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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [Fee Required]
For the fiscal year ended December 31, 1995
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]
For the transition period from to
Commission File No. 0-7870
EVRO Corporation
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(Name of Small Business Issuer in Its Charter)
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<S> <C>
Florida 59-3229961
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(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1509 South Florida Avenue, Suite 3, Lakeland, Florida 33803
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(Address of Principal Executive Offices) (Zip Code)
523 Douglas Avenue, Altamonte Springs, Florida 32714
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(Former Address) (Zip Code)
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Issuer's telephone number (941) 683-3333
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Securities registered under Section 12(b) of the Exchange Act:
Name of each Exchange
Title of Each Class on Which Registered
None NASDAQ
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Securities registered under Section 12(g) of the Exchange Act:
Common Stock (No par value) (Title of Class)
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Check whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No The Exhibit Index appears on page 92.
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Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [ ]
The issuer's revenues for its most recent fiscal year were:
$1,635,962.
The aggregate market value of the voting stock held by non-affiliates
of the registrant on March 29, 1996 totaled $4,592,850 (computed by reference
to the closing bid price on March 29, 1996 ($2.22).
The number of shares outstanding of registrant's common stock, no par
value, at March 29, 1996, was 2,497,665 shares.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
INTRODUCTION
EVRO Corporation, a Florida corporation ("EVRO") operates three
separate businesses - a home shopping business, an entertainment business and a
recreational vehicle ("RV") campground business. EVRO operates the home
shopping business through two subsidiaries, The Sports & Shopping Network,
Inc., a Florida corporation ("TSSN") and The Shopping Connection, Inc., a
Florida corporation ("TSC"). Both TSSN and TSC are based in Orlando, Florida.
EVRO operates its entertainment business through its partially owned
subsidiary, Channel America Television Network, Inc. ("Channel America"), a
Delaware corporation based in Darien, Connecticut. EVRO operates its RV
campground business through its wholly owned subsidiary, Technology Holdings,
Inc., a Florida corporation ("THI").
HISTORICAL OPERATIONS
EVRO was organized February 5, 1946, under the name of Moreno-Cripple
Creek Corporation, which name was changed to Moreno Uranium Corporation on
March 12, 1954, to EnviroSearch Corp. on March 10, 1970, to EVRO Financial
Corp. on September 17, 1986, and finally to EVRO Corporation on March 1, 1994.
During 1990, EVRO entered into the RV campground business by acquiring
all of the stock of Treasure Rockhound Ranches, Inc., a Texas corporation
("Treasure Rockhound"). EVRO expanded this business in 1994, by acquiring a
46-acre RV campground in Glen Rose, Texas. EVRO formed a wholly owned
subsidiary, Tres Rivers, Inc. ("Tres Rivers"), a Texas corporation, to acquire
all of the assets of Three Rios, Ltd., the former owner of the RV campground
located in Glen Rose, Texas.
During 1992, EVRO acquired Lintronics Technologies, Inc., a Florida
corporation ("Lintronics") that manufactured breast-imaging devices, used to
detect breast abnormalities. EVRO expanded into other health related fields by
acquiring a majority interest in TGHC, Inc., a Florida corporation ("TGHC"),
formerly known as The Good Health Channel, Inc., that was engaged in the
business of providing health information programming designed for physician
waiting rooms. EVRO also formed EVRO Trading Corp., a Florida corporation
("EVRO Trading") in June 1994, and Lintronics formed Imaging Technologies, Inc.
("Imaging"), a foreign corporation, to manufacture and export Lintronics'
breast- imaging devices as well as other medical products. EVRO discontinued
its health related businesses in December 1994 and there has been no activity
in such businesses other than ordinary winding-up activities.
On January 20, 1995, EVRO organized THI and contributed all of its
then existing assets to THI, including 100% of the issued and outstanding
common stock of Treasure Rockhound and Tres
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Rivers. In connection with such transfer, THI assumed all of the then existing
liabilities of EVRO as of March 14, 1995.
During 1995, EVRO expanded its business operations by entering into
the home shopping and entertainment business. On March 14, 1995, EVRO acquired
98.35% of the issued and outstanding shares of the common stock of The Sports &
Shopping Network, Inc., a Florida corporation ("TSSN"), a development stage
company that owns and operates a television shopping network. EVRO
subsequently acquired the remaining shares of the issued and outstanding shares
of the common stock of TSSN and currently owns 100% of the common stock of
TSSN.
EVRO further expanded its home shopping and entertainment business in
October 1995 by acquiring Channel America.
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MATERIAL ACQUISITIONS - 1995
TSSN ACQUISITION
During 1994, The Stellar Companies, Inc. ("Stellar"), the former owner
of 98.35% of the shares of the common stock of TSSN (the "TSSN Shares"),
granted Boyar Holdings, Inc. ("BHI") an option to acquire the TSSN Shares (the
"TSSN Option"). On January 12, 1995, EVRO purchased the TSSN Option from BHI,
pursuant to the terms of the Assignment of Option Agreement by and between BHI
and EVRO. As consideration for the transfer of the TSSN Option, EVRO issued to
BHI 30,000 shares of EVRO's Series E Preferred Stock which is convertible into
3,000,000 shares of EVRO's common stock at such time as the shareholders of
EVRO approve an increase in the authorized shares of EVRO's common stock.
On March 14, 1995, EVRO exercised the TSSN Option and acquired the
TSSN Shares from Stellar in exchange for EVRO's agreement to issue 16,759,038
shares of its common stock to Stellar (the "TSSN Acquisition"). As EVRO only
had 2,500,000 shares of common stock authorized at the time of the exercise of
the TSSN Option, EVRO and certain of its shareholders agreed to use their best
efforts to cause EVRO's authorized common stock to be increased as soon as was
practicable. Pending such increase in EVRO's authorized common stock, EVRO
issued Stellar 500,000 shares of its authorized but then unissued shares of
common stock. On the date that EVRO's shareholders approved the increase of
the number of shares of EVRO's common stock, EVRO was required to issue
16,259,038 (16,759,038 - 500,000) shares of its common stock to Stellar,
representing the balance of the shares of EVRO's common stock that EVRO was
obligated to issue to Stellar under the TSSN Acquisition agreement. Pursuant
to the TSSN Acquisition agreement, EVRO acquired on January 15, 1995, the
remaining 1.65% of TSSN's issued and outstanding shares of common stock held by
its minority shareholders in exchange for an aggregate of 28.1418 shares of
EVRO's Series F Convertible Preferred Stock. EVRO has no further obligation to
the minority shareholders of TSSN who consented to transfer their shares of the
common stock of TSSN to EVRO. If EVRO issues Special Shares (as defined
herein) to THI, only Stellar, and not the minority shareholders of TSSN, have
the option described below to purchase those shares from THI.
In conjunction with the TSSN Acquisition, ACL, which then held 587,219
shares of EVRO's common stock ("the ACL Shares"), granted Stellar an
irrevocable proxy to vote the ACL Shares, effective March 14, 1995 and expiring
on the date the ACL Shares represent less than five percent of EVRO's issued
and outstanding shares of common stock.
Prior to consummating the TSSN Acquisition, EVRO formed a wholly owned
subsidiary, THI, and transferred to THI all of the assets that were owned by
EVRO prior to the TSSN Acquisition. Pursuant to the TSSN Acquisition
agreement, the holders of record of EVRO's common stock as of March 27, 1995,
were issued a stock dividend consisting of EVRO's Series D Convertible
Preferred Stock ("Series D Preferred"). EVRO has the right, but not the
obligation, to redeem the Series D Preferred in exchange for all of THI's
issued and outstanding capital stock.
The creation of THI and the authorization and issuance of EVRO's
Series D Preferred was done for the purpose of preserving the value of EVRO's
then existing assets for the holders of EVRO's common stock at the time of the
TSSN Acquisition. Due to the significant difference in the
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historical business of EVRO and that of TSSN, EVRO insisted on the creation of
THI as a condition of the TSSN Acquisition. By creating THI and issuing a
stock dividend of the Series D Preferred Stock to EVRO's then existing common
shareholders of EVRO, those shareholders would, upon liquidation of EVRO, be
granted a preference in liquidation in an amount equal to the value of THI's
assets. Alternatively, upon the redemption of the Series D Preferred prior to
a liquidation of EVRO, the holders of EVRO's common stock prior to the TSSN
Acquisition would receive all of the value of THI.
As additional consideration for entering the TSSN Acquisition
agreement, Stellar agreed to cause EVRO to contribute $455,000 to THI from the
proceeds that EVRO would receive from EVRO's then contemplated private debt or
equity offerings, which obligation has been satisfied by EVRO. Upon the
completion of EVRO's current financing activities, it is EVRO's intention to
redeem its Series D Preferred in exchange for all of THI's issued and
outstanding common stock.
Additionally, THI is entitled to receive, on an annual basis, that
number of shares of EVRO's voting common stock (the "Special Shares") equal to
20% of the average total assets of THI over a twelve month period (March 14
through the following March 13 each year) divided by two dollars. The phrase
"total assets" is defined to mean the amount set forth on the consolidated
balance sheet of THI as total assets, including, without limitation, the
current assets, property and equipment (net of accumulated depreciation),
investments and other assets (net of accumulated amortization and adjustments).
The phrase "average total assets" is defined to mean the sum of the "total
assets" (as defined above) of THI as set forth on the balance sheets of THI
during each of the quarters ending March 31, June 30, September 30 and December
31 during each applicable twelve month period and dividing such sum by four.
THI ratably earns the Special Shares over each applicable twelve month period.
THI's entitlement to the Special Shares shall cease upon EVRO's redemption of
its Series D Preferred. As of December 31, 1995, THI has earned 426,417
Special Shares.
In connection with the agreement between The Stellar Companies, Inc.
("Stellar"), the former owner of TSSN, and EVRO, Stellar acquired the option to
purchase the Special Shares from THI for an amount equal to the greater of (a)
two dollars per share; or (b) 50% of the bid price of EVRO's common stock as of
the end of the month preceding Stellar's exercise of its option. Stellar paid
no additional consideration for the option to purchase the Special Shares from
THI. Stellar's option to acquire the Special Shares shall terminate June 30,
1997. Stellar has not been granted "registration rights" with respect to the
Special Shares.
The following example is provided to illustrate the application of the
contractual provisions of the TSSN Acquisition agreement related to the
obligation of EVRO to issue Special Shares. The following illustration
presumes that EVRO has not redeemed its Series D Preferred prior to March 13,
1996, as such event terminates the obligation of EVRO to issue Special Shares
as discussed more fully above.
EXAMPLE: Assume that during the period from March 14, 1995 to March
13, 1996, THI's average total assets were $5,274,324, then the number
of shares of EVRO common stock; i.e., the Special Shares, that would
be issued to THI would total 527,432 shares [(20% x $5,274,324) /
$2.00].
Stellar has the option to purchase the Special Shares from THI on or
before June 30, 1997 by paying THI the greater of (a) two dollars per
share; or (b) 50% of the bid price of EVRO's common stock as of the
end of the month preceding Stellar's exercise of its option. The bid
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price of EVRO's common stock on March 29, 1996, was $2.22,
consequently the option price would be $2.00. If Stellar were to
exercise its option to acquire all of the Special Shares, it would be
required to pay THI $1,054,864.
The Special Shares that Stellar may acquire upon the exercise of its
option will be restricted securities, and such Special Shares can be
transferred by Stellar either pursuant to the limitations imposed by
Rule 144 or without limitation through an effective registration
statement relating to such securities.
To the extent that EVRO redeems the Series D Preferred by issuing
shares of THI to the holders thereof, the common shareholders of EVRO who do
not also own shares of the Series D Preferred will be diluted, as EVRO will
receive no consideration for the issuance of the Series D Preferred shares. To
the extent that Special Shares are issued to THI and Stellar exercises its
option to acquire the Special Shares from THI, Stellar will benefit from such
transaction to the extent that the market price of the shares of EVRO's common
stock is greater than the option price that Stellar must pay THI for the
Special Shares.
EXAMPLE: Assume that the "bid" price of EVRO's common stock on June
30, 1996, was $3.75 and the "ask" price $4.00. Applying the formula
set forth above, if Stellar exercises its option to acquire the
Special Shares on June 30, 1996, the option price will be $2.00 per
share (the greater of $2.00 or 50% of the bid price of EVRO's common
stock). Stellar would receive a benefit unavailable to other
shareholders of EVRO as it would be able to acquire shares of the
common stock of EVRO at a substantial discount to the "ask" price of
the shares of EVRO; however, the shares acquired by Stellar would be
restricted securities, as that term is defined in Rule 144(a)(3),
promulgated by the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, and as a result thereof, are not
freely transferable by Stellar.
If the Series D Preferred has not been redeemed by June 30, 1997, the
holders thereof shall be entitled to receive a special dividend of shares of
EVRO's common stock in an aggregate amount equal to the number of Special
Shares held by THI as of June 30, 1997. As long as the Series D Preferred
remains outstanding, additional stock dividends shall be payable by EVRO to the
holders of the Series D Preferred, beginning July 1, 1998, and continuing each
July 1st thereafter until EVRO has redeemed its Series D Preferred, in an
annual amount equal to the number of Special Shares transferred to THI during
the immediately preceding applicable twelve month period.
For financial reporting purposes, the business combination between
TSSN and EVRO has been accounted for as a reverse purchase acquisition under
which TSSN and EVRO have been recapitalized to include the historical financial
information of TSSN and the assets and liabilities of EVRO revalued to reflect
the market value of EVRO's outstanding shares.
There have been subsequent amendments to the TSSN Acquisition
agreement, the first of which occurred on April 19, 1995, when Stellar agreed
to return the 500,000 shares of restricted common stock previously issued to
Stellar at the closing of EVRO's purchase of TSSN. EVRO asked Stellar to amend
the TSSN Acquisition agreement in order to make the 500,000 shares of common
stock available to EVRO for issuance by EVRO pursuant to its 1995 Employee
Stock Compensation Plan. Stellar agreed to return the 500,000 shares of common
stock to EVRO in exchange for EVRO's agreement to increase, by 1,000,000
shares, the number of shares of EVRO's common stock that EVRO would issue to
Stellar at such time as EVRO increased its authorized
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shares of common stock. Consequently, the number of shares that EVRO was
obligated to issue to Stellar for the shares of TSSN increased from 16,759,038
to 17,759,038.
The then existing members of the Board of Directors of EVRO
unanimously approved the amendment to the TSSN Acquisition agreement increasing
the number of shares to be issued to Stellar. As originally negotiated, the
TSSN Acquisition agreement contemplated that Stellar would own 77.1% of the
shares of EVRO's common stock after the closing of the TSSN Acquisition
agreement. As a result of the return by Stellar to EVRO of the 500,000 shares
of common stock previously issued to Stellar and EVRO's subsequent issuance
thereof, Stellar requested that EVRO agree to issue sufficient additional
shares so that it would receive the same percentage ownership that it had the
contractual right to receive prior to the April 19, 1995 amendment. The
resulting agreement by the Board of Directors to agree to issue an additional
1,000,000 shares to Stellar reflects the compromise reached between Stellar and
EVRO. The percentage of the common stock of EVRO to be owned by Stellar, after
giving effect to the agreement to issue an additional 1,000,000 shares of
common stock as a result of the April 19, 1995 amendment to the TSSN
Acquisition agreement and after also giving effect to EVRO's issuance of an
additional 500,000 shares of the common stock returned to EVRO by Stellar,
decreased from 77.1% to 76.4% of EVRO's common stock. On the date that the
TSSN Acquisition agreement was amended, April 19, 1995, the bid price of EVRO's
common stock was $3.12 and its ask price was $3.25.
In addition, the April 19, 1995 amendment to the TSSN Acquisition
agreement required EVRO to issue to Stellar 500 shares of its Series F
Preferred. Each share of Series F Preferred entitles the holder thereof with
the right to cast 1,000 votes on any matter requiring the approval of common
shareholders. In the event that EVRO issued additional voting securities prior
to the time that EVRO had increased the number of shares of its authorized
shares of common stock, EVRO agreed to issue additional shares of its Series F
Preferred to Stellar in an amount equal in voting rights with any subsequent
voting shares of common or preferred stock issued by EVRO. For example, if
EVRO issued 300,000 shares of its common stock, EVRO would be required to issue
300 shares of its Series F Preferred to Stellar.
The shares of EVRO's Series F Preferred are convertible, at the option
of Stellar, into shares of EVRO's restricted common stock, on a 1 for 10,000
basis, following an increase in the number of EVRO's authorized shares of
common stock. Any common stock issued to Stellar as a result of its
conversion of Series F Preferred into EVRO's common stock reduces EVRO's
obligation to issue the 17,759,038 shares of restricted common stock that EVRO
is obligated to issue Stellar. As of April 26, 1996, Stellar held 1,198.4303
shares of Series F Preferred.
Pending an increase in EVRO's authorized capital stock, the Series F
Preferred was intended to grant voting rights to Stellar similar to those
voting rights held by Stellar prior to the April 15, 1995 amendment to the TSSN
Acquisition agreement. More specifically, the grant to Stellar of 500 shares
of Series F Preferred gave Stellar 500,000 votes (500 shares of Series F
Preferred with each share having 1,000 votes per share), the number of votes
that Stellar had prior to returning 500,000 shares of common stock to EVRO.
The Series F Preferred also granted Stellar the right to convert the Series F
Preferred into common shares at a conversion ratio of 10,000 to 1. By
converting the Series F Preferred, Stellar could increase its voting power ten
fold, however, any shares of common stock issued to Stellar upon Stellar's
conversion of the Series F Preferred decreases, on a one for one basis, EVRO's
obligation to issue the 17,759,038 shares of common stock EVRO is obligated to
issue to Stellar under the TSSN Acquisition agreement as amended.
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On October 6, 1995, the TSSN Acquisition agreement was further amended
to provide that Stellar would, upon the conversion by Stellar of its shares of
Series F Preferred, return 2,126,000 shares of the 17,759,038 shares of common
stock to be received by Stellar upon EVRO increasing its shares of authorized
common stock. Additionally, Stellar agreed to deliver 9,000,000 shares of the
common stock to be issued to Stellar upon its conversion of the Series F
Preferred to the law firm of Scolaro, Shulman, Cohen, Lawler & Burstein, P.C.
("Scolaro, Shulman"), who agreed to hold the shares in escrow, and would
release the 9,000,000 shares, on a pro rata basis, upon EVRO and its sports and
shopping-related subsidiaries achieving net earnings of $5,000,000. Any and
all shares held in escrow which are not released by the escrow agent to Stellar
on or before December 31, 2000, are to be returned to EVRO. Stellar suggested
that the TSSN Acquisition agreement be amended to reduce the number of shares
that Stellar would receive under the TSSN Acquisition agreement (2,126,000) and
to subject an additional 9,000,000 shares to a risk of forfeiture if EVRO's
earnings did not meet certain benchmarks, in order to facilitate EVRO's capital
raising efforts.
On February 26, 1996, EVRO and Stellar amended the October 6, 1995
amendment to the TSSN Acquisition agreement to provide that upon the conversion
by Stellar of its shares of Series F Preferred, Stellar would return only
1,350,000 shares of the 17,759,038 shares of common stock to be received by
Stellar upon EVRO increasing its shares of authorized common stock rather than
the 2,126,000 shares that Stellar had earlier agreed to return in the October
6, 1995 amendment. EVRO agreed to this amendment as the basis for Stellar
agreeing to the October 6, 1995 amendment was Stellar's understanding that EVRO
would be required to issue 2,126,000 shares of its common stock or common stock
equivalents to various third parties to assist EVRO in its fund raising
efforts. As EVRO was only required to issue 1,350,000 shares to such third
parties, the amount of shares to be forfeited by Stellar to EVRO was reduced
accordingly.
The acquisition of TSSN resulted in no immediate tax consequences to
EVRO, except that it is likely that EVRO will lose a portion of the tax
benefits that it might otherwise have realized from its net operating losses
due to the fact that, as a result of the TSSN Acquisition an ownership change
will occur, as such term is defined for federal income tax purposes, thereby
limiting EVRO's ability to utilize its net operating loss carryforwards.
CHANNEL AMERICA ACQUISITION
The acquisition agreements between EVRO and Channel America, initially
signed on July 13, 1995, provided that EVRO would acquire 100% of the issued
and outstanding shares of the capital stock of Channel America. EVRO executed
agreements with Channel America on October 10, 1995, in which EVRO agreed to
pay $1,000,000 to Channel America and to issue 48,000 shares of EVRO's Series H
Convertible Preferred Stock ("Series H Preferred Stock"). Channel America
issued 27,500,000 shares of its common stock to EVRO, which represented 51% of
the issued and outstanding shares of Channel America's voting stock, after
giving effect to the anticipated issuance of additional shares of Channel
America's common stock to its creditors pursuant to the anticipated conversion
of Channel America's indebtedness described below. Of the $1,000,000 purchase
price, $600,000 has been paid as of March 29, 1996 and, the balance was paid by
EVRO's delivery of its promissory note, bearing interest at eight percent per
annum, the principal and accrued interest of which was due on April 7, 1996.
The note has been extended to May 16, 1996 in exchange for EVRO's agreement to
issue to Channel America 50,000 shares of its common stock. EVRO has the
option to extend the note for an additional 30 days by paying to Channel
America an additional
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50,000 shares and $50,000. In the event that EVRO is deemed to be in default
in the payment of any portion of the purchase price, the percentage of Channel
America's shares acquired by EVRO will be reduced pro rata with respect to the
percentage of the purchase price actually paid.
Since October 10, 1995, EVRO has made working capital advances
directly to Channel America, or to creditors of Channel America, in the amount
of $1,349,000.
EVRO issued, on October 10, 1995, 48,000 shares of its Series H
Preferred Stock to Channel America, for the benefit of shareholders of Channel
America other than EVRO, and delivered such shares to Scolaro, Shulman, in its
capacity as the escrow agent for the shareholders of Channel America. The
Series H Preferred is convertible into 3,764,588 shares of EVRO's common stock.
The Series H preferred stock will be held in escrow, pending the conversion, by
the holders of an aggregate of 90% of the sum of [i] the face amount of the
notes previously issued by Channel America; and [ii] the stated value of the
outstanding preferred stock of Channel America. The face amount of the notes
and the stated value of the preferred shares is $7,768,533, and, as of December
31, 1996, the holders of 49% of the debt and equity, representing $3,773,229,
had converted their debt or equity into shares of Channel America's common
stock. Another approximate $2,618,000 (34%) has committed, but has not yet
converted. The Series H Preferred will be held in escrow, pending (a) the
conversion of an aggregate of 90% of Channel America's notes payable and
preferred stock; (b) EVRO increasing its authorized shares; and (c) EVRO
registering the shares of common stock underlying the Series H Preferred Stock
with the Securities and Exchange Commission.
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BUSINESS OF EVRO - Home Shopping and Entertainment Business.
Channel America
GENERAL
The current business focus of EVRO is to expand its home shopping and
entertainment business by expanding its broadcast television network and its
home shopping programming. EVRO's partially owned subsidiary, Channel America,
currently operates a broadcast television network. As of March 29, 1996,
Channel America had 79 affiliates that broadcast its television network, with a
potential reach of approximately 32.7 million US households, including 9.2
million direct cable homes and 4.6 million satellite homes. The mix of
television stations comprising the Channel America network includes 13 full
power, 9 cable and 57 low power stations.
Channel America generates revenues from affiliate fees, a limited
number of direct response clients who pay the network on a per-inquiry basis
for orders generated through their commercials, and from paid programming.
Channel America also generates non-cash revenues from barter transactions where
it acquires programming in exchange for airtime on the network. Channel
America's primary expenses are costs associated with formatting and
transmitting its programming to its affiliates, principally "master control
services", uplink costs and satellite communication fees. See "MANAGEMENT'S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION".
CURRENT PROGRAMMING
Channel America, which began broadcasting in October 1988, provides
syndicated and first-run programming and movies 24 hours a day, seven days a
week. Currently, its programming consists of the following:
Public domain movies: "Classic" black and white movies including movies
starring Fred Astaire, Cary Grant, John Wayne, Roy Rogers, Gene Autry and The
Three Stooges. Channel America owns approximately 750 movies in its library.
This aspect of its programming accounts for approximately 30% of its air time.
Vintage Television: Vintage Television is comprised of shows for which, in
most cases, the copyright has expired. Channel America has approximately 170
hours of 1950's television which include series such as Sherlock Holmes and
Ozzie & Harriet. This aspect of its programming accounts for approximately 10%
of its air time.
Sports and Exercise Programming. This programming represents first run sports,
including basketball and soccer events and series such as Scuba World and Golf
Doctor. This aspect of its programming accounts for approximately 15% of its
air time.
Talk and Entertainment Shows. These are shows that have not appeared on any
other network before Channel America. Among the talk and entertainment shows
on the network are programs such as
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"Shirley", "The David Spatz Show" and "Hollywood Update with Barry Zevan".
This type of programming accounts for approximately 12% of Channel America's
air time.
Children's Shows. Children's programming includes shows such as Kosmic Korner
and Roger Rock Videos and constitutes approximately 12% of Channel America's
airtime.
Paid Programming. The predominant number of paid programmer hours are
purchased by infomercial program providers, music program providers (e.g.
variety, gospel, country-western) and religious program providers. Combined,
such programming currently constitutes approximately 20% of airtime.
FUTURE PROGRAMMING -- THE "HOMETOWN NETWORK"
Channel America has adopted a new strategy that it hopes will
distinguish it in the television market place. This strategy involves a
programming and marketing approach geared to making the network more attractive
to present and prospective affiliates, viewers and ultimately to national and
local advertisers. Management envisions Channel America as becoming the
"hometown network" and expects its affiliates to become the "hometown channel,"
with the network offering stations a structure and programming that is
consistent with this identity. The key component of this strategy is
"localizable" programming, in which a locally introduced segment may be
inserted into the network program thereby providing the program with a local
flavor. The secondary component of this stragegy is to "brand" each program
block with a sponsor, similar to 1950 type programming where the television
show often had an advertiser's name associated with the television show.
Another aspect of the hometown network will be national events or
competitions which will have corresponding local events or competitions
coordinated by the affiliates and customized for the affiliate markets.
Channel America has tested this format in certain markets with shows
titled the "Hometown Matinee" and "The Round-Up". The Hometown Matinee
consisted of two features with hosted wrap-arounds and both national and
localizaeable giveaways. The Round-up consisted of a serialized western and
feature, again with hosted wrap-arounds and both natioanal and localizeable
giveaways. Management believes that classic movies can attract an audience if
re-packaged for both viewers and advertisers.
Channel America has limited experience in localizable programming and
the development of original programming in general. Accordingly, and because
of Channel America's continuing liquidity problems, there can be no assurance
that the Hometown Matinee and Afternoon Round-Up will continue beyond its
limited distribution or that Channel America will produce any future
programming to implement its hometown strategy or, if produced, that such
programming will be successful. Channel America will continue to air
non-localizable programming throughout the network schedule, including
syndicated programming, sports and other events, movies and original
programming created by independent producers.
Channel America intends to pursue programming relationships with
independent producers and syndicators in order to bring first run programming
to the Channel America network. Channel America hopes to pursue a network
programming relationship with a movie or television studio that would also use
the network to test programs, formats and talent. The studio could also feed
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<PAGE> 13
programming not presently in syndication to Channel America for broadcast over
the network. Channel America also intends to expand its original production
efforts if and when it has its own production facility/broadcast center or in
conjunction with another television production entity. However, there can be
no assurance that Channel America will be successful in developing a
programming relationship, or ever have its own production facility/broadcast
center or enter into such programming relationships.
As previously mentioned, it is EVRO's intention to expand Channel
America's programming by incorporating TSSN's home shopping shows. It is
estimated that TSSN's programming will constitute approximately 25% of Channel
America's programming by late 1996. EVRO also intends to further diversify
Channel America's programming by introducing game shows and high-tech animation
programming. To that end, EVRO has entered into negotiations with SBI
Communications, Inc. to develop a "bingo" game show and EVRO has entered into a
joint venture agreement with MIT-F/x, Inc. to develop computer animated
television movies and multi-episode programming.
AFFILIATES
In order to distribute Channel America's programming, it must enter
into agreements with broadcast stations and/or cable system operators.
Typically, affiliation agreements entered into by Channel America have a one
year term, with automatic, successive one-year renewals in the absence of
written cancellation by either party. In most instances, the agreements are
cancelable by the affiliate upon 30 days notice. Historically, the affiliate
stations generally paid a monthly fee of $250 during the first 12 months and
$500 during the balance of the two-year term. In many instances, Channel
America waived all or a portion of the monthly fees for specified periods of
time to attract affiliates in desirable markets. Currently, Channel America
has had to waive the fee entirely. These waivers and discounts are offered to
affiliates that Channel America believes provide good opportunities for revenue
generation through the sale of advertising and enhancement of the network's
image as a national network. In addition, Channel America retains six minutes
of the 12 minutes of the advertising time that is available every hour.
Although most of Channel America's affiliates have signed agreements, there can
be no assurance that an affiliate, even if contractually bound, will continue
to air Channel America's programming for the full term of the agreement, or
that Channel America will have the resources to take action against those
affiliates who refuse to honor their obligations.
By waiving affiliation fees and providing programming through a barter
system by which affiliates are able to obtain quality programming without any
significant cash outlay, Channel America believes that it will be successful in
signing additional affiliates.
As of March 29, 1996, Channel America had 79 affiliates consisting of
13 full power television stations, 57 low power television ("LPTV") stations
and 9 local cable systems currently on the air. Each station is located in an
"Area of Dominant Influence" ("ADI"), a geographic market design that defines
and measures each television market based on the number of households in each
market. A full power television station is a station whose signal can be
received in all areas of an ADI, while a LPTV station's signal can only be
reached in a portion of an ADI. Twelve of the thirteen full power stations and
31 of the LPTV stations are also carried on local cable systems. Although most
stations in the Channel America network are LPTVs, with a local broadcast
radius of 15-25 miles, Channel America has increased its focus on signing full
power independent television stations and direct cable affiliates to its
network.
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<PAGE> 14
Many of the affiliates only broadcast a portion of Channel America's
programming.. In addition, the affiliates that are not carried on local cable
systems cannot be viewed by cable subscribers who do not disconnect the cable
receiving device. Channel America will continue to market its network to new
affiliates in areas not now being served by the network. Although Channel
America has increased its focus on seeking full power television stations, it
will continue to add LPTVs or additional cable systems in those markets in
which it is impossible to attract a full power station.
MARKETING AND DISTRIBUTION
In order for a network to be able to transmit its programming to an
affiliate, the network must be able to format its programming in such a manner
to be able to transmit the programming to a communications satellite for
further distribution to the affiliates. The formatting process, known as the
"master control" services is generally performed in-house by the network. On
September 15, 1992, Channel America entered into a five-year agreement with IDB
Communications Group, Inc. ("IDB"), to provide master control services. IDB
also has uplink transmission facilities located in Los Angeles, California,
that transmits the formatted programming of Channel America to a communications
satellite for further distribution to its affiliates. Channel America was
delinquent in paying for the services provided by IDB in the approximate amount
of $400,000, renegotiated the terms of the initial agreement and is currently
obligated to pay a monthly fee of $42,790 for IDB's primary services, which
includes payments towards the delinquent amounts owed IDB. The monthly payment
under the IDB contract increases to $44,950 from September 1996 through
September 1997. Additional services are provided by IDB at an hourly rate
ranging from $65 per hour to $187.50 per hour.
Channel America has entered into an agreement with AT&T to provide
satellite transmission services to Channel America at a cost of $130,000 per
month. Channel America is currently 60 days past due on its payments to AT&T.
Channel America's signal is received by its broadcast and cable
affiliates, who then transmit it to their respective viewers, however, viewers
with satellite dishes can access the network directly by turning to the proper
satellite coordinates.
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<PAGE> 15
COMPETITION
Competition for viewers among companies providing programming services
via broadcast and cable networks is intense. Channel America competes for
advertising revenues and sources with other broadcast networks, cable
programming services, local over-the-air television stations, and the print
media, most of which have significantly greater financial, production and
operational resources.
GOVERNMENT REGULATIONS
The distribution of television programming through the Channel America
network is subject to FCC regulations. The Federal Communications Act, and the
rules promulgated pursuant thereto, require that prior to the transfer of
control or assignment of a broadcast network, the proposed transfer or
assignment must receive the approval of the FCC. A transfer of control occurs
when any individual stockholder, family group or any group in privity gains or
loses affirmative or negative control. Affirmative control means control of
more than 50% of the voting stock; negative control consists of control of
exactly 50% of the voting stock. Channel America monitors compliance with
these requirements.
Cable television is regulated by both the FCC and municipalities and
counties. As defined by the FCC, cable television originates from a cable
system facility consisting of closed transmission paths and associated signal
generation, reception and control equipment that is designed to provide cable
service, which includes video programming, to multiple subscribers within a
community. Many municipal governments require that local cable operators
originate their own programming, which is referred to as "community access"
television or "local origination" television. Broadcast television generates
revenues from advertising sales, paid programming and direct response
advertising. Cable television generates revenues from advertising sales,
subscriber payments and direct response advertising.
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<PAGE> 16
TSSN AND TSC
GENERAL
The other aspect to EVRO's home shopping and entertainment business is
its television shopping network that EVRO operates through its wholly owned
subsidiaries, TSSN and TSC. TSSN specializes in marketing sports memorabilia,
apparel and related merchandise and TSC specializes in jewelry and other
collectibles, and both will sell their respective products through Channel
America's network. Television shopping, as a form of business activity, has
been the subject of rapid development and expansion over the last decade and
may, by the turn of the century, become a major component of retailing in the
world marketplace. Television shopping began with the offering of a variety of
products by such companies as QVC and Home Shopping Network, each of which
began as a start-up venture that have seen their respective annual sales expand
to more than $1 billion currently. Others, including major conventional
retailers, are entering the business. It is this marketplace, now estimated as
having annual retail sales of more than $2.5 billion, in which TSSN and TSC
intend to participate, by taking advantage of perceived strategic advantages
that it can market in competition with the current market leaders.
It is management's opinion that barriers to entry in this market have
been significantly reduced due to the anticipated expansion of basic cable
channels which will be provided to the viewing public. It is estimated that
500 or more channels will be available to the more than 60 million cable
households who tune in each day. As a result, a window of opportunity exists
to create an entertaining shopping show which will be attractive to television
executives and home shoppers alike. Television executives will be challenged
to identify low cost yet entertaining programs to retain and expand their
audiences. In that regard, TSSN's business plan is to focus its prime time
telecast hours to capitalize on the marketing of sports-related products from
sporting goods manufacturers, as well as highlighting its own sports
memorabilia and apparel line, whereas TSC initially intends to limit its
programming to the sale of jewelry and related products. During off-peak
hours, TSSN will provide sports products of general interest to appeal to the
broad range of viewers in these time slots. TSSN and TSC will also seek to
provide a source of income to the stations that carry their broadcast by
offering a percentage of the gross revenues that it generates from their
viewing audiences.
TSSN intends to supply a TV program designed to capture the attention
of sports enthusiasts with accurate up-to-the-minute information on all major
sporting events as well as providing the opportunity to shop for a wide variety
of sporting goods at discounted prices. TSSN will also offer the serious
collector sports memorabilia not easily acquired other than on TSSN. TSSN
anchor sales personnel will explain the qualities of products they are selling
and help the viewer understand how to use them to best help their game or
sport. TSSN will strive to keep a strong and loyal viewership by utilizing
all-star athletes as anchors as much as possible. TSSN intends to use sports
legends extensively in connection with the sale of its memorabilia. TSSN plans
to use special graphics to update the scores of major professional and amateur
events, which will allow the sales anchors to continue selling products while
the scores are being updated and create prospective customers from viewers who
tune in to catch a score update.
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<PAGE> 17
TSSN will seek to provide a broad range of products to satisfy the
diverse needs of its viewers at prices below its competition. EVRO believes
this effort will be successful as a result of its ability to source product
directly from major wholesalers, thereby enabling savings to be passed on to
the consumer. TSSN has acquired "Cager Classic," a trademarked apparel line
with products that are planned to be marketed and distributed nationally to
department stores, sports stores, college bookstores and catalog merchandisers
after its initial introduction on TSSN. The apparel and sports collectibles
owned by TSSN will be marketed by their brand names to ensure maximum brand
development for each product.
TSSN has a capability to bring to its viewers sports memorabilia and
collectibles that have been created solely for its use. Through an agreement
with Yes! Entertainment, an unaffiliated manufacturer specializing in "talking
books" produced with audio disc technology previously owned by a TSSN
subsidiary, TSSN has retained the right to the exclusive use of that technology
in connection with the marketing of recordings related to the activities of
notable sports figures and specific sports events. This patented product will
allow the sports fan to hear the excitement and relive the thrill of events
such as Hank Aaron breaking Babe Ruth's home run record or Wilt Chamberlain
scoring 100 points in a single game.
TSSN expects to create a series of broadcasts which will be unusual
and entertaining, yet complement studio broadcasts. In the coming year, TSSN
hopes to create a series of remote broadcasts directly from the sites of major
sporting events or sporting goods shows. This ability will allow TSSN viewers
to see sports celebrities, while at the same time staying current with respect
to the new products and technologies that are introduced for marketing in
particular sports activities.
MARKETING AND COMPETITION
The home shopping television programming business is highly
competitive, dependent upon and subject to technology advancements and requires
the availability of substantial capital. The annual sales of Home Shopping
Network and QVC represent 80% or more of the aggregated retail sales of the
television home shopping market. In 1993, Home Shopping Network had gross
sales of over $1 billion and QVC had gross sales of over $1.2 billion. Home
Shopping Network is currently broadcasting to just over 60 million homes, and
QVC is in just under 53 million homes. Both stations sell sports memorabilia,
on a limited basis, mostly in the form of collectible cards, (baseball,
football, basketball and hockey). QVC also sells baseball cards and other
assorted memorabilia and generally concentrates on higher quality products at
higher prices than Home Shopping Network. In addition, there are a number of
smaller companies which offer shop at home programming on satellite and
directly to broadcasting stations and cable networks on a part-time basis. The
financial and operating resources of more established providers of television
shopping services are far superior to those of TSSN and TSC, potentially
enabling them to outbid TSSN or TSC for available broadcast time. Moreover, if
TSSN's or TSC's programming orientation or other methodologies by which it will
seek to secure broadcast space are successful, it can expect to find larger
providers offering similar products at highly competitive prices and margins
within the market segment staked out by TSSN and TSC.
Other forms of competition include sporting goods stores, department
stores, specialty shops, pro shops and mail order catalogues. In recent years,
new mega-stores, located in large metropolitan areas, such as Sports Authority
(owned by K-Mart) have begun to offer sports products at discounted prices.
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<PAGE> 18
PATENTS AND TRADEMARKS
TSSN holds three federally registered trademarks supporting its "Cager
Classic" sports apparel line, including "Cager Classic," "America's Game" and
"Billy Baseline." In addition, TSSN owns the exclusive rights to the audio
disk technology used in connection with the production of "talking collectible
cards" dealing with notable sports figures or specific sports events. The
technology is protected by patents held by Yes! Entertainment.
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<PAGE> 19
BUSINESS OF EVRO - RV CAMPGROUND BUSINESS.
THI
THI was formed in January 1995 as a wholly owned subsidiary of EVRO.
THI owns all of the assets that were owned by EVRO prior to March 14, 1995, the
date that EVRO acquired TSSN (the "TSSN Acquisition"), and constitute EVRO's RV
Campground business, which is operated through its wholly-owned subsidiaries,
Treasure Rockhound and Tres Rivers.
TREASURE ROCKHOUND AND TRES RIVERS
Treasure Rockhound operates nine recreational ranches in four
southwestern states. Its private membership organization, Camper Ranch Club of
America ("Camper Ranch Club"), is now in its 23rd year of offering its
approximately 4,600 dues-paying members, primary RV travelers, daily or long
term leases on improved campsites at its various ranch locations. Treasure
Rockhound owns approximately 5,200 acres and leases approximately 13,000 acres
from individuals, cities, states and the federal government.
Treasure Rockhound caters to a growing trend in which RV travelers
search out remote locations in naturally pristine areas of the country.
Ranches are located in valleys, on mountains or near lakes or rivers and offer
RV travelers a different climate and culture in which to enjoy their leisure
time. Members of the Camper Ranch Club have year-round access to all of the
fully managed Treasure Rockhound ranches which provide electric and water
hookups for their convenience and the opportunity to explore the natural beauty
surrounding all ranch locations.
Tres Rivers is a 46 acre RV campground in Glen Rose, Texas located
approximately 55 miles southwest of Dallas/Fort Worth. Tres Rivers' RV
facilities can accommodate approximately 500 RVs. Tres Rivers also offers tent
camping, cabin rentals and meeting and entertainment facilities. Located on a
scenic junction of three rivers, Tres Rivers offers various water recreation
opportunities.
Treasure Rockhound and Tres Rivers compete with all other RV
campgrounds in the southwest United States. Treasure Rockhound and Tres Rivers
advertise in various recreational and camper magazines and Treasure Rockhound
has expanded and improved several of its ranches in an effort to attract new
interest to Camper Ranch Club. Tres Rivers also has improved its facilities in
an attempt to expand its business. EVRO believes that Treasure Rockhound and
Tres Rivers will continue to hold its market share in the highly competitive
recreational camping business.
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<PAGE> 20
EMPLOYEES
The following table sets forth the employees of EVRO and its
subsidiaries as of March 29, 1996.
<TABLE>
<CAPTION>
Company Full Time Part Time Total
------------------------------------------------------------------------------------
<S> <C> <C> <C>
EVRO 2 2
TSSN/TSC 5 5
Channel America 8 8
THI 5 5
Treasure Rockhound 17 20 37
Tres Rivers 6 3 9
------------------------------------------------------------------------------------
Total 43 23 66
</TABLE>
MANAGEMENT AGREEMENT WITH STELLAR
Stellar provides management, financial, administrative and marketing
services to TSSN pursuant to a Management and Services Agreement, wherein
Stellar is obligated to provide to TSSN personnel, supplies, equipment,
administrative and accounting services, management expertise, and other
resources. During the twelve months ended December 31, 1995, and 1994, Stellar
billed TSSN $1,150,000 and $760,000, respectively, for such management and
accounting services performed on TSSN's behalf, based upon estimated time and
charges incurred by Stellar on TSSN's behalf. Management believes that the
fees charged to TSSN by Stellar approximates the costs that would have been
incurred by TSSN if it had operated on a stand alone basis.
As of December 31, 1995, Stellar was owed $430,000 by EVRO principally
for amounts owed to Stellar under the management agreement between TSSN and
Stellar, which amounts do not bear interest.
ITEM 2. DESCRIPTION OF PROPERTIES.
EVRO's and THI's principal offices are located at 1509 South Florida
Avenue, Suite 3, Lakeland Florida 33803. These premises, comprising
approximately 2,500 square feet, are leased by Treasure Rockhound under a
three-year lease. Treasure Rockhound also leases, on a month to month basis, a
1,500 square foot office facility at 3701 Waukegan Drive, Conroe, Texas 77301.
Treasure Rockhound owns approximately 5,200 acres and leases
approximately 13,000 acres from individuals, states and the federal government.
Only a portion of these acres are utilized by Camper Ranch Club. To a large
extent, much of the land could be leased to ranchers or sold; however, EVRO is
not aggressively seeking buyers at this time as it is the goal of EVRO to
expand
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<PAGE> 21
the ranches in the future. Tres Rivers owns a 46-acre recreational vehicle
campground located in Glen Rose, Texas.
THI owns a 160 space mobile home park located in Alliance, Nebraska
and a 46 acre tract of unimproved real estate located in Boulder, Colorado.
Channel America's principal offices are located at 397 Boston Post
Road, Darien, Connecticut 06820. These premises, comprising approximately
3,000 square feet, are leased by Channel America under a three-year lease.
EVRO feels that its leased facilities are adequate for its current level of
activity.
ITEM 3. LEGAL PROCEEDINGS
Genesee Cattle Co. has threatened to file a lawsuit against EVRO,
seeking to collect $298,000, the sum of the amounts due under a promissory note
issued by EVRO ($248,000) and a consulting agreement between Genesee Cattle Co.
and EVRO ($50,000). EVRO has accrued the amount owed to Genesee Cattle Co. and
intends to satisfy its obligations to Genesee Cattle Co. at such time as EVRO
has available cash resources.
EVRO is the subject of an informal private inquiry which has been
initiated by the staff of the SEC. The actions under examinations apparently
involve the sale by EVRO of shares of its common stock at prices lower than
that described in its private placement memorandum dated December 17, 1992; its
failure to modify favorable press statements when EVRO became aware that the
initial statements were no longer accurate; the allegedly improper registration
of shares under Form S-8 registration statements; and the allegedly improper
reliance upon the transactional exemption afforded by Regulation S, in
connection with several separate offers and sales of shares of its common
stock. The staff of the SEC has yet to file a formal complaint against EVRO
and EVRO's management does not believe that EVRO has violated the federal
securities laws.
On September 8, 1995, the Company received notice from the Osceola
County, Florida Clerk of Circuit Court, of a default judgement filed against
International Sports Collectibles, Inc., a wholly owned subsidiary of TSSN, and
Stellar, in favor Dreams Franchise Corporation, a California corporation, on
November 28, 1994 in the amount of $117,492. This liability has been recorded
and is included in accounts payable as of December 31, 1995.
There are various judgments and lawsuits pending against inactive
subsidiaries of EVRO, including TGHC, Inc. f/k/a Good Health Channel, Inc.;
and Lintronics, however, EVRO has no responsibility for such judgments.
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<PAGE> 22
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During EVRO's 1995 fiscal year, no matters were submitted to a vote of
EVRO's shareholders.
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<PAGE> 23
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(A) Price Range of Common Stock
The following table shows the high and low closing bid prices as
represented by Nasdaq for EVRO's Common Stock for the calendar quarters
indicated. EVRO's Common Stock is traded on Nasdaq Small Cap Market under the
symbol "EVRO".
The quotations represent prices between dealers in securities, do not
include retail markup, markdowns or commissions and may not necessarily
represent actual transactions.
<TABLE>
<CAPTION>
1994 HIGH LOW
---- ---- ---
<S> <C> <C>
First Quarter $2.56 $0.88
Second Quarter $1.31 $0.63
Third Quarter $1.13 $0.50
Fourth Quarter $0.53 $0.16
1995 HIGH LOW
---- ---- ---
First Quarter $2.63 $1.19
Second Quarter $3.75 $1.19
Third Quarter $3.06 $0.75
Fourth Quarter $2.69 $1.03
</TABLE>
The prices for 1994 do not reflect a 1:20 reverse stock split
effective January 26, 1995.
(B) APPROXIMATE NUMBER OF EQUITY SECURITY HOLDERS
As of March 29, 1996, the number of shareholders of record of EVRO's
common stock was approximately 2,400.
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<PAGE> 24
(C) DIVIDENDS
EVRO has never paid cash dividends on its common stock. Payment of
dividends is within the discretion of EVRO's Board of Directors and will depend
on, among other factors, earnings, capital requirements and the operating and
financial condition of EVRO. At the present time, EVRO anticipates retaining
future earnings, if any, in order to finance the development of its business
activities. The holders of EVRO's common stock as of the record date of March
27, 1995, were issued a stock dividend consisting of EVRO's Series D
Convertible Preferred Stock ("Series D Preferred Stock") which has limited
voting rights. EVRO has the right, but not the obligation, to redeem the
Series D Preferred Stock in exchange for all of THI's issued and outstanding
capital stock.
EVRO is required to pay a stock dividend to the holders of its Series
D Preferred Stock as more fully discussed above. As of December 31, 1995, the
accrued dividend totaled 426,417 shares of common stock payable to the holders
of EVRO's Series D Preferred Stock.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW OF EVRO PRIOR TO THE TSSN AND CHANNEL AMERICA ACQUISITIONS
In anticipation of the closing of the TSSN acquisition in March 1995,
EVRO formed a wholly owned subsidiary, THI, and EVRO contributed to THI all of
the assets that were owned by EVRO prior to the TSSN acquisition. Pursuant to
the agreement between EVRO and Stellar (the former owner of TSSN) setting forth
the terms of the TSSN acquisition (the "TSSN Acquisition Agreement"), the
holders of record of EVRO's common stock as of March 27, 1995, were issued a
stock dividend consisting of EVRO's Series D Preferred, which has limited
voting rights. EVRO has the right, but not the obligation, to redeem the
Series D Preferred in exchange for all of THI's issued and outstanding capital
stock.
EVRO previously had two business segments, a health related business
segment and a recreational business segment. EVRO operated the health related
business segment through Lintronics, TGHC, Imaging, and EVRO Trading. During
the last quarter of EVRO's 1994 fiscal year, EVRO discontinued the business
operations of its health related business segment (other than winding-up
activities), effective as of December 31, 1994.
EVRO's recreational business segment is comprised of the ownership and
operation of RV campground facilities and EVRO conducts such operations out of
its subsidiaries, Treasure Rockhound and Tres Rivers.
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<PAGE> 25
RESULTS OF OPERATIONS
The following is a discussion of EVRO's results of operations for 1994
and 1995. EVRO's net loss increased from $1,703,000 in 1994 to $7,899,000 in
1995. The increase is primarily attributable to (1) the loss from operations
of $1,078,000 of THI (historic EVRO) for the period March 1, 1995 through
December 31, 1995 including the amortization of goodwill of $170,000 (this loss
was incurred in the business historically operated by EVRO), (2) the loss from
operations of $1,096,000 of Channel America for the period October 1, 1995
through December 31, 1995 including the amortization of goodwill of $141,000,
(3) increase in corporate overhead of $1,590,000, including accounting, legal
and financial consulting services and other costs to support EVRO's
acquisitions and financial activities of $1,265,000, (4) the loss on the sale
of sports memorabilia in January and February 1995 of $231,000, (5) an
uninsured jewelry and gem stone inventory theft loss of $538,000, and (6)
interest and other financing costs associated with 1995 borrowings of $857,000,
and (7) costs associated with convertible debenture modifications and defaults
of $1,318,000, partially offset by a reduction in management and accounting
services of $390,000.
EVRO's net loss per share decreased from $(3.62) in 1994 to $(3.37) in
1995. The decrease in loss per share in 1995 from that reported for 1994
reflects the change in the average common shares outstanding caused by the
issuance of additional shares of common stock.
Revenues, listed as "Rental, memberships, and other revenues" on
EVRO's Consolidated Statements of Operations, in the amount of $1,070,000,
reflect the operations of EVRO's RV campgrounds (historic EVRO and its
subsidiaries) since March 1, 1995. Programming and advertising revenues, in
the amount of $389,000, reflect the operations of Channel America since October
1, 1995. Revenues from product sales totaling $177,000, reflect sales of
sports memorabilia through a contractual arrangement with VIA TV Network
located in Knoxville, Tennessee during January and February 1995. EVRO
received revenues from the sale of sports memorabilia during November and
December 1994 through Via TV of $49,000. The increased revenues received from
product sales in 1995 resulted from additional cable distribution on the
Nostalgia Network.
Cost of sales and revenues is comprised of the costs associated with
the RV campgrounds, totaling $734,000; Channel America, totaling $685,000; and,
sports memorabilia, totaling $260,000 (inclusive of a provision for inventory
obsolescence and write down to market value of $95,000). The cost of sales
associated with the sports memorabilia was approximately 30-35% higher than
would normally be expected due to product selection and high product costs
directly attributable to the initial low sales volume levels. Channel America
incurred a negative gross margin of $296,000 for the period October 1, 1995
through December 31, 1995, primarily attributable to unsold advertising time.
Selling, general and administrative expenses for the year ended
December 31, 1995 totaled $951,000 for RV campground operations, $552,000 for
operations of Channel America, $1,833,000 for the shopping operations,
including an uninsured jewelry theft loss of $538,000, and $1,590,000
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<PAGE> 26
for corporate expenses and consulting services and other costs incurred in
support of EVRO's acquisition and financing activities. EVRO is currently
reviewing all of its insurance requirements and policies to assure that its
insurance coverage is adequate.
During the years ended December 31, 1994 and 1995, Stellar billed TSSN
$1,150,000 and $760,000, respectively, for management and accounting services
performed on TSSN's or EVRO's behalf. Stellar charged TSSN based upon
estimated time and charges incurred by Stellar on EVRO's behalf. Management
believes that the fees charged to EVRO and TSSN approximate the costs that
would have been incurred by TSSN if it had operated on a stand alone basis.
For the year ended December 31, 1994, TSSN accrued interest at 7% per annum
($80,444) on a note payable to Stellar dated December 31, 1993 in the principal
amount of $1,258,116. The note and accrued interest was satisfied by TSSN's
issuance of common shares to Stellar.
Interest expense of $1,048,464 for the year ended December 31, 1995
includes (a) additional consideration of $559,000 on certain loans paid by
issuance of 50,000 shares of Series C Convertible Preferred Stock and 1,000
shares of Series I Convertible Preferred Stock, and (b) amortization of loan
costs incurred in connection with issuance of the convertible debentures of
$6,000. Costs associated with convertible debenture modifications and defaults
were comprised of (1) penalty principal added to the face value of the
Debentures of $170,000 resulting from the Company not obtaining shareholder
approval for an increase in the Company's authorized common stock by certain
dates, (2) the adjustment of liability on debentures in default from the
adjusted face values to their mandatory redemption values, and (3) the write off
of related loan costs regarding debentures in default of $175,000.
EVRO's subsidiary, TGHC, received a promissory note in exchange for
the sale of substantially all of the assets of TGHC. As the ultimate
collection of the contingent promissory note is uncertain and largely dependent
upon the success of the acquiring entity, Better Health Network, Inc.,
establishing future profitable operations, EVRO utilized the cost recovery
method of accounting for this transaction. The payments received pursuant to
the promissory note, which are based on a percentage of the sales generated by
Better Health Network, will be recognized as income upon receipt. As of
December 31, 1995 no income had been recognized by EVRO.
PLAN OF OPERATION
TSSN AND TSC
TSSN and TSC are considered to be in the development stage as defined
in Financial Accounting Standard No. 7. TSSN is engaged in the development of
a television shopping network marketing its products through satellite,
television broadcast stations and cable networks. TSSN anticipates that it
will recommence broadcasting of its shopping programming in 1996. Initially,
TSSN will market jewelry, gemstones, non-sports collectibles and other general
merchandise through
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<PAGE> 27
TSC. The marketing of sports memorabilia, apparel and related merchandise by
TSSN will begin shortly thereafter.
In November 1994, TSSN initiated the sale of sports memorabilia on a
limited basis (6 to 21 hours per week) through a contractual arrangement with
ViaTV Network located in Knoxville, Tennessee. Initially the broadcast was
limited to satellite only homes; however, beginning in January 1995, TSSN sales
programming was broadcast over the Nostalgia Network for 6 hours per week.
While these sales activities confirmed, in management's opinion, the viability
of TSSN's programming, the operations were discontinued in late February 1995
until TSSN could independently obtain broadcasting capability and distribution
at more favorable economic costs. In January 1996, TSC initiated the sale of
jewelry, gem stones and non-sports collectibles on a limited basis. The
shopping broadcast was limited primarily to satellite only homes. In late
February 1996, EVRO temporarily discontinued the operations of TSC at its
Altamonte Springs, Florida television studio facility in order to relocate and
consolidate its shopping program operations with the operations of Channel
America. EVRO anticipates that it will operate from facilities located in
California, however, EVRO has yet to obtain such a facility. Upon the
consolidation of EVRO's television operations at one studio facility, TSSN will
relaunch its shopping programming on Channel America during late evening hours,
seven days a week.
CHANNEL AMERICA
Channel America, a broadcast television network, enhances EVRO's
business plan by affording EVRO a means to distribute TSSN's programming, and,
additionally, expands EVRO's entertainment business to include a television
network. Channel America currently broadcasts its programming 24 hours per day
through its television network which, as of March 29, 1996, is comprised of 79
affiliates with a potential reach of approximately 32.7 million US households,
including 9.2 million direct cable homes and 4.6 million satellite homes. EVRO
intends to initially commence broadcasting the programming of TSC, 6 hours per
day, seven days per week on Channel America's network. Thereafter, EVRO
anticipates expanding such programming to 12 hours per day, seven days per
week.
CASH REQUIREMENTS. EVRO is currently unable to meet its cash
requirements and will need approximately $5,700,000 to continue the execution
of its business plan through the next twelve months including (1) $3,000,000 to
satisfy its existing cash needs, including $200,000 for the repayment of
existing bridge loan; (2) $1,295,000 for its anticipated cash needs in the next
twelve months; (3) $430,000 to complete payments for WinSAT and Channel
America; (4) $675,000 for working capital to be utilized in the operations of
Channel America; and (5) $300,000 for THI's debt and operations. EVRO plans to
obtain funds to satisfy its cash requirements from the issuance of its capital
stock or from issuance of its debt securities, however, EVRO currently has no
commitments to receive either debt or equity financing and no assurance can be
given that EVRO will be successful in obtaining additional equity or debt
funding.
-27-
<PAGE> 28
EXPECTED PURCHASE OF EQUIPMENT FROM WINSAT. In furtherance of TSSN's
plans to acquire the ability to transmit its programming, EVRO, on April 26,
1995, entered into an agreement to merge TSSN with America's Collectibles
Network, Inc. ("ACN"), which agreement was subsequently terminated due to ACN's
inability to obtain audited financial statements. Upon the termination of the
ACN agreement, EVRO, again, in an effort to obtain the ability to transmit its
programming, on August 25, 1995, executed an agreement to merge with WinSAT
Communication Corporation ("WinSAT"), a Florida corporation based in Largo,
Florida, into a wholly owned subsidiary of EVRO, in exchange for $60,000 cash
and the requisite number of shares of EVRO's preferred stock (of a series of
preferred stock to be designated) which preferred stock will be convertible
into 86,000 shares of EVRO's common stock on the date that EVRO increases its
authorized shares of common stock. While the original agreement lapsed, on
January 13, 1996, EVRO executed a new agreement with WinSAT to purchase the
assets of WinSAT, principally three mobile satellite uplink facilities valued
at $620,000 for (1) $30,000 in cash; (2) the requisite number of shares of
EVRO's preferred stock (of a series of preferred stock to be designated) which
shall be convertible into 230,000 shares of EVRO's common stock on the date
that EVRO increases its authorized shares of common stock; and (3) the
assumption of a note payable for $130,000. The closing of the asset purchase
agreement was conditioned upon TSC entering into an employment agreement with
Frankie S. Winsett, the President of WinSAT. WinSAT currently owns two uplink
trucks. The January 13, 1996 agreement has also lapsed, however, EVRO is
presently negotiating a modified transaction with WinSAT. EVRO entered into
the asset purchase agreement with WinSAT primarily to obtain WinSAT's uplink
facilities and the services of Mr. Winsett who has experience in satellite
communications and broadcasting in the television industry. The acquisition of
the uplink facilities together with the employment agreement with Mr. Winsett
will provide EVRO and TSC with the capability to broadcast programming through
the mobile satellite uplink facilities.
OUTLOOK
EVRO has established the following objectives to achieve profitable
operations in 1996, all of which assume that EVRO will raise approximately
$10,000,000 through the sale of EVRO's debt or equity securities. To date,
EVRO has no commitment to receive such funding, nor can there be any assurance
that EVRO will be successful in its capital raising efforts. If EVRO is
successful in its capital raising efforts, it expects to:
1. Strengthen its management team, including recruiting
experienced Chief Operating Officers for both EVRO and Channel
America;
2. Consolidate the operations of Channel America and TSSN/TSC
into a television studio facility in California. This
consolidation will provide for considerable cost savings as it
will allow for the use of common uplink and transponder
facilities, as well as reducing related overhead costs;
3. Obtain Nielsen ratings of Channel America's programming to
facilitate the sale of advertising time to national
advertisers;
-28-
<PAGE> 29
4. Enhance the programming of Channel America through joint
ventures with partners such as MIT-F/x, Inc. to distribute a
computer animated television series called W.I.N.G.S. Angela
and SBI Communications to broadcast an interactive live
television bingo game show; and
5. To further diversify the geographic regions and seasonal
variations of its RV park division, the Company is currently
negotiating the purchase of a fully developed RV park and
campground in the northeast United States, which includes
approximately 400 sites.
LIQUIDITY AND CAPITAL RESOURCES
EVRO has incurred operating losses in 1994 and 1995, of $1,703,000 and
$7,899,000, respectively, which have adversely reduced EVRO's liquidity and
capital resources. In addition, TSSN and Channel America will require a
substantial capital infusion to fully establish their respective operations.
EVRO anticipates that it will continue to incur losses throughout its 1996
fiscal year.
In October and November, 1995 EVRO issued $1,000,000 of its 8.5%
Convertible Debentures due October 31, 2000 and $500,000 of 9.5% Convertible
Debentures due November 27, 2000 (the "1995 Debentures"). The holders of the
1995 Debentures can convert any or all of the original principal amounts of the
1995 Debentures into shares of EVRO's common stock, at a conversion price per
share equal to 50%-65% of the average closing bid price of EVRO's common stock
during the five business days immediately preceding the conversion date or
immediately preceding the date the 1995 Debenture was acquired, whichever is
lower.
The 1995 Debentures, as amended, provided for additional common stock
of EVRO to be issued, if EVRO failed to timely obtain shareholder authorization
to increase its authorized shares of common stock necessary to satisfy EVRO's
conversion obligation under the 1995 Debentures. Since EVRO did not timely
obtain authorization to issue additional shares, EVRO recorded additional
principal due on the 1995 Debentures of $170,000 as of December 31, 1995.
The 1995 Debentures provided that EVRO would be required to redeem the
1995 Debentures, for cash, at their common stock equivalent value ($3,068,567),
if EVRO had not increased its authorized common stock on or before a date 90
days after the 1995 Debentures were issued. Consequently, due to the failure
of EVRO to increase its authorized common stock on a timely basis, EVRO became
obligated to redeem the 1995 Debentures for cash, during the first quarter of
1996. EVRO has obtained extensions from the mandatory redemption provisions
from the holders of approximately 46% of the 1995 Debentures and is negotiating
with the remaining holders for similar extensions.
-29-
<PAGE> 30
During the period January 11, 1996 through February 8, 1996, EVRO
issued additional 8.5% Convertible Debentures aggregating $3,040,000 (the "1996
Debentures"). The 1996 Debentures have conversion provisions similar to the
1995 Debentures, and, as of April 26, 1996, the common stock equivalent value
of the 1996 Debentures aggregated $4,881,653. As of April 26, 1996, EVRO is
currently negotiating the extension of the mandatory redemption dates with all
of the 1996 Debenture holders, having obtained extensions from the holders of
approximately 20% of the 1996 Debenture holders.
On November 1, 1995, pursuant to a Stock Purchase Agreement, EVRO sold
to an accredited investor, 50,000 shares of Series C Preferred for $500,000.
The buyer has an option, for a period of six months following the date of
issuance, to put the shares back to EVRO at a redemption price of $10.00 per
share. As security for the agreement by EVRO to buy back any shares put to
EVRO, EVRO has pledged all common shares of Channel America owned by EVRO and
40 shares of EVRO's Series J Convertible Preferred Stock ("Series J
Preferred"), representing the equivalent of 2,000,000 common shares upon
conversion. In addition, EVRO entered into a five-year consulting agreement,
as amended, with Southern Resource Management, Inc., of which the investor is
president. The amended agreement provides for payments of $100,000 on
February 8, 1996; $25,000 on March 15, 1996; and $125,000 each on November 1,
1996, 1997, 1998 and 1999. EVRO shall deliver to the consultant, on or before
March 15, 1996, either a letter of credit in the amount of $400,000 or a
"Satisfaction Payment" of $400,000 in cash. EVRO has pledged 60 shares of
EVRO's Series L Preferred, representing the equivalent of 3,000,000 common
shares upon conversion, as security for payment of the Satisfaction Payment of
$400,000. In addition, D. Jerry Diamond and Daniel M. Boyar personally
guaranteed the obligations of EVRO pursuant to the Stock Purchase Agreement and
Consulting Agreement. The Company paid to Southern Resource Management, Inc.,
$100,000 on February 8, 1996 and $190,000 on March 25, 1996. However, the
Company has not delivered to Southern Resource Management, Inc., the
aforementioned letter of credit or "Satisfaction Payment." Thus, the Company
is in default under the terms of the agreement and Southern Resource
Management, Inc. may elect to accelerate all of the payments as a result of the
default.
During the first quarter of 1996, the Company sold 15,000 shares of
Series C Preferred Stock and 17 shares of Series K Preferred Stock for
$787,500, net of sales commissions of $212,500.
EVRO used the $4,472,000 that it received from the issuance of its
Debentures and sale of preferred stock in the following manner: (1)
repayment of a bridge loan which was utilized to fund the initial deposit on
Channel America acquisition ($252,000); (2) additional payments to Channel
America for its acquisition ($400,000); (3) advances to Channel America for
payment of amounts due on its satellite and transmission contracts
($1,005,000); (4) other advances to or payments on behalf of Channel America
($345,000); (5) legal and accounting fees incurred to complete certain filings
with the Securities and Exchange Commission ($244,000); (6) debt service and
working capital to fund the operations of THI ($432,000); (7) payment to
Stellar for management and accounting services ($60,000); (8) working capital
for operations of TSSN and TSC ($500,000); (9) working capital for corporate
overhead operations ($344,000); (10) repayment of outstanding debt, the
-30-
<PAGE> 31
proceeds of which were previously used for working capital purposes ($350,000);
(11) consulting services ($290,000); and (12) the redemption of previously
issued shares of EVRO's Series C Preferred ($250,000).
EVRO is currently experiencing a significant deficiency in working
capital and Channel America and TSSN (EVRO's primary future operating
subsidiaries) have operated since their inception with a negative working
capital position. As of December 31, 1995, EVRO had current assets of $297,201
and current liabilities of $10,976,956, or a working capital deficiency of
$10,679,755. EVRO is currently in default on various notes payable aggregating
approximately $5,500,000. These factors raise substantial doubts as to EVRO's
ability to continue as a going concern unless it is able to successfully
complete a sizable private equity offering and attain future profitable
operations. The future success of EVRO will depend, among other factors, upon
management's ability to attain and maintain profitable operations; to obtain
favorable financing arrangements; to retire its current indebtedness; and, to
raise additional capital.
EVRO intends to schedule a shareholders meeting at which EVRO will
ask its shareholders to increase the number of shares of EVRO's authorized
common and preferred stock. If the shareholders of EVRO do not approve the
increase in EVRO's authorized common stock, the holders of EVRO's Debentures
will likely demand the repayment of amounts owed to them in cash rather than
convert such Debentures into shares of EVRO's common stock as EVRO will not be
able to issue additional common shares. Thus, it is critical to the success of
EVRO that the shareholders of EVRO's common stock increase the authorized
shares of EVRO's common stock. Not only are the increased shares needed for
possible issuance to Debenture holders, but, such shares are also required to
raise additional capital for EVRO. On the other hand, if the shareholders of
EVRO fail to increase the authorized shares of EVRO's preferred stock, EVRO
does not envision that such action will materially impact EVRO, although it
will limit EVRO's ability to engage in certain financing transactions requiring
the issuance of preferred stock. If the shareholders of EVRO do not approve an
increase in EVRO's common stock, EVRO will likely seek to renegotiate the terms
of its existing Debentures to extend the maturity date thereof, however, there
can be no assurance that the Debenture holders would extend the terms of the
Debentures in which case, if payment of a substantial amount of the Debentures
were demanded, EVRO would likely be unable to meet such request.
Despite the inability of EVRO to establish positive cash flow from its
operations it has been able to raise capital through the issuance of its
debentures and its preferred stock, however, there can be no assurance that
EVRO will be able to continue to issue its securities.
-31-
<PAGE> 32
ITEM 7. FINANCIAL STATEMENTS
The Financial Statements and Schedules are attached hereto as required
by Rule 14(a)-3(b).
<TABLE>
<CAPTION>
Page No.
<S> <C>
Independent Auditor's Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Consolidated Balance Sheet as of December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Consolidated Statements of Operations for Years Ended
December 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Consolidated Statements of Stockholders' Equity
for Years Ended December 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Consolidated Statements of Cash Flow for Years Ended
December 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
[Balance of Page Left Intentionally Blank.]
-32-
<PAGE> 33
INDEPENDENT AUDITORS' REPORT
EVRO Corporation
Altamonte Springs, Florida
We have audited the accompanying consolidated balance sheet of EVRO
Corporation and subsidiaries ("Company") as of December 31, 1995 and the
related consolidated statements of income, stockholders' equity, and cash flows
for the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audit. We
did not audit the financial statements of a wholly owned subsidiary, which
statements reflect total assets of $161,499 as of December 31, 1995, and total
revenues of $1,483,034 for the year then ended. Those statements were audited
by other auditors whose report has been furnished to us, and our opinion,
insofar as it relates to such amounts is based solely on the report of the
other auditors.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit and the report of other auditors provide a reasonable basis for our
opinion.
In our opinion, based on our audit and the report of other auditors,
the consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of EVRO Corporation and
subsidiaries as of December 31, 1995 and the results of their operations and
their cash flows for the year then ended in conformity with generally accepted
accounting principles.
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in
the notes to the financial statements, which also addresses management's plans,
the Company's recurring losses from operations, as well as certain loan and
convertible debenture note defaults, raise substantial doubt about its ability
to continue as a going concern. The consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/ Alessandri & Alessandri
May 2, 1996
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<PAGE> 34
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
The Sports & Shopping Network, Inc.
We have audited the consolidated statements of operations, stockholders'
equity, and cash flows of The Sports & Shopping Network, Inc. (a Florida
corporation) for the year ended December 31, 1994. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations, stockholders' equity, and
cash flows of The Sports & Shopping Network, Inc. for the year ended December
31, 1994, in conformity with generally accepted accounting principles.
/s/ Hohl & Foley
May 13, 1995
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<PAGE> 35
EVRO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31, 1995
<TABLE>
<S> <C>
ASSETS
Current Assets:
Cash $ 33,351
Notes and other receivables 40,899
Inventories 77,814
Prepaid expenses 145,137
--------------
Total current assets 297,201
Property, Equipment, and Program Library
(less accumulated depreciation of $678,580) 5,324,614
Other Assets
Goodwill (less accumulated amortization of $358,305) 11,707,191
Other - net 1,161,275
--------------
TOTAL ASSETS $ 18,490,281
==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable and current portion of long-term debt $ 1,886,637
Notes payable - related parties 251,982
Convertible debentures 1,853,183
Accounts payable 3,725,601
Accrued liabilities 2,817,607
Amounts due to affiliates 441,946
--------------
Total current liabilities 10,976,956
Long-Term Debt:
Convertible debentures 790,000
Long-term debt 1,444,309
Other 559,765
--------------
TOTAL LIABILITIES 13,771,030
--------------
Minority interest 212,780
--------------
Preferred Stock - Series C subject to
repurchase agreement 500,100
--------------
Stockholders' Equity:
Preferred stock, no par value, 1,250,000 shares
authorized, 338,285 shares issued and outstanding 16,933,434
Common stock, no par value, 2,500,000 shares
authorized, 2,497,665 shares issued and outstanding 0
Accumulated deficit (11,306,156)
--------------
5,627,278
Less:
Unearned compensation (1,504,725)
Subscription receivable (115,000)
Common stock held by subsidiary - 416 shares (1,182)
--------------
TOTAL STOCKHOLDERS' EQUITY 4,006,371
--------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 18,490,281
==============
</TABLE>
See notes to consolidated financial statements
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<PAGE> 36
EVRO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended
----------
12/31/95 12/31/94
-------- --------
<S> <C> <C>
Sales and Revenues
Rental, memberships and other revenues $ 1,070,471 $
Programming and advertising 388,925
Product sales 176,566 48,898
-------------- -----------
1,635,962 48,898
Cost of Sales and Revenues 1,679,730 73,325
-------------- -----------
Gross Margin (43,768) (24,427)
-------------- -----------
Operating Expenses:
Selling, general and administrative 4,166,790 414,526
Management and accounting services 760,000 1,150,000
Depreciation and amortization 545,521 33,186
-------------- -----------
5,472,311 1,597,712
-------------- -----------
Loss from Operations (5,516,079) (1,622,139)
Other Income (Expenses)
Interest expense (1,048,464) (81,024)
Costs associated with convertible debenture
modifications and defaults (1,318,183)
Other-net (15,920)
-------------- -----------
Net Loss $ (7,898,646) $(1,703,163)
============== ===========
Net Loss Per Share $ (3.37) $ (3.62)
============== ===========
Average Number of Common Shares
Outstanding 2,342,215 470,809
============== ===========
</TABLE>
See notes to consolidated financial statements
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<PAGE> 37
EVRO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Additional
------------ Preferred Paid in
Shares $ Stock Capital
------ - ----- -------
<S> <C> <C> <C> <C>
BALANCE - DECEMBER 31, 1993 5,000 $ 5,000 $ $ 1,325,177
Adjustment pursuant to stock split 54,995,000 (440) 440
Exercise of warrants 356,500 30 178,220
Sale of common stock 630,000 52 244,948
Common stock issued in satisfacton of note
payable to The Stellar Companies, Inc. 1,729,908 144 1,338,560
Common stock issued in satisfacton of advances
made to Stellar 2,018,226 167 403,478
Loss for the year ended December 31, 1994
----------- ------------ ----------- ------------
BALANCE - DECEMBER 31, 1994 59,734,634 4,953 0 3,490,823
Adjustment to reflect reverse purchase acquisition
of EVRO Corporation (57,536,969) 7,574,976 (3,490,823)
Issuance of Preferred Series D Convertible
Preferred Stock, no par value (16,985 shares) (4,084,153) 4,084,153
Issuance of Preferred Series E Convertible
Preferred Stock, no par value (30,000 shares) (30,000) 30,000
Return and cancellation of common stock issued
to Stellar (500,000)
Series F Convertible Preferred Stock, no par value
issued:
To Stellar or its designee (1,300 shares) (1,300) 1,300
For payment of consulting services (24.4 shares) 170,000
Proceeds from sale of common stock 224,000 162,500
Common stock issued pursuant to the 1995
Employee Stock Compensation Plan 576,000 1,755,500
Proceeds from sale of Series C Convertible
Preferred Stock, no par value (65,500 shares) (67,515) 655,000
<CAPTION>
Common
Accumulated Unearned Notes Stock Held
Deficit Compensation Receivable by THI
------- ------------ ---------- ------
<S> <C> <C> <C> <C>
BALANCE - DECEMBER 31, 1993 $ (1,704,347) $ $ $
Adjustment pursuant to stock split
Exercise of warrants
Sale of common stock
Common stock issued in satisfacton of note
payable to The Stellar Companies, Inc.
Common stock issued in satisfacton of advances
made to Stellar
Loss for the year ended December 31, 1994 (1,703,163)
------------ ------------ ---------- ---------
BALANCE - DECEMBER 31, 1994 (3,407,510) 0 0 0
Adjustment to reflect reverse purchase acquisi
of EVRO Corporation (115,000)
Issuance of Preferred Series D Convertible
Preferred Stock, no par value (16,985 shares
Issuance of Preferred Series E Convertible
Preferred Stock, no par value (30,000 shares
Return and cancellation of common stock issued
to Stellar
Series F Convertible Preferred Stock, no par v
issued:
To Stellar or its designee (1,300 shares)
For payment of consulting services (24.4 s (170,000)
Proceeds from sale of common stock
Common stock issued pursuant to the 1995
Employee Stock Compensation Plan (1,755,500)
Proceeds from sale of Series C Convertible
Preferred Stock, no par value (65,500 share
</TABLE>
(Continued on following page)
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<PAGE> 38
EVRO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DEMBER 31, 1995
<TABLE>
<CAPTION>
Common Stock Additional
------------ Preferred Paid in
Shares $ Stock Capital
------ - ----- -------
<S> <C> <C> <C> <C>
Recision of sale of Series C Convertible
Preferred Stock, (42,000 shares) 44,015 (420,000)
Valuation of related shares held as collateral (42,000) 42,000
Series C Convertible Preferred Stock issued:
As collateral for note payable (26,000 shares) (260,000) 260,000
In settlement of litigation (3,900 shares) 39,000
Pursuant to a loan financing agreement
(50,000 shares) 500,000
Series H Convertible Preferred Stock, no par value,
issued into escrow pursuant to Plan of Merger with
Channel America (48,000 shares) 6,000,000
Series I Convertible Preferred Stock, no par value,
issued:
Pursuant to consulting agreements (5,750 shares) 382,193
Pursuant to a loan agreement (1,000 shares) 58,750
Series J Convertible Preferred Stock, no par value,
issued as collateral pursuant an agreement to
to repurchase certain Series C Convertible
Preferred Stock and a consulting agreement
(100 shares) (5,000,000) 5,000,000
Series M Convertible Preferred Stock, no par value,
issued:
Services rendered by related party (15,000 shares) 74,062
Collateral for unpaid legal fees (25,000 shares) (56,976) 56,976
Purchase of common stock by a subsidiary
(416 shares)
Stock compensation earned during 1995
Loss for the year ended December 31, 1995
--------- ------------ -------------- -------------
Balance - December 31, 1995 2,497,665 $ 0 $ 16,933,434 $ 0
========= ============ ============== =============
<CAPTION>
Common
Accumulated Unearned Notes Stock Held
Deficit Compensation Receivable by THI
------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
Recision of sale of Series C Convertible
Preferred Stock, (42,000 shares)
Valuation of related shares held as collateral
Series C Convertible Preferred Stock issued:
As collateral for note payable (26,000 shares)
In settlement of litigation (3,900 shares)
Pursuant to a loan financing agreement
(50,000 shares)
Series H Convertible Preferred Stock, no par value,
issued into escrow pursuant to Plan of Merger with
Channel America (48,000 shares)
Series I Convertible Preferred Stock, no par value,
issued:
Pursuant to consulting agreements (5,750 shares) (382,193)
Pursuant to a loan agreement (1,000 shares)
Series J Convertible Preferred Stock, no par value,
issued as collateral pursuant an agreement to
to repurchase certain Series C Convertible
Preferred Stock and a consulting agreement
(100 shares)
Series M Convertible Preferred Stock, no par value,
issued:
Services rendered by related party (15,000 shares) (74,062)
Collateral for unpaid legal fees (25,000 shares)
Purchase of common stock by a subsidiary
(416 shares) (1,182)
Stock compensation earned during 1995 877,030
Loss for the year ended December 31, 1995 (7,898,646)
-------------- ----------- ---------- --------
Balance - December 31, 1995 $ (11,306,156) $(1,504,725) $ (115,000) $ (1,182)
============== =========== ========== ========
</TABLE>
See notes to consolidated financial statements
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<PAGE> 39
EVRO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Year Ended
------------------
12/31/95 12/31/94
-------- --------
<S> <C> <C>
Cash Flows From Operating Activities:
Net loss $ (7,898,646) $ (1,703,163)
Adjustments to reconcile net loss to net cash utilized by
operating activities:
Depreciation and amortization 545,521 33,186
Use of program rights 49,948
Compensation for financial consulting services
paid in common and preferred stock 877,030
Additional consideration paid on loans with
preferred stock 558,750
Costs associated with convertible debenture
modifications or defaults 1,318,183
Write off of placement costs of preferred stock
to be rescinded 44,015
Write off of funds expended on abandoned acquisition 100,000
Settlement of litigation by issuance of common
stock 39,000
Other, net 25,806
Decrease in current assets 236,300 91,516
Increase in accounts payable and accrued liabilities 1,010,424 199,009
-------------- --------------
Net cash used in operating activities (3,093,669) (1,379,452)
-------------- --------------
Cash Flows From Investing Activities:
Acquisition of equipment, net (94,275) (62,152)
Cash acquired in acquisition of EVRO Corporation 9,102
Funds expended on abandoned acquisition (100,000)
Funds expended to acquire Channel America Television
Network, Inc. (123,993)
Other non-current assets (53,738)
-------------- --------------
Net cash used in investing activities (362,904) (62,152)
-------------- --------------
Cash Flows From Financing Activities:
Convertible debentures 1,132,857
Notes payable 1,057,402
Repayment of debt (529,584)
Proceeds from sale of common and preferred stock 1,250,085 423,250
Working capital advances from/to affiliates, net 292,125 1,017,472
Deferred RV lot rental 279,074
Other 7,898
-------------- --------------
Net cash provided by financing activities 3,489,857 1,440,722
-------------- --------------
Net Increase (Decrease) in Cash 33,284 (882)
Cash, Beginning of Period 67 949
-------------- --------------
Cash, End of Period $ 33,351 $ 67
============== ==============
Supplemental Disclosures:
Interest paid $ 58,559 $ 81,024
============== ==============
</TABLE>
See notes to consolidated financial statements
39
<PAGE> 40
EVRO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. BASIS OF ACCOUNTING
The consolidated financial statements of EVRO Corporation, a Florida
corporation, and its subsidiaries ("EVRO" or the "Company") have been
presented on the basis that they are a going concern, which contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business and, accordingly, no adjustments have been recorded because of this
uncertainty. The Company has incurred net losses during 1994 and 1995 of
$1,703,000 and $7,899,000, respectively, which have adversely reduced the
Company's liquidity and capital resources. At December 31, 1995, the Company
had current assets of $297,000 and current liabilities of $10,977,000 or a
working capital deficit of $10,680,000.
The Company is in default on $1,853,183 of convertible debentures
which were outstanding as of December 31, 1995. As also described in Note 10 -
Convertible Debentures and Subsequent Events, during the period January 11,
1996 through February 8, 1996, the Company had issued additional 8.5%
Convertible Debentures aggregating $3,040,000. These Debentures provided that
in the event authorization for issuance of the common stock is not obtained
before 75 days from date of issue, the Company is required to redeem the
Debentures at an amount equal to the value of the common stock into which the
Debentures would have been convertible at the date of redemption. As of April
26, 1996, the common stock equivalent value of these newly issued Debentures
aggregated $4,881,653. As of April 26, 1996, the Company was negotiating the
extension of the mandatory redemption dates with all of the Debenture holders.
EVRO intends to schedule a shareholders meeting at which EVRO will
ask its shareholders to increase the number of shares of EVRO's authorized
common and preferred stock. If the shareholders of EVRO do not approve the
increase in EVRO's authorized common stock, the holders of EVRO's Debentures
will likely demand the repayment of amounts owed to them in cash rather than
convert such Debentures into shares of EVRO's common stock as EVRO will not be
able to issue additional common shares.
The Company is also in default of a note payable in the amount of
$550,000 due June 24, 1995 which has as collateral all the common stock, held
by the Company, of The Sports & Shopping Network, Inc, a Florida corporation
and majority owned subsidiary ("TSSN"). As of December 31, 1995, the Company
was in default of a consulting contract regarding the payment of $625,000 in
fees. This obligation is collateralized by 60 shares of Series J Convertible
Preferred Stock ("Series J Preferred Stock") which is convertible into
3,000,000 shares of the common stock of the Company, and by the personal
guarantees of a Director and the Special Legal Counsel to the Board of
Directors. In addition, Channel America Television Network, Inc., a Delaware
corporation and majority owned subsidiary ("Channel America") is in default on
notes payable aggregating $830,309.
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<PAGE> 41
In addition, TSSN and its subsidiaries are considered to be
development stage companies as defined in Financial Accounting Standard No. 7
which will require substantial capital infusion to fully establish their
operations. As more fully described below, management of the Company believes
that it has put into place a business plan that will provide for positive
operating results and allow for the settlement of its liabilities in a timely
manner, however, should existing creditors demand immediate payment, at the
present time the Company does not have a readily available source of additional
capital nor a source of long term financing to allow for the repayment of those
creditors. Although the Company has plans in process which it believes will
allow it to obtain additional and other financing, there can be no assurance
that such plans will be implemented successfully.
The Company's current business focus is to develop and expand its home
shopping and entertainment business. The Company plans to attain future
profitable operations by developing and/or expanding (1) sources of supply of
products that it will sell at retail; (2) the ability to acquire and/or produce
and broadcast television shopping and entertainment programming; and (3) a
distribution network for such programming.
The consolidated financial statements include the accounts of EVRO and
its subsidiaries, Technology Holdings, Inc., a Florida corporation ("THI"),
TSSN, The Shopping Connection, Inc., a Florida corporation ("TSC"), and
Channel America. THI is a holding company with two wholly owned operating
subsidiaries, Treasure Rockhound Ranches, Inc., a Texas corporation ("Treasure
Rockhound") and Tres Rivers, Inc., a Texas corporation ("Tres Rivers"). THI
has one wholly owned inactive subsidiary, Lintronics Technologies, Inc.
("Lintronics"), whose operations were terminated in 1994. As of December 31,
1994, THI terminated the operations of Imaging Technologies, Inc. ("Imaging"),
an indirect wholly-owned subsidiary, and TGHC, Inc. ("TGHC"), formally known
as The Good Health Channel Inc., a majority owned subsidiary, both Florida
corporations, which corporations were abandoned in 1995. During 1995, THI
transferred EVRO Trading Corporation, a Florida corporation and wholly-owned
subsidiary ("EVRO Trading") to its President for the value of debts owed him.
The operations of EVRO Trading were also terminated as of December 31, 1994.
TSSN has two wholly-owned subsidiaries, International Sports Collectibles, Inc.
and Microsonics International, Inc., both Florida corporations and an 80% owned
subsidiary, Centennial Sports Promotions, Inc., a Missouri corporation.
Channel America has one wholly- owned subsidiary, Channel America LPTV License
Subsidiary, Inc., whose operations were discontinued in 1992.
The Company, on March 14, 1995, acquired 98.35% of the issued and
outstanding common shares of TSSN. For financial reporting purposes, this
transaction was accounted for as a reverse purchase acquisition under which the
companies were recapitalized to include the historical financial information of
TSSN and the assets and liabilities of the Company revalued to reflect the
market value of the Company's outstanding shares. As closing occurred on March
14, 1995, the middle of a month, the accounts of TSSN have been consolidated
with the Company as of February 28, 1995, a date that lies within the date on
which the transaction was initiated and the date of closing. The historical
financial statements prior to February 28, 1995, included herein, are those of
TSSN.
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<PAGE> 42
On October 10, 1995, the Company acquired Channel America as more
fully described in Note 6, Acquisition of Channel America Television Network,
Inc. For accounting purposes, the acquisition was recorded as of October 1,
1995 using the purchase method of accounting.
2. HISTORY AND OPERATIONS
FORMATION OF TECHNOLOGY HOLDINGS, INC. - On January 20, 1995, the
Company organized THI, and contributed substantially all of its assets and
liabilities together with 100% of the issued and outstanding common stock of
Treasure Rockhound, Tres Rivers, Lintronics, Imaging, and EVRO Trading, and
the 60% of the issued and outstanding common stock of TGHC, which the Company
owned, into THI in exchange for all of the issued and outstanding stock of
THI.
Treasure Rockhound operates nine recreational vehicle ("RV")
campgrounds in four southwestern states through its private organization,
Camper Ranch Club of America ("Camper Ranch Club"). Camper Ranch Club offers
its members daily or long-term leases on improved campsites at its various
locations. Treasure Rockhound also operates a mobile home park in the Midwest.
During 1994, the Company acquired a 46-acre RV campground in Texas. The
campground was acquired by the Company's subsidiary, Tres Rivers.
THE SPORTS & SHOPPING NETWORK, INC. AND THE SHOPPING CONNECTION, INC.
- - On March 14, 1995, the Company acquired 98.35% of the issued and outstanding
common shares of TSSN. TSSN, together with the Company's newly formed
wholly-owned subsidiary, TSC, is engaged in the development of a television
shopping network. TSSN specializes in the marketing of sports memorabilia,
apparel and related merchandise and TSC specializes in the marketing of jewelry
and other collectibles through satellite and television broadcast and cable
affiliates, including Channel America.
CHANNEL AMERICA TELEVISION NETWORK, INC. - During 1995, the Company
executed certain agreements with Channel America for the acquisition of 100% of
the issued and outstanding shares of the common stock of Channel America.
Channel America currently operates a broadcast television network, which
provides programming 24 hours per day. Channel America has relied mainly on
barter licensing, wherein it exchanges air time for programming. Channel
America maintains a program library consisting of approximately 750 public
domain motion pictures and 400 television programs.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements of
EVRO include the accounts of EVRO and its majority owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated in
consolidation. Certain reclassifications have been made to the 1994 financial
statements to conform to 1995 classifications.
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<PAGE> 43
USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
REVENUE RECOGNITION - The Company, through its subsidiary Channel
America, derives a portion of its operating revenues from paid programming,
affiliate fees, and per-inquiry fees. Channel America also generates non-cash
revenues from barter transactions. Paid programming represents revenue earned
for broadcasting customer generated programming and to a lesser extent, paid
spot advertising (e.g. 30-second commercials). Affiliate fees are monthly
charges to affiliated stations for the right to belong to the broadcast
network. The Company may from time to time waive all or a portion of such fees
to attract and maintain affiliates. Per inquiry fees represent fees generated,
on a direct response basis, when a customer uses air time to sell directly to
viewers who then place orders with the customer. Barter (nonmonetary)
transactions generally are used by the Company to acquire programming. In a
typical barter transaction, the Company is given programming rights in exchange
for air time. The estimated fair value of programming rights is recognized as
revenue and programming expense when the air time is used. As is the general
accounting practice in this industry, no gain or loss is recognized on barter
transactions. Therefore, barter transactions increase both revenue and
expenses, but do not affect net income or cash flow. Although the Company does
not receive any cash in barter transactions, such transactions alleviate cash
expenditures by the Company to acquire programming.
Revenues from dues, rentals and memberships are recognized during the
period of service.
Revenues from the sale of merchandise are recognized as shipment
occurs. Costs of broadcasting the shopping programming are recognized as
incurred.
CASH AND CASH EQUIVALENTS - Cash and cash equivalents are comprised of
cash and highly liquid investments with a maturity of three months or less when
purchased. The Company had no cash equivalents at December 31, 1995.
ALLOWANCE FOR DOUBTFUL ACCOUNTS - The Company provides for an
allowance for doubtful accounts when, in the opinion of management, there is
uncertainty as to the ability to collect an amount receivable.
INVENTORIES - Inventories are carried at the lower of cost determined
on a first-in first-out basis or market.
PROGRAM RIGHTS - Program rights relate to rights purchased for
broadcast materials. The costs are amortized over the estimated number of
future showings unless the program is licensed for an unlimited number of
showings in which case it is amortized over the contract period.
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<PAGE> 44
PROPERTY AND EQUIPMENT - Furniture, fixtures, equipment, and program
library are stated at cost. Depreciation and amortization are computed using
the straight-line method over the estimated useful lives which range from 5 to
11 years. The cost of replacements, renewals and repairs, which neither add
materially to the value of the property, nor appreciably prolong its life are
charged to expense as incurred.
GOODWILL - Goodwill resulting from acquisitions is stated at cost less
accumulated amortization. Amortization is calculated using the straight-line
method over the estimated useful life. Generally, between fifteen and forty
years has been identified as the estimated useful life of goodwill. EVRO has
adopted a policy requiring periodic review and evaluation to determine whether
there has been a permanent impairment in the value of goodwill. This policy
includes, but is not limited to, evaluation of factors such as current
operating results, expected cash flows, business trends, and the market
valuation of the outstanding common shares of EVRO. The calculation
methodology provides for the recognition of a permanent impairment of goodwill
if the market valuation of the outstanding common stock, after deduction for
the value of all other assets, is less than the goodwill amount, and any
diminution in the market value has been determined to be of a permanent nature
and not caused by fluctuation of normal market activity.
INCOME TAXES - The provision (benefit) for income taxes is based on
the pre-tax earnings (loss) reported in the consolidated financial statements,
adjusted for transactions that may never enter into the computation of income
taxes payable. A deferred tax liability or asset is recognized for the
estimated future tax effect attributable to temporary differences in the
recognition of income and expenses for financial statement and income tax
purposes. A valuation allowance is provided in the event that the tax benefits
are not expected to be realized.
EARNINGS (LOSS) PER SHARE - Earnings (loss) per common share is based
upon the weighted average number of common shares outstanding during the
period.
The calculation of loss per share for the year ended December 31,
1995 is based on the weighted average number of shares as follows: (a) for the
period January 1, 1995 through March 14, 1995, the number of common shares to
be issued to The Stellar Companies, Inc., a Florida corporation ("Stellar")
(500,000 shares) and (b) for the period from March 14, 1995 through December
31, 1995, the actual number of EVRO shares outstanding. For the year ended
December 31, 1994, the weighted average number of shares is based on the number
of EVRO common shares to be issued to Stellar (500,000 shares) adjusted for the
effect of a November 30, 1994 change in the number of issued shares of TSSN
held by Stellar.
The common shares issuable under convertible preferred stock and
debentures have not been included in the determination of the loss per common
share as they would be antidilutive.
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<PAGE> 45
4. ACQUISITION OF THE SPORTS & SHOPPING NETWORK, INC.
On March 14, 1995, the Company acquired 98.35% of the issued and
outstanding common shares of TSSN from Stellar. In connection with the
acquisition of the controlling interest in TSSN, the Company agreed to issue
16,759,038 shares of its common stock to Stellar (the "TSSN Acquisition"). The
common shares to be issued to Stellar, when issued, will represent 77.09% of
the outstanding shares of the Company's common stock, calculated on a fully
diluted basis. As the Company only had 2,500,000 shares of common stock
authorized at the time of closing of the TSSN Acquisition, the Company and
certain of its shareholders agreed to use their best efforts to cause the
Company's authorized common stock to be increased as soon as practicable.
Pending such increase in the Company's authorized common stock, the Company
issued Stellar 500,000 restricted shares of its authorized, but then unissued
common stock. Once the Company increases the number of its authorized common
stock, the Company shall be required to issue 16,259,038 (16,759,038 - 500,000)
shares of its common stock to Stellar, representing the balance of the
Company's common stock to be issued to Stellar under the TSSN Acquisition
agreement, before consideration of the April 19, 1995 amendment discussed
below.
On April 19, 1995, Stellar agreed to return the 500,000 shares of
restricted common stock previously issued to Stellar at the closing of the
Company's purchase of TSSN. The Company asked Stellar to amend the TSSN
Acquisition agreement in order to make the 500,000 shares of common stock
available to the Company for issuance by the Company pursuant to its 1995
Employee Stock Compensation Plan. Stellar agreed to return the 500,000 shares
of common stock to the Company in exchange for the Company's agreement to
increase, by 1,000,000 shares, the number of shares of the Company's common
stock that the Company would issue to Stellar at such time as the Company
increases its authorized shares of common stock. Consequently, the number of
shares that the Company is obligated to issue to Stellar for the shares of TSSN
increased from 16,759,038 to 17,759,038.
In addition, the April 19, 1995 amendment to the TSSN Acquisition
agreement required the Company to issue to Stellar 500 shares of Series F
Convertible Preferred Stock ("Series F Preferred Stock"). Each share of Series
F Preferred Stock entitles the holder thereof with the right to cast 1,000
votes on any matter requiring the approval of common shareholders. In the
event the Company issues voting securities prior to the time that the Company
has increased the number of shares of its authorized shares of common stock,
the Company has agreed to issue additional Series F Preferred Stock to Stellar
in an amount equal in voting rights with any subsequent voting shares of common
or preferred stock issued by the Company. For example, if the Company issued
300,000 shares of its common stock, the Company would be required to issue 300
shares of Series F Preferred Stock to Stellar. During the period April 1, 1995
through December 31, 1995, EVRO issued 576,000 shares of common stock pursuant
to the EVRO Corporation 1995 Employee Stock Compensation Plan and 224,000
shares of common stock sold for $162,500, net of legal costs aggregating
$12,500, in private placements to accredited investors. Accordingly, the
Company issued 780 additional shares of Series F Preferred Stock to Stellar.
In addition the Company issued 20 shares of Series F Preferred
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<PAGE> 46
Stock to a law firm in lieu of issuance of such shares to Stellar. As of
December 31, 1995, Stellar held 1,280 shares of Series F Preferred Stock.
The Series F Preferred Stock is convertible, at the option of the
holder, into shares of the Company's restricted common stock following
completion of an increase in the Company's authorized shares of common stock on
a 10,000 for 1 basis. Stellar has informed the Company that it intends to
convert all Series F Preferred Stock it holds upon the Company completing the
increase in the authorized shares of common stock. Any common shares issued to
Stellar as a result of its conversion of Series F Preferred Stock into the
Company's common stock reduces the Company's obligation to issue to Stellar the
17,759,038 shares of restricted common stock.
On October 6, 1995, the TSSN Acquisition agreement was further amended
to provide that Stellar would, upon the conversion of the Series F Preferred
Stock, return 2,126,000 shares of the 17,759,038 shares of common stock to be
received by Stellar upon the Company increasing its shares of authorized common
stock. Additionally, Stellar agreed to deliver 9,000,000 shares of the common
stock to be issued to Stellar upon conversion of the Series F Preferred Stock
to the law firm of Scolaro, Shulman, Cohen, Lawler & Burstein, P.C. ("Scolaro,
Shulman") who agreed to hold the shares in escrow, and will release the
9,000,000 shares, on a pro rata basis for each $1,000,000 of net earnings,
cumulatively to $5,000,000, earned by the Company and its subsidiaries
excluding THI. Any and all shares held in escrow which are not released by the
escrow agent to Stellar on or before December 31, 2000, are to be returned to
the Company. On February 26, 1996, the Company agreed to reduce the shares to
be returned to the Company from 2,126,000 to 1,350,000 shares, the actual
number of equivalent common shares issued in satisfaction of certain consulting
agreements. The amendments to the TSSN Acquisition agreement to reduce the
number of shares that Stellar would receive under the TSSN Acquisition
agreement (1,350,000) and to subject an additional 9,000,000 shares to a risk
of forfeiture if the Company's earnings did not meet certain benchmarks were
made to facilitate the Company's capital raising efforts.
Pursuant to the agreement between the Company and Stellar, the Company
acquired on January 15, 1996, the remaining 1.65% of TSSN's issued and
outstanding shares of common stock held by its minority shareholders in
exchange for an aggregate of 281,418 shares of the Company's Series F Preferred
Stock.
The Company purchased the option to acquire TSSN from Boyar Holdings,
Inc. ("BHI") on January 12, 1995. Pursuant to the Assignment of Option
Agreement, the Company agreed to issue to BHI 30,000 shares of the Company's
Series E Convertible Preferred Stock ("Series E Preferred Stock") which shall
be convertible into 3,000,000 shares of the Company's restricted common stock
following completion of an increase in the Company's authorized shares of
common stock.
In conjunction with the TSSN acquisition, American Clinical Labs,
Inc., a Florida corporation ("ACL") the holder of 587,219 shares of the
Company's common stock, provided to Stellar an irrevocable proxy with full
power of substitution, to represent ACL or any assignee thereof at all regular
and special meetings of shareholders, or in connection with any other
shareholder action of
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<PAGE> 47
the Company, but only in ACL's capacity as the owner of record of, and to vote
the shares of the common stock of the Company which are owned by ACL as of
March 14, 1995 ("the Shares"). This irrevocable proxy shall be effective from
March 14, 1995 to the date the Shares represent less than five percent (5%) of
the Company's issued and outstanding shares of common stock.
The Company has formed a wholly-owned subsidiary, THI, which owns all
of the assets that were owned by the Company prior to the TSSN acquisition.
Pursuant to such acquisition, the holders of record of the Company's common
stock as of March 27, 1995, were issued a stock dividend consisting of the
Company's Series D Convertible Preferred Stock ("Series D Preferred Stock"),
which have limited voting rights. The Company has the right, but not the
obligation, to redeem the Series D Preferred Stock in exchange for all of THI's
issued and outstanding capital stock. As of December 31, 1995, the net book
value of THI, including net working capital advances of $607,000 from EVRO
since March 14, 1995, is approximately $3,876,000. The Company is prohibited
from pledging, hypothecating or otherwise encumbering its shares of THI's
capital stock.
The creation of THI and the authorization and issuance of the
Company's Series D Preferred Stock was done for the purpose of preserving the
value of the Company's then existing assets for the holders of the Company's
common stock at the time of the TSSN acquisition. Due to the significant
difference in the historical business of the Company and that of TSSN, the
Company insisted on the creation of THI as a condition of the TSSN acquisition.
Pursuant to the TSSN Acquisition agreement, the Company has contributed
$455,000 to THI. Upon the successful completion of private debt or equity
offerings, the Company intends to redeem the Series D Preferred Stock in
exchange for all of THI's issued and outstanding common stock.
The TSSN Acquisition agreement also provides that THI shall be
entitled to receive, on an annual basis, that number of shares of the Company's
voting common stock (the "Special Shares") equal to 20% of the average total
assets of THI over a twelve month period (March 14 through the following March
13 each year) divided by Two Dollars ($2.00). The phrase "total assets" is
defined to mean the amount set forth on the consolidated balance sheet of THI
as total assets, including, without limitation, the current assets, property
and equipment (net of depreciation), investments and other assets (net of
amortization and adjustments). The phrase "average total assets" is defined to
mean the sum of the "total assets" (as defined above) of THI as set forth on
the balance sheets of THI during each of the quarters ending March 31, June 30,
September 30, and December 31 during each applicable twelve month period and
dividing the sum by four. THI ratably earns the Special Shares over each
applicable twelve month period. THI's entitlement to the Special Shares shall
cease upon the redemption of the Series D Preferred Stock. As of December 31,
1995, THI had earned 426,417 shares of the Company's common stock which have
yet to be issued.
Stellar has the option to purchase the Special Shares from THI for an
amount equal to the greater of Two Dollars ($2.00) per share or 50% of the bid
price of the Company's common stock as of the end of the month preceding
Stellar's exercise of its option. Stellar's option to acquire the Special
Shares shall terminate June 30, 1997. Stellar has not been granted
registration rights with respect to the Special Shares.
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<PAGE> 48
The Series D Preferred Stock contains a special dividend provision
that in the event such preferred stock is not redeemed by June 30, 1997, the
Company shall, as of July 1, 1997, declare a stock dividend of its voting
common stock payable to the holders of the Series D Preferred Stock equal to
the number of shares of common stock held by THI as of June 30, 1997.
Additional stock dividends shall be payable to the holders of Series D
Preferred Stock each July 1st following July 1, 1997 until the Company has
redeemed its Series D Preferred Stock. The amount of such additional stock
dividend shall equal the number of shares of the Company's common stock
transferred to THI during the immediately preceding twelve month period.
5. ACCOUNTING FOR ACQUISITION OF THE SPORTS & SHOPPING NETWORK, INC.
For financial reporting purposes, this transaction was accounted for
as a reverse purchase acquisition under which the companies were recapitalized
to include the historical financial information of TSSN. The assets and
liabilities of the Company were revalued to reflect the market value of the
Company's outstanding common shares. The market value of the Company's
outstanding common shares ($4,084,000) was based on the month end trading range
of the Company's common stock for the three months, December, 1994 and January
and February, 1995. The carrying value of EVRO's assets immediately prior to
the acquisition of TSSN reflect their approximate fair market value. The costs
of acquisition aggregated $305,000, including a finders fee of $150,000 and
legal costs of $155,000. The excess ($3,596,000) of market value of the
Company's outstanding common shares, together with the costs of acquisition
over and above the net assets of EVRO immediately prior to the acquisition of
TSSN, was allocated to goodwill. The goodwill is being amortized on a straight
line basis over 15 years, the estimated life of the membership list of the
Company's RV campgrounds. No value has been assigned to the minority
shareholders of TSSN as the book value of the net assets of TSSN was negative
as of December 31, 1995.
As closing occurred in the middle of a month on March 14, 1995, the
transaction has been recorded as of February 28, 1995, a date that lies within
the date on which the transaction was initiated and the date of closing.
Accordingly, the financial statements for the year ended December 31, 1995
reflect the operations of TSSN for the year ended December 31, 1995 and the
operations of EVRO for the period March 1, 1995 through December 31, 1995. The
cost of acquisition and net income for the period from February 28, 1995 to
March 14, 1995 have been reduced by imputed interest of $17,903 using a 10%
annual rate of interest. The historical financial statements for 1994 are
those of TSSN.
6. ACQUISITION OF CHANNEL AMERICA TELEVISION NETWORK, INC.
During 1995, the Company executed agreements with Channel America, for
the acquisition of 100% of the issued and outstanding shares of the common
stock of Channel America for a purchase price of $7,000,000, comprised of cash
of $1,000,000 and $6,000,000 of the Company's
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<PAGE> 49
Series H Convertible Preferred Stock ("Series H Preferred"). The cash portion
of the purchase price was paid in installments of which $300,000 was paid as of
December 31, 1995; $300,000 was paid on March 25, 1996; and $400,000 was paid
by a promissory note bearing interest of 8% per annum, which is due and payable
April 7, 1996. The Company has agreed to pay to Channel America an additional
50,000 shares of common stock or its equivalent in preferred stock to extend
the note to May 15, 1996. In addition, the Company may further extend the
note to June 15, 1996 by payment of an additional 50,000 shares of common stock
or its equivalent in preferred stock, together with $50,000 in cash.
The Company has made working capital advances to Channel America of
$690,811 as of December 31, 1995 together with $658,569 of additional working
capital advances between January 1, 1996 and April 26, 1996.
On October 10, 1995, Channel America issued 27,500,000 shares of its
common stock to the Company for the $1,000,000 of the purchase price. The
27,500,000 shares of Channel America common stock will represent at least 51%
of the issued and outstanding shares of Channel America when it completes the
conversion of the outstanding notes payable and preferred stock into common
stock as described below.
The Company issued into escrow $6,000,000 (48,000 shares) of its
Series H Preferred for the remaining 49% of the common shares of Channel
America. Under the terms of the agreements, as amended, between the companies,
the Series H Preferred is convertible into a maximum of 3,000,000 shares of the
Company's common stock, unless the market price of such common shares was less
than $2.00 per share as of December 31, 1995. If the market price of the
Company's common stock was less than $2.00 per share at December 31, 1995, then
the number of common shares would be increased to attain the ascribed value of
$6,000,000. At December 31, 1995, the average of the closing bid and ask
prices for the Company's common stock was $1.5938. Accordingly, the Company
shall issue, upon conversion of the Series H Preferred, 3,764,588 shares of
the Company's common stock to the minority shareholders of Channel America.
The Series H Preferred will be held in escrow, pending (a) the conversion of an
aggregate of 90% of Channel America's notes payable and preferred stock (which
totaled $7,769,000 as of June 30, 1995) into shares of Channel America's common
stock; (b) the Company increasing the number of its authorized shares of common
stock; and (c) the Company registering the shares of common stock underlying
the Series H Preferred with the Securities and Exchange Commission.
For accounting purposes, the Company's acquisition of Channel America
was recorded as of October 1, 1995, using the purchase method of accounting and
the assets and liabilities of Channel America were revalued to reflect their
fair values as of the date of acquisition. Channel America maintains a program
library consisting of approximately 750 public domain motion pictures and 400
television programs. Management revalued the program library at estimated
replacement cost using, in part, evaluations by representatives of a
distributor of films in the public domain and a film editing firm. Management
believes that the value so determined is reasonable.
-49-
<PAGE> 50
The conversion of an aggregate of 90% of Channel America's note and
preferred stock holders into shares of Channel America's common stock was a
significant consideration in the Company's decision to acquire Channel America.
Before the closing of the agreements on October 10, 1995, Channel America
provided to the Company written acceptances from note and preferred stock
holders whereby the holders accepted the Conversion Plan to convert their notes
and preferred stock into Channel America's common stock. The written
acceptances represented in excess of 80% of the total notes payable and
preferred stock outstanding as of June 30, 1995. As of December 31, 1995,
note and preferred stock holders aggregating $3,773,000, or 49% of the notes
payable and preferred stock outstanding as of June 30, 1995, had been converted
into shares of Channel America's common stock. In addition, note and preferred
stock holders aggregating $2,618,000, or 34% of the notes payable and preferred
stock outstanding as of June 30, 1995, had committed, but had not yet converted
into additional shares of Channel America's common stock. The Company recorded
the conversion of both groups of debt and equity holders as if their conversion
had occurred on October 1, 1995.
The goodwill amount of $8,311,878, which includes transaction costs of
$350,000 relating to the acquisition, represents the purchase price plus net
liabilities assumed over and above the aggregate fair value of the assets
acquired. The goodwill will be amortized on a straight line basis over 15
years, the estimated life of Channel America's list of affiliate television
stations and cable companies. A minority interest of $212,780 was recorded as
of October 1, 1995, which represents the par value and paid in capital of the
unconverted preferred stock.
As closing occurred in the middle of the month on October 10, 1995,
the transaction has been recorded as of October 1, 1995, a date which lies
within the date on which the transaction was initiated and the date of closing.
Accordingly, the financial statements of EVRO for the year ended December 31,
1995 reflect the operations of Channel America for the entire three month
period. The cost of acquisition and net income for the period from October 1,
1995 to October 10, 1995 has been reduced by imputed interest of $1,600 using a
10% annual rate of interest.
7. INVENTORIES
Inventories are comprised of sports memorabilia ($71,254) and Cager
Classic apparel ($6,560). Inventories are carried at the lower of cost
(determined on a first-in, first-out basis) or market. At December 31, 1995,
inventories were adjusted by $95,105 to their estimated market value with a
corresponding charge to cost of sales. Inventories aggregating $57,553 are held
by vendors to which the Company has outstanding accounts payable aggregating
$114,039 and is subject to a judgement of the Supreme Court of the State of
California in the amount of $117,492. The inventory of sports memorabilia has
been pledged as security to $1,605,000 of promissory notes issued by Stellar
pursuant to a private placement offering dated March 21, 1993.
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<PAGE> 51
8. PROPERTY AND EQUIPMENT
Property, equipment and program library is comprised of the following:
<TABLE>
<S> <C>
Land and improvements $1,972,546
Building and structures 1,531,179
Machinery and equipment 476,533
Furniture and fixtures 78,277
Vehicles 62,049
Program library 1,882,610
---------
6,003,194
Less - Accumulated depreciation and amortization (678,580)
---------
Total property and equipment, net $5,324,614
=========
</TABLE>
9. OTHER ASSETS
GOODWILL - Goodwill is summarized below by acquisition:
<TABLE>
<CAPTION>
1995 1995 1994
Year Acquisition Unamortized Amortization Amortization Life
---- ----------- ----------- ------------ ------------ ----
<S> <C> <C> <C> <C> <C>
1992 Microsonics $ 109,110 $ 15,587 $ 15,587 10
1992 TSSN 1,508 216 216 10
1995 EVRO, reverse purchase 3,426,088 169,504 0 15
1995 Channel America 8,170,485 141,393 0 15
---------- ------- --------
$11,707,191 $ 326,700 $ 15,803
========== ======= ========
</TABLE>
Goodwill resulting from the current year acquisitions is discussed in
Note 5 - Accounting for Acquisition of The Sports & Shopping Network, Inc., and
Note 6 - Acquisition of Channel America Television Network, Inc.
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<PAGE> 52
OTHER -NET - Other assets are comprised of the following:
<TABLE>
<S> <C>
Prepaid consulting contract $ 479,167
Unamortized loan costs 186,468
LPTV station licenses 159,900
Proprietary technology, net 114,329
Note receivable 20,000
Trademarks 3,254
Deposits:
AT&T Skynet 125,000
Stock purchase agreement 50,000
Office leases 9,708
Telephone and utilities 8,000
Other 5,449
---------
Total other assets - net $1,161,275
=========
</TABLE>
CONSULTING CONTRACT - On November 1, 1995 the Company entered into an
agreement with a company to provide advice and counsel regarding various
television production and advertising issues, to assist in the selection of
health related products to offer for sale, to introduce potential hosts for
health related programming, and to provide other advice as the consultant may
be reasonably considered qualified to render, including advice regarding stock
related activities. The term of the agreement is for a five year period ending
October 31, 2000 and provides for annual consulting fees of $125,000 or an
aggregate of $625,000.
This agreement is being amortized on a straight-line basis over five
years. The unamortized balance of $604,167 is included in these financial
statements as prepaid expenses ($125,000) and as other assets ($479,167).
LOAN COSTS - In October and November, 1995, the Company issued
convertible debentures with a face value of $1,500,000. The costs associated
with the issuance of these debentures aggregated $367,143 and are being
amortized over sixty months, the life of the debentures. Amortization of loan
fees during 1995 was $5,675. Loan costs incurred of $175,000 related to
convertible debentures in default were written off and included in costs
associated with convertible debenture modifications and defaults.
PROPRIETARY TECHNOLOGY - Microsonics owns the right to use the
technology of certain patents relating to microphonographic and microrecord
products to be used in the sale of "notable
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<PAGE> 53
figure" cards and "notable item" cards and related players. The cost of these
rights is being amortized over 10 years which is the estimated life of the
related products that the Company intends to market. Amortization was $16,332
for both 1995 and 1994.
10. CONVERTIBLE DEBENTURES AND SUBSEQUENT EVENT
In October and November, 1995 the Company issued $1,000,000 of 8.5%
Convertible Debentures due October 31, 2000 and $500,000 of 9.5% Convertible
Debentures due November 27, 2000 (the "Debentures"). The debentures were
issued to individuals and corporations located outside of the United States.
The holders of the Debentures are entitled, at their option, at any time
commencing 41 days after issue to convert any or all of the original principal
amounts of the Debenture into shares of common stock of the Company, at a
conversion price per share equal to 50%-65% of the market price of the
Company's common stock. Market price is defined as the average closing bid
price for the five business days immediately preceding the conversion date or
immediately preceding the debenture subscription date, whichever is lower.
The Debentures, as amended, provide that a penalty of 10% to 20% of
the face value of the Debentures be added to principal in the event that the
Company does not obtain shareholder authorization to increase its authorized
shares of common stock necessary to satisfy the Company's conversion obligation
under the Debentures by certain dates. The Company has not obtained the
authorization for the issuance of this common stock and accordingly recorded
additional principal due on the Debentures of $170,000 as of December 31, 1995.
As of December 31, 1995, the common stock equivalent value of the Debentures,
including additional principal, aggregated $3,069,000.
The Debentures provide that in the event authorization for issuance of
the Common Stock is not obtained before 90 days from date of issue, the Company
is required to redeem the Debentures at an amount equal to the value of the
common stock into which the Debentures would have been convertible at the date
of redemption. The Company has obtained extensions of the mandatory redemption
dates for Debentures with adjusted principal amounts of $550,00 until May 15,
1996 and $240,000 until June 1, 1996. Debentures with an adjusted principal
value of $880,000 are in default. Accordingly, the Company has adjusted the
liability of the Debentures in default from their face value, including
additional principal, to the common stock equivalent value of $1,853,183 as of
the respective mandatory redemption dates with a corresponding charge of
$973,183 to costs associated with convertible debenture modifications and
defaults.
Costs associated with convertible debenture modifications and defaults
were comprised of (1) additional principal on the Debentures of $170,000, (2)
adjustment of liability on debentures in default to common stock equivalent
value of $973,183, and (3) write off of related loan costs of debentures in
default of $175,000.
During the period January 11, 1996 through February 8, 1996, the
Company had issued additional 8.5% Convertible Debentures aggregating
$3,040,000. These Debentures provided that
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<PAGE> 54
in the event authorization for issuance of the Common Stock is not obtained
before 75 days from date of issue, the Company is required to redeem the
Debentures at an amount equal to the value of the common stock into which the
Debentures would have been convertible at the date of redemption. As of April
26, 1996, the common stock equivalent value of these newly issued Debentures
aggregated $4,881,653. As of April 26, 1996, the Company was negotiating the
extension of the mandatory redemption dates with all of the Debenture holders.
.
[Balance of Page Intentionally Left Blank.]
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<PAGE> 55
11. NOTES PAYABLE
Notes and mortgage notes payable, as of December 31, 1995, are
comprised of the following:
<TABLE>
<CAPTION>
Related
Parties Other
------- -----
<S> <C> <C>
Note payable to a company at 10% per annum interest, due December 5,
1995, having as collateral TSSN common stock. $ $ 550,000
Mortgage payables to banks and individuals (7) at 10-10.52% per annum
interest, payable in monthly installments including interest aggregating
$17,714, due February, 1998 through 2001, having as collateral land,
buildings, and equipment located at the Company's RV campgrounds, stock 1,898,813
of Treasure Rockhound, and 27,500 shares of the Company.
Note payable to an individual at 15% per annum interest, due May 31,
1996, as extended, having as collateral 26,000 shares of Series C 200,000
Convertible Preferred Stock.
Notes payable to banks at 11-14% per annum interest, payable in monthly
installments including interest aggregating $614, due February, 1998
through August, 2000, having as collateral equipment located at the RV 16,320
campgrounds.
Notes payable to former lessor and supplier, non-interest bearing,
payable in monthly installments of $13,583. 57,466
Note payable to a corporation at 7% per annum interest, due December 31,
1995, as extended, without collateral. 30,000
Debt of Channel America:
Senior convertible debentures payable at 10% per annum interest,
principal and interest due March 31, 1995 having as collateral all
tangible and intangible assets of Channel America. 5,000
Subordinated notes payable at 10% per annum interest, due December 196,825 295,239
31, 2000.
Fixed rate notes payable at 10% per annum, due August 31, 1996,
having as collateral certain broadcast stations and construction 20,157 48,498
permits owned by Channel America.
Five year notes payable at 10% per annum interest, due 1995 to 2000. 230,118
Two year notes payable at 10% per annum interest, due 1995 and 1996. 30,000
Fixed rate note payable on demand at 15% interest per annum. 4,492
------------ ---------
Total notes and mortgage payables 251,982 3,330,946
Less current portion 251,982 1,886,637
------------ ---------
Long term notes and mortgages $ 0 $1,444,309
============ =========
</TABLE>
On April 10, 1995, the Company borrowed $550,000 from Genesee Cattle
Company ("Genessee"). The promissory note bears interest at the rate of 10%
per annum. The note was originally due and payable on June 24, 1995. Genessee
agreed to extend the term of the note until December 5, 1995. As of April 26,
1996, the Company has paid $350,000 of principal on the note.
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<PAGE> 56
The note is currently in default. The note has as collateral all of the common
stock of TSSN held by the Company. The note is also personally guaranteed by
Daniel M. Boyar, Special Legal Counsel to the Board of Directors. In addition,
the Company entered into a consulting agreement with Genessee for financial
public relations and promotion services. Payment under the terms of this
agreement, as amended, required a payment of $50,000 on December 5, 1995. The
Company is in default on payment under this agreement.
On December 2, 1994, the Company borrowed $200,000 from an individual.
The promissory note provides for interest at the rate of 15% per annum. The
note was originally due and payable on June 5, 1995. The individual agreed to
various extensions to May 31, 1996. The note has as collateral 26,000 shares
of the Company's Series C Preferred Stock.
Channel America is in default with respect to its long-term debt and,
accordingly, the entire amount has been classified as current liabilities. As
more fully described in Note 6 - Acquisition of Channel America Television
Network, Inc., the conversion of an aggregate of 90% of Channel America's note
and preferred stock holders into shares of Channel America's common stock was a
determinative item in the Company's decision to acquire Channel America. The
following debt of Channel America was outstanding as of December 31, 1995, for
which the holders had accepted the Conversion Plan to convert their notes into
Channel's America's common stock. The debt was considered to have been
converted in the recording of the acquisition of Channel America.
<TABLE>
<CAPTION>
Related
Parties Other
------- -----
<S> <C> <C>
Senior convertible debentures payable at 5% per annum interest, principal
and interest due September 30, 1996 having as collateral all tangible and
intangible assets of Channel America $ 62,500 $ 500,000
Senior convertible debentures payable at 10% per annum interest,
principal and interest due March 31, 1995 having as collateral all
tangible and intangible assets of Channel America 50,000 25,000
Subordinated notes payable at 10% per annum interest, due December 31,
2000 80,754 39,247
Fixed rate notes payable at 10% per annum, due August 31, 1996, having as
collateral certain broadcast stations and construction permits owned by
Channel America collateral 320,770 787,171
Five year notes payable at 10% per annum interest, due 1995 to 2000
78,360
Two year notes payable at 10% per annum interest, due 1995 and 1996 408,906
-------- ---------
Total notes payable $ 922,930 $1,429,778
======== =========
</TABLE>
-56-
<PAGE> 57
According to the Conversion Plan, the total notes payable of $2,352,708
summarized above, together with accrued interest of $226,841, convert into
7,962,060 shares of common stock of Channel America.
Maturities of long term debt over the next five years are as follows:
<TABLE>
<CAPTION>
Year Ended
December 31 Amount
----------- ------
<S> <C>
1996 $2,138,619
1997 204,020
1998 324,082
1999 93,346
2000 822,861
----------
$3,582,928
==========
</TABLE>
12. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable at December 31, 1995 are comprised of the following:
<TABLE>
<S> <C>
Satellite transponder and uplink contracts $1,959,067
Inventory 616,912
Consulting 300,000
Legal and accounting 169,523
Overhead 434,244
Campgrounds 221,855
Rent 24,000
---------
Total accounts payable $3,725,601
=========
</TABLE>
[Balance of Page Intentionally Left Blank.]
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<PAGE> 58
Accrued liabilities at December 31, 1995 are comprised of the
following:
<TABLE>
<S> <C>
Consulting $ 799,025
Payroll and benefits 662,682
Payroll and benefits - related parties 70,101
Obligation to repurchase 42,000 shares
of Series C Preferred Stock (Note 16) 450,000
Legal and accounting 308,396
Interest 239,063
LPTV stations 159,900
Litigation settlement 30,000
Campgrounds 32,559
Broadcasting 36,050
Other 29,831
---------
Total accrued liabilities $2,817,607
=========
</TABLE>
CONSULTING CONTRACT - As more fully described in Note 9 - Other
Assets, the Company entered into a five year consulting agreement, as amended,
which provides for annual consulting fees of $125,000 or an aggregate of
$625,000. The amended agreement provides that the fees are payable $100,000 on
February 8, 1996; $25,000 on March 15, 1996; and $125,000 on each of November
1, 1996, 1997, 1998 and 1999. The Company paid $100,00 on February 8, 1996 and
$190,000 on March 25, 1996. The amended agreement also required the Company to
deliver to the consultant a letter of credit of "Satisfaction Payment" in the
amount of $400,000 on or before March 15, 1996. The Company did not deliver
the letter of credit or "Satisfaction Payment" and accordingly has accrued the
consulting fees in full as of December 31, 1995. As a result of the default,
the consultant may elect to accelerate the scheduled payments.
With respect to this obligation, collateral has been provided
consisting of 60 shares of Series J Preferred Stock, which is convertible into
3,000,000 shares of the common stock of the Company, and by the personal
guarantees of a Director and the Special Legal Counsel to the Board of
Directors.
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<PAGE> 59
13. INCOME TAXES
The provision (benefit) for income taxes differs from the amount of
income tax determined by applying the applicable U.S. statutory federal income
tax rate to pre-tax income as a result of the following differences at December
31:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Income tax provision (benefit)-34% $(2,391,000) $(579,075)
Increase (decrease) in rates resulting from:
Non-deductible items 1,500 1,201
State and local taxes, net (297,000) (61,697)
Valuation allowance for recognized deferred tax assets 2,686,500 639,571
----------- ---------
Effective tax rates $ 0 $ 0
=========== =========
</TABLE>
On a consolidated basis, EVRO had deferred tax assets of approximately
$12,756,000 at December 31, 1995, which includes the deferred tax assets of
Channel America of $8,773,000. In addition, the deferred tax assets were
reduced in 1995 by $2,024,000 which represents a reduction of the deferred tax
assets as a result of net operating loss carryforwards which will not be
available due to the change in control caused by the merger in 1995. Also, the
deferred tax assets of Channel America may not be available due to its issuance
of substantial additional stock. At December 31, 1994, the deferred tax assets
totaled approximately $1,244,000 and were those of TSSN. All of the deferred
tax assets primarily result from unused net operating losses.
The Company will need to realize significant profits to utilize the
net operating losses, all of which may not be available as described above, and
may be further limited due to the organization, capitalization and acquisition
costs incurred. Because of these uncertainties, a valuation allowance was
established in the same amounts as the deferred tax assets because the benefit
is more likely than not to be lost.
-59-
<PAGE> 60
Accumulated net operating losses total approximately $13,103,000 which
expire as shown below, and do not include those of Channel America:
<TABLE>
<S> <C> <C> <C>
1997 $93,000 2006 $18,000
1999 $259,000 2007 $906,000
2000 $413,000 2008 $2,339,000
2001 $311,000 2009 $2,811,000
2003 $23,000 2010 $5,930,000
</TABLE>
14. COMMITMENTS AND CONTINGENCIES
On September 15, 1992, the Company entered into a five year agreement
with IDB Communications Group, Inc., which provided stereo tape play-back of
Channel America programming, uplink transmission facilities to Spacenet II and
occasional downlink turnaround service which enables the Company to selectively
choose programming from other satellites and transmit it back to Spacenet II
for transmission to the Company's network. At December 31, 1995, $885,590 due
to IDB is included in accounts payable. Under the agreement, the Company was
required to pay a monthly fee for primary services of $42,790 through September
15, 1996, plus a 50% surcharge until certain deferred amounts are repaid in
full. Additional services such as downlink turnaround service and other
services will be provided by IDB at an hourly rate ranging from $65 per hour to
$188 per hour during the term. If the agreement is terminated or a change in
control of the Company occurs prior to the expiration of the agreement, the
entire unpaid balance due under the agreement plus the $400,000 previously due
to IDB shall become immediately payable.
On March 31, 1995, the Company entered into a four-year satellite
communication agreement with AT&T, whereby the Company incurred monthly service
charges of $125,000 until December 31, 1995. Thereafter, the monthly rate will
be $131,500. The Company was required to pay a $125,000 deposit.
On September 8, 1995, the Company received notice from the Osceola
County, Florida Clerk of Circuit Court, of a default judgement filed against
International Sports Collectibles, Inc., a wholly owned subsidiary of TSSN, and
Stellar, in favor Dreams Franchise Corporation, a California corporation, on
November 28, 1994 in the amount of $117,492. This liability has been recorded
and is included in accounts payable as of December 31, 1995.
The Company is the subject of an informal private inquiry which has
been initiated by the staff of the Securities and Exchange Commission. The
actions under examination apparently involve the sale by the Company of shares
of its common stock at prices lower than that described in its private
placement memorandum dated December 17, 1992; its failure to modify favorable
press statements
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<PAGE> 61
when the Company became aware that the initial statements were no longer
accurate; the allegedly improper registration of shares under Form S-8
registration statements; and the allegedly improper reliance upon the
transactional exemption afforded by Regulation S, in connection with several
offers and sales of shares of its common stock. No allegations have been made
and management believes that its actions were proper.
15. MINORITY INTEREST
Minority Interest represents the par value and paid in capital of the
unconverted preferred stock of Channel America. The preferred stock provides
for payment of annual dividends in the amount of six percent (6%) per annum
through December 31, 1996, and seventeen percent (17%) per annum thereafter.
The preferred stock is redeemable by Channel America, at its option, at any
time at a redemption price of 105% of its par value, provided that the
subordinated notes payable due December 31, 2000 have been fully paid. Upon
failure of Channel America to pay two consecutive dividends, the holders of the
preferred stock have the right to gain control of the Board of Directors of
Channel America and convert their shares of preferred stock into an aggregate
of fifty percent (50%) of the Company's outstanding common stock. As of
December 31, 1995, Channel America has failed to pay the 1995 dividend which
aggregates approximately $13,000 for the unconverted preferred stock.
As more fully described in Note 6 - Acquisition of Channel America
Television Network, Inc., the conversion of an aggregate of ninety percent
(90%) of Channel America's notes payable and preferred stock into shares of
Channel America's common stock was a significant consideration in the Company's
decision to acquire Channel America. As of December 31, 1995, 32,710 shares
of preferred stock were outstanding ($327,100) for which the holders had
accepted the Conversion Plan to convert their preferred stock into Channel's
America's common stock and were eliminated in the recording of the acquisition
of Channel America.
16. COMMON AND PREFERRED STOCK
On January 26, 1995, the Board of Directors of EVRO authorized a 1:20
reverse stock split of its common and preferred stock.
COMMON STOCK - The Company has authorized common stock of 2,500,000
shares without par value, of which 2,497,665 shares were issued at December 31,
1995, of which 416 shares were held by THI. The Company is filing a Proxy
Statement to obtain shareholder approval of an increase of its authorized
common shares to 100,000,000 shares. Upon approval of the increase in
authorized common shares, the Company expects to issue approximately 27,650,00
shares of common stock pursuant to the conversion of convertible preferred
stock and convertible debentures outstanding as of December 31, 1995.
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<PAGE> 62
Restricted common shares issued for services are valued by management
for financial statement reporting purposes at the approximate market price per
share less an appropriate discount to account for the inherent lack of
marketability, which amount management believes reasonably approximates the
value of the services received.
THE SPORTS & SHOPPING NETWORK, INC. - The Statement of Stockholders'
Equity for the period January 1, 1994 through February 28, 1995, reflects the
historic transactions of TSSN.
Change in Authorized Shares and Stock Split - On January 13, 1994,
the Board of Directors of TSSN amended its Articles of Incorporation to
increase its authorized capital stock from 5,000 shares of common stock to
60,300,000 shares of common stock. The Board of Directors also authorized a
stock split of the Company's common stock equal to 11,000 shares for 1 share,
and changed the par value from $1.00 per share to $.000082918 per share.
Warrants - On January 15, 1994, the Board of Directors of Stellar
granted warrants to the holders of certain Stellar common stock. The warrants
entitled the holders to purchase one (1) share of common stock at $.50 per
share for every two (2) shares of Stellar common stock held. Stellar
shareholders exercised warrants to purchase 356,000 shares of common stock with
cash proceeds of $178,250. All remaining warrants expired on February 18,
1994.
NON-QUALIFIED STOCK OPTION PLAN - In December 1994, EVRO adopted a
non-qualified 50,000 share stock option plan for directors and employees. The
stock option plan provides for the granting of shares at market value and
payment to be in cash or note payable in two years with interest to accrue at
an annual rate equal to that rate of interest from time to time announced by
the Internal Revenue Service as its minimum stated interest rate (determined as
of the date of the note and thereafter annually on the first business day of
each succeeding year). The note is collateralized by the stock exercised under
the option. On January 4, 1995, the Company granted options to purchase
50,000 shares of common stock to its directors and employees at $2.50 per
share pursuant to the non-qualified stock option plan. During January, 1995,
all options were exercised for $10,000 in cash and $115,000 in notes
receivable. The notes receivable have been classified as subscriptions
receivable and shown as a reduction of Stockholders' Equity.
1995 EMPLOYEE STOCK COMPENSATION PLAN - Effective April 18, 1995, the
Company adopted the 1995 Employee Stock Compensation Plan (the "Plan"). No
shares may be issued after April 15, 2000. The maximum number of shares of
common stock which may be awarded pursuant to the Plan is 800,000 shares.
Awards of common stock may be made as compensation for services rendered,
directly or in lieu of other compensation payable, or as a bonus in recognition
of past service or performance. As of September 30, 1995, the Company had
awarded 576,000 shares of common stock for legal and financial consulting work
to be completed over a period of two years. The fair market value of the
common stock awards aggregated $1,755,500 based upon the average of the closing
bid and ask prices of the common stock on the date of awards which averages
ranged from $2.22 to $3.72 per share. The compensation is being allocated over
the life of the service contracts. During the year ended December 31, 1995,
compensation pursuant to these service contracts
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<PAGE> 63
aggregating $569,620 was charged to selling, general and administrative
expense. The unearned compensation at December 31, 1995 of $1,185,880 is shown
as a reduction of stockholders' equity. The Company registered 600,000 shares
pursuant the Plan with the Securities and Exchange Commission by the filing of
two Form S-8's which became effective on April 25, 1995 and June 7, 1995.
PROVISION FOR LOSS ON PURCHASE CONTRACT - On October 19, 1992, the
Company's wholly-owned subsidiary Treasure Rockhound, entered into an
employment agreement with Dale A. Fullerton. Mr. Fullerton was a former
Chairman of the Board, President and the largest shareholder of the Company.
In addition to a monthly salary, Mr. Fullerton was granted an option to
acquire 5,000 shares (as adjusted for the reverse stock split) of the common
stock of the Company for $10,000.
In August, 1993 the Company terminated Mr. Fullerton for violating the
terms of his employment agreement. In June, 1994 the parties to the employment
agreement entered into a Settlement Agreement ("Agreement"). The Company
entered into the Agreement, not as an admission of any wrongdoing on its part,
but to avoid the substantial legal costs and management time to prepare a legal
defense. Under the Agreement, Mr. Fullerton was paid amounts due to him
pursuant to a promissory note, severance pay totaling $160,000, and permitted
him to exercise his option to acquire 5,000 shares of common stock. The
Agreement provided that Mr. Fullerton has the right, but not the obligation,
to sell the 5,000 shares (100,000 shares before the reverse stock split of
January 1995) to the Company over a 120 month period beginning in August, 1994
for an aggregate of $456,032. The discounted difference between the repurchase
price of the stock and the current value of the Company's common stock is
included in accounts payable ($22,016) and other debt ($240,692).
PREFERRED STOCK - The Company has authorized preferred stock of
1,250,000 shares without par value. As of December 31, 1995, the following
series of preferred stock were authorized and outstanding.
<TABLE>
<S> <C>
Series A Preferred Stock, $20 par value, 100,000 shares authorized, no shares issued
or outstanding $ 0
Series C Convertible Preferred Stock, $10 stated value, 500,000 shares authorized,
195,400 shares issued and outstanding 1,996,100
Series D Convertible Preferred Stock, no par value, 17,000 shares authorized and
16,984.9 shares issued and outstanding 4,084,153
Series E Convertible Preferred Stock, no par value, 30,000 shares authorized, issued
and outstanding 30,000
Series F Convertible Preferred Stock, no par value, 1,680 shares authorized,
1,324.4494 shares issued and outstanding 171,300
</TABLE>
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<PAGE> 64
<TABLE>
<S> <C>
Series H Convertible Preferred Stock, no par value, 100,000 shares authorized, 48,000
shares issued and outstanding 6,000,000
Series I Convertible Preferred Stock, no par value, 7,000 shares authorized, 6,750
shares issued and outstanding 440,943
Series J Convertible Preferred Stock, no par value, 100 shares authorized, issued and
outstanding 5,000,000
Series K Convertible Preferred Stock, no par value, 100 shares authorized, no shares
issued or outstanding 0.00
Series L Convertible Preferred Stock, no par value, 100 shares authorized, no shares
issued or outstanding 0.00
Series M Convertible Preferred Stock, no par value, 40,000 shares authorized, issued
and outstanding 131,038
----------
Total Preferred Stock, 795,980 shares designated; 338,285.3494 shares of
designated series issued and outstanding $17,853,534
Less Series C Convertible Preferred Stock:
Shares subject to agreement to rescind sale thereof (42,000 shares) (420,000)
Shares subject to repurchase agreement (50,000 shares) (500,000)
Adjusted Preferred Stock $16,933,434
==========
</TABLE>
Series B Preferred Stock was canceled by the Board of Directors during
1995. Series G Preferred Stock has not been designated nor issued. Series K
and L Preferred Stock have been designated by the Board of Directors, but, no
shares were issued as of December 31, 1995
SERIES C CONVERTIBLE PREFERRED STOCK - The Board of Directors
established this series with 500,000 shares authorized, with a stated value of
$10.00 per share. This series was primarily created to be sold to accredited
investors through private placements.
The Series C Preferred Stock has no voting rights except as provided
by operation of law and shall not bear dividends. As long as the Series C
Preferred Stock is outstanding, the Company cannot without the affirmative vote
or the written consent as provided by law of 80% of the holders of the
outstanding shares, voting as a class, change the preferences, rights or
limitations with respect to the Series C Preferred Stock in any material
respect prejudicial to the holders thereof, or increase the authorized number
of shares of such Series.
Shares of Series C Preferred Stock may be redeemed in whole or in
part, at the option of the Company, at any time on or after April 15, 1996 at a
price equal to the sum of $10.00 per share. Each holder of Series C Preferred
Stock shall have the right on or before April 15, 1997, to convert
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each share into fully paid and nonassessable shares of the Company's common
stock at a conversion price equal to 50% of the common stock's market value.
The market value is defined to be the average closing price of the Company's
common stock for the ten day period prior to conversion.
At December 31, 1995, the Company had sold 115,500 shares of Series C
Preferred Stock outstanding for $1,087,585 in cash, net of sales commissions
and closing costs of $67,515. In addition, the Company issued 50,000 shares of
Series C Preferred Stock as additional consideration for a loan in the amount
of $550,000; 26,000 shares of Series C Preferred Stock to be held as collateral
against a $200,000 note payable due May 31, 1996, as extended; and 3,900 shares
of Series C Preferred Stock in settlement of litigation. For the non-cash
shares issued, the shares were valued at preference value with a corresponding
charge against common stock.
With respect to the sale of 42,000 shares of Series C Preferred Stock
at $10.00 per share or an aggregate of $420,000, sold on May 31, 1995, the
Company has agreed to rescind the sale at its sales price plus interest of
$30,000. The recision was made due to the Company's inability to obtain an
increase in its authorized common shares on a timely basis. For financial
statement purposes, the liability of $450,000, including accrued interest, has
been included in accrued liabilities. The related shares have been valued at
preference value. The related sales commissions and closing costs of $44,015
have been charged against interest expense. As of April 26, 1996, the Company
had repaid $250,000 of the purchase price.
In connection with the sale of 50,000 shares of Series C Preferred
Stock included above, the Company granted the buyer a put, whereby the Company
would be required to redeem the 50,000 shares at $10.00 per share. Due to the
put granted to the buyer, the Company has classified the related 50,000 shares
of Series C Preferred Stock outside of Stockholders' Equity as being subject to
a repurchase obligation. The payment of this obligation has as collateral a
pledge of all of Channel America's common stock held by the Company, 40 shares
of Series J Preferred Stock which is convertible into 2,000,000 shares of the
common stock of the Company, and the personal guarantees of a Director and the
Special Legal Counsel to the Board of Directors.
In the event of liquidation, dissolution or winding up of the affairs
of the Company, whether voluntary or otherwise, after payment of the debts and
other liabilities of the Company and before any distribution shall be made to
the holder of any class of the Company's common stock, each holder of Series C
Preferred Stock shall be entitled to receive the sum of $10.00 in cash for each
share of Series C Preferred Stock held subject to the first priority of all
holders of Series A 10% Preferred Stock.
SERIES D CONVERTIBLE PREFERRED STOCK - The Board of Directors
established this series with no par value and 17,000 shares authorized of which
16,984.9 shares are issued and outstanding as of December 31, 1995.
This series was established for the purpose of preserving the value of
the Company's then existing assets for the holders of the Company's common
stock at the time of the TSSN acquisition. Pursuant to the acquisition of
TSSN, EVRO issued one share of Series D Preferred Stock for each
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<PAGE> 66
100 shares of issued and outstanding common stock (See Note 4 - Acquisition of
The Sports and Shopping Network, Inc.). The Series D Preferred Stock were
issued to all holders of common stock of record as of March 27, 1995, except
for Stellar. The Company issued the stock certificates on or about August 28,
1995. The Series D Preferred Stock was recorded at a value of $ 4,084,153,
which represents the value net assets of THI at the date of acquisition.
The Series D Preferred Stock has limited voting rights except as
provided by operation of law and as long as any Series D Preferred Stock
remains outstanding, the Company shall not, without the affirmative vote or
written consent of the holders of a majority of the Series D Preferred Stock:
(a) change the preferences, rights or limitations with respect to the Series D
Preferred Stock, or increase the authorized number of shares of such Series,
but nothing herein contained shall require such a vote or consent (i) in
connection with any increase in the total number of authorized shares of the
Corporation's common stock; or (ii) in connection with the authorization,
designation, increase or issuance of any class or series of stock holding a
ranking subordinate to the Series D preferred stock; (b) cause THI to issue
additional capital stock; (c) pledge, hypothecate or otherwise encumber the THI
common stock held by the Company; or (d) take any other action which will
restrict the Company's ability to conduct the conversion of the Series D
Preferred Stock.
The TSSN Acquisition agreement also provides that THI shall be
entitled to receive, on an annual basis, that number of shares of the Company's
voting common stock (the "Special Shares") equal to 20% of the average total
assets of THI over a twelve month period (March 14 through the following March
13 each year) divided by Two Dollars ($2.00). The phrase "total assets" is
defined to mean the amount set forth on the consolidated balance sheet of THI
as total assets, including, without limitation, the current assets, property
and equipment (net of depreciation), investments and other assets (net of
amortization and adjustments). The phrase "average total assets" is defined to
mean the sum of the "total assets" (as defined above) of THI as set forth on
the balance sheets of THI during each of the quarters ending March 31, June 30,
September 30, and December 31 during each applicable twelve month period and
dividing the sum by four. THI ratably earns the Special Shares over each
applicable twelve month period. THI's entitlement to the Special Shares shall
cease upon the redemption of the Series D Preferred Stock.
The Series D Preferred Stock contains a special dividend provision
that in the event such preferred stock is not redeemed by June 30, 1997, the
Company shall, as of July 1, 1997, declare a stock dividend of its voting
common stock payable to the holders of the Series D Preferred Stock equal to
the number of shares of common stock held by THI as of June 30, 1997.
Additional stock dividends shall be payable to the holders of Series D
Preferred Stock each July 1st following July 1, 1997 until the Company has
redeemed its Series D Preferred Stock. The amount of such additional stock
dividend shall equal the number of shares of the Company's common stock
transferred to THI during the immediately preceding twelve month period.
In the event of liquidation, dissolution or winding up of the affairs
of the Company, whether voluntary or otherwise, after payment of the debts and
other liabilities of the Company and before any distribution shall be made to
the holder of any class of the Company's common stock, each holder of
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<PAGE> 67
Series D Preferred Stock shall be entitled to receive all of the THI common
stock held by the Company subject to the first priority of all holders of all
prior series of preferred stock.
SERIES E CONVERTIBLE PREFERRED STOCK - The Board of Directors
established this series with 30,000 shares authorized, no par value. The
series was used to purchase the option to acquire TSSN from BHI. The shares
were recorded at their preference value of $1.00 per share with a corresponding
charge against common stock.
The holder of each share of Series E Preferred Stock is entitled to
one vote on each matter with respect to which a vote is required of the
shareholders of the Company's common stock. As long as the Series E Preferred
Stock is outstanding, the Company cannot without the affirmative vote or the
written consent as provided by law of 80% of the holders of the outstanding
shares, voting as a class, change the preferences, rights or limitations with
respect to the Series E Preferred Stock in any material respect prejudicial to
the holders thereof, or increase the authorized number of shares of such
Series. Series E Preferred Stock shall not bear dividends.
Each holder of Series E Preferred Stock shall have the right, at his
option, at any time after the Company increases its authorized common shares,
to convert each share into fully paid and nonassessable shares of the Company's
common stock at a conversion ratio of 100 shares of common stock for each share
of Series E Preferred Stock.
In the event of liquidation, dissolution or winding up of the affairs
of the Company, whether voluntary or otherwise, after payment of the debts and
other liabilities of the Company and before any distribution shall be made to
the holder of any class of the Company's common stock, each holder of Series E
Preferred Stock shall be entitled to receive the sum of $1.00 in cash for each
share of Series E Preferred Stock held subject to the first priority of all
holders of all prior series of preferred stock.
SERIES F CONVERTIBLE PREFERRED STOCK - The Board of Directors has
established this series with 1,680 shares authorized, no par value. This
series was created pursuant to the April 19, 1995 amendment to the TSSN
Acquisition agreement for issuance to Stellar (See Note 4 - Acquisition of The
Sports and Shopping Network, Inc.).
As of December 31, 1995, the Company had issued 1,280 shares of Series
F Preferred Stock to Stellar. In addition, the Company issued 20 shares of
Series F Preferred Stock to a law firm in lieu of issuance of such shares to
Stellar. Further, the Company issued 24.4494 shares of Series F Preferred
Stock to two companies pursuant to consulting agreements.
The 1,300 shares of Series F Preferred Stock were recorded at their
preference value of $1.00 per share with a corresponding charge to common
stock. The Series F Preferred Stock issued pursuant to consulting agreements
were recorded at the average of the closing bid and ask prices of the common
stock on the date of the consulting agreements, discounted to reflect stock
restrictions, with a corresponding charge to operations.
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<PAGE> 68
The holder of each share of Series F Preferred Stock is entitled to
1,000 votes on each matter with respect to which a vote is required of the
shareholders of the Company's common stock. As long as the Series F Preferred
Stock is outstanding, the Company cannot without the affirmative vote or the
written consent as provided by law of 80% of the holders of the outstanding
shares, voting as a class, change the preferences, rights or limitations with
respect to the Series F Preferred Stock in any material respect prejudicial to
the holders thereof, or increase the authorized number of shares of such
Series. Series F Preferred Stock shall not bear dividends.
Each holder of Series F Preferred Stock shall have the right, at his
option, at any time after the Company increases its authorized common shares,
to convert each share into fully paid and nonassessable shares of the Company's
common stock at a conversion ratio of 10,000 shares of common stock for each
share of Series F Preferred Stock.
In the event of liquidation, dissolution or winding up of the affairs
of the Company, whether voluntary or otherwise, after payment of the debts and
other liabilities of the Company and before any distribution shall be made to
the holder of any class of the Company's common stock, each holder of Series F
Preferred Stock shall be entitled to receive the sum of $1.00 in cash for each
share of Series F Preferred Stock held subject to the first priority of all
holders of all prior series of preferred stock.
SERIES H CONVERTIBLE PREFERRED STOCK - The Board of Directors
established this series with 100,000 shares authorized, no par value. This
series was primarily created to be used in connection with acquisitions,
including the acquisition of Channel America (See Note 6 - Acquisition of
Channel America Television Network, Inc.).
The Series H Preferred Stock has no voting rights except as provided
by operation of law and shall not bear dividends. As long as the Series H
Preferred Stock is outstanding, the Company cannot without the affirmative vote
or the written consent as provided by law of 80% of the holders of the
outstanding shares, voting as a class, change the preferences, rights or
limitations with respect to the Series H Preferred Stock in any material
respect prejudicial to the holders thereof, or increase the authorized number
of shares of such Series.
Shares of Series H Preferred Stock may be redeemed in whole or in
part, at the option of the Company, at any time on or after June 30, 1996 at a
price equal to the sum of $125.00 per share. Each holder of Series H Preferred
Stock shall have the right, at his option, at any time, but not later than June
30, 1997, after the Company increases its authorized common shares, to convert
each share into fully paid and nonassessable shares of the Company's common
stock at a conversion price equal to the greater of the common stock's per
share market value or $2.00. The Shares being converted shall be multiplied by
125 before determining the common shares to be received. Market value is
defined to be the average closing price per share of the Company's common stock
for the ten day period prior to conversion. As more fully described in Note 6
- - Acquisition of Channel America Television Network, Inc., the purchase
agreements, as amended, provide that in the event the per share market value of
the Company's common stock was less than $2.00 per share, then the number of
common shares would be increased to attain the ascribed value of $6,000,000. At
December 31,
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<PAGE> 69
1995, the average of the closing bid and ask prices for the Company's common
stock was $1.5938. Accordingly, the Company shall issue upon conversion of the
related Series H Preferred Stock, 3,764,588 shares of the Company's common
stock. As of December 31, 1995, the Company had issued 48,000 shares into
escrow in connection with the acquisition of Channel America. Such shares were
ascribed a value of $6,000,000 as discussed above.
In the event of liquidation, dissolution or winding up of the affairs
of the Company, whether voluntary or otherwise, after payment of the debts and
other liabilities of the Company and before any distribution shall be made to
the holder of any class of the Company's common stock, each holder of Series H
Preferred Stock shall be entitled to receive the sum of $125.00 in cash for
each share of Series H Preferred Stock held subject to the first priority of
all holders of all prior series of preferred stock and Series I Convertible
Preferred Stock.
SERIES I CONVERTIBLE PREFERRED STOCK - The Board of Directors
established this series with 7,000 shares authorized, no par value. This
series was primarily created to be used for compensation of persons under
consulting agreements.
As of December 31, 1995, the Company had issued 5,750 shares of Series
I Preferred Stock to two individuals and a brokerage firm pursuant to financial
consulting agreements. The Company also issued 1,000 shares of Series I
Preferred Stock as additional consideration for a loan in the amount of
$250,000. The value of the shares issued pursuant to the consulting agreements
and loan was determined based upon the average of the closing bid and ask
prices of the underlying restricted common stock on the date of the respective
agreements, discounted to reflect stock restrictions. With respect to the
consulting agreements, the compensation is being allocated over the life of the
consulting contracts. The contracts expire in July and October 1997. During
the year ended December 31, 1995, compensation and loan costs of $122,000 were
charged to operations. The unearned compensation at December 31, 1995 of
$319,000 is shown as a reduction of stockholders' equity. Management believes
that the values ascribed as compensation pursuant to the consulting contracts
are reasonable.
The Series I Preferred Stock has no voting rights except as provided
by operation of law and shall not bear dividends. As long as the Series I
Preferred Stock is outstanding, the Company cannot without the affirmative vote
or the written consent as provided by law of 80% of the holders of the
outstanding shares, voting as a class, change the preferences, rights or
limitations with respect to the Series I Preferred Stock in any material
respect prejudicial to the holders thereof, or increase the authorized number
of shares of such Series.
Shares of Series I Preferred Stock may be redeemed in whole or in
part, at the option of the Company, at any time on or after April 15, 1996 at a
price of $162.50 per share. Each holder of Series I Preferred Stock shall have
the right, at his option, at any time after the Company increases its
authorized common shares, to convert each share into fully paid and
nonassessable shares of the
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<PAGE> 70
Company's common stock at a conversion ratio of 200 shares of common stock for
each share of Series I Preferred Stock.
In the event of liquidation, dissolution or winding up of the affairs
of the Company, whether voluntary or otherwise, after payment of the debts and
other liabilities of the Company and before any distribution shall be made to
the holder of any class of the Company's common stock, each holder of Series I
Preferred Stock shall be entitled to receive the sum of $162.50 in cash for
each share of Series I Preferred Stock held subject to the first priority of
all holders of all prior series of preferred stock, except for Series H
Preferred Stock which was issued subsequent to Series I Preferred Stock.
SERIES J CONVERTIBLE PREFERRED STOCK - The Board of Directors
established this series with 100 shares authorized, no par value.
This series was intended to be sold to accredited investors through
private placements. However, 60 shares of Series J Preferred Stock was used as
collateral for a put granted to the buyer of 50,000 shares of Series C
Preferred Stock (see Series C Convertible Preferred Stock of this Note) and 40
shares of the Series J Preferred Stock was used as collateral for an obligation
pursuant to a five year consulting contract (see Note 9 - Other Assets; Other -
Net; Consulting Contract). The shares were recorded at their liquidation
preference value of $50,000 per share with a corresponding charge to common
stock.
The Series J Preferred Stock has no voting rights except as provided
by operation of law does not bear dividends, and is not redeemable. As long as
the Series J Preferred Stock is outstanding, the Company cannot without the
affirmative vote or the written consent as provided by law of 80% of the
holders of the outstanding shares, voting as a class, change the preferences,
rights or limitations with respect to the Series J Preferred Stock in any
material respect prejudicial to the holders thereof, or increase the authorized
number of shares of such Series.
Each holder of Series J Preferred Stock shall have the right, at his
option, at any time after the Company increases its authorized common shares,
to convert each share into fully paid and nonassessable shares of the Company's
common stock at a conversion ratio of 50,000 shares of common stock for each
share of Series J Preferred Stock. The Series J Preferred Stock automatically
converts to common shares on June 30, 1997.
In the event of liquidation, dissolution or winding up of the affairs
of the Company, whether voluntary or otherwise, after payment of the debts and
other liabilities of the Company and before any distribution shall be made to
the holder of any class of the Company's common stock, each holder of Series J
Preferred Stock shall be entitled to receive the sum of $50,000 in cash for
each share of Series J Preferred Stock held subject to the first priority of
all holders of all prior series of preferred stock.
SERIES M CONVERTIBLE PREFERRED STOCK - The Board of Directors
established this series with 40,000 shares authorized, no par value.
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The Company issued 25,000 shares of Series M Preferred Stock to a law
firm (of which a director of the Company is a partner) as security for
outstanding legal fees in excess of $250,000. The Company also issued 15,000
shares of Series M Preferred Stock to Daniel M. Boyar, Special Legal Counsel to
the Board of Directors and a former Director, President and Chief Executive
Officer, for the exclusive services rendered by him to the Company (see Note 14
- - Related Party Transactions). The 25,000 shares issued to the law firm as
collateral were recorded at $56,976 which represents the lower of the
liquidation preference of $10.00 per share ($250,000) or the available common
stock carrying value ($56,976) with a corresponding charge to common stock.
The value of the 15,000 shares issued for compensation ($74,062) was determined
based upon the average of the closing bid and ask prices of the underlying
restricted common stock on the date of the agreement, discounted to reflect
stock restrictions, with a corresponding charge to operations. Management
believes that the value ascribed as compensation is reasonable.
The holder of each share of Series M Preferred Stock is entitled to 10
votes on each matter with respect to which a vote is required of the
shareholders of the Company's common stock. As long as the Series M Preferred
Stock is outstanding, the Company cannot without the affirmative vote or the
written consent as provided by law of 80% of the holders of the outstanding
shares, voting as a class, change the preferences, rights or limitations with
respect to the Series M Preferred Stock in any material respect prejudicial to
the holders thereof, or increase the authorized number of shares of such
Series. The shares do not bear dividends and are not redeemable.
Each holder of Series M Preferred Stock shall have the right, at his
option, at any time after the Company increases its authorized common shares,
to convert each share into fully paid and nonassessable shares of the Company's
common stock at a conversion ratio of 10 shares of common stock for each share
of Series M Preferred Stock. The Series M Preferred Stock automatically
converts to common stock on June 30, 1997.
In the event of liquidation, dissolution or winding up of the affairs
of the Company, whether voluntary or otherwise, after payment of the debts and
other liabilities of the Company and before any distribution shall be made to
the holder of any class of the Company's common stock, each holder of Series M
Preferred Stock shall be entitled to receive the sum of $10.00 in cash for each
share of Series M Preferred Stock held subject to the first priority of all
holders of all prior series of preferred stock.
17. RELATED PARTY TRANSACTIONS
THE STELLAR COMPANIES, INC. - In March 1995, EVRO acquired 98.35%
of the shares of the common capital stock of TSSN, from Stellar in exchange for
EVRO's agreement to issue shares of its common stock. The agreement between
EVRO and Stellar has been subsequently amended and is discussed more fully
elsewhere herein.
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During 1995 and 1994, Stellar charged TSSN $760,000 and $1,150,000,
respectively, for management and accounting services which were accrued to
Amounts Due to Affiliates - The Stellar Companies, Inc. Stellar charged TSSN
based upon estimated time and charges incurred by Stellar on TSSN's behalf.
Management asserts that the fees charged to TSSN approximate the costs that
would have been incurred by TSSN if it had operated on a stand alone basis.
During 1995 and 1994, TSSN paid to Stellar $454,969 and $428,116, respectively.
At December 31, 1995, Stellar was owed $430,302 by TSSN, which amounts do not
bear interest.
TSSN issued a note payable to Stellar, as of December 31, 1993 in the
amount of $1,258,116 in satisfaction of the balance of the Amounts Due to
Affiliates - The Stellar Companies, Inc. The note provided for interest at 7%
per annum and was payable in cash or by the issuance of 1,729,908 (as adjusted
for stock split) shares of common stock, at the option of TSSN.
On November 30, 1994, TSSN satisfied the note payable and accrued
interest of $80,588.36 by issuance of 1,729,908 shares of common stock to
Stellar. In addition, TSSN issued 2,018,226 shares of common stock in
satisfaction of additional advances by Stellar aggregating $403,645.
During 1994, a founder of Stellar, former officer and former director
of Stellar raised certain claims with respect to inventory of TSSN held in part
by the individual. Due to the claims outstanding, TSSN transferred the
inventory of sports memorabilia and lithographs of jazz greats at a cost of
$231,333, together with liabilities of $73,365 to Stellar which was offset
against $157,968 of advances from Stellar.
AMERICAN CLINICAL LABORATORIES, INC. - ACL and THI provide management
services to one another. The cost of these services are based upon the
percentage of time that the individuals expend on one another's behalf,
including payroll taxes, insurance, automobile allowance, and reimbursed
expenditures. The aggregate billings of each company for the period March 1,
1995 through December 31, 1995 were approximately equal. During 1995, THI paid
$12,906, on a net basis, to ACL. As of December 31, 1995, ACL was owed
$11,644.
OTHER - Daniel M. Boyar, President of BHI, served as Director,
President and Chief Executive Officer of the Company from March 14, 1995
through October 3, 1995 for compensation of $93,500, of which $60,000 was paid
in 1995. Effective October 1, 1995, the Company engaged Mr. Boyar as Special
Legal Counsel for the Board of Directors of the Company. The professional
services agreement, which expires on March 14, 1997, as amended, provides for a
legal fee at the rate of $180,000 per annum. Fees aggregated $45,000 for 1995
and were accrued but not paid as of December 31, 1995. The agreement provides
that in addition to the base fee, the Company shall pay to Boyar a cash bonus
equal to 5% of any gross funds received by the Company, in excess of
$4,000,000, from any and all activity which is directly attributed to and the
result of Mr. Boyar's services to the Company. No amounts were due and/or
accrued for bonus in 1995. EVRO also issued Mr. Boyar 15,000 shares of its
Series M Preferred for services rendered.
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During 1995, Scolaro, Shulman provided legal services to EVRO totaling
approximately $250,000. EVRO agreed to issue to Scolaro, Shulman 25,000 shares
of EVRO's Series M Preferred Stock as security for the payment of such fees.
Each share of Series M Preferred is convertible into 10 shares of EVRO's common
stock and has voting rights equal to 10 shares of EVRO's common stock. At any
time after EVRO increases its authorized shares of common stock, Scolaro,
Shulman may put its shares of Series M Preferred to EVRO at a price of $10.00
per share. If EVRO is unable or unwilling to fulfill its obligations under the
put, Scolaro, Shulman shall have the right to retain all 25,000 shares of its
Series M Preferred and shall further be entitled to receive all legal fees due
and owing from EVRO or any of its subsidiaries. Stephen H. Cohen, who is both
EVRO's secretary and a director, is a partner with Scolaro, Shulman. While the
Board believes that the agreement reached with Scolaro, Shulman is fair to
EVRO, there can be no assurance that the agreement is as favorable to EVRO as
one that might have been negotiated in an arms-length transaction.
18. BUSINESS SEGMENTS
The Company has identified its major lines of business to be the RV
campgrounds, broadcasting and shopping.
<TABLE>
<CAPTION>
- ------------------------------------------------------------
RV
Campgrounds Broadcasting Shopping Corporate Total
----------- ------------ ----------- ----------- -----------
<S> <C> <C> <C>
Sales and revenues $ 1,070,471 $ 388,925 $ 176,566 $ 0 $ 1,635,962
Cost of sales and revenues 734,104 685,256 260,370 0 1,679,730
----------- ------------ ----------- ------------ -----------
Gross margin 336,367 (296,331) (83,804) 0 (43,768)
Operating expenses 950,885 552,396 1,833,317 1,590,192 4,926,790
Depreciation and amortization 277,337 235,542 32,642 0 545,521
----------- ------------ ------------ ----------- -----------
Income (loss) from operations (891,855) (1,084,269) (1,949,763) (1,590,192) (5,516,079)
Other items 185,765 11,751 10,395 2,174,656 2,382,567
----------- ------------ ------------ ----------- -----------
Net income (loss) $(1,077,620) $ (1,096,020) $ (1,960,158) $(3,764,848) $(7,898,646)
=========== ============ ============ =========== ===========
Identifiable assets $ 6,977,963 $ 10,279,123 $ 374,857 $ 858,339 $18,490,282
=========== ============ ============ =========== ===========
</TABLE>
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<PAGE> 74
19. ADDITIONAL CASH FLOW STATEMENT INFORMATION
The noncash effect of the acquisition of TSSN and Channel America is
summarized below:
<TABLE>
<CAPTION>
CHANNEL
INCREASE IN ASSETS: TSSN AMERICA
---- -------
<S> <C> <C>
Notes and other receivables $ 81,141 $ 41,713
Prepaid expenses 18,788 86,506
------------ ---------------
Increase in current assets 99,929 128,219
Property , equipment, and program library 3,487,891 1,882,957
Unamortized goodwill 3,595,592 8,311,878
Other assets 168,617 242,400
------------ ---------------
Total increase in assets 7,352,029 10,565,454
------------ ---------------
INCREASE IN LIABILITIES:
Notes payable and current portion of long-term debt 428,638 874,783
Accounts payable 654,495 2,910,863
Amounts due to affiliates 24,550
Accrued liabilities 145,995 443,035
------------ ---------------
Increase in current liabilities 1,253,678 4,228,681
Long-term debt 1,731,276
Other liabilities 292,024
------------ ---------------
Total increase in liabilities 3,276,978 4,228,681
------------ ---------------
Minority interest 212,780
---------------
CHANGE IN STOCKHOLDERS' EQUITY:
Issuance of Series D Convertible Preferred Stock (16,985 4,084,153
shares)
Issuance of Series E Convertible Preferred Stock (30,000
shares) 30,000
Issuance of Series H Convertible Preferred Stock 6,000,000
(48,000 shares)
Common stock 3,460,823
Additional paid in capital (3,490,823)
------------ ---------------
Total increase in stockholders' equity 4,084,153 6,000,000
------------- ---------------
Total increase in liabilities and stockholders' equity 7,361,131 10,441,461
------------- ---------------
CASH ACQUIRED (INVESTED) $ 9,102 $ (123,993)
============= ===============
</TABLE>
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<PAGE> 75
Other noncash transactions which occurred during the twelve months
ended December 31, 1995 are as follows:
<TABLE>
<S> <C>
Common stock issued pursuant to the 1995 Employee Stock Compensation Plan
(576,000 shares) $ (1,755,500)
Preferred stock issued pursuant to Consulting Agreements:
Series F Convertible Preferred Stock - 24.4 shares (170,000)
Series I Convertible Preferred Stock - 5750 shares (382,193)
Series M Convertible Preferred Stock - 15,000 shares (74,062)
Compensation earned during the year ended December 31, 1995 877,030
Unearned compensation as of December 31, 1995 1,504,725
Issuance of Series F Convertible Preferred Stock
to Stellar and its designee - 1,300 shares $ (1,300)
Common stock 1,300
Issuance of Preferred Stock as collateral:
Series C Convertible Preferred Stock - 26,000 shares $ (260,000)
Series J Convertible Preferred Stock -100 shares (5,000,000)
Series M Convertible Preferred Stock - 25,000 shares (56,976)
Common stock 5,056,976
Issuance of Preferred Stock in consideration of loan agreements:
Series C Convertible Preferred Stock - 50,000 shares $ (500,000)
Series I Convertible Preferred Stock - 1,000 shares (58,750)
Interest and financing costs 558,750
Series C Convertible Preferred Stock issued in settlement of litigation -
26,000 shares $(39,000)
Selling, general and administrative costs 39,000
</TABLE>
20. PROFORMA FINANCIAL INFORMATION
The Condensed Proforma Combined Statements of Operations (the
"Statement") shown below for the years ended December 31, 1995 and 1994 have
been prepared as if EVRO and Channel America had been acquired as of the
beginning of each of the respective periods, adjusted to reflect an increase in
amortization resulting from goodwill recorded in the mergers. In addition, the
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<PAGE> 76
Statement was adjusted to reflect the reduction of interest expense and
dividends as if certain notes payable and preferred stock aggregating
$6,391,000 had been converted into common stock of Channel America at the
beginning of each of the respective periods. The proforma weighted average
number of shares used to compute the proforma loss per share was based on the
actual number of EVRO shares outstanding, adjusted for the number of common
shares issued to Stellar (500,000 shares). For the year ended December 31,
1994, the number of EVRO common shares issued to Stellar (500,000 shares) were
adjusted for the effect of a November 30, 1994 change in the number of issued
shares of TSSN held by Stellar.
Condensed Proforma Combined Statement of Operations
<TABLE>
<CAPTION>
For The Year Ended
------------------
12/30/95 12/30/94
-------- --------
<S> <C> <C>
Sales and revenues $ 2,904,295 $ 2,769,700
Cost of sales and revenues 3,620,017 2,714,134
------------ -----------
Gross margin (715,722) 55,566
Operating expenses 7,083,076 5,815,609
------------ -----------
Operating loss of continuing operations (7,798,798) (5,760,043)
Other income (expense) (2,320,538) (272,013)
------------ -----------
Net loss from continuing operations $(10,119,336) $(6,032,056)
============ ===========
Net loss per share from continuing operations $(4.34) $ (3.49)
============ ===========
Average number of common shares outstanding 2,330,656 1,726,172
============ ===========
</TABLE>
21. FAIR VALUE OF FINANCIAL INSTRUMENTS
As of December 31, 1995, the balance sheet of the Company includes
notes payable and mortgage notes payable with a carrying value of $3,583,000.
The aforementioned carrying value is considered to reflect fair value, because
the current terms and conditions of loans presently available to the Company
are similar to those for the existing debt.
With respect to the convertible debt of $790,000 as shown in the
balance sheet at December 31, 1995, such debt and its related terms and
conditions represent transactions entered into during the last quarter of 1995.
Additional debenture transactions were concluded during the first quarter of
1996 with similar terms and conditions. Accordingly, the carrying value for
the debenture payables is considered to approximate fair value.
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<PAGE> 77
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
EVRO had no change in or disagreements with its accountants during the last
two fiscal years.
[Balance of Page Left Intentionally Blank.]
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<PAGE> 78
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The following individuals are the Directors and Officers of EVRO. All
Directors are elected annually by the shareholders to serve until the next
annual meeting of shareholders and until their successors are duly elected and
qualified. Officers are elected annually by the Board of Directors to serve at
the pleasure of the Board.
<TABLE>
<CAPTION>
NAME POSITION AGE
---- -------- ---
<S> <C> <C>
Thomas L. Jensen Chairman of the Board, Chief
Executive Officer and 61
Director
Stephen H. Cohen Secretary and Director 50
D. Jerry Diamond Director 56
Max P. Cawal Director 51
Daniel M. Boyar Special Legal Counsel to the
Board of Directors 41
O. Don Lauher Treasurer and Chief
Financial Officer 53
</TABLE>
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<PAGE> 79
THOMAS L. JENSEN was elected Chairman of the Board and Director of
EVRO on March 14, 1995 and has served as EVRO's Chief Executive Officer from
October 3, 1995. Mr. Jensen is also Chairman of the Board, Chief Executive
Officer and President of The Stellar Companies, Inc. ("Stellar"), in which
capacities he has served since November 1992. Mr. Jensen is also President of
Olympus Development Corporation which develops commercial real estate primarily
in Florida. In addition, from 1979 until March 1993, he served as vice
president of Wood Properties, Inc., an affiliate of the Lawler-Wood Group, a
closely held corporation based in Knoxville, Tennessee. He is presently a
general partner of Spacecoast Associates, Ltd., the managing partner of the
Maingate Joint Venture, a partnership that owns the Radisson Maingate Hotel in
Orlando, Florida (located directly outside the main entrance to Walt Disney
World.) Mr. Jensen served in the Tennessee Legislature from 1967 until
associating with the Lawler-Wood Group in 1979. He was elected Minority Leader
of the House of Representatives in 1970 and was floor leader for Governor
Winfield Dunn through multiple terms of office. As a legislator, Mr. Jensen
sponsored and passed several landmark bills in Tennessee, including one that
effected a restructuring of the rules of procedure, the budgeting process and
several departments of State Government, and another that established a system
of statewide public kindergartens. As a legislator, Mr. Jensen also served on
numerous national committees and boards and in 1975 was elected President of
the National Conference of State Legislatures. During his term, the California
Assembly praised him for "his active role in improving state image at the
national level and in assisting the California Legislature and other state
legislatures..." Mr. Jensen serves as Past Chairman and Member of the Board of
Metropolitan Knoxville Airport Authority, Chairman of the Board of the Knox
County Private Industry Council, Board Member of the Knoxville Chamber of
Commerce, Chairman of the Board of Trustees of the Tennessee Baptist
Foundation, and on several other business and civic boards and committees.
STEPHEN H. COHEN was elected Secretary and Director of EVRO on March
14, 1995. Mr. Cohen, a licensed attorney, is a founding partner of the
Syracuse, New York law firm of Scolaro, Shulman, Cohen, Lawler & Burstein, P.C.
("Scolaro Shulman"). Mr. Cohen has been with such law firm since its inception
in 1979 and is presently a partner with the firm. He is a member of the New
York and Pennsylvania bars, and specializes in the areas of federal income tax,
employee benefits, estate planning, and health care. Mr. Cohen received his
undergraduate degree in Accounting from Syracuse University in 1967 and his
J.D. from Syracuse University's College of Law in 1970. He is a frequent
lecturer on the topics of employee benefits and health care and has been
designated in the book, "Best Lawyers in America," in the area of employee
benefits. Mr. Cohen is also the Secretary and a director of Stellar, in which
capacity he has served since November, 1992.
D. JERRY DIAMOND was elected as Director of EVRO on October 19, 1992.
He served as Chairman of the Board, President and Chief Executive Officer of
EVRO from October 19, 1992 until his resignation on March 14, 1995. Since
October, 1994, Mr. Diamond has served as Chairman, President and Chief
Executive Officer of American Clinical Labs, Inc. ("ACL"), a Florida
corporation. From February 1992 through October 1992, Mr. Diamond was Senior
Vice President and Chief Operating Officer of Veridien Corporation, a publicly
traded healthcare company headquartered in St. Petersburg, Florida, which
specializes in infection control. From May 1988 through February
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<PAGE> 80
1992, Mr. Diamond was Chairman, President and Chief Executive Officer of
Coastland Corporation of Florida, a Tampa, Florida based company specializing
in the development of businesses in the hazardous and nonhazardous waste
recycling industry. For the past 18 years, Mr. Diamond has had an extensive
background in managing publicly traded companies. Mr. Diamond is currently the
Chairman of the Board of Directors, Chief Executive Officer and President of
Technology Holdings, Inc. ("THI"), a Florida corporation and wholly owned
subsidiary of EVRO.
MAX P. CAWAL was appointed as a Director of EVRO on March 1, 1996.
From August 1990 to June 1995, Mr. Cawal served as the President of Peak
Development Co., a time share resort located in Orlando, Florida. Mr. Cawal
graduated from Queens College in New York, New York where Mr. Cawal received a
bachelor's degree in Economics. On March 1, 1996, EVRO retained Mr. Cawal as a
consultant for a one year period to provide general financial advice to EVRO.
DANIEL M. BOYAR was elected President, Chief Executive Officer and
Director of EVRO on March 14, 1995 positions he held until October 3, 1995 at
which time he resigned as an officer and director of EVRO and was retained by
EVRO as Special Legal Counsel to the Board of Directors. Mr. Boyar, a licensed
attorney, is the sole owner of Boyar Holdings, Inc., an investment company
specializing in equity capital private placements, syndications, corporate
mergers and acquisitions, and growth stocks for public companies. Mr. Boyar is
a sole practitioner, who specializes in commercial transaction law, and has
practiced in either Ocala, West Palm Beach or Orlando, Florida from December
1990 to date. From November 1993 to May 1994, Mr. Boyar served as the
secretary and special counsel to Members Service Corp., a corporation whose
shares are traded on NASDAQ. From June 1993 to July 1993, Mr. Boyar served as
the President, Chief Executive Officer and a Director of Aspen Marine Group,
Inc., also a corporation whose shares were traded on NASDAQ. From August 1991
to date, Mr. Boyar served as the President, Chief Executive Officer and a
Director of Sportsworld 2000, Inc., a corporation whose shares were traded in
the over-the-counter market. From March 1991 to June 1991, Mr. Boyar served as
the President, Chief Executive Officer and a Director of Iroquois Brands, Ltd.
a corporation whose shares were traded on the American Stock Exchange. From
January 1991 to April 1991, Mr. Boyar served as the President, Chief Executive
Officer and a Director of International Standards Group, Inc., a corporation
whose shares were traded in the over-the-counter market. Mr. Boyar is a third
generation real estate developer from southern California, having participated
in his family's home building public company at the age of 20. He is a
graduate of the University of Miami, from which he received a Bachelor of
Business Administration Degree in Finance, and of Southwestern University
School of Law, from which he completed the law school curriculum in two years,
receiving a J.D. degree. Additionally, Mr. Boyar completed the Masters of Law
Program in Taxation at Boston University, receiving his L.L.M. degree. On
March 21, 1996, Mr. Boyar was indicted, and charged with wire fraud, money
laundering and violating the federal securities laws in connection with his
employment by Members Service Corporation. This proceedings is currently
pending in the United States District Court, Middle District, State of Florida,
Orlando, Division. Mr. Boyar is charged with issuing false press releases,
selling securities that were not propertly registered under the Securities Act
of 1933, as amended, and with making misrepresentations in connection with the
sale of such securities. Mr. Boyar has plead "Not guilty" to such charges,
believes such charges to be without merit and has retained counsel to
vigorously defend the charges brought against him.
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<PAGE> 81
O. DON LAUHER was elected Treasurer and Chief Financial Officer of
EVRO on March 14, 1995. Mr. Lauher is also Chief Financial Officer and
Treasurer of Stellar, in which capacities he has served since January 1993.
Prior to joining Stellar, Mr. Lauher served as Vice President/Chief Accounting
Officer of The Major Group, Inc. (f/k/a the Radice Corporation), a NYSE listed
company from 1982 through 1992, principally engaged in providing real estate
management and advisory services. Prior to 1989, Major was a diversified real
estate merchant builder involved in the development of commercial office parks;
residential, single-family and condominium communities; rental apartment
projects; and adult congregate living facilities with total assets
approximating $400 million. Mr. Lauher directed and monitored the overall
accounting and financial activities, including cash management, accounting,
tax, SEC compliance, MIS, construction financing, insurance and administrative
functions, prepared short and long-range financial models for all phases of the
company's operations, and its annual business plan. He coordinated the use of
the company's consultants for accounting, financial and tax matters. In
addition, he also served as corporate secretary from 1990 through 1992. Prior
to his tenure with Major, Mr. Lauher was the Chicago Regional Controller for
Levitt Homes, Inc., for five years. The annual sales for the Chicago region
were in excess of $60 million. Prior to his service with Levitt, Mr. Lauher
served as Audit Manager, Senior and Junior Accountant with Price Waterhouse &
Company for 11 years. Mr. Lauher is a member of the American Institute of
Certified Public Accountants and graduated from Southern Illinois University
with a B.S. in Accounting.
[Balance of Page Left Intentionally Blank.]
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<PAGE> 82
SECTION 16 REPORTS
The requirements imposed by Section 16(a) of the Securities Exchange
Act of 1934, as amended, provide that EVRO's Officers and Directors, and
persons who own more than ten percent of EVRO's Common Stock, file initial
statements of beneficial ownership (Form 3), and statements of changes in
beneficial ownership (Forms 4 or 5) with the Securities and Exchange Commission
("SEC"). Officers, directors and greater than ten percent shareholders are
required by SEC regulations to furnish EVRO with copies of all such forms they
file. Based solely on its review of the copies of such forms received, EVRO
believes that during its fiscal year ended December 31, 1995, ACL had two late
filings of Form 4 regarding two transactions, Messrs. Donald R. Mastropietro
and Max P. Cawal each had one late filing of Form 3, and James L. Kennedy and
Gerald Pennington each had one late Form 4 filing. To EVRO's knowledge, the
preceding persons were the only officers, directors or greater than ten percent
beneficial owners that did not file all of the above referenced forms on a
timely basis.
[Balance of Page Left Intentionally Blank]
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<PAGE> 83
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
CASH COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
---------------------------------------------------------------
Restricted
Name and Other Annual Stock All Other
Principal Salary Bonus Compensation Award(s) Options/ Payouts Compensation
Position Year $ $ $ $ SAR's (#) $ $
-------- ---- -------- ------ ------------- --------- --------- ------- ------------
<S> <C> <C> <C> <C>
D. Jerry
Diamond, 1995 -0- 0
Chief 1994 135,000 0
Executive 1993 180,000(1) 5,638
Officer
Daniel M.
Boyar,
Chief 1995 97,500(2) 74,062 45,000
Executive
Officer
Thomas 1995 -0-
L. Jensen
Chief
Executive
Officer
</TABLE>
______________
(1)Included in the amount earned in 1993 is $90,000 for which payment
was deferred to 1994.
(2)Salary accrued for the six and one-half month period Mr. Boyar served
as Chief Executive Officer, of which $60,048 has been paid. The balance of
which will be paid as EVRO has available cash flow. Mr. Boyar was subsequently
retained as special counsel. The amount recorded as other annual compensation
relates to accrued earnings for Mr. Boyar's services as special counsel. (See
"Certain Relationships and Related Transactions of Management and Others." The
amount recorded as a bonus paid to Mr. Boyar was paid by EVRO's issuance to Mr.
Boyar of 15,000 shares of EVRO's Series M Preferred.
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<PAGE> 84
EVRO may adopt additional compensation programs at a later date
suitable for its executive personnel. EVRO is unable to predict at this time
the format or manner of compensation to be included in any such program.
[Balance of Page Left Intentionally Blank.]
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<PAGE> 85
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
To EVRO's knowledge, the following table sets forth information as of
March 29, 1996 with respect to the beneficial ownership of EVRO's Voting Stock
by each person who is known by EVRO to beneficially own more than 5% of any
class of the Voting Stock, by each director and by all directors and executive
officers as a group. The table also sets forth the number of shares of common
stock that will be owned by such persons or group if EVRO's shareholders
approve of the increase in the authorized shares of EVRO's common stock to
100,000,000 shares, as more fully discussed herein.
COMMON SHARES
<TABLE>
<CAPTION>
After Increase in Authorized
Present Holdings Shares of Common Stock(1)
---------------- --------------------------
Title Percent Percent
Class Name and Address Amount of Class Amount of Class
----- ---------------- ------ -------- ------ --------
<S> <C> <C> <C> <C> <C>
Common Thomas L. Jensen 525,018.80(2) 21.02% 15,465,540 44.41%
(Chief Executive Officer, Chairman
of the Board and Director)
1601 Riverview Tower
Knoxville, TN 37902
Common Daniel M. Boyar(4) 0 0% 449,900 1.29%
3101 S.W. 34th Avenue #905-427
Ocala, FL 34474
Common Stephen H. Cohen 525,018.80(2) 21.02% 15,751,199 45.23%
(Secretary and Director)(5)
90 Presidential Plaza
Syracuse, NY 13202
Common D. Jerry Diamond (Director) 21,738.85 *(6) 896,756 2.57%
1509 S. Florida Avenue, Ste. 3
Lakeland, FL 33803
Common Max P. Cawal (Director) 10,000.00 *(6) 10,000 *(6)
8731 Fernwicke Court
Orlando, FL 32819
Common O. Don Lauher 525,018.80(2) 21.02% 15,465,540 44.41%
(Treasurer and Chief Financial Officer)(3)
523 Douglas Avenue
Altamonte Springs, FL 32714
Common The Stellar Companies, Inc. 525,018.80(2) 0% 15,465,540 44.41%
c/o EVRO Corporation
523 Douglas Avenue
Altamonte Springs, FL 32714
</TABLE>
-85-
<PAGE> 86
<TABLE>
<CAPTION>
After Increase in Authorized
Present Holdings Shares of Common Stock
---------------- ----------------------
Title Percent Percent
Class Name and Address Amount of Class Amount of Class
----- ---------------- ------ -------- ------ --------
<S> <C> <C> <C> <C>
Common American Clinical Labs, Inc. 525,018.80 21.02% 875,018 2.51%
1509 S. Florida Avenue, Ste. 3
Lakeland, FL 33803
Common All Executive Officers and Directors as a 556,757.65 22.29% 16,657,955 47.83%
Group (5 Persons)
PREFERRED SHARES
Series E Boyar Holdings, Inc. 4,499 15.00% n/a n/a
Preferred 3101 S.W. 34th Avenue #905-427
Ocala, Fl 34474
Series E Blackhawk Financial Group, Inc. 4,000 13.33% n/a n/a
Preferred 1211 Tech Boulevard, Ste. 101
Tampa, FL 33619
Series E American Clinical Labs, Inc. 3,500 11.67% n/a n/a
Preferred 1509 S. Florida Avenue, Ste. 3
Lakeland, FL 33803
Series F The Stellar Companies, Inc. 1,198.4303 88.60% n/a n/a
Preferred c/o EVRO Corporation
523 Douglas Avenue
Altamonte Springs, FL 32714
Series F Scolaro, Shulman, Cohen, Lawler & 3.5659 *(6) n/a n/a
Preferred Burstein, P.C.
90 Presidential Plaza
Syracuse, NY 13202
Series M Daniel M. Boyar 15,000 37.50% n/a n/a
Preferred 3101 S.W. 34th Avenue # 905-427
Ocala, Florida 34474
Series M Scolaro, Shulman, Cohen, Lawler & 25,000 62.50% n/a n/a
Preferred Burstein, P.C.
90 Presidential Plaza
Syracuse, NY 13202
</TABLE>
(1)The various assumptions made to determine the number of shares of
common stock that will be issued by EVRO upon an increase in its authorized
shares of common stock are set forth on Schedule A to this Annual Report.
(2)Includes 525,018.8 shares owned by American Clinical Labs, Inc.
("ACL"). ACL provided The Stellar Companies, Inc., ("Stellar"), a corporation
which Mr. Jensen serves as an officer and director, an irrevocable proxy to
vote the shares of ACL until the shares owned by ACL represent less than 5% of
EVRO's issued and outstanding shares of common stock. Upon the approval of the
increase in EVRO's authorized shares of common stock, the proxy shall expire.
ACL has subsequently sold 125,000 shares, however, such shares were sold after
the record date for EVRO's upcoming shareholder meeting.
(3)Includes 11,856,502 shares that Stellar can receive upon the
conversion of its shares of Series F Preferred Stock; and 3,609,038 shares of
common stock to be received by Stellar upon EVRO's increase in its authorized
shares of common stock, representing the balance of the shares that EVRO is
obligated to issue to Stellar pursuant to the terms of the agreement, dated
March 14, 1995, between EVRO and Stellar, whereby EVRO acquired 98.35% of the
shares of the common stock of The Sports and Shopping Network, Inc.
(collectively, the "Stellar Shares").
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<PAGE> 87
(4)Includes 449,900 shares of common stock of EVRO which can be issued
to Boyar Holdings, Inc. ("BHI"), an entity wholly owned by Mr. Boyar, upon BHI
converting the 4,499 shares of Series E Stock Preferred Stock that it owns.
Also includes 150,000 shares of EVRO's common stock issuable to Mr. Boyar, upon
his conversion of the 15,000 shares of Series M Preferred Stock that Mr. Boyar
owns.
(5)Mr. Cohen is a director of Stellar and is attributed with the
ownership of the shares that Stellar has voting control over and any shares
directly or indirectly owned by Stellar and, accordingly, is attributed with
the voting power of the Stellar Shares. Includes 35,659 shares of Common Stock
issuable to Scolaro, Shulman, Cohen, Lawler & Burstein, P.C. ("Scolaro
Shulman"), a law firm of which Mr. Cohen is a shareholder, upon the conversion
of the 3.5659 shares of Series F Preferred Stock owned by Scolaro Shulman. Also
includes 250,000 shares of EVRO's common stock issuable to Scolaro Shulman upon
the conversion of the 25,000 shares of Series M Preferred Stock that Scolaro
Shulman owns.
(6)Less than 1%.
(7)Mr. Lauher is a director of Stellar and is attributed with the
ownership of the shares that Stellar has voting control over and shares
directly or indirectly owned by Stellar.
[Balance of Page Left Intentionally Blank.]
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<PAGE> 88
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS WITH MANAGEMENT
AND OTHERS
In connection with EVRO's acquisition of TSSN, EVRO and THI agreed
that EVRO would issue to the holders of EVRO's common stock as of March 27,
1995, a stock dividend consisting of EVRO's Series D Preferred Stock which has
limited voting rights. EVRO has the right, but not the obligation, to redeem
the Series D Preferred Stock in exchange for all of THI's issued and
outstanding capital stock.
ACL and THI provide management services to one another. The cost of
these services are based upon the percentage of time that the individuals
expend on one another's behalf, including payroll taxes, insurance, automobile
allowance, and reimbursed expenditures. The aggregate billings of each company
for the period March 1, 1995 through December 31, 1995 were approximately
equal. During 1995, THI paid $12,906, on a net basis, to ACL. As of December
31, 1995, ACL was owed $11,644.
During 1995, Scolaro, Shulman provided legal services to EVRO totaling
approximately $250,000. EVRO agreed to issue to Scolaro, Shulman 25,000 shares
of EVRO's Series M Convertible Preferred Stock ("Series M Preferred") as
security for the payment of such fees. Each share of Series M Preferred is
convertible into 10 shares of EVRO's common stock and has voting rights equal
to 10 shares of EVRO's common stock. At any time after EVRO increases its
authorized shares of common stock, Scolaro, Shulman may put its shares of
Series M Preferred to EVRO at a price of $10.00 per share. If EVRO is unable
or unwilling to fulfill its obligations under the put, Scolaro, Shulman shall
have the right to retain all 25,000 shares of its Series M Preferred and shall
further be entitled to receive all legal fees due and owing from EVRO or any of
its subsidiaries. Stephen H. Cohen, who is both EVRO's secretary and a
director, is a partner with Scolaro Shulman. While the Board believes that the
agreement reached with Scolaro, Shulman is fair to EVRO, there can be no
assurance that the agreement is as favorable to EVRO as one that might have
been negotiated in an arms-length transaction.
In March 1995, EVRO acquired 98.35% of the shares of the common
capital stock of TSSN, from Stellar in exchange for EVRO's agreement to issue
shares of its common stock. The agreement between EVRO and Stellar has been
subsequently amended and is discussed more fully elsewhere herein.
As of December 31, 1995, Stellar was owed $44,382 by TSSN for amounts
advanced to EVRO or its subsidiaries, by Stellar, or for amounts owed to
Stellar under the management agreement between TSSN and Stellar (discussed
below), which amounts do not bear interest.
TSSN has an agreement with Stellar to perform managerial and
administrative services, the terms and conditions of which are more fully
discussed elsewhere herein. See "BUSINESS OF EVRO - Employees."
TSSN also accrued an interest expense of $81,000 during 1994, payable
to Stellar, on the outstanding indebtedness evidenced by a promissory note
dated December 31, 1993, in the amount of $1,258,000. TSSN satisfied the
principal and accrued interest on the indebtedness between TSSN and Stellar, on
November 30,
-88-
<PAGE> 89
1994, by issuing 1,729,908 shares of TSSN's common stock to Stellar. TSSN also
issued 2,018,226 shares of its common stock to Stellar in satisfaction of
additional advances made to TSSN by Stellar in the amount of $404,000.
EVRO entered into an Employment Agreement with Daniel M. Boyar on
March 15, 1995, pursuant to which Mr. Boyar was retained as President and Chief
Executive Officer of EVRO at an annual salary of $180,000. Mr. Boyar resigned
as an officer and director of EVRO, effective October 3, 1995, at which time
EVRO entered into an agreement retaining Mr. Boyar as Special Legal Counsel to
the Board of Directors at an annual compensation of $180,000. EVRO also issued
Mr. Boyar 15,000 shares of its Series M Preferred for services rendered.
In May 1994, EVRO was billed approximately $77,000 by ACL for legal
and consulting services incurred by ACL on behalf of EVRO. During 1994, EVRO
issued a total of 33,328 shares of EVRO's common stock to ACL: 13,278 shares of
which were issued to ACL in exchange for shares of EVRO's preferred stock
redeemed from ACL; and 20,050 shares of which were issued to ACL as
consideration for ACL paying vendors who provided services for the benefit of
EVRO.
In June 1994, EVRO converted ACL's 48,920 preferred shares of EVRO to
common stock of EVRO on a one for one basis. Also in June 1994, EVRO's Board
of Directors determined and approved the purchase of two Lintronics'
dealerships from ACL in exchange for 5,500 shares of EVRO's common stock. The
purchase price was determined based on the historic purchase prices of
dealerships, the most recent of which occurred in June 1994.
At December 31, 1994, ACL owned 34% of the issued and outstanding
common capital stock of EVRO. In January and February 1994, ACL repaid EVRO
$214,000 for amounts due EVRO at December 31, 1993. In three separate
transactions during 1994, ACL sold a total of 205,676 shares of its EVRO common
stock, and loaned the proceeds totaling approximately $1,821,000 to EVRO. In
May, June and December 1994, EVRO repaid ACL with the issuance of 92,438,
11,852 and 101,386 shares of EVRO's common stock, respectively. During the
fourth quarter of 1994, ACL loaned EVRO approximately $192,000 for working
capital purposes, of which $50,000 was repaid. At December 31, 1994, EVRO owed
ACL approximately $142,000. During the first quarter of 1995, ACL advanced an
additional approximate $110,000.
-89-
<PAGE> 90
ITEM 13. EXHIBITS, REPORTS ON FORM 8-K
(A) EXHIBITS
<TABLE>
<CAPTION>
Exhibit # Description of Document
-----------------------
<S> <C>
2.01 Modification of Letter of Intent and Addendum to Modification of Letter of Intent dated January 12,
1995 by and between EVRO Corporation and The Stellar Companies, Inc. (c)
2.02 Option Agreement among The Stellar Companies, Inc., The Sports & Shopping Network, Inc., and Boyar
Holdings, Inc. (c)
2.03 Assignment of Option dated January 12, 1995 amongst Boyar Holdings, Inc., EVRO Corporation, The Stellar
Companies, Inc. And The Sports & Shopping Network, Inc. (c)
2.04 Stock Purchase Agreement by and among Channel America Television Network, Inc. and EVRO Corporation
dated July 13, 1995. (d)
2.05 Agreement and Plan of Merger by and among Channel America Television Network, Inc. and EVRO Corporation
dated July 13, 1995. (d)
2.06 Escrow Agreement by and among Channel America Television Network, Inc., EVRO Corporation and Scolaro,
Shulman, Cohen, Lawler & Burstein, P.C. dated July 13, 1995. (d)
2.07 Amendment Agreement I to Stock Purchase Agreement, Agreement and Plan of Merger, and Escrow Agreement
by and among Channel America Television Network, Inc., EVRO Corporation and Scolaro, Shulman, Cohen,
Lawler & Burstein, P.C. dated September 18, 1995. (d)
2.08 Second Amended Agreement to Stock Purchase Agreement, Agreement of Plan and Merger, and Escrow
Agreement by and among Channel America Television Network, Inc., EVRO Corporation and Scolaro, Shulman,
Cohen, Lawler & Burstein, P.C. dated October 10, 1995 (d).
2.09 Consent to Amendment of Agreement and Plan of Merger and Escrow Agreement dated October 10, 1995. (d)
2.10 Third Amended Agreement to Stock Purchase Agreement, Agreement of Plan and Merger, and Escrow Agreement
by and among Channel America Television Network, Inc., EVRO Corporation and Scolaro, Shulman, Cohen,
Lawler & Burstein, P.C. dated October 26, 1995. (d)
</TABLE>
-90-
<PAGE> 91
<TABLE>
<S> <C>
2.11 Fourth Amended Agreement to Stock Purchase Agreement, Agreement of Plan and Merger, and Escrow
Agreement by and among Channel America Television Network, Inc., EVRO Corporation and Scolaro, Shulman,
Cohen, Lawler & Burstein, P.C. dated February 7, 1996.
2.12 Fifth Amended Agreement to Stock Purchase Agreement, Agreement of Plan and Merger, and Escrow Agreement
by and among Channel America Television Network, Inc., EVRO Corporation and Scolaro, Shulman, Cohen,
Lawler & Burstein, P.C. dated February 29, 1996.
2.13 Sixth Amended Agreement to Stock Purchase Agreement, Agreement of Plan and Merger, and Escrow Agreement
by and among Channel America Television Network, Inc., EVRO Corporation and Scolaro, Shulman, Cohen,
Lawler & Burstein, P.C. dated April 23, 1996.
3.01 Articles of Incorporation. (a)
3.02 By-Laws of the Registrant. (a)
3.03 Articles of Amendment to Articles of Incorporation filed October 3, 1994. (b)
3.04 Articles of Amendment to Articles of Incorporation filed January 24, 1995. (b)
3.05 Articles of Amendment to the Certificate of Designation, Preferences, Rights and Limitations of Series
A 10% Convertible Preferred Stock, $20.00 Face Value of EVRO Corporation filed October 17, 1995.
3.06 Articles of Amendment to cancel the Certificate of Designation, Preferences, Rights and Limitations of
Series B 8% Preferred Stock, $1.00 Face Value of EVRO Corporation filed October 17, 1995.
3.07 Articles of Amendment to the Seconded Amended Certificate of Designation, Preferences, Rights and
Limitations of Series C Convertible Preferred Stock, No Par Value of EVRO Corporation filed August 4,
1995.
3.08 Articles of Amendment to the Certificate of Designation, Preferences, Rights and Limitations of Series
D Convertible Preferred Stock, No Par Value of EVRO Corporation filed April 10, 1995. (b)
3.09 Articles of Amendment to the Certificate of Designation, Preferences, Rights and Limitations of Series
E Convertible Preferred Stock, No Par Value of EVRO Corporation filed March 15, 1995. (b)
3.10 Articles of Amendment to the Certificate of Designation, Preferences, Rights and Limitations of Series
F Convertible Preferred Stock, No Par Value of EVRO Corporation filed May 26, 1995.
</TABLE>
-91-
<PAGE> 92
<TABLE>
<S> <C>
3.11 Articles of Amendment to the Certificate of Designation, Preferences, Rights and Limitations of Series
H Convertible Preferred Stock, No Par Value of EVRO Corporation filed October 17, 1995.
3.12 Articles of Amendment to the Seconded Amended Certificate of Designation, Preferences, Rights and
Limitations of Series I Convertible Preferred Stock, No Par Value of EVRO Corporation filed September
21, 1995.
3.13 Articles of Amendment to the Third Amended Certificate of Designation, Preferences, Rights and
Limitations of Series J Convertible Preferred Stock, No Par Value of EVRO Corporation filed October 23,
1995.
3.14 Articles of Amendment to the Certificate of Designation, Preferences, Rights and Limitations of Series
K Convertible Preferred Stock, No Par Value of EVRO Corporation filed November 13, 1995.
3.15 Articles of Amendment to the Certificate of Designation, Preferences, Rights and Limitations of Series
L Convertible Preferred Stock, No Par Value of EVRO Corporation filed November 13, 1995.
3.16 Articles of Amendment to the Certificate of Designation, Preferences, Rights and Limitations of Series
M Convertible Preferred Stock, No Par Value of EVRO Corporation filed November 13, 1995.
4.01 Specimen Stock Certificate. (a)
10.01 1995 Employee Stock Compensation Plan of the Registrant.
10.02 Promissory Note of EVRO Corporation ("Debtor") payable to the order of Genesee Cattle Co. ("Holder")
for the principal sum of $550,000. (f)
10.03 Escrow Agreement, dated April 10, 1995, by and among Genesee Cattle Co. ("Creditor"), EVRO Corporation,
and Scolaro, Shulman, Cohen, Lawler & Berstein, P.C. ("Escrow Agent"). (f)
10.04 Stock Purchase Agreement and Stock Pledge Agreement (Stock) dated November 1, 1995 by and between EVRO
Corporation and E. Carl Anderson, Jr.
10.05 Consulting Agreement and Stock Pledge Agreement (Consulting) dated November 1, 1995 by and between EVRO
Corporation and Southern Resource Management, Inc.
</TABLE>
-92-
<PAGE> 93
<TABLE>
<S> <C>
10.06 First Amendment to Consulting Agreement by and between EVRO Corporation and Southern Resource
Management, Inc. dated November 30, 1995.
10.07 Joint Venture Agreement dated January 11, 1996 by and between EVRO Corporation and MIT-F/x, Inc. and
Larry Mitchell.
10.08 Professional Services Agreement dated October 3, 1995 by and between EVRO Corporation and Daniel M.
Boyar.
10.09 Management Services Agreement by and between The Stellar Companies, Inc, and Microsonics International,
Inc., International Sports Collectibles, Inc., The Sports & Shopping Network, Inc. And Centennial
Sports Promotions, Inc. (e)
22.01 Subsidiaries of the registrant.
27.0 Financial Data Schedule (for SEC use only).
</TABLE>
(B) REPORTS ON FORM 8-K
A report on Form 8-K dated September 18, 1995, reported matters under Item
2 (Acquisition or Disposition of Assets) dealing with the acquisition of
Channel America.
- -------------------------
(a) Filed as an Exhibit to Report on Form 10-KSB for the Year Ended
December 31, 1993.
(b) Filed as an Exhibit to Report on Form 10-KSB for the Year Ended
December 31, 1994.
(c) Filed as an Exhibit to Report on Form 8-K dated March 14, 1995.
(d) Filed as an Exhibit to Report on Form 8-K dated September 18, 1995.
(e) Filed as an Exhibit to Report on Form 10-QSB for the Quarter Ended
March 31, 1995.
(f) Filed as an Exhibit to Report on Form 10-QSB for the Quarter Ended June
30, 1995.
-93-
<PAGE> 94
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized on this 5th day of May, 1996.
EVRO CORPORATION
By:/s/ Thomas L. Jensen
--------------------
Thomas L. Jensen
Chief Executive Officer
In accordance with the Exchange, this Report has been signed below by
the following persons on behalf of the Registrant, and in the capacities and on
the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Thomas L. Jensen Chairman of the Board and
- --------------------------------- Chief Executive Officer
Thomas L. Jensen May 5, 1996
/s/ Stephen H. Cohen Secretary and Director May 5, 1996
- ---------------------------------
Stephen H. Cohen
/s/ D. Jerry Diamond Director May 5, 1996
- ---------------------------------
D. Jerry Diamond
/s/ O. Don Lauher Treasurer, Chief Financial May 5, 1996
- --------------------------------- Officer and Principal Accounting
O. Don Lauher Officer
/s/ Max P. Cawal Director May 5, 1996
- ---------------------------------
Max P. Cawal
</TABLE>
-94-
<PAGE> 95
Schedule A to the Annual Report on Form 10-KSB for the Year Ended
December 31,1995
PRO FORMA CAPITALIZATION
The following table sets forth the number of shares of the EVRO's
common stock that would have been issued, as of March 29, 1996, assuming that,
effective as of that date, the shareholders of EVRO had approved an increase in
the number of shares of EVRO's authorized shares of common stock, and, assuming
further that: (i) the holders of EVRO's preferred stock exercised their rights
to convert EVRO's outstanding shares of preferred stock into shares of EVRO's
common stock; (ii) EVRO issued the balance of the shares that it had
contractually agreed to issue to Stellar for the shares of TSSN; and (iii) EVRO
acquired the assets of WinSAT.
<TABLE>
<CAPTION>
Class of Stock or, alternatively, the
Obligation Giving Rise to the Potential Common Stock
Issuance of Common Stock Equivalents
- ------------------------ -----------
<S> <C>
Common Stock Issued as of
December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,497,957
Series C Convertible Preferred Stock
210,400 shares issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,896,563(9)
Series E Convertible Preferred Stock
30,000 shares issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000(10)
Series F Convertible Preferred Stock
1,352.5911 shares issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,525,911(11)
Series H Convertible Preferred Stock
48,000 shares issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,764,706(12)
Series I Convertible Preferred Stock
6,750 shares issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,350,000(13)
Series J Convertible Preferred Stock
100 shares issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000,000(14)
Series K Convertible Preferred Stock
17 shares issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 696,542(15)
Series M Convertible Preferred Stock
40,000 shares issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400,000(16)
</TABLE>
-95-
<PAGE> 96
<TABLE>
<S> <C>
Balance of Shares that EVRO is
Contractually Obligated to Issue to
Stellar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,609,038(17)
Shares to be issued to Channel America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000(18)
Shares to be issued to WinSAT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230,000(19)
Shares to be issued to the holders
of EVRO's 8.5% Convertible
Debentures Due October 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,806,908(20)
----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,827,625
==========
Adjusted Total (See Footnote 14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,827,625
==========
</TABLE>
(9)As of March 29, 1996 there were 210,400 shares of Series C Preferred
Stock issued at a price of $10.00 per share. The holders of the Series C
Preferred Stock can convert the shares into EVRO's common stock at 50% of the
market price of EVRO's common stock. The market price of EVRO's common stock,
as of March 29, 1996, was $2.21875 (this price represents the stock's closing
price for March 29, 1996).
(10)As of March 29, 1996 there were 30,000 shares of Series E Preferred
Stock issued, convertible into 3,000,000 shares of EVRO's common stock.
(11)As of March 29, 1996 there were 1,352.5911 shares of Series F
Preferred Stock issued, convertible into 13,525,911 shares of EVRO's common
stock.
(12)As of March 29, 1996 there were 48,000 shares of Series H Preferred
Stock issued with a face value of $6,000,000. The Series H Preferred Stock is
convertible into 3,764,706 shares pursuant to the Agreement and Plan of Merger,
as amended.
(13)As of March 29, 1996 there were 6,750 shares of Series I Preferred
Stock issued, convertible into 1,350,000 shares of EVRO's common stock.
(14)As of March 29, 1996 there were 100 shares of Series L Preferred
Stock issued, convertible into 5,000,000 shares of EVRO's common stock. EVRO
issued the shares of Series L Preferred Stock as collateral for EVRO's
obligations to E. Carl Anderson, Jr. and/or Southern Resource Management, Inc.
(See "Management's Discussion and Analysis or Plan of Operation - Liquidity and
Capital Resources").
(15)As of March 29, 1996, there were 17 shares of Series K Preferred
Stock issued, at a price of $50,000 per share. The holders of the Series K
Preferred Stock can convert the shares into EVRO's common stock at 55% of the
market price of EVRO's common stock. The market price of EVRO's common stock, as
of March 29, 1996, was $2.21875 (this price represents the stock's closing price
for March 29, 1996).
(16)As of March 29, 1996 there were 40,000 shares of Series M Preferred
Stock issued, convertible into 400,000 shares of EVRO's common stock. Twenty
five thousand shares of the Series M Preferred Stock were issued to Scolaro,
Shulman as security for EVRO's obligation to Scolaro, Shulman for legal
services rendered. See "Certain Relationships and Related Transactions with
Management and Others."
(17)EVRO initially agreed to issue to Stellar 16,759,038 shares of
EVRO's common stock which was subsequently decreased to 16,409,038. EVRO
issued 1,280 shares of its Series F Preferred Stock to Stellar in partial
satisfaction of such obligation to issue shares and, by issuing the Series F,
EVRO was relieved of its obligation to issue 12,800,000 shares of common stock
to Stellar. See "Business of EVRO - Material Acquisitions - 1995 -- TSSN
Acquisition"). The balance of the 16,409,038 shares that EVRO agreed to issue
to Stellar, 4,959,038, remain to be issued by EVRO to Stellar.
(18)EVRO agreed to issue to Channel America 50,000 shares of EVRO's
common stock pursuant to an extension of a promissory note.
-96-
<PAGE> 97
(19)EVRO agreed to acquire the assets of WinSat Communication
Corporation ("WinSAT") in exchange for preferred stock convertible into 230,000
shares of EVRO's common stock.
(20)As of March 29, 1996 EVRO had issued its 8.5% and 9.5% Convertible
Debentures Due January 31, 1998 - November 27, 2000 with original face value of
$4,540,000. The holders of the Convertible Debentures can convert the
debenture into EVRO's common stock at 50%-70% of the market price of EVRO's
common stock. The market price of EVRO's common stock, as of March 29, 1996,
was $2.21875 (this price represents the stock's closing price for March 29,
1996).
-97-
<PAGE> 1
EXHIBIT 2.11
FOURTH AMENDED AGREEMENT
TO
STOCK PURCHASE AGREEMENT,
AGREEMENT AND PLAN OF MERGER,
AND
ESCROW AGREEMENT
THIS FOURTH AMENDED AGREEMENT (this "Agreement"), made and entered into
this 7th day of February, 1996, by and among CHANNEL AMERICA TELEVISION
NETWORK, INC., a Delaware corporation (the "Company"), having offices located
in Darien, Connecticut, EVRO CORPORATION, a Florida corporation ("Purchaser"),
having offices located in Kissimmee, Florida, and SCOLARO, SHULMAN, COHEN,
LAWLER & BURSTEIN, P.C., a New York professional corporation, with its
principal place of business located in Syracuse, New York.
W I T N E S S E T H:
WHEREAS, the parties hereto have entered into a certain Stock Purchase
Agreement dated July 13, 1995 ("the Stock Purchase Agreement");
WHEREAS, the parties hereto have entered into a certain Agreement and Plan
of Merger dated July 13, 1995 (the "Merger Agreement");
WHEREAS, the parties hereto have entered into a certain Escrow Agreement
dated July 13, 1995 (the "Escrow Agreement");
WHEREAS, the parties hereto have entered into certain amendments to the
Stock Purchase Agreement, the Merger Agreement and the Escrow Agreement dated
September 18, 1995, October 3, 1995, and October 26, 1995 (the "Prior
Amendments"); and
WHEREAS, the parties hereto desire to further amend the Stock Purchase
Agreement, the Merger Agreement and the Escrow Agreement, as heretofore amended
pursuant to the Prior Amendments (collectively, the "Agreements"), as set forth
herein.
NOW, THEREFORE, in consideration of the premises, the covenants and
agreements herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Waiver of Default; Extension of Term. The parties hereto hereby
acknowledge that Purchaser has defaulted in the payment of cash installments
under the Agreements in the sum of $300,000 (the "Default"). In consideration
of the payment by Purchaser, made in consideration of these premises, (a) to
[KEYSTONE/IDB] of the sum of One Hundred Thousand Dollars ($100,000) and (b)
<PAGE> 2
to AT&T of outstanding obligations of the Company to AT&T in the sum of One
Hundred and Twenty Five Thousand Dollars ($125,000), and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company hereby irrevocably agrees to waive the Default and to
extend the time of payment of such $300,000 to the close of business on February
29, 1996 (the "Extension Date"). The parties hereto hereby agree to extend the
term of the Agreements, and the binding legal nature of the respective rights
and obligations created thereunder, through the Extension Date.
2. Entire Agreement. The Agreements, as amended by this Amendment,
contain the entire agreement of the parties regarding the subject matter
thereof, and supersedes all prior agreements and understandings, written and
oral, among the parties, or any of them, with respect to the subject matter
hereof. Notwithstanding anything to the contrary contained herein, unless this
Amendment specifically amends a provision contained in the Agreements, the
terms and conditions of the Agreements shall remain in full force and effect.
In case of a discrepancy or conflict between this Amendment and the Agreements,
this Amendment shall be controlling and the parties agree to use their best
efforts to fully implement the spirit and intent of this Agreement.
3. Governing Law. This Amendment and the rights and obligations of the
parties shall be governed by and construed and enforced in accordance with the
substantive laws of the State of Florida.
4. Counterparts and Facsimile Signatures. This Amendment may be executed
in multiple counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument. Execution and
delivery of this Amendment by exchange of facsimile copies bearing facsimile
signature of a party shall constitute a valid and binding execution and
delivery of this Amendment. Such facsimile copies shall constitute enforceable
original documents.
[signature page follows]
2
<PAGE> 3
IN WITNESS WHEREOF, this Amendment has been executed effective as of the
date first above written by the parties hereto.
CHANNEL AMERICA TELEVISION
NETWORK, INC.
By: /s/ David A. Post
----------------------------------
David A. Post, Chairman
EVRO CORPORATION
By: /s/ Daniel M. Boyar
----------------------------------
Daniel M. Boyar, Authorized Signatory
SCOLARO, SHULMAN, COHEN, LAWLER &
BURSTEIN, P.C.
By: /s/ Stephen H. Cohen
----------------------------------
Stephen H. Cohen, Partner
3
<PAGE> 1
EXHIBIT 2.12
FIFTH AMENDED AGREEMENT
TO
STOCK PURCHASE AGREEMENT,
AGREEMENT AND PLAN OF MERGER,
AND
ESCROW AGREEMENT
THIS FIFTH AMENDED AGREEMENT (this "Agreement"), made and entered into
this 29th day of February, 1996, by and among CHANNEL AMERICA TELEVISION
NETWORK, INC., a Delaware corporation (the "Company"), having offices located
in Darien, Connecticut, EVRO CORPORATION, a Florida corporation ("Purchaser"),
having offices located in Kissimmee, Florida, and SCOLARO, SHULMAN, COHEN,
LAWLER & BURSTEIN, P.C., a New York professional corporation, with its
principal place of business located in Syracuse, New York.
W I T N E S S E T H:
WHEREAS, the parties hereto have entered into a certain Stock Purchase
Agreement dated July 13, 1995 ("the Stock Purchase Agreement");
WHEREAS, the parties hereto have entered into a certain Agreement and Plan
of Merger dated July 13, 1995 (the "Merger Agreement");
WHEREAS, the parties hereto have entered into a certain Escrow Agreement
dated July 13, 1995 (the "Escrow Agreement");
WHEREAS, the parties hereto have entered into certain amendments to the
Stock Purchase Agreement, the Merger Agreement and the Escrow Agreement dated
September 18, 1995, October 3, 1995, October 26, 1995 and February 7, 1996 (the
"Prior Amendments"); and
WHEREAS, the parties hereto desire to further amend the Stock Purchase
Agreement, the Merger Agreement and the Escrow Agreement, as heretofore amended
pursuant to the Prior Amendments (collectively, the "Agreements"), as set forth
herein.
NOW, THEREFORE, in consideration of the premises, the covenants and
agreements herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Waiver of Default; Extension of Term. The parties hereto hereby
acknowledge that Purchaser has defaulted in the payment of cash installments
under the Agreements in the sum of $300,000 (the "Default"). In consideration
of the payment by Purchaser, made in consideration of these premises, to (a)
Channel America, as a partial payment of the Default, the sum of Fifty Thousand
Dollars ($50,000), (b) Mortensen & Associates as retainer for the 1995
Audit, the sum of Twenty-Five Thousand Dollars ($25,000), and (c) Allen
Rosenblatt, a financial consultant, of the sum of Eight Thousand Dollars
($8,000), and for other good and valuable consideration, the
<PAGE> 2
receipt and sufficiency of which are hereby acknowledged, the Company
hereby irrevocably agrees to waive the Default and to extend the time of
payment of the remaining $250,000 to the close of business on March 15, 1996
(the "Extension Date"). The parties hereto hereby agree to extend the term of
the Agreements, and the binding legal nature of the respective rights and
obligations created thereunder, through the Extension Date.
2. Entire Agreement. The Agreements, as amended by this Amendment,
contain the entire agreement of the parties regarding the subject matter
thereof, and supersedes all prior agreements and understandings, written and
oral, among the parties, or any of them, with respect to the subject matter
hereof. Notwithstanding anything to the contrary contained herein, unless this
Amendment specifically amends a provision contained in the Agreements, the
terms and conditions of the Agreements shall remain in full force and effect.
In case of a discrepancy or conflict between this Amendment and the Agreements,
this Amendment shall be controlling and the parties agree to use their best
efforts to fully implement the spirit and intent of this Agreement.
3. Governing Law. This Amendment and the rights and obligations of the
parties shall be governed by and construed and enforced in accordance with the
substantive laws of the State of Florida.
4. Counterparts and Facsimile Signatures. This Amendment may be executed
in multiple counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument. Execution and
delivery of this Amendment by exchange of facsimile copies bearing facsimile
signature of a party shall constitute a valid and binding execution and
delivery of this Amendment. Such facsimile copies shall constitute enforceable
original documents.
IN WITNESS WHEREOF, this Amendment has been executed effective as of the
date first above written by the parties hereto.
CHANNEL AMERICA TELEVISION NETWORK, INC.
By: /s/ David A. Post
-------------------------------------
David A. Post, Chairman
EVRO CORPORATION
By: /s/ Daniel M. Boyar
-------------------------------------
Daniel M. Boyar, Authorized Signatory
SCOLARO, SHULMAN, COHEN, LAWLER &
BURSTEIN, P.C.
By: /s/ Stephen H. Cohen
-------------------------------------
Stephen H. Cohen, Partner
<PAGE> 1
EXHIBIT 2.13
SIXTH AMENDED AGREEMENT
TO
STOCK PURCHASE AGREEMENT,
AGREEMENT OF PLAN AND MERGER,
AND
ESCROW AGREEMENT
THIS AGREEMENT ("AMENDMENT"), made and entered into this 23rd day of
April, 1996, by and among CHANNEL AMERICA TELEVISION NETWORK, INC., a Delaware
corporation ("Company"), having offices located in Darien, Connecticut, EVRO
CORPORATION, a Florida corporation ("Purchaser"), with its principal place of
business located in Orlando, Florida, and SCOLARO, SHULMAN, COHEN, LAWLER &
BURSTEIN, P.C., a New York professional corporation ("Escrow Agent"), with its
principal place of business located in Syracuse, New York.
W I T N E S S E T H :
WHEREAS, the parties hereto have entered into a certain Stock Purchase
Agreement dated July 13, 1995 ("Stock Purchase Agreement");
WHEREAS, the parties hereto have entered into a certain Agreement and
Plan of Merger dated July 13, 1995 ("Merger Agreement");
WHEREAS, the parties hereto have entered into a certain Escrow
Agreement dated July 13, 1995 ("Escrow Agreement"); and
WHEREAS, the parties hereto have entered into certain amendments to
the Stock Purchase Agreement, Merger Agreement and Escrow Agreement dated
September 18, 1995, October 3, 1995, October 26, 1995, February 7, 1996 and
February 29, 1996 ("Prior Amendments"); and
WHEREAS, the parties hereto desire to amend the aforementioned
agreements (collectively the "Agreements") by and among the parties as set
forth herein.
NOW, THEREFORE, in consideration of the foregoing, the covenants,
agreements, conditions and promises hereinafter set forth, the sum of One
Dollar ($1.00) each paid to the other in hand, and other good and valuable
consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Waiver of Default; Extension of Term. The Company and
Purchaser hereby agree to extend the dates for payment of the $400,000
installment payment due to the Company under the Stock Purchase Agreement and
evidenced by a promissory note (the "Note") due and payable
1
<PAGE> 2
on April 7, 1996. The Note shall be extended until May 16, 1996 in
consideration of the Purchaser agreeing to pay the Company an additional 50,000
shares of common stock, or the equivalent in convertible preferred shares. The
Note shall be further extended to June 15, 1996 if Purchaser pays to the
Company on or before June 15, 1996 an additional 50,000 shares of common stock,
or the equivalent in convertible preferred shares together with $50,000 in cash.
Upon execution of this Amendment, the Company and the parties hereto
hereby acknowledge and expressly agree that no default of any of the referenced
agreements has occured and that the agreements are legally binding and still in
full force and effect.
2. Entire Agreement. The Agreements, as amended by this
Amendment, constitute the entire agreement of the parties regarding the subject
matter hereof, and supersede all prior agreements and understandings, both
written and oral, among the parties, or any of them, with respect to the
subject matter hereof. Notwithstanding anything to the contrary contained
herein, unless this Amendment specifically amends a provision contained in the
Agreements, the terms and conditions of the Agreements shall remain in full
force and effect. In case of a discrepancy or conflict between this Amendment
and the Agreements, this Amendment shall be controlling and the parties agree
to use their best efforts to fully implement the spirit and intent of this
Amendment.
3. Governing Law. This Agreement and the rights and obligations
of the parties shall be governed by and construed and enforced in accordance
with the substantive laws of the State of Florida.
4. Counterparts and Facsimile Signatures. This Agreement may be
executed in multiple counterparts, each of which shall be deemed an original,
and all of which together shall constitute one and the same instrument.
Execution and delivery of this agreement by exchange of facsimile copies
bearing facsimile signature of a party shall constitute a valid and binding
execution and delivery of this Agreement. Such facsimile copies shall
constitute enforceable original documents.
IN WITNESS WHEREOF, this Agreement has been executed effective as of
the date first above written by the parties hereto.
CHANNEL AMERICA TELEVISION NETWORK, INC.
By: /s/ David A. Post
------------------------------------
David A. Post, Chairman
EVRO CORPORATION
By: /s/ Thomas L. Jensen
------------------------------------
Thomas L. Jensen, Chairman and CEO
2
<PAGE> 3
SCOLARO, SHULMAN, COHEN, LAWLER & BURSTEIN, P.C.
By: /s/ Stephen H. Cohen
--------------------------------
Stephen H. Cohen
3
<PAGE> 1
EXHIBIT 3.05
SECOND AMENDED
CERTIFICATE OF DESIGNATED, PREFERENCES, RIGHTS AND
LIMITATIONS OF
SERIES A 10% CONVERTIBLE PREFERRED STOCK,
$20.00 FACE VALUE,
EVRO CORPORATION
EVRO Corporation (the "Corporation"), organized and existing under
Florida law, hereby certifies that, pursuant to authority conferred upon the
Board of Directors by the Articles of Incorporation of the Corporation and
Section 607.0602 of the Florida Business Corporation Act, the Board of
Directors, by written action taken on October 9, 1995, adopted a Resolution
providing for the amendment and restatement of the Corporation's Certificate of
Designation, Preferences, Rights and Limitations for its Series A 10%
Convertible Preferred Stock, $20.00 Face Value, which Series was created by the
Corporation's filing with the Florida Department of State, on October 3, 1994,
of its Certificate of Designation, Preferences, Rights and Limitations therefor
and, on January 24, 1995, the Amendment to the Certificate of Designation,
Preferences, Rights and Limitations therefor, which Resolution is hereafter set
forth in its entirety.
RESOLVED, that pursuant to the authority expressly granted and vested
in the Board of Directors of this Corporation in accordance with the provisions
of its Articles of Incorporation, a series of the Corporation's authorized
class of preferred stock, $20.00 face value per share, is hereby established as
Series A 10% Convertible Preferred Stock, $20.00 Face Value (hereinafter
referred to as the "Series A Preferred Stock"), which Series consists of
100,000 authorized shares. The issued and outstanding shares of Series A
Preferred Stock, as they may exist from time to time, are sometimes referred to
below as the "Shares". The preferences and relative, participating, conversion
or other special rights of, and the qualifications, limitations and
restrictions, imposed upon the Series A Preferred Stock shall be as follows:
1. Cash Dividends. The holders of the Shares of Series A
Preferred Stock shall be entitled to receive cash dividends at an annual rate
of 10% of the face value, or $2.00 per Share, such dividends to begin accruing
the month following the third consecutive month in which the Corporation's
subsidiary, Lintronics Technologies, Inc. ("Lintronics") sells three
Mammo-ScanTM units per month. As so accrued, the dividends shall be payable on
December 31st of each year. The right to receive such dividends is cumulative
but the dividends are non-compounding. No dividend may be declared and set
aside for any other equity securities of the Corporation at any time the
holders of Series A Preferred Stock have not received the full dividend to
which they are entitled to pursuant to this paragraph 1. If any dividends are
paid with respect to the Shares in an amount less than provided for above, the
Corporation shall make such dividend payments ratably upon all outstanding
Shares.
2. Conversion Rights. The holders of the Shares shall have the
conversion rights as set forth in this Paragraph 2. At any time after July 1,
1992, the Shares shall be convertible in to
Page 1 of 4
<PAGE> 2
shares of the Corporation's common stock in the amount of $71,428.57 per
calendar quarter plus the amount of accrued dividends, if any (the "Conversion
Payment"). The common stock received upon conversion will not be registered
with the Securities and Exchange Commission or any state authority, and the
holder will have no right to require any such registration. The conversion
ratio will be based upon the fair market value of such common stock at the
conversion date (the "Conversion Ratio"). The holders of the Shares can
require that one-half of the quarterly Conversion Payment be paid to them in
cash and one-half in common stock. Not withstanding the above, the total
Conversion Payment to be made by the Corporation during any given quarter, in
both common stock and cash, shall not exceed 85% of the Lintronics quarterly
net after tax profits, less applicable debt service. In the event that this
limitation results in the Conversion Payment being less than $71,428.57 in any
quarter, the shortfall shall not be added to the Conversion Payment of
successor quarters, the total maximum quarterly Conversion Payment never
exceeding $71,428.57.
Shares shall be convertible at the office of the Corporation for shares of the
Corporation's common stock at the time of conversion. The number of shares of
common stock into which the Shares submitted for conversion shall be converted,
shall be calculated to the nearest 1/10th of a share, fractions of a share less
than 1/10th of a share being disregarded. Upon conversion, no fractional share
of common stock shall be issued, but in lieu thereof, cash shall be paid to the
holder of the Shares submitted for conversion in an amount equal to the fair
market value, at the time, of the fractional share of common stock that would
otherwise have been issued.
Before any holder of Shares be entitled to convert the Shares into common
stock, he or she shall surrender the certificate, or certificates for such
Shares duly endorsed, at the office of the Corporation for the shares of common
stock at the time of conversion, and shall give written notice to Corporation
at such office of the election to convert the same and shall state in writing
therein the name or names in which the certificate or certificates for common
stock are to be issued. The Corporation shall, as soon as practicable
thereafter under the circumstances, issue and deliver at the office of the
transfer agent for the common stock, or at the office of the Corporation if
there be no such transfer agent, to such holder of such Shares, or the nominee
of such holder, certificates for the number of full shares of common stock
which the holder shall be entitled, as aforesaid, together with cash in lieu of
any fraction of a share.
In the case of any capital reorganization or any reclassification of the
capital stock of the Corporation or in the case of the consolidation or merger
of the Corporation with or into another corporation or the conveyance of all or
substantially all of the assets or shares of the Corporation to another
corporation, the Plan of Merger and Plan of Reorganization or Assets and/or
Capital Stock Purchase Agreement shall set forth that such holder of Shares
will be issued preferred stock in the surviving or purchasing corporation with
the same designation, preferences, rights and limitations as contained in this
Certificate.
The Corporation shall at all times reserve and keep available out of its
authorized but unissued common stock, solely for the purpose of effecting the
conversion of the Shares, the full number of
Page 2 of 4
<PAGE> 3
shares of common stock deliverable upon the conversion of all Shares from time
to time outstanding. The Corporation shall, from time to time (subject to
obtaining any necessary consent for action of the directors or shareholders),
in accordance with the laws of the State of Florida, increase the authorized
amount of its common stock if at any time the authorized amount of shares of
such stock remaining unissued shall not be sufficient to permit the conversion
of all Shares at the time outstanding.
3. Redemption Rights. The Corporation may redeem the Shares, if
unconverted, at any time after giving 30 days notice, at a price of $20.00 per
Share plus all accrued but unpaid dividends.
4. Voting Rights. Each issued and outstanding share of Series A
Preferred Stock shall entitle the registered holder thereof to the exact voting
rights of a given holder of a share of the Corporation's Common Stock.
5. Priority in the Event of Liquidation or Dissolution. In the
event of any liquidation, dissolution or winding up of the affairs of the
Corporation, whether voluntary or otherwise, after payment or provision for
payment of the debts and other liabilities of the Corporation and before any
distribution shall be made to the holder of any class of the common stock of
the Corporation, each holder of Series A Preferred Stock shall be entitled to
receive, out of the net assets of the Corporation, the sum of $20.00 in cash
plus accrued but unpaid dividends, for each Share of Series A Preferred Stock
so held. After payment shall have been made in full to the holder of Series A
Preferred Stock, of funds necessary for such payment shall have been set aside
in trust for the exclusive benefit of such holders, the holders of the Series A
Preferred Stock shall be entitled to no further participation in any
distribution of the assets of the Corporation.
6. Limitations on Corporations; Shareholder Consent. So long as
any Shares of Series A Preferred Stock are outstanding, the Corporation shall
not, without the affirmative vote or the written consent as provided by law of
80% of the holders of the outstanding Shares, voting as a class, change the
preferences, rights or limitations with respect to the Series A Preferred Stock
in any material respect prejudicial to the holders thereof, or increase the
authorized number of Shares of such Series, but nothing herein contained shall
require such a class vote or consent (a) in connection with any increase in the
total number of authorized shares of Common Stock, or (b) in connection with
the authorization, designation, increase or issuance of any series of preferred
stock holding liquidation preference equal to or subordinate to the Series A
Preferred Stock. Further, no such vote or written consent of the holders of
the Series A Preferred Stock shall be required if, at or prior to the time when
such change is to take effect, provision is made for the redemption of all
Shares at the time outstanding; and the provisions of this paragraph 6, shall
not in any way limit the right and power of the Corporation to issue any bonds,
notes, mortgages, debentures and other obligations, and to incur indebtedness
to banks and to other lenders.
7. Notices. All notices or other communications required or
permitted to be given
Page 3 of 4
<PAGE> 4
pursuant to this resolution shall be in writing and shall be considered as
properly given or made if hand delivered, mailed by certified or registered
mail, return receipt requested, or sent by prepaid telegram, if to the
Corporation at its address indicated in its Annual Report as most recently
filed with the Florida Department of State, and if to a holder of Series A
Preferred Stock at the address set forth in the shareholder records as
maintained by the Corporation, or to such other address as any such shareholder
may have designated by like notice forwarded to the Corporation. All notices,
except notices of change of address, shall be deemed given when mailed or hand
delivered and notices of change of address shall be deemed given when received.
IN WITNESS WHEREOF, EVRO Corporation has caused its corporate seal to
be hereunto affixed and this Certificate to be executed by its Vice President
and Assistant Secretary as of October 9, 1995.
/s/Christopher P. Dona
-----------------------------------
Christopher P. Dona, Vice President
/s/O. Don Lauher
------------------------------------
O. Don Lauher, Assistant Secretary
STATE OF FLORIDA
COUNTY OF ORANGE
This instrument was acknowledged before me on October 9, 1995, on
behalf of EVRO CORPORATION by Christopher P. Dona, its Vice President.
/s/Karen D. Jackson
----------------------------------
Notary Public
My Commission Expires: 06/25/98
STATE OF FLORIDA
COUNTY OF ORANGE
This instrument was acknowledged before me on October 16, 1995, on
behalf of EVRO CORPORATION by O. Don Lauher, its Assistant Secretary.
/s/Karen L. Bohn
----------------------------------
Notary Public
My Commission Expires: 09/10/96
Page 4 of 4
<PAGE> 1
EXHIBIT 3.06
ARTICLES OF AMENDMENT TO THE
CERTIFICATE OF DESIGNATION, PREFERENCES, RIGHTS AND LIMITATIONS
OF
SERIES B 8% PREFERRED STOCK, $20.00 FACE VALUE
OF
EVRO CORPORATION
EVRO Corporation, (the "Corporation"), organized and existing under
Florida law, hereby certifies that, pursuant to authority conferred upon the
Board of Directors by the Articles of Incorporation of the Corporation and
Section 607.0602 of the Florida Business Corporation Act, the Board of
Directors, by written action taken on October 9, 1995, has adopted a resolution
providing for the cancellation of the Corporation's Series B 8% Preferred
Stock, $20.00 Face Value, which Series was created by the Corporation's filing
with the Florida Department of State, on October 3, 1994, of its Certificate of
Designation, Preferences, Rights and Limitations therefor and, on January 24,
1995, the Amendment to the Certificate of Designation, Preferences, Rights and
Limitations therefor, which Resolution is hereafter set forth in its entirety.
RESOLVED, that pursuant to the authority expressly granted and vested
in the Board of Directors of this Corporation in accordance with the provisions
of its Articles of Incorporation, the Series B 8% Preferred Stock, $20.00 Face
Value is canceled and no shares of Series B 8% Preferred Stock, $20.00 Face
Value shall be authorized hereafter.
IN WITNESS WHEREOF, EVRO Corporation has caused its corporate seal to
be hereunto affixed and this Certificate to be executed by its Vice President
and Assistant Secretary as of October 9, 1995.
/s/Christopher P. Dona
-----------------------------------
Christopher P. Dona, Vice President
/s/O. Don Lauher
-----------------------------------
O. Don Lauher, Assistant Secretary
STATE OF FLORIDA
COUNTY OF ORANGE
This instrument was acknowledged before me on October 9, 1995, on
behalf of EVRO CORPORATION by Christopher P. Dona, its Vice President.
/s/Karen D. Jackson
------------------------------------
Notary Public
My Commission Expires: 6/25/98
Page 1 of 2
<PAGE> 2
STATE OF FLORIDA
COUNTY OF ORANGE
This instrument was acknowledged before me on October 16, 1995, on
behalf of EVRO CORPORATION by O. Don Lauher, its Assistant Secretary.
/s/Karen L. Bohn
-------------------------------------
Notary Public
My Commission Expires: 9/10/96
Page 2 of 2
<PAGE> 1
EXHIBIT 3.07
SECOND
AMENDED CERTIFICATE OF DESIGNATION, PREFERENCES, RIGHTS AND
LIMITATIONS OF
SERIES C CONVERTIBLE PREFERRED STOCK,
NO PAR VALUE,
OF EVRO CORPORATION
EVRO Corporation (the "Corporation"), organized and existing under Florida
law, hereby certifies that, pursuant to authority conferred upon the Board of
Directors by the Articles of Incorporation of the Corporation and Section
607.0602 of the Florida Business Corporation Act, the Board of Directors on
March 14, 1995, adopted a Resolution providing for the creation and issuance of
a series of its authorized preferred stock, designated Series C Convertible
Preferred Stock, no par value, which Resolution is hereafter set forth in its
entirety.
RESOLVED, that pursuant to the authority expressly granted and vested in
the Board of Directors of this Corporation in accordance with the provisions of
its Articles of Incorporation, a series of the Corporation's authorized class
of preferred stock, no par value, is hereby established as "Series C
Convertible Preferred Stock" (hereinafter referred to as the Series C Preferred
Stock), which series consists of 500,000 authorized shares. The issued and
outstanding shares of the Series C Preferred Stock, as they may exist from time
to time, are sometimes referred to below as the "Shares". The preferences and
relative, participating, optional or other special rights of, and the
qualifications, limitations and restrictions imposed upon the Series C
Preferred Stock shall be as follows:
1. No Dividends.
This Series C Preferred Stock shall not bear dividends.
2. Redemption Rights.
(a) Voluntary. Shares of the Series C Preferred Stock shall be
redeemable, in whole or in part, at the option of the Corporation, by
resolution of its Board of Directors adopted, at any time on or after
April 15, 1996, at a price equal to the sum of $10.00 per Share. In the
event that less than all of the outstanding Shares of Series C Preferred
Stock are redeemed at any one time, the Shares to be redeemed shall be
selected in a non-discriminatory manner to be determined by the Board of
Directors of the Corporation. Not less than 30 nor more than 60 days
prior to the date fixed for redemption of any Shares of Series C
Preferred Stock, a notice specifying the time and place of such
redemption shall be given to all holders of record of Shares of Series C
Preferred Stock, at their respective addresses as the same shall appear on
the stock books of the Corporation, but no failure on the part of the
shareholder to receive such notice and no defect in the wording of the
notice shall affect the validity of the proceedings adopted with respect to
the redemption of any such Shares. After the
<PAGE> 2
Corporation has furnished its notice of redemption, each holder of Shares
of Series C Preferred Stock called for redemption may, on or before the
close of the last business day preceding the designated redemption date,
convert such Shares into shares of common stock of the Corporation in
accordance with the conversion privileges set forth in Section 5 hereof.
(b) Effect of Redemption. On the redemption date determined under
subsection (a), each shareholder, some or all of whose Shares of Series C
Preferred Stock are being redeemed, shall tender such Shares for
cancellation by the Corporation and against payment of the redemption
price. Upon the consummation of any such redemption, each holder of
Shares of Series C Preferred Stock whose Shares have been redeemed shall
cease to be a shareholder with respect to such Shares, shall have no
interest in or claim against the Corporation by virtue thereof and shall
have no voting or other rights with respect to such Shares as are
redeemed. Any Shares of Series C Preferred Stock received by the
Corporation upon redemption shall resume the status of authorized but
unissued Shares of preferred stock.
3. No Voting Rights. Except as required by Florida Business
Corporation Act, the holders of the Shares shall have no voting rights.
4. Priority in the Event of Liquidation or Dissolution. In the event
of any liquidation, dissolution or winding up of the affairs of the Corporation,
whether voluntary or otherwise, after payment or provision for payment of the
debts and other liabilities of the Corporation and before any distribution
shall be made to the holder of any class of the common stock of the
Corporation, each holder of Series C Preferred Stock shall be entitled to
receive, out of the net assets of the Corporation, the sum of $10.00 in cash
for each Share of Series C Preferred Stock so held subject to the first
priority of all holders of the Corporation's Series A 10% Preferred Shares and
Series B 8% Preferred Shares to receive $1.00 per share in cash plus all
accrued but unpaid dividends. After payment shall have been made in full to
the holder of Series C Preferred Stock, or funds necessary for such payment
shall have been set aside in trust for the exclusive benefit of such holders,
the holders of the Series C Preferred Stock shall be entitled to no further
participation in any distribution of the assets of the Corporation.
5. Conversion of Preferred Stock into Common Stock.
(a) In General. Subject to the provisions of this Section 5, each
holder of record of Shares of Series C Preferred Stock shall have the
right, at his option, at any time on or prior to April 15, 1997, to convert
each Share then held by him into fully paid and nonassessable shares of the
Corporation's authorized common capital stock, no par value (the "Common
Stock") at a conversion price equal to 50% of the Common Stock's market
value ("Conversion Price"). In order to determine the actual number of
shares of Common Stock, the holder shall be entitled to receive upon
conversion of the Shares into Common Stock the actual number of Shares
being offered for
<PAGE> 3
conversion shall be divided by the Conversion Price with the resulting
number then being multipled by 10. For purposes of this Agreement, the
market value of the Company's Common Stock shall be determined as follows:
(a) if at the time of valuation the Company's Common Stock is listed on any
national securities exchange, the average closing price on such exchange
for the ten day period prior to conversion, or, if listed on more than one
exchange, on the exchange on which the Company's Common Stock shall have
had the largest total trading volume; (b) if at the time of valuation the
Company's Common Stock is publicly traded but not listed on any national
securities exchange, the average of the average closing bid and asked
prices appearing on the National Association of Securities Dealers, Inc.
Automated Quotation System (NASDAQ) for the ten day period preceding the
conversion date or, if not listed on NASDAQ, the average of the average
closing bid-and-asked prices as reported by the National Quotation Bureau,
Inc. or a comparable general quotation service; or (c) if at the time of
valuation the Company's Common Stock is not publicly traded, the net book
value per share as reflected on the Corporation's audited consolidated
balance sheet for its latest fiscal year ending prior to the valuation
date. In case any Shares of the Series C Preferred Stock shall have been
called for redemption, such right of conversion in respect of the Shares so
called shall cease and terminate at the close of the last business day
immediately preceding the date fixed for the redemption of such Shares,
unless thereafter default shall occur in the payment of the redemption
price.
(b) Procedure. Any holder of Shares of Series C Preferred Stock
desiring to convert any such Share into Common Stock shall surrender each
certificate representing one or more Shares of such Stock to be converted,
duly endorsed to the Corporation or in blank, at the principal business
office of the Corporation (or such other place as may be designated by the
Corporation), and shall give written notice to the Corporation at that
office of his election to convert the same, setting forth therein the name
or names (with the address or addresses) in which the shares of Common
Stock are to be issued. If the last day for any exercise of the
conversion right shall be a legal holiday or a day on which federally
chartered banking institutions are authorized by law to close, then such
conversion right may be exercised on the next succeeding day not a legal
holiday or a day on which such banking institutions are authorized by law
to close.
(c) Additional Provisions. Conversion of Series C Preferred Stock
shall be subject to the following additional terms and provisions:
(1) Replacement Certificates. As promptly as practicable after
the surrender for conversion of any Series C Preferred Stock, the
Corporation shall deliver or cause to be delivered at the principal
office of the Corporation (or such other place as may be designated
by the Corporation), to or upon the written order of the holder of
such Series C Preferred Stock, one or more certificates representing
the shares of Common Stock issuable upon such conversion, issued in
such name or names as such holder may reasonably direct. Shares of
the Series
<PAGE> 4
C Preferred Stock shall be deemed to have been converted as of
the close of business on the date of the surrender of the
Series C Preferred Stock for conversion, as provided above, and
the rights of the holders of such Series C Preferred Stock shall
cease at such time, and each person in whose name a certificate
for such shares is to be issued shall be treated for all
purposes as having become the record holder of such Common Stock
at such time; provided, however, that any such surrender on any
date when the stock transfer books of the Corporation shall be
closed shall constitute the person in whose name each
certificate for such shares is to be issued as the record holder
thereof for all purposes at the close of business on the next
succeeding day on which such stock transfer books are open.
(2) Subdivisions or Combinations. In the event that the
Corporation shall at any time prior to a particular conversion
subdivide or combine its outstanding shares of Common Stock
into a greater or lesser number of such shares, the number
of shares of Common Stock issuable upon conversion of the Series
C Preferred Stock shall be proportionately increased in the case
of a subdivision or decreased in the case of a combination,
effective in either case at the close of business on the date
which such subdivision or combination shall become effective.
(3) Recapitalizations. In the event that the Corporation
shall be recapitalized, consolidated with or merged into any
other corporation, or shall sell or convey to any other
corporation all or substantially all of its property as an
entity, provision shall be made as part of the terms of such
recapitalization, consolidation, merger, sale or conveyance for
each holder of Series C Preferred Stock to thereafter receive in
lieu of the Common Stock otherwise issuable to him upon
conversion of his Preferred Stock, but at the conversion ratio
stated in this Section 5, the same kind and amount of securities
or assets as may be distributable upon such recapitalization,
consolidation, merger, sale or conveyance, with respect to the
Common Stock of the Corporation.
(4) Successive Adjustments. The adjustments hereinabove
referenced shall be made successively if more than one event
listed in the above subdivisions of this subsection (c) of
this Section 5 shall occur.
(5) No Fractional Shares. The Corporation shall not be
required to issue any fractions of shares of Common Stock upon
conversions of Series C Preferred Stock. If any interest in a
fractional share of Common Stock would otherwise be deliverable
upon the conversion of any Series C Preferred Stock, the
Corporation shall make adjustment for such fractional share
interest by payment to the converting shareholder of cash in an
amount bearing the same ratio to the fair market value of a
whole share of Common Stock of the Corporation, as determined
by the Corporation's Board of Directors, as the fractional
interest to
<PAGE> 5
which the shareholder would otherwise be entitled bears to a
whole share of Common Stock.
(6) No Adjustments. No adjustment of the conversion ratio
shall be by reason of:
(A) the payment of any cash dividend on the Common Stock
or any other class of the capital stock of the Corporation;
(B) the purchase, acquisition, redemption or retirement
by the Corporation of any shares of the Common Stock or of
any other class of the capital stock of the Corporation,
except as provided in subdivision (3) of this subsection (c);
(C) the issuance, other than as provided in the
subdivisions of this subsection (c), of any shares of
Common Stock of the Corporation, or of any securities
convertible into shares of Common Stock or other securities
of the Corporation, or of any rights, warrants or options to
subscribe for or purchase shares of the Common Stock or
other securities of the Corporation, or of any other
securities of the Corporation, provided that in the event
the Corporation offers any of its securities, or any rights,
warrants or options to subscribe for or purchase any of its
securities, to the holders of its Common Stock pursuant to
any preemptive or preferential rights granted to holders of
Common Stock by the Certificate of Incorporation of the
Corporation, or pursuant to any similar rights that may be
granted to such holders of Common Stock by the Board of
Directors of the Corporation, the Corporation shall mail
written notice of such offer to the holders of the Series C
Preferred Stock then of record at least 20 days prior to the
record date for the determination of holders of the Common
Stock entitled to receive any such offer so as to provide
such holders with a reasonable period of time within which
to determine whether to exercise their rights of conversion;
(D) any offer by the Corporation to redeem or acquire
shares of its Common Stock by paying or exchanging therefor
stock of another corporation or the carrying out by the
Corporation of the transactions contemplated by such offer,
provided that at least 20 days prior to the expiration of
any such offer the Corporation shall mail written notice of
such offer to the holders of the Series C Preferred Stock
then of record; or
(E) the distribution to holders of Common Stock of stock
or other securities of another issuer, if the issuers of
such securities shall be engaged at the time of such
distribution in a business (i) which shall have been
previously operated on a divisional or subsidiary basis by
an entity acquired
<PAGE> 6
by the Corporation and (ii) which shall be distinct from the principal
business of the entity to be acquired.
(7) The Corporation shall at all times reserve and keep
available solely for the purpose of issuance upon conversion of
Series C Preferred Stock, as herein provided, such number of shares
of Common Stock as shall be issuable upon the conversion of all
outstanding Series C Preferred Stock.
(8) All shares of Common Stock which may be issued upon
conversion of the shares of Series C Preferred Stock will upon
issuance by the Corporation be validly issued, fully paid and
nonassessable and free from all taxes, liens, and charges with
respect to the issuance thereof.
(d) Expenses. The issuance of certificates representing shares of
Common Stock upon conversion of the Series C Preferred Stock shall be
made to each applicable shareholder without charge for any excise tax in
respect of such issuance. However, if any certificate is to be issued in
a name other than that of the holder of record of the Series C Preferred
Stock so converted, the person or persons requesting the issuance thereof
shall pay to the Corporation the amount of any tax which may be payable
in respect of any transfer involved in such issuance, or shall establish
to the satisfaction of the Corporation that such tax has been paid or is
not due and payable.
(e) Verification. Upon the occurrence of each adjustment or
readjustment of the conversion ratio pursuant hereto, the Corporation at
its expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof, cause independent public accountants
selected by the Corporation to verify such computation and prepare and
furnish to each holder of Series C Preferred Stock affected thereby a
certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based.
The Corporation shall, upon the written request at any time of any holder
of Series C Preferred Stock, furnish or cause to be furnished to such
holder a like certificate setting forth (a) such adjustment or
readjustment, (b) the conversion ratio at the time in effect, and (c) the
number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of his
Shares.
(f) Status of Converted Stock. In case any Shares of Series C
Preferred Stock shall be converted, the Shares so converted shall resume
the status of authorized but unissued shares of preferred stock.
6. Limitations on Corporation; Shareholder Consent. So long as any Shares
of Series C Preferred Stock are outstanding, the Corporation shall not, without
the affirmative vote or the written consent as provided by law of 80% of the
holders of the outstanding Shares, voting as a class, change the preferences,
rights or limitations with respect to the Series C Preferred Stock in any
material respect prejudicial to the holders thereof, or increase the a
authorized number of Shares of such Series, but nothing herein contained shall
require such
<PAGE> 7
class vote or consent (a) in connection with any increase in the total number of
authorized shares of Common Stock, or (b) in connection with the authorization,
designation, increase or issuance of any series of preferred stock holding
liquidation preference equal to or subordinate to the Series C Preferred Stock.
Further, no such vote or written consent of the holders of the Series C
Preferred Stock shall be required if, at or prior to the time when such change
is to take effect, provision is made for the redemption of all Shares at the
time outstanding; and the provisions of this paragraph 6, shall not in any way
limit the right and power of the Corporation to issue any bonds, notes,
mortgages, debentures and other obligations, and to incur indebtedness to banks
and to other lenders.
7. Stated Capital. Of the consideration received by the Corporation in
exchange for the issuance of each share of the Series C Preferred Stock, $10.00
shall constitute paid in capital.
8. Notices. All notices or other communications required or permitted to
be given pursuant to this resolution shall be in writing and shall be
considered as properly given or made if hand delivered, mailed by certified or
registered mail, return receipt requested, or sent by prepaid telegram, if to
the Corporation at its address indicated in its Annual Report as most recently
filed with the Florida Department of State, and if to a holder of Series C
Preferred Stock at the address set forth in the shareholder records as
maintained by the Corporation, or to such other address as any such shareholder
may have designated by like notice forwarded to the Corporation. All notices,
except notices of change of address, shall be deemed given when mailed or hand
delivered and notices of change of address shall be deemed given when received.
IN WITNESS WHEREOF, EVRO Corporation has caused its corporate seal to be
hereunto affixed and this Amended Certificate to be executed by its President
and Secretary as of June 2, 1995.
/s/ Daniel M. Boyar
--------------------------------
Daniel M. Boyar, President
/s/ Stephen H. Cohen
--------------------------------
Stephen H. Cohen, Secretary
STATE OF FLORIDA )
) SS.
COUNTY OF ORANGE )
This instrument was acknowledged before me on July 27, 1995 on behalf of
EVRO Corporation by Daniel M. Boyar, its President.
[NOTARY SEAL] /s/ Steven Dragona
--------------------------------
Notary Public
My Commission Expires: 10/2/98
<PAGE> 8
STATE OF NEW YORK )
) SS.
COUNTY OF ONONDAGA )
This instrument was acknowledged before me on June 2, 1995 on behalf of
EVRO Corporation by Stephen H. Cohen, its Secretary.
[NOTARY SEAL] /s/ Ann T. Ealy
--------------------------------
Notary Public
My Commission Expires: 2/12/96
<PAGE> 1
EXHIBIT 3.10
CERTIFICATE OF DESIGNATION, PREFERENCES,
RIGHTS AND LIMITATIONS OF
SERIES F CONVERTIBLE PREFERRED STOCK,
NO PAR VALUE,
OF
EVRO CORPORATION
EVRO Corporation (the "Corporation"), organized and existing under
Florida law, hereby certifies that pursuant to authority conferred upon the
Board of Directors by the Articles of Incorporation of the Corporation and
Section 607.0602 of the Florida Business Corporation Act, on May 24, 1995, the
Board of Directors adopted a resolution providing for the creation and issuance
of a series of its authorized preferred stock, designated Series F Convertible
Preferred Stock, no par value, which resolution is hereafter set forth in its
entirety.
RESOLVED, that the authority expressly granted and vested in the Board
of Directors of this Corporation in accordance with the provisions of its
Articles of Incorporation, a series of the Corporation's authorized class of
preferred stock, no par value, is hereby established as "Series F Convertible
Preferred Stock" hereafter referred to as the Series F Preferred Stock, which
series consists of 1,680 authorized shares. The issued and outstanding shares
of the Series F Preferred Stock, as they may exist from time to time are
sometimes referred to below as the "Shares." The preferences and relative,
participating, optional or other special rights of, and the qualifications,
limitations and restrictions imposed upon the Series F Preferred Stock shall be
as follows:
1. No Dividends. The Series F Preferred Stock shall not bear
dividends.
2. Voting Rights. Each issued and outstanding share of Series F
Preferred Stock shall entitle the registered holder thereof to one thousand
votes on each matter with respect to which a vote is required of the holders of
the Corporation's common stock.
3. Priority in the Event of Liquidation or Dissolution. In the
event of any liquidation, dissolution or winding up of the affairs of the
Corporation, whether voluntary or otherwise, after payment or provision for
payment of the debts and other liabilities of the Corporation and before any
distribution shall be made to the holder of any class of the common stock of
the Corporation, each holder of Series F Preferred Stock shall be entitled to
receive, out of the net uses of the Corporation, the sum of $1.00 in cash for
each Share of Series F Preferred Stock so held subject to the first priority of
(a) all holders of the Corporation's Series A 10% Preferred Shares and Series B
8% Preferred Shares to receive $1.00 per share in cash plus all accrued but
unpaid dividends; (b) all holders of the Corporation's Series C Convertible
Preferred Stock to receive $10.00 per share in cash; (c) all holders of the
Corporation's Series D Preferred Stock to receive, on a pro rata basis, the
Corporation's shares of capital stock of Technology Holdings, Inc., a Florida
corporation which is a wholly owned subsidiary of the Corporation, and (d) all
holders of the Corporation's Series E Preferred Stock to receive $1.00 per
share in cash plus all accrued but unpaid dividends. After payment shall have
been made in full to the holders of Series F Preferred Stock, or funds
necessary for such payment shall
<PAGE> 2
have been set aside in trust for the exclusive benefit of such holders, the
holders of the Series F Preferred Stock shall be entitled to no other
participation in any distribution of the assets of the Corporation.
4. Conversion of Preferred Stock into Common Stock.
a. In General. Each holder of record of Shares of Series F
Preferred Stock shall have the right, at his option, at any time after the
Corporation increases its authorized common shares from 2,500,000 shares to
35,000,000 shares, to convert each Share then held by him into fully paid and
nonassessable shares of the Corporation's authorized common capital stock, no
par value (the "Common Stock") at a conversion ratio of 10,000 shares of Common
Stock for each Share of Series F Preferred Stock.
b. Procedure. Any holder of Shares of Series F Preferred Stock
desiring to convert any such Share into Common Stock shall surrender each
certificate representing one or more Shares of such Stock to be converted, duly
endorsed to the Corporation or in blank at the principal business office of the
Corporation (or such other place as may be designated by the Corporation), and
shall give written notice to the Corporation at that office of his election to
convert the same, setting forth therein the name or names (with the address or
addresses) in which the shares of Common Stock are to be issued.
c. Additional Provisions. Conversion of Series F Preferred Stock
shall be subject to the following additional terms and provisions:
(1) Replacement Certificates. As promptly as
practicable after the surrender for conversion of any Series F
Preferred Stock, the Corporation shall deliver or cause to be
delivered at the principal office of the Corporation (or such other
place as may be designated by the Corporation), to or upon the written
order of the holder of such Series F Preferred Stock, one or more
certificates representing the shares of Common Stock issuable upon
such conversion issued in such name or names as such holder may
reasonably direct. Shares of the Series F Preferred Stock shall be
deemed to have been converted as of the close of business on the date
of the surrender of the Series F Preferred Stock for conversion, as
provided above, and the rights of the holders of such Series F
Preferred Stock shall cease at such time, and each person in whose
name a certificate for such shares is to be issued shall be treated
for all purposes as having become the record holder of such Common
Stock at such time; provided, however, that any such surrender on any
date when the stock transfer books of the Corporation shall be closed
shall constitute the person in whose name each certificate for such
shares is to be issued as the record holder thereof for all purposes
at the close of business on the next succeeding day on which such
stock transfer books are open.
(2) Subdivisions or Combinations. In the event
that the Corporation shall at any time prior to a particular
conversion subdivide or combine its outstanding shares of Common
-2-
<PAGE> 3
Stock into a greater or lesser number of such shares, the number of
shares of Common Stock issuable upon conversion of the Series F
Preferred Stock shall be proportionately increased in the case of a
subdivision or decreased in the case of a combination, effective in
either case at the close of business on the date when such subdivision
or combination shall become effective.
(3) Recapitalizations. In the event that the
Corporation shall be recapitalized, consolidated with or merged into
any other corporation, or shall sell or convey to any other
corporation all or substantially all of its property as an entity,
provision shall be made as part of the terms of such recapitalization
consolidation, merger, sale or conveyance for each holder of Series F
Preferred Stock, to thereafter receive in lieu of the Common Stock
otherwise issuable to him upon conversion of his Preferred Stock, but
at the conversion ratio stated in this Section 4, the same kind and
amount of securities or assets as may be distributable upon such
recapitalization, consolidation, merger, sale or conveyance, with
respect to the Common Stock of the Corporation.
(4) Successive Adjustments. The adjustments
hereinabove referenced shall be made successively if more than one
event listed in the above subdivisions of this subsection (c) of this
Section 4 shall occur.
(5) No Fractional Shares. The Corporation shall
not be required to issue any fractions of shares of Common Stock upon
conversions of Series F Preferred Stock. If any interest in a
fractional share of Common Stock would otherwise be deliverable upon
the conversion of any Series F Preferred Stock, the Corporation shall
make adjustment for such fractional share interest by payment to the
converting shareholder of cash in an amount bearing the same ratio to
the fair market value of a whole share of Common Stock of the
Corporation, as determined by the Corporation's Board of Directors, as
the fractional interest to which the shareholder would otherwise be
entitled bears to a whole share of Common Stock.
(6) No Adjustments. No adjustment of the
conversion ratio shall be made by reason of:
(A) the payment of any cash dividend on
the Common Stock or any other class of the capital stock of
the Corporation;
(B) the purchase, acquisition,
redemption or retirement by the Corporation of any shares of
the Common Stock or of any other class of the capital stock of
the Corporation, except as provided in subdivision (3) of this
subsection (c);
(C) the issuance, other than as provided
in the subdivisions (2) and (3) of this subsection (c), of any
shares of Common Stock of the Corporation, or of any
-3-
<PAGE> 4
securities convertible into shares of Common Stock or other
securities of the Corporation, or of any rights, warrants or
options to subscribe for or purchase shares of the (Common
Stock or other securities of the Corporation or of any other
securities of the Corporation, provided that in the event the
Corporation offers any of its securities, or any rights,
warrants or options to subscribe for or purchase any of its
securities, to the holders of its Common Stock pursuant to any
preemptive or preferential rights granted to holders of Common
Stock by the Certificate of Incorporation of the Corporation,
or pursuant to any similar rights that may be granted to such
holders of Common Stock by the Board of Directors of the
Corporation, the Corporation shall mail written notice of such
offer to the holders of the Series F Preferred Stock then of
record at least 20 days prior to the record date for the
determination of holders of the Common Stock entitled to
receive any such offer so as to provide such holders with a
reasonable period of time within which to determine whether to
exercise their rights of conversion;
(D) any offer by the Corporation to
redeem or acquire shares of its Common Stock by paying or
exchanging therefor stock of another corporation or the
carrying out by the Corporation of the transactions
contemplated by such offer, provided that at least 20 days
prior to the expiration of any such offer the Corporation
shall mail written notice of such offer to the holders of the
Series F Preferred Stock then of record; or
(E) the distribution to holders of
Common Stock of stock or other securities of another issuer,
if the issuers of such securities shall be engaged at the time
of such distribution in a business (i) which shall have been
previously operated on a divisional or subsidiary basis by an
entity acquired by the Corporation and (ii) which shall be
distinct from the principal businesses of the entity to
acquired.
(7) Following the proposed increase in the
Corporation's authorized common stock from 2,500,000 to 35,000,000,
the Corporation shall at all times reserve and keep available solely
for the purpose of issuance upon conversion of Series F Preferred
Stock, as herein provided, such number of shares of Common Stock as
shall be issuable upon the conversion of all outstanding Series F
Preferred Stock.
(8) All shares of Common Stock which may be issued
upon conversion of the shares of Series F Preferred Stock will upon
issuance by the Corporation be validly issued, fully paid and
nonassessable and free from all taxes, liens, and charges with respect
to the issuance thereof.
d. Expenses. The issuance of certificates representing shares of
---------
Common Stock upon conversion of the Series F Preferred Stock shall be made to
each applicable shareholder without charge for any excise tax in respect of
such issuance. However, if any certificate to be issued in a
-4-
<PAGE> 5
name other than that of the holder of record of the Series F Preferred Stock so
converted, the person or persons requesting the issuance thereof shall pay to
the Corporation the amount of any tax which may be payable in respect of any
transfer involved in such issuance, or shall establish to the satisfaction of
the Corporation that such tax has been paid or is not due and payable.
e. Verification. Upon the occurrence of each adjustment or
readjustment of the conversion ratio pursuant hereto, the Corporation at its
expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof, cause independent public accountants selected by the
Corporation to verify such computation and prepare and furnish to each holder
of Series F Preferred Stock affected thereby a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon the written
request at any time of any holder of Series F Preferred Stock, furnish or cause
to be furnished to such holder a like certificate setting forth (a) such
adjustment or readjustment, (b) the conversion ratio at the time in effect, and
(c) the number of shares of Common Stock and the amount if any, of other
property which at the time would be received upon the conversion of his Shares.
f. Status of Converted Stock. In case any Shares of Series F
Preferred Stock shall be converted, the Shares so converted shall resume the
status of authorized but unissued shares of preferred stock.
5. Limitations on Corporation, Shareholder Consent. So long as
any Shares of Series F Preferred Stock are outstanding, the Corporation shall
not, without the affirmative vote or the written consent as provided by law of
80% of the holders of the outstanding Shares, voting as a class, change the
preferences, rights or limitations with respect to the Series F Preferred Stock
in any material respect prejudicial to the holders thereof, or increase the
authorized number of Shares of such Series, but nothing herein contained shall
require such a class vote or consent (a) in connection with any increase in the
total number of authorized shares of Common Stock, or (b) in connection with
the authorization, designation, increase or issuance of any series of preferred
stock holding liquidation preference equal to or subordinate to the Series F
Preferred Stock. The provisions of this Section 5 shall not in any way limit
the right and power of the Corporation to issue any bonds, notes, mortgages,
debentures and other obligations, and to incur indebtedness to banks and to
other lenders.
6. Notices. All notices or other communications required or
permitted to be given pursuant to this resolution shall be in writing and shall
be considered as property given or made if hand delivered, mailed by certified
or registered mail return receipt requested, or sent by prepaid telegram, if to
the Corporation at its address indicated in its Annual Report as most recently
filed with the Florida Department of State, and if to a holder of Series F
Preferred Stock at the address set forth in the shareholder records as
maintained by the Corporation, or to such other address as any such shareholder
may have designated by like notice forwarded to the Corporation. All notices
except notices of change of address, shall be deemed given when mailed or hand
delivered and notices of change of address shall be deemed given when received.
-5-
<PAGE> 6
IN WITNESS WHEREOF, EVRO Corporation has caused its corporate seal to
be hereunto affixed and this Certificate to be executed by its President and
Secretary as of May 24, 1995.
EVRO CORPORATION
Attest:
/s/ Teresa B. Fannin By: /s/ Daniel M. Boyar
- ------------------------------ ------------------------------
Teresa B. Fannin, Daniel M. Boyar, President
Assistant Secretary
STATE OF FLORIDA
COUNTY OF Hillsborough
--------------------------
The foregoing instrument was acknowledged before me this ____ day of
May, 1995, by Daniel M. Boyar, President of EVRO Corporation, a Florida
corporation, on behalf of the Corporation. He is personally known to me or has
produced ______________________________ as identification and did (did not)
take an oath.
/s/ Donald R. Mastropietro
-------------------------------
Notary Public
My Commission Expires: 11/6/95
STATE OF FLORIDA
COUNTY OF Hillsborough
--------------------------
The foregoing instrument was acknowledged before me this ____ day of
May, 1995, by Teresa B. Fannin, Assistant Secretary of EVRO Corporation, a
Florida corporation, on behalf of the Corporation. She is personally known to
me or has produced __________________________ as identification and did (did
not) take an oath.
/s/ Donald R. Mastropietro
-------------------------------
Notary Public
My Commission Expires: 11/6/95
-6-
<PAGE> 1
EXHIBIT 3.11
SECOND AMENDED
CERTIFICATE OF DESIGNATION, PREFERENCES, RIGHTS AND
LIMITATIONS OF
SERIES H CONVERTIBLE PREFERRED STOCK,
NO PAR VALUE,
OF EVRO CORPORATION
EVRO Corporation (the "Corporation"), organized and existing under Florida
law, hereby certifies that, pursuant to authority conferred upon the Board of
Directors by the Articles of Incorporation of the Corporation and Section
607.0602 of the Florida Business Corporation Act, the Board of Directors by
written action taken on October 9, 1995, adopted a Resolution providing for the
amendment and restatement of the Corporation's Certificate of Designation,
Preferences, Rights and Limitations for its Series H Convertible Preferred
Stock, which Series was created by the Corporation's filing with the Florida
Department of State, on August 4, 1995, of its Certificate of Designation,
Preferences, Rights and Limitations therefor and, on September 20, 1995, the
Amendment to the Certificate of Designation, Preferences, Rights and
Limitations therefor, which Resolution is hereafter set forth in its entirety.
RESOLVED, that pursuant to the authority expressly granted and vested in
the Board of Directors of this Corporation in accordance with the provisions of
its Articles of Incorporation, a series of the Corporation's authorized class
of preferred stock, no par value, is hereby established as "Series H
Convertible Preferred Stock" (hereinafter referred to as the Series H Preferred
Stock), which series consists of 100,000 authorized shares. The issued and
outstanding shares of the Series H Preferred Stock, as they may exist from time
to time, are sometimes referred to below as the "Shares". The preferences and
relative, participating, optional or other special rights of, and the
qualifications, limitations and restrictions imposed upon the Series H
Preferred Stock shall be as follows:
1. No Dividends.
This Series H Preferred Stock shall not bear dividends.
2. Redemption Rights.
(a) Voluntary. Shares of the Series H Preferred Stock shall be
redeemable, in whole or in part, at the option of the Corporation, by
resolution of its Board of Directors adopted, at any time on or after June
30, 1996, at a price equal to the sum of $125.00 per Share. In the event
that less than all of the outstanding Shares of Series H Preferred Stock
are redeemed at any one time, the Shares to be redeemed shall be selected
in a non-discriminatory manner to be determined by the Board of Directors
of the Corporation. Not less than 30 nor more than 60 days prior to the
date fixed for redemption of any Shares of Series H Preferred Stock, a
notice specifying the time and place of such redemption shall be given to
all holders of record of Shares of Series H Preferred Stock, at their
respective addresses as the same shall appear on the stock books of the
Corporation, but no failure on the part of the shareholder to receive such
Page 1 of 8
<PAGE> 2
notice and no defect in the wording of the notice shall affect the
validity of the proceedings adopted with respect to the redemption of any
such Shares. After the Corporation has furnished its notice of
redemption, each holder of Shares of Series H Preferred Stock called for
redemption may, on or before the close of the last business day preceding
the designated redemption date, convert such Shares into shares of common
stock of the Corporation in accordance with the conversion privileges set
forth in Section 5 hereof.
(b) Effect of Redemption. On the redemption date determined under
subsection (a), each shareholder, some or all of whose Shares of Series H
Preferred Stock are being redeemed, shall tender such Shares for
cancellation by the Corporation and against payment of the redemption
price. Upon the consummation of any such redemption, each holder of
Shares of Series H Preferred Stock whose Shares have been redeemed shall
cease to be a shareholder with respect to such Shares, shall have no
interest in or claim against the Corporation by virtue thereof and shall
have no voting or other rights with respect to such Shares as are
redeemed. Any Shares of Series H Preferred Stock received by the
Corporation upon redemption shall resume the status of authorized but
unissued Shares of preferred stock.
3. No Voting Rights. Except as required by Florida Business Corporation
Act, the holders of the Shares shall have no voting rights.
4. Priority in the Event of Liquidation or Dissolution. In the event of
any liquidation, dissolution or winding up of the affairs of the Corporation,
whether voluntary or otherwise, after payment or provision for payment of the
debts and other liabilities of the Corporation and before any distribution
shall be made to the holder of any class of the common stock of the
Corporation, each holder of Series H Preferred Stock shall be entitled to
receive, out of the net assets of the Corporation, the sum of $125.00 in cash
for each Share of Series H Preferred Stock so held subject to the first
priority of all holders of the Corporation's Series A 10% Preferred Shares and
Series B 8% Preferred Shares to receive $1.00 per share in cash plus all
accrued but unpaid dividends, Series C Preferred Shares to receive $10.00 per
share and Series D Preferred, Series E Preferred, Series F Preferred and Series
I Preferred to receive $1.00 per share. After payment shall have been made in
full to the holder of Series H Preferred Stock, or funds necessary for such
payment shall have been set aside in trust for the exclusive benefit of such
holders, the holders of the Series H Preferred Stock shall be entitled to no
further participation in any distribution of the assets of the Corporation.
5. Conversion of Preferred Stock into Common Stock.
(a) In General. Subject to the provisions of this Section 5, each
holder of record of Shares of Series H Preferred Stock shall have the
right, at his option, at any time on or prior to June 30, 1997, to convert
each Share then held by him into fully paid and
Page 2 of 8
<PAGE> 3
nonassessable shares of the Corporation's authorized common capital stock,
no par value (the "Common Stock") at a conversion price equal to the
greater of the Common Stock's market value, as determined below, or $2.00,
("Conversion Price"). In order to determine the actual number of shares
of Common Stock the holder shall be entitled to receive upon conversion of
the Shares into Common Stock, the actual number of Shares being offered
for conversion shall be multiplied by 125, with the product then being
divided by the Conversion Price. For purposes of this Agreement, the
market value of the Company's Common Stock shall be determined as follows:
(a) if at the time of valuation the Company's Common Stock is listed on
any national securities exchange, the average closing price on such
exchange for the ten day period prior to conversion, or, if listed on more
than one exchange, on the exchange on which the Company's Common Stock
shall have had the largest total trading volume; (b) if at the time of
valuation the Company's Common Stock is publicly traded but not listed on
any national securities exchange, the average of the average closing bid
and asked prices appearing on the National Association of Securities
Dealers, Inc. Automated Quotation System (NASDAQ) for the ten day period
preceding the conversion date or, if not listed on NASDAQ, the average of
the average closing bid-and-asked prices as reported by the National
Quotation Bureau, Inc. or a comparable general quotation service; or (c)
if at the time of valuation the Company's Common Stock is not publicly
traded, the net book value per share as reflected on the Corporation's
audited consolidated balance sheet for its latest fiscal year ending prior
to the valuation date. In case any Shares of the Series H Preferred Stock
shall have been called for redemption, such right of conversion in respect
of the Shares so called shall cease and terminate at the close of the last
business day immediately preceding the date fixed for the redemption of
such Shares, unless thereafter default shall occur in the payment of the
redemption price.
(b) Procedure. Any holder of Shares of Series H Preferred Stock
desiring to convert any such Share into Common Stock shall surrender each
certificate representing one or more Shares of such Stock to be converted,
duly endorsed to the Corporation or in blank, at the principal business
office of the Corporation (or such other place as may be designated by the
Corporation), and shall give written notice to the Corporation at that
office of his election to convert the same, setting forth therein the name
or names (with the address or addresses) in which the shares of Common
Stock are to be issued. If the last day for any exercise of the
conversion right shall be a legal holiday or a day on which federally
chartered banking institutions are authorized by law to close, then such
conversion right may be exercised on the next succeeding day not a legal
holiday or a day on which such banking institutions are authorized by law
to close.
(c) Additional Provisions. Conversion of Series H Preferred Stock
shall be subject to the following additional terms and provisions:
Page 3 of 8
<PAGE> 4
(1) Replacement Certificates. As promptly as practicable after
the surrender for conversion of any Series H Preferred Stock, the
Corporation shall deliver or cause to be delivered at the principal
office of the Corporation (or such other place as may be designated
by the Corporation), to or upon the written order of the holder of
such Series H Preferred Stock, one or more certificates representing
the shares of Common Stock issuable upon such conversion, issued in
such name or names as such holder may reasonably direct. Shares of
the Series H Preferred Stock shall be deemed to have been converted
as of the close of business on the date of the surrender of the
Series H Preferred Stock for conversion, as provided above, and the
rights of the holders of such Series H Preferred Stock shall cease at
such time, and each person in whose name a certificate for such
shares is to be issued shall be treated for all purposes as having
become the record holder of such Common Stock at such time; provided,
however, that any such surrender on any date when the stock transfer
books of the Corporation shall be closed shall constitute the person
in whose name each certificate for such shares is to be issued as the
record holder thereof for all purposes at the close of business on
the next succeeding day on which such stock transfer books are open.
(2) Subdivisions or Combinations. In the event that the
Corporation shall at any time prior to a particular conversion
subdivide or combine its outstanding shares of Common Stock into a
greater or lesser number of such shares, the number of shares of
Common Stock issuable upon conversion of the Series H Preferred Stock
shall be proportionately increased in the case of a subdivision or
decreased in the case of a combination, effective in either case at
the close of business on the date which such subdivision or
combination shall become effective.
(3) Recapitalizations. In the event that the Corporation shall
be recapitalized, consolidated with or merged into any other
corporation, or shall sell or convey to any other corporation all or
substantially all of its property as an entity, provision shall be
made as part of the terms of such recapitalization, consolidation,
merger, sale or conveyance for each holder of Series H Preferred
Stock to thereafter receive in lieu of the Common Stock otherwise
issuable to him upon conversion of his Preferred Stock, but at the
conversion ratio stated in this Section 5, the same kind and amount
of securities or assets as may be distributable upon such
recapitalization, consolidation, merger, sale or conveyance, with
respect to the Common Stock of the Corporation.
(4) Successive Adjustments. The adjustments hereinabove
referenced shall be made successively if more than one event listed
in the above subdivisions of this subsection (c) of this Section 5
shall occur.
Page 4 of 8
<PAGE> 5
(5) No Fractional Shares. The Corporation shall not be required
to issue any fractions of shares of Common Stock upon conversions of
Series H Preferred Stock. If any interest in a fractional share of
Common Stock would otherwise be deliverable upon the conversion of
any Series H Preferred Stock, the Corporation shall make adjustment
for such fractional share interest by payment to the converting
shareholder of cash in an amount bearing the same ratio to the fair
market value of a whole share of Common Stock of the Corporation, as
determined by the Corporation's Board of Directors, as the fractional
interest to which the shareholder would otherwise be entitled bears
to a whole share of Common Stock.
(6) No Adjustments. No adjustment of the conversion ratio shall
be made by reason of:
(A) the payment of any cash dividend on the Common Stock or
any other class of the capital stock of the Corporation;
(B) the purchase, acquisition, redemption or retirement by
the Corporation of any shares of the Common Stock or of any
other class of the capital stock of the Corporation, except as
provided in subdivision (3) of this subsection (c);
(C) the issuance, other than as provided in the subdivisions
of this subsection (c), of any shares of Common Stock of the
Corporation, or of any securities convertible into shares of
Common Stock or other securities of the Corporation, or of any
rights, warrants or options to subscribe for or purchase shares
of the Common Stock or other securities of the Corporation, or of
any other securities of the Corporation, provided that in the
event the Corporation offers any of its securities, or any
rights, warrants or options to subscribe for or purchase any of
its securities, to the holders of its Common Stock pursuant to
any preemptive or preferential rights granted to holders of
Common Stock by the Certificate of Incorporation of the
Corporation, or pursuant to any similar rights that may be
granted to such holders of Common Stock by the Board of Directors
of the Corporation, the Corporation shall mail written notice of
such offer to the holders of the Series H Preferred Stock then of
record at least 20 days prior to the record date for the
determination of holders of the Common Stock entitled to receive
any such offer so as to provide such holders with a reasonable
period of time within which to determine whether to exercise
their rights of conversion;
Page 5 of 8
<PAGE> 6
(D) any offer by the Corporation to redeem or acquire shares
of its Common Stock by paying or exchanging therefor stock of
another corporation or the carrying out by the Corporation of the
transactions contemplated by such offer, provided that at least
20 days prior to the expiration of any such offer the Corporation
shall mail written notice of such offer to the holders of the
Series H Preferred Stock then of record; or
(E) the distribution to holders of Common Stock of stock or
other securities of another issuer, if the issuers of such
securities shall be engaged at the time of such distribution in
a business (i) which shall have been previously operated on a
divisional or subsidiary basis by an entity acquired by the
Corporation and (ii) which shall be distinct from the principal
business of the entity to be acquired.
(7) The Corporation shall at all times reserve and keep
available solely for the purpose of issuance upon conversion of
Series H Preferred Stock, as herein provided, such number of shares
of Common Stock as shall be issuable upon the conversion of all
outstanding Series H Preferred Stock.
(8) All shares of Common Stock which may be issued upon
conversion of the shares of Series H Preferred Stock will upon
issuance by the Corporation be validly issued, fully paid and
nonassessable and free from all taxes, liens, and charges with respect
to the issuance thereof.
(d) Expenses. The issuance of certificates representing shares of
Common Stock upon conversion of the Series H Preferred Stock shall be
made to each applicable shareholder without charge for any excise tax in
respect of such issuance. However, if any certificate is to be issued in
a name other than that of the holder of record of the Series H Preferred
Stock so converted, the person or persons requesting the issuance thereof
shall pay to the Corporation the amount of any tax which may be payable
in respect of any transfer involved in such issuance, or shall establish
to the satisfaction of the Corporation that such tax has been paid or is
not due and payable.
(e) Verification. Upon the occurrence of each adjustment or
readjustment of the conversion ratio pursuant hereto, the Corporation at
its expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof, cause independent public accountants
selected by the Corporation to verify such computation and prepare and
furnish to each holder of Series H Preferred Stock affected thereby a
certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based.
The Corporation shall, upon the written request at any time of any holder
of Series H Preferred Stock, furnish or cause to be furnished to such
holder a like certificate setting forth (a) such
Page 6 of 8
<PAGE> 7
adjustment or readjustment, (b) the conversion ratio at the time in
effect, and (c) the number of shares of Common Stock and the amount, if
any, of other property which at the time would be received upon the
conversion of his Shares.
(f) Status of Converted Stock. In case any Shares of Series H
Preferred Stock shall be converted, the Shares so converted shall resume
the status of authorized but unissued shares of preferred stock.
6. Limitations on Corporation; Shareholder Consent. So long as any Shares
of Series H Preferred Stock are outstanding, the Corporation shall not, without
the affirmative vote or the written consent as provided by law of 80% of the
holders of the outstanding Shares, voting as a class, change the preferences,
rights or limitations with respect to the Series H Preferred Stock in any
material respect prejudicial to the holders thereof, or increase the authorized
number of Shares of such Series, but nothing herein contained shall require
such a class vote or consent (a) in connection with any increase in the total
number of authorized shares of Common Stock, or (b) in connection with the
authorization, designation, increase or issuance of any series of preferred
stock holding liquidation preference equal to or subordinate to the Series H
Preferred Stock. Further, no such vote or written consent of the holders of
the Series H Preferred Stock shall be required if, at or prior to the time when
such change is to take effect, provision is made for the redemption of all
Shares at the time outstanding; and the provisions of this paragraph 6, shall
not in any way limit the right and power of the Corporation to issue any bonds,
notes, mortgages, debentures and other obligations, and to incur indebtedness to
banks and to other lenders.
7. Stated Capital. Of the consideration received by the Corporation in
exchange for the issuance of each share of the Series H Preferred Stock,
$125.00 shall constitute paid in capital.
8. Notices. All notices or other communications required or permitted to
be given pursuant to this resolution shall be in writing and shall be
considered as properly given or made if hand delivered, mailed by certified or
registered mail, return receipt requested, or sent by prepaid telegram, if to
the Corporation at its address indicated in its Annual Report as most recently
filed with the Florida Department of State, and if to a holder of Series H
Preferred Stock at the address set forth in the shareholder records as
maintained by the Corporation, or to such other address as any such shareholder
may have designated by like notice forwarded to the Corporation. All notices,
except notices of change of address, shall be deemed given when mailed or hand
delivered and notices of change of address shall be deemed given when received.
Page 7 of 8
<PAGE> 8
IN WITNESS WHEREOF, EVRO Corporation has caused its corporate seal to be
hereunto affixed and this Certificate to be executed by its Vice President and
Assistant Secretary as of October 9, 1995.
/s/ Christopher P. Dona
-----------------------------------
Christopher P. Dona, Vice President
/s/ O. Don Lauher
-----------------------------------
O. Don Lauher, Assistant Secretary
STATE OF FLORIDA )
) SS.
COUNTY OF ORANGE )
This instrument was acknowledged before me on October 9, 1995 on behalf of
EVRO Corporation by Christopher P. Dona, its Vice President.
/s/ Karen D. Jackson
----------------------------------
Notary Public
My Commission Expires: 6/25/98
STATE OF FLORIDA )
) SS.
COUNTY OF ORANGE )
This instrument was acknowledged before me on October 16, 1995 on behalf
of EVRO Corporation by O. Don Lauher, its Assistant Secretary.
/s/ Karen L. Bohn
----------------------------------
Notary Public
My Commission Expires: 9/10/96
<PAGE> 1
EXHIBIT 3.12
SECOND AMENDED
CERTIFICATE OF DESIGNATION, PREFERENCES, RIGHTS AND
LIMITATIONS OF
SERIES I CONVERTIBLE PREFERRED STOCK,
NO PAR VALUE,
OF EVRO CORPORATION
EVRO Corporation (the "Corporation"), organized and existing under Florida
law, hereby certifies that, pursuant to authority conferred upon the Board of
Directors by the Articles of Incorporation of the Corporation and Section
607.0602 of the Florida Business Corporation Act, the Board of Directors on
July 26, 1995, adopted a Resolution providing for the creation and issuance of
a series of its authorized preferred stock, designated Series I Convertible
Preferred Stock, no par value, which Resolution is hereafter set forth in its
entirety.
RESOLVED, that pursuant to the authority expressly granted and vested in
the Board of Directors of this Corporation in accordance with the provisions of
its Articles of Incorporation, a series of the Corporation's authorized class
of preferred stock, no par value, is hereby established as "Series I
Convertible Preferred Stock" (hereinafter referred to as the Series I Preferred
Stock), which series originally consisted of 5,000 authorized shares and shall
now consist of 7,000 authorized shares. The issued and outstanding shares of
the Series I Preferred Stock, as they may exist from time to time, are
sometimes referred to below as the "Shares". The preferences and relative,
participating, optional or other special rights of, and the qualifications,
limitations and restrictions imposed upon the Series I Preferred Stock shall be
as follows:
1. No Dividends.
This Series I Preferred Stock shall not bear dividends.
2. Redemption Rights.
(a) Voluntary. Shares of the Series I Preferred Stock shall be
redeemable, in whole or in part, at the option of the Corporation, by
resolution of its Board of Directors adopted, at any time on or after
April 15, 1996, at a price equal to the sum of $162.50 per Share. In the
event that less than all of the outstanding Shares of Series I Preferred
Stock are redeemed at any one time, the Shares to be redeemed shall be
selected in a non-discriminatory manner to be determined by the Board of
Directors of the Corporation. Not less than 30 nor more than 60 days
prior to the date fixed for redemption of any Shares of Series I Preferred
Stock, a notice specifying the time and place of such redemption shall be
given to all holders of record of Shares of Series I Preferred Stock, at
their respective addresses as the same shall appear on the stock books of
the Corporation, but no failure on the part of the shareholder to receive
such notice and no defect in the wording of the notice shall affect the
validity of the proceedings adopted with respect to the redemption of any
such Shares. After the Corporation has furnished its notice of
redemption, each holder of Shares of Series I Preferred Stock called for
redemption may, on or before the close of the last business day preceding
the designated redemption date, convert such Shares into shares of common
stock of the Corporation in accordance with the conversion privileges set
forth in Section 5 hereof.
Page 1 of 7
<PAGE> 2
(b) Effect of Redemption. On the redemption date determined under
subsection (a), each shareholder, some or all of whose Shares of Series I
Preferred Stock are being redeemed, shall tender such Shares for
cancellation by the Corporation and against payment of the redemption
price. Upon the consummation of any such redemption, each holder of
Shares of Series I Preferred Stock whose Shares have been redeemed shall
cease to be a shareholder with respect to such Shares, shall have no
interest in or claim against the Corporation by virtue thereof and shall
have no voting or other rights with respect to such Shares as are
redeemed. Any Shares of Series I Preferred Stock received by the
Corporation upon redemption shall resume the status of authorized but
unissued Shares of preferred stock.
3. No Voting Rights. Except as required by Florida Business Corporation
Act, the holders of the Shares shall have no voting rights.
4. Priority in the Event of Liquidation or Dissolution. In the event of
any liquidation, dissolution or winding up of the affairs of the Corporation,
whether voluntary or otherwise, after payment or provision for payment of the
debts and other liabilities of the Corporation and before any distribution
shall be made to the holder of any class of the common stock of the
Corporation, each holder of Series I Preferred Stock shall be entitled to
receive, out of the net assets of the Corporation, the sum of $162.50 in cash
for each Share of Series I Preferred Stock so held subject to the first
priority of all holders of the Corporation's Series A 10% Preferred Shares and
Series B 8% Preferred Shares to receive $1.00 per share in cash plus all
accrued but unpaid dividends. The Holders of Series C Preferred Shares to
receive $10.00 per share and Series D and Series E, Series F Preferred to
receive $1.00 per share. After payment shall have been made in full to the
holders of Series I Preferred Stock, or funds necessary for such payment shall
have been set aside in trust for the exclusive benefit of such holders, the
holders of the Series I Preferred Stock shall be entitled to no further
participation in any distribution of the assets of the Corporation.
5. Conversion of Preferred Stock into Common Stock. In case any Shares of
the Series I Preferred Stock shall have been called for redemption, such right
of conversion in respect of the Shares so called shall cease and terminate at
the close of the last business day immediately preceding the date fixed for the
redemption of such Shares, unless thereafter default shall occur in the payment
of the redemption price.
(a) In General. Subject to the provision of this Section 5, each
holder of record of Shares of Series I Preferred Stock shall have the
right, at his option, at any time after the Corporation increases its
authorized common shares from 2,500,000 shares to 35,000,000 shares, to
convert each Share then held by him into fully paid and non-assessable
shares of the Corporation's authorized common capital stock, no par
value (the "Common Stock") at a conversion ratio of 200 shares of
Common Stock for each Share of Series I Preferred Stock.
(b) Procedure. Any holder of Shares of Series I Preferred Stock
desiring to convert any such Share into Common Stock shall surrender
each certificate representing one or more Shares of such Stock to be
converted, duly endorsed to the Corporation or in blank at the
principal business office of the Corporation (or such other place
as may be designated by the Corporation), and shall give written notice
to the Corporation at that office of his election to convert the same,
setting forth therein the name or names (with the address or addresses)
in which the Shares of Common Stock are to be issued.
Page 2 of 7
<PAGE> 3
(c) Additional Provisions. Conversion of Series I Preferred Stock
shall be subject to the following additional terms and provisions:
(1) Replacement Certificates. As promptly as practicable after the
surrender for conversion of any Series I Preferred Stock, the
Corporation shall deliver or cause to be delivered at the principal
office of the Corporation (or such other place as may be designated by
the Corporation), to or upon the written order of the holder of such
Series I Preferred Stock, one or more certificates representing the
shares of Common Stock issuable upon such conversion issued in such
name or names as such holder may reasonably direct. Shares of the
Series I Preferred Stock shall be deemed to have been converted as of
the close of business on the date of the surrender of the Series I
Preferred Stock for conversion, as provided above, and the rights of
the holders of such Series I Preferred Stock shall cease at such time,
and each person in whose name a certificate for such shares is to be
issued shall be treated for all purposes as having become the record
holder of such Common Stock at such time; provided, however, that any
such surrender on any date when the stock transfer books of the
Corporation shall be closed shall constitute the person in whose name
each certificate for such shares is to be issued as the record holder
thereof for all purposes at the close of business on the next
succeeding day on which such stock transfer books are open.
(2) Subdivisions or Combinations. In the event that the Corporation
shall at any time prior to a particular conversion subdivide or combine
its outstanding shares of Common Stock into a greater or lesser number
of such shares, the number of shares of Common Stock issuable upon
conversion of the Series I Preferred Stock shall be proportionately
increased in the case of a subdivision or decreased in the case of a
combination, effective in either case at the close of business on the
date when such subdivision or combination shall become effective.
(3) Recapitalizations. In the event that the Corporation shall be
recapitalized, consolidated with or merged into any other corporation,
or shall sell or convey to any other corporation all or substantially
all of its property as an entity, provision shall be made as part of
the terms of such recapitalization consolidation, merger, sale or
conveyance for each holder of Series I Preferred Stock to thereafter
receive in lieu of the Common Stock otherwise issuable to him upon
conversion of his Preferred Stock, but at the conversion ratio stated
in this Section 5, the same kind and amount of securities or assets as
may be distributable upon such recapitalization, consolidation, merger,
sale or conveyance, with respect to the Common Stock of the
Corporation.
(4) Successive Adjustments. The adjustments hereinabove referenced
shall be made successively if more than one event listed in the above
subdivisions of this subsection (c) of this Section 5. shall occur.
(5) No Fractional Shares. The Corporation shall not be required to
issue any fractions of shares of Common Stock upon conversions of
Series I Preferred Stock. If any interest in a fractional share of
Common Stock would otherwise be deliverable upon the conversion of any
Series I Preferred Stock, the Corporation shall make adjustment for
such fractional share interest by payment to the converting shareholder
of cash in an amount bearing the same ratio to the fair market value of
a whole share of Common Stock of the
Page 3 of 7
<PAGE> 4
Corporation, as determined by the Corporation's Board of Directors, as the
fractional interest to which the Shareholder would otherwise be entitled
bears to a whole share of Common Stock.
(6) No Adjustments. No adjustment of the conversion ratio shall be
made by reason of:
(A) the payment of any cash dividend on the Common Stock or any
other class of the capital stock of the Corporation;
(B) the purchase, acquisition, redemption or retirement by the
Corporation of any shares of the Common Stock or of any other class
of the capital stock of the Corporation, except as provided in
subdivision (3) of this subsection (c).
(C) the issuance, other than as provided in the subdivisions (2)
and (3) of this subsection (c), of any shares of Common Stock of the
Corporation, or of any securities convertible into shares of Common
Stock or other securities of the Corporation, or of any rights,
warrants or options to subscribe for or purchase shares of the
Common Stock or other securities of the Corporation or of any other
securities of the Corporation, provided that in the event the
Corporation offers any of its securities, or any rights, warrants or
options to subscribe for or purchase any of its securities, to the
holders of its Common Stock pursuant to any preemptive or
preferential rights granted to holders of Common Stock by the
Certificate of Incorporation of the Corporation, or pursuant to any
similar rights that may be granted to such holders of Common Stock
by the Board of Directors of the Corporation, the Corporation shall
mail written notice of such offer to the holders of the Series I
Preferred Stock then of record at least twenty (20) days prior to
the record date for the determination of holders of the Common Stock
entitled to receive any such offer so as to provide such holders
with a reasonable period of time within which to determine whether
to exercise their rights of conversion;
(D) any offer by the Corporation to redeem or acquire shares of
its Common Stock by paying or exchanging therefor stock of another
corporation or the carrying out by the Corporation of the
transactions contemplated by such offer, provided that at least
twenty (20) days prior to the expiration of any such offer the
Corporation shall mail written notice of such offer to the holders
of the Series I Preferred Stock then of record; or
(E) the distribution to holders of Common Stock of stock or other
securities of another issuer, if the issuers of such securities
shall be engaged at the time of such distribution in a business
(i) which shall have been previously operated on a divisional or
subsidiary basis by an entity acquired by the Corporation, and (ii)
which shall be distinct from the principal businesses of the entity
to be acquired.
(7) Following the proposed increase in the Company's authorized
common stock from 2,500,000 to 35,000,000, the Corporation shall at all
times reserve and keep available solely for the purpose of issuance upon
conversion of Series I Preferred Stock, as herein provided, such number
of shares of Common Stock as shall be issuable upon the conversion of all
outstanding Series I Preferred Stock.
Page 4 of 7
<PAGE> 5
(8) All shares of Common Stock which may be issued upon
conversion of the shares of Series I Preferred Stock will upon
issuance by the Corporation be validly issued, fully paid and
non-assessable and free from all taxes, liens, and charges with
respect to the issuance thereof.
(d) Expenses. The issuance of certificates representing shares of
Common Stock upon conversion of the Series I Preferred Stock shall be
made to each applicable shareholder without charge for any excise tax in
respect of such issuance. However, if any certificate is to be issued in
a name other than that of the holder of record of the Series I Preferred
Stock so converted, the person or persons requesting the issuance thereof
shall pay to the Corporation the amount of any tax which may be payable
in respect of any transfer involved in such issuance, or shall establish
to the satisfaction of the Corporation that such tax has been paid or is
not due and payable.
(e) Verification. Upon the occurrence of each adjustment or
readjustment of the conversion ratio pursuant hereto, the Corporation at
its expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof, cause independent public accountants
selected by the Corporation to verify such computation and prepare and
furnish to each holder of Series I Preferred Stock affected thereby a
certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based.
The Corporation shall, upon the written request at any time of any holder
of Series I Preferred Stock, furnish or cause to be furnished to such
holder a like certificate setting forth (a) such adjustment or
readjustment, (b) the conversion ratio at the time in effect, and (c) the
number of shares of Common Stock and the amount, if any, of other property
which at the time would be received upon the conversion of his Shares.
(f) Status of Converted Stock. In case any Shares of Series I
Preferred Stock shall be converted, the Shares so converted shall resume
the status of authorized but unissued shares of Preferred Stock.
6. Limitations on Corporation; Shareholder Consent. So long as any Shares
of Series I Preferred Stock are outstanding, the Corporation shall not, without
the affirmative vote or the written consent as provided by law of 80% of the
holders of the outstanding Shares, voting as a class, change the preferences,
rights or limitations with respect to the Series I Preferred Stock in any
material respect prejudicial to the holders thereof, or increase the authorized
number of Shares of such Series, but nothing herein contained shall require
such a class vote or consent (a) in connection with any increase in the total
number of authorized shares of Common Stock, or (b) in connection with the
authorization, designation, increase or issuance of any series of preferred
stock holding liquidation preference equal to or subordinate to the Series I
Preferred Stock. Further, no such vote or written consent of the holders of
the Series I Preferred Stock shall be required if, at or prior to the time when
such change is to take effect, provision is made for the redemption of all
Shares at the time outstanding; and the provisions of this paragraph 6, shall
not in any way limit the right and power of the Corporation to issue any bonds,
notes, mortgages, debentures and other obligations, and to incur indebtedness
to banks and to other lenders.
7. Stated Capital. Of the consideration received by the Corporation in
exchange for the issuance of each share of the Series I Preferred Stock,
$162.50 shall constitute paid in capital.
Page 5 of 7
<PAGE> 6
8. Notices. All notices or other communications required or permitted to
be given pursuant to this resolution shall be in writing and shall be
considered as properly given or made if hand delivered, mailed by certified or
registered mail, return receipt requested, or sent by prepaid telegram, if to
the Corporation at its address indicated in its Annual Report as most recently
filed with the Florida Department of State, and if to a holder of Series I
Preferred Stock at the address set forth in the shareholder records as
maintained by the Corporation, or to such other address as any such shareholder
may have designated by like notice forwarded to the Corporation. All notices,
except notices of change of address, shall be deemed given when mailed or hand
delivered and notices of change of address shall be deemed given when received.
IN WITNESS WHEREOF, EVRO Corporation has caused its corporate seal to be
hereunto affixed and this Certificate to be executed by its President and
Secretary as of September 19, 1995.
/s/ Daniel M. Boyar
----------------------------------
Daniel M. Boyar, President
/s/ O. Don Lauher
----------------------------------
O. Don Lauher, Assistant Secretary
STATE OF FLORIDA ) SS.
COUNTY OF ORANGE )
This instrument was acknowledged before me on September 19, 1995, on
behalf of EVRO CORPORATION by O. Don Lauher, Assistant Secretary, who produced
as identification Florida Driver License No. L600-644-42-263-0, exp. 7/23/98.
/s/ Paula L. Salemi
---------------------------------- [NOTARY SEAL]
Notary Public
My Commission Expires: March 28, 1997
Page 6 of 7
<PAGE> 7
STATE OF NEW YORK )
) SS.
COUNTY OF ONONDAGA )
This instrument was acknowledged before me on September 19, 1995, on
behalf of EVRO CORPORATION by Daniel M. Boyar, President, who produced as
identification Florida Driver License No. B600-173-55-066-0, exp. 2/26/98.
/s/ Paula L. Salemi
---------------------------------- [NOTARY SEAL]
Notary Public
My Commission Expires: March 28, 1997
Page 7 of 7
<PAGE> 1
EXHIBIT 3.13
THIRD AMENDED
CERTIFICATE OF DESIGNATION, PREFERENCES, RIGHTS AND
LIMITATIONS OF
SERIES J CONVERTIBLE PREFERRED STOCK,
NO PAR VALUE,
OF EVRO CORPORATION
===============================================================================
EVRO Corporation (the "Corporation"), organized and existing under Florida
law, hereby certifies that, pursuant to authority conferred upon the Board of
Directors by the Articles of Incorporation of the Corporation and Section
607.0602 of the Florida Business Corporation Act, the Board of Directors on
October 18, 1995, adopted a Resolution providing for the amendment and
restatement of the Corporation's Certificate of Designation, Preferences,
Rights and Limitations for its Series J Convertible Preferred Stock, which
Series was created by the Corporation's filing with the Florida Department of
State, on August 4, 1995, of its Certificate of Designation, Preferences,
Rights and Limitations therefor, and on September 20, 1995, the Amendment to
the Certificate of Designation, Preferences, Rights and Limitations therefor
and, on September 26, 1995, the Second Amendment of the Certificate of
Designation, Preferences, Rights and Limitations therefor, which Resolution is
hereafter set forth in its entirety.
RESOLVED, that pursuant to the authority expressly granted and vested in
the Board of Directors of this Corporation in accordance with the provisions of
its Articles of Incorporation, a series of the Corporation's authorized class
of preferred stock, no par value, is hereby established as "Series J
Convertible Preferred Stock" (hereinafter referred to as the Series J Preferred
Stock), which series consists of 100 authorized shares. The issued and
outstanding shares of the Series J Preferred Stock, as they may exist from time
to time, are sometimes referred to below as the "Shares". The preferences and
relative, participating, optional or other special rights of, and the
qualifications, limitations and restrictions imposed upon the Series J
Preferred Stock shall be as follows:
1. No Dividends. The Series J Preferred Stock shall not bear dividends.
2. Redemption Rights. The Corporation shall have no right to redeem the
Series J Preferred Stock.
3. No Voting Rights. Except as required by Florida Business Corporation
Act, the holders of the Shares shall have no voting rights.
<PAGE> 2
4. Priority in the Event of Liquidation or Dissolution. In the event of
any liquidation, dissolution or winding up of the affairs of the Corporation,
whether voluntary or otherwise, after payment or provision for payment of the
debts and other liabilities of the Corporation and before any distribution
shall be made to the holder of any class of the common stock of the
Corporation, each holder of Series J Preferred Stock shall be entitled to
receive, out of the net assets of the Corporation, the sum of $50,000.00 in
cash for each Share of Series J Preferred Stock so held subject to the first
priority of all holders of the Corporation's Series A 10% Preferred Shares and
Series B 8% Preferred Shares to receive $1.00 per share in cash plus all
accrued but unpaid dividends, Series C Preferred Shares to receive $10.00 per
share and Series D Pre-ferred, Series E Preferred, Series F Preferred, Series I
Preferred to receive $1.00 per share, and Series H Preferred to receive $125.00
per share. After payment shall have been made in full to the holder of Series
J Preferred Stock, or funds necessary for such payment shall have been set
aside in trust for the exclusive benefit of such holders, the holders of the
Series J Preferred Stock shall be entitled to no further participation in any
distribution of the assets of the Corporation.
5. Conversion of Preferred Stock into Common Stock.
(a) In General. Subject to the provisions of this Section 5, each
holder of record of Shares of Series J Preferred Stock shall have the right, at
his option, at any time after the Corporation increases its authorized common
stock from 2,500,000 shares to 35,000,000 shares, but in no event later than
June 30, 1997, to convert each Share then held by him into 50,000 shares of
fully paid and nonassessable shares of the Corporation's authorized common
capital stock, no par value (the "Common Stock"), provided, however, that in
the event that the holder has not converted each Share held by him into shares
of the Corporation's common stock on or before June 30, 1997, such Shares shall
automatically be converted on June 30, 1997.
(b) Procedure. Any holder of Shares of Series J Preferred Stock
desiring to convert any such Share into Common Stock shall surrender each
certificate representing one or more Shares of such Stock to be converted, duly
endorsed to the Corporation or in blank, at the principal business office of
the Corporation (or such other place as may be designated by the Corporation),
and shall give written notice to the Corporation at that office of his election
to convert the same, setting forth therein the name or names (with the address
or addresses) in which the shares of Common Stock are to be issued. If the
last day for any exercise of the conversion right shall be a legal holiday or a
day on which federally chartered banking institutions are authorized by law to
close, then such conversion right may be exercised on the next succeeding day
not a legal holiday or a day on which such banking institutions are authorized
by law to close.
(c) Additional Provisions. Conversion of Series J Preferred Stock
shall be subject to the following additional terms and provisions:
(1) Replacement Certificates. As promptly as practicable after the
surrender for conversion of any Series J Preferred Stock, the Corporation shall
deliver or cause to be delivered at the principal office of the Corporation (or
such other place as may be designated by the Corporation), to or upon the
written order of the holder of such Series J Preferred Stock, one or more
certificates representing the shares of Common Stock issuable upon such
conversion, issued in such name or names as such holder may reasonably direct.
Shares of the Series J Preferred Stock shall be deemed to have been converted
as of the close of business on the date of the surrender of the Series J
Preferred Stock for conversion, as provided above, and the rights of the
holders of such Series J Preferred Stock shall cease at such time, and each
person in whose name a certificate for such shares is to be issued shall be
treated for all purposes as having become the record holder of such Common
Stock at such time; provided, however, that any such surrender on any date when
the stock transfer books of the Corporation shall be closed shall constitute
the person in whose name each certificate for such shares is to be issued as
the record holder thereof for all purposes at the close of business on the next
succeeding day on which such stock transfer books are open.
<PAGE> 3
(2) Subdivisions or Combinations. In the event that the Corporation
shall at any time prior to a particular conversion subdivide or combine its
outstanding shares of Common Stock into a greater or lesser number of such
shares, the number of shares of Common Stock issuable upon conversion of the
Series J Preferred Stock shall be proportionately increased in the case of a
subdivision or decreased in the case of a combination, effective in either case
at the close of business on the date which such subdivision or combination
shall become effective.
(3) Recapitalizations. In the event that the Corporation shallbe
recapitalized, consolidated with or merged into any other corporation, or shall
sell or convey to any other corporation all or substantially all of its
property as an entity, provision shall be made as part of the terms of such
recapitalization, consolidation, merger, sale or conveyance for each holder of
Series J Preferred Stock to thereafter receive in lieu of the Common Stock
otherwise issuable to him upon conversion of his Preferred Stock, but at the
conversion ratio stated in this Section 5, the same kind and amount of
securities or assets as may be distributable upon such recapitalization,
consolidation, merger, sale or conveyance, with respect to the Common Stock of
the Corporation.
(4) Successive Adjustments. The adjustments hereinabove referenced
shall be made successively if more than one event listed in the above
subdivisions of this subsection (c) of this Section 5 shall occur.
(5) No Fractional Shares. The Corporation shall not be required to
issue any fractions of shares of Common Stock upon conversions of Series J
Preferred Stock. If any interest in a fractional share of Common Stock would
otherwise be deliverable upon the conversion of any Series J Preferred Stock,
the Corporation shall make adjustment for such fractional share interest by
payment to the converting shareholder of cash in an amount bearing the same
ratio to the fair market value of a whole share of Common Stock of the
Corporation, as determined by the Corporation's Board of Directors, as the
fractional interest to which the shareholder would otherwise be entitled bears
to a whole share of Common Stock.
(6) No Adjustments. No adjustment of the conversion ratio shall be
made by reason of:
<PAGE> 4
(A) the payment of any cash dividend on the Common Stock or any other
class of the capital stock of the Corporation;
(B) the purchase, acquisition, redemption or retirement by the
Corporation of any shares of the Common Stock or of any other class of the
capital stock of the Corporation, except as provided in subdivision (3) of this
subsection (c);
(C) the issuance, other than as provided in the subdivisions of this
subsection (c), of any shares of Common
<PAGE> 5
Stock of the Corporation, or of any securities convertible into shares
of Common Stock or other securities of the Corporation, or of any rights,
warrants or options to subscribe for or purchase shares of the Common Stock or
other securities of the Corporation, or of any other securities of the
Corporation, provided that in the event the Corporation offers any of its
securities, or any rights, warrants or options to subscribe for or purchase any
of its securities, to the holders of its Common Stock pursuant to any
preemptive or preferential rights granted to holders of Common Stock by the
Certificate of Incorporation of the Corporation, or pursuant to any similar
rights that may be granted to such holders of Common Stock by the Board of
Directors of the Corporation, the Corporation shall mail written notice of such
offer to the holders of the Series J Preferred Stock then of record at least 20
days prior to the record date for the determination of holders of the Common
Stock entitled to receive any such offer so as to provide such holders with a
reasonable period of time within which to determine whether to exercise their
rights of conversion;
(D) any offer by the Corporation to redeem or acquire shares of its
Common Stock by paying or exchanging therefor stock of another corporation or
the carrying out by the Corporation of the transactions contemplated by such
offer, provided that at least 20 days prior to the expiration of any such offer
the Corporation shall mail written notice of such offer to the holders of the
Series J Preferred Stock then of record; or
(E) the distribution to holders of Common Stock of stock or other
securities of another issuer, if the issuers of such securities shall be
engaged at the time of such distribution in a business (i) which shall have
been previously operated on a divisional or subsidiary basis by an entity
acquired by the Corporation and (ii) which shall be distinct from the principal
business of the entity to be acquired.
(7) The Corporation shall, after it has successfully increased its
authorized shares from 2,500,000 shares to 35,000,000 shares, at all
thereafter times reserve and keep available solely for the purpose of issuance
upon conversion of Series J Preferred Stock, as herein provided, such number
of shares of Common Stock as shall be issuable upon the conversion of all
outstanding Series J Preferred Stock.
(8) All shares of Common Stock which may be issued upon conversion
of the shares of Series J Preferred Stock will upon issuance by the
Corporation be validly issued, fully paid
-5-
<PAGE> 6
and nonassessable and free from all taxes, liens, and charges with
respect to the issuance thereof.
(d) Expenses. The issuance of certificates representing shares of
Common Stock upon conversion of the Series J Preferred Stock shall be made to
each applicable shareholder without charge for any excise tax in respect of
such issuance. However, if any certificate is to be issued in a name other
than that of the holder of record of the Series J Preferred Stock so converted,
the person or persons requesting the issuance thereof shall pay to the
Corporation the amount of any tax which may be payable in respect of any
transfer involved in such issuance, or shall establish to the satisfaction of
the Corporation that such tax has been paid or is not due and payable.
(e) Verification. Upon the occurrence of each adjustment or
readjustment of the conversion ratio pursuant hereto, the Corporation at its
expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof, cause independent public accountants selected by the
Corporation to verify such computation and prepare and furnish to each holder
of Series J Preferred Stock affected thereby a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon the written
request at any time of any holder of Series J Preferred Stock, furnish or cause
to be furnished to such holder a like certificate setting forth (a) such
adjustment or readjustment, (b) the conversion ratio at the time in effect, and
(c) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of his Shares.
(f) Status of Converted Stock. In case any Shares of Series J
Preferred Stock shall be converted, the Shares so converted shall resume the
status of authorized but unissued shares of preferred stock.
6. Limitations on Corporation; Shareholder Consent. So long as any
Shares of Series J Preferred Stock are outstanding, the Corporation shall not,
without the affirmative vote or the written consent as provided by law of 80%
of the holders of the outstanding Shares, voting as a class, change the
preferences, rights or limitations with respect to the Series J Preferred Stock
in any material respect prejudicial to the holders thereof, or increase the
authorized number of Shares of such Series, but nothing herein contained shall
require such a class vote or consent (a) in
-6-
<PAGE> 7
connection with any increase in the total number of authorized shares
of Common Stock, or (b) in connection with the authorization, designation,
increase or issuance of any series of preferred stock holding liquidation
preference equal to or subordinate to the Series J Preferred Stock. Further,
no such vote or written consent of the holders of the Series J Preferred Stock
shall be required if, at or prior to the time when such change is to take
effect, provision is made for the redemption of all Shares at the time
outstanding; and the provisions of this paragraph 6, shall not in any way limit
the right and power of the Corporation to issue any bonds, notes, mortgages,
debentures and other obligations, and to incur indebtedness to banks and to
other lenders.
7. Stated Capital. Of the consideration received by the Corporation in
exchange for the issuance of each share of the Series J Preferred Stock,
$50,000.00 shall constitute paid in capital.
8. Notices. All notices or other communications required or permitted to
be given pursuant to this resolution shall be in writing and shall be
considered as properly given or made if hand delivered, mailed by certified or
registered mail, return receipt requested, or sent by prepaid telegram, if to
the Corporation at its address indicated in its Annual Report as most recently
filed with the Florida Department of State, and if to a holder of Series J
Preferred Stock at the address set forth in the shareholder records as
maintained by the Corporation, or to such other address as any such shareholder
may have designated by like notice forwarded to the Corporation. All notices,
except notices of change of address, shall be deemed given when mailed or hand
delivered and notices of change of address shall be deemed given when received.
IN WITNESS WHEREOF, EVRO Corporation has caused its corporate seal to be
hereunto affixed and this Certificate to be executed by any Vice President and
its Assistant Secretary as of the 19th day of October, 1995.
/s/ Christopher P. Dona /s/ O. Don Lauher
- ---------------------------- ------------------------------
Christopher P. Dona O. Don Lauher
Vice President Assistant Secretary
-7-
<PAGE> 8
STATE OF FLORIDA )
) SS.
COUNTY OF ORANGE )
The foregoing instrument was acknowledged before me this 19th day of
October, 1995 by Christopher P. Dona, as Vice President of EVRO Corporation, a
Florida Corporation, on behalf of the corporation. He is personally known to
me or has produced personally known to me as identification.
/s/ Karen D. Jackson
----------------------------
[NOTARY SEAL] Notary Signature
Karen D. Jackson
----------------------------
Notary Name Printed
NOTARY PUBLIC
Commission No. CC387622
-------------
The foregoing instrument was acknowledged before me this 19th day of
October, 1995 by O. Don Lauher, as Assistant Secretary of EVRO Corporation, a
Florida Corporation, on behalf of the corporation. He is personally known to
me or has produced personally known to me as identification.
/s/ Karen D. Jackson
----------------------------
[NOTARY SEAL] Notary Signature
Karen D. Jackson
----------------------------
Notary Name Printed
NOTARY PUBLIC
Commission No. CC387622
-------------
-8-
<PAGE> 1
EXHIBIT 3.14
CERTIFICATE OF DESIGNATION, PREFERENCES, RIGHTS AND
LIMITATIONS OF
SERIES K CONVERTIBLE PREFERRED STOCK
NO PAR VALUE
OF EVRO CORPORATION
===============================================================================
EVRO Corporation (the "Corporation"), organized and existing under Florida
law, hereby certifies that, pursuant to authority conferred upon the Board of
Directors by the Articles of Incorporation of the Corporation and Section
607,0602 of the Florida Business Corporation Act, the Board of Directors on
October 30, 1995, adopted a Resolution providing for the creation and issuance
of the Corporation's Certificate of Designation, Preferences, Rights and
Limitations for its Series K Convertible Preferred Stock, which Resolution is
hereafter set forth in its entirety.
RESOLVED, that pursuant to the authority expressly granted and vested in
the Board of Directors of this Corporation in accordance with the provisions of
its Articles of Incorporation, a series of the Corporation's authorized class
of preferred stock, no par value, is hereby established as "Series K
Convertible Preferred Stock" (hereinafter referred to as the Series K Preferred
Stock), which series consists of 100 authorized shares. The issued and
outstanding shares of the Series K Preferred Stock, as they may exist from time
to time, are sometimes referred to below as the "Shares". The preferences, any
relative, participating, optional or other special rights of, and the
qualifications, limitations and restrictions imposed upon the Series K
Preferred Stock shall be as follows:
1. No Dividends. The Series K Preferred Stock shall not bear dividends.
2. Redemption Rights. The Corporation shall have no right to redeem the
Series K Preferred Stock.
3. No Voting Rights. Except as required by Florida Business Corporation
Act, the holders of the Shares shall have no voting rights.
4. Priority in the Event of Liquidation or Dissolution. In the event of
any liquidation, dissolution or winding up of the affairs of the Corporation,
whether voluntary or otherwise, after payment or provision for payment of the
debts and other liabilities of the Corporation and before any distribution
shall be made to the
<PAGE> 2
holder of any class of the common stock of the Corporation, each holder of
Series K Preferred Stock shall be entitled to receive, out of the assets of the
Corporation, the sum of $50,000.00 in cash for each Share of Series K Preferred
Stock so held subject to the first priority of all holders of the Corporation's
Series A 10% Preferred Stock to receive $20.00 per share in cash plus accrued
but unpaid dividends, Series B 8% Preferred Shares to receive $1.00 per share in
cash plus all accrued but unpaid dividends, Series C Preferred Stock to receive
$10.00 per share and Series D Preferred, Series E Preferred, Series F Preferred,
Series I Preferred to receive $1.00 per share, Series H Preferred to receive
$125.00 per share, and Series J Preferred to receive $50,000 per share. After
payment shall have been made in full to the holders of the Series K Preferred
Stock, or funds necessary for such payment shall have been set aside in trust
for the exclusive benefit of such holders, the holders of the Series K Preferred
Stock shall be entitled to no further participation in any distribution of the
assets of the Corporation.
5. Conversion of Preferred Stock into Common Stock.
(a) In General. Subject to the provisions of this Section 5, each
holder of record of Shares of Series K Preferred Stock shall have the right,
at his option, at any time after the Corporation increases its authorized
common stock from 2,500,000 shares to 35,000,000 shares, but in no event later
than June 30, 1997, to convert each Share then held by him into fully paid and
nonassessable shares of the Corporation's authorized common capital stock, no
par value (the "Common Stock") at a conversion price equal to 55% of the
Common Stock's market value ("Conversion Price"), provided, however, that in
the event that the holder has not converted each Share held by him into shares
of the Corporation's common stock on or before June 30, 1997, such Shares
shall automatically be converted on June 30, 1997. In order to determine the
actual number of shares of Common Stock the holder shall be entitled to receive
upon conversion of the Shares into Common Stock, the actual number of shares
being offered for conversion shall be divided by the Conversion Price with the
resulting number then being multiplied by 50,000. The market value of the
Company's Common Stock shall be determined as follows: (a) if at the time of
valuation the Company's Common Stock is listed on any national securities
exchange, the average closing price on such exchange for the ten day period
prior to conversion, or, if listed on more than one exchange, on the exchange
on which the Company's Common Stock shall have had the largest total trading
volume; (b) if at the time of
-2-
<PAGE> 3
valuation of the Company's Common Stock is publicly traded but not
listed on any national securities exchange, the average of the average
closing bid and asked prices appearing on the National Association of
Securities Dealers, Inc. Automated Quotation System (NASDAQ) for the ten day
period preceding the conversion date or, if not listed on NASDAQ, the average
of the average closing bid-and-asked prices as reported by the National
Quotation Bureau, Inc. or a comparable general quotation service; or (c) if at
the time of valuation the Company's Common Stock is not publicly traded, the
net book value per share as reflected on the Corporation's audited consolidated
balance sheet for its latest fiscal year ending prior to the valuation date.
In case any Shares of the Series C Preferred Stock shall have been called for
redemption, such right of conversion in respect of the Shares so called shall
cease and terminate at the close of the last business day immediately preceding
the date fixed for the redemption of such Shares, unless thereafter default
shall occur in the payment of the redemption price.
(b) Procedure. Any holder of Shares of Series K Preferred Stock
desiring to convert any such Share into Common Stock shall surrender each
certificate representing one or more Shares of such Stock to be converted, duly
endorsed to the Corporation or in blank, at the principal business office of
the Corporation (or such other place as may be designated by the Corporation),
and shall give written notice to the Corporation at that office of his election
to convert the same, setting forth therein the name or names (with the address
or addresses) in which the shares of Common Stock are to be issued. If the
last day for any exercise of the conversion right shall be a legal holiday or a
day on which federally chartered banking institutions are authorized by law to
close, then such conversion right may be exercised on the next succeeding day
not a legal holiday or a day on which such banking institutions are authorized
by law to close.
(c) Additional Provisions. Conversion of Series K Preferred Stock
shall be subject to the following additional terms and provisions:
(1) Replacement Certificates. As promptly as practicable after
the surrender for conversion of any Series K Preferred Stock, the Corporation
shall deliver or cause to be delivered at the principal office of the
Corporation (or such other place as may be designated by the Corporation), to
or upon the written order of the holder of such Series K Preferred Stock, one
or more certificates representing the shares of Common Stock
-3-
<PAGE> 4
issuable upon such conversion, issued in such name or names as such
holder may reasonably direct. Shares of the Series K Preferred Stock shall be
deemed to have been converted as of the close of business on the date of the
surrender of the Series K Preferred Stock for conversion, as provided above,
and the rights of the holders of such Series K Preferred Stock shall cease at
such time, and each person in whose name a certificate for such shares is to be
issued shall be treated for all purposes as having become the record holder of
such Common Stock at such time; provided, however, that any such surrender on
any date when the stock transfer books of the Corporation shall be closed shall
constitute the person in whose name each certificate for such shares is to be
issued as the record holder thereof for all purposes at the close of business
on the next succeeding day on which such stock transfer books are open.
(2) Subdivisions or Combinations. In the event that the Corporation
shall at any time prior to a particular conversion subdivide or combine its
outstanding shares of Common Stock into a greater or lesser number of such
shares, the number of shares of Common Stock issuable upon conversion of the
Series K Preferred Stock shall be proportionately increased in the case of a
combination, effective in either case at the close of business on the date
which such subdivision or combination shall become effective.
(3) Recapitalizations. In the event that the Corporation shall be
recapitalized, consolidated with or merged into any other corporation, or shall
sell or convey to any other corporation all or substantially all of its
property as an entity, provision shall be made as part of the terms of such
recapitalization, consolidation, merger, sale or conveyance for each holder of
Series K Preferred Stock to thereafter receive in lieu of the Common Stock
otherwise issuable to him upon conversion of his Preferred Stock, but at the
conversion ratio stated in this Section 5, the same kind and amount of
securities or assets as may be distributable upon such recapitalization,
consolidation, merger, sale or conveyance, with respect to the Common Stock of
the Corporation.
(4) Successive Adjustments. The adjustments hereinabove referenced
shall be made successively if more than one event listed in the above
subdivisions of this subsection (c) of this Section 5 shall occur.
-4-
<PAGE> 5
(5) No Fractional Shares. The Corporation shall not be required to
issue any fractions of shares of Common Stock upon conversions of Series K
Preferred Stock. If any interest in a fractional share of Common Stock would
otherwise be deliverable upon the conversion of any Series K Preferred Stock,
the Corporation shall make adjustment for such fractional share interest by
payment to the converting shareholder of cash in an amount bearing the same
ratio to the fair market value of a whole share of Common Stock of the
Corporation, as determined by the Corporation's Board of Directors, as the
fractional interest to which the shareholder would otherwise be entitled bears
to a whole share of Common Stock.
(6) No Adjustments. No adjustment of the conversion ratio shall be
made by reason of:
(A) The payment of any cash dividend on the Common Stock or any
other class of the capital stock of the Corporation;
(B) the purchase, acquisition, redemption or retirement by the
Corporation of any shares of the Common Stock or of any other class of the
capital stock of the Corporation, except as provided in subdivision (3) of
this subsection (c):
(C) the issuance, other than as provided in the subdivisions of
this subsection (c), of any shares of Common Stock of the Corporation, or of any
securities convertible into shares of Common Stock or other securities of the
Corporation, or of any rights, warrants or options to subscribe for or purchase
shares of the Common Stock or other securities of the Corporation, or of any
other securities of the Corporation, provided that in the event the Corporation
offers any of its securities, or any rights, warrants or options to subscribe
for or purchase any of its securities, to the holders of its Common Stock
pursuant to any preemptive or preferential rights granted to holders of Common
Stock by the Certificate of Incorporation of the Corporation, or pursuant to
any similar rights that may be granted to such holders of Common Stock by the
Board of Directors of the Corporation, the Corporation shall mail written
notice of such offer to the holders of the Series K Preferred Stock then of
record at least 20 days prior to the record date for the determination of
holders of the Common Stock entitled to receive any such offer so as to provide
such holders with a reasonable period of time within which to determine whether
to exercise their rights of conversion;
-5-
<PAGE> 6
(D) any offer by the Corporation to redeem or acquire
shares of its Common Stock by paying or exchanging therefor stock of another
corporation or the carrying out by the Corporation of the transactions
contemplated by such offer, provided that at least 20 days prior to the
expiration of any such offer the Corporation shall mail written notice of such
offer to the holders of the Series K Preferred Stock then of record; or
(E) the distribution to holders of Common Stock of stock
or other securities of another issuer, if the issuers of such securities shall
be engaged at the time of such distribution in a business (i) which shall have
been previously operated on a divisional or subsidiary basis by an entity
acquired by the Corporation and (ii) which shall be distinct from the principal
business of the entity to be acquired.
(7) The Corporation shall, after it has successfully increased
its authorized common stock from 2,500,000 shares to 35,000,000, at all
thereafter times reserve and keep available solely for the purpose of issuance
upon conversion of Series K Preferred Stock, as herein provided, such number of
shares of Common Stock as shall be issuable upon the conversion of all
outstanding Series K Preferred Stock.
(8) All shares of Common Stock which may be issued upon
conversion of the shares of Series K Preferred Stock will upon issuance by the
Corporation be validly issued, fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issuance thereof.
(d) Expenses. The issuance of certificates representing shares of
Common Stock upon conversion of the Series K Preferred Stock shall be made to
each applicable shareholder without charge for any excise tax in respect of
such issuance. However, if any certificate is to be issued in a name other
than that of the holder of record of the Series K Preferred Stock so converted,
the person or persons requesting the issuance thereof shall pay to the
Corporation the amount of any tax which may be payable in respect of any
transfer involved in such issuance, or shall establish to the satisfaction of
the Corporation that such tax has been paid or is not due and payable.
(e) Verification. Upon the occurrence of each adjustment or
readjustment of the conversion ratio pursuant hereto, the Corporation at its
expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof,
-6-
<PAGE> 7
cause independent public accountants selected by the Corporation to verify such
computation and prepare and furnish to each holder of Series K Preferred Stock
affected thereby a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment is
based. The Corporation shall, upon the written request at any time of any
holder of Series K Preferred Stock, furnish or cause to be furnished to such
holder a like certificate setting forth (a) such adjustment or readjustment,
(b) the conversion ratio at the time in effect, and (c) the number of shares
of Common Stock and the amount, if any, of other property which at the time
would be received upon the conversion of his Shares.
(f) Status of Converted Stock. In case any Shares of Series K
Preferred Stock shall be converted, the Shares so converted shall resume the
status of authorized but unissued shares of preferred stock.
6. Limitations on Corporation; Shareholder Consent. So long as any Shares
of Series K Preferred Stock are outstanding, the Corporation shall not, without
the affirmative vote or the written consent as provided by law of 80% of the
holders of the outstanding Shares, voting as a class, change the preferences,
rights or limitations with respect to the Series K Preferred Stock in any
material respect prejudicial to the holders thereof, or increase the authorized
number of Shares of such Series, but nothing herein contained shall require
such a class vote or consent (a) in connection with any increase in the total
number of authorized shares of Common Stock, or (b) in connection with the
authorization, designation, increase or issuance of any series of preferred
stock holding liquidation preference equal to or subordinate to the Series K
Preferred Stock. Further, no such vote or written consent of the holders of
the Series K Preferred Stock shall be required if, at or prior to the time when
such change is to take effect, provision is made for the redemption of all
Shares at the time outstanding; and the provisions of this paragraph 6, shall
not in any way limit the right and power of the Corporation to issue any bonds,
notes, mortgages, debentures and other obligations, and to incur indebtedness
to banks and to other lenders.
7. Stated Capital. Of the consideration received by the Corporation in
exchange for the issuance of each share of the Series K Preferred Stock,
$50,000.00 shall constitute paid in capital.
-7-
<PAGE> 8
8. Notices. All notices or other communications required or permitted to
be given pursuant to this resolution shall be in writing and shall be
considered as properly given or made if hand delivered, mailed by certified or
registered mail, return receipt requested, or sent by prepaid telegram, if to
the Corporation at its address indicated in its Annual Report as most recently
filed with the Florida Department of State, and if to a holder of Series K
Preferred Stock at the address set forth in the shareholder records as
maintained by the Corporation, or to such other address as any such shareholder
may have designated by like notice forwarded to the Corporation. All notices,
except notices of change of address, shall be deemed given when mailed or hand
delivered and notices of change of address shall be deemed given when received.
IN WITNESS WHEREOF, EVRO Corporation has caused its corporate seal to be
hereunto affixed and this Certificate to be executed by its Chief Executive
Officer and its Secretary as of the 31st day of October, 1995.
/s/ Christopher P. Dona /s/ O. Don Lauher
----------------------- --------------------------
Christopher P. Dona O. Don Lauher
Vice President Assistant Secretary
STATE OF FLORIDA )
) SS.
COUNTY OF ORANGE )
The foregoing instrument was acknowledged before me this 31st day of
October, 1995, by Christopher P. Dona, as Vice President of EVRO Corporation, a
Florida corporation, on behalf of the corporation. He is personally known to
me or has produced to me personally known as identification.
/s/ Karen D. Jackson
--------------------------
Notary Signature
Karen D. Jackson
--------------------------
Notary Name Printed
[NOTARY SEAL] NOTARY PUBLIC
Commission No. CC387622
---------
-8-
<PAGE> 9
STATE OF FLORIDA )
) SS.
COUNTY OF ORANGE )
The foregoing instrument was acknowledged before me this 31st day of
October, 1995, by O. Don Lauher, as Assistant Secretary of EVRO Corporation, a
Florida corporation, on behalf of the corporation. He is personally known to
me or has produced to me personally known as identification.
/s/ Karen D. Jackson
---------------------------
Notary Signature
Karen D. Jackson
---------------------------
Notary Name Printed
[NOTARY SEAL] NOTARY PUBLIC
Commission No. CC387622
-------------
-9-
<PAGE> 1
EXHIBIT 3.15
CERTIFICATE OF DESIGNATION, PREFERENCES, RIGHTS AND
LIMITATIONS OF
SERIES L CONVERTIBLE PREFERRED STOCK
NO PAR VALUE
OF EVRO CORPORATION
===============================================================================
EVRO Corporation (the "Corporation"), organized and existing under Florida
law, hereby certifies that, pursuant to authority conferred upon the Board of
Directors by the Articles of Incorporation of the Corporation and Section
607,0602 of the Florida Business Corporation Act, the Board of Directors on
October 30, 1995, adopted a Resolution providing for the creation and issuance
of the Corporation's Certificate of Designation, Preferences, Rights and
Limitations for its Series L Convertible Preferred Stock, which Resolution is
hereafter set forth in its entirety.
RESOLVED, that pursuant to the authority expressly granted and vested in
the Board of Directors of this Corporation in accordance with the provisions of
its Articles of Incorporation, a series of the Corporation's authorized class
of preferred stock, no par value, is hereby established as "Series L
Convertible Preferred Stock" (hereinafter referred to as the Series L Preferred
Stock), which series consists of 100 authorized shares. The issued and
outstanding shares of the Series L Preferred Stock, as they may exist from time
to time, are sometimes referred to below as the "Shares". The preferences, any
relative, participating, optional or other special rights of, and the
qualifications, limitations and restrictions imposed upon the Series L
Preferred Stock shall be as follows:
1. No Dividends. The Series L Preferred Stock shall not bear dividends.
2. Redemption Rights. The Corporation shall have no right to redeem the
Series L Preferred Stock.
3. No Voting Rights. Except as required by Florida Business Corporation
Act, the holders of the Shares shall have no voting rights.
4. Priority in the Event of Liquidation or Dissolution. In the event of
any liquidation, dissolution or winding up of the affairs of the Corporation,
whether voluntary or otherwise, after payment or provision for payment of the
debts and other liabilities of the Corporation and before any distribution
shall be made to the
<PAGE> 2
holder of any class of the common stock of the Corporation, each holder of
Series L Preferred Stock shall be entitled to receive, out of the assets of the
Corporation, the sum of $50,000.00 in cash for each Share of Series L Preferred
Stock so held subject to the first priority of all holders of the Corporation's
Series A 10% Preferred Stock, Series B 8% Preferred Stock, if any, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock, Series I Preferred Stock, Series H Preferred Stock, Series J
Preferred Stock, and Series K Preferred Stock, as set forth in the respective
certificates of designation, preferences, rights and limitations of such series
of preferred stock of the Corporation. After payment shall have been made in
full to the holders of the Series L Preferred Stock, or funds necessary for such
payment shall have been set aside in trust for the exclusive benefit of such
holders, the holders of the Series L Preferred Stock shall be entitled to no
further participation in any distribution of the assets of the Corporation.
5. Conversion of Preferred Stock into Common Stock.
(a) In General. Subject to the provisions of this Section 5, each
holder of record of Shares of Series L Preferred Stock shall have the right, at
his option, at any time after the Corporation increases its authorized common
stock from 2,500,000 shares to 35,000,000 shares, but in no event later than
June 30, 1997, to convert each Share then held by him into fully paid and
nonassessable shares of the Corporation's authorized common capital stock, no
par value (the "Common Stock") provided, however, that in the event that the
holder has not converted each Share held by him into shares of the
Corporation's common stock on or before June 30, 1997, such Shares shall
automatically be converted on June 30, 1997.
(b) Procedure. Any holder of Shares of Series L Preferred Stock
desiring to convert any such Share into Common Stock shall surrender each
certificate representing one or more Shares of such Stock to be converted, duly
endorsed to the Corporation or in blank, at the principal business office of
the Corporation (or such other place as may be designated by the Corporation),
and shall give written notice to the Corporation at that office of his election
to convert the same, setting forth therein the name or names (with the address
or addresses) in which the shares of Common Stock are to be issued. If the
last day for any exercise of the conversion right shall be a legal holiday or a
day on which federally chartered banking institutions are authorized by law to
close, then such conversion right may be
-2-
<PAGE> 3
exercised on the next succeeding day not a legal holiday or a day on which
such banking institutions are authorized by law to close.
(c) Additional Provisions. Conversion of Series L Preferred Stock shall
be subject to the following additional terms and provisions:
(1) Replacement Certificates. As promptly as practicable after
the surrender for conversion of any Series L Preferred Stock, the Corporation
shall deliver or cause to be delivered at the principal office of the
Corporation (or such other place as may be designated by the Corporation), to
or upon the written order of the holder of such Series L Preferred Stock, one
or more certificates representing the shares of Common Stock issuable upon such
conversion, issued in such name or names as such holder may reasonably direct.
Shares of the Series L Preferred Stock shall be deemed to have been converted
as of the close of business on the date of the surrender of the Series L
Preferred Stock for conversion, as provided above, and the rights of the
holders of such Series L Preferred Stock shall cease at such time, and each
person in whose name a certificate for such shares is to be issued shall be
treated for all purposes as having become the record holder of such Common
Stock at such time; provided, however, that any such surrender on any date when
the stock transfer books of the Corporation shall be closed shall constitute
the person in whose name each certificate for such shares is to be issued as
the record holder thereof for all purposes at the close of business on the next
succeeding day on which such stock transfer books are open.
(2) Subdivisions or Combinations. In the event that the
Corporation shall at any time prior to a particular conversion subdivide or
combine its outstanding shares of Common Stock into a greater or lesser number
of such shares, the number of shares of Common Stock issuable upon conversion
of the Series L Preferred Stock shall be proportionately increased in the case
of a combination, effective in either case at the close of business on the date
which such subdivision or combination shall become effective.
(3) Recapitalizations. In the event that the Corporation shall be
recapitalized, consolidated with or merged into any other corporation, or shall
sell or convey to any other corporation all or substantially all of its
property as an entity, provision shall be made as part of the terms of such
recapitalization, consolidation, merger, sale or conveyance for each holder of
-3-
<PAGE> 4
Series L Preferred Stock to thereafter receive in lieu of the Common Stock
otherwise issuable to him upon conversion of his Preferred Stock, but at the
conversion ratio stated in this Section 5, the same kind and amount of
securities or assets as may be distributable upon such recapitalization,
consolidation, merger, sale or conveyance, with respect to the Common Stock of
the Corporation.
(4) Successive Adjustments. The adjustments hereinabove referenced
shall be made successively if more than one event listed in the above
subdivisions of this subsection (c) of this Section 5 shall occur.
(5) No Fractional Shares. The Corporation shall not be required to
issue any fractions of shares of Common Stock upon conversions of Series L
Preferred Stock. If any interest in a fractional share of Common Stock would
otherwise be deliverable upon the conversion of any Series L Preferred Stock,
the Corporation shall make adjustment for such fractional share interest by
payment to the converting shareholder of cash in an amount bearing the same
ratio to the fair market value of a whole share of Common Stock of the
Corporation, as determined by the Corporation's Board of Directors, as the
fractional interest to which the shareholder would otherwise be entitled bears
to a whole share of Common Stock.
(6) No Adjustments. No adjustment of the conversion ratio shall be
made by reason of:
(A) The payment of any cash dividend on the Common Stock or any
other class of the capital stock of the Corporation;
(B) the purchase, acquisition, redemption or retirement by the
Corporation of any shares of the Common Stock or of any other class of the
capital stock of the Corporation, except as provided in subdivision (3) of
this subsection (c):
(C) the issuance, other than as provided in the subdivisions of
this subsection (c), of any shares of Common Stock of the Corporation, or of any
securities convertible into shares of Common Stock or other securities of the
Corporation, or of any rights, warrants or options to subscribe for or purchase
shares of the Common Stock or other securities of the Corporation, or of any
other securities of the Corporation, provided that in the event the Corporation
offers any of its securities, or any rights,
-4-
<PAGE> 5
warrants or options to subscribe for or purchase any of its securities, to the
holders of its Common Stock pursuant to any preemptive or preferential rights
granted to holders of Common Stock by the Certificate of Incorporation of the
Corporation, or pursuant to any similar rights that may be granted to such
holders of Common Stock by the Board of Directors of the Corporation, the
Corporation shall mail written notice of such offer to the holders of the
Series L Preferred Stock then of record at least 20 days prior to the record
date for the determination of holders of the Common Stock entitled to receive
any such offer so as to provide such holders with a reasonable period of time
within which to determine whether to exercise their rights of conversion;
(D) any offer by the Corporation to redeem or acquire shares
of its Common Stock by paying or exchanging therefor stock of another
corporation or the carrying out by the Corporation of the transactions
contemplated by such offer, provided that at least 20 days prior to the
expiration of any such offer the Corporation shall mail written notice of such
offer to the holders of the Series L Preferred Stock then of record; or
(E) the distribution to holders of Common Stock of stock or
other securities of another issuer, if the issuers of such securities shall be
engaged at the time of such distribution in a business (i) which shall have
been previously operated on a divisional or subsidiary basis by an entity
acquired by the Corporation and (ii) which shall be distinct from the principal
business of the entity to be acquired.
(7) The Corporation shall, after it has successfully its increased
authorized common stock from 2,500,000 shares to 35,000,000, at all thereafter
times reserve and keep available solely for the purpose of issuance upon
conversion of Series L Preferred Stock, as herein provided, such number of
shares of Common Stock as shall be issuable upon the conversion of all
outstanding Series L Preferred Stock.
(8) All shares of Common Stock which may be issued upon conversion
of the shares of Series L Preferred Stock will upon issuance by the Corporation
be validly issued, fully paid and nonassessable and free from all taxes, liens
and charges with respect to the issuance thereof.
(d) Expenses. The issuance of certificates representing shares of
Common Stock upon conversion of the Series L Preferred Stock shall be made to
each applicable shareholder
-5-
<PAGE> 6
without charge for any excise tax in respect of such issuance. However, if
any certificate is to be issued in a name other than that of the holder of
record of the Series L Preferred Stock so converted, the person or persons
requesting the issuance thereof shall pay to the Corporation the amount of any
tax which may be payable in respect of any transfer involved in such issuance,
or shall establish to the satisfaction of the Corporation that such tax has
been paid or is not due and payable.
(e) Verification. Upon the occurrence of each adjustment or
readjustment of the conversion ratio pursuant hereto, the Corporation at its
expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof, cause independent public accountants selected by the
Corporation to verify such computation and prepare and furnish to each holder
of Series L Preferred Stock affected thereby a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon the written
request at any time of any holder of Series L Preferred Stock, furnish or cause
to be furnished to such holder a like certificate setting forth (a) such
adjustment or readjustment, (b) the conversion ratio at the time in effect, and
(c) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of his Shares.
(f) Status of Converted Stock. In case any Shares of Series L
Preferred Stock shall be converted, the Shares so converted shall resume the
status of authorized but unissued shares of preferred stock.
6. Limitations on Corporation; Shareholder Consent. So long as any Shares
of Series L Preferred Stock are outstanding, the Corporation shall not, without
the affirmative vote or the written consent as provided by law of 80% of the
holders of the outstanding Shares, voting as a class, change the preferences,
rights or limitations with respect to the Series L Preferred Stock in any
material respect prejudicial to the holders thereof, or increase the authorized
number of Shares of such Series, but nothing herein contained shall require
such a class vote or consent (a) in connection with any increase in the total
number of authorized shares of Common Stock, or (b) in connection with the
authorization, designation, increase or issuance of any series of preferred
stock holding liquidation preference equal to or subordinate to the Series L
Preferred Stock. Further, no such vote or written consent of the holders of
the Series L Preferred Stock shall be required
-6-
<PAGE> 7
if, at or prior to the time when such change is to take effect, provision is
made for the redemption of all Shares at the time outstanding; and the
provisions of this paragraph 6, shall not in any way limit the right and power
of the Corporation to issue any bonds, notes, mortgages, debentures and other
obligations, and to incur indebtedness to banks and to other lenders.
7. Stated Capital. Of the consideration received by the Corporation in
exchange for the issuance of each share of the Series L Preferred Stock,
$50,000.00 shall constitute paid in capital.
8. Notices. All notices or other communications required or permitted to
be given pursuant to this resolution shall be in writing and shall be
considered as properly given or made if hand delivered, mailed by certified or
registered mail, return receipt requested, or sent by prepaid telegram, if to
the Corporation at its address indicated in its Annual Report as most recently
filed with the Florida Department of State, and if to a holder of Series L
Preferred Stock at the address set forth in the shareholder records as
maintained by the Corporation, or to such other address as any such shareholder
may have designated by like notice forwarded to the Corporation. All notices,
except notices of change of address, shall be deemed given when mailed or hand
delivered and notices of change of address shall be deemed given when received.
IN WITNESS WHEREOF, EVRO Corporation has caused its corporate seal to be
hereunto affixed and this Certificate to be executed by its Chief Executive
Officer and its Secretary as of the 31st day of October, 1995.
/s/ Christopher P. Dona /s/ O. Don Lauher
- ------------------------------- ---------------------------------
Christopher P. Dona O. Don Lauher
Vice President Assistant Secretary
STATE OF FLORIDA )
) SS.
COUNTY OF ORANGE )
-7-
<PAGE> 8
The foregoing instrument was acknowledged before me this 31st day of
October, 1995, by Christopher P. Dona, as Vice President of EVRO Corporation, a
Florida corporation, on behalf of the corporation. He is personally known to
me or has produced to me personally known as identification.
/s/ Karen D. Jackson
--------------------------
Notary Signature
Karen D. Jackson
--------------------------
Notary Name Printed
[NOTARY SEAL] NOTARY PUBLIC
Commission No. CC387622
--------
STATE OF FLORIDA )
) SS.
COUNTY OF ORANGE )
The foregoing instrument was acknowledged before me this 31st day of
October, 1995, by O. Don Lauher, as Assistant Secretary of EVRO Corporation, a
Florida corporation, on behalf of the corporation. He is personally known to
me or has produced to me personally known as identification.
/s/ Karen D. Jackson
--------------------------
Notary Signature
Karen D. Jackson
--------------------------
Notary Name Printed
[NOTARY SEAL] NOTARY PUBLIC
Commission No. CC387622
--------
-8-
<PAGE> 1
EXHIBIT 3.16
CERTIFICATE OF DESIGNATION, PREFERENCES, RIGHTS AND
LIMITATIONS OF
SERIES M CONVERTIBLE PREFERRED STOCK
NO PAR VALUE
OF EVRO CORPORATION
===============================================================================
EVRO Corporation (the "Corporation"), organized and existing under Florida
law, hereby certifies that, pursuant to authority conferred upon the Board of
Directors by the Articles of Incorporation of the Corporation and Section
607,0602 of the Florida Business Corporation Act, the Board of Directors on
November 8, 1995, adopted a Resolution providing for the creation and issuance
of the Corporation's Certificate of Designation, Preferences, Rights and
Limitations for its Series M Convertible Preferred Stock, which Resolution is
hereafter set forth in its entirety.
RESOLVED, that pursuant to the authority expressly granted and vested in
the Board of Directors of this Corporation in accordance with the provisions of
its Articles of Incorporation, a series of the Corporation's authorized class
of preferred stock, no par value, is hereby established as "Series M
Convertible Preferred Stock" (hereinafter referred to as the Series M Preferred
Stock), which series consists of 40,000 authorized shares. The issued and
outstanding shares of the Series M Preferred Stock, as they may exist from time
to time, are sometimes referred to below as the "Shares". The preferences, any
relative, participating, optional or other special rights of, and the
qualifications, limitations and restrictions imposed upon the Series M
Preferred Stock shall be as follows:
1. No Dividends. The Series M Preferred Stock shall not bear dividends.
2. Redemption Rights. The Corporation shall have no right to redeem the
Series M Preferred Stock.
3. Voting Rights. Each issued and outstanding share of Series M Preferred
Stock shall entitle the registered holder thereof to ten votes on each matter
with respect to which a vote is required of the holders of the Corporation's
common stock.
4. Priority in the Event of Liquidation or Dissolution. In the event of
any liquidation, dissolution or winding up of the affairs of the Corporation,
whether voluntary or otherwise, after payment or provision for payment of the
debts and other liabilities of the Corporation and before any distribution
shall be made to the holder of any class of the common stock of the
Corporation, each holder of Series M Preferred Stock shall be entitled to
receive,
<PAGE> 2
out of the assets of the Corporation, the sum of $10.00 in cash for each Share
of Series M Preferred Stock so held subject to the first priority of all holders
of the Corporation's Series A 10% Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock,
Series I Preferred Stock, Series H Preferred Stock, Series J Preferred Stock,
Series K Preferred Stock, and Series L Preferred Stock, as set forth in the
respective certificates of designation, preferences, rights and limitations of
such series of preferred stock of the Corporation. After payment shall have
been made in full to the holders of the Series M Preferred Stock, or funds
necessary for such payment shall have been set aside in trust for the exclusive
benefit of such holders, the holders of the Series M Preferred Stock shall be
entitled to no further participation in any distribution of the assets of the
Corporation.
5. Conversion of Preferred Stock into Common Stock.
(a) In General. Subject to the provisions of this Section 5, each
holder of record of Shares of Series M Preferred Stock shall have the right,
at his option, at any time after the Corporation increases its authorized
common stock from 2,500,000 shares to 35,000,000 shares, but in no event later
than June 30, 1997, to convert each Share then held by him into 10 fully paid
and nonassessable shares of the Corporation's authorized common capital
stock, no par value (the "Common Stock") provided, however, that in the event
that the holder has not converted each Share held by him into shares of the
Corporation's common stock on or before June 30, 1997, such Shares shall
automatically be converted on June 30, 1997.
(b) Procedure. Any holder of Shares of Series M Preferred Stock
desiring to convert any such Share into Common Stock shall surrender each
certificate representing one or more Shares of such Stock to be converted, duly
endorsed to the Corporation or in blank, at the principal business office of
the Corporation (or such other place as may be designated by the Corporation),
and shall give written notice to the Corporation at that office of his election
to convert the same, setting forth therein the name or names (with the address
or addresses) in which the shares of Common Stock are to be issued. If the
last day for any exercise of the conversion right shall be a legal holiday or a
day on which federally chartered banking institutions are authorized by law to
close, then such conversion right may be exercised on the next succeeding day
not a legal holiday or a day on which such banking institutions are authorized
by law to close.
(c) Additional Provisions. Conversion of Series M Preferred Stock
shall be subject to the following additional terms and provisions:
-2-
<PAGE> 3
(1) Replacement Certificates. As promptly as practicable after the
surrender for conversion of any Series M Preferred Stock, the Corporation shall
deliver or cause to be delivered at the principal office of the Corporation (or
such other place as may be designated by the Corporation), to or upon the
written order of the holder of such Series M Preferred Stock, one or more
certificates representing the shares of Common Stock issuable upon such
conversion, issued in such name or names as such holder may reasonably direct.
Shares of the Series M Preferred Stock shall be deemed to have been converted
as of the close of business on the date of the surrender of the Series M
Preferred Stock for conversion, as provided above, and the rights of the
holders of such Series M Preferred Stock shall cease at such time, and each
person in whose name a certificate for such shares is to be issued shall be
treated for all purposes as having become the record holder of such Common
Stock at such time; provided, however, that any such surrender on any date when
the stock transfer books of the Corporation shall be closed shall constitute
the person in whose name each certificate for such shares is to be issued as
the record holder thereof for all purposes at the close of business on the next
succeeding day on which such stock transfer books are open.
(2) Subdivisions or Combinations. In the event that the Corporation
shall at any time prior to a particular conversion subdivide or combine its
outstanding shares of Common Stock into a greater or lesser number of such
shares, the number of shares of Common Stock issuable upon conversion of the
Series M Preferred Stock shall be proportionately increased in the case of a
combination, effective in either case at the close of business on the date
which such subdivision or combination shall become effective.
(3) Recapitalizations. In the event that the Corporation shall be
recapitalized, consolidated with or merged into any other corporation, or shall
sell or convey to any other corporation all or substantially all of its
property as an entity, provision shall be made as part of the terms of such
recapitalization, consolidation, merger, sale or conveyance for each holder of
Series M Preferred Stock to thereafter receive in lieu of the Common Stock
otherwise issuable to him upon conversion of his Preferred Stock, but at the
conversion ratio stated in this Section 5, the same kind and amount of
securities or assets as may be distributable upon such recapitalization,
consolidation, merger, sale or conveyance, with respect to the Common Stock of
the Corporation.
(4) Successive Adjustments. The adjustments hereinabove referenced
shall be made successively if more than one event listed in the above
subdivisions of this subsection (c) of this Section 5 shall occur.
-3-
<PAGE> 4
(5) No Fractional Shares. The Corporation shall not be required to
issue any fractions of shares of Common Stock upon conversions of Series M
Preferred Stock. If any interest in a fractional share of Common Stock would
otherwise be deliverable upon the conversion of any Series M Preferred Stock,
the Corporation shall make adjustment for such fractional share interest by
payment to the converting shareholder of cash in an amount bearing the same
ratio to the fair market value of a whole share of Common Stock of the
Corporation, as determined by the Corporation's Board of Directors, as the
fractional interest to which the shareholder would otherwise be entitled bears
to a whole share of Common Stock.
(6) No Adjustments. No adjustment of the conversion ratio shall be
made by reason of:
(A) The payment of any cash dividend on the Common Stock or any
other class of the capital stock of the Corporation;
(B) the purchase, acquisition, redemption or retirement by the
Corporation of any shares of the Common Stock or of any other class of the
capital stock of the Corporation, except as provided in subdivision (3) of
this subsection (c):
(C) the issuance, other than as provided in the subdivisions of
this subsection (c), of any shares of Common Stock of the Corporation, or of any
securities convertible into shares of Common Stock or other securities of the
Corporation, or of any rights, warrants or options to subscribe for or purchase
shares of the Common Stock or other securities of the Corporation, or of any
other securities of the Corporation, provided that in the event the Corporation
offers any of its securities, or any rights, warrants or options to subscribe
for or purchase any of its securities, to the holders of its Common Stock
pursuant to any preemptive or preferential rights granted to holders of Common
Stock by the Certificate of Incorporation of the Corporation, or pursuant to
any similar rights that may be granted to such holders of Common Stock by the
Board of Directors of the Corporation, the Corporation shall mail written
notice of such offer to the holders of the Series M Preferred Stock then of
record at least 20 days prior to the record date for the determination of
holders of the Common Stock entitled to receive any such offer so as to provide
such holders with a reasonable period of time within which to determine whether
to exercise their rights of conversion;
(D) any offer by the Corporation to redeem or acquire shares of
its Common Stock by paying or exchanging therefor stock of another corporation
or the carrying out by the Corporation of the transactions contemplated by such
offer, provided that
-4-
<PAGE> 5
at least 20 days prior to the expiration of any such offer the
Corporation shall mail written notice of such offer to the holders of the
Series M Preferred Stock then of record; or
(E) the distribution to holders of Common Stock of stock or
other securities of another issuer, if the issuers of such securities shall be
engaged at the time of such distribution in a business (i) which shall have
been previously operated on a divisional or subsidiary basis by an entity
acquired by the Corporation and (ii) which shall be distinct from the principal
business of the entity to be acquired.
(7) The Corporation shall, after it has successfully increased its
authorized common stock from 2,500,000 shares to 35,000,000, at all thereafter
times reserve and keep available solely for the purpose of issuance upon
conversion of Series M Preferred Stock, as herein provided, such number of
shares of Common Stock as shall be issuable upon the conversion of all
outstanding Series M Preferred Stock.
(8) All shares of Common Stock which may be issued upon conversion
of the shares of Series M Preferred Stock will upon issuance by the Corporation
be validly issued, fully paid and nonassessable and free from all taxes, liens
and charges with respect to the issuance thereof.
(d) Expenses. The issuance of certificates representing shares of
Common Stock upon conversion of the Series M Preferred Stock shall be made to
each applicable shareholder without charge for any excise tax in respect of
such issuance. However, if any certificate is to be issued in a name other
than that of the holder of record of the Series M Preferred Stock so converted,
the person or persons requesting the issuance thereof shall pay to the
Corporation the amount of any tax which may be payable in respect of any
transfer involved in such issuance, or shall establish to the satisfaction of
the Corporation that such tax has been paid or is not due and payable.
(e) Verification. Upon the occurrence of each adjustment or
readjustment of the conversion ratio pursuant hereto, the Corporation at its
expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof, cause independent public accountants selected by the
Corporation to verify such computation and prepare and furnish to each holder
of Series M Preferred Stock affected thereby a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon the written
request at any time of any holder of Series M Preferred Stock, furnish or cause
to be furnished to such holder a like certificate setting forth (a) such
adjustment or readjustment, (b) the conversion ratio at the time
-5-
<PAGE> 6
in effect, and (c) the number of shares of Common Stock and the amount, if any,
of other property which at the time would be received upon the conversion of
his Shares.
(f) Status of Converted Stock. In case any Shares of Series M
Preferred Stock shall be converted, the Shares so converted shall resume the
status of authorized but unissued shares of preferred stock.
6. Limitations on Corporation; Shareholder Consent. So long as any Shares
of Series M Preferred Stock are outstanding, the Corporation shall not, without
the affirmative vote or the written consent as provided by law of 80% of the
holders of the outstanding Shares, voting as a class, change the preferences,
rights or limitations with respect to the Series M Preferred Stock in any
material respect prejudicial to the holders thereof, or increase the authorized
number of Shares of such Series, but nothing herein contained shall require
such a class vote or consent (a) in connection with any increase in the total
number of authorized shares of Common Stock, or (b) in connection with the
authorization, designation, increase or issuance of any series of preferred
stock holding liquidation preference equal to or subordinate to the Series M
Preferred Stock. Further, no such vote or written consent of the holders of the
Series M Preferred Stock shall be required if, at or prior to the time when such
change is to take effect, provision is made for the redemption of all Shares at
the time outstanding; and the provisions of this paragraph 6, shall not in any
way limit the right and power of the Corporation to issue any bonds, notes,
mortgages, debentures and other obligations, and to incur indebtedness to banks
and to other lenders.
7. Stated Capital. Of the consideration received by the Corporation in
exchange for the issuance of each share of the Series M Preferred Stock, $10.00
shall constitute paid in capital.
8. Notices. All notices or other communications required or permitted to
be given pursuant to this resolution shall be in writing and shall be
considered as properly given or made if hand delivered, mailed by certified or
registered mail, return receipt requested, or sent by prepaid telegram, if to
the Corporation at its address indicated in its Annual Report as most recently
filed with the Florida Department of State, and if to a holder of Series M
Preferred Stock at the address set forth in the shareholder records as
maintained by the Corporation, or to such other address as any such shareholder
may have designated by like notice forwarded to the Corporation. All notices,
except notices of change of address, shall be deemed given when mailed or hand
delivered and notices of change of address shall be deemed given when received.
-6-
<PAGE> 7
IN WITNESS WHEREOF, EVRO Corporation has caused its corporate seal to be
hereunto affixed and this Certificate to be executed any Vice President and its
Assistant Secretary as of the ______ day of November, 1995.
/s/ Christopher P. Dona /s/ O. Don Lauher
- ----------------------- ----------------------
Christopher P. Dona O. Don Lauher
Vice President Assistant Secretary
STATE OF FLORIDA )
) SS.
COUNTY OF ORANGE )
The foregoing instrument was acknowledged before me this _____ day of
November, 1995, by Christopher P. Dona, as Vice President of EVRO Corporation,
a Florida corporation, on behalf of the corporation. He is personally known to
me or has produced DO500-115-51-083-0 as identification.
/s/ Ileana I. Labo
---------------------------
Notary Signature
Ileana I. Labo
[NOTARY SEAL] ---------------------------
Notary Name Printed
NOTARY PUBLIC
Commission No. CC294908
STATE OF FLORIDA ) --------
)SS.
COUNTY OF ORANGE )
-7-
<PAGE> 8
The foregoing instrument was acknowledged before me this ____ day of
November, 1995, by O. Don Lauher, as Assistant Secretary of EVRO Corporation, a
Florida corporation, on behalf of the corporation. He is personally known to
me or has produced L600-644-42-263-0 as identification.
/s/ Ileana I. Labo
---------------------------
Notary Signature
Ileana I. Labo
---------------------------
[NOTARY SEAL] Notary Name Printed
NOTARY PUBLIC
Commission No. CC294908
--------
-8-
<PAGE> 1
EXHIBIT 10.01
1995 EMPLOYEE STOCK COMPENSATION PLAN
EVRO CORPORATION
1. PURPOSE OF THE PLAN.
This 1995 Employee Stock Compensation Plan ("Plan") is intended to
further the growth and advance the best interests of EVRO CORPORATION, a
Florida corporation (the "Company"), and Affiliated Corporations, by supporting
and increasing the Company's ability to attract, retain and compensate persons
of experience and ability and whose services are considered valuable, to
encourage the sense of proprietorship in such persons, and to stimulate the
active interest of such persons in the development and success of the Company
and Affiliate Corporations. This Plan provides for stock compensation through
the award of the Company's Common Stock.
2. DEFINITIONS.
Whenever used in this Plan, except where the context might clearly
indicate otherwise, the following terms shall have the meanings set forth in
this section:
a. "Act" means the U.S. Securities Act of 1933, as amended.
b. "Affiliated Corporation" means any Parent or Subsidiary of the
Company.
c. "Award" or "grant" means any grant of Common Stock made under
this Plan.
d. "Board of Directors" means the Board of Directors of the
Company. The term "committee" is defined in Section 4 of this
Plan.
e. "Code" means the Internal Revenue Code of 1986, as amended.
f. "Common Stock" or "Common Shares" means the common stock, no
par value per share, of the Company, or in the event that the
outstanding Common Shares are hereafter changed into or
exchanged for different shares of securities of the Company,
such other shares or securities.
g. "Date of Grant" means the day the Committee authorizes the
grant of Common Stock or such later date as may be specified
by the Committee as the date a particular award will become
effective.
h. "Employee" means any person or entity that renders bona fide
services to the Company, including, without limitation, (i) a
person employed by the Company or an Affiliated Corporation;
(ii) an officer or director (including advisory or other
<PAGE> 2
directors) of the Company or an Affiliated Corporation; (iii)
a person or company engaged by the Company or an Affiliated
Corporation as a consultant, advisor or agent; (iv) a lawyer,
law firm, accountant or accounting firm, or other professional
or professional firm engaged by the Company or an Affiliated
Corporation; or (v) any other person defined as an "employee"
herein or in Rule 405 of Regulation C of the Securities and
Exchange Commission.
i. "Parent" means any corporation owning 50% or more of the total
combined voting stock of all classes of the Company or of
another corporation qualifying as a Parent within this
definition.
j. "Participant" means an Employee to whom an Award of Plan
Shares has been made.
k. "Plan Shares" means shares of Common Stock from time to time
subject to this Plan.
l. "Subsidiary" means a corporation more than 50% of whose total
combined capital stock of all classes is held by the Company
or by another corporation qualifying as a Subsidiary within
this definition.
3. EFFECTIVE DATE OF THE PLAN.
The effective date of this Plan is April 18, 1995. No Plan Shares may
be issued after April 15, 2000.
4. ADMINISTRATION OF THE PLAN.
The Executive Committee or other duly appointed committee of the Board
of Directors ("Committee"), and in default of the appointment of such a
committee the Board of Directors, will be responsible for the administration of
this Plan, and will award Common Shares under this Plan. Subject to the
express provisions of this Plan, the Committee shall have full authority and
sole and absolute discretion to interpret this Plan, to prescribe, amend and
rescind rules and regulations relating to it, and to make all other
determinations which it believes to be necessary or advisable in administering
this Plan. The determination of those eligible to receive an award of Plan
Shares shall rest in the sole discretion of the Committee, subject to the
provisions of this Plan. Awards of Plan Shares may be made as compensation for
services rendered, directly or in lieu of other compensation payable, or as a
bonus in recognition of past service or performance. The Committee may correct
any defect, supply any omission or reconcile any inconsistency in this Plan in
such manner and to such extent it shall deem necessary to carry it into effect.
Any decision made, or action taken, by the Committee arising out of or in
connection with the interpretation and administration of this Plan shall be
final and conclusive.
2
<PAGE> 3
5. STOCK SUBJECT TO THE PLAN.
The maximum number of Plan Shares which may be awarded under this Plan
is 800,000 shares.
6. PERSONS ELIGIBLE TO RECEIVE AWARDS.
Awards may be granted only to Employees (as herein defined).
7. GRANTS OR AWARDS OF PLAN SHARES.
Except as otherwise provided herein, the Committee shall have complete
discretion to determine when and to which Employees Plan Shares are to be
granted, and the number of Plan Shares to be awarded to each Employee. No
grant will be made if, in the judgment of the Committee, such a grant would
constitute a public distribution with the meaning of the Act or the rules and
regulations promulgated thereunder.
8. DELIVERY OF STOCK CERTIFICATES.
As promptly as practicable after authorizing an award of Plan Shares,
the Company shall deliver to the person who is the recipient of the award, a
certificate or certificates registered in that person's name, representing the
number of Plan Shares that were granted. Unless the Plan Shares have been
registered under the Act, each certificate evidencing Plan Shares shall bear a
legend to indicate that such shares represented by the certificate were issued
in a transaction which was not registered under the Act, and may only be sold
or transferred in a transaction that is registered under the Act or is exempt
from the registration requirements of the Act. In the absence of registration
under the Act, any person awarded Plan Shares may be required to execute and
deliver to the Company an investment letter, satisfactory in form and substance
to the Company, prior to the issuance and delivery of the shares. An award may
be made under this Plan wherein the Plan Shares may be issued only after
registration under the Act.
9. ASSIGNABILITY.
An award of Plan Shares may not be assigned. Plan Shares themselves
may be assigned only after such shares have been awarded, issued and delivered,
and only in accordance with law and any transfer restrictions imposed at the
time of award.
10. EMPLOYMENT NOT CONFERRED.
Nothing in this Plan or in the award of Plan Shares shall confer upon
any Employee the right to continue in the employ of the Company or Affiliated
Corporation nor shall it interfere with or restrict in any way the lawful
rights of the Company or any Affiliated Corporation to discharge any Employee
at any time for any reason whatsoever, with or without cause.
3
<PAGE> 4
11. LAWS AND REGULATIONS.
The obligation of the Company to issue and deliver Plan Shares
following an award under this Plan shall be subject to the condition that the
Company be satisfied that the sale and delivery thereof will not violate the
Act or any other applicable laws, rules or regulations.
12. WITHHOLDING OF TAXES.
If subject to withholding tax, the Company or any Affiliated
Corporation may require that the Employee concurrently pay to the Company the
entire amount or a portion of any taxes which the Company or Affiliated
Corporation is required to withhold by reason of granting Plan Shares, in such
amount as the Company or Affiliated Corporation in its discretion may
determine. In lieu of part or all of any such payment, the Employee may elect
to have the Company or Affiliated Corporation withhold from the Plan Shares
issued hereunder a sufficient number of shares to satisfy withholding
obligations. If the Company or Affiliated Corporation becomes required to pay
withholding taxes to any federal, state or other taxing authority as a result
of the granting of Plan Shares, and the Employee fails to provide the Company
or Affiliated Corporation with the funds with which to pay that withholding
tax, the Company or Affiliated Corporation may withhold up to 50% of each
payment of salary or bonus to the Employee (which will be in addition to any
required or permitted withholding), until the Company or Affiliated Corporation
has been reimbursed for the entire withholding tax it was required to pay in
respect of the award of Plan Shares.
13. RESERVATION OF SHARES.
The stock subject to this Plan, at all times, consist of authorized
but unissued Common Shares, or previously issued shares of Common Stock
reacquired or held by the Company or an Affiliated Corporation equal to the
maximum number of shares the Company may be required to issue as stated in
Section 5 of this Plan, and such number of Common Shares hereby is reserved for
such purpose. The Committee may decrease the number of shares subject to this
Plan, but only the Board of Directors my increase such number, except as a
consequence of a stock split or other reorganization or recapitalization
affecting all Common Shares.
14. AMENDMENT AND TERMINATION OF THE PLAN.
The Committee may suspend or terminate this Plan at any time or from
time to time, but no such action shall adversely affect the rights of a person
granted an Award under this Plan prior to that date. Otherwise, this Plan
shall terminate on the earlier of the terminal date stated in Section 3 of this
Plan or the date when all Plan Shares have been issued. The Committee shall
have absolute discretion to amend this Plan, subject only to those limitations
expressly set forth herein.
4
<PAGE> 5
15. DELIVERY OF PLAN.
A copy or synopsis (for which copy the prospectus will serve) or
description of this Plan shall be delivered to every person to whom an award of
Plan Shares is made. The Secretary of the Company may, but is not required to,
also deliver a copy of the resolution or resolutions of the Committee
authorizing the award.
16. LIABILITY.
No member of the Board of Directors, the Committee or any other
committee of directors, or officers, employees or agents of the Company or any
Affiliated Corporation shall be personally liable for any action, omission or
determinations made in good faith in connection with this Plan.
17. Miscellaneous Provisions.
The place of administration of this Plan shall be in the State of
Florida (or subsequently, wherever the Company's principal executive offices
are located), and the validity, construction, interpretation and effect of this
Plan and of its rules, regulations and rights relating to it, shall be
determined solely in accordance with the laws of the State of Florida. Without
amending this Plan, the Committee may issue Plan Shares to employed of the
Company who are foreign nationals or employed outside the United States, or
both, on such terms and conditions different from those specified in this Plan
but consistent with purpose of this Plan, as it deems necessary and desirable
to create equitable opportunities given differences in tax laws in other
countries. All expenses of administering this Plan and issuing Plan Shares
shall be borne by the Company.
18. REORGANIZATIONS AND RECAPITALIZATION OF THE COMPANY.
(a) The shares of Common Stock subject to this Plan are shares of
the Common Stock of the Company as currently constituted. If, and whenever,
the Company shall effect a subdivision or consolidation of shares or other
capital readjustment, the payment of a Common Stock dividend, a stock split,
combination of shares (reverse stock split) or recapitalization or other
increase or reduction of the number of shares of the Common Stock outstanding
without receiving compensation therefor in money, services or property, then
the number of shares of Common Stock subject to this Plan shall (i) in the
event of an increase in the number of outstanding shares, be proportionately
increased; and (ii) in the event of a reduction in the number of outstanding
shares, be proportionately reduced.
(b) Except as expressly provided above, the Company's issuance of
shares of Common Stock of any class, or securities convertible into shares of
Common Stock of any class, for cash or property, or for labor or services,
either upon direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company
convertible into or exchangeable for shares of Common Stock or other
securities, shall not affect,
5
<PAGE> 6
and no adjustment by reason thereof shall be made with respect to, the number
of shares of Common Stock subject to this Plan.
By signature below, the undersigned officers of the Company hereby
certify that the foregoing is a true and correct copy of the 1995 Employee
Stock Compensation Plan of the Company.
DATED: April 17, 1995
EVRO CORPORATION
(SEAL) By: /s/ Daniel M. Boger
--------------------------------
President
ATTEST:
By: /s/ O. Don Lauher
--------------------------------------
Secretary or Assistant Secretary
6
<PAGE> 1
EXHIBIT 10.04
STOCK PURCHASE AGREEMENT
THIS AGREEMENT, shall be effective as of this 1st day of November,
1995, by and between EVRO Corporation, a Florida corporation ("Seller" or
"EVRO") and E. Carl Anderson, Jr., an individual ("Buyer").
W I T N E S S E T H:
WHEREAS, Buyer desires to purchase from Seller and Seller desires to
sell to Buyer 50,000 shares of series C Convertible Preferred Stock of EVRO
Corporation (the "EVRO Shares"), a company currently trading publicly on the
NASDAQ Small Caps Market; and
WHEREAS, Buyer desires to acquire a Put from Seller on the EVRO Shares
to protect Buyer from certain risks on his investment, and Seller has agreed to
grant to Buyer a Put for the EVRO Shares, pursuant to the terms and conditions
of this Agreement.
NOW THEREFORE, for and in consideration of the mutual promises,
payments and covenants and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by the parties, Seller and
Buyer hereby agree as follows:
1. Recitals. The above referenced recitals are incorporated
herein as though fully restated in this Agreement.
2. Sale of Stock. Seller hereby sells, transfers and conveys all
of its right, title and interest in and to 50,000 shares of EVRO Series C
Convertible Preferred Stock, convertible into common shares on the basis of one
share of each preferred into
<PAGE> 2
ten shares of restricted common stock of EVRO and having such additional rights
and privileges as set forth in the "Second Amended Certificate of Designation,
Preferences, Rights and Limitations of Series C Convertible Preferred Stock, No
Par Value, of EVRO Corporation," a copy of which is attached hereto as Exhibit
"A," for Five Hundred Thousand One Hundred and No/100 Dollars ($500,100.00)
payable in the form of cash, wire transfer, or certified funds to Seller on or
before the ___ day of November, 1995.
3. Granting of Put. At the option of Buyer or any subsequent
of the EVRO Shares or any common shares received on conversion thereof (the
EVRO Shares or any common shares received on conversion thereof shall
hereinafter be referred to as the "Option Shares"), the Seller shall redeem and
repurchase the Option Shares from the holder thereof. The redemption price for
the Option Shares shall be $10.00 per share for the EVRO Shares (or an
appropriately adjusted amount for shares received on conversion) and shall be
payable in cash, wire transfer or certified funds on the later of (a) the date
the holder tenders certificates for the Option Shares endorsed in blank to
Seller or (b) five business days following the date on which Buyer exercises
this option.
Buyer or any subsequent holder of the Option Shares desiring
to exercise the option set forth above shall give notice of its desire for
redemption and the number of Option Shares it desires the Seller to redeem (the
"Noticed Shares"). This option may be exercised at any time for a period of
six months following
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<PAGE> 3
the date of issuance of the Option Shares to Buyer. Such funds shall be
delivered to the holders of the Option Shares participating in the redemption
in proportion to the number of Option Shares with respect to which this option
is exercised by each. Seller shall also promptly execute and deliver to such
holders a new certificate for the balance of any Option Shares that were
included in the delivered certificate but with respect to which this option was
not exercised. Notwithstanding anything in this Paragraph to the contrary,
Buyer shall not exercise this option prior to thirty-one (31) days from the
date of this Agreement.
4. Seller's Representations. Seller hereby represents and warrants
to Buyer, as a material inducement to Buyer's entry into this Agreement, the
following:
a. The execution and delivery of this Agreement, the consummation
of the transaction herein contemplated, and compliance with the terms of this
Agreement will not result in a breach of any indenture, other agreement or
instrument to which Seller is a party or by which it or the EVRO shares are
bound; or any applicable regulation, rule, judgment, order or decree of any
governmental instrumentality (including, but not limited to, the United States
Securities and Exchange Commission and any Blue Sky Law authority) or court,
domestic or foreign, having jurisdiction over Seller or the EVRO Shares, or any
securities exchange or regulated market such as NASDAQ.
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<PAGE> 4
b. That as of the closing date, there shall exist no liens or
encumbrances on the EVRO shares, of any kind whatsoever.
c. Seller has filed an Information Statement with the Securities
and Exchange commission on or about June 9, 1995, for the purpose of increasing
the number of authorized common shares of EVRO and has obtained the consent
from the holders of a majority of the shares of EVRO to increase the number of
authorized shares of common stock of EVRO up to 35,000,000 common shares, so
that the shares of convertible preferred stock will be able to convert into
common shares. Seller shall take such action as may be necessary and proper to
cause the number of authorized shares of common stock of EVRO to be increased
to 35,000,000 common shares within thirty (30) days from the date of this
Agreement.
d. Seller shall have complied with all of its state and federal
tax obligations, if any, and there shall be no taxes outstanding concerning the
EVRO shares.
e. Seller is currently contemplating a private offering of its
stock. In connection with such offering, Seller shall provide to investors
subsequent to the closing of the transactions contemplated herein a prospectus
offering such stock (the "Prospectus"). The Prospectus shall not contain an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements contained therein not
misleading.
f. Upon payment of the purchase price for the EVRO Shares and the
delivery of one or more certificates for the EVRO Shares by
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<PAGE> 5
Seller to Buyer, the EVRO Shares will constitute fully paid and nonassessable
shares of Seller.
g. The sale and the issuance of the EVRO Shares to Buyer subject
to the put option described herein and the execution of a certain consulting
agreement with Buyer or an affiliate of Buyer of even date are not material
transactions to Seller when considered independently or together that would
require disclosure in connection with the Information Statement referred to
above or any other registration statement or securities filings currently on
file or which are reasonably likely to be filed or required to be filed in the
future.
h. Upon the consummation of the sale of the EVRO Shares to Buyer,
Seller will have adequate capital and surplus to enable it to redeem the Option
Shares upon exercise by Buyer of the option described in section 3 of this
Agreement and Seller believes that it will continue to have such adequate
capital and surplus throughout the term of the option. Further, no provision
of Seller's Articles of Incorporation, By-Laws, other organizational documents,
or any loan agreement, debenture, indenture or other agreement or obligation of
any kind that would prevent it from honoring its obligation under the put
option or would require the consent or approval of any other party prior to
honoring that obligation.
5. Buyer's representations. Buyer hereby represents and warrants
to Seller, the following:
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<PAGE> 6
a. Buyer has all requisite authority and power to enter
into this Agreement.
b. Buyer, or an entity affiliated with Buyer, has
contemporaneously with the execution of this Agreement, entered into a
Consulting Agreement with EVRO for the purposes of providing counsel and advice
to EVRO for the benefit of the EVRO shareholders.
6. Deliveries at closing. Seller shall deliver the EVRO shares
to Buyer at the Closing and Buyer shall tender the payment to Seller at the
Closing.
7. Closing. Closing of the transaction contemplated by this
Agreement shall occur within five days of the date of this Agreement.
8. Miscellaneous
a. Amendment. No modification, waiver, amendment, discharge or
change of this Agreement shall be valid unless the same is evidenced by a
written instrument, subscribed by the party against which such modification,
waiver, amendment, discharge, or change is sought.
b. Notice. All notices, demands or other communications given
hereunder shall be in writing and shall be deemed to have been duly given on
the first business day after mailing by United States registered or certified
mail, return receipt requested, postage prepaid, addressed as follows;
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<PAGE> 7
TO SELLER:
EVRO Corporation
7501 W. Irlo Bronson Memorial Hwy.
Suite 105
Kissimmee, Florida 34747
TO BUYER:
E. Carl Anderson, Jr.
Post Office Box 274147
Tampa, Florida 33688-4147
or such other address or to such other person as any party shall instruct in a
notice to the other.
c. Entire Agreement. This instrument, together with the
instruments referred to herein, contains all of the understandings and
agreements of the parties with respect to the subject matter discussed herein.
All prior agreements whether written or oral are merged herein and shall be of
no force or effect.
d. Survival. The several representations, warranties and
covenants of the parties contained herein shall survive the execution hereof
and shall be effective regardless of any investigation that may have been made
or may be made by or on behalf of any party.
e. Severability. If any provision or any portion of any
provision of this Agreement, other than one of the conditions precedent, or the
application of such provision or any portion thereof to any person or
circumstance shall be held invalid or unenforceable, the remaining portions of
such provision and the remaining provisions of this Agreement or the
application of such provisions or portions of such provisions as is held
invalid or
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<PAGE> 8
unenforceable to persons or circumstances other than those to which it is held
invalid or unenforceable, shall not be affected thereby.
f. Governing Law and Venue. This Agreement shall be construed in
Accordance with the laws of the State of Florida, and venue shall be agreed to
be in Orange County.
g. Litigation. In any action between the parties to enforce any
of the terms of this Agreement or any other matter arising from this Agreement,
the Prevailing Party shall be entitled to recover its costs and expenses,
including reasonable attorneys' fees, such costs associated with all
negotiations, trials, and appeals, whether or not litigation is initiated.
h. Benefit of Agreement. The terms and provisions of this
Agreement shall be binding upon and inure to the benefit of the parties, their
successors, assigns, personal representatives, estate, heirs, and legatees.
i. Captions. The captions in this Agreement are for convenience
of reference only and in no way define, describe,, extend or limit the scope of
this Agreement or the intent of any provisions hereof.
j. Number and Gender. All pronouns and any variation thereof
shall be deemed to refer to the masculine, feminine, neuter, singular or
plural, as the identity of the party or parties, or their personal
representatives, successors and assigns may require.
k. Further Assurances. The parties agree to do, execute,
acknowledge, and deliver, or to cause to be done, executed,
-8-
<PAGE> 9
acknowledged, or delivered, and to perform all such deeds, assignments,
transfers, conveyances, powers of attorney, assurances, stock certificates and
other documents as may from time to time be required herein to effect the
intent and purpose of this Agreement.
l. Counterparts. This Agreement may be executed in any number of
counterparts, including facsimile signatures which shall be deemed as original
signatures. All executed counterparts shall constitute one Agreement
notwithstanding that all signatories are not signatories to the original or the
same counterpart.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date indicated above.
EVRO CORPORATION
By /s/ Daniel M. Boyar
------------------------------------
Its Special Counsel
--------------------------------
/s/ E. Carl Anderson, Jr.
------------------------------------
E. CARL ANDERSON, JR.
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<PAGE> 10
STOCK PLEDGE AGREEMENT (STOCK)
THIS AGREEMENT made this 1st day of November, 1995, by and between
EVRO CORPORATION, ("Pledgor"), and E. CARL ANDERSON, JR., an individual
("Pledgee").
W I T N E S S E T H:
WHEREAS, Pledgor owns 27,500,000 shares of common stock, par value
$.01, of Channel America Television Network, Inc., a Delaware corporation
("Channel America"), as evidenced by Certificate Number CA1007 (the "CA
Shares") as adjusted to 8,250,000 CA Shares, which have been currently paid
for, upon receipt of an additional $100,000 (see attached letter from Channel
America) representing 51% ownership of Channel America, as adjusted; and
WHEREAS, Pledgor has issued 100 shares of Series J Convertible
Preferred Stock of Evro Corporation, 40 shares of which are evidenced by
Certificate Number 3 (the "EVRO Shares"), representing the equivalent of
2,000,000 common shares upon conversion, and which have been pledged as
collateral under this Agreement; and
WHEREAS, Pledgor has agreed that as security for the agreement by the
Pledgor to buy back certain shares of stock issued by the Pledgor at the option
of the Pledgee for the sum of $500,000, as set forth in a Stock Purchase
Agreement, a copy of which is attached hereto as Exhibit "A" (hereinafter the
"Stock Purchase Agreement"), Pledgor has agreed to pledge the CA Shares and the
EVRO Shares as security for the performance of its obligations under the Stock
Purchase Agreement; and
<PAGE> 11
WHEREAS, the parties desire to set forth the terms of their agreement
with respect to the foregoing in writing.
NOW, THEREFORE, in consideration of the foregoing, the terms and
conditions set forth herein and other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto agree as follows:
1. Recitals. The above recitals to this Agreement are hereby
incorporated into this Agreement as though fully restated herein.
2. Grant of Security Interest. Pledgor hereby grants Pledgee a
security interest in and to the CA Shares and in and to the EVRO Shares as
security for the faithful performance by Pledgor of all Pledgor's obligations
under the Stock Purchase Agreement. Upon execution of this Agreement, Pledgor
shall immediately deliver to Pledgee the certificate representing the CA Shares
and the certificate representing the Evro Shares, together with stock powers
and signature guaranteed as to each certificate (hereinafter the "Collateral"),
which Collateral shall be held by Pledgee in accordance with the following
terms and conditions:
(a) Pledgor hereby authorizes Pledgee upon the failure by
the Pledgor to fulfill any of its obligations under this Agreement or under the
Stock Purchase Agreement, to sell all or a portion of the Collateral, at public
or private sale, to satisfy, in full or in part, Pledgor's monetary obligation
under the Stock Purchase Agreement after first deducting from the proceeds
thereof all costs and expenses incurred in connection with the sale of the
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<PAGE> 12
Collateral, including, without limitation, reasonable attorney fees incurred in
connection with the sale. Notwithstanding anything in this Agreement to the
contrary, Pledgee shall have all additional rights and remedies available to
him pursuant to the Uniform Commercial Code as enacted in the State of Florida;
(b) Pledgor, or its designees, shall be solely entitled
to represent the EVRO Shares and the CA Shares with complete voting and
dividend rights, so long as no default shall have occurred in the performance
and/or payment required hereunder or under the Stock Purchase Agreement. In
the event of and upon default in the obligations of Pledgor under this
Agreement or under the Stock Purchase Agreement, and during the continuance of
such default or non-performance, Pledgee, or his nominee or agent, shall be
entitled to represent and vote the EVRO Shares and the CA Shares; and
(c) Pledgee shall arrange for the transfer of the EVRO
Shares and the CA Shares on the books of the issuing corporations to the name
of the Pledgee, in pledge.
3. Pledgor Representations and Warranties. Pledgor hereby
represents and warrants to Pledgee that:
(a) This Agreement has been duly authorized and approved
by all necessary corporate action on the part of Pledgor and, when duly
executed, this Agreement will be a valid, legally binding and enforceable
obligation of Pledgor in accordance with its terms;
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<PAGE> 13
(b) Pledgor has good and marketable title to 8,250,000 of
the CA Shares, upon payment to Channel America of $100,000 and has good and
marketable title to the EVRO Shares;
(c) Concurrently with the execution of this Agreement,
Pledgor shall deliver to Channel America the sum of $100,000 so as to obtain
good and marketable title to the EVRO Shares;
(d) Pledgor shall pay all taxes upon the EVRO Shares and
the CA Shares, and/or any transfer fees or expenses which may result from this
Agreement, and/or defend title (or pay all costs and expenses incurred or paid
by another to defend title) to the EVRO Shares and the CA Shares; and
(e) Pledgor shall not dispose of or further encumber the
Collateral during the term of this Agreement, without the written consent of
the Pledgee.
4. Continuing Lien. Notwithstanding any other provision
contained in this Agreement, Pledgor hereby grants to Pledgee a continuing lien
upon and security interest in the Shares, which lien and security interest
shall secure the warranties, representations, guarantees, promises, covenants,
liabilities, claims, costs, and expenses arising from rights, duties or
obligations created by or arising out of the terms and conditions of this
Agreement.
5. Release of Pledge. If Pledgor repays the $500,000 due under
the Stock Purchase Agreement, in a timely manner, then the entire obligations
of Pledgor under this Agreement shall have been deemed fully satisfied, and
Pledgee shall release the pledged EVRO
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<PAGE> 14
Shares and the CA Shares back to Pledgor, and the Pledge or lien against the
EVRO Shares and the CA Shares granted hereby shall terminate.
6. Benefit of Agreement. This Agreement shall be binding upon
and inure to the benefit of the parties hereto, their heirs, personal
representatives, successors and assigns.
7. Governing Law. This Agreement shall be governed in all
respects by the laws of the State of Florida.
8. Entire Agreement. This Agreement represents the entire
agreement among the parties hereto and specifically supersedes any oral or
written agreements heretofore entered into by such parties with respect to the
subject matter hereof.
9. Attorneys' Fees. In the event that either party engages an
attorney in connection with any dispute between the parties, the prevailing
party shall be entitled to recover reasonable attorneys' fees and costs
associated therewith.
IN WITNESS WHEREOF, the undersigned parties hereto have executed this
Agreement the day and year first above written.
"PLEDGOR"
EVRO CORPORATION
By: /s/ Daniel M. Boyar
------------------------------------
Daniel M. Boyar, By the authority of
The Board of Directors
"PLEDGEE":
/s/ E. Carl Anderson, Jr.
------------------------------------
E. Carl Anderson, Jr.
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<PAGE> 1
EXHIBIT 10.05
CONSULTING AGREEMENT
THIS AGREEMENT is made as of November 1st, 1995, by and between EVRO
CORPORATION, a Florida corporation (the "Company" or "EVRO"), and SOUTHERN
RESOURCE MANAGEMENT, INC., a Florida corporation (the "Consultant").
R E C I T A L S:
A. The Company is a public company, and desires to promote its
business plan to the investment community and to build the value of EVRO for
the benefit of its shareholders; and
B. The Consultant and its employees and independent contractors
are involved in a variety of businesses, with particular emphasis in stock
market related activities, health products, advertising and other matters; and
C. The Company recognizes the substantial experience and
knowledge of the Consultant in matters relating to stock market related
activities, health products and advertising; and
D. The Company further recognizes that it is in the best
interests of the Company to engage the consulting services of the Consultant
and to enter into an agreement to prevent Consultant from providing its
consulting services to any business which competes with the Company by owning
or operating a television broadcasting network; and
E. The Company desires to retain the valuable services and
counsel of the Consultant, and the Consultant desires to render
<PAGE> 2
such services to the Company upon the terms set forth in this Agreement.
NOW THEREFORE, in consideration of the mutual promises and covenants
set forth below, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound hereby agree as follows:
1. Recitals. The Recitals to this Agreement are hereby
incorporated into this Agreement as though fully restated herein.
2. Engagement. The Company hereby engages the Consultant, and
the Consultant accepts engagement by the Company, upon the terms and conditions
set forth in this Agreement.
3. Term. The term of this Agreement shall begin on the date here
of and shall continue until October 31, 2000, unless terminated prior thereto
upon the death or disability of the Consultant or extended by the parties hereto
pursuant to paragraph 4(B) hereof.
4. Consulting Services Compensation.
(A) The Company shall pay to Consultant or its designees,
as compensation for its services under this Agreement, and as compensation for
Consultant's agreement not to compete with Company, as described in paragraph 7
hereof, the sum of Six Hundred Twenty-five Thousand and No/100 Dollars
($625,000.00) in cash, payable as follows:
(i) One Hundred Twenty-five Thousand and No/100 Dollars
($125,000.00) on or before thirty days from the date hereof;
<PAGE> 3
(ii) One Hundred Twenty-five Thousand and No/100 Dollars
($125,000.00) on or before November 1, 1996;
(iii) One Hundred Twenty-five Thousand and No/100 Dollars
($125,000.00) on or before November 1, 1997;
(iv) One Hundred Twenty-five Thousand and No/100 Dollars
(125,000.00) on or before November 1, 1998; and
(v) One Hundred Twenty-five Thousand and No/100 Dollars
($125,000.00) on or before November 1, 1999.
The Company shall: (a) deliver to the Consultant a Letter of Credit drawn on a
financial institution and in a form reasonably acceptable to the Consultant
securing the payments set forth in this subparagraph within thirty (30) days
from the date of this Agreement (the "Letter of Credit") or, in the
alternative, (b) deliver to the Consultant the sum of Five Hundred Thousand and
No/100 Dollars ($500,000.00) in cash within thirty (30) days from the date of
this Agreement (the "Satisfaction Payment"). The delivery to the Consultant of
the Satisfaction Payment within thirty (30) days from the date of this
Agreement shall constitute a complete satisfaction of the Company's obligations
under this subparagraph. The Company's failure to timely deliver either the
Letter of Credit or the Satisfaction Payment contemplated by this subparagraph
shall constitute a material breach of this Agreement. Time is of the essence.
Notwithstanding anything contained in this subparagraph to the
contrary, the Company shall have an extension of time until the earlier of the
receipt by the Company of at least One Million and No/100 Dollars
($1,000,000.00) from the proceeds of a private placement of the Company's
stock, or December 31, 1995, to deliver
-3-
<PAGE> 4
to the Consultant: (a) the One Hundred Twenty-five Thousand and No/100 Dollars
($125,000.00) due on or before thirty (30) days from the date hereof; and (b)
either the Letter of Credit or the Satisfaction Payment required by this
subparagraph.
(B) The Company may in the future provide the Consultant
with such additional compensation as the Company and the Consultant shall
mutually agree for any additional services by the Consultant not provided for
in this Agreement, which terms shall be set forth, during the term of this
Agreement, in Schedules attached hereto and incorporated herein by reference.
(C) If Consultant becomes unable to perform consulting
services due to the death or disability of its principal, E. Carl Anderson,
Jr., during the term of this Agreement, the Consultant (or its successors and
assigns, as the case may be) shall nonetheless be entitled to keep all of the
compensation described in paragraph 4(A) hereof.
5. Duties. From time to time as reasonably requested by the
Company during normal business hours, the Consultant shall provide advice and
counsel regarding production of television advertising, timing of placement of
television advertising, editorial content of television advertising, analysis
of the results of television advertising that has been run, selection of health
related products to offer for sale, introduction of potential hosts or guests
for the health related programming, and such other advising as he may be
reasonably considered qualified to render, including advice regarding stock
market related activities.
-4-
<PAGE> 5
6. Nature of Engagement. The Consultant is being engaged by the
Company as an independent contractor and shall be responsible for payment of
his own taxes. Nothing in this Agreement shall be construed so as to create an
employer-employee relationship between the parties.
7. Agreement Not to Compete. During the term of this Agreement,
the Consultant, and its principal, E. Carl Anderson, Jr., agrees not to
compete with the Company by ownership of a major interest in any corporation
whose primary business is operation of a television broadcasting network or by
providing consultation services to such a corporation.
8. Expenses. Upon receipt of requests from the Consultant for
reimbursement, the Company shall reimburse Consultant for all reasonable and
necessary expenses the Consultant incurs, prior to and after the date of this
Agreement in performing his duties in connection with this Agreement. The
Consultant shall be required to receive authorization from the Company prior to
incurring any such expenses in excess of $1,000.00.
9. Contemporaneous Transactions. EVRO and the Consultant's
principal, E. Carl Anderson, Jr., have entered into a Stock Purchase Agreement
contemporaneously with this Agreement, and each acknowledge and agree that this
transaction is intended to stand alone and not be construed in relation to said
Stock Purchase Agreement.
10. Notices. Any notice, report or demand required, permitted or
desired under this Agreement shall be sufficient if in
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<PAGE> 6
writing and delivered by certified mail, return receipt requested, Federal
Express (or similar courier), telegram or receipted hand delivery at the
following addresses (or such other addresses designated by proper notice):
To the Company: EVRO CORPORATION
7501 W. IRLO BRONSON MEMORIAL HIGHWAY
SUITE 105
KISSIMMEE, FLORIDA 34747
ATTENTION: DANIEL M. BOYAR
To the Consultant: SOUTHERN RESOURCE MANAGEMENT, INC.
15414 E. Burrell Drive
Lutz, Florida 33549
ATTENTION: E. CARL ANDERSON, JR.
Any notice otherwise delivered shall be deemed given when actually received by
recipient.
11. Limited Joinder of E. Carl Anderson, Jr. The parties
acknowledge and agree that E. Carl Anderson, Jr. is executing this Agreement
in his individual capacity for the limited purpose of evidencing his agreement
to the non-competition restriction set forth in Paragraph 7 and for no other
purpose.
12. Miscellaneous.
(A) Governing Law. This Agreement shall be governed by,
interpreted and enforced in accordance with the laws of the State of Florida.
(B) Waiver. The waiver by any party hereto of a breach
of any provision of this Agreement shall not operate as a waiver of any other
breach of any provision of this Agreement by any party.
(C) Entire Agreement. This instrument contains the
entire agreement of the parties concerning engagement and may not
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<PAGE> 7
be changed or modified except by written agreement duly executed by the parties
hereto.
(D) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors, heirs, personal representatives and assigns.
(E) Day(s). Reference in this Agreement to "day" or
"days" refers to calendar days, but if a referenced date falls on a Saturday,
Sunday or federal holiday, it will be deemed to fall on the next calendar day
that is not a Saturday, Sunday or federal holiday.
(F) Confidentiality. Except as may otherwise be required
by law, the provisions of this Agreement shall remain strictly confidential.
To the extent permitted by law, the Board of Directors of the Company shall
ensure that no person other than members of the Board of Directors of the
Company and appropriate officers of the Company are made aware of the terms of
this Agreement. Tn addition, neither the Company nor the Consultant shall,
either directly or indirectly through their respective officers, directors,
employees, shareholders, partners, joint ventures, agents, consultants,
contractor, affiliates or any other person, disclose, communicate, disseminate
or otherwise breach the confidentiality of all or any provision of this
Agreement, without the express written consent of both parties to this
Agreement.
(G) Additional Documents. The Company agrees to execute
such other documents and agreements to effectuate the purposes of this
Agreement, as the Consultant may request from time to time.
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<PAGE> 8
(H) Assignment. The obligations of the parties under
this Agreement shall not be assigned without the written consent of the
parties. Notwithstanding any provision of this Agreement to the contrary,
however, the Consultant shall be entitled to provide that any funds payable or
stock issuable to him pursuant to this Agreement shall instead be paid or
issued to another person.
(I) Counterparts. This Agreement may be executed in
counterparts, and all counterparts will be considered as part of one agreement
binding on all parties to this Agreement.
(J) Facsimile Signatures. The parties may execute this
Agreement by facsimile, which signatures shall be deemed an original and
binding upon such party.
(K) Severability. If any term, condition or provision of
this Agreement or the application thereof to any party or circumstances shall,
at any time or to any extent, be invalid or unenforceable, the remainder of
this Agreement, or the application of such term, condition or provision to
parties or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term, condition and
provision of this Agreement shall be valid and enforceable to the fullest
extent permitted by law.
(L) Dispute Procedure. Any dispute, controversy or claim
arising out of, or in connection with this Agreement shall be settled by
binding arbitration in accordance with the rules of the American Arbitration
Association then in effect. The arbitration shall be conducted on an expedited
basis in the Orange County,
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<PAGE> 9
Florida area by an independent arbitrator selected by the American Arbitration
Association. The arbitration shall be subject to, and the arbitrator shall
have the powers and rights afforded by, the rules of the American Arbitration
Association. The decision of such arbitrator, including any award of
attorney's fees and costs, may be entered into any court with jurisdiction.
(M) Board of Directors. Except as expressly provided
otherwise in this Agreement, reference to actions, determinations or similar
occurrences by the Company shall mean the action, decision or determination of
its Board of Directors.
(N) Authority. The Company hereby represents and
warrants that the person executing this Agreement on its behalf is duly
authorized to do so, that the execution of this Agreement has been duly
approved by the Board of Directors of the Company, and that this Agreement is
binding upon the Company. The Company hereby agrees to provide such
documentation evidencing such authorization and approval as the Consultant may
reasonably request, including, without limitation, written consents of the
Board of Directors of the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
EVRO CORPORATION
By: /s/ Daniel M. Boyar
---------------------------------
its: Special Counsel
------------------------------
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<PAGE> 10
SOUTHERN RESOURCE MANAGEMENT, INC.
By: /s/ E. Carl Anderson, Jr.
------------------------------------
its: President
-------------------------------
As to Paragraph 7, only:
/s/ E. Carl Anderson, Jr.
------------------------------------
E. CARL ANDERSON, JR.
[THIS PAGE LEFT INTENTIONALLY BLANK]
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<PAGE> 11
STOCK PLEDGE AGREEMENT (CONSULTING)
THIS AGREEMENT made this 1st day of November, 1995, by and between
EVRO CORPORATION ("Pledgor"), and SOUTHERN RESOURCE MANAGEMENT, INC., a Florida
corporation ("Pledgee").
W I T N E S S E T H:
WHEREAS, Pledgor has issued 100 shares of Series J Convertible
Preferred Stock of Evro Corporation, 60 shares of which are evidenced by
Certificate Number 2 (the "EVRO Shares"), representing the equivalent of
3,000,000 common shares upon conversion, and which have been pledged as
collateral under this Agreement; and
WHEREAS, Pledgor has agreed that as security for the payment by
Pledgor to Pledgee of a consulting fee in the amount of Five Hundred Thousand
and NO/100 Dollars ($500,000.00), as set forth in a certain Consulting
Agreement, a copy of which is attached hereto as Exhibit "A" (hereinafter the
"Consulting Agreement"), Pledgor has agreed to pledge the EVRO Shares as
security for the performance of its obligations under the Consulting Agreement;
and
WHEREAS, the parties desire to set forth the terms of their agreement
with respect to the foregoing in writing.
NOW, THEREFORE, in consideration of the foregoing, the terms and
conditions set forth herein and other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto agree as follows:
1. Recitals. The above recitals to this Agreement are hereby
incorporated into this Agreement as though fully restated herein.
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<PAGE> 12
2. Grant of Security Interest. Pledgor hereby grants Pledgee a
security interest in and to the EVRO Shares as security for the faithful
performance by Pledgor of all Pledgor's obligations under the Consulting
Agreement. Upon execution of this Agreement, Pledgor shall immediately deliver
to Pledgee the certificate representing the EVRO Shares, together with a stock
power and signature guaranteed as to the certificate (hereinafter the
"Collateral"), which Collateral shall be held by Pledgee in accordance with the
following terms and conditions:
(a) Pledgor hereby authorizes Pledgee upon the failure by
the Pledgor to fulfill any of its obligations hereunder or under the Consulting
Agreement, to sell all or a portion of the Collateral, at public or private
sale, to satisfy, in full or in part, Pledgor's monetary obligation under the
Consulting Agreement after first deducting from the proceeds thereof all costs
and expenses incurred in connection with the sale of the Collateral, including,
without limitation, reasonable attorneys' fees incurred in connection with the
sale. Notwithstanding anything in this Agreement to the contrary, Pledgee
shall have all additional rights and remedies available to him pursuant to the
Uniform Commercial Code as enacted in the State of Florida;
(b) Pledgor or its designees shall be solely entitled to
represent the EVRO Shares with complete voting and dividend rights, so long as
no default shall occur in the performance and/or payment required under this
Agreement or under the Consulting Agreement. In the event of and upon default
in the obligations of Pledgor
-2-
<PAGE> 13
under this Agreement or under the Consulting Agreement, and during the
continuance of such default or non-performance, Pledgee, or his nominee or
agent, shall be entitled to represent and vote the EVRO Shares; and
(c) Pledgee shall arrange for the transfer of the EVRO
Shares on the books of the issuing corporation to the name of the Pledgee, in
pledge.
3. Pledgor Representations and Warranties. Pledgor hereby
represents and warrants to Pledgee that:
(a) This Agreement has been duly authorized and approved
by all necessary corporate action on the part of Pledgor and, when duly
executed, this Agreement will be a valid, legally binding and enforceable
obligation of Pledgor in accordance with its terms;
(b) Pledgor has good and marketable title to the EVRO
Shares;
(c) Pledgor shall pay all taxes upon the EVRO Shares,
and/or any transfer fees or expenses which may result from this Agreement,
and/or defend title (or pay all costs and expenses incurred or paid by another
to defend title) to the EVRO Shares; and
(d) Pledgor shall not dispose of or further encumber the
Collateral during the term of this Agreement, without the written consent of
the Pledgee.
4. Continuing Lien. Notwithstanding any other provision
contained in this Agreement, Pledgor hereby grants to Pledgee a continuing lien
upon and security interest in the EVRO Shares,
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<PAGE> 14
which lien and security interest shall secure the warranties, representations,
guarantees, promises, covenants, liabilities, claims, costs, and expenses
arising from rights, duties or obligations created by or arising out of the
terms and conditions of this Agreement.
5. Release of Pledge. If Pledgor pays the Five Hundred Thousand
and NO/100 Dollars ($500,000.00) due under the Consulting Agreement, in a
timely manner, then the entire obligations of Pledgor under this Agreement
shall have been deemed fully satisfied, and Pledgee shall release the pledged
EVRO Shares back to Pledgor, and the Pledge or lien against the EVRO Shares
granted hereby shall terminate.
6. Benefit of Agreement. This Agreement shall be binding upon
and inure to the benefit of the parties hereto, their heirs, personal
representatives, successors and assigns.
7. Governing Law. This Agreement shall be governed in all
respects by the laws of the State of Florida.
8. Entire Agreement. This Agreement represents the entire
agreement among the parties hereto and specifically supersedes any oral or
written agreements heretofore entered into by such parties with respect to the
subject matter hereof.
9. Attorneys' Fees. In the event that either party engages an
attorney in connection with any dispute between the parties, the prevailing
party shall be entitled to recover reasonable attorneys' fees and costs
associated therewith.
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<PAGE> 15
IN WITNESS WHEREOF, the undersigned parties hereto have executed this
Agreement the day and year first above written.
"PLEDGOR":
EVRO CORPORATION
By: /s/ Daniel M. Boyar
----------------------------------
Daniel M. Boyar, By the
authority of The Board of
Directors
"PLEDGEE":
SOUTHERN RESOURCE MANAGEMENT, INC.
By: /s/ E. Carl Anderson, Jr.
----------------------------------
its: President
-----------------------------
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<PAGE> 1
EXHIBIT 10.06
FIRST AMENDMENT TO CONSULTING AGREEMENT
THIS FIRST AMENDMENT TO CONSULTING AGREEMENT is made as of November
30, 1995, by and between EVRO CORPORATION, a Florida corporation (the "Company"
or "EVRO") and SOUTHERN RESOURCE MANAGEMENT, INC., a Florida corporation (the
"Consultant").
R E C I T A L S:
A. WHEREAS the Company and the Consultant entered into a certain
Consulting Agreement dated as of November 1, 1995 (hereinafter the "Consulting
Agreement");
B. WHEREAS the terms of the Consulting Agreement requires the
company to pay to the Consultant or its designees, as compensation for its
services and as compensation for Consultant's agreement not to compete with
Company, the total sum of Six Hundred Twenty-five Thousand and No/100 Dollars
($625,000.00) in accordance with a certain schedule of payments and deliver to
the Consultant a Letter of Credit securing said payments or, in the
alternative, deliver to the Consultant the sum of Five Hundred Thousand and
No/100 Dollars ($500,000.00) in complete satisfaction of all amounts due
Consultant under the Consulting Agreement on or before December 1, 1995.
C. WHEREAS the Company failed to pay the consultant or its
designees the sum of One Hundred Twenty-five Thousand and No/100 Dollars
($125,000.00) on or before December 1, 1995 as required by the terms of the
Consulting Agreement.
<PAGE> 2
D. WHEREAS the Company failed to deliver to the Consultant a
Letter of Credit securing said payments or, in the alternative, deliver to the
Consultant the sum of Five Hundred Thousand and No/100 Dollars ($500,000.00) in
complete satisfaction of all amounts due Consultant under the Consulting
Agreement on or before December 1, 1995.
E. WHEREAS on or about February 8, 1996, the Company paid the
consultant the sum of One Hundred Thousand and No/100 Dollars ($100,000.00).
F. The Company and the Consultant desire to amend the consulting
Agreement in accordance with the terms set forth in this First Amendment to
Consulting Agreement.
NOW THEREFORE, in consideration of the mutual promises and covenants
set forth below, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
1. Paragraph 4(A) of the Consulting Agreement is deleted in its
entirety and the following is substituted in its place:
"4. Consulting Services Compensation.
(A) The Company shall pay to Consultant
or its designees, as compensation for its services
under this Agreement, and as compensation for
Consultant's agreement not to compete with Company,
as described in paragraph 7 hereof, the sum of Six
Hundred Twenty-five Thousand and No/100 Dollars
($625,000.00) in cash, payable as follows:
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<PAGE> 3
(i) One Hundred Thousand and No/100
Dollars ($100,000.00) on or before February
8, 1996;
(ii) Twenty-five Thousand
and No/100 Dollars ($25,000.00) on or before
March 15, 1996;
(iii) One Hundred Twenty-five
Thousand and No/100 Dollars ($125,000.00) on
or before November 1, 1996;
(iv) One Hundred Twenty-five
Thousand and No/100 Dollars ($125,000.00) on
or before November 1, 1997;
(v) One Hundred Twenty-five
Thousand and No/100 Dollars ($125,000.00) on
or before November 1, 1998; and
(vi) One Hundred Twenty-five
Thousand and No/100 Dollars ($125,000.00) on
or before November 1, 1999.
The Company shall: (a) deliver to the Consultant a Letter of Credit
drawn on a financial institution and in a form reasonably acceptable
to the Consultant securing the payment set forth in subparagraphs
4(a)(iii) through 4(A)(vi) on or before March 15, 1996 (the "Letter of
Credit") or, in the alternative, (b) deliver to the Consultant the sum
of Four Hundred Thousand and No/100 Dollars ($400,000.00) in cash on
or before March 15, 1996 (the "Satisfaction Payment"). The delivery
to the Consultant of the Satisfaction Payment as contemplated by this
subparagraph shall constitute a complete satisfaction of the Company's
obligations under this subparagraph. The Company's failure to timely
deliver either the Letter of Credit or the Satisfaction Payment
contemplated by this subparagraph shall constitute a material breach
of this Agreement entitling the Consultant to accelerate the maturity
of all payments due under this Agreement and receive the immediate
payment of the same. Time is of the essence."
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<PAGE> 4
2. The Consultant acknowledges receipt of the sum of One Hundred
Thousand and No/100 Dollars ($100,000.00) from the Company on or about February
8, 1996.
3. All other terms and conditions contained in the Consulting
Agreement remain in full force and effect and are hereby reaffirmed.
[THE REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
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<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
EVRO CORPORATION
By: /s/ Daniel M. Bogar
-----------------------------------
its: Special Counsel
-------------------------------
SOUTHERN RESOURCE MANAGEMENT, INC.
By: /s/ E. Carl Anderson, Jr.
----------------------------------
its: President
------------------------------
/s/ E. Carl Anderson, Jr.
--------------------------------------
E. CARL ANDERSON, JR., individually
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
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<PAGE> 1
EXHIBIT 10.07
JOINT VENTURE AGREEMENT
THIS AGREEMENT ("Agreement") is executed this 11th day of January,
1996, by and between EVRO CORPORATION, a Florida corporation ("EVRO"), MIT-F/x,
INC., a Florida corporation ("MIT"), and LARRY MITCHELL, an individual
("MITCHELL").
W I T N E S S E T H :
WHEREAS, EVRO is a publicly traded company currently listed on the
NASDAQ Small Caps Market (trading symbol "EVRO"); and
WHEREAS, MIT is in the business of owning and developing computer
animated software and related productions which have application to video
games, theatrical movies, television broacasting, comic books and other forms
of distribution; and
WHEREAS, MITCHELL is the sole owner of all of the issued and
outstanding shares of MIT, and desires to enter into a business arrangement
with EVRO to develop and exploit certain projects for financial gain; and
WHEREAS, the parties desire to enter into a Joint Venture in
accordance with the terms and conditions of this Agreement.
1
<PAGE> 2
NOW, THEREFORE, in consideration of the mutual promises, payments and
warranties herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. RECITATIONS. The foregoing recitations are true and correct
and are incorporated herein by this reference.
2. TERM. The term of this Agreement shall be for a period of
five years, commencing upon execution hereof by all the parties.
3. PAYMENT. EVRO shall pay to MITCHELL the following:
(a) $300,000.00 in 60 equal monthly installments of
$5,000 each, payable on the 1st of each month, commencing February 1, 1996.
(b) 40,000 restricted common shares of EVRO in the form
of an equivalent number of shares of Convertible Preferred stock, which shares
shall convert immediately upon the increase in the authorized common shares of
EVRO.
(c) An annual bonus in the amount of four percent (4%) of
the gross revenues earned and received by EVRO that are directly attributed to
and a proximate cause from the efforts and work product of MITCHELL, shall be
paid to MITCHELL. Such bonus shall be
2
<PAGE> 3
paid in a lump sum, annually, at the end of EVRO's fiscal year.
(d) A discretionary bonus in an amount to be determined
by the EVRO Board of Directors, to be paid from net earnings received by EVRO
that are directly or indirectly attributed to the efforts and work product of
MITCHELL with regard to other entities or projects that are currently owned by
EVRO and which are not related directly to MIT, shall be paid to MITCHELL. Such
bonus shall be paid in a lump sum, annually, at the end of EVRO's fiscal year.
4. SERVICES TO BE PROVIDED BY MITCHELL AND MIT. MITCHELL and MIT
shall provide on an exclusive basis during the term of this agreement, those
projects listed on Schedule B attached hereto to EVRO, and its subsidiary
corporation Channel America Television Network, Inc., the rights to show or
distribute such projects. The distribution of these projects shall be on a
joint venture basis, to be exclusive only to EVRO or its affiliates, unless
waived or agreed by EVRO to allow for distribution to a third party.
EVRO and MIT shall split all revenues and profits from the distribution of
these projects on an equal 50-50 basis. Any revenues received by MIT shall be
split in half with EVRO.
5. PRODUCTION COSTS. MIT shall be responsible for all
3
<PAGE> 4
costs of Production and creation of the projects that are the property of the
joint venture, and EVRO shall only be responsible for the costs associated with
the distribution of these projects. MIT shall have the right to raise funds
necessary to cover the production costs through any lawful means that it
determines or desires.
6. CONDITIONS OF JOINT VENTURE. EVRO shall determine in its sole
discretion, which projects, if any, to distribute or promote, that are created
and produced by MITCHELL and MIT. The parties agree that the "WINGS ANGELA"
computer animated cartoon created by MITCHELL shall be the first project and
priority in the joint venture to be developed into a 60 minute pilot and then
26 half-hour television shows. The intended distribution date shall be Summer
1996 for the pilot and Fall 1996 for the commencement of the series. However,
EVRO reserves the right to change the schedule or priorities and MITCHELL and
MIT agree to fully cooperate in good faith.
During the term of this agreement, MITCHELL shall provide consulting services
to EVRO and its other projects and affiliates, at no additional compensation,
provided it does not materially interfere with the development of the projects
listed on Schedule "B" hereof.
7. REPRESENTATIONS, COVENANTS AND WARRANTIES OF MITCHELL AND
4
<PAGE> 5
MIT. MITCHELL and MIT hereby jointly and severally represent, warrant and
covenant to EVRO that the following statements are true and correct:
(a) MITCHEL is currently the sole owner of all of the
shares of stock of MIT, a Florida corporation, which is the owner of all of the
assets set forth on Schedule "A" and the intellectual properties set forth on
Schedule "B", both attached hereto; and
(b) MITCHELL has contributed all of the assets and
properties set forth on Schedules "A" and "B", respectively, into a newly
formed Florida corporation, named MIT-F/x, Inc.; and
(c) The assets and intellectual properties as stated on
the atttached Schedules are complete and accurate in their entirety and
MITCHELL has disclosed all relevant information regarding these assets and
properties to EVRO.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES OF EVRO. EVRO
hereby represents, warrants and covenants to MITCHELL that the following
statements are true and correct:
(a) The information contained in the financial statements
and corporate package delivered to MITCHELL is complete and accurate in all
material respects as of the closing.
5
<PAGE> 6
(b) EVRO has full authority and approvals necessary to
enter into this Agreement.
9. TERMINATION AND DEFAULT. This agreement may not be terminated
by either party without the consent of the other party, in writing. The parties
agree that since the majority assets that are the subject property in the joint
venture involve intellectual property and rights to distribute such properties
on an exclusive basis, that the relationship between the parties would be
impossible to replicate. Therefore, the parties acknowledge that there would be
irreperable harm done to the other party if the terms of the joint venture were
not honored and there is a default by any party. As such, all equitable
remedies or at law will be granted to the party who is injured or damaged as a
result of the other party breaching any part of this agreement, including
injuctive relief and related remedies.
10. MISCELLANEOUS.
10.1 Notices. All notices to be sent to the parties hereto in
connection with this Agreement shall be sent:
If to EVRO: EVRO CORPORATION
ATTN: CHRISTOPHER P. DONA, V.P.
523 DOUGLAS AVENUE
ALTAMONTE SPRINGS, FLORIDA 32714
with a copy to: DANIEL M. BOYAR, ESQ.
ATTORNEY AT LAW
6
<PAGE> 7
3101 S.W. 34TH AVENUE, #905-427
OCALA, FLORIDA 34474
If to MITCHELL or MIT: LARRY MITCHELL
1507 ACROPOLIS CIRCLE
OCOEE, FLORIDA 34761
with a copy to: ALAN KALINOSKI, ESQ.
DEAN, RINGERS, MORGAN & LAWTON
200 EAST ROBINSON STREET, SUITE 1020
ORLANDO, FLORIDA 32801
or such other address as the party to whom notice is to be given furnishes in
writing to the other party in the manner set forth above.
10.2 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
10.3 Attached Schedules and Exhibits. The Schedules and Exhibits
to this Agreement, which are attached hereto, are fully incorporated into this
Agreement by reference and shall be part of this Agreement.
10.4 Waiver. Any term, provision or condition of this Agreement
(other than the requirement for stockholder approval) may be waived in writing
by the party which is entitled to the benefits thereto.
10.5 Expenses. Except as otherwise provided, all costs and
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<PAGE> 8
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expense.
10.6 Parties in Interest, Assignment. This Agreement is binding
upon and is solely for the benefit of the parties hereto and their respective
successors, legal representatives and assigns. This Agreement cannot be
assigned except by mutual consent.
10.7 Headings. The headings in this Agreement are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.
10.8 Entire Agreement. This Agreement supersedes any and all oral
or written agreements and understandings heretofore made relating to the
subject matter hereof and contains the entire agreement of the parties relating
to the subject matter hereof and documents referred to herein.
10.9 Severability. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or unenforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provisions of
8
<PAGE> 9
this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
10.10 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Florida applicable to
contracts entered into or to be performed in that state. All actions and
proceedings relating hereto shall be litigated in any state court or federal
court located in Orange County, Florida.
10.11 Counterparts; Facsimile Copies. This Agreement may be
executed in several counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. An
executed copy of this Agreement received by way of facsimile transmission shall
be deemed to be an original, enforceable and admissible for all purposes as may
be necessary under the terms hereof.
10.12 Rule of Construction as to Ambiguities Not Applicable. Each
party to this Agreement acknowledges that such party has reviewed this
Agreement and the rule of construction that ambiguities are to be resolved
against the party drafting this Agreement shall not apply.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
9
<PAGE> 10
EVRO CORPORATION, A FLORIDA CORPORATION
BY: /s/ Christopher P. Dona
---------------------------------------
CHRISTOPHER P. DONA, VICE PRESIDENT
MIT-F/X, INC., A FLORIDA CORPORATION
BY: /s/ Larry Mitchell
---------------------------------------
LARRY MITCHELL, PRESIDENT
/s/ Larry Mitchell
- --------------------------------------------
LARRY MITCHELL, AN INDIVIDUAL
10
<PAGE> 1
EXHIBIT 10.08
PROFESSIONAL SERVICES AGREEMENT
THIS AGREEMENT is made as of the 3rd day of October, 1995, by and between EVRO
CORPORATION, a Florida corporation ("the Company"), and DANIEL M. BOYAR, an
individual ("Boyar").
W I T N E S S E T H:
WHEREAS, the Company is a public company currently trading on the
NASDAQ Small Caps Market and is currently undercapitalized to implement its
business plan; and
WHEREAS, the Company requires someone as a legal advisor to report to
the Board of Directors directly as Special Counsel to coordinate the daily
investment banking needs of the Company regarding raising capital, bridge
loans, other financings, general promotion to the investment community,
financial public relations, and related matters, on a continuous basis, who is
cognizant of the regulatory environment in which the company operates, and is
knowledgable about the National Association of Securities Dealers ("NASD"),
Securities and Exchange Commission ("SEC") and related federal and state
securities laws; and
WHEREAS, Boyar is formerly a Director and President and Chief
Executive Officer of the Company and is knowledgable about the Company and its
transactions, including Channel America Television Network, Inc. and The Sports
& Shopping Network, Inc., and has extensive experience in and knowledge of
investment banking, public companies, financial public relations, promotions,
private placements, the NASD, SEC, federal and state securites laws, mergers
and acquisitions, and related business and is a licensed Attorney at Law in
Florida as well as certain United States Federal Courts; and
WHEREAS, the Company desires the services of Boyar in the
aforementioned capacities for a period of one year from the date hereof.
NOW THEREFORE, in consideration of the promises, payments, covenants
and conditions contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is acknowledged by the parties, the parties
hereby agree as follows:
1. RECITALS. The above recitations are true and correct and are
hereby incorporated into this Agreement as though fully restated herein.
<PAGE> 2
2. CONTROLLING DOCUMENT. Notwithstanding anything else to the
contrary, this document shall supersede, govern and control all other written
documentation and oral communications between or about the parties, without
limiting any rights or benefits which Boyar may receive from any other
agreements related to his involvement with the Company.
3. RETAINER. The Company hereby retains Boyar as Special Legal
Counsel for the Board of Directors of the Company, and Boyar hereby agrees to
such retainer by the Company, upon the terms and conditions set forth herein.
Boyar shall not be required to serve as General Counsel, inasmuch as the
Company shall retain other lawyers or law firms to represent the Company for
its general corporate matters and other legal matters.
4. TERM. The term of Boyar's retainer under this Agreement (the
"Term") shall be until March 14, 1996 (the "Term Expiration Date"), unless
terminated earlier pursuant to Section 12 hereof or extended for a longer term
as modified by the terms of a mutually agreed written agreement between the
parties.
5. DUTIES. During the term, Boyar shall assume those
responsibilities of the Company and perform such duties for the Company and its
affiliates as are customarily assigned by the Board of Directors to Special
Legal Counsel for the Company. Boyar shall devote his best efforts, skill,
attention, and energies to the Company's business.
6. COMPENSATION.
6.1 - Base Fee. For all services rendered by Boyar to the Company
pursuant to this Agreement, the Company shall pay to Boyar, a legal fee at the
rate of $180,000 per annum, payable in twenty-four equal installments of
$7,500.00 on the first and the fifteenth day of each month unless Boyar shall
agree in writing to defer any portion of the compensation, in which case the
compensation shall accrue and shall be paid at such time as the Company has the
necessary resources to do so. Nothing herein contained shall prohibit the
Company from increasing Boyar's compensation from time to time during the Term
or granting to Boyar bonuses from time to time on a discretionary basis.
6.2 - Back Salary. The Company shall pay to Boyar any and all back
salary due and owing to Boyar as a result of his Employment Agreement dated
July 15, 1995, when he was employed as President and Chief Executive Officer of
the Company. The back salary shall be payable upon receipt by the Company of
gross
2
<PAGE> 3
proceeds of $2,000,000 from the sale of Company shares or other financing.
6.3 - Bonus. In addition to a base fee, the Company shall pay to
Boyar a cash bonus in the form of a monetary sum equal to five percent (5%) of
any gross funds received by the Company, in excess of $4,000,000, from any and
all activity which is directly attributed to and the result of Boyar's services
to the Company. This shall include, but not be limited to, introductions to a
financial source or sources which funds any transaction in which the Company
participates or derives any benefit, in any form whatsoever, whether in the
form of a bridge loan, equity capital placement, debt placement, or other
financing, or through the introduction of a specific transaction, such as a
merger or acquisition, which the Company undertakes and from which the Company
derives a monetary or economic benefit.
As an example, if the Company receives gross proceeds of
$5,000,000 from a private placement, Boyar shall receive a bonus of 5% on
$1,000,000 (the difference between $5 Million and $4 Million) which would
equate to $50,000.00. Such bonus shall be payable to Boyar immediately upon
receipt of such funds by the Company, in a lump sum.
7. OUTSIDE ACTIVITES. The Company agrees and recognizes that
Boyar has various investment and business interests, including Sportsworld
2000, which he may pursue, if such pursuits do not interfere with his duties
hereunder. Further, provided such activities are not in conflict or in
competition with the Company's interests and the time and energy Boyar devotes
to such activities do not significantly impair his ability to act
satisfactorily as the Company's Special Legal Counsel, Boyar shall be permitted
to act in such other capacities outside his involvment with the Company.
8. EXPENSES. The Company shall reimburse Boyar for all
reasonable expenses incurred by Boyar in the performance of his duties in
carrying out the terms of this Agreement, including without limitation expenses
incurred for such items as travel, lodging, food, telephone bills,
entertainment, and similar items. Boyar shall submit an expense report to the
Company, for reimbursement.
The Company shall provide Boyar with the use of an executive
automobile of his choice or assist Boyar in purchasing such automobile, and the
Company shall make the lease, insurance and maintenance payments on such
automobile.
3
<PAGE> 4
9. TERMINATION. Boyar's retainer under this Agreement and,
except as expressly provided herein, the Company's obligation under this
Agreement to pay Boyar further compensation and to provide Boyar with further
benefits (except for the obligation to pay fee and bonuses which have been
earned and accrued as of the date of termination) shall terminate upon the
first to occur of:
(a) The expiration of the Term of this Agreement, unless extended
by the parties.
(b) Boyar's death. If Boyar dies while retained under this
Agreement, the Company shall pay to Boyar's estate his salary and earned Bonus,
if any, pursuant to paragragph 6 hereof, which would be remaining under this
Agreement.
(c) At the Company's option, upon any material breach for cause by
Boyar of his obligations under this Agreement, which is not cured by Boyar
within thirty (30) days after the Company has notified Boyar in writing of the
specific material breach for cause and all related circumstances thereto. In
the event of termination under this section, the Company shall pay Boyar his
fee and earned Bonus, if any, in an amount of one months payment, in a lump
sum, as full and final settlement under this Agreement.
(d) At the Company's option, upon Boyar's inability, as a result
of any medically determinable physical or mental impairment, incapacity or
disease to perform his duties under this Agreement for and after a period of
three consecutive months or for five months in a twelve-month period. In the
event of termination under this section, the Company shall pay Boyar his fee
and earned Bonus, if any, remaining under this Agreement.
(e) At the option of Boyar, upon any material adverse change in
Boyar's duties or conditions of retainer including, without limitation, any
substantial reduction in Boyar's responsibilities, which has been objected to
in writing or facsimile by Boyar and which change has not been abrogated by the
Company within three (3) days after Boyar notified the Company of his
objection. In the event of termination under this section, the Company shall
pay Boyar his fee and earned Bonus, if any, remaining under this Agreement.
Nothing contained in this Agreement shall grant the Company the right to reduce
Boyar's compensation due Boyar in accordance with the terms of Paragraph 6
hereof.
(f) If at any time during the term of this Agreement, the Company
terminates this Agreement, without cause, then in such event the Company hereby
agrees to immediately and irrevocably commence a two year Consulting
arrangement with Boyar on a non-exclusive basis, under the same terms of this
Agreement, and shall execute a Consulting Agreement with Boyar to pay Boyar the
same compensation and benefits, referred to in this Agreement, as
4
<PAGE> 5
required hereunder, unless increased by the Company, or as modified by the
parties in writing.
10. ARBITRATION. All controversies, claims, disputes and other
matters in question between the parties arising out of, or relating to, this
Agreement or the breach thereof, shall be decided by arbitration before one
arbitrator in Orlando, Florida, in accordance with the commercial rules of the
American Arbitration Association then in effect, and judgment upon the award
shall be binding upon the parties hereto and may be entered in any court having
jurisdiction thereof.
11. MISCELLANEOUS.
11.1 - Notices. All notices and other communications required under
this Agreement shall be in writing and shall be effective (a) upon actual
delivery if presented personally, sent by telecopy, telegram, or telex, or
(b) seven days following deposit in the United States mail if sent by certified
or registered mail, postage prepaid, return receipt requested, to the following
addresses:
If to Boyar, to:
MR. DANIEL M. BOYAR
3101 S.W. 34TH AVENUE
# 905-427
OCALA, FLORIDA 34474
If to the Company, to:
EVRO CORPORATION
7501 W. IRLO BRONSON MEMORIAL HIGHWAY
SUITE 105
KISSIMMEE, FLORIDA 34747
Notice of any change in any such address shall also be given in the manner set
forth above. Whenever the giving of notice is required, the giving of such
notice may be waived by the party entitled to receive such notice.
11.2 - Waiver. The failure of either party to insist upon strict
performance of any of the terms or conditions of this Agreement will not
constitute a waiver of any of its rights hereunder.
11.3 - Governing Law. This Agreement shall be construed
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<PAGE> 6
and enforced in accordance with Florida law, without giving effect to
principles of conflict of law thereof.
11.4 - Attorney's Fees. In the event that either party employs
counsel to enforce any of the terms or provisions of this Agreement, the
non-prevailing party shall pay to the prevailing party all reasonable
attorneys' fees and costs incurred by the prevailing party in connection
therewith.
11.5 - Amendments. This Agreement may be amended and supplemented
only by a written instrument duly executed by both parties.
11.6 - Board Authorization. This Agreement has been authorized by a
Resolution of the Board of Directors of the Company and the signatory hereto
has been authorized by all necessary corporate action.
11.7 - Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
11.8 - Facsimile Signatures. This Agreement may be executed by
facsimile, such signature to be deemed an original and binding signature
against the party so executing.
IN WITNESS WHEREOF, intending to be legally bound, the parties have
executed this Agreement on the date first above written.
WITNESS EVRO CORPORATION
BY: /s/Thomas L. Jensen
- --------------------------- ----------------------------------------
THOMAS L. JENSEN, CHAIRMAN AND CEO
/s/Daniel M. Boyar
- --------------------------- --------------------------------------------
DANIEL M. BOYAR
6
<PAGE> 1
EXHIBIT 22.01
SUBSIDIARIES OF THE REGISTRANT
All significant subsidiaries of the Company as of March 31, 1996 are listed
below:
<TABLE>
<CAPTION>
Percentage of
State of Ownership by the
Subsidiaries of the Registrant Incorporation Company
- ------------------------------ ------------- ----------------
<S> <C> <C>
Technology Holdings, Inc. Florida
Treasure Rockhound Ranches, Inc. Texas 100.0%
Tres Rivers, Inc. Texas 100.0%
Lintronics Technologies, Inc. (Discontined as of
12/31/94) Florida 100.0%
Good Health Channel, Inc.(Discontinued as of
12/31/94) Florida 58.6%
The Sports & Shopping Network, Inc. Florida 100.0%
International Sports Collectibles, Inc. Florida 100.0%
Microsonics International, Inc. Missouri 100.0%
Centennial Sports Promotion, Inc. Florida 80.0%
The Sports Connection, Inc. Florida 100.0%
Channel America Television Network, Inc. Delaware 100.0%
Channel America LPTV License Subsidiary, Inc. Delaware 100.0%
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 33,351
<SECURITIES> 0
<RECEIVABLES> 40,899
<ALLOWANCES> 0
<INVENTORY> 77,814
<CURRENT-ASSETS> 297,201
<PP&E> 6,003,194
<DEPRECIATION> 678,580
<TOTAL-ASSETS> 18,490,281
<CURRENT-LIABILITIES> 10,976,956
<BONDS> 0
500,100
16,933,434
<COMMON> 0
<OTHER-SE> (12,927,063)
<TOTAL-LIABILITY-AND-EQUITY> 18,490,281
<SALES> 176,566
<TOTAL-REVENUES> 1,635,962
<CGS> 260,370
<TOTAL-COSTS> 1,679,730
<OTHER-EXPENSES> 5,488,231
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,366,647
<INCOME-PRETAX> (7,898,646)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,898,646)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,898,646)
<EPS-PRIMARY> $3.37
<EPS-DILUTED> 0
</TABLE>
