As Filed with the Securities and Exchange Commission on May 24, 1995
Registration No. 33-81892
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
AMENDMENT NO. 3 ON FORM S-3
TO
FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
------------
ELECTRONIC ASSOCIATES, INC.
(Exact name of registrant as specified in its charter)
------------
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<S> <C>
New Jersey 21-0606484
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
185 Monmouth Parkway
West Long Branch, New Jersey 07764-9989
(908) 229-1100
(Address, including zip code, and
telephone number, including area
code, of registrant's principal
executive offices)
Richard P. Jaffe, Esquire
Mesirov Gelman Jaffe
Cramer & Jamieson
1735 Market Street, 38th Floor
Philadelphia, PA 19103-7598
(215) 994-1046
(Name, address, including
zip code, and telephone number,
including area code, of agent
for service)
---------------------------------------------
Approximate date of commencement of proposed sale to public: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.[ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box.[X]
--------------------------------------------
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CALCULATION OF REGISTRATION FEE
=================================================================================================================================
Proposed Proposed maximum Amount of
Title of Securities Amount to be maximum offering aggregate offering Registration
to be registered registered(1) price per share price fee
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<S> <C> <C> <C> <C>
Common Stock.................... 5,189,250 $5.0625(2) $26,270,578(2) $ 9,060(6)
---------------------------------------------------------------------------------------------------------------------------------
Common Stock.................... 500,000 $7.1875(3) $ 3,593,750(3) $ 1,240(6)
---------------------------------------------------------------------------------------------------------------------------------
Common Stock.................... 4,911,273 $7.125(4) $34,992,821(4) $12,067
---------------------------------------------------------------------------------------------------------------------------------
Preferred Stock
Purchase Rights(5).............. 10,600,523 NA NA NA
---------------------------------------------------------------------------------------------------------------------------------
Total Registration Fee $22,367
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Fee Paid Previously $10,300
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Balance Paid with this Filing $12,067
=================================================================================================================================
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(continued on next page)
<PAGE>
(1) There are registered hereby 10,600,523 shares of Common Stock (the
"Shares") of Electronic Associates, Inc. (the "Company") currently
outstanding or issuable upon currently exercisable warrants outstanding
to purchase shares of Common Stock of the Company and 10,600,523
Preferred Stock Purchase Rights ("Rights") associated with such Shares
of Common Stock being registered hereby.
(2) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457 under the Securities Act of 1933. The proposed
maximum offering price is based upon $5.0625, the average of the high
and low prices reported on the New York Stock Exchange on July 20,
1994.
(3) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457 under the Securities Act of 1933. The proposed
maximum offering price is based upon $7.1875 the average of the high
and low prices reported on the New York Stock Exchange on October 17,
1994.
(4) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457 under the Securities Act of 1933. The proposed
maximum offering price is based upon $7.125 the average of the high and
low prices reported on the New York Stock Exchange on May 17, 1995.
(5) The Rights associated with the Shares of Common Stock are not
exercisable or transferable apart from the Shares of Common Stock at
the present time and no additional consideration has been, or will be,
received by the Company in connection with the granting of such Rights
upon issuance of the Common Stock. Accordingly, no material independent
value is attributable to the Rights and no separate registration fee is
required with respect to such Rights pursuant to Rule 457.
(6) This amount has been previously paid.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states
that this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as the
Commission, acting pursuant to Section 8(a), may determine.
(ii)
<PAGE>
CROSS REFERENCE SHEET SHOWING LOCATION IN PROSPECTUS
OF INFORMATION REQUIRED BY FORM S-3
FILED AS PART OF REGISTRATION STATEMENT
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Item
Number
in Form
S-3 Item Caption in Form S-3 Caption in Prospectus
<S> <C> <C>
1 Forepart of Registration Statement and Outside Cover Page
Front Cover Page of Prospectus
2 Inside Front and Outside Back Cover Pages of Inside Front Cover Page; Table of
Prospectus Contents
3 Summary of Information, Risk Factors and Ratio The Company; Risk Factors;
of Earnings to Fixed Charges Selected Consolidated Financial
Data; and Selected Unaudited Pro
Forma Combined Condensed
Financial Data
4 Use of Proceeds Use of Proceeds
5 Determination of Offering Price Cover Page
6 Dilution Inapplicable
7 Selling Security Holders Plan of Distribution and Selling
Securityholders
8 Plan of Distribution Plan of Distribution and Selling
Securityholders
9 Description of Securities to be Registered Inapplicable
10 Interests of Named Experts and Counsel Legal Matters
11 Material Changes The Company; and Selected
Unaudited Pro Forma Combined
Condensed Financial Data
12 Incorporation of Certain Information by Reference Incorporation of Certain
Information by Reference
13 Disclosure of Commission Position on Indemnification of Directors and
Indemnification for Securities Act Liabilities Officers
</TABLE>
(iii)
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE
TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL
NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL
THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED MAY 24, 1995
Prospectus
----------
10,600,523 Shares
[GRAPHIC OMITTED]
ELECTRONIC ASSOCIATES, INC.
Common Stock
This Prospectus relates to the offer for sale of 10,600,523 shares of
common stock (the "Shares") of Electronic Associates, Inc. (the "Company" or
"EAI") from time to time after the date hereof by certain stockholders and
warrant holders ("Warrant Holders") of the Company (the Warrant Holders and such
stockholders are collectively referred to as the "Selling Securityholders" and
individually as a "Selling Securityholder"), together with the 10,600,523
Preferred Stock Purchase Rights ("Rights") associated with such Shares. The
Rights associated with the Shares are not exercisable or transferrable apart
from the Shares as of the date of this Prospectus and no additional
consideration has been, or will be, received by the Company in connection with
the granting of such Rights upon the issuance of the Shares. Except as described
elsewhere in this Prospectus, the Company will not receive any portion of the
proceeds from the sale of the Shares offered hereby. See "Plan of Distribution
and Selling Securityholders."
THE SECURITIES BEING SOLD HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE
OF RISK. THE COMPANY HAS EXPERIENCED LOSSES FOR THE PAST FOUR YEARS. SEE
"RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION (THE "COMMISSION") NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The Shares will be offered by the Selling Securityholders or their
donees for resale by this Prospectus from time to time after the date hereof in
one or more transactions on the New York Stock Exchange ("NYSE"), in negotiated
transactions, or private transactions, or otherwise, or a combination of such
methods of sale, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. The Selling
Securityholders may effect such transactions by selling the Shares to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
underwriting discounts, concessions or commissions (which compensation may be in
excess of customary commissions). Any broker-dealers that participate in the
distribution of the Shares, including, without limitation, the Warrant Holders,
may be deemed to be underwriters and any commissions received by them and any
profit on the resale of Shares sold by them might be deemed to be underwriting
discounts and commissions under the Securities Act of 1933, as amended (the
"Securities Act"). Each of the Selling Securityholders may also be deemed to be
an underwriter as defined in the Act.
The Company's common stock (the "Common Stock") is traded on the NYSE
under the symbol EA. However, as a result of, among other things, continuing
losses, the Company has been informed by the NYSE that its shares of Common
Stock no longer qualify for listing on the NYSE. Although the NYSE has not taken
any affirmative action to de-list the Common Stock, it has reserved the right to
do so. See "Risk Factors." On May 17, 1995, the last reported sale price of the
Common Stock as reported by the NYSE was $7.00.
The expenses relating to the offering are estimated to be $295,000, of
which $75,000 will be paid by certain Selling Securityholders and $220,000 will
be paid by the Company.
The Date of this Prospectus is __________, 1995.
<PAGE>
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus in connection with
the offer made hereby and, if given or made, such information or representations
must not be relied upon as having been authorized by the Company or the Selling
Securityholders. This Prospectus does not constitute an offer to sell or
solicitation of an offer to buy, nor shall there be any sale of these securities
by anyone in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities law of any
such State, or in which the person making such offer or solicitation is not
qualified to do so, or to any person to whom it is unlawful to make such offer
or solicitation.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and other
information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Commission's Regional Offices at 500 West
Madison Street, Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300,
New York, New York 10048. Copies of such material can be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549 at prescribed rates.
The Company's Common Stock is listed on the New York Stock Exchange
("NYSE"), 11 Wall Street, New York, New York 10005. Information regarding the
Company is also available at the NYSE.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 31,
1994, as amended on Form 10-K/A dated April 28, 1995, Quarterly Report on Form
10-Q for the quarter ended April 1, 1995, Current Report on Form 8-K dated
January 4, 1995, as amended on Form 8-K/A dated March 17, 1995, relating to the
Tanon Acquisition (as such term is hereinafter defined), Current Report on Form
8-K dated January 16, 1995, as amended on Form 8-K/A dated March 30, 1995,
relating to the BarOn Investment (as such term is hereinafter defined), and
Current Report on Form 8-K dated May __, 1995, relating to updated pro forma
financial data and historical financial statements for Tanon Manufacturing, Inc.
and BarOn Technologies Ltd., are incorporated herein by reference and made a
part hereof.
All documents filed subsequent to the date of this Prospectus by the
Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 prior to the termination of the offering described in this
Prospectus shall be deemed to be incorporated in this Prospectus and to be a
part hereof from the date of filing of such documents. Any statement contained
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The description of the Company's Common Stock is incorporated herein by
reference from the registration statement therefor under Section 12 of the
Exchange Act, including any amendment or report filed for the purpose of
updating such description.
(2)
<PAGE>
The description of the Company's Preferred Stock Purchase Rights is
incorporated herein by reference from the registration statement therefor under
Section 12 of the Exchange Act, including any amendment or report filed for the
purpose of updating such description.
The Company will provide, without charge, to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the oral or written
request of such person, a copy (without exhibits, unless such exhibits are
specifically incorporated by reference into the information that this Prospectus
incorporates) of any and all information that has been incorporated by reference
in this Prospectus. Written or telephone requests for such information should be
directed to Shareholder Relations, Electronic Associates, Inc., 185 Monmouth
Parkway, West Long Branch, New Jersey 07764-9989, telephone: (980) 229-1100.
TABLE OF CONTENTS
<TABLE>
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Page
<S> <C>
AVAILABLE INFORMATION............................................................................................ (2)
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.................................................................. (2)
THE COMPANY...................................................................................................... (4)
RISK FACTORS .................................................................................................... (6)
USE OF PROCEEDS.................................................................................................. (12)
SELECTED CONSOLIDATED FINANCIAL DATA............................................................................. (13)
SELECTED UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA................................................... (14)
PLAN OF DISTRIBUTION AND SELLING SHAREHOLDERS.................................................................... (15)
LEGAL MATTERS.................................................................................................... (22)
EXPERTS.......................................................................................................... (22)
INDEMNIFICATION OF DIRECTORS AND OFFICERS ....................................................................... (22)
</TABLE>
(3)
<PAGE>
THE COMPANY
General
-------
The Company is in the business of providing contract electronic
manufacturing services to original equipment manufacturers. The Company
functions in whole or in part as the manufacturing arm of its customers,
providing services which range from the assembly of printed circuit boards to
the complete procurement, production, assembly, testing and delivery of entire
electronic products and systems.
The Company has invested in new manufacturing equipment to accommodate the
increased business for surface mount technology ("SMT") equipment. The SMT
process is increasingly replacing the older, through-hole technology previously
utilized in the assembly of printed circuit boards. SMT allows for production
of a smaller circuit board, with greater component and circuit density,
resulting in increased performance. Management believes that SMT will continue
to constitute an increasing percentage of printed circuit board production and
assembly.
The Company manufactures over 1,500 different assemblies which are
incorporated into product lines of over 30 different companies. The Company
provides its services primarily to manufacturers of: micro, mini and mainframe
computers; computer peripheral equipment; high quality graphic equipment; office
equipment; telecommunications equipment; consumer appliances, industrial tools
and measuring devices.
During 1994, the Company's sales and gross profit increased to
approximately $30.5 million and $2.8 million, respectively, while sales, general
and administrative expenses declined. The Company's net loss from continuing
operations in 1994 was $4,784,000 which includes the non-recurring provision for
restructuring of $2,400,000, compared to a loss of $4,664,000 in 1993 from
continuing operations.
Historically, the Company has had substantial recurring sales from
existing customers. Current marketing efforts are aimed at obtaining long-term
relationships with new customers, as well as maintaining its current customer
base. The Company employs a variety of marketing techniques for the sale of its
products, including direct sales efforts by an in-house sales force, and the
utilization of independent sales representatives. The Company's backlog consists
of firm purchase orders which are typically shipped within twelve months from
receipt of order. As of year-end 1994 and 1993, the Company's backlog from
continuing operations totalled approximately $19,240,000, and $19,453,000,
respectively.
The shares of the Company's Common Stock have been continuously
listed for trading on the NYSE since 1962; however, the Common Stock presently
does not meet the NYSE's requirements for continued listing. See "Risk Factors."
The Company's principal executive offices are located at 185 Monmouth
Parkway, West Long Branch, New Jersey 07764-9989, and its telephone number is
(908) 229-1100.
Recent Developments
-------------------
On January 4, 1995, the Company acquired Tanon Manufacturing, Inc.
("Tanon"), a privately owned contract electronic manufacturing firm with
operations located in Fremont, California (the "Tanon Acquisition"). The Tanon
Acquisition has been reported as a purchase for accounting purposes and,
accordingly, the results of operations of Tanon are included with those of the
Company from January 4, 1995 forward. Tanon's manufacturing services consist
primarily of the assembly of printed circuit boards, the manufacturing and
(4)
<PAGE>
assembly of integrated electro-mechanical systems and related engineering
support. At the closing of the Tanon Acquisition, the Company issued 1,538,462
shares of its Common Stock and granted options to purchase its common stock with
a combined appraised value of $14,460,000 in exchange for all the outstanding
common stock of Tanon and outstanding options to purchase common stock of Tanon.
In addition, (a) the Company invested $2,000,000 in Tanon, and (b) the Company
has agreed to use its best efforts to invest in (or, at the Company's option,
loan to) Tanon (in form and on terms acceptable to the Company and its lenders)
up to an additional $5,000,000 subject to receipt by the Company of an
acceptable operating plan.
On January 16, 1995, the Company acquired a 25.01% equity interest in
BarOn Technologies Ltd. ("BarOn"), a privately-owned Israeli corporation
based in Haifa, Israel (the "BarOn Investment"). BarOn is a development stage
company engaged in the research and development of a computer input device that
can directly digitize handwriting in a variety of languages, from any surface.
The BarOn Investment has been accounted for as a purchase of a minority interest
using the equity method of accounting, and, accordingly, the Company's
investment in BarOn and the 25.01% equity interest in the results of BarOn are
included in the consolidated results of the Company from January 16, 1995
forward. At the closing of the BarOn Investment, the Company acquired 25.01% of
the ordinary shares of BarOn for a consideration of cash and shares of Common
Stock in the Company and a right to acquire an additional 8.33% of the ordinary
shares of BarOn. The Company acquired 8.33% of the 25.01% equity interest in
BarOn from certain shareholders of BarOn for $2,700,000 which was paid in cash
at closing. The balance of 16.68% was acquired from BarOn in exchange for
$3,000,000 in cash and 127,592 shares of Common Stock of the Company with an
estimated value of $1,000,000 payable as follows: (i) of such $3,000,000 cash
payment, $2,000,000 was paid at closing in the form of $1,500,000 in cash and
the cancellation of BarOn's obligation to repay the Company $500,000 pursuant to
the terms of a business loan to BarOn, and (ii) the $1,000,000 balance due BarOn
and the issuance and delivery of the 127,592 shares of Common Stock of the
Company are presently due and payable to BarOn. Pursuant to the terms of an
Investment Agreement with BarOn, BarOn is obligated to issue to the Company
ordinary shares to increase the Company's equity interest by 8.33%, which would
give the Company an aggregate equity interest of up to 33-1/3% of the
outstanding ordinary shares of BarOn, in the event that the Company elects to
make certain subsequent investments. The subsequent investments, which would
aggregate $2,000,000 in cash, together with the delivery of 255,183 shares of
Common Stock of the Company with an estimated value of $2,000,000, are at the
option of the Company, which is exercisable on the earlier of BarOn's reaching
certain development milestones or September 30, 1995.
(5)
<PAGE>
RISK FACTORS
In addition to the information set forth elsewhere in, and incorporated by
reference into, this Prospectus, the following factors should be considered
carefully in evaluating the Company and its business before purchasing the
Shares offered hereby.
Absence of Profitable Operations
--------------------------------
The Company has not had a profitable year since 1990. Although the Company
has eliminated certain operations and reduced expenses in an attempt to
improve its operating results, there can be no assurance that the Company's
results of operations will improve or that the Company will be profitable in the
future.
History of Losses
-----------------
The Company has incurred significant losses in each of the last four years
and for the quarterly period ended April 1, 1995. In addition, the
Company had negative cash flows from continuing operations in each of the last
four years and for the quarterly period ended April 1, 1995. Moreover, under
the Company's asset based credit facility, the Company's borrowing capacity can
be severely curtailed by its lenders.
Delisting of the Company's Common Stock from Trading on the New York
--------------------------------------------------------------------
Stock Exchange
--------------
The Company has been informed by the New York Stock Exchange ("NYSE") that
the Company's Common Stock no longer qualifies for listing on the NYSE. In
order for the Company to maintain the listing of its Common Stock on the NYSE,
the Company must meet certain continued listing criteria, including without
limitation, minimum levels with respect to (1) the number of shareholders and
shareholdings (1,200 holders each owning 100 shares or more), (2) the number of
publicly-held shares (600,000), (3) the aggregate market value of publicly-held
shares ($5,000,000) and of all outstanding shares ($8,000,000), and (4) minimum
annual earnings (average of $600,000 per year for prior three years). On
September 11, 1991, the NYSE notified the Company in writing that a review of
the Company's annual financial results for the fiscal year ended December 31,
1990 indicated that the Company had fallen below the continued listing criteria
for aggregate market value of outstanding shares (less than $8,000,000) and
average earnings for the prior three years (less than $600,000 per year). As of
the date of this Prospectus, the Company believes that it is in compliance with
all of the NYSE's continued listing criteria, with the exception of the minimum
average earnings of $600,000 for each of the last three fiscal years. The NYSE
has indicated in a letter dated March 29, 1995 approving the listing of
additional shares of Common Stock, that consideration is being given to the
appropriateness of continued listing of the Company's Common Stock. Management
of the Company met with representatives of the NYSE on April 21, 1995 to discuss
this matter and is awaiting a response from the NYSE. To date, to the Company's
knowledge, the NYSE has taken no affirmative action to delist the Common Stock,
but has reserved the right to do so in the future. If the Company's Common Stock
is delisted from the NYSE, it could have a material adverse effect on the price
and liquidity of the Company's Common Stock.
Working Capital Needs and Liquidity Problems
--------------------------------------------
As described above, the Company has experienced negative cash flow from
operations and significant operating losses in each of the four years
ending December 31, 1994 and for the quarterly period ended April 1, 1995. In
January and February 1994, in order to conserve cash and reduce expenses, the
Company imposed a 20% decrease in pay on substantially all employees, arranged
for additional concessions from its West Long Branch landlord, deferred certain
debts and lease payments and arranged to raise capital as
(6)
<PAGE>
described below. Cash flows from financing activities during 1994 amounted to
$13,192,000, resulting primarily from the issuance of 1,200,000 units (each unit
consisting of one share of Common Stock, a Class A Warrant (hereinafter defined)
and a Class B Warrant (hereinafter defined)) (the "February Units") in the
private placement completed in February 1994 (the "February 1994 Private
Placement") and the issuance of 2,500,000 units (each unit consisting of one
share of Common Stock and one Class C Warrant (hereinafter defined) (the "June
Units") in the private placement commenced in June 1994 (the "June 1994 Private
Placement") and exercise of related Class C Warrants issued in the June 1994
Private Placement, net of reductions in outstanding debt. The proceeds from
these activities were used to maintain cash balances for working capital and to
consummate the Tanon Acquisition and the BarOn Investment.
In order to provide additional capital, on April 14, 1995, the Company
completed the sale of 525,000 shares of Common Stock at $5.85 per share for
net proceeds of approximately $3,000,000 in an offering exempt from the
registration provisions under the Securities Act, which proceeds are
being used for working capital purposes. In addition, in contemplation
of the Tanon Acquisition, the Company has implemented measures to reduce
costs, including the closing or sale of its Southwest operations in Arizona
and Mexico, consolidation of its corporate administrative functions with
those of its newly acquired subsidiary, Tanon, and reduction of certain other
administrative expenses, which the Company expects to complete during the second
quarter of 1995. Although the Company's projections indicate that operating
losses and negative cash flows from operations will continue during 1995,
management believes that its available cash, together with funds available under
its existing lines of credit, will enable the Company to meet its obligations in
the normal course of business through December 31, 1995, however, no assurance
can be given in that regard.
Further, the Company's business plan includes making certain additional
investments with respect to Tanon and BarOn as a result of the acquisitions
made in January 1995, which may require, among other things, additional cash
resources in excess of those presently available. The Class A and Class B
warrants issued in the February 1994 Private Placement, if exercised, could
provide the Company with additional capital of approximately $4,400,000.
Additional capital could also come from the exercise of the other warrants held
by Warrant Holders of which the underlying shares are covered by this Prospectus
(such warrants, together with the Class A Warrants and Class B Warrants are
collectively hereinafter referred to as the "Warrants"). However, none of the
Warrants have been exercised and no assurance can be given that any such
Warrants will be exercised. In addition, the Company is presently in
negotiations with its existing lenders to increase the amount available under
its revolving credit facilities and has engaged an investment banking firm to
assist it in raising additional capital. There can be no assurance that such
additional borrowings or financing will be available.
Limitations on Dividend Payments
--------------------------------
The Company has not had a profitable year since 1990 and has paid no
cash dividends from that date through the date of this Prospectus. If the
Company were to become profitable, it would expect that all of such earnings
would be retained to support the business of the Company. Accordingly, the
Company does not anticipate paying cash dividends on its Common Stock in the
foreseeable future. Moreover, certain financial covenants set forth in the
Company's current loan agreement prohibit the Company from paying cash
dividends.
Dependence on a Limited Number of Customers and the Electronics Industry
------------------------------------------------------------------------
Concurrent Computer Corporation, Iris Graphics, Inc. and Dialogic
Corporation were the Company's largest customers during the fiscal year
ended December 31, 1994 and accounted for 33%, 25% and 11%, respectively, of the
Company's net sales for such period. The Company expects that most of its
current customers will continue to account for a significant portion of its net
sales. However, since customer contracts can be cancelled and purchase levels
can be changed or purchases delayed at any time, the timely replacement of
cancelled, delayed or reduced contracts with new orders cannot be assured. In
addition, substantially all of the
(7)
<PAGE>
Company's customers are in the computer, telecommunications and electronics
industries which are each subject to rapid technological changes. Such
technological changes could have a material adverse effect on the Company's
major customers which, in turn, could have a material adverse effect on the
Company's results of operations.
Availability of Raw Materials
-----------------------------
The Company relies on third-party suppliers for components which it uses
in its assembly processes. At various times in the electronics industry
there have been shortages of these kinds of components. While management
believes that these shortages have not impacted significantly its performance in
the past, if shortages should occur in the future, the Company may be forced to
delay manufacturing and shipments, which could have a material adverse effect on
the Company's results of operations.
Competition
-----------
The Company competes with numerous domestic and offshore contract
manufacturers as well as the in-house manufacturing capabilities of certain
of its existing and potential customers. Some of the Company's competitors have
substantially greater manufacturing, financial and marketing resources than the
Company. The Company believes that the significant competitive factors in
contract manufacturing are technology, quality, service, price and ability to
deliver finished products on a timely and reliable basis. The Company's
inability to compete effectively in any of these areas could have a material
adverse effect on the Company's business.
Environmental Compliance and Current Litigation
-----------------------------------------------
The Company is subject to a variety of environmental regulations
relating to the use, storage, discharge and disposal of hazardous chemicals
used during its manufacturing process. Any failure by the Company to comply with
present and future regulations could restrict the Company's ability to expand
its facilities or require the Company to acquire costly equipment or to incur
other expenses to comply with environmental regulations, or incur fines and
penalties. In addition, there are two lawsuits presently pending which involve
environmental claims against EAI, namely, the Lemco Associates lawsuit and the
Bridgeport Rental and Oil Services Superfund Site lawsuit. In October, 1992,
Lemco Associates L.P., a limited partnership ("Lemco"), the owner of property
previously owned by EAI, initiated an action against EAI and others alleging,
among other things, that the defendants created environmental contamination at
the property and is seeking damages in unspecified amounts. EAI has denied
Lemco's allegations, asserted numerous defenses to the claims asserted and made
cross claims for indemnification and contribution against co-defendants and
others. In addition, the Company has made a demand upon its insurance carriers
for coverage for the claims made by Lemco and cross claims and third party
claims may be filed against these insurance companies seeking indemnification
against these claims. To date, the Company's insurance carriers have agreed to
pay 71% of its defense costs under a reservation of rights. Discovery in this
matter is ongoing. By letter dated March 30, 1995, Lemco has provided the
Company with a statement of its remediation costs to date, as well as an
estimate of future remediation costs associated with the contamination for which
it seeks recovery in this action. Specifically, Lemco claims that it has
expended approximately $424,000 in remediation costs, including fees for legal
oversight and consultation. It further estimates that its future remediation
costs will amount to approximately $4,900,000. Such amount is included in a
report made by Lemco's environmental consultants based on their current
assessment of the extent of contamination and the method and period required to
complete the remediation. At this time, the Company and its environmental
consultants have not evaluated the information recently received from Lemco nor
has any independent analysis of the site been performed to determine the
appropriateness of Lemco's claim and of the estimated cost of remediation.
Investigation of this matter is ongoing; therefore, it is not possible to
predict its outcome at this time.
(8)
<PAGE>
The second matter involves environmental claims against EAI and others
regarding the Bridgeport Rental and Oil Services Superfund Site in Logan
Township, New Jersey (the "B.R.O.S. Site"). EAI has been identified as one of
the parties potentially responsible for clean up costs at the B.R.O.S. Site.
EAI's alleged connection to the site is through Rollins Environmental Services,
Inc. ("Rollins") which is a waste hauler that was allegedly hired by EAI to
transport certain waste material alleged to be hazardous from EAI's operations
for appropriate disposal. Litigation has been initiated in the federal courts
with respect to the remediation alleged to be required at the B.R.O.S. Site. EAI
is not a party to this litigation but is participating in informal discovery and
settlement negotiations with respect to the federal court actions without
admitting liability. EAI has pursued insurance coverage for these claims. To
date, one carrier has responded, has agreed to pay one-third of EAI's defense
costs and has otherwise reserved rights. The other carrier to which EAI has
submitted the B.R.O.S. claims has denied coverage on grounds that EAI believes
are without merit under New Jersey law. This insurance company recently advised
EAI that it has no information at this time that would support EAI's claim of
coverage under any of the policies issued by it to EAI. EAI has asked for
reconsideration of its position and is awaiting a response. Settlement
discussions in this matter are ongoing.
Dependence on Key Executives
----------------------------
The Company is continually assessing and evaluating its management team.
The Company is and will continue to be dependent upon the ability and
experience of its executive officers, including Joseph R. Spalliero. There can
be no assurance that the Company will be able to retain experienced management.
If, for any reason, the Company is unable to retain such management, the
Company's operations could be adversely affected.
Possible Volatility of Stock Price
----------------------------------
The trading price of the Company's Common Stock could be subject to
significant fluctuations in response to variations in quarterly operating
results, general conditions in the electronics industry, general conditions in
the economy and other factors, including the relatively small number of shares
held publicly.
Limitation of Net Operating Loss Carryforward
---------------------------------------------
A limitation on the ability to utilize a portion of the Company's net
operating loss carryforwards, which amounted to approximately $23.4 million
as of December 31, 1994, may result if future stock ownership changes exceed
certain thresholds as defined in Section 382 of the Internal Revenue Code of
1986.
Future Sales of Common Stock
----------------------------
At March 31, 1995, the Company had approximately 10,480,000 shares of
Common Stock outstanding. Of these shares, approximately 7,500,000 shares
are "restricted" or "affiliate" securities as such terms are defined in the
Securities Act and may not be sold in the absence of registration under the
Securities Act or an exemption therefrom, including the exemption contained in
Rule 144. The Company has granted certain holders of restricted or affiliate
shares of Common Stock certain rights which enable such holders to require the
Company to register shares of Common Stock held by them, including without
limitation, (i) the 1,200,000 shares included in the February Units sold in the
February 1994 Private Placement, (ii) the 2,500,000 shares included in the June
Units sold by the Company in the June 1994 Private Placement, (iii) the
1,482,744 shares purchased upon exercise of the Class C Warrants included in the
June Units sold by the Company in the June 1994 Private Placement, and (iv) the
1,538,000 shares issued to stockholders of Tanon upon consummation of the Tanon
Acquisition on January 4, 1995. Of such shares, 6,725,000 shares are included in
the Registration Statement in which this Prospectus is a part. None of the
Company's approximately 7,500,000 restricted or affiliated securities
(9)
<PAGE>
outstanding as of March 31, 1995 are currently for sale in the public in
reliance upon Rule 144. As of December 31, 1994, the Company has granted to
employees and others options to purchase up to 3,352,836 shares of Common Stock,
of which all such shares are covered by currently effective registration
statements. The Company also expects to file a registration statement
shortly covering options issued to employees to purchase up to approximately
690,000 shares of Common Stock. The Company has also issued warrants which
are exercisable for an aggregate of approximately 4,500,000 shares of the
Company's Common Stock and which contain certain registration rights for
the underlying shares. Of such warrants, 3,876,084 shares (including
without limitation, the shares underlying the Class A Warrants and Class B
Warrants issued in the February 1994 Private Placement) are included in the
Registration Statement in which this Prospectus is a part. Possible or actual
sales made under Rule 144, or pursuant to exemptions under the Securities Act,
or pursuant to registration rights, of the aforementioned shares of Common Stock
or shares of Common Stock issued upon the exercise of the aforementioned stock
options or warrants may have a material adverse effect upon the market price of
the Company's Common Stock.
Control by Board of Directors
-----------------------------
As of March 31, 1995, all officers and directors of the Company as a
group beneficially owned approximately 3,235,806 shares or 26.75% of the
outstanding Common Stock or options or warrants exercisable for Common Stock,
assuming the exercise of presently exercisable options and warrants held by such
persons. Consequently, the Board of Directors can and will be able to continue
to exercise significant influence over the Company and its affairs.
Possible Issuances of Preferred Stock
-------------------------------------
Shares of Preferred Stock of the Company may be issued by the Board of
Directors of the Company, without shareholder approval, on such terms as
the Board of Directors may determine. The rights of the holders of Common Stock
will be subject to, and may be adversely affected by, the rights of the holders
of any Preferred Stock that may be issued in the future. Moreover, although the
ability to issue Preferred Stock may provide flexibility in connection with
possible acquisitions and other corporate purposes, such issuance may make it
more difficult for a third party to acquire, or may discourage a third party
from acquiring, control of the Company. The Company has no outstanding Preferred
Stock.
Provisions with Possible Anti-Takeover Effect
---------------------------------------------
The New Jersey Business Corporation Act ("NJBCA") provides that in
determining whether a proposal or offer to acquire a corporation is in the
best interests of the corporation, the corporation's board of directors may, in
addition to considering the effects of any action on shareholders, consider any
of the following: (a) the effects of the proposed action on the corporation's
employees, suppliers, creditors and customers, (b) the effects on the community
in which the corporation operates and (c) the long-term as well as short term
interests of the corporation and its shareholders, including the possibility
that these interests may best be served by the continued independence of the
corporation and if, based on these factors, the board of directors determines
that any such offer is not in the best interest of the corporation, it may
reject the offer. The New Jersey Shareholders Protection Act (the "Protection
Act"), prohibits a publicly held New Jersey corporation with its principal
executive office and significant business operations in New Jersey from engaging
in any business combination with an "Interested Shareholder" (defined generally
as a beneficial owner of 10% or more of the outstanding voting stock) for a
period of five years from the date the Interested Shareholder became an
Interested Shareholder, unless such transaction is approved by the board of
directors prior to the date the shareholder became an Interested Shareholder. In
addition, the Protection Act prohibits any business combination at any time with
an Interested Shareholder other than a transaction that (i) is approved by the
board of directors for the applicable company prior to the date the Interested
Shareholder became an Interested Shareholder; or (ii) is approved by the
affirmative vote
(10)
<PAGE>
of the holders of two-thirds of the voting stock not beneficially owned by the
Interested Shareholder at a meeting called for that purpose; or (iii) satisfies
certain stringent price and terms criteria.
The Company's Certificate of Incorporation and By-Laws provide that the
Board of Directors of the Company shall be divided into three classes, each
of which serves for a three year term, with one class standing for election
every year. As a result, it ordinarily requires two annual meeting cycles and
more than one year for stockholders holding a majority of the shares to elect a
majority of the Board. The Company has also adopted a Shareowners Rights Plan,
pursuant to which it has granted to shareholders one Preferred Stock Purchase
Right for each outstanding share of Common Stock. Under certain conditions,
each Right entitles shareholders to purchase one 1/100th of a share of Series A
Junior Participating Preferred Stock of the Company at an exercise price of
$11.00, which Rights expire in 1998. The Rights are exercisable only if a
person or group acquires 15% or more of EAI's outstanding Common Stock (except
in a transaction directly with the Company which the Board determines is in the
best interests of shareowners) or commences a tender offer the consummation of
which would result in ownership by a person or group of 15% or more of the
Common Stock. In the event a person or group acquires 15% or more of EAI's
outstanding Common Stock (except in a transaction directly with the Company
which the Board determines is in the best interest of shareowners) each Right
will entitle all other holders to receive, upon exercise, EAI Common Stock
with a value of twice the exercise price. In addition, at any time after a 15%
position is acquired, the Board of Directors may, at its option, require each
outstanding Right to be exchanged for one share of Common Stock. Further, if EAI
is acquired in a merger or other business combination transaction after the
Rights become exercisable, each Right will entitle its holder to purchase, at
the Right's then-current exercise price, a number of the acquiring company's
common shares having a value at that time of twice the Right's exercise price.
These provisions of New Jersey Law, the Company's Certificate of
Incorporation and By-Laws, and Preferred Stock Purchase Rights Plan could
delay or impede the removal of incumbent directors and could make a merger,
tender offer or proxy contest involving the Company more difficult, even if such
event could be beneficial to the interests of the stockholders. Such provisions
could limit the price that certain investors might be willing to pay in the
future for the Company's Common Stock.
(11)
<PAGE>
USE OF PROCEEDS
The Company will not receive any portion of the proceeds of the resale
of the Shares by the Selling Securityholders. However, the Company could
receive gross cash proceeds of up to approximately $6.5 million from the
issuance of the Shares upon the exercise of the Warrants, assuming the exercise
in full of the Warrants. As of the date of this Prospectus, none of the Warrant
Holders has exercised his or her Warrants and, therefore, no proceeds have been
received. There can be no assurance that any of the Warrants will be exercised.
In the event any of such Warrants is exercised, the net proceeds
therefrom will be used for working capital purposes. Pending expenditure,
the Company will invest the proceeds, if any, of the sale of Shares upon the
exercise of the Warrants in investment grade, interest-bearing securities.
(12)
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth historical consolidated financial data of
the Company for the three-month periods ended April 1, 1995 and March 31,
1994 and for each of the years in the five-year period ended December 31, 1994.
The selected historical consolidated financial data for each of the years ended
December 31, 1990 through 1994 presented below were derived from the
consolidated financial statements of the Company, which were audited by Arthur
Andersen LLP, independent public accountants. The financial data of the Company
for the three-month periods ended April 1, 1995 and March 31, 1994 were derived
from the unaudited consolidated condensed financial statements of the Company.
The results for the three-month periods ended April 1, 1995 and March 31, 1994
are not necessarily indicative of results for the full year or any future
period. This data should be read in conjunction with the Company's financial
statements and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" incorporated by reference in the Company's Form 10-K, as
amended on Form 10-K/A dated April 28, 1995, filed for the year ended December
31, 1994 and Form 10-Q filed for the quarter ended April 1, 1995.
<TABLE>
<CAPTION>
(thousands of dollars, except per share data)
Quarterly Period Ended
April 1 March 31 Year Ended December 31,
-----------------------------------------------------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
------------------------------------------------------------------------------------------------------------------------------------
Unaudited Unaudited
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Results: (Note 1)
Sales from Continuing
Operations .................................... $ 19,056 $ 5,377 $ 30,539 $ 26,024 $ 22,248 $ 22,933 $ 19,620
Provision (Credit) for
Restructuring ................................. $ -- -- 2,400 (68) 285 -- --
Loss from Continuing
Operations Before Taxes ...................... $ (8,064) (536) (4,784) (5,348) (3,524) (6,811) (497)
Loss from Continuing
Operations, Net .............................. $ (8,064) (536) (4,784) (4,664) (3,189) (5,227) (334)
Income from Discontinued
Operations, Net .............................. $ -- -- -- 1,327 651 1,531 793
Net Income (Loss) .............................. $ (8,598) (661) (4,784) (3,337) (2,538) (3,696) 459
Income (Loss) per
Common Share:
Continuing Operations ........................ $ (.84) (.19) (.95) (1.76) (1.22) (2.02) (.12)
Discontinued Operations ...................... $ -- -- -- .50 .25 .59 .28
Net Income (Loss) ............................ $ (.84) (.19) (.95) (1.26) (.97) (1.43) .16
------------------------------------------------------------------------------------------------------------------------------------
Balance Sheet Data:
Current Assets ............................... $ 23,977 -- 16,969 7,355 14,547 12,267 12,168
Current Liabilities .......................... $ 25,254 -- 12,603 8,614 11,594 5,019 4,339
Working Capital .............................. $ (1,277) -- 4,366 (1,259) 2,953 7,248 7,829
Net Property and
Equipment ................................... $ 5,139 -- 2,719 3,603 4,344 2,351 2,610
Total Assets ................................. $ 45,732 -- 22,845 12,762 19,836 14,805 15,153
Long-Term Debt ............................... $ 1,431 -- 690 1,820 1,678 605 703
Shareholders' Equity
(Deficit) ................................... $ 16,367 -- 7,244 (546) 2,776 5,137 9,671
Common Shares
Outstanding ................................. 10,484 -- 8,108 2,661 2,646 2,588 2,602
Book Value per
Common Share ................................ $ 1.56 -- .89 (.21) 1.05 1.99 3.72
------------------------------------------------------------------------------------------------------------------------------------
Other Data:
Number of Shareholders
of Record .................................. 4,417 -- 4,447 4,600 4,718 4,877 4,969
Number of Employees .......................... 520 -- 334 315 458 368 379
Orders Received .............................. $ 19,165 -- 30,326 18,805 31,592 20,064 24,656
Sales Backlog at End of
Period ..................................... $ 33,596 -- 19,240 19,453 26,676 17,260 20,239
------------------------------------------------------------------------------------------------------------------------------------
Note (1): 1995 amounts include the results of Tanon Manufacturing, Inc. from the date of the Tanon Acquisition (January 4, 1995)
and EAI's equity in the results of BarOn Technologies Ltd. from the date of the BarOn Investment (January 16, 1995).
</TABLE>
(13)
<PAGE>
SELECTED UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA
The following selected unaudited pro forma combined condensed
financial data for the year ended December 31, 1994, and three months ended
March 31, 1994, give effect to the consummation of the Tanon Acquisition
contemplated by the Agreement and Plan of Reorganization dated December 12, 1994
(the "Tanon Acquisition Agreement") accounted for under the purchase method of
accounting and the BarOn Investment contemplated by the BarOn Stock Purchase
Agreements between the Company and various shareholders of BarOn and the BarOn
Investment Agreement between the Company and BarOn accounted for as a purchase
of a minority interest using the equity method of accounting. The unaudited pro
forma combined condensed statements of operations assume the Tanon Acquisition
and BarOn Investment were consummated on January 1, 1994. The selected
unaudited pro forma combined condensed financial data exclude any nonrecurring
costs expected to be incurred by EAI and Tanon in connection with the Tanon
Acquisition contemplated by the Tanon Acquisition Agreement. Also excluded from
the selected unaudited pro forma combined condensed financial data are any
benefits that may result from the Tanon Acquisition due to synergies that may
be derived and the elimination of duplicate efforts. The pro forma financial
data presented are for informational purposes only and are not necessarily
indicative of the results that actually would have occurred had the Tanon
Acquisition and BarOn Investment been consummated on the dates indicated or the
results that may occur in the future. This data should be read in conjunction
with the Company's financial statements and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" incorporated by
reference in the Company's Form 10-K, as amended on Form 10-K/A dated April 28,
1995, filed for the year ended December 31, 1994 and Form 10-Q filed for the
quarter ended April 1, 1995 and pro forma financial statements and notes
related thereto incorporated by reference in the Company's Current Report on
Form 8-K dated January 4, 1995, as amended, relating to the Tanon Acquisition,
Current Report on Form 8-K dated January 16, 1995, as amended, relating to the
BarOn Investment, and Current Report on Form 8-K dated May __, 1995, relating to
updated pro forma financial data and historical financial statements for Tanon
and BarOn.
<TABLE>
<CAPTION>
(thousands of dollars)
For the Three For the Year
Months Ended Ended
March 31, 1994 December 31, 1994
-------------- -----------------
<S> <C> <C>
Operating Results:
Sales .................................................. $ 16,730 $ 81,274
Costs and Expenses
Costs of Sales ............................... 15,448 75,256
Selling, General and Administrative .......... 1,806 8,179
Other Expenses, Net .......................... 358 1,456
-------- --------
Total Costs and Expenses ............................... 17,612 84,891
-------- --------
Net Loss ............................................... $ (882) $ (3,617)
======== ========
Loss per Common Share .................................. $ (.14) $ (.45)
======== ========
Weighted Average Number of Common Shares Outstanding ... 6,313 7,957
======== ========
</TABLE>
(14)
<PAGE>
PLAN OF DISTRIBUTION AND
SELLING SECURITYHOLDERS
The Shares will be offered by the Selling Securityholders or their donees
for resale by this Prospectus from time to time after the date hereof in one or
more transactions on the NYSE, in negotiated transactions, or private
transactions, or otherwise, or a combination of such methods of sale, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices. The Selling Securityholders may effect
such transactions by selling the Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of underwriting discounts,
concessions or commissions (which compensation may be in excess of customary
commissions). The following table sets forth as of April 30, 1995 (a) the name
of each Selling Securityholder, (b) the nature of any position, office or other
material relationship which the Selling Securityholder has had within the past
three years with the Company, (c) the number of Shares owned prior to the
offering, (d) the number of Shares to be offered for the Selling
Securityholder's account, (e) the number of Shares to be owned by the Selling
Securityholder after completion of the offering, and (f) the percentage of
Common Stock to be owned by the Selling Securityholder after completion of the
offering.
<TABLE>
<CAPTION>
Percentage
Number of of Common
Number of Shares Stock
Relation- Shares Number of Owned Owned
Name of Selling ship to Owned Prior Shares After After
Securityholder Company(1) to Offering Offered Offering(8) Offering(8)
--------------- ---------- ----------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Laura Huberfeld .................... 1,058,826(2) 1,058,826 -0- -0-
Naomi Bodner ....................... 1,058,826(2) 1,058,826 -0- -0-
Dale Enterprises, Inc. ............. 529,413(2) 529,413 -0- -0-
Daniel Lemberg ..................... 529,413(2) 529,413 -0- -0-
Cong. Ahavas Tzdokah
V'chesed ........................... 114,714(2) 114,714 -0- -0-
Rita Folger ........................ 88,233(2) 88,233 -0- -0-
Martin Chopp ....................... 35,292(2) 35,292 -0- -0-
Shushana Mueller ................... 35,292(2) 35,292 -0- -0-
Ezra Birnbaum ...................... 17,646(2) 17,646 -0- -0-
L.B. Partners, L.P ................. 17,646(2) 17,646 110,000 1%
and
110,000
Seth Joseph Antine ................. Director 19,646(2) 17,646 2,000 less than 1%
Daniel Bock ........................ 17,646(2) 17,646 -0- -0-
Moses Mayer ........................ 17,646(2) 17,646 -0- -0-
Nachum Barnesky .................... 17,646(2) 17,646 -0- -0-
Moses Elias ........................ 17,646(2) 17,646 -0- -0-
Reuvain Schepansky ................. 17,646(2) 17,646 -0- -0-
Fred Rudy .......................... 8,823(2) 8,823 -0- -0-
</TABLE>
(15)
<PAGE>
<TABLE>
<CAPTION>
Percentage
Number of of Common
Number of Shares Stock
Relation- Shares Number of Owned Owned
Name of Selling ship to Owned Prior Shares After After
Securityholder Company(1) to Offering Offered Offering(8) Offering(8)
--------------- ---------- ----------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Charles A. Milo and Former 1,225,250(3) 1,225,250 -0- -0-
Loretta W. Milo, Joint Director,
Tenants President and
CEO
185 Monmouth Parkway
Associates, L.P ................... 230,000(4) 230,000 -0- -0-
Norcross Securities, Inc. ......... 50,000(5) 50,000 -0- -0-
Mezzanine Financial
Fund, L.P ......................... 75,000(6) 75,000 -0- -0-
Charles T. Parton ................. Former 11,000(7) 5,000 6,000 less than 1%
Chairman
Bruce F. Coe ...................... Former 10,000(7) 4,000 6,000 less than 1%
Director
George McCaffrey, III ............. 145,000(9) 145,000 -0- -0-
Michael P. McCaffrey .............. 145,000(9) 145,000 -0- -0-
Anthony B. Petrelli ............... 50,000(9) 50,000 -0- -0-
Eugene L. Neidiger ................ 48,000(9) 48,000 2,000 less than 1%
and
2,000
Charles C. Bruner ................. 48,000(9) 48,000 -0- -0-
Robert L. Parrish ................. 24,500(9) 24,500 -0- -0-
J. Henry Morgan ................... 19,500(9) 19,500 -0- -0-
Randall S. Mallett ................ 1,000(9) 1,000 -0- -0-
Regina L. Neidiger ................ 3,000(9) 3,000 -0- -0-
John J. Turk ...................... 16,000(9) 16,000 -0- -0-
William J. Geiger ................. 36,000(10) 36,000 -0- -0-
Chester Shure ..................... 36,000(10) 36,000 -0- -0-
Gruntal & Co. (Hollander IRA) ..... 15,000(10) 15,000 -0- -0-
Richard Koenig .................... 25,000(10) 25,000 -0- -0-
Geert Kersten ..................... 20,000(10) 20,000 -0- -0-
Albert Resnick .................... 36,000(10) 36,000 -0- -0-
All American Funding Corp. ........ 36,000(10) 36,000 -0- -0-
</TABLE>
(16)
<PAGE>
<TABLE>
<CAPTION>
Percentage
Number of of Common
Number of Shares Stock
Relation- Shares Number of Owned Owned
Name of Selling ship to Owned Prior Shares After After
Securityholder Company(1) to Offering Offered Offering(8) Offering(8)
--------------- ---------- ----------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
James A. Wiggins .................. 20,000(10) 20,000 -0- -0-
Lenore Katz ....................... 36,000(10) 36,000 -0- -0-
Molumply Capital .................. 10,000(10) 10,000 -0- -0-
Management Profit
Sharing Plan
Alvin M. Petersen ................. 10,000(10) 10,000 -0- -0-
Leo M. Harrison ................... 20,000(10) 20,000 -0- -0-
Bernard J. Meinerz Trust #1 ....... 16,000(10) 16,000 -0- -0-
John D. Ballard ................... 72,000(10) 72,000 -0- -0-
Cong. Ohel Yonah .................. 20,000(10) 20,000 -0- -0-
Lloyd D. Renard ................... 20,000(10) 20,000 -0- -0-
Gustave Birnberg .................. 20,000(10) 20,000 -0- -0-
LB Partners, L.P .................. 145,000(10) 145,000 -0- -0-
Robert/Viola Enright .............. 146,000(10) 146,000 -0- -0-
Jacob Koval ....................... 26,000(10) 26,000 -0- -0-
Porpoise Investors I, L.P. ........ 46,000(10) 46,000 -0- -0-
David/Esther Mann ................. 36,000(10) 36,000 -0- -0-
Jules Nordlicht ................... 550,000(10) 550,000 -0- -0-
Mark A. Nordlicht ................. 50,000(10) 50,000 -0- -0-
Norman Weiss ...................... 36,000(10) 36,000 -0- -0-
George M. Gilstrap ................ 40,348(10) 40,348 -0- -0-
Meshiva Yeshiva Rabbi
Chaim Berlin ...................... 18,000(10) 18,000 -0- -0-
Stephen R. Levy ................... 20,000(10) 20,000 -0- -0-
Philip Shaiman
Irrevocable Trust.................. 27,000(10) 27,000 -0- -0-
Philip Shaiman .................... 59,000(10) 59,000 -0- -0-
Universal Partners, L.P ........... 36,000(10) 36,000 -0- -0-
Joseph and Sylvia Tagnoli ......... 55,500(10) 55,500 -0- -0-
Presentation Homes
Profit Sharing Plan ............... 53,500(10) 53,500 -0- -0-
George D. Kickliter ............... 32,600(10) 32,600 -0- -0-
Jerry A. Hahn ..................... 65,500(10) 65,500 -0- -0-
</TABLE>
(17)
<PAGE>
<TABLE>
<CAPTION>
Percentage
Number of of Common
Number of Shares Stock
Relation- Shares Number of Owned Owned
Name of Selling ship to Owned Prior Shares After After
Securityholder Company(1) to Offering Offered Offering(8) Offering(8)
--------------- ---------- ----------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
H.K. Financial
Corporation ....................... 72,000(10) 72,000 -0- -0-
Southwest Securities fbo
C. Wesley Woodcock ................ 36,000(10) 36,000 -0- -0-
Southwest Securities fbo
Milton P. Kudlac................... 51,000(10) 51,000 -0- -0-
Russell D. Evans .................. 20,000(10) 20,000 -0- -0-
Philip Huberfeld .................. 10,000(10) 10,000 -0- -0-
Congregation Eitz Chaim ........... 36,000(10) 36,000 -0- -0-
Harry Slam ........................ 144,000(10) 144,000 -0- -0-
G. Corson Ellis, Jr ............... Director 36,000(10) 36,000 -0- -0-
Cong. Beth Mikroh Inc. ............ 36,000(10) 36,000 -0- -0-
Ilan Falkovich .................... 18,000(10) 18,000 -0- -0-
Isaac and Bina Levy ............... 10,000(10) 10,000 -0- -0-
Sara Esses c/o Rudy ............... 26,000(10) 26,000 -0- -0-
Jeffrey Rubin ..................... 18,000(10) 18,000 -0- -0-
Paramount Acquisition, Inc. ....... 32,521(10) 32,521 -0- -0-
Delaware Charter
Guarantee TTEE Custody
for Jerry Hahn, IRA ............... 10,000(10) 10,000 -0- -0-
Morris and Elaine Rubin ........... 36,000(10) 36,000 -0- -0-
J.M. Hull Associates, L.P. ........ 36,000(10) 36,000 -0- -0-
Robert P. Krauss .................. 166,000(10) 166,000 -0- -0-
Jack Mueller ...................... 40,000(10) 40,000 -0- -0-
K.K. Yankopolus, MD ............... 10,000(10) 10,000 -0- -0-
Harmonic Research Inc. ............ 20,000(10) 20,000 -0- -0-
Ohr Somayach/Joseph
Tanenbaum Education
Center ............................ 10,000(10) 10,000 -0- -0-
Lakewood Trading
Group, LLC ........................ 223,775(10) 223,775 -0- -0-
David Lewy ........................ 72,000(10) 72,000 -0- -0-
Joshua Silber ..................... 14,000(10) 14,000 -0- -0-
</TABLE>
(18)
<PAGE>
<TABLE>
<CAPTION>
Percentage
Number of of Common
Number of Shares Stock
Relation- Shares Number of Owned Owned
Name of Selling ship to Owned Prior Shares After After
Securityholder Company(1) to Offering Offered Offering(8) Offering(8)
--------------- ---------- ----------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Gross Foundation .................... 60,000(10) 60,000 -0- -0-
Paul and Lillian Lapa ............... 18,000(10) 18,000 -0- -0-
Alphonse Inclema .................... 40,000(10) 40,000 -0- -0-
Richard and Rhonda
Weinberg ............................ 22,000(10) 22,000 -0- -0-
LMWW Custodian fbo
Lewis Pearlstein P/S Plan ........... 20,000(10) 20,000 -0- -0-
Wagner Resources .................... 120,000(10) 120,000 -0- -0-
Wagner Equipment
Engineering Co. ..................... 439,000(10) 439,000 -0- -0-
Wagner Construction P/S
Plan ................................ 130,000(10) 130,000 -0- -0-
Lee James Wagner .................... 20,000(10) 20,000 -0- -0-
Wagner's Associated ................. 20,000(10) 20,000 -0- -0-
Phillip J. Kendall .................. 20,000(10) 20,000 -0- -0-
Wayne Alvey ......................... 91,033(11) 45,517 45,516 less than 1%
Frank D. Berry, Jr .................. 22,758(11) 22,758 -0- -0-
William H. Curry, Jr ................ 22,758(11) 22,758 -0- -0-
John Hogue .......................... 18,206(11) 18,206 -0- -0-
James Krehbiel ...................... 136,549(11) 68,275 68,274 less than 1%
H. Glenn Lutge ...................... 13,654(11) 13,654 -0- -0-
Bruce McGraw ........................ 72,826(11) 72,826 -0- -0-
Margaret C. Myers ................... 29,585(11) 29,585 -0- -0-
Paul I. Myers, III .................. 9,103(11) 9,103 -0- -0-
Paul I. Myers, III,
Executor of the Estate of
Paul I. Myers ....................... 29,585(11) 29,585 -0- -0-
Mauro Pappalardo .................... 9,103(11) 9,103 -0- -0-
Dominic Vincent
Spalliero ........................... 4,551(11) 4,551 -0- -0-
Joseph R. Spalliero ................. President 992,259(11) 496,130 496,129 4.7%
and Director
Tracie Anne Spalliero ............... 4,551(11) 4,551 -0- -0-
</TABLE>
(19)
<PAGE>
<TABLE>
<CAPTION>
Percentage
Number of of Common
Number of Shares Stock
Relation- Shares Number of Owned Owned
Name of Selling ship to Owned Prior Shares After After
Securityholder Company(1) to Offering Offered Offering(8) Offering(8)
--------------- ---------- ----------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Joseph Robert Spalliero,
Jr ................................... 4,551(11) 4,551 -0- -0-
Vincent J. Spalliero ................. 4,551(11) 4,551 -0- -0-
Cheryl Vaughn ........................ 45,516(11) 45,516 -0- -0-
Robert Zehntner ...................... 27,309(11) 27,309 -0- -0-
</TABLE>
--------------------------------------
(1) Except as expressly set forth in the table, each of the Selling
Securityholders has had no relation to the Company within the past three years.
(2) Such Selling Securityholder, who is also a Warrant Holder, as
defined under this Prospectus, purchased units comprised of one share of Common
Stock, one Class A Warrant exercisable for one share of Common Stock at $1.00
per share (the "Class A Warrants") and one Class B Warrant exercisable for one
share of Common Stock at $1.75 per share (the "Class B Warrants"), in the
Company's February 1994 Private Placement. Accordingly, of such total number of
Shares offered hereunder, one-third of such Shares represent the shares in the
units, one-third of such Shares are issuable upon exercise of the Class A
Warrants and one-third of such Shares are issuable upon exercise of the Class B
Warrants.
(3) As of May 31, 1994, in connection with the Company's sale of
units in the February 1994 Private Placement, Charles A. Milo, former President
and Director of the Company, received written notice by the holders of not
less than 300,000 of such units, exercising their Conversion Right requiring
the outstanding indebtedness incurred by the Company in connection with the Milo
Acquisition and evidenced by the MTI Note to be automatically converted into
398,042 units on the basis of $0.85 per unit. Accordingly, of such total number
of Shares offered hereunder, 398,042 of such Shares represent the shares in the
units, 398,042 of such Shares are issuable upon exercise of Class A Warrants and
398,042 of such Shares are issuable upon exercise of Class B Warrants. The
balance of 31,124 Shares were acquired in the Milo Acquisition.
(4) Represents (i) 100,000 Shares of Company's Common Stock and (ii)
a warrant to purchase 130,000 shares of Company's Common Stock, exercisable from
August 4, 1995 through August 4, 1998 at a purchase price of $1.50 per Share.
The 100,000 Shares were purchased pursuant to a Subscription Agreement by and
between Company and 185 Monmouth Parkway Associates, the Landlord of the
Company's West Long Branch facility, which Shares were consideration for a rent
abatement of approximately $114,000 over the period February, 1994 through
March, 1995. The warrant to purchase 130,000 shares was granted by the Company
to the Landlord in exchange for certain rent abatements totaling approximately
$2.7 million granted during the 1993 renegotiation of the Company's lease at its
West Long Branch facility.
(5) Represents a warrant to purchase up to 50,000 Shares of the
Company's Common Stock at the price of $1.00 per share through January 6, 1998.
The Company has agreed to grant to Norcross a warrant to purchase up to an
additional 50,000 shares of the Company's Common Stock at the price of $1.00 per
share through January 6, 1998 if all of the Class A Warrants comprising a
portion of the units of securities sold in the February 1994 Private Placement
are exercised. The warrant to purchase 50,000 Shares and the agreement to issue
another such warrant were granted to Norcross pursuant to a Letter Agreement
dated January 28, 1994 by and between Norcross and the Company, in exchange for
investment banking services provided by Norcross in connection with the
Company's February 1994 Private Placement.
(6) Represents the shares that were acquired by Mezzanine in full
payment of the fee payable by the Company on August 12, 1994, under the
Mezzanine Participation in the Congress Loan Agreement pursuant to Mezzanine's
option to convert such fee into shares of Company's Common Stock.
(7) Effective May 2, 1994 Charles T. Parton, former Chairman of the
Company's Board of Directors, and Bruce F. Coe resigned as directors of the
Company. Options granted to each of them under the Company's 1994 Directors Plan
were cancelled and the Board of Directors awarded 5,000 shares of Common Stock
to Mr. Parton and 4,000 shares of Common Stock to Mr. Coe in each case.
(8) Assumes that all Shares which are registered are sold in the
Offering. Also, calculation is based on approximately 10,480,000 shares of EAI
Common Stock outstanding at March 31, 1995.
(9) Represents the Unit Warrants to purchase, in the aggregate,
250,000 units (each unit consisting of one share of Common Stock of the Company
and a Class C Warrant to purchase one share of Common Stock at the price of
$4.60 per share) issued by the
(20)
<PAGE>
Company to Neidiger, Tucker, Bruner, Inc. ("NTB") in consideration of the
placement agent services performed by NTB in the June 1994 Private Placement,
which NTB Unit Warrants were assigned by NTB to the named officers and
employees of NTB. The NTB Unit Warrants are exercisable for a period of 5 years
at an exercise price of $3.025 per unit. Accordingly, of such total number of
Shares offered hereunder, one-half of such Shares represent the shares issuable
upon exercise of the NTB Unit Warrants and one-half of such Shares represent
the shares issuable upon exercise of the Class C Warrants issuable upon
exercise of the NTB Unit Warrants.
(10) Such shares were purchased in the June 1994 Private Placement
and also upon exercise of the Class C Warrants to purchase one share of Common
Stock at the purchase price of $4.60 per share sold as part of the units issued
in the June 1994 Private Placement.
(11) Such shares were acquired in the Tanon Acquisition.
(21)
<PAGE>
LEGAL MATTERS
The validity of the shares being offered hereby will be passed upon for the
Company by Mesirov Gelman Jaffe Cramer & Jamieson, 1735 Market Street,
Philadelphia, Pennsylvania 19103-7598. Richard P. Jaffe, a partner of such law
firm, is the Secretary of the Company.
EXPERTS
The audited financial statements and schedules of Electronic Associates,
Inc., incorporated by reference in this Prospectus and in the Registration
Statement of which the Prospectus is a part, have been audited by Arthur
Andersen LLP, independent public accountants, as stated in their report included
therein, and have been included herein in reliance upon the authority of said
firm as experts in accounting and auditing in giving said report.
The audited financial statements and schedules of Tanon Manufacturing, Inc.
as of and for the year ended December 31, 1994, incorporated by reference in
this Prospectus and in the Registration Statement of which the Prospectus is a
part, have been audited by Arthur Andersen LLP, independent public accountants,
as stated in their report included therein, and have been included herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said report.
The financial statements of Tanon Manufacturing, Inc. as of and for the
year ended December 31, 1993, incorporated by reference in this Prospectus and
in the Registration Statement of which the Prospectus is a part, have been
included herein in reliance upon the report of KPMG Peat Marwick LLP,
independent auditors, included therein, and upon the authority of said firm as
experts in accounting and auditing.
The financial statements of Tanon Manufacturing, Inc. as of December 31,
1992 and for the years ended December 31, 1992 and 1991, incorporated by
reference in this Prospectus and in the Registration Statement of which the
Prospectus is a part, have been included herein and in the Registration
Statement in reliance upon the report of Shilling & Kenyon Inc., certified
public accountants, included therein, and upon the authority of said firm as
experts in accounting and auditing.
The financial statements of BarOn as of December 31, 1994 and for the years
ended December 31, 1993 and 1992, incorporated by reference in this Prospectus
and in the Registration Statement of which the Prospectus is a part, have been
included herein and in the Registration Statement in reliance upon the report of
Luboshitz, Kasierer & Co. and Yosef Shimony, certified public accountants,
included therein, and upon the authority of said firms as experts in accounting
and auditing.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
As authorized under New Jersey law, the Company's Certificate of
Incorporation eliminates the personal liability of directors and officers to the
Company and its shareholders for monetary damages for acts or omissions
(including negligent and grossly negligent acts or omissions) in violation of
directors' and officers fiduciary duties of care. The duty of care refers to the
fiduciary duty of directors and officers to manage the affairs of the
corporation with the same degree of care as would be applied by an "ordinarily
prudent person under similar circumstances." The Certificate of Incorporation
does not, however, in any way eliminate or limit the liability of a director or
officer for breaching his duty of loyalty (i.e., the duty to refrain from fraud,
self-dealing, and transactions involving improper conflicts of interest) to the
Company or its shareholders, failing to act in good faith, or knowingly
violating or obtaining an improper personal benefit. These provisions do not
have
(22)
<PAGE>
any effect on the availability of equitable remedies (such as an injunction or
rescission) for breach of fiduciary duty. However, as a practical matter,
equitable remedies may not be available in particular circumstances.
Article 37 of the Company's by-laws ("Article 37") provides, among other
things, that the Company shall, to the fullest extent permitted by the laws of
the State of New Jersey as from time to time in effect, indemnify any person who
is or was made a party or is threatened to be made a party to any proceeding by
reason of the fact that he is or was a director or officer of the Company or,
while serving as a director or officer of the Company, is or was serving at the
request of the Company as a director, officer, trustee, employee or agent of
another corporation, partnership, trust, employee benefit plan or other
enterprise against all expenses and liabilities. Article 37 further provides
that the Company shall, from time to time, reimburse or advance to any such
director or officer the funds necessary for payment of expenses incurred in
connection with any proceeding, upon receipt of a written undertaking by or on
behalf of such director or officer to repay such amount unless it shall
ultimately be determined that he is entitled to indemnification. The rights and
authority conferred in Article 37 are not exclusive of any other right which an
indemnified party may have or acquire under any statute, provision of the
Company's by-laws, agreement, vote of the shareholders or directors or
otherwise. The Company's by-laws specify that the right to indemnification is a
contract right, enforceable against the Company with respect to any act or
omission which occurs while such by-law provision is in effect, even if such
by-law provision is not in effect when the claim for indemnification is made.
The NJBCA generally provides that a corporation may, and in certain
circumstances, shall, indemnify its officers, directors, employees and agents
("Corporate Agents"), Corporate Agents of constituent corporations that it has
absorbed by merger or consolidation, and Corporate Agents of other corporations
if such Corporate Agents serve at the indemnifying corporation's request. A
corporation may indemnify such Corporate Agent in a civil proceeding if the
Corporate Agent acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the corporation and, in a criminal
proceeding, if he had no reasonable cause to believe his conduct was unlawful,
except that indemnification is not permitted in an action by or in the right of
the corporation if the Corporate Agent is adjudged to be liable to the
corporation, unless the court in which the proceeding was brought shall have
determined that indemnification is appropriate in light of the circumstances of
the case.
The Company has purchased and maintains insurance for its officers and
directors against certain liabilities, including liabilities under the
Securities Act. The effect of such insurance is to indemnify any officer or
director of the Company against expenses, judgements, fines, attorney's fees and
other amounts paid in settlements incurred by him, subject to certain
exclusions. Such insurance does not insure against any such amount incurred by
an officer or director as a result of his own dishonesty.
These provisions of the Company's Certificate of Incorporation and By-laws
apply only to claims against a director or officer arising out of his
service in such a capacity. Insofar as indemnification for liabilities arising
under the Securities Act of 1933, as amended, may be permitted to directors,
officers or persons controlling the Company pursuant to the foregoing
provisions, the Company has been informed that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and therefore is unenforceable.
(23)
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
-------------------------------------------
<TABLE>
<S> <C>
SEC registration fee $ 22,367
Legal fees and expenses 150,000*
Accounting fees and expenses 100,000*
Blue sky fees and expenses 2,000*
Printing costs 15,000*
Miscellaneous 5,633*
--------
TOTAL $295,000*
========
</TABLE>
-------------------
*Estimated.
Item 15. Indemnification of Directors and Officers
-----------------------------------------
As authorized under New Jersey law, the Company's Certificate of
Incorporation eliminates the personal liability of directors and officers
to the Company and its shareholders for monetary damages for acts or omissions
(including negligent and grossly negligent acts or omissions) in violation of
directors' and officer's fiduciary duties of care. The duty of care refers to
the fiduciary duty of directors and officers to manage the affairs of the
corporation with the same degree of care as would be applied by an "ordinarily
prudent person under similar circumstances." The Certificate of Incorporation
does not, however, in any way eliminate or limit the liability of a director or
officers for breaching his duty of loyalty (i.e., the duty to refrain from
fraud, self-dealing, and transactions involving improper conflicts of interest)
to the Company or its shareholders, failing to act in good faith, knowingly
violating or obtaining an improper personal benefit. These provisions do not
have any effect on the availability of equitable remedies (such as an injunction
or rescission) for breach of fiduciary duty. However, as a practical matter,
equitable remedies may not be available in particular circumstances.
Article 37 of the Company's by-laws ("Article 37") provides, among other
things, that the Company shall, to the fullest extent permitted by the laws
of the State of New Jersey as from time to time in effect, indemnify any person
who is or was made a party or is threatened to be made a party to any proceeding
by reason of the fact that he is or was a director or officer of the Company or,
while serving as a director or officer of the Company, is or was serving at the
request of the Company as a director, officer, trustee, employee or agent of
another corporation, partnership, trust, employee benefit plan or other
enterprise against all expenses and liabilities. Article 37 further provides
that the Company shall, from time to time, reimburse or advance to any such
director or officer the funds necessary for payment of expenses incurred in
connection with any proceeding, upon receipt of a written undertaking by or on
behalf of such director or officer to repay such amount unless it shall
ultimately be determined that he is entitled to indemnification. The rights and
authority conferred in Article 37 are not exclusive of any other right which an
indemnified party may have or acquire under any statute, provision of the
Company's by-laws, agreement, vote of the shareholders or directors or
otherwise. The Company's by-laws specify that the right to indemnification is a
contract right, enforceable against the Company with respect to any act or
omission which occurs while such by-law provision is in effect, even if such
by-law provision is not in effect when the claim for indemnification is made.
II-1
<PAGE>
The NJBCA generally provides that a corporation may, and in certain
circumstances, shall, indemnify its officers, directors, employees and
agents ("Corporate Agents"), Corporate Agents of constituent corporations that
it has absorbed by merger or consolidation, and Corporate Agents of other
corporations if such Corporate Agents serve at the indemnifying corporation's
request. A corporation may indemnify such Corporate Agent in a civil proceeding
if the Corporate Agent acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation and,
in a criminal proceeding, if he had no reasonable cause to believe his conduct
was unlawful, except that indemnification is not permitted in an action by or in
the right of the corporation if the Corporate Agent is adjudged to be liable to
the corporation, unless the court in which the proceeding was brought shall have
determined that indemnification is appropriate in light of the circumstances of
the case.
The Company has purchased and maintains insurance for its officers and
directors against certain liabilities, including liabilities under the
Securities Act. The effect of such insurance is to indemnify any officer or
director of the Company against expenses, judgements, fines, attorney's fees and
other amounts paid in settlements incurred by him, subject to certain
exclusions. Such insurance does not insure against any such amount incurred by
an officer or director as a result of his own dishonesty.
II-2
<PAGE>
Item 16. Exhibits
--------
<TABLE>
<CAPTION>
Exhibit No.
<S> <C>
+^2.1 Agreement and Plan of Reorganization by and among Electronic Associates, Inc.,
Tanon Manufacturing, Inc., EA Acquisition Corp. and Joseph R. Spalliero, dated
December 12, 1994.
^2.2 Form of Investment Agreement dated January 16, 1995 by and between Electronic
Associates, Inc. and BarOn Technologies Ltd., was filed as Exhibit 10.1 to the
Company's Current Report on Form 8-K (Date of Report: January 16, 1995), as
amended, and is hereby incorporated herein by reference.
^2.3 Form of Stock Purchase Agreement, dated January 10, 1995, between the Company
and various shareholders of BarOn Technologies Ltd., was filed as Exhibit 10.2
to the Company's Current Report on Form 8-K (date of report: January 16,
1995), as amended, and is hereby incorporated herein by reference.
^2.4 Form of Shareholders Agreement, dated January 16, 1995, among the Company,
BarOn Technologies Ltd., and the shareholders of BarOn Technologies Ltd.,
was filed as Exhibit 10.3 to the Company's Current Report on Form 8-K (Date of
Report: January 16, 1995), as amended, and is hereby incorporated herein by
reference.
+4.1 Specimen of Common Stock share Certificate.
4.2 Rights Agreement, dated as of February 10, 1988, between the Company and
Manufacturers Hanover Trust Company, as Rights Agent, was filed as
Exhibit 1 to the Company's Form 8-A, dated February 11, 1988, and is hereby
incorporated by reference. (File No. 1-4680)
4.3 Amendment, dated as of October 24, 1990, to the Rights Agreement, was filed as
Exhibit 2 to the Company's Form 8, dated October 24, 1990, and is hereby
incorporated by reference.
*5 Opinion of Mesirov Gelman Jaffe Cramer & Jamieson.
+23.1 Consent of Mesirov Gelman Jaffe Cramer &
Jamieson is included in their opinion filed as
Exhibit 5 hereto.
23.2 Consent of Arthur Andersen LLP, Independent Public Accountants of Electronic
Associates, Inc.
23.3 Consent of KPMG Peat Marwick LLP, Independent Auditors of Tanon
Manufacturing, Inc.
23.4 Consent of Shilling & Kenyon Inc., Certified Public Accountants of Tanon
Manufacturing, Inc.
*23.5 Consent of Luboshitz, Kasierer & Co., and Yosef Shimony, Independent Auditors
of BarOn Technologies Ltd.
*23.6 Consent of Arthur Andersen LLP, Independent Public Accountants of Tanon
Manufacturing, Inc.
+24 Power of attorney (set forth on signature page hereto).
</TABLE>
-------
+ Previously Filed.
^ The Company will furnish supplementally to the Commission, upon request,
copies of any Appendices, Schedules and Exhibits to the named Agreement
which are omitted from Exhibit Nos. 2.1 through 2.4.
* To be filed by amendment.
II-3
<PAGE>
Item 17. Undertakings
------------
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933 (the "Act");
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement:
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the undersigned Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability
under the Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the provisions discussed in Item 14 of this registration statement,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all
requirements for filing on Form S-3 and has duly caused this Amendment No. 3
to this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of West Long Branch, New Jersey on
the 23rd day of May, 1995.
ELECTRONIC ASSOCIATES, INC.
By: /s/ JOSEPH R. SPALLIERO
------------------------------
Joseph R. Spalliero, President
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 3
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ IRWIN L. GROSS Chairman of the Board May 23, 1995
-----------------------
Irwin L. Gross
/s/ JOSEPH R. SPALLIERO President and Director May 23, 1995
----------------------- (Principal Executive
Joseph R. Spalliero Officer)
/s/ JONATHAN R. WOLTER Treasurer and Vice May 23, 1995
----------------------- President, Finance
Jonathan R. Wolter Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ BRUCE P. MURRAY Director May 23, 1995
-----------------------
Bruce P. Murray
/s/ JULES M. SESHENS Director May 23, 1995
-----------------------
Jules M. Seshens
</TABLE>
[Signatures continued on next page]
II-5
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ G. CORSON ELLIS Director May 23, 1995
-----------------------
G. Corson Ellis
/s/ SETH JOSEPH ANTINE Director May 23, 1995
-----------------------
Seth Joseph Antine
______________________ Director ____________, 1995
Michael M. Michigami
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page No.
<S> <C> <C>
+^2.1 Agreement and Plan of Reorganization by and Among Electronic Associates, Inc.,
Tanon Manufacturing, Inc., EA Acquisition Corp. and Joseph R. Spalliero, dated
December 12, 1994.
^2.2 Form of Investment Agreement dated January 16, 1995 by and between Electronic
Associates, Inc. and BarOn Technologies Ltd., was filed as Exhibit 10.1 to the
Company's Current Report on Form 8-K (Date of Report: January 16, 1995), as
amended, and is hereby incorporated herein by reference.
^2.3 Form of Stock Purchase Agreement dated January 10, 1995 between the Company
and various shareholders of BarOn Technologies Ltd., was filed as Exhibit 10.2
to the Company's Current Report on Form 8-K (date of report: January 16, 1995),
as amended, and is hereby incorporated herein by reference.
^2.4 Form of Shareholders Agreement dated January 16, 1995 among the Company, BarOn
Technologies Ltd., and the shareholders of BarOn Technologies Ltd., was filed
as Exhibit 10.3 to the Company's Report on Form 8-K (Date of Report: January 16,
1995), as amended, and is hereby incorporated herein by reference.
+4.1 Specimen of Common Stock share Certificate.
4.2 Rights Agreement, dated as of February 10, 1988, between the Company and
Manufacturers Hanover Trust Company, as Rights Agent, was filed as Exhibit 1 to
the Company's Form 8-A, dated February 11, 1988, and is hereby incorporated by
reference. (File no. 1-4680)
4.3 Amendment, dated as of October 24, 1990, to the Rights Agreement, was filed as
Exhibit 2 to the Company's Form 8, dated October 24, 1990, and is hereby
incorporated by reference.
*5 Opinion of Mesirov Gelman Jaffe Cramer & Jamieson.
+23.1 Consent of Mesirov Gelman Jaffe Cramer & Jamieson is included in their opinion
filed as Exhibit 5 hereto.
23.2 Consent of Arthur Andersen LLP, Independent Public Accountants of Electronic
Associates, Inc.
23.3 Consent of KPMG Peat Marwick LLP, Independent Auditors of Tanon
Manufacturing, Inc.
23.4 Consent of Shilling & Kenyon Inc., Certified Public Accountants of Tanon
Manufacturing, Inc.
*23.5 Consent of Luboshitz, Kasierer & Co., and Yosef Shimony, Independent Auditors of
BarOn Technologies Ltd.
*23.6 Consent of Arthur Andersen LLP, Independent Public Accountants of Tanon
Manufacturing, Inc.
+24 Power of attorney (set forth on signature page hereto).
</TABLE>
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+ Previously Filed.
^ The Company will furnish to the Commission, upon request, copies of any
Appendices, Schedules and Exhibits to the named Agreement which are
omitted from Exhibit Nos. 2.1 through 2.4.
* To be filed by amendment.
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
To Electronic Associates, Inc:
As independent public accountants, we hereby consent to the incorporation
by reference in the Form S-3 Registration Statement of our report dated April
14, 1995 included in Electronic Associates, Inc.'s Form 10-K for the year ended
December 31, 1994, as amended by Form 10-K/A dated April 28, 1995, and to all
references to our firm included in or made a part of this registration
statement.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Roseland, New Jersey
May 18, 1995
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Electronic Associates, Inc:
We consent to the incorporation by reference in the Registration Statement
on Form S-3 of Electronic Associates, Inc. of our report dated March 31, 1994,
with respect to the balance sheet of Tanon Manufacturing, Inc. as of December
31, 1993 and the related statements of operations, shareholders' equity and cash
flows for the year ended December 31, 1993, which report appears in the Form
8-K of Electronic Associates, Inc. dated January 4, 1995. We also consent to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
San Jose, California
May 18, 1995
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
To Electronic Associates, Inc.:
As independent public accountants of Tanon Manufacturing, Inc., we hereby
consent to the incorporation by reference in this Form S-3 Registration
Statement of our report dated September 23, 1994 included in the financial
statements of Tanon Manufacturing, Inc as of December 31, 1992 and for the years
ended December 31, 1992 and 1991 filed as part of Exhibit 99 to Electronic
Associates, Inc.'s Form 8-K (date of report: January 4, 1995), as amended by
Form 8-K/A dated March 17, 1995 and to all references to our firm included in
or made a part of this registration statement.
/s/ SHILLING & KENYON, INC.
SHILLlNG & KENYON, INC.
San Jose, California
May 18, 1995
