UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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)
Under the Securities Exchange Act of 1934
European Micro Holdings, Inc.
(NAME OF ISSUER)
Common Stock
(TITLE OF CLASS OF SECURITIES)
298786104
(CUSIP NUMBER)
John B. Gallagher
6073 N.W. 167th Street, Unit C-25
Miami, Florida 33015
(305) 825-2458
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS)
Copy To:
Clayton E. Parker, Esq.
Kirkpatrick & Lockhart LLP
201 S. Biscayne Boulevard, Suite 2000
Miami, Florida 33131
(305) 539-3300
April 6, 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 which 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 [ ].
<PAGE>
SCHEDULE 13D
298786104
(CUSIP NUMBER)
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1 NAME OF REPORTING PERSONS
JOHN B. GALLAGHER
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ X ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
PF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) ( )
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
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NUMBER 7 SOLE VOTING POWER
OF
SHARES 1,900,000 SHARES OF COMMON STOCK
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
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8 SHARED VOTING POWER
-0- SHARES OF COMMON STOCK
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9 SOLE DISPOSITIVE POWER
1,900,000 SHARES OF COMMON STOCK
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10 SHARED DISPOSITIVE POWER
-0- SHARES OF COMMON STOCK
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,900,000 SHARES OF COMMON STOCK
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
( )
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
47.5%
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14 TYPE OF REPORTING PERSON
IN
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<PAGE>
SCHEDULE 13D
298786104
(CUSIP NUMBER)
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1 NAME OF REPORTING PERSONS
HARRY D. SHIELDS
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ X ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
PF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) ( )
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
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NUMBER 7 SOLE VOTING POWER
OF
SHARES 1,602,696 SHARES OF COMMON STOCK
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
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8 SHARED VOTING POWER
-0- SHARES OF COMMON STOCK
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9 SOLE DISPOSITIVE POWER
1,602,696 SHARES OF COMMON STOCK
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10 SHARED DISPOSITIVE POWER
-0- SHARES OF COMMON STOCK
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,602,696 SHARES OF COMMON STOCK
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
( )
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
40.0%
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14 TYPE OF REPORTING PERSON
IN
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<PAGE>
SCHEDULE 13D
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1 NAME OF REPORTING PERSONS
STUART S. SOUTHARD AND ROBERT H. TRUE, TRUSTEES
OF THE HENRY DANIEL SHIELDS 1997 IRREVOCABLE EDUCATIONAL TRUST
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ X ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) ( )
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
TENNESSEE
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NUMBER 7 SOLE VOTING POWER
OF
SHARES 397,304 SHARES OF COMMON STOCK
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
- --------------------------------------------------------------------------------
8 SHARED VOTING POWER
-0- SHARES OF COMMON STOCK
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9 SOLE DISPOSITIVE POWER
397,304 SHARES OF COMMON STOCK
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10 SHARED DISPOSITIVE POWER
-0- SHARES OF COMMON STOCK
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
397,304 SHARES OF COMMON STOCK
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
( )
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.0%
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14 TYPE OF REPORTING PERSON
OO
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<PAGE>
ITEM 1. SECURITY AND ISSUER.
This statement relates to shares of common stock, par value $0.01 per
share (the "Shares"), of European Micro Holdings, Inc., a Nevada corporation
(the "Company" and the "Issuer"). The principal address of the Company is 6073
N.W. 167th Street, Unit C-25, Miami, Florida 33015.
ITEM 2. IDENTITY AND BACKGROUND.
(a) - (c), (f). This statement is being filed by: (i) John B. Gallagher
("Mr. Gallagher"); (ii) Harry D. Shields ("Mr. Shields"); and (iii) Stuart S.
Southard and Robert H. True, Trustees of the Henry Daniel Shields 1997
Irrevocable Educational Trust, a Tennessee entity (the "Trust"). Mr. Gallagher,
Mr. Shields and the Trust are sometimes collectively referred to herein as the
"Reporting Persons."
Mr. Gallagher and Mr. Shields are co-founders and presently serve as
Co-Chairmen, Co-President and Directors of European Micro Holdings, Inc., an
independent distributor of personal computers and related products. The
principal business address of Mr. Gallagher is 6073 N.W. 167th Street, Unit
C-25, Miami, Florida 33015. The principal business address of Mr. Shields is 808
Third Avenue South, Nashville, Tennessee 37210. Mr. Gallagher and Mr. Shields
are citizens of the United States of America. The Trust was organized to hold
investments for the benefit of the children of Henry D. Shields. Mr. Shields
specifically disclaims the beneficial interest in and to the Shares held by the
Trust. The business address of the Trust is 808 Third Avenue South, Nashville,
Tennessee 37210.
(d) and (e). During the last five years, none of the Reporting Persons
have been (i) convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is the subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violations with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Mr. Gallagher and Mr. Shields are both founders, officers and directors
of the Company and acquired the Shares through an investment of personal funds.
As of the close of business on April 6, 1998, the Reporting Persons held in the
aggregate 3,900,000 Shares, of which (i) 1,900,000 were held by Mr. Gallagher,
(ii) 1,602,696 were held by Mr. Shields and (iii) 397,304 were held by the
Trust.
Mr. Gallagher purchased his Shares for an aggregate purchase price of
$798,000, all of which was provided by Mr. Gallagher's personal funds.
Mr. Shields purchased his Shares for an aggregate purchase price of
$673,132, all of which was provided by Mr. Shields' personal funds.
The Trust acquired its Shares through an irrevocable gift from Mr.
Shields. The Trust was created for the benefit of Mr. Shields' children. Mr.
Shields originally purchased the Shares which were gifted to the Trust for an
aggregate purchase price of $166,868, all of which was provided by Mr. Shields'
personal funds.
5
<PAGE>
ITEM 4. PURPOSE OF TRANSACTION.
Mr. Gallagher and Mr. Shields acquired their Shares as founders of the
Company. The Trust acquired its Shares in a gift from Mr. Shields. The Trust
holds the Shares for the benefit of Mr. Shields' children. The ownership of the
Shares by the Reporting Persons became a reportable event under the Securities
Exchange Act of 1934, as amended, on April 6, 1998, the effective date of the
Company's (i) Registration Statement on Form 8-A and (ii) Registration Statement
on Form S-1 (No. 333-44393) (collectively, the "Registration Statement"). The
Shares registered pursuant to the Registration Statement will be sold pursuant
to a "best efforts" initial public offering (the "Offering"). The information
set forth herein is based on the ownership of Shares prior to the sale of Shares
in the Offering.
(a) Each of Mr. Gallagher and Mr. Shields together intend to sell up to
100,000 Shares at $10.00 per share in the Offering.
(e) The Company intends to sell up to 1,000,000 Shares at $10.00 per
share in the Offering. The Company expects the net proceeds of the Offering to
be approximately $8,400,000 after deducting expenses related to the Offering.
Except as set forth above, the Reporting Persons have no present plans
or intentions which would result in or relate to any transactions described in
subparagraphs (a) through (j) of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a)-(b) As of the close of business on April 6, 1998, Mr. Gallagher
directly owned 1,900,000 Shares, Mr. Shields directly owned 1,602,696 Shares and
the Trust directly owned 397,304 Shares, which represents approximately 47.5%,
40.0% and 10.0%, respectively, of the 4,000,000 Shares outstanding as of the
close of business on April 6, 1998. The information reported in this Schedule
13D does not give effect to the sale of any Shares in the Offering. Each of Mr.
Gallagher and Mr. Shields has the sole power to vote or direct the vote, and to
dispose or to direct the disposition of the Shares which he directly owns.
Messrs. Southard and True, Trustees of the Trust, have the sole power to vote or
direct the vote, and to dispose or to direct the disposition of the Shares of
the Trust.
Except as set forth in this Item 5(a)-(b), each of the persons named in
this Item 5(a)-(b) disclaims beneficial ownership of any Shares owned
beneficially or of record by any other person named in this Item 5(a)-(b).
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACT, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
All the Shares held by Mr. Gallagher and Mr. Shields are held in an
individual capacity. All the Shares held by the Trust are held for the benefit
of the children of Mr. Shields. Such Shares are subject to a Trusteed
6
<PAGE>
Shareholders Cross-Purchase Agreement dated January 31, 1998. (the "Shareholders
Agreement"). A copy of the form of Shareholders Agreement is attached as Exhibit
1 and is incorporated by reference herein.
The terms of the Shareholders Agreement provide that Mr. Gallagher and
Mr. Shields shall vote in concert on all matters submitted to a vote of
shareholders of the Company, including the election of directors. In the event
Mr. Gallagher and Mr. Shields cannot agree on how to vote such Shares, neither
Mr. Gallagher nor Mr. Shields shall vote his Shares. The Shareholders Agreement
also provides that the Trust shall vote its shares in concert with the Gallagher
Irrevocable Trust (a non-reporting party). In the event the Trust and the
Gallagher Irrevocable Trust cannot agree on how to vote Shares, neither the
Trust nor the Gallagher Irrevocable Trust shall vote its Shares. Certain
provisions also exist for the purchase of Shares by Mr. Gallagher upon the death
of Mr. Shields and vice versa.
The discussion of the terms of the Shareholders Agreement contained in
Item 6 is only a brief summary and is qualified in its entirety by reference to
the Shareholders Agreement contained in Exhibit 1. Additionally, the
Registration Statement on Form S-1 contains a description of the shareholders
and the Shareholders Agreement on pages 42 and 54, respectively.
Except as set forth herein, none of the parties have contracts,
arrangements, understandings or relationships (legal or otherwise) with any
person with respect to any securities of the Company, including, without
limitation, any contracts, arrangements, understandings or relationships
concerning the transfer or voting of such securities, finders fees, joint
ventures, loan or option arrangements, puts or calls, guarantees of profits,
division of profits and losses or the giving or withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 Form of Trusteed Shareholders Cross-Purchase Agreement dated
January 31, 1998
7
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of each of the undersigned's
knowledge and belief, each certifies that the information set forth in this
statement is true, complete and correct.
Dated: April 6, 1998
JOHN B. GALLAGHER
By: /s/ John B. Gallagher
-------------------------------------
HARRY D. SHIELDS
By: /s/ Harry D. Shields
-------------------------------------
HENRY DANIEL SHIELDS 1997
IRREVOCABLE EDUCATIONAL TRUST
By: /s/ Stuart S. Southard
-------------------------------------
Name: Stuart S. Southard
Its: Co-Trustee
By: /s/ Robert H. True
-------------------------------------
Name: Robert H. True
Its: Co-Trustee
8
<PAGE>
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f) promulgated under the Securities
Exchange Act of 1934, as amended, the undersigned hereby agree to the joint
filing with all other Reporting Persons (as such term is defined in the Schedule
13D referred to below) on behalf of each of them of a statement on Schedule 13D
(including amendments thereto) with respect to the common stock, par value $0.01
per share, of European Micro Holdings, Inc., a Nevada corporation, and that this
Agreement may be included as an Exhibit to such joint filing. This Agreement may
be executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned hereby execute this Agreement as of
the 6th day of April, 1998.
JOHN B. GALLAGHER
By: /s/ John B. Gallagher
-------------------------------------
HARRY D. SHIELDS
By: /s/ Harry D. Shields
-------------------------------------
HENRY DANIEL SHIELDS 1997
IRREVOCABLE EDUCATIONAL TRUST
By: /s/ Stuart S. Southard
-------------------------------------
Name: Stuart S. Southard
Its: Co-Trustee
By: /s/ Robert H. True
-------------------------------------
Name: Robert H. True
Its: Co-Trustee
<PAGE>
EXHIBIT 1
FORM OF
TRUSTEED SHAREHOLDERS CROSS-PURCHASE AGREEMENT
THIS TRUSTEED SHAREHOLDER CROSS PURCHASE AGREEMENT is made this 31st
day of January, 1998, by and among JOHN B. GALLAGHER, HARRY D. SHIELDS, (each
being a "Shareholder" and collectively the "Shareholders"), GALLAGHER FAMILY
TRUST ("Gallagher Trust"), HENRY DANIEL SHIELDS 1997 IRREVOCABLE EDUCATIONAL
TRUST ("Shields Trust") (each of the Trusts are collectively referred to as the
"Trusts"), EUROPEAN MICRO HOLDINGS, INC., a Nevada corporation (the "Company")
and SUNTRUST BANK, NASHVILLE, N. A. As Trustee (the "Trustee") with its
principal place of business at 424 Church Street, Nashville, Tennessee 37219.
(the "Agreement").
WHEREAS, the Shareholders are presently active in the management of the
Company and own the following interests in it:
Shareholder Name Number of Shares Percentage of Total Shares
---------------- ---------------- --------------------------
John B. Gallagher 1,900,000 47.5%
Harry D. Shields 1,602,696 40.1%
Gallagher Trust 100,000 2.5%
Shields Trust 397,304 9.9%
WHEREAS, the Shareholders and the Trusts believe it to be in their best
interests and in the best interest of the Company to provide for continuity and
harmony in management, and,
WHEREAS, it is in the Shareholders and the Trusts best interests to
vote any and all beneficially held common shares of the Company (the "Shares")
in concert, to provide for restrictions on the sale of Shares, to provide for
the purchasing of certain of the shares of a deceased Shareholder, and to
provide funds necessary for the purchase of such Shares.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the receipt and sufficiency of which is acknowledged, the
parties agree as follows:
1. AGREEMENT. The Shareholders, Trusts, Company and Trustee agree to be
bound and to comply with all the terms and conditions of this Agreement as set
forth herein.
2. DEPOSIT OF SHARE CERTIFICATES WITH THE TRUSTEE. Upon the execution
of this Agreement, each of the Shareholders and the Trusts shall deposit with
the Trustee, all certificates representing Shares of the Company owned by them.
In addition, each of the Shareholders shall execute stock powers in blank with
respect to all Shares of the Company owned by each Shareholder and deliver such
stock powers to the Trustee.
<PAGE>
3. RESTRICTION ON ENCUMBRANCE. No Shareholder or Trust shall encumber
or pledge his or its Shares of the Company without the prior written consent of
all the Shareholders.
4. VOTING OF SHARES.
(a) VOTING OF SHARES BY THE SHAREHOLDERS. Each Shareholder agrees
to vote his Shares in concert on all matters submitted to a vote of shareholders
of the Company, specifically including without limitation the election of all
directors, so as to maintain continuity in the management of the Company for the
duration of this Agreement. In the event that either Shareholder cannot agree to
vote his Shares in concert with the other Shareholder, neither Shareholder shall
vote his Shares.
(b) VOTING OF SHARES BY THE TRUSTS. Each Trust agrees to vote its
Shares in concert on all matters submitted to a vote of the shareholders of the
Company, specifically including without limitation the election of all
directors, so as to maintain continuity in the management of the Company for the
duration of this Agreement. In the event that either Trust cannot agree to vote
its Shares in concert with the other Trust, neither Trust shall vote its Shares.
5. RESTRICTIONS ON SALE. No Shareholder or Trust shall sell, transfer,
or assign his or its Shares of the Company to any person, firm or corporation
without first receiving the written consent of the other Shareholder or
Shareholders, as the case may be, unless the Shareholder or Trust desiring to
make the sale, transfer, or assignment (hereinafter referred to as the "Seller")
shall have first complied with the Offer to Sell provisions as hereinafter
described and such Offer to Sell shall not have been accepted. Any attempt to
sell, transfer, or assign Shares in contravention of the terms of this Agreement
shall be void and of no force or effect.
(a) OFFER TO SELL. The term "Offer to Sell" means a bona fide,
written offer to sell, transfer or assign Shares owned by a Shareholder or
Trust. The written offer shall state all pertinent details regarding the
proposed sale, transfer or assignment including the price and terms, shall
identify the prospective purchaser, transferee or assignee desiring to obtain an
interest in the Shares, and shall state the number of Shares involved.
(b) NOTICE TO COMPANY, SHAREHOLDERS AND TRUSTS. A copy of the Offer
to Sell shall be given to the Company, other Shareholder(s) and Trusts, and to
the Trustee.
(c) VOLUNTARY TRANSFER OF SHAREHOLDER SHARES.
(i) GALLAGHER SALE OF SHARES. In the event that John B.
Gallagher receives an Offer to Sell Shares owned by him, then such Shares shall
be first offered to Harry D. Shields. Within thirty (30) days after receipt of
such Offer to sell, Harry D. Shields may at his option elect to purchase all of
the Shares proposed to be sold as set forth in the Offer to Sell and shall
exercise his option to purchase by giving written notice to John B. Gallagher
and the Trustee. The notice shall specify a date for the closing of the purchase
and shall not be more than sixty (60) days after the date of giving such notice.
Payment terms shall be in accordance with paragraph (e). If John B. Gallagher's
Offer to Sell is not accepted by Harry D. Shields, John B. Gallagher may make a
bona fide sale, transfer or assignment as provided in the Offer to Sell. If John
B. Gallagher shall fail to make such sale, transfer or assignment within thirty
(30) days following the expiration of the time provided above for the election
2
<PAGE>
of Harry D. Shields, such Shares shall again become subject to all the
restrictions of this Agreement.
(ii) SHIELDS SALE OF SHARES. In the event that Harry D. Shields
receives an Offer to Sell Shares owned by him, then such Shares shall be first
offered to John B. Gallagher. Within thirty (30) days after receipt of such
Offer to sell, John B. Gallagher may at his option elect to purchase all of the
Shares proposed to be sold as set forth in the Offer to Sell and shall exercise
his option to purchase by giving written notice to Harry D. Shields and the
Trustee. The notice shall specify a date for the closing of the purchase which
shall not be more than sixty (60) days after the date of giving such notice.
Payment terms shall be in accordance with paragraph (e). If Harry D. Shields's
Offer to Sell is not accepted by John B. Gallagher, Harry D. Shields may make a
bona fide sale, transfer or assignment as provided in the Offer to Sell. If
Harry D. Shields shall fail to make such sale, transfer or assignment within
thirty (30) days following the expiration of the time provided above for the
election of John B. Gallagher, such Shares shall again become subject to all the
restrictions of this Agreement.
(d) TRANSFER OF TRUST SHARES.
(i) SHARES HELD BY THE GALLAGHER TRUST.
(1) GALLAGHER OPTION TO PURCHASE THE GALLAGHER TRUST
SHARES. In the event that the Gallagher Trust receives an Offer to Sell Shares
owned by it, then such Shares shall be first offered to John B. Gallagher.
Within thirty (30) days after receipt of such Offer to sell, John B. Gallagher
may at his option elect to purchase all of the Shares proposed to be sold as set
forth in the Offer to Sell. John B. Gallagher shall exercise his option to
purchase by giving written notice to the Gallagher Trust and the Trustee. The
notice shall specify a date for the closing of the purchase which shall not be
more than sixty (60) days after the date of giving such notice.
(2) SHIELDS OPTION TO PURCHASE THE GALLAGHER TRUST SHARES.
In the event John B. Gallagher declines to exercise his option to purchase the
Shares of the Gallagher Trust which are subject to the Offer to Sell, then the
Gallagher Trust shall offer such Shares to Harry D. Shields for the same
purchase price as set forth in the Offer to Sell. Within thirty (30) days after
the receipt of such Offer to Sell, Harry D. Shields may at his option elect to
purchase all of the Shares proposed to be sold in the Offer to Sell. Harry D.
Shields shall exercise his option to purchase by giving written notice to the
Gallagher Trust and the Trustee. The notice shall specify a date for the closing
of the purchase which shall not be more than sixty (60) days after the date of
giving such notice.
(3) BONA FIDE SALE, TRANSFER OR ASSIGNMENT. If the Offer to
Sell is neither accepted by John B. Gallagher nor Harry D. Shields, the
Gallagher Trust may make a bona fide sale, transfer or assignment as provided in
the Offer to Sell provided, however, if the Gallagher Trust shall fail to make
such sale, transfer or assignment within thirty (30) days following the
expiration of the time provided above for the election by Harry D. Shields, all
such Shares shall again become subject to all of the restrictions of this
Agreement.
3
<PAGE>
(ii) SHARES HELD BY THE SHIELDS TRUST.
(1) SHIELDS OPTION TO PURCHASE THE SHIELDS TRUST SHARES. In
the event that the Shields Trust receives an Offer to sell any Shares owned by
it, then such Shares shall be first offered to Harry D. Shields. Within thirty
(30) days after receipt of such Offer to sell, Harry D. Shields may at his
option elect to purchase all of the Shares proposed to be sold as set forth in
the Offer to Sell. Harry D. Shields shall exercise his option to purchase by
giving written notice to the Shields Trust and the Trustee. The notice shall
specify a date for the closing of the purchase which shall not be more than
sixty (60) days after the date of giving such notice.
(2) GALLAGHER OPTION TO PURCHASE THE SHIELDS TRUST SHARES.
In the event Harry D. Shields declines to exercise his option to purchase the
Shares of the Shields Trust which are subject to the Offer to Sell, then the
Shields Trust shall offer such Shares to John B. Gallagher for the same purchase
price as set forth in the Offer to Sell. Within thirty (30) days after the
receipt of such Offer to Sell, John B. Gallagher may at his option elect to
purchase all of the Shares proposed to be sold in the Offer to Sell. John B.
Gallagher shall exercise his option to purchase by giving written notice to the
Shields Trust and the Trustee. The notice shall specify a date for the closing
of the purchase which shall not be more than sixty (60) days after the date of
giving such notice.
(3) BONA FIDE SALE, TRANSFER OR ASSIGNMENT. If the Offer to
Sell is neither accepted by Harry D. Shields nor John B. Gallagher, the Shields
Trust may make a bona fide sales transfer or assignment as provided in the Offer
to Sell provided, however, if the Shields Trust shall fail to make such sale,
transfer or assignment within thirty (30) days following the expiration of the
time provided above for the election by John B. Gallagher, all such Shares shall
again become subject to all of the restrictions of this Agreement.
(e) CLOSING OF PURCHASE. If any Shareholder elects to purchase
Shares under the provisions of paragraphs (a)-(d), then the closing of the
purchase shall take place within sixty (60) days after acceptance of the Offer
to Sell at the principal office of the Company (or at such other location agreed
to by the Shareholders) and the purchase price shall be paid by the payment of
twenty percent (20%) in cash at closing and by delivery of a promissory note for
the balance payable in twelve (12) equal monthly installments of principal and
interest commencing one month after the closing. The promissory note shall bear
interest at the rate of ten percent (10%) per annum from the date of closing and
shall be in the form of Exhibit A ("Exhibit A") hereto. The indebtedness
evidenced by the said promissory note shall be secured by a lien against the
Shares being purchased, with said lien to terminate at such time as the said
promissory note is paid in full. Such Shares shall be held by the Trustee until
such time as the promissory note is paid in full.
4
<PAGE>
(f) PURCHASE AND SALE OF SHARES UPON DEATH OF A SHAREHOLDER. The
following terms and conditions shall govern in the event of the death of a
Shareholder:
(i) Upon the death of John B. Gallagher, Harry D. Shields shall
purchase and the personal representative of John B. Gallagher shall sell to
Harry D. Shields, one million (1,000,000) Shares for a purchase price of Two
Million Dollars (US$2,000,000).
(ii) Upon the death of Harry D. Shields, John B. Gallagher
shall purchase and the personal representative of Harry D. Shields shall sell to
John B. Gallagher, one million (1,000,000) Shares for a purchase price of Two
Million Dollars (US$2,000,000).
6. TRUSTEE DUTIES ON DEATH OF A SHAREHOLDER. The Trustee accepts and
agrees to safeguard the certificates of Shares, all insurance policies purchased
for purposes of this Agreement, an original copy of this Agreement and any
amendments thereto, and any other policies or documents which hereafter may be
incorporated into this Agreement.
Upon the death of a Shareholder, the Trustee shall:
(a) Collect the proceeds of the policies insuring the deceased
Shareholder. The Trustee shall not be obligated to commence any action to
recover proceeds unless it is indemnified in advance by the remaining
Shareholder;
(b) Give notice of the amount of proceeds received to the surviving
Shareholder and to the personal representative of the deceased Shareholder;
(c) Upon receipt of the insurance proceeds and the qualification of
the personal representative, pay to such personal representative the Purchase
Price of Two Million Dollars ($2,000,000). Any remaining proceeds under a policy
shall be paid to the surviving Shareholder who purchased and paid the premiums
on such policy;
(d) At the time the personal representative of the deceased
Shareholder is paid the insurance proceeds under paragraph (c) above, the
Trustee shall lawfully transfer to the surviving Shareholder a valid Company
stock certificate representing one million (1,000,000) Shares previously owned
by the deceased Shareholder.
(e) The Trustee shall deliver all remaining Shares to each of the
respective parties to this Agreement (including the personal representative of
the deceased Shareholder) and this Agreement shall terminate.
7. LIFE INSURANCE.
(a) For purposes of this Agreement, life insurance has been
purchased in the amount of Two Million Dollars ($2,000,000) and is owned by each
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Shareholder on the life of the other Shareholder as is reflected in the life
insurance schedule attached hereto as Exhibit B ("Exhibit B"). Exhibit B shall
be amended and updated from time to time as is needed to accurately reflect the
insurance coverage in effect. Each Shareholder shall designate the Trustee as
beneficiary of all policies and such policies shall be held by the Trustee for
purposes of this Agreement. This Agreement shall extend to and include any
additional policies procured hereunder and they shall be set forth on such
Exhibit B.
(b) Each Shareholder shall be individually be responsible for
payment of the premiums on the policies owned by him. The Trustee shall be under
no obligation to make any premium payments on any such life insurance policies.
If a Shareholder should fail to pay his portion of any premium within twenty
five (25) days after the due date, the Shareholder on whom the policy is issued
may pay such premium. The Trustee shall promptly notify the Shareholders of the
receipt of any notice of non-payment, termination, cancellation or modification
of any insurance policies, but in no event shall the Trustee be held liable if
an insurance policy lapses.
8. TRUSTEE'S COMPENSATION AND SUCCESSION.
(a) The Trustee shall be paid an annual fee while this Agreement is
in force. The Trustee reserves the right to adjust the annual fee, but no such
adjustment shall become effective sooner than one year after notice has been
given to all parties to this Agreement but the Trustee shall have the right to
change an extraordinary fee based upon the current fee schedule upon the death
of one of the insured parties and upon the voluntary transfer of Shareholder's
share based upon this Agreement. All Trustee fees shall be paid by the
Shareholders.
(b) By mutual written agreement, the Shareholders may remove the
Trustee and appoint a successor corporate trustee ("Corporate Trustee") by
giving written notice to the Trustee.
(c) In the event the Trustee resigns or is removed, it shall
deliver to the successor Corporate Trustee all share certificates, policies, and
documents held in its possession, but no Trustee's resignation shall be
effective until thirty (30) days after the Shareholders receive written notice
thereof.
9. ENDORSEMENT OF SHARE CERTIFICATES. The Shares of stock of the
Company authorized and issued to the Shareholders and Trusts shall be endorsed
with the following:
(a) "NOTICE IS HEREBY GIVEN THAT THE SALE, ASSIGNMENT, TRANSFER,
PLEDGE, OR OTHER DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO A SHAREHOLDERS AGREEMENT DATED JANUARY 31, 1998 MADE BY AND AMONG THE
SHAREHOLDERS, CERTAIN TRUSTS AND THE COMPANY, A COPY OF WHICH AGREEMENT IS ON
FILE IN THE OFFICE OF THE COMPANY."
6
<PAGE>
(b) The endorsement referenced in paragraph (a) above is deemed to
refer to this Agreement and any amendments thereto.
(c) The certificates so endorsed shall be delivered to the Trustee
to be held by it or its successor subject to the terms and conditions of this
Agreement.
10. DEBT/LOSSES. The Shareholders agree that to the extent either of
them suffers any loss in relation to loans or credit given to the Company or
guarantees on security given for the benefit of the Company, they shall make
contributions, one to the other, to equalize on a pro-rata basis the losses
among the Shareholders. The Shareholders also agree that to the extent that the
Company, in its ordinary course of business, becomes indebted to any
Shareholder, to American Surgical Supply Corp. of Florida, d/b/a American Micro
Computer Center (partially owned by John B. Gallagher) or Technology Express,
Inc. (owned by Harry D. Shields) upon liquidation of the Company or upon the
Company ceasing to do business, each Shareholder shall make contributions to the
other Shareholder, to American Surgical Supply Corp. of Florida d/b/a American
Micro Computer Center, or to Technology Express, Inc. as is necessary to
equalize the amount of debt the Company has with regard to a Shareholder,
American Surgical Supply Corp. of Florida, d/b/a American Micro Computer Center,
or Technology Express, Inc.
11. NOTICES. Any and all notices, designations, consents, offers,
acceptances, or any other communication provided for herein shall be given in
writing by certified mail, which shall be addressed to the following addressees
until such time as a different address has been designated in writing sent to
the other parties:
If to John B. Gallagher: If to Harry D. Shields:
John B. Gallagher Harry D. Shields
American Micro Computer Center Technology Express, Inc.
6073 NW 167th Street, Unit C-25 808 Third Avenue, South
Miami, Florida 33015 Nashville, Tennessee 37210
If to the Trustee: If to Shields Trust:
SunTrust Bank,Nashville, N.A. Robert H. True, Co-Trustee
P.O. Box 305110 Summit Financial Group
Nashville, Tennessee 37230-5110 First American Center
Attn: Pam Utley, V.P. and Trust Officer Suite 2070
315 Deaderck Street
Nashville, Tennessee 37238
If to Gallagher Trust:
c/o Thomas H. Minkoff, as Trustee
1635 D Royal Palm Drive South
Gulfport, Florida 33707
12. TERMINATION OF AGREEMENT. This Agreement shall terminate upon:
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(a) The written agreement of all of the Shareholders;
(b) The bankruptcy, receivership, or dissolution of the Company;
(c) The death of a Shareholder and the completion of the purchase
and sale set forth in Sections 5 and 6 hereof.
13. AMENDMENT OF AGREEMENT. This Agreement may be altered, amended, or
modified at any time by written agreement signed by all of the Shareholders and
the Trustees of the Trusts.
14. AGREEMENT TO BE BOUND. This Agreement shall be binding not only
upon the parties hereto but also upon their heirs, personal representatives,
trustees, successors and assigns, and the parties hereto agree for themselves
and their heirs, personal representatives, trustees, successors and assigns to
execute any instruments in writing which may be necessary or proper in carrying
out the purposes of this Agreement.
15. SPECIFIC PERFORMANCE. If any party is required and fails to give
notice, sell Shares, transfer Shares, close a sale or take any other action set
forth pursuant to this Agreement and, in such event, if the failure continues
for thirty (30) days after written notice of such default is provided to the
defaulting party by any Shareholder, any Shareholder of the Company may then
initiate and maintain a proceeding to compel the specific performance of this
Agreement by the defaulting party, and the successful party or parties shall be
entitled to all court costs, including reasonable trial and appellate attorney's
fees incurred in such proceeding.
16. MISCELLANEOUS PROVISIONS. This Agreement shall be governed by the
laws of the State of Florida, USA and contains the entire agreement of the
parties hereto. The headings used throughout this Agreement are for convenience
only and have no significance in the interpretation of the body of this
Agreement and the parties hereto agree that they are to be disregarded in
construing the provisions of this Agreement. All references made herein to
plural or singular or to masculine or feminine or neuter gender shall be deemed
interchangeable as the context requires.
17. TERMS. The term "personal representative" shall include the terms
"executor" and "executrix"; the term "Articles of Incorporation" shall include
the term "Articles of Association"; the term "Shareholders" shall include the
term "Stockholders"; and the term "Company" shall include the term
"Corporation."
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IN WITNESS WHEREOF, the Company has caused this Agreement to be signed
by its duly authorized officers, the Shareholders have hereunto set their hands
and seals the day and year first above written, and the Trustee has caused this
Agreement to be signed by its duly authorized officer.
EUROPEAN MICRO HOLDINGS, INC. SHAREHOLDERS
(SEAL)
By: /s/ John B. Gallagher By: /s/ John B. Gallagher
------------------------------ -------------------------------
JOHN B. GALLAGHER, Co-Chairman JOHN B. GALLAGHER, individually
By: /s/ Harry D. Shields By: /s/ Harry D. Shields
------------------------------ -------------------------------
HARRY D. SHIELDS, Co-Chairman HARRY D. SHIELDS, individually
GALLAGHER FAMILY TRUST
By: /s/ Thomas H. Minkoff
------------------------------
THOMAS H. MINKOFF, Trustee
HENRY DANIEL SHIELDS 1997 SUNTRUST BANK, NASHVILLE, N. A.
IRREVOCABLE EDUCATIONAL TRUST AS TRUSTEE
AGREEMENT
By: /s/ Robert H. True By: /s/ Pamela Utley
------------------------------ -------------------------------
ROBERT H. TRUE, Co-Trustee PAMELA UTLEY, Vice President
and Trust Officer
By: /s/ Stuart S. Southard
------------------------------
STUART S. SOUTHARD, Co-Trustee
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<PAGE>
EXHIBIT "A"
PROMISSORY NOTE
---------------
U.S. $ , 199
------------------- -------------- -
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
________________________ the principal sum of _______________ and /100 U.S.
Dollars (U.S. $_________________ ), together with interest from ______________,
19___ at the rate of ten per cent (10%) simple interest per annum until
maturity, said principal and interest being payable as follows:
Principal and interest in the sum of $__________shall be due
and payable on _____________, 19_ and on the 1st day of each
succeeding month thereafter, until paid in full.
This note is prepayable in whole or in part without penalty.
If this note or any installment of principal or interest as set forth
above be not promptly and fully paid within 15 days of the date it is due, then,
at the option of the holder, this note shall be accelerated without notice to
the maker, and the then unpaid principal balance and accrued interest shall
become due and payable forthwith and said unpaid principal balance and accrued
interest shall bear interest at the hereafter specified deferred rate.
The maker waives demand, protest, and notice of maturity, non-payment
or protest and all requirements necessary to hold him liable as maker.
The maker further agrees to pay all costs of collection, including a
reasonable attorney's fee in case the principal of this note or any payment on
the principal or any interest thereon is not paid at the respective maturity
thereof, or in case it becomes necessary to protect the security hereof, whether
suit be brought or not.
Any past due principal and interest payments shall bear interest at the
rate of 18 per cent per annum from their respective maturities until paid.
This note is to be construed and enforced according to the laws of the
State of Florida, USA.
--------------------------------
<PAGE>
EXHIBIT "B"
LIFE INSURANCE SCHEDULE
<TABLE>
<CAPTION>
OWNER- BENEFICIARY INSURER POLICY FACE
SHAREHOLDER/ NUMBER AMOUNT
INSURED
<S> <C> <C> <C> <C>
John B. Third National General American No. 3287949 US $ 500,000
Gallagher on Bank in Lincoln Benefit Life No. 559635 US $1,000,000
the life of Nashville Phoenix Home Life No. 11121616 US $ 500,000
Harry D. -------------
Shields US $2,000,000
- -------------------------------------------------------------------------------------------------------------
Harry D. Third National General American No. 3287948 US $ 500,000
Shields on Bank in Lincoln Benefit Life No. 559634 US $1,000,000
the life of Nashville Phoenix Home Life No. 11121582 US $ 500,000
John -------------
Gallagher US $2,000,000
</TABLE>
