-----------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 4)*
Individual Investor Group, Inc.
(Name of Issuer)
Common Stock, $.01 par value
(Title Class of Securities)
455907105
(CUSIP Number)
Jonathan L. Steinberg, Chairman
Individual Investor Group, Inc., 1633 Broadway, 38th Floor, New York, NY 100019
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
April 22, 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 |_|. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.).
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
- -------------------------------------------------------------------------------
CUSIP No. 455907105 Page 2 of 7 Pages
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Jonathan L. Steinberg
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
N/A
- -------------------------------------------------------------------------------
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 of America
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
1,051,676 shares of Common Stock
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
----------------------------------------------------
8 SHARED VOTING POWER
-0-
----------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,051,676 shares of Common Stock
----------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,051,676 shares of Common Stock
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.7%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
Item 1. Security and Issuer.
This statement relates to the Common Stock, par value $.01 per
share ("Common Stock"), of Individual Investor Group, Inc. ("Company"), whose
principal executive offices are located at 1633 Broadway, 38th Floor, New York,
New York 10019.
Item 2. Identity and Background.
This statement is filed by Mr. Jonathan Lawrence Steinberg,
whose business address is 1633 Broadway, 38th Floor, New York, New York 10019.
Mr. Steinberg is the Chairman of the Board and Chief Executive Officer of
Individual Investor Group, Inc., 1633 Broadway, 38th Floor, New York, New York
10019. Mr. Steinberg has not, during the last five years, been convicted in a
criminal proceeding or 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 law. Mr.
Steinberg is a citizen of the United States of America. Mr. Steinberg is the
brother-in-law of Jonathan Tisch, a stockholder and former director of the
Company, and the son of Mr. Saul Steinberg, a stockholder of the Company.
Item 3. Source and Amount of Funds or Other Consideration.
No change.
Item 4. Purpose of Transaction.
No change.
Item 5. Interest in Securities of the Issuer.
No change.
Item 6. Contracts, Arrangements, Undertakings or Relationships with Respect to
Securities of the Issuer.
The Common Stock beneficially owned by Mr. Steinberg is
subject to a Stockholder Agreement, dated as of January 1, 1989, among the
Company, Mr. Steinberg, Mr. Tisch, Mr. Saul Steinberg and certain other security
holders of the Company. Following the Company's initial public offering on
December 4, 1991, the sole surviving provision of the Stockholder Agreement
provides that the parties thereto have registration rights with respect to their
shares of Common Stock if the Company files certain forms of registration
statements.
The Stock Purchase Agreement, dated August 7, 1991, among the
Company, Mr. Tisch and Mr. Steinberg under which Mr. Tisch purchased 59,874
shares of Common Stock, provides, among other provisions, that (a) At Mr.
Tisch's request, Mr. Steinberg will vote all of his shares of voting securities
of the Company, and will use his best efforts to secure Mr. Saul
3 of 7
<PAGE>
Steinberg's agreement to vote all of his shares of voting securities of the
Company, in favor of the election of Mr. Tisch as a director of the Company
(although it is noted that Mr. Tisch resigned as a director of the Company on
March 16, 1995) and (b) on or after August 7, 1992, Mr. Tisch can require the
reporting person to purchase the 59,874 shares of Common Stock owned by Mr.
Tisch for $100,000 plus an additional 20% per annum.
Pursuant to a Lock-Up Agreement, dated December 4, 1991,
("Lock-Up Agreement") entered into among the Company, GKN Securities Corp.
("GKN") and Mr. Steinberg, Mr. Steinberg has agreed not to sell any of his
shares of Common Stock until December 4, 1996 without the prior written consent
of the GKN, except that Mr. Steinberg may pledge to Republic National Bank of
New York ("Republic") and Mr. Steinberg and Republic may sell, from time to
time, either publicly or privately, any shares of Common Stock beneficially
owned by Mr. Steinberg solely to pay any amounts due under the Demand Grid Note
("1994 Note") and Continuing General Security Agreement ("1994 Security
Agreement") between Mr. Steinberg and Republic, both of which are dated December
16, 1994, without prior notice to or the consent of GKN.
To fund the purchase of Common Stock proposed to be acquired
(see response to Item 4), Mr. Steinberg entered into the 1994 Note and 1994
Security Agreement with Republic on December 16, 1994. The 1994 Note permits Mr.
Steinberg to borrow, from time to time, an aggregate of $1,000,000. Interest is
payable on the unpaid principal of the 1994 Note monthly in arrears at the
reference rate of Republic, and the principal is payable upon demand by
Republic. As security for any amounts due from Mr. Steinberg to Republic under
the 1994 Note, Mr. Steinberg has pledged to Republic 845,000 shares of Common
Stock pursuant to the 1994 Security Agreement. In the event of default under the
1994 Note or 1994 Security Agreement, Republic may foreclose upon and publicly
or privately sell the shares of Common Stock pledged by Mr. Steinberg.
On April 8, 1996, Mr. Steinberg and another person formed Wise
Partners, L.P., a limited partnership under Delaware law ("Wise"), of which Mr.
Steinberg is the sole general partner. On April 22, 1996, Wise entered into a
Demand Grid Note ("1996 Note") and Security Agreement ("1996 Security
Agreement") with Republic. The 1996 Note permits Wise to borrow, from time to
time, an aggregate of $3,000,000. Interest is payable on the unpaid principal of
the 1996 Note monthly in arrears at the reference rate of Republic, and the
principal is payable upon demand by Republic. As security for the 1996 Note, Mr.
Steinberg pledged pursuant to the 1996 Security Agreement 55,000 shares of
Common Stock previously unpledged to Republic under the 1994 Note and 1994
Security Agreement. Therefore, as security for the 1996 Note, Mr. Steinberg has
pledged an aggregate of 900,000 shares of Common Stock. In the event of default
under the 1996 Note or 1996 Security Agreement, Republic may exercise all the
voting rights and foreclose upon and publicly or privately sell the shares of
Common Stock pledged by Mr.
Steinberg.
The Lock-Up Agreement was further amended on April 15, 1996 to
permit Republic to sell the shares pledged under the 1996 Note and 1996 Security
Agreement without prior notice to or consent of GKN.
4 of 7
<PAGE>
Item 7. Material to be Filed as Exhibits.
(a) Stockholder Agreement, dated as of January 1, 1989,
among the Company, Mr. Steinberg, Mr. Jonathan Tisch,
Mr. Saul Steinberg and certain other stockholders of
the Company.*
(b) Stock Purchase Agreement, dated August 7, 1991,
among the Company, Mr. Jonathan Tisch and Mr.
Steinberg.*
(c) Lock Up Agreements, dated December 4, 1991, among
the Company, GKN and Mr. Steinberg.*
(d) Modification, dated December 12, 1994, to Lock-Up
Agreement, dated December 4, 1991, among the
Company, GKN and Mr. Steinberg.*
(e) Demand Grid Note, dated December 16, 1994, between
Mr. Steinberg and Republic National Bank of New
York.*
(f) Continuing General Security Agreement, dated
December 16, 1994, between Mr. Steinberg and
Republic National Bank of New York.*
(g) Stock Option Agreement, dated April 7, 1994, between
Mr. Steinberg and the Company.*
(h) Stock Option Agreement, dated June 23, 1995, between
Mr. Steinberg and the Company.*
(i) Modification, dated April 15, 1996, to Lock-up
Agreement, dated December 4, 1991, among the Company
GKN and Mr. Steinberg.
(j) Demand Grid Note, dated April 22, 1996, between Wise
Partners, L.P. and Republic National Bank of New
York.
(k) Guaranty and Security Agreement, dated April 22,
1996, between Wise Partners, L.P. and Republic
National Bank of New York.
* Previously filed.
5 of 7
<PAGE>
SIGNATURE
After a reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true
complete, and correct.
Dated: July 3, 1996
/s/ Jonathan L. Steinberg
Jonathan L. Steinberg
6 of 7
<PAGE>
EXHIBIT INDEX
(a) Stockholder Agreement, dated as of January 1, 1989, among the Company, Mr.
Steinberg, Mr. Jonathan Tisch, Mr. Saul Steinberg and certain other
stockholders of the Company.*
(b) Stock Purchase Agreement, dated August 7, 1991, among the Company, Mr.
Jonathan Tisch and Mr. Steinberg.*
(c) Lock Up Agreements, dated December 4, 1991, among the Company, GKN and Mr.
Steinberg.*
(d) Modification, dated December 12, 1994, to Lock-Up Agreement, dated December
4, 1991, among the Company, GKN and Mr. Steinberg.*
(e) Demand Grid Note, dated December 16, 1994, between Mr. Steinberg and
Republic National Bank of New York.*
(f) Continuing General Security Agreement, dated December 16, 1994, between Mr.
Steinberg and Republic National Bank of New York.*
(g) Stock Option Agreement, dated April 7, 1994, between Mr. Steinberg and the
Company.*
(h) Stock Option Agreement, dated June 23, 1995, between Mr. Steinberg and the
Company.*
(i) Modification, dated April 15, 1996, to Lock-up Agreement, dated December 4,
1991, among the Company GKN and Mr. Steinberg.
(j) Demand Grid Note, dated April 22, 1996, between Wise Partners, L.P. and
Republic National Bank of New York.
(k) Guaranty and Security Agreement, dated April 22, 1996, between Wise
Partners, L.P. and Republic National Bank of New York.
* Previously filed.
7 of 7
<PAGE>
EXHIBIT I
April 15, 1996
Mr. David Nussbaum
GKN Securities Corp.
61 Broadway, 12th Floor
New York, New York 10006
Mr. Scot Rosenblum
Individual Investor Group, Inc.
1633 Broadway, 38th Floor
New York, New York 10019
Dear David and Scot:
I have agreed to guarantee a credit facility of up to
$3,000,000 being established by Republic National Bank in favor of Wise
Partners, L.P., a Delaware limited partnership of which I am the general
partner, and to pledge the Common Stock of Individual Investor Group, Inc. that
I own to secure such guarantee. If you may recall, my stock is already subject
to a pledge to Republic National Bank to secure a $1,000,000 personal credit
facility.
The Common Stock of Individual Investor Group, Inc. which I
presently own is still subject to my "lock-up" agreement dated December 4, 1991
among GKN Securities Corp., the Company and myself ("Lock-Up Agreement"). This
Lock-Up Agreement was previously modified to permit me to pledge my stock to
secure my personal credit facility. I request a further modification to permit
my pledge of Common Stock to secure the partnership's credit facility.
This letter will serve to modify the Lock-Up Agreement so that
I may pledge to Republic National Bank under the terms of my guarantee, and I or
Republic National Bank may offer, sell, transfer or otherwise dispose, from time
to time, in the public market or privately, any shares of Common Stock which I
am the beneficial owner solely to repay any amount or amounts that may be due
Republic National Bank under either credit facility, all of which offers,
<PAGE>
Mr. David Nussbaum
Mr. Scott Rosenblum
April 15, 1996
Page 2
sales, transfers or dispositions may be made without notice to or consent of GKN
Securities Corp. The right to offer, sell, transfer or dispose of any Common
Stock pursuant to this modification is in addition to any other right I have to
sell securities of the Company pursuant to the Lock-Up Agreement.
If you are in agreement with this modification, please sign in
the space provided below to acknowledge your consent and return the executed
copy to me.
Sincerely,
Jonathan L. Steinberg
ACKNOWLEDGED AND AGREED to this
15th day of April, 1996
GKN SECURITIES CORP.
By:________________________________
David Nussbaum, Chairman
INDIVIDUAL INVESTOR GROUP, INC.
By:_________________________________
Scot Rosenblum, Vice President
<PAGE>
EXHIBIT J
DEMAND GRID NOTE
New York, New York
$3,000,000.00 Date: April 22, 1996
ON DEMAND, the undersigned ("Maker") promises to pay to the order of
REPUBLIC NATIONAL BANK OF NEW YORK ("Bank") at the principal office of Bank
located at 452 Fifth Avenue, New York, New York 10018 or at any of its other
banking offices in New York as Bank may designate by written notice to Maker,
the principal sum of $3,000,000.00 DOLLARS, or so much thereof as shall be
advanced by Bank to Maker, in Bank's sole discretion, and not repaid, together
with interest on the unpaid principal amount hereof from time to time
outstanding from the date hereof until the date on which this Note is paid in
full, at the rate set forth below.
Interest on the unpaid principal of this Note will be due and payable
when demand is made for payment of the principal of this Note and (indicate
whichever is applicable):
X on the last day of each month.
on the ______ day of each __________.
---
Prior to the date that demand is made for payment of the principal
hereof, this Note shall bear interest at a rate (the "Contract Rate") equal to
(indicate whichever is applicable):
a fixed rate of ______% per annum.
X a fluctuating rate of O% per annum above the
Reference Rate (as defined below), such rate to
change without notice from time to time with each
change in the Reference Rate.
After demand is made for payment of the principal of this Note, interest under
this Note shall be payable on demand and shall accrue at a fluctuating rate per
annum equal to 2% per annum above (i) if the Contract Rate is a fixed rate, the
Contract Rate, or (ii) if the Contract Rate is a fluctuating rate, the greater
from time to time of (x) the Contract Rate in effect on the date that the
principal became due and (y) the Contract Rate that would have been in effect
from time to time if the principal had not become due. Interest shall be
calculated on the basis of a 360-day year for actual days elapsed. In no event
shall the interest rate applicable at any time to this Note exceed the maximum
rate permitted by law. As used herein, "Reference Rate" means the rate
established by Bank from time to time at its principal domestic office as its
reference lending rate for domestic commercial loans. Bank may make loans to
customers above, at or below the Reference Rate.
This Note evidences loans made by Bank to Maker in Bank's sole
discretion, from time to time. The unpaid principal balance of this Note at any
time shall be the total amount advanced by Bank to Maker in Bank's sole
discretion, less the total amount of principal payments made hereon by Maker.
The date and amount of each such loan and each payment on account of principal
thereof may be endorsed by Bank on the grid attached to and made a part of this
Note, and when so endorsed shall represent evidence thereof binding upon Maker
in the absence of manifest error. Any failure by Bank to so endorse shall in no
way
<PAGE>
mitigate or discharge the obligation of Maker to repay any loans actually made.
Maker may prepay this Note in whole at any time with all accrued interest to the
date of prepayment. So long as Maker is not in default under this Note, Maker
may prepay this Note in part at any time with accrued interest to the date of
prepayment on the principal amount prepaid.
Requests for loans to Maker from Bank and directions as to the
deposition of the proceeds thereof may be given orally (including by telephone)
or in writing to Bank by the General Partner of Maker as authorized by the
Partnership Bank Account Agreement heretofore delivered to Bank, as such
Partnership Bank Account Agreement may be amended or superseded from time to
time, provided an amended Partnership Bank Account Agreement shall have been
executed by the General Partner(s) of Maker and delivered to an officer of Bank
at its office for payment. Bank may conclusively rely on the authorities
contained in said Partnership Bank Account Agreement. Any such loan so made
shall be conclusively presumed to have been made to or for the benefit of Maker
and Maker shall be liable in respect thereof when made in accordance with any
such request or direction, or when deposited to any account of Maker with Bank,
even though persons other than those authorized to borrow on behalf of Maker may
have authority to draw against such account. Bank may rely on any such request
or direction which it believes to be genuine, and Bank shall be fully protected
in so doing without any duty to make further inquiry as to such genuineness or
in otherwise acting in good faith in the premises. By making a request for a
loan, Maker shall be deemed to be representing to Bank that all of the
representations and warranties of Maker set forth in this Note are true and
correct as of the date of such request as if made on and as of such date and
shall also be deemed to be representing and warranting to Bank that on such date
Maker is not in breach of any of its covenants to Bank set forth in this Note or
in any other document or instruments of Maker to Bank and no event of default
has occurred and is continuing with respect to any Obligations (as defined
below).
This Note shall be payable in lawful money of the United
States of America in immediately available funds. Except as otherwise provided
herein with respect to prepayments, all payments on this Note shall be applied
to the payment of accrued interest before being applied to the payment of
principal. Any payment which is required to be made on a day which is not a
banking business day in the City of New York shall be payable on the next
succeeding banking business day and such additional time shall be included in
the computation of interest. In the event that any other Obligations are due at
any time that Bank receives a payment from Maker on account of this Note or any
such other Obligations, Bank may apply such payment to amounts due under this
Note or any such other Obligations in such manner as Bank, in its discretion,
elects, regardless of any instructions from Maker to the contrary.
Maker acknowledges that this Note is an obligation which is payable on
demand and that notwithstanding anything to the contrary in any other
instrument, agreement or other document to which Maker and/or Bank is a party,
the enumeration in any such document of specific events of default, conditions
and/or covenants relating to the loan evidenced by this Note or to any other
Obligation, shall not be construed to qualify, define or otherwise limit in any
way Bank's right, power or ability, at any time, to make demand for payment of
the principal of and interest on this Note, and Maker agrees that the occurrence
of any event of default or breach of any condition or covenant in any such
document is not the only basis for demand to be made on this Note.
To induce Bank, in its sole discretion, to make loans to Maker, Maker
represents, warrants and covenants to Bank that (i) Maker is duly organized and
validly existing in good standing under the laws of the jurisdiction of its
organization, with full power and authority to make, deliver and perform this
Note; (ii) the
2
<PAGE>
execution, delivery and performance by Maker of this Note have been duly
authorized by all necessary Partnership action and do not and will not violate
or conflict with its Limited Partnership Agreement or any agreement or
instrument to which Maker is a party or which may be binding on Maker; (iii)
this Note has been fully executed by the general partner of Maker and
constitutes a legal, valid, binding and enforceable obligation of Maker; (iv) no
authorization, consent, approval, license, exemption of or filing or
registration with, any court or government or governmental agency is or will be
necessary to the valid execution, delivery or performance by Maker of this Note;
(v) the loans evidenced by this Note will be used solely for working capital
purposes; and (vi) there are no pending or threatened actions, suits or
proceedings against or affecting Maker by or before any court, commission,
bureau or other governmental agency or instrumentality, which, individually or
in the aggregate, if determined adversely to Maker, would have a material
adverse effect on the business, properties, operations, or condition, financial
or otherwise, of Maker.
Bank shall have a continuing lien and/or right of setoff on, and is
hereby granted a security interest in, all deposits (general and special) and
credits with Bank or any Bank Affiliate of any Maker and indorser, and may apply
all or part of the same to any Obligations, at any time or times, without
notice. Bank shall have a continuing lien on, and is hereby granted a security
interest in, all property of every Maker and indorser and the proceeds thereof
held or received by or for Bank or any Bank Affiliate for any purpose, whether
or not for the express purpose of serving as collateral security for the
Obligations. As used in this Note, the term "Bank Affiliate" includes any
individual, partnership or corporation acting as nominee or agent for Bank, and
any corporation or bank which is directly or indirectly owned or controlled by,
or under common control with, Bank. Any notice of disposition of property shall
be deemed reasonable if oral notice is attempted to be given to the General
Partner of the Maker by telephone and if written notice is mailed by certified
mail at least five days before such disposition to the last address of Maker or
indorser on Bank's records. However, the failure of the Bank to reach the
General Partner by telephone shall not limit any of the rights of the Bank at
law or hereunder. If the Obligations evidenced by this Note are secured by a
security agreement and/or other security documents which Maker has separately
delivered to Bank (whether or not such documents make specific reference to this
Note), reference to such documents is made for a description of the collateral
provided thereby and of the rights of Maker and Bank therein. The rights and
remedies of Bank provided hereunder are cumulative with the rights and remedies
available to Bank under any other instruments or agreements or under applicable
law. As used in this Note, the term "Obligations" means all amounts payable
under this Note and any and all other indebtedness, obligations and liabilities
of Maker to Bank, and all claims of Bank against Maker, now existing or
hereafter arising, direct or indirect (including participations or any interest
of Bank in indebtedness of Maker to others), acquired outright, conditionally,
or as collateral security from another, absolute or contingent, joint or
several, secured or unsecured, matured or unmatured, monetary or non-
monetary,arising out of contract or tort, liquidated or unliquidated, arising by
operation of law or otherwise, and all extensions, renewals, refundings,
replacements and modifications of any of the foregoing.
In case any principal of or interest on this Note is not paid when due,
each Maker and indorser shall be jointly and severally liable for all costs of
enforcement and collection of this Note incurred by Bank or any other holder of
this Note, including but not limited to reasonable attorneys' fees,
disbursements and court costs. In addition, in the event of a default hereunder,
Maker shall pay all reasonable attorneys' fees and disbursements incurred by
Bank in obtaining advice as to its rights and remedies in connection with such
default.
Maker and each indorser hereby separately waive presentment, notice of
dishonor, protest and notice of protest, and any or all other notices or demands
(other than demand for payment) in connection with the
3
<PAGE>
delivery, acceptance, performance, default, endorsement or guarantee of this
Note. The liability of any Maker or indorser hereunder shall be unconditional
and shall not be in any manner affected by any indulgence whatsoever granted or
consented to by the holder hereof, including, but not limited to any extension
of time, renewal, waiver or other modification. Any failure of the holder to
exercise any right hereunder shall not be construed as a waiver of the right to
exercise the same or any other right at any time and from time to time
thereafter. Bank or any holder may accept late payments, or partial payments,
even though marked "payment in full" or containing words of similar import or
other conditions, without waiving any of its rights. No amendment, modification
or waiver of any provision of this Note nor consent to any departure by Maker
therefrom shall be effective, irrespective of any course of dealing, unless the
same shall be in writing and signed by Bank, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. This Note cannot be changed or terminated orally or by estoppel
or waiver or by any alleged oral modification regardless of any claimed partial
performance referable thereto.
Any notice from Bank to Maker or any indorser shall be deemed given
when delivered to Maker or such indorser by hand or five days after it is
deposited in the United States mail by certified mail and addressed to Maker or
such indorser at the last address of maker or such indorser appearing on Bank's
records.
This Note shall be governed by and construed in accordance with the
laws of the State of New York applicable to instruments made and to be performed
wholly within that state. If any provision of this Note is held to be illegal or
unenforceable for any reason whatsoever, such illegality or unenforceability
shall not affect the validity of any other provision hereof.
MAKER AND EACH INDORSER AGREE THAT ANY ACTION, DISPUTE, PROCEEDING,
CLAIM OR CONTROVERSY BETWEEN MAKER OR SUCH INDORSER AND BANK, WHETHER SOUNDING
IN CONTRACT, TORT OR OTHERWISE ("DISPUTE" OR "DISPUTES") SHALL, AT BANK'S
ELECTION, WHICH ELECTION MAY BE MADE AT ANY TIME PRIOR TO THE COMMENCEMENT OF A
JUDICIAL PROCEEDING BY BANK, OR IN THE EVENT OF A JUDICIAL PROCEEDING INSTITUTED
BY MAKER OR SUCH INDORSER AT ANY TIME PRIOR TO THE LAST DAY TO ANSWER AND/OR
RESPOND TO A SUMMONS AND/OR COMPLAINT MADE BY MAKER OR SUCH INDORSER, BE
RESOLVED BY ARBITRATION IN ACCORDANCE WITH THE PROVISIONS OF THIS PARAGRAPH AND
SHALL, AT THE ELECTION OF BANK, INCLUDE ALL DISPUTES ARISING OUT OF OR IN
CONNECTION WITH (1) THIS NOTE OR ANY RELATED AGREEMENTS OR INSTRUMENTS, (2) ALL
PAST, PRESENT AND FUTURE AGREEMENTS INVOLVING MAKER OR SUCH INDORSER AND BANK,
(3) ANY TRANSACTION RELATED TO THIS NOTE AND ALL PAST, PRESENT AND FUTURE
TRANSACTIONS INVOLVING MAKER OR SUCH INDORSER AND BANK, AND (4) ANY ASPECT OF
THE PAST, PRESENT OR FUTURE RELATIONSHIP OF MAKER OR SUCH INDORSER AND BANK.
Bank may elect to require arbitration of any Dispute with Maker or any indorser
without thereby being required to arbitrate all Disputes between Bank and Maker
or such indorser. Any such Dispute shall be resolved by binding arbitration in
accordance with Article 75 of the New York Civil Practice Law and Rules and the
Commercial Arbitration Rules of the American Arbitration Association ("AAA"). In
the event of any inconsistency between such Rules and these arbitration
provisions, these provisions shall supersede such Rules. All statutes of
limitations which would otherwise be applicable shall apply to any arbitration
proceeding under this paragraph. In any arbitration proceeding subject to this
paragraph, the arbitration panel (the "arbitrator") is specifically empowered to
decide (by documents only, or with a hearing, at the arbitrator's sole
discretion) pre-hearing motions which are substantially similar to pre- hearing
motions to dismiss and motions for summary adjudication. In any such arbitration
proceeding, the
4
<PAGE>
arbitrator shall not have the power or authority to award punitive damages to
any party. Judgment upon the award rendered may be entered in any court having
jurisdiction. Whenever an arbitration is required, the parties shall select an
arbitrator in the manner provided in this paragraph. No provision of, nor the
exercise of any rights under, this paragraph shall limit the right of Bank (1)
to foreclose against any real or personal property collateral through judicial
foreclosure, by the exercise of the power of sale under a deed of trust,
mortgage or other security agreement or instrument, pursuant to applicable
provisions of the Uniform Commercial Code, or otherwise herein pursuant to
applicable law, (2) to exercise self-help remedies including but not limited to
setoff and repossession, or (3) to request and obtain from a court having
jurisdiction before, during or after the pendency of any arbitration,
provisional or ancillary remedies and relief including but not limited to
injunctive or mandatory relief or the appointment of a receiver. The institution
and maintenance of an action or judicial proceeding for, or pursuit of,
provisional or ancillary remedies or exercise of self-help remedies shall not
constitute a waiver of the right of Bank, even if Bank is the plaintiff, to
submit the Dispute to arbitration if Bank would otherwise have such right.
Whenever an arbitration is required under this paragraph, the arbitrator shall
be selected, except as otherwise herein provided, in accordance with the
Commercial Arbitration Rules of the AAA. A single arbitrator shall decide any
claim of $100,000 or less and he or she shall be an attorney with at least five
years' experience. Where the claim of any party exceeds $100,000, the Dispute
shall be decided by a majority of three arbitrators, at least two of whom shall
be attorneys (at least one of whom shall have not less than five years'
experience representing commercial banks). The arbitrator shall have the power
to award recovery of all costs and fees (including attorneys' fees,
administrative fees, arbitrator's fees, and court costs) to the prevailing
party. In the event of any Dispute governed by this paragraph, each of the
parties shall, subject to the award of the arbitrator, pay an equal share of the
arbitrator's fees.
MAKER AND EACH INDORSER AGREE THAT ANY ACTION, SUIT OR PROCEEDING IN
RESPECT OF OR ARISING OUT OF THIS NOTE MAY BE INITIATED AND PROSECUTED IN THE
STATE OR FEDERAL COURTS, AS THE CASE MAY BE, LOCATED IN NEW YORK COUNTY, NEW
YORK AND ANY ARBITRATION PROCEEDING PURSUANT HERETO SHALL BE CONDUCTED IN NEW
YORK, NEW YORK. MAKER AND EACH INDORSER CONSENT TO AND SUBMIT TO THE EXERCISE OF
JURISDICTION OVER ITS PERSON BY ANY SUCH COURT HAVING JURISDICTION OVER THE
SUBJECT MATTER, WAIVE PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND
CONSENT THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO
MAKER OR SUCH INDORSER AT ITS ADDRESS SET FORTH BELOW OR TO ANY OTHER ADDRESS AS
MAY APPEAR IN BANK'S RECORDS AS THE ADDRESS OF MAKER OR SUCH INDORSER.
IN ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS
NOTE, BANK, MAKER AND EACH INDORSER WAIVE TRIAL BY JURY, AND MAKER AND EACH
INDORSER ALSO WAIVE (1) THE RIGHT TO INTERPOSE ANY SET-OFF OR COUNTERCLAIM OF
ANY NATURE OR DESCRIPTION, (II) ANY OBJECTION BASED ON FORUM NON CONVENIENS OR
VENUE, AND (III) ANY CLAIM FOR CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES.
Bank is authorized to fill in any blank spaces and to otherwise
complete this Note and correct any patent errors herein.
5
<PAGE>
Copies of all written notices given by Bank to Maker shall be sent to:
1) Graubard Mollen & Miller
600 Third Avenue
New York, New York 10016
Attention: Peter M. Ziemba
2) Howard E. Steinberg, Esq.
General Counsel
Reliance Group Holdings, Inc.
Park Avenue Plaza
29th Floor
55 East 52nd Street
New York, New York 10055
Wise Partners, L.P.
Name of Maker
By:____________________________________
Signature of Authorized Signatory
Jonathan L. Steinberg, General Partner
Print Name and Title
1633 Broadway, 38th Floor
New York, New York 10019
Address for Notices
6
<PAGE>
[If Maker is not a natural person,
indicate the type of entity below]
Maker signing above is a:
partnership organized under
the laws of ___________________
X limited partnership organized
under the laws of Delaware
corporation organized under
the laws of ___________________
other (specify): ___________
<TABLE>
LOANS AND PAYMENTS OF PRINCIPAL
Amount of Unpaid
Amount of Principal Principal Notation
Date Loan No. Loan Paid Balance Made By
<S> <C> <C> <C> <C> <C>
</TABLE>
7
<PAGE>
EXHIBIT K
GUARANTY
AND SECURITY AGREEMENT
Date: April 22, 1996
SECTION 1. Definitions. The following terms have the following meanings unless
otherwise specified herein:
"Bank" means Republic National Bank of New York, a national banking association,
and its successors and assigns, and any Person acting as agent or nominee for
Republic National Bank of New York and any corporation the stock of which is
owned or controlled directly or indirectly by, or is under common control with,
Republic National Bank of New York and/or Republic New York Corporation.
"Bankruptcy Code" shall mean the United States Bankruptcy Code, and any
amendments thereto (Title 11, United States Code).
"Borrower", shall mean Wise Partners, L.P., a Delaware limited partnership (if
more than one, "Borrower" shall mean each, any or all of them).
"Claims" shall mean each "claim" as that term is defined under Section 101(4) of
the Bankruptcy Code.
"Collateral" shall mean all property that secures the payment of the
Obligations, and any Proceeds thereof.
"Guaranty" shall mean this Guaranty and Security Agreement.
"Guarantor" shall mean the undersigned (and if more than one, "Guarantor" shall
mean each, any and all of them, jointly and severally).
"Liabilities" shall mean any and all indebtedness, obligations (whether monetary
or non-monetary) and liabilities of Guarantor to the Bank under this Guaranty,
and all Claims thereon.
"Lien" means any lien, security interest, pledge, hypothecation, or other claim
in or with respect to any Security.
"Obligations" shall mean any and all indebtedness any and all indebtedness in
connection with the $3,000,000 demand grid note dated April 22, 1996 and any
reasonable expenses related thereto.
"Person" shall mean any natural person, corporation, partnership, trust,
government or other association or legal entity.
"Proceeds" shall have the meaning assigned to that term by the New York Uniform
Commercial Code, as amended, and also means all "proceeds," "products,"
"offspring," "rents" or "profits" of any property, as such quoted terms are used
in the Bankruptcy Code.
"Security" shall mean any property which secures payment or performance of any
of the Liabilities, and all Proceeds thereof.
SECTION 2. Scope of Guaranty. In consideration of any extension of credit or
other financial accommodation heretofore, now or hereafter made by the Bank to
or for the account of the Borrower, whether voluntary or obligatory, Guarantor
hereby absolutely and unconditionally guarantees to the Bank the prompt and
complete payment and performance when due (whether at stated maturity, by
required prepayment, acceleration, or otherwise) of all Obligations and all
expenses incurred in collecting or enforcing the same, as more fully set forth
below, all of which conclusively shall be deemed to have been incurred in
reliance upon this Guaranty, as if each of the foregoing were the direct and
primary legal responsibility of Guarantor and not the Borrower.
<PAGE>
SECTION 3. Security. As Security for the Liabilities of Guarantor, Guarantor
hereby grants to the Bank a continuing lien upon and security interest in, and
hereby pledges, assigns and transfers to the Bank, all right, title and interest
of Guarantor in and to all deposits (general or special) of Guarantor at any
time maintained with the Bank or any branch, subsidiary or affiliate of the
Bank, wherever located, and any substitutions and all products and Proceeds
thereof, and any other property described below, whether now or hereafter
existing or acquired and wherever located, and any substitutions and all
products and Proceeds (including but not limited to insurance proceeds) thereof:
[mark or initial the applicable boxes]
Specific X All of the following property: See Schedule A
Property
Guarantor further grants to the Bank a continuing lien upon and security
interest in, and hereby pledges and assigns to the Bank, all right, title and
interest of Guarantor in and to any and all moneys, securities and any other
property of Guarantor and the Proceeds thereof, now or hereafter actually or
constructively held or received by or in transit to or from the Bank, including
its branches, subsidiaries and affiliates, wherever located, for any purpose,
including, without limitation, for collection, custody, pledge and transmission.
Guarantor hereby authorizes the Bank to sign and file financing statements at
any time with respect to any Security without the signature of Guarantor.
Guarantor will, however, at any time on request of the Bank, sign financing
statements, trust receipts, security agreements or other agreements or
instruments with respect to any Security. Upon Guarantor's failure to do so, the
Bank is authorized, as the agent of Guarantor, to sign (and file, if Bank deems
appropriate) any such instrument. Guarantor agrees to pay all filing fees and to
reimburse the Bank for all costs and expenses of any kind reasonably incurred in
any way in connection with the Security.
The Bank or its nominee may exercise any right of Guarantor with respect to
any Security whether or not any Obligation or Liability is then due and payable
or any default has occurred. In any statutory or non-statutory proceeding,
affecting the Borrower, Guarantor or any Security or any Obligation or
Liability, the Bank or its nominee may, whether or not any Obligation or
Liability is then due and payable or any default shall have occurred, and
regardless of the amount of Obligations or Liabilities, assert, or file a proof
of claim for, the full amount of any such Obligation, Liability or the Security
and vote such claim, for the full amount thereof: (a) for or against any
proposal or resolution; (b) for a trustee or trustees or for a committee of
creditors; or (c) for the acceptance or rejection of any proposed arrangement,
plan of reorganization, wage earners plan, composition or extension, and the
Bank or its nominee may receive any payment or distribution and give acquittance
therefor and may exchange or release any Security. Guarantor agrees that at any
time, whether or not any Obligation or Liability is then due and payable or any
default shall have occurred, the Bank shall have the right to notify any account
debtor (with respect to any Security consisting of Accounts), or the obligor on
any Instrument or other right or claim of Guarantor to any payment which is
Security, to make payment directly to the Bank, whether or not any default shall
have occurred and whether or not Guarantor was theretofore making collections on
such Security, and also to take control of any Proceeds the Bank is entitled to
under Section 9-306 of the New York Uniform Commercial Code. If any Security
consists of Accounts, Instruments or other rights or claims of Guarantor to any
payment, then at the Bank's request Guarantor shall promptly notify (in manner,
form and substance satisfactory to the Bank) all Persons obligated to Guarantor
under any such Accounts, Instruments or other rights or claims of Guarantor to
any payment that the Bank possesses a security interest in such Accounts,
Instruments or other rights or claims of Guarantor to any payment and that all
payments in respect of such Accounts, Instruments or other rights or claims of
Owner to any payment are to be made directly to the Bank. Guarantor shall not
settle, compromise or adjust any disputed amount, or allow any credit, rebate or
discount with respect to any Account, Instrument or other right
2
<PAGE>
or claim of Guarantor to any payment which constitutes Security under this
Guaranty. After the Bank shall have given any notice to an account debtor of the
type specified above, any and all accounts recovered by Guarantor from the
account debtor or other obligor so notified shall be promptly remitted to the
Bank, and until so remitted shall be segregated by Guarantor and held in trust
for the Bank.
Any and all stocks, bonds or other securities of Guarantor at any time held
by the Bank hereunder may, with notice, when an event of default exists
hereunder, be registered in the name of the Bank or its nominee without
disclosing that the Bank is a pledgee. The Bank or such nominee (when an event
of default exists hereunder and regardless of the amount of Obligations or
Liabilities) may, with notice, exercise all voting and Corporate rights at any
meeting of any corporation issuing such stocks, bonds or other securities, and
exercise any and all rights of conversion, exchange, subscription or any other
rights, privileges or options pertaining to such stocks, bonds or other
securities as if the absolute owner thereof, including without limitation the
right to exchange, at its discretion, any and all of such stocks, bonds or other
securities for other stocks, bonds, securities or any other property upon the
merger, consolidation, reorganization, recapitalization or other readjustment of
any corporation issuing the same or upon the exercise by the issuing corporation
or the Bank of any right, privilege or option pertaining to such stocks, bonds,
or other securities, and in connection therewith, to deposit and deliver any and
all of such stocks, bonds or other securities with any committee, trustee,
depositary, transfer agent, registrar or other designated agency upon such terms
and conditions as it may determine, all without liability except to account for
property actually received by it. If Guarantor, as registered holder of any
security, shall become entitled to receive or does receive any stock
certificate, option or right, in substitution of, or in exchange for, such
security, or otherwise, Guarantor agrees to accept same as the Bank's agent and
to hold same in trust for the Bank, and to forthwith deliver the same to the
Bank in the exact form received, with Guarantor's endorsement when necessary, to
be held by the Bank as Security.
Guarantor recognizes that the Bank may be unable to effect a public sale of
any securities which may constitute a portion of the Security by reason of
certain prohibitions contained in the Securities Act of 1933 and applicable
state securities laws and instead may resort to one or more private sales of
such Security to a restricted group of purchasers who would be obliged to agree,
among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. Guarantor
recognizes and agrees that, because of this restriction, sales of securities may
result in prices and other terms less favorable to the seller than if the
disposition were made pursuant to a public sale and, notwithstanding such
circumstances, agrees that any such private or limited sale or sales shall be
deemed to have been made in a commercially reasonable manner. The Bank shall be
under no obligation to delay a sale of any of the securities constituting part
of the Security for the period of time necessary to permit the issuer of such
securities to register them for public sale under the Securities Act of 1933 or
under applicable state securities laws.
To the extent permitted by applicable law, the Bank or its nominee is hereby
given a right of setoff for the amount of the Liabilities upon any of and all
said deposits and any credits of Guarantor with, and any and all claims of
Guarantor against, the Bank at any time existing and the Bank is hereby
authorized to setoff and apply such deposits, credits and claims, without prior
notice or demand, to the Liabilities in such order and amounts as the Bank may
elect.
Guarantor shall, upon request of the Bank, assemble the Security and make it
available to the Bank at a place to be designated by the Bank which is
reasonably convenient to the Bank and Guarantor. The Bank will give Guarantor
notice of the time and place of any public sale of the Security or of the time
after which any private sale or any other intended disposition thereof is to be
made by sending notice, as provided below, at least five days before the time of
the sale or disposition, which provisions for notice Guarantor agrees are
reasonable. No such notice need be given by the Bank with respect to Security
which is perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market. Guarantor shall remain liable to the
Bank for the payment of any deficiency with interest thereon at the highest rate
applicable
3
<PAGE>
to the Obligations, or if no rate is specified with respect to such Obligations,
at the then legal rate of interest.
Guarantor will do all such other acts and things and will execute and
deliver all such other instruments and documents, including further security
agreements, pledges, endorsements, assignments, and notices as the Bank may
reasonably deem necessary or advisable from time to time in order to perfect and
preserve the Liens created by this Guaranty and will, at its own cost and
expense, cause such Lien to be perfected and continue to be perfected and to be
and remain prior to all other Liens. The Bank, acting through its officers,
employees and authorized agents, is hereby irrevocably appointed the
attorney-in-fact of Guarantor to do, at Guarantor's expense, all acts and things
which the Bank may reasonably deem necessary or advisable to preserve, perfect,
continue to perfect and/or maintain the priority of such Liens, including the
signing of financing, continuation or other similar statements and notices on
behalf of Guarantor, and which Guarantor is required to do by the terms of this
Guaranty. Guarantor hereby authorizes the Bank to sign and file financing
statements with respect to the Security without the signature of Guarantor.
Guarantor shall pay all filing fees for financing statements with respect to the
Security.
SECTION 4. Reinstatement. If after receipt of any payment of or proceeds of
Security applied (or intended to be applied) to the payment of, all or any part
of the Obligations, the Bank is for any reason compelled to surrender or
voluntarily surrenders, such payment or proceeds to any person, (a) because such
payment or application of proceeds is or may be avoided, invalidated, declared
fraudulent, set aside, determined to be void or voidable as a preference,
fraudulent conveyance, impermissible setoff or a diversion of trust funds; or
(b) for any other reason, including without limitation (i) any judgment, decree
or order of any Court or administrative body having jurisdiction over the Bank
or any of its property, or (ii) any settlement or compromise of any such claim
effected by the Bank with any such claimant (including the Borrower), then the
Obligations or part thereof intended to be satisfied shall be reinstated and
continue and this Guaranty shall continue in full force as if such payment or
proceeds had not been received by the Bank, notwithstanding any revocation
thereof or the cancellation of any note or other instrument evidencing any
Obligation or otherwise; and Guarantor shall be liable to pay to the Bank, and
hereby does indemnify the Bank and hold the Bank harmless for, the amount of
such payment or proceeds so surrendered and all expenses (including all
attorneys' fees, court costs and expenses attributable thereto) incurred by the
Bank in the defense of any claim made against the Bank that any payment or
proceeds received by the Bank in respect of all or any part of the Obligations
must be surrendered. The provisions of this Section 4 shall survive the
termination of this Guaranty, and any satisfaction and discharge of the Borrower
by virtue of any payment, court order or any federal or state law.
SECTION 5. Waiver. Guarantor hereby waives (a) notice of acceptance of this
Guaranty and all notice of the creation, extension or accrual of any of the
Obligations; (b) presentment and protest; (c) notice of any other nature
whatsoever, except for notices specifically provided for in this Guaranty or
which may not be waived under applicable law; (d) any requirement that the Bank
file any claim in the event of the bankruptcy of the Borrower; or (e) failure to
exercise or enforce the Bank's rights under any other guaranties of or security
for the Obligations; and Guarantor further agrees that this Guaranty will not be
discharged (subject to the provisions contained in Section 11) except by
complete performance of all Obligations of the Borrower and the Liabilities of
Guarantor hereunder. **See Addendum to this Section 5.
SECTION 6. Consent. Guarantor hereby consents that from time to time, and
without further notice to or consent of Guarantor, the Bank may take any or all
of the following actions without diminishing, releasing or otherwise affecting
the liability of Guarantor to pay and perform under this Guaranty: (a) extend,
renew, modify, compromise, settle or release the Obligations (including without
limitation any increase or decrease in the interest rate); (b) release or
compromise any liability of any party or parties with respect to Obligations;
(c) release its security interest in any or all of the Collateral or exchange,
surrender, or otherwise deal with the Collateral as the Bank may determine; or
(d) exercise or refrain from exercising any right or remedy of the Bank against
any person or property.
4
<PAGE>
SECTION 7. Guaranty Absolute. The liability of Guarantor under this Guaranty
shall be absolute and unconditional irrespective of any lack of validity,
regularity or enforceability of the Obligations or any note, instrument or
agreement evidencing the same or relating thereto, the acceptance of additional
guarantees or collateral or the termination, by operation of law or otherwise,
of the liability of anyone with respect to the Obligations, or any other
circumstance which might otherwise constitute a defense available to, or a
discharge of, the Borrower.
SECTION 8. [Deleted]
SECTION 9. Expenses. Guarantor hereby agrees to pay any and all expenses
reasonably incurred by the Bank in enforcing any rights under this Guaranty or
in defending any of its rights or any amounts received hereunder. Without
limiting the foregoing, Guarantor agrees that whenever any attorney is used by
the Bank to obtain payment hereunder, to advise it as to its rights, to
adjudicate the rights of the parties hereunder or for the defense of any of its
rights or amounts received hereunder, the Bank shall be entitled to recover all
reasonable attorneys' fees, court costs, and expenses attributable thereto.
SECTION 10. Binding Effect. Except to the extent it may be terminated in
accordance with Section 11, this Guaranty shall remain in full force and effect
and shall be binding upon Guarantor, its successors and assigns, in accordance
with its terms, notwithstanding any increase, decrease or change in the partners
of Guarantor, if it should be a partnership, or the merger, consolidation, or
reorganization of Guarantor, if it be a corporation, or any other change
concerning the form, structure or substance of any such entity.
SECTION 11. Continuing Guaranty; Termination. This Guaranty is a continuing
guaranty, which shall remain in effect until notice of termination in writing
from Guarantor is actually received by the Bank at the Bank's address set forth
below. Such termination will be effective only with respect to all Obligations
incurred or contracted by the Borrower or acquired by the Bank after the date on
which such notice is so received, but this Guaranty shall remain in full force
and effect as to all Obligations existing at the date of receipt of such notice,
including all renewals, compromises, modifications, extensions and other
amendments relating thereto, all interest thereon and collection expenses
therefor, until full payment of such Obligations to the Bank.
SECTION 12. Obligations Deemed to Become Due. If the Borrower or Guarantor makes
an assignment for the benefit of creditors or a trustee or receiver is appointed
for the Borrower or Guarantor or for any of its property; or any proceeding by
or against the Borrower or Guarantor (or any other guarantor), under any
bankruptcy, reorganization, arrangement of debt, insolvency, readjustment of
debt, receivership, liquidation or dissolution law or statute is commenced; or
Guarantor fails to furnish to the Bank such financial information concerning
Guarantor as the Bank may from time to time request; or Bank shall in good faith
determine that there has been a material adverse change in Guarantor's or the
Borrower's net worth or in good faith deem itself insecure with respect to
Guarantor's or the Borrower's financial condition or ability to pay the
Liabilities or Obligations, as the case may be, then all Obligations, regardless
of their terms, for the purposes of this Guaranty, together with all
Liabilities, shall be immediately due and payable, notwithstanding the absence
of any default by the Borrower under any of the Obligations.
SECTION 13. [Deleted]
SECTION 14. Notices. Each notice or other communication hereunder shall be in
writing, shall be sent by messenger, by first class mail or by facsimile
transmitter, and shall be effective when received, and shall be sent as follows:
If to the Guarantor, to the address set forth below its signature or such
other address as it may designate, by written notice to the Bank as herein
provided or such other address as may appear in the records of the Bank.
5
<PAGE>
If to the Bank, to the following address:
Republic National Bank of New York
452 Fifth Avenue
New York, New York 10018
Attention: Loan Department
or such other address as it may designate, by written notice to the Guarantor
as herein provided. **See Addendum to this section 14.
SECTION 15. Other Guarantees; Amendments. The execution and delivery hereafter
to the Bank by Guarantor of a new instrument of guarantee shall not terminate,
supersede or cancel this instrument, unless expressly provided therein, and this
instrument shall not terminate, supersede or cancel any instrument of guarantee
previously delivered to the Bank by Guarantor, and all rights and remedies of
the Bank hereunder or under any instrument of guarantee hereafter or heretofore
executed and delivered to the Bank by Guarantor shall be cumulative and may be
exercised singly or concurrently. This Guaranty may be amended only by a writing
executed by Guarantor and a duly authorized officer of the Bank.
SECTION 16. No Waiver; Cumulative Remedies. No delay on the part of the Bank in
exercising any of its options, powers or rights, or partial or single exercise
thereof, shall constitute a waiver thereof. NO WAIVER OF ANY PROVISION OF THIS
GUARANTY IS EFFECTIVE UNLESS MADE IN WRITING AND EXECUTED BY A DULY AUTHORIZED
OFFICER OF THE BANK. All rights and remedies hereunder are cumulative and may be
exercised singly or concurrently.
SECTION 17. Statute of Limitations. Any acknowledgment, new promise, payment of
principal or interest or other act by the Borrower or others with respect to the
Obligations shall be deemed to be made as agent of Guarantor, and shall, if the
statute of limitations in favor of Guarantor against the Bank shall have
commenced to run, toll the running of such statute of limitations, and if such
statute of limitations shall have expired, prevent the operation of such
statute.
SECTION 18. Governing Law; Consent to Jurisdiction; Service of Process. This
Guaranty shall be governed by and construed in accordance with the laws of the
State of New York made and to be performed wholly within that State. Guarantor
hereby consents to the jurisdiction of the courts of the State of New York and
the courts of the United States of America for the Southern District of New York
and consents that any' action or proceeding hereunder may be brought in such
courts, and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same; and authorizes the service of process on Guarantor by registered or
certified mail sent to its address as set forth in Section 14.
SECTION 19. RIGHT OF BANK TO ARBITRATE DISPUTES.
(a) GUARANTOR AGREES THAT ANY ACTION, DISPUTE, PROCEEDING, CLAIM OR CONTROVERSY
BETWEEN OR AMONG GUARANTOR AND THE BANK WHETHER SOUNDING IN CONTRACT, TORT
OR OTHERWISE ("DISPUTE" OR "DISPUTES") SHALL, AT THE BANK'S ELECTION, WHICH
ELECTION MAY BE MADE AT ANY TIME PRIOR TO THE COMMENCEMENT OF A JUDICIAL
PROCEEDING BY THE BANK, OR IN THE EVENT OF A JUDICIAL PROCEEDING INSTITUTED
BY GUARANTOR AT ANY TIME PRIOR TO THE LAST DAY TO ANSWER AND/OR RESPOND TO
A SUMMONS AND/OR COMPLAINT MADE BY GUARANTOR, BE RESOLVED BY ARBITRATION IN
NEW YORK, NEW YORK IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 19 AND
SHALL, AT THE ELECTION OF THE BANK, INCLUDE ALL DISPUTES ARISING OUT OF OR
IN
6
<PAGE>
CONNECTION WITH (I) THIS GUARANTY OR ANY RELATED AGREEMENTS OR
INSTRUMENTS, (II) ALL PAST, PRESENT AND FUTURE AGREEMENTS INVOLVING
GUARANTOR AND THE BANK, (III) ANY TRANSACTION CONTEMPLATED HEREBY AND
ALL PAST, PRESENT AND FUTURE TRANSACTIONS INVOLVING GUARANTOR AND THE
BANK, AND (IV) ANY ASPECT OF THE PAST, PRESENT OR FUTURE RELATIONSHIP
OF GUARANTOR AND THE BANK. Bank may elect to require arbitration of any
such Dispute with Guarantor without thereby being required to arbitrate
all Disputes between the Bank and Guarantor. Any such dispute shall be
resolved by binding arbitration in accordance with Article 75 of the
New York Civil Practice Law and Rules and the commercial arbitration
rules of the American arbitration association ("AAA"). In the event of
any inconsistency between such Rules and these arbitration provisions,
these provisions shall supersede such Rules.
All statutes of limitations which would otherwise be applicable shall
apply to any arbitration proceeding under this subsection 19(a). In any
arbitration proceeding subject to these provisions, the arbitration
panel (the "arbitrator") is specifically empowered to decide (by
documents only, or with a hearing, at the arbitrator's sole discretion)
pre-hearing motions which are substantially similar to pre-hearing
motions to dismiss and motions for summary adjudication. In any such
arbitration proceeding, the arbitrator shall not have the power or
authority to award punitive damages to any party. Judgment upon the
award rendered may be entered in any court having jurisdiction.
Whenever an arbitration is required, the parties shall select an
arbitrator in the manner provided in subsection 19(d).
(b) No provision of, nor the exercise of any rights under, subsection 19(a)
shall limit the right of any party (i) to foreclose against any real or
personal property collateral through judicial foreclosure, by the exercise
of a power of sale under a deed of trust, mortgage or other security
agreement or instrument, pursuant to applicable provisions of the Uniform
Commercial Code, or otherwise pursuant to applicable law, (ii) to exercise
self help remedies including but not limited to setoff and repossession, or
(iii) to request and obtain from a court having jurisdiction before, during
or after the pendency of any arbitration, provisional or ancillary remedies
and relief including but not limited to injunctive or mandatory relief or
the appointment of a receiver. The institution and maintenance of an action
or judicial proceeding for, or pursuit of, provisional or ancillary
remedies or exercise of self help remedies shall not constitute a waiver of
the right of the Bank, even if the Bank is the plaintiff, to submit the
Dispute to arbitration if the Bank would otherwise have such right.
(c) The Bank may require arbitration of any Dispute(s) concerning the
lawfulness, unconscionableness, propriety, or reasonableness of any
exercise by the Bank of its right to take or dispose of any Collateral
or its exercise of any other right in connection with Collateral
including, without limitation, judicial foreclosure, exercising a power
of sale under a deed of trust or mortgage, obtaining or executing a
writ of attachment, taking or disposing of property with or without
judicial process pursuant to Article 9 of the Uniform Commercial Code
or otherwise as permitted by applicable law, notwithstanding any such
exercise by the Bank.
(d) Whenever an arbitration is required under subsection 19(a), the
arbitrator shall be selected, except as otherwise herein provided, in
accordance with the Commercial Arbitration Rules of the AAA. A single
arbitrator shall decide any claim of $100,000 or less and he or she
shall be an attorney with at least five years' experience. Where the
claim of any party exceeds $100,000, the Dispute shall be decided by a
majority vote of three arbitrators, at least two of whom shall be
attorneys (at least one of whom shall have not less than five years'
experience representing commercial banks).
(e) In the event of any Dispute governed by this Section 19, each of the
parties shall, subject to the award of the arbitrator, pay an equal
share of the arbitrator's fees. The arbitrator shall have the power to
award recovery of all costs and fees (including attorneys' fees,
administrative fees, arbitrator's fees, and court costs) to the
prevailing party.
7
<PAGE>
SECTION 20. Severability. If any one or more of the provisions contained in this
Guaranty or any document executed in connection herewith shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions contained herein shall
not (to the full extent permitted by law) in any way be affected or impaired.
SECTION 21. Headings. The descriptive headings used in this Guaranty are for
convenience only and shall not be deemed to affect the meaning or construction
of any provision hereof.
SECTION 20. WAIVER OF TRIAL BY JURY. EACH OF THE BANK AND GUARANTOR HEREBY
WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY OR
AGAINST IT ON ANY MATTERS WHATSOEVER, IN CONTRACT OR IN TORT, ARISING OUT OF OR
IN ANY WAY CONNECTED WITH THIS GUARANTY OR THE OBLIGATIONS.
SECTION 21. WAIVER OF CERTAIN OTHER RIGHTS. GUARANTOR HEREBY WAIVES THE RIGHT TO
INTERPOSE ANY DEFENSE BASED UPON ANY CLAIMS OF LACHES OR SET-OFF OR COUNTERCLAIM
OF ANY NATURE OR DESCRIPTION, ANY OBJECTION BASED ON FORUM NON CONVENIENS OR
VENUE, AND ANY CLAIM FOR CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES.
IN WITNESS WHEREOF the Guarantor(s) has/have executed this Guaranty and Security
Agreement.
[SEAL]
/s/______________________________________________
Saul P. Steinberg
740 Park Avenue, New York, NY
Address
/s/______________________________________________
Jonathan L. Steinberg
22 West 15th Street, Apt. 7I, NY, NY
Address
8
<PAGE>
[Individual Acknowledgment]
STATE OF NEW YORK
COUNTY OF NEW YORK
On this 22nd day of April, 1996, before me personally appeared Jonathan
L. Steinberg, to me known, and known to me to be the individual described in and
who executed the foregoing instrument and he duly acknowledged to me that he
executed the same.
/s/________________________________________________
Notary Public
[Individual Acknowledgment]
STATE OF NEW YORK
COUNTY OF NEW YORK
On this 18th day of April, 1996, before me personally appeared Saul P.
Steinberg, to me known, and known to me to be the individual described in and
who executed the foregoing instrument and he duly acknowledged to me that he
executed the same.
/s/________________________________________________
Notary Public
[Corporate Acknowledgment]
STATE OF NEW YORK
COUNTY OF
On this day Of ,19, before me personally came
, and , to me known who, being duly sworn,
deposes and says that (t)(s)he(y) is/are the
and the of , the
corporation described in and which executed the above instrument; that
(t)(s)he(y) know(s) the seal of the corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by order of the Board
of Directors of said corporation and (t)(s)he(y) signed his (her) (their)
name(s) by like order.
--------------------------------------------------
Notary Public
9
<PAGE>
SCHEDULE AND ADDENDA
TO
GUARANTY AND SECURITY AGREEMENT
DATED APRIL 22, 1996
OF
JONATHAN L. STEINBERG AND SAUL P. STEINBERG
TO
REPUBLIC NATIONAL BANK OF NEW YORK
Schedule A - Property constituting Security
A. Deposited by Jonathan L. Steinberg:
55,000 Shares of Common Stock of Individual Investor Group,
Inc. ("IIGI")
B. Deposited by Saul P. Steinberg:
500,000 Shares of Common Stock of IIGI
650,000 Shares of Common Stock of Reliance Group Holdings, Inc.
Addendum to Section 5
Bank hereby agrees to seek payment of the Obligation, first by making demand for
payment from the Borrower, second by demanding payment from the Guarantors under
this Guaranty and then by selling the Security.
Addendum to Section 14
With respect to any notice relating to a default of the Borrower or any
Guarantor or to the sale of any Security hereunder, Bank shall attempt to give
oral notice of such default by placing a telephone call to Jonathan L. Steinberg
(212-843-2744) and to Saul P. Steinberg (212-909-1100). However, the failure of
the Bank to reach either or both of these individuals by telephone shall not
prevent the Bank from exercising any of its rights under law or this Guaranty.
Copies of all written notices given by Bank to the Guarantors shall be sent to:
Graubard Mollen & Miller Howard E. Steinberg, Esq.
600 Third Avenue General Counsel
New York, New York 10016 Reliance Group Holdings, Inc.
Attention: Peter M. Ziemba Park Avenue Plaza
Tel No: (212) 818-8667 55 East 52nd Street
New York, New York 10055
Tel No: (212) 909-1394
10
<PAGE>
RIDER
TO
GUARANTY AND SECURITY AGREEMENT
DATED AS OF APRIL 22, 1996
OF
JONATHAN L. STEINBERG AND SAUL P. STEINBERG
TO
REPUBLIC NATIONAL BANK OF NEW YORK
A. This Rider constitutes part of the Guaranty and Security Agreement,
dated as of April 22, 1996, of Jonathan L. Steinberg and Saul P. Steinberg to
Republic National Bank of New York, to which this Rider is attached. Capitalized
terms that are used but are not defined in this Rider are used as they are
defined in the printed portion of said Guaranty and Security Agreement (the
"Printed Text"). In the event of any conflict between the Printed Text and this
Rider, the terms set forth in this Rider shall control (except to the extent
that the printed Text includes any typewritten changes, in which case the
Printed Text as so changed shall control). References to this Guaranty, and like
references, whether appearing in the Printed Text, any Addendum (including the
schedule and addenda, the "Addendum") or in this Rider, shall mean the Printed
Text, any such Addendum and this Rider, and shall include the same as
supplemented, modified, amended or restated from time to time in accordance with
the terms of this Guaranty.
B. Each Guarantor represents and warrants to Bank, severally as to
himself only and not jointly and only as to any Collateral pledged by him, as to
each of the matters set forth below: (a) such Guarantor has the full legal
capacity, power and authority to execute and deliver this Guaranty and to
perform all of such Guarantor's obligations hereunder; and (b) this Guaranty is
the legal, valid and binding obligation of such Guarantor, enforceable against
such Guarantor in accordance with its terms and provisions. Each Guarantor
further represents, warrants and covenants, severally as to himself only and not
jointly and only as to any Collateral pledged by him, that the following are
true and correct at present and at all times while any Obligations are
outstanding the following will be true and correct; such Collateral (i) is and
will be owned of record (unless in the name of Bank's nominee) and beneficially
solely by the undersigned (except as otherwise provided in this Guaranty) with
good and marketable title thereto, free and clear of any lien, security
interest, charge or encumbrance, except that the Bank will have a valid first
priority security interest therein, (ii) is and will be duly and validly issued,
fully paid and non-assessable (iii) in the case of Jonathan L. Steinberg, the
13,000, 20,000, 18,000 and 4,000 shares of Common Stock of Individual Investor
Group, Inc. pledged by him as Collateral were acquired by him in open market
purchase transactions on January 11, 1995, May 17, 1995, May 22, 1995 and May
23, 1995, respectively, and are not "restricted securities" under Rule 144
("Rule 144") promulgated by the Securities and Exchange Commission (the "SEC")
under the Securities Act of 1933, as amended (the "Act"); and (iv) in the case
of Saul P. Steinberg, all Collateral pledged by him has been beneficially owned
by him for a period of at least three (3) years determined in accordance with
paragraph (d) of Rule 144.
11
<PAGE>
C. Without limiting the generality of any other provision of this
Guaranty, Bank shall have, and shall be entitled to exercise, all the rights and
remedies granted to a secured party under the New York Uniform Commercial Code,
except as otherwise expressly provided in this Guaranty. To the extent waiver is
not limited under applicable law, each Guarantor hereby expressly waives each
and every claim or defense, and agrees that such Guarantor will not assert or
pursue (by action, suit, counterclaim or otherwise) any claim or defense,
respecting (i) the selection or order of disposition of the Collateral (which
may be as to such Collateral, and in any order, Bank may select in its
reasonable discretion, and may be without regard to any holding period or tax
basis that any person may have therein), (ii) the private sale of any shares of
Individual Investor Group, Inc., whether or not any public market exists and
regardless of the availability of any registration statement or of Rule 144,
(iii) the choice or timing of any sale date (which Bank may select in its
reasonable discretion), irrespective of whether greater sale proceeds would be
realizable on a different sale date, (iv) the adequacy of the sale price of any
shares of Individual Investor Group, Inc., (v) any insufficiency of the proceeds
to fully satisfy the Liabilities or (vi) any sale of shares of Individual
Investor Group, Inc., to the first person to receive an offer or make a bid or
the selection of any purchaser of those shares (which may be restricted, in
Bank's discretion, to purchasers or prospective purchasers by number, class,
nature and investment intention) or any default by any such purchaser; provided
that such dispositions are effected in a commercially reasonable manner. In
enforcing its remedies, Bank may sell pledged shares of Reliance Group Holdings,
Inc. only through public markets.
D. In enforcing its rights in accordance with Addendum to Section 5,
and without limiting the rights of Bank under the Printed Text, but subject
however to the provisions of the Addendum and to any typewritten provisions in
the Printed Text, Bank may take (and/or may cause one or more of its designees
to take) any or all of the following actions, all without notice to the
Guarantor or any other person (except as may otherwise be required in this
Guaranty or by applicable law), with a single notice (if required or otherwise
given, and except as otherwise required under the Addendum) being sufficient to
entitle Bank from time to time thereafter to take any one or more of the actions
described below; to sell, assign, lease or otherwise dispose of the whole of, or
from time to time any part of, the Collateral, or offer or agree to do so, in
any established market or, in the case of shares of Individual Investor Group,
Inc., private sale or public auction or sale (with or without demand on the
Guarantor or any advertisement or other notice of the time, place or terms of
sale, and with or without any reserve or minimum bid price, whether disclosed or
undisclosed) for cash and upon such other terms and subject to such other
conditions as Bank in its reasonable discretion may determine, and the Bank may
postpone or adjourn any such auction, sale or other disposition or cause the
same to be postponed or adjourned from time to time to a subsequent time and
place, or to abandon or cause the abandonment of the same, all without any
advertisement or other notice thereof, and to carry out any agreement to sell
any item or items of the Collateral in accordance with the terms and provisions
of such agreement, notwithstanding that, after Bank shall have entered into such
an agreement, all of the Liabilities may have been paid and satisfied in full.
Any sale of Collateral conducted in conformity with reasonable commercial
practices of banks disposing of similar collateral shall be deemed to be
commercially reasonable for all purposes of this Guaranty.
12
<PAGE>
E. This Rider may be executed in one or more counterparts which,
taken together, shall constitute one and the same instrument and each of which
shall be deemed an original.
IN WITNESS WHEREOF, the Guarantor has executed and delivered this
Guaranty for the benefit of Bank as of the date set forth in the Printed Text.
/s/___________________________________
Jonathan L. Steinberg
/s/___________________________________
Saul P. Steinberg
Acknowledged and Agreed:
REPUBLIC NATIONAL BANK OF NEW YORK
By: /s/___________________________________
, Vice President
13
<PAGE>
