SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. )*
Audio Book Club, Inc.
(Name of Issuer)
Common Stock, no par value
(Title of Class of Securities)
05068R 10 8
(CUSIP Number)
Brad Shiffman, Esq.
Tenzer Greenblatt LLP
405 Lexington Avenue, New York, New York 10174 (212) 885-5442
(Name, Address and Telephone Number of Person Authorized to
Receive Notice and Communications)
December 31, 1998
(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(e), 13d-1(f) or 13d-1(g), check the following box
|_|.
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) 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 1 of 6 Pages
<PAGE>
SCHEDULE 13D
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CUSIP NO. 05068R-10-8 Page 2 of 6 Pages
- --------------------- -----------------
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Norton Herrick
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF, OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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7 SOLE VOTING POWER
NUMBER OF 2,916,627 (includes options, warrants and a convertible note
SHARES to acquire an aggregate of 2,908,427 shares of Common Stock)
BENEFICIALLY as of February 12, 1999
OWNED BY -----------------------------------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING
PERSON 0
WITH
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9 SOLE DISPOSITIVE POWER
3,893,547 (includes options, warrants and a convertible note
to acquire an aggregate of 2,908,427 shares of Common Stock)
as of February 12, 1999
-----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,893,547 (includes options, warrants and a note to acquire
an aggregate of 2,908,427 shares of Common Stock)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |X|
Does not include 2,714,180 shares held by N. Herrick Irrevocable
ABC Trust (the "N. Herrick Trust"), of which Norton Herrick is
the sole beneficiary and in which he therefore may be deemed to
have an economic interest. Mr. Herrick does not have voting power
or dispositive power with respect to the 2,714,180 shares held by
the N. Herrick Trust.
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
39.0%
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14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEM 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
Page 2 of 6 Pages
<PAGE>
Item 1. Security and Issuer.
This statement relates to the Common Stock, no par value ("Common Stock")
issued by Audio Book Club, Inc., a Florida corporation (the "Company"), whose
principal executive offices are located at 2295 Corporate Boulevard, Suite 222,
Boca Raton, Florida 33431. All share information in this statement gives
retroactive effect to a 16,282-for-1 split of the Common Stock effected in
October 1997.
Item 2. Identity and Background.
This statement is filed by Norton Herrick, Co-Chief Executive Officer and a
principal shareholder of the Company (the "Reporting Person"). The business
address of the Reporting Person is c/o Audio Book Club, Inc., 2295 Corporate
Boulevard, Suite 222, Boca Raton, Florida 33431. The Reporting Person is a
United States citizen.
Mr. Herrick has not, during the last five years (i) been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors), or
(ii) 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 violations with respect to such laws.
Item 3. Source and Amount of Funds or other Consideration.
In connection with the formation of the Company, between August 1993 and
January 1994 the Reporting Person, and two of his sons, Howard Herrick ("H.
Herrick") and Michael Herrick ("M. Herrick") purchased from the Company, for
total consideration of $200, an aggregate of 3,256,400 shares of Common Stock of
which 2,301,200 shares were purchased by the Reporting Person and 477,600 shares
were purchased by each of H. Herrick and M. Herrick. Subsequent to this date,
but and prior to the Company's October 1997 initial public offering (the "IPO"),
the Reporting Person effected certain transfers of his shares of Common Stock
and established the N. Herrick Irrevocable ABC Trust, of which the Reporting
Person is sole beneficiary and H. Herrick is the sole trustee (the "N. Herrick
Trust"). The Trust Agreement for the N. Herrick Trust provides H. Herrick with
sole voting and dispositive power with respect to the shares of Common Stock
held by the N. Herrick Trust. In addition, M. Herrick established the M.E.
Herrick Irrevocable Trust (the "M.E. Herrick Trust"), of which M. Herrick is the
sole beneficiary and H. Herrick is the sole trustee. H. Herrick has irrevocably
granted to N. Herrick sole dispositive power with respect to shares of Common
Stock held by H. Herrick on his own behalf and on behalf of the M.E. Herrick
Trust. Immediately prior to the IPO, the N. Herrick Trust converted $5,975,200
of indebtedness owed to it by the Company into 597,520 shares of Common Stock.
As of the date of the IPO, as a result of transfers of Common Stock by the
Reporting Person to the N. Herrick Trust and other share transfers and the
October 1997 share issuance to the N. Herrick Trust noted above, the Reporting
Person owned of record no shares of Common Stock, the N. Herrick Trust owned of
record 2,714,180 shares, H. Herrick owned of record 488,460 shares, and the M.E.
Herrick Trust owned of record 488,460 shares.
Between March 31, 1998 and April 3, 1998 the Reporting Person purchased on
the open market a total of 8,200 shares of
Page 3 of 6 Pages
<PAGE>
Common Stock at prices ranging from $4.25-$4.375 per share. On June 16, 1998 the
Company issued to the Reporting Person pursuant to the Company's 1997 Stock
Option Plan (the "Plan"), five-year options to purchase 250,000 shares of Common
Stock at $3.50 per share. On September 10, 1998, the Company granted to the
Reporting Person five-year Plan Options to purchase 750,000 shares of Common
Stock at $7.25 per share. On December 31, 1998, the Company issued to the
Reporting Person five-year warrants (the "Warrants") to purchase 500,000 shares
of Common Stock at $12.00 per share and a convertible note (the "Note") which
was initially convertible into 1,348,315 shares of Common Stock and is currently
convertible into 1,258,427 shares of Common Stock at any time until the earlier
of the repayment of the Note or December 31, 2004. The Warrants and Note were
issued to the Reporting Person in consideration of his loan to the Company in
the initial amount of $15,000,000 (reduced to $14,000,000 in January 1999) (the
"Loan") the proceeds of which was used by the Company to fund a portion of the
purchase price of the audio book club division of The Columbia House Company
which was acquired by the Company in December 31, 1998. The number of shares
issuable upon exercise of the foregoing options and the Warrants and upon
conversion of the note are subject to certain anti-dilution and other
adjustments. None of such options or Warrants has been exercised and the Note
has not been converted. In addition, Evan Herrick, a son of the Reporting
Person, has granted to the Reporting Person voting and dispositive power with
respect to 150,000 shares of Common Stock issuable upon exercise of five-year
options granted to Evan Herrick in November 1998.
Item 4. Purpose of Transaction.
The purpose of the acquisition of the shares of Common Stock by the
Reporting Person as acquired prior to the IPO was for control and for investment
purposes. The 8,200 shares acquired in the open market by the Reporting Person
were acquired for investment purposes. The Reporting Persons may make additional
purchases of Common Stock from time to time and may dispose of any or all of the
shares of Common Stock held by him at any time. The Reporting Person has no
plans or proposals which relate to, or could result in any of the matters
referred to in Paragraphs (b) through (j) of Item 4 of Schedule 13D although in
his capacity as a director and executive officer of the Company he will be
involved in any decisions of the Company to issue additional securities and to
continue the Company's strategy which includes pursuing acquisitions of
complementary businesses. The Reporting Person may review or reconsider his
position with respect to the Company or to formulate plans or proposals with
respect to any such matter, but, except as noted above, has no present intention
of doing so.
Item 5. Interest in Securities of the Issuer.
As of February 12, 1999, the Reporting Person beneficially owns an
aggregate of 3,893,547 shares of Common Stock constituting approximately 39.0%
of the outstanding Common Stock. The amount includes: (i) 8,200 shares owned of
record by the Reporting Person, (ii) 1,000,000 shares issuable upon Plan options
granted to the Reporting Person, (iii) 500,000 shares issuable upon exercise of
the Warrants, (iv) 1,258,427 shares issuable upon conversion of the Note, (v)
488,460 shares owned of record by H. Herrick, of which the Reporting Person has
sole dispositive but no voting power, (vi) 488,460 shares owned of record by the
M. E. Herrick Trust, of which the Reporting Person has sole dispositive but no
voting power, and (v) 150,000 shares issuable upon exercise of Plan options
granted to Evan Herrick, of which the Reporting Person has sole voting and
dispositive power. The foregoing calculation does not include the 2,714,180
shares owned of record by the N. Herrick Trust, of which the
Page 4 of 6 Pages
<PAGE>
Reporting Person is the sole beneficiary but has no voting or dispositive power.
The percentage used herein is calculated based upon the 7,078,920 shares of
Common Stock issued and outstanding at December 31, 1998, as provided by the
Company. Except for the shares owned of record by H. Herrick and the M.E.
Herrick Trust as to which the Reporting Person has sole dispositive power, but
no voting power, the Reporting Person has sole voting and dispositive power with
respect to all the shares of Common Stock to which this statement relates. The
Reporting Person has not effected any transactions in shares of the Common Stock
in the past 60 days other than as indicated above.
Except as noted below, no person other than the Reporting Person has the right
to receive or the power to direct receipt of dividends from, or the proceeds of,
the sale of the shares of Common Stock. H. Herrick has the right to receive
dividends and proceeds from any disposition of shares of Common Stock owned of
record by him. The M.E. Herrick Trust, whose sole beneficiary is M. Herrick, has
the right to receive any dividends on any shares owned of record by the M.E.
Herrick Trust and the proceeds from any sale of Common Stock by the M.E. Herrick
Trust.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
Other than as set forth above, there are no contracts, arrangements,
understandings or relationships with the Reporting Persons or any other person
with respect to the securities of the Issuer, including but not limited to
transfer or voting of any other securities, finders' fees, joint ventures, loan
or option arrangements, puts or calls, guaranties of profits, divisions of
profits or loss or the giving or withholding of proxies except that pursuant to
a December 31, 1998 letter agreement between the Reporting Person and the
Company, the Company may be obligated to issue to the Reporting Person warrants
to purchase 350,000 shares of Common Stock at $12.00 per share in certain
circumstances involving the re-financing of the Note.
The Reporting Person has received certain registration rights with respect
to the shares of Common Stock beneficially owned by him.
Item 7. Materials to be filed as Exhibits.
Exhibit 1 December 31, 1998 financing letter agreement between the Company
and the Reporting Person.
Exhibit 2 Proxy of Howard Herrick to the Reporting Person.
Exhibit 3 Proxy of Evan Herrick to the Reporting Person.
Page 5 of 6 Pages
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
DATE: February 12, 1999
/s/ Norton Herrick
----------------------------
Norton Herrick
Page 6 of 6 Pages
Exhibit 1
AUDIO BOOK CLUB, INC.
20 COMMUNITY PLACE
P.O. BOX 2346
MORRISTOWN, NJ 07962-2346
December 31, 1998
Mr. Norton Herrick
2295 Corporate Blvd., N.W.
Suite 222
P.O. Box 5010
Boca Raton, FL 33431
Dear Mr. Herrick:
As an inducement to, and in consideration of, your purchase from Audio Book
Club, Inc. (the "Company"), of the Company's 9% Convertible Senior Subordinated
Promissory Note Due December 31, 2004 (the "Note") in the principal amount of
$15,000,000, the Company hereby agrees as follows (capitalized terms used and
not otherwise defined herein having the meanings ascribed to them in the Note):
1. The officers of the Company (other than Norton, Michael or Howard
Herrick) shall use their best efforts to seek to refinance or replace the Note
with debt or equity financing and will consider all proposals and accept a
proposal (which is permitted under the Senior Credit Facilities or consented to
by the lenders thereunder) whether or not (i) as favorable as the terms of the
Note, including, without limitation, those providing for a principal amount of
up to $18.5 million, a higher interest rate, the issuance of additional
warrants, a lower exercise price for the warrants and/or a lower conversion
price (or a variable conversion price based on the future market price of the
Company's Common Stock) for the Note; (ii) involving the issuance of equity
securities, including shares of preferred stock with a variable conversion rate
and mandatory redemption features; and/or (iii) requiring the payment of
financing, placement or other fees.
2. In the event refinancing is obtained from anyone other than the Herricks
or an Affiliate of any of the Herricks, you will not be required to return to
the Company the warrants ("Warrants") issued to you pursuant to the Warrant
Agreement dated December 31, 1998 by and between you and the Company and you
shall be issued additional warrants (identical to Warrants) to purchase 350,000
shares of Common Stock; and
<PAGE>
3. In the event that (i) an offer is presented to the Company's Board of
Directors to provide debt or equity refinancing of the Note (which is permitted
under the Senior Credit Facilities or consented to by the lenders thereunder)
and such refinancing is not accepted by the Company's board of directors or (ii)
debt or equity refinancing is not obtained by the Company on or prior to
September 30, 1999, in either case, at your option, after September 30, 1999,
and upon receipt of approval of the Company's shareholders (which the Company's
Board of Directors has agreed to recommend to the Company's shareholders), (a)
the interest rate of the Note will increase to 11%, except that no increase in
the interest rate on the Note shall be permitted or may be effected prior to
January 1, 2000 other than non-current pay interest which accrues and is not
payable in cash until final maturity of the Note, (b) the conversion price of
the Note will be decreased to the lesser of the conversion price then in effect
or the average of the closing bid price of the Common Stock for the five trading
days prior to conversion, (c) the exercise price of the Warrants will, be
reduced (but not increased) to the average of the 10 lowest closing bid prices
of the Common Stock for the 30 trading days prior to the date that shareholder
approval has been obtained, but not below $8.00 per share, and (d) you shall
have all other rights and remedies available to you.
The Company acknowledges that your holding of the Note (notwithstanding the
terms thereof) from the Company was intended to be short-term financing and
serve as a bridge to replacement financing. However, Fleet National Bank
requires the Note to mature following the expiration of the senior credit
facilities and therefore, you agreed to the terms of the Note as an
accommodation to the Company.
AUDIO BOOK CLUB, INC.
By:
----------------------------------
Name: John Levy
TITLE: Executive Vice President
Chief Financial Officer
Accepted and Agreed:
- ----------------------------------
Norton Herrick
Exhibit 2
IRREVOCABLE GRANT OF POWER
I, HOWARD EVAN HERRICK ("Grantor"), residing at 26 Alder Lane, Basking
Ridge, New Jersey 07920, hereby irrevocably grant and convey to Norton Herrick
("Grantee"), with an office at c/o The Herrick Company, 2295 Corporate
Boulevard, N.W., Boca Raton, Florida 33431, power of general disposition over
any or all shares of the capital stock of Audio Book Club, Inc., a Florida
corporation, including, any other securities of such corporation or any other
entity issued at any time upon any conversion or exchange of any such shares of
the capital stock of Audio Book Club, Inc. ("Property"), in the same manner and
to the same extent as the Grantor could do if the Grantor were personally acting
with respect to any dispositive transaction. The grant of power made hereunder
shall survive the Grantor's death and disability and shall bind his heirs,
executors, legal representatives and assigns. The general power of disposition
granted herein shall, include, but not be limited, to: (a) the power to sell any
or all of the Property at any time and to any person as Grantee deems
appropriate, including, but not limited to, the power to make loans to Grantee
or, upon his death, to his spouse, Elayne Herrick ("Elayne"), provided that such
loans bear interest at the minimum rate as specified by the Internal Revenue
Service for loans of similar tenor and are not greater than twenty (20) years in
duration; and/or
<PAGE>
(b) the power to create a security interest in, and pledge, any or all of
the Property as security for the repayment of any loan made by any person (a
"Lender") to Grantee (or, upon his death, to Elayne) and/or to any entity in
which Grantee (or, upon his death, Elayne) holds or may hereafter hold an equity
interest as a shareholder, member or partner; and/or
(c) the power to create a security interest in, and pledge, any or all of
the Property to secure the obligations of Grantee to any Lender under Grantee's
(or, upon his death, Elayne's) guarantee of a loan made by a Lender to any
entity of which Grantee (or, upon his death, Elayne) holds or may hereafter hold
an equity interest as shareholder, member or partner.
Notwithstanding any contrary provision herein upon the death or
adjudication of incompetence of Grantee, the general power of disposition
granted hereby shall vest in Elayne and upon the death and/or adjudication of
incompetence of both Grantee and Elayne, the general power of disposition
granted herein shall terminate and revert to the Grantor.
It is intended that Grantee (and, upon his death, Elayne) shall be fully
vested with general power of disposition over the Property, while Grantor shall
retain all other incidents of ownership of the Property, including, but not
limited to, the right to receive and retain any proceeds from the disposition of
the Property, other than the proceeds of any loan to Grantee (and, upon his
death, Elayne) and/or any entity in which Grantee (or, upon his death, Elayne)
may have an equity interest, which is directly or indirectly secured by any of
the Property.
-2-
<PAGE>
Following the execution of this instrument, Grantor shall not take any action to
sell, transfer or pledge or otherwise dispose of the Property or any interest
therein, and shall not participate in any such transaction except at the
direction of Grantee (or, upon his death, Elayne). In furtherance of the power
of disposition granted to Grantee (and, upon his death, Elayne) hereunder,
Grantor is concurrently delivering to Grantee certificates representing the
shares of the capital stock of Audio Book Club, Inc. which are the current
subject of this power, together with stock powers duly executed in blank by
Grantor.
This instrument is executed by Grantor in consideration for Grantee's
undertaking to offer Grantor the opportunity from time to time to invest in
various business ventures, including Audio Book Club, Inc.
To induce any third party to rely on this instrument, Grantor hereby
declares that any third party receiving a duly executed copy or facsimile of
this instrument may conclusively rely on this instrument without any further
inquiry, and that any attempted rescission, revocation or termination of this
instrument by Grantor at any time shall be ineffective, and null and void.
Grantor, for himself and his heirs, executors, legal representatives and
assigns, hereby agrees to indemnify and hold harmless any such third party from
and against any and all claims that may arise against such third party by reason
of such third party having relied on the provisions of this instrument.
-3-
<PAGE>
This instrument shall be governed by and construed in accordance with the
laws of the State of New Jersey (without giving effect to the choice of law
rules thereof), especially the common law of such state relating to powers of
appointment and other powers over property, other than powers of attorney.
IN WITNESS WHEREOF, I have hereunto signed my name on June _________, 1997.
----------------------------
HOWARD EVAN HERRICK
CONFIRMED AND APPROVED:
- -------------------------
NORTON HERRICK
- -------------------------
ELAYNE HERRICK
-4-
<PAGE>
STATE OF NEW JERSEY )
: ss.:
COUNTY OF MORRIS )
On the ____ day of June, 1997, before me personally came HOWARD EVAN
HERRICK, to me known and known to me to be the individual described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
----------------------------
Notary Publi
-5-
Exhibit 3
IRREVOCABLE GRANT OF POWER
I, EVAN HERRICK ("Grantor"), residing at ______________________________
________________________________, hereby irrevocably grant and convey to Norton
Herrick ("Grantee"), with an office at c/o The Herrick Company, 2295 Corporate
Boulevard, N.W., Boca Raton, Florida 33431, power to vote and power of general
disposition over (i) the option ("Option") granted to Grantor pursuant to the
NonQualified Stock Option Agreement dated as of November 5, 1998 between Grantor
and Audio Book Club, Inc., a Florida corporation, and (ii) the shares of the
capital stock of Audio Book Club, Inc. issuable upon exercise of the Option
including, any other securities of such corporation or any other entity issued
at any time upon any conversion or exchange of any such shares of the capital
stock of Audio Book Club, Inc. (collectively, "Property"), in the same manner
and to the same extent as the Grantor could do if the Grantor were personally
acting with respect to any dispositive transaction. The grant of power made
hereunder shall survive the Grantor's death and disability and shall bind his
heirs, executors, legal representatives and assigns. The general power of
disposition granted herein shall, include, but not be limited, to:
(a) the power to exercise the Option in whole or in part, and whether any
such exercise shall be made on a "cash" or "cashless" basis; and/or
<PAGE>
(b) the power to sell any or all of the Property at any time and to any
person as Grantee deems appropriate, including, but not limited to, the power to
make loans to Grantee or, upon his death, to his spouse, Elayne Herrick
("Elayne"), provided that such loans bear interest at the minimum rate as
specified by the Internal Revenue Service for loans of similar tenor and are not
greater than twenty (20) years in duration; and/or
(c) the power to create a security interest in, and pledge, any or all of
the Property as security for the repayment of any loan made by any person (a
"Lender") to Grantee (or, upon his death, to Elayne) and/or to any entity in
which Grantee (or, upon his death, Elayne) holds or may hereafter hold an equity
interest as a shareholder, member or partner; and/or
(d) the power to create a security interest in, and pledge, any or all of
the Property to secure the obligations of Grantee to any Lender under Grantee's
(or, upon his death, Elayne's) guarantee of a loan made by a Lender to any
entity of which Grantee (or, upon his death, Elayne) holds or may hereafter hold
an equity interest as shareholder, member or partner.
Notwithstanding any contrary provision herein upon the death or
adjudication of incompetence of Grantee, the general power of disposition
granted hereby shall vest in Elayne and upon the death and/or adjudication of
incompetence of both Grantee and Elayne, the general power of disposition
granted herein shall terminate and revert to the Grantor.
-2-
<PAGE>
It is intended that Grantee (and, upon his death, Elayne) shall be fully
vested with general power of disposition over the Property, while Grantor shall
retain all other incidents of ownership of the Property, including, but not
limited to, the right to receive and retain any proceeds from the disposition of
the Property, other than the proceeds of any loan to Grantee (and, upon his
death, Elayne) and/or any entity in which Grantee (or, upon his death, Elayne)
may have an equity interest, which is directly or indirectly secured by any of
the Property. Following the execution of this instrument, Grantor shall not take
any action to sell, transfer or pledge or otherwise dispose of the Property or
any interest therein, and shall not participate in any such transaction except
at the direction of Grantee (or, upon his death, Elayne). In furtherance of the
power of disposition granted to Grantee (and, upon his death, Elayne) hereunder,
Grantor is concurrently delivering to Grantee a non-qualified stock option
agreement representing the Options which are the current subject of this power,
together with stock powers duly executed in blank by Grantor.
This instrument is executed by Grantor in consideration for Grantee's
undertaking to offer Grantor the opportunity from time to time to invest in
various business ventures.
To induce any third party to rely on this instrument, Grantor hereby
declares that any third party receiving a duly executed copy or facsimile of
this instrument may conclusively rely on this instrument without any further
inquiry, and that any attempted rescission, revocation or termination of this
-3-
<PAGE>
instrument by Grantor at any time shall be ineffective, and null and void.
Grantor, for himself and his heirs, executors, legal representatives and
assigns, hereby agrees to indemnify and hold harmless any such third party from
and against any and all claims that may arise against such third party by reason
of such third party having relied on the provisions of this instrument.
This instrument shall be governed by and construed in accordance with the
laws of the State of New Jersey (without giving effect to the choice of law
rules thereof), especially the common law of such state relating to powers of
appointment and other powers over property, other than powers of attorney.
IN WITNESS WHEREOF, I have hereunto signed my name as of November 5, 1998.
----------------------------
EVAN HERRICK
CONFIRMED AND APPROVED:
- -------------------------
NORTON HERRICK
- -------------------------
ELAYNE HERRICK
-4-
<PAGE>
STATE OF NEW JERSEY )
: ss.:
COUNTY OF MORRIS )
On the ____ day of _____________, 1999, before me personally came EVAN
HERRICK, to me known and known to me to be the individual described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
----------------------------
Notary Publc
-5-
