www.sec.gov/Archives/edgar/data/11027/0000950136-02-003 -
[Cached Version]
Published on: 12/9/2002
Last Visited: 12/11/2002
Because Carlyle will be treated as the acquirer for accounting purposes, upon the consummation of the merger Carlyle will assume approximately $4.935 million of Levcor's debt consisting of accounts payable and accrued expenses of $1.158 million, long-term debt of $3 million and a loan payable to Robert A. Levinson, a stockholder, officer and director of Levcor, in the amount of approximately $777,000 (notwithstanding the fact that as a legal matter, Carlyle is merging into Levcor and, upon the consummation of the merger Levcor will assume approximately $18.3 million of Carlyle's revolving credit and long-term debt and an obligation commencing June 15, 2007 to redeem the Carlyle Series B preferred stock, which approximated $4.6 million at September 30, 2002).
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Robert A. Levinson Chairman of the Board of Directors, President and Chief
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Robert A. Levinson Chairman of the Board of Directors, President,
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Robert A. Levinson(1) (2) 35.3% 462 Seventh Ave
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(1) Includes: (i) 498,693 shares of common stock held of record by Mr. Levinson; (ii) 419,746 shares of common stock held by Swenvest Corporation, as to which Mr. Levinson has sole voting and investment power; (iii) 15,000 shares of common stock held by three trusts for the benefit of Mr. Levinson's children, as to all of which trusts Mr. Levinson serves as co-trustee; and (iv) 105,200 shares of common stock which Mr. Levinson could acquire on or within 60 days after November 21, 2002 upon the exercise of stock options. (2) Includes 4,479,485 shares of preferred stock held by Swenvest Corporation, as to which Mr. Levinson has sole voting and investment power.
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Robert A. Levinson serves as the Chairman of the board of directors, President, Secretary and Principal Financial Officer of Levcor while also serving as the Chairman of the board of directors, President and Chief Executive Officer of Carlyle.
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Mr. Levinson is a significant holder of Carlyle's Series B preferred stock, owning approximately 98.3% of the outstanding Carlyle Series B preferred.Furthermore, Mr. Levinson is entitled to exercise approximately 29.9% of the voting power of the Levcor common and approximately 38.7% of the voting power of the Carlyle capital stock entitled to vote at the respective meetings. Robert Levinson will continue to be an executive officer of Levcor after the merger, serving as both President and Chief Executive Officer.
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Levinson and Cooke to purchase an aggregate of 478,000 shares of Carlyle common stock at a weighted average price of $.55 per share, to vest.
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Levinson and Cooke will hold options to purchase an aggregate of 95,600 shares of Levcor common stock at a weighted average price of $2.75 per share.
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Pursuant to the terms of Mr. Levinson's employment agreement with Carlyle, in the event of a change in control of Carlyle, Mr. Levinson would be entitled to a lump sum severance payment generally equal to 2.99 times his average annual compensation for the five calendar years preceding the calendar year during which a change in control occurred or for such shorter period during which he was employed.Mr. Levinson has agreed to waive such provision.
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462 Seventh Avenue 1 Palmer Terrace New York, New York 10018 Carlstadt, New Jersey 07072 Attention: Robert A. Levinson, Attention: Edward F. Cooke, President Chief Financial Officer and (212) 354-8500 Vice President
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o Robert A. Levinson serves as the Chairman of the board of directors, President, Secretary and Principal Financial Officer of Levcor while also serving as the Chairman of the board of directors, President and Chief Executive Officer of Carlyle.
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As of the record date, Mr. Levinson beneficially owned 749,175 shares of Levcor common stock, which represents approximately 31.4% of Levcor's outstanding common stock.This 31.4% consists of 699,175 shares of Levcor common stock and 50,000 currently exercisable options to purchase shares of Levcor common stock pursuant to Levcor's Stock Option Plan.As of the record date, Mr. Levinson beneficially owned 2,878,423 shares of Carlyle common stock, which represents approximately 20.4% of Carlyle's outstanding common stock, and 4,479,485 shares of Carlyle Series B preferred stock, which represents approximately 98.3% of Carlyle's outstanding Series B preferred stock.
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Such persons include the three current directors of Levcor, Robert A. Levinson, Edward H. Cohen and John McConnaughy, as well as three current Carlyle directors, Joseph S. DiMartino, Giandomenico Picco and Edward F. Cooke.
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o If the merger is consummated, Robert A. Levinson will continue to be an executive officer of Levcor after the merger serving as President and Chief Executive Officer and Edward F. Cooke, who is currently the Chief Financial Officer and Vice President of Carlyle, will become Levcor's Vice President, Chief Financial Officer, Treasurer and Secretary.
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o If the merger is completed, all unvested Carlyle stock options held by Carlyle's current directors Robert A. Levinson, Joseph S. DiMartino, Edward F. Cooke and
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o Mr. Levinson and Mr. Cooke have employment agreements that provide for the receipt of benefits and payments upon involuntary termination or termination of employment for permitted reasons.
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Robert A. Levinson has agreed to continue to personally support its cash requirements to enable Levcor to meet its current obligations through January 2, 2004.
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There can be no assurance that Mr. Levinson will continue to personally support Levcor's cash requirements, or that these measures will otherwise continue to be successful. The Textile Conversion Business Is Extremely Competitive. In the event we are unable to continue to be competitive in our product offerings and services, our business, results of operations and financial condition may suffer.Within the domestic textile converting business, competition is based on price, uniqueness in styling of fabrics and the ability to quickly respond to customers' orders.However, we cannot assure you that our domestic or foreign competitors will not be able to offer services that are more attractive to our customers or potential customers than what we are able to provide.
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Levcor depends on the continued services of its key personnel particularly its employees comprising its marketing and sales department as well as Robert A. Levinson.
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In late 2001, the potential business and synergistic benefits from a business combination of Carlyle and Levcor became apparent to Robert Levinson, Chairman and President of Levcor and Chairman, President and Chief Executive Officer of Carlyle.
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In early December 2001, Mr. Levinson had preliminary discussions with Houlihan Lokey Howard & Zukin whereby Mr. Levinson described in general terms a transaction that would result in the merger of Carlyle and Levcor.
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Mr. Levinson contacted Houlihan Lokey because of Houlihan's previous experience representing Carlyle in prior transactions. During the next few months, until the time Carlyle officialy executed an engagement letter whereby Houlihan Lokey Howard & Zukin would serve as financial advisors to Carlyle, Mr. Levinson had several discussions with Houlihan Lokey regarding the terms of a possible engagement whereby Houlihan Lokey would give a dual opinion to the stockholders of both companies, as well as the impact of potential operating synergies between Carlyle and Levcor including the value Levcor's net operating losses.
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Mr. Levinson also advised the Board that Houlihan Lokey Howard & Zukin had discussed with him the issuance of a fairness opinion including the necessary valuations for a fee of $75,000.A decision was made by the board to continue to proceed exploring the benefits and the structure of the proposed transaction. On February 12, 2002, Mr. Levinson on behalf of Levcor, met with representatives of Katten Muchin Zavis Rosenman, Levcor's legal counsel, to discuss the relative values of the companies and the potential tax benefits of the merger that could be achieved by structuring the transaction in a way to preserve the net operating loss of Levcor and allow the surviving company to offset its taxable income.
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The board also discussed what steps should be taken in light of the fact that Mr. Levinson is a stockholder, officer and director of both Carlyle and Levcor and whether or not a special committee should be formed comprised of the board's independent members.
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At this meeting, the independent members of the board, Joseph S. DiMartino, Giandomenico Picco and Ralph Langer requested that Mr. Levinson, as result of his interests as a stockholder, officer and director of Levcor, excuse himself from the meeting so the remaining members of the board could freely discuss Levcor's proposed acquisition of Carlyle by Levcor and any steps that should be taken to preserve the board's duties of loyalty and care.
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