As filed with the Securities and Exchange Commission on April 28, 1998
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form S-8
Registration Statement
Under
The Securities Act of 1933
EGAN SYSTEMS, INC.
--------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3250816
- ----------------- ------------------
(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
1501 Lincoln Avenue, Holbrook, NY 11741
----------------------------------- ---------
(Address of Principal Executive Offices) (Zip Code)
STOCK ISSUANCE PURSUANT TO
CONSULTING AGREEMENT WITH
MARTIN CONSULTANTS, INC. AND SHIPWRIGHT ASSETS LIMITED
------------------------------------------------------------
(Full title of the plan)
Copy to:
Hank Vanderkam
Vanderkam & Sanders
440 Louisiana, #475
Houston, Texas 77002
(713) 547-8900
-------------------------------
(Name, address and telephone
number of agent for service)
Approximate date of proposed sales pursuant to the plan:
From time to time after the effective date of this Registration Statement.
CALCULATION OF REGISTRATION FEE
<TABLE>
Proposed maximum Proposed maximum Amount of
Title of securities Amount to be offering price per aggregate offering registration
to be registered registered share (1) price fee
-------------------- -------------- ------------------- -------------------- -------------
<S> <C> <C> <C> <C>
Common Stock, $.05 par value 200,000 $2.38 $476,000 $140.42
===================================== =================== ===================== ===================== ==================
</TABLE>
(1) Calculated in accordance with Rule 457(h) solely for the purpose of
determining the registration fee.
<PAGE>
PART I
INFORMATION REQUIRED IN SECTION 10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION
Information required by Item 1 is included in documents sent or given to
the consultants as specified by Rule 428(b)(1) of the Securities Act.
ITEM 2. REGISTRATION INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
Information required by Item 2 is included in documents sent or given to
the consultants as specified by Rule 428(b)(1) of the Securities Act.
<PAGE>
CROSS REFERENCE SHEET
FOR PROSPECTUS TO BE USED FOR REOFFERS OF
SHARES OF COMMON STOCK BY AFFILIATES
EGAN SYSTEMS, INC.
<TABLE>
Registration Statement
Item and Heading Prospectus Heading
------------------------ ---------------------
<S> <C> <C>
1. Forepart of the Registation Statement and Outside
Front Cover Page of Prospectus...................... Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus.......................................... Available Information; Incorporation
of Certain Documents by Reference
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges........................... General Information
4. Use of Proceeds..................................... Use of Proceeds
5. Determination of Offering Price..................... Not applicable
6. Dilution............................................ Not applicable
7. Selling Security Holders............................ Selling Shareholders
8. Plan of Distribution................................ Plan of Distribution
9. Description of Securities to be Registered.......... Not applicable'
10. Interests of Named Experts and Counsel.............. Legal Matters
11. Material Changes.................................... Not applicable
12. Incorporation of Certain Information by Reference... Incorporation of Certain Documents
by Reference
13. Disclosure of Commission Position on Indemnification
For Securities Act Liabilities...................... Not applicable
</TABLE>
<PAGE>
PROSPECTUS
200,000 Shares
EGAN SYSTEMS, INC.
Common Stock
$.05 par value
-------------------------
This Prospectus relates to the reoffer and resale by various persons (the
"Selling Shareholders") of shares (the "Shares") of Common Stock, $.05 par value
(the "Common Stock") of EGAN SYSTEMS, INC. (the "Company") that were issued by
the Company to the Selling Shareholders pursuant to Consulting Agreements with
the Company. The offer and sale of the Shares by the Selling Shareholders is
registered under the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to a registration statement, of which this Prospectus forms a part. The
Shares are being reoffered and resold for the account of the Selling
Shareholders and the Company will not receive any of the proceeds from the
resale of the Shares.
The Selling Shareholders have advised the Company that the resale of their
Shares may be effected from time to time on the OTC Bulletin Board ("Bulletin
Board"), or in negotiated transactions, or a combination of such methods of
sale, at fixed prices which may be changed, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices, or at
negotiated prices. See "Plan of Distribution." The Selling Shareholders bear all
expenses in connection with the preparation of this Prospectus.
The Common Stock of the Company is traded on the Bulletin Board under the
symbol "EGNS". On April 24, 1998, the last reported price of the Common Stock on
the Bulletin Board was $2.38.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
----------------------
The date of this Prospectus is April 28, 1998
<PAGE>
TABLE OF CONTENTS
Available Information................................................... 2
Incorporation of Certain Documents by Reference......................... 3
General Information..................................................... 3
Selling Shareholders.................................................... 4
Plan of Distribution.................................................... 4
Legal Matters........................................................... 4
Available Information
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information filed by the Company can be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
Room 1024, Washington, D.C. 20549 or at the Commissioner's Regional Offices in
New York (7 World Trade Center, Suite 1300, New York, New York 10048) and
Chicago (500 West Madison Street, Suite 1400, Chicago, Illinois 60661). Copies
of such material can be obtained from the Public Reference Section of the
Commission in Washington, D.C. at prescribed rates.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-KSB for the year-ended December 31,
1997, and the description of securities included in Form 8-A declared effective
by the Commission on April 30, 1987 are incorporated by reference in this
Prospectus and shall be deemed to be a part hereof. All reports and other
documents subsequently filed by the Company pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Securities Exchange Act of 1934, as amended, prior to filing
of a post-effective amendment which indicates that all securities offered hereby
have been sold or which deregisters all securities then remaining unsold, are
deemed to be incorporated by reference in this Prospectus and shall be deemed to
be a part hereof from the date of the filing of such reports and documents.
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, on the written or oral
request of any such person, a copy of any or all of the documents incorporated
by reference in the Registration Statement of which this Prospectus forms a part
(excluding exhibits to such documents unless specifically incorporated by
reference). Requests for such copies should be directed to Mr. Edward J. Egan,
1501 Lincoln Avenue, Holbrook, New York 11741, (516) 588-8000.
-----------------
No dealer, salesman or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer made hereby, and, if given or made, such
information or represenations must not be relied upon as having been authorized
by the Company or any Selling Shareholder. This Prospectus does not constitute
an offer to sell, or a solicitation of an offer to buy, the securities offered
hereby to any person in any state or other jurisdiction in which such offer or
solicitation is unlawful. The delivery of this Prospectus at any time does not
imply that information contained herein is correct as of any time subsequent to
its date.
GENERAL INFORMATION
The Company is engaged in the business of developing, selling and
supporting computer software products, particularly products related to the
COBOL computer language. The Company's main business has been, and continues to
be, the creation and sale of COBOL language dialects that permit programs
written in heretofore proprietary versions of COBOL to move (migrate) to
inexpensive high performance systems available from a variety of suppliers
without the need to rewrite the programs. Egan Systems is focused on the
substantial opportunities presented by the downsizing or rightsizing of computer
systems employing the COBOL computer language.
With the acquisition of Envyr Corp. in 1988, the Company introduced its
first software product. This product, a combined hardware and software solution
called ICHost, permitted programs written in Data General's proprietary
Interactive COBOL to run on inexpensive MS-DOS PC's without any conversion or
rewrite. The Companys' ICHost software, when installed on a single PC running
the popular MS-DOS operating system from Microsoft, will permit up to 129
individuals to simultaneously employ programs written in COBOL on inexpensive
"dumb" terminals connected to the PC via three wire serial lines.
3
<PAGE>
The Company is also a distributor of Interactive & COBOL products.
The Company's executive offices are located at 1501 Lincoln Avenue,
Holbrook, New York, New York 11741.
The Company will receive the services of the consultants in developing
markets for the Company's services in Asia. The Company will not, however,
receive any of the proceeds from the reoffer and resale of the Shares by the
Selling Shareholders.
SELLING SHAREHOLDERS
This Prospectus relates to the reoffer and resale of the following Shares
issued to the following consultants of the Company (the "Selling Shareholders").
Name Number of Shares to be Resold
- ----------------------------- --------------------------------------
Martin Consultants, Inc. 100,000
Shipwright Assets Limited 100,000
PLAN OF DISTRIBUTION
It is anticipated that all of the Shares will be offered by the Selling
Shareholders from time to time in the open market, either directly or through
brokers or agents, or in privately negotiated transactions. The Selling
Shareholders have advised the Company that they are not parties to any
agreements, arrangement or understandings as to such sales.
LEGAL MATTERS
Certain legal matters in connection with the issuance of the Shares offered
hereby have been passed upon for the Company by Vanderkam & Sanders, Houston,
Texas.
4
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed with the Securities and Exchange Commission
(the "Commission") are incorporated by reference into this Registration
Statement and are made a part hereof:
(a) The Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1997.
(b) All other reports filed pursuant to Section 13 or 15(d) of the
Exchange Act since the end of the fiscal year covered by the
Annual Report referred to in Item 3(a) above.
(c) The description of securities included in Form 8-A declared
effective by the Commission on April 30, 1987.
All reports and other documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934,
as amended, prior to the filing of a post- effective amendment which indicates
that all securities offered hereby have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of the filing of such
reports and documents.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Delaware General Corporation Law confers authority on Delaware
corporations to indemnify their officers, directors, employees, agents and
fiduciaries of employee benefit plans and those persons serving at the request
of the corporation as a director, officer, employee or agent of another
enterprise against certain costs of litigation for suits brought by persons
other than the corporation itself. A corporation is authorized to indemnify
covered individuals against expenses including attorneys fees, judgements, fines
and amounts paid in settlement actually and reasonably incurred by them in
connection with such action, suit or proceeding. The sole statutory condition to
indemnification is that the indemnitee have acted in good faith and in a manner
he reasonably believes to be in or not opposed to the best interest of the
corporation. With the respect to any criminal action or proceeding, he must have
no reasonable cause to believe such action was unlawful. Whether such a person
is entitled to indemnification is to be determined by a majority vote of a
disinterested quorum of directors; or if such quorum is not obtainable, or even
if obtainable, by a quorum of disinterested directors or by independent legal
counsel in a written opinion, or by the stockholders. The corporation has not
incorporated any other indemnification provisions in either its articles of
incorporation, its by-laws, or in any employment contracts with its officers
and/or directors.
II-1
<PAGE>
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
4.1 Consulting Agreement with Martin Consultants, Inc.
4.2 Consulting Agreement with Shipwright Assets Limited
5.1 Opinion and consent of Vanderkam & Sanders re: the legality of the
shares being registered
23.1 Consent of Vanderkam & Sanders (included in Exhibit 5.1)
23.2 Consent of Patrusky, Mintz & Semel
ITEM 9. UNDERTAKINGS
(a) The registrant hereby undertakes:
(1) To file, during any period in which offers or sells are being
made, a post-effective amendment to this registration statement
to include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining liability under the
Securities Act of 1933, each post-effective amendment shall be
treated as a new registration statement of the securities
offered, and the offering of the securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To file a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the
offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing
II-2
<PAGE>
provisions, or otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Holbrook, State of New York on the 27th day of April,
1998.
EGAN SYSTEMS, INC.
By: /s/ Edward J. Egan
-------------------------
EDWARD J. EGAN, President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
Signatures Title Date
----------- ------- ------
/s/ Edward J. Egan
- --------------------------- Chairman of the Board, President, April 27, 1998
EDWARD J. EGAN Chief Executive Officer, Treasurer
and Director (Principal Executive
Officer and Principal Financial and
Accounting Officer)
/s/ Barbara Jean Schultze
- --------------------------- Secretary and Director April 27, 1998
BARBARA JEAN SCHULTZE
/s/ Jack Laskin
- -------------------------- Director April 27, 1998
JACK LASKIN
/s/ Ralph Jordan
- -------------------------- Director April 27, 1998
RALPH JORDAN
II-4
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page No.
- ----------- ------------- -----------
4.1 Consulting Agreement with Martin Consultants, Inc.............. E-3
4.2 Consulting Agreement with Shipwright Assets Limited............ E-11
5.1 Opinion and consent of Vanderkam & Sanders re: the legality
of the shares being registered................................. E-19
23.1 Consent of Vanderkam & Sanders (included in Exhibit 5.1)....... E-21
23.2 Consent of Patrusky, Mintz & Semel............................. E-22
<PAGE>
EXHIBITS
E-2
<PAGE>
4.1
Consulting Agreement with Martin Consultants, Inc.
E-3
<PAGE>
CONSULTING AGREEMENT
This consulting agreement (this "Agreement") is made the 20th day of March,
1998, by and between Egan Systems, Inc., a Delaware corporation (the "Company"),
and Martin Consultants, Inc., (the "Consultant").
RECITALS
WHEREAS, the Company wishes to engage the Consultant with respect to
certain aspects of its business;
WHEREAS, the Consultant is willing to make available to the Company the
consulting services provided for in the Agreement as set forth below;
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, the parties hereto
agree as follows:
1. TERM
The term of this Agreement shall commence on the date hereof and end on
March 20, 1999.
2. CONSULTING SERVICES
(a) Long range corporate planning, including but not limited to the
development of corporate strategy, market direction and implantation
of business plans;
Review and analysis of potential mergers and/or acquisitions.
Review of operations and analysis of deviations from the business
plan.
(b) Compensation. In consideration of the consulting services set forth in
paragraph 2(a), and subject to the terms and conditions set forth
herein the Company hereby agrees to issue to the Consultant 100,000
shares of Common Stock (the "Shares") of the Company, as of the
Closing Date (as defined below), and to register such shares at the
time of issuance, or immediately thereafter, on Form S-8 under the
Securities Act of 1933, as amended.
(c) Issuance. Issuance and delivery of the Shares shall be made at the
offices of Egan Systems, Inc. on or before March 31, 1998 (the
"Closing Date"). On the Closing Date, the Company shall deliver to the
Consultant:
(i) the certificate or certificates evidencing the Shares to be
issued to the Consultant hereunder, registered in the name of the
Consultant; and
E-4
<PAGE>
(ii) evidence that the Shares have been registered on Form S-8, or an
appropriately prepared Form S-8 to be filed upon issuance of the
Shares to the Consultant, registering for resale thereof.
(d) Expenses. During the term of the Consultant's engagement hereunder,
the Consultant shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by the Consultant in preforming
services hereunder, including all travel and living expenses while
away from home on business at the request of and in the service of the
Company, provided that such expenses are incurred and accounted for in
accordance with the policies and procedures established by the
Company, and that any expenses in excess of $500.00 have been pre-
approved in writing by the Company. Notwithstanding the foregoing, the
Consultant shall bear all expenses in connection with the initial
mailing of material describing the Company to brokers and dealers.
3. CONFIDENTIAL INFORMATION
(a) Confidential Information. In connection with the providing of
Consulting Services hereunder, the Company may provide the Consultant
with information concerning the Company which the Company deems
confidential (the "Confidential Information"). The Consultant
understands and agrees that any Confidential Information disclosed
pursuant to this Agreement is secret, proprietary and of great value
to the Company, which value may be impaired if the secrecy of such
information is not maintained. The Consultant further agrees that he
will take reasonable security measures to preserve and protect the
secrecy of such Confidential Information, and to hold such information
in confidence and not to disclose such information, either directly or
indirectly to any person or entity during the term of this Agreement
or any time following the expiration or termination hereof; provided,
however, that the Consultant may disclose the Confidential Information
to an assistant to whom disclosure is necessary for the providing of
services under this Agreement.
(b) Exclusions. For purposes of this paragraph 3, the term Confidential
Information shall not include information which (i) becomes generally
available to the public other than as a result of a disclosure by the
Consultant or his assistants, agents or advisors, or (ii) becomes
available on a non-confidential basis to the Consultant from a source
other than the Company or its advisors, provided that such source is
not known to the Consultant to be bound by a Confidentiality Agreement
with or other obligation of secrecy to the Company or another party.
(c) Government Order. Notwithstanding anything to the contrary in this
Agreement, the Consultant shall not be precluded from disclosing any
of the Confidential Information pursuant to a valid order or any
governmental or regulatory authority, or pursuant to the order of any
court or arbitrator.
(d) Injunctive Relief. The Consultant agrees that, since a violation of
this paragraph 3 would cause irreparable injury to the Company, and
that there may not be an adequate remedy at law for such violation,
the Company shall have the right in addition to any other remedies
available at law or in equity, to enjoin the Consultant in a court of
equity for violating the provisions of this paragraph 3.
2
E-5
<PAGE>
4. REPRESENTATION AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Consultant that as of the
date hereof and as of the Closing Date (after giving effect to the transactions
contemplated hereby):
(a) Existence and Authority. The Company is a corporation duly organized
and validly existing in good standing under the laws of its
jurisdiction of incorporation and has full power and authority to own
its respective property, carry on its respective business as now being
conducted, and enter into and perform its obligations under this
Agreement and to issue and deliver the Shares to be issued by it
hereunder. The Company is duly qualified in all jurisdictions in which
it is necessary to be so qualified to transact business as currently
conducted. This Agreement, has been duly authorized by all necessary
corporate action, executed, and delivered by the Company, and
constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms subject
to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting the rights of creditors
generally and to general principals of equity.
(b) Authorization and Validity of Shares. The Shares have been duly
authorized and are validly issued and outstanding, fully paid and
nonassessable and free of any preemptive rights. The Shares are not
subject to any lien, pledge, security interest or other encumbrance.
(c) Authorization of Agreement. The Company has taken all actions and
obtained all consents or approvals necessary to authorize and enter
into this Agreement.
(d) No Violation. Neither the execution or delivery of this Agreement, the
issuance or delivery of Shares, the performance by the Company of its
obligations under this Agreement, nor the consummation of the
transactions contemplated hereby will conflict with, violate,
constitute a breach of or a default (with the passage of time or
otherwise) require the consent or approval of or filing with any
person (other than consents and approvals which have been obtained and
filings which have been made) or result in the imposition of a lien on
or securities interest in any properties or assets of the Company,
pursuant to the charter or bylaws of the Company, any award of any
arbitrator or any Agreement (including any Agreement with
stockholders), instruments, order, judgment, decree, statute, law,
rule or regulation to which the Company is party or to which any such
person or any of their respective properties or assets is subject.
(e) Registration. The Shares have been, or will, be upon the filing of an
S-8 Registration Statement, registered pursuant to the Securities Act
of 1933, as amended, and all applicable state laws.
5. FILINGS
3
E-6
<PAGE>
The Company shall furnish to the Consultant, promptly after the sending or
filing thereof, copies of all reports which the Company sends to its equity
security holders generally, and copies of all reports and registration
statements which the Company files with the Securities and Exchange Commission
(the "Commission"), any other securities exchange or the National Association of
Securities Dealers, Inc. ("NASD").
6. SUPPLYING INFORMATION
The Company shall cooperate with the Consultant in supplying such publicity
available information as may be reasonably necessary for the Consultant to
complete and file any information reporting forms.
7. INDEMNIFICATION
(a) The Company shall indemnify the Consultant from and against any and
all expenses (including attorney's fees'), judgments, fines, claims,
causes of action, liabilities and other amounts paid (whether in
settlement or otherwise actually and reasonably incurred) by the
Consultant in connection with such action, suit or proceeding if (i)
the Consultant was made a party to any action, suit or proceeding by
reason of the fact that the Consultant rendered advice or services
pursuant to this Agreement, and (ii) the Consultant acted in good
faith and in a manner reasonably believed by the Consultant to be in
or not opposed to the interests of the Company, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea
of nolo contendere or its equivalent, shall not, or itself, create a
presumption that the Consultant did not act in good faith in or not
opposed to the best interests of the Company, and, with respect to any
criminal action or proceedings, had reasonable cause to believe that
his conduct was not unlawful. Notwithstanding the forgoing, the
Company shall not indemnify the Consultant with respect to any claim,
issue or matter as to which the Consultant shall have been adjudged to
be liable for gross negligence or willful misconduct in the
performance of his duties pursuant to this Agreement unless and only
to the extent that the court in which such action or suit was brought
shall determine upon application that, despite the adjunction of
liability, but in view of all circumstances of the case, the
Consultant is fairly and reasonably entitled to be indemnified for
such expenses which such court shall deem proper.
(b) The Consultant shall indemnify the Company from and against any and
all expenses (including attorney's fees), judgments, fines, claims,
causes of action, liabilities and other amounts paid (whether in
settlement or otherwise actually and reasonably incurred) by the
Company in connection with such action, suit or proceeding if (i) the
Company was made a party to any action, suit or proceeding by reason
of the fact that the Consultant rendered advice or services pursuant
to this Agreement, and (ii) the Consultant did not act in good faith
and in a manner reasonably believed by the Consultant to be in or not
opposed to the interests of the Company, and with respect to any
criminal action or proceeding, did not reasonably believe his conduct
was lawful. Notwithstanding the forgoing, the Consultant shall not
indemnify the Company with respect to any claim, issue or matter as to
which the Company shall have been adjudged to be liable for gross
negligence or willful misconduct in connection with the performance of
the Consultant's duties pursuant to this Agreement unless and only to
the extent that the court in which such action or suit was brought
shall determine upon application that, despite the adjunction of
liability, but in view of all circumstances of the case, the Company
is fairly and reasonably entitled to be indemnified for such expenses
which such court shall deem proper.
4
E-7
<PAGE>
8. INDEPENDENT CONTRACTOR STATUS
It is expressly understood and agreed that this is a consulting Agreement
only and does not constitute an employer-employee relationship. Accordingly, the
Consultant agrees that the Consultant shall be solely responsible for payment of
his own taxes or sums due to the federal, state, or local governments, overhead,
workmen's compensation, fringe benefits, pension contributions and other
expenses. It is further understood and agreed that the Consultant is an
independent contractor and the Company shall have no right to control the
activities of the Consultant other than during the express period of time in
which the Consultant is performing services hereunder, and that such services
provided hereunder and not because of any presumed employer-employee
relationship. The Consultant shall have no authority to bind the Company.
The parties further acknowledge that the Consultant's services hereunder
are not exclusive, but that the Consultant shall be performing services and
undertaking other responsibilities, for and with other entities or persons,
which may directly or indirectly compete with the Company. Accordingly, the
services of the Consultant hereunder are on a part time basis only, and the
Company shall have no discretion, control of, or interest in, the Consultant's
services which are not covered by the terms of the Agreement. The Company hereby
waives any conflict of interest which now exists or may hereafter arise with
respect to the Consultant's current employment and future employment.
9. NOTICE
All notices provided by this Agreement shall be in writing and shall be
given by facsimile transmission, overnight courier, by registered mail or by
personal delivery, by one party to the other, addressed to such other party at
the applicable address set forth below, or to such other address as may be given
for such purpose by such other party by written notice duly given hereunder.
Notice shall be deemed properly given on the date of the delivery.
To Consultant: Martin Consultants, Inc.
9025 South 700 West
Sandy, UT 84070
To the Company: Egan Systems, Inc.
1501 Lincoln Avenue
Holbrook, New York 11741
10. MISCELLANEOUS
(a) Waiver. Any term or provision of this Agreement may be waived at any
time by the party entitled to the benefit thereof by a written
instrument duly executed by such party.
5
E-8
<PAGE>
(b) Entire Agreement. This Agreement contains the entire understanding
between the parties hereto with respect to the transactions
contemplated hereby, and may not be amended, modified, or altered
except by an instrument in writing signed by the party against whom
such amendment, modification, or alteration is sought to be enforced.
This Agreement supersedes and replaces all other Agreements between
the parties with respect to any services to be performed by the
Consultant of behalf of the Company.
(c) Governing Law. This Agreement shall be construed and interpreted in
accordance with the laws of the State of New York.
(d) Binding Effect. This Agreement shall bind and inure to the benefit of
the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
(e) Construction. The captions and headings contained herein are inserted
for convenient reference only, are not a part hereof and the same
shall not limit or constrict the provisions to which they apply.
References in this Agreement to "paragraphs" are to the paragraphs in
this Agreement, unless otherwise noted.
(f) Expenses. Each party shall pay and be responsible for the cost and
expenses, including, without limitations, attorneys' fees, incurred by
such party in connection with negotiation, preparation and execution
of this Agreement and the transactions contemplated hereby.
(g) Assignment. No party hereto may assign any of its rights or delegate
any of its obligations under this Agreement without the express
written consent of the other party hereto.
(h) No Rights to Others. Nothing herein contained or implied is intended
or shall be construed to confer upon or give to any person, firm or
corporation, other than the parties hereto.
(i) Counterparts. This Agreement may be executed simultaneously in two
counterparts, each of which shall be deemed an original, but both of
which together shall constitute one and the same Agreement, binding
upon both parties hereto, notwithstanding that both parties are not
signatories to the original or the same counterpart.
6
E-9
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.
THE "COMPANY"
EGAN SYSTEM, INC.
By: /s/ Edward J. Egan
---------------------------
President
THE "CONSULTANT"
MARTIN CONSULTANTS, INC.
By: /s/ Jeffery D. Martin
---------------------------
President
7
E-10
<PAGE>
4.2
Consulting Agreement with Shipwright Assets Limited
8
E-11
<PAGE>
CONSULTING AGREEMENT
This consulting agreement (this "Agreement") is made the 20th day of March,
1998, by and between Egan Systems, Inc., a Delaware corporation (the "Company"),
and Shipwright Assets Limited, (the "Consultant").
RECITALS
WHEREAS, the Company wishes to engage the Consultant with respect to
certain aspects of its business;
WHEREAS, the Consultant is willing to make available to the Company the
consulting services provided for in the Agreement as set forth below;
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, the parties hereto
agree as follows:
1. TERM
The term of this Agreement shall commence on the date hereof and end on
March 20, 1999.
2. CONSULTING SERVICES
(a) Long range corporate planning, and business development in the Far
East, including the People's Republic of China for the development of
corporate strategy, market direction and implantation of the Company's
business plans;
Review and analysis of potential markets and customers in such
markets.
Review of operations and analysis of deviations from the business plan
for such markets.
(b) Compensation. In consideration of the consulting services set forth in
paragraph 2(a), and subject to the terms and conditions set forth
herein the Company hereby agrees to issue to the Consultant 100,000
shares of Common Stock (the "Shares") of the Company, as of the
Closing Date (as defined below), and to register such shares at the
time of issuance, or immediately thereafter, on Form S-8 under the
Securities Act of 1933, as amended.
(c) Issuance. Issuance and delivery of the Shares shall be made at the
offices of Egan Systems, Inc. on or before March 31, 1998 (the
"Closing Date"). On the Closing Date, the Company shall deliver to the
Consultant:
E-12
<PAGE>
(i) the certificate or certificates evidencing the Shares to be
issued to the Consultant hereunder, registered in the name of the
Consultant; and
(ii) evidence that the Shares have been registered on Form S-8, or an
appropriately prepared Form S-8 to be filed upon issuance of the
Shares to the Consultant, registering for resale thereof.
(d) Expenses. During the term of the Consultant's engagement hereunder,
the Consultant shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by the Consultant in preforming
services hereunder, including all travel and living expenses while
away from home on business at the request of and in the service of the
Company, provided that such expenses are incurred and accounted for in
accordance with the policies and procedures established by the
Company, and that any expenses in excess of $500.00 have been pre-
approved in writing by the Company. Notwithstanding the foregoing, the
Consultant shall bear all expenses in connection with the initial
mailing of material describing the Company to brokers and dealers.
3. CONFIDENTIAL INFORMATION
(a) Confidential Information. In connection with the providing of
Consulting Services hereunder, the Company may provide the Consultant
with information concerning the Company which the Company deems
confidential (the "Confidential Information"). The Consultant
understands and agrees that any Confidential Information disclosed
pursuant to this Agreement is secret, proprietary and of great value
to the Company, which value may be impaired if the secrecy of such
information is not maintained. The Consultant further agrees that he
will take reasonable security measures to preserve and protect the
secrecy of such Confidential Information, and to hold such information
in confidence and not to disclose such information, either directly or
indirectly to any person or entity during the term of this Agreement
or any time following the expiration or termination hereof; provided,
however, that the Consultant may disclose the Confidential Information
to an assistant to whom disclosure is necessary for the providing of
services under this Agreement.
(b) Exclusions. For purposes of this paragraph 3, the term Confidential
Information shall not include information which (i) becomes generally
available to the public other than as a result of a disclosure by the
Consultant or his assistants, agents or advisors, or (ii) becomes
available on a non-confidential basis to the Consultant from a source
other than the Company or its advisors, provided that such source is
not known to the Consultant to be bound by a Confidentiality Agreement
with or other obligation of secrecy to the Company or another party.
(c) Government Order. Notwithstanding anything to the contrary in this
Agreement, the Consultant shall not be precluded from disclosing any
of the Confidential Information pursuant to a valid order or any
governmental or regulatory authority, or pursuant to the order of any
court or arbitrator.
2
E-13
<PAGE>
(d) Injunctive Relief. The Consultant agrees that, since a violation of
this paragraph 3 would cause irreparable injury to the Company, and
that there may not be an adequate remedy at law for such violation,
the Company shall have the right in addition to any other remedies
available at law or in equity, to enjoin the Consultant in a court of
equity for violating the provisions of this paragraph 3.
4. REPRESENTATION AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Consultant that as of the
date hereof and as of the Closing Date (after giving effect to the transactions
contemplated hereby):
(a) Existence and Authority. The Company is a corporation duly organized
and validly existing in good standing under the laws of its
jurisdiction of incorporation and has full power and authority to own
its respective property, carry on its respective business as now being
conducted, and enter into and perform its obligations under this
Agreement and to issue and deliver the Shares to be issued by it
hereunder. The Company is duly qualified in all jurisdictions in which
it is necessary to be so qualified to transact business as currently
conducted. This Agreement, has been duly authorized by all necessary
corporate action, executed, and delivered by the Company, and
constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms subject
to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting the rights of creditors
generally and to general principals of equity.
(b) Authorization and Validity of Shares. The Shares have been duly
authorized and are validly issued and outstanding, fully paid and
nonassessable and free of any preemptive rights. The Shares are not
subject to any lien, pledge, security interest or other encumbrance.
(c) Authorization of Agreement. The Company has taken all actions and
obtained all consents or approvals necessary to authorize and enter
into this Agreement.
(d) No Violation. Neither the execution or delivery of this Agreement, the
issuance or delivery of Shares, the performance by the Company of its
obligations under this Agreement, nor the consummation of the
transactions contemplated hereby will conflict with, violate,
constitute a breach of or a default (with the passage of time or
otherwise) require the consent or approval of or filing with any
person (other than consents and approvals which have been obtained and
filings which have been made) or result in the imposition of a lien on
or securities interest in any properties or assets of the Company,
pursuant to the charter or bylaws of the Company, any award of any
arbitrator or any Agreement (including any Agreement with
stockholders), instruments, order, judgment, decree, statute, law,
rule or regulation to which the Company is party or to which any such
person or any of their respective properties or assets is subject.
(e) Registration. The Shares have been, or will, be upon the filing of an
S-8 Registration Statement, registered pursuant to the Securities Act
of 1933, as amended, and all applicable state laws.
3
E-14
<PAGE>
5. FILINGS
The Company shall furnish to the Consultant, promptly after the sending or
filing thereof, copies of all reports which the Company sends to its equity
security holders generally, and copies of all reports and registration
statements which the Company files with the Securities and Exchange Commission
(the "Commission"), any other securities exchange or the National Association of
Securities Dealers, Inc. ("NASD").
6. SUPPLYING INFORMATION
The Company shall cooperate with the Consultant in supplying such publicity
available information as may be reasonably necessary for the Consultant to
complete and file any information reporting forms.
7. INDEMNIFICATION
(a) The Company shall indemnify the Consultant from and against any and
all expenses (including attorney's fees'), judgments, fines, claims,
causes of action, liabilities and other amounts paid (whether in
settlement or otherwise actually and reasonably incurred) by the
Consultant in connection with such action, suit or proceeding if (i)
the Consultant was made a party to any action, suit or proceeding by
reason of the fact that the Consultant rendered advice or services
pursuant to this Agreement, and (ii) the Consultant acted in good
faith and in a manner reasonably believed by the Consultant to be in
or not opposed to the interests of the Company, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea
of nolo contendere or its equivalent, shall not, or itself, create a
presumption that the Consultant did not act in good faith in or not
opposed to the best interests of the Company, and, with respect to any
criminal action or proceedings, had reasonable cause to believe that
his conduct was not unlawful. Notwithstanding the forgoing, the
Company shall not indemnify the Consultant with respect to any claim,
issue or matter as to which the Consultant shall have been adjudged to
be liable for gross negligence or willful misconduct in the
performance of his duties pursuant to this Agreement unless and only
to the extent that the court in which such action or suit was brought
shall determine upon application that, despite the adjunction of
liability, but in view of all circumstances of the case, the
Consultant is fairly and reasonably entitled to be indemnified for
such expenses which such court shall deem proper.
(b) The Consultant shall indemnify the Company from and against any and
all expenses (including attorney's fees), judgments, fines, claims,
causes of action, liabilities and other amounts paid (whether in
settlement or otherwise actually and reasonably incurred) by the
Company in connection with such action, suit or proceeding if (i) the
Company was made a party to any action, suit or proceeding by reason
of the fact that the Consultant rendered advice or services pursuant
to this Agreement, and (ii) the Consultant did not act in good faith
and in a manner reasonably believed by the Consultant to be in or not
opposed to the interests of the Company, and with respect to any
criminal action or proceeding, did not reasonably believe his conduct
was lawful. Notwithstanding the forgoing, the Consultant shall not
indemnify the Company with respect to any claim, issue or matter as to
which the Company shall have been adjudged to be liable for gross
negligence or willful misconduct in connection with the performance of
the Consultant's duties pursuant to this Agreement unless and only to
the extent that the court in which such action or suit was brought
shall determine upon application that, despite the adjunction of
liability, but in view of all circumstances of the case, the Company
is fairly and reasonably entitled to be indemnified for such expenses
which such court shall deem proper.
4
E-15
<PAGE>
8. INDEPENDENT CONTRACTOR STATUS
It is expressly understood and agreed that this is a consulting agreement
only and does not constitute an employer-employee relationship. Accordingly, the
Consultant agrees that the Consultant shall be solely responsible for payment of
his own taxes or sums due to the federal, state, or local governments, overhead,
workmen's compensation, fringe benefits, pension contributions and other
expenses. It is further understood and agreed that the Consultant is an
independent contractor and the Company shall have no right to control the
activities of the Consultant other than during the express period of time in
which the Consultant is performing services hereunder, and that such services
provided hereunder and not because of any presumed employer-employee
relationship. The Consultant shall have no authority to bind the Company.
The parties further acknowledge that the Consultant's services hereunder
are not exclusive, but that the Consultant shall be performing services and
undertaking other responsibilities, for and with other entities or persons,
which may directly or indirectly compete with the Company. Accordingly, the
services of the Consultant hereunder are on a part time basis only, and the
Company shall have no discretion, control of, or interest in, the Consultant's
services which are not covered by the terms of the Agreement. The Company hereby
waives any conflict of interest which now exists or may hereafter arise with
respect to the Consultant's current employment and future employment.
9. NOTICE
All notices provided by this Agreement shall be in writing and shall be
given by facsimile transmission, overnight courier, by registered mail or by
personal delivery, by one party to the other, addressed to such other party at
the applicable address set forth below, or to such other address as may be given
for such purpose by such other party by written notice duly given hereunder.
Notice shall be deemed properly given on the date of the delivery.
To Consultant: Shipwright Assets Limited
4703, 47/F, Central Plaza
18 Harbour Road
Wanchai, Hong Kong
To the Company: Egan Systems, Inc.
1501 Lincoln Avenue
Holbrook, New York 11741
10. MISCELLANEOUS
5
E-16
<PAGE>
(a) Waiver. Any term or provision of this Agreement may be waived at any
time by the party entitled to the benefit thereof by a written
instrument duly executed by such party.
(b) Entire Agreement. This Agreement contains the entire understanding
between the parties hereto with respect to the transactions
contemplated hereby, and may not be amended, modified, or altered
except by an instrument in writing signed by the party against whom
such amendment, modification, or alteration is sought to be enforced.
This Agreement supersedes and replaces all other Agreements between
the parties with respect to any services to be performed by the
Consultant of behalf of the Company.
(c) Governing Law. This Agreement shall be construed and interpreted in
accordance with the laws of the State of New York.
(d) Binding Effect. This Agreement shall bind and inure to the benefit of
the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
(e) Construction. The captions and headings contained herein are inserted
for convenient reference only, are not a part hereof and the same
shall not limit or constrict the provisions to which they apply.
References in this Agreement to "paragraphs" are to the paragraphs in
this Agreement, unless otherwise noted.
(f) Expenses. Each party shall pay and be responsible for the cost and
expenses, including, without limitations, attorneys' fees, incurred by
such party in connection with negotiation, preparation and execution
of this Agreement and the transactions contemplated hereby.
(g) Assignment. No party hereto may assign any of its rights or delegate
any of its obligations under this Agreement without the express
written consent of the other party hereto.
(h) No Rights to Others. Nothing herein contained or implied is intended
or shall be construed to confer upon or give to any person, firm or
corporation, other than the parties hereto.
(i) Counterparts. This Agreement may be executed simultaneously in two
counterparts, each of which shall be deemed an original, but both of
which together shall constitute one and the same Agreement, binding
upon both parties hereto, notwithstanding that both parties are not
signatories to the original or the same counterpart.
6
E-17
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.
THE "COMPANY"
EGAN SYSTEM, INC.
By: /s/ Edward J. Egan
---------------------------
President
THE "CONSULTANT"
SHIPWRIGHT ASSETS LIMITED
By: /s/ Thomas Tedrow
---------------------------
President
7
E-18
<PAGE>
5.1
Opinion and consent of Vanderkam & Sanders
Re: the legality of the shares being registered
8
E-19
<PAGE>
April 27, 1998
Egan Systems, Inc.
1501 Lincoln Avenue
Holbrook, New York 11741
Gentlemen:
You have requested that we furnish you our legal opinion with respect to
the legality of the following described securities of Egan Systems, Inc. (the
"Company") covered by a Form S-8 Registration Statement, as amended through the
date hereof (the "Registration Statement") initially filed with the Securities
and Exchange Commission (File No. 33-______) by the Company on April 27, 1998
for the purpose of registering such securities under the Securities Act of 1933:
200,000 shares of Common Stock issuable upon the execution of the
Consulting Agreement with Shipwright Assets Limited and Martin Consultants,
Inc.
In connection with this opinion, we have examined the corporate records of
the Company, including the Company's Certificate of Incorporation, Bylaws, as
amended, and the Minutes of its Board of Directors and Shareholders meetings,
the Registration Statement, and such other documents and records as we deemed
relevant in order to render this opinion. In addition, the opinion expressed
herein is limited to federal law.
Based upon the foregoing, it is our opinion that:
The Registered Securities, when sold in accordance with the
Registration Statement and the final prospectus thereunder, and for
the consideration therein referred to, will be legally issued, fully
paid, and non-assessable.
We hereby consent to the filing of this opinion, with the Securities
Exchange Commission as an exhibit to the Registration Statement.
Sincerely,
VANDERKAM & SANDERS
HV:avb
Egan.Opinion
9
E-20
<PAGE>
23.1
Consent of Vanderkam & Sanders
(included in Exhibit 5.1)
10
E-21
<PAGE>
23.2
Consent of Patrusky, Mintz & Semel
11
E-22
<PAGE>
PATRUSKY, MINTZ & SEMEL
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
on Form S-8 of our report dated February 10, 1998 for the year ended December
31, 1997, included in the Form 10-KSB of Egan Systems, Inc. for the year ended
December 31, 1997 and to all references to this firm included in this
Registration Statement.
New York, New York PATRUSKY, MINTZ & SEMEL
March 31, 1998
12
E-6
