-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, YPL2ieaD+3NjWRoigtcJwYMZBOGWYwH7XVgPoaxlgAFtqU2XWCUAwHeW+7wZ/qw8 l0Z2LarGR3PXFVBI1cD2jA== 0000950130-95-000276.txt : 19950615 0000950130-95-000276.hdr.sgml : 19950615 ACCESSION NUMBER: 0000950130-95-000276 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950214 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARIETTA CORP CENTRAL INDEX KEY: 0000792969 STANDARD INDUSTRIAL CLASSIFICATION: 7389 IRS NUMBER: 161074992 STATE OF INCORPORATION: NY FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14699 FILM NUMBER: 95510318 BUSINESS ADDRESS: STREET 1: 37 HUNTINGTON ST CITY: CORTLAND STATE: NY ZIP: 13045 BUSINESS PHONE: 6077536746 MAIL ADDRESS: STREET 1: 37 HUNTINGTON STREET CITY: CORTLAND STATE: NY ZIP: 13045 10-Q 1 QUARTERLY REPORT FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended December 31, 1994 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 014699 ------------- MARIETTA CORPORATION (Exact name of Registrant as specified in its Charter) New York 16-1074992 _______________________________ ____________________ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 37 Huntington Street, Cortland, New York 13045 ________________________________________ __________ (Address of Principal Executive Offices) (Zip Code) (607) 753-6746 ________________________________________________ (Registrant's Telephone Number, including area code) Not Applicable ________________________________________________ (Former name, former address, and former fiscal year if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ------- ------- As of February 3, 1995 there were outstanding 3,590,858 shares of the registrant's Common Stock, par value $.01 per share. MARIETTA CORPORATION -------------------- FORM 10-Q INDEX ----- PART I. FINANCIAL INFORMATION: Item 1. Financial Statements: Consolidated Statements of Operations Consolidated Balance Sheets Consolidated Statements of Cash Flows Notes to Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION: Item 6. Exhibits and Reports on Form 8-K SIGNATURES PART I. FINANCIAL INFORMATION Item 1. Financial Statements Marietta Corporation Consolidated Statements of Operations (Unaudited)
Three Months Ended December 31, January 1, 1994 1994 ------------ ----------- Net sales $13,108,956 $14,434,428 Cost of sales 9,404,265 10,723,386 ----------- ----------- Gross profit 3,704,691 3,711,042 Selling, general and administrative expenses 3,413,644 3,431,406 ----------- ----------- Operating income 291,047 279,636 Other income, net 47,423 137,473 ----------- ----------- Income before income taxes and cumulative effect of a change in accounting principle 338,470 417,109 Income tax provision 151,459 184,673 ----------- ----------- Income before cumulative effect of a change in accounting principle 187,011 232,436 Cumulative effect of a change in accounting for income taxes - 336,596 ----------- ----------- Net income $ 187,011 $ 569,032 =========== =========== Earnings per share: Earnings before cumulative effect of a change in accounting principle $ .05 $ .07 Cumulative effect of a change in accounting for income taxes - .09 ----------- ----------- Earnings per share $ .05 $ .16 =========== =========== Weighted average number of shares and common share equivalents 3,592,702 3,577,282 =========== ===========
See accompanying notes to condensed, consolidated financial statements. Marietta Corporation Consolidated Balance Sheets
December 31, October 1, Assets 1994 1994 - - - ------ ----------- ----------- (unaudited) Current assets: Cash and cash equivalents $ 5,769,644 $ 7,476,101 Accounts receivable, net 7,973,293 10,074,495 Inventories 14,473,536 11,926,566 Refundable income taxes 550,235 341,735 Other current assets 663,022 770,475 Deferred tax asset 537,215 467,083 ----------- ----------- Total current assets 29,966,945 31,056,455 Property, plant and equipment, net 22,319,770 22,187,484 Restricted cash 2,400,000 2,300,000 Marketable securities 2,079,758 2,219,823 Excess of cost over net assets acquired, net 3,289,433 3,327,901 Other assets 670,136 744,773 ----------- ----------- Total assets $60,726,042 $61,836,436 =========== =========== Liabilities and Shareholders' Equity - - - ------------------------------------ Current liabilities: Accounts payable $ 2,699,501 $ 2,754,613 Accrued payroll 1,069,498 1,512,467 Accrued rebates 298,600 445,226 Accrued expenses 744,768 818,880 Current maturities of long-term debt 374,448 361,894 Income taxes payable 29,229 21,602 ----------- ----------- Total current liabilities 5,216,044 5,914,682 Long-term debt, less current maturities 6,617,344 6,851,034 Convertible subordinated note 274,800 273,720 Deferred tax liability 2,525,838 2,522,406 ----------- ----------- Total liabilities 14,634,026 15,561,842 ----------- ----------- Shareholders' equity: Preferred stock, $0.01 par value, authorized 1,000,000 shares Common stock, $0.01 par value, authorized 10,000,000 shares, issued 4,005,717 shares 40,057 40,057 Additional paid-in capital 36,727,062 36,768,483 Common stock notes receivable (607,500) (607,500) Treasury stock, at cost (3,877,333) (3,923,993) Retained earnings 14,937,940 14,750,930 Equity adjustment from foreign currency translation (962,084) (753,383) Marketable securities valuation allowance (166,126) - ----------- ----------- Total shareholders' equity 46,092,016 46,274,594 ----------- ----------- Total liabilities and shareholders'equity $60,726,042 $61,836,436 =========== ===========
See accompanying notes to condensed, consolidated financial statements. Marietta Corporation Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended December 31, January 1, 1994 1994 ------------- ------------ Cash flows from operating activities: Net income $ 187,011 $ 569,032 Adjustments to reconcile net income to net cash provided by operating activities: Cumulative effect of a change in accounting - (336,596) for income taxes Depreciation and amortization 861,528 889,533 Provision for loss on accounts receivable 58,902 59,334 Provision for inventory obsolescence 160,902 161,334 Deferred compensation - 58,284 Deferred income taxes (66,700) (87,600) Restricted cash (100,000) (100,000) Other assets (4,443) (31,324) Stock bonus 61,040 74,610 Changes in working capital: Accounts receivable 1,987,347 871,315 Inventories (2,734,291) (1,241,555) Other current assets 104,645 162,684 Accounts payable and accrued expenses (704,683) (1,752,691) Income taxes (199,778) (226,149) ----------- ----------- Net cash used in operating activities (388,520) (929,789) ----------- ----------- Cash flows from investing activities: Capital expenditures (938,317) (440,822) Sales (purchases) of marketable securities (26,061) 175,560 ----------- ----------- Net cash used in investing activities (964,378) (265,262) ----------- ----------- Cash flows from financing activities: Payments on long-term debt (221,137) (227,520) Purchase of treasury stock (55,800) - ----------- ----------- Net cash used in financing activities (276,937) (227,520) ----------- ----------- Effect of foreign currency translation (76,622) 5,189 ----------- ----------- Net decrease in cash and cash equivalents (1,706,457) (1,417,382) Cash and cash equivalents, beginning of period 7,476,101 8,844,276 ----------- ----------- Cash and cash equivalents, end of period $ 5,769,644 $ 7,426,894 =========== =========== Supplemental disclosures of cash flow information: Cash paid during the year for: Interest $ 138,493 $ 132,050 Income taxes 421,374 495,171
See accompanying notes to condensed, consolidated financial statements. MARIETTA CORPORATION NOTES TO FINANCIAL STATEMENTS Note 1. Basis of Presentation The statements for the periods ended December 31, 1994 and January 1, 1994 are unaudited. In the opinion of the Company the statements include all adjustments necessary for a fair presentation of the results for the periods. The results of operations for the period ended December 31, 1994 are not necessarily indicative of the results of operations to be expected for the year ending September 30, 1995. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. It is suggested that these financial statements be read in conjunction with the audited financial statements and notes thereto for the year ended October 1, 1994 included in the Company's Annual Report. Note 2. Inventories. Inventories are stated at lower of cost or market. Cost is determined on the first-in, first-out method. Inventories consisted of the following:
December 31, October 1, 1994 1994 ------------ ----------- Raw materials and $ 5,008,378 $ 4,082,839 supplies Finished goods 9,465,158 7,843,727 ----------- ----------- $14,473,536 $11,926,566 =========== ===========
Note 3. Legal Proceedings As previously reported, as a result of an embezzlement of funds by a former financial officer and of other financial irregularities in Marietta's financial statements discovered by the Company during 1991, the Securities and Exchange Commission and the United States Attorney were each conducting independent investigations. The investigation by the United States Attorney is concluded; however, the investigation by the Securities and Exchange Commission is continuing. As previously reported, an action has been commenced by a former owner of Marietta American, Inc. (formerly American Soap Company, Inc.), and by California Soap, Inc. and two of its shareholders. This complaint alleges, among other things, misrepresentations and omissions in connection with the Company's acquisition of Marietta American, Inc., misrepresentations in and omissions from various financial and other statements made by the Company, breaches of contract and other violations of federal and state laws. This action seeks an unspecified amount of damages. No assurance can be given as to the outcome of this action, which could have a material adverse effect on the Company. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations - - - --------------------- Net sales decreased in the quarter ended December 31, 1994 by 9.2% to $13,109,000 from $14,434,000 in the prior year's first quarter. The decrease of $1,325,000 was attributable to a decrease in custom packaging sales of $1,690,000, partially offset by an increase in guest amenity sales of $365,000. Custom packaging sales were affected primarily by delays in receiving customer- supplied materials which in turn caused delays in shipment of finished products by Marietta. For the first quarter of fiscal 1995 the Company's gross profit increased to 28.3% of sales from 25.7% during the same period of fiscal 1994. The increase was attributable to a change in product mix and is consistent with the 28.0% gross profit percentage achieved for all of fiscal year 1994. Selling, general and administrative expenses, as a percentage of sales, increased to 26.0% of sales in the first quarter of fiscal 1995 from 23.8% in the first quarter of fiscal 1994 due mainly to the decrease in sales. In actual dollars, selling, general and administrative expenses for the first quarter of fiscal 1995 were comparable to the first quarter of fiscal 1994. Other income (expense), net represents the netting of interest expense, investment income and other miscellaneous income and expense. For the first quarter of fiscal 1995 interest and other expense was $161,000 compared to $108,000 in the first quarter of fiscal 1994. This increase is due to increases in both interest expense because of slightly higher rates and to increases in miscellaneous expenses. Investment income of $126,000 in the first quarter of fiscal 1995 compares to $134,000 in 1994. Other miscellaneous income, which is primarily profit on the sale of inventory components was approximately $82,000 in 1995 compared to $111,000 in the first quarter of 1994. Marietta's effective tax rate for federal, state and foreign income taxes was 44.7% in the first quarter of fiscal 1995 compared to 44.3% for 1994. Both the 1995 and 1994 tax rates were increased by state and provincial franchise/equity taxes. Liquidity and Capital Resources - - - ------------------------------- The Company's working capital decreased slightly to $24,751,000 at December 31, 1994 from $25,142,000 at October 1, 1994. Cash used by operating activities for 1995 and 1994 was $388,000 and $930,000 respectively. The increase of cash used in investing activities in 1995 as compared to 1994 was caused primarily by an increase in capital expenditures. The Company had a $12,000,000 Revolving Credit Facility, all of which was available as of December 31, 1994. The revolving credit portion of the facility expires in October 1996, and thereafter the outstanding balance is payable in equal quarterly installments over a four year period. Borrowings under the facility bear interest at the prime rate or, if elected by the Company, at an interest rate 1.1% above the LIBOR rate. Management believes that the Company is in sound financial condition as evidenced by its total shareholders' equity of $46,092,000 versus its long-term debt of $7,267,000. Management believes that its current assets plus funds provided by operations and the Company's existing lines of credit and debt capacity are adequate to meet its anticipated capital and short-term needs. Management also believes that inflation has not had a material effect on its business. The Company experienced a decline in its shareholders' equity as a result of a reduction in the Canadian exchange rate from 74.49% to 71.29% and a decline in the value of certain long-term marketable securities. The decline attributable to the reduction in the exchange rate was approximately $209,000, while the decline attributable to the loss in value of marketable securities was approximately $166,000. In fiscal 1995 the Company anticipates making capital expenditures for capital improvements aggregating approximately $6,000,000. To date, during fiscal 1995 the Company has authorized expenditures of approximately $3,600,000. On February 3, 1995 the Company announced that Goldman, Sachs & Co. had been retained to act as its financial advisor. The Company anticipates that during the second quarter of fiscal 1995 it will reverse $309,831 of accrued legal costs. Such accrual represents defense costs incurred by the Company's former chief executive officer who was convicted of violations of the federal securities laws and fraud. The Company is unable to determine the impact upon the Company's financial condition of an adverse determination, if any, in any action, proceeding or investigation arising out of the events discussed in Note 3 of the Notes to Financial Statements. Seasonality - - - ----------- The Company's guest amenity business is subject to some fluctuation in results reflecting the seasonal nature of the travel and lodging industry. As a consequence the revenues from the Company's guest amenity business in its third and fourth fiscal quarters tend to be slightly higher than during the rest of the year. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibit No. ----------- 10.1 Agreement between the Company and Goldman, Sachs & Co. (b) Registrant filed a Form 8-K, dated November 30, 1994, under Item 5, in which Registrant announced that Stephen D. Tannen, who has been a director of the Registrant since 1992, was elected President and Chief Executive Officer of the Registrant. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MARIETTA CORPORATION Dated: February 13, 1995 BY: /s/ Stephen D. Tannen --------------------- Stephen D. Tannen President and Chief Executive Officer BY: /s/ Philip A. Shager -------------------- Philip A. Shager Chief Accounting Officer and Treasurer EX-10.1 2 AGREEMENT BETWEEN THE COMPANY AND GOLDMAN, SACHS & CO. EXHIBIT 10.1 DEJAVU: Raid Defense Fee Letter 6 PERSONAL AND CONFIDENTIAL - - - ------------------------- January 25, 1995 Mr. Stephen D. Tannen Chief Executive Officer and President Marietta Corporation 37 Huntington Street Post Office Box 5250 Cortland, NY 13045 Dear Mr. Tannen: We are pleased to confirm the arrangements under which Goldman, Sachs & Co. ("Goldman Sachs") is exclusively engaged by Marietta Corporation (the "Company") as financial advisor to the Company in reviewing financial alternatives available to the Company with respect to any acquisition proposal which has been or may be made to the Company and with respect to the possible purchase of all or a portion of the stock or assets of the Company, a Recapitalization (as hereinafter defined), a purchase by the Company of securities or assets of other companies or the sale of the Company by way of tender offer, merger or otherwise to any other party. At your request we will also undertake a study to enable us to render our opinion as to the fairness of the financial consideration to be received by stockholders of the Company or the Company, as the case may be, in connection with the sale of the Company. The nature and scope of our investigation as well as the scope, form and substance of our opinion shall be such as we consider appropriate. If requested our opinion will be in written form. Our compensation for the services referred to above will be as follows: (a) A fee of $250,000 in cash payable forthwith, which, to the extent paid, shall be creditable against any transaction fee payable under subparagraph (c) below and, except in the case described in the second sentence of subparagraph (e) below, any transaction fee payable under subparagraph (d) below. (b) If at least 30% of the outstanding stock of the Company is acquired by any person or group, including the Company, in one or a series of transactions by means of a tender offer or merger, private or open market purchases of stock or otherwise, or if all or substantially all of the assets of the Company are transferred, in one or a series of transactions, by way of a sale, distribution or liquidation, the Company shall pay, or cause to be paid, to us an additional fee equal to 3.75% of the aggregate value of all such transactions; it being understood, however, that such aggregate value shall be deemed to include amounts paid by the purchaser or the Company with respect to contingently issuable shares, such as shares issuable pursuant to options, Marietta Corporation January 25, 1995 Page Two warrants and convertible securities. If in excess of 50% of the outstanding stock of the Company is acquired by any person or group, including the Company, such aggregate value shall be determined as if such acquisition were of 100% of the stock of the Company (including all contingently issuable shares). (c) If the Company or any other entity formed or owned in substantial part or controlled by the Company or one or more members of senior management of the Company or any employee benefit plan of the Company or any of its subsidiaries (a "Related Entity") effects a transaction or series of transactions and no fee has become payable or been paid to us with respect to any transaction or transactions pursuant to subparagraph (b) above and (i) at least 30% of the aggregate market value of the Company as of the date of this letter is transferred to the stockholders of the Company through (A) a merger with, purchase of assets by, or other combination with a Related Entity, (B) a reclassification of stock, (C) a purchase of stock, (D) a distribution of cash, securities or other assets (including, without limitation, a distribution of all or a portion of stock in one or more of its subsidiaries), (E) a plan of partial liquidation or (F) any similar transactions or combinations of the foregoing and (ii) the public stockholders of the Company retain an equity interest in the Company or, if the Company does not survive in the transactions described above, in the surviving entity (a "Recapitalization"), the Company shall pay, or cause to be paid, to us an additional fee equal to 3.75% of the aggregate value of the Recapitalizations, defined as the per share value in cash, securities and other assets received by the Company's stockholders (including shares of stock continued to be held by the Company's stockholders) times the number of shares of stock included therein; it being understood that such aggregate value shall be deemed to include amounts paid by the Company or the Related Entity with respect to contingently issuable shares, such as shares issuable pursuant to options, warrants and convertible securities. Marietta Corporation January 25, 1995 Page Three (d) In the event that the Company acquires all or a substantial portion of the securities or assets of another company or sells, distributes or liquidates all or a substantial portion of the assets of the Company, including any pension-related assets, or sells or distributes securities of the Company, whether such distribution is made by dividend or otherwise, and no fee has become payable or been paid to us with respect to any transaction pursuant to subparagraphs (b) and (c) above, the Company shall pay, or cause to be paid, to us a fee based upon the aggregate value of such transaction pursuant to the following schedule: Aggregate Value Aggregate of Transaction Fee -------------- ------- $ 50 million, or less 3.75% 100 million 3.00 200 million 2.00 For a transaction in which the aggregate value is within the range of any two values shown in the above fee schedule, the percentage fee applicable to such transaction will be pro-rated between the fee percentages applicable to such values. In the case of public offerings or private placements of securities of the Company, we will charge customary fees for such services and would expect to negotiate a separate mutually agreeable arrangement with respect thereto, but we will credit against fees payable pursuant to this sentence any amount otherwise paid under this subparagraph (d) in respect of the transaction in connection with which such securities were issued by the Company. (e) In the event no transaction of the type described in subparagraphs (b) or (c) is consummated by January 25, 1996, the Company shall pay, or cause to be paid, to us in cash an additional financial advisory fee of $1,250,000. In the event a transaction fee becomes payable or has been paid to us with respect to a transaction pursuant to subparagraph (d) and such transaction constitutes a combination or merger of equals involving the purchase by the Company of another company of substantially the same size (based on book value of assets and market capitalization) as the Company or involving the sale of the Company to such company, then such transaction fee, to the extent paid, shall be deducted from any additional financial advisory fee that may become payable under the preceding sentence. It is understood that if such transaction fee exceeds such additional financial advisory fee, no such additional financial advisory fee shall be payable hereunder, and no rebate shall be due the Company from us. Any fees payable pursuant to subparagraphs (b), (c) and (d) above shall be paid to us in cash at the consummation of the particular transaction giving rise to such fee. Except as otherwise Marietta Corporation January 25, 1995 Page Four provided, the aggregate value of a transaction shall be the value of the aggregate consideration paid or received by the Company or its stockholders as the case may be. In the case of a sale or purchase of all or substantially all of the assets of the Company, or another entity, aggregate value shall include the net value of any current assets not sold. Amounts paid into escrow and contingent payments in connection with any transaction will be included as part of the aggregate value. Fees on amounts paid into escrow will be payable upon the establishment of such escrow. If the consideration in connection with any transaction may be increased by payments related to future events, the portion of our fee relating to such contingent payments will be calculated and payable if and when such contingent payments are made. Aggregate value also shall include the aggregate amount of dividends or other distributions declared by the Company with respect to its stock after the date hereof, other than normal recurring cash dividends in amounts not materially greater than currently paid. If any portion of the aggregate consideration is paid in the form of securities, the value of such securities, for purposes of calculating the transaction fee, will be determined by the average of the last sales prices for such securities on the five trading days ending five days prior to the consummation of the transaction. If such securities do not have an existing public trading market, the value of the securities shall be the mutually agreed upon fair market value on the day prior to the consummation of the transaction. Anything to the contrary contained herein notwithstanding, the exercise by the shareholders of the Company of their purchase rights under the Company's Shareholders' Rights Plan, and the purchase of securities of the Company in connection therewith, shall not be deemed a transaction of the type contemplated pursuant to subparagraph (b), (c) or (d) above. In the event that the Company becomes the subject of, or is threatened with, a contested proxy or consent solicitation by any party, Goldman Sachs shall act as the Company's exclusive financial advisor with regard to such proxy or consent solicitation. No additional fee shall be paid to us by the Company in connection therewith. You also agree to reimburse us periodically for our reasonable out-of-pocket expenses, including the fees and disbursements of our attorneys, plus any sales, use or similar taxes (including additions to such taxes, if any) arising in connection with any matter referred to in this letter. In order to coordinate most effectively our efforts together during the period of our engagement hereunder, neither the Company nor its management will initiate any discussions looking toward any transaction as contemplated hereby, except through Goldman Sachs. In the event the Company or its management receives an inquiry concerning any such transaction, they will promptly inform Goldman Sachs of such inquiry in order that we can assess such inquiry and assist the Company in any resulting negotiations. Marietta Corporation January 25, 1995 Page Five In connection with engagements such as this, it is our firm policy to receive indemnification. The Company agrees to the provisions with respect to our indemnity and other matters set forth in Annex A which is incorporated by reference into this letter. Our services may be terminated by you or us at any time with or without cause effective upon receipt of written notice to that effect. We will be entitled to the fees set forth above if at any time prior to the expiration of one year after such termination a transaction of the type contemplated by subparagraph (b), (c) or (d) is consummated and, in the case of a transaction contemplated by subparagraph (b) or (d), there was contact with the acquiring party, or any affiliate thereof, regarding such a transaction during the period of our engagement; provided, however, in the event Goldman Sachs terminates this authorization without cause, the provisions of this sentence shall not apply. Furthermore, in the event Goldman Sachs receives a financial advisory fee pursuant to subparagraph (e) above, such fee and the fee payable under subparagraph (a) (in the case of a transaction of the type contemplated by subparagraph (c) or a transaction under subparagraph (d) except in the case described in the second sentence of subparagraph (d)) shall be credited to any fee due under the preceding sentence. Please note that any written or oral opinion or advice provided by Goldman Sachs in connection with our engagement is exclusively for the information of the Board of Directors and senior management of the Company and may not be disclosed to any third party or circulated or referred to publicly without our prior written consent. As you know, Goldman Sachs is a full service securities firm and as such may from time to time effect transactions, for its own account or the account of customers, and hold positions in securities or options on securities of the Company and other companies which may be the subject of the engagement contemplated by this letter. Please confirm that the foregoing is in accordance with your understanding by signing and returning to us the enclosed copy of this letter, which shall become a binding agreement upon our receipt. Very truly yours, Confirmed: GOLDMAN, SACHS & CO. MARIETTA CORPORATION By: ____________________________ Date: ____________________________ DEJAVU: List Annex A Name of Client: Marietta Corporation Date: January 25, 1995 Annex A ------- In the event that Goldman Sachs becomes involved in any capacity in any action, proceeding or investigation brought by or against any person, including stockholders of the Company, in connection with or as a result of either our engagement or any matter referred to in this letter, the Company periodically will reimburse Goldman Sachs for its legal and other expenses (including the cost of any investigation and preparation) incurred in connection therewith. The Company also will indemnify and hold Goldman Sachs harmless against any and all losses, claims, damages or liabilities to any such person in connection with or as a result of either our engagement or any matter referred to in this letter, except to the extent that any such loss, claim, damage or liability results from the gross negligence or bad faith of Goldman Sachs in performing the services that are the subject of this letter. If for any reason the foregoing indemnification is unavailable to Goldman Sachs or insufficient to hold it harmless, then the Company shall contribute to the amount paid or payable by Goldman Sachs as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative economic interests of the Company and its stockholders on the one hand and Goldman Sachs on the other hand in the matters contemplated by this letter as well as the relative fault of the Company and Goldman Sachs with respect to such loss, claim, damage or liability and any other relevant equitable considerations. The reimbursement, indemnity and contribution obligations of the Company under this paragraph shall be in addition to any liability which the Company may otherwise have, shall extend upon the same terms and conditions to any affiliate of Goldman Sachs and the partners, directors, agents, employees and controlling persons (if any), as the case may be, of Goldman Sachs and any such affiliate, and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company, Goldman Sachs, any such affiliate and any such person. The Company also agrees that neither Goldman Sachs nor any of such affiliates, partners, directors, agents, employees or controlling persons shall have any liability to the Company or any person asserting claims on behalf of or in right of the Company in connection with or as a result of either our engagement or any matter referred to in this letter except to the extent that any losses, claims, damages, liabilities or expenses incurred by the Company result from the gross negligence or bad faith of Goldman Sachs in performing the services that are the subject of this letter. The provisions of this Annex A shall survive any termination or completion of the engagement provided by this letter agreement and this letter agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of laws. -----END PRIVACY-ENHANCED MESSAGE-----