UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
SCIENCE MANAGEMENT CORPORATION
------------------------------
(Name of Issuer)
Common Stock, $0.10 par value per share
Preferred Stock, $1.00 par value per share
------------------------------------------
(Title of Class of Securities)
808638209 (Common)
808638308 (Preferred)
---------------------
(CUSIP Number)
Stephen M. Vine, Esq.
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
399 Park Avenue
New York, New York 10022
(212) 872-1000
-----------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
July 10, 1996
---------------------------
(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 [X]. (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 disclosure
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).
Continued on following page(s)
Page 1 of 24 Pages
Exhibit Index: Page 12
<PAGE>
Page 2 of 24 Pages
CUSIP No.: 808638209 (Common) SCHEDULE 13D
808638308 (Preferred)
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Sorol, a New York general partnership
2 Check the Appropriate Box If a Member of a Group*
a. [_]
b. [X]
3 SEC Use Only
4 Source of Funds*
WC
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [_]
6 Citizenship or Place of Organization
United States
7 Sole Voting Power
Number of 531,950 shares of Common Stock
Shares 659,750 shares of Preferred Stock
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 531,950 shares of Common Stock
With 659,750 shares of Preferred Stock
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
531,950 shares of Common Stock
659,750 shares of Preferred Stock
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
[_]
13 Percent of Class Represented By Amount in Row (11)
26.6% of Common Stock
37.7% of Preferred Stock
14 Type of Reporting Person*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 3 of 24 Pages
CUSIP No.: 808638209 (Common) SCHEDULE 13D
808638308 (Preferred)
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
VDM Inc.
2 Check the Appropriate Box If a Member of a Group*
a. [_]
b. [X]
3 SEC Use Only
4 Source of Funds*
AF
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [_]
6 Citizenship or Place of Organization
United States
7 Sole Voting Power
Number of 0
Shares
Beneficially 8 Shared Voting Power
Owned By 531,950 shares of Common Stock
Each 659,750 shares of Preferred Stock
Reporting 9 Sole Dispositive Power
Person 0
With
10 Shared Dispositive Power
531,950 shares of Common Stock
659,750 shares of Preferred Stock
11 Aggregate Amount Beneficially Owned by Each Reporting Person
531,950 shares of Common Stock
659,750 shares of Preferred Stock
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
[_]
13 Percent of Class Represented By Amount in Row (11)
26.6% of Common Stock
37.7% of Preferred Stock
14 Type of Reporting Person*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 4 of 24 Pages
CUSIP No.: 808638209 (Common) SCHEDULE 13D
808638308 (Preferred)
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Roleo Corporation Retirement Plan
2 Check the Appropriate Box If a Member of a Group*
a. [_]
b. [X]
3 SEC Use Only
4 Source of Funds*
AF
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
United States
7 Sole Voting Power
Number of 0
Shares
Beneficially 8 Shared Voting Power
Owned By 531,950 shares of Common Stock
Each 659,750 shares of Preferred Stock
Reporting 9 Sole Dispositive Power
Person 0
With
10 Shared Dispositive Power
531,950 shares of Common Stock
659,750 shares of Preferred Stock
11 Aggregate Amount Beneficially Owned by Each Reporting Person
531,950 shares of Common Stock
659,750 shares of Preferred Stock
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
[_]
13 Percent of Class Represented By Amount in Row (11)
26.6% of Common Stock
37.7% of Preferred Stock
14 Type of Reporting Person*
EP
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 5 of 24 Pages
CUSIP No.: 808638209 (Common) SCHEDULE 13D
808638308 (Preferred)
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Paul Soros (in his capacity as sole shareholder and sole director of VDM
Inc., a general partner of Sorol)
2 Check the Appropriate Box If a Member of a Group*
a. [_]
b. [X]
3 SEC Use Only
4 Source of Funds*
PF
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [_]
6 Citizenship or Place of Organization
United States
7 Sole Voting Power
Number of 0
Shares
Beneficially 8 Shared Voting Power
Owned By 531,950 shares of Common Stock
Each 659,750 shares of Preferred Stock
Reporting 9 Sole Dispositive Power
Person 0
With
10 Shared Dispositive Power
531,950 shares of Common Stock
659,750 shares of Preferred Stock
11 Aggregate Amount Beneficially Owned by Each Reporting Person
531,950 shares of Common Stock
659,750 shares of Preferred Stock
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
[_]
13 Percent of Class Represented By Amount in Row (11)
26.6% of Common Stock
37.7% of Preferred Stock
14 Type of Reporting Person*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 6 of 24 Pages
CUSIP No.: 808638209 (Common) SCHEDULE 13D
808638308 (Preferred)
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Andrew Romay (in his capacity as sole trustee of Roleo
Corporation Retirement Plan, a general partner of Sorol)
2 Check the Appropriate Box If a Member of a Group*
a. [_]
b. [X]
3 SEC Use Only
4 Source of Funds*
PF
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [_]
6 Citizenship or Place of Organization
United States
7 Sole Voting Power
Number of 0
Shares
Beneficially 8 Shared Voting Power
Owned By 531,950 shares of Common Stock
Each 659,750 shares of Preferred Stock
Reporting 9 Sole Dispositive Power
Person 0
With
10 Shared Dispositive Power
531,950 shares of Common Stock
659,750 shares of Preferred Stock
11 Aggregate Amount Beneficially Owned by Each Reporting Person
531,950 shares of Common Stock
659,750 shares of Preferred Stock
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
[_]
13 Percent of Class Represented By Amount in Row (11)
26.6% of Common Stock
37.7% of Preferred Stock
14 Type of Reporting Person*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 7 of 24 Pages
Item 1. Security and Issuer.
This statement on Schedule 13D relates to shares of common stock,
$0.10 par value per share (the "Common Shares"), and shares of Preferred Stock,
$1.00 par value per share (the "Preferred Shares", and together with the Common
Shares, the "Shares") of the Science Management Corporation (the "Issuer"). The
address of the principal executive offices of the Issuer is 721 Route 202/206,
Bridgewater, New Jersey 08807-1760. This statement on Schedule 13D is being
filed by the Reporting Persons (as defined below) to report a recent acquisition
of Shares as a result of which the Reporting Persons may be deemed the
beneficial owner of more than 5% of each of the total outstanding Common Shares
and the total outstanding Preferred Shares.
The Preferred Shares are non-convertible, non-dividend bearing
shares of preferred stock which, as a class, are entitled to .01% of the vote of
the issued and outstanding Common Shares.
Item 2. Identity and Background.
This statement is being filed on behalf of:
(i) Sorol, a New York general partnership ("Sorol");
(ii) VDM Inc. ("VDM");
(iii) Roleo Corporation Retirement Plan (the "Plan");
(iv) Paul Soros ("Mr. Soros"), in his capacity as sole
shareholder and sole director of VDM; and
(v) Andrew Romay ("Dr. Romay"), in his capacity as sole trustee of
the Plan
(collectively, the "Reporting Persons"). Information contained herein with
respect to each Reporting Person has been provided by such Reporting Person and
no other Reporting Person is responsible for the accuracy and completeness of
such information.
The Reporting Persons
Sorol is a New York general partnership organized on June 26,
1996. Sorol has its principal place of business and principal office at 200 West
86th Street, New York, New York 10024, c/o Andrew Romay. The sole business of
Sorol is to make investments.
VDM and the Plan are the general partners of Sorol and may be
deemed to exercise shared voting and dispositive ownership power with respect to
securities (including the Shares) held for the account of Sorol.
<PAGE>
Page 8 of 24 Pages
Mr. Soros is the sole shareholder and sole director of VDM. Mr.
Soros is a United States citizen who is the founder and former president of
Soros Associates, an international engineering firm. Mr. Soros has his principal
office at 888 Seventh Avenue, New York, New York 10106. Pursuant to regulations
promulgated under Section 13(d) of the Act, Mr. Soros may be deemed to be the
beneficial owner of securities held for the account of Sorol (as sole
shareholder and sole director of VDM).
Dr. Romay is the sole trustee of the Plan. Dr. Romay is a United
States citizen who is the President of Roleo Corporation, a Delaware corporation
engaged in financial consulting. Dr. Romay has his principal office at 200 West
86th Street, New York, New York 10024. Pursuant to regulations promulgated under
Section 13(d) of the Act, Dr. Romay may be deemed to be the beneficial owner of
securities held for the account of Sorol (as sole trustee of the Plan).
None of the Reporting Persons has, during the past five years,
been (a) convicted in a criminal proceeding, or (b) a party to any civil
proceeding as a result of which he has been subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws, or finding any
violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Sorol entered into an agreement, dated June 27, 1996, with
Imperial Capital Worldwide Partners, L.P., a Delaware limited partnership
("Imperial"), Jonathan Borsuk and Harvey Borsuk, a copy of which is attached
hereto as Exhibit B (the "Stock Purchase Agreement") and incorporated herein by
reference in response to this Item 3. Pursuant to the terms of the Stock
Purchase Agreement, Sorol purchased from Imperial for an aggregate purchase
price of $500,000 (the "Purchase Price"), (i) a portion of a call option
permitting it to purchase up to 131,950 Common Shares for $2.143 per share for a
period of 18 months from and after July 10, 1996 (the "Call Option"), (ii)
400,000 Common Shares, and (iii) 659,750 Preferred Shares (collectively, the
"Relevant Assets"). Sorol's obligations under the Stock Purchase Agreement with
respect to the Relevant Assets were conditioned upon the Issuer's Fifth Plan of
Reorganization becoming effective, which occurred on July 10, 1996 on which date
Sorol purchased the Relevant Assets.
Sorol obtained the funds for payment of the Purchase Price from
VDM and the Plan, each of which obtained its funds from its own working capital.
Item 4. Purpose of Transaction.
Sorol entered into the Stock Purchase Agreement for investment
purposes. None of the Reporting Persons has any plans or proposals which relate
to or would result in any of the transactions described in subparagraphs (a)
through (j) of Item 4 of Schedule 13D. The Reporting Persons reserve the right
to acquire additional securities of the Issuer, to dispose of such securities at
any time or to formulate other purposes, plans or proposals regarding the Issuer
or any of its securities, to the extent deemed advisable in light of its general
investment and trading policies, market conditions or other factors.
Item 5. Interest in Securities of the Issuer.
<PAGE>
Page 9 of 24 Pages
(a) The aggregate number of Shares of which each of Reporting Persons
may be deemed a beneficial owner is (i) 531,950 Common Shares (approximately
26.6% of the total number of Common Shares outstanding assuming the exercise of
the Call Option by Sorol), which includes the 131,950 Common Shares issuable
pursuant to the Call Option and the 400,000 Common Shares held for the account
of Sorol, and (ii) 659,750 Preferred Shares held for the account of Sorol
(approximately 37.7% of the total number of Preferred Shares outstanding).
(b) Sorol may be deemed to have sole power to vote and dispose of the
Shares held for its account and any Common Shares issued upon exercise of the
Call Option. By virtue of the position of VDM and the Plan as general partners
of Sorol, each of VDM and the Plan may be deemed to have shared beneficial
ownership with respect to the voting and disposition of the Shares held by Sorol
and any Common Shares issued upon exercise of the Call Option. By virtue of the
position of Mr. Soros and Dr. Romay with respect to each of VDM and the Plan,
respectively, each of Mr. Soros and Dr. Romay may be deemed to have shared
beneficial ownership with respect to the voting and disposition of the Shares
held by Sorol and any Common Shares issued upon exercise of the Call Option.
(c) Other than as set forth herein, no transactions in the securities
of the Issuer have been effected by the Reporting Persons since May 24, 1996 (60
days prior to the date hereof).
(d) Other than VDM, the Plan, and except as set forth in response to
Item 6, no other individuals or entities have the right to participate in the
receipt of dividends from, or proceeds from the sale of, any securities held for
the account of Sorol (including the Shares held for the account of Sorol and the
Common Shares issuable to Sorol upon exercise of the Call Option), and Mr. Soros
and Dr. Romay have the sole right to participate in the receipt of dividends
from, or proceeds from the sale of, any securities held for the account of VDM
and the Plan, respectively.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings in Relationship with
Respect to Securities of the Issuer.
Except for the Joint Filing Agreement dated July 22, 1996 between
Sorol, VDM, the Plan, Mr. Soros and Dr. Romay, the Stock Purchase Agreement and
a Letter Agreement dated June 27, 1996 between Imperial and Sorol, a copy of
which is attached hereto as Exhibit C, all of which are incorporated herein by
reference in response to this Item 6, the Reporting Persons do not have any
contracts, arrangements, understandings or relationships with respect to any
securities of the Issuer.
Pursuant to the terms of the Stock Purchase Agreement, among
other things, (i) Imperial has the right, but not the obligation, for a period
of 18 months from and after July 10, 1996 to repurchase from Sorol, one or more
Assigns (as defined therein) or both, for a price of $760,000 in cash, all of
the Relevant Assets and all rights or assets of any nature arising therefrom or
relating or accruing thereto from and after July 10, 1996 (including by virtue
of dividends); (ii) both Imperial and Sorol have agreed that, prior to any such
repurchase set forth in (i) above, if either wishes to sell any of its interest
in the Issuer to a third party, the other party shall have the opportunity to
acquire such interests on the same terms and conditions applicable to such third
party or to participate in such sale; and (iii) Imperial represented and agreed
(A) that none of Imperial, Jonathan Borsuk, Harvey Borsuk or their respective
affiliates (the "Affiliates") shall, except as otherwise may be required
pursuant to their respective fiduciary duties or applicable law, vote for any
action that would materially and adversely affect the economic interest of Sorol
in the Relevant Assets unless consented to by Sorol, which consent will not be
unreasonably withheld, conditioned or delayed and (B) to consult with Sorol
prior to any vote by any of the Affiliates at any director or shareholder
meeting of the Issuer. The information set forth herein with respect to the
Stock Purchase Agreement is qualified in its entirety by reference to the
provisions of the Stock Purchase Agreement attached hereto and incorporated
herein by reference.
Item 7. Material to be Filed as Exhibits.
(a) Joint Filing Agreement, dated July 22, 1996, between Sorol, VDM,
the Plan, Mr. Soros and Dr. Romay.
(b) Agreement, dated June 27, 1996, among Imperial, Sorol, Jonathan
Borsuk and Harvey Borsuk.
(c) Letter Agreement, dated June 27, 1996, between Imperial and Sorol.
<PAGE>
Page 10 of 24 Pages
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
Date: July 22, 1996
SOROL, a New York general partnership
By: VDM Inc.
General Partner
By: /S/ PAUL SOROS
----------------------------------
Paul Soros
Sole Shareholder and Sole Director
VDM INC.
By: /S/ PAUL SOROS
---------------------------------
Paul Soros
Sole Shareholder and Sole Director
ROLEO CORPORATION RETIREMENT PLAN
By: /S/ ANDREW ROMAY
---------------------------------
Andrew Romay
Sole Trustee
PAUL SOROS
/S/ PAUL SOROS
-------------------------------------
ANDREW ROMAY
/S/ ANDREW ROMAY
-------------------------------------
<PAGE>
Page 11 of 24 Pages
INDEX OF EXHIBITS
EXHIBIT PAGE
A Joint Filing Agreement, dated July 22, 1996, between Sorol,
VDM Inc., Roleo Corporation Retirement Plan, Paul Soros
and Andrew Romay.
B Agreement, dated June 27, 1996, among Imperial Capital
Worldwide Partners, L.P., Sorol, a New York general
partnership, Jonathan Borsuk and Harvey Borsuk.
C Letter Agreement, dated June 27, 1996, between Imperial
Capital Worldwide Partners, L.P. and Sorol, a New York general
partnership.
<PAGE>
Page 12 of 24 Pages
EXHIBIT A
JOINT FILING AGREEMENT
The undersigned hereby agree that the statement on Schedule 13D with
respect to the Common Stock of Science Management Corporation, dated July 22,
1996 is, and any amendments thereto signed by each of the undersigned shall be,
filed on behalf of us pursuant to and in accordance with the provisions of Rule
13d-1(f) under the Securities Exchange Act of 1934.
Date: July 22, 1996
SOROL, a New York general partnership
By: VDM Inc.
General Partner
By: /S/ PAUL SOROS
----------------------------------
Paul Soros
Sole Shareholder and Sole Director
VDM INC.
By: /S/ PAUL SOROS
----------------------------------
Paul Soros
Sole Shareholder and Sole Director
ROLEO CORPORATION RETIREMENT PLAN
By: /S/ ANDREW ROMAY
----------------------------------
Andrew Romay
Sole Trustee
PAUL SOROS
/S/ PAUL SOROS
-----------------------------------------
ANDREW ROMAY
/S/ ANDREW ROMAY
-----------------------------------------
<PAGE>
Page 13 of 24 Pages
EXHIBIT B
AGREEMENT
AGREEMENT, dated June 27, 1996, among Imperial Capital Worldwide
Partners, L.P. ("Imperial"), SOROL, a New York general partnership
("Purchaser"), Jonathan Borsuk and Harvey Borsuk.
WHEREAS, Science Management Corporation ("Science Management"), a
Delaware corporation that filed for reorganization pursuant to 11 U.S.C. ss.101
et seq., had its Fifth Amended Plan of Reorganization approved by the United
States Bankruptcy Court for the District of New Jersey on April 17, 1996 (the
"Plan"); and
WHEREAS, pursuant to the Plan, on the Effective Date of and as defined
in the Plan (the "Effective Date"), Science Management is to, among other
things, issue (a) two million (2,000,000) shares of new Science Management
common stock (the "New Common Stock") to replace and supersede all Science
Management common stock theretofore in existence, and (b) one million seven
hundred and fifty thousand (1,750,000) shares of new Science Management
preferred stock possessing a par value of one dollar ($1.00) per share (the "New
Preferred Stock") to replace and supersede all Science Management preferred
stock theretofore in existence; and
WHEREAS, pursuant to, and on the Effective date of, the Plan, Imperial
is to, among other things, pay Four Hundred and Sixty Three Thousand Dollars
($463,000.00) to Science Management, and Science Management is to, among other
things, place in escrow for the Call Period (as hereinafter defined) three
hundred and fifty thousand (350,000) shares of New Common Stock subject to the
Call Option (as hereinafter defined) (the "Escrowed New Common Stock") and
distribute to Imperial the following, hereinafter collectively referred to as
the "Science Management Interests": (a) one million seventy thousand (1,070,000)
shares of the New Common Stock, (b) a call option to acquire the Escrowed New
Common Stock, which option may be exercised in whole, in part or in increments,
by the holder thereof at any time(s) within the period commencing with the
Effective Date and ending eighteen (18) months thereafter (the "Call Period"),
for $2.143 in cash per share (the "Call Price") of Escrowed New Common Stock so
acquired (the "Call Option"), and (c) all the New Preferred Stock which New
Preferred Stock is, without limitation, redeemable for cash at par value by
Science Management three (3) years after the Effective Date; and
WHEREAS, Purchaser desires to purchase and Imperial desires to sell
(a) that portion of the Call Option that would permit the holder thereof to
acquire one hundred and thirty-one thousand nine hundred and fifty (131,950)
shares of Escrowed New Common Stock, which option represented by said portion of
the Call Option may be exercised in whole, in part or in increments, by the
holder thereof at any time(s) during the Call Period for the Call Price
("Purchaser's Call Option"), (b) four hundred thousand (400,000) shares of New
Common Stock, and (c) six hundred and fifty-nine thousand seven hundred and
fifty (659,750) shares of New Preferred Stock, all of the foregoing being
hereinafter referred to as the "Relevant Assets"; and
WHEREAS, Purchaser and Imperial desire to set forth certain terms and
conditions regarding their ownership and voting of shares of Science Management;
and
WHEREAS, Imperial has represented to Purchaser that, to the best of
Imperial's knowledge, the balance sheets and profit and loss statements of
Science Management presented to Purchaser are true and correct in all material
respects and do not fail to state a material fact necessary to make such balance
sheets and profit and loss statements, in light of the circumstances under which
they were presented, not misleading; and
WHEREAS, Purchaser has represented to Imperial that it, its
principals, or its beneficiaries are "accredited investors" as defined under
Regulation D of the U.S. Securities Act of 1933, as amended, and have the
financial wherewithal to make, and bear the risk of loss of their total
investment in connection with, a purchase of interests in Science Management as
contemplated by this Agreement; and
WHEREAS, each of Imperial and Purchaser has represented one to the
other that (i) it is duly organized, validly existing and in good standing under
the laws of the State of its organization or formation, (ii) it has all
necessary power and authority to execute, deliver and perform this Agreement,
(iii) this Agreement, upon and after execution, will be a valid and binding
obligation of such party, enforceable in accordance with its terms, the making
and performance of which will have been duly authorized by all necessary action,
and will not violate, or constitute a default, or require the consent of any
person or entity, under the provisions of any agreement or instrument by which
such party is bound, or any law, requirement or restriction imposed by a
judicial, arbitral or governmental instrumentality on such party, and (iv) no
brokerage, finder's, escrow or like fees or commissions are due any person as a
result of this Agreement or the transactions contemplated hereby.
NOW THEREFORE:
1. Purchaser agrees that on or before the Effective Date Purchaser
shall deliver to Rogers & Wells, counsel to Imperial, as escrow agent ("Escrow
Agent"), a certified or bank check payable to Science Management Corporation in
the amount of Four Hundred and Sixty Three Thousand Dollars ($463,000.00) (the
"SMC Check"), which check shall be held and released by Escrow Agent pursuant to
the terms of that certain Escrow Agreement annexed hereto as Exhibit A (the
"Escrow Agreement"). Purchaser agrees that on the Effective Date, upon Escrow
Agent's notification to Purchaser of Escrow Agent's receipt of the Relevant
Assets legended pursuant to paragraph 5 hereinbelow (the "Legended Relevant
Assets"), Purchaser shall pay to Imperial the sum of Thirty Seven Thousand
Dollars ($37,000.00), by bank or certified check payable to Imperial Capital
Worldwide Partners, L.P., or by wire transfer to the favor of Republic National
Bank of New York, 452 Fifth Avenue, New York, New York, United States of
America, ABA# 021004823, for the account of Imperial Capital Worldwide Partners,
L.P., Account Number 318265346 (the "Imperial Payment"), and Imperial shall
thereupon notify Escrow Agent of Imperial's receipt of the Imperial Payment, and
Escrow Agent shall, pursuant to the Escrow Agreement, deliver to Purchaser the
Legended Relevant Assets. Imperial shall give Purchaser three (3) business days'
notice of the Effective Date.
<PAGE>
Page 14 of 24 Pages
2. Imperial hereby represents, warrants and covenants that (a)
Imperial shall on the Effective Date own the Relevant Assets, free and clear of
any liabilities, obligations, liens, pledges, security interests, contractual
commitments, charges, equities or other encumbrances (collectively
"Encumbrances"), (b) upon transfer of the Relevant Assets to Purchaser in
accordance with this Agreement, good and marketable title in and to the Relevant
Assets, free and clear of Encumbrances, shall have been transferred and sold to
Purchaser, (c) during the Shareholder Cooperation Period (as hereinafter
defined) none of Imperial, Jonathan Borsuk, Harvey Borsuk or their respective
affiliates (the "Affiliates"), shall, except as otherwise may be required
pursuant to their respective fiduciary duties or applicable law, vote for any
action in their capacity as director, officer or shareholder of Science
Management which will materially and adversely affect the economic interests of
the Purchaser in the Relevant Assets, including without limitation the issuance
of additional securities by Science Management, unless consented to by Purchaser
which consent shall not be unreasonably withheld, conditioned or delayed, and
(d) during the Shareholder Cooperation Period, Purchaser shall be consulted by
Imperial prior to any vote by any of the Affiliates at any Board of Directors or
shareholders meetings of Science Management.
3. (a) At any time from and after the Effective Date (unless and
until Imperial re- purchases the Relevant Assets from Purchaser pursuant to
paragraph 4 hereinbelow) (the "Shareholder Cooperation Period") if either
Purchaser or Imperial desires to sell any of their interests in Science
Management to a third party (a "Triggering Sale"), such intending selling party
(the "Seller") shall, in writing, offer the other party hereto (the "Option
Holder") the option, which such Option Holder may exercise in its sole
discretion by delivering written notice to the Seller within the seven (7) days,
and closing on such option within the thirty (30) days (unless the Seller
desires to extend such period), following receipt of such written offer, either
(i) to sell in such Triggering Sale up to the Maximum Allotment (as hereinafter
defined) of its interests in which case a sufficient amount of the Seller's
interests to be sold in such Triggering Sale shall be withdrawn from such
Triggering Sale to the extent necessary to accommodate the sale of interests
pursuant hereto by the Option Holder, (ii) to cancel such Triggering Sale by
instead acquiring all of the Seller's and all other intended sellers' interests
intended to be sold in such Triggering Sale upon the same terms and conditions
of such Triggering Sale, or (iii) to take no action whatsoever with respect to
such Triggering Sale.
(b) As used herein, the "Maximum Allotment" refers to, with
respect to each type of interest to be sold in a Triggering Sale, the amount of
all like interests held by the Option Holder multiplied by a fraction of which
the numerator is the number of like interests intended to be sold by the Seller
in such Triggering Sale and the denominator of which is the total amount of such
interests held by the Seller immediately preceding such Triggering Sale.
(c) Notwithstanding anything to the contrary contained in this
Agreement, any and each sale or other transfer of any of the Relevant Assets
shall be subject to Imperial's rights contained in paragraph 4 hereinbelow which
rights shall be paramount and extend to, along with the obligations of Purchaser
attendant to such rights which obligations shall be assumed by and binding upon,
any purchaser or transferee of any of the Relevant Assets (an "Assign"), or such
sale or transfer will be null and void ab initio.
4. Notwithstanding anything to the contrary, Imperial shall have the
right, but not the obligation, to at any time until after the date that is
eighteen (18) months after the Effective Date (the "Buyback Period"),
re-purchase, from and whether held by Purchaser, one or more Assigns or both,
for a total price of Seven Hundred and Sixty Thousand Dollars ($760,000.00) in
cash, allocable to Purchaser and any and each Assign in accordance with the
applicable agreements among Purchaser and such Assign, all of the Relevant
Assets and all rights or assets of any nature arising therefrom or relating or
accruing thereto from and after the Effective Date (by virtue of dividends, the
exercise, in whole or in part, of Purchaser's Call Option, or otherwise, and
irrespective of when in such period, or whether to the benefit of Purchaser or
any Assigns, so arising, relating or accruing, but excluding the payment by
Science Management or Imperial to Purchaser of the advisor compensation referred
to in paragraph 6 hereinbelow).
5. The parties agree that the Science Management Interests shall be
legended as set forth in Exhibit B annexed hereto to give notice of the
provisions of paragraphs 3 and 4 hereinabove and that such interests will only
be transferred subject to said provisions. Purchaser hereby grants Imperial an
irrevocable and unconditional power of attorney to affix the legend on the
Science Management Interests only as set forth in Exhibit B annexed hereto.
6. Imperial agrees to use its reasonable best efforts, to the extent
consistent with its fiduciary duties and applicable law, to cause Science
Management to (a) offer to hire Purchaser as advisor to Science Management at a
compensation of two thousand dollars ($2,000.00) per month for a period
commencing with the Effective Date and ending on the earlier of the expiration
of the Shareholder Cooperation Period or the third anniversary of the Effective
Date (the "Advisory Period"), and (b) permit Purchaser to attend every meeting
of the Science Management Board of Directors during the Advisory Period, and
Jonathan Borsuk agrees, during the Advisory Period and to the extent consistent
with his fiduciary duties and applicable law, to submit matters on the record of
the meetings of the Science Management Board of Directors as may be requested by
Purchaser. Furthermore, Imperial intends that Jonathan Borsuk shall be actively
involved in the management of Science Management during the Advisory Period. If
Science Management does not offer to hire Purchaser as advisor as contemplated
in clause (a) of this paragraph 6, Imperial shall offer to hire Purchaser as
advisor to Imperial for the Advisory Period at a compensation of two thousand
dollars ($2,000.00) per month.
7. (a) Imperial agrees to indemnify Purchaser and hold it harm-
less from and against, and shall be obligated to pay or reimburse Purchaser in
respect of, the consequences of any claims by Irwin Kallman by virtue of the
transactions contemplated by this Agreement, including, without limitation, any
and all deficiency, direct or indirect losses, damages to its interests, and
reasonable costs (including attorneys' fees) and other reasonable expenses which
it may sustain or incur as a result thereof.
(b) Imperial agrees that, during the Shareholder Cooperation
Period, it shall keep Purchaser apprised of all material developments in the
case styled Irwin Kallman v. Imperial Capital Worldwide Partners, L.P, et al.,
-------------------------------------------------------------------
filed in the Supreme Court of the State of New York, County of New York, Index
No. 12167/95, and any related or associated claims or actions arising from the
subject matter thereof.
(c) In the event that, during the Shareholder Cooperation Period,
Irwin Kallman ("Kallman") obtains a judgment against Imperial pursuant to which
Kallman would be entitled to receive any of the interests in Science Management
received by Imperial pursuant to the Plan, then Purchaser shall have the right
but not the obligation to acquire such interests by payment to Imperial, for
contemporaneous payment by Imperial to Kallman, of the amount of said judgment.
<PAGE>
Page 15 of 24 Pages
8. Jonathan Borsuk and Harvey Borsuk unconditionally guarantee the
performance of all obligations and undertakings and the accuracy of all
representations and warranties, of Imperial under this Agreement.
9. It is understood and agreed by the parties that monetary damages
would not suffice as a remedy for any breach hereunder, and that the parties
shall be entitled to, without limitation, equitable relief, including injunction
and specific performance, in order to enforce the terms and provisions of this
Agreement.
10. The address of each party, for delivery of all notices,
notifications, communications and other deliveries hereunder, shall be as
follows or such other address as such party may hereafter designate by written
notice to the other party as herein provided: if for Imperial, Jonathan Borsuk
or Harvey Borsuk, care of Imperial Capital Funding Corporation, 666 Fifth
Avenue, 37th Floor, New York, New York 10103, and if for Purchaser, care of
Andrew Romay, 200 West 86th Street, New York, New York 10024, with a copy to
Paul Soros, care of Soros Associates, 888 Seventh Avenue, New York, New York
10106.
11. This Agreement may be executed in counterparts each of which shall
be deemed an original and all of which taken together shall constitute but one
and the same instrument. A facsimile signature on any counterpart hereto will be
deemed an original for all purposes.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed the day and year first above written.
SOROL
By:
--------------------------------------------
Its:
By:
---------------------------------------------
Its:
<PAGE>
Page 16 of 24 Pages
IMPERIAL CAPITAL WORLDWIDE PARTNERS, L.P.
By Imperial Capital Investors Corp.,
its general partner
By:
--------------------------------------------
Its:
Jonathan Borsuk
/S/ JONATHAN BORSUK
------------------------------------------------
Harvey Borsuk
/S/ HARVEY BORSUK
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<PAGE>
Page 17 of 24 Pages
EXHIBIT C
ESCROW AGREEMENT
ESCROW AGREEMENT, dated June 27, 1996, among Imperial Capital
Worldwide Partners, L.P., a Delaware limited partnership ("Imperial"), SOROL, a
New York general partnership ("Purchaser"), and Rogers & Wells ("Escrow Agent").
WHEREAS:
A. Imperial, Purchaser, Harvey Borsuk and Jonathan Borsuk have
executed that certain Agreement of even date herewith pursuant to which, among
other things, Purchaser has agreed to purchase and Imperial has agreed to sell
certain interests in Science Management Corporation (the "Principal Agreement");
and
B. All capitalized terms used and not expressly otherwise
defined herein shall have the meanings ascribed to them in the Principal
Agreement; and
C. The Escrow Agent is willing to act as escrow agent under the
Principal Agreement pursuant to the terms of this Escrow Agreement.
NOW, THEREFORE, for good and valuable consideration the receipt
and sufficiency of which is hereby acknowledged, the parties hereto hereby agree
as follows:
1. Imperial shall give Escrow Agent and Purchaser three (3) business
days' notice of the Effective Date. Imperial shall inform Escrow Agent of the
time and place of the consummation of the Plan (the "Closing") and a duly
authorized representative of Escrow Agent shall, at Imperial's request, attend
the Closing for the purpose of effecting the proceedings contemplated by this
Escrow Agreement.
2. On or prior to the Effective Date, Purchaser shall deliver the SMC
Check to Escrow Agent. Escrow Agent shall accept and hold such SMC Check in
escrow until the Effective Date whereupon Escrow Agent shall release and deliver
the SMC Check to Science Management contemporaneously with and only upon
completion of all of the following (a) Imperial's written request to Escrow
Agent to release the SMC Check to Science Management, (b) Escrow Agent's receipt
of written advice from Imperial that Imperial has received delivery of the
Science Management Interests, and (c) Imperial's delivery to Escrow Agent of the
Legended Relevant Assets, whereupon Escrow Agent shall notify Purchaser that
Escrow Agent has received the Legended Relevant Assets.
3. Escrow Agent shall hold all Legended Relevant Assets in escrow on
the terms and conditions set forth herein until Imperial notifies Escrow Agent
and Purchaser that Imperial has received the Imperial Payment (which
notification Imperial shall deliver to Escrow Agent immediately upon Imperial's
receipt of the Imperial Payment and completion of the conditions listed in
paragraph 2 hereinabove) whereupon Escrow Agent shall release and deliver to
Purchaser all Legended Relevant Assets. The assets placed in escrow pursuant to
the provisions of paragraphs 2 and 3 hereof are hereinafter collectively
referred to as the "Escrowed Property".
4. If the conditions set forth in paragraphs 2 and 3 hereof shall not
have been satisfied by August 31, 1996, unless said date has been mutually
extended by an agreement signed by all the parties hereto, in which case the
release of the Escrowed Property shall be governed by the terms of such
extension agreement, then Escrow Agent shall return each item of the Escrowed
Property to the party hereto which placed such item in escrow hereunder.
<PAGE>
Page 18 of 24 Pages
5. Escrow Agent shall have no rights, duties or obligations with
regard to the Escrowed Property except to follow the instructions contained
herein. Escrow Agent's rights and duties are as a depositary only, and Escrow
Agent is expressly precluded from accepting or making any partial or conditional
release, delivery or payment, or imposing or waiving any condition on the
release, delivery or payment by Escrow Agent, with respect to any of the
Escrowed Property, except as expressly set forth herein.
6. Escrow Agent shall be entitled to act on and rely upon any written
notice or document which purports to have been signed or presented by the party
or parties entitled to execute and delivery such document and Escrow Agent shall
have no duty to inquire of or investigate the authorization, signature or
authenticity of such person or document. Escrow Agent shall be fully protected
in relying upon any written notice, demand, certificate or document which it, in
good faith, believes to be genuine. Escrow Agent shall not be responsible for
the sufficiency or accuracy of the form, execution, validity or genuineness of
instruments, documents or securities now or hereafter deposited hereunder or
delivered pursuant hereto, or of any endorsement thereon, or for any lack of
endorsement thereon, or for any description therein; nor shall Escrow Agent be
responsible or liable in any respect on account of the identity, authority or
rights of the persons executing or delivering or purporting to execute or
deliver any such instrument, document, security or endorsement.
7. Escrow Agent shall not be liable for any error of judgment or for
any act taken or omitted by it or for any mistake in fact or law or for anything
which it may do or refrain from doing in connection herewith except for its own
willful misconduct or gross negligence. The parties hereto agree, jointly and
severally, to indemnify the Escrow Agent and hold it harmless from and against
any and all claims, liabilities, losses, actions suits or proceedings at law or
in equity, or any other reasonable expenses, fees or charges of any character or
nature which it may incur or with which it may be threatened by reason of its
acting as escrow agent under this Escrow Agreement, other than claims,
liabilities, losses, actions, suits, proceedings or expenses, charges or fees
which shall have been finally determined by a court of competent jurisdiction to
arise directly from the gross negligence or willful misconduct of Escrow Agent.
8. Escrow Agent shall not be bound in any way by any other terms of
any other agreement to which Imperial and Purchaser are parties, including the
Principal Agreement, whether or not it has knowledge thereof, and Escrow Agent
shall not in any way be required to determine whether or not any other agreement
has been complied with by Imperial or Purchaser or any other party thereto.
9. Escrow Agent shall not be bound by any modification, amendment,
termination, cancellation, rescission or supersession of this Escrow Agreement
unless the same shall be in writing and signed jointly by Imperial and
Purchaser, and agreed to by Escrow Agent which agreement by Escrow Agent shall
not be unreasonably withheld, delayed or conditioned. Escrow Agent may consult
with counsel of its choice, and shall not be liable for any action taken,
suffered or omitted by it in accordance with the advice of such counsel. In the
event that Escrow Agent shall, in good faith, be uncertain as to its duties or
rights hereunder or shall receive instructions, claims or demands which, in its
reasonable opinion, are in conflict with any of the provisions of this Escrow
Agreement, it shall be entitled to refrain from taking any action other than to
keep safely all property held in escrow until it shall jointly be directed
otherwise in writing by Imperial and Purchaser or by a final judgment of a court
of competent jurisdiction.
10. Escrow Agent shall not be required to institute legal proceedings
of any kind and may but shall not be required to defend any legal proceedings
which may be instituted against it.
11. This Escrow Agreement shall not create any fiduciary duty on
Escrow Agent's part to Imperial or Purchaser or Science Management or any other
person, firm or entity, nor disqualify Escrow Agent from representing Imperial
in any dispute with Purchaser including any dispute with respect to this Escrow
Agreement or the Principal Agreement or the transactions contemplated hereby or
thereby. The parties to this Escrow Agreement acknowledge that Escrow Agent has
represented and continues to represent Imperial and consents to the continued
representation by Escrow Agent of Imperial. In connection with its duties
hereunder, Escrow Agent will be acting for the benefit of the parties hereto.
12. If the parties hereto shall be in disagreement about the
interpretation of this Escrow Agreement, or about their rights or obligations
hereunder or the propriety of any action taken by Escrow Agent hereunder, Escrow
Agent may, at its sole discretion, file an action in interpleader to resolve
such disagreement. Escrow Agent shall be indemnified by the parties hereto for
all costs, including reasonable attorneys' fees, in connection with the
aforesaid interpleader action, and shall be fully protected in suspending all or
a part of its activities under this Agreement until a final judgment in the
interpleader action is received. Escrow Agent may resign upon thirty (30) days'
written notice to the parties to this Escrow Agreement. If a successor escrow
agent hereunder is not appointed within the thirty (30) day period, the Escrow
Agent may petition a court of competent jurisdiction to name a successor.
13. All notices, requests, demands, deliveries and other
communications hereunder shall be in writing, with copies to all the other
parties hereto, and shall be deemed to have been duly given if delivered by
hand, air courier or messenger service or mailed, postage prepaid, certified
mail, return receipt requested, if to Purchaser, addressed to SOROL, c/o Andrew
Romay, 200 West 86th Street, New York, New York 10024, with a copy to Paul
Soros, c/o Soros Associates, 888 Seventh Avenue, New York, New York 10106, if to
Imperial, c/o Imperial Capital Funding Corporation, 666 Fifth Avenue, 37th
Floor, New York, New York, 10103, attn: Jonathan Borsuk, and if to Escrow Agent,
200 Park Avenue, New York, New York 10166, attn: Shephard Melzer, Esq., or at
such other address as any of the parties to this Escrow Agreement may hereafter
designate by at least five (5) days' written notice to the others. Notice shall
be deemed to have been delivered upon receipt in the case of hand delivery, five
(5) days after mailing in the case of mailing, and upon delivery if given to an
air courier or messenger service.
14. This Escrow Agreement embodies the entire agreement and
understanding among the parties hereto relating to the subject matter hereof and
may not be changed orally, but only by an instrument in writing, signed by all
the parties hereto. This Escrow Agreement shall be construed and enforced in
accordance with the internal laws of the State of New York but without giving
effect to conflict of laws rules. This Escrow Agreement may be executed in
counterparts each of which shall be deemed an original and all of which taken
together shall constitute but one and the same instrument. A facsimile signature
on any counterpart hereto will be deemed an original for all purposes.
IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be signed the day and year first above written.
Imperial Capital Worldwide Partners, L.P.
By Imperial Capital Investors Corp.,
its general partner
By:
------------------------------------------------
Its:
<PAGE>
Page 19 of 24 Pages
SOROL
By:
-------------------------------------------------
Its:
By:
-------------------------------------------------
Its:
Rogers & Wells
By:
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Its:
<PAGE>
Page 20 of 24 Pages
EXHIBIT D
SOROL
a New York general partnership
c/o Andrew Romay
200 West 86th Street
New York, New York 10024
June 27, 1996
Imperial Capital Worldwide Partners, L.P.
666 Fifth Avenue, 37th Floor
666 Fifth Avenue, 27th Floor
New York, NY 10103
Attn: Jonathan L. Borsuk
Dear Jonathan:
This letter shall confirm that, pursuant to clause (iii) of
subparagraph 3(a) of the Agreement between us of even date herewith (the
"Agreement"), we elect to take no action whatsoever with respect to your
intended sale to Rahul Rana of 12, 500 shares of the new common stock of Science
Management Corporation to be distributed to you on the Effective Date of Science
Management Corporation's Fifth Modified Plan of Reorganization. In light of the
foregoing, this letter shall serve as evidence of our consent that such new
stock being sold to Mr. Rana need not bear the legending that would otherwise be
required to paragraph 5 of the Agreement.
Yours very truly,
SOROL, a New York general partnership
By:
---------------------------------------
Its:
By:
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Its:
