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ANVIL HOLDINGS, INC.
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ANVIL HOLDINGS, INC.
228 EAST 45TH STREET
NEW YORK, NY 10017
INFORMATION STATEMENT
Relating to the Annual Meeting of Stockholders
to be held May 24, 2001
This information is being furnished in connection with matters to be considered
and voted upon at the 2001 Annual Meeting of Stockholders of Anvil Holdings,
Inc. ("Holdings" or the "Company") to be held at 9:00 a.m., Eastern Daylight
Time on Thursday, May 24, 2001, at the Company's Executive Offices, 228 East
45th Street, New York, NY 10017, 4th Floor, and any adjournment thereof.
PURPOSES OF THE ANNUAL MEETING
At the Annual Meeting, stockholders will be asked to consider and to take action
on the election of six directors to serve until the next annual meeting of
stockholders or until their respective successors are elected and qualified. See
"Information as to Nominees for Election of Directors," below. In addition, the
meeting will be for the purpose of transacting such other business as may
properly be brought before the meeting and any adjournment thereof.
VOTING PROCEDURES
The Company's Class B Common Stock, $0.01 per share par value (the "Class B
Common"), is the only voting security of the Company entitled to vote at the
meeting. Each holder of Class B Common shall be entitled to one vote in person
or by proxy for each share of Class B Common held by such holder. At April 20,
2001, there were 3,590,000 shares of Class B Common Stock outstanding. Under the
Company's by-laws, at all stockholder meetings, with a quorum present, the
affirmative vote of the majority of shares present in person or by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders.
INFORMATION AS TO NOMINEES FOR ELECTION AS DIRECTORS
The information on the following pages sets forth, certain information with
respect to the nominees for election as directors of the Company. The positions
indicated (other than directorships) are positions held as officers of Holdings'
wholly-owned operating subsidiary, Anvil Knitwear, Inc. ("Anvil"). Holdings has
no independent operations; its sole asset is the capital stock of Anvil. The
Board of Directors of Anvil is identical to that of Holdings.
1
As used herein, the "Company" refers to Holdings, including, in some instances,
its subsidiaries, as appropriate to the context.
NAME AGE(1) POSITION
- ---- ------ --------
Bernard Geller.......67 Chief Executive Officer and Chairman of the Board
Jacob Hollander......59 Executive Vice President, Chief Administrative Officer,
Secretary, General Counsel and Director
Bruce C. Bruckmann...47 Director
Stephen F. Edwards...37 Director
David F. Thomas......51 Director
John D. Weber........37 Director
- ----------
(1) All ages are as of December 31, 2000
BERNARD GELLER has served as the Chief Executive Officer of Anvil, President of
Holdings, and has been a Director of Anvil and Holdings since February 1995.
Since March 1997, Mr. Geller has served as Chairman of the Board of Anvil and
Holdings and from July 1997 to February 28, 2001, as President of Anvil. From
1989 to 1995, Mr. Geller served as Chairman of Anvil's predecessor. From 1986 to
1989, Mr. Geller served as President of Anvil's predecessor and from 1975 to
1986, as Controller. Before joining Anvil's predecessor, Mr. Geller was with
Union Underwear Co., Inc., a subsidiary of Fruit of the Loom, Inc., where he
worked for 14 years, principally as that company's controller.
JACOB HOLLANDER has served as Executive Vice President, Chief Administrative
Officer, Secretary and General Counsel of Anvil and Vice President, Secretary
and General Counsel of Holdings since February, 1995. Since March, 1997, Mr.
Hollander has served as a Director of Anvil and Holdings. From 1991 to 1995, Mr.
Hollander served as Vice President and General Counsel of Astrum International
Corp. From 1985 to 1990, Mr. Hollander served as Vice President and General
Counsel of McGregor Corporation and Faberge, Incorporated, and from 1987 to
1989, Mr. Hollander also served as Vice President and General Counsel of
Elizabeth Arden, Inc. During 1990, Mr. Hollander provided legal consulting
services to the Unilever group of companies and to McGregor. Prior to its
acquisition by McGregor, Mr. Hollander was Vice President of Faberge,
Incorporated.
BRUCE C. BRUCKMANN has served as a Director of Anvil and Holdings since March
1997. Since 1994, Mr. Bruckmann has served as a Managing Director of Bruckmann,
Rosser, Sherrill & Co., L.P. ("BRS"). From 1983 until 1994, Mr. Bruckmann served
as an officer and subsequently a Managing Director of Citicorp Venture Capital,
Ltd. ("CVC"). CVC is an affiliate of 399 Venture Partners, Inc. (399 Venture").
Prior to joining CVC, Mr. Bruckmann was an associate at the New York law firm of
Patterson, Belknap, Webb & Tyler. Mr. Bruckmann is currently a director of
Mohawk Industries, Inc., AmeriSource
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Distribution Corporation, Town Sports International, Inc., Mediq, Inc., Penhall
International, Inc., California Pizza Kitchen, Inc., and several private
companies.
STEPHEN F. EDWARDS has served as a Director of Anvil and Holdings since March
1997. Since 1994, Mr. Edwards has served as a principal of BRS. From 1993 until
1994, Mr. Edwards served as an officer of CVC. From 1988 through 1991, he was an
associate of CVC. Prior to joining CVC, Mr. Edwards worked with
Citicorp/Citibank in various corporate finance positions. Mr. Edwards is
currently a director of several private companies.
DAVID F. THOMAS has served as a Director of Anvil and Holdings since March 1997.
Mr. Thomas has been President of Citicorp Venture Capital since 2000 and prior
to that, a Managing Director for more than five years. Mr. Thomas is currently a
director of Lifestyle Furnishings International, Ltd., Neenah Corporation,
Sleepmaster Corporation and American Commercial Lines, LLC.
JOHN D. WEBER has served as a Director of Anvil and Holdings since March 1997.
Since 1994, Mr. Weber has been a Vice President at CVC and a Vice President at
399 Venture. Previously, Mr. Weber worked at Putnam Investments for two years.
Mr. Weber is currently a director of Electrocal Designs, Inc., FFC Holdings,
Inc., Gerber Childrenswear, Inc., Graphic Design Technologies, Plainwell, Inc.,
Sleepmaster Corporation, Smith Alarm, Neenah Corporation, Lifestyle Furnishings
International, Ltd. and Homelife Rhodes, Inc.
Directors are elected at the annual meeting of stockholders and each director so
elected holds office until the next annual meeting of stockholders and until a
successor is duly elected and qualified. There are no family relations among any
of the directors of Holdings.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board has created two standing committees: an Audit Committee and a
Compensation Committee. The Board may also establish other committees to assist
in the discharge of its responsibilities. Currently, there is no standing
nominating committee of the Board.
The Audit Committee reviews the scope of the work performed by the independent
public accountants and the results thereof, including internal accounting and
financial controls for the Company and accounting procedures to be employed in
the preparation of the financial statements of the Company. The Audit Committee
makes recommendations to the Board concerning the engagement of independent
public accountants to audit the annual financial statements of the Company,
affirms their independence and review the scope of the audit to be undertaken by
such accountants. Deloitte & Touche LLP presently serves as the independent
auditors of the Company. Representatives of Deloitte and Touche LLP will not be
present at the Annual Meeting. Messrs. Weber, Edwards and Hollander have been
appointed to the Audit Committee. The Audit Committee met once during the fiscal
year ended February 3, 2001.
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The Compensation Committee reviews and, as it deems appropriate, recommends to
the Board policies, practices and procedures relating to the compensation of
managerial employees and the establishment and administration of employee
benefit plans. The Compensation Committee has and exercises all authority under
the employee stock option plan of the Company and otherwise advises and consults
with the officers of the Company regarding managerial personnel policies.
Messrs. Thomas, Bruckmann and Geller have been appointed to the Compensation
Committee. On December 5, 2000, Mr. Weber replaced Mr. Thomas as a member of the
Compensation Committee. The Compensation Committee held three telephonic
meetings during the fiscal year ended February 3, 2001.
Pursuant to the Stockholders Agreement (as defined), 399 Venture, BRS and
certain management investors (the "Management Investors") have agreed to vote
their shares of Common Stock so that each of the Boards of Holdings and Anvil
have up to eight members, comprised of up to three members of each Board
designated by 399 Venture, up to three members of each Board designated by BRS
and up to two members of each Board designated by the Management Investors. The
Directors that are designated by BRS are Messrs. Bruckmann and Edwards; the
Directors that are designated by 399 Venture are Messrs. Thomas and Weber; and
the Directors that are designated by the Management Investors are Messrs. Geller
and Hollander. See "Security Ownership of Certain Beneficial Owners and
Management--Stockholders Agreement."
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Directors of Anvil and Holdings do not receive compensation for services
rendered in that capacity, but are reimbursed for any out-of-pocket expenses
incurred by them in connection with their travel to and attendance at board
meetings and committees thereof.
Compensation of all executive officers of the Company is fixed by the Board and
no executive officer is prevented from receiving compensation by virtue of the
fact that he is also a Director. The table on the following page sets forth
information for the periods presented concerning the compensation for the
Company's Chief Executive Officer and each of the three other most highly
compensated executive officers of the Company who were serving as executive
officers of the Company at the end of fiscal 2000 (collectively, the "Named
Executive Officers") for services rendered in all capacities to the Company
during such period. The Company has no other executive officers.
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SUMMARY COMPENSATION TABLE(1)
ANNUAL COMPENSATION
---------------------------------------------------
FISCAL OTHER ANNUAL ALL OTHER
YEAR SALARY BONUS(2) COMPENSATION(3) COMPENSATION(4)
---- ------ ----- ------------ ------------
Bernard Geller 2000 $484,615 $301,000 $ 14,242 $ 14,110
Chief Executive Officer 1999 455,000 145,000 14,932 13,720
1998 455,000 370,511(5) 17,870 14,402
Anthony Corsano(6) 2000 338,846 190,000 14,462 8,857
President and Chief Operating 1999 308,077 72,000 10,949 8,455
Officer 1998 300,000 120,000 11,124 9,088
Jacob Hollander 2000 341,827 190,000 11,907 8,888
Executive Vice President, 1999 315,000 87,000 14,925 8,523
Chief Administrative Officer, 1998 315,000 145,000 12,637 8,923
Secretary and General Counsel
William H. Turner 2000 250,770 239,000 6,667 8,590
Executive Vice President 1999 220,866 108,000 5,319 8,205
of Manufacturing 1998 205,000 181,000 6,983 8,636
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(1) See "Certain Relationships and Related Transactions," below.
(2) The Company provides bonus compensation based on the Company's operating
performance. See "Bonus Plan" below.
(3) None of the Named Executive Officers received any Other Annual Compensation
in an amount in excess of either $50,000 or 10% of such Named Executive
Officer's salary and bonus.
(4) All Other Compensation includes: (i) matching contributions under the
Company's savings and investment plan relating to before-tax contributions
made by each of the Named Executive Officers in the following amounts for
fiscal 2000, 1999 and 1998, respectively: Mr. Geller--$7,878, $7,520 and
$7,648; Mr. Corsano--$7,882, $7,535 and $7,888; Mr. Hollander--$7,892,
$7,577 and $7,669; and Mr. Turner--$7,887, $7,552 and $7,815 (ii) insurance
premiums paid by the Company with respect to term life insurance for the
benefit of the Named Executive Officers in the following amounts: Mr.
Geller--$920, $888 and $1,442; Mr. Corsano--$975, $920 and $1,200; Mr.
Hollander--$996, $946 and $1,254; and Mr. Turner--$703, $653 and $821;
(iii) the amount of premiums paid by the Company under a life insurance
policy designed to fund certain retirement benefits for Mr. Geller--$5,312,
$5,312 and $5,312.
(5) Includes a bonus payment of $115,511 in fiscal 1998 received by Mr. Geller
pursuant to an agreement entered into at the time of the acquisition of the
Company.
(6) During fiscal years 1998 through 2000, Mr. Corsano was Executive Vice
President of Sales and Marketing
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EMPLOYMENT AGREEMENTS
As of January 30, 2001, the Company entered into new employment agreements with
Messrs. Geller, Corsano, Hollander, and Turner (collectively, the "Employment
Agreements"). The Employment Agreements are for an initial term of three years
and with respect to Messrs. Corsano, Hollander and Turner contain automatic one
year extensions unless terminated as set forth therein. The Employment
Agreements provide for Messrs. Geller, Corsano, Hollander and Turner
(collectively, the "Executives") to serve in the same or similar capacity with
the Company as they did under their previous employment contracts, and provide
for an initial annual base salary of $500,000, $350,000, $355,000 and $255,000
for Messrs. Geller, Corsano, Hollander and Turner, respectively. The Employment
Agreements expire on January 31, 2004. The Employment Agreements also provide
each Executive with customary fringe benefits and vacation periods as well as
entitle the Executive to participate in all of the Company's employee pension
plans, welfare benefit plans, tax deferred savings plans, and other welfare or
retirement benefits, the Bonus Plan and any stock option plan. Each Executive's
employment may be terminated by the Company at any time with or without Cause
(as defined below). If such Executive is terminated by the Company without Cause
or such Executive resigns for Good Reason (as defined below), other than in
connection with a Strategic Sale (as defined below), the Executive will be
entitled to receive, within 30 days after termination, an amount equal to his
base salary through the end of the term then in effect, but not less than two
years salary (the "Severance Period"), plus a pro-rata bonus for the year in
which the termination takes place. In addition, the Executive is entitled to
continue to participate in the Company's benefit plans through the second
anniversary of the date that such termination occurs. If the Executive's
employment terminates for any other reason, such Executive will be entitled to
only his base salary and benefits through the end of the calendar month in which
termination occurs, excluding bonuses. With respect to Messrs. Corsano,
Hollander and Turner, in the event of non-renewal of an agreement at the
election of the Company, the Executive shall be entitled to continue to receive
his salary (payable monthly in arrears) through the first anniversary of the
Non-renewal Date (as defined) and to be continued on the Company's medical
reimbursement plans for the same period.
Each of the Executives is subject to confidentiality, non-competition and
non-solicitation provisions. The non-competition provision provides that the
Executive is not to own, manage, control, participate in, consult with, render
services for, or in any manner engage in, any business that competes anywhere in
the world with the businesses of the Company and is enforceable for the term of
the Employment Agreement or during any period of time the Executive is receiving
payments thereunder unless the Company terminates the Executive without Cause or
the Executive resigns for Good Reason, in which case the provision expires upon
such termination.
"Cause" is defined in the Employment Agreements to mean: (i) a material breach
of the Employment Agreement by the Executive which is not cured within thirty
days of receipt of written notice from the Board; (ii) the Executive's willful
and repeated failure to comply with the lawful directives of the Board or his
superior officers(s) consistent with the terms of the Employment Agreement;
(iii) gross negligence or willful misconduct in the performance of the
Executive's duties under the Employment Agreement which results in material
injury to Holdings, Anvil or their subsidiaries; (iv) fraud committed by the
Executive with respect to Holdings, Anvil or their subsidiaries; or (v)
indictment for a
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felony or a crime involving moral turpitude, conviction of which would
materially injure relationships with customers, suppliers or employees or
otherwise cause material injury to the Company or its subsidiaries. "Good
Reason" is defined in the Employment Agreements to mean: (i) a material breach
of the Employment Agreement which is not cured within thirty days after the
Board's receipt of written notice from the Executive of non-compliance; (ii) the
assignment to the Executive of duties inconsistent with the Executive's
position, duties or responsibilities as in effect after the date of execution of
the Employment Agreement; (iii) the relocation by the Company of its executive
officers to a location outside a thirty mile radius around its current location;
or (iv) upon a sale ("Strategic Sale") of the Company to a corporation or other
legal entity that is, or is part of a group of such entities, engaged in
operating a material business in competition with, or similar or related to the
business of the Company at the time of such a sale. The Executive must give a
written notice of his election to terminate employment for Good Reason.
BONUS PLAN
The Company maintains an Executive Bonus Plan (the "Bonus Plan") which provides
annual incentive bonuses to certain management employees of the Company. The
Bonus Plan provides for an aggregate annual bonus pool equal to 4.0% of the
Company's operating income (subject to adjustment by the Board to exclude
certain charges). The Chief Executive Officer of the Company determines the
allocation of the bonus pool among the participants of the Bonus Plan.
STOCK OPTION PLAN
Holdings has a stock option plan which authorizes the granting of options for
approximately 5.0% of the outstanding Class B Common on a fully diluted basis
(the "Stock Option Plan"). Options under the Stock Option Plan may be granted to
certain members of management and key employees, which include the Named
Executive Officers, and are subject to time and performance vesting provisions.
The exercise price of such options is the fair market value of the Common Stock
as of the date of grant. No options have been granted to any of the Named
Executive Officers.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
On March 14, 1997, the Company completed a reorganization plan (the
"Recapitalization") which is more fully described in the Company's Annual Report
on Form 10-K for the fiscal year ended February 3, 2001.
All of Anvil's issued and outstanding capital stock is owned by Holdings. The
following table sets forth certain information with respect to the beneficial
ownership of the Company's common stock as of April 20, 2001 by (i) any person
or group who beneficially owns more than five percent of any class of Holdings'
voting securities, (ii) each Named Executive Officer and Director, and (iii) all
Directors and Executive Officers of Holdings as a group.
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SHARES BENEFICIALLY OWNED
------------------------- PERCENTAGE OF
CLASS A COMMON CLASS B COMMON VOTING POWER(1)
-------------- -------------- ---------------
Bruckmann, Rosser, Sherrill & Co., L.P(2) 117,645 1,298,152 36.2%
126 East 56th Street
New York, New York 10022
399 Venture Partners, Inc.(3) ........... 97,751 1,078,634 30.0
399 Park Avenue, 14th Floor
New York, New York 10043
CCT Partners II, L.P(4) ................. 17,250 190,347 5.3
399 Park Avenue, 14th Floor
New York, New York 10043
Executive Officers and Directors:
Bernard Geller .......................... 22,516 248,447 6.9
Anthony Corsano ......................... 7,505 82,816 2.3
Jacob Hollander ......................... 7,505 82,816 2.3
William H. Turner ....................... 7,505 82,816 2.3
Bruce C. Bruckmann(5) ................... 119,958 1,323,676 36.9
Stephen F. Edwards(5) ................... 117,645 1,298,152 36.2
David F. Thomas(6) ...................... 100,946 1,113,884 31.0
John D. Weber(6) ........................ 98,171 1,083,271 30.2
Directors and executive officers
as a group (8 persons)(7) ............. 266,355 2,939,091 81.9
- ----------
(1) Calculated pursuant to Rule 13d-3(d) under the Exchange Act. The Class B
Common is the only voting security of Holdings and entitles the holder
thereof to one vote per share. The Class A Common is nonvoting and is
entitled to the Class A Preference upon any distribution by Holdings.
(2) Excludes shares held individually by Mr. Bruckmann and another individual,
each of whom is a principal of BRS.
(3) Excludes shares held individually by Messrs. Thomas and Weber and by
certain individuals (and affiliates thereof), each of whom is employed by
399 Venture. Also excludes shares held by a family trust established by Mr.
Thomas.
(4) CCT Partners II, L.P. is a Delaware limited partnership, the limited
partners of which are certain employees of 399 Venture.
(5) Includes shares held by BRS. Messrs. Bruckmann and Edwards each disclaims
beneficial ownership of such shares. The address for such persons is c/o
BRS & Co., 126 East 56th Street, New York, New York 10022.
(6) Includes shares held by 399 Venture. Messrs. Thomas and Weber each
disclaims beneficial ownership of such shares. The address for such persons
is c/o 399 Venture Partners, Inc., 399 Park Avenue, 14th floor, New York,
New York 10043. Also includes shares held by a family trust established by
Mr. Thomas. Mr. Thomas disclaims beneficial ownership of such shares.
(7) Includes: (i) shares held by BRS, which may be deemed to be owned
beneficially by Messrs. Bruckmann and Edwards, and (ii) shares held by 399
Venture, which may be deemed to be owned beneficially by Messrs. Thomas and
Weber. Excluding the shares beneficially owned by BRS and 399 Venture, the
Directors and Executive Officers as a group beneficially own 50,958 shares
of Class A Common and 562,305 shares of Class B Common, which represents
approximately 15.7% of the voting power of the Common Stock.
8
STOCKHOLDERS AGREEMENT
Pursuant to the Recapitalization, Holdings, 399 Venture, BRS and the Management
Investors entered into a Stockholders Agreement (the "Stockholders Agreement").
The Stockholders Agreement provides: (i) that all parties thereto will vote
their shares of Common Stock so as to cause the Boards of Directors of Anvil and
Holdings each to consist of up to eight members, up to three to be selected by
399 Venture, up to three to be selected by BRS and up to two to be selected by
the Management Investors; (ii) for certain restrictions on transfer of the
Common Stock including, but not limited to, provisions providing that Holdings
and certain holders of Common Stock will have limited rights of first offer and
certain limited participation rights in any proposed third party sale of Common
Stock by 399 Venture or BRS; (iii) that if Holdings authorizes the issuance or
sale of any Common Stock (other than as a dividend on the outstanding Common
Stock) to 399 Venture or BRS, Holdings will first offer to sell to each of the
other parties thereto a percentage of the shares of such issuance equal to the
percentage of Common Stock held, respectively, by each of them at the time of
such issuance; and (iv) that upon approval by the Board of Directors of Holdings
of a sale of all or substantially all of the consolidated assets of Holdings or
substantially all the outstanding capital stock of Holdings (whether by merger,
consolidation or otherwise), each party thereto will consent to and raise no
objections against such sale and sell its Common Stock in such sale. In
reference to paragraph (iv) above, (A) at any time, both the holders of a
majority of 399 Venture Stockholder Shares (as defined) and the holders of a
majority of BRS Stockholder Shares (as defined), acting together as group may,
and (B) after March 14, 2001, either a majority of 399 Venture Stockholder
Shares or the holders of a majority of BRS Stockholder Shares may, require that
Holdings enter into, and the Board of Directors approve, such a sale. None of
the parties received compensation for entering into the Stockholders Agreement.
The Stockholders Agreement is governed by Delaware law, which explicitly
authorizes transfer limitations and voting arrangements of the type and nature
contemplated by the Stockholders Agreement.
REGISTRATION RIGHTS AGREEMENT
Pursuant to the Recapitalization, 399 Venture, BRS, the Management Investors and
Donaldson, Lufkin & Jenrette entered into a Registration Rights Agreement (the
"Equity Registration Rights Agreement") which inures to the benefit of the
transferees of the Class B Common initially issued in connection with the
Initial Units Offering, subject to the limitations set forth therein. The Equity
Registration Rights Agreement provides that, subject to certain conditions, 399
Venture and BRS each have the right to exercise a limited number of long-form
and shelf demand registrations, and an unlimited number of short-form demand
registrations under the Securities Act of their respective shares of Common
Stock. The Equity Registration Rights Agreement also provides for piggyback
registration rights, allowing the parties thereto to include their Common Stock
in any registration filed by Holdings other than pursuant to a registration
statement on Form S-8 or S-4 or any similar form or in connection with a
registration the primary purpose of which is to register debt securities (i.e.,
in connection with a so-called "equity kicker"). However, if the piggyback
registration is an underwritten primary registration on behalf of Holdings, and
the managing underwriters advise Holdings that, in their opinion, the aggregate
number of shares of Common Stock which the participants elect to include in
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such offering exceeds the number which can be sold in such offering without
adversely affecting the marketability of such offering, the number of such
shares sold in such offering shall be allocated according to the following
priority: (i) first, the securities Holdings proposes to sell; (ii) second, the
Common Stock requested to be included in such registration, pro rata among the
holders of such Common Stock on the basis of the number of shares of Common
Stock owned by each such holder; and (iii) third, other securities requested to
be included in such registration.
In addition, the parties thereto (other than certain individual investors and
the Unit holders and successors) are, subject to certain conditions, prohibited
from selling their shares of Common Stock within 180 days after the
effectiveness of any demand registration or piggyback registration (except as
part of such underwritten registration) unless the underwriters managing the
registered offering otherwise agree.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
MANAGEMENT AGREEMENT
Anvil, Holdings and Cottontops have entered into a management agreement with BRS
(the "Management Agreement"), effective as of the Recapitalization, whereby BRS
is to provide certain advisory and consulting services in relation to the
affairs of Anvil, Holdings and Cottontops, including services in connection with
strategic financial planning, and the selection, retention and supervision of
investment bankers or other financial advisors or consultants. Annual fees under
the Management Agreement are $250,000.
FINANCING FEES
Holdings' Articles of Incorporation provide for dividends on its Series 1-Class
A Common Stock, all of which is held by 399 Venture and its affiliates. In lieu
of such dividends Holdings has agreed to pay 399 Venture financing fees in the
aggregate annual amount of $250,000 from the date of the Recapitalization.
BRS and 399 Venture are significant stockholders of the Company and each has two
representatives on the Company's Board of Directors.
Jacob Hollander
Secretary
April 26, 2001
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