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Exhibit 3.07
JARED STAMELL, ESQ.
STAMELL TABACCO & SCHAGER
One Liberty Plaza, 35th Floor
New York, New York 10006
(212) 566-4047
Attorneys for Plaintiff
IRVING L. GOLOMB, ESQ.
GOLOMB, SINDEL & DIBLE, P.C.
185 Madison Avenue, Suite 1600
New York, New York 10016
(212) 686-4004
Attorneys for Defendants
- -------------------------------------X UNITED STATES DISTRICT COURT
SHARON P. SANDLER, SOUTHERN DISTRICT COURT
OF NEW YORK
Plaintiff,
- against - Case No. 92 Civ. 5292
PROGRAMMING AND SYSTEMS
INCORPORATED, IRWIN MAUTNER, ALVIN AMENDMENT TO STIPULATION
LIPOFF, LESTER J. TANNER, KENNETH OF SETTLEMENT
FULD and MARTIN GREENSTEIN, C.P.A.,
Defendants.
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This Amendment of Stipulation of Settlement ("Amendment") dated as of
April , 1995, amending that certain Stipulation of Settlement in the captioned
cation dated November 15, 1993, is made and entered into by and among the
plaintiff, acting individually and on behalf of the Class, and the defendant
Programming and Systems, Incorporated ("PSI" or "the Company"), by and through
its counsel, subject to court approval, described below.
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THE ACTION
A. The Court granted approval of the Stipulation of Settlement in this
action on January 21, 1994.
B. The Stipulation of Settlement was entered into in settlement of claims
on behalf of a class of purchasers of the common stock of PSI who were injured
by defendants' alleged violations of the federal securities laws and the common
law.
C. Plaintiff alleged that: (i) as a result of false and misleading
statements and/or omissions by defendants, the market prices of PSI's common
stock were artificially inflated from at least May 31, 1989 through and
including June 17, 1992, and (ii) as a result of the alleged misstatements,
non-disc1osures and the resulting suspension in trading of PSI's common stock on
June 17, 1992, plaintiff and the Class were damaged. Defendants denied all
liability on the claims made against them.
D. Defendants represented that, as a group, they owned or controlled
approximately 1,200,000 shares of PSI common stock, and that as of June 17, 1992
there were issued and outstanding about 2,432,290 additional shares of PSI
common stock. PSI represents that this same number of shares continue to be
issued and outstanding as of the date of this Amendment. PSI further represents
that its common stock was eligible for quotation on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") until June 17, 1992,
and since that date the stock has not been eligible to trade and has not traded
on any public exchange or market.
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E. Plaintiff has been afforded the opportunity to investigate the facts
and circumstances of PSI relevant to this Amendment and has made such an
investigation. In connection with that investigation, counsel interviewed
executives of PSI and considered the best interests of the shareholders and the
Company in amending the Stipulation of Settlement approved on November 17, 1994,
to provide for PSI to obtain audited financial statements for the fiscal year
ended February 28, 1995 and the current fiscal year in order to seek a relisting
on the NASDAQ of PSI's shares or, in the alternative, a listing of the shares of
its wholly-owned subsidiary, PSI Settlement Corp. ("PSC"). This will provide
Class Members and all PSI shareholders with a market in which to sell their PSI
shares, or in the alternative, the shares of PSC which will be distributed to
them, share for share, in the event of such listing in lieu of listing the
shares of PSI. Based upon these and other considerations, plaintiff and her
counsel have concluded that is in the best interests of plaintiff, the Class and
all shareholders of PSI to enter into this Amendment.
F. PSI considers it desirable to enter into the Amendment because of the
progress it has made in resolving claims against PSI and its former school
subsidiaries and the prospect of providing a greater value to the PSI
shareholders than a liquidation of PSC would provide. By providing PSI
shareholders with a market for their stock, and the ability to benefit from
PSI's net operating tax loss carryover, the Company believes the PSI
shareholders will be able to sell or hold their shares, as each shareholder
determines, and benefit from an earlier realization of the value of the shares
through marketability than could be realized by a liquidation of the real estate
assets, a substantial portion of which depend on future developments and
recoveries in that market.
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G. In accordance with the Stipulation of Settlement, PSI created a
Settlement Fund in the sum of $1.4 million which was distributed recently to
shareholders pursuant to this Court's Orders, in the amount of fifty cents
($.50) per share. PSI also paid the fees and expenses contemplated by the
Stipulation of Settlement.
H. PSI incorporated PSC as a Delaware corporation and a wholly-owned
subsidiary of PSI pursuant to the Court's Order. The stock of PSC is held in
escrow for the benefit of PSI's shareholders and PSI transferred to PSC all of
the stock of the following PSI subsidiaries: PSI Capital Corp. and PSI Food
Services, Inc., which in turn owns all of the stock of Wendcello Corp. and
Wendclark Corp. (collectively the "Identified Subsidiaries") and assets relating
thereto.
I. To secure the obligations of PSI and PSC under the terms of the
Stipulation of Settlement and to pledge, hypothecate and grant a security
interest in the stock of PSC for the benefit of the PSI shareholders, and to
perfect such security interest, the shares of PSC were delivered to, and are
held by, Irving L. Golomb, attorney for defendants, and Jared Stamell, attorney
for plaintiffs, as Escrow Agents.
J. In accordance with the Stipulation of Settlement, Irwin Mautner
resigned as Chairman and as an employee of PSI, and has no further role in its
management. Further, a majority of the members of PSI's Board are persons who
were not associated with PSI before commencement of this action.
K. The stated purpose of PSC in the Stipulation of Settlement was to sell
or otherwise dispose of all of its assets in a reasonable and prudent manner so
as to maximize the net proceeds realizable therefrom, with a view to realizing
an amount of no less than
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$1.50 per issued and outstanding share of PSI, and pay over and deposit the net
proceeds into the Supplemental Settlement Fund. PSC has not sold or disposed of
the PSC assets because it has not been able to do so in a reasonable and prudent
manner which would be in the best interests of PSI's shareholders.
L. Plaintiff and her counsel have cooperated with the Company to represent
to various governmental agencies that PSI should only be required to provide and
file with the SEC audited financial statements that would have current financial
information. The SEC has not required the Company to obtain audited financial
statements for the fiscal years ended before March 1, 1994 and PSI's new
management has determined that the Company can best serve the interests of the
PSI shareholders by providing audited financial statements of PSI for the two
fiscal years commencing March 1, 1994.
M. The parties to this Amendment conclude that it is not presently
economically practical, nor in the best interest of PSI's shareholders, to sell
the shares of the Identified subsidiaries or liquidate their assets. For
example, one of the three Identified Subsidiaries was, as of the date of the
Stipulation of Settlement, and still is a Debtor in a Proceeding for
Reorganization under Chapter 11 of the Bankruptcy Code.
NOW, THEREFORE, IT IS STIPULATED AND AGREED by and among the parties,
through them or their undersigned counsel, that the parties will enter into this
Amendment, subject to the approval of the District Court under Rule 23(e) of the
Federal Rules of Civil Procedure, upon and subject to the terms and conditions
set forth below.
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TERMS OF THE PROPOSED SETTLEMENT
1. PSI shall prepare and file an audited financial statement for the
fiscal year ended February 28, 1995, on or before July 10, 1995. PSI will cause
PSC to prepare audited financial statements for its fiscal year ended February
28, 1995, on or before July 10, 1995. Said financial statements shall comply
with SEC regulations applicable to a public corporation and annual audited
financial statements shall be prepared in subsequent years for whichever of PSI
or PSC shall have its shares listed or to be listed on the NASDAQ.
2. PSI has furnished PSC, or will furnish, to PSC additional assets and
working capital of not less than $1,000,000, or such greater amount as may be
available to PSI's subsidiaries in order to develop properties owned by them and
to conduct their business in a manner that will allow PSI or PSC to register
with the SEC and to list the shares of one of said corporations on the NASDAQ.
3. PSI will take such action as may be necessary, including any amendment
of PSC's Certificate of Incorporation, to have the shares of PSI or PSC traded
on the NASDAQ. In the event this does not, in fact, take place on the earlier of
(i) two years after the date of the Order of the Court giving its final approval
to this Amendment, or (ii) the date relisting is determined not to be feasible
or (iii) the date efforts to relist are abandoned, then the obligation in the
Stipulation of Settlement to liquidate the assets of PSC and to distribute the
proceeds pro-rata to all shareholders of PSI shall be reinstated.
4. In the event PSI determines to list the shares of PSC in lieu of
relisting the PSI shares, PSI will prepare and file with the SEC, with the
appropriate states, and with
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NASDAQ, all necessary and appropriate filings, and upon such filings being
declared effective, the parties hereto and their counsel will thereupon cause
the Escrow Agent that is holding PSC's shares as security for PSI's performance
of its obligations under the Settlement to distribute PSC's shares to PSI's
shareholders at the rate of one share of PSC for each share of PSI owned at the
effective date of such distribution.
5. This Amendment of Settlement Agreement will be effective upon approval
by the United States District Court for the Southern District of New York (the
"Court").
6. The parties hereto will cooperate with each other to obtain the
approval of the Court, make any necessary or appropriate filings with federal
and state agencies and NASDAQ and use their best efforts to cause such filings
to be declared effective.
7. All reasonable costs and expenses of this Amendment, including, without
limitation, the fees of the parties' counsel and the expense of giving notice to
Class Members, shall be paid by PSI, which may utilize any remaining balance in
the Expense Fund established pursuant to the Stipulation of Settlement.
8. Except as defined herein, all definitions set forth in the Stipulation
of Settlement are incorporated herein by reference.
9. Except as superseded or amended by the provisions of this Amendment of
the Stipulation of Settlement, all terms, conditions and provisions of the
Stipulation of Settlement, including the transfers of assets and shares made by
PSI to PSC following the final approval of the Stipulation of Settlement by the
Court's Order of January 21, 1994, are ratified and confirmed in all respects.
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10. The parties to the Settlement shall promptly submit this Amendment to
the Court and jointly request the Court to enter an Order of Preliminary
Approval substantially in the form annexed hereto as Exhibit A, and to enter the
Order Approving the Amendment in the event of final approval in the form annexed
hereto as Exhibit B.
IN WITNESS WHEREOF, the Amendment of Stipulation of Settlement has been
executed by the undersigned counsel of record.
Dated: April 28, 1995
New York, New York
STAMMEL, TABACCO & SCHAGER GOLOMB, SINDEL & DIBLE, P.C.
Counsel for Plaintiff Counsel for Defendants
By: /s/ Jared B. Stamell By: /s/ Irving L. Golomb
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Jared B. Stamell (JS-5225) Irving L. Golomb (IG-2755)
One Liberty Plaza, 35th Floor 185 Madison Avenue, Suite 1600
New York, NY 10006 New York, NY 10016
Telephone: (212) 566-4047 Telephone: (212) 686-4004
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