UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __)*
SAM & LIBBY, INC.
(Name of Issuer)
Common Stock, $.001 par value
(Title of Class of Securities)
79584310
(CUSIP Number)
Andre W. Brewster
Howard, Rice, Nemerovski, Canady, Falk & Rabkin
A Professional Corporation
Three Embarcadero Center, Suite 700
San Francisco, CA 94111
(415) 434-1600
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
July 30, 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 this
statement [x]. (A fee is not required only if the filing 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 the disclosures provided
in a prior cover page.
The information required in the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18<PAGE>
CUSIP No. 79584310 SCHEDULE 13D Page 2 of 41
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 1 of 41
Exhibit Index Located on Page 9<PAGE>
CUSIP No. 79584310 SCHEDULE 13D Page 3 of 41
1 Name of Reporting Person Lane International Trading, Inc.
IRS Identification No. of Above Person
2 Check the Appropriate Box if a Member of a Group (a) [ ]
(b) [x]
3 SEC USE ONLY
4 Source of Funds OO, 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 California
7 Sole Voting Power 0
NUMBER OF
SHARES 8 Shared Voting Power 1,358,608
BENEFICIALLY
OWNED BY EACH 9 Sole Dispositive Power 0
REPORTING
PERSON WITH
10 Shared Dispositive Power 1,358,608
11 Aggregate Amount Beneficially Owned by Each Reporting
Person 1,358,608
12 Check Box if the Aggregate Amount in Row 11 Excludes Certain
Shares [ ]
13 Percent of Class Represented by Amount in Row 11 9.89%*
14 Type of Reporting Person CO
* See response to Item 5.<PAGE>
CUSIP No. 79584310 SCHEDULE 13D Page 4 of 41
1 Name of Reporting Person Lane L.T. Shay
IRS Identification No. of Above Person
2 Check the Appropriate Box if a Member of a Group (a) [ ]
(b) [x]
3 SEC USE ONLY
4 Source of Funds AF, 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 USA
7 Sole Voting Power 10,653
NUMBER OF
SHARES 8 Shared Voting Power 1,358,608*
BENEFICIALLY
OWNED BY EACH 9 Sole Dispositive Power 10,653
REPORTING
PERSON WITH
10 Shared Dispositive Power 1,358,608*
11 Aggregate Amount Beneficially Owned by Each Reporting
Person 1,369,261*
12 Check Box if the Aggregate Amount in Row 11 Excludes Certain
Shares [ ]
13 Percent of Class Represented by Amount in Row 11 9.96%*
14 Type of Reporting Person IN
* See response to Item 5.<PAGE>
CUSIP No. 79584310 SCHEDULE 13D Page 5 of 41
Item 1. Security and Issuer
This Schedule 13D relates to shares of Common
Stock, $0.001 par value (the "Common Stock"), of Sam & Libby,
Inc., a California corporation (the "Issuer"). The address
of the principal executive offices of the Issuer is 58 West
40th Street, New York, New York 10018.
Item 2. Identity and Background
This Schedule is filed on behalf of Lane
International Trading, Inc., a California corporation
("Lane"), and Lane L.T. Shay, the President, a director and a
controlling shareholder of Lane ("Shay"). (Lane and Shay are
collectively referred to herein as the "Reporting Persons.")
Lane is a California corporation whose principal
business is importing shoes. The principal business and
office address of Lane is 31284 San Antonio Street, Suite 7,
Hayward, California 94544. The names of the executive
officers, directors and controlling shareholders of Lane and
their addresses, principal occupations and citizenship are as
follows:
Principal
Occupation Citizen-
Name and Position Business Address or Employment ship
Lane L.T. Shay 31284 San Antonio Street President and USA
President, Director Suite 7 Director of
and Controlling Hayward, CA 94544 Lane and
Shareholder Managing
Director of
La Lano
International
Trading, Inc.
(shoe
exporter)
Manuel E. Salazar 31284 San Antonio Street Vice USA
Vice President, Suite 7 President,
Treasurer, Secretary Hayward, CA 94544 Treasurer,
and Director Secretary and
Director of
Lane<PAGE>
CUSIP No. 79584310 SCHEDULE 13D Page 6 of 41
To the best knowledge of the Reporting Persons,
none of the persons identified in this Item 2 has, during the
last five years, been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors), nor
been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result
of such proceeding was or is 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
The purchase price for the shares of Common Stock
described in Item 4 below was $1,018,956. The source of
funds for the purchase of such shares was the cancellation of
an equal amount of trade indebtedness owed by the Issuer to
Lane and La Lano International Trading, Inc. ("La Lano").
Shay holds an additional 10,653 shares of Common
Stock that was purchased on the open market with his personal
funds at various times prior to July 30, 1996.
Item 4. Purpose of Transaction
Effective as of July 30, 1996, the Issuer, Braha
Industries, Inc. ("Braha"), Lane and La Lano entered into a
Composition and Conversion Agreement (the "Composition
Agreement") and the Issuer, Braha and Lane entered into a
related Registration Rights Agreement (the "Registration
Rights Agreement"; collectively, the "Agreements").
Pursuant to the Agreements, Lane and La Lano
converted $1,018,956 in trade indebtedness into 1,358,608
shares of Common Stock (the "Shares") at a conversion price
of $0.75 per Share. Copies of the Agreements are attached as
Exhibits 2 and 3. All descriptions of the Agreements
contained in this Schedule are qualified in their entirety by
reference to the terms of the Agreements.
Lane acquired the Shares to compromise a portion of
the debt owed to it and La Lano by the Issuer. Depending
upon the prospects of the Issuer, general market conditions
and other factors, the Reporting Persons may acquire
additional securities of the Issuer, including shares of
Common Stock, in the open market, in privately negotiated
transactions, directly from the Issuer or otherwise.
Alternatively, depending upon such factors, the Reporting
Persons may, from time to time, dispose of some or all of the
securities of the Issuer that they may beneficially own. Any<PAGE>
CUSIP No. 79584310 SCHEDULE 13D Page 7 of 41
such disposition of the Shares would be subject to the
transfer restrictions and registration rights described in
Item 6 below.
Other than as set forth in this Schedule, the
Reporting Persons have no present plans or proposals that
relate to or would result in any of the consequences listed
in paragraphs (a)-(j) of Item 4 of Schedule 13D, although
they may in the future take actions which would have such
consequences.
Item 5. Interest in Securities of the Issuer
(a), (b) According to information furnished to the
Reporting Persons by the Issuer, there were 13,741,367 shares
of Common Stock issued and outstanding as of July 31, 1996
(after giving effect to the additional 2,697,868 shares of
Common Stock issued to Lane and Braha pursuant to the
Composition Agreement).
To the best knowledge of the Reporting Persons, the
following table shows as of July 31, 1996 the number of
shares of Common Stock as to which each person named in
Item 2 has sole or shared voting and dispositive power, as
well as the aggregate number and percentage of shares of
Common Stock beneficially owned:
Sole Voting Shared Percentage
and Voting and Aggregate of
Dispositive Dispositive Number Outstanding
Name Power Power of Shares Shares
Lane L.T. Shay 10,653 1,358,608 1,369,261 9.96%
Lane International 0 1,358,608 1,358,608 9.89%
Trading, Inc.
Manuel E. Salazar 500 0 500 Less than
.01%
As President, director and controlling shareholder
of Lane, Shay might be deemed to be beneficial owner of the
1,358,608 shares owned by Lane. Although Shay is joining in
this Schedule as a Reporting Person, the filing of this
Schedule shall not be construed as an admission that he, or
any of the other executive officers, directors or
shareholders of Lane is, for any purpose, the beneficial
owner of any of the shares owned by Lane.<PAGE>
CUSIP No. 79584310 SCHEDULE 13D Page 8 of 41
(c) During the past 60 days, no transactions in
the Common Stock were effected by the persons named in
Item 5(a), other than the transactions reported in this
Schedule.
(d), (e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the
Issuer
Transfer Restrictions. In the Composition
Agreement, Lane acknowledges that the Shares are not
registered under the Securities Act of 1933, as amended (the
"Act"), and may not be transferred in the absence of such
registration or an exemption therefrom. The shares owned by
Lane and Shay may be subject to other restrictions on
transfer under federal and state securities laws.
Registration Rights. Under the Registration Rights
Agreement, Lane and Braha have certain rights to require the
Issuer to register the Shares for resale under the Act after
September 24, 1996. Lane and Braha also have certain rights
to require the Issuer to include the Shares in registrations
initiated by the Issuer.
Voting. Lane has agreed to vote the Shares in
favor of the proposed transaction involving the sale of
certain trademark, trade name and other assets of the Company
to Maxwell Shoe Company Inc.
Other. Except for the contracts, arrangements,
understandings and relationships described above, none of the
Reporting Persons or, to the best knowledge of the Reporting
Persons, the other persons named in Item 2, is a party to any
contract, arrangement, understanding or relationship with
respect to any securities of the Issuer, including but not
limited to the transfer or voting of any of the securities of
the Issuer, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division
of profits or loss, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits
Exhibit 1 Joint Filing Agreement
Exhibit 2 Composition and Conversion Agreement, dated as
of June 26, 1996
Exhibit 3 Registration Rights Agreement, dated as of
June 26, 1996<PAGE>
CUSIP No. 79584310 SCHEDULE 13D Page 9 of 41
Signatures
After reasonable inquiry and to the best of their
knowledge and belief, the undersigned certify that the
information set forth in this statement is true, complete and
correct.
Dated: August 8, 1996
LANE INTERNATIONAL TRADING,
INC.
By /s/LANE L.T. SHAY /s/ LANE L.T. SHAY
_________________________ ____________________________
Lane L.T. Shay, President Lane L.T. Shay<PAGE>
CUSIP No. 79584310 SCHEDULE 13D Page 10 of 41
INDEX TO EXHIBITS
Sequentially
Numbered
Item Description Page
Exhibit 1 Joint Filing Agreement 11
Exhibit 2 Composition and Conversion 12
Agreement, dated as of June 26,
1996
Exhibit 3 Registration Rights Agreement, 28
dated as of June 26, 1996<PAGE>
CUSIP No. 79584310 SCHEDULE 13D Page 11 of 41
JOINT FILING AGREEMENT EXHIBIT 1
The undersigned persons, being duly authorized,
hereby agree, in accordance with Rule 13d-1(f)(1) under the
Securities Exchange Act of 1934, to file this Schedule 13D
jointly on behalf of each of such persons.
Dated: August 8, 1996
LANE INTERNATIONAL TRADING,
INC.
By /s/ LANE L.T. SHAY /s/ LANE L.T. SHAY
_________________________ ____________________________
Lane L.T. Shay, President Lane L.T. Shay<PAGE>
CUSIP No. 79584310 SCHEDULE 13D Page 12 of 41
EXHIBIT 2
COMPOSITION AND CONVERSION AGREEMENT
AGREEMENT, dated as of June 26, 1996, by and among SAM &
LIBBY, INC., a California corporation, with its principal
office at 58 West 40th Street, New York, New York 10018 (the
"Company"), BRAHA INDUSTRIES, INC., a New York corporation,
with its principal office at 1 East 33rd Street, New York,
New York 10016 ("Braha"), LANE INTERNATIONAL TRADING, INC., a
California corporation, with its principal office at 31284
San Antonio Street, Suite 7, Hayward, California 94544
("LIT") and LA LANO INTERNATIONAL TRADING, INC., a Taiwan
corporation, with offices at Room 8, 8th Floor, No. 20, Ta
Lung Rd., Taichung, Taiwan R.O.C. ("La Lano"). Lane
International Trading, Inc. and La Lano International
Trading, Inc. shall hereinafter sometimes be referred to,
jointly and severally, as "Lane".
W I T N E S S E T H :
WHEREAS, the Company has been and still is engaged in
the business of the design, development and marketing of
women's and children's footwear; and
WHEREAS, the Company, in the course of transacting its
business, has incurred various indebtedness to each of Braha
and Lane; and
WHEREAS, Braha and Lane are willing to settle the
Company's respective outstanding indebtedness to them, but
solely upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and of
the mutual undertakings of the respective parties hereto and
the mutual promises of and to the several parties hereto, it
is agreed as follows:
1. Braha hereby agrees to forgive Eight Hundred
Ninety-Seven Thousand Seven Hundred Seventy-Seven Dollars and
Fifty Cents ($897,777.50) of the Company's approximate Three
Million Two Hundred Thousand Dollars ($3,200,000)
indebtedness to Braha, for an approximate aggregate remaining
debt of Two Million Three Hundred Two Thousand Two Hundred
Twenty-Two Dollars and Fifty Cents ($2,302,222.50) when, as
and if the approximate One Million Two Hundred Ninety-Seven
Thousand Seven Hundred Seventy-Seven Dollars and Fifty Cents
($1,297,777.50) referred to in Section 4 hereof has been paid
in full.
-1-<PAGE>
CUSIP No. 79584310 SCHEDULE 13D Page 13 of 41
2. Lane hereby agrees to forgive Three Hundred Ninety
Thousand Five Hundred Twenty-Two Dollars ($390,522) of the
Company's One Million Seven Hundred Thirty-Four Thousand
Eight Hundred Thirty Dollars ($1,734,830) indebtedness to
Lane, for an aggregate remaining debt of One Million Three
Hundred Forty-Four Thousand Three Hundred Eight Dollars
($1,344,308) when, as and if the Three Hundred Twenty-Five
Thousand Three Hundred Fifty-Two Dollars ($325,352) referred
to in Section 5 hereof has been paid in full.
3. On the date the opinion of corporate counsel to the
Company is delivered to Braha and Lane in accordance with
Section 14 of this Agreement, the Company shall cause its
transfer agent to issue a stock certificate to Braha for One
Million Three Hundred Thirty-Nine Thousand Two Hundred Sixty
(1,339,260) shares of the Company's Common Stock, $0.001 par
value and a stock certificate to LIT for One Million Three
Hundred Fifty-Eight Thousand Six Hundred Eight (1,358,608)
shares of the Company's Common Stock, $0.001 par value,
(together the "Conversion Stock") at a conversion of debt
purchase price of $0.75 per share, for an aggregate purchase
price to Braha of One Million Four Thousand Four Hundred
Forty-Five Dollars ($1,004,445) and to Lane of One Million
Eighteen Thousand Nine Hundred Fifty Six Dollars ($1,018,956)
(as it applies to each of Braha and/or Lane, the "Conversion
Debt") to be applied to the approximate aggregate remaining
debt of each of Braha and Lane under Sections 1 and 2 hereof.
Braha and LIT have each severally subscribed for the purchase
of the Conversion Stock with the Conversion Debt by their
execution of this Agreement, subject to the receipt of the
aforementioned opinion of corporate counsel to the Company as
hereinabove referred.
4. After provisional application of the debt reduction
provided for in Section 1 above and the application of the
Conversion Debt as set forth in Section 3 above, there is now
due and payable from the Company to Braha the approximate
aggregate sum of One Million Two Hundred Ninety-Seven
Thousand Seven Hundred Seven Dollars and Fifty Cents
($1,297,777.50), which the Company and Braha agree shall be
paid in consecutive monthly installments, due on or before
the first (1st) day of each month commencing August, 1996 and
ending November, 1996, of Two Hundred Fifty Thousand Dollars
($250,000) per month, an installment of Two Hundred Thousand
-2-<PAGE>
CUSIP No. 79584310 SCHEDULE 13D Page 14 of 41
Dollars ($200,000) due on or before the first (1st) day of
December, 1996, and a final installment of Ninety-Seven
Thousand Seven Hundred Seventy-Seven Dollars and Fifty Cents
($97,777.50) due on or before the first (1st) day of January,
1997, all without interest thereon, except as provided in
Section 9 hereof, until paid.
5. After provisional application of the debt reduction
provided for in Section 2 above and the application of the
Conversion Debt as set forth in Section 3 above, there is now
due and payable to Lane the aggregate sum of Three Hundred
Twenty-Five Thousand Three Hundred Fifty-Two Dollars
($325,352), which the Company and Lane agree shall be paid in
consecutive monthly installments, due on or before the first
(1st) day of each month commencing August, 1996, and ending
December, 1996, of Forty-Six Thousand Nine Hundred Sixty-Six
($46,966) per month, and a final installment of Eighty-Two
Thousand Thirty-Three Dollars ($82,533) due on or before the
first (1st) day of January, 1997, without interest thereon,
except as provided in Section 9 hereof, until paid.
6. Braha and/or Lane may unilaterally agree with the
Company to defer and/or reduce payments to itself under
Sections 4 or 5 hereof, as the case may be, without the
consent of the remaining party and without constituting an
Event of Default (as hereinafter defined) hereunder.
7. The Company shall have the right to make
prepayments under Sections 4 or 5 hereof; provided, however,
that unless agreed to the contrary by the parties hereto,
Braha shall receive 80.82% of any such prepayments and Lane
shall receive 19.18% of any such prepayments. Provided,
however, that in the event that the Company successfully
concludes the presently proposed sale of certain of its
assets to Maxwell Shoe Company, Inc. (the "Maxwell
Transaction") then, in that event, the Company shall prepay
to Braha and/or Lane, as the case may be, the remaining
balance due and owing to such entity under Sections 4 and/or
5 hereof (after application of the related debt reduction
provided for in Sections 1 and/or 2 hereof and the Conversion
Debt provided for in Section 3 hereof) within five (5)
business days following the date upon which the Company
receives the proceeds of such sale as cleared funds ("Maxwell
Funding Date").
8. If an Event of Default (as those terms are
hereinafter defined) shall occur with respect to Braha and/or
Lane, as the case may be, then,in such event, the entity(ies)
as to which such Event of Default shall have occurred
-3-<PAGE>
CUSIP No. 79584310 SCHEDULE 13D Page 15 of 41
will no longer be subject to the provisional forgiveness
provisions of Sections 1 and/or 2 hereof, as the case may be,
and any sums due under this Agreement shall be immediately
due and payable by the Company.
9. Interest shall accrue at the maximum interest rate
permitted by law from January 1, 1996, on any portion of the
debts outstanding referred to in Sections 1 and/or 2 hereof,
until such time as the Company has repaid such debt or
portion, or such debt or portion has been forgiven and/or
such debt or portion has become Conversion Debt, all as
hereinabove provided. Provided, however, that no payment of
such interest shall be due and/or payable by the Company
unless and until an Event of Default shall have occurred
hereunder, in which case all such accrued, but unpaid
interest shall become immediately due and payable.
Notwithstanding the foregoing, Braha and/or Lane, as the case
may be, hereby agrees to forgive such interest in its
entirety upon payment of the amounts due to it under the
provisions of Section 4 or 5 hereof (after application of the
debt reduction and Conversion Debt provided for in Sections
1, 2 and 3 hereof), as the case may be.
10. The Company shall contemporaneously with the
issuance of the stock certificates to Braha and LIT in
accordance with the provision of Section 3 hereof execute and
deliver to each of Braha and LIT a Registration Rights
Agreement in the form of Exhibit A annexed hereto, which
relates solely to the Conversion Stock purchased hereunder
with the Conversion Debt.
11. Braha and Lane severally acknowledge that the
Conversion Stock to be issued in consideration of the
Conversion Debt will not be registered under the Securities
Act of 1933 (the "1933 Act") and therefore shall be subject
to restrictions on sale and/or other transfers under federal
and state securities laws and, in connection therewith, the
certificates to be issued for the Conversion Stock shall each
bear a restrictive legend in substantially the following
form:
"The shares represented by this
certificate have not been
registered under the securities
act of 1933. The shares have
been acquired for investment
and may not be transferred or
assigned in the absence of an
effective registration
statement for these
-4-<PAGE>
CUSIP No. 79584310 SCHEDULE 13D Page 16 of 41
shares under the Securities Act
of 1933 or an exemption from
registration under such Act."
12. All actions to be taken by Lane pursuant to this
Agreement shall require the signature of each of La Lano and
LIT, except as to any and all rights with respect to the
issuance of the Conversion Stock, with respect to which La
Lano may take no action or exercise any rights under this
Agreement. It being understood and agreed by both such
entities that no Event of Default may be declared by one such
entity unless also declared by the other and that no exercise
of any right hereunder, except as hereinabove reserved to
LIT, may be exercised by any such entity individually without
the written consent of the Company first obtained.
13. The Company represents and warrants to Braha and
Lane as of the date of the execution of this Agreement, as
follows:
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the
State of California and has all requisite corporate power and
authority for the carrying on of its business in the manner
conducted;
(b) the Company has all necessary corporate powers
and has taken all necessary corporate action required to make
all provisions of this Agreement and any and all other
documents and instruments delivered in connection herewith
the valid and enforceable obligations of the Company, subject
to usury and creditor's rights laws;
(c) neither the execution, delivery and
performance of this Agreement nor the offer, issuance and
sale of the Conversion Stock to Braha and LIT, as the case
may be, will; (i) conflict with or violate the Articles or
By-laws of the Company; (ii) conflict with or result in a
default under or breach of any instrument or agreement to
which the Company is a party or by which it is bound; (iii)
require the consent (other than such consents as may have
been required and which have been obtained) of, or other
action by, any non-governmental person, including any
shareholder, trustee or creditor of, any lessor to or any
investor in the Company; or (iv) cause the Company to be in
violation of any statute, law, regulation or ordinance or any
judgment, decree, writ, injunction, order, award or other
action of any court or governmental authority or arbitrator;
-5-<PAGE>
CUSIP No. 79584310 SCHEDULE 13D Page 17 of 41
(d) the Company has reserved an aggregate of Two
Million Six Hundred Ninety-Seven Thousand Eight Hundred
Sixty-Eight (2,697,868) shares of its Common Stock, $0.001
par value, for issuance in connection with this Agreement;
and
(e) the Conversion Stock has been duly authorized
and, when issued and delivered, will be validly issued and
fully paid and nonassessable; and that Braha and LIT, will
receive good title to the Conversion Stock free and clear of
any liens, encumbrances, rights and restrictions of any
nature, other than restrictions on transfer of the shares of
Conversion Stock imposed by relevant state and federal
securities laws.
14. The Company shall cause an opinion of Wilson,
Sonsini, Goodrich and Rosati, corporate counsel to the
Company, dated the date hereof, in form and substance
reasonably acceptable to counsel for Braha and/or Lane, as
the case may be, to be delivered to Braha and Lane.
15. Each of Braha and Lane represent and warrant to the
Company, as of the date of this Agreement, as follows:
(a) It is a corporation duly organized, validly
existing and in good standing under the laws of the state (or
country) of its incorporation and has all requisite corporate
power and authority for the carrying on of its business in
the manner conducted;
(b) it has all necessary corporate powers and has
taken all necessary corporate action required to make all
provisions of this Agreement and any and all other documents
and instruments delivered in connection herewith its valid
and enforceable obligations, subject to creditor's rights
laws;
(c) neither the execution, delivery and
performance of this Agreement nor (with respect only to Braha
and LIT) the purchase, acquisition and receipt of the
Conversion Stock will: (i) conflict with or violate the
Articles or By-laws of Braha or Lane, as the case may be;
(ii) conflict with or result in a default under or breach of
any instrument or agreement to which Braha or Lane, as the
case may be, is a party or by which it is bound; (iii)
require the consent (other than such consent as may have been
required and which have been obtained) of, or other action
by, any non-governmental person, including any shareholder,
trustee or creditor of, any lessor to or any
-6-<PAGE>
CUSIP No. 79584310 SCHEDULE 13D Page 18 of 41
investor in Braha or Lane, as the case may be; or (iv) cause
the Braha or Lane, as the case may be, to be in violation of
any statute, law, regulation or ordinance or any judgment,
decree, writ, injunction, order, award or other action of any
court or governmental authority or arbitrator;
(d) that the Conversion Stock Braha and/or LIT, as
the case may be, acquires pursuant to the provisions of
Section 3 hereof are being acquired for investment purposes
only and not with a view toward resale thereof;
(e) it is an experienced investor who can afford
the risk of loss of its entire investment; has had access to
financial and other information regarding the Company's
business and has been afforded the opportunity to ask the
officers of the Company for such information as it required,
except for the Letter of Intent for the Maxwell Transaction;
and
(f) Braha and/or LIT, as the case may be,
understands that the benefits of the Registration Rights
Agreement are personal to it and may not be assigned or
otherwise devolve to any other person or entity, except as
specifically provided for therein.
16. The Company undertakes and agrees that:
(a) The Company will pay to Lane the sum of Three
Hundred Thirty-Five Thousand Two Hundred Eighty Dollars and
Seven Cents ($335,280.07) within three (3) business days
following the first to occur of (i) the date upon which the
Company receives additional funding from BNY Financial
Corporation, pursuant to its ongoing negotiations with such
entity for a new banking agreement; (ii) the Maxwell Funding
Date; or (iii) the thirty-third (33rd) day following the
execution of this Agreement by all parties named herein.
Provided, however, that such amount is to be paid in full on
the first to occur of (i), (ii) or (iii) above, and any
adjustments provided for herein not agreed to in writing by
Lane and the Company prior to either of such events, shall be
retroactively adjusted upon resolution by Lane and the
Company. This sum relates to the Company's purchase orders
placed, and Lane's invoices issued, after March 23, 1996.
The Company agrees to notify Lane when, as and if such
additional funding is received and or the Maxwell Funding
Date shall occur.
-7-<PAGE>
CUSIP No. 79584310 SCHEDULE 13D Page 19 of 41
(b) that the Company shall at all times have such
number of shares of its Common Stock issued and outstanding
so that the then issued and outstanding Shares of Conversion
Stock then owned beneficially and of record by Braha
(including 30,000 shares presently owned by the Braha
Industries, Inc. Profit Sharing Trust) or Lane (including
10,653 shares presently owned by Lane Shay) shall,
separately, and not in the aggregate, constitute less than
ten percent (10%) of the shares of the Company's Common Stock
then issued and outstanding, unless the Company shall have
obtained the written consent of Braha and/or Lane, as the
case may be.
17. The amounts referred to in Sections 1, 2 and
subsection 16(a) hereof are believed by the Company, Braha
and Lane to be definitive and are subject to adjustment for
mathematical errors and for missing invoices or payments.
18. The approximate amount of aggregate debt due to
Braha under Section 1 hereof includes all invoices of Braha
to the Company up to and including March 20, 1996, and the
aggregate debt due to Lane under Section 2 hereof includes
all invoices of Lane to and including March 23, 1996. Any
and all debt (except interest as defined in Section 9 hereof)
incurred by the Company with such entities on or after the
applicable dates set forth herein is not subsumed within
Sections 1 or 2 hereof, as the case may be.
19. The Company agrees that it will not assert any
claims for defective merchandise against Braha and/or Lane
with respect to invoiced merchandise included within the
applicable periods set forth in Section 18 above.
20. This Agreement may be executed in two or more
counterparts each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
21. The Company shall be deemed to be in breach of this
Agreement and the claims of Braha and/or Lane, as the case
may be, shall be reinstated in full, except as to (i) such
portions thereof as were forgiven (with all conditions
thereto having been met) under Sections 1, 2 and/or 9 hereof
and (ii) the conversion of the Conversion Debt into
Conversion Stock, all with respect only to whichever of Braha
and/or Lane such Event of Default relates, upon the happening
of one or more of the following events and the giving of the
applicable written notice provided below to such effect by
Braha and/or Lane,
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CUSIP No. 79584310 SCHEDULE 13D Page 20 of 41
as the case may be (provided, however, that in the event of
an Event of Default under sub-sections g, h, i and/or j
below, no notice shall be required) and notwithstanding the
foregoing, the Company may use such notice period to effect
the cure of any such breach prior to the expiration of the
notice period when such breach shall become an Event of
Default and, if so cured, the Event of Default shall be
deemed not to have occurred ("Event of Default"):
(a) the failure of the Company to make any of the
payments provided in Section 4 hereof, which breach remains
uncured for a period of fifteen (15) days after written
notice thereof to the Company (this sub-section shall not be
a breach available to Lane);
(b) the failure of the Company to make any of the
payments provided in Section 5 hereof, which breach remains
uncured for a period of fifteen (15) days after written
notice thereof to the Company (this sub-section shall not be
a breach available to Braha);
(c) the failure of the Company to pay when due its
current obligations to Braha arising after the date hereof,
which breach remains uncured for a period of thirty-five (35)
days after the expiration of trade terms, if any, then being
extended to the Company and after written notice thereof to
the Company (this sub-section shall not be a breach available
to Lane);
(d) the failure of the Company to pay when due its
current obligations to Lane arising after the date hereof
(this sub-section shall not be a breach available to Braha),
which breach remains uncured for a period of thirty-five (35)
days after the expiration of trade terms, if any, then being
extended to the Company and after written notice thereof to
the Company;
(e) the failure of the Company to pay, when due,
the payment provided in Section 16(a) hereof, which breach
remains uncured for a period of five (5) days after written
notice thereof to the Company (this sub-section shall not be
a breach available to Braha);
(f) the failure of the Company to comply with any
material covenant in this Agreement for a period of thirty-
five (35) days after written notice thereof to the Company;
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CUSIP No. 79584310 SCHEDULE 13D Page 21 of 41
(g) the filing of a petition against the Company
in a court of competent jurisdiction in an involuntary case
under the federal bankruptcy laws, as may now or hereafter be
constituted or hereafter amended, or any applicable federal
or state bankruptcy, insolvency or other similar law or the
appointment of a receiver, liquidator, assignee, custodian,
trustee or other similar official for all or any substantial
part of the property of the Company and the continuance of
any such decree, order or appointment unstayed and in effect
for a period of ninety (90) consecutive days;
(h) the commencement by the Company of a voluntary
case under the federal bankruptcy laws, as may now or
hereafter be constituted or hereafter amended, or any other
applicable federal or state bankruptcy, insolvency or other
similar law, or the making by any of the Company of any
assignment for the benefit of creditors;
(i) the entry of a judgment by a court of
competent jurisdiction against the Company and the scheduling
of a sale of a substantial part of the Company's inventory or
equipment pursuant to any formal legal proceeding instituted
against the Company and the Company having failed to
discharge or vacate the lien of such judgment or legal
proceeding within at least five (5) days before the date
scheduled for the sale; or
(j) the failure of the Company to pay any taxes as
a result of which any action shall have been taken to
foreclose upon any lien for such taxes on any of the
Company's property, unless such claim is contested in good
faith.
22. In no event shall the provisions of subsection
21(c) and/or 21(d) hereof be deemed to require either Braha
or Lane, as the case may be, to give any notice, or extend
any cure period, to the Company with respect to its non-
payment of any such current debt, such subsections relating
only to the declaration of an Event of Default hereunder.
23. Upon the occurrence of an Event of Default and
proper notice by Braha and/or Lane to the Company, if no cure
is effected during the applicable notice period, if any, the
noticing party may exercise any and all of its legal or
equitable rights or remedies.
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CUSIP No. 79584310 SCHEDULE 13D Page 22 of 41
24. The failure or delay of Braha and/or Lane to
declare any default or to enforce any rights, powers or
remedies hereunder shall not operate as a waiver of their
respective rights to subsequently declare any such default or
enforce such rights, powers or remedies, but any default or
right, power or remedy shall continue to remain in full force
and effect notwithstanding that Braha and/or Lane may, at any
time, in its discretion, by action taken or by forbearance,
grant, agree to or permit any extensions, renewals,
modifications, waivers or indulgences whatsoever.
25. Nothing contained in this Agreement shall be
construed or deemed to release or discharge any rights and
remedies that either Braha and/or Lane may now or hereafter
have against any endorser, guarantor or other surety who may
now or hereafter be liable to either of them upon any debt
within the purview of this Agreement, and each such right and
remedy is hereby expressly reserved.
26. Provided that the Company shall not be in
substantial default in the performance of any of the material
terms, provisions and conditions of this Agreement, and shall
keep, observe and perform the same, neither Braha nor Lane
will institute any action or proceeding, or continue any
pending action or proceeding against the Company and will not
levy any execution, attachment or any other process against
the Company's property for and by reason of any debt owing to
Braha as of March 20, 1996, and as to Lane as of March 23,
1996, and will not file or join in any petition in bankruptcy
or in any proceeding under the Bankruptcy Code or its
amendment or in any other proceeding having for its object
the appointment of a receiver or trustee for the Company.
27. All notices, requests, demands, exercises and other
communication provided for herein shall be in writing and
sent by express, certified or registered mail, postage
prepaid, return receipt requested, or by Federal Express for
next business day delivery (signature not waived) if domestic
United States and, if international, solely by Federal
Express or Airborne Express for the fastest possible delivery
time available through such carrier to the applicable party
at the addresses indicated below:
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CUSIP No. 79584310 SCHEDULE 13D Page 23 of 41
If to the Company:
Sam & Libby, Inc.
58 West 40th Street
New York, NY 10018
Attn: Mr. Samuel L. Edelman
With a copy to each of:
Kaufmann, Feiner, Yamin, Gildin & Robbins LLP
777 Third Avenue
New York, NY 10017
Attn: Michael G. Yamin, Esq.
- and -
Wilson Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attn: Steven L. Berson, Esq.
If to Braha:
Braha Industries, Inc.
1 East 33rd Street
New York, NY 10016
Attn: Mr. David Braha
With a copy to:
Todtman, Young, Tunick, Nachamie,
Hendler & Spizz, P.C.
425 Park Avenue
New York, NY 10022
Attn: Stanley B. Hendler, Esq.
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CUSIP No. 79584310 SCHEDULE 13D Page 24 of 41
If to LIT (or Lane):
Lane International Trading, Inc.
31284 San Antonio Street, Suite 7
Hayward, CA 94544
Attn: Mr. Lane Shay
With a copy to:
Howard, Rice, Nemerovski, Canady, Falk &
Rabkin
Three Embarcadero Center
7th Floor
San Francisco, CA 94111
Attn: Janet A. Nexon, Esq.
If to La Lano (or Lane):
La Lano International Trading, Inc.
Room 8, 6th Floor
No. 20, Ta Lung Rd.
Taichung, Taiwan R.O.C.
With a copy to:
Howard, Rice, Nemerovski, Canady, Falk &
Rabkin
Three Embarcadero Center
7th Floor
San Francisco, CA 94111
Attn: Janet A. Nexon, Esq.
All notices sent by Express Mail, Federal Express or Airborne
Express will be deemed given on the earlier of the date
indicated as received on the return receipt or on the
signature log of Federal Express or Airborne Express, as the
case may be, or the first date of attempted delivery on a
business day by such carrier as indicated in their official
records. All domestic notices sent by certified or
registered mail will be deemed given on the earlier of the
date indicated as received on the return receipt card or five
(5) business days after the mailing thereof as indicated by a
United States Postal Service Stamp on the official mailing
receipt. For purposes of this Section, the term "business
day" excludes Saturday, Sunday, national holidays and state
holidays in the country and state of the noticed party.
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CUSIP No. 79584310 SCHEDULE 13D Page 25 of 41
28. The terms of this Agreement may not be modified,
amended or altered in any respect, nor compliance with any
covenant or provision herein set forth omitted or waived,
except by a written instrument signed by the party or parties
to be charged.
29. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective
successors and assigns.
30. All representations and warranties made in this
Agreement shall survive the execution and delivery hereof.
31. This Agreement constitutes the entire agreement
between the parties and supersedes any prior understandings
or agreements concerning the subject matter hereof.
32. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability
or any other provision.
33. All questions pertaining to the validity,
construction, execution and performance of this Agreement
shall be construed in accordance with and be governed by the
laws of the State of California, irrespective of the fact
that one or more of the parties hereto now is or may
hereafter be, domiciled in a different state, jurisdiction or
country and each of the parties hereto hereby consents to the
exclusive jurisdiction of the Supreme Court of the State of
New York, County of New York, and the Federal District Court
for the Southern District of New York as the exclusive forums
for the resolution of all matters relating to this Agreement.
34. This Agreement shall not be binding or enforceable
against any party until (a) this Agreement has been signed by
all parties and (b) there has been delivered on or before
July 1, 1996, an opinion of Wilson, Sonsini, Goodrich &
Rosati in the form agreed to by the parties, together with
certificates for all of the Conversion Stock being issued
hereunder.
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CUSIP No. 79584310 SCHEDULE 13D Page 26 of 41
IN WITNESS WHEREOF, each of the parties hereto has
caused this Agreement to be executed by their duly authorized
officers, all as of the date first above written.
SAM & LIBBY, INC.
By: /s/ KENNETH M. SITOMER
________________________
Title: COO
BRAHA INDUSTRIES, INC.
By: /s/ RALPH BRAHA
________________________
Title: President
LANE INTERNATIONAL TRADING,
INC.
By: /s/ LANE SHAY
________________________
Title: President
LA LANO INTERNATIONAL TRADING,
INC.
By: /s/ LANE SHAY
_________________________
Title: Managing Director
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CUSIP No. 79584310 SCHEDULE 13D Page 27 of 41
August 1, 1996
Mr. Samuel L. Edelman
Sam & Libby, Inc.
58 West 40th Street
New York, NY 10018
Re: Composition and Conversion Agreement (the
"Agreement")
Dear Sam:
Lane International Trading, Inc. ("LIT") and La
Lano International Trading, Inc. hereby waive the
requirements under Section 34(b) of the Agreement of delivery
of an opinion of Wilson, Sonsini, Goodrich & Rosati and
certificates for all the Conversion Stock on or before
July 1, 1996. In making this waiver, it is our understanding
that your counsel is holding a certificate for Lane's
Conversion Stock and an opinion of counsel, each dated
July 30, 1996, which will be delivered upon receipt of this
waiver letter.
Very truly yours,
/s/ Lane Shay
Lane Shay
cc: Michael G. Yamin, Esq.
Steven L. Berson, Esq.<PAGE>
CUSIP No. 79584310 SCHEDULE 13D Page 28 of 41
EXHIBIT 3
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
June 26, 1996
Gentlemen:
This will confirm that in consideration of your
agreement on June 26, 1996, to compromise the debt owed to
each of you by Sam & Libby, Inc., a California corporation
(the "Company") in connection with which Braha (as defined
below) subscribed for and was issued One Million Three
Hundred Thirty-Nine Thousand Two Hundred Sixty (1,339,260)
shares, and Lane (as defined below) subscribed for and was
issued One Million Three Hundred Fifty-Eight Thousand Six
Hundred Eight (1,358,608) shares, of the Company's Common
Stock, $0.001 par value (the "Shares"), all under the
circumstances as set forth in the Composition and Conversion
Agreement dated June 26, 1996 by and among Braha Industries,
Inc. ("Braha"), Lane International Trading, Inc. ("Lane"), La
Lano International Trading, Inc. ("La Lano") and the Company
(the "Conversion Agreement"), and as an inducement to each of
you to consummate the transactions contemplated by the
Conversion Agreement and the other agreements referred to
therein, the Company covenants and agrees with each of you as
follows:
1. Certain Definitions. As used in this Agreement,
the following terms shall have the following respective
meanings:
"Commission" shall mean the Securities and Exchange
Commission, or any other federal agency at the time
administering the Securities Act.
"Common Stock" shall mean the Common Stock, $0.001
par value, of the Company, as constituted as of the date
of this Agreement.
"Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended, or any similar federal statute,
and the rule and regulations
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CUSIP No. 79584310 SCHEDULE 13D Page 29 of 41
of the Commission thereunder, all as the same shall be
in effect at the time.
"holder" or "holders" shall mean Braha and/or Lane,
as the case may be; this Agreement and/or the
registration rights granted hereunder being non-
assignable by either of such entities, except to a
person or entity which (i) acquires all of the
Restricted Stock of the assignor, (ii) directly or
indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common
control with such assignor, or (iii) is a purchaser of
all or substantially all of the assets of such assignor
by merger, sale of assets, stock sale or otherwise.
"Restricted Stock" shall mean the Shares of Common
Stock, then held beneficially and of record by Braha
and/or Lane, excluding any such Shares of Common Stock
which have been (a) registered under the Securities Act
pursuant to an effective registration statement filed
thereunder and disposed of in accordance with the
registration statement covering them or (b) publicly
sold pursuant to Rule 144 under the Securities Act.
"Securities Act" shall mean the Securities Act of
1933, as amended, or any similar federal statute, and
the rules and regulations of the Commission thereunder,
all as the same shall be in effect at the time.
2. Required Registration.
(a) At any time after ninety (90) days following
the date of this Agreement, the holders of Restricted Stock
constituting at least fifty-one percent (51%) of the total
shares of Restricted Stock then outstanding may request the
Company to register under the Securities Act all or any
portion of the shares of Restricted Stock held by such
requesting holder or holders for sale in the manner specified
in such notice, provided that the shares of Restricted Stock
for which registration has been requested shall constitute at
least thirty percent (30%) of the total shares of Restricted
Stock then outstanding if such holder or holders shall
request the registration of less than all shares of
Restricted Stock then held by such holder or holders.
Notwithstanding anything to the contrary contained herein, no
request may be made under this Section 2 within one hundred
eighty (180) days after the effective date of a registration
statement filed by the Company (other than a registration
statement on Form S-4, S-8 or another form not available for
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CUSIP No. 79584310 SCHEDULE 13D Page 30 of 41
registering the Restricted Stock for sale to the public). In
furtherance hereof, the Company undertakes and agrees that
for a period of One Hundred Fifty (150) days following the
date of this Agreement, unless it has obtained the prior
written consent of all holders, that it will not file a
registration statement under the Securities Act for sale of
any of its securities to the public, except with respect to
registration statements on Form S-4, S-8 or another form not
available for registering the Restricted Stock for sale to
the public and, in the event of any such registration
statement being filed (except with the consent of all
holders) during such period, the 180-day period referred to
above shall not be applicable.
(b) Following receipt of any notice under this
Section 2, the Company shall immediately notify all holders
of Restricted Stock from whom notice has not been received
and shall use its best efforts to register under the
Securities Act, for public sale in accordance with the method
of disposition specified in such notice from requesting
holders, the number of shares of Restricted Stock specified
in such notice (and in all notices received by the Company
from other holders within thirty (30) days after the giving
of such notice by the Company). If such method of
disposition shall be an underwritten public offering, the
holders of a majority of the Shares of Restricted Stock to be
sold in such offering may designate the managing underwriter
of such offering, subject to the approval of the Company,
which approval shall not be unreasonably withheld or delayed.
The Company shall be obligated to register Restricted Stock
pursuant to this Section 2 on one (1) occasion only;
provided, however, that such obligation shall be deemed
satisfied only when a registration statement covering all of
the Shares of Restricted Stock specified in notices received
as aforesaid, for sale in accordance with the method of
disposition specified by the requesting holders, shall have
become effective.
3. Incidental Registration. If the Company at any
time (other than pursuant to Section 2 or Section 4) proposes
to register any of its securities under the Securities Act
for sale to the public, whether for its own account or for
the account of other security holders or both (except with
respect to registration statements on Forms S-4, S-8 or
another form not available for registering the Restricted
Stock for sale to the public), each such time it will give
written notice to all holders of outstanding Restricted Stock
of its intention so to do. Upon the written request of any
such holder, received by the Company within thirty (30) days
after the giving of such notice by the Company, to register
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CUSIP No. 79584310 SCHEDULE 13D Page 31 of 41
any of its Restricted Stock (which request shall state the
intended method of disposition thereof), the Company will use
its best efforts to cause the Restricted Stock as to which
registration shall have been so requested to be included in
the securities to be covered by the registration statement
proposed to be filed by the Company, all to the extent
requisite to permit the sale or other disposition by the
holder (in accordance with its written request) of such
Restricted Stock so registered. In the event that any
registration pursuant to this Section 3 shall be, in whole or
in part, an underwritten public offering of Common Stock, the
number of Shares of Restricted Stock to be included in such
an underwriting may be reduced (pro rata among the requesting
holders based upon the number of shares of Restricted Stock
owned by such holders) if and to the extent that the managing
underwriter shall be of the opinion that such inclusion would
adversely affect the marketing of the securities to be sold
by the Company therein; provided, however, that in no event
may less than ten percent (10%) of the total number of shares
of Common Stock to be included in such underwriting be made
available for Shares of Restricted Stock. Notwithstanding
the foregoing provisions, the Company may withdraw or
postpone any registration statement referred to in this
Section 3 without thereby incurring any liability to the
holders of Restricted Stock.
4. Registration on Form S-3. If at any time after
ninety (90) days from the date hereof (i) a holder or holders
of Restricted Stock constituting at least fifty percent (50%)
of the total Shares of Restricted Stock then outstanding
request that the Company file a registration statement on
Form S-3 or any successor thereto for a public offering of
all or any portion of the shares of Restricted Stock held by
such requesting holder or holders, and (ii) the Company is a
registrant entitled to use Form S-3 or any successor thereto
to register such shares, then the Company shall use its best
efforts to register under the Securities Act on Form S-3 or
any successor thereto, for public sale in accordance with the
method of disposition specified in such notice, the number of
shares of Restricted Stock specified in such notice.
Whenever the Company is required by this Section 4 to use its
best efforts to effect the registration of Restricted Stock,
each of the procedures and requirements of Section 2(b) shall
apply to such registration; provided, however, that there
shall be no more than two (2) registrations on Form S-3
effected under this Section 4.
5. Registration Procedures. If and whenever the
Company is required by the provisions of Sections 2, 3 or 4
to use its best efforts to effect the registration of any
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CUSIP No. 79584310 SCHEDULE 13D Page 32 of 41
Shares of Restricted Stock under the Securities Act, the
Company will, as expeditiously as possible:
(a) prepare and use its best efforts to file with
the Commission, within forty-five (45) days of the completion
of the notification process under Section 2 above, a
registration statement (which in the case of an underwritten
public offering pursuant to Section 2, shall be on Form S-1,
Form SB-2 or other form of general applicability satisfactory
to the managing underwriter selected as therein provided)
with respect to such securities and use its best efforts to
cause such registration statement to become and remain
effective for the period of the distribution contemplated
thereby (determined as hereinafter provided);
(b) prepare and file with the Commission such
amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for
the period specified in Paragraph (a) above and comply with
the provisions of the Securities Act with respect to the
disposition of all Restricted Stock covered by such
registration statement in accordance with the sellers'
intended method of disposition set forth in such registration
statement for such period;
(c) furnish to each seller of Restricted Stock and
to each underwriter such number of copies of the registration
statement and the prospectus included therein (including each
preliminary prospectus) as such persons reasonably may
request in order to facilitate the public sale or other
disposition of the Restricted Stock covered by such
registration statement;
(d) use its best efforts to register or quality
the Restricted Stock covered by such registration statement
under the securities or "Blue Sky" laws of such jurisdictions
as the sellers of Restricted Stock or, in the case of an
underwritten public offering, the managing underwriter
reasonably shall request; provided, however, that the Company
shall not for any such purpose be required to qualify
generally to transact business as a foreign corporation in
any jurisdiction where it is not so qualified or to consent
to general service of process in any such jurisdiction;
(e) use its best efforts to list the Restricted
Stock covered by such registration statement with any
securities exchange or quotation system on which the Common
Stock of the Company is then listed;
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CUSIP No. 79584310 SCHEDULE 13D Page 33 of 41
(f) immediately notify each Seller of Restricted
Stock and each underwriter under such registration statement,
at any time when a prospectus relating thereto is required to
be delivered under the Securities Act, of the happening of
any event of which the Company has knowledge as a result of
which the prospectus contained in such registration
statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to
be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing;
(g) if the offering is underwritten, at the
request of any seller of Restricted Stock use its best
efforts to furnish on the date that Restricted Stock is
delivered to the underwriters for sale pursuant to such
registration: (i) an opinion dated such date of counsel
representing the Company for the purposes of such
registration, addressed to the seller, in form and substance
identical to the letter delivered by such counsel to the
underwriters and (ii) a letter dated such date from the
independent public accountants retained by the Company,
addressed to such seller, in form and substance identical to
the letter delivered by such independent public accountants
to the underwriters; and
(h) make available for inspection by each seller
of Restricted Stock, any underwriter participating in any
distribution pursuant to such registration statement, and any
attorney, accountant or other agent retained by such seller
or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause
the Company's officers, directors and employees to supply all
information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with
such registration statement.
For purposes of Sections 5(a) and 5(b), the period
of distribution of Restricted Stock in a firm commitment
underwritten public offering shall be deemed to extend until
each underwriter has completed the distribution of all
securities purchased by it, and the period of distribution of
Restricted Stock in any other registration shall be deemed to
extend until the earlier of the sale of all Restricted Stock
covered thereby or one hundred eighty (180) days after the
effective date thereof.
In connection with each registration hereunder, the
sellers of Restricted Stock will furnish to the Company in
writing such information with respect to themselves and the
proposed distribution by them as reasonably shall be
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CUSIP No. 79584310 SCHEDULE 13D Page 34 of 41
necessary in order to assure compliance with federal and
applicable state securities laws.
In connection with each registration pursuant to
Sections 2, 3 or 4 covering an underwritten public offering,
the Company and each seller agree to enter into any written
agreement with the managing underwriter selected in the
manner herein provided in such form and containing such
provisions as are customary in the securities business for
such an arrangement between such underwriter and companies of
the Company's size and investment stature.
6. Expenses. All expenses incurred by the Company in
complying with Sections 2, 3 and 4, including without
limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel and independent
public accountants for the Company, fees and expenses
(including counsel fees) incurred in connection with
complying with state securities or "Blue Sky" laws, fees of
the National Association of Securities Dealers, Inc.,
transfer taxes, fees of transfer agents and registrars, costs
of insurance, but excluding any Selling Expenses, are called
"Registration Expenses". All underwriting discounts, selling
commission applicable to the sale of Restricted Stock and
fees and disbursements of one special counsel for the sellers
of Restricted Stock are called "Selling Expenses".
The Company will pay all Registration Expenses in
connection with the one (1) registration statement provided
for under Section 2, each registration statement under
Section 3 and the first registration effected by the Company
pursuant to Section 4. All Selling Expenses in connection
with each registration statement under Sections 2, 3 or 4
shall be borne by the participating sellers in proportion to
the number of shares sold by each, or by such participating
sellers other than the Company (except to the extent the
Company shall be a seller) as they may agree.
7. Indemnification and Contribution.
(a) In the event of a registration of any of the
Restricted Stock under the Securities Act pursuant to
Sections 2, 3 or 4, the Company will indemnify and hold
harmless each seller of such Restricted Stock thereunder,
each underwriter of such Restricted Stock thereunder and each
other person, if any, who controls such seller or underwriter
within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which
such seller, underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in
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CUSIP No. 79584310 SCHEDULE 13D Page 35 of 41
respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact
contained in any registration statement under which such
Restricted Stock was registered under the Securities Act
pursuant to Sections 2, 3 or 4 any preliminary prospectus or
final prospectus contained therein, or any amendment or
supplement thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each
such seller, each such underwriter and each such controlling
person for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such
loss, claim, damage, liability or motion; provided, however,
that the Company will not be liable in any case if and to the
extent that any such loss, claim, damage or liability arises
out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in
conformity with information furnished by any such seller, any
such underwriter or any such controlling person in writing
specifically for use in such registration statement or
prospectus.
(b) In the event of a registration of any of the
Restricted Stock under the Securities Act pursuant to
Sections 2, 3 or 4, each seller of such Restricted Stock
thereunder, severally and not jointly, will indemnify and
hold harmless the Company, each person, if any, who controls
the Company within the meaning of the Securities Act, each
officer of the Company who signs the registration statement,
each director of the Company, each underwriter and each
person who controls any underwriter within the meaning of the
Securities Act, against all losses, claims, damages or
liabilities, joint or several, to which the Company or such
officer, director, underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact
contained in the registration statement under which such
Restricted Stock was registered under the Securities Act
pursuant to Sections 2, 3 or 4, any preliminary prospectus or
final prospectus contained therein, or any amendment or
supplement thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the
Company and each such officer, director, underwriter and
controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or
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CUSIP No. 79584310 SCHEDULE 13D Page 36 of 41
defending any such loss, claim, damage, liability or action;
provided, however, that such seller will be liable hereunder
in any such case if and only to the extent that any such
loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or
omission or alleged omission made in reliance upon and in
conformity with information pertaining to such seller, as
such, furnished in writing to the Company by such seller
specifically for use in such registration statement or
prospectus, and; provided, further, however, that the
liability of each seller hereunder shall be limited to the
proportion of any such loss, claim, damage, liability or
expense which is equal to the proportion that the public
offering price of the shares sold by such seller under such
registration statement bears to the total public offering
price of all securities sold thereunder, but not in any event
to exceed the proceeds received by such seller from the sale
of Restricted Stock covered by such registration statement.
8. Changes in Common Stock. If, and as often as,
there is any change in the Common Stock by way of a stock
split, stock dividend, combination or reclassification, or
through a merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions hereof so that the
rights and privileges granted hereby shall continue with
respect to the Common Stock as so changed.
9. Rule 144 Reporting. With a view to making
available the benefits of certain rules and regulations of
the Commission which may at any time permit the sale of the
Restricted Stock to the public without registration, the
Company agrees at all times to:
(a) use its best efforts to make and keep public
information available, as those terms are understood and
defined in Rule 144 under the Securities Act;
(b) use its best efforts to file with the
Commission in a timely manner all reports and other documents
required of the Company under the Securities Act and the
Exchange Act; and
(c) furnish to each holder of Restricted Stock
forthwith upon request a written statement by the Company as
to its compliance with the reporting requirements of such
Rule 144 and of the Securities Act and the Exchange Act, a
copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed by the
Company as such holder may reasonably request in availing
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CUSIP No. 79584310 SCHEDULE 13D Page 37 of 41
itself of any rule or regulation of the Commission allowing
such holder to sell any Restricted Stock without
registration.
10. Representations and Warranties of the Company. The
Company represents and warrants to you as follows:
(a) The execution, delivery and performance of
this Agreement by the Company have been duly authorized by
all requisite corporate action and will not violate any
provision of law, any order of any court or other agency of
government, the Articles of Incorporation or By-laws of the
Company or any provision of any indenture, agreement or other
instrument to which it or any of its properties or assets is
bound, conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under
any such indenture, agreement or other instrument or result
in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the
properties or assets of the Company.
(b) This Agreement has been duly executed and
delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable in accordance
with its terms.
11. Miscellaneous.
(a) All covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall
bind and inure to the benefit of the parties signatory
hereto, but no rights contained in this Agreement shall inure
to the benefit of the respective successors, heirs and
assigns of Braha and/or Lane (including, transferees of any
Restricted Stock) whether so expressed or not, except for the
permitted assignee of Braha and/or Lane, as defined in
Section 1 hereof under the definition of "holder" or
"holders".
(b) All notices, requests, demands, exercises and
other communication provided for herein shall be in writing
and sent by express, certified or registered mail, postage
prepaid, return receipt requested, or by Federal Express for
next business day delivery (signature not waived) if domestic
United States and, if international, solely by Federal
Express or Airborne Express for the fastest possible delivery
time available through such carrier to the applicable party
at the addresses indicated below:
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CUSIP No. 79584310 SCHEDULE 13D Page 38 of 41
If to the Company:
Sam & Libby, Inc.
58 West 40th Street
New York, NY 10018
Attn: Mr. Samuel L. Edelman
With a copy to each of:
Kaufmann, Feiner, Yamin, Gildin & Robbins LLP
777 Third Avenue
New York, NY 10017
Attn: Michael G. Yamin, Esq.
- and -
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attn: Steven L. Berson, Esq.
If to Braha:
Braha Industries, Inc.
1 East 33rd Street
New York, NY 10016
Attn: Mr. David Braha
With a copy to:
Todtman, Young, Tunick, Nachamie,
Hendler & Spizz, P.C.
425 Park Avenue
New York, NY 10022
Attn: Stanley B. Hendler, Esq.
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CUSIP No. 79584310 SCHEDULE 13D Page 39 of 41
If to Lane:
Lane International Trading, Inc.
31284 San Antonio Street, Suite 7
Hayward, CA 94544
Attn: Mr. Lane Shay
With a copy to:
Howard, Rice, Nemerovski, Canady, Falk &
Rabkin
Three Embarcadero Center
7th Floor
San Francisco, CA 94111
Attn: Janet A. Nexon, Esq.
If to any subsequent holder of Restricted Stock, to such
holder at such address as may have been furnished to the
Company in writing by such holder;
or, in any case, at such other address or addresses as shall
have been furnished in writing to the Company (in the case of
a holder of Restricted Stock) or to the holders of Restricted
Stock (in the case of the Company) in accordance with the
provisions of this paragraph.
All notices sent by Express Mail, Federal Express or Airborne
Express will be deemed given on the earlier of the date
indicated as received on the return receipt or on the
signature log of Federal Express or Airborne Express, as the
case may be, or the first date of attempted delivery on a
business day by such carrier as indicated in their official
records. All domestic notices sent by certified or
registered mail will be deemed given on the earlier of the
date indicated as received on the return receipt card or five
(5) business days after the mailing thereof as indicated by a
United States Postal Service Stamp on the official mailing
receipt. For purposes of this Section, the term "business
day" excludes Saturday, Sunday, national holidays and state
holidays in the country and state of the noticed party.
(c) This Agreement shall be governed by and
construed in accordance with the laws of the State of
California.
(d) This Agreement may not be amended or modified,
and no provision thereof may be waived, without the written
consent of the Company and the holders of at least fifty-one
percent (51%) of the outstanding shares of Restricted Stock
affected by such amendment, modification or waiver.
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CUSIP No. 79584310 SCHEDULE 13D Page 40 of 41
(e) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
(f) The obligations of the Company to register
shares of Restricted Stock under Sections 2, 3 or 4 shall
terminate on the third anniversary of the date of the date of
the Conversion Agreement.
(g) If any provision of this Agreement shall be
held to be illegal, invalid or unenforceable, such
illegality, invalidity or unenforceability shall attach only
to such provision and shall not in any manner affect or
render illegal, invalid or unenforceable any other provision
of this Agreement, and this Agreement shall be carried out as
if any such illegal, invalid or unenforceable provision were
not contained herein.
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CUSIP No. 79584310 SCHEDULE 13D Page 41 of 41
Upon your acceptance of the foregoing by signing and
returning the enclosed counterpart of this letter, this
Agreement shall be a binding agreement between the Company
and each of you.
Very truly yours,
SAM & LIBBY, INC.
By: /s/ KENNETH M. SITOMER
_________________________
Title: COO
AGREED TO AND ACCEPTED as of
the date first above written:
BRAHA INDUSTRIES, INC.
By: /s/RALPH BRAHA
___________________________
Title: President
LANE INTERNATIONAL TRADING, INC.
By: /s/ LANE SHAY
___________________________
Title: President
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