UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 7)*
MARIETTA CORPORATION
(Name of Issuer)
COMMON STOCK, $.01 PAR VALUE
(Title of Class of Securities)
567634100
(CUSIP Number)
Barry Florescue Charles I. Weissman
701 Southeast 6th Avenue, Suite 204 Shereff, Friedman, Hoffman & Goodman, LLP
Delray Beach, Florida 33483 919 Third Avenue
(407) 272-7746 New York, New York 10022
(212) 758-9500
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
August 26, 1995
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box |_|
Check the following box if a fee is being paid with the statement |_|. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE>
Schedule 13D Amendment No.7
Marietta Corporation
This Amendment No. 7 to the statement on Schedule 13D (as
defined below) amends and supplements the statement on Schedule 13D dated
September 26, 1994, as amended by Amendment No. 1 thereto dated November 2,
1994, Amendment No. 2 thereto dated January 20, 1995, Amendment No. 3 thereto
dated March 7, 1995, as amended and restated by Amendment No. 4 thereto dated
May 28, 1995, as amended by Amendment No. 5 thereto dated June 16, 1995, and
as amended by Amendment No. 6 thereto dated August 7, 1995 (together, the
"Schedule 13D") by Barry W. Florescue, 286 Bridge Street, Inc. ("286 Bridge
Street") and Florescue Family Corporation ("FFC", and collectively with Mr.
Florescue and 286 Bridge Street, the "Reporting Persons"), relating to the
common stock, $.01 par value per share (the "Common Stock"), of Marietta
Corporation (the "Issuer").
Item 4: Purpose of the Transaction
Item 4 of the Schedule 13D is hereby supplemented as
follows:
On August 26, 1995, BFMA Holding Corporation, a corporation
wholly owned by Mr. Florescue, and BFMA Acquisition Corporation, a
wholly-owned subsidiary of BFMA Holding Corporation, entered into an Agreement
and Plan of Merger with the Issuer to acquire all of the outstanding shares of
common stock (including all related stock options and warrants) of the Issuer
for $10.25 per share. The Agreement and Plan of Merger is attached hereto as
Exhibit I and incorporated herein by reference. In connection with the
execution of the Agreement and Plan of Merger, BFMA Holding Corporation
delivered commitment letters from Foothill Capital Corporation and Siena
Capital Partners, L.P. Copies of the letters are attached hereto as Exhibits J
and K, respectively, and incorporated herein by reference.
Item 6:
Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
Item 6 of the Schedule 13D is hereby supplemented as
follows:
On August 25, 1995 FFC and Mr. Florescue entered into an
agreement with the Issuer, pursuant to which FFC and Mr. Florescue agreed not
to acquire, by purchase or otherwise, beneficial or record ownership of more
than 14.99% of the then issued and outstanding shares of common stock of the
Issuer, except under certain circumstances. Further, FFC and Mr. Florescue
agreed, except under the circumstances set forth in the letter, not to (i)
propose a transaction between Mr. Florescue or any of his affiliates, on the one
hand, and the Issuer or its security holders, on the other hand, (ii) assist,
advise or encourage any other person in acquiring control of the Issuer or (iii)
solicit proxies relating to the election of directors of the Isser other than as
a nominee of the Board of Directors on behalf of the slate nominated by the
Board of Directors of the Issuer. The letter is attached hereto as Exhibit L and
incorporated herein by reference.
<PAGE>
Item 7: Material to filed as Exhibits
Item 7 of the Schedule 13D is hereby supplemented as
follows:
Exhibit I: Agreement and Plan of Merger, dated as of August 26, 1995, by and
among BFMA Holding Corporation, BFMA Acquisition Corporation and
the Issuer.
Exhibit J: Letter, dated August 26, 1995, by and between Foothill Capital
Corporation and BFMA Holding Corporation.
Exhibit K: Letter, dated August 26, 1995, by and between Siena Capital
Partners, L.P. and BFMA Holding Corporation.
Exhibit L: Agreement, dated August 25, 1995, by and among FFC, Mr. Florescue
and the Issuer.
<PAGE>
Signature
After reasonable 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: August 28, 1995
/s/ Barry W. Florescue
----------------------------
BARRY W. FLORESCUE
286 BRIDGE STREET, INC.
By: /s/ Barry W. Florescue
----------------------------
Name: Barry W. Florescue
Title: President
FLORESCUE FAMILY CORPORATION
By: /s/ Barry W. Florescue
----------------------------
Name: Barry W. Florescue
Title: President
=========================================
AGREEMENT AND PLAN OF MERGER
dated as of August 26, 1995,
by and among
BFMA HOLDING CORPORATION,
BFMA ACQUISITION CORPORATION
and
MARIETTA CORPORATION
=========================================
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made and entered into
as of August 26, 1995, by and among BFMA Holding Corporation, a Delaware
corporation (the "Parent"), BFMA Acquisition Corporation, a New York corporation
and a wholly-owned subsidiary of the Parent ("Newco"), and Marietta Corporation,
a New York corporation (the "Company").
WHEREAS, the respective Boards of Directors of the Parent, Newco and the
Company desire to effect, and have approved on the terms and subject to the
conditions of this Agreement, a business combination of the Company and Parent
in which Newco will merge with and into the Company (such merger being referred
to herein as the "Merger"), pursuant to which among other things, the holders of
the then outstanding shares of the common stock, $.01 par value (the "Shares"),
of the Company, and the holders of the then outstanding stock options of the
Company exercisable or convertible into Shares, will receive a price of $10.25
per Share, on a fully-diluted basis (and, in the case of options, $10.25 per
Share into which such options are convertible or exercisable, less any exercise
price or other payments payable by the holders thereof to the Company), in cash
without interest (the "Per Share Price");
WHEREAS, the respective Boards of Directors of the Parent, Newco and the
Company have duly approved the Merger and the Company's Board of Directors has
resolved to recommend its acceptance by the Company's shareholders.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, each intending to be legally bound, hereby agree as follows:
1. Definitions.
1.1 Defined Terms. As used herein, the following terms shall have
the following meanings:
Action: Defined in Section 6.9.
Affiliate: With respect to any Person, any director or
executive officer of such Person or any of its Subsidiaries and any member of
the immediate family of any such director or officer and any other Person who or
which, directly or indirectly, controls, is controlled by, or is under common
control with such Person or any of its Subsidiaries.
Affiliate Contracts: Defined in Section 4.17.
Agreement: This Agreement and Plan of Merger, including the
Exhibits and Schedules annexed hereto.
Assets: All Intangible and Other Property, Tangible Property
and Real Property.
BCL: The New York Business Corporation Law, as amended.
Benefit Plans: Defined in Section 4.16.
best knowledge or knowledge: When modifying a representation
and warranty made by a Person under this Agreement as to the existence or non-
existence of any fact or situation described therein, that the appropriate
Responsible Official of such Person has actual knowledge or has made reasonable
inquiry in determining the existence or non-existence of such fact or situation
as of the date such representation and warranty is made or deemed made except in
any representation or warranty wherein knowledge is stated to be without due
inquiry.
Business Day: Any day of the year on which banks are not
required or authorized to be closed in the State of New York.
CERCLA: The Comprehensive Environmental Response Compensation
and Liability Act, as amended, and the rules and regulations promulgated
thereunder.
Certificates: Defined in Section 3.11.
Change-in-Control: A Change-in-Control shall be deemed to have
occurred if a proxy contest for the election of directors of the Company results
in the persons constituting the Company Board immediately prior to the
initiation of such proxy contest ceasing to constitute a majority of the Company
Board upon the conclusion of such proxy contest.
Closing: Defined in Section 3.12.
Closing Date: Defined in Section 3.12.
Code: The Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
Commission: The Securities and Exchange Commission.
Commission Filings: Defined in Section 4.6.
Company: Defined in the prologue to this Agreement.
Company Board: The Board of Directors of the Company.
Company's Counsel: The law firm of Rubin Baum Levin Constant &
Friedman.
Company Group Member: The Company, its subsidiaries and its
predecessors and (i) each Person that is or was at any time within the preceding
five (5) Benefit Plan years a member of the same controlled group of
corporations (within the meaning of Section 414(b) of the Code) as the Company,
its subsidiaries or its predecessors, (ii) each trade or business, whether or
not incorporated, that is or was at any time within the preceding five (5)
Benefit Plan years under common control (within the meaning of Section 414(c) of
the Code) with the Company, its subsidiaries or its predecessors, and (iii)
each trade or business, whether or not incorporated, that is or was at any time
within the preceding five (5) Benefit Plan years a member of the same affiliated
service group (within the meaning of Sections 414(m) and (o) of the Code) as the
Company, its subsidiaries or its predecessors.
Consents: All governmental and third party consents, permits,
approvals, orders, authorizations, qualifications, and waivers necessary for the
consummation of the transactions contemplated by this Agreement or that
thereafter may be necessary for the Surviving Corporation or its subsidiaries to
continue to have the same interest as the interest of the Company and its
Subsidiaries immediately prior to the Effective Time in any Contract, License
and Permit or other license, permit, approval, order, authorization,
qualification or waiver.
Constituent Corporations: Defined in Section 3.1.
Contract: Any contract, agreement, mortgage, deed of trust,
bond, indenture, lease, license, note, franchise, certificate, option, warrant,
right, instrument or other similar document or agreement, whether written or
oral.
Dissenting Shares: Defined in Section 3.7.
Dollars or "$": The legal currency of the United States of
America.
Effective Time: Defined in Section 3.3.
Environmental Claim: With respect to any Person, any written
notice, claim or demand by any other Person alleging or asserting such Person's
liability for investigatory costs, cleanup costs, Governmental Authority
response costs, damages to natural resources or other property, personal
injuries, fines or penalties arising out of, based on or resulting from (a) the
presence, or release into the environment, of any Hazardous Material at any
location, whether or not owned by such Person, or (b) circumstances forming the
basis of any violation, or alleged violation, of any Environmental Law. The
term "Environmental Claim" shall include any claim by any Governmental Authority
for enforcement, cleanup, removal, response, remedial or other actions or
damages pursuant to any applicable Environmental Law, and any claim by any third
party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from the presence of hazardous
materials or arising from alleged injury or threat of injury to health, safety
or the environment.
Environmental Laws: Any Laws relating to the regulation or
protection of human health, safety or the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes into the
environment (including ambient air, soil, surface water, ground water, wetlands,
land or subsurface strata), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
Exchange Act: The Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
Fairness Opinion: Defined in Section 8.6.
Exchange Agent: Defined in Section 3.11.
Financing: Defined in Section 5.5.
GAAP: Generally accepted accounting principles set forth in the
opinions and pronouncements of the Financial Accounting Standards Board, applied
on a consistent basis and consistent with past practices.
Governmental Authority: Any United States or foreign
governmental authority, including all agencies, bureaus, commissions,
authorities or bodies of the federal government or any state, county, municipal
or local government, including any court, judge, justice or magistrate.
Hazardous Materials: Any pollutants, hazardous or toxic
materials, substances or wastes, including: petroleum and petroleum products
and derivatives; asbestos; radon; polychlorinated bi-phenyls; urea-formaldehyde
foam insulation; explosives; radioactive materials; laboratory wastes and
medical wastes; and any chemicals, materials or substances designated or
regulated as hazardous or as toxic substances, materials, or wastes, or
otherwise regulated, under any Environmental Law.
Indemnified Party: Defined in Section 6.9.
Indemnified Parties: Defined in Section 6.9.
Insurance: Defined in Section 4.10.
Intangible and Other Property: All Contracts, certificates of
deposit, bank accounts, securities, partnership or other ownership interests,
rights to receive money or property by assignment, future interests, claims and
rights against third parties, accounts receivable, notes receivable,
Intellectual Property, Software, prepaid expenses, acquisition costs and other
intangible property of any nature owned, leased, licensed, used or held for use,
directly or indirectly, by, on behalf of or for the account of a Person.
Intellectual Property: All patents, trademarks, trademark
rights, trade names, product designations, service marks, copyrights, and
applications for any of the foregoing, used, licensed, leased or owned, directly
or indirectly, by, on behalf of or for the account of a Person.
Judgment: Any judgment, writ, order, injunction, determination,
award or decree of or by any Governmental Authority.
Law: Any statute, ordinance, code, rule, regulation, order or
other law enacted, adopted, promulgated or applied by any Governmental
Authority.
Licenses and Permits: All licenses, permits, certificates,
approvals, franchises, registrations, accreditations or authorizations (i)
required by Law or (ii) issued to the Company or any of its Subsidiaries by a
Governmental Authority and used in their respective businesses, as currently
conducted.
Lien: Any security agreement, financing statement (whether or
not filed), security or other like interest, conditional sale or other title
retention agreement, lease or consignment or bailment given for security
purposes, lien, mortgage, deed of trust, indenture, pledge, constructive or
other trust or attachment.
Material Adverse Effect: An adverse change in the financial
condition, business or results of operations of the Company or any of its
Subsidiaries, or the Parent or Newco, as the case may be, which is material to
the Company and its Subsidiaries, taken as a whole, or Parent and Newco, taken
as a whole, as the case may be.
Merger: Defined in the prologue of this Agreement.
Nadolski Note: Defined in Section 3.10.
Newco: Defined in the prologue of this Agreement.
NPL: The National Priorities List under CERCLA.
Option: Defined in Section 3.8.
Option Plans: Defined in Section 3.8.
Other Filings: Defined in Section 2.2.
Parent: Defined in the prologue of this Agreement.
Parent's Counsel: The law firm of Shereff, Friedman, Hoffman &
Goodman, LLP.
Payment Event: Defined in Section 9.3(b).
Permitted Liens: Includes liens arising by operation of law in
favor of materialmen, mechanics, warehousemen, carriers, lessors or other
similar persons incurred by the Company in the ordinary course of business which
secure its obligations to such person, liens (excluding environmental liens)
securing taxes, assessments or governmental charges or levies not yet due, liens
(excluding environmental liens) securing taxes, assessments or government
charges or levies that are being contested in good faith and as to which
adequate reserves (determined in accordance with GAAP) have been provided, and
liens incurred or pledges and deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance, old-age
pensions and other social security benefits; provided, however, that the Company
is not in default with respect to any payment obligation with respect thereto;
provided further, however, that all such liens individually or in the aggregate
have no reasonable likelihood of having a Material Adverse Effect.
Per Share Price: Defined in the prologue of this Agreement.
Person: Any individual, trustee, corporation, general or
limited partnership, limited liability partnership, limited liability company,
joint venture, joint stock company, bank, firm, Governmental Authority, trust,
association, organization or unincorporated entity of any kind or nature
whatsoever.
Proxy Statement: Defined in Section 2.2.
Real Property: All realty, fixtures, easements, rights-of-way
and other interests (excluding Tangible Property) in real property, buildings,
improvements and construction-in-progress.
Responsible Official: With respect to any particular
representation or warranty of the Company or any of its Subsidiaries, the
corporate officer of the Company or a Subsidiary of the Company who, because of
his management and supervisory positions, is informed of the business and
affairs of the Company or such Subsidiary and, as a result, is suited to make
such representation and warranty of the Company set forth in this Agreement.
Returns: All returns, declarations and reports filed with a
taxing authority and all information returns and statements of any kind or
nature whatsoever filed with a taxing authority.
Rights: Defined in Section 3.6.
SARs: Defined in Section 3.8.
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
Seibert Note: Defined in Section 3.10.
Shares: Defined in the prologue of this Agreement.
Software: All electronic data processing systems, information
systems, computer software programs, program specifications, designs, charts,
procedures, input data, routines, data bases, report layouts, formats, record
file layouts, written manifestations (in both source code and object code form),
diagrams, functional specifications, narrative descriptions and flow charts, and
other related material, used, licensed, leased or owned, directly or indirectly,
by, on behalf of or for the account of a Person.
Special Meeting: Defined in Section 2.1.
Stock Purchase Plan: Defined in Section 3.9.
Subsidiary: With respect to any Person, any corporation,
association or other business entity of which more than fifty percent (50%) of
the issued and outstanding stock or equivalent thereof having ordinary voting
power is owned or controlled by such Person, by one or more Subsidiaries or by
such Person and one or more Subsidiaries or which a Person otherwise has the
power to control the management thereof.
Superior Offer: Defined in Section 6.2.
Surviving Corporation: Defined in Section 3.1.
Tangible Property: All cash, furnishings, machinery, equipment,
computer systems (hardware only), supplies, inventories, vehicles, books and
records and other tangible property and facilities of any kind or nature
whatsoever.
Taxes: All foreign, federal, state, county, local, municipal
and other taxes, levies, impositions, deductions, charges and withholdings,
including income, employment, property, ad valorem, sales and use taxes, and
shall include any interest, penalties or additions thereto.
Termination Agreements: Defined in Section 4.17.
Walsh Note: Defined in Section 3.10.
1.2 Use of Defined Terms. Any defined term used in the plural shall
refer to all members of the relevant class, and any defined term used in the
singular shall refer to any one or more of the members of the relevant class.
The use of any gender shall be applicable to all genders.
1.3 Accounting Terms. All accounting terms not otherwise defined in
this Agreement shall be construed in conformity with, and all financial data
required to be submitted by this Agreement shall be prepared in conformity with,
GAAP, except as expressly permitted by this Agreement.
1.4 Sections, Exhibits and Schedules. References in this Agreement
to Sections, Exhibits and Schedules are to Sections, Exhibits and Schedules of
and to this Agreement. The Exhibits and Schedules to this Agreement are hereby
incorporated herein by this reference as if fully set forth herein.
1.5 Miscellaneous Terms. The term "or" shall not be exclusive. The
terms "herein," "hereof," "hereto," "hereunder" and other terms similar to such
terms shall refer to this Agreement as a whole and not merely to the specific
article, section, paragraph or clause where such terms may appear. The term
"including" shall mean "including, but not limited to."
2. Special Meeting; Annual Meeting.
2.1 Special Meeting. In order to consummate the Merger, the
Company, acting through the Company Board, in accordance with applicable Law, at
the earliest practicable date, shall duly call, give notice of, convene and hold
a special meeting of shareholders of the Company (the "Special Meeting") for the
purpose of considering, adopting and approving this Agreement, the Merger and
the transactions contemplated hereby.
2.2 Proxy Statement.
(a) Subject to the terms and conditions of this Agreement,
at the earliest practicable date after the date hereof, the Company shall
prepare and, subject to the review and, with respect to information relating to
the Parent, Newco, their respective Affiliates or the operation of the Company
after the Effective Time, approval of the Parent (which review and approval
shall not be unreasonably withheld or delayed), file with the Commission the
Proxy Statement of the Company for the Special Meeting. Subject to the terms
and conditions of this Agreement, the Company shall use all reasonable efforts
to have the Proxy Statement cleared for mailing by the Commission. Subject to
the terms and conditions of this Agreement, promptly after the Commission has
approved the Proxy Statement for distribution to the shareholders of the
Company, the Company will mail the Proxy Statement to the shareholders of the
Company entitled to receive it, and will otherwise comply in all material
respects with all applicable legal requirements in connection with the vote of
shareholders at the Special Meeting. The term "Proxy Statement" as used herein
shall mean the proxy statement of the Company for the Special Meeting at the
time it is initially mailed, and all amendments or supplements thereto, if any,
similarly filed and mailed. Subject to the terms and conditions of this
Agreement, the Proxy Statement shall contain the recommendation of the Company
Board in favor of this Agreement and the Merger and the recommendation that the
shareholders of the Company vote for the adoption and approval of this Agreement
and the Merger. Subject to the terms and conditions of this Agreement, the
Company shall use all reasonable efforts to solicit proxies in connection with
the vote of shareholders with respect to the Merger and the Company shall
solicit such proxies in favor of the adoption and approval of this Agreement and
the Merger.
(b) The Parent and Newco shall, and shall cause their
respective Affiliates to, promptly furnish all information, and take such other
actions, as may reasonably be requested by the Company in connection with the
actions contemplated by this Section 2.2. The Proxy Statement, on the date
filed with the Commission and on the date first published, sent or given to the
Company's shareholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however, that the Company
makes no representation or warranty as to any information supplied by the Parent
or Newco, or their respective Affiliates, for inclusion in the Proxy Statement
or, with respect to information relating to the Parent, Newco, their respective
Affiliates or the operation of the Company after the Effective Time, approved by
the Parent for inclusion in the Proxy Statement; provided further, however, that
Parent and Newco make no representation or warranty as to any information not
supplied or approved by them for inclusion in the Proxy Statement. The Parent
and Newco represent and warrant that the information to be supplied or approved
by them for inclusion in the Proxy Statement shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Company (and
the Parent and Newco, with respect to information supplied by them for use in
the Proxy Statement) agrees promptly, and Parent and Newco shall cause their
respective Affiliates, to correct the Proxy Statement if and to the extent that
it shall have become false or misleading in any material respect and the Company
shall take all steps necessary to cause the Proxy Statement as so corrected to
be filed with the Commission and mailed to the Company's shareholders to the
extent required by applicable federal securities Laws.
(c) As soon as practicable after the date hereof, the
Company shall promptly and properly prepare and file any other filings of the
Company required under the Exchange Act or any other federal or state securities
Laws relating to the Merger and the transactions contemplated hereby (the "Other
Filings"), subject to review and, with respect to information relating to the
Parent, Newco, their respective Affiliates or the operation of the Company after
the Effective Time, approval of the Parent (which review and approval shall not
be unreasonably withheld or delayed). The Other Filings, on the date filed,
shall not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that the Company makes no representation or
warranty as to any information supplied by the Parent or Newco, or their
respective Affiliates, for inclusion in the Other Filings or, with respect to
information relating to the Parent, Newco, their respective Affiliates or the
operation of the Company after the Effective Time, approved by the Parent for
inclusion in the Other Filings; provided further, however, that Parent and Newco
make no representation or warranty as to any information not supplied or
approved by them for inclusion in the Other Filings. The Parent and Newco
represent and warrant that the information to be supplied by them for inclusion
in the Other Filings shall not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The Company (and the Parent or Newco, or their
respective Affiliates, with respect to information supplied by them for use in
the Other Filings) agrees promptly, and Parent and Newco shall cause their
respective Affiliates, to correct the Other Filings if and to the extent that
any of them shall have become false or misleading in any material respect.
(d) The Company shall notify the Parent promptly of the
receipt by the Company of any comments of the Commission and of any request by
the Commission for amendments or supplements to the Proxy Statement or by the
Commission or any other Governmental Authority with respect to any Other Filing
or for additional information and will supply the Parent with copies of all
correspondence between the Company and its representatives, on the one hand, and
the Commission or the members of its staff or any other appropriate Governmental
Authority, on the other hand, with respect to the Proxy Statement and any Other
Filings. The Company shall use all reasonable efforts to obtain and furnish the
information required to be included in the Proxy Statement and any Other
Filings. After the review and, with respect to information relating to the
Parent, Newco, their respective Affiliates or the operation of the Company after
the Effective Time, approval of the Parent (which review and approval shall not
be unreasonably withheld or delayed), the Company shall use all reasonable
efforts to respond promptly to any comments made by the Commission or any other
Governmental Authority with respect to the Proxy Statement and any Other Filing
and any preliminary version thereof and cause the Proxy Statement and related
form of proxy to be mailed to its shareholders at the earliest practicable date
after clearance of the Proxy Statement by the Commission; provided, however,
that the Company shall not be required to cause the Proxy Statement and the
related form of proxy to be mailed until such time as all of the conditions to
closing relating to the Financing, other than the completion of definitive
documents, have been satisfied.
2.3 Company Action. The Company represents that the Company Board
has duly adopted and approved the execution of this Agreement, including the
Merger, and resolved to recommend the adoption and approval of the Merger by the
Company's shareholders.
3. Merger.
3.1 Merger. At the Effective Time and subject to the terms and
conditions of this Agreement and the provisions of the BCL, the separate
existence of Newco shall thereupon cease and the Company shall continue as the
surviving corporation (the "Surviving Corporation"). Newco and the Company are
sometimes hereinafter referred to collectively as the "Constituent
Corporations."
3.2 Effect of the Merger. The separate corporate existence of the
Company, as the Surviving Corporation, with all its purposes, objects, rights,
privileges, powers, certificates and franchises, shall continue unimpaired by
the Merger. The Surviving Corporation shall succeed to all the Assets of the
Constituent Corporations and to all debts, choses in action and other interests
due or belonging to the Constituent Corporations and shall be subject to, and
responsible for, all the debts, liabilities, obligations and duties of the
Constituent Corporations with the effect set forth in Section 906 of the BCL.
3.3 Effective Time. Subject to the terms and conditions hereof, the
Merger shall be consummated as promptly as practicable after the satisfaction or
waiver of the conditions of this Agreement by duly filing an appropriate
Certificate of Merger in such form as is required by, and executed in accordance
with, the relevant provision of the BCL. The Merger shall be effective at such
time as the Certificate of Merger is duly filed with the Secretary of State of
the State of New York in accordance with the BCL or at such later time as is
specified in the Certificate of Merger (the "Effective Time").
3.4 Articles of Incorporation and By-Laws of the Surviving
Corporation.
(a) At the Effective Time and without any further action on
the part of the Company or Newco, the Articles of Incorporation of Newco, as in
effect at the Effective Time, shall be the Articles of Incorporation of the
Surviving Corporation.
(b) At the Effective Time and without further action on the
part of the Company or Newco, the By-laws of Newco, as in effect at the
Effective Time, shall be the By-laws of the Surviving Corporation.
3.5 Directors and Officers of the Surviving Corporation. At the
Effective Time, the directors of Newco immediately prior to the Effective Time
shall be the directors of the Surviving Corporation, each of such directors to
hold office, subject to the applicable provisions of the Articles of
Incorporation and By-laws of the Surviving Corporation, until the next annual
shareholders' meeting of the Surviving Corporation and until their successors
shall be duly elected or appointed and shall duly qualified. At the Effective
Time, the officers of the Surviving Corporation shall consist of the Persons
designated in writing by the Parent prior to the Closing who shall hold the
positions designated by the Parent, which officers shall be the officers of the
Surviving Corporation until their respective successors are duly elected or
appointed and qualified.
3.6 Conversion of Shares. At the Effective Time and by virtue of
the Merger and without any action on the part of the holders thereof:
(a) Each Share together with the associated right to
purchase shares of Series A Participating Preferred Stock (each a "Right"),
pursuant to the Rights Agreement, dated as of September 11, 1989 by and between
the Company and Continental Stock Transfer & Trust Company, as Rights Agent,
issued and outstanding immediately prior to the Effective Time (other than
Shares and Rights owned by Parent and Shares to be cancelled pursuant to
subparagraph (b) below, Dissenting Shares and Shares as outlined in Section 3.10
hereof) shall be converted into the right to receive the Per Share Price.
(b) Each Share (together with the associated Right) held in
the treasury of the Company and each Share (together with the associated Right)
owned by the Company, or by any direct or indirect Subsidiary of the Company,
shall be cancelled and retired without payment of any consideration therefor.
(c) Each share of common stock, par value $.01 per share, of
Newco issued and outstanding immediately prior to the Effective Time shall be
converted into one validly issued, fully paid and nonassessable share of common
stock, par value $.01 per share, of the Surviving Corporation.
3.7 Dissenting Shares.
(a) Notwithstanding the provisions of Section 3.6 or any
other provision of this Agreement to the contrary, Shares that are issued and
outstanding immediately prior to the Effective Time and are held by shareholders
who have not voted such Shares in favor of the approval and adoption of this
Agreement and who shall have properly demanded appraisal of such Shares in
accordance with the BCL (the "Dissenting Shares") shall not be converted into
the right to receive the Per Share Price at or after the Effective Time, unless
and until the holder of such Dissenting Shares shall have failed to perfect or
shall have effectively withdrawn or lost such right to appraisal and payment
under the BCL. If a holder of Dissenting Shares shall have so failed to perfect
or shall have effectively withdrawn or lost such right to appraisal and payment,
then, as of the Effective Time or the occurrence of such event, whichever last
occurs, such holder's Dissenting Shares shall be converted into and represent
solely the right to receive the Per Share Price, without any interest thereon,
as provided in Section 3.6 hereof.
(b) The Company shall give the Parent (i) prompt notice of
any written demands for appraisal, withdrawals of demands for appraisal and any
other instruments served pursuant to Section 910 (or any successor or
replacement) of the BCL which are received by the Company, and (ii) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under the BCL. The Company will not voluntarily make any payment
with respect to any demands for appraisal and will not, except with the prior
written consent of the Parent, settle or offer to settle any such demands.
3.8 Stock Options and Stock Appreciation Rights.
(a) As a result of the Merger, each option ("Option") which
has been granted under the Company's 1986 Incentive Stock Option Plan or 1986
Stock Option Plan (together, the "Option Plans") and which is outstanding at the
Effective Time, whether or not then exercisable, will be deemed converted into,
and the holder of each such Option will be entitled to receive from the Exchange
Agent upon surrender of the Option for cancellation, an amount of cash equal to
the product of the following:
(i) the positive difference, if any, between the Per
Share Price and the exercise price of each such Option; times
(ii) the number of Shares covered by such Option.
(b) As a result of the Merger, each Stock Appreciation Right
("SAR") which is outstanding at the Effective Time, whether or not then
exercisable, will be deemed converted into, and the holder of each such SAR will
be entitled to receive from the Exchange Agent upon surrender of such SAR for
cancellation, an amount of cash, which in no event shall be more than $630,000,
equal to the product of the following:
(i) the positive difference, if any, between the Per
Share Price and $7.00; times
(ii) the number of SARs.
3.9 Stock Purchase Plan. As a result of the Merger, the Company's
1986 Employee Stock Purchase Plan (the "Stock Purchase Plan") and the current
offering period thereunder (the "Offering Period") which commenced on April 1,
1995 and is scheduled to terminate on March 31, 1996 (the "Scheduled Termination
Date"), shall terminate, and each then participant in the Offering Period shall
be entitled to receive from the Exchange Agent, at the Effective Time, an amount
of cash equal to the difference between (a) the product of the following:
(i) the Per Share Price, times
(ii) the number of Shares which would have been
issued to such participant had such participant continued participation in the
Offering Period through the Scheduled Termination Date; and
(b) the amount remaining to be deducted from the
participant's compensation subsequent to the Effective Time in accordance with
the provisions of the Stock Purchase Plan had such participant continued
participating in the Offering Period through the Scheduled Termination Date.
3.10 Repayment of Promissory Notes. As a result of the Merger and
the transactions contemplated thereby, the promissory notes issued to the
Company by each of John Nadolski in the amount of $364,500 (the "Nadolski
Note"), Chester F. Seibert, Sr. in the amount of $121,500 (the "Seibert Note")
and Thomas D. Walsh in the amount of $121,500 (the "Walsh Note") each become
immediately due and payable.
3.11 Exchange of Certificates.
(a) Prior to the Effective Time, the Parent shall designate
a bank or trust company located in the United States with assets in excess of
$500,000,000 and reasonably satisfactory to the Company (the "Exchange Agent")
to act as exchange agent in effecting the exchange, for the Per Share Price
multiplied by the number of Shares formerly represented thereby, of certificates
(the "Certificates") that, prior to the Effective Time, represented Shares
entitled to payment pursuant to Section 3.6. Upon the surrender of each
Certificate and a properly executed letter of transmittal and any other required
documents and the issuance and delivery by the Exchange Agent of the Per Share
Price in exchange therefor, such Certificate shall forthwith be cancelled.
Until so surrendered and exchanged, each such Certificate (other than
Certificates representing Shares held by the Parent or the Company or any direct
or indirect subsidiary of the Parent or the Company, Dissenting Shares and
Shares governed by the provisions of Section 3.10) shall represent solely the
right to receive the total Per Share Price multiplied by the number of Shares
represented by such Certificate. Upon the surrender and exchange of such an
outstanding Certificate, the holder shall receive the total Per Share Price
without any interest thereon. If any cash is to be paid to a name other than
the name in which the Certificate representing Shares surrendered in exchange
therefor is registered, it shall be a condition to such payment or exchange that
the Person requesting such payment or exchange shall pay to the Exchange Agent
any transfer or other Taxes required by reason of the payment of such cash to a
name other than that of the registered holder of the Certificate surrendered, or
such Person shall establish to the satisfaction of the Exchange Agent that such
Tax has been paid or is not applicable. Notwithstanding the foregoing, neither
the Exchange Agent nor any party hereto shall be liable to a holder of Shares
for the Per Share Price delivered to a public official pursuant to applicable
abandoned property, escheat and similar Laws. In the event any Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the Person claiming such Certificate to be lost, stolen or
destroyed and the posting by such Person of a bond in such amount as the Parent
may reasonably require as an indemnity against any claim that may be made
against the Parent or the Surviving Corporation with respect to such
Certificate, the Parent shall cause the Exchange Agent to issue, in exchange for
such Certificate, the Per Share Price payable in respect thereof pursuant to
this Agreement.
(b) Simultaneously with the Closing, the Exchange Agent
shall be provided with an amount in cash (which amount shall not be more than
the amount of cash and cash equivalents on the consolidated financial statements
of the Company on such date, less amounts held by the Company or any Subsidiary
in escrow or in trust for Persons (including, without limitation, sales, accrued
payroll, use and withholding Taxes)) designated by the Parent in writing prior
to the Closing to allow for cash payments pursuant to Section 3.6 hereof (which
amount shall also take into account the Company's cash needs in the short term),
which cash shall be deposited with the Exchange Agent in trust for the benefit
of holders of the Shares and shall not be used for any purpose except as set
forth in this Agreement. Simultaneously with the Closing, the Parent shall, or
shall cause Newco to, provide the Exchange Agent with sufficient cash (after
taking into account the cash to be provided by the Company pursuant to the prior
sentence) to pay in full the balance of cash payments pursuant to Sections 3.6,
3.8 and 3.9 hereof, which cash shall be deposited with the Exchange Agent in
trust for the benefit of holders of the Shares, the Options and the SARs and
shall not be used for any purpose except as set forth in this Agreement.
(c) Promptly following the date which is twelve (12) months
after the Effective Time, the Exchange Agent shall return to the Surviving
Corporation all cash in its possession relating to the transactions described in
this Agreement, and the Exchange Agent's duties shall terminate. Thereafter,
each holder of a Certificate formerly representing a Share may surrender such
Certificate to the Surviving Corporation and (subject to applicable abandoned
property, escheat and similar Laws) receive in exchange therefor the Per Share
Price, without any interest thereon, but shall have no greater rights against
the Surviving Corporation than may be accorded to general creditors of the
Surviving Corporation under applicable Law. If any Certificates representing
Shares entitled to payment pursuant to Section 3.6 shall not have been
surrendered for such payment prior to the third anniversary of the Effective
Time (or prior to such earlier date on which any payment in respect thereof
would otherwise escheat to or become the property of any Governmental Authority)
the consideration payable in respect of such Shares shall, to the extent
permitted by applicable Law, become the property of the Surviving Corporation,
free and clear of all claims or interest of any Person previously entitled
thereto.
(d) Promptly after the Effective Time, the Exchange Agent
shall mail to each record holder of Certificates that immediately prior to the
Effective Time represented Shares a form of letter of transmittal and
instruction in form and substance reasonably acceptable to the Parent and the
Company, for use in surrendering such Certificates and receiving the Per Share
Price therefor.
(e) At and after the Effective Time, holders of Certificates
shall cease to have any rights as shareholders of the Company except for the
right to surrender such Certificates in exchange for the Per Share Price or to
perfect their right to receive payment for their Shares pursuant to the BCL and
Section 3.6 hereof, and there shall be no transfers on the stock transfer books
of the Company or the Surviving Corporation of any Shares that were outstanding
immediately prior to the Merger. If, after the Effective Time, Certificates are
presented to the Surviving Corporation or the Exchange Agent, they shall be
cancelled and exchanged for the Per Share Price, as provided in Section 3.6
hereof, subject to applicable Law and the provisions of this Agreement in the
case of Dissenting Shares.
3.12 The Closing. Subject to the terms and conditions of this
Agreement, the closing (the "Closing") of this Agreement and the transactions
contemplated hereunder (except for the filing of the Certificate of Merger with
the Secretary of State of the State of New York, which shall take place at the
offices of the Secretary of State of the State of New York) shall take place at
the offices of Shereff, Friedman, Hoffman & Goodman, LLP, 919 Third Avenue, New
York, New York, at 10:00 a.m., local time, on the date which is three (3)
Business Days after the satisfaction or waiver of all conditions to consummation
of the transactions contemplated hereby or at such other time and place as the
Company and the Parent shall mutually agree in writing (the day on which the
Closing takes place is referred to herein as the "Closing Date").
4. Representations and Warranties of the Company.
The Company hereby represents and warrants to the Parent and Newco as
follows:
4.1 Organization and Qualification. Each of the Company and its
Subsidiaries is a corporation duly incorporated, organized, validly existing and
in good standing under the Laws of its jurisdiction of incorporation, and the
Company and the Subsidiaries have the requisite corporate power to own their
respective properties and carry on their respective businesses as now being
conducted. Each of the Company and its Subsidiaries is duly qualified as a
foreign corporation to do business, and is in good standing, in each other
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary, except to the
extent that such failures to so qualify are not reasonably likely, individually
or in the aggregate, to have a Material Adverse Effect. An accurate, correct
and complete list, as of the date hereof, of all of the Subsidiaries of the
Company, the percentage owned by the Company and their jurisdictions of
incorporation is set forth in Schedule 4.1 annexed hereto. Other than the
Subsidiaries and Persons set forth in Schedule 4.1 annexed hereto and Persons
whose stock, bonds or other equity rights are held by the Company or any of its
Subsidiaries as an investment of cash, neither the Company nor any of its
Subsidiaries controls, directly or indirectly, or has any direct or indirect
equity participation in, any Person.
4.2 Capitalization. The authorized capital stock of the Company
consists of (a) 10,000,000 Shares and (b) 1,000,000 shares of preferred stock,
par value $.01 per share, none of which is outstanding. As of the date hereof,
(i) 3,596,049 Shares were issued and outstanding, (ii) 90,000 Shares subject to
SARs were issued and outstanding, (iii) 76,218 Shares subject to options to
purchase Shares under the Option Plans were issued and outstanding and (iv)
6,886 Shares subject to rights under the Stock Purchase Plan (a correct and
complete list of such options, including their respective exercise prices, is
set forth in Schedule 4.2 annexed hereto). Except as set forth in Schedule 4.2
annexed hereto and reflected in the prior sentence, there are no options,
warrants or other rights, agreements or commitments obligating the Company to
issue any shares of its capital stock or securities convertible into its capital
stock. On the Closing Date, no more than 3,686,158 Shares, calculated on a
fully-diluted basis, will be issued and outstanding. All Shares outstanding on
the date hereof are, and all Shares subject to issuance upon exercise or vesting
of any options or restricted stock rights, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be, duly authorized, validly issued, fully paid, non-assessable and free of
preemptive rights. All the outstanding capital stock of each of the
Subsidiaries is duly authorized, validly issued, fully paid and non-assessable
and is owned by the Company, free and clear of any Lien. There are no existing
options, warrants or other rights, agreements or commitments of any character
relating to the issued or unissued capital stock or other securities of any
Subsidiary.
4.3 Authority Relative to this Agreement. The Company has all
requisite corporate power and authority to enter into this Agreement and to
perform all of its obligations under this Agreement. The execution, delivery
and performance of this Agreement and the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Company (except for the need to obtain the affirmative vote of the Company's
shareholders for the transactions contemplated hereby). This Agreement has been
duly executed and delivered by the Company and assuming due authorization,
execution and delivery by the Parent and Newco, this Agreement constitutes the
valid and binding agreement of the Company enforceable in accordance with its
terms except as may be limited by bankruptcy, moratorium and insolvency Laws and
other Laws affecting the rights of creditors' generally and except as may be
limited by the availability of equitable remedies.
4.4 Compliance. Neither the execution and delivery of this
Agreement by the Company, nor the consummation by the Company of the
transactions contemplated hereby, nor compliance by the Company with any of the
provisions hereof will (i) violate, conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or result in a right of
termination or acceleration under, or result in the creation of any Lien upon
any of the Assets of the Company or any of its Subsidiaries under, any of the
terms, conditions or provisions of (x) the charter or By-laws of the Company or
any of its Subsidiaries, or (y) any Contracts to which the Company or any of its
Subsidiaries is a party or to which any of them or any of their respective
Assets is subject; or (ii) violate any Judgment applicable to the Company or any
of its Subsidiaries or any of their respective Assets, except for, in the case
of each of clauses (i)(y) and (ii) above, such violations, conflicts, breaches,
defaults, terminations, accelerations or creations of Liens (A) which are set
forth in Schedule 4.4 annexed hereto (or which arise between the date hereof and
the Closing) and (B) which are not reasonably likely, individually or in the
aggregate (together with the items set forth in Schedule 4.4 annexed hereto), to
have a Material Adverse Effect.
4.5 Consents; Transferability.
(a) Other than (i) in connection with or in compliance with
the Exchange Act, (ii) as set forth in Schedule 4.5 annexed hereto or (iii) in
connection with obtaining the adoption by and approval of the Company's
shareholders for the transactions contemplated hereby, no notice to, filing
with, or Consent of, any Person is necessary for the consummation by the Company
of the transactions contemplated by this Agreement, except for such Consents
which, if not obtained, are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect. Prior to the Closing, the Company
shall have given all notices, made all filings and obtained all Consents set
forth in Schedule 4.5 annexed hereto.
(b) Subject to obtaining the Consents set forth in Schedule
4.5 annexed hereto, the interest of the Company in all claims, Contracts,
licenses, leases and commitments and all of the other Assets in which the
Company has an interest shall not, upon the consummation of the transactions
contemplated hereby, including the Merger, be terminated or defaulted in any
manner whatsoever by said consummation except for such terminations or defaults
which are not reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect, and such claims, Contracts, licenses, leases,
commitments and Assets shall be the property of the Surviving Corporation
immediately thereafter, and the Surviving Corporation shall have all of the
right, title and interest which the Company had available to it prior to the
consummation of the Merger in and to such claims, Contracts, licenses, leases,
commitments and Assets except where the failure to obtain such right, title and
interest are not reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect. The interest of the Company in all claims, Contracts,
licenses, leases, commitments and its Assets is sufficient to allow the
Surviving Corporation to operate the business of the Company and its
Subsidiaries, as currently conducted.
(c) Schedule 4.5 annexed hereto sets forth all material
Contracts (other than purchase orders entered into in the ordinary course of
business) which terminate or become renewable at any time prior to December 31,
1995 and, except as set forth in Schedule 4.5 annexed hereto, to the best
knowledge of the Company, there are no facts or circumstances in existence which
are reasonably likely to prevent the Company from renewing each such renewable
Contract (other than purchase orders entered into in the ordinary course of
business).
4.6 Commission Filings. The Company has filed all required forms,
reports and other documents with the Commission since October 1, 1993
(collectively, the "Commission Filings"), each of which has complied in all
material respects with all applicable requirements of the Securities Act and the
Exchange Act. The Company has heretofore made available to the Parent all of
the Commission Filings. As of their respective dates, the Commission Filings
(including all exhibits and schedules thereto and documents incorporated by
reference therein) did not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements made, in
light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited consolidated interim
financial statements of the Company and its Subsidiaries included or
incorporated by reference in such Commission Filings have been prepared in
accordance with GAAP (except as may be indicated in the notes thereto or, in the
case of the unaudited statements, as permitted by Form 10-Q), complied as of
their respective dates in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission with
respect thereto, and fairly present the consolidated financial position of the
Company and its Subsidiaries as of the dates thereof and the consolidated income
and retained earnings and sources and applications of funds for the periods then
ended (subject, in the case of any unaudited interim financial statements, to
the absence of footnotes required by GAAP and normal year-end adjustments).
4.7 Absence of Undisclosed Liabilities. Except as set forth in
Schedule 4.7 annexed hereto or in the Commission Filings made since October 1,
1994 (including the financial statements and the notes thereto contained
therein), as of the date hereof, neither the Company nor any of its Subsidiaries
has any indebtedness, duties, responsibilities, liabilities, claims or
obligations of any nature, whether absolute, accrued, contingent or otherwise,
whether as principal, agent, partner, co-venturer, guarantor or in any capacity
whatsoever, related to or arising from the operation of its businesses or other
ownership, possession or use of its respective Assets, other than (i)
indebtedness, duties, responsibilities, liabilities, claims or obligations which
were incurred by the Company in the ordinary course of business or (ii)
indebtedness, duties, responsibilities, liabilities, claims or obligations which
would not require separate disclosure in the Company's Form 10-K.
4.8 Absence of Specified Changes. Except as set forth in Schedule
4.8 annexed hereto or disclosed in the Commission Filings, from October 1, 1994
(except as otherwise noted below) to the date hereof, there has not been with
respect to the Company or its Subsidiaries any:
(a) sales not in the ordinary course of business, which
sales have a value individually in excess of $50,000 or in excess of $100,000 in
the aggregate;
(b) material damage, destruction or loss, whether or not
insured, (i) affecting its business, as currently conducted or as proposed by
the Company to be conducted, or (ii) to its Assets;
(c) failure to maintain in full force and effect
substantially the same level and types of Insurance coverage as in effect on
October 1, 1994 for destruction, damage to, or loss of any of its Assets;
(d) change in accounting principles, methods or practices or
investment practices, including such changes as were necessary to conform with
GAAP;
(e) change in payment and processing practices or policies
regarding intercompany transactions;
(f) write-ups of the valuation of any Assets on its books or
records;
(g) declaration, setting aside, or payment of a dividend or
other distribution in respect of its capital stock, or any direct or indirect
redemption, purchase or other acquisition of any shares of its capital stock;
(h) issuance or sale of any shares of its capital stock or
of any other equity security or of any security convertible into or exchangeable
for its equity securities, except for the issuance of (i) options to purchase
5,000 Shares under the Company's Option Plans (exclusive of 90,000 Shares
cancelled subsequent to October 1, 1994), (ii) 12,077 Shares pursuant to the
Stock Purchase Plan and (iii) 90,000 SARs;
(i) amendment to its Articles of Incorporation or By-laws or
equivalent organizational documents;
(j) increase or commitment to increase the salary or other
compensation payable, or to pay any bonus, to (i) any of its employees, agents
or independent contractors who earn in excess of $100,000 per annum, other than
in the ordinary course of business, or (ii) any of its officers or directors who
earn in excess of $100,000 per annum, whether or not in the ordinary course of
business, except to the extent provided in such person's current Contract listed
on Schedule 4.17;
(k) execution of additional termination, severance or
similar agreements with its officers or directors, other than those listed on
Schedule 4.17;
(l) increase, reduction, draw-down or reversal of its
reserves (other than in accordance with GAAP; or
(m) agreement or understanding legally obligating it to take
any of the actions described above in this Section 4.8.
4.9 Taxes.
(a) All Tax Returns for all periods ending on or before the
Closing Date that are or were required to be filed by the Company or any of its
Subsidiaries on or before the Closing Date have been or shall be filed on a
timely basis (after taking into account all extensions which may be available)
in accordance with the Laws of the applicable Governmental Authority. All such
Tax Returns that have been filed were, when filed, and continue to be, true,
correct and complete in all material respects.
(b) Schedule 4.9 annexed hereto lists all United States
federal, state, local and foreign Tax Returns that have been filed from October
1, 1987 through the date hereof by the Company and each of its Subsidiaries.
Schedule 4.9 annexed hereto describes all adjustments to Tax Returns filed by,
or on behalf of, the Company and each of its Subsidiaries for all taxable
periods from October 1, 1987 through the date hereof that have been proposed by
any representative of any Governmental Authority, and the resulting Taxes, if
any, proposed to be assessed. Prior to the Closing, the Company will provide to
the Parent an accurate, correct and complete list of (i) all federal, state,
local and foreign Tax Returns that have been filed from the date hereof through
the Closing Date by the Company or any of its Subsidiaries and (ii) all
adjustments to Tax Returns filed by, or on behalf of, the Company or any of its
Subsidiaries for all taxable periods from October 1, 1987 through the Closing
Date not set forth in Schedule 4.9 annexed hereto that have been proposed by any
representative of any Governmental Authority, and the resulting Taxes, if any,
proposed to be assessed. All Taxes proposed to be assessed (plus interest,
penalties and additions to Tax that were or are proposed to be assessed thereon,
if any) as a result of any examinations have been paid, reserved against,
settled, or, as set forth in Schedule 4.9 annexed hereto, are being contested in
good faith by appropriate proceedings. Except as set forth in Schedule 4.9
annexed hereto, there are no outstanding waivers or extensions of any statute of
limitations relating to the assessment or collection of Taxes for which the
Company or any of its Subsidiaries may be liable and no Governmental Authority
has requested such a waiver or extension.
(c) Each of the Company and its Subsidiaries has paid, will
pay prior to the Closing Date or will make provision for the payment of all
Taxes that have or may become due for all periods ending on or before the
Closing Date, including all Taxes reflected on the Tax Returns referred to in
this Section 4.9, or in any assessment, proposed assessment or notice, either
formal or informal, received by the Company or any of its Subsidiaries, except
such Taxes, if any, as are set forth in Schedule 4.9 annexed hereto that are
being contested in good faith and as to which adequate reserves (determined in
accordance with GAAP) have been provided. The charges, accruals and reserves
with respect to Taxes on the consolidated books and records of the Company
(determined in accordance with GAAP) are adequate for Taxes of the Company and
its Subsidiaries. All Taxes that the Company or any of its Subsidiaries is or
was required by law to withhold or collect have been duly withheld or collected
and, to the extent required, have been paid to the appropriate Governmental
Authorities. There are no Liens with respect to Taxes upon any of the Assets of
the Company or any of its Subsidiaries (except for Permitted Liens).
(d) No consent under Section 341(f)(2) of the Code has been
filed with respect to any Assets held or acquired or to be acquired by the
Company or any of its Subsidiaries.
(e) None of the Assets owned by the Company or any of its
Subsidiaries are Assets that the Parent, the Surviving Corporation, the Company
or its Subsidiaries is or shall be required to treat as being owned by another
Person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue
Code of 1954, as amended and in effect immediately before the enactment of the
Tax Reform Act of 1986, or is "tax-exempt use property" within the meaning of
Section 168(h)(1) of the Code.
(f) None of the Company or any of its Subsidiaries is
currently or ever was included in a consolidated or combined Tax Return for
federal or state Tax purposes, other than a Tax Return in which only the Company
or its Subsidiaries were included. There are no existing and since October 1,
1987 there have not been any Tax sharing agreements or other Contracts providing
for the payment or allocation of Taxes to which the Company or any of its
Subsidiaries is a party.
(g) Except as set forth in Schedule 4.9 annexed hereto, none
of the Company or any of its Subsidiaries (i) has agreed to or been required to
make any adjustment pursuant to Section 481(a) of the Code, (ii) has knowledge
that the Internal Revenue Service has proposed any such adjustment or change in
accounting method with respect to it, or (iii) has an application pending with a
Governmental Authority requesting permission for any change in accounting
method.
(h) Except as set forth in Schedule 4.9, there is no
Contract or arrangement of the Company or any of its Subsidiaries covering any
Person that, individually or collectively with all other Contracts or
arrangements, as a consequence of this transaction could give rise to the
payment of any amount that would not be deductible as an excess parachute
payment by the Parent, the Surviving Corporation, the Company or its
Subsidiaries by reason of Section 280G of the Code.
4.10 Insurance. Schedule 4.10 annexed hereto sets forth, as of the
date hereof, an accurate, correct and complete list of all binders or policies
of fire, liability, product liability, directors' and officers' liability,
workers compensation, vehicular, unemployment and other insurance, self
insurance programs and fidelity bonds (collectively, "Insurance") maintained by
the Company or any of its Subsidiaries. Prior to the Closing, the Company shall
provide to the Parent an accurate, correct and complete list of all Insurance
policies or binders entered into by the Company or any of its Subsidiaries from
the date hereof through the Closing Date. All Insurance has been issued under
valid and enforceable policies or binders for the benefit of the Company and its
Subsidiaries, and all such policies or binders are in full force and effect and
none of the premiums therefor are past due. Each of the Company and its
Subsidiaries is in compliance with the terms of all such policies and binders in
all material respects. All Insurance is of such types and in such amounts and
for such risks, casualties and contingencies as is reasonable based upon the
business of the Company and its Subsidiaries, as currently conducted. As of the
date hereof, there are no pending or asserted claims outstanding against any
Insurance carrier as to which any insurer has denied liability, and there are no
pending or asserted claims outstanding under any Insurance policy or binder that
have been disallowed or improperly filed. The Company shall promptly notify the
Parent if, from the date hereof through the Closing Date, (i) any insurer has
denied liability of any pending or asserted claim outstanding against any
Insurance carrier or (ii) any pending or asserted claim outstanding under any
Insurance policy or binder is disallowed or improperly filed.
4.11 Contracts. (a) Schedule 4.11 annexed hereto sets forth an
accurate, correct and complete list of the following Contracts, in effect at any
time from October 1, 1994 through the date hereof, to which the Company or any
of its Subsidiaries is or was a party, by which any of them are bound or
pursuant to which the Company or any of its Subsidiaries is or was an obligor or
a beneficiary:
(i) Any material Contracts with respect to Real Property
(which restrains the ability of the Company or any of its Subsidiaries to use
such Real Property), Intangible and Other Property, all Affiliate Contracts
(whether or not material), Termination Agreements (whether or not material),
Benefit Plans (whether or not material), and labor matters;
(ii) Any Contract for capital expenditures or services by the
Company or any of its Subsidiaries which involves consideration payable by the
Company or any of its Subsidiaries in excess of $100,000 in any fiscal year;
(iii) Any Contract evidencing any indebtedness for borrowed
money in excess of $50,000 or obligation for the deferred purchase price of
Assets in excess of $100,000 (excluding normal trade payables) or guaranteeing
any indebtedness, obligation or liability in excess of $100,000;
(iv) Any material Contract wherein the Company or any of its
Subsidiaries has agreed to a non-competition provision;
(v) Any material joint venture, partnership, cooperative
arrangement or any other material Contract involving a sharing of profits;
(vi) Any material Contract with any Governmental Authority
other than for sale of merchandise in the ordinary course of business;
(vii) Any power of attorney, proxy or similar instrument
granted by or to the Company or any of its Subsidiaries; and
(viii) Any other Contract related to the business of the
Company or any of its Subsidiaries, as currently conducted, which provides for a
period of performance which extends beyond twelve (12) months from the date
hereof or is not cancelable upon ninety (90) days' notice.
Accurate, correct and complete copies of each such written Contract and written
summaries of each such oral Contract have been delivered by the Company to the
Parent or made available to the Parent at the Company's offices. Prior to the
Closing, the Company will provide to the Parent an accurate, correct and
complete list, and make available to the Parent at the Company's offices
accurate, correct and complete copies, of all written Contracts and written
summaries of each oral Contract entered into by the Company or any of its
Subsidiaries from the date hereof through the Closing Date of a type that is
described in this Section 4.11(a).
(b) Each Contract listed or referred to on Schedule 4.11 to
which the Company or any of its Subsidiaries is or was a party, by which any of
them is bound or pursuant to which the Company or any of its Subsidiaries is or
was an obligor or a beneficiary is in full force and effect, except as is not
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect. Each of the Company and its Subsidiaries has complied with all
commitments and obligations on its part to be performed or observed under each
such Contract, except for such noncompliance which is not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect. To the
knowledge of the Company without due inquiry, each party to each such Contract
other than the Company and its Subsidiaries has complied with all commitments
and obligations on its part to be performed or observed thereunder, except for
such noncompliance which is not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect. Except as set forth in Schedule
4.11 annexed hereto, none of the Company or any of its Subsidiaries has received
any notice of a default under any such Contract and no event or condition has
happened or presently exists which constitutes a default or, after notice or
lapse of time or both, would constitute a default under any such Contract,
except for such notices and defaults which are not reasonably likely,
individually or in the aggregate (together with the items set forth in Schedule
4.11 annexed hereto), to have a Material Adverse Effect. Except as set forth in
Schedule 4.11 annexed hereto, the Merger will not be considered an assignment of
any of the Contracts.
4.12 Real Property. (a) Schedule 4.12 annexed hereto and the
Commission Filings set forth, as of the date hereof, a correct and complete list
of all Real Property owned, leased or subleased by the Company or any of its
Subsidiaries. The Company or its Subsidiaries are the sole and exclusive legal
and equitable owners of all right, title and interest in, and have good,
marketable and insurable title to, all of the Real Property set forth on
Schedule 4.12 annexed hereto as being owned by the Company or any of its
Subsidiaries, free and clear of all Liens, except as set forth on Schedule 4.12,
the Commission Filings and Permitted Liens. Except as set forth in Schedule
4.12 annexed hereto, and except for changes occurring between the date hereof
and the Closing Date which are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect, all Real Property owned, leased or
subleased by the Company or any of its Subsidiaries is in condition and repair
adequate for its current use, is suitable for the purposes for which it is
presently being used and is adequate to meet all present requirements of the
business of the Company and its Subsidiaries, as currently conducted. Except as
set forth in Schedule 4.12 annexed hereto, and except for changes occurring
between the date hereof and the Closing Date which are not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect, the Company
or its Subsidiaries have been in peaceable possession of the premises covered by
each Real Property lease or sublease since the commencement of the original term
of such lease or sublease.
(b) Except for Real Property leases and subleases which
expire by their terms between the date hereof and the Closing Date which are not
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect, each of the Real Property leases and subleases (and leases underlying
such subleases) is in full force and effect and contains no terms other than the
terms contained in the copies heretofore delivered to the Parent or made
available to the Parent at the Company's offices. Each of the Company and its
Subsidiaries has complied with all commitments and obligations on its part to be
performed or observed under each Real Property lease or sublease, except for
such noncompliance which is not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect. To the knowledge of the Company
without due inquiry, each party to each Real Property lease or sublease other
than the Company and its Subsidiaries has complied with all commitments and
obligations on its part to be performed or observed thereunder, except for such
noncompliance which is not reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect. To the knowledge of the Company, none of the
Company nor any of its Subsidiaries has received any notice of a default, offset
or counterclaim under any Real Property lease or sublease (or lease underlying
such sublease) and, to the knowledge of the Company, no event or condition has
happened or presently exists which constitutes a default or, after notice or
lapse of time or both, would constitute a default under any Real Property lease
or sublease (or lease underlying such sublease), except for such notices,
defaults, offsets or counterclaims which are not reasonably likely, individually
or in the aggregate, to have a Material Adverse Effect. There is no Lien upon
any leasehold interest of the Company or any of its Subsidiaries under any Real
Property lease or sublease, to the best knowledge of the Company. Except as set
forth in Schedule 4.12 annexed hereto, the Merger will not be considered an
assignment of any of the Real Property leases (requiring the consent or approval
by another Person) and subleases and shall not constitute a default under any of
the Real Property leases or subleases.
(c) Except for changes occurring between the date hereof and
the Closing Date which are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect, to the best knowledge of the
Company, there are no pending or threatened actions or proceedings (including
condemnation and foreclosure) which could adversely affect the Real Property or
any of the Real Property leases or subleases against the Company or any of its
Subsidiaries and, to the best knowledge of the Company, there are no such
actions or proceedings against other parties. There are no violations of any
Law affecting the Real Property leased or subleased by the Company or any of its
Subsidiaries which are reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect.
(d) Except for changes occurring between the date hereof and
the Closing Date which are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect, to the knowledge of the Company
without due inquiry, there are no defaults by the landlords under any of the
Real Property leases or subleases and such landlords have performed all of their
obligations thereunder to the extent that such performance was to be completed
heretofore. Neither the Company nor any of its Subsidiaries has waived any
obligation of any landlord or any right under any of the Real Property leases or
subleases, except as set forth in any written agreement disclosed to the Parent
together with the leases and subleases.
4.13 Tangible Property. (a) The Company or its Subsidiaries have
good and marketable title to all of the Tangible Property owned by the Company
or any of its Subsidiaries, free and clear of all Liens, except for Commission
Filings and Permitted Liens. Except as set forth in Schedule 4.13 annexed
hereto, all Tangible Property in use by the Company or any of its Subsidiaries
is in good operating condition and repair (reasonable wear and tear excepted),
is suitable for the purposes for which it is presently being used and is
adequate to meet all present requirements of the business of the Company and its
Subsidiaries, as currently conducted.
(b) Each of the Tangible Property leases is in full force
and effect, except as the same is not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect. Each of the Company and its
Subsidiaries has complied with all commitments and obligations on its part to be
performed or observed under each Tangible Property lease or sublease, except for
such noncompliance which is not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect. None of the Company or any of its
Subsidiaries has received any notice of a default, offset or counterclaim under
any Tangible Property lease, and no event or condition has happened or presently
exists which constitutes a default or, after notice or lapse of time or both,
would constitute a default under any Tangible Property lease, except for such
notices, defaults, offsets or counterclaims which are not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect.
4.14 Environmental Matters. (a) Except for Environmental Claims
which would not, individually or in the aggregate, have a Material Adverse
Effect or as otherwise disclosed in the Commission Filings or on Schedule 4.14,
no Judgment has been issued since January 1, 1987, no Environmental Claim has
been filed since January 1, 1987 and no penalty has been assessed, and the
Company is not aware of any investigation or review which has occurred or is
pending or threatened against the Company or any of its Subsidiaries, by any
Governmental Authority with respect to (i) any alleged failure by the Company or
any of its Subsidiaries to have any License and Permit required under applicable
Environmental Laws, (ii) any Environmental Laws or (iii) any generation,
treatment, storage, recycling, transportation, discharge, disposal or release of
any Hazardous Materials generated by the Company or any of its Subsidiaries,
and, furthermore, to the best knowledge of the Company, there are no facts or
circumstances in existence which could form the basis for any such Judgment,
Environmental Claim or penalty.
(b) None of the Company or any of its Subsidiaries owns,
operates or leases a treatment, storage or disposal facility requiring a permit
under the Resource Conservation and Recovery Act, as amended, or under any other
comparable state or local Law; and, without limiting the foregoing, except as
are not reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect, (i) no polychlorinated bi-phenyl is or has been brought, (ii) no
asbestos or asbestos-containing material is or has been brought, (iii) no
underground storage tanks or surface impoundments for hazardous materials,
active or abandoned, have been installed or operated by the Company or any of
its Subsidiaries and (iv) no Hazardous Material has been released in a quantity
reportable under, or in violation of, any Environmental Law or otherwise
released, in the cases of clauses (i) through (iv), at, on or under any site or
facility now owned, operated or leased or to the knowledge of the Company
without due inquiry previously owned, operated or leased by the Company or any
of its Subsidiaries.
(c) None of the Company or any of its Subsidiaries has
transported or arranged for the transportation of any Hazardous Material to any
location that is (i) listed on the NPL, (ii) listed for possible inclusion on
the NPL or any similar state or local list by the Environmental Protection
Agency or similar state or local Governmental Authority or (iii) the subject of
enforcement actions by any Governmental Authority that may lead to Environmental
Claims against the Company or any of its Subsidiaries.
(d) No Hazardous Material generated by the Company or any of
its Subsidiaries has been recycled, treated, stored, disposed of or released by
the Company or any of its Subsidiaries at any location in violation of any
applicable Environmental Law.
(e) No notification of a release of Hazardous Materials has
been registered or filed by or on behalf of the Company or any of its
Subsidiaries and no site or facility now owned, operated or leased or to the
knowledge of the Company without due inquiry previously owned, operated or
leased by the Company or any of its Subsidiaries is listed or proposed for
listing on the NPL or any similar list of sites requiring investigation or
clean-up.
(f) No Liens have arisen under or pursuant to any
Environmental Law on any site or facility now owned, operated or leased or to
the knowledge of the Company without due inquiry previously owned, operated or
leased by the Company or any of the Subsidiaries, and no Governmental Authority
action has been taken or is in process that could subject any such site or
facility to such Liens, and none of the Company or any of its Subsidiaries would
be required to place any notice or restriction relating to the presence of
Hazardous Materials at any site or facility owned by it in any deed to the Real
Property on which such site or facility is located.
(g) All environmental investigations, studies, audits,
tests, reviews or other analyses conducted by, or that are in the possession of,
the Company or any of its Subsidiaries relating to any site or facility now or
previously owned, operated or leased by the Company or any of its Subsidiaries
have been delivered to the Parent or made available to the Parent at the
Company's offices.
4.15 Intangible and Other Property. (a) Schedule 4.15 annexed
hereto sets forth an accurate, correct and complete list, as of the date hereof,
of all material Intellectual Property of the Company or any of its Subsidiaries.
Unless specifically noted in Schedule 4.15 annexed hereto, the Company and its
Subsidiaries owns, is licensed or otherwise has the right to use all material
Intangible and Other Property used in the business of the Company and its
Subsidiaries, as presently conducted by the Company, except for such Intangible
and Other Property the loss of the use of which is not reasonably likely,
individually or in the aggregate (together with the items set forth in Schedule
4.15 annexed hereto), to have a Material Adverse Effect.
(b) Unless specifically noted in Schedule 4.15 annexed
hereto, (i) to the knowledge of the Company, without due inquiry the use of the
Intangible and Other Property by the Company or any of its Subsidiaries does not
infringe upon or otherwise violate the rights of any third party in or to such
Intangible and Other Property and (ii) since October 1, 1993 no claim has been
asserted by any Person against the Company or its Subsidiaries that the use of
any item of Intangible and Other Property infringes or violates the rights of
such Persons, except for such infringements, violations or claims which are not
reasonably likely, individually or in the aggregate (together with the items set
forth in Schedule 4.15 annexed hereto), to have a Material Adverse Effect. The
Merger will not be considered an assignment of any of the Intangible or Other
Property.
4.16 Employee Benefit Plans.
(a) Benefit Plans. Schedule 4.16 annexed hereto sets forth
a correct and complete list (including the name of the plan, the employee class
covered thereunder, the annual contribution by the Company and, in the case of
profit-sharing plans, the payments made by the Company to such plan during the
last five (5) fiscal years) of all "employee benefit plans" (as defined in
Section 3(3) of ERISA), bonus, profit sharing, deferred compensation, incentive
or other compensation plans or arrangements, and other employee fringe benefit
plans, whether funded or unfunded, qualified or unqualified, maintained or
contributed to by any of the Company Group Members in the current year or, to
the extent there may be any liability, in the prior five (5) Benefit Plan years
for the benefit of any of their respective directors, officers or employees or
other Persons (all the foregoing are collectively referred to herein as the
"Benefit Plans"). All Benefit Plans, related trust Contracts or annuity
Contracts (or any other funding instrument) are in full force and effect.
Except as set forth in Schedule 4.16 annexed hereto, no Benefit Plan which had
previously been in effect has been terminated.
(b) Funding. All contributions to, and payments from, the
Benefit Plans that may have been required to be made in accordance with the
Benefit Plans have been made in a timely manner during the prior five (5)
Benefit Plan years. All such contributions to the Benefit Plans for any period
ending before the Closing that are not yet required to be made shall be properly
accrued. No Benefit Plan is a "defined benefit plan" within the meaning of
Section 3(35) of ERISA.
(c) Compliance With the Code and ERISA. All necessary
governmental approvals for the Benefit Plans have been obtained. Each of the
Company Group Members and each Benefit Plan (and any related trust agreement or
annuity Contract or any other funding instrument) complies currently, and has
complied in the past, both as to form and operation, with the provisions of all
Laws applicable to Benefit Plans, except for such noncompliance which could not,
individually or in the aggregate, in the sole good faith opinion of the Parent,
have a Material Adverse Effect.
(d) Administration. Each Benefit Plan has been administered
in compliance, in all material respects, with the requirements of the Code and
ERISA. All reports, Returns and similar documents with respect to the Benefit
Plans required to be filed since the commencement of the Benefit Plans with any
Government Authority or distributed to any Benefit Plan participant have been
duly and timely filed or distributed (after taking into account all extensions
and deferral rights), except for such failure to file or distribute which could
not individually or in the aggregate, in the sole good faith opinion of the
Parent, have a Material Adverse Effect. There are no investigations by any
Governmental Authority, termination proceedings or other claims (except claims
for benefits payable in the normal operation of the Benefit Plans), suits or
proceedings against or involving any Benefit Plan or asserting any rights or
claims to benefits under any Benefit Plan pending or, to the best knowledge of
the Company, threatened that could give rise to any liability in any material
respect to any of the Company Group Members, or the directors, officers or
employees of the Company or any of its Subsidiaries or a trustee, administrator
or other fiduciary of any trusts created under any Benefit Plan.
(e) Prohibited Transactions. No "prohibited transaction"
(as defined in Section 4975 of the Code or Section 406 of ERISA) has ever
occurred which involves the Assets of any Benefit Plan and which could subject
to a material extent any of the Company Group Members, or any of the directors,
officers or employees of the Company or any of its Subsidiaries, or a trustee,
administrator or other fiduciary of any trusts created under any Benefit Plan,
to the tax or penalty on prohibited transactions imposed by Section 4975 of the
Code or the sanctions imposed under Title I of ERISA. Neither the Company Group
Members nor, to the best knowledge of the Company, the directors, officers or
employees of the Company or any of its Subsidiaries, a trustee, administrator or
other fiduciary of any Benefit Plan, nor any agent of any of the foregoing, has
ever engaged in any transaction or acted or failed to act in a manner which
could subject any of the Company Group Members, their businesses, the Surviving
Corporation or the Parent to any liability for breach of fiduciary duty under
ERISA or any other applicable Law, except for such liability which could not,
individually or in the aggregate, in the sole good faith opinion of the Parent,
have a Material Adverse Effect.
(f) Multiemployer Plans. None of the Benefit Plans is, and
none of the Company Group Members has ever been a party to, a "multiemployer
pension plan" as defined in Section 3(37) of ERISA.
(g) Medical or Death Benefits. No Benefit Plan, including
any welfare plan (as defined in Section 3(1) of ERISA), maintained by any
Company Group Member provides medical or death benefits with respect to current
or former employees beyond their termination of employment (other than coverage
mandated by Law). Each such welfare plan to which Section 601-609 of ERISA and
Section 4980B of the Code apply has been administered in compliance in all
material respects, with such sections.
(h) Compensation. Except for stock option agreements and as
set forth in Schedule 4.17 annexed hereto, no Contract entitles any individual
to severance or termination pay or accelerates the time of payment and vesting,
or increases the amount of compensation due, or benefits payable under any
Benefit Plan with respect to, any Person.
4.17 Labor Matters.
(a) Affiliate Contracts. Schedule 4.17 annexed hereto sets
forth, as of the date hereof, a correct and complete list (including the name of
the parties, term and rate of compensation) of all Contracts (other than stock
option agreements) between the Company or any of its Subsidiaries and any
executive officer and director of the Company or any of its Subsidiaries, or
Affiliates of any of the foregoing (collectively, "Affiliate Contracts"). Prior
to the Closing, the Company will provide to the Parent a correct and complete
list of all Affiliate Contracts entered into by the Company or any of its
Subsidiaries from the date hereof through the Closing Date.
(b) Termination Agreements; Compensation. Schedule 4.17
annexed hereto sets forth a correct and complete list of all termination,
severance, or similar agreements with the Company's officers or directors (the
"Termination Agreements") in effect as of the date hereof to which the Company
or any of its Subsidiaries is or may be bound or affected and under which the
Company or any of its Subsidiaries have any remaining obligations. Schedule
4.17 annexed hereto sets forth a correct and complete list of the fifteen (15)
most highly compensated employees of the Company or any of its Subsidiaries
(including bonuses, commissions and deferred compensation) for each of the
Company's 1993 and 1994 fiscal years.
(c) Labor Contracts; Disputes. There are no
controversies pending or, to the best knowledge of the Company, threatened
involving the employees of the Company or any of its Subsidiaries and, except as
set forth on Schedule 4.17 annexed hereto, there are no collective bargaining or
other union Contracts to which the Company or any of its Subsidiaries is a party
or by which the Company or any of its Subsidiaries may be bound. None of the
Company or any of its Subsidiaries has suffered or sustained any work stoppage
and, to the best knowledge of the Company, no such work stoppage is threatened.
To the best knowledge of the Company, no union organizing, election or other
activities involving any employees of the Company or any of its Subsidiaries are
in progress or threatened.
4.18 Customers and Suppliers. Schedule 4.18 annexed hereto sets
forth an accurate, correct and complete list of the twenty (20) largest
customers (in terms of gross revenues) of the Company and its Subsidiaries, on a
consolidated basis, for fiscal years 1993, 1994 and 1995 (year-to-date) and the
ten (10) largest suppliers (in terms of purchases) to the Company and its
Subsidiaries, on a consolidated basis, for fiscal years 1992, 1993 and 1994.
4.19 Inventory. All inventory of the Company and its
Subsidiaries was acquired or manufactured in the ordinary course of business and
is usable and saleable in the ordinary course of such business or is otherwise
recorded on the books and records of the Company in accordance with GAAP. The
Company and its Subsidiaries have good and valid title to the inventory, free
and clear of all Liens.
4.20 Accounts Receivable. All accounts receivable of the Company and
its Subsidiaries reflected on the balance sheet as at the date set forth in the
most recent Commission Filings and all accounts receivable of the Company and
its Subsidiaries arising subsequent to the date thereof have arisen in the
ordinary course of business of the Company and its Subsidiaries and, to the best
knowledge of the Company, are subject to no defenses, offsets or counterclaims,
other than reserves reflected on the balance sheet as at the most recent
Commission Filings.
4.21 Compliance With Laws. Each of the Company and its Subsidiaries,
complies with all Laws applicable to such Company or Subsidiary, its business
and its Assets, except for such noncompliance which is not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect. As of the
date hereof, there are no unsatisfied Judgments applicable to the Company or any
of its Subsidiaries, their respective businesses and their respective Assets
(and having any current or future effect on the Company or any of its
Subsidiaries). The Company and its Subsidiaries are in compliance with all
Judgments applicable to the Company or any of its Subsidiaries, their respective
businesses and their respective Assets, except for such noncompliance which is
not reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect.
4.22 Licenses and Permits. Schedule 4.22 annexed hereto contains an
accurate, correct and complete list of all Licenses and Permits which are
material to the business of the Company and its Subsidiaries, as currently
conducted by the Company. All such Licenses and Permits are valid and in full
force and effect and there are no pending or, to the best knowledge of the
Company, threatened proceedings which could result in the termination,
revocation, limitation or impairment of any of such Licenses and Permits, except
for such terminations, revocations, limitations or impairments which are not
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect. The Licenses and Permits are sufficient to enable the Company and its
Subsidiaries to own and conduct their business, as currently conducted by the
Company.
4.23 Legal Proceedings. There is no action, suit, proceeding,
complaint, charge, Tax or other audit, investigation or arbitration or other
method of settling disputes or disagreements by or before any Governmental
Authority pending or, to the best knowledge of the Company, threatened against
or affecting the Company or any of its Subsidiaries or their respective Assets,
except as summarized in Schedule 4.23 annexed hereto or in the Commission
Filings, and except as the same is not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect. Except as summarized on Schedule
4.23 or disclosed in the Commission Filings, on the Closing Date, there will be
no action, suit, proceeding, complaint, charge, Tax or other audit,
investigation or arbitration or other method of settling disputes or
disagreements by or before any Governmental Authority pending or, to the best
knowledge of the Company, threatened against or affecting the Company or any of
its Subsidiaries or their respective Assets, except as the same is not
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect. There is, and at the Closing Date there will be, no action, suit,
proceeding, complaint, charge, Tax or other audit, investigation or arbitration
or other method of settling disputes or disagreements by or before any
Governmental Authority which questions the validity of this Agreement or any
action taken or to be taken by the Company or any of its Subsidiaries in
connection with the transactions contemplated hereby. Neither the Company, its
Subsidiaries nor any of the Assets of the Company or its Subsidiaries are
subject to any Judgment which restricts the ability of the Company or any of its
Subsidiaries to consummate the Merger or, except as summarized in Schedule 4.23
annexed hereto, to operate the business of the Company and its Subsidiaries, as
currently conducted.
4.24 No Brokers. Except as set forth in the Commission Filings,
neither the Company nor any of its Subsidiaries has entered into any Contract,
arrangement or understanding with any Person or incurred any liability which
could result in the obligation of any Person to pay any finder's fees, brokerage
or agent's commissions or other like payments in connection with this Agreement
or the transactions contemplated hereby.
4.25 Disclosure. No representation, warranty or statement made by
the Company in this Agreement, the Exhibits and the Schedules, or in any other
material furnished or to be furnished by the Company to the Parent or its
representatives, financing sources, attorneys and accountants, pursuant to this
Agreement or the transactions contemplated hereby, contains or shall contain any
untrue statement of a material fact, or omits or shall omit to state a material
fact required to be stated herein or therein or necessary to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not misleading.
4.26 Books and Records. The books of account and other financial
records of the Company and its Subsidiaries are accurate, correct and complete
in all material respects. The minute books of each of the Company and its
Subsidiaries contain accurate, correct and complete records of the respective
charters (as amended or restated) and By-laws (as amended or restated) and
accurately reflect all corporate action of the shareholders and the Board of
Directors of such Company or Subsidiary.
5. Representations and Warranties of the Parent and Newco.
The Parent and Newco hereby represent and warrant to the Company as
follows:
5.1 Organization and Qualification. The Parent is a corporation
duly incorporated, organized, validly existing and in good standing under the
Laws of the State of Delaware, and Newco is a corporation duly incorporated,
organized, validly existing and in good standing under the Laws of the State of
New York. Each of the Parent and Newco has the requisite corporate power to own
its properties and carry on its business as now being conducted. Each of the
Parent and Newco is duly qualified as a foreign corporation to do business, and
is in good standing, in each other jurisdiction where the character of its
properties owned or held under lease or the nature of its activities makes such
qualification necessary, except to the extent that any such failure so to
qualify is not reasonably likely, individually or in the aggregate, to have a
material adverse effect on the business, Assets, operations or financial
condition of the Parent or Newco.
5.2 Authority Relative to this Agreement. Each of the Parent and
Newco has all requisite corporate power and authority to enter into this
Agreement and to perform all of its obligations under this Agreement. The
execution, delivery and performance of this Agreement and the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of each of the Parent and Newco. This Agreement has been duly
executed and delivered by the Parent and Newco and assuming due authorization,
execution and delivery by the Company, this Agreement constitutes the valid and
binding agreement of the Parent and Newco enforceable in accordance with its
terms, except as may be limited by bankruptcy, moratorium and insolvency Laws
and other Laws affecting the rights of creditors' generally and except as may be
limited by the availability of equitable remedies.
5.3 Compliance. Neither the execution and delivery of this
Agreement by the Parent or Newco, nor the consummation by the Parent or Newco of
the transactions contemplated hereby, nor compliance by the Parent and Newco
with any of the provisions hereof will (i) violate, conflict with, or result in
a breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in a
right of termination or acceleration under, or result in the creation of any
Lien upon any of the Assets of the Parent or Newco under, any of the terms,
conditions or provisions of (x) the charter or By-laws of the Parent or Newco,
or (y) any Contracts to which the Parent or Newco is a party or to which the
Parent or Newco or their respective Assets may be subject; or (ii) violate any
Judgment applicable to the Parent or Newco or their respective Assets, except
for, in the case of each of clauses (i)(y) and (ii) above, such violations,
conflicts, breaches, defaults, terminations, accelerations or creations of Liens
which are set forth on Schedule 5.3 annexed hereto and which are not reasonably
likely, individually or in the aggregate (together with the items set forth in
Schedule 5.3 annexed hereto), to have a Material Adverse Effect on the business,
Assets, operations or financial condition of the Parent or Newco.
5.4 Consents. Other than (i) in connection with or in compliance
with the Exchange Act and (ii) as set forth on Schedule 5.4 annexed hereto, no
notice to, filing with, or Consent of, any Person is necessary for the
consummation by the Parent or Newco of the transactions contemplated by this
Agreement. Prior to the Closing, the Parent or Newco shall have given all
notices, made all filings and obtained all Consents set forth on Schedule 5.4
annexed hereto.
5.5 Financing. The Parent has delivered to the Company the
commitment letters annexed hereto relating to the financing (the "Financing")
needed to consummate the transactions contemplated by the Agreement. Parent
represents that it has sufficient funds to finance the equity portion of the
Financing, as outlined in the commitment letters. In addition, Florescue Family
Corporation has delivered a letter guarantying the availability of the equity
portion of the Financing. The debt portion of the Financing, the equity portion
of the Financing and the anticipated net working capital of the Company is
sufficient to consummate the transactions contemplated by the Agreement.
5.6 Legal Proceedings. There is no action, suit, proceeding,
complaint, charge, Tax or other audit, investigation or arbitration or other
method of settling disputes or disagreements by or before any Governmental
Authority pending or, to the best knowledge of the Parent and Newco, threatened
against or affecting the Parent, Newco or their respective Assets. There is,
and at the Closing Date there will be, no action, suit, proceeding, complaint,
charge, Tax or other audit, investigation or arbitration or other method of
settling disputes or disagreements by or before any Governmental Authority which
questions the validity of this Agreement or any action taken or to be taken by
the Parent or Newco in connection with the transactions contemplated hereby.
Neither the Parent, Newco nor any of their respective Assets are subject to any
Judgment or other agreement which restricts the ability of the Parent or Newco
from consummating the Merger or purchasing the Shares.
5.7 No Brokers. Except as set forth on Schedule 5.7 annexed hereto,
neither the Parent nor Newco has entered into any Contract, arrangement or
understanding with any Person which could result in the obligation of any Person
to pay any finder's fees, brokerage or agent's commissions or other like
payments in connection with this Agreement or the transactions contemplated
hereby.
5.8 Disclosure. No representation, warranty or statement made by
the Parent in this Agreement, the Exhibits and the Schedules, or in any other
material furnished or to be furnished by the Parent to the Company or its
representatives, attorneys and accountants pursuant to or, in connection with
this Agreement or the transactions contemplated hereby, contains or shall
contain any untrue statement of a material fact, or omits or shall omit to state
a material fact required to be stated herein or therein or necessary to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading.
6. Covenants and Other Agreements.
The parties hereto covenant and agree as follows:
6.1 Conduct of Business. (a) The Company shall, and the Company
shall cause each of the Subsidiaries to, except as otherwise expressly
contemplated by this Agreement or as specifically consented to in writing by the
Parent (which consent shall not be unreasonably withheld or delayed), from and
after the date of this Agreement until the Closing Date, use all reasonable
efforts to preserve its present business organization intact, keep available the
services of its present employees, preserve its present relationships with
Persons having business dealings with such Company or Subsidiary, operate its
business in the ordinary and regular course consistent with its prior practices
(including the payment of trade payables and the collection of accounts
receivables), maintain its books and records in accordance with good business
practice, on a basis consistent with prior practice and in accordance with GAAP,
and maintain all Insurance, certificates and Licenses and Permits necessary for
the conduct of its business, as currently conducted and as proposed by the
Company to be conducted; provided, however, that nothing in this Section 6.1
shall require the Company or any of its Subsidiaries to make any payment or
incur any obligation which (i) is not in the ordinary course of business or (ii)
is inconsistent with its existing policies and practices or this Agreement.
(b) During the period from and after the date of this
Agreement until the Closing Date, except as otherwise expressly contemplated by
this Agreement or set forth in Schedule 6.1 annexed hereto or as otherwise
consented to by the Parent in writing, the Company shall not, and the Company
shall cause each of the Subsidiaries not to: (i) declare, set aside or pay any
dividend or other distribution in respect of its capital stock or redeem,
purchase or acquire any shares of its capital stock (other than cashless
exercises of stock options by employees or directors); (ii) issue any of its
capital stock, stock options or rights requiring it to sell or issue any of its
capital stock or securities, except for the issuance of Shares upon exercise of
outstanding options or stock purchase rights under the Option Plans and the
Stock Purchase Plan; (iii) amend its charter or By-laws; (iv) make any capital
expenditure or capital commitment, other than those expenditures or commitments
made between July 1, 1995 and the Closing Date which do not exceed $2,500,000 in
the aggregate; (v) make any change in its business, as currently conducted or as
proposed by the Company to be conducted other than in the ordinary course of
business; (vi) dispose of any material rights with respect to any Intellectual
Property or Intangible and Other Property, other than in the ordinary course of
business; (vii) change its accounting principles, methods or practices,
investment practices, payment and processing practices or policies regarding
intercompany transactions, except for such changes as are necessary to conform
with GAAP and are disclosed to the Parent prior to such change; (viii) hire, or
renew any existing Contract with, any Person as an officer or director; (ix)
hire, or renew any existing Contract with, any Person as a consultant,
independent contractor or non-officer employee, if such Person would receive
pro-rated annual compensation (including salary, fringe benefits and bonuses) in
excess of $100,000; (x) incur any obligation (not part of normal, continuing
operations, such as payroll and Taxes, or in the operation of the Company and
its Subsidiaries in the ordinary course of business or the performance of
Contracts disclosed in any Schedule annexed hereto) in excess of $100,000 in the
aggregate; (xi) increase, reduce, draw-down or reverse any of its reserves,
other than in accordance with GAAP; (xii) settle any litigations or dispute with
Messrs. Rowe or Nadolski; (xiii) enter into any other transaction that would be
required to be set forth in Schedule 4.8 annexed hereto if such transaction
occurred between October 1, 1994 and the date hereof; or (xiv) agree or commit
orally or in writing to do any of the foregoing.
6.2 No Shop; Non-Disclosure. (a) Until the Closing or the
termination of this Agreement as provided in Section 9.1, except as mutually
agreed in writing by the parties hereto, the Company shall not, and the Company
shall use all reasonable efforts to cause its officers, employees,
representatives or agents (including Goldman, Sachs & Co.) not to, directly or
indirectly solicit, encourage, initiate, discuss with others or induce the
making of any inquiries or proposals for the acquisition of any of the capital
stock, Assets (other than in the ordinary course of business) or business of, or
the merger with, or any similar transaction concerning, the Company, or furnish
information to, or engage in negotiations relating to the foregoing or otherwise
cooperate in any way with, or accept any proposal relating to the foregoing
from, any Person or group other than the Parent and its officers, employees,
representatives and agents, provided, however, that the Company Board may
furnish or cause to be furnished such information to, and may participate in
such discussions or negotiations with, Persons who have made a bona fide
proposal if the Company Board believes, in good faith, after consultation with
its financial advisors, that such bona fide proposal is for a transaction more
favorable to the Company's shareholders than the transactions contemplated
hereby and, in the opinion of outside counsel to the Company Board, the Company
Board's fiduciary duty under applicable Law requires it to furnish or cause to
be furnished such information and/or participate in such discussions or
negotiations (a "Superior Offer"). The Company shall promptly communicate in
writing to the Parent the principal substance of any discussion and the terms of
any proposal received or the fact that the Company has received inquiry with
respect to, or will participate in discussions or negotiations in respect of,
any such transactions on the same date that the Company knows that such
discussions will take place, and, on the same date or promptly thereafter, the
Company shall promptly communicate to the Parent the existence of any such
discussions or negotiations.
(b) No party (or its representatives, agents, counsel or
accountants) hereto shall disclose to any third party, other than potential
lenders, any confidential or proprietary information about the business, Assets
or operations of the Company or its Subsidiaries or the transaction contemplated
hereby, except as may be required in connection with a Superior Offer. The
parties hereto agree that the remedy at law for any breach of the requirements
of this subsection will be inadequate and that any breach would cause such
immediate and permanent damage as would be impossible to ascertain, and,
therefore, the parties hereto agree and consent that in the event of any breach
of this subsection, in addition to any and all other legal and equitable
remedies available for such breach, including a recovery of damages, the non-
breaching parties shall be entitled to obtain preliminary or permanent
injunctive relief without the necessity of proving actual damage by reason of
such breach and, to the extent permissible under applicable Law, a temporary
restraining order may be granted immediately on commencement of such action.
6.3 Employment Agreements. (a) From the date hereof until the
Closing or earlier termination of this Agreement, neither the Company nor any of
its Subsidiaries shall adopt, enter into or amend, or extend by action or
inaction, any Benefit Plan (other than in the ordinary course of business or as
required by law), whether or not such Benefit Plans were previously approved by
the Company Board.
(b) Parent shall cause the Surviving Corporation to honor
(without modification) the Termination Agreements and individual benefit
arrangements listed on Schedule 6.3(b), all as in effect at the Effective Time,
and agrees (i) to pay, at the Effective Time, all amounts then owing under such
agreements and arrangements as a result of the triggering of "change of control"
and other provisions; or (ii) if, subsequent to the Effective Time but prior to
the expiration or renewal of any such agreement or arrangement with an executive
officer, such executive officer is terminated (other than for cause) or is not
employed in a position substantially equivalent to his position at the Effective
Time at a location within 25 miles of the location where he performed such
duties at the Effective Time, such executive officer shall be entitled to
receive all amounts then payable under such agreement as if the "change of
control" occasioned by the Merger and the subsequent termination or change in
position or location occurred simultaneously.
6.4 Parent's Access to Information. From and after the date hereof,
the Parent, its outside financing sources and investors, and their respective
counsel, accountants, representatives and agents, shall have full access, upon
reasonable notice and during normal business hours, to the Company and the
financial, legal, accounting and other representatives of the Company with
knowledge of the business and the Assets of the Company and, upon reasonable
notice, shall be furnished all relevant documents, records and other information
concerning the business, finances and properties of the Company and its
Subsidiaries that the Parent, its outside financing sources, investors and their
respective counsel, accountants, representatives and agents, may reasonably
request. The Parent agrees not to contact any employees, personnel, suppliers
or customers of the Company or its Subsidiaries without the prior approval of
the Company (which approval shall not be unreasonably withheld or delayed).
6.5 Consents. The Company shall use all reasonable efforts to give
any notices, make any filings, and obtain any Consents set forth on Schedule 4.5
annexed hereto. The Parent and Newco shall use all reasonable efforts to give
notices, make any filings and obtain any Consents set forth on Schedule 5.4
annexed hereto.
6.6 Notification of Certain Matters. Each of the parties hereto
agrees to give prompt notice to the other parties hereto of (i) the occurrence,
or failure to occur, of any event which occurrence or failure to occur is
reasonably likely to cause any representation or warranty of such party
contained in this Agreement to be untrue or inaccurate at any time from the date
hereof to the Closing Date, (ii) any failure on its part to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder and (iii) any breach of any representation or warranty of such
party hereunder; provided, however, that the delivery of or the failure to
deliver any notice pursuant to this Section 6.6 shall not limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
6.7 Action of Shareholders of the Company; Voting and Disposition of
the Shares. The Company shall take all action necessary, in accordance with the
BCL and its Articles of Incorporation and By-laws, to convene the Special
Meeting as promptly as practicable to consider and vote upon the Merger. At the
Special Meeting, each of the Parent and Newco shall vote, or cause to be voted,
all of the Shares then owned by it, if any, in favor of the Merger.
6.8 Financial Statements. From and after the date hereof until the
Closing, as soon as practicable after the end of each calendar month (but no
later than thirty (30) days after the end of such calendar month), the Company
shall deliver to the Parent an unaudited consolidated balance sheet of the
Company and its Subsidiaries at the last day of such calendar month, an
unaudited consolidated statement of income of the Company and its Subsidiaries
for such calendar month and an unaudited consolidated statement of cash flows of
the Company and its Subsidiaries for such calendar month. All such unaudited
financial statements shall be (x) in accordance with the books of account,
records and past practices of the Company and its Subsidiaries for interim
financial statements; (y) fair presentations of the material liabilities and
obligations, financial condition, accruals for incentive or bonus payments,
reserves for incurred but unreported claims and results of operations of the
Company and its Subsidiaries as of the dates and for the periods indicated; and
(z) prepared in accordance with GAAP; provided, however, that such financial
statements need not contain all of the footnotes required by GAAP, and may be
condensed and subject to year-end and quarter-end adjustments.
6.9 Indemnification of Directors and Officers.
(a) From and after the Effective Time, Parent shall cause the
Surviving Corporation to, and the Surviving Corporation agrees to, indemnify,
defend and hold harmless in accordance with the Certificate of Incorporation and
By-laws of the Company, and subject to the limitations of the BCL, each present
and past officer, director, employee, representative or agent (other than
Nadolski and Blair), of the Company (or any subsidiary or division thereof),
including, without limitation, each person controlling any of the foregoing
persons (individually, an "Indemnified Party" and collectively, the "Indemnified
Parties"), against all losses, claims, damages, liabilities, costs or expenses
(including attorneys' fees), judgments, fines, penalties and amounts paid in
settlement in connection with any claim, action, suit, proceeding or
investigation arising out of or pertaining to acts or omissions, or alleged acts
or omissions, by them in their capacities as such, whether commenced, asserted
or claimed before or after the Effective Time. In the event of any such claim,
action, suit, proceeding or investigation (an "Action"), (i) the Surviving
Corporation shall advance the reasonable fees and expenses of counsel selected
by the Indemnified Party, which counsel shall be reasonably acceptable to
Parent, in advance of the final disposition of any such action; provided,
however, that prior to advancement of fees and expenses, the Indemnified Party
shall provide an undertaking in form and substance reasonably satisfactory to
the Surviving Corporation, and (ii) the Surviving Corporation will cooperate in
the defense of any such matter; provided, however, that the Surviving
Corporation shall not be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld or delayed) and
provided, further, that the Surviving Corporation shall not be obligated
pursuant to this Section to pay the fees and disbursements of more than one
counsel for all Indemnified Parties in any single Action except to the extent
that, in the opinion of counsel for the Indemnified Parties, to do so would be
inappropriate due to actual or potential differing interests between or among
such parties.
(b) For a period of six years after the Effective Time, the
Surviving Corporation shall not amend the provisions of its Certificate of
Incorporation and By-laws providing for exculpation of director and officer
liability and indemnification, except as required by applicable law.
(c) Parent shall cause the Surviving Corporation to, and the
Surviving Corporation agrees to, maintain in effect for the Indemnified Parties
for not less than three years the current policies of directors' and officers'
liability insurance and fiduciary liability insurance maintained by the Company
and the Company's subsidiaries with respect to matters occurring at or prior to
the Effective Time; provided, that Parent may substitute therefor policies of
substantially the same coverage containing terms and conditions which are no
less advantageous, in any material respect, to the Indemnified Parties.
(d) Parent shall cause the Surviving Corporation to, and the
Surviving Corporation agrees to, pay all expenses, including attorneys' fees,
that may be incurred by any Indemnified Parties in enforcing the indemnity and
other obligations provided for in this Section 6.9.
(e) The rights of each Indemnified Party hereunder shall be
in addition to any other rights such Indemnified Party has under the Certificate
of Incorporation or By-laws of the Company, under the BCL or otherwise. This
Section 6.9 is intended to benefit each of the Indemnified Parties and shall be
binding on all successors and assigns of Newco, the Company and the Surviving
Corporation.
6.10 Additional Agreements. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all reasonable efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement, and to
cooperate with each other in connection with the foregoing.
7. Conditions Precedent to the Parent's Obligations.
The obligations of the Parent and Newco are subject to the satisfaction,
at or before the Closing, of the conditions set forth below.
7.1 Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company set forth herein are true and
correct in all material respects as of the date hereof and as of the Closing
Date. Any matter which would otherwise constitute a failure to comply with or
conform to a representation or warranty by the Company hereunder shall not be
deemed to be such a failure if the Parent has consented to the same in writing.
7.2 Performance by the Company. The Company shall have performed,
satisfied and complied with all covenants, agreements, and conditions required
to be performed by it.
7.3 Deliveries By the Companies at Closing. At the Closing, the
Company shall have delivered to the Parent (or, in the case of clauses (h) and
(i) below, have made available to the Parent at the offices of the Company or
its Subsidiaries) all of the following:
(a) a certificate of the Company, executed by the President
and the Chief Financial Officer of the Company, to the effect that each of the
conditions specified in Sections 7.1, 7.2, 7.4, 7.5, 7.7 and 7.10 has been
satisfied;
(b) evidence of the filing with the office of the Secretary
of State of the State of New York of the Certificate of Merger, pursuant to
Section 904 of the BCL, with respect to the Merger of Newco with and into the
Company, in the form annexed hereto as Exhibit A;
(c) resolutions duly adopted by the Company Board
authorizing the transactions which are the subject of this Agreement, certified
by the Secretary of the Company;
(d) certificates issued by appropriate Governmental
Authorities evidencing, as of a recent date, the good standing and franchise tax
status of the Company and each of its Subsidiaries in the jurisdiction in which
such Company or Subsidiary is incorporated and in those jurisdictions in which
such Company or Subsidiary is qualified to do business and, as of the most
recent practicable date, telegrams, if available, issued by the appropriate
Governmental Authorities with respect to the good standing and franchise tax
status of such Company or Subsidiary in the jurisdiction in which such Company
or Subsidiary is incorporated;
(e) a copy of the Articles of Incorporation or other
applicable charter instruments and all amendments thereto of the Company and
each of its Subsidiaries, certified by the appropriate Governmental Authorities;
(f) certificates executed by the Secretary of the Company to
the effect that there have been no amendments to the charter documents referred
to in Section 7.3(e) hereof since the date of this Agreement;
(g) the original books of account, minute books, minutes and
other records of all meetings of the Company and each of its Subsidiaries, and
the stock books and stock transfer ledgers of each of the Subsidiaries of the
Company;
(h) the corporate seal of the Company and each of its
Subsidiaries and such other documents, records, and other items as shall be
necessary for the operation of the businesses of the Company and each of its
Subsidiaries;
(i) a statement upon which the Parent and the Exchange Agent
shall rely in tendering the Per Share Price pursuant to Section 3.6 and which
(i) shall provide the name of each shareholder of record of Shares and the
number of Shares held by such shareholder and (ii) shall be issued by the
Company's transfer agent, Continental Stock Transfer & Trust Company.
7.4 Consents. The Company shall have obtained and delivered to the
Parent all Consents set forth in Schedule 4.5 annexed hereto, except where the
failure to obtain such Consents would not be reasonably likely, individually or
in the aggregate, to have a Material Adverse Effect.
7.5 Changes in the Business. From and after the date hereof, there
shall have occurred or be threatened no event relative to the Assets or business
of the Company and its Subsidiaries which is reasonably likely, individually or
in the aggregate, to have a Material Adverse Effect.
7.6 Dissenting Shares. The number of Dissenting Shares (if any)
with respect to which the holders thereof shall have properly demanded appraisal
in accordance with the BCL before the taking of a vote on the Merger at the
Special Meeting or any adjournment thereof, the holders of which shall not have
withdrawn such demand as of the Closing Date, shall not exceed ten percent (10%)
of the issued and outstanding Shares entitled to vote thereon.
7.7 Shareholder Approval. This Agreement and the transactions
contemplated hereby shall have been adopted and approved by the holders of
sixty-six and two-thirds percent (66 2/3%) of the Shares.
7.8 Simultaneous Closing. Simultaneously with the Closing, the
Parent shall have closed the Financing.
7.9 Opinion of the Company's Counsel. The Parent shall have
received the favorable opinion, dated the date of the Closing, of the Company's
Counsel, reasonably acceptable in substance and form to the Parent.
7.10 Absence of Litigation. There shall not be pending or threatened
before any Governmental Authority any action, suit or proceeding which, if
adversely determined, would (i) make the purchase by the Parent of the Shares
illegal, (ii) require the divestiture by the Parent of all or a material portion
of the business or Assets of the Surviving Corporation or any of its
Subsidiaries as a result of the transactions contemplated hereby, (iii) impose
limitations which adversely affect to a significant extent the ability of the
Surviving Corporation to exercise full rights of ownership of the Assets or
business of the Company and its Subsidiaries, as currently conducted by the
Company, as a result of the transactions contemplated hereby, (iv) prevent the
consummation of the Merger or (v) cause the Merger to be rescinded following
consummation of the Merger, and no Judgment with respect to any of the foregoing
shall be in effect.
7.11 Proceedings and Documents. All legal and corporate proceedings
in connection with the transactions contemplated by this Agreement shall be in
form and substance reasonably satisfactory to the Parent and the Parent's
Counsel, and the Parent shall have received all such counterpart originals or
certified or other copies of such documents and proceedings in connection with
such transactions as the Parent reasonably requests.
7.12 Current Assets; Inventory. Parent shall have received from the
Company an audited balance sheet dated as of September 30, 1995, certified by
the Company's Accounting Officer and Deloitte & Touche, showing that the Company
has (i) at least $27,750,000 in net current assets (consisting of total current
assets plus restricted cash and marketable securities plus common stock notes
receivable, less current liabilities (other than the current portion of long-
term debt)) less an amount, not to exceed $100,000, equal to the out-of-pocket
expenses incurred in connection with the completion of a physical inventory and
(ii) inventory recorded on the books and records of the Company in accordance
with GAAP of not more than $14,150,000. In connection with the audit, a
physical inventory shall be taken.
7.13 Officer's Certificate. Parent shall have received from the
Company's Chief Accounting Officer a certificate stating that there has been (i)
no change in the Company's balance sheet which is reasonably likely to
individually, or in the aggregate with all other such changes, have a Material
Adverse Effect, since September 30, 1995, and (ii) no change in the inventory
since September 30, 1995 other than changes in the ordinary course of business.
8. Conditions Precedent to the Company's Obligations.
The obligations of the Company are subject to the satisfaction, at or
before the Closing, of the conditions set forth below. The benefit of these
conditions is for the Company only and may be waived by the Company in writing
at any time in its sole discretion.
8.1 Accuracy of the Parent's Representations and Warranties. The
representations and warranties of the Parent and Newco set forth herein are true
and correct in all material respects as of the date hereof and the Closing Date.
8.2 Performance by the Parent. The Parent and Newco shall have
performed, satisfied and complied with all covenants, agreements and conditions
required to be performed by each of them.
8.3 Deliveries by the Parent at Closing. At the Closing, the Parent
shall deliver to the Company the following:
(a) a certificate of each of the Parent and Newco executed
by the President, Chief Executive Officer or Chief Financial Officer of each of
the Parent and Newco to the effect that each of the conditions specified in
Sections 8.1, 8.2, 8.4 and 8.7 has been satisfied;
(b) evidence of the filing with the Office of the Secretary
of State of the State of New York of the Certificate of Merger, pursuant to
Section 904 of the BCL, with respect to the Merger of Newco with and into the
Company, in the form annexed hereto as Exhibit A;
(c) resolutions adopted by the Board of Directors of each of
the Parent and Newco authorizing the transactions contemplated hereby, certified
by the Secretary of each of the Parent and Newco;
(d) certificates issued by appropriate Governmental
Authorities evidencing, as of the most recent practicable date, the good
standing and franchise tax status of Newco in its state of incorporation and, as
of a date not more than two Business Days prior thereto, telegrams, if
available, issued by the appropriate Governmental Authorities with respect to
the good standing and franchise tax status of Newco in its state of
incorporation;
(e) copies of the Articles of Incorporation or other
applicable charter instruments and all amendments thereto of Newco, certified by
the applicable Governmental Authorities;
(f) certificates executed by the Secretary of Newco to the
effect that there have been no amendments to the charter documents referred to
in Section 8.3(e) hereof since the date of the certifications referred to in
such subsection; and
(g) copies of the By-laws or comparable documents, including
all amendments thereto, of Newco, certified by the Secretary of Newco.
8.4 Consents. The Parent and Newco shall have obtained and
delivered to the Company all Consents set forth in Schedule 5.4 annexed hereto.
8.5 Opinion of the Parent's Counsel. The Seller shall have received
the favorable opinion, dated the date of the Closing, of Parent's Counsel,
reasonably acceptable in substance and form to the Company.
8.6 Fairness Opinion. The Company shall have received from Goldman,
Sachs & Co. a favorable opinion (the "Fairness Opinion") as to the fairness of
the consideration to be received by the shareholders (other than Parent and its
Affiliates) in the Merger.
8.7 Absence of Litigation. There shall not be pending or threatened
before any Governmental Authority any action, suit or proceeding which, if
adversely determined, would (i) make the purchase by the Parent of the Shares
illegal, (ii) prevent the consummation of the Merger, or (iii) cause the Merger
to be rescinded following consummation of the Merger, and no Judgment with
respect to any of the foregoing shall be in effect.
8.8 Simultaneous Closing. Simultaneously with the Closing, the
Parent shall have closed the Financing and deposited the proceeds with the
Exchange Agent in accordance with Section 3.11(b).
8.9 Shareholder Approval. This Agreement and the transactions
contemplated hereby shall have been adopted and approved by holders of sixty-six
and two-thirds percent (66 2/3%) of the Shares.
8.10 Proceedings and Documents. All legal and corporate proceedings
in connection with the transactions contemplated by this Agreement shall be in
form and substance reasonably satisfactory to the Company and the Company's
Counsel, and the Company shall have received all such counterpart originals or
certified or other copies of such documents and proceedings in connection with
such transactions as the Company reasonably requests.
9. Termination.
9.1 Termination. This Agreement may be terminated and the Merger
abandoned at any time before the Effective Time, whether before or after
adoption by the shareholders of the Company or the Parent:
(a) By mutual consent of the Parent and the Company.
(b) By the Parent giving written notice to Company if, without fault
on the part of the Parent or its Affiliates, the Closing does not occur prior to
November 30, 1995, unless the Proxy Statement has not been mailed prior to
November 10, 1995 in which case such date shall be extended to a date 20 days
after the date of mailing of the Proxy Statement but not later than December 31,
1995.
(c) By the Parent or the Company, if any Governmental Authority
shall have enacted, issued, promulgated, enforced or entered any Law or Judgment
which has the effect of prohibiting consummation of the transactions
contemplated hereby.
(d) By the Parent, if without fault on the part of the Parent or its
Affiliates, any of the conditions to the Parent's obligations contained in
Section 7 of this Agreement required to have been met (i) are not met within 5
days of adoption and approval by the shareholders of the Company of the
transactions contemplated hereby, or (ii) at any time prior to the time in
clause (i) hereof become incapable of being met, and such failure has not been
waived by the Parent or cured by the Company.
(e) By the Parent or the Company, if prior to the Closing (i) the
Company Board votes to recommend to the shareholders of the Company a Superior
Offer rather than recommending shareholder adoption and approval of the Merger,
(ii) the Company Board fails to recommend the Merger to the shareholders of the
Company in the Proxy Statement or (iii) the shareholders of the Company fail to
adopt and approve the Merger at the Special Meeting.
(f) By the Company giving written notice to Parent if, without fault
on the part of the Company or its officers or Affiliates, the Closing does not
occur prior to November 30, 1995, unless the Proxy Statement has not been mailed
prior to November 10, 1995 in which case such date shall be extended to a date
20 days after the date of mailing of the Proxy Statement but not later than
December 31, 1995.
(g) By the Company, if without fault on the part of the Company or
its Affiliates, any of the conditions to the Company's obligations contained in
Section 8 of this Agreement required to have been met (i) are not met within 5
days of adoption and approval by the shareholders of the Company of the
transactions contemplated hereby, or (ii) at any time prior to the time in
clause (i) hereof become incapable of being met, and such breach or failure has
not been waived by the Company or cured by the Parent.
(h) By the Company, if it does not obtain from Goldman, Sachs & Co.
the Fairness Opinion.
(i) By the Parent, if a Change-in-Control shall have occurred.
9.2 Effect of Termination. Upon the termination of this Agreement,
this Agreement shall forthwith become null and void, other than the agreements
set forth in this Section 9.2 and Sections 2.2 (to the extent that such Section
relates to the parties' respective responsibilities for the Proxy Statement and
the Other Filings), 2.4, 6.2(b), 9.3 and 11 hereof. In the event of termination
of this Agreement under any of the circumstances that constitute a Payment Event
(as defined below), the sole and exclusive right of the Parent and its
Affiliates shall be as provided in Section 9.3(a). In the event that the
transactions contemplated by this Agreement do not occur for any reason or if
the Agreement is terminated for any reason, except as otherwise set forth in
this Section 9.2, the parties will have no remedies against, and will have no
liability to, each other or their respective officers, directors, shareholders,
partners, representatives or Affiliates.
9.3 Termination Payments and Expenses.
(a) Promptly after the occurrence of a Payment Event, the
Company shall pay immediately to an account designated by the Parent, in
immediately available funds, a cancellation fee as provided in this Section 9.3.
(b) A "Payment Event" shall mean the termination of this
Agreement as a result of any of the following:
(i) any Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any Law or Judgment which has the
effect of prohibiting consummation of the transactions contemplated hereby as a
result of an action or inaction by the Company not directly related to the
Parent, Newco or their respective Affiliates;
(ii) the Financing is not closed solely as a result
of the Rowe litigation;
(iii) the representations and warranties contained in
Sections 4.8(g)-(l) or 4.21 shall not be true and correct as of the Closing
Date;
(iv) the representations and warranties contained in
Sections 4.6, 4.7 (with respect to the Quarterly Report on Form 10-Q for the
quarter ended July 1, 1995) or 4.8(d) shall not be true and correct as of the
Closing Date;
(v) any of the conditions to the Parent's
obligations contained in Sections 7.6 or 7.12 of this Agreement not being met or
becoming incapable of being met, and such failure has not been waived by the
Parent or cannot be cured by the Company;
(vi) the shareholders of the Company fail to adopt
and approve the Merger at the Special Meeting;
(vii) the Company Board votes to recommend to the
shareholders of the Company a Superior Offer rather than recommending
shareholder adoption and approval of the Merger, or the Company Board fails to
recommend the Merger to the shareholders of the Company in the Proxy Statement;
or
(viii) the Company does not obtain from Goldman, Sachs
& Co. the Fairness Opinion;
(c) If the Agreement is terminated as a result of (i)
Sections 9.3(b)(i) through (b)(iii) the Company shall pay immediately to an
account designated by the Parent in immediately available funds an amount equal
to $250,000, (ii) Sections 9.3(b)(iv) through (b)(vi) the Company shall pay
immediately to an account designated by the Parent in immediately available
funds an amount equal to $600,000, and (iii) Sections 9.3(b)(vii) or (b)(viii)
the Company shall pay immediately to an account designated by the Parent in
immediately available funds an amount equal to $1,250,000.
(d) The Company acknowledges that the agreements contained
in this Section 9.3 are an integral part of the transactions contemplated by
this Agreement and that, without these agreements, the Parent and Newco would
not enter into this Agreement. The Company's obligations under this Section 9.3
shall survive any termination of this Agreement.
10. Survival of Representations and Warranties.
The representations, warranties and covenants (other than the covenants
set forth in Sections 6.3(b) and 6.9) contained in this Agreement shall not
survive beyond the earlier of (i) termination of this Agreement or (ii) the
Effective Time. This Section 10 shall not limit any covenant or agreement of
the parties hereto which by its terms contemplates performance after the
Effective Time.
11. Miscellaneous.
The parties will consult with each other and will mutually agree upon
any press releases or public announcements pertaining to the Merger and shall
not issue any such press releases or make any such public announcements prior to
such consultation and agreement, except as may be required by applicable law or
by obligations pursuant to any listing agreement with any national securities
exchange, or association, in which case the party proposing to issue such press
release or make such public announcement shall use its reasonable efforts to
consult in good faith with the other party before issuing any such press
releases or making any such public announcements.
11.1 Headings. Section headings contained in this Agreement are
included for convenience only and shall not affect the interpretation of any
provisions of this Agreement.
11.2 Notices. Any notice, demand, request, waiver, or other
communication under this Agreement shall be in writing (including facsimile or
similar writing) and shall be deemed to have been duly given (i) on the date of
service if personally served, (ii) on the third day after mailing if mailed to
the party to whom notice is to be given, by first class mail, registered, return
receipt requested, postage prepaid or (iii) on the date sent if sent by
facsimile, to the parties at the following addresses or facsimile numbers with a
copy sent by mail as aforesaid on the same date (or at such other address or
facsimile number for a party as shall be specified by like notice):
If to the Company, to:
Marietta Corporation
37 Huntington Street
Cortland, New York 13045
Attention: Chief Executive Officer
Fax No.: (607) 756-0657
with a copy to:
Rubin Baum Levin Constant & Friedman
30 Rockefeller Plaza, 29th Floor
New York, New York 10112
Attention: Barry A. Adelman, Esq.
Fax No.: (212) 698-7825
If to the Parent or Newco, to:
BFMA Holding Corporation
701 S.E. 6th Street, Suite 204
Delray Beach, Florida 33483
Attention: Barry W. Florescue
Fax No.: (407) 278-3578
with a copy to:
Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue
New York, New York 10022
Attention: Charles I. Weissman, Esq.
Fax No.: (212) 758-9526
11.3 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns. None of the parties hereto shall assign any rights or delegate any
duties hereunder without the prior written consent of the Company and the
Parent, and any assignment made without such consent shall be void and
constitute a default hereunder.
11.4 Governing Law. This Agreement shall be construed in accordance
with, and governed by, the internal laws of the State of New York, without
giving effect to the principles of conflict of laws thereof. Any legal action,
suit or proceeding arising out of or relating to this Agreement may be
instituted in any state or federal court located within the County of New York,
State of New York, and each party hereto agrees not to assert, by way of motion,
as a defense, or otherwise, in any such action, suit or proceeding, any claim
that it is not subject personally to the jurisdiction of such court in an
inconvenient forum, that the venue of the action, suit or proceeding is improper
or that this Agreement or the subject matter hereof may not be enforced in or by
such court. Each party hereto further irrevocably submits to the jurisdiction
of any such court in any such action, suit or proceeding.
11.5 Entire Agreement. This Agreement, including the Exhibits and
the Schedules sets forth the entire understanding and agreement of the parties
with respect to their subject matter and supersedes any and all prior
understandings, negotiations or agreements among the parties hereto, both
written and oral, with respect to such subject matter (except any and all prior
agreements relating to the protection of confidential information of the Company
and its Subsidiaries).
11.6 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, and all of which together shall
constitute a single agreement.
11.7 Severability. In the event that any one or more of the
provisions contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, in whole or in part, the
validity of the remaining provisions shall not be affected and the remaining
portion of any provision held to be invalid, illegal or unenforceable shall in
no way be affected, prejudiced or disturbed thereby.
11.8 No Prejudice. This Agreement has been jointly prepared and
negotiated by the parties hereto and the terms hereof shall not be construed in
favor of or against any party on account of its participation in such
preparation.
11.9 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the parties hereto and their
respective successors and permitted assigns.
11.10 Amendment and Modification. This Agreement, including the
Schedules hereto, may be amended or modified only by written agreement executed
by all parties hereto; provided, however, that after adoption and approval of
this Agreement by the shareholders of the Company, no amendment shall be made
which changes the consideration payable in the Merger or adversely affects the
rights of the Company's shareholders hereunder without the approval of such
shareholders.
11.11 Waiver. At any time prior to the Closing, each of the parties
hereto may (i) extend the time for the performance of any of the obligations or
other acts of any other party hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, or (iii) waive compliance with any of the covenants, agreements
or conditions contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in a written
instrument signed by the party granting such waiver. Such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or future failure.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth above.
BFMA HOLDING CORPORATION
By:/s/ Barry W. Florescue
--------------------------------
Barry W. Florescue, President
BFMA ACQUISITION CORPORATION
By:/s/ Barry W. Florescue
--------------------------------
Barry W. Florescue, President
MARIETTA CORPORATION
By:/s/ Stephen D. Tannen
--------------------------------
Stephen D. Tannen, President
August 25, 1995
Mr. Barry Florescue
President
BFMA HOLDING CORPORATION
701 S.E. Sixth Ave
Delrey Beach, FL 33483
Re: Acquisition Financing
Dear Barry:
In accordance with our recent discussions, Foothill Capital
Corporation ("Lender") is pleased to issue this financing commitment to BFMA
Acquisition Corporation and, as appropriate, affiliates (collectively
"Borrower") including Marietta Corporation upon the completion of the
contemplated acquisitions by Borrower of all of the common stock (including
all related stock options and warrants) of Marietta Corporation.
In connection with your request for this commitment, we have
reviewed various publicly available information relating to Marietta
Corporation including the most recent Annual Report on Form 10K and 10Q
filings. We have also renewed financial projections and the draft version of
the memorandum required by Dabney/Resnick. Finally, we have had various
discussions with yourself, your counsel and Rick Bloom of Dabney/Resnick in
order that we might better put into context the information we have been
provided. This information formed the basis for our own internal analysis,
and, together with the other information supplied, was reviewed and approved
by our credit committee.
Our financing commitment, as reviewed and approved by our
credit committee, and subject to the satisfactory completion of each of the
conditions contained herein, the financing, would be as follows:
1. Maximum Amount: $30,000,000.
a. Accounts Receivable Line of Credit (the "Line"):
Lender would extend credit to Borrower up to the
lesser of (i) $17,000,000, or (ii) up to 85% of
accounts receivable net of ineligible accounts and
reserves as customarily defined by Lender. The
credit extended against accounts receivable would
be limited to an amount equal to Borrower's cash
collections for the immediately preceding forty
five day period.
<PAGE>
BFMA Holding Corporation
August 25, 1995
Page 2
b. Inventory Subline: Lender would extend credit to
Borrower under the Line up to the lesser of (i)
$8,500,000, and (ii) up to 50% of the lower of cost
or market value of eligible inventory, and (iii)
the amount of credit availability created by clause
a. above. Eligible Inventory would be as
customarily defined by Lender and would exclude
slow moving goods or obsolete items, restrictive or
custom items, work-in-process, packaging and
shipping materials, bill and hold goods, returned
or defective goods, "seconds," Inventory acquired
on consignment, and such other inventory or
reserves as Lender shall deem appropriate.
c. Letter of Credit Facility: Under the Line, Borrower
would be entitled to request that Lender issue
letters of credit for the account of Borrower
("L/Cs") or issue guarantees ("L/C Guarantees") of
payment with respect to letters of credit issued by
one or more issuing banks in an aggregate undrawn
amount not to exceed five million dollars
($5,000,000). The aggregate undrawn amount of
outstanding L/Cs and L/C Guarantees would be
reserved against the credit availability created
under clauses (a) and (b) above. All L/Cs and L/C
Guarantees would be in form and substance
acceptable to Lender in its sole discretion.
d. Term Loan: Lender would provide Borrower with a
term loan (the "Term Loan") in the amount of up to
thirteen million dollars ($13,000,000) based upon
acceptable results of appraisals of the fixed
assets. The Term Loan would mature sixty months
after the Closing Date (the "Term Loan Maturity
Date"). The Term Loan would be repaid in 59
installments of principal in the amount of $220,000
each, such installments to be due and payable on
the first day of each month commencing on the first
day of the first month following the Closing Date,
and continuing until and including the Term Loan
Maturity Date on which date the unpaid balance of
the Term Loan would be paid in full. The
outstanding principal balance and all accrued and
unpaid interest under the Term Loan would be due
and payable upon the termination of the Line,
whether by its terms, by prepayment, by
acceleration, or otherwise.
2. Interest Rate:
The rate of interest charged with respect to all obligations (other
than the Term Loan) would be one and three quarters percentage points
(1.75%) above the reference rate or prime rate publicly announced by
major banks selected by Lender. The rate of interest charged with
respect to the Term Loan would be two and three quarters percentage
points above the reference rate or prime rate publicly announced by
major
<PAGE>
BFMA Holding Corporation
August 25, 1995
Page 3
banks selected by Lender. Borrower would be charged a letter of
credit fee of two and one quarter percent (2.25%) per annum times the
undrawn or unreimbursed amount of L/Cs and/or L/C Guarantees. If L/C
Guarantees are used to induce a commercial bank to issue letters of
credit, Borrower also would be responsible for all related bank
charges for the underlying letter of credit. Interest and letter of
credit fees would be calculated on the basis of a three hundred sixty
(360) day year and actual days elapsed and would be payable monthly
in arrears. In no event would the rate of interest charged be less
than eight percent (8.0%) per annum nor would the minimum monthly
interest and letter of credit payment made by Borrower with respect
to the Line and the Term Loan and the L/Cs and L/C Guarantees be less
than one hundred thousand dollars ($100,000).
3. Collection:
Borrower and Lender would establish one or more lock boxes and
depositary accounts at financial institutions acceptable to Lender.
Borrower would direct customers to remit all payments to the lock
boxes and would be required immediately to remit any payments
received by it to the lock boxes. All collections received in such
lock boxes would be subject to a three business day clearance charge.
The Terms and conditions of the agreements relative to such lock
boxes and depositary accounts would need to be acceptable to Lender
and would need to provide Lender with dominion and control over any
funds deposited into such deposit accounts.
4. Fees and Expenses:
a. Commitment Fee: On the Closing Date, Borrower shall
pay to Lender a fee (the "Commitment Fee") in an
amount of three hundred thousand dollars. The
Commitment Fee shall be fully earned and
non-refundable upon removal of the conditions set
forth in Section 10(f), (i), (k), (l), (m), & (n);
b. Annual Fee: Borrower would be obligated to pay
Lender a fee (the "Annual Fee") on the Closing Date
and on each anniversary of the Closing Date in an
amount equal to one-half percent (0.50%) of the
Maximum Amount. The Annual Fee would be
fully-earned and non-refundable on the Closing Date
and each anniversary of the Closing Date;
c. Unused Line Fee: Borrower would be obligated to pay
Lender a fee (the "Unused Line Fee") in an amount
equal to one-half percent (0.50%) per annum
<PAGE>
BFMA Holding Corporation
August 25, 1995
Page 4
times the unused portion of the Line. The Unused
Line Fee would be due and payable monthly in arrears;
d. Servicing Fee: Borrower would be obligated to pay to
Lender a fee (the "Servicing Fee") of five thousand
dollars ($5,000) per month for each month during
the term of the financing arrangements. The
Servicing Fee would be due and payable monthly
in arrears; and
e. Foothill Expenses: Borrower would agree to
reimburse Lender for all of Lender's out-of-pocket
costs and expenses relating to this financing
transaction, including, but not limited to, search
fees, title search and insurance fees, filing and
recording fees, attorneys fees and expenses
(including the fees and expenses of local counsel
to Lender), and examination and appraisal fees
(collectively, "Foothill Expenses").
5. Loan Maturity and Prepayment:
The loan would mature in five years. Borrower would have the right to
prepay the Term Loan, in whole or in part, at any time, without
penalty or premium. Termination of the Line, prior to maturity, would
result in an early termination premium equal to the greater of total
interest accrued with respect to the Line to Lender by Borrower
during the prior six month period and fifteen thousand dollars
($15,000) times the number of months remaining until maturity.
6. Purpose:
The purpose of this financing would be to provide for the
transactions contemplated and for the general corporate purposes of
Borrower.
7. Financial Examination and Appraisal Fees:
Borrower would be obligated to pay to Lender a fee of $650 per day
per examiner and $1,000 per day per appraiser for financial analyses
and examinations and collateral appraisals, plus out-of-pocket
expenses for each such analysis, examination, and appraisal performed
by Lender or its agents, and Borrower would be obligated to pay
Lender an annual legal loan document review charge of $5,000.
<PAGE>
BFMA Holding Corporation
August 25, 1995
Page 5
8. Collateral:
As collateral for all of Borrower's present and future obligations to
Lender, including those arising under the Line, the L/Cs and L/C
Guarantees, and the Term Loan, Lender would be granted a first
priority, perfected lien or security interest in and to Borrower's
now owned or hereafter acquired accounts, chattel paper, contract
rights, documents, equipment, fixtures, general intangibles
(including, without limitation, all copyrights, deposit accounts,
licensing agreements, patents, trademarks, and trade names),
instruments, inventory, real property, securities (including the
stock of subsidiaries but not including the stock of BFMA Acquisition
Corporation), and the proceeds of all of the foregoing, wherever
located. The foregoing is collectively referred to as the
"Collateral."
9. Financial Covenants:
Borrower would be required to maintain minimum levels of tangible net
worth and working capital, a maximum indebtedness to tangible net
worth ratio, a minimum current ratio, and a limitation on annual
capital expenditures. The levels for each of the foregoing would be
based upon Borrower's historic and projected operating performance.
10. Conditions Precedent:
The following would be conditions precedent to Lender's obligation to
extend credit to Borrower:
a. Borrower, including each of the entities composing
Borrower, would need to be a corporation in good standing in
the jurisdiction of its incorporation and qualified to do
business in any other jurisdiction where such qualification
is necessary or appropriate to its business;
b. The Line and the Term Loan would need to be made
pursuant to, and subject to, the terms of loan agreements,
notes, and other financing documents (the "Loan Documents")
executed and delivered by Borrower on or prior to the
Closing Date. The Loan Documents would contain such
representations, warranties, and covenants (affirmative and
negative) as are customary, in Lender's experience, for a
transaction of this type.
<PAGE>
BFMA Holding Corporation
August 25, 1995
Page 6
c. Borrower would need to have executed and/or
delivered, or caused to be delivered, to Lender prior to the
Closing Date, such security agreements, financing
statements, fixture filings, deeds of trust, mortgages, and
chattel mortgages, title insurance policies and
endorsements, lock box and depositary account agreements,
copies of leases, landlord waivers, bailee agreements, and
other agreements affecting the Collateral, insurance
certificates and endorsements, and other documentation
relative to the liens and security interest in the
Collateral as Lender may reasonably request (the "Security
Documents"). Each of the Loan Documents and the Security
Documents (the "Documents") would be governed by the law of
the State of California (except to the extent that real
property is located in another jurisdiction in which case
the real property Security Document would be governed by the
laws of such jurisdiction) and would need to be in form and
substance reasonably satisfactory to Lender and its counsel;
d. The financing statements, fixture filings, deeds of
trust, mortgages, and other Documents related to perfection
of Lender's interests in the Collateral would need to have
been filed or recorded in all appropriate jurisdictions and,
with respect to financing statements, Lender would need to
have received searches reflecting its filings of record;
e. Lender would need to have received ALTA Lender's
Policies of Title Insurance, or a commitment therefor, from
a title company satisfactory to Lender, in an amount
satisfactory to Lender, insuring its first priority lien
upon each parcel of real property composing the Collateral.
Such policies would need to contain such endorsements as
would be required by Lender, would contain only those
exceptions acceptable to Lender, and would need to be in
form reasonably satisfactory to Lender;
f. A phase-1 environmental report and real estate
survey would need to have been completed on each of the
parcels of real property composing the Collateral. The
environmental consultants retained for the environmental
reports, the scope of the reports, and the results of the
reports would need to be acceptable to Lender and its
counsel, in their sole discretion;
g. No material adverse change would have occurred in
Borrower's condition or any material adverse change in the
value of the Collateral;
<PAGE>
BFMA Holding Corporation
August 25, 1995
Page 7
h. Lender would need to have received such opinions of
Borrower's counsel and such advice of Lender's local counsel
as Lender would reasonably require, which opinions and/or
advice would need to be in form and substance satisfactory
to Lender and its counsel. Such opinions of Borrower's
counsel would include, but not be limited to, opinions as to
Borrower's corporate existence, Borrower's power and
authority to enter into the Documents, the validity, binding
effect, and enforceability of each of the Documents, and the
perfection of Lender's liens and security interests in the
Collateral;
i. Lender's review of supply contracts into customers,
the results of which are satisfactory to Lender;
j. Payment of all accrued and unpaid Foothill
Expenses;
k. Completion of a field survey by Lender's examiners,
the results of which are acceptable to Lender;
l. Receipt of acceptable appraisals by independent
third party appraisal firms and on-site inspection by
Lender's appraisal department, the results of which are
acceptable to Lender;
m. Lender's senior credit committee's review and
approval, including the approval of Norwest Corporation
(with whom Lender agreed to merge), for any committed amount
in excess of $20,000,000, or, in the alternative, Lender
would need to have received binding commitments to
participate in the Line and Term Loan, for all committed
amounts in excess of $20,000,000, from participants, and on
terms and conditions, acceptable to Lender;
n. Lender's receipt of reference checks regarding
Borrower's senior management, the results of which are
satisfactory to Lender;
o. Lender's review of the post-closing capital
structure of Borrower, the results of which are satisfactory
to Lender.
<PAGE>
BFMA Holding Corporation
August 25, 1995
Page 8
11. Brokers' Fees:
Any brokerage commission or finder's fees payable in connection with
the financing arrangement (including any investment banking fee
payable to Dabney/Resnick) outlined herein would be payable by
Borrower and not by Lender. Borrower agrees to indemnify, defend, and
hold Lender harmless from and against any claim of any broker or
finder arising out of the financing arrangement outlined herein.
12. Closing Date:
If the financing arrangement contemplated by this letter is not
consummated on or before December 31, 1995, then, without any
requirement of notice or other formality, no party hereto would have
any obligation to pursue the financing arrangement outlined in this
letter; provided, however, that prior thereto Borrower and Lender
agree to use their respective reasonable best efforts to cause the
financing to be consummated on or before such date. The date on which
the first advance (or L/C or L/C Guarantee) is made under the Line
would be deemed the "Closing Date."
13. Complete Agreement; No Oral Modifications.
This commitment letter embodies the entire agreement between the
parties hereto with respect to the subject matter hereof and
supersedes all prior proposals, negotiations, or agreements whether
written or oral, relating to the subject matter hereof including any
letter of intent. This letter may not be modified, amended,
supplemented, or otherwise changed, except by a document in writing
signed by the parties hereto.
14. GOVERNING LAW; JURY WAIVER.
THIS LETTER SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF
CALIFORNIA AND THE VALIDITY OF THIS LETTER, AND THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES
HERETO RELATING TO CLAIMS OR CAUSES OF ACTION ARISING IN CONNECTION
HEREWITH SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. BORROWER AND
LENDER HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY
CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING ARISING UNDER
OR
<PAGE>
BFMA Holding Corporation
August 25, 1995
Page 9
RESPECT TO THIS LETTER, OR IN ANY WAY RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO WITH RESPECT TO THIS LETTER, OR THE
TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE WHETHER NOW OR
HEREAFTER ARISING, IRRESPECTIVE OF WHETHER SOUNDING IN CONTRACT,
TORT, OR OTHERWISE. BORROWER AND LENDER HEREBY AGREE THAT ANY SUCH
CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING SHALL BE
DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT
AS WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER PARTY HERETO TO WAIVE
ITS RIGHT TO TRIAL BY JURY.
15. Expense Deposit:
In connection with the requested financing, Borrower understands that
it will be necessary for Lender to make certain financial, legal, and
collateral investigations and determinations. Within 10 days of this
date and prior to the commencement of further due diligence, Borrower
shall pay to Lender the sum of $50,000 as a deposit against the
Foothill Expenses that may be incurred by Lender. This Expense
Deposit will be applied to Foothill Expenses as and when they are
incurred. If Lender concludes for any reason, that it will not make
the financing outlined herein available to Borrower, it will return
the unused balance of the Expense Deposit. As an illustration, the
amount to be deducted from the Expense Deposit may include costs and
expenses incurred by auditors and appraisers and in verifying
Borrower's records, Lender's legal expenses in connection with advice
concerning the subject financing or with the preparation of the
Documents, and any filing and search fees. If, on the other hand,
Lender continues to be prepared to extend the credit described herein
to Borrower and Borrower declines for any reason, to accept such
financial accommodations from Lender, Lender shall be entitled to
retain the full amount of the Expense Deposit, irrespective of the
amount of the Foothill Expenses incurred. Lender's retention of the
balance of the Expense Deposit results from its reasonable endeavor
to estimate the added administrative costs incurred and the amount of
damage sustained by Lender as a result of Borrower's decision to
decline to accept the financing. If the financing is funded, the
Expense Deposit will be returned to Borrower after deducting all
Foothill Expenses actually incurred by Lender. Lender shall not be
obligated to segregate the Expense Deposit from its other funds and
Borrower is not entitled to receive interest on any portion of the
Expense Deposit.
<PAGE>
BFMA Holding Corporation
August 25, 1995
Page 10
16. Confidentiality, Exclusivity:
This letter is being provided exclusively for the benefit of Borrower
for such uses as it may deem appropriate including disclosure to
various third parties and/or regulatory filings. Nothing in this
letter or its use or disclosure to any third party shall create any
contractual relationship or privity between Lender and any third party.
We are very enthusiastic about the opportunity to finance
the acquisition and subsequent operations of Marietta Corporation and
believe that we can proceed very quickly to the signing of the
Documents and subsequent closing of the financing. If you wish to
proceed on the basis outlined above, please execute this letter in
the space provided below and return it to the undersigned no later
than 5:00 p.m., California time, on or before August 27, 1995. If you
fail to pay the Expense Deposit in a timely manner consistent with
Section 15, this letter shall expire automatically without any
further act. This letter is being provided to Borrower on a
confidential basis and is not for the benefit of, nor should it be
relied upon by, any third party.
Very truly yours.
FOOTHILL CAPITAL CORPORATION,
By /s/ Craig Forrest Noell
-------------------------------
Title: V.P.
The foregoing terms and conditions are hereby accepted and agreed to
as of August 27, 1995.
BFMA HOLDING CORPORATION
By /s/ Barry Florescue
-------------------------------
Title: President
August 26, 1995
Barry Florescue
BFMA Holding Corporation
701 S.E. 6th Avenue
Delray Beach, FL 33483
Gentlemen:
Based on our discussions and the information you have provided to us
to date, Siena Capital Partners, L.P. ("Siena") is pleased to present the
following financing commitment (the "Commitment Letter") for a bridge facility
(the "Bridge Facility") to BFMA Holding Corporation ("BFMAHC") and BFMA
Acquisition Corporation, a newly formed subsidiary of BFMAHC (collectively,
the "Company") for the purposes of acquiring Marietta Corporation, a New York
corporation ("Marietta"). The Bridge Facility under which Siena shall provide
up to $5,500,000 of financing will be based upon the terms outlined below and
is subject to satisfaction of the following conditions. In connection with our
review, Siena has reviewed the public filings of Marietta and financial and
other documents provided by BFMAHC.
1. Transaction. The Company has entered into an agreement to
acquire all the outstanding shares of common stock (including all related
stock options and warrants) of Marietta for up to $10.25 per share. The
Company will also be responsible for refinancing all the debt of Marietta and
will assume all other assets and liabilities of Marietta at the closing of the
transaction (the "Transaction"). The Company has the necessary equity (the
"Equity") and presently has a commitment letter regarding a Revolving Line of
Credit and Term Loan (the "Senior Debt"). The Bridge Facility will be used to
provide the balance of the financing required to complete the Transaction.
2. Purpose. The proceeds of the Bridge Facility in combination
with the Equity and the Senior Debt are for the specific purpose of (i)
providing the necessary capital to purchase Marietta shares in connection with
the merger, the consummation of which will be deemed the Closing Date; (ii)
refinancing all the debt of Marietta; and (iii) paying the fees and expenses
related to the Transaction. The Bridge Facility is not intended to provide the
Company or Marietta with long-term permanent financing.
3. Sources and Uses of Funds at Closing. Siena's commitment
for $5,500,000 is based upon the following sources and uses of the Transaction:
<PAGE>
<TABLE>
<CAPTION>
SOURCES USES
- ------- ----
<S> <C> <S> <C>
Cash, Revolver and Term Facility................. $34,913,000 Purchase Marietta shares*................... $37,284,000
Bridge Facility.................................. 5,500,000 Refinance Marietta debt..................... 7,129,000
Equity........................................... 7,500,000 Fees and expenses........................... 3,500,000
----------- -----------
Total.......................................... $47,913,000 Total...................................... $47,913,000
=========== ===========
<FN>
* Assumes 3.6 million shares at $10.25 per share and approximately 80 thousand
stock options and 90 thousand stock appreciation rights with an average
exercise price of $7.40 for those options and SARs which are in the money.
</TABLE>
4. Permanent Financing. An affiliate of the Company, Florescue
Family Corporation, ("Florescue") has entered into an engagement letter (the
"Engagement Letter") with Dabney Resnick, Inc. ("DR"), which provides that DR
will act as exclusive financial advisor and placement agent to Florescue and
the Company in connection with the Company's acquisition of Marietta and the
refinancing of the Bridge Facility (the "Permanent Financing").
DR, acting in the best interests of the Company, will use its
reasonable good faith efforts to arrange Permanent Financing at customary and
reasonable market terms. As necessary, the Company will make available
sufficient equity participation in the Company, to the lenders of and
investors in the Permanent Financing to allow DR to place the securities in a
timely manner. Nothing contained herein shall constitute a commitment by DR or
Siena to purchase any securities in the Permanent Financing.
5. Term. The Bridge Facility shall terminate and all then
unpaid balances will be due six months after the Closing Date (the "Maturity
Date"). Prior to the Maturity Date, the Company shall have the right to repay
at any time without premium or penalty the principal of the Bridge Facility in
full or in integrals of $250,000. The Bridge Facility shall be redeemed out of
the first proceeds received from any financing consummated subsequent to the
Closing Date and prior to the Maturity Date. Such prepayment or any
refinancing will also include all accrued interest, fees or any other amounts
due and payable under the Bridge Facility and the Engagement Letter.
6. Security. The Bridge Facility shall be secured by a first
priority lien on all the shares of common stock of Marietta acquired by the
Company (the "Priority Collateral"). Siena will release all the above security
upon completion of the Permanent Financing.
7. Interest. The Bridge Facility shall bear interest at a rate
of 18.0% per annum. Interest and days outstanding shall be calculated on a
30/360 basis and shall be payable monthly in arrears, with the first interest
payment due 30 Days subsequent to the Closing
<PAGE>
Date. If the Bridge Facility has not been paid in full by the Maturity Date
then any outstanding balances will bear interest at a rate per annum of 20.0%.
8. Commitment Fee. A non-refundable fee (the "Commitment Fee")
shall be payable to Siena upon the execution of this Commitment Letter in the
amounts and pursuant to the terms and conditions set forth in the Commitment
Fee Agreement dated as of the date hereof, between the Company and Siena.
9. Takedown Fee. A non-refundable fee of $220,000 shall be
payable to Siena on the Closing Date (the "Takedown Fee"). If, for any reason,
Siena or the Company should choose not to fund the entire amount available
under the Bridge Facility, the Takedown Fee will be reduced by a prorated
amount. It is agreed that the Takedown Fee shall be paid from the proceeds of
the Bridge Facility.
10. Expenses. In addition to the Commitment Fee and the
Takedown Fee, the Company shall be responsible for all expenses associated with
the Transaction. Upon request by Siena, the Company agrees to reimburse Siena
and DR for all out-of-pocket expenses (including without limitation all
reasonable fees and expenses of counsel) incurred by Siena or DR in connection
with the Transaction. Such reimbursement to occur no later than 30 days
following the submission of expenses to the Company by Siena or DR.
11. Warrants. Upon closing the Transaction, the Company shall
issue to Siena warrants (the "Siena Warrants") which when exercised will
represent 3.0% of the common stock of Marietta on a fully-diluted basis
(including, without limitation, the common stock underlying warrants issued to
DR and the warrants expected to be issued to the lenders of and investors in
the Permanent Financing). The Siena Warrants will contain certain standard and
customary anti-dilution provisions. The Siena Warrants will entitle the
holders to purchase shares at an exercise price of $0.01 per share and will
contain a "cashless" exercise provision. The Siena Warrants will be
exercisable for a term of five years and will be entitled to standard
piggyback registration rights.
12. Conditions Precedent to Funding. Siena's obligation to enter
into the Bridge Facility and provide the Company with cash proceeds is subject
to satisfaction of all the following conditions in a manner acceptable to
Siena and its counsel:
(a) Approval and consummation of the merger.
(b) The Sources of Funds are substantially similar to those
outlined above in Section 3 and are satisfactory to Siena, in the sole
discretion of Siena.
<PAGE>
(c) Siena's security interests, as outlined above, shall be
perfected and all financing statements or other documents relating to such
collateral shall have been filed or recorded as appropriate. There shall be no
other security interests in the Priority Collateral.
(d) All statutory, judicial, regulatory and governmental
approvals and consents, if any, required with respect to the Transaction and the
secured Bridge Facility contemplated by this letter shall have been obtained,
and such approvals and consents shall be on terms acceptable to Siena. All
necessary notifications, registrations and filings shall have been made in
compliance with all applicable laws and regulations.
(e) No material adverse change, as determined by Siena or DR, in
the sole discretion of Siena or DR, in the condition or operations (financial or
otherwise) of Marietta shall have occurred since the date of the Commitment
Letter.
(f) No default or event of default shall exist or will exist
upon completion of the Transaction under any financing documents between the
Company and any other party to the Transaction.
(g) All costs, fees, expenses and other compensation payable to
Siena contemplated in this letter shall have been paid to the extent then due.
(h) Documentation satisfactory to Siena, in the sole discretion
of Siena, shall be completed prior to the Closing Date.
(i) Approval by Siena's Executive Loan Committee of the
definitive terms of the Bridge Facility.
13. Indemnification. The Company hereby agrees to (a)
indemnify and hold harmless Siena and DR, each of their affiliates and each
director, officer, employee and agent of each such entity (each an "Indemnified
Person") from and against any and all losses, claims, damages, liabilities and
expenses that arise out of, result from or relate to this letter or the
Transaction, and (b) reimburse each Indemnified Person for all legal or other
expenses incurred in connection with investigating, defending or participating
in the defenses of any such matter (whether or not such Indemnified Person is a
party to any action or proceeding out of which any such expense arises).
<PAGE>
We look forward to working with you to complete this transaction.
Sincerely,
SIENA CAPITAL PARTNERS, L.P.
By: CHARLEVILLE CAPITAL, L.P.
- -------------------------------
its General Partner
By: ANEIS ADVISORS, INC.
- -------------------------------
its General Partner
By: /s/Jeffrey Serota
- -------------------------------
Jeffrey Serota
Vice President
Agreed to and accepted this 26th day of August, 1995
BFMA HOLDING CORPORATION
By: /s/Barry Florescue
- -------------------------------
Barry Florescue
President
MARIETTA CORPORATION
37 Huntington Street
Cortland, New York 13045
August 25, 1995
Barry W. Florescue
701 Southeast 6th Avenue
Delray Beach, Florida 33483
Florescue Family Corporation
701 Southeast 6th Avenue
Delray Beach, Florida 33483
Attention: Barry Florescue
Gentlemen:
In consideration of the agreements of Marietta Corporation
(the "Company") set forth herein, each of Barry W. Florescue ("BF") and
Florescue Family Corporation ("FFC"; BF and FFC are hereinafter referred to
collectively as "Florescue") hereby agrees, on behalf of itself and each of
its affiliates (as such term is defined in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) that for a period of two years from the date of this letter
agreement (the "Termination Date"), neither Florescue nor its affiliates will,
subject to the next succeeding paragraph, (i) acquire, or in conjunction with
any other person acquire, by purchase or otherwise, beneficial or record
ownership of more than 14.99% of the then issued and outstanding shares of
common stock, par value $.01 per share, of the Company (the "Common Stock"),
(ii) without the prior written consent of the Board of Directors of the
Company propose to the Company or any other person any transaction between
Florescue, or any of its affiliates, on the one hand, and the Company or its
security holders, or involving any of its securities or security holders, on
the other hand, whether by merger, tender offer or otherwise, (iii) acquire,
or assist, advise or encourage any other person in acquiring, directly or
indirectly, control of the Company, whether by solicitation of proxies or
otherwise, or any of the Company's securities, businesses or assets, (iv)
directly or indirectly, or through any other person, solicit proxies with
respect to the Common Stock or any other securities of the Company entitled to
vote, or become a "participant" in any "election contest" relating to the
election of directors of the Company (as such terms are used in Rule 14a-11 of
Regulation A under the Exchange Act) other than as a nominee of the Board of
Directors of the Company on behalf of the slate nominated by the Board of
Directors of the Company, (v) request or demand the call, or participate with
or in any way assist any other person in requesting or demanding the call of a
special or annual meeting of shareholders; or (vi) take any other action,
alone or in concert with any other person, the effect of which would be
similar to or accomplishes the same purpose as any of the foregoing. The term
"person" as used in this
<PAGE>
Barry W. Florescue
Florescue Family Corporation
August 25, 1995
Page 2
letter agreement shall be broadly interpreted to include the media and any
corporation, partnership, group, individual or other entity.
The provisions contained in the preceding paragraph shall be
of no further force or effect, if at any time prior to the Termination Date
(other than in connection with the process now being conducted by Goldman,
Sachs & Co. pursuant to which offers to purchase the Company are being
solicited), the Company (i) solicits or assists any other person to acquire
beneficial or record ownership of more than 14.99% of the then outstanding
shares of Common Stock, (ii) solicits or assists any other person to acquire,
directly or indirectly, (x) control of the Company, whether by solicitation of
proxies or otherwise, or (y) all or substantially all of the assets or
business of the Company, or (iii) takes any other action, alone or in concert
with any other person, the effect of which would be to accomplish the same
purposes as any of the foregoing.
It is understood and agreed that no failure or delay by the
Company in exercising any right, power or privilege hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right,
power or privilege hereunder or under applicable law.
It is further understood and agreed that money damages would
not be a sufficient remedy for any breach of this letter agreement by
Florescue and that the Company shall be entitled to equitable relief,
including an injunction and specific performance, as a remedy in addition to
all other available remedies at law or in equity for any such breach. In the
event of litigation relating to this letter agreement, if a court of competent
jurisdiction determines by a final, nonappealable order that either party has
breached this letter agreement, then such party shall be liable and pay to the
other party the reasonable legal fees that the other party has incurred in
connection with such litigation, including any appeal therefrom.
If any provision of this Agreement shall be held invalid,
illegal or unenforceable in any jurisdiction, such provision shall, as to such
jurisdiction, be ineffective only to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction, and there
shall be substituted for the provisions at issue a valid and enforceable
provision as similar as possible to the provision at issue.
The Company agrees that, so long as Florescue continues to
beneficially own at least 75% of the shares of the Company he now beneficially
owns, the Company will use its best efforts to cause the nominating committee
of the Board of Directors of the Company to nominate two designees of
Florescue for election as director at any meeting of shareholders intended to
be called for the purpose of electing directors and to be held prior to the
Termination Date. In
<PAGE>
Barry W. Florescue
Florescue Family Corporation
August 25, 1995
Page 3
the event that (i) the nominees of the Board of Directors of the Company are
not elected to such Board at the 1995 Annual Meeting of Shareholders, or
(ii) the Board of Directors shall fail to nominate two designees of Florescue
for election as director at any meeting of shareholders called for the purpose
of electing directors and held prior to the Termination Date, or if such
designees so nominated shall not be elected as directors at any such meeting,
then, in either such case and notwithstanding any other provision of this
letter agreement, this letter agreement shall immediately terminate and be of
no further force or effect.
Two individuals designated by Florescue have been nominated
for election as directors at the 1995 Annual Meeting of Shareholders scheduled
for August 31, 1995. Florescue agrees that at the 1995 Annual Meeting it will,
and will cause each of its Affiliates to, vote all shares of Common Stock
beneficially owned by such Persons for the slate of directors nominated by the
Company's Board of Directors.
This letter agreement shall be governed by and construed in
accordance with the laws of the State of New York, without reference to
conflicts of laws principles, and shall be binding upon Florescue, and its
successors and assigns.
Please confirm your acceptance of, and agreement with, the
foregoing by signing and returning one copy of this letter to the Company.
Very truly yours,
MARIETTA CORPORATION
By:/s/ Stephen D. Tannen, President
-----------------------------------
Title:
Accepted and agreed to as of this
25th day of August, 1995
FLORESCUE FAMILY CORPORATION
By:/s/ Barry Florescue, President
- ---------------------------------
Title:
/s/ Barry W. Florescue
- ---------------------------------
Barry W. Florescue
