<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 31, 1994
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 014699
-------------
MARIETTA CORPORATION
(Exact name of Registrant as specified in its Charter)
New York 16-1074992
_______________________________ ____________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
37 Huntington Street, Cortland, New York 13045
________________________________________ __________
(Address of Principal Executive Offices) (Zip Code)
(607) 753-6746
________________________________________________
(Registrant's Telephone Number, including area code)
Not Applicable
________________________________________________
(Former name, former address, and former fiscal year
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
------- -------
As of February 3, 1995 there were outstanding 3,590,858 shares of the
registrant's Common Stock, par value $.01 per share.
<PAGE>
MARIETTA CORPORATION
--------------------
FORM 10-Q
INDEX
-----
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Consolidated Statements of Operations
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Notes to Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II. OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Marietta Corporation
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 31, January 1,
1994 1994
------------ -----------
<S> <C> <C>
Net sales $13,108,956 $14,434,428
Cost of sales 9,404,265 10,723,386
----------- -----------
Gross profit 3,704,691 3,711,042
Selling, general and administrative expenses 3,413,644 3,431,406
----------- -----------
Operating income 291,047 279,636
Other income, net 47,423 137,473
----------- -----------
Income before income taxes and cumulative
effect of a change in accounting principle 338,470 417,109
Income tax provision 151,459 184,673
----------- -----------
Income before cumulative effect of a change in
accounting principle 187,011 232,436
Cumulative effect of a change in accounting for
income taxes - 336,596
----------- -----------
Net income $ 187,011 $ 569,032
=========== ===========
Earnings per share:
Earnings before cumulative effect of a change in
accounting principle $ .05 $ .07
Cumulative effect of a change in accounting for
income taxes - .09
----------- -----------
Earnings per share
$ .05 $ .16
=========== ===========
Weighted average number of shares and
common share equivalents 3,592,702 3,577,282
=========== ===========
</TABLE>
See accompanying notes to condensed, consolidated financial statements.
<PAGE>
Marietta Corporation
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31, October 1,
Assets 1994 1994
- - - ------ ----------- -----------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 5,769,644 $ 7,476,101
Accounts receivable, net 7,973,293 10,074,495
Inventories 14,473,536 11,926,566
Refundable income taxes 550,235 341,735
Other current assets 663,022 770,475
Deferred tax asset 537,215 467,083
----------- -----------
Total current assets 29,966,945 31,056,455
Property, plant and equipment, net 22,319,770 22,187,484
Restricted cash 2,400,000 2,300,000
Marketable securities 2,079,758 2,219,823
Excess of cost over net assets acquired, net 3,289,433 3,327,901
Other assets 670,136 744,773
----------- -----------
Total assets $60,726,042 $61,836,436
=========== ===========
Liabilities and Shareholders' Equity
- - - ------------------------------------
Current liabilities:
Accounts payable $ 2,699,501 $ 2,754,613
Accrued payroll 1,069,498 1,512,467
Accrued rebates 298,600 445,226
Accrued expenses 744,768 818,880
Current maturities of long-term debt 374,448 361,894
Income taxes payable 29,229 21,602
----------- -----------
Total current liabilities 5,216,044 5,914,682
Long-term debt, less current maturities 6,617,344 6,851,034
Convertible subordinated note 274,800 273,720
Deferred tax liability 2,525,838 2,522,406
----------- -----------
Total liabilities 14,634,026 15,561,842
----------- -----------
Shareholders' equity:
Preferred stock, $0.01 par value, authorized
1,000,000 shares
Common stock, $0.01 par value, authorized
10,000,000 shares, issued 4,005,717 shares 40,057 40,057
Additional paid-in capital 36,727,062 36,768,483
Common stock notes receivable (607,500) (607,500)
Treasury stock, at cost (3,877,333) (3,923,993)
Retained earnings 14,937,940 14,750,930
Equity adjustment from foreign currency
translation (962,084) (753,383)
Marketable securities valuation allowance (166,126) -
----------- -----------
Total shareholders' equity 46,092,016 46,274,594
----------- -----------
Total liabilities and shareholders'equity $60,726,042 $61,836,436
=========== ===========
</TABLE>
See accompanying notes to condensed, consolidated financial statements.
<PAGE>
Marietta Corporation
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 31, January 1,
1994 1994
------------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 187,011 $ 569,032
Adjustments to reconcile net income to net cash
provided by operating activities:
Cumulative effect of a change in accounting - (336,596)
for income taxes
Depreciation and amortization 861,528 889,533
Provision for loss on accounts receivable 58,902 59,334
Provision for inventory obsolescence 160,902 161,334
Deferred compensation - 58,284
Deferred income taxes (66,700) (87,600)
Restricted cash (100,000) (100,000)
Other assets (4,443) (31,324)
Stock bonus 61,040 74,610
Changes in working capital:
Accounts receivable 1,987,347 871,315
Inventories (2,734,291) (1,241,555)
Other current assets 104,645 162,684
Accounts payable and accrued expenses (704,683) (1,752,691)
Income taxes (199,778) (226,149)
----------- -----------
Net cash used in operating activities (388,520) (929,789)
----------- -----------
Cash flows from investing activities:
Capital expenditures (938,317) (440,822)
Sales (purchases) of marketable securities (26,061) 175,560
----------- -----------
Net cash used in investing activities (964,378) (265,262)
----------- -----------
Cash flows from financing activities:
Payments on long-term debt (221,137) (227,520)
Purchase of treasury stock (55,800) -
----------- -----------
Net cash used in financing activities (276,937) (227,520)
----------- -----------
Effect of foreign currency translation (76,622) 5,189
----------- -----------
Net decrease in cash and cash equivalents (1,706,457) (1,417,382)
Cash and cash equivalents, beginning of period 7,476,101 8,844,276
----------- -----------
Cash and cash equivalents, end of period $ 5,769,644 $ 7,426,894
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 138,493 $ 132,050
Income taxes 421,374 495,171
</TABLE>
See accompanying notes to condensed, consolidated financial statements.
<PAGE>
MARIETTA CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The statements for the periods ended December 31, 1994 and January 1, 1994 are
unaudited. In the opinion of the Company the statements include all
adjustments necessary for a fair presentation of the results for the periods.
The results of operations for the period ended December 31, 1994 are not
necessarily indicative of the results of operations to be expected for the
year ending September 30, 1995.
Certain information and footnote disclosure normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been omitted. It is suggested that these financial statements
be read in conjunction with the audited financial statements and notes thereto
for the year ended October 1, 1994 included in the Company's Annual Report.
Note 2. Inventories.
Inventories are stated at lower of cost or market. Cost is determined on the
first-in, first-out method. Inventories consisted of the following:
<TABLE>
<CAPTION>
December 31, October 1,
1994 1994
------------ -----------
<S> <C> <C>
Raw materials and $ 5,008,378 $ 4,082,839
supplies
Finished goods 9,465,158 7,843,727
----------- -----------
$14,473,536 $11,926,566
=========== ===========
</TABLE>
Note 3. Legal Proceedings
As previously reported, as a result of an embezzlement of funds by a former
financial officer and of other financial irregularities in Marietta's
financial statements discovered by the Company during 1991, the Securities and
Exchange Commission and the United States Attorney were each conducting
independent investigations. The investigation by the United States Attorney
is concluded; however, the investigation by the Securities and Exchange
Commission is continuing.
As previously reported, an action has been commenced by a former owner of
Marietta American, Inc. (formerly American Soap Company, Inc.), and by
California Soap, Inc. and two of its shareholders. This complaint alleges,
among other things, misrepresentations and omissions in connection with the
Company's acquisition of Marietta American, Inc., misrepresentations in and
omissions from various financial and other statements made by the Company,
breaches of contract and other violations of federal and state laws. This
action seeks an unspecified amount of damages. No assurance can be given as
to the outcome of this action, which could have a material adverse effect on
the Company.
<PAGE>
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Results of Operations
- - - ---------------------
Net sales decreased in the quarter ended December 31, 1994 by 9.2% to
$13,109,000 from $14,434,000 in the prior year's first quarter. The decrease of
$1,325,000 was attributable to a decrease in custom packaging sales of
$1,690,000, partially offset by an increase in guest amenity sales of $365,000.
Custom packaging sales were affected primarily by delays in receiving customer-
supplied materials which in turn caused delays in shipment of finished products
by Marietta.
For the first quarter of fiscal 1995 the Company's gross profit increased to
28.3% of sales from 25.7% during the same period of fiscal 1994. The increase
was attributable to a change in product mix and is consistent with the 28.0%
gross profit percentage achieved for all of fiscal year 1994.
Selling, general and administrative expenses, as a percentage of sales,
increased to 26.0% of sales in the first quarter of fiscal 1995 from 23.8% in
the first quarter of fiscal 1994 due mainly to the decrease in sales. In actual
dollars, selling, general and administrative expenses for the first quarter of
fiscal 1995 were comparable to the first quarter of fiscal 1994.
Other income (expense), net represents the netting of interest expense,
investment income and other miscellaneous income and expense. For the first
quarter of fiscal 1995 interest and other expense was $161,000 compared to
$108,000 in the first quarter of fiscal 1994. This increase is due to increases
in both interest expense because of slightly higher rates and to increases in
miscellaneous expenses. Investment income of $126,000 in the first quarter of
fiscal 1995 compares to $134,000 in 1994. Other miscellaneous income, which is
primarily profit on the sale of inventory components was approximately $82,000
in 1995 compared to $111,000 in the first quarter of 1994.
Marietta's effective tax rate for federal, state and foreign income taxes was
44.7% in the first quarter of fiscal 1995 compared to 44.3% for 1994. Both the
1995 and 1994 tax rates were increased by state and provincial franchise/equity
taxes.
Liquidity and Capital Resources
- - - -------------------------------
The Company's working capital decreased slightly to $24,751,000 at December 31,
1994 from $25,142,000 at October 1, 1994. Cash used by operating activities for
1995 and 1994 was $388,000 and $930,000 respectively. The increase of cash used
in investing activities in 1995 as compared to 1994 was caused primarily by an
increase in capital expenditures.
The Company had a $12,000,000 Revolving Credit Facility, all of which was
available as of December 31, 1994. The revolving credit portion of the facility
expires in October 1996, and thereafter the outstanding balance is payable in
equal quarterly installments over a four year period. Borrowings under the
facility bear interest at the prime rate or, if elected by the Company, at an
interest rate 1.1% above the LIBOR rate.
Management believes that the Company is in sound financial condition as
evidenced by its total shareholders' equity of $46,092,000 versus its long-term
debt of $7,267,000. Management believes that its current assets plus funds
provided by operations and the Company's existing lines of credit and debt
capacity are adequate to meet its anticipated capital and short-term needs.
Management also believes that inflation has not had a material effect on its
business.
The Company experienced a decline in its shareholders' equity as a result of a
reduction in the Canadian exchange rate from 74.49% to 71.29% and a decline in
the value of certain long-term marketable securities. The decline attributable
to the reduction in the exchange rate was approximately $209,000, while the
decline attributable to the loss in value of marketable securities was
approximately $166,000.
<PAGE>
In fiscal 1995 the Company anticipates making capital expenditures for capital
improvements aggregating approximately $6,000,000. To date, during fiscal 1995
the Company has authorized expenditures of approximately $3,600,000.
On February 3, 1995 the Company announced that Goldman, Sachs & Co. had been
retained to act as its financial advisor.
The Company anticipates that during the second quarter of fiscal 1995 it will
reverse $309,831 of accrued legal costs. Such accrual represents defense costs
incurred by the Company's former chief executive officer who was convicted of
violations of the federal securities laws and fraud.
The Company is unable to determine the impact upon the Company's financial
condition of an adverse determination, if any, in any action, proceeding or
investigation arising out of the events discussed in Note 3 of the Notes to
Financial Statements.
Seasonality
- - - -----------
The Company's guest amenity business is subject to some fluctuation in results
reflecting the seasonal nature of the travel and lodging industry. As a
consequence the revenues from the Company's guest amenity business in its third
and fourth fiscal quarters tend to be slightly higher than during the rest of
the year.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit No.
-----------
10.1 Agreement between the Company and Goldman, Sachs & Co.
(b) Registrant filed a Form 8-K, dated November 30, 1994, under Item 5, in
which Registrant announced that Stephen D. Tannen, who has been a director of
the Registrant since 1992, was elected President and Chief Executive Officer of
the Registrant.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MARIETTA CORPORATION
Dated: February 13, 1995
BY: /s/ Stephen D. Tannen
---------------------
Stephen D. Tannen
President and Chief Executive Officer
BY: /s/ Philip A. Shager
--------------------
Philip A. Shager
Chief Accounting Officer
and Treasurer
<PAGE>
EXHIBIT 10.1
DEJAVU: Raid Defense Fee Letter 6
PERSONAL AND CONFIDENTIAL
- - - -------------------------
January 25, 1995
Mr. Stephen D. Tannen
Chief Executive Officer and President
Marietta Corporation
37 Huntington Street
Post Office Box 5250
Cortland, NY 13045
Dear Mr. Tannen:
We are pleased to confirm the arrangements under which Goldman, Sachs & Co.
("Goldman Sachs") is exclusively engaged by Marietta Corporation (the "Company")
as financial advisor to the Company in reviewing financial alternatives
available to the Company with respect to any acquisition proposal which has been
or may be made to the Company and with respect to the possible purchase of all
or a portion of the stock or assets of the Company, a Recapitalization (as
hereinafter defined), a purchase by the Company of securities or assets of other
companies or the sale of the Company by way of tender offer, merger or otherwise
to any other party.
At your request we will also undertake a study to enable us to render our
opinion as to the fairness of the financial consideration to be received by
stockholders of the Company or the Company, as the case may be, in connection
with the sale of the Company. The nature and scope of our investigation as well
as the scope, form and substance of our opinion shall be such as we consider
appropriate. If requested our opinion will be in written form.
Our compensation for the services referred to above will be as follows:
(a) A fee of $250,000 in cash payable forthwith, which, to the extent
paid, shall be creditable against any transaction fee payable under
subparagraph (c) below and, except in the case described in the
second sentence of subparagraph (e) below, any transaction fee
payable under subparagraph (d) below.
(b) If at least 30% of the outstanding stock of the Company is acquired
by any person or group, including the Company, in one or a series of
transactions by means of a tender offer or merger, private or open
market purchases of stock or otherwise, or if all or substantially
all of the assets of the Company are transferred, in one or a series
of transactions, by way of a sale, distribution or liquidation, the
Company shall pay, or cause to be paid, to us an additional fee
equal to 3.75% of the aggregate value of all such transactions; it
being understood, however, that such aggregate value shall be deemed
to include amounts paid by the purchaser or the Company with respect
to contingently issuable shares, such as shares issuable pursuant to
options,
<PAGE>
Marietta Corporation
January 25, 1995
Page Two
warrants and convertible securities. If in excess of 50% of
the outstanding stock of the Company is acquired by any person or
group, including the Company, such aggregate value shall be
determined as if such acquisition were of 100% of the stock of the
Company (including all contingently issuable shares).
(c) If the Company or any other entity formed or owned in substantial part
or controlled by the Company or one or more members of senior
management of the Company or any employee benefit plan of the Company
or any of its subsidiaries (a "Related Entity") effects a transaction
or series of transactions and no fee has become payable or been paid to
us with respect to any transaction or transactions pursuant to
subparagraph (b) above and (i) at least 30% of the aggregate market
value of the Company as of the date of this letter is transferred to
the stockholders of the Company through (A) a merger with, purchase of
assets by, or other combination with a Related Entity, (B) a
reclassification of stock, (C) a purchase of stock, (D) a distribution
of cash, securities or other assets (including, without limitation, a
distribution of all or a portion of stock in one or more of its
subsidiaries), (E) a plan of partial liquidation or (F) any similar
transactions or combinations of the foregoing and (ii) the public
stockholders of the Company retain an equity interest in the Company
or, if the Company does not survive in the transactions described
above, in the surviving entity (a "Recapitalization"), the Company
shall pay, or cause to be paid, to us an additional fee equal to 3.75%
of the aggregate value of the Recapitalizations, defined as the per
share value in cash, securities and other assets received by the
Company's stockholders (including shares of stock continued to be held
by the Company's stockholders) times the number of shares of stock
included therein; it being understood that such aggregate value shall
be deemed to include amounts paid by the Company or the Related Entity
with respect to contingently issuable shares, such as shares issuable
pursuant to options, warrants and convertible securities.
<PAGE>
Marietta Corporation
January 25, 1995
Page Three
(d) In the event that the Company acquires all or a substantial portion of
the securities or assets of another company or sells, distributes or
liquidates all or a substantial portion of the assets of the Company,
including any pension-related assets, or sells or distributes
securities of the Company, whether such distribution is made by
dividend or otherwise, and no fee has become payable or been paid to us
with respect to any transaction pursuant to subparagraphs (b) and (c)
above, the Company shall pay, or cause to be paid, to us a fee based
upon the aggregate value of such transaction pursuant to the following
schedule:
Aggregate
Value Aggregate
of Transaction Fee
-------------- -------
$ 50 million, or less 3.75%
100 million 3.00
200 million 2.00
For a transaction in which the aggregate value is within the range of
any two values shown in the above fee schedule, the percentage fee
applicable to such transaction will be pro-rated between the fee
percentages applicable to such values. In the case of public offerings
or private placements of securities of the Company, we will charge
customary fees for such services and would expect to negotiate a
separate mutually agreeable arrangement with respect thereto, but we
will credit against fees payable pursuant to this sentence any amount
otherwise paid under this subparagraph (d) in respect of the
transaction in connection with which such securities were issued by the
Company.
(e) In the event no transaction of the type described in subparagraphs (b)
or (c) is consummated by January 25, 1996, the Company shall pay, or
cause to be paid, to us in cash an additional financial advisory fee of
$1,250,000. In the event a transaction fee becomes payable or has been
paid to us with respect to a transaction pursuant to subparagraph (d)
and such transaction constitutes a combination or merger of equals
involving the purchase by the Company of another company of
substantially the same size (based on book value of assets and market
capitalization) as the Company or involving the sale of the Company to
such company, then such transaction fee, to the extent paid, shall be
deducted from any additional financial advisory fee that may become
payable under the preceding sentence. It is understood that if such
transaction fee exceeds such additional financial advisory fee, no such
additional financial advisory fee shall be payable hereunder, and no
rebate shall be due the Company from us.
Any fees payable pursuant to subparagraphs (b), (c) and (d) above shall be paid
to us in cash at the consummation of the particular transaction giving rise to
such fee. Except as otherwise
<PAGE>
Marietta Corporation
January 25, 1995
Page Four
provided, the aggregate value of a transaction shall be the value of the
aggregate consideration paid or received by the Company or its stockholders as
the case may be. In the case of a sale or purchase of all or substantially all
of the assets of the Company, or another entity, aggregate value shall include
the net value of any current assets not sold.
Amounts paid into escrow and contingent payments in connection with any
transaction will be included as part of the aggregate value. Fees on amounts
paid into escrow will be payable upon the establishment of such escrow. If the
consideration in connection with any transaction may be increased by payments
related to future events, the portion of our fee relating to such contingent
payments will be calculated and payable if and when such contingent payments are
made. Aggregate value also shall include the aggregate amount of dividends or
other distributions declared by the Company with respect to its stock after the
date hereof, other than normal recurring cash dividends in amounts not
materially greater than currently paid.
If any portion of the aggregate consideration is paid in the form of securities,
the value of such securities, for purposes of calculating the transaction fee,
will be determined by the average of the last sales prices for such securities
on the five trading days ending five days prior to the consummation of the
transaction. If such securities do not have an existing public trading market,
the value of the securities shall be the mutually agreed upon fair market value
on the day prior to the consummation of the transaction.
Anything to the contrary contained herein notwithstanding, the exercise by the
shareholders of the Company of their purchase rights under the Company's
Shareholders' Rights Plan, and the purchase of securities of the Company in
connection therewith, shall not be deemed a transaction of the type contemplated
pursuant to subparagraph (b), (c) or (d) above.
In the event that the Company becomes the subject of, or is threatened with, a
contested proxy or consent solicitation by any party, Goldman Sachs shall act as
the Company's exclusive financial advisor with regard to such proxy or consent
solicitation. No additional fee shall be paid to us by the Company in connection
therewith.
You also agree to reimburse us periodically for our reasonable out-of-pocket
expenses, including the fees and disbursements of our attorneys, plus any sales,
use or similar taxes (including additions to such taxes, if any) arising in
connection with any matter referred to in this letter.
In order to coordinate most effectively our efforts together during the period
of our engagement hereunder, neither the Company nor its management will
initiate any discussions looking toward any transaction as contemplated hereby,
except through Goldman Sachs. In the event the Company or its management
receives an inquiry concerning any such transaction, they will promptly inform
Goldman Sachs of such inquiry in order that we can assess such inquiry and
assist the Company in any resulting negotiations.
<PAGE>
Marietta Corporation
January 25, 1995
Page Five
In connection with engagements such as this, it is our firm policy to receive
indemnification. The Company agrees to the provisions with respect to our
indemnity and other matters set forth in Annex A which is incorporated by
reference into this letter.
Our services may be terminated by you or us at any time with or without cause
effective upon receipt of written notice to that effect. We will be entitled to
the fees set forth above if at any time prior to the expiration of one year
after such termination a transaction of the type contemplated by subparagraph
(b), (c) or (d) is consummated and, in the case of a transaction contemplated by
subparagraph (b) or (d), there was contact with the acquiring party, or any
affiliate thereof, regarding such a transaction during the period of our
engagement; provided, however, in the event Goldman Sachs terminates this
authorization without cause, the provisions of this sentence shall not apply.
Furthermore, in the event Goldman Sachs receives a financial advisory fee
pursuant to subparagraph (e) above, such fee and the fee payable under
subparagraph (a) (in the case of a transaction of the type contemplated by
subparagraph (c) or a transaction under subparagraph (d) except in the case
described in the second sentence of subparagraph (d)) shall be credited to any
fee due under the preceding sentence.
Please note that any written or oral opinion or advice provided by Goldman Sachs
in connection with our engagement is exclusively for the information of the
Board of Directors and senior management of the Company and may not be disclosed
to any third party or circulated or referred to publicly without our prior
written consent.
As you know, Goldman Sachs is a full service securities firm and as such may
from time to time effect transactions, for its own account or the account of
customers, and hold positions in securities or options on securities of the
Company and other companies which may be the subject of the engagement
contemplated by this letter.
Please confirm that the foregoing is in accordance with your understanding by
signing and returning to us the enclosed copy of this letter, which shall become
a binding agreement upon our receipt.
Very truly yours, Confirmed:
GOLDMAN, SACHS & CO. MARIETTA CORPORATION
By: ____________________________
Date: ____________________________
<PAGE>
DEJAVU: List Annex A
Name of Client: Marietta Corporation
Date: January 25, 1995
Annex A
-------
In the event that Goldman Sachs becomes involved in any capacity in any action,
proceeding or investigation brought by or against any person, including
stockholders of the Company, in connection with or as a result of either our
engagement or any matter referred to in this letter, the Company periodically
will reimburse Goldman Sachs for its legal and other expenses (including the
cost of any investigation and preparation) incurred in connection therewith. The
Company also will indemnify and hold Goldman Sachs harmless against any and all
losses, claims, damages or liabilities to any such person in connection with or
as a result of either our engagement or any matter referred to in this letter,
except to the extent that any such loss, claim, damage or liability results from
the gross negligence or bad faith of Goldman Sachs in performing the services
that are the subject of this letter. If for any reason the foregoing
indemnification is unavailable to Goldman Sachs or insufficient to hold it
harmless, then the Company shall contribute to the amount paid or payable by
Goldman Sachs as a result of such loss, claim, damage or liability in such
proportion as is appropriate to reflect the relative economic interests of the
Company and its stockholders on the one hand and Goldman Sachs on the other hand
in the matters contemplated by this letter as well as the relative fault of the
Company and Goldman Sachs with respect to such loss, claim, damage or liability
and any other relevant equitable considerations. The reimbursement, indemnity
and contribution obligations of the Company under this paragraph shall be in
addition to any liability which the Company may otherwise have, shall extend
upon the same terms and conditions to any affiliate of Goldman Sachs and the
partners, directors, agents, employees and controlling persons (if any), as the
case may be, of Goldman Sachs and any such affiliate, and shall be binding upon
and inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company, Goldman Sachs, any such affiliate and any such
person. The Company also agrees that neither Goldman Sachs nor any of such
affiliates, partners, directors, agents, employees or controlling persons shall
have any liability to the Company or any person asserting claims on behalf of or
in right of the Company in connection with or as a result of either our
engagement or any matter referred to in this letter except to the extent that
any losses, claims, damages, liabilities or expenses incurred by the Company
result from the gross negligence or bad faith of Goldman Sachs in performing the
services that are the subject of this letter. The provisions of this Annex A
shall survive any termination or completion of the engagement provided by this
letter agreement and this letter agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflicts of laws.
