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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) December 8, 1998
Eastwind Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware 000-27638 23-2732753
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification No.)
incorporation)
100 Four Falls corporate Center, Suite 305, West Conshohocken, PA 19428
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (610) 828-6860
(Former name or former address, if changed since last Report.)
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Item 2 Acquisition or Disposition of Assets
On December 8, 1998, the Company entered into a Share Exchange
Agreement (the "Agreement") with ConMat Technologies, Inc., a Florida
corporation ("ConMat") pursuant to which, the Company sold all of the
outstanding shares of common stock of its water treatment equipment
manufacturing subsidiary, Polychem Corporation, to ConMat in exchange for (i)
1,000,000 shares of ConMat common stock ("ConMat Common Stock), (ii) 1,333,333
shares of Series A convertible preferred stock of ConMat ("ConMat Series A
Preferred Stock") and (iii) the assumption and discharge of certain liabilities
of the Company. The liabilities that were assumed and discharged were: (1)
$160,000 owed to the Company's former Chairman and Chief Executive Officer, Paul
DeJuliis, being discharged by the issuance to DeJuliis of 53,333 shares of
ConMat Series A Preferred Stock, (2) $100,000 owed to Clifton Capital, Ltd.,
being discharged by the payment of $100,000 and (3) $500,000 owed to Mentor
Special Situation Fund, L.P., being discharged by the issuance to Mentor of
166,667 shares of ConMat's Series B Preferred Stock plus warrants to purchase
166,667 shares of ConMat Common Stock. All of the creditors, DeJuliis, Clifton
and Mentor released the Company , its officers, directors, shareholders, agents,
successors and assigns from and against any and all claims, costs, expenses,
damages or other liabilities arising out of or relating to their respective
obligations. As a result of the transaction, the Company now owns 66% of ConMat,
a holding company, by virtue of its common stock and convertible preferred stock
holdings. The ConMat Series A Preferred Stock is convertible into ConMat Common
Stock and entitles the holders to receive quarterly dividends at the rate of 2%
per annum and to liquidation preference and is not subject to redemption. ConMat
is required, pursuant to the Agreement, to register the ConMat Common Stock by
December 31, 1999.
Item 7 Financial Statements and Exhibits
(c) Exhibits
2.1 Share Exchange Agreement between ConMat Technologies, Inc. and
The Eastwind Group, Inc. dated December 8, 1998
2.2. Assumption and Conversion Agreement dated December 8, 1998 by
and among ConMat Technologies, Inc., The Eastwind Group, Inc.
and Paul DeJuliis
2.3. Assumption and Conversion Agreement dated December 8, 1998 by
and among ConMat Technologies, Inc., The Eastwind Group, Inc.
and Mentor Special Situation Fund, L.P.
2.4 Assumption and Conversion Agreement dated December 8, 1998 by
and among ConMat Technologies, Inc., The Eastwind Group, Inc.
and Clifton Capital, Ltd.
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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 hereunto duly authorized.
The Eastwind Group, Inc.
By: /s/ Howard M. Appel
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Howard M. Appel
Chief Executive Officer
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SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT (the "Agreement") dated this 8th day of
December, 1998, is between ConMat Technologies, Inc. a Florida corporation
("ConMat"), and The Eastwind Group, Inc., a Delaware corporation ("Eastwind").
RECITALS
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A. Eastwind is a holding company that currently owns all of the
outstanding shares of the common stock of Polychem Corporation ("Polychem"), par
value $0.01 per share ("Polychem Common Stock").
B. The parties desire to enter into a share exchange transaction
whereby ConMat will acquire all of the outstanding shares of Polychem Common
Stock from Eastwind in exchange for (i) one million (1,000,000) shares of newly
issued common stock of ConMat, par value $0.001 per share ("ConMat Common
Stock") and one million three hundred thirty-three thousand three hundred
thirty-three (1,333,333) shares of newly issued Series A convertible preferred
stock of ConMat, par value $0.001 per share ("ConMat Series A Preferred Stock"),
and (ii) the assumption by ConMat of certain liabilities of Eastwind.
NOW, THEREFORE, in consideration of the agreements and mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties hereby agree as follows:
1. Share Exchange Transaction. At the Closing, Eastwind shall convey,
transfer, assign and deliver to ConMat all of the outstanding shares of Polychem
Common Stock (the "Polychem Shares"), free and clear of any security interest,
lien, pledge, encumbrance or other adverse claim or interest except as provided
herein. In exchange for the Polychem Shares, at the Closing, ConMat shall issue
and deliver to Eastwind (i) one million (1,000,000) shares of ConMat Common
Stock and (ii) one million three hundred thirty-three thousand three hundred
thirty-three (1,333,333) shares of ConMat Series A Preferred Stock
(collectively, the "ConMat Shares"). The rights, preferences and privileges of
the ConMat Series A Preferred Stock shall be as set forth in the form of
Certificate of Designation attached hereto as Exhibit "A".
2. Assumption and Discharge of Eastwind Obligations by ConMat. As
further consideration for the Polychem Shares, at the Closing (defined below),
ConMat will assume and discharge certain liabilities of Eastwind as follows:
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(a) $160,000 owed to Paul DeJuliis, to be discharged by the issuance
to Paul DeJuliis of 53,333 shares of ConMat Series A Preferred Stock, pursuant
to an agreement in substantially the form attached hereto as Exhibit "B";
(b) $100,000 owed to Clifton Capital, Ltd., to be discharged by the
payment to Clifton Capital, Ltd. of $100,000, pursuant to an agreement in
substantially the form attached hereto as Exhibit "C"; and
(c) $500,000 owed to Mentor Special Situation Fund, L.P., a
Pennsylvania limited partnership ("Mentor"), to be discharged by the issuance to
Mentor of 166,667 shares of ConMat's Series B Preferred Stock, plus warrants to
purchase 166,667 shares of ConMat Common Stock, pursuant to an agreement in
substantially the form attached hereto as Exhibit "D".
3. Obligations of Eastwind to Polychem. In addition to the share
exchange described above, at the Closing, Eastwind shall issue to Polychem a
promissory note (the "Eastwind Note"), in substantially the form attached as
Exhibit "E", in the amount of $940,000 to evidence the outstanding amount owed
by Eastwind to Polychem for prior advances, secured by the pledge of 313,333
shares of Series A Preferred Stock, pursuant to a Collateral Pledge of Stock
Agreement in the form attached as Exhibit "F"; and
4. Closing. The closing (the "Closing") will be held at the offices of
Klehr, Harrison, Harvey, Branzburg & Ellers LLP, located at 1401 Walnut Street,
Philadelphia, Pennsylvania 19102-3163, on December 7, 1998 or such other date
and such other place as the parties shall agree, provided that if the Closing
has not been completed by December 31, 1998, this Agreement will terminate and
neither party will have any further obligations to the other except for any
obligations arising out of any breach of its obligations hereunder.
5. Representations and Warranties of Eastwind. Eastwind represents and
warrants to ConMat as follows, which representations and warranties shall be
true and correct as of the date when made and as of the Closing as though made
at that time:
(a) Eastwind is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has full corporate
power and authority to execute and deliver this Agreement and to assume and
perform its obligations hereunder.
(b) Polychem is a corporation duly organized, validly existing and
in good standing under the laws of the Commonwealth of Pennsylvania.
(c) The authorized capital stock of Polychem consists of 1,000
shares of Polychem Common Stock, of which only the Polychem shares are currently
outstanding. Eastwind is the lawful owner, of record and beneficially, of the
Polychem Shares free and clear of any security interest, lien, pledge,
encumbrance or other adverse claim or interest other than a pledge in favor of
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General Electric Capital Corporation ("GECC"). Upon delivery of certificates
representing the Polychem Shares pursuant to the terms of this Agreement, ConMat
will acquire good title to the Polychem Shares, free and clear of any security
interest, lien, pledge, encumbrance or other adverse claim or interest other
than the pledge in favor of GECC.
(d) The Polychem Shares are duly authorized, validly issued, fully
paid and non-assessable.
(e) Eastwind has taken all necessary corporate action to authorize
the execution and delivery of this Agreement and this Agreement constitutes the
legal, valid and binding agreement of Eastwind enforceable against Eastwind in
accordance with its terms.
(f) Neither the execution nor delivery of this Agreement by
Eastwind, nor the performance by Eastwind of any of the transactions
contemplated hereby (i) will result in a violation of the certificate of
incorporation or by-laws of Eastwind or Polychem, (ii) conflicts with, or
constitutes a breach or default under any applicable judgment, order, writ,
injunction or decree of any court or any applicable law or any applicable rule
or regulation of any administrative agency or governmental or regulatory
authority or (iii) except as set forth on schedule I hereto, violates, conflicts
with, or constitutes a default (or an event or condition that, with notice or
lapse of time or both, would constitute a default) under, any contract,
commitment, understanding, arrangement, agreement or restriction of any kind or
character to which Eastwind or Polychem is a party or may be bound, other than
with respect to which the other party has given, or gives prior to Closing, its
consent.
(g) Until the ConMat Common Stock is registered under the Securities
Acts of 1933, Eastwind is acquiring the ConMat Shares for its own account, as
principal, for investment purposes only and not with a view to the resale or
distribution of all or any portion thereof. Eastwind has no present intention,
agreement or arrangement to divide the ConMat Shares with others or to resell,
assign, transfer or otherwise dispose of all or any part of the ConMat Shares,
other than to assign the ConMat Common Stock to a trust for the benefit of its
shareholders.
6. Representations and Warranties of ConMat. ConMat represents and
warrants to Eastwind as follows, which representations and warranties shall be
true and correct as of the date when made and as of the Closing as though made
at that time:
(a) ConMat is a corporation duly organized, validly existing and in
good standing under the laws of the State of Florida and has full corporate
power and authority to execute and deliver this Agreement and to assume and
perform its obligations hereunder.
(b) ConMat's authorized capital consists of 40,000,000 shares of
common stock, par value $0.001 per share, of which 1,000,000 shares are issued
and outstanding, and 10,000,000 shares of "blank check" preferred stock, par
value $0.001 per share, of which no shares are issued and outstanding. Except as
otherwise indicated in this Agreement or the exhibits thereto, other than
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the options granted to Paul A. DeJuliis for 500,000 shares of Common Stock,
there are no options, warrants or rights to purchase shares of capital stock or
other securities of ConMat authorized, issued or outstanding, nor is ConMat
obligated in any other manner to issue shares of its capital stock or other
securities. No holder of any security of ConMat is entitled to preemptive or
similar statutory or contractual rights with respect to the sale or voting of
any shares of capital stock of ConMat, either arising pursuant to any agreement
or instrument, to which ConMat is a party, or which are otherwise binding upon
ConMat.
(c) Upon delivery at the Closing, the ConMat Shares will be duly
authorized, validly issued, fully paid and non-assessable.
(d) ConMat has taken all necessary corporate action to authorize the
execution and delivery of this Agreement and this Agreement constitutes the
legal, valid and binding agreement of ConMat enforceable against ConMat in
accordance with its terms.
(e) Neither the execution nor delivery of this Agreement by ConMat,
nor the performance by ConMat of any of the transactions contemplated hereby (i)
will result in a violation of the certificate of incorporation or by-laws of
ConMat, (ii) conflicts with, or constitutes a breach or default under any
applicable judgment, order, writ, injunction or decree of any court or any
applicable law or any applicable rule or regulation of any administrative agency
or governmental or regulatory authority or (iii) violates, conflicts with, or
constitutes a default (or an event or condition that, with notice or lapse of
time or both, would constitute a default) under, any contract, commitment,
understanding, arrangement, agreement or restriction of any kind or character to
which ConMat is a party or may be bound.
(f) Based on the representations made by Eastwind in Section 5
above, and in reliance thereon, the issuance and sale of the Conmat Shares to
Eastwind as contemplated hereby is exempt from the registration and prospectus
delivery requirements of the Securities Act of 1933.
7. Conditions to ConMat's Obligation to Close. The obligation of ConMat
to accept the Polychem Shares and to issue the ConMat Shares at the Closing is
subject to the satisfaction, at or before the Closing, of each of the following
conditions, provided that such conditions are for ConMat's sole benefit and may
be waived by ConMat:
(a) Eastwind shall have delivered to ConMat the Polychem Shares and
shall have performed, satisfied and complied in all material respects with all
terms and provisions of this Agreement;
(b) Eastwind shall have received all authorizations and consents
necessary to consummate the transactions contemplated by this Agreement,
including without limitation, any required shareholder approvals;
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(c) Eastwind's board of directors shall have approved the
distribution of the ConMat Common Stock to Eastwind's shareholders immediately
following the effectiveness of a registration statement covering the ConMat
Common Stock;
(d) Eastwind shall have issued the Eastwind Note to Polychem; and
(e) Centennial shall have issued the Centennial Note to Polychem.
8. Conditions to Eastwind's Obligation to Close. The obligation of
Eastwind to accept the ConMat Shares and to deliver the Polychem Shares at the
Closing is subject to the satisfaction, at or before the Closing, of each of the
following conditions, provided that such conditions are for Eastwind's sole
benefit and may be waived by Eastwind:
(a) ConMat shall have issued to Eastwind the ConMat Shares and shall
have performed, satisfied and complied in all material respects with all terms
and provisions of this Agreement;
(b) ConMat shall have received all authorizations necessary to
consummate the transactions contemplated by this Agreement, including without
limitation, any required shareholder approvals;
(c) GECC shall have released Eastwind from all liability under the
Guarantee dated September 30, 1998; and
(d) ConMat shall have discharged certain obligations of Eastwind as
required pursuant to Section 2 of this Agreement.
9. Registration Rights. Each present and future holder of Series A
Preferred Stock shall be entitled to the benefits of the registration rights
granted pursuant to this Section 9.
(a) For purposes of this Section 9:
(i) The term "register," "registered," and "registration" refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document;
(ii) The term "Registrable Securities" means the shares of
ConMat Common Stock issued to Eastwind pursuant to this Agreement and all shares
of ConMat Common Stock issued as (or issuable upon the conversion or exercise of
any warrant, right or other security which is issued as) a dividend or other
distribution with respect to , or in exchange for or in replacement of any of
the ConMat Common Stock issued to Eastwind pursuant to this Agreement excluding
in all cases, however, any Registrable Securities (x) sold by a person in
transaction in
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which his rights under this Section 9 are not assigned, (y) sold in a public
offering registered under the Securities Act or (z) sold pursuant to Rule 144
promulgated under the Securities Act;
(iii) The term "Holder" means any person owning or having the
right to acquire Registrable Securities;
(iv) The term "SEC" means the Securities and Exchange
Commission; and
(v) The term "Securities Act" shall mean the Securities Act of
1933, as from time to time amended.
(b) No later than December 31, 1999 the Company shall file with the
Securities and Exchange Commission ("SEC") a registration statement covering the
Registerable Securities, and shall use its best offers to cause such
registration statement is filed (the "Initial Registration"). If such Initial
Registration is not declared effective by the end of such period or does not
include all Registrable Securities, or the Company is not in compliance with its
obligations under Section 9(d), the Holders of a majority of the Registrable
Securities, or the Company is not in compliance with its obligations under
Section 9(d), the Holders of a majority of the Registrable Securities shall have
the right to require by notice in writing that the Company register all or any
part of the Registrable Securities held by such Holders (a "Demand
Registration") and the Company shall thereupon effect such registration in
accordance herewith. The parties agree that if such Holders demand registration
of less than all of the Registrable Securities, the Company, at its option, may
nevertheless file a registration statement covering all of the Registrable
Securities. Upon the filing by the Company of a Registration Statement under
Section 9(c) below, and if the Company is in compliance with its obligations
under Sections 9(c) and (d) below, the Demand Registration rights granted
pursuant to this Section 9(b) shall cease. If such Registration statement is not
declared effective with respect to all Registrable Securities or if the Company
is not in compliance with such obligations, the Demand Registration rights
described herein shall remain in effect.
(ii) If the Holders initiating the registration request hereunder (the
"Initiating Holders") intend to distribute the Registrable Securities covered by
their request by means of an underwriting, they shall so advise the Company as a
part of their request made pursuant to this Section 9(b) and the Company shall
include such information in the written notice referred to in Section 9(b)(i).
In such event, the right of any Holder to include its, his or her Registrable
Securities in such registration shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Holders and such Holder) to the extent
provided herein. All Holders proposing to distribute their securities through
such underwriting shall (together with the Company as provided in Section
9(d)(v)) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Holders. Notwithstanding any other provision of this
Section 9(b), if the underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Company shall so advise all Holders of Registrable
Securities
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which would otherwise be underwritten pursuant hereto, and the number of shares
of securities that may be included in the underwriting shall be allocated among
all Initiating Holders and other Holders who have been provided the notice
required by Section 9(b)(i) in proportion (as nearly as practicable) to the
number of shares of Registrable Securities requested to be included in such
registration by such Holder and which would be eligible for inclusion in the
registration but for the application of this sentence.
(iii) Notwithstanding the foregoing, the Company shall not be
required to file a registration statement following the effective date of any
registration of Company securities with respect to which Holders were given the
opportunity to register Registrable Shares under Section 9(c) below, or (B)
during the period of time beginning on the date the Company files a registration
statement with the SEC described in Section 9(c) below and ending on the earlier
to occur of (x) the date which is 120 days after such registration becomes
effective, or (y) the date on which the Company withdraws such registration with
the SEC. In addition, if the Company shall furnish to Holders requesting a
registration statement pursuant to this Section 9(b) a certificate signed by the
President of the Company stating that in the good faith judgment of the board of
directors of the Company it would be seriously detrimental to the Company and
its stockholders for such registration statement to be filed and it is therefore
essential to defer the filing of such registration statement, the Company shall
have the right to defer such filing for a period of not more than ninety (90)
days after receipt of the request of the Holders; provided, however, that the
Company may not utilize this right more than once in any twelve (12) month
period.
(c) If (but without any obligation to do so) the Corporation
proposes to register (including for this purpose a registration effected by the
Corporation for stockholders other than the Holders) any shares of its Common
Stock under the Securities Act in connection with the public offering of such
securities solely for cash (other than a registration relating solely to the
sale of securities to employees pursuant to stock option awards and/or to
participants in a Company employee benefit or stock plan, or a registration on
any form which does not include substantially the same information, other than
information related to the selling stockholders or their plan of distribution,
as would be required to be included in a registration statement covering the
sale of the Registrable Securities), the Corporation shall, at such time,
promptly give each Holder written notice of such registration. Upon the written
request of each Holder given within twenty (20) days after mailing of such
notice by the Corporation, the Corporation shall, subject to the provisions of
the immediately preceding sentence and Section 9(e) hereof, cause to be
registered under the Securities Act all of the Registrable Securities that each
such Holder has requested to be so registered.
(d) Whenever required under this Section 9 to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
(i) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for up to one hundred twenty (120) days.
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(ii) Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.
(iii) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
(iv) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions.
(v) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
(vi) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(vii) In the case of an underwritten public offering, furnish, at the
request of any Holder requesting registration of Registrable Securities pursuant
to this Section 9, on the date that such Registrable Securities are delivered to
the underwriters for sale in connection with a registration pursuant to this
Section 9, (A) an opinion, dated such date, of the counsel representing the
Company for the purposes of such registration, in such form and substance as is
customarily given to underwriters in an underwritten public offering, addressed
to the underwriters and (B) a letter dated such date, from the independent
certified public accountants of the Company, in such form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering, addressed to the underwriters.
(e) It shall be a condition precedent to the obligations of the
Corporation to take any action pursuant to this Section 9 with respect to the
Registrable Securities of any selling Holder that such Holder shall have
furnished to the Corporation such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities.
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(f) Except as set forth in this Section 9(f), the Company shall bear
and pay all expenses incurred by it in connection with any registrations,
filings or qualifications pursuant to Section 9(b), including without limitation
all registration, filing and qualification fees, printers, and accounting fees,
and fees and disbursements of counsel for the Company, but excluding
underwriter's commissions and/or discounts with respect to shares sold by
Holders, which shall be the responsibility of the Holders; provided, however,
that (subject to Section 9(b)(ii) hereof) the Holders participating in any
registration pursuant to Section 9(b) shall reimburse the Company for any
expenses of any Demand Registration proceeding begun pursuant to Section 9(b) if
the registration request is subsequently withdrawn at the request of the Holders
of a majority of the Registrable Securities to be registered (in which case all
Holders participating in such withdrawn registration shall bear such expenses
pro rata based upon the number of Registrable Securities to be included in such
registration). In no event shall the Company be required to pay any expenses
incurred by a Holder in connection with any registration, filing or
qualification pursuant to Section 9(b).
(g) The Corporation shall bear and pay all expenses incurred by it
in connection with any registration, filing or qualification of Registrable
Securities with respect to the registrations pursuant to Section 9(c), including
without limitation all registration, filing, and qualification fees, printers
and accounting fees and all fees and disbursements of counsel for the
Corporation relating or allocable thereto. The Corporation shall not pay any
expenses incurred by a Holder in connection with any such registration, filing
or qualification, including, but not limited to underwriting discounts and
commissions relating to Registrable Securities and the fees and disbursements of
any professional advisors (including attorneys and accountants) utilized by the
selling Holders in connection with such registration, filing or qualification.
(h) In connection with any offering involving an underwriting of
shares being issued by the Corporation, the Corporation shall not be required
under Section 9(b) or (c) hereof to include any of the Holders' securities in
such underwriting unless they accept the customary and reasonable terms of the
underwriting as agreed upon between the Corporation and the underwriters
selected by it, and then only in such quantity as will not, in the opinion of
the underwriters, jeopardize the success of the offering by the Corporation. If
the total amount of securities, including Registrable Securities, requested by
stockholders to be included in such offering exceeds the amount of securities
sold other than by the Corporation that the underwriters reasonably believe
compatible with the success of the offering, then the Corporation shall be
required to include in the offering only that number of such securities,
including Registrable Securities, which the underwriters believe will not
jeopardize the success of the offering (the securities so included to be
allocated first among all holders of Other Securities and next apportioned among
the Holders who have provided notice required by Section 9(b) or (c) and all
other holders of securities subject to registration rights granted by the
Corporation in proportion (as nearly as practicable) to the number of shares of
securities requested to be included in such registration by such Holder and such
other holders and which would have been eligible for inclusion in such
registration but for the application of this sentence, or in such other
proportions as shall mutually be agreed to by such selling stockholders). For
purposes of the provision of the preceding sentence concerning apportionment
amongst the selling stockholders, for any selling stockholder which is a
partnership or corporation, the partners, retired partners and
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stockholders of such Holder, or the estates and family members of any such
partners and retired partners and any trusts for the benefit of any of the
foregoing persons shall be deemed to be a single "selling stockholder," and any
reduction with respect to such "selling stockholder" shall be based upon the
aggregate amount of shares carrying registration rights owned by all entities
and individuals included in such "selling stockholder," as defined in this
sentence.
(i) No Holder shall have any right to obtain or seek an injunction
restraining or otherwise delaying any registration by the Corporation as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 9.
(j) In the event any Registrable Securities are included pursuant to
a registration statement under this Section 9:
(i) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, any underwriter (as defined in the Securities Act)
and each person if any, who controls such Holder or underwriter within the
meaning of the Securities Act or the Securities Exchange Act of 1934, as amended
(the "Exchange Act") against any losses, claims, damages or liabilities (joint
or several) to which they or any of them may become subject under the Securities
Act, the Exchange Act or any other federal or state law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any of the following statements, omissions or violations
(collectively a "Violation"): (A) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus (but only if such is not corrected in the final
prospectus) contained therein or any amendments or supplements thereto, (B) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading (but
only if such is not corrected in the final prospectus), or (C) any violation or
alleged violation by the Company in connection with the registration of
Registrable Securities under the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law; and the Company will pay to each
such Holder, underwriter or controlling person, as incurred, any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the indemnity agreement contained in this Section 9(j)(i) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld), nor shall the Company be liable in
any such case for any such loss, claim, damage, liability or action to the
extent that it arises out of or is based upon a violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by any such Holder, underwriter or
controlling person.
(ii) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter,
any other Holder selling securities in such registration statement and any con-
10
<PAGE>
trolling person of any such underwriter or other Holder, against any losses,
claims, damages or liabilities (joint or several) to which any of the foregoing
persons may become subject, under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with information furnished by such Holder for
use in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this Section 9(j)(ii), in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this Section
9(j)(ii) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Holder, which consent shall not be unreasonably withheld; provided that
in no event shall any indemnity under this Section 9(j)(ii) exceed the net
proceeds from the offering received by such Holder.
(iii) Promptly after receipt by an indemnified party under this
Section 9(j) of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 9(j), deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 9(j), but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section
9(j).
(iv) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 9(j)(i) and
(ii) is applicable but for any reason is held to be unavailable from the Company
with respect to all Holders or any Holder, the Company and the Holder or
Holders, as the case may be, shall contribute to the aggregate losses, claims,
damages and liabilities (including any investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claims asserted) to which the Company and one or more
of the Holders may be subject in such proportion as is appropriate to reflect
the relative fault of the Company on the one hand, and the Holder or Holders on
the other, in connection with statements or omissions which resulted in such
losses, claims, damages or liabilities. Notwithstanding the foregoing, no Holder
shall be required to contribute any amount in excess of the net proceeds
received by such Holder from the Registrable Securities as the
11
<PAGE>
case may be, sold by such Holder pursuant to the registration statement. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. Each person, if any,
who controls a Holder within the meaning of the Securities Act shall have the
same rights to contribution as such Holder.
(v) The obligations of the Company and Holders under this Section
9(j) shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 9 or otherwise.
9. Miscellaneous Terms and Conditions.
(a) Entire Agreement. This Agreement represents the entire
understanding of the parties hereto as to the subject matter hereof and
supersedes any and all other oral or written agreements and understandings as to
such subject matter.
(b) Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
successors and assigns.
(c) Governing Law. This Agreement will be governed by the laws of
the Commonwealth of Pennsylvania, without regard to conflicts of law principles.
(d) Notices. All notices and other communications between the
parties shall be in writing and shall be deemed to have been given if mailed
first-class, postage prepaid to the address set forth below or such other
address as ConMat or Eastwind may give the other for such purpose:
If to ConMat:
ConMat Technologies
Franklin Avenue and Grant Street
Phoenixville, PA 19460
Attention: Chairman
Tel.: (610) 935-0225
Fax: (610) 935-7151
12
<PAGE>
With a copy to:
Klehr, Harrison, Harvey,
Branzburg & Ellers LLP
1401 Walnut Street
Philadelphia, PA 19102
Attention: Michael C. Forman, Esquire
Tel: (215) 569-4284
Fax: (215) 568-6603
If to Eastwind:
The Eastwind Group, Inc.
275 Geiger Road
Philadelphia, PA 19115
Attention: Chief Financial Officer
Tel: (215) 671-0606
Fax: (215) 673-8964
(e) Further Assurances. Prior to and following the Closing, at the
request of either party, the other party shall deliver any further instruments
of transfer and take all reasonable actions as may be necessary or appropriate
to effectuate the transactions contemplated by this Agreement.
(f) Execution in Counterparts. This Agreement may be executed and
delivered by facsimile and in counterparts, each of which shall be deemed to be
an original as against any party whose signature appears thereon, and all of
such shall together constitute one and the same instrument.
(g) Section Headings. The section headings are inserted for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
(h) DAR Group Fees. Eastwind agrees to be responsible for all fees
and expenses of DAR Group in connection with the transactions contemplated by
this Agreement, which are in the amount of $250,000.00.
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto, intending to be legally
bound hereby, have executed this Agreement as of the date first written above.
CONMAT TECHNOLOGIES, INC.
By: /s/ Steven B. Rosner
---------------------
Name: Steven B. Rosner
Title: President
THE EASTWIND GROUP, INC.
By: /s/ Paul A. DeJuliis
----------------------
Name: Paul A. DeJuliis
Title: President
14
<PAGE>
SCHEDULE I
Section 7.3 of the Securities Purchase Agreement dated as of May 10, 1996
between Odyssey Capital Group, L.P., and Eastwind states that without the prior
consent of Odyssey, neither Eastwind nor any of its subsidiaries shall sell,
lease or otherwise dispose of its properties or assets.
Section 5 of the Term Note dated March 10, 1995 in the original principal amount
of $1,600,000 from Polychem to The Budd Company states that the amount due
thereunder shall be accelerated and immediately due and payable upon the
transfer, sale or assignment of more than fifty percent of Polychem's voting or
equity securities.
Section 7 of the Surety Agreement dated March 10, 1995 by Eastwind and Polychem
in favor of The Budd Company incorporates by reference certain covenants include
Polychem's agreement that it shall not directly or indirectly "sell, assign,
lease, transfer, abandon, or otherwise dispose of any stock or indebtedness to
any other person."
15
<PAGE>
Exhibit "B"
-----------
ASSUMPTION AND CONVERSION AGREEMENT
THIS ASSUMPTION AND CONVERSION AGREEMENT (the "Agreement"), dated as of
the 8th day of December, 1998, by and among CONMAT TECHNOLOGIES, a Florida
corporation with an address of Franklin Avenue and Grant Street, Phoenixville,
PA 19460 ("ConMat"), THE EASTWIND GROUP, INC., a Delaware corporation with an
address of 100 Four Falls Corporate Center, Suite 305, West Conshohocken, PA
19428 ("Eastwind"), and PAUL DEJULIIS, an individual with an address of 1110
Daniel Davis Drive, West Chester, PA 19382 ("Creditor").
Background
Creditor has advanced funds to Eastwind in the amount of one hundred
sixty thousand dollars ($160,000) (the "DeJuliis Obligation"). Pursuant to the
terms of a Share Exchange Agreement dated December 8, 1998 (the "Share Exchange
Agreement"), Eastwind has agreed to transfer to ConMat all of the outstanding
capital stock of Polychem Corporation in exchange for certain shares of capital
stock of ConMat and the assumption of certain obligations of Eastwind, including
its obligations under the DeJuliis Obligation, and Creditor has agreed to such
assumption, and to the conversion of the DeJuliis Obligation into shares of
ConMat capital stock, on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein and intending to be legally bound hereby, the parties agree as follows:
1. Assumption; Release.
(a) ConMat hereby assumes all of Eastwind's duties and
obligations under the DeJuliis Obligation.
(b) Creditor consents to the foregoing assumption, and hereby
releases, and agrees to hold harmless, Eastwind, its officers, directors,
shareholders, agents, successors and assigns, from and against any and all
claims, costs, expenses, damages or other liabilities arising out of or relating
to the DeJuliis Obligation.
2. Exchange. Creditor hereby agrees to exchange the DeJuliis Obligation
for shares of ConMat's Series A Preferred Stock having a Stated Value equal to
the outstanding principal balance of the DeJuliis Obligation (the "Preferred
Shares"). ConMat shall deliver to Creditor a certificate evidencing the
Preferred Shares. Upon receipt by Creditor of the Preferred Shares, the DeJuliis
Obligation shall be deemed canceled and ConMat (and its successors and assigns)
shall have no further liabilities or obligations thereunder.
<PAGE>
3. Eastwind Representations and Warranties. Eastwind, in order to
induce ConMat and Creditor to enter into this Agreement and complete the
transactions contemplated hereby, represents and warrants as follows:
(a) Eastwind is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has full
corporate power and authority to execute and deliver this Agreement and to
assume and perform its obligations hereunder.
(b) All actions of the directors and shareholders of Eastwind
necessary to authorize the execution and delivery of this Agreement have been
taken, and this Agreement constitutes the legal, valid and binding agreement of
Eastwind enforceable against Eastwind in accordance with its terms.
(c) Neither the execution nor delivery of this Agreement by
Eastwind, nor the performance by Eastwind of any of the transactions
contemplated hereby (i) will result in a violation of the certificate of
incorporation or by-laws of Eastwind, (ii) conflicts with, or constitutes a
breach or default under any applicable judgment, order, writ, injunction or
decree of any court or any applicable law or any applicable rule or regulation
of any administrative agency or governmental or regulatory authority or (iii)
violates, conflicts with, or constitutes a default (or an event or condition
that, with notice or lapse of time or both, would constitute a default) under,
any contract, commitment, understanding, arrangement, agreement or restriction
of any kind or character to which Eastwind is a party or may be bound.
4. ConMat Representations and Warranties. ConMat, in order to induce
Eastwind and Creditor to enter into this Agreement and complete the transactions
contemplated hereby, represents and warrants as follows:
(a) ConMat is a corporation duly organized, validly existing
and in good standing under the laws of the State of Florida and has full
corporate power and authority to execute and deliver this Agreement and to
assume and perform its obligations hereunder.
(b) Upon delivery, the Preferred Shares will be duly
authorized, validly issued, fully paid and non-assessable.
(c) All actions of the directors and shareholders of ConMat
necessary to authorize the execution and delivery of this Agreement have been
taken, and this Agreement constitutes the legal, valid and binding agreement of
ConMat enforceable against ConMat in accordance with its terms.
(d) Neither the execution nor delivery of this Agreement by
ConMat, nor the performance by ConMat of any of the transactions contemplated
hereby (i) will result in a violation of the certificate of incorporation or
by-laws of ConMat, (ii) conflicts with, or constitutes a breach or default under
any applicable judgment, order, writ, injunction or decree of any court or any
-2-
<PAGE>
applicable law or any applicable rule or regulation of any administrative agency
or governmental or regulatory authority or (iii) violates, conflicts with, or
constitutes a default (or an event or condition that, with notice or lapse of
time or both, would constitute a default) under, any contract, commitment,
understanding, arrangement, agreement or restriction of any kind or character to
which ConMat is a party or may be bound.
5. Creditor Representations and Warranties. Creditor, in order to
induce Eastwind and ConMat to enter into this Agreement and complete the
transactions contemplated hereby, represents and warrants as follows:
(a) Creditor has full power and authority to execute and
deliver this Agreement and to assume and perform his obligations hereunder.
(b) This Agreement constitutes the legal, valid and binding
agreement of Creditor enforceable against Creditor in accordance with its terms.
(c) Neither the execution nor delivery of this Agreement by
Creditor, nor the performance by Creditor of any of the transactions
contemplated hereby (i) conflicts with, or constitutes a breach or default under
any applicable judgment, order, writ, injunction or decree of any court or any
applicable law or any applicable rule or regulation of any administrative agency
or governmental or regulatory authority or (ii) violates, conflicts with, or
constitutes a default (or an event or condition that, with notice or lapse of
time or both, would constitute a default) under, any contract, commitment,
understanding, arrangement, agreement or restriction of any kind or character to
which Creditor is a party or may be bound.
(d) Creditor has carefully reviewed and understands the risks
of, and other considerations relating to, the acquisition of the Preferred
Shares. Creditor, and Creditor's advisors, if any, have been furnished all
information relating to ConMat and its proposed activities and the Preferred
Shares which they have requested and have been afforded the opportunity to
obtain any additional information necessary to verify the accuracy of any such
information.
(e) ConMat has answered all inquiries that Creditor has put to
it concerning ConMat and its proposed activities.
(f) Creditor has relied only on the information described in
Subsections (d) and (e) above in determining to exchange the DeJuliis Obligation
for the Preferred Shares.
(g) Creditor is acquiring the Preferred Shares for Creditor's
own account, as principal, for investment purposes only and not with a view to
the resale or distribution of all or any part of such Preferred Shares and has
no present intention, agreement or arrangement to divide the Preferred Shares
with others or to resell, assign, transfer or otherwise dispose of all or any
part of the Preferred Shares.
-3-
<PAGE>
(h) Creditor recognizes that the information furnished by
ConMat does not constitute investment, accounting, legal or tax advice. Creditor
is relying on professional advisors for such advice.
(i) Creditor is aware that there is no public market for the
Preferred Shares, that no market is likely to develop, and that it will not be
possible to readily liquidate this investment.
6. Miscellaneous Terms and Conditions.
(a) This Agreement represents the entire understanding of the
parties hereto as to the subject matter hereof and supersedes any and all other
oral or written agreements and understandings as to such subject matter.
(b) This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective heirs, successors and
assigns.
(c) This Agreement will be governed by the laws of the
Commonwealth of Pennsylvania, without regard to conflicts of law principles.
(d) All notices and other communications between the parties
shall be in writing and shall be deemed to have been given if mailed
first-class, postage prepaid to the address set forth below or such other
address as any party may give the other by notice in accordance with this
Subsection for such purpose:
If to ConMat:
ConMat Technologies
Franklin Avenue and Grant Street
Phoenixville, PA 19460
Attention: President
Tel.: (610) 935-0225
Fax: (610) 935-7151
With a copy to:
Klehr, Harrison, Harvey,
Branzburg & Ellers LLP
1401 Walnut Street
Philadelphia, PA 19102
Attention: Michael C. Forman, Esquire
Tel: (215) 569-4284
Fax: (215) 568-6603
-4-
<PAGE>
If to Eastwind:
The Eastwind Group, Inc.
275 Geiger Road
Philadelphia, PA 19115
Attention: Chairman
Tel: (215) 671-0606
Fax: (215) 673-8964
If to Creditor:
Paul DeJuliis
1110 Daniel Davis Drive
West Chester, PA 19382
Tel: _____________________
Fax: _____________________
(e) At the request of a party, any other party shall deliver
any further instruments of transfer and take all reasonable actions as may be
necessary or appropriate to effectuate the transactions contemplated by this
Agreement.
(f) This Agreement may be executed and delivered by facsimile
and in counterparts, each of which shall be deemed to be an original as against
any party whose signature appears thereon, and all of such shall together
constitute one and the same instrument.
(g) The captions and headings of the various Sections of this
Agreement are for ease of reference only, and shall not be used to interpret or
supplement any of the terms hereof.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have executed this Agreement as of the date first written above.
CONMAT TECHNOLOGIES, INC.
By: /s/ Steven B. Rosner
--------------------------
Name: Steven B. Rosner
Title: President
THE EASTWIND GROUP, INC.
By: /s/ Paul A. DeJuliis
--------------------------
Name: Paul A. DeJuliis
Title: President
/s/ Paul DeJuliis
---------------------------
Paul DeJuliis
-6-
<PAGE>
Exhibit "C"
-----------
ASSUMPTION AND DISCHARGE AGREEMENT
THIS ASSUMPTION AND DISCHARGE AGREEMENT (the "Agreement"), dated as of
the 8th day of December, 1998, by and among CONMAT TECHNOLOGIES, a Florida
corporation with an address of Franklin Avenue and Grant Street, Phoenixville,
PA 19460 ("ConMat"), EASTWIND GROUP, INC., a Delaware corporation with an
address of 100 Four Falls Corporate Center, Suite 305, West Conshohocken, PA
19428 ("Eastwind"), and CLIFTON CAPITAL, LTD., a ______________ with an address
of ______________ ("Creditor").
Background
----------
Creditor has advanced funds to Eastwind in the amount of one hundred
thousand dollars ($100,000) (the "Clifton Obligation"). Pursuant to the terms of
a Share Exchange Agreement dated December 8, 1998 (the "Share Exchange
Agreement"), Eastwind has agreed to transfer to ConMat all of the outstanding
capital stock of Polychem Corporation in exchange for certain shares of capital
stock of ConMat and the assumption of certain obligations of Eastwind, including
its obligations under the Clifton Obligation, and Creditor has agreed to such
assumption, and to the discharge of the Clifton Obligation by ConMat on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein and intending to be legally bound hereby, the parties agree as follows:
1. Assumption; Release.
(a) ConMat hereby assumes all of Eastwind's duties and
obligations under the Clifton Obligation.
(b) Creditor consents to the foregoing assumption, and hereby
releases, and agrees to hold harmless, Eastwind, its officers, directors,
shareholders, agents, successors and assigns, from and against any and all
claims, costs, expenses, damages or other liabilities arising out of or relating
to the Clifton Obligation, including without limitation all rights, duties and
obligations of Eastwind and Creditor under the Securities Purchase Agreement
dated April 10, 1998 by and between Eastwind and Creditor pursuant to which
Creditor agreed to purchase 400,000 shares of Common Stock of Eastwind ("Common
Stock"), the Common Stock Purchase Warrant dated April 10, 1998 from Eastwind to
Creditor pursuant to which Creditor was granted the right to purchase up to
200,000 shares of Common Stock at $1.25 per share, and the Registration Rights
Agreement between Eastwind and Creditor dated April 10, 1998 pursuant to which
Eastwind agreed to register the aforesaid Common Stock under applicable
securities laws (the "Agreements"). Eastwind and Creditor hereby agree that
effective immediately the Agreements shall become null and void and of no
further force or effect, and Eastwind and Creditor shall have no further
obligations or duties
<PAGE>
thereunder. Creditor represents and warrants to Eastwind that Creditor has not
assigned, conveyed, or transferred to any person or entity any interest
whatsoever in the Agreements.
2. Discharge. ConMat shall pay to Creditor one hundred thousand dollars
($100,000), representing payment in full for the Clifton Obligation. Upon
receipt by Creditor of such payment, the Clifton Obligation shall be deemed
canceled and ConMat (and its successors and assigns) shall have no further
liabilities or obligations thereunder.
3. Eastwind Representations and Warranties. Eastwind, in order to
induce ConMat and Creditor to enter into this Agreement and complete the
transactions contemplated hereby, represents and warrants as follows:
(a) Eastwind is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has full
corporate power and authority to execute and deliver this Agreement and to
assume and perform its obligations hereunder.
(b) All actions of the directors and shareholders of Eastwind
necessary to authorize the execution and delivery of this Agreement have been
taken, and this Agreement constitutes the legal, valid and binding agreement of
Eastwind enforceable against Eastwind in accordance with its terms.
(c) Neither the execution nor delivery of this Agreement by
Eastwind, nor the performance by Eastwind of any of the transactions
contemplated hereby (i) will result in a violation of the certificate of
incorporation or by-laws of Eastwind, (ii) conflicts with, or constitutes a
breach or default under any applicable judgment, order, writ, injunction or
decree of any court or any applicable law or any applicable rule or regulation
of any administrative agency or governmental or regulatory authority or (iii)
violates, conflicts with, or constitutes a default (or an event or condition
that, with notice or lapse of time or both, would constitute a default) under,
any contract, commitment, understanding, arrangement, agreement or restriction
of any kind or character to which Eastwind is a party or may be bound.
4. ConMat Representations and Warranties. ConMat, in order to induce
Eastwind and Creditor to enter into this Agreement and complete the transactions
contemplated hereby, represents and warrants as follows:
(a) ConMat is a corporation duly organized, validly existing
and in good standing under the laws of the State of Florida and has full
corporate power and authority to execute and deliver this Agreement and to
assume and perform its obligations hereunder.
(b) All actions of the directors and shareholders of ConMat
necessary to authorize the execution and delivery of this Agreement have been
taken, and this Agreement constitutes the legal, valid and binding agreement of
ConMat enforceable against ConMat in accordance with its terms.
-2-
<PAGE>
(c) Neither the execution nor delivery of this Agreement by
ConMat, nor the performance by ConMat of any of the transactions contemplated
hereby (i) will result in a violation of the certificate of incorporation or
by-laws of ConMat, (ii) conflicts with, or constitutes a breach or default under
any applicable judgment, order, writ, injunction or decree of any court or any
applicable law or any applicable rule or regulation of any administrative agency
or governmental or regulatory authority or (iii) violates, conflicts with, or
constitutes a default (or an event or condition that, with notice or lapse of
time or both, would constitute a default) under, any contract, commitment,
understanding, arrangement, agreement or restriction of any kind or character to
which ConMat is a party or may be bound.
5. Creditor Representations and Warranties. Creditor, in order to
induce Eastwind and ConMat to enter into this Agreement and complete the
transactions contemplated hereby, represents and warrants as follows:
(a) Creditor is a ______________ duly organized, validly
existing and in good standing under the laws of the State of ___________________
and has full power and authority to execute and deliver this Agreement and to
assume and perform its obligations hereunder.
(b) All actions of the __________ of Creditor necessary to
authorize the execution and delivery of this Agreement have been taken, and this
Agreement constitutes the legal, valid and binding agreement of Creditor
enforceable against Creditor in accordance with its terms.
(c) Neither the execution nor delivery of this Agreement by
Creditor, nor the performance by Creditor of any of the transactions
contemplated hereby (i) conflicts with, or constitutes a breach or default under
any applicable judgment, order, writ, injunction or decree of any court or any
applicable law or any applicable rule or regulation of any administrative agency
or governmental or regulatory authority or (ii) violates, conflicts with, or
constitutes a default (or an event or condition that, with notice or lapse of
time or both, would constitute a default) under, any contract, commitment,
understanding, arrangement, agreement or restriction of any kind or character to
which Creditor is a party or may be bound.
6. Miscellaneous Terms and Conditions.
(a) This Agreement represents the entire understanding of the
parties hereto as to the subject matter hereof and supersedes any and all other
oral or written agreements and understandings as to such subject matter.
(b) This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective heirs, successors and
assigns.
(c) This Agreement will be governed by the laws of the
Commonwealth of Pennsylvania, without regard to conflicts of law principles.
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<PAGE>
(d) All notices and other communications between the parties
shall be in writing and shall be deemed to have been given if mailed
first-class, postage prepaid to the address set forth below or such other
address as any party may give the other by notice in accordance with this
Subsection for such purpose:
If to ConMat:
ConMat Technologies
Franklin Avenue and Grant Street
Phoenixville, PA 19460
Attention: President
Tel.: (610) 935-0225
Fax: (610) 935-7151
With a copy to:
Klehr, Harrison, Harvey,
Branzburg & Ellers LLP
1401 Walnut Street
Philadelphia, PA 19102
Attention: Michael C. Forman, Esquire
Tel: (215) 569-4284
Fax: (215) 568-6603
If to Eastwind:
Eastwind Group, Inc.
275 Geiger Road
Philadelphia, PA 19115
Attention: Chairman
Tel: (215) 671-0606
Fax: (215) 673-8964
If to Creditor:
Clifton Capital, Ltd.
____________________________
____________________________
Attention:__________________
Tel: _______________________
Fax: _______________________
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<PAGE>
Exhibit "C"
-----------
(e) At the request of a party, any other party shall deliver
any further instruments of transfer and take all reasonable actions as may be
necessary or appropriate to effectuate the transactions contemplated by this
Agreement.
(f) This Agreement may be executed and delivered by facsimile
and in counterparts, each of which shall be deemed to be an original as against
any party whose signature appears thereon, and all of such shall together
constitute one and the same instrument.
(g) The captions and headings of the various Sections of this
Agreement are for ease of reference only, and shall not be used to interpret or
supplement any of the terms hereof.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have executed this Agreement as of the date first written above.
CONMAT TECHNOLOGIES, INC.
By: /s/ Steven B. Rosner
--------------------------
Name: Steven B. Rosner
Title: President
EASTWIND GROUP, INC.
By: /s/ Paul A. DeJuliis
--------------------------
Name: Paul A. DeJuliis
Title: President
CLIFTON CAPITAL, LTD.
By: __________________________
Name:
Title:
-6-
<PAGE>
Exhibit "D"
ASSUMPTION AND CONVERSION AGREEMENT
AGREEMENT, dated as of the 8th day of December, 1998, by and among
CONMAT TECHNOLOGIES, a Florida corporation with an address of Franklin Avenue
and Grant Street, Phoenixville, PA 19460 ("ConMat"), THE EASTWIND GROUP, INC., a
Delaware corporation with an address of 100 Four Falls Corporate Center, Suite
305, West Conshohocken, PA 19428 ("Eastwind"), and MENTOR SPECIAL SITUATION
FUND, L.P., a Pennsylvania limited partnership with an address of P.O. Box 560,
Yardley, PA 19067 ("Creditor").
Background.
On June 20, 1996, Eastwind issued to Creditor its $500,000 Subordinated
Debenture (the "Debenture") pursuant to a Securities Purchase Agreement dated
June 20, 1996 (the "Purchase Agreement"), together with a Common Stock Purchase
Warrant (the "Creditor Warrant") from Eastwind to Creditor pursuant to which
Creditor was granted the right to purchase up to 80,000 shares of Common Stock
of Eastwind (the "Common Stock") at $6.00 per share, and the Registration Rights
Agreement between Eastwind and Creditor dated June 20, 1996 pursuant to which
Eastwind agreed to register the Common Stock issuable under the aforesaid
warrant under applicable securities laws (the "Registration Rights Agreement").
Pursuant to the terms of a Share Exchange Agreement dated December 8, 1998 (the
"Share Exchange Agreement"), Eastwind has agreed to transfer to ConMat all of
the outstanding capital stock of Polychem Corporation in exchange for certain
shares of capital stock of ConMat and the assumption of certain obligations of
Eastwind, including its obligations under the Debenture, and Creditor has agreed
to such assumption, and to the conversion of the Debenture into shares of ConMat
capital stock, on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein and intending to be legally bound hereby, the parties agree as follows:
1. Assumption; Release. (a) ConMat hereby assumes all of Eastwind's
duties and obligations under the Debenture, including but not limited to payment
of principal and interest thereon, and the related duties and obligations set
forth in the Purchase Agreement. ConMat does not assume any of Eastwind's
obligations under the Creditor Warrant or the Registration Rights Agreement.
(b) Creditor consents to the foregoing assumption, and hereby
releases, Eastwind, its officers, directors, shareholders, agents, successors
and assigns (acknowledging that ConMat is not a successor or assign of Eastwind
for purposes of this Section), from and against any and all claims, costs,
expenses, damages or other liabilities arising out of or relating to the
Debenture and/or the Purchase Agreement, including without limitation the
obligation to pay principal and interest on the Debenture and all rights, duties
and obligations of Eastwind under the Purchase
<PAGE>
Agreement, the Creditor Warrant and the Registration Rights Agreement. Creditor
and Eastwind hereby agree that effective immediately the Purchase Agreement,
Creditor Warrant and Registration Rights Agreement shall become null and void
and of no further force and effect, and Eastwind and Creditor shall have no
further obligations or duties thereunder. Creditor represents and warrants to
Eastwind that Creditor has not assigned, conveyed, or transferred to any person
or entity any interest whatsoever in the Purchase Agreement, Creditor Warrant
and Registration Rights Agreement.
2. Exchange. (a) Creditor hereby agrees to exchange the Debenture for
(i) 166,667 shares of ConMat's Series B Preferred Stock (the "Preferred
Shares"), (ii) a warrant to purchase 166,667 shares of ConMat's common stock
(the "Warrant Shares") at an initial exercise price of $3.00 per share (the
"Warrant"), and (iii) ConMat's agreement to pay all accrued interest on the
Debenture through the date of this Agreement, in the amount of approximately
$25,000.00, promptly following closing by Polychem Corporation on the
sale/leaseback of its operating facility. Upon delivery to ConMat of the
original Debenture for cancellation, ConMat shall deliver to Creditor a
certificate evidencing the Preferred Shares together with the Warrant. Upon
receipt by Creditor of the Preferred Shares and the Warrant, the Debenture shall
be deemed canceled and ConMat (and its successors and assigns) shall have no
further liabilities or obligations thereunder or under the Purchase Agreement.
(b) As a condition to the effectiveness of this Agreement
against Creditor, Edward F. Sager, Jr., a representative of Creditor, shall be
appointed to the Board of Directors of ConMat effective upon execution of this
Agreement.
(c) ConMat agrees that, so long as Creditor is a holder of
Preferred Shares, ConMat shall not incur any indebtedness for money borrowed or
similar indebtedness, other than in the ordinary course of business, without the
prior written consent of Creditor.
3. Eastwind Representations and Warranties. Eastwind, in order to
induce ConMat and Creditor to enter into this Agreement and complete the
transactions contemplated hereby, represents and warrants as follows:
(a) Eastwind is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has full
corporate power and authority to execute and deliver this Agreement and to
assume and perform its obligations hereunder.
(b) All actions of the directors and shareholders of Eastwind
necessary to authorize the execution and delivery of this Agreement have been
taken, and this Agreement constitutes the legal, valid and binding agreement of
Eastwind enforceable against Eastwind in accordance with its terms.
(c) Neither the execution nor delivery of this Agreement by
Eastwind, nor the performance by Eastwind of any of the transactions
contemplated hereby (i) will result in a
<PAGE>
violation of the certificate of incorporation or by-laws of Eastwind, (ii)
conflicts with, or constitutes a breach or default under any applicable
judgment, order, writ, injunction or decree of any court or any applicable law
or any applicable rule or regulation of any administrative agency or
governmental or regulatory authority or (iii) violates, conflicts with, or
constitutes a default (or an event or condition that, with notice or lapse of
time or both, would constitute a default) under, any contract, commitment,
understanding, arrangement, agreement or restriction of any kind or character to
which Eastwind is a party or may be bound.
4. ConMat Representations and Warranties. ConMat, in order to induce
Eastwind and Creditor to enter into this Agreement and complete the transactions
contemplated hereby, represents and warrants as follows:
(a) ConMat is a corporation duly organized, validly existing
and in good standing under the laws of the State of Florida and has full
corporate power and authority to execute and deliver this Agreement and to
assume and perform its obligations hereunder.
(b) Upon delivery, the Preferred Shares and the Warrant will
be duly authorized, validly issued, fully paid and non-assessable. The requisite
number of shares of unissued common stock of ConMat have been duly authorized
and reserved for issuance upon exercise of the Warrant, and no further corporate
action is required for the valid issuance of Warrant Shares upon exercise of the
Warrant. The Warrant Shares are not subject to preemptive or similar rights of
any person, and when issued against payment therefor in accordance with the
terms of the Warrant will be validly issued, fully paid and non-assessable.
(c) All actions of the directors and shareholders of ConMat
necessary to authorize the execution and delivery of this Agreement have been
taken, and this Agreement constitutes the legal, valid and binding agreement of
ConMat enforceable against ConMat in accordance with its terms.
(d) Neither the execution nor delivery of this Agreement by
ConMat, nor the performance by ConMat of any of the transactions contemplated
hereby (i) will result in a violation of the certificate of incorporation or
by-laws of ConMat, (ii) conflicts with, or constitutes a breach or default under
any applicable judgment, order, writ, injunction or decree of any court or any
applicable law or any applicable rule or regulation of any administrative agency
or governmental or regulatory authority or (iii) violates, conflicts with, or
constitutes a default (or an event or condition that, with notice or lapse of
time or both, would constitute a default) under, any contract, commitment,
understanding, arrangement, agreement or restriction of any kind or character to
which ConMat is a party or may be bound.
5. Creditor Representations and Warranties. Creditor, in order to
induce Eastwind and ConMat to enter into this Agreement and complete the
transactions contemplated hereby, represents and warrants as follows:
<PAGE>
(a) Creditor is a limited partnership duly organized, validly
existing and in good standing under the laws of the Commonwealth of Pennsylvania
and has full partnership power and authority to execute and deliver this
Agreement and to assume and perform its obligations hereunder. Mentor Partners,
the general partner of Creditor, is a general partnership duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Pennsylvania and has full partnership power and authority to execute and deliver
this Agreement on Creditor's behalf.
(b) All actions of the partners of Creditor necessary to
authorize the execution and delivery of this Agreement have been taken, and this
Agreement constitutes the legal, valid and binding agreement of Creditor
enforceable against Creditor in accordance with its terms.
(c). Creditor is the lawful owner, of record and beneficially,
of the Debenture free and clear of any security interest, lien, pledge,
encumbrance or other adverse claim or interest.
(d) Neither the execution nor delivery of this Agreement by
Creditor, nor the performance by Creditor of any of the transactions
contemplated hereby (i) will result in a violation of the Amended and Restated
Agreement of Limited Partnership of Creditor, (ii) conflicts with, or
constitutes a breach or default under any applicable judgment, order, writ,
injunction or decree of any court or any applicable law or any applicable rule
or regulation of any administrative agency or governmental or regulatory
authority or (iii) violates, conflicts with, or constitutes a default (or an
event or condition that, with notice or lapse of time or both, would constitute
a default) under, any contract, commitment, understanding, arrangement,
agreement or restriction of any kind or character to which Creditor is a party
or may be bound.
(e) Creditor has carefully reviewed and understands the risks
of, and other considerations relating to, the acquisition of the Preferred
Shares and the Warrant. Creditor, and Creditor's advisors, if any, have been
furnished all information relating to ConMat and its proposed activities and the
Preferred Shares and the Warrant which they have requested and have been
afforded the opportunity to obtain any additional information necessary to
verify the accuracy of any such information.
(f) ConMat has answered all inquiries that Creditor has put to
it concerning ConMat and its proposed activities.
(g) Creditor has relied only on the information described in
Subsections (e) and (f) above in determining to exchange the Debenture for the
Preferred Shares and the Warrant.
(h) Creditor is acquiring the Preferred Shares and the Warrant
for Creditor's own account, as principal, for investment purposes only and not
with a view to the resale or distribution of all or any part of the Preferred
Shares and the Warrant and has no present intention, agreement or arrangement to
divide the Preferred Shares with others or to resell, assign, transfer or
otherwise dispose of all or any part of the Preferred Shares and the Warrant.
<PAGE>
(i) Creditor recognizes that the information furnished by
ConMat does not constitute investment, accounting, legal or tax advice. Creditor
is relying on professional advisors for such advice.
(j) Creditor is aware that there is no public market for the
Preferred Shares, the Warrant or the ConMat common stock that no market is
likely to develop, and that it will not be possible to readily liquidate this
investment.
6 Miscellaneous Terms and Conditions.
(a) This Agreement represents the entire understanding of the
parties hereto as to the subject matter hereof and supersedes any and all other
oral or written agreements and understandings as to such subject matter.
(b) This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective heirs, successors and
assigns.
(c) This Agreement will be governed by the laws of the
Commonwealth of Pennsylvania, without regard to conflicts of law principles.
(d) All notices and other communications between the parties
shall be in writing and shall be deemed to have been given if mailed
first-class, postage prepaid to the address set forth below or such other
address as any party may give the other by notice in accordance with this
Subsection for such purpose:
If to ConMat:
ConMat Technologies, Inc.
Franklin Avenue and Grant Street
Phoenixville, PA 19460
Attention: President
Tel.: (610) 935-0225
Fax: (610) 935-7151
With a copy to:
Klehr, Harrison, Harvey,
Branzburg & Ellers LLP
1401 Walnut Street
Philadelphia, PA 19102
Attention: Michael C. Forman, Esquire
Tel: (215) 569-4284
Fax: (215) 568-6603
<PAGE>
If to Eastwind:
The Eastwind Group, Inc.
275 Geiger Road
Philadelphia, PA 19115
Attention: Chairman
Tel: (215) 671-0606
Fax: (215) 673-8964
If to Creditor:
Mentor Special Situation Fund, L.P.
P.O. Box 560
Yardley, PA 19067
Attention: Edward F. Sager, Jr.
Tel: (215) 736-8882
Fax: (215) 736-8882
(e). At the request of a party, any other party shall deliver
any further instruments of transfer and take all reasonable actions as may be
necessary or appropriate to effectuate the transactions contemplated by this
Agreement.
(f) This Agreement may be executed and delivered by facsimile
and in counterparts, each of which shall be deemed to be an original as against
any party whose signature appears thereon, and all of such shall together
constitute one and the same instrument.
(g) The captions and headings of the various Sections of this
Agreement are for ease of reference only, and shall not be used to interpret or
supplement any of the terms hereof.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have executed this Agreement as of the date first written above.
MENTOR SPECIAL SITUATION FUND, L.P. CONMAT TECHNOLOGIES, INC.
By: MENTOR PARTNERS,
General Partner By: /s/ Steven B. Rosner
---------------------------------
Name: Steven B. Rosner, President
By: /s/ Edward F. Sager, Jr. THE EASTWIND GROUP, INC.
-------------------------------------
Edward F. Sager, Jr., General Partner
By: /s/ Paul A. DeJuliis
---------------------------------
Name: Paul A. DeJuliis, President
