to transport or store
goods, the possession, transportation or use of which is illegal;
or
(i) causes Lender in good faith to deem itself insecure due to a
significant decline in the value of any of the Collateral.
21. RIGHTS OF LENDER ON DEFAULT. If there is a default under this
Agreement, Lender shall be entitled to exercise one or more of the following
remedies without notice or demand (excepts as required by law):
(a) to declare the Obligations immediately due and payable in full;
(b) to collect the outstanding Obligations with or without resorting to
judicial process;
(c) to change Owner's mailing address, open Owner's mail, and retain any
instruments or other remittances constituting the Collateral
contained therein;
(d) to take possession of any Collateral in any manner permitted by law;
(e) to apply for and obtain, without notice and upon ex parte
application, the appointment of a receiver for the Collateral
without regard to Owner's financial condition or solvency, the
adequacy of the Collateral to secure the payment or performance of
the obligations, or the existence of any waste to the Collateral;
(f) to require Owner to deliver and make available to Lender any
Collateral at a place reasonably convenient to Owner and Lender;
(g) to sell, lease or otherwise dispose of any Collateral and collect
any deficiency balance with or without resorting to legal process;
(h) to set-off Owner's obligations against any amounts due to Owner
including, but not limited to, monies, instruments, and deposit
accounts maintained with Lender, and
(i) to exercise all other rights available to Lender under any other
written agreement or applicable law.
Lender's rights are cumulative and may be exercised together, separately, and in
any order. If notice to Owner of intended disposition of Collateral is required
by law, Lender will provide reasonable notification of the time and place of any
sale or intended disposition as required under the Uniform Commercial Code. In
the event that Lender institutes an action to recover any Collateral or seeks
recovery of any Collateral by way of prejudgment remedy in an action against
Owner, Owner waives the posting of any bond which might otherwise be required.
Upon default, Owner shall segregate all proceeds of Collateral and hold such
proceeds in trust for Lender. Lender's remedies under this paragraph are in
addition to those at common law, such as setoff.
22. APPLICATION OR PAYMENTS. Whether or not a default has occurred under
this Agreement, all payments made by or on behalf of Owner and all credits due
to Owner from the disposition of the Collateral or otherwise may be applied
against the amounts paid by Lender (including attorney's fees and legal
expenses) in connection with the exercise of its rights or remedies described in
this Agreement and any interest thereon and then to the payment of the
remaining Obligations in whatever order Lender chooses.
<PAGE>
23. REIMBURSEMENT OF AMOUNTS EXPENDED BY LENDER. Owner shall reimburse
Lender for all amounts (including attorneys' fees and legal expenses) expended
by Lender in the performance of any action required to be taken by Owner or the
exercise of any right or remedy belonging to Lender under this Agreement,
together with interest thereon at the lower of the highest rate described in any
promissory note or credit agreement executed by Borrower or Owner or the highest
rate allowed by law from the date of payment until the date of reimbursement.
These sums shall be included in the definition of Obligations, shall be secured
by the Collateral identified in this Agreement and shall be payable upon demand.
24. ASSIGNMENT. Owner shall not be entitled to assign any of its rights,
remedies or obligations described in this Agreement without the prior written
consent of Lender. Consent may be withheld by Lender in its sole discretion.
Lender shall be entitled to assign some or all of its rights and remedies
described in this Agreement without notice to or the prior consent of Owner in
any manner.
25. MODIFICATION AND WAIVER. The modification or waiver of any of Owner's
Obligations or Lender's rights under this Agreement must be contained in a
writing signed by Lender. Lender may perform any of Owner's Obligations or delay
or fail to exercise any of its rights without causing a waiver of those
Obligations or rights. A waiver on one occasion shall not constitute a waiver on
any other occasion. Owner's Obligations under this Agreement shall not be
affected if Lender amends, compromises, exchanges, fails to exercise, impairs or
releases any of the obligations belonging to any Owner or third party or any of
its rights against any Owner, third party or Collateral.
26. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of Owner and Lender and their respective successors, assigns,
trustees, receivers, administrators, personal representatives, legatees, and
devisees.
27. NOTICES. Any notice or other communication to be provided under this
Agreement shall be in writing and sent to the parties at the addresses described
in this Agreement or such other address as the parties may designate in writing
from time to time.
28. SEVERABILITY. If any provision of this Agreement violates the law or
is unenforceable, the rest of the Agreement shall remain valid.
29. APPLICABLE LAW. This Agreement shall be governed by the laws of the
state identified in Lender's address. Owner consents to the jurisdiction and
venue of any court located in the state indicated in Lender's address in the
event of any legal proceeding pertaining to the negotiation, execution,
performance or enforcement of any term or condition contained in this Agreement
or any related document and agrees not to commence or seek to remove such legal
proceeding in or to a different court.
30. COLLECTION COSTS. If Lender hires an attorney to assist in collecting
any amount due or enforcing any right or remedy under this Agreement, Owner
agrees to pay Lender's reasonable attorneys' fees and collection costs.
31. MISCELLANEOUS. This Agreement is executed for commercial/agricultural
purposes. Owner shall supply information regarding Owner's business operations
and financial condition or the Collateral in the form and manner as requested by
Lender from time to time. All information furnished by Owner to Lender shall be
true, accurate and complete in all respects. Owner and Lender agree that time is
of the essence. Owner waives presentment, demand for payment, notice of dishonor
and protest except as required by law. All references to Owner in this Agreement
shall include all parties signing below except Lender. This Agreement shall be
binding upon the heirs, successors and assigns of Owners and Lender. If there is
more than one Owner, their obligations shall be joint and several. This
Agreement shall remain in full force and effect until Lender provides Owner with
written notice of termination. This Agreement and any related documents
represent the complex and integrated understanding between Owner and Lender
pertaining to the terms and conditions of those documents.
32. WAIVER OF PERSONAL SERVICE OF ANY PROCESS. Service may be made by
certified or registered mail at the address set forth herein. Owner shall appear
or answer within thirty (30) days of receipt of service. If Owner fails to
appear, Owner shall be deemed in default and judgment may be entered.
33. WAIVER OF JURY TRIAL. LENDER AND OWNER HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT
TO ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONJUNCTION WITH THE
CONTINUING GUARANTY(S), THIS AGREEMENT AND ANY OTHER AGREEMENT CONTEMPLATED TO
BE EXECUTED IN CONJUNCTION HEREWITH OR THEREWITH, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER
PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER MAKING THE LOAN(S) TO
BORROWER.
34. ADDITIONAL TERMS.
Owner acknowledges that Owner has read, understands, and agrees to the terms and
conditions of this Agreement.
Dated:
LENDER: Chemung Canal Trust Company
---------------------------------------
Corey
EVP
OWNER: Stuart Komer OWNER:
- ------------------------------------- ---------------------------------------
Stuart Komer
OWNER: OWNER:
- ------------------------------------- ---------------------------------------
<PAGE>
SCHEDULE A
CCTC Trust Department Investment Management Acct. #51-0341-00 to the extent of
$625,000.
SCHEDULE B
Record Owner Name:
SCHEDULE C
SCHEDULE D
<PAGE>
Exhibit (a)(8)
[LOGO]
Chemung Canal Trust Company
One Chemung Canal Plaza
Elmira, New York, 14901
(607) 737-3711
"LENDER"
COMMERCIAL CONTINUING
GUARANTY
(LIMITED)
GUARANTOR BORROWER
- --------------------------------------------------------------------------------
Stuart Komer Thomas C Wyckoff
Katherine B Wyckoff
ADDRESS ADDRESS
- --------------------------------------------------------------------------------
850 Euclid Avenue 111 Drive A Strathmot Park
Elmira, NY 14901-1950 Elmira, NY 14905
TELEPHONE NO. IDENTIFICATION NO. TELEPHONE NO. IDENTIFICATION NO.
- --------------------------------------------------------------------------------
734-0102 735-4555
1. Consideration. This Guaranty is being executed to induce Lender
indicated above to enter into one or more loans or other financial
accommodations with or on behalf of Borrower.
2. Guaranty. Guarantor hereby unconditionally guarantees the prompt and
full payment and performance of Borrower's present and future, joint and/or
several, direct and indirect, absolute and contingent, express and implied,
indebtedness, liabilities, obligations and covenants (cumulatively
"indebtedness") to Lender when due (whether upon maturity or by demand,
acceleration or otherwise) as follows:
|X| LIMITED TO AN AMOUNT: Guarantor's liabilities and obligations under this
Guaranty ("Obligations") shall include all present or future written
agreements between Borrower and Lender (whether executed for the same or
different purposes), but shall be limited to the principal amount of FIVE
HUNDRED THOUSAND AND NO/100 Dollars, together with all interest and all of
Lender's expenses and costs, incurred in connection with the indebtedness,
including any amendments, extensions, modifications, renewals, replacements
or substitutions thereto. The limitation on the liability of Guarantor shall
not apply to any costs incurred by Lender in connection with paragraph 24
hereof.
|_| LIMITED TO A PERCENTAGE: Guarantor's liabilities and obligations under
this Guaranty ("Obligations") shall include all present and future written
agreements between Borrower and Lender (whether executed for the same or
different purposes) evidencing the indebtedness, but shall be limited to
________% of the indebtedness (as the same may change from time to time),
together with all interest thereon and all of Lender's expenses and costs
incurred in connection with the indebtedness. This limitation on the
liability of Guarantor shall not apply to any costs incurred by Lender
pursuant to paragraph 24 hereof.
|X| LIMITED TO THE FOLLOWING DESCRIBED NOTES/AGREEMENTS: Guarantor's
liabilities and obligations under this Guaranty ("Obligations") shall be
limited to the following described promissory notes and agreements between
Borrower and Lender, together with all interest and all of Lender's
expenses and costs, incurred in connection with the indebtedness,
including any amendments, extensions, modifications, renewals,
replacements or substitutions thereto:
<TABLE>
<CAPTION>
INTEREST RATE PRINCIPAL AMOUNT/CREDIT LIMIT FUNDING/AGREEMENT DATE MATURITY/DATE CUSTOMER NUMBER LOAN NUMBER
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
VARIABLE $500,000,000 05/01/98 05/01/03
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
3. SECURITY INTEREST: [X] If checked, the Obligations under this Guaranty
are secured by a lien on and/or security interest in the property described in
the documents executed in connection with this Guaranty as well as any other
property designated as security now or in the future.
4. ABSOLUTE AND CONTINUING NATURE OF GUARANTY. Guarantor's Obligations are
absolute and continuing and shall not be affected or impaired if Lender amends,
renews, extends, compromises, exchanges, fails to exercise, impairs or releases
any of the indebtedness owed by any Borrower, Co-guarantor, or third party or
any of Lender's rights against any Borrower, Co-guarantor, third party, or
collateral. In addition, the Obligations shall not be affected or impaired by
the death, incompetency, termination, dissolution, insolvency, business
cessation, or other financial deterioration or any Borrower, Guarantor, or third
party or by any state of facts or the happening from time to time of any event,
including without limitation: The invalidity, irregularity, illegality or
unenforceability of, or any defect in, the promissory note or any agreement or
any collateral security for the Obligation (the "Collateral"); Any present or
future law or order of any government (de jure or de facto) or of any agency
thereof purporting to reduce, amend or otherwise affect the indebtedness of the
Borrower or any other obligor or to any other terms of payment; The waiver,
compromise, settlement, release or termination of any or all of the Obligations,
covenants or agreements of the Borrower under the promissory note or any
agreement or of any party named as a Guarantor under this Guaranty; The failure
to give notice to the Guarantor of the occurrence of an event of default under
the promissory note or any other agreement; The loss, release, sale, exchange,
surrender or other change in any Collateral; The extension of the time for
payment of any principal of or interest on the indebtedness or of the time for
performance of any obligations, covenants or agreements under or arising out of
the promissory note or any agreement or the extension or the renewal of any
thereof; The modification or amendment (whether material or otherwise) of any
obligation, covenant or agreement set forth in the promissory note or any
agreement; The taking of, or the omission to take, any of the actions referred
to in the promissory note or any agreement; Any failure, omission or delay on
the part of the Lender to enforce, assert or exercise any right, power or
remedy conferred on the Lender in the promissory note or any agreement; The
voluntary or involuntary liquidation, dissolution, sale or other disposition of
all or substantially all the assets, marshalling of assets and liabilities,
receivership, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition with creditors or readjustment of, or
other similar proceedings affecting the Guarantor or the Borrower or any of
their assets, or any allegation or contest of the validity of the promissory
note or any agreement; The default or failure of the Guarantor to fully perform
any Obligations set forth in this Guaranty; Any event or action that would, in
the absence of this paragraph, result in the release or discharge of the
Guarantor from the performance or observance of any Obligation, covenant or
agreement contained in this Guaranty; and Any other circumstances which might
otherwise constitute a legal or equitable discharge or defense of a surety or a
guarantor.
5. DIRECT AND UNCONDITIONAL NATURE OF GUARANTY. Guarantor's Obligations
are direct and unconditional and may be enforced without requiring Lender to
exercise, enforce, or exhaust any right or remedy against any Borrower,
Co-guarantor, third party, or any security or the Collateral.
- --------------------------------------------------------------------------------
GUARANTOR ACKNOWLEDGES GUARANTOR HAS READ, UNDERSTANDS, AND AGREES TO THE TERMS
AND CONDITIONS OF THIS AGREEMENT INCLUDING THE TERMS AND CONDITIONS ON THE
REVERSE SIDE. GUARANTOR HAS EXECUTED THIS AGREEMENT WITH THE INTENT TO BE
LEGALLY BOUND. GUARANTOR ACKNOWLEDGES RECEIPT OF AN EXACT COPY OF THIS
AGREEMENT.
DATED:
GUARANTOR: Stuart Komer GUARANTOR:
- --------------------------------- ---------------------------------
Stuart Komer
GUARANTOR: GUARANTOR:
- --------------------------------- ---------------------------------
<PAGE>
6. WAIVER. Guarantor hereby waives notice of the acceptance of this
Guaranty; notice of present and future extensions of credit and other financial
accommodations by Lender to any Borrower; notice of the obtaining or release of
any guaranty, assignment, or other security for any of the indebtedness notices
of presentment for payment, demand, protest, dishonor, default, and nonpayment
pertaining to the indebtedness and this Guaranty and all other notices and
demands pertaining to the indebtedness and this Guaranty; any and all defenses
to payment as permitted by law.
7. WAIVER OF JURY TRIAL. LENDER AND GUARANTOR KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT TO
ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONJUNCTION WITH THE
INDEBTEDNESS GUARANTEED HEREBY, THIS GUARANTY AND ANY OTHER AGREEMENT
CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER
PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER MAKING THE LOAN OR
LOANS GUARANTEED HEREBY.
8. NATURE OF GUARANTY. This Guaranty is a guaranty of payment and not of
collection and the Guarantor hereby waives the right to require that any action
be brought first against the Borrower or any other Guarantor, or any security,
or to require that resort be made to any security or to any balance of any
deposit account on credit on the books of the Lender in favor of the Borrower or
of any Guarantor.
9. DEFAULT. Guarantor shall be in default under this Guaranty in the event
that any Borrower or Guarantor:
(a) fails to pay any amount under this Guaranty or any indebtedness to
Lender when due (whether such amount is due at maturity by
acceleration or otherwise);
(b) fails to perform any obligation or breaches any warranty or covenant
to Lender contained in any loan document or this Guaranty or any
other present or future promissory note or written agreement;
(c) provides or causes any false or misleading signature or
representation to be provided to Lender;
(d) allows any collateral for the indebtedness or this Guaranty to be
destroyed, lost or stolen, or damaged in any material respect;
(e) permits the entry or service of any garnishment, judgment, tax levy,
attachment or lien against Borrower, Guarantor, or any of their
property;
(f) dies, becomes legally incompetent, is dissolved or terminated,
ceases to operate its business, becomes insolvent, makes an
assignment for the benefit of creditors, or becomes the subject of
any bankruptcy, insolvency or debtor rehabilitation proceeding; or
(g) causes Lender to deem itself insecure due to a significant decline
in the value of any security securing the indebtedness or any
Collateral securing this Guaranty.
10. RIGHTS OF LENDER ON DEFAULT. If there is a default under this
Guaranty, Lender shall be entitled to exercise one or more of the following
remedies without notice or demand (except as required by law):
(a) to declare Guarantor's obligations under this Guaranty immediately
due and payable in full;
(b) to collect the outstanding Obligations under this Guaranty with or
without resorting to judicial process;
(c) to take possession of any Collateral in any manner permitted by law;
(d) to require Guarantor to deliver and make available to Lender any
Collateral at a place reasonably convenient to Guarantor and Lender;
(e) to sell, lease or otherwise dispose of any Collateral and collect
any deficiency balance with or without resorting to judicial
process;
(f) to set-off Guarantor's obligations under this Guaranty against any
amounts due to Guarantor including, but not limited to, monies,
instruments, and deposit accounts maintained with Lender; and
(g) to exercise all other rights available to Lender under any other
written agreement or applicable law.
Lender's rights are cumulative and may be exercised together, separately, and in
any order. Lender's remedies under this paragraph are in addition to those
available at common law, including, but not limited to, the right to set-off.
11. SUBORDINATION. The payment of any present or future indebtedness of
Borrower to Guarantor will be postponed and subordinated to the payment in full
of any present or future indebtedness of Borrower to Lender during the term of
this Agreement. In the event that Guarantor receives any monies, instruments, or
other remittances to be applied against Borrower's obligations to Guarantor,
Guarantor will hold these funds in trust for Lender and immediately endorse or
assign (if necessary) and deliver these monies, instruments and other
remittances to Lender. Guarantor agrees that Lender shall be preferred to
Guarantor in any assignment for the benefit of Borrower's creditors in any
bankruptcy, insolvency, liquidation, or reorganization proceeding commenced by
or against Borrower in any federal or state court.
12. INDEPENDENT INVESTIGATION. Guarantor's execution and delivery to
Lender of this Guaranty is based solely upon Guarantor's independent
investigation of Borrower's financial condition and not upon any written or oral
representation of Lender in any manner. Guarantor assumes full responsibility
for obtaining any additional information regarding Borrower's financial
condition and Lender shall not be required to furnish Guarantor with any
information of any kind regarding Borrower's financial condition.
13. ACCEPTANCE OF RISKS. Guarantor acknowledges the absolute and
continuing nature of this Guaranty and voluntarily accepts the full range of
risks associated herewith including, but not limited to, the risk that
Borrower's financial condition shall deteriorate or, if this Guaranty is
unlimited, the risk that Borrower shall incur additional indebtedness to Lender
in the future.
14. SUBROGATION. The Guarantor hereby irrevocably waives and releases the
Borrower from all "claims" (as defined in Section 101(5) of the Bankruptcy Code)
to which the Guarantor is or would, at any time, be entitled by virtue of its
obligations under this Guaranty, including, without limitation, any right of
subrogation (whether contractual, under Section 509 of the Bankruptcy Code or
otherwise), reimbursement, contribution, exoneration or similar right against
the Borrower.
15. APPLICATION OF PAYMENTS. Lender will be entitled to apply any payments
or other monies received from Borrower, any third party, or any collateral
against Borrower's present and future indebtedness to Lender in any order.
16. ESSENCE OF TIME. Guarantor and Lender agree that time is of the
essence.
17. TERMINATION. The Guaranty shall remain in full force and effect until
Lender executes and delivers to Guarantor a written release thereof.
18. ASSIGNMENT. Guarantor shall not be entitled to assign any of its
rights or Obligations described in this Guaranty without Lender's prior written
consent which may be withheld by Lender in its sole discretion. Lender shall be
entitled to assign some or all of its rights and remedies described in this
Guaranty without notice to or the prior consent of Guarantor in any manner.
Unless the Lender shall otherwise consent in writing, the Lender shall have an
unimpaired right prior and superior to that of any assignee, to enforce this
Guaranty for the benefit of the Lender, as to those Obligations that the Lender
has not assigned.
19. MODIFICATION AND WAIVER. The modification or waiver of any of
Guarantor's Obligations or Lender's rights under this Guaranty must be contained
in a writing signed by Lender. Lender may delay in exercising or fail to
exercise any of its rights without causing a waiver of those rights. A waiver on
one occasion shall not constitute a waiver on any other occasion.
20. SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon and inure
to the benefit of Guarantor and Lender and their respective successors, assigns,
trustees, receivers, administrators, personal representatives, legatees, and
devisees.
21. NOTICE. Any notice or other communications to be provided under this
Guaranty shall be in writing and sent to the parties at the addresses described
in the Guaranty or such other addresses as the parties may designate in writing
from time to time.
22. SEVERABILITY. If any provision of this Guaranty violates the law or is
unenforceable, the rest of the Guaranty shall remain valid.
23. APPLICABLE LAW. This Guaranty shall be governed by the laws of the
state indicated in Lender's address. Guarantor consents to the jurisdiction and
venue of any court located in such state in the event of any legal proceeding
under this Guaranty.
24. COLLECTION COSTS. If Lender hires an attorney to assist in collecting
any amount due or enforcing any right or remedy under this Guaranty, Guarantor
agrees to pay Lender's reasonable attorneys' fees, legal expenses and other
costs as permitted by law.
25. REPRESENTATIONS OF GUARANTOR. Guarantor acknowledges receipt of
reasonably equivalent value in consideration for the execution of this Guaranty
and represents that, after giving effect to this Guaranty, the fair market value
of Guarantor's assets exceeds Guarantor's total liabilities, including
contingent, subordinate and unliquidated liabilities, that Guarantor has
sufficient cash flow to meet debts as they mature, and that Guarantor does not
have unreasonably small capital. Guarantor represents that all required director
and shareholder consents to enter into this Guaranty have been obtained.
26. MISCELLANEOUS. This Guaranty is executed in connection with a
commercial or agricultural loan. Guarantor will provide Lender with a current
financial statement upon request. All references to Guarantor in this Guaranty
shall include all entities or persons signing this Guaranty. If there is more
than one Guarantor, their obligations shall be joint and several. This Guaranty
and any related documents represent the complete and integrated understanding
between Guarantor and Lender pertaining to the terms and conditions of those
documents.
27. ADDITIONAL TERMS.
<PAGE>
Exhibit (a)(9)
ASSIGNMENT
WHEREAS, Stuart Komer, Assignor, whose address is 850 Euclid Avenue,
Elmira, New York 14901-1950, is or may become indebted unto CHEMUNG CANAL TRUST
COMPANY, Assignee, a banking corporation having an office at One Chemung Canal
Plaza, Elmira, New York; and
WHEREAS said indebtedness may be of any kind and character, whether
incurred alone or together with any other person, firm, or corporation, now
existing or hereafter incurred or arising, direct or indirect, absolute or
contingent (including guaranty liability), and may be from time to time reduced
and thereafter increased, or entirely extinguished and thereafter reincurred,
and shall include, without limitation, any sums advanced by Assignee for taxes,
assessments, insurance, and other charges and expenses (hereinafter referred to
as "Indebtedness").
NOW, THEREFORE, as collateral security for the payment of any and all such
Indebtedness now or hereafter owed by Assignor to Assignee, whether incurred
alone or together with any other person, firm, or corporation, and in order to
induce Assignee to continue such Indebtedness already incurred or to agree to
the incurrence of such Indebtedness from time to time hereafter, Assignor does
hereby pledge and assign to Assignee and grant to Assignee a security interest
in Assignor' right, title, and interest in and to the securities and other
assets and all of them owned by Assignor and held by Assignee under an Agreement
dated March 18, 1996 (hereinafter referred to as "Agreement") and designated as
Investment Management Account Number 51-0341-00 (hereinafter referred to as
"Account").
1. It is understood and agreed by and between Assignor and Assignee that
Assignor shall have the right to withdraw from said Account under the Agreement
such securities as Assignor may determine to the extent and in the manner
permitted by said Agreement, provided that at all times the securities and other
assets remaining in said Account have a market value of no less than Six Hundred
Twenty-Five Thousand and 00/00 ($625,000.00) Dollars (hereinafter referred to as
the "Minimum Value") and that in the event the market value of the securities
and other assets remaining in said Account should decrease to less than the
Minimum Value, whether on account of withdrawal of securities, decline in market
price(s), or other reasons, Assignor will within 15 days after demand by
Assignee either (a) deposit in said Account sufficient additional securities or
other assets to restore the market value of said Account to at least the Minimum
Value or (b) make payment upon the Indebtedness to the satisfaction of Assignee.
<PAGE>
2. If the Assignor should fail to deposit as demanded by the Assignee or
upon the nonpayment of Indebtedness in accordance with its terms or as required
hereunder, then and in any such event all Indebtedness of the Assignor to the
Assignee shall thereupon become immediately due and payable without demand or
notice; and Assignor does hereby name, constitute and appoint Assignee
attorney-in-fact, in Assignor's name, place, and stead, to demand, receipt for
and receive from said Account the securities or other assets therein or any part
thereof, and to execute such stock powers or other instruments of transfer as
may be desirable or necessary, in the name of the Assignor or otherwise, to
effectually transfer such securities and to sell the same at public or private
sale subject to any notice requirement imposed by law, and to apply the proceeds
first to the payment of any reasonable expenses incurred by the Assignee
including a reasonable attorney's fee, and the to the payment of all
Indebtedness of the Assignor to the Assignee in such order of preference as
Assignee shall determine, and the Assignor covenants and agrees to remain liable
for and to pay forthwith upon demand any deficiency. The duty is to notify, if
required, shall be met if, at least five (5) days before the time of the sale or
other disposition, such notice is mailed, ordinary mail, postage prepaid, to the
Assignor at the address set forth above or such other address designated by the
Assignor.
3. The Assignor covenants and represents that the securities and other
assets now in said Account are free and clear of any and all liens or
encumbrances and that Assignor has not heretofore assigned or encumbered
Assignee's interest, or any part thereof, therein, and that the said account
created under the Agreement remains in full force and effect and agrees that the
Agreement will not be modified, revoked or in any manner changed without the
prior written consent of the Assignee except for withdrawals permitted by
Paragraph I.
4. It is further understood and agreed that so long as Assignor is not in
default under any of the terms of this instrument or of any Indebtedness,
Assignor shall be entitled to all dividends, whether payable in cash or
securities, and interest upon the assets in said Account.
5. Assignor does hereby consent that any action brought against Assignor
by reason of any liability of Assignor to Assignee may be brought in the New
York Supreme Court, Chemung County. Assignor hereby submits to the jurisdiction
of said court, consents to the application of New York law, and agrees that
service of process upon Assignor by certified mall, return receipt required,
shall be valid and sufficient.
<PAGE>
6. This Assignment is a continuing agreement and applies to all future as
well as to all existing transactions between the Assignor and the Assignee. It
shall be binding upon and inure to the benefit of the Assignee and Assignor and
their respective heirs, legal representatives: successors and assigns.
IN WITNESS WHEREOF, I have set my hand and seal this 1st day of May, 1998.
Assignor: Accepted by:
- --------------------------- ---------------------------------
Stuart Komer Chemung Canal Trust Company
<PAGE>
EXHIBIT (B)
April 24, 1998
CONFIDENTIAL
The Special Committee of the Board of Directors
Artistic Greetings Incorporated
One Komer Center
Elmira, NY 14902
Ladies and Gentlemen:
Artistic Greetings Incorporated (the "Company") has entered into an
Agreement and Plan of Merger (the "Agreement") with AGI Acquisition Co.
("Newco") and MDC Communications Corp. ("Parent") dated December 21, 1997,
pursuant to which Newco shall be merged with and into the Company (the
"Merger"). At the Effective Time (as defined in the Agreement) of the Merger,
each outstanding share of common stock, par value $0.10 per share of the Company
(the "Company Common Stock"), other than shares held in the Company's treasury,
will be converted into the right to receive $5.70 in cash (the "Merger
Consideration").
You have asked us whether or not, in our opinion, the proposed Merger
Consideration to be received by the unaffiliated shareholders of the Company is
fair to the unaffiliated shareholders of the Company from a financial point of
view. For the purposes of this opinion, "unaffiliated shareholders" means all of
the shareholders of the Company other than American Greetings Corporation,
Stuart Komer, Morry Weiss and Thomas C. Wyckoff.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed the Company's Annual Reports, Forms 10-K and related financial
information for the three fiscal years ended December 31, 1996, the
Company's Forms 10-Q and the related unaudited financial information for
the nine months ended September 30, 1996 and 1997;
(2) Reviewed certain information, including financial forecasts, relating to
the business, earnings, cash flow, assets and prospects of the Company
which were furnished to us by the Company;
(3) Conducted discussions with members of senior management of the Company
concerning its businesses and prospects;
(4) Reviewed the historical market prices and trading activity for the
Company Common Stock and compared them with that of certain other
publicly traded companies which we deemed to be relevant;
(5) Compared the results of operations of the Company with that of certain
other companies which we deemed to be relevant;
(6) Reviewed the Merger Consideration premium to the historical market
prices of the Company Common Stock and compared them to historical
transaction stock premiums paid by acquirors in transactions of similar
value;
(7) Reviewed the Agreement; and
(8) Reviewed such other financial studies and analyses and performed such
other investigations and took into account such other matters as we
deemed necessary, including our assessment of general economic, market
and monetary conditions.
In preparing our opinion, we have relied on the accuracy and completeness of
all information that was publicly available, supplied or otherwise communicated
to us by or on behalf of the Company, and we have not assumed any responsibility
to independently verify such information. With respect to the financial
<PAGE>
forecasts (the "Projections") examined by us, we have assumed, with your
consent, that they were reasonably prepared on bases reflecting the best
available estimates and good faith judgments of the Company's management as to
the future performance of the Company at the time of such preparation.
PaineWebber Incorporated noted that the Projections provided by the Company's
management (i) for the Fiscal Year Ended December 31, 1997 were significantly
higher than the actual results for the twelve month period ended September 30,
1997; (ii) had been prepared approximately eight months prior to delivery of the
Opinion; and (iii) had not been updated since that time. We have not undertaken,
and have not been provided with, an independent evaluation or appraisal of the
assets or liabilities (contingent or otherwise) of the Company and have assumed
that (i) the purchase method of accounting will be used, and (ii) all material
assets and liabilities (contingent or otherwise, known or unknown) of the
Company are as set forth in the consolidated financial statements.
Our Opinion is directed to the Special Committee of the Board of Directors
of the Company and does not constitute a recommendation to any shareholder of
the Company as to how any such shareholder should vote on the Merger. This
opinion does not address the relative merits of the Merger and any other
transactions or business strategies that may have been discussed by the Special
Committee of the Board of Directors of the Company as alternatives to the Merger
or the decision of the Special Committee of the Board of Directors of the
Company to proceed with the Merger. In addition, we were not requested to, and
have not, expressed any opinion as to the fairness, from a financial point of
view, of that sale of certain assets and liabilities of the non-check businesses
of the Company. Our opinion is based on economic, monetary and market conditions
on the date hereof.
In the ordinary course of its business, PaineWebber Incorporated may trade
the securities of the Company and Parent for its own account and for the
accounts of customers and, accordingly, may at any time hold long or short
positions in such securities.
PaineWebber Incorporated is currently acting as financial advisor to the
Special Committee of the Board of Directors of the Company in connection with
the Merger and will receive a fee in connection with rendering of this opinion
and upon the consummation of the Merger.
On the basis of, and subject to the foregoing, we are of the opinion that,
as of the date hereof, the proposed Merger Consideration to be received by the
unaffiliated shareholders of the Company pursuant to the Merger is fair to the
unaffiliated shareholders of the Company from a financial point of view.
This opinion has been prepared at the request of and for the information of
the Special Committee of the Board of Directors of the Company in connection
with the Merger and shall not be reproduced, summarized, described or referred
to, provided to any person or otherwise made public or used for any other
purpose without the prior written consent of PaineWebber Incorporated; provided,
however, that this letter may be reproduced in full in the Proxy Statement
relating to the Merger.
Very truly yours,
PAINEWEBBER INCORPORATED
