SCHEDULE 14C
(Rule 14c-101)
Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934
Check the appropriate box:
[X] Preliminary Information Statement [ ] Confidential, for Use of
the Commission Only
(as permitted by Rule
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[ ] Definitive Information Statement
The Viola Group, Inc.
(Name of Registrant)
The Viola Group, Inc.
(Name of Person(s) Filing Information Statement)
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THE VIOLA GROUP, INC.
1653 Haight Avenue
Bronx, New York 10461-1503
May 15, 2000
Dear Stockholder:
This is to advise you that on June 5, 2000, the holders of the issued and
outstanding shares of common stock of The Viola Group, Inc. ("Viola" or "the
Company") shall conduct a special meeting to vote on a proposed amendment and
restatement of the Company's Certificate of Incorporation to: (i) increase
the authorized number of shares of common stock from Two-Million (2,000,000)
to Seventy-five Million; (ii) authorize the issuance of Five Million
(5,000,0000) shares of preferred stock whose designations, preferences and
rights are to be determined by the Board of Directors of the Company; (iii)
eliminate stockholders' preemptive rights; (iv) specify that the vote
required for all matters, other than the election of directors, required or
permitted by law to be submitted to a vote of stockholders be determined by
a simple majority; and (v) permit any action which may be taken by
stockholders at a meeting, to be taken by written consent of those
stockholders having at least the minimum votes necessary to authorize such
action.
The Information Statement, furnished pursuant to Section 14(c) of the
Securities Exchange Act 1934, as amended accompanying this transmittal letter
describes in greater detail the Amended and Restated Certificate of
Incorporation and the purpose of such amendment and restatement. The Board
of Directors of Viola urges you to read this Information Statement in its
entirety.
Sincerely,
/s/ Arthur D. Viola
_____________________
Arthur D. Viola
President
THE VIOLA GROUP, INC.
1653 HAIGHT AVENUE
BRONX, NEW YORK 10461-1503
INFORMATION STATEMENT
This Information Statement is being furnished by The Viola Group, Inc., a
New York Corporation ("Viola" or the "Company") for informational purposes
to the holders of common stock, pursuant to Section 14(c) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act) and Regulation 14C,
promulgated thereunder. The purpose of the Information Statement is to
inform the stockholders of the Company of the proposed actions to be voted
on at the special meeting to be held at 2:00 p.m. on June 5, 2000 at the
offices of Holland & Knight, LLP, 195 Broadway, 24th Floor, New York,
New York. The record date for determining stockholders entitled to vote at
such special meeting is April 25, 2000.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU
ARE REQUESTED NOT TO SEND US A PROXY
At the special meeting of the stockholders to be held on June 5, 2000, the
stockholders will be requested to vote on a proposed amendment and
restatement of the Company's Certificate of Incorporation to: (i) increase
the authorized number of shares of common stock from Two-Million (2,000,000)
to Seventy-five Million; (ii) authorize the issuance of Five Million
(5,000,0000) shares of preferred stock whose designations, preferences and
rights are to be determined by the Board of Directors of the Company; (iii)
eliminate stockholders' preemptive rights; (iv) specify that the vote
required for all matters, other than the election of directors, required or
permitted by law to be submitted to a vote of stockholders be determined by
a simple majority; and (v) permit any action which may be taken by
stockholders at a meeting, to be taken by written consent of those
stockholders having at least the minimum votes necessary to authorize such
action. A true copy of the proposed Amended and Restated Certificate of
Incorporation is attached hereto as Annex A. The vote of a majority of all
outstanding shares entitled to vote thereon in favor of such amendment and
restatement is required to authorize its adoption as Viola's Amended and
Restated Certificate of Incorporation.This Information Statement is to also
inform you that the purpose of amending the Certificate of Incorporation to
increase the number of authorized shares of common stock is to permit the
Corporation, by corporate action taken solely by its Board of Directors, to
declare a stock dividend of .65 shares for each share of Viola stock issued
and outstanding (the "Common Stock Dividend") and to effectuate a proposed
share exchange whereby all of the issued and outstanding shares of DataMEG
Corporation, a Virginia corporation ("DataMEG") shall be exchanged for shares
of Viola's common stock, equaling upon completion of the share exchange,
ninety percent (90%) of the issued and outstanding voting capital stock of
Viola (the "Share Exchange"). A true copy of the Agreement and Plan of
Share Exchange between Viola and DataMEG is attached hereto as Annex B.
The Share Exchange has been approved by the Board of Directors of Viola and
by the Board of Directors and the stockholders of DataMEG. Under New York
law, the stockholders of the Company, as the acquiring corporation, need not
approve a stock dividend or share exchange. The Common Stock Dividend, the
Share Exchange and the Amended and Restated Certificate of Incorporation have
been approved by Viola's Board of Directors through consents in lieu of
special meetings of the Sole Director of Viola dated April 24, 2000, subject
only to the Viola stockholders approving the Amended and Restated Certificate
of Incorporation and the effectiveness thereof as a result of its filing by
the New York Department of State. No other approval is necessary to
effectuate the proposed Share Exchange. This Information Statement is first
being mailed to the stockholders of Viola on or about May 15, 2000.
The date of this Information Statement is May 15, 2000.
SUMMARY OF INFORMATION STATEMENT
The following summary is intended to highlight certain information contained
elsewhere in this Information Statement. This summary is not a complete
statement of all material information presented herein and is qualified in
its entirety by the more detailed information contained elsewhere in this
Information Statement and in the accompanying annexes and the documents
referred to herein. Stockholders are encouraged to read the Information
Statement and the accompanying annexes in their entirety. All information
concerning Viola included in this Information Statement has been provided by
Viola, and all information concerning DataMEG included in this Information
Statement has been provided by DataMEG.
Introduction
This Information Statement relates to the approval of an Amended and Restated
Certificate of Incorporation of the Company which shall enable Viola to
effectuate the contemplated Common Stock Dividend and Share Exchange.
Special Meeting of the Stockholders of Viola
On June 5, 2000, Viola shall hold a Special Meeting of the stockholders for
the purposes of voting on the Amended and Restated Certificate of
Incorporation. All of the changes to Viola's existing Certificate of
Incorporation resulting from the adoption of the Amended and Restated
Certificate of Incorporation are more fully described in the section of this
Information Statement entitled "Amended and Restated Certificate of
Incorporation: beginning on page 5. Of particular importance to Viola's
stockholders, however, is that portion of the Amended and Restated
Certificate of Incorporation which increases the authorized number of shares
of Viola's common stock, because approval thereof allows the Company's Sole
Director, without further approval from the Viola stockholders, to effectuate
the Common Stock Dividend and the Share Exchange described in the sections of
this Information Statement entitled "Common Stock Dividend" and "Share
Exchange" beginning on page 10. Prior to the adoption of the Amended and
Restated Certificate of Incorporation, the authorized capital stock of Viola
consists of Two-Million (2,000,000) authorized shares of common stock, par
value $.01. The Amended and Restated Certificate of Incorporation increases
the authorized number of shares of stock to Eighty Million (80,000,000) of
which Seventy-five Million (75,000,000) shall be common stock, with a par
value of $.01 and Five Million (5,000,000) shall be preferred stock with a
par value of $.01. Stockholder approval of the proposed action is necessary
under New York law and, as a practical matter, is required if the Company is
to proceed with the proposed Common Stock Dividend and Share Exchange because
currently all of Viola's 2,000,000 authorized shares of Common Stock are
issued and outstanding. The proposed action will permit Viola, through
the consent of its sole Director, Arthur D. Viola, to effectuate the Common
Stock Dividend and Share Exchange by and between DataMEG and Viola. Pursuant
to the Common Stock Dividend, each owner of common stock would receive an
additional .65 shares of common stock for each share currently owned,
resulting in an aggregate 3,300,000 shares of Viola's Common Stock being
issued and outstanding. In the Share Exchange, all of the issued and
outstanding shares of DataMEG shall be exchanged for shares of Viola's common
stock, equaling upon completion of the Share Exchange, Ninety percent (90%)
of the issued and outstanding voting capital stock of Viola. In the Share
Exchange stockholders of DataMEG will be issued 29,700,000 shares of Viola
common stock and DataMEG would become a wholly owned subsidiary of Viola.
Under New York law, Directors may, in their discretion, declare a stock
dividend subject to the availability of sufficient authorized shares to
effectuate such dividends. Additionally, under New York law, the vote of
the stockholders of the acquiring corporation, in this case, Viola, is not
necessary to approve a share exchange. On April 24, 2000, the Board of
Directors of Viola determined that it was in the best interests of Voila to
enter into the Agreement and Plan of Share Exchange and to declare the Common
Stock Dividend to facilitate the share exchange ratio contemplated in the
Share Exchange. On April 24, 2000, the Board of Directors of DataMEG
approved the contemplated Share Exchange and recommended that the
stockholders of DataMEG approve the contemplated Share Exchange. By
unanimous written consent of the DataMEG stockholders effective May 15, 2000
the stockholders of DataMEG approved, adopted and consented to the proposed
Agreement and Plan of Share Exchange with Voila.
As a consequence of that portion of the proposed Amended and Restated
Certificate of Incorporation which eliminates stockholders' preemptive
rights, any Viola stockholder who objects thereto and fulfills certain
statutory requirements will be entitled to receive payment for their shares.
Under New York law, stockholders intending to enforce their rights to receive
payment for shares, if certain proposed corporate action is taken, must do
so in accordance with the procedures set forth in Section 623 of the New York
Business Corporation Law, a copy of which is attached to the Notice of
Special Meeting accompanying this Information Statement. As set forth in
greater detail in Section 623, any objecting stockholders of Viola must file
their written objection to the proposed actions to be taken with the Company
prior to the special meeting or at the special meeting, before any vote is
taken. The objection shall include a notice of the stockholder's election
to dissent, the stockholder's name, stockholder's residence address, the
number and class of shares as to which the stockholder dissents and a demand
for payment of the fair market value of his shares if the action is taken.
A failure to timely file such objection will be deemed a waiver of a
stockholder's right to dissent and to demand payment of the fair value of
his shares, if the action is taken.
The Company's common stock is not listed on any exchange nor are quotations
provided on any automated quotation system by NASDAQ or otherwise. The
Company's audited balance sheet for its last fiscal year ending June 30,
1999, reflected total deficit stockholder's equity of -$5,695 or
approximately - $.028 per share.
THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
General
This section of the Information Statement describes certain aspects of the
Amended and Restated Certification of Incorporation. The following
description does not purport to be complete and is qualified in its entirety
by reference to the Amended and Restated Certificate of Incorporation, which
is attached as Annex A to this Information Statement and is incorporated
herein by reference. All stockholders are urged to read the Amended and
Restated Certificate of Incorporation in its entirety.
The Amended and Restated Certificate of Incorporation
The Amended and Restated Certificate of Incorporation shall amend and
restate Viola's Certificate of Incorporation, as more specifically described
below.
Authorization of Increasing the Number of Authorized Shares
Presently, the number of shares which the Company is authorized to issue
is Two Million (2,000,000) shares of common stock, with a par value of $.01.
All of these authorized shares are currently issued and outstanding. The
Amended and Restated Certificate of Incorporation would change the aggregate
number of shares which the Company shall have authority to issue to Eighty
Million (80,000,000) shares, of which Seventy-five Million (75,000,000)
shares shall be common stock with a par value of $.01 and Five Million
(5,000,000) shares shall be preferred stock with a par value of $.01.
Inasmuch as Viola presently has no shares of authorized capital stock which
have not been issued and are outstanding, the Board of Directors believes
that the number of shares of Common Stock currently available for future
issuance is inadequate. The Board also believes that an increase in the
number of authorized shares of common stock will permit Viola to take
advantage of future opportunities for raising additional capital, possible
acquisitions, stock splits and the Common Stock Dividend and Share Exchange,
which have been approved subject to stockholder approval of, and the filing
of, the Amended and Restated Certificate of Incorporation, and other
corporate purposes, without the delay and expense incident to the
preparation, filing and mailing of additional Information or Proxy
Statements necessary to obtain stockholder approval.
Authorization of the Creation of a Class of Preferred Stock
As stated above, the Amended and Restated Certificate of Incorporation
authorizes the issuance of five million (5,000,000) shares of preferred
stock with a par value of $.01. The relative rights, preferences and
limitations of the preferred stock are to be determined, from time to time,
in the discretion of the Viola Board of Directors in accordance with New
York law.
According to the Amended and Restated Certificate of Incorporation the
series, designations, preferences, dividend rates, redemption rights and
prices, liquidation rights, conversion rights and prices, exchange rights
and prices, maturity dates, purchase, features involving restrictions upon
the creation of indebtedness or payment of dividends on the common stock,
cumulative, relative, participating or optional rights or such other rights,
including voting rights, qualifications, limitations or restrictions thereof
are all to be determined by the Board of Directors.
Although the Board of Directors has no present intention of so doing, it
could issue shares of preferred stock that could, depending on the terms of
such series, make more difficult or discourage an attempt to obtain control
of Viola by means of a merger, tender offer, proxy contest or other means.
For example, such shares could be privately placed with purchasers favorable
to the Board of Directors in opposing any such action. In addition, the
Board of Directors could authorize holders of a series of preferred stock
to vote either separately as a class or with the holders of Viola's Common
Stock, on any merger, sale or exchange of assets by Viola or any other
extraordinary corporate transaction. Moreover, the issuance of preferred
stock could be used to dilute the stock ownership of a person or entity
seeking to obtain control of Viola should the Board of Directors consider
the action of such person or entity not to be in the best interest of the
stockholders and Viola. The Board of Directors believes that the
authorization of the creation of the class of preferred stock is in the
best interests of Viola and its stockholders, and believes it advisable
to have available such shares for possible issuance in connection with, but
not limited to the following: the raising of additional working capital, a
public or private offering, the payment of dividends in the form of stock of
Viola, the acquisition of related businesses or assets, or the
implementation of an employee benefit plan and for other corporate purposes,
without the delay and expense incident to the preparation, filing and
mailing of additional Information or Proxy Statements necessary to obtain
stockholder approval.
Indemnification
The Amended and Restated Certificate of Incorporation permits the
corporation to indemnify any and all persons whom it shall have powers to
indemnify under New York law from and against any and all of the expenses,
liabilities or other matters and such indemnification is to continue for a
person is no longer a director, officer, employee or agent. The original
Certificate of Incorporation did not expressly provide for indemnification.
The Amended and Restated Certificate of Incorporation provides for the
greatest amount indemnification within the bounds of New York law.
The Board of Directors believes that providing for the greatest amount
of indemnification within the bounds of New York law is in the best interest
of Viola and believes it is advisable to provide for such indemnification in
the Amended and Restated Certificate of Incorporation to attract, retain and
protect its Board of Directors, officers, employees and agents.
Preemptive Rights
The Amended and Restated Certificate of Incorporation eliminates
stockholders' preemptive rights. Preemptive rights are the right of
existing stockholders to purchase shares (or other securities to be issued
or subjected to rights or options to purchase) under certain circumstances.
Under New York law, unless provided in the Certificate of Incorporation,
stockholders of any New York corporation incorporated prior to February 22,
1998, automatically have preemptive rights with respect to the proposed
issuance of (or the proposed granting of rights or options to purchase) its
shares of any class (or any shares or other securities convertible into or
rights or options to purchase shares or other securities), if such issuance
would adversely affect the unlimited dividends rights of such holders.
Viola was originally incorporated prior to February 22, 1998. The right as
it currently exists would give each Viola stockholder the right during a
reasonable time and on reasonable conditions, as fixed by the Board of
Directors to purchase such shares or other securities, convertible into or
subject to a right or option to purchase Viola shares, before the Company
could consummate any offer involving such shares or other securities.
The Board of Directors believes that eliminating preemptive rights is
in the best interest of Viola and believes that it is advisable in order to
take advantage of possible future opportunities for raising additional
capital, for possible acquisitions, mergers and other corporate purposes,
without the delay, expense and potentially adverse effect on potential
opportunities, incident to making an offer to the Viola stockholder before
each such transaction.
Majority Vote of Stockholders
The Amended and Restated Certificate of Incorporation provides that
whenever any corporate action, other than the election of directors, is to
be taken by vote of the stockholders, it shall be authorized by a majority
of the votes cast in favor of such action by the holders of shares entitled
to vote thereon present in person or by proxy at a meeting of stockholders.
Under New York law, certain corporate actions, such as the authorization of
a plan of merger or consolidation, the sale, lease, exchange or other
disposition of assets, or dissolution of the corporation, require the vote
of two-thirds of the holders of stock of the corporation, if such corporation
was incorporated prior to February 22, 1998. Viola was originally
incorporated prior to February 22, 1998. The New York Business Corporation
Law permits a corporation in its Certificate of Incorporation to specify that
any, including the above-mentioned actions may be approved by a majority of
the stockholders. The Amended and Restated Certificate of Incorporation
allows the majority of the stockholders to approve such actions.
The Board of Directors believes that, except for the election of Directors,
providing for all matters, required or permitted by law to be submitted to
the stockholders, to be approved by a majority vote is in the best interest
of Viola.
Stockholders Written Consent
The Amended and Restated Certificate of Incorporation provides that
any action may be taken by the stockholders without a meeting upon the
written consent of those stockholders having at least the minimum votes
necessary to authorize such action in accordance with Section 615 of the
New York Business Corporation Law.
Under New York Law, in the absence of any provision in the Certificate
of Incorporation, a written consent of the stockholders approving corporate
action without a meeting of the stockholders must be signed by all of the
stockholders. Section 615 of the New York Business Corporation Law permits
a corporation in its Certificate of Incorporation to specify that a written
consent approving corporate action may be signed by the number of
stockholders necessary to approve such action at a stockholder meeting.
The Board of Directors believe that such amendment will avoid
unnecessary expense and delay which would be incurred in holding special
meetings of the Company's stockholders when the outcome of the vote is
already determined by the written consent of those stockholders who have the
voting power necessary to approve such action at a meeting, if one were held.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's common stock, as of the record date, April 25,
2000, by the Company's executive officers, directors, and each person known
by the Company to be the beneficial owner of more than 5% of the Company's
common stock. Except as otherwise indicated, the persons named in the table
below have sole voting and investment power with respect to the shares shown
as beneficially owned by such persons, subject to applicable community
property laws. However, as indicated by the notes following the table,
certain shares may be deemed to be beneficially owned by more than one
person or entity as a result of attribution of ownership among affiliated
persons and entities.
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Address Amount and Percentage of
Of Beneficial Owner Nature of Beneficial
Beneficial Ownership
Ownership
Mr. Arthur D. Viola 623,460 31.2%
1653 Haight Avenue
Bronx, NY 10461-1503
Sole Director, President, CEO,
CFO, Secretary and Treasurer
Mr. Nichala Viola 455,000 22.8%
24 Kellogg Road
Carland, New York 13045
Assistant Secretary
</TABLE>
1. Mr. Arthur D. Viola and Mr. Nicholas Viola are brothers. Although
not parties to any agreement or understanding, Mr. Arthur Viola as the
Company's sole Director has approved the Amendment and Restatement of the
Company's Certificate of Incorporation as set forth in Annex A hereto as
well as the Common Stock Dividend and Share Exchange, subject to
stockholder approval and the effectiveness of the Amended and Restated
Certificate of Incorporation and Mr. Nicholas Viola has independently
expressly his intention to vote in favor of the proposed Amended and
Restated Certificate of Incorporation. In the event both the Viola
brothers vote in favor of the adoption of the Amended and Restated
Certificate of Incorporation, such adoption would be approved by the
affirmation vote of approximately 53.9% of Viola's issued and outstanding
capital stock.
ALTHOUGH NO ACTION WITH RESPECT TO THE FOLLOWING MATTERS IS TO
BE TAKEN BY STOCKHOLDERS AT THE SPECIAL MEETING CALLED FOR THE
PURPOSE OF APPROVING THE AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION, THE FOLLOWING INFORMATION IS FURNISHED BECAUSE
STOCKHOLDERS WILL NOT HAVE A SEPARATE OPPORTUNITY TO VOTE ON
THE COMMON STOCK DIVIDEND AND THE SHARE EXCHANGE.
COMMON STOCK DIVIDEND
This section of the Information Statement describes certain aspects of the
Common Stock Dividend.
The Board of Directors of Viola through a written consent of its sole
director, dated April 24, 2000, has approved a stock dividend of .65 shares
for each share of Viola common stock issued and outstanding (the "Common
Stock Dividend"), subject to stockholder approval and the effectiveness of
the Amended and Restated Certificate of Incorporation. As a consequence,
each owner of shares of the Company's Common Stock will then own 1.65 shares
in lieu of each share of the Company's common stock formerly owned and the
aggregate amount of common stock of the Company issued and outstanding will
be 3,300,000 shares.
To implement the stock dividend, Viola must transfer to stated capital
from surplus that amount equal to the aggregate par value of stock issued in
the Common Stock Dividend ($13,000) and upon such transfer, and without
payment of any consideration by the receiptants of the Common Stock Dividend,
all of the shares issued in the Common Stock Dividend shall be fully paid
and non-assessable.
The Common Stock Dividend is effected to adjust the conversation ratio
contemplated by the Share Exchange whereby all of the issued and outstanding
shares of DataMEG shall be exchanged for shares of Viola's common stock, in
order that upon completion of the Share Exchange, 90% of the issued and
outstanding capital stock of Viola will be owned by the former stockholders
of DataMEG. Under New York law the vote of Viola stockholders is not
required to approve a dividend of its common stock, provided there exist
sufficient shares of common stock authorized from which the Board may issues
shares in satisfaction of the declared dividend.
SHARE EXCHANGE AGREEMENT
General
This section of the Information Statement describes certain aspects of the
Share Exchange. The following description does not purport to be complete and
is qualified in its entirety by reference to the Agreement and Plan of Share
Exchange, which is attached as Annex B to this Information Statement and is
incorporated herein by reference. All stockholders are urged to read the
Agreement and Plan of Share Exchange in its entirety.
The Agreement and Plan of Share Exchange
On April 24, 2000, the sole director of Viola approved an Agreement and
Plan of Share Exchange between Viola and DataMEG pursuant to which all of
the issued and outstanding shares of DataMEG shall be exchanged for shares
of Viola's common stock equaling, upon completion of the share exchange, 90%
of the issued and outstanding voting capital stock of Viola. As a result of
such transaction, the present stockholders of Viola would then own 10% of the
issued and outstanding shares of Viola common stock totaling, in the
aggregate, 3,300,000 shares, after giving effect to the Common Stock
Dividend. The former stockholders of DataMEG would, as a consequence of the
Share Exchange, then own 90% of the issued and outstanding shares of common
stock of Viola, equally approximately 29,700,000 shares of Viola common stock.
Under New York Law, the vote of the stockholders of Viola, as the acquiring
corporation, is not required to approve a share exchange, however, such share
exchange could not be effected without the increase in the number of shares
of authorized Common Stock contemplated in the Amended and Restated
Certificate of Incorporation which is the subject of approval at the special
meeting of stockholders.
On April 24, 2000, the Board of Directors of DataMEG approved the
contemplated Share Exchange and recommended that the stockholders of DataMEG
approve the contemplated Share Exchange. By unanimous written consent of the
DataMEG stockholders, effective May 5, 2000, the stockholders of DataMEG
approved, adopted and consented to the proposed Agreement and Plan of Share
Exchange with Viola.
The Parties to the Share Exchange
Viola
The Viola Group, Inc. is a corporation organized under the laws of the
state of New York on October 14, 1982. The Company conducts a limited
financial consulting business; its annual revenues for the last three fiscal
years ending June 30, 1999 totaled, in the aggregate $3,500. As reported
in the Company's Annual Report on Form 10-K for the fiscal year ending
June 30, 1999 and Quarterly Report on Form 10-Q for the quarter ending
December 31, 1999, the Company had total assets of $1,105 and $1,296 in
cash, respectively. On June 30, 1999 and December 31, 1999 the total deficit
stockholders equity on such dates was -$5,295 and -$5,104, respectively.
The business of the Company has been to pursue a business combination
transactions with other companies in order to establish value and a potential
for long term growth for the company's stock. Copies of the Company's Annual
Reports on Form 10-K for the last two fiscal years ending June 30, 1998 and
June 30, 1999 and its Quarterly Report on Form 10-Q for the quarter ending
December 31, 1999 are incorporated by reference herein. The Company is
neither listed on an exchange nor quoted on an automated quotation system
by NASDAQ or otherwise. Neither the Company, its Directors, Officers,
affiliates or beneficial owner of more than 5% of its common stock is a
party to, nor is its property subject to, any pending legal proceeding.
The New York Department of State reports that the Company is in an inactive
status and that fees and expenses of approximately $25,000 will be required
to be paid to the State of New York to reinstate the Company to active status
before the Company's Amended and Restated Certificate of Incorporation may
become effective. DataMEG has agreed to pay these expenses as part of the
transaction cost.
DataMEG
DataMEG Corp. ("DataMEG") is a research and development stage company
focused primarily on developing new technologies related to the internet
and information access. DataMEG was incorporated in Virginia in 1999 and
has its principal place of business at 3148 Dumbarton Street, NW.,
Washington, D.C. 20007. Telephone (202) 965-2448.
DataMEG has no material properties. Other than office supplies,
furniture and equipment incidental to the development to the of its
technology products, its primary assets are the technology it has and is
developing for high speed data transmission over ordinary telephone lines
referred to by the Company as a Communications Acceleration Systems (CAS).
DataMEG reports to have filed patents pertinent to this technology
development and its proprietary tone, frequency, modulation technology.
DataMEG's core strategy is to obtain business partners in specific market
sectors that its feels will enhance its ability to introduce a working CAS
network. As with all start-up companies, the success of its business plan,
the viability of its technology, market acceptance of its products, when
and if developed from such technology, and DataMEG's ability to obtain the
necessary capital to implement such plan are speculative.
Legal Proceedings
On February 15, 2000 a complaint was filed by Quantum Advanced
Technologies, Inc. in the Superior Court for the District of Columbia,
Civil Division, Civil Action No. 00-0001066, against DataMEG Corporation,
the three founders and principal stockholders thereof, Reggie L. Phillips,
DataMEG's Chief Operating Officer, Andrew Benson, the Company's President
and John P. Cairns, and against other entities affiliated with Messrs.
Benson and Phillips. The Complaint alleges: in Count I, that Benson,
Phillips, DataMEG and other entities with whom Benson and Phillips were
affiliated breached a nondisclosure and confidentiality agreement with the
Plaintiff by inducing Cairns to leave the Plaintiff's employment and to
bring with him to DataMEG, disclose and use proprietary, confidential
and trade secret information relating to a new modulation technology with
enormous potential commercial value in the field of data transmission
technology allegedly developed by Cairns at the end of 1996 while an
employee of Plaintiff; Count II alleges that the same conduct by Benson,
Phillips, DataMEG, and other entities with whom Benson and Phillips are
affiliated, is in violation of the Uniform Trade Secrets Act. Count III
alleges that Benson, Phillips, DataMEG and other affiliates with whom
Benson and Phillips are affiliated, tortiuously interfered with the
Plaintiff's contractual relationship with Cairns. Count IV alleges that
Benson, Phillips, DataMEG, and other entities with whom Benson and Phillips
are affiliated, tortiuously interfered with Plaintiff's prospective
business expectancy by misappropriating the Plaintiff's proprietary,
confidential and trade secret information and by attempting to develop,
market and sale products, services and applications which use the claimed
proprietary technology. Count V alleges that Cairns breached his employment
agreement with the Plaintiff by disclosing the aforesaid proprietary,
confidential and trade secret information to Benson, Phillips, DataMEG and
other entities with whom Benson and Phillips are affiliated. Count VI
alleges that Cairns breached a fiduciary duty of confidentiality owed by
virtue of his employment with the Plaintiff with respect to its proprietary
confidential and trade secret information. And Count VII alleges that
Cairns has violated the Uniform Trade Secrets Act of the District of
Columbia by virtue of his disclosure of the Plaintiff's alleged proprietary
confidential and trade secret information relating to the technology and
conduct constituting his misappropriation of the Plaintiff's trade secrets
in violation of the Uniform Trade Secrets Act. The Complaint seeks
declaratory and injunctive relief, compensatory and punitive damages in
unspecified amounts and a decree directing that all inventions,
improvements, developments conceived, produced or developed by the
Defendants or any of them relating to the Plaintiff's claim of proprietary,
confidential and trade secret information be assigned to the Plaintiff.
The Complaint also seeks costs and attorneys fees as provided in the alleged
nondisclosure and confidentiality agreement to which the Defendants are
allegedly parties.
Both DataMEG and Messrs. Phillips, Benson and Cairns dispute the
allegations of the Complaint. DataMEG contends that the Tone Frequency
Technology that DataMEG is developing is unrelated to the Waveform
Technology owned by Quantum Advanced Technologies and therefore, believes
that it has not violated any rights of Quantum Advanced Technologies.
The ultimate outcome of the litigation which may extend over a substantial
period of time is uncertain. At a minimum, such litigation may distract the
management of DataMEG from expending time and efforts on behalf of the
business of that company.
Other Material Terms of the Share Exchange
Conditions to closing
In addition to the accuracy of customary representations and warranties
at the time of closing, the approval and effectiveness of the Viola Amended
and Restated Certificate of Incorporation and the completion of the Common
Stock Dividend, closing is also conditioned on DataMEG's obtaining
commitments to loan it at least $850,000 on terms satisfactory to DataMEG.
In the event any of the referenced conditions are not met or waived by the
parties and accordingly closing does not occur, the Amended and Restated
Certificate of Incorporation of Viola will permit its Directors to pursue
and close other transactions involving the issuance of the newly authorized
and unissued common and preferred stock without prior disclosure to or
approval by its stockholders.
Agreement regarding control of the Viola Board of Directors
The Agreement and Plan of Share Exchange provides that promptly upon
compliance with the requirements of Section 14(f) of the Securities Exchange
Act of 1934 and Rule 14(f)-1 promulgated thereunder, two designees of
DataMEG shall be appointed to serve the vacant unexpired terms of office
of former Directors of Viola's Board of Directors. The effect of the
forgoing would be to put designees of DataMEG, the acquired corporation,
in control of the Company's Board of Directors, without a vote of the
stockholders. Rule 14(f)-1 requires the dissemination of certain information
regarding the director designees who will take control of the Viola Board
to all Viola stockholders ten (10) days prior to their taking office,
however, it does not empower stockholders to vote on such matter. DataMEG
has not determined who its designees to the Viola Board of Directors will be.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated herein by reference and have been
previous filed with the Securities and Exchange Commission:
1. The Company's Annual Report on Form 10-K for the fiscal year ending
June 30, 1998;
2. The Company's Annual Report on Form 10-K for the fiscal year ending
June 30, 1999;
3. The Company's Quarterly Report on Form 10-Q for the quarter ending
December 31, 1999.
Copies of such documents are also furnished to Viola stockholders together
with this Information Statement.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
OF THE VIOLA GROUP, INC.
PLEASE TAKE NOTICE that The Viola Group, Inc., a New York corporation (the
"Corporation"), will hold a Special Meeting of Stockholders at 2:00 p.m. on
June 5, 2000, at the Offices of Holland & Knight, LLP, 195 Broadway, 24th
Floor, New York, New York 10007. This Notice of Special Meeting of
Stockholders ("Notice") is issued by the President of the Corporation
pursuant to Section 605 of the New York Business Corporation Law and the
By-laws of the Corporation.
PLEASE TAKE FURTHER NOTICE that attendance at this meeting may be in person
or by proxy. Stockholders entitled to vote at this Special Meeting of
Stockholders are the stockholders of record as of the close of business on
April 25, 2000 ("Record Date").
PLEASE TAKE FURTHER NOTICE that the purposes of this Special Meeting of
Stockholders is to consider and vote upon the following matters:
1. the amendment and restatement of the Corporation's Certificate of
Incorporation to:
(i) increase the authorized number of shares of Common Stock to
75,000,000;
(ii) authorize the issuance of up to 5,000,000 shares of Preferred Stock
whose designations, preferences and rights shall be determined by the Board
of Directors;
(iii) abolish all Stockholder preemptive rights;
(iv) establish the vote required to approve all matters, other than the
election of Directors, required or permitted by law to be submitted
to the Stockholders to be a simple majority; and
(v) authorizing written consents by shareholders in lieu of meetings
pursuant to Section 615 of the New York Business Corporation Law.
All as set forth in the Amended and Restated Certificate of
Incorporation attached hereto as Appendix A(Exhibit A).
PLEASE TAKE FURTHER NOTICE that as a consequence of the proposed
action to abolish Stockholder preemptive rights, any shareholder who objects
thereto and who fulfills the requirements of section 623 of the New York
Business Corporation Law will be entitled to received payment for their
shares, if such action is taken, by filing with the Corporation his written
objection to such action before the Special Meeting or at the Special
Meeting, before any vote is taken. The objection shall include a notice of
the Stockholder's election to dissent, the Stockholder's name, residence
address, the number and classes of shares as to which the Stockholder
dissents and a demand for payment of the fair market value of his shares
if the action is taken. A copy of Section 623 of the New York Business
Corporation Law is attached hereto.
Issued this 15th day of May, 2000.
THE VIOLA GROUP, INC.
/s/ Arthur D. Viola
_____________________
By: Arthur D. Viola
President
EXHIBIT A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF THE VIOLA GROUP, INC.
FIRST: The name of the corporation is The Viola Group, Inc. (the
"Corporation").
SECOND: The purposes for which the Corporation is formed are to engage in
any lawful act or activity for which corporations may be organized under
the New York Business Corporation Law provided that the corporation is not
formed to engage in any activity which requires the consent or approval of
any state official, department, board, agency or other body, without such
consent or approval first being obtained.
THIRD: The office of the Corporation is located in the County of Bronx,
State of New York.
FOURTH: The aggregate number of shares which the corporation shall have
authority to issue is eighty million (80,000,000) shares of which seventy-
five million shares shall be common stock, par value, $.01 and five million
(5,000,000) shares shall be preferred stock, par value $.01.
The relative rights, preferences and limitations of the shares of each
class are as follows:
Common Stock
The shares of Common Stock shall be alike and equal in all respects and shall
have one vote for each share. After the requirements with respect to
preferential dividends, if any, on the Preferred Stock shall have been met,
then, and not otherwise, dividends payable in cash or in any other medium may
be declared and paid on the shares of Common Stock. After distribution in
full of the preferential amount, if any, to be distributed to the holders of
Preferred Stock in the event of voluntary or involuntary liquidation,
dissolution, distribution of assets or winding-up of the Corporation, the
holders of the Common Stock shall be entitled to receive all of the remaining
assets of the Corporation of whatever kind available for distribution to
stockholders ratably in proportion to number of shares of Common Stock held
by them respectively.
Preferred Stock
The designations, powers, preferences, rights, qualifications, limitations
and restrictions of the
Preferred Stock are as follows:
The Preferred Stock may be issued in one or more series at such time or
times and for such consideration or considerations as the Board of Directors
may determine pursuant to a resolution or resolutions providing for such
issuance duly adopted by the Board (authority to do so being hereby expressly
vested in the Board) and such resolution or resolutions shall also set forth,
with respect to each such series of Preferred Stock, the following:
(1) The distinctive designation, stated value and number of shares
comprising such series,
which number may (except where otherwise provided by the Board of Directors
in creating such series) be increased or decreased (but not below the number
of shares then outstanding) from time to time by action of the Board of
Directors;
(2) The rate of dividend, if any, on the shares of that series, whether
dividends shall be cumulative and, if so, from which date, and the relative
rights of priority, if any, of payment of dividends on shares of that series
over shares of any other series;
(3) Whether the shares of that series shall be redeemable and, if so,
the terms and conditions of such redemption, including the date upon or after
which they shall be redeemable, and the amount per share payable in case of
redemption, which amount may vary under different conditions and at different
redemption dates, or the property or rights, including securities of any
other corporation, payable in case of redemption;
(4) Whether that series shall have a sinking fund for the redemption or
purchase of shares of that series and, if so, the terms and amounts payable
into such sinking fund;(5) The rights to which the holders of the shares
of that series shall be entitled in the event of voluntary or involuntary
liquidation, dissolution, distribution of assets or winding-up of the
Corporation, and the relative rights of priority, if any, of payment of
shares of that series;
(6) Whether the shares of that series shall be convertible into or
exchangeable for shares
of capital stock of any class or any other series of Preferred Stock and, if
so, the terms and conditions of such conversion or exchange, including the
rate of conversion or exchange, the date upon or after which they shall be
convertible or exchangeable, the duration for which they shall be convertible
or exchangeable, the event upon or after which they shall be convertible or
exchangeable and at whose option they shall be convertible or exchangeable,
and the method of adjusting the rate of conversion or exchange in the event
of a stock split, stock dividend, combination of shares or similar event;
(7) Whether the shares of that series shall have voting rights in
addition to the voting rights provided by law and, if so, the terms of such
voting rights;
(8) Whether the issuance of any additional shares of such series, or of
any shares of any other series, shall be subject to restrictions as to
issuance, or as to the powers, preferences or rights of any such other
series; and
(9) Any other preferences, privileges and powers, and relative,
participating, optional or other special rights, and qualification,
limitation or restriction of such series, as the Board of Directors may deem
advisable and as shall not be inconsistent with the provisions of this
Certificate of Incorporation and to the full extent now or hereafter
permitted by the laws of the State of New York.
FIFTH: The Secretary of State is designated as the agent of the Corporation
upon whom process against the corporation may be served. The address to
which the Secretary of State shall mail a copy of any such process served
upon him is 1653 Haight Avenue, Bronx, New York 10461-1503.
SIXTH: The name and address of the registered agent which is the agent of
the Corporation upon whom process against it may be served, is Mr. Arthur D.
Viola, 1653 Haight Avenue, Bronx, New York 10461-1503.
SEVENTH: The Corporation may, to the fullest extent permitted by Sections
722, 723, 724, 725 and 726 of the New York Business Corporation Law, as the
same may be amended and supplemented, indemnify any and all persons whom it
shall have power to indemnify under said section from and against any and
all of the expenses, liabilities or other matters referred to in or covered
by said section, and shall continue as to a person who has ceased to be
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
EIGHTH: No directors of the Corporation shall have personal liability to the
corporation or its shareholders for damages for any breach of duty in such
capacity, provided that the foregoing shall not eliminate or limit the
liability of any director if a judgment or other final adjudication adverse
to him establishes that his acts or omissions were in bad faith or involved
intentional misconduct or a knowing violation of law or that he personally
gained in fact a financial profit or other advantage to which he was not
legally entitled or that his act violated Section 719 of the New York
Business Corporation Law. No amendment to repeal this paragraph shall apply
to or have any effect on the liability or alleged liability of any director
of the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment or repeal. If the New York
Business Corporation Law is amended hereafter to expand or limit liability
of a directors, then the liability of a director of the Corporation shall be
expanded to the extent required or limited to the extent permitted by New
York law.
NINTH: Meetings of the Stockholders may be held within or without
the State of New York as the By-laws may provide. The books of the
Corporation may be kept (subject to any statutory provision) outside of the
State of New York at such place or places as may be designated from time
to time by the Board of Directors or in the Bylaws.
TENTH: No Stockholder shall be entitled to preemptive rights to purchase
shares or other securities of the Corporation.
ELEVENTH: Except as to the election of directors, who shall be elected by
a plurality of the votes cast by the holders of shares entitled to vote in
such election at a meeting of shareholders, any corporate action required or
permitted by law to be submitted to shareholders at a meeting of
shareholders shall be authorized by a majority of votes cast by the holders
of shares entitled to vote thereon present in person or by proxy; and
TWELFTH: The taking of corporate action by the written consent of those
shareholders having at least the minimum votes necessary to authorize such
action is authorized, in lieu of requiring a meeting of shareholders, in
accordance with Section 615 of the General Business Law. In the event that
any of the provisions of this Amended and Restated Certificate of
Incorporation (including any provision within a single Section, paragraph
or sentence) is held by a court of competent jurisdiction to be invalid,
void or otherwise unenforceable, the remaining provisions are severable and
shall remain enforceable to the full extent permitted by law.
THE VIOLA GROUP, INC.
/s/ Arthur D. Viola
By:_____________________________
Arthur D. Viola
President
(CORPORATE SEAL)
ATTEST:
Arthur D. Viola, Secretary
EXHIBIT B
AGREEMENT AND PLAN OF SHARE EXCHANGE
This Agreement and Plan of Share Exchange (the "Agreement") is entered into
as of this 24th day of April, 2000, by and between DataMEG Corporation, a
Virginia corporation ("DataMEG") and The Viola Group, Inc., a New York
corporation ("Viola").
BACKGROUND
DataMEG and Viola desire to enter into a binding share exchange transaction
pursuant to Section 13.1-717 et seq. of the Virginia Stock Corporation Act
and Section 913 of the New York Business Corporation Law wherein shareholders
of DataMEG shall transfer all of DataMEG's issued and outstanding shares of
capital stock ("Shares") to Viola and such Shares shall be converted into and
exchanged for shares of Viola's common stock, equaling upon completion of
this share exchange ninety percent (90%) of the issued and outstanding
capital stock of Viola (the "Share Exchange"). Following the Share Exchange,
DataMEG shall become the wholly owned subsidiary of Viola. The parties
intend that the Share Exchange qualify under both Sections 351 and Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code"). Therefore, in consideration of the mutual covenants, and in
reliance on the representations and warranties set forth in this Agreement,
the parties agree as follows:
TERMS
Section 1. Share Exchange. On the Closing Date, as defined in Section 2,
in accordance with applicable provision of the Virginia Stock Corporation Act
and the New York Business Corporation Law and Sections 351 and 368(a)(1)(B)
of the Internal Revenue Code, DataMEG shall deliver or cause to be delivered
certificates representing the Shares, accompanied by stock powers duly signed
in blank, together with, appropriate documentary evidence establishing its
capacity and authority to enter into this Agreement and to sell, transfer and
assign its Shares under this Agreement upon delivery to it of the
consideration therefor as set forth below. DataMEG agrees to cure any
deficiencies with respect to the endorsement of the certificates
representing the Shares or with respect to the stock powers accompanying
the Shares. In exchange for the Shares, Viola shall issue and deliver on the
Closing Date to DataMEG for distribution to its shareholders in accordance
with their relative interests, shares of common stock of Viola, equaling upon
the completion of the Share Exchange ninety percent (90%) of the issued and
outstanding voting capital stock of Viola ("Viola Stock").
Section 2. Closing; Effective Date.
(a) Closing; Effective Date. The closing of the transactions
contemplated by this Agreement will occur at the close of business on
June 6, 2000 (the "Closing Date"). On or before the Closing Date, the
parties shall execute and deliver the documents and certificates contemplated
by this Agreement to be executed and delivered.
(b) Legends. Viola shall place on each certificate evidencing shares of
Viola Stock the restrictive legend set forth below in order to comply with
applicable securities laws and Viola may condition the issuance of the share
certificates to DataMEG shareholders upon their execution and delivery to
Viola of the representations, warranties, and covenants set forth in Section
3 to the extent such apply to each DataMEG Shareholders and such additional
representation, warranties and covenants as Viola may reasonably request in
order to comply with such laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW.
THESE SECURITIES MAY NOT BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED IN ANY
MANNER ABSENT EITHER REGISTRATION UNDER THE ACT AND UNDER APPLICABLE STATE
SECURITIES LAW, OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT
REGISTRATION UNDER THOSE LAWS IS NOT REQUIRED.
Section 3. Representations and Warranties of DataMEG and DataMEG
Shareholders. DataMEG and, where the context requires, each DataMEG
Shareholder, represent, warrant, and agree as follows:
(a) No encumbrances. All of the Shares will on the Closing Date be free
and clear of all liens, encumbrances and claims of every kind. The delivery
of such Shares to Viola pursuant to the provisions of this Agreement will
transfer valid title thereto, free and clear of all liens, encumbrances, and
claims of every kind.
(b) Authority. DataMEG has full legal right, power, legal capacity and
authority to enter into and to perform its obligations under this Agreement,
and all other agreements, instruments and documents to be executed by it
pursuant to this Agreement. Its execution, delivery and performance of this
Agreement, has been duly authorized by all necessary action, including
approval by its board of directors and stockholders, and no other approval
or consent of, or notice to any person, entity or governmental agency or
authority is necessary. The Agreement and the other documents to be
delivered by DataMEG pursuant to this Agreement (when executed and delivered)
will be, valid and enforceable, binding on it in accordance with their terms.
(c) Organization. DataMEG is a corporation duly organized and validly
existing under the laws of Virginia and its status is active. It has all
necessary corporate power to own and operate its assets and to carry on its
business as presently conducted and as proposed to be conducted after the
Share Exchange, and it is duly authorized to conduct business in, and is
in good standing under the laws of, each jurisdiction in which the nature of
its business or the ownership or operation of its properties requires such
qualification. It is not in default under or in violation of any provisions
of its Certificate of Incorporation or Bylaws.
(d) Investment Purposes Only. Each DataMEG Shareholder is acquiring
Viola Stock in connection with the transactions contemplated by this
Agreement solely for his or her own account, for investment purposes only
and not with a view to or any present intention of or effecting a resale in
connection with, any distribution of such securities or underwriting of any
of such stock, except through underwriters pursuant to a registration
statement filed with the Securities and Exchange Commission or pursuant to
an exemption from the registration requirements of federal and state
securities laws.
(e) No Sale of Securities. No DataMEG shareholder shall sell, transfer,
pledge or otherwise dispose of any shares of Viola Stock unless the shares
are registered under the Securities Act of 1933 and under every applicable
state securities law or unless, to the satisfaction of Viola and its counsel,
they are to be transferred in a transaction for which registration under
those laws is not required.
(f) No Intention to Sell. No DataMEG shareholder has any plan or
intention to engage, directly or indirectly, in a sale, exchange, transfer,
redemption or reduction in any way of his or her ownership of any of the
Viola Stock, and did not engage in any sale, exchange, transfer or redemption
in any way of his or her ownership of stock in contemplation of the Share
Exchange.
(g) Expenses. DataMEG will pay all expenses incurred in the transactions
contemplated by this Agreement.
Section 4. Representations and Warranties of Viola. Viola represents and
warrants to DataMEG as follows:
(a) Authority. It has the full right, power, legal capacity and
authority to enter into, and to perform its obligations under, this Agreement
and all other agreements, instruments, and documents to be executed by it
pursuant to this Agreement. Its execution, delivery, and performance of
this Agreement, have been duly authorized by all necessary action, including
approval by its board of directors, and no other approval or consent of, or
notice to, any person, entity, or governmental agency or authority is
necessary. This Agreement and the other documents to be delivered by Viola
pursuant to this Agreement (when executed and delivered) will be, Viola's
valid and enforceable obligations, binding on it in accordance with their
terms.
(b) Organization. It is a corporation duly organized and validly
existing under the laws of New York and its status is active. It has all
necessary corporate power to own and operate its assets and to carry on its
business as presently conducted and as proposed to be conducted after the
Share Exchange, and it is duly authorized to conduct business in, and is in
good standing under the laws of, each jurisdiction in which the nature of
its business or the ownership or operation of its properties requires such
qualification. It is not in default under or in violation of any provisions
of its Certificate of Incorporation or Bylaws.
(c) Issuance of Stock. The shares of Viola Stock to be issued by Viola
pursuant to the Share Exchange shall be validly issued, fully paid, and
nonassessable voting common stock. As of the date of Closing, the
authorized number of shares of Viola capital stock shall be eighty million
(80,000,000), seventy-five million (75,000,000) of which are common stock,
$.01 par value, of which 3,300,000 shall be issued and outstanding, and
five million (5,000,000) of which are preferred stock, $.01 par value, none
of which shall be issued and outstanding.
(d) Reports. Beginning in 1995, Viola has timely filed all reports
required to be filed with the Commission pursuant to the Exchange Act or
the Securities Act (collectively, the "SEC Reports"), and has previously
made available to DataMEG true and complete copies of all such SEC Reports
as have been requested by DataMEG. Such SEC Reports, as of their respective
dates, complied in all material respects with the applicable requirements of
the Securities Act and the Exchange Act, as the case may be, and none of the
such SEC Reports contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading.
(e) Investment Purposes Only. Viola is purchasing the Shares solely for
its own account, for investment purposes only and not with a view to, or any
present intention of resale in connection with effecting a distribution of
such securities or any part thereof or underwriting of any such stock except
through underwriters pursuant to a registration or an available exemption
under applicable law. Viola acknowledges that the Shares have not been
registered under the Securities Act or the securities laws of any state or
other jurisdiction and cannot be disposed of unless they are subsequently
registered under the Securities Act and any applicable state laws or
exemption from such registration is available.
(f) No Sale of Securities. Viola shall not sell, transfer, pledge or
otherwise dispose of any of the Shares unless the shares are registered under
the Securities Act of 1933 and under every applicable state securities law or
unless transferred in a transaction satisfactory to DataMEG and its counsel
for which registration under those laws is not required.
(g) No Intention to Sell. Viola has no plan or intention to engage,
directly or indirectly, in a sale, exchange, transfer, redemption or
reduction in any way of its ownership of any of the Shares, and did not
engage in any sale, exchange, transfer or redemption in any way of its
ownership of stock in contemplation of the Share Exchange.
(h) Certificate of Incorporation and Bylaws. Attached hereto as
Exhibit A are true and complete copies of Viola's Certificate of
Incorporation and Bylaws and Viola's Amended and Restated Certificate of
Incorporation to be submitted to and approved by Viola's Shareholders and
to become effective prior to the Closing.
(i) Fair Market Value of Viola Stock. The fair market value of the
Viola Stock received by DataMEG in the Share Exchange will approximately
equal the fair market value of the stock surrendered in the Share Exchange
by DataMEG.
Section 5. Conduct of Business Pending Closing. Pending the consummation
of the Share Exchange, Viola shall operate only in the ordinary course of
business and shall take all necessary actions to preserve their goodwill
and operations, and will not enter into any material contract except in the
ordinary course of business or incur any material liability. Without
limiting the generality of the foregoing, DataMEG shall take such actions as
shall be necessary to cause the conditions specified in Section 6, as they
relate to DataMEG, to be fulfilled.
Section 6. Further Agreements.
(a) Third Party Notices and Consents. During the period between the
execution of this Agreement and the Closing Date, DataMEG will give any
notices to third parties, and will diligently use all reasonable efforts
to obtain any third-party consents, that Viola may reasonably request in
connection with the Share Exchange.
(b) Notice of Developments. Pending consummation of the Share Exchange,
Viola and the DataMEG shall give prompt written notice to each other of any
material development affecting the ability of the parties to consummate the
Share Exchange.
(c) Nondisclosure. DataMEG agrees not to make or permit any
announcement or public disclosure, and not to issue or permit issuance of
any press release, concerning this Agreement or the transactions
contemplated by this Agreement prior to the Closing Date, without the prior
approval of Viola, except as required by law.
(d) Change of Board Control. Promptly, upon compliance with the
requirements of Section 14(f) of the Exchange Act and Rule 14(f)-1
promulgated thereunder two designees of DataMEG shall be appointed to
serve the vacant unexpired terms of office of former members of Viola's
Board of Directors.
Section 7. Conditions Precedent to Obligations of Viola. The obligations
of Viola to consummate the Share Exchange are subject to satisfaction of
the following conditions on or before the Closing Date:
(a) Representations and Covenants. The representations and warranties of
DataMEG contained in this Agreement shall be true and correct when made and
shall continue to be true and correct on the Closing Date with the same full
force and effect as if then made. DataMEG shall have performed all
obligations in this Agreement required to be performed by it on or before
the Closing Date.
(b) No Litigation. There shall be no effective injunction, writ, or
preliminary restraining order of any nature issued by a court or
governmental agency of competent jurisdiction restraining or prohibiting
the consummation of implementation of the Share Exchange and threatened by
any governmental or regulatory agency, or, except as disclosed, any other
person with respect to the Share Exchange that Viola in good faith, and with
the advice of counsel, reasonably believes (i) is likely to result in any of
the foregoing or (ii) may result in the payment of substantial damages by
Viola.
(c) Consents. DataMEG and Viola shall have obtained such consents,
approvals, and assurances as are necessary or advisable in the opinion of
Viola, including approvals of applicable regulatory bodies, lenders and
landlords, and other parties to material contracts.
(d) Legal Matters. The Share Exchange shall be legally permitted by
all applicable laws and regulations, including all applicable securities
law, and Viola shall have completed its review of legal issues and shall
have obtained such written representations and warranties of the DataMEG as
it deems advisable, including representations and warranties of DataMEG
Shareholders concerning their intent and obligation to hold the shares of
Viola issued to them in connection with the Share Exchange as an investment,
for their own account, and not for resale or distribution.
(e) Closing Documents. At or before the closing, DataMEG shall have
executed and delivered to Viola all documents required by this Agreement to
be delivered to Viola by DataMEG. All documents and proceedings incident to
the authorization, execution, and delivery of this Agreement by DataMEG and
to the transactions contemplated by this Agreement that have not been
previously approved by Viola and its counsel shall be satisfactory to Viola
and its counsel.
(f) Full Participation. DataMEG's Board of Directors and all of its
Shareholders shall have approved and Share Exchange and waived any appraisal
rights.
Section 8. Conditions Precedent to Obligations of DataMEG. The obligations
of DataMEG to consummate the Share Exchange are subject to satisfaction of
the following conditions on or before the Closing Date:
(a) Representations and Covenants. (i) The representations and
warranties of Viola contained in this Agreement shall be true and correct
when made and shall continue to be true and correct on the Closing Date
with the same full force and effect as if then made; (ii) there shall not
have been any material adverse change with respect to Viola prior to the
Closing Date; and (iii) Viola shall have performed all obligations in this
Agreement required to be performed by it on or before the Closing Date.
(b) No Litigation. There shall be no effective injunction, writ, or
preliminary restraining order of any nature issued by a court or
governmental agency of competent jurisdiction restraining or prohibiting
the consummation or implementation of the Share Exchange and threatened by
any governmental or regulatory agency, or any other person with respect to
the Share Exchange that DataMEG, in good faith and with the advice of counsel,
believe (i) is likely to result in any of the foregoing, or (ii) may result
in the payment of substantial damages by Viola.
(c) Legal Matters. The Share Exchange shall be legally permitted by all
applicable laws and regulations, including all applicable securities laws.
(d) Appraisal Rights. The waiver or expiration of all existing Viola
shareholders' rights to receive payment for shares under section 623 of the
New York Business Corporation Law.
(e) Full Participation. DataMEG's Board of Directors and all of its
Shareholders shall have approved the Share Exchange and waived any appraisal
rights.
Section 9. Conditions Precedent to Obligations of DataMEG and Viola.
The obligations of DataMEG and Viola to consummate the Share Exchange are
subject to satisfaction of the following conditions on or before the Closing
Date:
(a) Loan Commitments. DataMeg shall have received commitments for loans
to it of at least $850,000 on terms satisfactory to DataMEG and Viola.
Section 10. Miscellaneous.
(a) Further Assurances. If at any time Viola determines that any further
assignments, conveyances, or assurances are necessary or desirable to vest
in Viola the title to the Shares, DataMEG shall execute such assignments,
conveyances, or assurances and do all acts that may be necessary or
appropriate to vest title in the Shares in Viola and otherwise to carry out
the intent and purposes of this Agreement.
(b) Governing Law and Choice of Venue. This Agreement, in every respect,
shall be governed by and construed in accordance with the laws of New York,
except any choice of law principles of New York that may direct the
interpretation or enforcement of this Agreement to the law of any other
jurisdiction, notwithstanding that some of the parties to this Agreement
are or may be residents of another state.
(c) Successors and Assigns. A party shall not assign any of its rights
or delegate any of its obligations under this Agreement without the prior,
written consent of the other parties. All of the terms of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by and
against the successors, legal representatives and permitted assigns of the
parties to this Agreement.
(d) Entire Agreement. This Agreement, including the exhibit and the
other documents delivered pursuant to this Agreement, constitute the full
and entire understanding and agreement among the parties concerning the
subject matter of this Agreement, and supersedes all prior agreements and
negotiations, oral or written, concerning that subject matter, all of which
are merged into this Agreement.
(e) Amendment. A modification or amendment of this Agreement is
effective only if it is in writing and executed by all the parties.
(f) Titles and Subtitles. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
(g) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.
(h) Delays or Omissions. No delay or omission in exercising any right,
power, or remedy of any party to this Agreement, upon any breach or default
of any other party to this Agreement, shall impair any such right, power or
remedy, nor shall it be construed to be a waiver of any such breach or
default, or any acquiescence therein, or of or in any similar breach or
default thereafter occurring. To be effective, any waiver, permit, consent
or approval of any kind on the part of any party to this Agreement of any
breach or default under this Agreement, or any waiver of any provisions or
conditions of this Agreement, must be in writing. Unless otherwise specified
in this Agreement, all remedies of a party for a breach of this Agreement
shall be cumulative.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
THE VIOLA GROUP, INC.
/s/ Arthur D. Viola
___________________
By: Arthur D. Viola
President and Sole Director
DATAMEG
/s/ Andy Benson
___________________
By: Andy Benson
President
