-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IZtti/FNdUe73JXAPFi+lniJyAkaLJ1360x9rbDH6nUS+bqlac8FMHGGGmFHou9I 7xKSUgzr3MsV0WiPXjkgyg== 0000950172-01-500403.txt : 20010619 0000950172-01-500403.hdr.sgml : 20010619 ACCESSION NUMBER: 0000950172-01-500403 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20010618 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: NIAGARA CORP CENTRAL INDEX KEY: 0000710976 STANDARD INDUSTRIAL CLASSIFICATION: STEEL PIPE & TUBES [3317] IRS NUMBER: 593182820 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-40787 FILM NUMBER: 1662811 BUSINESS ADDRESS: STREET 1: 667 MADISON AVE CITY: NEW YORK STATE: NY ZIP: 10021 BUSINESS PHONE: 2123171000 FORMER COMPANY: FORMER CONFORMED NAME: PALM BEACH GAS CORP DATE OF NAME CHANGE: 19890720 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SCHARF MICHAEL J CENTRAL INDEX KEY: 0000934975 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: P O BOX 1592 CITY: PONTE VEDRA BEACH STATE: FL ZIP: 32004 BUSINESS PHONE: 2123171000 MAIL ADDRESS: STREET 1: PO BOX 1592 CITY: PONTE VEDRA BEACH STATE: FL ZIP: 32004 SC 13D/A 1 s495232.txt UNITED STATES 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. 8)* Niagara Corporation - ------------------------------------------------------------------------------- (Name of Issuer) Common Stock, par value $.001 per share - ------------------------------------------------------------------------------- (Title of Class of Securities) 653349100 ------------------------------ (CUSIP Number) Michael J. Scharf c/o Niagara Corporation 667 Madison Avenue New York, N.Y. 10021 (212) 317-1000 - ------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) June 6, 2001 -------------- (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 that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13(d)-1(f) or 13(d)-1(g), check the following box o. Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 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 (the "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). SCHEDULE 13D CUSIP No. 653349100 - ------------------------------------------ 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Michael J. Scharf 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) ( ) (b) ( ) 3 SEC USE ONLY 4 SOURCE OF FUNDS* PF 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States NUMBER OF 7 SOLE VOTING POWER SHARES 2,048,700 (includes 480,000 Shares issuable upon the exercise of Options which are currently exercisable) BENEFICIALLY OWNED BY 8 SHARED VOTING POWER 0 EACH 9 SOLE DISPOSITIVE POWER REPORTING 2,048,700 (includes 480,000 Shares issuable upon the exercise of Options which are currently exercisable) PERSON 10 SHARED DISPOSITIVE POWER WITH 0 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,048,700 (includes 480,000 Shares issuable upon the exercise of Options which are currently exercisable) 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |X| (excludes 420,000 Shares issuable upon the exercise of Options which are not exercisable within 60 days**) 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 23.17% 14 TYPE OF REPORTING PERSON* IN *SEE INSTRUCTIONS BEFORE FILLING OUT! ** These Options will become exercisable with respect to (i) 40,000 Shares on September 13, 2001, (ii) 20,000 Shares on April 27, 2002 and (iii) 120,000 Shares on each of the next three anniversaries of January 28, 2001 (provided Mr. Scharf continues to be employed by the Issuer or one of its subsidiaries on such date), except in the event of a Change in Control of the Issuer. Michael J. Scharf hereby amends his Statement on Schedule 13D, dated August 30, 1993, as amended on September 30, 1993, October 29, 1993, February 4, 1994, June 7, 1995, October 10, 1996, June 4, 1997 and July 31, 1997 (as amended, the "Schedule 13D"), relating to the Common Stock, par value $.001 per share, of Niagara Corporation, a Delaware corporation (the "Issuer"). Capitalized terms used and not defined herein shall have the meanings previously ascribed to them in the Schedule 13D. Item 2. Identity and Background. ----------------------- Item 2(c) is hereby amended to read in its entirety as follows: (c) Mr. Scharf is Chairman of the Board, President and Chief Executive Officer of the Issuer, Chairman of the Board and Chief Executive Officer of the Issuer's subsidiaries, Niagara LaSalle Corporation ("Niagara LaSalle") and LaSalle Steel Company, and Chairman of the Board of the Issuer's subsidiary, Niagara LaSalle (UK) Limited. He also holds various other positions with such subsidiaries. Item 3. Source and Amount of Funds or Other Consideration. ------------------------------------------------- Item 3 is hereby amended by adding the following: On October 31, 1997, the Issuer exercised its right to redeem on December 9, 1997 (which date was extended to December 11, 1997) all of its then outstanding and unexercised Warrants at $.01 per Warrant. As a result of this call for redemption, the Warrants could not be exercised after the redemption date. Each outstanding Warrant entitled the holder to purchase from the Issuer, prior to the exercise deadline, one Share at an exercise price of $5.50. On December 4, 1997, Mr. Scharf converted his beneficial interest in 93,000 Warrants by selling such Warrants from his IRA account at $3.375 per Warrant (for consideration totaling $313,875) and simultaneously acquiring 93,000 Warrants at $3.375 per Warrant (for consideration totaling $313,875). On December 8, 1997, Mr. Scharf exercised 354,500 Warrants, the Michael J. Scharf 1987 Grantor Income Trust exercised 95,000 Warrants and the Scharf Family 1989 Trust exercised 63,000 Warrants for a consideration totaling $1,949,750, $522,500, and $346,500, respectively. The funds used to acquire and exercise the Warrants were respectively Mr. Scharf's personal funds and the internal funds of each of the Trusts. On August 31, 1998, Mr. Scharf purchased through open market purchases an additional 5,000 Shares at approximately $5.8125 per Share for an aggregate consideration of $29,062.50. On March 2, 5, 6, 7 and 8, 2001, Mr. Scharf purchased through open market purchases an additional 8,500, 2,400, 2,400, 300 and 4,800 Shares, respectively, at approximately $2.3125 per Share, except for the purchase on March 8, 2001 which was at approximately $2.375 per Share, for aggregate consideration of $42,850. The funds used to purchase these Shares were Mr. Scharf's personal funds. On June 18, 2001, Mr. Scharf purchased from Performance Capital L.P. ("Performance Capital") 331,100 Shares at $2.50 per Share, for an aggregate consideration of $827,750, pursuant to a Stock Purchase Agreement dated June 6, 2001 (the "Stock Purchase Agreement"). (See Item 6) Item 4. Purpose of Transaction. ---------------------- Item 4 is hereby amended to read in its entirety as follows: Mr. Scharf acquired the Shares for investment purposes. Mr. Scharf will continue to evaluate his ownership of Shares, and presently intends from time to time to purchase additional Shares through open market purchases or privately negotiated transactions, depending on his continuing evaluation of pertinent factors, including without limitation the following: the Issuer's business, prospects and financial condition; other business and investment opportunities available to him; the market for the Shares; economic conditions; stock market and money market conditions; availability of funds; and other factors that he may deem relevant from time to time. Except as set forth above or in any other Item hereof, and except in his capacity as Chairman, President and Chief Executive Officer of the Issuer, which from time to time may consider a transaction involving the Shares, Mr. Scharf does not have any present plans or proposals that relate to or would result in any of the actions set forth in clauses (a) - (j) of Item 4 of Schedule 13D. Item 5. Interest in Securities of the Issuer. ------------------------------------ Item 5(a) is hereby amended to read in its entirety as follows: (a) As described in Item 3 hereof, Mr. Scharf directly owns 1,169,200 Shares. Pursuant to Rule 13d-3 under the Exchange Act, Mr. Scharf may be deemed to be the beneficial owner of an additional (i) 399,500 Shares owned in the aggregate by the Scharf Trusts for which Mr. Scharf is trustee and (ii) 480,000 Shares underlying options that are currently exercisable. Accordingly, Mr. Scharf may be deemed to be the beneficial owner of an aggregate of 2,048,700 Shares, representing approximately 23.17% of the sum of (i) 8,363,817 outstanding Shares as of May 16, 2001 (based upon information contained in the Issuer's Proxy Statement dated May 29, 2001 and (ii) 480,000 Shares underlying options which are currently exercisable by him. In connection with his serving as President and Chief Executive Officer of the Issuer, the Compensation Committee of the Board of Directors of the Issuer (the "Compensation Committee") granted to Mr. Scharf (i) on September 13, 1996, an incentive stock option to purchase an aggregate of 100,000 Shares and a non-qualified stock option to purchase an aggregate of 100,000 Shares, (ii) on April 27, 1997, a non-qualified stock option to purchase an aggregate of 100,000 Shares and (iii) on January 28, 1999, a non-qualified stock option to purchase an aggregate of 600,000 Shares. The exercise price of each of the options described in (i) and (ii) above is $5.50 per Share and the exercise price of the options described in (iii) above is $5.875. As described in Item 6, the forgoing options are currently exercisable as to 480,000 Shares and will become exercisable with respect to (i) 40,000 Shares on September 13, 2001, (ii) 20,000 Shares on April 27, 2002 and (iii) 120,000 Shares on each of the next three anniversaries of January 28, 2001 (provided Mr. Scharf continues to be employed by the Issuer or one of its subsidiaries on such date), except in the event of a "Change in Control" of the Issuer (as defined in the Issuer's 1995 Stock Option Plan). Accordingly, and pursuant to Rule 13d-3 under the Exchange Act, options with respect to 480,000 Shares which are currently exercisable have been included in calculating the number of Shares beneficially owned by Mr. Scharf. The foregoing is a summary of certain provisions of Mr. Scharf's Stock Option Agreements and is qualified in its entirety by reference to such Agreements, copies of which are attached hereto as Exhibits 6, 7, 8, and 10 and incorporated herein by reference. Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer. --------------------------------------------------------- The Issuer and Niagara LaSalle entered into an employment agreement with Mr. Scharf dated as of January 1, 1999 ("Employment Agreement"), providing, among other things, that he will continue to serve as Chairman, Chief Executive Officer and President of the Issuer and Chairman and Chief Executive Officer of Niagara LaSalle for five years, subject to annual one-year extensions commencing on January 1, 2002, unless the Issuer or Mr. Scharf provides the other with timely notice not to extend. The Employment Agreement provides that Mr. Scharf will receive (i) an annual base salary ("Annual Base Salary") of not less than $480,000; (ii) a performance-based annual incentive bonus subject to approval by the Issuer's stockholders (which was approved at the Issuer's 1999 Annual Meeting of Stockholders); (iii) a supplemental annual retirement benefit ("SERP") equal in amount to Mr. Scharf's Final Average Pay (as defined in the Employment Agreement), multiplied by the product of Mr. Scharf's years of service with the Issuer and 2.5%, with 50% of such annual amount to be paid to Mr. Scharf's surviving spouse during her lifetime; (iv) annual grants of stock options as determined by the Compensation Committee of the Issuer's Board of Directors; and (v) medical coverage and specified fringe benefits. If Mr. Scharf's employment is terminated by the Issuer without Cause (as defined in the Employment Agreement) or by Mr. Scharf due to a breach of the Employment Agreement by the Issuer, the Issuer will (i) pay Mr. Scharf a lump sum equal to the product of (A) the greater of three or the number of years remaining in the term of the Employment Agreement ("Severance Multiple"), and (B) the sum of Mr. Scharf's then current Annual Base Salary and the greater of Mr. Scharf's three-year average annual bonus and target bonus for the year of termination; (ii) provide Mr. Scharf with a pro rata bonus for the year of termination; (iii) provide Mr. Scharf, for the number of years equal to the Severance Multiple, with additional years of service credit under the SERP, continued life insurance benefits and continued exercisability of stock options; and (iv) cause all of Mr. Scharf's outstanding equity awards to vest. Mr. Scharf would also receive a gross-up payment for any excise tax payable under Section 4999 of the Internal Revenue Code of 1986, as amended. The foregoing is a summary of certain provisions of the Employment Agreement and is qualified in its entirety by reference to such Agreement, a copy of which is attached hereto as Exhibit 11 and incorporated herein by reference. On June 18, 2001, Mr. Scharf purchased from Performance Capital 331,100 Shares at $2.50 per Share, for an aggregate consideration of $827,750, pursuant to the Stock Purchase Agreement. The Stock Purchase Agreement also provides that if at any time during the 365 days following the date of closing, Mr. Scharf purchases more than 50,000 Shares from one seller at a price in access of $2.50 per Share, Mr. Scharf will pay Performance Capital an additional amount equal to the sum of (i) 331,000 multiplied by the excess above $2.50 less (ii) 6% of $827,750 multiplied by the number of days from the closing divided by 365. The Stock Purchase Agreement also contains customary representations, warranties and conditions. The foregoing is a summary of certain provisions of the Stock Purchase Agreement and is qualified in its entirety by reference to such Agreement, a copy of which is attached hereto as Exhibit 12 and incorporated herein by reference. Item 7. Material to be Filed as Exhibits. -------------------------------- Exhibit 1 - Stock Escrow Agreement, dated August 13, 1993, by and among the Issuer, the Initial Stockholders and the Escrow Agent (incorporated by reference to Exhibit 1 to the Statement on Schedule 13D of Michael J. Scharf, dated August 30, 1993). Exhibit 2 - Letter Agreement, dated May 26, 1993, by and between Michael J. Scharf and GKN Securities Corp (incorporated by reference to Exhibit 2 to the Statement on Schedule 13D of Michael J. Scharf, dated August 30, 1993). Exhibit 3 - Letter Agreement, dated May 26, 1993, by and between the Michael J. Scharf 1987 Guarantor Income Trust and GKN Securities Corp (incorporated by reference to Exhibit 3 to the Statement on Schedule 13D of Michael J. Scharf, dated August 30, 1993). Exhibit 4 - Letter Agreement, dated May 26, 1993, by and between the Scharf Family 1989 Trust and GKN Securities Corp (incorporated by reference to Exhibit 4 to the Statement on Schedule 13D of Michael J. Scharf, dated August 30, 1993). Exhibit 5 - Letter, dated June 1, 1995, from Michael Scharf to all of the stockholders of Niagara Cold Drawn Corp. (incorporated by reference to Exhibit 5 to Amendment No. 4 to the Statement on Schedule 13D of Michael J. Scharf, dated June 7, 1995). Exhibit 6 - Stock Option Agreement, dated as of September 13, 1996, by and between the Issuer and Michael Scharf (incorporated by reference to Exhibit 6 to Amendment No. 5 to the Statement on Schedule 13D of Michael J. Scharf, dated October 10, 1996). Exhibit 7 - Stock Option Agreement, dated as of September 13, 1996, by and between the Issuer and Michael Scharf (incorporated by reference to Exhibit 7 to Amendment No. 5 to the Statement on Schedule 13D of Michael J. Scharf, dated October 10, 1996). Exhibit 8 - Stock Option Agreement, dated as of April 27, 1997, by and between the Issuer and Michael Scharf (incorporated by reference to Exhibit 8 to Amendment No. 6 to the Statement on Schedule 13D of Michael J. Scharf, dated June 4, 1997). Exhibit 9 - Stockholders Agreement, dated as of April 18, 1997, among the Issuer, Niagara Cold Drawn Corp., Michael J. Scharf, The Prudential Insurance Company of America, the Equitable Life Assurance Society of the United States and the United States Fidelity and Guaranty Company (incorporated by reference to Exhibit 8 to Amendment No. 6 to the Statement on Schedule 13D of Michael J. Scharf, dated June 4, 1997). Exhibit 10 - Stock Option Agreement, dated as of January 28, 1999, between the Issuer and Michael Scharf. Exhibit 11 - Employment Agreement, dated as of January 1, 1999, among the Issuer, Niagara LaSalle Corporation and Michael Scharf. Exhibit 12 - Stock Purchase Agreement, dated June 6, 2001, between Michael Scharf and Performance Capital L.P. 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. Dated: June 18, 2001 /s/ Michael Scharf ------------------ Michael Scharf EX-99.1 2 exh10.txt EXHIBIT 10 Exhibit 10 STOCK OPTION AGREEMENT AGREEMENT made as of January 28, 1999, by and between Niagara Corpora tion (formerly International Metals Acquisition Corporation), a Delaware corporation ("Niag ara"), and Michael Scharf (the "Executive"). WHEREAS, on August 15, 1995, Niagara's Board of Directors (the "Board") approved the International Metals Acquisition Corporation 1995 Stock Option Plan (the "Plan"); WHEREAS, on May 16, 1996, Niagara's stockholders approved the Plan; and WHEREAS, the Compensation Committee of the Board desires to grant to the Executive a Non-Qualified Stock Option under the Plan to acquire an aggregate of 600,000 shares of Niagara common stock, par value $.001 per share (the "Stock"), on the terms set forth herein. NOW, THEREFORE, the parties hereby agree as follows: 1. Definitions. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Plan. 2. Grant of Option. The Executive is hereby granted a Non-Qualified Stock Option (the "Option") to purchase an aggregate of 600,000 shares of Stock, pursuant to the terms of this Agreement and the provisions of the Plan. 3. Option Price. The exercise price of the Option shall be $5.875 per share of Stock issuable pursuant to the exercise thereof. 4. Conditions to Exercisability. (a) The Option shall become exercisable as to twenty percent (20%) of the shares of Stock covered by the Option on each of the next five anniversaries of this Agree ment, provided that the Executive continues to be employed by Niagara or one of its subsidiaries (collectively, the "Company") on such date. (b) Notwithstanding the foregoing, the Option shall become exercis able in full upon the occurrence of the Change in Control of Niagara (as defined in the Plan). 5. Period of Option. This Option shall expire on the earliest to occur of: (a) the tenth anniversary of the date of this Agreement; and (b) 90 days after the termination of the Executive's employment with the Company for any reason. 6. Exercise of Option. (a) The Option shall be exercised in the following manner: the Executive shall deliver to Niagara written notice specifying the number of shares of Stock which he elects to purchase. The Executive must included with such notice full payment of the exercise price for the Stock being purchased pursuant to such notice. Payment of the exercise price must be made in cash or in shares of Stock having a Fair Market Value equal to such Option price or in a combination of cash and Stock. In lieu of full payment of the exercise price in cash, upon request of the Executive, Niagara may, at its discretion, allow the Executive to exercise the Option or a portion thereof through a cashless exercise procedure. (b) Upon the disposition of shares of Stock acquired pursuant to the exercise of the Option, Niagara shall have the right to require the payment of the amount of any taxes which are required by law to be withheld with respect to such disposition. (c) The Executive will not be deemed to be a holder of any shares of Stock pursuant to exercise of the Option until the date of the issuance of a stock certificate to him for such shares and until such shares are paid for in full. 7. Entire Agreement. This Agreement and the Plan contain all the under standings between the parties hereto pertaining to the matters referred to herein, and supersedes all undertakings and agreements, whether oral or in writing, previously entered into by them with respect thereto. The Executive represents that, in executing this Agreement, he does not rely and has not relied upon any representation or statement not set forth therein made by the Company with regard to the subject matter, bases or effect of this Agreement or otherwise. 8. Amendment or Modification; Waiver. No provision of this Agreement may be amended or waived unless such amendment or waiver is agreed to in writing, signed by the Executive and by a duly authorized director or officer of Niagara. No waiver by any party hereto of any breach by another party hereto of any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of a similar or dissimilar condition or provision at the same time, any prior time or any subsequent time. 9. Notices. Any notice to be given hereunder shall be in writing and shall be deemed given when delivered personally, sent by courier or telecopy or registered or certified mail, postage prepaid, return receipt requested, addressed to the party concerned at the address indicated below or to such other address as such party may subsequently give notice of hereunder in writing: To the Executive at: c/o 667 Madison Avenue New York, New York 10021 To Niagara at: Niagara Corporation 667 Madison Avenue New York, New York 10021 Attention: Marc J. Segalman Vice President & General Counsel Any notice delivered personally or by courier under this Section 9 shall be deemed given on the date delivered and any notice sent by telecopy of registered or certified mail, postage prepaid, return receipt requested, shall be deemed given on the date telecopies or mailed. 10. Severability. If any provision of this Agreement or the application of any such provision to any party or circumstances shall be determined by any court of competent jurisdiction to be invalid or unenforceable to any extent, the remainder of this Agreement or the application of such provision to such person or circumstances other than those to which it is so determined to be invalid and unenforceable, shall not be affected thereby, and each provision hereof shall be validated and shall be enforced to the fullest extent permitted by law. 11. Survival. The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary to the intended preserva tion of such rights and obligations. 12. Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of Delaware, without regard to its conflicts of laws principles. 13. Headings. All descriptive headings of sections and paragraphs in this Agreement are intended solely for convenience, and no provision of this Agreement is to be construed by reference to the heading of any section or paragraph. 14. Construction. This Agreement is made under and subject to the provisions of the Plan, and all of the provisions of the Plan are hereby incorporated herein as provisions of this Agreement. If there is a conflict between the provisions of this Agreement and the provisions of the Plan, the provisions of the Plan will govern. By signing this Agreement, the Executive confirms that he has received a copy of the Plan and has had an opportunity to review the contents thereof. 15. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. NIAGARA CORPORATION By: /s/ Marc Segalman -------------------------------- Marc J. Segalman Vice President /s/ Michael Scharf ----------------------------------- Michael Scharf EX-99.2 3 exh11.txt EXHIBIT 11 Exhibit 11 EMPLOYMENT AGREEMENT THIS AGREEMENT by and among Niagara Corporation, a Delaware corporation (the "Company"), Niagara LaSalle Corporation, a Delaware corporation and a wholly owned subsidiary of the Company ("Niagara LaSalle"), and Michael Scharf (the "Executive"), dated as of the first day of January, 1999. W I T N E S S E T H WHEREAS, the Executive serves the Company as its Chairman, Chief Executive Officer and President and serves Niagara LaSalle as its Chairman; and WHEREAS, the Company wishes to provide for the continued employment by the Company of the Executive, and the Executive wishes to continue to serve the Company, on the terms and conditions set forth in this Agreement; NOW, THEREFORE, it is hereby agreed as follows: 1. EMPLOYMENT PERIOD. The Company shall employ the Executive, and the Executive shall serve the Company, on the terms and conditions set forth in this Agreement, for the period beginning on the date hereof (the "Effec tive Date") and ending on the fifth anniversary of the Effective Date (together with any extensions made pursuant to this Section 1, the "Employment Period"). Com mencing on the third anniversary of the Effective Date and each subsequent anniver sary thereof (each of such third and subsequent anniversaries, an "Extension Date"), the term of this Agreement shall automatically be extended for one additional year unless, at least three months prior to the applicable Extension Date, the Company or the Executive shall have given notice not to extend this Agreement. 2. POSITION AND DUTIES. (a) During the Employment Period, the Executive shall continue to serve the Company as its Chairman, Chief Executive Officer and President and shall serve Niagara LaSalle as its Chairman and Chief Executive Officer; in each case with such duties and responsibilities as are consistent with past practice and are customarily assigned to such positions, and such other duties and responsibilities not inconsistent therewith as may from time to time be assigned to him by the Board of Directors of the Company (the "Board") or the Board of Directors of Niagara LaSalle, as applicable. (b) During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive shall devote reasonable attention and time during normal business hours to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive under this Agreement, use the Executive's reasonable best efforts to carry out such responsibilities faithfully and efficiently. It shall not be considered a violation of the foregoing for the Executive to pursue his other business interests or to serve on corporate, industry, civic or charitable boards or committees, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities as an employee of the Company in accordance with this Agreement. (c) The Company's headquarters shall be located in New York, New York, and the Executive shall be based primarily in New York, New York (or such other location as may be approved by the Board and the Executive), except for such reasonable travel obligations as do not materially exceed the Executive's present travel obligations. 3. COMPENSATION. (a) BASE SALARY. During the Employment Period, the Company shall pay the Executive a base salary at the annual rate of not less than $480,000, subject to increase by the Board if warranted by the Com pany's growth during such period ("Annual Base Salary"). Annual Base Salary shall be payable in accordance with the Company's regular payroll practice for its senior executives, as in effect from time to time. Any increase in the Annual Base Salary shall not limit or reduce any other obligation of the Company under this Agreement. The Annual Base Salary shall not be reduced after any such increase, and the term "Annual Base Salary" shall thereafter refer to the Annual Base Salary as so in creased. (b) ANNUAL BONUS. With respect to each of the Company's fiscal years occurring during the Employment Period, the Company shall, subject to the immediately following sentence, pay the Executive an annual bonus, in cash (the "Annual Bonus"), equal in amount to 50 % of Annual Base Salary, as in effect on the first day of the Company's fiscal year with respect to which the Annual Bonus is paid (the "Target Bonus"), based upon achievement by the Company of an EBITDA target approved by the Compensation Committee of the Board (the "Committee") for such year, and increasing by 1 % of such Annual Base Salary for each 1% increment in EBITDA in excess of such target. The EBITDA target shall be based on opera tions existing at the time the target is approved, but the target may be amended by the Compensation Committee based upon corporate acquisitions or dispositions, or other relevant factors. The Company shall seek the approval of its shareholders for the Annual Bonus during the Employment Period at its annual shareholders' meeting following the execution of this Agreement, and the Annual Bonus shall be paid only if such approval is obtained. If such approval is not obtained, the Company and the Executive shall negotiate in good faith to structure an alternative incentive compen sation arrangement to fairly compensate the Executive. For purposes of this Agree ment, EBITDA shall mean the Company's earnings before interest, taxes, depreciation and amortization, as determined in accordance with the Company's audited financial statements. (c) STOCK OPTIONS. During the Employment Period, the Executive shall receive annual grants of stock options pursuant to a stock option plan of the Company, in such amount as the Committee may in its discretion determine. (d) SERP. Commencing on the first day of the month following the month in which the Executive's employment with the Company and Niagara LaSalle terminates for any reason, the Executive shall be entitled to receive retirement income in an annual amount equal to the product of (1) the Executive's Final Average Pay, (2) (subject to Section 5(a)(ii)), the number of years, including fractional parts thereof, of the Executive's service with the Company and (3) 2.5 %. Such retirement income shall be paid to the Executive during his lifetime and, upon his death, an amount equal to 50 % of such retirement income shall be paid to his surviving spouse during her lifetime. For purposes of the SERP, Final Average Pay shall mean the average of Executive's combined Annual Base Salary and Annual Bonus for the three consecutive years during the ten years immediately preceding the year in which occurs the Executive's termination of employment during which such average is highest. (e) MEDICAL COVERAGE. The Executive and his spouse and their dependent children shall be entitled to receive health, medical, dental and hospitalization coverage on a basis at least as favorable (on an after-tax basis) as is provided to such persons on the date hereof, such coverage to be provided during the Employment Period and, with respect to the Executive and his surviving spouse, during each of their lifetimes, and, with respect to their dependent children, for such period as coverage is permitted under the terms of the Company's insurance policy as in effect on the date hereof. (f) FRINGE BENEFITS. During the Employment Period, the Executive shall be entitled to receive six weeks' paid vacation each year and paid holidays, each in accordance with past practice; Company automobile, payment of private club membership fees and dues and any other currently provided fringe benefits in accordance with past practice; and individual tax advice and other financial planning services not to exceed in the aggregate an annual amount of $25,000. (g) OTHER BENEFITS. During the Employment Period the Executive shall be entitled to participate in all other employee benefit plans, practices, policies and programs of the Company on a basis at least as favorable as any other executive of the Company. 4. TERMINATION OF EMPLOYMENT. (a) DEATH OR DISABILITY. The Executive's employment shall terminate automatically upon the Executive's death during the Employment Period. The Company shall be entitled to terminate the Executive's employment because of the Executive's Disability during the Employment Period. "Disability" means that (i) the Executive has been unable, for the period specified in the Company's disability plan for senior executives, but not less than a period of 180 consecutive business days, to perform the Executive's duties under this Agreement, as a result of physical or mental illness or injury, and (ii) a physician selected by the Company or its insurers, and reasonably acceptable to the Executive or the Executive's legal representative, has determined that the Executive is disabled within the meaning of the applicable disability plan for senior executives. A termination of the Executive's employment by the Company for Disability shall be communicated to the Executive by written notice, and shall be effective on the 30th day after receipt of such notice by the Executive (the "Disability Effective Date"), unless the Executive returns to full-time performance of the Executive's duties before the Disability Effective Date. (b) TERMINATION BY THE COMPANY. (i) the Company may terminate the Executive's employment during the Employment Period for Cause or without Cause. "Cause" means the conviction of the Executive for the commission of a felony, or willful gross misconduct by the Executive in connection with his employment by the Company, in either case that results in material and demonstrable financial harm to the Company. No act or failure to act on the part of the Executive shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive's action or omission was in the best interests of the Company. Any act or failure to act that is based upon authority given pursuant to a resolution duly adopted by the Board, or the advice of counsel for the Company, shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. In the event of a dispute concerning the application of this provision, no claim by the Company that Cause exists shall be given effect unless the Company establishes to the Board by clear and convincing evidence that Cause exists. (ii) A termination of the Executive's employment for Cause shall be not be effective unless it is accomplished in accordance with the following proce dures. The Company shall give the Executive written notice ("Notice of Termination for Cause") of its intention to terminate the Executive's employment for Cause, setting forth in reasonable detail the specific conduct of the Executive that it considers to constitute Cause and the specific provisions of this Agreement on which it relies, and stating the date, time and place of the Special Board Meeting for Cause. The "Special Board Meeting for Cause" means a meeting of the Board called and held specifically and exclusively for the purpose of considering the Executive's termination for Cause, that takes place not less than twenty nor more than thirty business days after the Executive receives the Notice of Termination for Cause. The Executive shall be given an opportunity, together with counsel, to be heard at the Special Board Meeting for Cause. The Executive's termination for Cause shall be effective when and if a resolution is duly adopted at the Special Board Meeting for Cause by affirmative vote of two-thirds of the entire membership of the Board stating that, in the good faith opinion of the Board, the Executive is guilty of the conduct described in the Notice of Termination for Cause and that such conduct constitutes Cause under this Agreement. (c) GOOD REASON. (i) The Executive may terminate employment for Good Reason or without Good Reason. For purposes of this Agreement, "Good Reason" shall mean any material breach of this Agreement by the Company that is not remedied by the Company promptly after receipt of notice thereof from the Executive. (ii) A termination of employment by the Executive for Good Reason shall be effectuated by giving the Company written notice ("Notice of Termination for Good Reason") of the termination, setting forth in reasonable detail the specific conduct of the Company that constitutes Good Reason and the specific provision(s) of this Agreement on which the Executive relies. A termination of employment by the Executive for Good Reason shall be effective on the fifth business day following the date when the Notice of Termination for Good Reason is given, unless the notice sets forth a later date (which date shall in no event be later than 30 days after the notice is given). (iii) The failure to set forth any fact or circumstance in a Notice of Termination for Good Reason shall not constitute a waiver of the right to assert, and shall not preclude the party giving notice from asserting, such fact or circumstance in an attempt to enforce any right under or provision of this Agreement. (iv) A termination of the Executive's employment by the Executive without Good Reason shall be effected by giving the Company written notice of the termination. (d) DATE OF TERMINATION. The "Date of Termination" means the date of the Executive's death, the Disability Effective Date, the date on which the termination of the Executive's employment by the Company for Cause or without Cause or by the Executive for Good Reason is effective, or the date on which the Executive gives the Company notice of a termination of employment without Good Reason, as the case may be. 5. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a) OTHER THAN FOR CAUSE, DEATH OR DISABILITY, OR FOR GOOD REASON. If, during the Employment Period, the Company terminates the Execu tive's employment for any reason other than Cause, death or Disability, or the Executive terminates employment for Good Reason, the Company shall (i) pay to the Executive, in a lump sum in cash, within five business days after the Date of Termination, (A) an amount equal to the product of (1) the greater of three and the number of years, including fractional parts thereof, remaining until the date on which the Employment Period would have ended had the termination of the Executive's employment hereunder not been terminated (such number, the "Severance Multiple"), and (2) the sum of the Executive's then current Annual Base Salary (without giving effect to reductions thereto) and the average Annual Bonus earned in respect of the three years preceding the Date of Termination or, if greater, the Target Bonus for the year in which occurs the Date of Termination; and (B) the Accrued Obligations (as defined in paragraph (b) of this Section); and (ii) provide additional years of service credit under the SERP equal in number to the Severance Multiple; and (iii) shall continue to provide life insurance benefits to the Executive, for a period of years equal in number to the Severance Multiple, at least equal to those provided to the Executive prior to the events giving rise to the Executive's termination of employment; and (iv) take all actions necessary to cause all of the Executive's outstanding equity awards, to the extent then forfeitable, to immediately and fully vest and, to the extent then not exercisable, to become immediately and fully exercisable, and any posttermination exercise period associated with such awards to commence on the anniversary of the Date of Termination equal in number to the Severance Multiple; and the Company shall have no further obligations under this Agreement, except as specified in Section 6 below. (b) DEATH AND DISABILITY. If the Executive's employment is terminated by reason of the Executive's death or Disability during the Employment Period, the Company shall pay to the Executive or, in the case of the Executive's death, to the Executive's designated beneficiaries (or, if there is no such beneficiary, to the Executive's estate or legal representative), in a lump sum in cash within 30 days after the Date of Termination, the sum of the following amounts (the "Accrued Obligations"): (1) any portion of the Executive's Annual Base Salary through the Date of Termination that has not yet been paid; (2) an amount equal to the product of (A) the Target Bonus that the Executive would have been eligible to earn for the year during which such termination occurs, and (B) a fraction, the numerator of which is the number of days in such year through the Date of Termination, and the denomina tor of which is 365; and (3) all compensation and benefits payable to the Executive under the terms of the Company's compensation and benefit plans, programs or arrangements as in effect immediately prior to the Date of Termination. (c) BY THE COMPANY FOR CAUSE; BY THE EXECUTIVE OTHER THAN FOR GOOD REASON. If the Executive's employment is terminated by the Company for Cause or the Executive voluntarily terminates employ ment, other than for Good Reason, during the Employment Period, the Company shall pay to the Executive in a lump sum in cash within 30 days of the Date of Termination, (1) any portion of the Executive's Annual Base Salary through the Date of Termination that has not been paid; and (2) all compensation and benefits payable to the Executive under the terms of the Company's compensation and benefit plans, programs or arrangements as in effect immediately prior to the Date of Termination. (d) (i) In the event that any payment or benefit received or to be received by the Executive pursuant to the terms of this agreement (the "Contract Payments") or of any other plan, arrangement or agreement of the Company (or any affiliate) ("Other Payments" and, together with the Contract Payments, the "Pay ments") would be subject to the excise tax (the "Excise Tax") imposed by section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") as determined as provided below, the Company shall pay to the Executive, at the time specified in Section 5(d)(ii) below, an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of the Excise Tax on the Payments and any federal, state and local income and employment tax and the Excise Tax upon the Gross-Up Payment, and any interest, penalties or additions to tax payable by the Executive with respect thereto, shall be equal to the total present value (using the applicable federal rate (as defined in section 1274(d) of the Code in such calculation) of the Payments at the time such Payments are to be made. For purposes of determining whether any of the Payments will be subject to the Excise Tax and the amounts of such Excise Tax, (1) the total amount of the Payments shall be treated as "parachute payments" within the meaning of section 280G(b)(2) of the Code, and all "excess parachute payments" within the meaning of section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax, except to the extent that, in the opinion of the Company's independent auditor (the "Auditor"), a Payment (in whole or in part) does not constitute a "parachute payment" within the meaning of section 280G(b)(2) of the Code, or such "excess parachute payments" (in whole or in part) are not subject to the Excise Tax, (2) the amount of the Payments that shall be treated as subject to the Excise Tax shall be equal to the lesser of (A) the total amount of the Payments or (B) the amount of "excess parachute payments" within the meaning of section 280G(b)(1) of the Code (after applying clause (1) hereof), and (3) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rates of taxation applicable to individuals as are in effect in the state and locality of the Executive's residence in the calendar year in which the Gross-Up Payment is to be made, net of the maximum reduction in federal income taxes that can be obtained from deduction of such state and local taxes, taking into account any limitations applicable to individuals subject to federal income tax at the highest marginal rates. (ii) The Gross-Up Payments provided for in Section 5(d)(i) hereof shall be made upon the earlier of (i) ten days following termination of the Executive's employment or (ii) the imposition upon the Executive or payment by the Executive of any Excise Tax. (iii) If it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding or the opinion of the Auditor that the Excise Tax is less than the amount taken into account under Section 5(d)(i) hereof, the Executive shall repay to the Company within thirty (30) days of the Executive's receipt of notice of such final determination or opinion the portion of the Gross-Up Payment attributable to such reduction (plus the portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment tax imposed on the Gross-Up Payment being repaid by the Executive if such repayment results in a reduction in Excise Tax or a federal, state and local income and employment tax deduction) plus any interest received by the Executive on the amount of such repayment. If it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding or the opinion of the Auditor that the Excise Tax exceeds the amount taken into account hereunder (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess within thirty (30) days of the Company's receipt of notice of such final determination or opinion. (iv) In the event of any change in, or further interpretation of, sections 280G or 4999 of the Code and the regulations promulgated thereunder, the Executive shall be entitled, by written notice to the Company, to request an opinion of the Auditor regarding the application of such change to any of the foregoing, and the Company shall use its best efforts to cause such opinion to be rendered as promptly as practicable. All fees and expenses of the Auditor incurred in connection with this agreement shall be borne by the Company. 6. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any plan, program, policy or practice provided by the Company or any of its affiliated compa nies for which the Executive may qualify, nor shall anything in this Agreement limit or otherwise affect such rights as the Executive may have under any contract or agreement with the Company or any of its affiliated companies. Vested benefits and other amounts that the Executive is otherwise entitled to receive under any plan, policy, practice or program of, or any contract of agreement with, the Company or any of its affiliated companies on or after the Date of Termination shall be payable in accordance with the terms of each such plan, policy, practice, program, contract or agreement, as the case may be, except as explicitly modified by this Agreement. 7. FULL SETTLEMENT. The Company's obligation to make the payments provided for in, and otherwise to perform its obligations under, this Agreement shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action that the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced, regardless of whether the Executive obtains other employment. 8. CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential informa tion, knowledge or data relating to the Company or any of its affiliated companies and their respective businesses that the Executive obtains during the Executive's employment by the Company or any of its affiliated companies and that is not public knowledge (other than as a result of the Executive's violation of this Section 8) ("Confidential Information"). The Executive shall not communicate, divulge or disseminate Confidential Information at any time during or after the Executive's employment with the Company, except with the prior written consent of the Company or as otherwise required by law or legal process. 9. ATTORNEYS' FEES. The Company agrees to pay, as incurred, to the fullest extent permitted by law, all legal fees and expenses that the Executive may incur in good faith as a result of any contest (regardless of the outcome) by the Company, the Executive or others of the validity or enforceability of or liability under, or otherwise involving, any provision of this Agreement, together with interest on any delayed payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code. 10. SUCCESSORS; JOINT OBLIGORS. (a) This Agreement is personal to the Executive and, without the prior written consent of the Company, shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. (c) The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would have been required to perform it if no such succession had taken place. As used in this Agreement, "the Company" shall mean both the Company as defined above and any such successor that assumes and agrees to perform this Agreement, by operation of law or otherwise. (d) The Company and Niagara LaSalle shall be jointly and severally liable to the Executive for all obligations hereunder. 11. MISCELLANEOUS. (a) This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified except by a written agreement executed by the parties hereto or their respective successors and legal representatives. (b) All notices and other communications under this Agreement shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: ------------------ ------------------ If to the Company: ------------------ or to such other address as either party furnishes to the other in writing in accordance with this paragraph (b) of Section 11. Notices and communications shall be effective when actually received by the addressee. (c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. If any provision of this Agreement shall be held invalid or unenforce able in part, the remaining portion of such provision, together with all other provi sions of this Agreement, shall remain valid and enforceable and continue in full force and effect to the fullest extent consistent with law. (d) Notwithstanding any other provision of this Agreement, the Company may withhold from amounts payable under this Agreement all federal, state, local and foreign taxes that are required to be withheld by applicable laws or regulations. (e) The Executive's or the Company's failure to insist upon strict compliance with any provisions of, or to assert, any right under, this Agreement (including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to paragraph (c) of Section 4 of this Agreement) shall not be deemed to be a waiver of such provision or right or of any other provision of or right under this Agreement. (f) The Executive and the Company acknowledge that this Agree ment supersedes any other agreement between them concerning the subject matter hereof. (g) The rights and benefits of the Executive under this Agreement may not be anticipated, assigned, alienated or subject to attachment, garnishment, levy, execution or other legal or equitable process except as required by law. Any attempt by the Executive to anticipate, alienate, assign, sell, transfer, pledge, encum ber or charge the same shall be void. Payments hereunder shall not be considered assets of the Executive in the event of insolvency or bankruptcy. (h) This Agreement may be executed in several counterparts, each of which shall be deemed an original, and said counterparts shall constitute but one and the same instrument. IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and the Company and Niagara LaSalle have caused this Agreement to be executed in their names on their behalf, all as of the day and year first above written. NIAGARA CORPORATION By: /s/ Gerald L. Cohn -------------------------------- Name: Gerald L. Cohn Title: Chairman of the Compensation Committee NIAGARA LASALLE CORPORATION By: /s/ Frank Archer --------------------------------- Name: Frank Archer Title: President /s/ Michael J. Scharf ----------------------------------- Michael J. Scharf EX-99.3 4 s513900.txt EXHIBIT 12 Exhibit 12 STOCK PURCHASE AGREEMENT AGREEMENT dated as of June 6, 2001 between Michael J. Scharf (the "Purchaser") and Performance Capital L.P., a limited partnership organized under the laws of the state of New York (the "Seller"). WHEREAS the Seller wishes to sell to the Purchaser and the Purchaser wishes to purchase from the Seller, for the consideration hereinafter provided, an aggregate of 331,100 shares of the Common Stock, par value $ .001 per share (the "Shares") of Niagara Corporation, a Delaware corporation (the "Company"); NOW, THEREFORE, the parties hereto agree as follows: 1. The Seller represents and warrants that: (a) the seller is the record and beneficial owner of the Shares, free and clear of all and any encumbrance whatsoever, (b) the seller has been duly organized, and is validly existing and in good standing under the laws of the State of New York, has all requisite power and authority to execute and deliver this Agreement and to consummate the transactions thereof, and has taken all necessary corporate or other action to authorize the execution, delivery and performance of this Agreement, (c) this Agreement has been dully executed and delivered by the Seller and is a valid and binding agreement of the Seller enforceable against the Seller in accordance with its terms, neither the execution and delivery of this Agreement nor the consummation by the Seller of the transactions contemplated hereof will result in a violation of, or default under, or conflict with, or require any consent approval or notice under, any contract, commitment, trust, agreement, obligation or any other arrangement to which the Seller is a party or by which the Seller is bound or to which the Shares are subject, (d) subject to restrictions on retransfer imposed by the Securities Act of 1933, as amended, and the applicable rules and regulations thereunder (the "Securities Act"), the transfer of the Shares to the Purchaser hereunder will pass good and marketable title to the Shares, free and clear of any claims, charges, liens, proxies, encumbrances and security interests, (e) there are no restrictions on the right of the Seller to vote the Shares, (f) the Seller has not taken any action which will result in the Purchaser being liable for any finder's or broker's fee in connection with the purchase of the Shares, (g) Seller has relied solely on the publicly available information concerning the Company (including the financial statements included in the Company's filings with the Securities and Exchange Commission) in making the determination to enter into this Agreement, and (h) the seller has substantial experience in evaluating and investing in securities in companies similar to the Company so that the Seller is capable of evaluating the merits and risks of the transaction contemplated by this Agreement and has the capacity to protect its own interests, and the Seller has had the opportunity to, whether it chose to do so, to consult with an attorney, accountant or investment advisor of its own choice with respect to the transaction contemplated by this Agreement and its suitability and tax consequences for the Seller. 2. The Purchaser represents and warrants that: (a) the Purchaser has full legal right, power and authority to enter into and perform this Agreement, (b) this Agreement is a valid and binding Agreement of the Purchaser enforceable against the Purchaser in accordance with its terms, and (c) the Purchaser is acquiring the Company Shares for his own account and not with any view to their distribution or transfer to any other person or entity except in accordance with the requirements and provisions of the Securities Act, [and, in the case of a proposed distribution or transfer without registration under the Securities Act, such distribution or transfer will only be consummated after receipt of an opinion of counsel to the Company that such distribution or transfer may be made without such registration.] 3. Subject to the terms and conditions of this Agreement, the Purchaser shall purchase from the Seller, and the Seller shall sell to the Purchaser, the Shares. The purchase price per Share shall be $ 2.50 (the "Purchase Price"). The closing under this Agreement (the "Closing") shall take place at the offices of Performance Capital L.P., simultaneously with the execution of this Agreement, or as soon thereafter as practicable. At the Closing, the Seller shall deliver to the Purchaser (a) certificates, duly endorsed or accompanied by stock powers duly executed in blank with signatures guaranteed by a national bank or trust company or member firm of the New York Stock Exchange and otherwise in form acceptable for transfer on the books of the Company, representing the Shares, and (b) a duly authorized and signed proxy card in a form acceptable by the Company appointing the Purchaser to vote the Shares. The Purchaser shall deliver to the Seller a certified or bank cashier's check, payable in United States currency to the order of the Seller, or a wire transfer of immediately available funds in an amount equal to $827,750. If at any time during the 365 day period following the Closing, the Purchaser shall purchase more than 50,000 Shares of Niagara Corporation from one seller at a price in excess of $ 2.50 per share, Purchaser shall remit to the Seller an additional amount (the "Additional Amount") equal to the product of 331,100 x the excess above $2.50 less (.06 x $ 827,750 x number of days from closing date). ----------------------- 365 This additional amount shall be paid within 10 days of each such purchase. 4. The obligation of the Seller to sell the Shares to the Purchaser at the Closing is subject to fulfillment of the following conditions: (a) the representations and warranties of the Purchaser in paragraph 2 above shall be true when made and at and as of the Closing as though such representations and warranties were made at and as of the Closing; (b) the Purchaser shall have performed and complied with all agreements, obligations and conditions required by this Agreement to be so performed or complied with by the Purchaser at or prior to the Closing; and (c) the Seller shall not be enjoined, or otherwise prohibited by an order of a court of competent jurisdiction, from selling any of the Shares pursuant to this Agreement. 5. The obligation of the Purchaser to purchase the Shares from the Seller at the Closing is subject to the fulfillment of the following conditions: (a) the representations and warranties of Seller in paragraph 1 above shall be true when made and at and as of the Closing as though such representations and warranties were made at and as of the Closing; (b) the Seller shall have performed and complied with all agreements, obligations and conditions required by this Agreement to be so performed or complied with by the Seller at or prior to the Closing; and (c) the Purchaser shall not be enjoined, or otherwise prohibited by an order of a court of competent jurisdiction, from purchasing any of the Shares pursuant to this Agreement. 6. All representations, warranties and agreements made by the Seller and the Purchaser in this Agreement shall survive the Closing. 7. This Agreement will be binding upon, inure to the benefit of, and be enforceable by the respective heirs, executors, beneficiaries, representatives and successors of the parties hereto. 8. All fees and expenses incurred by the Purchaser in connection with this Agreement and the transactions contemplated hereby will be borne by the Purchaser. All fees and expenses incurred by the Seller in connection with this Agreement and the transactions contemplated hereby will be borne by the Seller. 9. This Agreement may be executed in counterparts and each such counterpart shall be deemed to be an original instrument. 10. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without giving effect to the principles of conflicts of laws thereof. This Agreement contains the entire understanding of the parties hereto with respect to its subject matter and supersedes all prior agreements and understandings between the parties with respect to its subject matter. This Agreement may be amended only by a written instrument duly executed by the parties hereto. 11. All notices, claims, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered or mailed (registered or certified mail, postage prepaid, return receipt) as follows: (a) If to the Purchaser, to: Michael J. Scharf 667 Madison Avenue New York, New York 10021 (b) If to the Sellers, to: Mr. Brian Warner Performance Capital L.P. 767 Third Avenue New York, New York 10017 with a copy to: IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. /s/ Michael Scharf ____________________________________ Michael J. Scharf, Purchaser /s/ Brian Warner ____________________________________ Performance Capital L.P. -----END PRIVACY-ENHANCED MESSAGE-----