SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
_______________________
Date of Report
(Date of earliest
event reported): April 29, 1997
EuroAmerican Group Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-17483 13-3477824
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
50 Broad Street, Suite 516, New York, New York 10004
(Address of principal executive offices, including zip code)
(212) 269-6686
(Registrant's telephone number)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On April 29, 1997, EuroAmerican Group Inc. (the "Company")
completed its acquisition of Tenfore Systems Limited, a UK limited
company, and Tenfore R&D ApS, a Danish private company (together,
"Tenfore"), from Tenfore Europe (Jersey) Limited, a Jersey limited
company. Tenfore is a real-time provider of financial information with
customers located throughout Europe. The Company will add Tenfore's
business (the "Acquired Business") to its own real-time financial
information business, as described in the press release filed as Exhibit
99 to this Current Report on Form 8-K.
The Company issued 170,000 shares of its Series B Non-Voting
Convertible Preferred Stock (the "Preferred Stock") and an option to
acquire 35,000 additional shares of Preferred Stock to Tenfore Europe
(Jersey) Limited as consideration for its acquisition of all the
outstanding shares of capital stock of Tenfore Systems Limited and Tenfore
R&D ApS. Such consideration was determined on the basis of arm's-length
negotiations.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
It is impracticable for the Company to provide the required
financial statements for the Acquired Business and pro forma financial
information at the time this Current Report on Form 8-K is filed. The
required financial statements for the Acquired Business and pro forma
financial information will be filed as soon as practicable, but in no
event later than July 14, 1997.
(b) Exhibits.
The exhibits listed in the accompanying Exhibit Index are filed as
part of this Current Report on Form 8-K.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
EUROAMERICAN GROUP INC.
Date: May 8, 1997 By: /s/ Steven C. Millner
Steven C. Millner
Secretary
<PAGE>
EUROAMERICAN GROUP INC.
EXHIBIT INDEX TO FORM 8-K
Dated April 29, 1997
Exhibit
No. Description
(2.1) Purchase Agreement dated April 29, 1997 by and
among EuroAmerican Group Inc., Tenfore Systems
Limited, Tenfore R&D ApS and Tenfore Europe
(Jersey) United *
(3.1) Articles of Incorporation, as amended
(99) Press Release dated May 7, 1997
* The schedules and exhibits to this document are not being filed
herewith. The registrant agreed to furnish supplementally a copy of any
such schedule or exhibit to the Securities and Exchange Commission upon
request.
EXHIBIT 2.1
PURCHASE AGREEMENT
By and Among
EuroAmerican Group Inc.,
a Delaware corporation
Tenfore Systems Limited,
a UK limited company
Tenfore R&D ApS,
a Danish private company
Tenfore Europe (Jersey) Limited,
a Jersey limited company
Dated
April 29, 1997
<PAGE>
PURCHASE AGREEMENT
TABLE OF CONTENTS
1. PURCHASE AND SALE OF TENFORE SHARES . . . . . . . . . . . . . . 1
2. PURCHASE PRICE - PAYMENT . . . . . . . . . . . . . . . . . . . . 1
2.1. Purchase Price . . . . . . . . . . . . . . . . . . . . . 1
2.2. Stock Option . . . . . . . . . . . . . . . . . . . . . . 1
2.3. Payment of Purchase Price . . . . . . . . . . . . . . . . 1
3. JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF TENFORE
COMPANIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.1. Corporate . . . . . . . . . . . . . . . . . . . . . . . . 2
3.2. Tenfore Companies . . . . . . . . . . . . . . . . . . . . 3
3.3. No Violation . . . . . . . . . . . . . . . . . . . . . . 4
3.4. Financial Statements . . . . . . . . . . . . . . . . . . 5
3.5. Tax Matters . . . . . . . . . . . . . . . . . . . . . . . 5
3.6. Accounts Receivable . . . . . . . . . . . . . . . . . . . 5
3.7. Absence of Certain Changes . . . . . . . . . . . . . . . 5
3.8. Absence of Undisclosed Liabilities . . . . . . . . . . . 7
3.9. No Litigation . . . . . . . . . . . . . . . . . . . . . . 7
3.10. Compliance With Laws and Orders . . . . . . . . . . . . . 7
3.11. Title to and Condition of Properties . . . . . . . . . . 8
3.12. Insurance . . . . . . . . . . . . . . . . . . . . . . . . 8
3.13. Contracts and Commitments . . . . . . . . . . . . . . . . 9
3.14. Labor Matters . . . . . . . . . . . . . . . . . . . . . . 10
3.15. Employee Benefit Plans . . . . . . . . . . . . . . . . . 10
3.16. Trade Rights . . . . . . . . . . . . . . . . . . . . . . 11
3.17. Major Customers and Suppliers . . . . . . . . . . . . . . 11
3.18. Product Warranty and Product Liability . . . . . . . . . 12
3.19. Bank Accounts . . . . . . . . . . . . . . . . . . . . . . 12
3.20. Affiliates' Relationships to Company . . . . . . . . . . 12
3.21. Assets of the Business . . . . . . . . . . . . . . . . . 12
3.22. Adjusted Net Worth at Closing . . . . . . . . . . . . . . 12
3.23. No Brokers or Finders . . . . . . . . . . . . . . . . . . 13
3.24. Disclosure . . . . . . . . . . . . . . . . . . . . . . . 13
4. REPRESENTATIONS AND WARRANTIES OF EAG . . . . . . . . . . . . . 13
4.1. Corporate . . . . . . . . . . . . . . . . . . . . . . . . 13
4.2. Authority . . . . . . . . . . . . . . . . . . . . . . . . 13
4.3. Capitalization of EAG . . . . . . . . . . . . . . . . . . 14
4.4. No Brokers or Finders . . . . . . . . . . . . . . . . . . 14
4.5. Disclosure . . . . . . . . . . . . . . . . . . . . . . . 14
4.6. Investment Intent . . . . . . . . . . . . . . . . . . . . 14
5. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.1. Stock Option . . . . . . . . . . . . . . . . . . . . . . 14
5.2. Escrow Agreement . . . . . . . . . . . . . . . . . . . . 14
5.3. License Agreement . . . . . . . . . . . . . . . . . . . . 14
5.4. Agency/Distribution Agreement with Tenfore-Italy . . . . 14
5.5. Noncompetition; Confidentiality . . . . . . . . . . . . . 14
5.6. General Releases . . . . . . . . . . . . . . . . . . . . 16
5.7. Access to Information and Records . . . . . . . . . . . . 16
5.8. Conduct of Business Pending the Closing . . . . . . . . . 17
5.9. Consents . . . . . . . . . . . . . . . . . . . . . . . . 18
5.10. Other Action . . . . . . . . . . . . . . . . . . . . . . 18
5.11. Disclosure Schedule . . . . . . . . . . . . . . . . . . . 18
6. CONDITIONS PRECEDENT TO EAG'S OBLIGATIONS . . . . . . . . . . . 18
6.1. Representations and Warranties True of the Closing Date . 18
6.2. Compliance With Agreement . . . . . . . . . . . . . . . . 19
6.3. Absence of Litigation . . . . . . . . . . . . . . . . . . 19
6.4. Consents and Approvals . . . . . . . . . . . . . . . . . 19
6.5. Material Contracts . . . . . . . . . . . . . . . . . . . 19
7. CONDITIONS PRECEDENT TO TENFORE EUROPE'S OBLIGATIONS . . . . . . 19
7.1. Representations and Warranties True on the Closing Date . 19
7.2. Compliance With Agreement . . . . . . . . . . . . . . . . 19
7.3. Absence of Litigation . . . . . . . . . . . . . . . . . . 19
8. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . 19
8.1. By Tenfore Europe . . . . . . . . . . . . . . . . . . . . 19
8.2. By EAG . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.3. Indemnification of Third-Party Claims . . . . . . . . . . 20
8.4. Payment . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.5. Limitations on Indemnification . . . . . . . . . . . . . 21
8.6. Return of Indemnification Payments in Certain
Circumstances . . . . . . . . . . . . . . . . . . . . . . 23
8.7. Impact on Purchase Price . . . . . . . . . . . . . . . . 23
8.8. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . 23
8.9. Limit on Liability. . . . . . . . . . . . . . . . . . . . 23
9. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.1. Documents to be Delivered by Tenfore Companies . . . . . 23
9.2. Documents to be Delivered by EAG . . . . . . . . . . . . 25
10. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . 25
10.1. Right of Termination Without Breach . . . . . . . . . . . 25
10.2. Termination for Breach . . . . . . . . . . . . . . . . . 26
10.3. Arbitration . . . . . . . . . . . . . . . . . . . . . . . 26
10.4. Arbitrators . . . . . . . . . . . . . . . . . . . . . . . 27
10.5. Procedures; No Appeal . . . . . . . . . . . . . . . . . . 27
10.6. Authority . . . . . . . . . . . . . . . . . . . . . . . . 27
10.7. Entry of Judgment . . . . . . . . . . . . . . . . . . . . 27
10.8. Confidentiality . . . . . . . . . . . . . . . . . . . . . 27
10.9. Continued Performance . . . . . . . . . . . . . . . . . . 27
10.10. Tolling . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.11. Escrow Agent Unnecessary . . . . . . . . . . . . . . . . 27
11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.1. Disclosure Schedule . . . . . . . . . . . . . . . . . . . 27
11.2. Further Assurance . . . . . . . . . . . . . . . . . . . . 28
11.3. Post-Closing Covenants . . . . . . . . . . . . . . . . . 28
11.4. Disclosures and Announcements . . . . . . . . . . . . . . 28
11.5. Assignment; Parties in Interest . . . . . . . . . . . . . 28
11.6. Law Governing Agreement . . . . . . . . . . . . . . . . . 29
11.7. Amendment and Modification . . . . . . . . . . . . . . . 29
11.8. Notice . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.9. Expenses . . . . . . . . . . . . . . . . . . . . . . . . 30
11.10. Entire Agreement . . . . . . . . . . . . . . . . . . . . 30
11.11. Counterparts . . . . . . . . . . . . . . . . . . . . . . 30
11.12. Headings . . . . . . . . . . . . . . . . . . . . . . . . 31
11.13. Glossary of Terms . . . . . . . . . . . . . . . . . . . . 32
Disclosure Schedule
Schedule 3.1.(d) - Interest in Business Entities
Schedule 3.1.(e) - Directors And Officers
Schedule 3.3 - Violation, Conflict, Default
Schedule 3.4 - Financial Statements
Schedule 3.5.(a) - Tax Returns
Schedule 3.5.(b) - Tax Audits
Schedule 3.6 - Accounts Receivable (Aged Schedule)
Schedule 3.7 - Certain Changes
Schedule 3.8 - Off-Balance Sheet Liabilities
Schedule 3.9 - Litigation Matters
Schedule 3.10.(a) - Non-Compliance with Laws
Schedule 3.10.(b) - Licenses and Permits
Schedule 3.11.(a) - Liens
Schedule 3.12 - Insurance
Schedule 3.13.(a) - Real Property Leases
Schedule 3.13.(b) - Personal Property Leases
Schedule 3.13.(d) - Contracts With Affiliates
Schedule 3.13.(f) - Collective Bargaining Agreements
Schedule 3.13.(g) - Loan Agreements, etc.
Schedule 3.13.(h) - Guarantees
Schedule 3.13.(j) - Certain Restrictive Contracts
Schedule 3.13.(k) - Material Contracts
Schedule 3.14 - Labor Matters
Schedule 3.15.(a) - Employee Plans/Agreements
Schedule 3.15.(c) - Future Commitments
Schedule 3.16 - Trade Rights
Schedule 3.17.(a) - Major Customers
Schedule 3.18.(b) - Dealers and Distributors
Schedule 3.19 - Bank Accounts
Schedule 3.20.(a) - Contracts with Affiliates
Schedule 3.20.(b) - No Adverse Interests
Schedule 3.20.(c) - Obligations of and to Affiliates
Schedule 3.21 - Assets Not Owned By Subsidiaries
Schedule 3.22 - Pro-forma Balance Sheet
Exhibits
Exhibit A - Capitalization of EAG
Exhibit B - Stock Option Agreement
Exhibit C - Escrow Agreement
Exhibit D - License Agreement
Exhibit E - Agency/Distribution Agreement with Tenfore-Italia
Spa
Exhibit F - Agreements Excluded From General Releases
Exhibit G - Material Contracts to be Assigned to Tenfore
Systems
Exhibit H - Nonsolicitation Agreement
PURCHASE AGREEMENT
PURCHASE AGREEMENT (this "Agreement") dated April 29, 1997, by
and among EuroAmerican Group Inc., a Delaware corporation ("EAG"), Tenfore
Systems Limited, a UK limited company ("Tenfore Systems"), Tenfore R&D
ApS, a Danish private company ("Tenfore R&D"), and Tenfore Europe (Jersey)
Limited, a Jersey limited company ("Tenfore Europe").
RECITALS
1. Tenfore Europe is the owner of all the issued and outstanding
shares of capital stock of Tenfore Systems ("Tenfore Systems Shares") and
all the issued and outstanding shares of capital stock of Tenfore R&D
("Tenfore R&D Shares") (together, the "Tenfore Shares"). Tenfore Europe
is also the owner of certain debt securities of Tenfore Systems and
Tenfore R&D (together, the "Tenfore Debt," and along with the Tenfore
Shares, the "Tenfore Securities").
2. EAG desires to purchase from Tenfore Europe and Tenfore Europe
desires to sell to EAG the Tenfore Securities for the Purchase Price (as
hereinafter defined) and upon the terms and conditions set forth in this
Agreement.
NOW THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions
hereinafter set forth, and intending to be legally bound hereby, EAG,
Tenfore Systems, Tenfore R&D and Tenfore Europe (collectively, "Parties")
hereto agree as follows.
1. PURCHASE AND SALE OF TENFORE SHARES
Subject to the terms and conditions of this Agreement, on the Closing
Date (as hereinafter defined) EAG shall purchase from Tenfore Europe and
Tenfore Europe shall sell to EAG all of the Tenfore Securities.
2. PURCHASE PRICE - PAYMENT
2.1. Purchase Price. The purchase price ("Purchase Price") payable
for the Tenfore Securities shall be (a) 170,000 shares ("EAG Shares") of
EAG's Series B Non-Voting Convertible Preferred Stock, par value $.001 per
share ("EAG Series B Preferred Stock"), and (b) options to purchase 35,000
shares of EAG Series B Preferred Stock as described in Section 2.2 below
("Stock Option").
2.2. Stock Option. The Stock Option will be exercisable for three
years after the Closing Date with an exercise price of $20.00 per share.
2.3. Payment of Purchase Price. The Purchase Price shall be paid by
EAG as follows:
2.3.(a) EAG Shares to Escrow Agent. At the Closing, EAG shall
deliver to the Escrow Agent, under the Escrow Agreement (as defined
in Section 5.2), a certificate representing 50,000 of the EAG Shares.
2.3.(b) EAG Shares to Tenfore Europe. At the Closing, EAG
shall deliver to Tenfore Europe a certificate (or certificates)
representing 120,000 of the EAG Shares.
3. JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF TENFORE COMPANIES
Subject to the provisions of Section 8.9, Tenfore Europe, Tenfore
Systems and Tenfore R&D (collectively, "Tenfore Companies"; individually,
"Tenfore Company") make the following representations and warranties to
EAG, each of which is true and correct on the date hereof, shall remain
true and correct to and including the Closing Date, shall be unaffected by
any investigation heretofore or hereafter made by EAG, or any knowledge of
EAG other than as specifically disclosed in the Schedules of the
Disclosure Schedule, including the bundles of documents identified as
Bundles A through F, delivered to EAG on the date hereof ("Disclosure
Schedule"), and shall survive the Closing of the transactions provided for
herein. Each representation and warranty is made jointly and severally by
Tenfore Europe and as the context indicates, by Tenfore Systems and
Tenfore R&D (together, "Subsidiaries"; individually, "Subsidiary").
3.1. Corporate.
3.1.(a) Organization. Each Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of
the jurisdiction in which it has been incorporated or organized.
3.1.(b) Corporate Power. Each Subsidiary has all requisite
corporate power and authority to own, operate and lease its
properties and to carry on its business as and where such is now
being conducted.
3.1.(c) Qualification. Each Subsidiary is duly licensed or
qualified to do business as a foreign corporation, and is in good
standing, in each jurisdiction wherein the character of the
properties owned or leased by it, or the nature of its business,
makes such licensing or qualification necessary.
3.1.(d) Subsidiaries. Except as set forth in Schedule 3.1.(d),
neither Subsidiary owns any interest in any corporation, partnership
or other entity.
3.1.(e) Corporate Documents, etc. The copies of the Articles
and Certificate of Incorporation or Articles and Memorandum of
Association or Formation Agreement and By-Laws of each Subsidiary,
including any amendments thereto, which have been delivered by
Tenfore Europe to EAG are true, correct and complete copies of such
instruments as presently in effect. The corporate minute book and
stock records of each Subsidiary which have been furnished to EAG for
inspection are true, correct and complete and accurately reflect all
material corporate action taken by each Subsidiary.
3.1.(f) Capitalization of Tenfore Systems. The authorized
capital stock of Tenfore Systems consists entirely of 1,000 shares of
common stock, par value 1 pound per share. No shares of such capital
stock are issued or outstanding except for the two Tenfore Systems
Shares which are owned of record and beneficially by Tenfore Europe.
All such shares of capital stock of Tenfore Systems are validly
issued, fully paid and nonassessable. There are no (a) securities
convertible into or exchangeable for any of Tenfore Systems' capital
stock or other securities, (b) options, warrants or other rights to
purchase or subscribe to capital stock or other securities of Tenfore
Systems or securities which are convertible into or exchangeable for
capital stock or other securities of Tenfore Systems or (c)
contracts, commitments, agreements, understandings or arrangements of
any kind relating to the issuance, sale or transfer of any capital
stock or other equity securities of Tenfore Systems, any such
convertible or exchangeable securities or any such options, warrants
or other rights.
3.1.(g) Capitalization of Tenfore R&D. The authorized capital
stock of Tenfore R&D consists entirely of 125 shares of common stock,
par value DKK 1,000 per share. All 125 shares of such capital stock
are owned of record and beneficially by Tenfore Europe. All such
shares of capital stock of Tenfore R&D are validly issued, fully paid
and nonassessable. There are no (a) securities convertible into or
exchangeable for any of Tenfore R&D's capital stock or other
securities, (b) options, warrants or other rights to purchase or
subscribe to capital stock or other securities of Tenfore R&D or
securities which are convertible into or exchangeable for capital
stock or other securities of Tenfore R&D or (c) contracts,
commitments, agreements, understandings or arrangements of any kind
relating to the issuance, sale or transfer of any capital stock or
other equity securities of Tenfore R&D, any such convertible or
exchangeable securities or any such options, warrants or other
rights.
3.2. Tenfore Companies.
3.2.(a) Power. Each Tenfore Company has full power, legal
right and authority to enter into, execute and deliver this Agreement
and the other agreements, instruments and documents contemplated
hereby (such other documents sometimes referred to herein as
"Ancillary Instruments"), and to carry out the transactions
contemplated hereby.
3.2.(b) Authorization. The execution and delivery of this
Agreement and the Ancillary Instruments, and full performance
thereunder, have been duly authorized by the respective boards of
directors of each Tenfore Company and by the shareholder of the
Subsidiaries, and no other or further corporate act on the part of
any such shareholder or on the part of the shareholders of Tenfore
Europe is necessary therefor.
3.2.(c) Validity. This Agreement has been duly and validly
executed and delivered by each Tenfore Company and is, and when
executed and delivered each Ancillary Instrument will be, the legal,
valid and binding obligation of such Tenfore Company, enforceable in
accordance with its terms, except as such may be limited by
bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally, and by general equitable principles.
3.2.(d) Title. Tenfore Europe has, and at Closing EAG will
receive, good and marketable title to the Tenfore Shares to be sold
by Tenfore Europe hereunder, free and clear of all Liens (as defined
in Section 3.12) including, without limitation, voting trusts or
agreements, proxies, marital or community property interests.
3.2.(e) Certain Securities Law Matters. Tenfore Europe is an
"accredited investor" within the meaning of Rule 501(a) under the
United States Securities Act of 1933, as amended (the "Securities
Act"), and has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and
risks of an investment in the EAG Shares. Tenfore Europe
acknowledges being furnished by EAG with the periodic filings EAG has
made with the United States Securities and Exchange Commission during
EAG's fiscal year beginning June 1, 1996, and further acknowledges
that EAG has made available to Tenfore Europe all documents, exhibits
and information that Tenfore Europe has requested relating to EAG and
the acquisition of the EAG Shares hereunder. Tenfore Europe further
acknowledges that it has been given an opportunity, a reasonable time
prior to the date hereof, (i) to ask questions and receive
satisfactory answers concerning the EAG Shares to be acquired
hereunder, EAG and its business and (ii) to obtain additional
information necessary to verify the accuracy of any such information.
Tenfore Europe hereby acknowledges and agrees that the EAG Shares to
be acquired pursuant to this Agreement are being acquired for
investment purposes only and for Tenfore Europe's own account, not on
behalf of others, and not with a view to resell or to otherwise
distribute such shares and Tenfore Europe further acknowledges and
agrees that it will not offer or sell or otherwise distribute such
shares in the United States or to "U.S. persons" (as such term is
defined in Rule 902(o) under the Securities Act) without registration
under the Securities Act and other applicable securities laws or
except pursuant to an applicable exemption therefrom. Tenfore Europe
acknowledges that it is not a U.S. person and is not acquiring the
EAG Shares for the account or benefit of any U.S. person and further
acknowledges that it has not been offered the EAG Shares through any
form of general advertising or general solicitation. Tenfore Europe
acknowledges that it is a Jersey limited company and that all
communications and information, written or oral, concerning, among
other things, the EAG Shares to be acquired hereunder and EAG, have
been directed to or received by Tenfore Europe in England. Tenfore
Europe understands that certificates representing the EAG Shares to
be delivered hereunder will bear the following legend reflecting
restrictions on transfer:
"The securities represented by this certificate have not
been registered under the United States Securities Act of
1933, as amended (the "Securities Act"), or under any other
applicable securities laws. The securities may not be
sold, transferred, assigned, pledged or otherwise disposed
of at any time unless they are registered under the
Securities Act and such other applicable laws or unless, in
the opinion of legal counsel for EuroAmerican Group Inc.,
such disposition will not result in a violation of the
Securities Act or any other applicable securities laws."
3.3. No Violation. Except as set forth on Schedule 3.3, neither the
execution and delivery of this Agreement or the Ancillary Instruments nor
the consummation by the Tenfore Companies of the transactions contemplated
hereby and thereby (a) will, to the best knowledge and belief of the
Tenfore Companies, violate any statute, law, ordinance, rule or regulation
(collectively, "Laws") or any order, writ, injunction, judgment, plan or
decree (collectively, "Orders") of any court, arbitrator, department,
commission, board, bureau, agency, authority, instrumentality or other
body, whether federal, state, municipal, foreign or other (collectively,
"Government Entities"), (b) will require any authorization, consent,
approval, exemption or other action by or notice to any Government Entity,
or (c) subject to obtaining the consents referred to in Schedule 3.3, will
violate or conflict with, or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or
will result in the termination of, or accelerate the performance required
by, or result in the creation of any Lien upon any of the assets of any
Tenfore Company (or the Shares) under, any term or provision of the
Articles and Certificate of Incorporation or Articles and Memorandum of
Association or Formation Agreement or By-Laws of any Tenfore Company or to
the best knowledge and belief of the Tenfore Companies of any contract,
commitment, understanding, arrangement, agreement or restriction of any
kind or character to which any Tenfore Company or by which Tenfore Company
or any of its assets or properties may be bound or affected.
3.4. Financial Statements. Included as Schedule 3.4 are complete
copies of the unaudited financial statements of Tenfore Systems and
Tenfore R&D, respectively, consisting of (i) balance sheets of such
companies as of December 31, 1996 (the "Recent Balance Sheet"), and (ii)
the related statements of income for the year then ended (including the
notes contained therein or annexed thereto). All of such financial
statements (including all notes and schedules contained therein or annexed
thereto) have been prepared in accordance with generally accepted
accounting principles used in the United Kingdom (except for the absence
of footnote disclosure) applied on a consistent basis, have been prepared
in accordance with the books and records of the companies, and fairly
present, in accordance with generally accepted accounting principles, the
assets, liabilities and financial position, the results of operations of
Company as of the date and for the year indicated.
3.5. Tax Matters.
3.5.(a) Tax Returns Filed. Except as set forth on Schedule
3.5.(a), all federal, state, foreign, county, local and other tax
returns required to be filed by or on behalf of each Subsidiary have
been timely filed and when filed were true and correct in all
material respects, and the taxes shown as due thereon were paid or
adequately accrued. Each Subsidiary has duly withheld and paid all
taxes which it is required to withhold and pay relating to salaries
and other compensation heretofore paid to the employees of said
Subsidiary.
3.5.(b) Tax Audits. Except as set forth on Schedule 3.5.(b),
all income, franchise and other tax returns of each Subsidiary have
been audited by the appropriate taxing authorities. No Subsidiary
has received from the tax authorities of any state, county, local or
other jurisdiction any notice of underpayment of taxes or other
deficiency which has not been paid nor any objection to any return or
report filed by such Subsidiary.
3.6. Accounts Receivable. To the best knowledge and belief of the
Tenfore Companies, all accounts receivable of each Subsidiary reflected on
the Recent Balance Sheet, and as incurred in the normal course of business
since the date thereof, represent arm's length sales actually made in the
ordinary course of business; are net of provisions collectible in the
ordinary course of business without the necessity of commencing legal
proceedings; are subject to no counterclaim or setoff; and are not in
dispute. Schedule 3.6 contains an aged schedule of accounts receivable
included in the Recent Balance Sheet.
3.7. Absence of Certain Changes. Except as and to the extent set
forth in Schedule 3.7, to the best knowledge and belief of the Tenfore
Companies, since the date of the Recent Balance Sheet there has not been:
3.7.(a) No Adverse Change. Any adverse change in the financial
condition, assets, liabilities, business, prospects or operations of
either Subsidiary;
3.7.(b) No Damage. Any loss, damage or destruction, whether
covered by insurance or not, affecting either Subsidiary's business
or properties;
3.7.(c) No Increase in Compensation. Any increase in the
compensation, salaries or wages payable or to become payable to any
employee or agent of either Subsidiary (including, without
limitation, any increase or change pursuant to any bonus, pension,
profit sharing, retirement or other plan or commitment), or any bonus
or other employee benefit granted, made or accrued;
3.7.(d) No Labor Disputes. Any labor dispute or disturbance,
other than routine individual grievances which are not material to
the business, financial condition or results of operations of either
Subsidiary.
3.7.(e) No Commitments. Any commitment or transaction by
either Subsidiary (including, without limitation, any borrowing or
capital expenditure) other than in the ordinary course of business
consistent with past practice;
3.7.(f) No Dividends. Any declaration, setting aside, or
payment of any dividend or any other distribution in respect of
either Subsidiary's capital stock; any redemption, purchase or other
acquisition by either Subsidiary of any capital stock of such
Subsidiary, or any security relating thereto; or any other payment to
any shareholder of such Subsidiary as such a shareholder;
3.7.(g) No Disposition of Property. Any sale, lease or other
transfer or disposition of any properties or assets of either
Subsidiary, except for the sale of inventory items in the ordinary
course of business;
3.7.(h) No Indebtedness. Any indebtedness for borrowed money
incurred, assumed or guaranteed by either Subsidiary;
3.7.(i) No Liens. Any mortgage, pledge, lien or encumbrance
made on any of the properties or assets of either Subsidiary;
3.7.(j) No Amendment of Contracts. Any entering into,
amendment or termination by either Subsidiary of any material
contract, or any waiver of material rights thereunder, other than in
the ordinary course of business;
3.7.(k) Loans and Advances. Any loan or advance (other than
advances to employees in the ordinary course of business for travel
and entertainment in accordance with past practice) to any person
including, but not limited to, any Affiliate (for purposes of this
Agreement, the term "Affiliate" shall mean and include all directors
and officers of either Subsidiary; the spouse of any such person; any
person who would be the heir or descendant of any such person if he
or she were not living; and any entity in which any of the foregoing
has a direct or indirect interest, except through ownership of less
than 5% of the outstanding shares of any entity whose securities are
listed on a national securities exchange or traded in the national
over-the-counter market);
3.7.(l) No Unusual Events. Any other event or condition not in
the ordinary course of business of either Subsidiary.
3.8. Absence of Undisclosed Liabilities. Except as and to the extent
specifically disclosed in the Recent Balance Sheet, or in Schedules 3.7 or
3.8, neither Subsidiary has any liabilities, commitments or obligations
(secured or unsecured, and whether accrued, absolute, contingent, direct,
indirect or otherwise), other than commercial liabilities and obligations
incurred since the date of the Recent Balance Sheet in the ordinary course
of business and consistent with past practice and none of which has or
will have an adverse effect on the business, financial condition or
results of operations of such Subsidiary. Except as and to the extent
described in the Recent Balance Sheet or in Schedule 3.8, no Tenfore
Company has knowledge of any basis for the assertion against any
Subsidiary of any liability and to the best knowledge and belief of the
Tenfore Companies, there are no circumstances, conditions, happenings,
events or arrangements, contractual or otherwise, which may give rise to
liabilities, except commercial liabilities and obligations incurred in the
ordinary course of each Subsidiary's business and consistent with past
practice.
3.9. No Litigation. Except as set forth in Schedule 3.9 there is no
action, suit, arbitration, proceeding, investigation or inquiry, whether
civil, criminal or administrative ("Litigation"), pending or threatened
against either Subsidiary, its directors (in such capacity), its business
or any of its assets, nor does any Tenfore Company know, or have grounds
to know, of any basis for any Litigation. Schedule 3.9 also identifies
all Litigation to which either Subsidiary or any of its directors (in such
capacity) have been parties since January 1, 1995. Except as set forth in
Schedule 3.9, neither Subsidiary nor its business or assets is subject to
any Order of any Government Entity.
3.10. Compliance With Laws and Orders.
3.10.(a) Compliance. Except as set forth in Schedule 3.10.(a),
to the best knowledge and belief of the Tenfore Companies, each
Subsidiary (including each and all of its operations, practices,
properties and assets) is in compliance with all applicable Laws and
Orders, including, without limitation, those applicable to
discrimination in employment, occupational safety and health, trade
practices, competition and pricing, product warranties, zoning,
environment, building and sanitation, employment, retirement and
labor relations and product advertising. Except as set forth in
Schedule 3.10.(a), neither Subsidiary has received notice of any
violation or alleged violation of, and is subject to no Liability for
past or continuing violation of, any Laws or Orders. All reports and
returns required to be filed by each Subsidiary with any Government
Entity have been filed, and were accurate and complete when filed.
Without limiting the generality of the foregoing:
(i) The operation of each Subsidiary's business as it is
now conducted does not, nor does any condition existing at any
of the Facilities, in any manner constitute a nuisance or other
tortious interference with the rights of any person or persons
in such a manner as to give rise to or constitute the grounds
for a suit, action, claim or demand by any such person or
persons seeking compensation or damages or seeking to restrain,
enjoin or otherwise prohibit any aspect of the conduct of such
business or the manner in which it is now conducted.
(ii) Each Subsidiary has made all required
payments to its unemployment compensation, social security and
similar reserve accounts with the appropriate governmental
departments of the jurisdictions where it is required to
maintain such accounts, and each of such accounts has a positive
balance.
3.10.(b) Licenses and Permits. Except as set forth in Schedule
3.10(b), to the best knowledge and belief of the Tenfore Companies,
each Subsidiary has all licenses, permits, approvals, authorizations
and consents of all Government Entities and all certifications
required for the conduct of the business (as presently conducted and
as proposed to be conducted) and operation of the Facilities. All
such licenses, permits, approvals, authorizations and consents are in
full force and effect and will not be affected or made subject to
loss, limitation or any obligation to reapply as a result of the
transactions contemplated hereby. Except as set forth in Schedule
3.10.(b), each Subsidiary (including its operations, properties and
assets) is and has been in compliance with all such permits and
licenses, approvals, authorizations and consents.
3.11. Title to and Condition of Properties.
3.11.(a) Marketable Title. Each Subsidiary has good and
marketable title to all of such Subsidiary's assets, business and
properties, including, without limitation, all such properties
(tangible and intangible) reflected in the Recent Balance Sheet,
except for inventory disposed of in the ordinary course of business
since the date of such Recent Balance Sheet, free and clear of all
mortgages, liens, (statutory or otherwise) security interests,
claims, pledges, licenses, equities, options, conditional sales
contracts, assessments, levies, easements, covenants, reservations,
restrictions, rights-of-way, exceptions, limitations, charges or
encumbrances of any nature whatsoever (collectively, "Liens") except
those described in Schedule 3.11. None of such Subsidiary's assets,
business or properties are subject to any restrictions with respect
to the transferability thereof; and the Subsidiary's title thereto
will not be affected in any way by the transactions contemplated
hereby.
3.11.(b) Condition. All property and assets reflected in the
Recent Balance Sheet and owned or utilized by each Subsidiary are in
good operating condition and repair, free from any defects (except
such minor defects as do not interfere with the use thereof in the
conduct of the normal operations of such Subsidiary).
3.11.(c) No Condemnation or Expropriation. Neither the whole
nor any portion of the property or any other assets of either
Subsidiary is subject to any Order to be sold or is being condemned,
expropriated or otherwise taken by any Government Entity with or
without payment of compensation therefor, nor to the best of the
knowledge of any Tenfore Company has any such condemnation,
expropriation or taking been proposed.
3.12. Insurance. Set forth in Schedule 3.12 is a description of
all policies of fire, liability, product liability, workers compensation,
health and other forms of insurance presently in effect with respect to
the business and properties of each Subsidiary, true and correct copies of
which have heretofore been delivered to EAG. No notice of cancellation or
termination has been received with respect to any such policy, and no
Tenfore Company has knowledge of any act or omission of either Subsidiary
which could result in cancellation of any such policy prior to its
scheduled expiration date. There is no claim by either Subsidiary pending
under any such policies as to which coverage has been questioned, denied
or disputed by the underwriters of such policies, and no Tenfore Company
knows of any basis for denial of any claim under any such policy.
3.13. Contracts and Commitments.
3.13.(a) Real Property Leases. Except as set forth in Schedule
3.13.(a), neither Subsidiary has leases of real property.
3.13.(b) Personal Property Leases. Except as set forth in
Schedule 3.13.(b), neither Subsidiary has leases of personal property
involving consideration or other expenditure in excess of $60,000 per
annum or involving performance over a period of more than twelve
months.
3.13.(c) Purchase Commitments. Neither Subsidiary has purchase
commitments for inventory items or supplies that, together with
amounts on hand, constitute in excess of six months normal usage, or
which are at an excessive price.
3.13.(d) Contracts With Affiliates and Certain Others. Except
as set forth in Schedule 3.13.(d), neither Subsidiary has agreement,
understanding, contract or commitment (written or oral) with any
Affiliate or any employee, agent, consultant, distributor, dealer or
franchisee that is not cancelable by said Subsidiary on notice of not
longer than 30 days without liability, penalty or premium of any
nature or kind whatsoever.
3.13.(e) Powers of Attorney. Neither Subsidiary has given a
power of attorney, which is currently in effect, to any person, firm
or corporation for any purpose whatsoever.
3.13.(f) Collective Bargaining Agreements. Except as set forth
in Schedule 3.13.(f), neither Subsidiary is a party to any collective
bargaining agreements with any unions, guilds, shop committees or
other collective bargaining groups.
3.13.(g) Loan Agreements. Except as set forth in Schedule
3.13.(g), neither Subsidiary is obligated under any loan agreement,
promissory note, letter of credit, or other evidence of indebtedness
as a signatory, guarantor or otherwise.
3.13.(h) Guarantees. Except as disclosed on Schedule 3.13.(h),
neither Subsidiary has guaranteed the payment or performance of any
person, firm or corporation, agreed to indemnify any person or act as
a surety, or otherwise agreed to be contingently or secondarily
liable for the obligations of any person.
3.13.(i) Contracts Subject to Renegotiation. Neither Subsidiary
is a party to any contract with any governmental body which is
subject to renegotiation.
3.13.(j) Burdensome or Restrictive Agreements. Neither
Subsidiary is a party to nor is it bound by any agreement, deed,
lease or other instrument which is so burdensome as to materially
affect or impair the operation of such Subsidiary. Without limiting
the generality of the foregoing, except as set forth in Schedule
3.13(j), neither Subsidiary is a party to nor is it bound by any
agreement requiring such Subsidiary to assign any interest in any
trade secret or proprietary information, or prohibiting or
restricting such Subsidiary from competing in any business or
geographical area or soliciting customers or otherwise restricting it
from carrying on its business anywhere in the world.
3.13.(k) Other Material Contracts. Neither Subsidiary has any
lease, contract or commitment of any nature involving consideration
or other expenditure in excess of $60,000 per annum, or involving
performance over a period of more than twelve months, or which is
otherwise individually material to the operations of such Subsidiary,
except as explicitly described in Schedule 3.14.(k) or in any other
Schedule.
3.13.(l) No Default. Neither Subsidiary is in default under any
lease, contract or commitment, nor has any event or omission occurred
which through the passage of time or the giving of notice, or both,
would constitute a default thereunder or cause the acceleration of
any of such Subsidiary's obligations or result in the creation of any
Lien on any of the assets owned, used or occupied by the Subsidiary.
No third party is in default under any lease, contract or commitment
to which the Subsidiary is a party, nor has any event or omission
occurred which, through the passage of time or the giving of notice,
or both, would constitute a default thereunder or give rise to an
automatic termination, or the right of discretionary termination,
thereof.
3.14. Labor Matters. Except as set forth in Schedule 3.14,
within the last five years neither Subsidiary has experienced any labor
disputes, union organization attempts or any work stoppage due to labor
disagreements in connection with its business. Except to the extent set
forth in Schedule 3.14, (a) to the best knowledge and belief of the
Tenfore Companies, each Subsidiary is in compliance with all applicable
laws respecting employment and employment practices, terms and conditions
of employment and wages and hours, and is not engaged in any unfair labor
practice; (b) there is no unfair labor practice charge or complaint
against either Subsidiary pending or threatened; (c) there is no labor
strike, dispute, request for representation, slowdown or stoppage actually
pending or threatened against or affecting either Subsidiary nor any
secondary boycott with respect to products of either Subsidiary; (d) no
question concerning representation has been raised or is threatened
respecting the employees of either Subsidiary; (e) no grievance which
might have a material adverse effect on either Subsidiary, nor any
arbitration proceeding arising out of or under collective bargaining
agreements, is pending and no such claim therefor exists; and (f) there
are no administrative charges or court complaints against either
Subsidiary concerning alleged employment discrimination or other
employment related matters pending or threatened before or any Government
Entity.
3.15. Employee Benefit Plans.
3.15.(a) Disclosure. Except as set forth in Schedule 3.15.(a),
neither Subsidiary has any pension, profit sharing, retirement, bonus
other than incentive bonus, medical, dental, life, accident
insurance, benefit, disability, group insurance, executive or
deferred compensation, and other similar fringe or employee benefit
plans, programs and arrangements, "golden parachutes," collective
bargaining agreements, severance agreements or plans, programs,
arrangements and policies, including, without limitation, any
employee manuals, or any written or binding oral statements of
policies, which are provided to, for the benefit of, or relate to,
any persons employed by either Subsidiary. The items described in
the foregoing sentence are hereinafter sometimes referred to
collectively as "Employee Plans/Agreements," and each individually as
an "Employee Plan/Agreement."
3.15.(b) No Triggering of Obligations. The consummation of the
transactions contemplated by this Agreement will not (i) entitle any
current or former employee of either Subsidiary to severance pay,
unemployment compensation or any other payment, except as expressly
provided in this Agreement, or (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due to any such
employee or former employee.
3.15.(c) Future Commitments. Except as set forth in Schedule
3.15.(c), neither Subsidiary has made or announced any plan or
legally binding commitment to create any Employee Plans/Agreements.
3.16. Trade Rights. Schedule 3.16 lists all Trade Rights (as
defined below), including but not limited to the Tenfore name, in which
either Subsidiary now has any interest, specifying whether such Trade
Rights are owned, controlled, used or held (under license or otherwise) by
the Subsidiary, and also indicating which of such Trade Rights are
registered. All Trade Rights shown as registered in Schedule 3.16 have
been properly registered, all pending registrations and applications have
been properly made and filed and all annuity, maintenance, renewal and
other fees relating to registrations or applications are current. In
order to conduct the business of each Subsidiary, as such is currently
being conducted or proposed to be conducted, such Subsidiary does not
require any Trade Rights that it does not already have. Neither
Subsidiary is infringing and has not infringed any Trade Rights of another
in the operation of the business of such Subsidiary, nor is any other
person infringing the Trade Rights of the Subsidiary. Neither Subsidiary
has granted any license or made any assignment of any Trade Right listed
on Schedule 3.16, nor does either Subsidiary pay any royalties or other
consideration for the right to use any Trade Rights of others. There is
no Litigation pending or threatened to challenge such Subsidiary's right,
title and interest with respect to its continued use and right to preclude
others from using any Trade Rights of such Subsidiary. All Trade Rights
of each Subsidiary are valid, enforceable and in good standing, and there
are no equitable defenses to enforcement based on any act or omission of
such Subsidiary. The consummation of the transactions contemplated hereby
will not alter or impair any Trade Rights owned or used by either
Subsidiary. As used herein, the term "Trade Rights" shall mean and
include: (i) all trademark rights, business identifiers, trade dress,
service marks, trade names and brand names, all registrations thereof and
applications therefor and all goodwill associated with the foregoing; (ii)
all copyrights, copyright registrations and copyright applications, and
all other rights associated with the foregoing and the underlying works of
authorship; (iii) all patents and patent applications, and all
international proprietary rights associated therewith; (iv) all contracts
or agreements granting any right, title, license or privilege under the
intellectual property rights of any third party; (v) all inventions, mask
works and mask work registrations, know-how, discoveries, improvements,
designs, trade secrets, shop and royalty rights, employee covenants and
agreements respecting intellectual property and non-competition and all
other types of intellectual property; and (vi) all claims for infringement
or breach of any of the foregoing, in each case as the foregoing relates
to the Business. The foregoing representations and warranties are given
to the best knowledge and belief of the Tenfore Companies.
3.17. Major Customers and Suppliers.
3.17.(a) Major Customers. Schedule 3.17.(a) contains a list of
the five largest customers, including distributors, of each
Subsidiary for each of the two (2) most recent fiscal years
(determined on the basis of the total dollar amount of net sales)
showing the total dollar amount of net sales to each such customer
during each such year. No Tenfore Company has any knowledge or
information of any facts indicating, nor any other reason to believe,
that any of the customers listed on Schedule 3.17.(a) will not
continue to be customers of the business of the Subsidiary after the
Closing at substantially the same level of purchases as heretofore.
3.17.(b) Distributors and Sales Agents. Schedule 3.17.(b)
contains a list of all distributors and sales agents of each
Subsidiary, together with representative copies of all distributor
and sales agent contracts, and a description of all substantial
modifications or exceptions.
3.18. Product Warranty and Product Liability. Neither Subsidiary
has made any warranty for sales of Products (as defined below) and there
are no warranties, commitments or obligations with respect to the return,
repair or replacement of Products. Neither Subsidiary has ever been party
to a product liability claim or similar Litigation relating to products
manufactured or sold, or services rendered. There are no material defects
in design, construction or manufacture of Products which would adversely
affect performance or create an unusual risk of injury to persons or
property. Such products have received all governmental approvals
necessary to allow their sale and use. As used in this Section 3.18, the
term "Products" means any and all products or services currently or at any
time previously distributed, sold or provided by either Subsidiary or by
any predecessor of either Subsidiary under any brand name or mark under
which products are or have been manufactured, distributed or sold by
either Subsidiary.
3.19. Bank Accounts. Schedule 3.19 sets forth the names and
locations of all banks, trust companies, savings and loan associations and
other financial institutions at which either Subsidiary maintains a safe
deposit box, lock box or checking, savings, custodial or other account of
any nature, the type and number of each such account and the signatories
therefore, a description of any compensating balance arrangements, and the
names of all persons authorized to draw thereon, make withdrawals
therefrom or have access thereto.
3.20. Affiliates' Relationships to Company.
3.20.(a) Contracts With Affiliates. All leases, contracts,
agreements or other arrangements between either Subsidiary and any
Affiliate are described on Schedule 3.20.(a).
3.20.(b) No Adverse Interests. Except as set forth in Schedule
3.20.(b), no Affiliate has any direct or indirect interest in (i) any
entity which does business with either Subsidiary or is competitive
with either Subsidiary business, or (ii) any property, asset or right
which is used by either Subsidiary in the conduct of its business.
3.20.(c) Obligations. All obligations of any kind whatsoever of
any Affiliate to either Subsidiary, and all obligations, of any kind
whatsoever of either Subsidiary to any Affiliate, are listed on
Schedule 3.20.(c).
3.21. Assets of the Business. Except as set forth in Schedule
3.21, each Subsidiary presently has and at the Closing will have good,
valid and marketable title to all property and assets, tangible and
intangible, and all leases, licenses and other agreements of the financial
services business of the Tenfore Companies as presently conducted (the
"Business").
3.22. Adjusted Net Worth at Closing. On the Closing Date, the
Subsidiaries will present a Schedule of Liquid Net Worth Deficiency as
herein defined. Liquid Net Worth Deficiency shall mean the aggregate
amount of the Subsidiaries' current liabilities determined in accordance
with generally accepted accounting standards used in the United Kingdom
("UKGAAP"), less the aggregate amount of the Subsidiaries' Current Assets,
determined in accordance with UKGAAP. Subsidiaries' Current Assets will
include: the aggregate amount of the Subsidiaries' cash balance, plus
receivables from customers less than 120 days old, net of an allowance for
doubtful accounts, plus inventories on hand. To the extent that the
Liquid Net Worth Deficiency exceeds $100,000, the amount in excess of
$100,000 shall be paid in cash at Closing by Tenfore Europe to EAG.
3.23. No Brokers or Finders. No Tenfore Company nor any of its
directors, officers, employees, shareholders or agents have retained,
employed or used any broker or finder in connection with the transaction
provided for herein or in connection with the negotiation thereof.
3.24. Disclosure. No representation or warranty by any Tenfore
Company in this Agreement, nor in any certificate, or Exhibit hereto
furnished or to be furnished by or on behalf of any Tenfore Company
pursuant to this Agreement or in connection with transactions contemplated
hereby, contains any untrue statement of material fact or omits a material
fact necessary to make the statements contained therein not misleading.
All statements and information contained in any certificate, or Exhibit
shall be deemed representations and warranties by the respective Tenfore
Company which delivered the same.
4. REPRESENTATIONS AND WARRANTIES OF EAG
EAG makes the following representations and warranties to the Tenfore
Companies, each of which is true and correct on the date hereof, shall
remain true and correct to and including the Closing Date, shall be
unaffected by any investigation heretofore or hereafter made by the
Tenfore Companies or any notice to the Tenfore Companies, and shall
survive the Closing of the transactions provided for herein.
4.1. Corporate.
4.1.(a) Organization. EAG is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware.
4.1.(b) Corporate Power. EAG has all requisite corporate power
to enter into this Agreement and the other documents and instruments
to be executed and delivered by EAG and to carry out the transactions
contemplated hereby and thereby.
4.2. Authority. The execution and delivery of this Agreement and the
other documents and instruments to be executed and delivered by EAG
pursuant hereto and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by the Board of Directors of
EAG. No other corporate act or proceeding on the part of EAG or its
shareholders is necessary to authorize this Agreement or the other
documents and instruments to be executed and delivered by EAG pursuant
hereto or the consummation of the transactions contemplated hereby and
thereby. This Agreement constitutes, and when executed and delivered, the
other documents and instruments to be executed and delivered by EAG
pursuant hereto will constitute, valid and binding agreements of EAG,
enforceable in accordance with their respective terms, except as such may
be limited by bankruptcy, insolvency, reorganization or other laws
affecting creditors' rights generally, and by general equitable
principles.
4.3. Capitalization of EAG. The authorized capital stock of EAG
consists entirely of 37,000,000 shares, consisting of 2,000,000 shares of
Preferred Stock, $.001 par value per share, and 35,000,000 shares of
Common Stock, $.001 par value per share. Exhibit A lists the number of
issued and outstanding shares of such capital stock, as well as the number
and a brief description of any (a) securities convertible into or
exchangeable for any of EAG's capital stock or other securities, (b)
options, warrants or other rights to purchase or subscribe to capital
stock or other securities of EAG or securities which are convertible into
or exchangeable for capital stock of EAG or (c) contracts, commitments,
agreements, understandings or arrangements of any kind relating to the
issuance, sale or transfer of any capital stock or other equity security
of EAG, any such convertible or exchangeable securities or any such
options, warrants or other rights.
4.4. No Brokers or Finders. Neither EAG nor any of its directors,
officers, employees or agents have retained, employed or used any broker
or finder in connection with the transaction provided for herein or in
connection with the negotiation thereof.
4.5. Disclosure. No representation or warranty by EAG in this
Agreement, nor any statement, certificate, schedule, document or exhibit
hereto furnished or to be furnished by or on behalf of EAG pursuant to
this Agreement, any exhibit to this Agreement or in connection with
transactions contemplated hereby, contains or shall contain any untrue
statement of material fact or omits or shall omit a material fact
necessary to make the statements contained therein not misleading.
4.6. Investment Intent. The Tenfore Shares are being acquired by EAG
for investment only and not with the view to resale or other distribution.
5. COVENANTS
5.1. Stock Option. At the Closing, EAG and Tenfore Europe shall
execute and deliver an Option Agreement substantially in the form of
Exhibit B hereto.
5.2. Escrow Agreement. At the Closing, Tenfore Europe and EAG shall
execute and deliver an Escrow Agreement ("Escrow Agreement") substantially
in the form of Exhibit C hereto.
5.3. License Agreement. At the Closing, Tenfore Europe shall deliver
a fully executed license ("License Agreement"), whereby Montana Services
Ltd., an affiliate of Tenfore Europe, grants Tenfore Systems a license for
use of the technology and software of Tenfore Europe's financial services
division, substantially in the form of Exhibit D hereto.
5.4. Agency/Distribution Agreement with Tenfore-Italy. At the
Closing, Tenfore Europe shall deliver a fully executed Agency/Distribution
Agreement with Tenfore Italia Spa (the "Agency/Distribution Agreement"),
substantially in the form of Exhibit E hereto.
5.5. Noncompetition; Confidentiality. Subject to the Closing, and as
an inducement to EAG to execute this Agreement and complete the
transactions contemplated hereby, and in order to preserve the goodwill
associated with the business of the Subsidiaries being acquired pursuant
to this Agreement, Tenfore Europe hereby covenants and agrees as follows:
5.5.(a) Covenant Not to Compete. For a period of five years
from the Closing Date, Tenfore Europe will not, directly or
indirectly, collectively or individually:
(i) engage in, continue in or carry on any business which
competes with the business of either Subsidiary on the Closing
Date or is substantially similar thereto, including owning or
controlling any financial interest in any corporation,
partnership, firm or other form of business organization which
is so engaged;
(ii) consult with, advise or assist in any way, whether or
not for consideration, any corporation, partnership, firm or
other business organization which is now or becomes a competitor
of either Subsidiary or EAG in any aspect with respect to the
business currently carried on by either Subsidiary, including,
but not limited to, advertising or otherwise endorsing the
products of any such competitor; soliciting customers or
otherwise serving as an intermediary for any such competitor;
loaning money or rendering any other form of financial
assistance to or engaging in any form of business transaction on
other than an arm's length basis with any such competitor;
(iii) offer employment to an employee of either Subsidiary,
without the prior written consent of EAG; or
(iv) engage in any practice the purpose of which is to
evade the provisions of this covenant not to compete or to
commit any act which adversely affects the Business;
provided, however, that the foregoing shall not prohibit the
ownership of securities of corporations which are listed on a
national securities exchange or traded in the national
over-the-counter market in an amount which shall not exceed 5% of the
outstanding shares of any such corporation. The Parties agree that
the geographic scope of this covenant not to compete shall extend
worldwide which is the current scope of the business of Tenfore
Europe. The Parties agree that EAG may not sell, assign or otherwise
transfer this covenant not to compete, in whole or in part, to any
person, corporation, firm or entity without the prior written consent
of Tenfore Europe, which consent shall not be unreasonably withheld.
In the event a court of competent jurisdiction determines that the
provisions of this covenant not to compete are excessively broad as
to duration, geographical scope or activity, it is expressly agreed
that this covenant not to compete shall be construed so that the
remaining provisions shall not be affected, but shall remain in full
force and effect, and any such over broad provisions shall be deemed,
without further action on the part of any person, to be modified,
amended and/or limited, but only to the extent necessary to render
the same valid and enforceable in such jurisdiction. Notwithstanding
the foregoing, Tenfore Europe may carry on the Business through
licensees of Tenfore Europe or directly by Tenfore Europe in France
and in the territories of France. Further, the Parties understand
and agree that Montana Services Limited ("Montana") has granted a
license of certain intellectual property rights to an Italian company
to carry on activities similar to the Business.
5.5.(b) Covenant of Confidentiality. Tenfore Europe shall
not at any time subsequent to the Closing, except as explicitly
requested by EAG, (i) use for any purpose, (ii) disclose to any
person, or (iii) keep or make copies of documents, tapes, discs or
programs containing, any confidential information concerning either
Subsidiary. For purposes hereof, "confidential information" shall
mean and include, without limitation, all Trade Rights in which
either Subsidiary has an interest, all customer lists and customer
information, and all other information concerning the Subsidiaries'
processes, apparatus, equipment, packaging, products, marketing and
distribution methods, not previously disclosed to the public directly
by said Subsidiaries. The Parties agree that Montana and Tenfore
Europe will be using their respective intellectual property rights
(x) other than for financial information in connection with their
operations, (y) in France and the territories of France for any
purpose, and (z) for the grant of a license to Tenfore Italia Spa.
5.5.(c) Equitable Relief for Violations. Tenfore Europe
agrees that the provisions and restrictions contained in this Section
5.5 are necessary to protect the legitimate continuing interests of
EAG in acquiring the Tenfore Securities, and that any violation or
breach of these provisions will result in irreparable injury to EAG
for which a remedy at law would be inadequate and that, in addition
to any relief at law which may be available to EAG for such violation
or breach and regardless of any other provision contained in this
Agreement, EAG shall be entitled to injunctive and other equitable
relief as a court may grant after considering the intent of this
Section 5.5.
5.6. General Releases. At the Closing, Tenfore Europe shall deliver
general releases to EAG, in form and substance satisfactory to EAG and its
counsel, releasing the Subsidiaries and the directors, officers, agents
and employees of the Subsidiaries from all Claims (as defined in Section
8.1) to the Closing Date, except (i) to the extent the Subsidiaries are
liable to Tenfore Europe pursuant to the Hive Down Agreement among the
Tenfore Companies dated as of April 15, 1997 ("Hive-Down Agreement") or
the assignment of loans by Tenfore Europe to Tenfore Systems or any other
written agreement approved by the Parties as set forth in Exhibit F hereto
("Excluded Agreements"), and (ii) in the case of persons who are employees
of the Subsidiaries, compensation for current periods expressly described
and excepted from such releases. Such releases shall also contain waivers
of any right of contribution or other recourse against the Subsidiaries,
with respect to representations, warranties or covenants made herein by
the Subsidiaries.
5.7. Access to Information and Records. During the period prior to
the Closing, Tenfore Europe shall, and shall cause the Subsidiaries to,
give EAG, its counsel, accountants and other representatives (i) access
during normal business hours to all of the properties, books, records,
contracts and documents of the Business for the purpose of such
inspection, investigation and testing as EAG deems appropriate (and each
Subsidiary shall furnish or cause to be furnished to EAG and its
representatives all information with respect to the business and affairs
of said Subsidiaries as EAG may request); (ii) access to employees, agents
and representatives for the purposes of such meetings and communications
as EAG reasonably desires; and (iii) with the prior consent of the
Subsidiary in each instance (which consent shall not be unreasonably
withheld), access to vendors, customers, manufacturers of its machinery
and equipment, and others having business dealings with the Subsidiary.
5.8. Conduct of Business Pending the Closing.
5.8.(a) Except as otherwise contemplated in this Agreement or
approved in writing by EAG, which approval shall not be unreasonably
withheld, from the date hereof until the Closing, each Subsidiary
covenants as follows, and Tenfore Europe shall cause each of the
following to occur:
(i) No Changes. Each Subsidiary will carry on its
business diligently and in the same manner as heretofore and
will not make or institute any changes in its methods of
purchase, sale, management, accounting or operation.
(ii) Maintain Organization. Each Subsidiary will take
such action as may be necessary to maintain, preserve, renew and
keep in force and effect the existence, rights and franchises of
said Subsidiary and will use its best efforts to preserve the
business organization of the Subsidiary intact, to keep
available to the Subsidiary the present officers and employees,
and to preserve for the Subsidiary its present relationships
with suppliers and customers and others having business
relationships with the Subsidiary.
(iii) No Breach. Each Subsidiary will not do or omit any
act, or permit any omission to act, which may cause a breach of
any material contract, commitment or obligation, or any breach
of any representation, warranty, covenant or agreement made by
said Subsidiary herein, or which would have required disclosure
on Schedule 3.7 had it occurred after the date of the Recent
Balance Sheet and prior to the date of this Agreement, except as
otherwise set forth in the Hive Down Agreement.
(iv) No Material Contracts. No contract or commitment
will be entered into, and no purchase of supplies and no sale of
goods or services (real, personal, or mixed, tangible or
intangible) will be made, by or on behalf of each Subsidiary,
except contracts, commitments, purchases or sales which are in
the ordinary course of business and consistent with past
practice, are not material to the Subsidiary (individually or in
the aggregate) and would not have been required to be disclosed
in the Disclosure Schedule had they been in existence on the
date of this Agreement and the Excluded Agreements.
(v) No Corporate Changes. Each Subsidiary shall not
amend its Articles and Certificate of Incorporation or Articles
and Memorandum of Association Formation Agreement or By-Laws or
make any changes in authorized or issued capital stock.
(vi) Maintenance of Insurance. Each Subsidiary shall
maintain all of the insurance in effect as of the date hereof
and shall procure such additional insurance as shall be
reasonably requested by EAG.
(vii) Maintenance of Property. Each Subsidiary shall use,
operate, maintain and repair all property of such Subsidiary in
a normal business manner.
(viii) Interim Financials. Each Subsidiary will
provide EAG with interim monthly financial statements and other
management reports as and when they are available.
(ix) No Negotiations. Neither Subsidiary nor Tenfore
Europe will directly or indirectly (through a representative or
otherwise) solicit or furnish any information to any prospective
buyer, commence, or conduct presently ongoing, negotiations with
any other party or enter into any agreement with any other party
concerning the sale of the Subsidiary or its assets or business
or any part thereof or any equity securities of the Subsidiary
(an "acquisition proposal"), and said Subsidiary and Tenfore
Europe shall immediately advise EAG of the receipt of any
acquisition proposal.
5.8.(b) From the date hereof until the Closing, except as
otherwise approved in writing by Tenfore Europe, EAG shall not take
any action in connection with its assistance in operating the
Business that, to the best knowledge and belief of EAG, would cause a
breach of any of the representations and warranties made by Tenfore
Europe and the Subsidiaries in this Agreement.
5.9. Consents. The Tenfore Companies will use their best efforts
prior to Closing to obtain all consents necessary for the consummation of
the transactions contemplated hereby.
5.10. Other Action. The Tenfore Companies shall use their best
efforts to cause the fulfillment at the earliest practicable date of all
of the conditions to the Parties' obligations to consummate the
transactions contemplated in this Agreement.
5.11. Disclosure Schedule. The Tenfore Companies shall have a
continuing obligation to promptly notify EAG in writing with respect to
any matter hereafter arising or discovered which, if existing or known at
the date of this Agreement, would have been required to be set forth or
described in the Disclosure Schedule, but no such disclosure shall cure
any breach of any representation or warranty which is inaccurate.
6. CONDITIONS PRECEDENT TO EAG'S OBLIGATIONS
Each and every obligation of EAG to be performed on the Closing Date
shall be subject to the satisfaction prior to or at the Closing of each of
the following conditions:
6.1. Representations and Warranties True of the Closing Date. Each
of the representations and warranties made by each of the Tenfore
Companies in this Agreement, and the statements contained in the
Disclosure Schedule (exluding statements contained in any document
included or deemed to be included in the Disclosure Schedule) or in any
certificate or Exhibit delivered by the Tenfore Companies pursuant to this
Agreement, shall be true and correct in all material respects when made
and shall be true and correct in all material respects at and as of the
Closing Date as though such representations and warranties were made or
given on and as of the Closing Date, except for any changes permitted by
the terms of this Agreement or consented to in writing by EAG.
6.2. Compliance With Agreement. Each of the Tenfore Companies shall
have in all material respects performed and complied with all of their
agreements and obligations under this Agreement which are to be performed
or complied with by them prior to or on the Closing Date, including the
delivery of the closing documents specified in Section 9.1.
6.3. Absence of Litigation. No Material Litigation (as defined
below) shall have been commenced or threatened, and no investigation by
any Government Entity shall have been commenced, against EAG, either
Subsidiary or any of the affiliates, officers or directors of any of them,
with respect to the transactions contemplated hereby. For purposes of
Section 6.3 and Section 7.3 only, "Material Litigation" shall mean any
Litigation involving claims that could exceed $10,000 or that could
adversely impact EAG, either Subsidiary or any affiliates, officers or
directors of any of them with respect to the transactions contemplated
hereby.
6.4. Consents and Approvals. All approvals, consents and waivers
that are required to effect the transactions contemplated hereby shall
have been received, and executed counterparts thereof shall have been
delivered to EAG not less than two business days prior to the Closing.
6.5. Material Contracts. Each of the Contracts listed on Exhibit G
shall have been assigned to or entered into by the indicated Subsidiary
and all approvals, consents and waivers required in connection with such
assignments shall have been obtained.
7. CONDITIONS PRECEDENT TO TENFORE EUROPE'S OBLIGATIONS
Each and every obligation of Tenfore Europe to be performed on the
Closing Date shall be subject to the satisfaction prior to or at the
Closing of the following conditions:
7.1. Representations and Warranties True on the Closing Date. Each
of the representations and warranties made by EAG in this Agreement shall
be true and correct in all material respects when made and shall be true
and correct in all material respects at and as of the Closing Date as
though such representations and warranties were made or given on and as of
the Closing Date.
7.2. Compliance With Agreement. EAG shall have in all material
respects performed and complied with all of Buyer's agreements and
obligations under this Agreement which are to be performed or complied
with by EAG prior to or on the Closing Date, including the delivery of the
closing documents specified in Section 9.2.
7.3. Absence of Litigation. No Material Litigation shall have been
commenced or threatened, and no investigation by any Government Entity
shall have been commenced, against EAG, either Subsidiary or any of the
affiliates, officers or directors of any of them, with respect to the
transactions contemplated hereby.
8. INDEMNIFICATION
8.1. By Tenfore Europe. Subject to the terms and conditions of this
Article 8, Tenfore Europe hereby agrees to indemnify, defend and hold
harmless EAG, its directors, officers, employees and controlled and
controlling persons (hereinafter, "EAG's Affiliates") and the Subsidiaries
from and against all Claims asserted against, resulting to, imposed upon,
or incurred by EAG, EAG's Affiliates or any Subsidiary, directly or
indirectly, by reason of, arising out of or resulting from (a) the
inaccuracy or breach of any representation or warranty of any Tenfore
Company contained in or made pursuant to this Agreement (regardless of
whether such breach is deemed "material" for purposes of Section 6.1), or
(b) the breach of any covenant of any Tenfore Company contained in this
Agreement, or (c) the litigation involving Tenfore R&D in Denmark, or (d)
the litigation involving Tenfore Systems in France. As used in this
Article 8, the term "Claim" shall include (i) all debts, liabilities and
obligations; (ii) all losses, damages (including, without limitation,
consequential damages), judgments, awards, settlements, costs and expenses
(including, without limitation, interest (including prejudgment interest
in any litigated matter), penalties, court costs and attorneys fees and
expenses); and (iii) all demands, claims, suits, actions, costs of
investigation, causes of action, proceedings and assessments, whether or
not ultimately determined to be valid.
8.2. By EAG. Subject to the terms and conditions of this Article 8,
EAG hereby agrees to indemnify, defend and hold harmless Tenfore Europe,
its directors, officers, employees and controlled and controlling persons
(hereinafter "Tenfore Europe's Affiliates") from and against all Claims
asserted against, resulting to, imposed upon or incurred by Tenfore Europe
or Tenfore Europe's Affiliates, directly or indirectly, by reason of or
resulting from (a) the inaccuracy or breach of any representation or
warranty of EAG contained in or made pursuant to this Agreement
(regardless of whether such breach is deemed "material" for purposes of
Section 7.1), or (b) the breach of any covenant of EAG contained in this
Agreement.
8.3. Indemnification of Third-Party Claims. The obligations and
liabilities of any Party to indemnify any other under this Article 8 with
respect to Claims relating to third parties shall be subject to the
following terms and conditions:
8.3.(a) Notice and Defense. The party or parties to be
indemnified (whether one or more, the "Indemnified Party") will give
the party from whom indemnification is sought (the "Indemnifying
Party") prompt written notice of any such Claim, and the Indemnifying
Party will undertake the defense thereof by representatives chosen by
it. Failure to give such notice shall not affect the Indemnifying
Party's duty or obligations under this Article 8, except to the
extent the Indemnifying Party is prejudiced thereby. So long as the
Indemnifying Party is defending any such Claim actively and in good
faith, the Indemnified Party shall not settle such Claim. The
Indemnified Party shall make available to the Indemnifying Party or
its representatives all records and other materials required by them
and in the possession or under the control of the Indemnified Party,
for the use of the Indemnifying Party and its representatives in
defending any such Claim, and shall in other respects give reasonable
cooperation in such defense.
8.3.(b) Failure to Defend. If the Indemnifying Party, within
a reasonable time after notice of any such Claim, fails to defend
such Claim actively and in good faith, the Indemnified Party will
(upon further notice) have the right to undertake the defense,
compromise or settlement of such Claim or consent to the entry of a
judgment with respect to such Claim, on behalf of and for the account
and risk of the Indemnifying Party, and the Indemnifying Party shall
thereafter have no right to challenge the Indemnified Party's
defense, compromise, settlement or consent to judgment therein.
8.3.(c) Indemnified Party's Rights. Anything in this Section
8.3 to the contrary notwithstanding, (i) if there is a reasonable
probability that a Claim may materially and adversely affect the
Indemnified Party other than as a result of money damages or other
money payments, the Indemnified Party shall have the right to defend,
compromise or settle such Claim, and (ii) the Indemnifying Party
shall not, without the written consent of the Indemnified Party,
settle or compromise any Claim or consent to the entry of any
judgment which does not include as an unconditional term thereof the
giving by the claimant or the plaintiff to the Indemnified Party of a
release from all Liability in respect of such Claim.
8.4. Payment. The Indemnifying Party shall promptly pay the
Indemnified Party any amount due under this Article 8, which payment may
be accomplished in whole or in part, at the option of the Indemnified
Party, by the Indemnified Party setting off any amount owed to the
Indemnifying Party by the Indemnified Party. To the extent set-off is
made by an Indemnified Party in satisfaction or partial satisfaction of an
indemnity obligation under this Article 8 that is disputed by the
Indemnifying Party, upon a subsequent determination by final judgment not
subject to appeal that all or a portion of such indemnity obligation was
not owed to the Indemnified Party, the Indemnified Party shall pay the
Indemnifying Party the amount which was set off and not owed together with
interest from the date of set-off until the date of such payment at an
annual rate equal to the average annual rate in effect as of the date of
the set-off, on those three maturities of United States Treasury
obligations having a remaining life, as of such date, closest to the
period from the date of the set-off to the date of such judgment. Upon
judgment, determination, settlement or compromise of any third party
Claim, the Indemnifying Party shall pay promptly on behalf of the
Indemnified Party, and/or to the Indemnified Party in reimbursement of any
amount theretofore required to be paid by it, the amount so determined by
judgment, determination, settlement or compromise and all other Claims of
the Indemnified Party with respect thereto, unless in the case of a
judgment an appeal is made from the judgment. If the Indemnifying Party
desires to appeal from an adverse judgment, then the Indemnifying Party
shall post and pay the cost of the security or bond to stay execution of
the judgment pending appeal. Upon the payment in full by the Indemnifying
Party of such amounts, the Indemnifying Party shall succeed to the rights
of such Indemnified Party, to the extent not waived in settlement, against
the third party who made such third party Claim.
8.5. Limitations on Indemnification. Except for any willful or
knowing breach or misrepresentation, as to which claims may be brought
without limitation as to time or amount:
8.5.(a) Time Limitation. No claim or action shall be brought
under this Article 8 for breach of representation or warranty after
the lapse of two (2) years following the Closing. Regardless of the
foregoing, however, or any other provision of the Agreement:
(i) Any claim or action brought for breach of any
representation or warranty made by the Tenfore Companies in or
pursuant to Section 3.1, 3.2 and 3.3 may be brought at any time
within seven years following the Closing, and the Tenfore
Companies hereby waive all applicable statutory or common law
limitation periods with respect thereto.
(ii) Any claim or action brought for breach of any
representation or warranty made by the Tenfore Companies in or
pursuant to Section 3.5 may be brought at any time until the
underlying tax obligation is barred by the applicable period of
limitation under federal, state, foreign, county, local or other
laws relating thereto (as such period may be extended by
waiver).
(iii) Any claim made by a party hereunder for breach of a
representation or warranty prior to the termination of the
survival period for such claim shall be preserved despite the
subsequent termination of such survival period.
(iv) If any act, omission, disclosure or failure to
disclosure shall form the basis for a claim for breach of more
than one representation or warranty, and such claims have
different periods of survival hereunder, the termination of the
survival period of one claim shall not affect a party's right to
make a claim based on the breach of representation or warranty
still surviving.
8.5.(b) Minimum Amount Limitation. An Indemnified Party
shall not be entitled to indemnification under this Article 8 for
breach of a representation or warranty unless the aggregate of the
Indemnifying Party's indemnification obligations to the Indemnified
Party pursuant to this Article 8 (but for this Section 8.5.(b))
exceeds $100,000, but in such event, the Indemnified Party shall be
entitled to indemnification in full for all breaches of
representations and/or warranties; provided, however, that this
limitation shall not apply to a breach of the representation or
warranty made by the Tenfore Companies in or pursuant to Section
3.22.
8.5.(c) Maximum Amount Limitation. The total aggregate
liability of an Indemnifying Party under this Article 8 for Claims
shall not exceed an amount equal to the Market Value (as defined
below) of 17,000,000 shares of EAG's Common Stock, $.001 par value
per share ("EAG Common Stock"), calculated as of the date of final
determination of the Claim(s) ("Determination Date"). The "Market
Value" with respect to EAG's Common Stock shall mean the quotient of
(i) the sum of the average of the final bid and final asked prices of
EAG Common Stock for the previous ten trading days, divided by (ii)
ten. Notwithstanding any other provision herein set forth, (y)
Tenfore Europe shall have the right to transfer to EAG in full and
final satisfaction of any Claim(s) all of the EAG Shares or such
number of EAG Shares as upon a deemed conversion thereof calculated
as of the Determination Date of the Claim(s) will have a Market Value
equal to the value of such Claim(s), and (z) EAG shall have the right
to transfer to Tenfore Europe in full and final satisfaction of any
Claim(s) such number of shares of EAG's Common Stock as will have a
Market Value calculated as of the Determination Date of the Claims(s)
equal to the value of such Claim(s).
8.5.(d) Insurance Claims and Offset. The Indemnified Party
shall use its best efforts to obtain any amounts recoverable with
respect to any Claim under any applicable insurance policies;
provided, however, that the Indemnified Party shall not be obligated
to obtain any such amounts if the increase identified in clause (i)
of the immediately following sentence exceeds the amount of the
Claim. The obligation of an Indemnifying Party to indemnify any
Claim under this Article 8 shall be reduced by any amounts actually
and irrevocably recovered by the Indemnified Party or any of its
subsidiaries with respect to such Claim or the underlying facts under
such insurance policies or if the Indemnified Party has already been
paid by the Indemnifying Party with respect to such Claim then the
amounts so recovered as aforesaid shall be paid as reimbursement by
said Indemnified Party to the Indemnifying Party, (i) net of any
increase that will occur, or is reasonably likely to occur, in
insurance premiums payable by the Indemnified Party, whether by
retrospective premium adjustments or any other premium increase under
the policy or policies under which the insurance claim is made or any
other policy, where the increase results directly from filing the
insurance claim and (ii) less, dollar for dollar, the amount by which
the insurance claim when filed or at any time during the applicable
policy period, either singly or in the aggregate with all other
insurance claims made under the applicable policy or policies,
exceeds the policy coverage limit; provided, however, that this
subsection shall apply only if this provision does not constitute an
improper waiver of the insurer's rights of subrogation against the
Indemnifying Party. Nothing contained in this Section 8.5(d) shall
be deemed to create an obligation of any party hereto to maintain any
form or level of insurance after the closing, to name any other party
as an additional insured or to obtain approval for any waiver of
rights of subrogation.
8.5.(e) Credit The obligation of an Indemnifying Party to
indemnify any Claim under this Article 8 shall be reduced by the amount of
any credit, recovery or other benefit actually and irrevocably paid to or
obtained by the Indemnified Party with respect to such Claim.
8.6. Return of Indemnification Payments in Certain Circumstances.
The Indemnified Party shall repay so much of any amount which is paid by
the Indemnifying Party in respect of any Claim for breach of any of the
representations and warranties or otherwise under this Agreement and which
is subsequently recovered by or paid to the Indemnified Party by any third
party (such repayment to be made forthwith upon the Indemnified Party
receiving the same).
8.7. Impact on Purchase Price. Any payments of indemnification under
this Article 8 shall be deemed to be adjustments to the Purchase Price.
8.8. No Waiver. The closing of the transactions contemplated by this
Agreement shall not constitute a waiver by any party of its rights to
indemnification hereunder, regardless of whether the party seeking
indemnification has knowledge of the breach, violation or failure of
condition constituting the basis of the Claim at or before the Closing,
and regardless of whether such breach, violation or failure is deemed to
be "material" for purposes of Section 10.2.
8.9. Limit on Liability. Notwithstanding other provisions in this
Agreement set forth, neither Tenfore Europe nor either Subsidiary shall
have any liability for any Claim under the warranties set forth in Article
3 or under this Article 8 or otherwise howsoever arising under or pursuant
to this Agreement in respect of matters fairly disclosed in this Agreement
including the Disclosure Schedule and the itemized Schedules identified on
page iv hereof; the Exhibits identified on page v hereof; the documents
specifically required pursuant to Section 9.1 hereof to be delivered by
the Tenfore Companies; and the itemized documents referenced in the
narrative portion of the various Schedules contained in the aforesaid
Disclosure Schedule.
9. CLOSING
The closing of this transaction (the "Closing") shall take place at
the offices of TenFore Europe, 1/3 Newton Street, London, England, at noon
local time, on April 29, 1997, or at such other time and place as the
Parties hereto shall agree upon. Such date is referred to in this
Agreement as the "Closing Date".
9.1. Documents to be Delivered by Tenfore Companies. At the Closing,
the Tenfore Companies shall deliver to EAG the following documents, in
each case duly executed or otherwise in proper form:
9.1.(a) Securities Certificates. Certificates representing
the Tenfore Securities, duly endorsed for transfer or with duly
executed stock powers attached.
9.1.(b) Compliance Certificate. A certificate signed by each
of the Tenfore Companies that each of the respective representations
and warranties made by said Tenfore Companies in this Agreement is
true and correct in all material respects on and as of the Closing
Date with the same effect as though such representations and
warranties had been made or given on and as of the Closing Date
(except for any changes permitted by the terms of this Agreement or
consented to in writing by EAG), and that each of the Tenfore
Companies have performed and complied with all of said Companies'
obligations under this Agreement which are to be performed or
complied with on or prior to the Closing Date.
9.1.(c) Nonsolicitation Agreement. A Nonsolicitation
Agreement, substantially in the form of Exhibit H hereto, duly
executed by Robert Horvath.
9.1.(d) Certified Resolutions. Certified copies of the
resolutions of the Board of Directors of each Tenfore Company
authorizing and approving this Agreement and the consummation of the
transactions contemplated by this Agreement.
9.1.(e) Articles; By-Laws. A copy of the organizational
documents of the Subsidiaries certified by the Managing Director of
said Subsidiaries, and a copy of the Articles and Certificate of
Incorporation or Articles and Memorandum of Association or Formation
Agreement of each Subsidiary certified by the appropriate
governmental authority, court, or agency of such Subsidiary's
organizational jurisdiction.
9.1.(f) Incumbency Certificate. Incumbency certificates
relating to each person executing (as a corporate officer or
otherwise on behalf of another person) any document executed and
delivered to EAG pursuant to the terms hereof.
9.1.(g) General Releases. The General Releases referred to
in Section 5.6, duly executed by the persons referred to in such
Section.
9.1.(h) Resignations. The resignations of all officers and
directors of the Subsidiaries, effective as of the Closing Date and
in form satisfactory to EAG's counsel.
9.1.(i) Escrow Agreement. The Escrow Agreement referred to
in Section 5.2, duly executed on behalf of Tenfore Europe.
9.1.(j) License Agreement. The License Agreement referred to
in Section 5.3, duly executed on behalf of Montana and Tenfore
Systems.
9.1.(k) Agency/Distribution Agreement. The
Agency/Distribution Agreement referred to in Section 5.4, duly
executed on behalf of Tenfore Systems and Tenfore Italia Spa.
9.1.(l) Tenfore Debt Assignment. The Assignment of the
Tenfore Debt from Tenfore Europe to EAG, duly executed and delivered
by Tenfore Europe and each Subsidiary.
9.1.(m) Other Documents. All other documents, instruments or
writings required to be delivered to EAG at or prior to the Closing
pursuant to this Agreement and such other certificates of authority
and documents as EAG may reasonably request.
9.2. Documents to be Delivered by EAG. At the Closing, EAG shall
deliver to Tenfore Europe the following documents, in each case duly
executed or otherwise in proper form:
9.2.(a) EAG Shares. To the Escrow Agent and Tenfore Europe,
stock certificates representing the EAG Shares as provided for in
Section 2.2.
9.2.(b) Compliance Certificate. A certificate signed by the
chief executive officer of EAG that the representations and
warranties made by EAG in this Agreement are true and correct on and
as of the Closing Date with the same effect as though such
representations and warranties had been made or given on and as of
the Closing Date (except for any changes permitted by the terms of
this Agreement or consented to in writing by Tenfore Europe), and
that EAG has performed and complied with all of EAG's obligations
under this Agreement which are to be performed or complied with on or
prior to the Closing Date.
9.2.(c) Certified Resolutions. A certified copy of the
resolutions of the Board of Directors of EAG authorizing and
approving this Agreement and the consummation of the transactions
contemplated by this Agreement.
9.2.(d) Incumbency Certificate. Incumbency certificates
relating to each person executing any document executed and delivered
to Tenfore Europe by EAG pursuant to the terms hereof.
9.2.(e) Stock Option. The Stock Option referred to in
Section 5.1, duly executed on behalf of EAG.
9.2.(f) Escrow Agreement. The Escrow Agreement referred to
in Section 5.2., duly executed on behalf of EAG.
9.2.(g) Tenfore Debt Assignment. The Assignment of the
Tenfore Debt from Tenfore Europe to EAG, duly executed and delivered
by EAG.
9.2.(h) Other Documents. All other documents, instruments or
writings required to be delivered to Tenfore Europe at or prior to
the Closing pursuant to this Agreement and such other certificates of
authority and documents as Tenfore Europe may reasonably request.
10. TERMINATION
10.1. Right of Termination Without Breach. This Agreement may be
terminated without further liability of any party at any time prior to the
Closing:
10.1.(a) by mutual written agreement of EAG and Tenfore
Europe, or
10.1.(b) by either EAG or Tenfore Europe if the Closing shall
not have occurred on or before May 31, 1997, provided the terminating
party has not, through breach of a representation, warranty or
covenant, prevented the Closing from occurring on or before such
date.
10.2. Termination for Breach.
10.2.(a) Termination by EAG. If (i) there has been a material
violation or breach by any Tenfore Company of any of the agreements,
representations or warranties contained in this Agreement which has
not been waived in writing by EAG, or (ii) there has been a failure
of satisfaction of a condition to the obligations of EAG which has
not been so waived, or (iii) any Tenfore Company shall have attempted
to terminate this Agreement under this Article 10 or otherwise
without grounds to do so, then EAG may, by written notice to Tenfore
Company at any time prior to the Closing that such violation, breach,
failure or wrongful termination attempt is continuing, terminate this
Agreement with the effect set forth in Section 10.2.(c) hereof.
10.2.(b) Termination by Tenfore Europe. If (i) there has been
a material violation or breach by EAG of any of the agreements,
representations or warranties contained in this Agreement which has
not been waived in writing by Tenfore Europe, or (ii) there has been
a failure of satisfaction of a condition to the obligations of
Tenfore Europe which has not been so waived, or (iii) EAG shall have
attempted to terminate this Agreement under this Article 10 or
otherwise without grounds to do so, then Tenfore Europe may, by
written notice to EAG at any time prior to the Closing that such
violation, breach, failure or wrongful termination attempt is
continuing, terminate this Agreement with the effect set forth in
Section 10.2.(c) hereof.
10.2.(c) Effect of Termination. Termination of this Agreement
pursuant to this Section 10.2 shall not in any way terminate, limit
or restrict the rights and remedies of any Party hereto against any
other Party which has violated, breached or failed to satisfy any of
the representations, warranties, covenants, agreements, conditions or
other provisions of this Agreement prior to termination hereof. In
addition to the right of any Party under common law to redress for
any such breach or violation, each Party whose breach or violation
has occurred prior to termination shall jointly and severally
indemnify each other Party for whose benefit such representation,
warranty, covenant, agreement or other provision was made
("indemnified party") from and against all losses, damages
(including, without limitation, consequential damages), costs and
expenses (including, without limitation, interest (including
prejudgment interest in any litigated matter), penalties, court
costs, and attorneys fees and expenses) asserted against, resulting
to, imposed upon, or incurred by the indemnified party, directly or
indirectly, by reason of, arising out of or resulting from such
breach or violation. Subject to the foregoing, the Parties'
obligations under Section 11.9.(c) of this Agreement shall survive
termination.
10.3. Arbitration. Any dispute, controversy or claim arising out
of or relating to this Agreement or any contract or Agreement entered into
pursuant hereto or the performance by the Parties of its or their terms
shall be settled by binding arbitration held in New York City in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect, except as specifically otherwise
provided in this Article 10. Notwithstanding the foregoing, EAG may, in
its discretion, apply to a court of competent jurisdiction for equitable
relief from any violation or threatened violation of the covenants of any
member of the Tenfore Group under Section 5.5 of this Agreement, or any
covenants not to solicit contained in any Nonsolicitation Agreement
delivered pursuant to Section 9.1.(d) hereof.
10.4. Arbitrators. The panel to be appointed shall consist of
three neutral arbitrators.
10.5. Procedures; No Appeal. The arbitrators shall allow such
discovery as the arbitrators determine appropriate under the circumstances
and shall resolve the dispute as expeditiously as practicable, and if
reasonably practicable, within 120 days after the selection of the
arbitrators. The arbitrators shall give the Parties written notice of the
decision, with the reasons therefor set out, and shall have 30 days
thereafter to reconsider and modify such decision if any Party so requests
within 10 days after the decision. Thereafter, the decision of the
arbitrators shall be final, binding, and nonappealable with respect to all
persons, including (without limitation) persons who have failed or refused
to participate in the arbitration process.
10.6. Authority. The arbitrators shall have authority to award
relief under legal or equitable principles, including interim or
preliminary relief, and to allocate responsibility for the costs of the
arbitration and to award recovery of attorneys fees and expenses in such
manner as is determined to be appropriate by the arbitrators.
10.7. Entry of Judgment. Judgment upon the award rendered by the
arbitrators may be entered in any court having in personam and subject
matter jurisdiction. EAG and each Tenfore Company hereby submit to the in
personam jurisdiction of the Federal courts in the Southern District of
New York, for the purpose of confirming any such award and entering
judgment thereon.
10.8. Confidentiality. All proceedings under this Article 10,
and all evidence given or discovered pursuant hereto, shall be maintained
in confidence by all Parties.
10.9. Continued Performance. The fact that the dispute
resolution procedures specified in this Article 10 shall have been or may
be invoked shall not excuse any Party from performing its obligations
under this Agreement and during the pendency of any such procedure all
Parties shall continue to perform their respective obligations in good
faith, subject to any rights to terminate this Agreement that may be
available to any Party and to the right of setoff provided in Section 8.4
hereof.
10.10. Tolling. All applicable statutes of limitation shall be
tolled while the procedures specified in this Article 10 are pending. The
Parties will take such action, if any, required to effectuate such
tolling.
10.11. Escrow Agent Unnecessary. The Parties agree that the
escrow agent under and as identified in the Escrow Agreement is not a
necessary party to and shall not be joined in or made Party to any
arbitration proceeding commenced under this Article 10.
11. MISCELLANEOUS
11.1. Disclosure Schedule. The Disclosure Schedule shall not
vary, change or alter the language of the representations and warranties
contained in this Agreement. As used in the Disclosure Schedule, the term
"Tenfore Agreements" shall mean all agreements and obligations entered
into between Tenfore Europe and certain other related Tenfore companies,
on the one hand, and Tenfore Systems or Tenfore R & D, on the other hand,
including but not limited to those documents set out or referred to in
Bundle F of the Disclosure Schedule.
11.2. Further Assurance. From time to time, at EAG's request and
without further consideration, the Tenfore Companies will execute and
deliver to EAG such documents and take such other action as EAG may
reasonably request in order to consummate more effectively the
transactions contemplated hereby.
11.3. Post-Closing Covenants.
11.3.(a) For a period of seven years after the Closing,
Tenfore Europe shall provide, and shall cause its appropriate
personnel to provide, when reasonably requested to do so by EAG,
access to all tax, financial and accounting records and any other
records of Tenfore Europe. During such seven-year period, Tenfore
Europe shall not, nor shall it permit its affiliates to, dispose of,
alter or destroy any such books, records and other data without
giving 30 days' prior written notice to EAG and permit EAG, at its
expense, to examine, duplicate or repossess such records, files,
documents and correspondence.
11.3.(b) Each party hereto agrees to cooperate with the other
party in the preparation for and prosecution of the defense of any
claim, action or cause of action arising out of or relating to any
liability of the Business which arose prior to the Closing,
including, without limitation, by making available evidence within
the control of such party and persons needed as witnesses employed by
or affiliated with such party, in each case as reasonably needed for
such defense. The party requesting such cooperation shall reimburse
the other party for its actual out-of-pocket costs relating to its
cooperation under this paragraph.
11.3.(c) After the Closing, Tenfore Europe, EAG and the
Subsidiaries, including any affiliates of the foregoing, shall use
their best efforts to assign to the Subsidiary specified by EAG any
and all property and assets, tangible and intangible, and all leases,
licenses and other agreements of the Business identified in the Hive
Down Agreement that have not previously been assigned to a
Subsidiary, and to obtain all approvals, consents and waivers
required in connection with such assignments.
11.4. Disclosures and Announcements. Announcements concerning
the transactions provided for in this Agreement by EAG or the Tenfore
Companies shall be subject to the approval of the other Parties in all
essential respects, except that approval of the Tenfore Companies shall
not be required as to any statements and other information which EAG may
submit to the Securities and Exchange Commission, EAG's stockholders or be
required to make pursuant to any rule or regulation of the Securities and
Exchange Commission or otherwise required by law. The Tenfore Companies
shall act hereunder only through Tenfore Europe.
11.5. Assignment; Parties in Interest.
11.5.(a) Assignment. Except as expressly provided herein, the
rights and obligations of a Party hereunder may not be assigned,
transferred or encumbered without the prior written consent of the
other Parties.
11.5.(b) Parties in Interest. This Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the respective
successors and permitted assigns of the Parties hereto. Nothing
contained herein shall be deemed to confer upon any other person any
right or remedy under or by reason of this Agreement.
11.6. Law Governing Agreement. This Agreement may not be
modified or terminated orally, and shall be construed and interpreted
according to the internal laws of the State of Delaware, excluding any
choice of law rules that may direct the application of the laws of another
jurisdiction.
11.7. Amendment and Modification. EAG and the Tenfore Companies
may amend, modify and supplement this Agreement in such manner as may be
agreed upon in writing among such Parties.
11.8. Notice. All notices, requests, demands and other
communications hereunder shall be given in writing and shall be: (a)
personally delivered; (b) sent by telecopier, facsimile transmission or
other electronic means of transmitting written documents; or (c) sent to
the Parties at their respective addresses indicated herein by registered
or certified U.S. mail, return receipt requested and postage prepaid, or
by private overnight mail courier service. The respective addresses to be
used for all such notices, demands or requests are as follows:
(a) If to EAG, to:
EuroAmerican Group Inc.
50 Broad Street, Suite 516
New York, New York 10004
Attention: Alexis Charamis
Facsimile: (212) 943-5750
(with a copy to)
Peter C. Linzmeyer, Esq.
Foley & Lardner
Washington Harbour
3000 K Street, N.W., Suite 500
Washington, DC 20007-5109
Facsimile: (202) 672-5399
or to such other person or address as EAG shall furnish to Tenfore Europe
in writing.
(b) If to any Tenfore Company:
P. O. Box 258
Malzard House
15 Union Street
St. Helier, Jersey
Channel Islands JE4 8T4
Attention: _______________
Facsimile: _______________
or to such other person or address as Tenfore Europe shall furnish to EAG
in writing.
If personally delivered, such communication shall be deemed delivered
upon actual receipt; if electronically transmitted pursuant to this
paragraph, such communication shall be deemed delivered the next business
day after transmission (and sender shall bear the burden of proof of
delivery); if sent by overnight courier pursuant to this paragraph, such
communication shall be deemed delivered upon receipt; and if sent by U.S.
mail pursuant to this paragraph, such communication shall be deemed
delivered as of the date of delivery indicated on the receipt issued by
the relevant postal service, or, if the addressee fails or refuses to
accept delivery, as of the date of such failure or refusal. Delivery to
Tenfore Europe shall constitute delivery to all Tenfore Companies. Any
Party to this Agreement may change its address for the purposes of this
Agreement by giving notice thereof in accordance with this Section.
11.9. Expenses. Regardless of whether or not the transactions
contemplated hereby are consummated:
11.9.(a) Brokerage. The Tenfore Companies and EAG each
represent and warrant to each other that there is no broker involved
or in any way connected with the transfer provided for herein on
their behalf respectively and each agrees to hold the other harmless
from and against all other claims for brokerage commissions or
finder's fees in connection with the execution of this Agreement or
the transactions provided for herein.
11.9.(b) Expenses to be Paid by Tenfore Europe. Tenfore
Europe shall pay, and shall indemnify, defend and hold EAG and the
Subsidiaries harmless from and against, each of the following:
(i) Transfer Taxes. Any sales, use, excise, transfer or
other similar tax imposed with respect to the transactions
provided for in this Agreement, and any interest or penalties
related thereto, except that EAG shall pay any U.K. stamp tax
applicable to the transactions herein contemplated.
(ii) Professional Fees. All fees and expenses of their
own and Subsidiaries' legal, accounting, investment banking and
other professional counsel in connection with the transactions
contemplated hereby.
11.9.(c) Other. Except as otherwise provided herein, each of
the Parties shall bear its own expenses and the expenses of its
counsel and other agents in connection with the transactions
contemplated hereby.
11.9.(d) Costs of Litigation or Arbitration. The Parties
agree that (subject to the discretion, in an arbitration proceeding,
of the arbitrators as set forth in Section 10.4) the prevailing Party
in any action brought with respect to or to enforce any right or
remedy under this Agreement shall be entitled to recover from the
other Party or Parties all reasonable costs and expenses of any
nature whatsoever incurred by the prevailing Party in connection with
such action, including without limitation attorneys' fees and
prejudgment interest.
11.10. Entire Agreement. This instrument embodies the entire
agreement between the Parties hereto with respect to the transactions
contemplated herein, and there have been and are no agreements,
representations or warranties between the Parties other than those set
forth or provided for herein.
11.11. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
11.12. Headings. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
11.13. Glossary of Terms. The following sets forth the location
of definitions of certain capitalized terms defined in the
body of this Agreement:
"Affiliate" - Section 3.7.(k)
"Agreement" - Preamble to Agreement
"Ancillary Instruments" - Section 3.2.(a)
"Business" - Section 3.21
"Claim" - Section 8.1
"Closing" - Preamble to Article 9
"Closing Date" - Preamble to Article 9
"Disclosure Schedule" - Section 3
"EAG" - Preamble to Agreement
"EAG's Affiliates" - Section 8.1
"EAG Shares" - Section 2.1
"EAG Series B Preferred Stock" - Section 2.1
"Employee Plans/Agreement" - Section 3.15.(a)
"Employee Plans/Agreements" - Section 3.15.(a)
"Escrow Agreement" - Section 5.2
"Excluded Agreements" - Section 5.6
"Government Entities" - Section 3.3
"Hive-Down Agreement" - Section 5.6
"Indemnified Party" - Section 8.3.(a)
"Indemnifying Party" - Section 8.3.(a)
"Laws" - Section 3.3
"Liens" - Section 3.11.(a)
"Litigation" - Section 3.9
"Material Litigation" - Section 6.3
"Orders" - Section 3.3
"Parties" - Recitals
"Products" - Section 3.19
"Purchase Price" - Section 2.1
"Recent Balance Sheet" - Section 3.4
"Stock Option" - Section 2.1
"Subsidiaries" - Preamble to Article 3
"Subsidiary" - Preamble to Article 3
"Technology License - Section 5.3
"Tenfore Agreements" - Section 11.1
"Tenfore Companies" - Preamble to Article 3
"Tenfore Company" - Preamble to Article 3
"Tenfore Debt" - Preamble to Agreement
"Tenfore Europe" - Preamble to Agreement
"Tenfore Group" - Section 5.1.(a)
"Tenfore R&D" - Preamble to Agreement
"Tenfore R&D Shares" - Recitals
"Tenfore Securities" - Preamble to Agreement
"Tenfore Shares" - Recitals
"Tenfore Systems" - Preamble to Agreement
"Tenfore Systems Shares" - Recitals
"Trade Rights" - Section 3.17
Where any group or category of items or matters is defined collectively in
the plural number, any item or matter within such definition may be
referred to using such defined term in the singular number.
IN WITNESS WHEREOF, the Parties have executed this Agreement as
of the date and year first above written.
EUROAMERICAN GROUP INC., TENFORE SYSTEMS LIMITED,
a Delaware corporation a UK limited company
By /S/ By /S/
Title Title
TENFORE EUROPE (JERSEY) LIMITED, TENFORE R&D APS,
a Jersey limited company a Danish private company
By /S/ By /S/
Title Title
EXHIBIT
3.1
CERTIFICATE OF INCORPORATION, AS AMENDED
EUROAMERICAN GROUP INC.
FIRST: The name of the Corporation is EuroAmerican Group Inc.
SECOND: Its registered office is to be located at 306 South State
Street, in the City of Dover, in the County of Kent, in the State of
Delaware. The name of its registered agent at that address is the United
States Corporation Corporation.
THIRD: The purpose of the Corporation is to engage in any lawful
act or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH:
(a) The Corporation is authorized to issue two classes of
shares to be designated, respectively, "Preferred Stock" and "Common
Stock". The total number of shares the Corporation is authorized to issue
is thirty-seven million (37,000,000) consisting on two million (2,000,000)
shares of Preferred Stock and thirty-five million (35,000,000) shares of
Common Stock. The Preferred Stock and the Common Stock shall each have a
par value of $0.001 per share, and the aggregate par value of all shares
of Preferred Stock shall be $2,000.00 and all shares of Common Stock shall
be $35,000.00.
(b) The shares of Preferred Stock may be issued from time to
time in one or more series. The Board of Directors is authorized, subject
to limitations prescribed by law and the provisions of this Article FOURTH
to provide for the issuance of the shares of Preferred Stock in one or
more series, by filing a certificate pursuant to the applicable law of the
State of Delaware, to establish from time to time the number of shares to
be included in each such series, and to fix the designated powers,
preference and rights of the shares of each such series and the
qualifications, limitations or restrictions thereof.
The authority of the Board of Directors with respect to each
series shall include, but not be limited to, determination of the
following:
(a) The number of shares constituting that series and
the distinctive designation of that series;
(b) The dividend rate on shares of that series,
whether dividends shall be cumulative, and, if so, from which
date or dates, and the relative rights or priority, if any, of
payment of dividends on shares of that series;
(c) Whether that series shall have voting rights, in
addition to the voting rights provided by law; and, if so, the
terms of such voting rights;
(d) whether that series shall have conversion
privileges, and, if so, the terms and conditions of such
conversion, including provision for adjustment of the conversion
rate in such events as the Board of Directors shall determine;
(e) whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such
redemption, including the date or dates 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;
(f) whether that series shall have a sinking fund for
the redemption or purchase of shares of that series, and, if so,
the terms and amount of such sinking fund;
(g) The rights of the shares of that series in the
event of voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, and the relative rights of
priority, if any, of payment on shares of that series; and
(h) Any other relative or participating rights,
preferences and limitations of that series.
RESOLVED, that pursuant to the authority expressly granted to and
vested in the Board by provisions of the Certificate of Incorporation of
the Company and the General Corporation Law of the State of Delaware, the
issuance of a series of Preferred Stock, which shall consist of 325,000
shares of the 2,000,000 shares of Preferred Stock which the Company now
has authority to issue, be, and the same hereby is, authorized, and the
Board hereby fixes the powers, designations, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, of the shares of such series
authorized by this resolution as follows:
1. Designation and Rank. The designation of such series of
Preferred Stock authorized by this resolution shall be Series A Non-Voting
Convertible Senior Preferred Stock (the "Series A Preferred Stock"). The
maximum number of shares of Series A Preferred Stock shall be 325,000.
Shares of the Series A Preferred Stock shall have a liquidation preference
of $2.00 per share. The Series A Preferred Stock shall rank prior to the
Company's Common Stock as to rights upon liquidation, dissolution or
winding up.
2. No Dividends. Except in the case of dividends which are
liquidating distributions (any such dividend to be governed by the
provisions of Section 3 hereof ), no dividends shall be paid on the Series
A Preferred Stock.
3. Liquidation. In the event of any voluntary or involuntary
dissolution, liquidation or winding up of the Company (a "Liquidation"),
before any distribution of assets shall be made to the holders of any
Common Stock or to any other capital stock of the Company which by its
terms ranks junior to the Series A Preferred Stock as to amounts
distributable on Liquidation of the Company, the holder of each share of
Series A Preferred Stock then outstanding shall be entitled to be paid out
of the assets of the Company available for distribution to its
stockholders, an amount equal to $2.00 per share plus the amount, if any,
per share in excess of $2.00 that would be due to the Series A Preferred
Stock if the Series A Preferred Stock were being redeemed for cash on the
date fixed for the distribution of assets of the Company to the holders of
Series A Preferred Stock.
The voluntary sale, conveyance, lease, exchange or transfer of
all or substantially all the property or assets of the Company, or the
merger or consolidation of the Company into or with any other corporation
or the merger of any other corporation into the Company in which merger or
consolidation the stockholders of the Company receive distributions in
cash or securities of another corporation as a result of such merger or
consolidation (in any case other than a merger solely for the purpose of
changing the Company's domicile) shall not be deemed to be a Liquidation
of the Company for the purposes of this Section 3.
The holder of any shares of Series A Preferred Stock shall not
be entitled to receive any payment owed for such shares under this Section
3 until such holder shall cause to be delivered to the Company (i) the
certificate(s) representing such shares of Series A Preferred Stock and
(ii) transfer instrument(s) satisfactory to the Company and sufficient to
transfer such shares of Series A Preferred Stock to the Company free of
any adverse interest. No interest shall accrue on any payment upon
Liquidation after the due date thereof.
After payment of the full amount of the liquidating distribution
to which they are entitled, the holders of shares of the Series A
Preferred Stock will not be entitled to any further participation in any
distribution of assets by the Company.
4. Conversion. The holders of the Series A Preferred Stock
shall have conversion rights as follows:
(a) Right to Convert. Each share of Series A Preferred
Stock shall be convertible, at the option of the holder thereof,
on each anniversary of the Original Issue Date (as hereinafter
defined), by giving a Conversion Notice (as hereinafter defined)
at least five days before such anniversary (but no Conversion
Notice shall be effective if a Redemption Notice '(as defined in
Section 5(b) hereof is given no later than 10 days prior to the
anniversary next following the Redemption Notice), at the office
of the Company or any transfer agent for such stock, into such
number of fully paid and nonassessable shares of Common Stock as
is determined in accordance with the table below (such number of
shares of Common Stock are herein referred to as the "Conversion
Rate"). Original Issue Date means the date on which shares of
Series A Preferred Stock were originally issued.
Anniversary of No. Shares
Original Issue Date of Common Stock
First 8
Second 7
Third 6
(b) Mechanics of Conversion. Before any holder of Series
A Preferred Stock shall be entitled to convert the same into
shares of Common Stock, he shall surrender the certificate or
certificates thereof, duly endorsed, at the principal office of
the Company (which shall be deemed to be the office set forth on
the cover page of the Company's last periodic report filed with
the Securities and Exchange Commission at 30 days prior to the
Conversion Notice) or of any transfer agent for such stock, and
shall give written notice to the Company at such office that he
elects to convert the same and shall state therein the name or
names in which he wishes the certificate or certificates for
shares of Common Stock to be issued (a "Conversion Notice").
The Company shall, as soon as practicable thereafter, issue and
deliver at such office to such holder of Series A Preferred
Stock, a certificate or certificates for the number of shares of
Common Stock to which he shall be entitled as aforesaid. Such
conversion shall be deemed to have been made on the anniversary
next following the Conversion Notice. The person or persons
entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the record
holder or holders of such shares of Common Stock on such date.
(c) Adjustments for Combinations or Subdivisions of Common
Stock. In the event the Company at any time or from time to
time after the Original Issue Date shall declare or pay any
dividend on the Common Stock payable in Common Stock or in any
right to acquire Common Stock, or shall effect a subdivision of
the outstanding shares of Common Stock into a greater number of
shares of Common Stock (by stock split, reclassification or
otherwise), or in the event the outstanding shares of Common
Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, then
the Conversion Rate of the Series A Preferred Stock in effect
immediately prior to such event shall, concurrently with the
effectiveness of such event, be proportionately decreased or
increased, as appropriate.
(d) Other Distributions. In the event the Company shall
at any time or from time to time make or issue, or fix a record
date for the determination of holders of Common Stock entitled
to receive, a dividend or other distribution payable in
securities of the Company or any of its subsidiaries, then in
each such event provision shall be made so that the holders of
Series A Preferred Stock shall receive, upon the conversion
thereof, the securities of the Company which they would have
received had their stock been converted into Common Stock on the
date of such event.
(e) Certificates as to Adjustments. Upon the occurrence
of each adjustment or readjustment of the number of shares of
Common Stock issuable upon conversion of a share of Series A
Preferred Stock pursuant to this Section 4, the Company at its
expense shall promptly compute such adjustment or readjustment
tin accordance with the terms hereof and prepare and furnish to
each holder of Series A Preferred Stock a certificate setting
forth such adjustment or readjustment and showing in detail the
facts upon which such adjustment or readjustment is based.
(f) Reservation of Stock Issuable Upon Conversion. The
Company shall at all times' reserve and keep available out of
its authorized but unissued shares of Common Stock, solely for
the purpose of effecting the conversion of the shares of the
Series A Preferred Stock, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of the Series A Preferred
Stock; and if at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the
conversion of all then outstanding shares of the Series A
Preferred Stock, the Company will take such corporate action as
may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock' to such number
of shares as shall be sufficient for such purpose, including,
without limitation, engaging in best efforts to obtain the
requisite stockholder approval of any necessary amendment to the
Certificate of Incorporation.
(g) Fractional Shares. No fractional share shall be
issued upon the conversion of any share or shares of Series A
Preferred Stock. All shares of Common Stock (including
fractions thereof) issuable upon conversion of more than one
share of Series A Preferred Stock by a holder thereof shall be
aggregated for purposes of determining whether the conversion
would result in the issuance of any fractional share. If, after
the aforementioned aggregation, the conversion would result in
the issuance of a fraction of a share of Common Stock, the
Company shall round such fractional share up to the next whole
share of Common Stock.
(h) Notices. Any notice required by the provisions of
this Section 4 to be given to the holders of shares of Series A
Preferred Stock shall be deemed given if deposited in the United
States mail, postage prepaid, and addressed to each holder of
record at its address appearing on the books of the Company.
(i) Adjustments. In case of any reorganization or any
reclassification of the capital stock of the Company or any
consolidation or merger of the Company with or into any other
corporation or corporations' or a sale of all or substantially
all of the assets of the Company, each share of Series A
Preferred Stock shall thereafter be convertible into the number
of shares of stock or other securities or property (including
cash) to which a holder of the number of shares of Common Stock
deliverable upon conversion of such share of Series A Preferred
Stock would have been entitled upon the record date of (or date
of, if no record date is fixed) such reorganization or
reclassification, and, in any case, appropriate adjustment (as
determined by the Board of Directors) shall be made in the
application of the provisions herein set forth with respect to
the rights and interests thereafter of the holders of such
Series A Preferred Stock, to the end that the provisions set
forth herein shall thereafter be applicable, as nearly as
equivalent as is practicable, in relation to any shares of stock
or the securities or property (including cash) thereafter
deliverable upon the conversion of the shares of such Series A
Preferred Stock.
5. Redemption.
(a) On the second anniversary of the Original Issue Date, the
Company shall be entitled to, and on the third anniversary of the Original
Issue Date, the Company shall, redeem from each holder of Series A
Preferred Stock (out of funds legally available therefor if the Redemption
Price (as hereinafter defined) is payable in cash), all, but not less than
all, of the outstanding shares of Series A Preferred Stock held by each
holder of Series A Preferred Stock. On the relevant date on which the
Series A Preferred Stock is to be redeemed (the "Redemption Date"), the
redemption shall be made at the election of the Company (i) by payment in
cash of a sum equal to $2.00 per share of Series A Preferred Stock plus,
if the Redemption Price is being paid in cash, an amount equal to $.32 per
share of Series A Preferred Stock, if the Redemption Date is the second
anniversary of the Original Issue Date, and $.48 per share if the
Redemption Date is the third anniversary of the Original Issue Date, or
(ii) by issuance of a number of shares of Common Stock equal to the
Redemption Shares (as hereinafter defined) (such amount of cash or number
of shares of Common Stock is herein referred to as the "Redemption
Price"), provided, however, if the Redemption Date is prior to the third
anniversary of the Original Issue Date, the Redemption Price may be paid
in Redemption Shares only if the Net Income Test (as hereinafter defined)
is met.
Redemption Shares means (i) if the Net Income Test is met, the
number of shares of Common Stock issued on redemption for each share of
Series A Preferred Stock shall be equal to the quotient of dividing $2.00
by 90 of the Average Price (as hereinafter defined), and (ii) if the Net
Income Test is not met, the Conversion Rate. Net Income Test means that
the Company's consolidated net income, determined in accordance with
generally accepted accounting principles, for the last fiscal year ending
prior to the Redemption Date, is at least $750,000. Any report by an
independent public accountant on the Company's financial statements for
such year which contains an opinion on such financial statements to the
effect that they are presented in accordance with generally accepted
accounting principles without exception and which contains no limitation
as to the scope of the audit shall be deemed conclusive evidence of the
Company's net income for such year. Average Price means the average of the
reported closing high bid and low asked prices per share of Common Stock
for the 30 trading days ending 15 days prior to the Redemption Notice in
the principal market in which the Common Stock is then traded.
(b) At least 10 days prior to the Redemption Date, written
notice (the "Redemption Notice") shall be mailed, first class postage
prepaid, by the Company to each holder of record (at the close of business
on the business day next preceding the day on which the Redemption Notice
is given) of the Series A Preferred Stock, at the address last shown on
the records of the Company for such holder, notifying such holder of the
redemption which is to be effected, specifying the Redemption Date, the
Redemption Price, whether the Redemption Price is to be paid in cash or in
Common Stock and if in Common Stock, the Redemption Shares, the place at
which payment may be obtained and calling upon each such holder to
surrender to the Company, in the manner and at the place designated, its
certificate Or certificates representing all of its shares. Except as
provided in Section 5(c), on or after the Redemption Date, each holder of
Series A Preferred Stock shall surrender to the Company the certificate or
certificates representing the shares of Series A Preferred Stock owned by
it in the manner and at the place designated in the Redemption Notice, and
thereupon the Redemption Price of such shares shall be payable to the
order of the person whose name appears on such certificate or certificates
as the owner thereof and each surrendered certificate shall be canceled.
(c) From and after the Redemption Date, unless there shall have
been a default in payment of the Redemption Price, all rights of the
holders of shares of Series A Preferred Stock (except the right to receive
the Redemption Price without interest upon surrender of their certificate
or certificates) shall cease with respect to such shares, and such shares
shall not thereafter be transferred on the books of the Company or be
deemed to be outstanding for any purpose whatsoever. In the event the
Company elects to pay the Redemption Price in cash and defaults in such
payment, the holders of the Series A Preferred Stock shall have such
rights as are afforded to them by law and under any agreement with the
Company providing security for such payment.
6. Voting Rights. Except as otherwise required by law, the
Series A Preferred Stock shall have no voting rights.
RESOLVED, that pursuant to the authority expressly granted to
and vested in the Board by provisions of the Certificate of Incorporation
of the Company and the General Corporation Law of the State of Delaware,
the issuance of a series of Preferred Stock, which shall consist of
250,000 shares of the 1,675,000 remaining shares of Preferred Stock which
the Company now has authority to issue, be, and the same hereby is,
authorized, and the Board hereby fixes the powers, designations,
preferences and relative, participating, optional or other special rights,
and the qualifications, limitations or restrictions thereof, of the shares
of such series authorized by this resolution as follows:
1. Designation and Rank. The designation of such series of
Preferred Stock authorized by this resolution shall be Series B Non-Voting
Convertible Preferred Stock (the "Series B Preferred Stock"). The maximum
number of shares of Series B Preferred Stock shall be 250,000. The Series
B Preferred Stock shall rank pari pasu with the Company's Common Stock as
to rights upon liquidation, dissolution or winding up of the Company, as
provided in Section 3 hereof.
2. No Dividends. Except in the case of dividends which are
liquidating distributions (any such dividend to be governed by the
provisions of Section 3 hereof), no dividends shall be paid on the Series
B Preferred Stock.
3. Liquidation. In the event of any voluntary or involuntary
dissolution, liquidation or winding up of the Company (a "Liquidation"),
the Series B Preferred Stock shall rank pari pasu with the Common Stock as
to amounts distributable on Liquidation and each share of Series B
Preferred Stock shall have the right to receive an amount equal to the
product of the amount each share of Common Stock has the right to receive
on Liquidation multiplied by the Conversion Rate (as defined in Section 4
hereof).
The voluntary sale, conveyance, lease, exchange or transfer of
all or substantially all the property or assets of the Company, or the
merger or consolidation of the Company into or with any other corporation
or the merger of any other corporation into the Company in which merger or
consolidation the stockholders of the Company receive distributions in
cash or securities of another corporation as a result of such merger or
consolidation (in any case other than a merger solely for the purpose of
changing the Company's domicile) shall not be deemed to be a Liquidation
of the Company for the purposes of this Section 3.
The holder of any shares of Series B Preferred Stock shall not
be entitled to receive any payment owed for such shares under this Section
3 until such holder shall cause to be delivered to the Company (i) the
certificate(s) representing such shares of Series B Preferred Stock and
(ii) transfer instrument(s) satisfactory to the Company and sufficient to
transfer such shares of Series B Preferred Stock to the Company free of
any adverse interest. No interest shall accrue on any payment upon
Liquidation after the due date thereof.
After payment of the full amount of the liquidating distribution
to which they are entitled, the holders of shares of the Series B
Preferred Stock will not be entitled to any further participation in any
distribution of assets by the Company.
4. Conversion. The Series B Preferred Stock shall convert
into shares of Common Stock as follows:
(a) Automatic Conversion. On January 31, 2000, each
outstanding share of Series B Preferred Stock shall, automatically
and with no action required on the part of the holder thereof or the
Company, convert into 100 fully paid and nonassessable shares of
Common Stock (the number of shares of Common Stock issuable upon
conversion of the Series B Preferred Stock is herein referred to as
the "Conversion Rate"); provided, however, that if the Company does
not have a sufficient number of authorized but unissued shares of
Common Stock to effect such conversion, then such conversion shall
not occur until the Company has a sufficient number of authorized but
unissued shares of Common Stock. With respect to any share of Class
B Preferred Stock, original Issue Date means the date such share is
originally issued by the Company.
(b) Mechanics of Conversion. Before any holder of Series
B Preferred Stock shall be entitled to receive certificates
representing the shares of Common Stock into which such holder's
shares of Series B Preferred Stock have been converted, such holder
shall surrender the certificate or certificates representing his or
her shares of Series B Preferred Stock, duly endorsed, at the
principal office of the Company (which shall be deemed to be the
office set forth on the cover page of the Company's last periodic
report filed with the Securities and Exchange Commission prior to
the delivery of the Conversion Notice) or of any transfer agent for
such stock, and shall give written notice to the Company at such
office of the name or names in which such holder wishes the
certificate or certificates for shares of Common Stock to be issued
(a "Conversion Notice"). The Company shall, as soon as practicable
thereafter, issue and deliver at such office to such holder a
certificate or certificates for the number of shares of Common Stock
to which such holder shall be entitled as aforesaid. Notwithstanding
the date certificates representing the Common Stock issued upon
conversion are actually prepared, the conversion shall be deemed to
have been made on the date provided for in Section 4(a), and the
person or persons entitled to receive the certificate or certificates
representing such shares of Common Stock issuable upon conversion
shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on such date.
(c) Adjustments for Combinations or Subdivisions of Common
Stock. In the event the Company at any time or from time to time
after the Original Issue Date shall declare or pay any dividend on
the Common Stock payable in Common Stock or in any right to acquire
Common Stock, or shall effect a subdivision of the outstanding shares
of Common Stock into a greater number of shares of Common Stock (by
stock split, reclassification or otherwise), or in the event the
outstanding shares of Common Stock shall be combined or consolidated,
by reclassification or otherwise, into a lesser number of shares of
Common Stock, then the Conversion Rate of the Series B Preferred
Stock in effect immediately prior to such event shall, concurrently
with the effectiveness of such event, be proportionately decreased or
increased, as appropriate.
(d) Other Distributions. In the event the Company shall
at any time or from time to time make or issue, or fix a record date
for the determination of holders of Common Stock entitled to receive,
a dividend or other distribution payable in securities of the Company
or any of its subsidiaries, then in each such event provision shall
be made so that the holders of Series B Preferred Stock shall
receive, upon the conversion thereof, the securities of the Company
which they would have received had their stock been converted into
Common Stock on the date of such event.
(e) Certificates as to Adjustments. Upon the occurrence
of each adjustment or readjustment of the number of shares of Common
Stock issuable upon conversion of a share of Series B Preferred Stock
pursuant to this Section 4, the Company at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms
hereof and prepare and furnish to each holder of Series B Preferred
Stock a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or
readjustment is based.
(f) Reservation of Stock Issuable Upon Conversion. The
Company shall at all times use its best efforts to reserve and keep
available out of its authorized but unissued shares of Common Stock,
solely for the purpose of effecting the conversion of the shares of
the Series B Preferred Stock, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of the Series B Preferred Stock;
and if at any time the number of authorized but unissued shares of
Common Stock shall not be sufficient to effect the conversion of all
then outstanding shares of the Series B Preferred Stock, the Company
will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares
of Common Stock to such number of shares as shall be sufficient for
such purpose, including, without limitation, engaging in best efforts
to obtain the requisite stockholder approval of any necessary
amendment to the Certificate of Incorporation.
(g) Fractional Shares. No fractional share shall be
issued upon the conversion of any share or shares of Series B
Preferred Stock. All shares of Common Stock (including fractions
thereof) issuable upon conversion of more than one share of Series B
Preferred Stock by a holder thereof shall be aggregated for purposes
of determining whether the conversion would result in the issuance of
any fractional share. If, after the aforementioned aggregation, the
conversion would result in the issuance of a fraction of a share of
Common Stock, the Company shall round such fractional share up to the
next whole share of Common Stock.
(h) Notices. Any notice required by the provisions of
this Section 4 to be given to the holders of shares of Series B
Preferred Stock shall be deemed given if deposited in the United
States mail, postage prepaid, and addressed to each holder of record
at its address appearing on the books of the Company.
(i) Adjustments. In case of any reorganization or any
reclassification of the capital stock of the Company or any
consolidation or merger of the Company with or into any other
corporation or corporations or a sale of all or substantially all of
the assets of the Company, each share of Series B Preferred Stock
shall thereafter be convertible into the number of shares of stock or
other securities or property (including cash) to which a holder of
the number of shares of Common Stock deliverable upon conversion of
such share of Series B Preferred Stock would have been entitled upon
the record date of (or date of, if no record date is fixed) such
reorganization or reclassification, and, in any case, appropriate
adjustment (as determined by the Board of Directors) shall be made in
the application of the provisions herein set forth with respect to
the rights and interests thereafter of the holders of such Series B
Preferred Stock, to the end that the provisions set forth herein
shall thereafter be applicable, as nearly as equivalent as is
practicable, in relation to any shares of stock or the securities or
property (including cash) thereafter deliverable upon the conversion
of the shares of such Series B Preferred Stock.
5. Voting Rights. Except as otherwise required by law, the
Series B Preferred Stock shall have no voting rights.
FIFTH: The number of directors of the Corporation that shall
constitute the entire Board of Directors shall be not less than three and
not more than five directors, with the exact number specified in the
Bylaws of the Corporation from time to time.
SIXTH: None of the following actions may be taken, nor commitments
therefor made on behalf of the Corporation, by the President or any other
officer, agent or representative of the Corporation without the prior
approval of a majority of the members of the Board of Directors:
(a) The acquisition or disposition of any item or related
items of real property or personal property for a consideration
in excess of $25,000;
(b) The lease of any personal property or real property,
if (i) the present value (computed on the basis of a 10%
discount rate) of the total lease payments due under such lease,
without regard to the exercise of any options to extend or
renew, exceeds $75,000 or (ii) the fair market value of the
property leased exceeds $75,000 or (iii) the term of such lease
exceeds 12 months;
(c) The expenditure by the Corporation in excess of
$25,000 in any single transaction or series of related
transactions;
(d) The establishment of a new line of credit or extension
of any existing line of credit; any guarantee of indebtedness by
the Corporation, other than pursuant to endorsement of checks or
drafts received in the ordinary course of business, and any
incurring or assumption of indebtedness by the Corporation in
excess of $25,000 in any single instance other than pursuant to
lines of credit approved in accordance with this section;
(e) The granting of any indemnity or performance guarantee
by the Corporation to any person where the potential liability
of the Corporation exceeds $25,000;
(f) The establishment and approval of any periodic budget
for the Corporation;
(g) Any decision relating to which produCts or services
the Corporation shall sell, market, distribute, lease, license
or otherwise deal in, including any decision not to sell,
market, distribute, lease, license or otherwise deal in any of
the Corporation's current products, services or improvements
thereto; any decisions regarding the general pricing policy for
products or services of the Corporation; or any material change
in the scope or nature of the business of the Corporation;
(h) Any decision regarding the conduct of litigation,
whether as plaintiff or defendant, where the aggregate amount in
controversy exceeds $10,000;
(i) Any entry into any commitment or agreement for
employment or termination of employment by the Corporation of
any person for any executive position or any other agreement or
commitment for the services of any person, including consulting
contracts, providing for an annual compensation in excess of
$40,000, in each case regardless of whether the agreement or
commitment is oral or in writing, for a term or at will, express
or implied;
(j) The issuance of any capital stock, securities
convertible into capital stock or any other securities of the
Corporation or subscriptions, options, warrants or other rights
of the issuance or purchase of any capital stock or other
securities to any officer of the Corporation or employee having
duties and responsibilities similar to those of an office or to
any shareholder of the Corporation;
(k) The granting of any distributorships with respect to
products or services of the Corporation;
(l) The alteration or change in any of the rights,
preferences or privileges of any class or series of the capital
stock;
(m) Any increase in the authorized number of shares of any
class or series of capital stock;
(n) The creation of any new class or series of shares of
capital stock or securities convertible into shares of capital
stock;
(o) Any amendment to the Certificate of Incorporation or
By-laws of the Corporation;
(p) Any merger into or consolidation with any other
corporation, partnership or other entity;
(q) The sale or transfer by the Corporation of any shares
of capital stock of the Corporation, whether a new issue or out
of treasury shares, or the issuance of any other securities,
whether equity or debt, or any warrant, option or other right
exercisable for any securities of the Corporation, including,
without limitation, the issuance of any Preferred Stock or other
securities in response to an unsolicited offer for the
Corporation or the issuance of securities under the
Corporation's 1988' Stock Incentive Plan or other employee
benefit plans;
(r) The purchase or other acquisition, redemption or
retirement of any capital stock or other securities of the
Corporation or any agreement or commitment to do any of the
foregoing, including the redemption or calling of any Stock or
Warrants owned by CAL.
(s) Any liquidation, dissolution, reorganization,
recapitalization or other alteration Of the Corporation's legal
status or the commencement of any proceedings therefor;
(t) The declaration or payment of any dividends or the
making of any other distributions, in cash, property or stock,
with respect to the capital stock of the Corporation;
(u) Any decision relating to the insolvency, bankruptcy or
similar financial distress of the Corporation;
(v) The appointment of any corporate officer of the
Corporation; or
(w) Entering into any new arrangement, or modification of
any existing arrangement, relating to the terms of service and
duties of any stockholder with the Corporation.
SEVENTH: The By-Laws of the Corporation may be made, altered,
amended, changed, added or repealed by the Board of Directors without the
assent or vote of the stockholders. Elections of directors need not be by
ballot unless the By-Laws so provide.
EIGHTH: The Corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware, 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 the indemnification provided for herein
shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any By-Law, agreement, vote of
stockholders, or disinterested directors or otherwise,' both as to action
in his official capacity and as to action in another capacity while
holding such office, and shall continue as to' a person who has ceased to
be a director, officer, employee, or agent and shall inure to the benefit
of the heirs, executors, and administrators of such a person. Without
limiting the generality of the foregoing, the Corporation shall have the
express authority to enter into such agreements as the Board of Directors
deems appropriate for the indemnification of present or future directors
and officers of the Corporation in connection with their service to or
status with, the Corporation or any other corporation, entity or
enterprise with whom such person is serving at the express written request
of the Corporation.
NINTH: A director of this Corporation shall not be liable to the
Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a Director, except to the extent such exemption from
liability or limitation thereof is not permitted under the Delaware
General Corporation Law as the same exists or may hereafter be amended.
In particular, and without limiting the generality of the foregoing, the
personal liability of the directors of the Corporation is hereby
eliminated to the fullest extent permitted by Paragraph (7) of Subsection
(b) of Section 102 of the General Corporation Law of the State of
Delaware, as the same may be amended or supplemented. Any repeal or
modification of the foregoing paragraph by the stockholders of the
Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or
modification.
TENTH: The Corporation reserves the right to amend, alter, change
or repeal any provision contained in this certificate in the manner now or
hereafter prescribed by law, and all rights and powers conferred herein on
stockholders, directors and officers are subject to this reserved power.
EXHIBIT 99
FOR IMMEDIATE RELEASE May 7, 1997
EUROAMERICAN GROUP INC. ANNOUNCES MAJOR ACQUISITION
EuroAmerican Group Inc. (EUAM-Bulletin Board) (the "Company") announced it
has completed the acquisition of Tenfore Systems Limited and Tenfore R&D
ApS (together referred to as "Tenfore"). Tenfore is a real-time provider
of financial information with customers located throughout Europe. The
Company now has approximately 2,000 terminals throughout Europe. The
European market is dominated by large players, such as Reuters and
Bloomberg but is also increasingly influenced by specialized, flexible
players such as Tenfore and EAG. These smaller, customer-oriented
organizations provide more targeted financial data services tailored for
specific user groups such as financial institutions, corporate treasurers
and independent traders and investors.
This acquisition brings together two established satellite data delivery
experts. Tenfore pioneered the delivery of market data via cable through
a joint venture with Videotron in the United Kingdom. This cable service
won an industry award for innovation in its first year. Tenfore also
launched the first financial data service for international GSM mobil
phones, called Mobil Money. This is marketed by Martin Dawes
Telecommunications - Europe's largest provider of mobil phone airtime.
The Company issued 170,000 shares of its newly designated Series B Non-
Voting Convertible Preferred Stock (the "Preferred Stock") and options to
acquire 35,000 additional shares of Preferred Stock. The options are
exercisable at $20 per share. Each share of the Preferred Stock
automatically converts into 100 shares of the Company's Common Stock on
January 31, 2000. The Preferred Stock is not convertible before January
31, 2000 except in the event of an extraordinary corporate action.
Mr. Charamis, the Company's Chairman and CEO, commented that, "The
acquisition of Tenfore is the single most important event in the Company's
history. The combination of both companies is very synergistic from a
cost, revenue, and technology perspective. We expect to make substantial
reductions in the cost of accumulating and disseminating financial data,
both companies single largest expense, and further cost reductions are
expected from the consolidation of redundant sales offices and the
consolidation of back office functions. From a revenue perspective, the
Company now has an extensive sales and marketing infrastructure throughout
Europe. The Company's sales and marketing efforts are greatly enhanced by
the added depth of its product offering made available by the Tenfore
product lines. The Company's product line now ranges from an Internet
service, sophisticated single user workstations, to multi-user solutions
to Mobile Money. The Company will seek to continue to grow its geographic
presence through new sales offices and strategic acquisitions". Mr.
Charamis further commented that, "We expect the integration of the
companies to take from 6 to 9 months. The Company will need to raise
approximately $3 million to finance the costs of the integration and
operations during this period. The Company is working with its investment
bankers to find additional sources of capital". There can be no assurance
that the Company will be able to raise the required funds or that the
terms of such financing will be favorable to the Company.
The new operation will initially keep the Tenfore and EAG brands separate,
running on a "business as usual" basis. Clients will benefit from
strengthened technical and research facilities and increased customer
support. In addition, the merger aims to provide improved quality of
service, and increasing the number of markets accessible to clients.
Contact: Alexis Charamis (Greece) 301 362-2596
Steven Millner (US) 212 269-6686
