-----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, Wxg78DNcdSFmwwTcfw252/gICmHGLagsN+7w8/TUGq5eKZ9esBlkYE+G99yi9ZP3 Lw2Wft8M6AmkG6MlMzUnjQ== 0000922435-98-000016.txt : 19980707 0000922435-98-000016.hdr.sgml : 19980707 ACCESSION NUMBER: 0000922435-98-000016 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19980706 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CELADON GROUP INC CENTRAL INDEX KEY: 0000865941 STANDARD INDUSTRIAL CLASSIFICATION: ARRANGEMENT OF TRANSPORTATION OF FREIGHT & CARGO [4731] IRS NUMBER: 133361050 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-45287 FILM NUMBER: 98660435 BUSINESS ADDRESS: STREET 1: ONE CELADON DR CITY: INDIANAPOLIS STATE: IN ZIP: 46236-4207 BUSINESS PHONE: 2129774447 MAIL ADDRESS: STREET 2: ONE CELADON DRIVE CITY: INDIIANAPOLIS STATE: IN ZIP: 46236 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HANSEATIC CORP CENTRAL INDEX KEY: 0000944801 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133273221 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 450 PARK AVENUE STREET 2: SUITE 2302 CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2128323038 MAIL ADDRESS: STREET 1: 450 PARK AVENUE STREET 2: SUITE 2302 CITY: NEW YORK STATE: NY ZIP: 10022 SC 13D/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 3)(1)* ------------------------------- CELADON GROUP, INC. (Name of Issuer) Common Stock, $.033 par value (Title of Class of Securities) 150838 10 0 (CUSIP Number) -------------------------------- Howard Kailes, Esq. Krugman Chapnick & Grimshaw LLP Park 80 West - Plaza Two Saddle Brook, New Jersey 07663 (201) 845-3434 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) ------------------------------- June 23, 1998 (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 Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. ------ Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Section 240.13d.7(b) 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 ("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). - ------------------------- (1) Constitutes Amendment No. 5 to Schedule 13G filed jointly by Hanseatic Corporation, Paul Biddelman and Wolfgang Traber. CUSIP NO. 150838 10 0 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Hanseatic Corporation 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) ----- (b) ----- 3 SEC USE ONLY 4 SOURCE OF FUNDS* Not applicable 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ----- 6 CITIZENSHIP OR PLACE OF ORGANIZATION New York NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: 7 SOLE VOTING POWER 959,353 (see footnote 1) 8 SHARED VOTING POWER (see footnote 2) 9 SOLE DISPOSITIVE POWER 959,353 (see footnote 1) 10 SHARED DISPOSITIVE POWER (see footnote 2) 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 959,353 (see footnotes 1 and 2) 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* (see footnote 2) 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 12.4% (see footnote 3) 14 TYPE OF REPORTING PERSON* CO - ----------------- (1) Includes 12,121 shares issuable upon exercise of outstanding warrants, and excludes the effect of a voting agreement entered into by Laredo Acquisition Corp., Hanseatic Agreement and Stephen Russell. (2) Excludes an aggregate of approximately 1,005,298 shares (the "Russell Shares") beneficially owned by Stephen Russell (including 63,334 shares issuable upon exercise of outstanding options exercisable within 60 days), as reported in the Proxy Statement dated October 17, 1997 of Celadon Group, Inc. The Russell Shares are subject to a stockholders' agreement among Celadon Group, Inc., Hanseatic Corporation and Stephen Russell. (3) Based upon an aggregate of 7,721,989 shares outstanding at June 23, 1998. CUSIP NO. 150838 10 0 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Wolfgang Traber 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) ----- (b) ----- 3 SEC USE ONLY 4 SOURCE OF FUNDS* Not applicable 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ----- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Germany NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: 7 SOLE VOTING POWER -- 8 SHARED VOTING POWER 959,353 (see footnotes 1 and 2) 9 SOLE DISPOSITIVE POWER -- 10 SHARED DISPOSITIVE POWER 959,353 (see footnotes 1 and 2) 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 959,353 (see footnotes 1 and 2) 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* (see footnote 2) 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 12.4% (see footnote 1) 14 TYPE OF REPORTING PERSON* IN - --------------- (1) Represents shares beneficially owned by Hanseatic Corporation; the undersigned holds in excess of a majority of the shares of capital stock of Hanseatic Corporation. (2) Excludes the Russell Shares. (3) Based upon an aggregate of 7,721,989 shares outstanding at June 23, 1998. CUSIP NO. 150838 10 0 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Paul A. Biddelman 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) ----- (b) ----- 3 SEC USE ONLY 4 SOURCE OF FUNDS* Not applicable 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ----- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: 7 SOLE VOTING POWER 28,500 (see footnote 1) 8 SHARED VOTING POWER 959,353 (see footnotes 2 and 3) 9 SOLE DISPOSITIVE POWER 28,500 (see footnote 1) 10 SHARED DISPOSITIVE POWER 959,353 (see footnotes 2 and 3) 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 987,853 (see footnotes 1, 2 and 3) 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* (see footnote 3) 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 12.7% (see footnote 4) 14 TYPE OF REPORTING PERSON* IN - --------------- (1) Represents shares issuable upon exercise of outstanding options exercisable within 60 days. (2) Represents shares beneficially owned by Hanseatic Corporation; the undersigned is the president of Hanseatic Corporation and its designee on the board of directors of Celadon Group, Inc. (3) Excludes the Russell Shares. (4) Based upon an aggregate of 7,721,989 shares outstanding at June 23, 1998. INTRODUCTION Pursuant to Reg. Section 240.13d-2 under the Securities Exchange Act of 1934, as amended, this Amendment No. 3 to Schedule 13D discloses changes in the Statement on Schedule 13D dated July 3, 1996, as amended by Amendment No. 1 thereto dated July 3, 1996 and Amendment No. 2 thereto dated December 31, 1997, filed jointly by Hanseatic Corporation ("Hanseatic"), Wolfgang Traber and Paul A. Biddelman, and therefore does not restate the items therein in their entirety. On June 23, 1998, Celadon Group, Inc. (the "Corporation") entered into an Agreement and Plan of Merger dated such date (the "Merger Agreement") with Laredo Acquisition Corp. ("Laredo"), a wholly-owned subsidiary of Odyssey Investment Partners, pursuant to which Laredo will be merged with and into the Corporation (the "Merger"). Upon the effectiveness of the Merger (the "Effective Time"), the separate corporate existence of Laredo will cease and the Corporation will continue as the surviving corporation (the "Surviving Corporation"). At the Effective Time: (i) the shares of common stock of Laredo issued and outstanding immediately prior to the Effective Time will be automatically converted into and thereafter represent 2,880,000 shares of validly issued, fully-paid and nonassessable shares of common stock, $.033 par value (the "Surviving Common Stock"), of the Surviving Corporation, and (ii) except as hereinafter described, each share of common stock, $.033 par value (the "Common Stock"), of the Corporation issued and outstanding immediately prior to the consummation of the Merger will be converted into the right to receive $20.00 (the "Merger Consideration"). Certain of the Corporation's current stockholders (including Hanseatic) will, in lieu of receiving the Merger Consideration, retain an aggregate of 320,000 shares of Common Stock currently held by them, each of which will, at the Effective Time, be converted into the right to receive one share of Surviving Common Stock (the "Rollover Shares"). The affirmative vote of a majority of the outstanding shares of Common Stock is required to consummate the Merger. As more fully described under Item 6 herein, on June 23, 1998 Hanseatic agreed, pursuant to a Voting Agreement dated such date (the "Voting Agreement") with Laredo and Stephen Russell, to vote in favor of the Merger, and to receive Rollover Shares in lieu of the Merger Consideration with respect to 120,000 shares of Common Stock beneficially owned by Hanseatic. Item 4. Purpose of Transaction. ---------------------- On June 23, 1998, Hanseatic entered into the Voting Agreement, which provides that Hanseatic will vote in favor of the Merger and receive Rollover Shares in lieu of the Merger Consideration with respect to 120,000 shares of Common Stock beneficially owned by Hanseatic. See Item 6 for a description of the Voting Agreement, which information is incorporated by reference to this item. Item 6. Contracts, Arrangements, Understandings or Relation- ships with Respect to Securities of the Issuer. ----------------------------------------------------- The Voting Agreement provides that, until the Merger Agreement is terminated in accordance with its terms (the "Termination Date"), at any meeting of the stockholders of the Corporation, or in connection with any written consent of stockholders of the Corporation, Hanseatic will vote all shares of Common Stock beneficially owned by it: (i) in favor of the Merger and adoption of the Merger Agreement, the execution and delivery by the Corporation of the Merger Agreement and the approval of the terms thereof and in favor of each of the other actions contemplated by the Merger Agreement and the Voting Agreement and any actions required in furtherance thereof; (ii) against any action or agreement that would (or would be reasonably likely to) result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Corporation under the Merger Agreement; and (iii) except as specifically requested in writing by Laredo in advance, against the following actions (other than the Merger and the transactions contemplated by the Merger Agreement): (1) any extraordinary corporate transaction such as a merger, consolidation or other business combination involving the Corporation or any of its subsidiaries, (2) a sale, lease or transfer (whether by merger, consolidation, operation of law or otherwise) of a material amount of assets of the Corporation or any of its subsidiaries or a reorganization, recapitalization, dissolution or liquidation of the Corporation or any of its subsidiaries; (3)(a) any change in the majority of the board of directors of the Corporation; (b) any change in the present capitalization of the Corporation or any amendment of the Corporation's certificate of incorporation or by-laws; (c) any other material change in the Corporation's corporate structure or business; or (d) any other action which is intended, or could reasonably be expected, to impede, interfere with, delay, postpone, discourage or materially adversely affect the Merger or the transactions contemplated by the Merger Agreement, or the Voting Agreement or the contemplated economic benefits of any of the foregoing. Prior to the Termination Date, Hanseatic will not directly or indirectly: (i) except pursuant to the terms of the Merger Agreement and to Laredo pursuant to the Voting Agreement, offer for sale, sell or otherwise dispose of any shares of Common Stock now or subsequently beneficially owned by Hanseatic, or any interest therein, or (ii) except as contemplated by the Voting Agreement, grant any proxies or powers of attorney with respect to any such shares, deposit any such shares into a voting trust or enter into a voting agreement with respect to any such shares. Under the Voting Agreement, Hanseatic has agreed to rollover an aggregate of 120,000 shares of Common Stock and receive Rollover Shares in lieu of the Merger Consideration for such shares. The Voting Agreement also provides that Hanseatic will not exercise any rights-of-first refusal or co-sale rights granted to it by Stephen Russell under the stockholders agreement dated October 8, 1992, as amended July 3, 1996, to the extent inconsistent with the Merger Agreement, the Voting Agreement or the transactions contemplated thereby. Under the terms thereof, either party may terminate the Merger Agreement if closing has not occurred on or before November 30, 1998, or earlier in the circumstances described in the Merger Agreement. Reference is hereby made to the Voting Agreement annexed hereto as Exhibit B, the full text of which is hereby incorporated into this item and qualifies all statements contained herein. Item 7. Materials to be Filed as Exhibits. --------------------------------- Exhibit A - Agreement pursuant to Rule 13d-1(k)(1)(iii) Exhibit B - Voting Agreement dated June 23, 1998 among Laredo Acquisition Corp., Stephen Russell and Hanseatic Corporation SIGNATURE --------- After reasonable inquiry and to the best of our knowledge and belief, we certify that the information set forth in this statement is true, complete and correct. Dated: July 3, 1998 HANSEATIC CORPORATION By s/Paul A. Biddelman ---------------------------- Paul A. Biddelman, President Dated: July 3, 1998 s/Wolfgang Traber ------------------------------ Wolfgang Traber Dated: July 3, 1998 s/Paul A. Biddelman ------------------------------ Paul A. Biddelman INDEX TO EXHIBITS Exhibit A - Agreement pursuant to Rule 13d-1(k)(1)(iii) Exhibit B - Voting Agreement dated June 23, 1998 among Laredo Acquisition Corp., Stephen Russell and Hanseatic Corporation EX-99.A 2 EXHIBIT A Pursuant to Rule 13d-1(k)(1)(iii) promulgated by the Securities and Exchange Commission, the undersigned agree that the statement to which this Exhibit is attached is filed on their behalf in the capacities set out hereinbelow. Dated: July 3, 1998 HANSEATIC CORPORATION By s/Paul A. Biddelman ---------------------------- Paul A. Biddelman, President Dated: July 3, 1998 s/Wolfgang Traber ------------------------------ Wolfgang Traber Dated: July 3, 1998 s/Paul A. Biddelman ------------------------------ Paul A. Biddelman EX-99.B 3 EXHIBIT B VOTING AGREEMENT AGREEMENT dated as of June 23, 1998 by and between LAREDO ACQUISITION CORP., a Delaware corporation ("Acquisition"), and the other parties signatory hereto (each a "Stockholder"). RECITALS A. Concurrently herewith, Acquisition, and Celadon Group, Inc., a Delaware corporation (the "Company"), are entering into an Agreement and Plan of Merger of even date herewith (as such agreement may be amended from time to time, the "Merger Agreement"; capitalized terms used but not defined herein shall have the meanings set forth in the Merger Agreement) pursuant to which (and subject to the terms and conditions specified therein) Acquisition will be merged with and into the Company (the "Merger"). B. As a condition to Acquisition entering into the Merger Agreement, Acquisition requires that each Stockholder enter into, and each such Stockholder hereby agrees to enter into, this Agreement. AGREEMENT To implement the foregoing and in consideration of the mutual agreements contained herein, the parties hereby agree as follows: 1. Representations and Warranties of Stockholders. Each Stockholder hereby severally and not jointly represents and warrants to Acquisition as follows: (a) Ownership of Shares. i. Such Stockholder is the record holder or beneficial owner of the number of shares of Company Common Stock as is set forth opposite such Stockholder's name on Schedule I hereto (such shares shall constitute the "Existing Shares", and together with any shares of Company Common Stock acquired of record or beneficially by such Stockholder in any capacity after the date hereof and prior to the termination hereof, whether upon exercise of options, conversion of convertible securities, purchase, exchange or otherwise, shall constitute the "Shares"). ii. On the date hereof, the Existing Shares set forth opposite such Stockholder's name on Schedule I hereto constitute all of the outstanding shares of Company Common Stock owned of record or beneficially by such Stockholder. Such Stockholder does not have record or beneficial ownership of any Shares not set forth on Schedule I hereto. iii. Such Stockholder has sole power of disposition with respect to all of the Existing Shares set forth opposite such Stockholder's name on Schedule I and sole voting power with respect to the matters set forth in Section 2 hereof and sole power to demand appraisal rights, in each case with respect to all of the Existing Shares set forth opposite such Stockholder's name on Schedule I, with no restrictions on such rights, subject to applicable federal securities laws and the terms of this Agreement. iv. Such Stockholder will have sole power of disposition with respect to Shares other than Existing Shares, if any, which become beneficially owned by such Stockholder and will have sole voting power with respect to the matters set forth in Section 2 hereof and sole power to demand appraisal rights, in each case with respect to all Shares other than Existing Shares, if any, which become beneficially owned by such Stockholder with no restrictions on such rights, subject to applicable federal securities laws and the terms of this Agreement. (b) Organization; Power; Binding Agreement. If such Stockholder is a corporation, such Stockholder is a corporation duly formed, validly existing and in good standing under the laws of its jurisdiction of its organization. If such Stockholder is a corporation, such Stockholder has the necessary corporate power and authority to enter into and perform all of such Stockholder's obligations under this Agreement and has taken all corporate action necessary to execute and deliver this Agreement, to consummate the transactions contemplated hereby and to perform its obligations hereunder, and no other corporate proceedings on the part of such Stockholder are necessary to authorize the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby. If such Stockholder is an individual, such Stockholder has the legal capacity, power and authority to enter into and perform all of such Stockholder's obligations under this Agreement. This Agreement has been duly and validly executed and delivered by such Stockholder and constitutes a valid and binding agreement of such Stockholder, enforceable against such Stockholder in accordance with its terms. If such Stockholder is married and such Stockholder's Shares constitute community property, this Agreement has been duly authorized, executed and delivered by, and constitutes a valid and binding agreement of, such Stockholder's spouse, enforceable against such person in accordance with its terms. (c) No Conflicts. Except for filings under the Hart- Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), if applicable, and any required amendments to any Schedule 13D filed by any such Stockholder, (A) no filing with, and no permit, authorization, consent or approval of, any state or federal public body or authority is necessary for the execution of this Agreement by such Stockholder and the consummation by such Stockholder of the transactions contemplated hereby and (B) neither the execution, delivery or performance of this Agreement by such Stockholder nor the consummation by such Stockholder of the transactions contemplated hereby nor compliance by such Stockholder with any of the provisions hereof shall (x) conflict with or result in any breach of any applicable certificate of incorporation, bylaws, trust, partnership agreement or other agreements or organizational documents applicable to such Stockholder, (y) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any third party right of termination, cancellation, material modification or acceleration) under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, contract, commitment, arrangement, understanding, agreement or other instrument or obligation of any kind to which such Stockholder is a party or by which such Stockholder or any of such Stockholder's properties or assets may be bound or (z) violate any order, writ, injunction, decree, judgment, law, statute, rule or regulation applicable to such Stockholder or any of such Stockholder's properties or assets. (d) No Transfer. Except as described on Schedule II, such Stockholder's Shares and the certificates representing such Shares are now and at all times during the term hereof will be held by such Stockholder, or by a nominee or custodian for the benefit of such Stockholder, free and clear of all liens, claims, security interests, proxies, voting trusts or agreements, understandings or arrangements or any other encumbrances whatsoever, except for any such encumbrances or proxies arising hereunder. (e) No Finders. No broker, investment banker, financial adviser or other person is entitled to any broker's, finder's, financial adviser's or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of such Stockholder in his or her capacity as such. (f) Acknowledgment. Such Stockholder understands and acknowledges that Acquisition is entering into the Merger Agreement in reliance upon such Stockholder's execution and delivery of this Agreement. 2. Agreement To Vote; Proxy. 2.1 Voting. Each Stockholder hereby severally and not jointly agrees that, until the Termination Date (as defined in Section 7 hereof), at any meeting of the stockholders of the Company, however called, or in connection with any written consent of the stockholders of the Company, such Stockholder shall vote (or cause to be voted) the Shares held of record or beneficially by such Stockholder (i) in favor of the Merger and adoption of the Merger Agreement, the execution and delivery by the Company of the Merger Agreement and the approval of the terms thereof and in favor of each of the other actions contemplated by the Merger Agreement and this Agreement and any actions required in furtherance hereof and thereof; (ii) against any action or agreement that would (or would be reasonably likely to) result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement or this Agreement; and (iii) except as specifically requested in writing by Acquisition in advance, against the following actions (other than the Merger and the transactions contemplated by the Merger Agreement): (1) any extraordinary corporate transaction, such as a merger, consolidation or other business combination involving the Company or any of its subsidiaries; (2) a sale, lease or transfer (whether by merger, consolidation, operation of law or otherwise) of a material amount of assets of the Company or any of its subsidiaries or a reorganization, recapitalization, dissolution or liquidation of the Company or any of its subsidiaries; (3) (a) any change in the majority of the board of directors of the Company; (b) any change in the present capitalization of the Company or any amendment of the Company's certificate of incorporation or by-laws; (c) any other material change in the Company's corporate structure or business; or (d) any other action which is intended, or could reasonably be expected, to impede, interfere with, delay, postpone, discourage or materially adversely affect the Merger or the transactions contemplated by the Merger Agreement or this Agreement or the contemplated economic benefits of any of the foregoing. Such Stockholder shall not enter into any agreement or understanding with any person or entity prior to the Termination Date to vote or give instructions after the Termination Date in any manner inconsistent with clauses (i), (ii) or (iii) of the preceding sentence. 2.2 PROXY. EACH STOCKHOLDER HEREBY GRANTS TO, AND APPOINTS, ACQUISITION AND BRIAN KWAIT, PRESIDENT OF ACQUISITION, AND DOUGLAS HITCHNER, VICE PRESIDENT OF ACQUISITION, IN THEIR RESPECTIVE CAPACITIES AS OFFICERS OF ACQUISITION, AND ANY INDIVIDUAL WHO SHALL HEREAFTER SUCCEED TO ANY SUCH OFFICE OF ACQUISITION, AND ANY OTHER DESIGNEE OF ACQUISITION, EACH OF THEM INDIVIDUALLY, SUCH STOCKHOLDER'S IRREVOCABLE (UNTIL THE TERMINATION DATE) PROXY AND ATTORNEY-IN-FACT (WITH FULL POWER OF SUBSTITUTION) TO VOTE THE SHARES AS INDICATED IN SECTION 2.1 ABOVE. EACH STOCKHOLDER INTENDS THIS PROXY TO BE IRREVOCABLE (UNTIL THE TERMINATION DATE) AND COUPLED WITH AN INTEREST AND WILL TAKE SUCH FURTHER ACTION AND EXECUTE SUCH OTHER INSTRUMENTS AS MAY BE NECESSARY TO EFFECTUATE THE INTENT OF THIS PROXY AND HEREBY REVOKES ANY PROXY PREVIOUSLY GRANTED BY SUCH STOCKHOLDER WITH RESPECT TO SUCH STOCKHOLDER'S SHARES. 3. Certain Covenants of Stockholders. Except in accordance with the terms of this Agreement, each Stockholder hereby severally covenants and agrees as follows: 3.1 No Solicitation. Prior to the Termination Date, no Stockholder shall, in its capacity as such, directly or indirectly (including through advisors, agents or other intermediaries), solicit (including by way of furnishing information) or respond to any inquiries or the making of any proposal by any person or entity (other than Acquisition or any Affiliate thereof) with respect to the Company that constitutes or could reasonably be expected to lead to an Acquisition Proposal (as defined in Section 6.4 in the Merger Agreement). If any Stockholder in its capacity as such receives any such inquiry or proposal, then such Stockholder shall promptly inform Acquisition of the terms and conditions, if any, of such inquiry or proposal and the identity of the person making it. Each Stockholder, in its capacity as such, will immediately cease and cause to be terminated any existing activities, discussions or negotiations with any parties conducted heretofore with respect to any of the foregoing. Notwithstanding the foregoing, nothing in this Section 3.1 shall restrict a Stockholder who is also a director of the Company from taking actions in such Stockholder's capacity as a director to the extent and in the circumstances permitted by Section 6.4 of the Merger Agreement. 3.2 Restriction on Transfer, Proxies and Noninterference; Restriction on Withdrawal. Prior to the Termination Date, no Stockholder shall, directly or indirectly: (i) except pursuant to the terms of the Merger Agreement and to Acquisition pursuant to this Agreement, offer for sale, sell, transfer (whether by merger, consolidation, operation of law or otherwise), tender, pledge, encumber, assign or otherwise dispose of, enforce or permit the execution of the provisions of any redemption agreement with the Company or enter into any contract, option or other arrangement or understanding with respect to or consent to the offer for sale, sale, transfer (whether by merger, consolidation, operation of law or otherwise), tender, pledge, encumbrance, assignment or other disposition of, or exercise any discretionary powers to distribute, any or all of such Stockholder's Shares or any interest therein, (ii) except as contemplated by this Agreement, grant any proxies or powers of attorney with respect to any Shares, deposit any Shares into a voting trust or enter into a voting agreement with respect to any Shares; or (iii) take any action that would make any representation or warranty of such Stockholder contained herein untrue or incorrect or have the effect of preventing or disabling such Stockholder from performing such Stockholder's obligations under this Agreement. Acquisition acknowledges the circumstances described on Schedule II which shall not be construed as a breach of this covenant. 3.3 Waiver of Appraisal Rights. Each Stockholder hereby waives any rights of appraisal from the Merger that such Stockholder may have. 3.4 Agreement to Roll-Over. Each Stockholder listed on Schedule A to the Merger Agreement understands and acknowledges that Sub is entering into the Merger Agreement in reliance upon the conversion of their shares into the right to receive the Surviving Corporation Common Stock and agree to such conversion pursuant to Section 3.2 of the Merger Agreement. Each Stockholder hereby agrees to rollover the number of shares of Company Common Stock set forth opposite such Stockholder's name on Schedule A to the Merger Agreement. 3.5 Confidentiality, No Hire. (a) Each Stockholder agrees that for a period ending five years after the Effective Time of the Merger, such Stockholder will not disclose to any other party, unless required to do so by law, any Confidential Information relating to the Company or to any subsidiary or affiliate thereof which information was acquired during the course of such Stockholder's relationship with the Company. As used in this Agreement, the term "Confidential Information" means information that is not generally known or available to the public and that is used, developed or obtained by the Company or its subsidiaries or affiliates in connection with its businesses, including but not limited to, (i) products or services; (ii) fees, costs and pricing structures; (iii) designs; (iv) computer software, including operating systems, applications and program listings; (v) flow charts, manuals and documentation; (vi) data bases; (vii) accounting and business methods; (viii) inventions, devices, new developments, methods and processes, whether patentable or unpatentable and whether or not reduced to practice; (ix) customers or customer requirements, order levels or projections and customer or client lists; (x) other copyrightable works; (xi) all technology and trade secrets; and (xii) all similar and related information in whatever form. Confidential Information will not include any information that has been published in a form generally available to the public prior to the date the Stockholder proposes to disclose or use such information. (b) Each Stockholder agrees that for a period ending two years after the Effective Time of the Merger, without the prior written consent of the Company, neither such Stockholder nor any business or enterprise with which such Stockholder is associated as an officer, director or controlling shareholder or other investor (in each case, with the power to direct or cause the direction of the management of such business or enterprise) will employ or attempt to employ an employee of the Company or any of its Subsidiaries or joint ventures. 3.6 Hanseatic Agreement. Each Stockholder that is a party to that certain Stockholders Agreement dated as of October 8, 1992 and as amended as of July 3, 1996 (the "Stockholders Agreement") by and among the Company, Stephen Russell, and Hanseatic Corporation agrees that, from the date hereof until the date the Merger Agreement is terminated in accordance with its terms, the Stockholders Agreement shall be of no force or effect to the extent that the Stockholders Agreement is inconsistent with this Agreement, the Merger Agreement or the transactions contemplated hereby or thereby and that such Stockholder shall not, and shall not attempt to, either directly or indirectly, exercise any of its rights under the Stockholders Agreement in any manner inconsistent with this Agreement, the Merger Agreement or the transactions contemplated hereby or thereby (it being agreed that, without limitation, the exercise of any rights under Article II of the Stockholders Agreement by any Stockholder in connection with the transactions contemplated by the Merger Agreement would be inconsistent with this Agreement, the Merger Agreement and the transactions contemplated hereby and thereby). Each Stockholder that is party to the Stockholders Agreement further agrees that the Stockholder Agreement shall terminate as of the Closing and to execute such additional documents and agreements to effect the foregoing. Acquisition acknowledges that Hanseatic Corporation's representations and warranties set forth in Sections 1(a)(ii), 1(a)(iii) and 1(a)(iv) shall not be deemed to have been breached as a result of the existence of the Stockholders Agreement. 4. Further Assurances. From time to time, at the other party's request and without further consideration, each party hereto shall execute and deliver such additional documents and take all such further action as may be necessary or desirable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement. 5. Certain Events. Each Stockholder agrees that this Agreement and the obligations thereunder shall attach to such Stockholder's Shares and shall be binding upon any person or entity to which legal or beneficial ownership of such Shares shall pass, whether by operation of law or otherwise, including without limitation such Stockholder's heirs, guardians, administrators or successors or as a result of any divorce. 6. Stop Transfer. Each Stockholder agrees with, and covenants to, Acquisition that such Stockholder shall not request that the Company register the transfer (book-entry or otherwise) of any certificate or uncertificated interest representing any of such Stockholder's Shares, unless such transfer is made in compliance with this Agreement. 7. Termination. The obligations of the Stockholders under this Agreement shall terminate upon the date the Merger Agreement is terminated in accordance with its terms. The termination of this Agreement shall not relieve any party from liability for any breach of this Agreement. 8. Miscellaneous. 8.1 Entire Agreement; Assignment. This Agreement (i) constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof and (ii) shall not be assigned by operation of law or otherwise without the prior written consent of the other parties, provided that Acquisition may assign, in its sole discretion, its rights and obligations hereunder to any affiliate of Acquisition, but no such assignment shall relieve Acquisition of its obligations hereunder if such assignee does not perform such obligations. 8.2 Amendments. This Agreement may not be modified, amended, altered or supplemented, except upon the execution and delivery of a written agreement executed by the parties hereto; provided that Schedule I may be supplemented by Acquisition by adding the name and other relevant information concerning any stockholder of the Company who is or agrees to be bound by the terms of this Agreement without the agreement of any other party hereto, and thereafter such added stockholder shall be treated as a "Stockholder" for all purposes of this Agreement. 8.3 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly received if so given) by hand delivery, telegram, telex or telecopy, or by mail (registered or certified mail, postage prepaid, return receipt requested) or by any courier service, such as Federal Express, providing proof of delivery. All communications hereunder shall be delivered to the Stockholders at the addresses set forth on Schedule I hereto. All communications hereunder shall be delivered to Acquisition as follows: c/o Odyssey Investment Partners, LLC 280 Park Avenue West Tower, 38th Floor New York, New York 10017 Attn: Brian Kwait copy to: Latham & Watkins 885 Third Avenue, Suite 1000 New York, New York 10022 Attn.: Richard Trobman or to such other address as the person to whom notice is given may have previously furnished to the others in writing in the manner set forth above. 8.4 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof. 8.5 Enforcement. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement. 8.6 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but both of which shall constitute one and the same Agreement. 8.7 Descriptive Headings. The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. 8.8 Severability. Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein. 8.9 Definitions; Construction. For purposes of this Agreement: (a) "beneficially own" or "beneficial ownership" with respect to any securities shall mean having "beneficial ownership" of such securities (as determined pursuant to Rule 13d-3 under the Exchange Act), including pursuant to any agreement, arrangement or understanding, whether or not in writing. Without duplicative counting of the same securities by the same holder, securities beneficially owned by a Person shall include securities beneficially owned by all other Persons with whom such Person would constitute a "group" as described in Section 13(d)(3) of the Exchange Act. (b) "Person" shall mean an individual, corporation, partnership, joint venture, association, trust, unincorporated organization or other entity. In the event of a stock dividend or distribution, or any change in the Company Common Stock by reason of any split-up, subdivision, recapitalization, combination, exchange of shares or the like, the term "Shares" shall be deemed to refer to and include the Shares as well as all stock distributed pursuant to such stock dividends and distributions and any shares into which or for which any or all of the Shares may be changed, exchanged, split, subdivided, combined or recapitalized. 8.10 Stockholder Capacity. Notwithstanding anything herein to the contrary, no person executing this Agreement who is, or becomes during the term hereof, a director of the Company makes any agreement or understanding herein in his or her capacity as such director, and the agreements set forth herein shall in no way restrict any director in the exercise of his or her fiduciary duties as a director of the Company. Each Stockholder has executed this Agreement solely in his or her capacity as the record or beneficial holder of such Stockholder's Shares. IN WITNESS WHEREOF, Acquisition and each Stockholder have caused this Agreement to be duly executed as of the day and year first above written. LAREDO ACQUISITION CORP. By: s/Brian Kwait ------------------------------ Name: Brian Kwait ---------------------------- Title: President --------------------------- By: s/Muzzi Mirza ------------------------------ Name: Muzzi Mirza ---------------------------- Title: Vice President --------------------------- STOCKHOLDERS: Stephen Russell s/Stephen Russell --------------------------------- Hanseatic Corporation By: s/Paul A. Biddelman ------------------------------ Name: Paul A. Biddelman ---------------------------- Title: President --------------------------- Schedule I ---------- Name Number of Existing Shares - ---- ------------------------- Stephen Russell 924,804 Hanseatic Corporation 947,232* * Exclusive of 12,121 shares issuable upon exercise of warrants, which for purposes of this Agreement shall be deemed Shares solely in the event of exercise of such warrants. Schedule II Hanseatic Americas LDC and certain clients of Hanseatic Corporation have economic rights with respect to the Shares beneficially owned by Hanseatic Corporation. However, such rights do not impair or limit Hanseatic Corporation's record and beneficial ownership power of disposition, voting power or power to demand appraisal rights with respect to its Shares. -----END PRIVACY-ENHANCED MESSAGE-----