SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 22, 1998
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ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-21456 06-1361276
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(State or other (Commission (I.R.S. Employer
jurisdiction of file number) Identification No.)
incorporation or
organization)
488 Main Avenue, Norwalk, Connecticut 06851
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: 203-849-2500
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Item 5. Other Events.
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On April 22, 1998, the Registrant and Telepanel Systems Inc.
("Telepanel") executed a formal agreement (the "Termination
Agreement") to terminate their previously announced agreement of
October 1997 contemplating a combination of the two companies, and
executed reciprocal releases thereunder. In addition, the parties
agreed: (i) to terminate their previously announced joint
distribution agreement; (ii) that the Registrant would withdraw its
demand for acceleration of repayment of the outstanding working
capital advances to the joint venture created under the joint
distribution agreement (in the amount of $2,000,000); and (iii)
that such balances, which are secured by all of the assets of
Telepanel (such collateral subordinated in right to specified bank
indebtedness but prior in right to any other interest), would be
due on October 5, 1998, subject to earlier repayment from equity or
debt offerings of Telepanel. Reference is hereby made to the full
text of the Termination Agreement filed as Exhibit 5(a) to this
Current Report for further information with respect to the
termination accomplished thereby, which is hereby incorporated by
reference into this item and qualifies all matters set forth
herein.
Item 7. Financial Statements and Exhibits.
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(c) Exhibits.
The exhibit filed as part of this Current Report on Form
8-K is listed in the attached Index to Exhibits.
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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 thereunto duly authorized.
ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC.
By s/Michael B. Persky
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Michael B. Persky
President
Dated: May 1, 1998<PAGE>
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INDEX TO EXHIBITS
Exhibit Description
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5(a) - Termination Agreement dated April 22, 1998 among
the Registrant, Telepanel Systems, Inc. and
Telepanel/ERS Joint Venture.
EXHIBIT 5(a)
TERMINATION AGREEMENT
AGREEMENT dated as of the 22nd day of April, 1998 by and
between:
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC., a
Delaware corporation ("ERS"),
-and-
TELEPANEL SYSTEMS INC., a corporation incorporated under
the Canada Business Corporations Act ("Telepanel"),
-and-
TELEPANEL/ERS JOINT VENTURE, INC., a corporation
incorporated under the Ontario Business Corporations Act
(the "JV")
RECITALS:
(a) ERS and Telepanel entered into a combination agreement dated
as of October 29, 1997 (the "Combination Agreement") and a joint
distribution agreement dated as of February 3, 1998 (the "JDA").
(b) On and subject to the terms contained in the JDA, ERS and
Telepanel formed the JV and the JV provided to ERS a promissory
note dated February 3, 1998 (the "Note"), with performance under
the Note guaranteed by Telepanel under a guarantee dated February
3, 1998 (the "Guarantee"), with security therefor provided by the
terms of collateral security agreements dated February 3, 1998 and
given by the JV and Telepanel (collectively, the "Security").
(c) The Combination Agreement, the JDA, the Note, the Guarantee
and the Security are collectively referred to as the "Combination
Documentation".
(d) The parties desire to terminate the Combination Agreement and
the JDA as set forth below.
NOW THEREFORE IN CONSIDERATION OF THE MUTUAL PREMISES AND THE
AGREEMENTS SET FORTH BELOW, THE PARTIES AGREE AS FOLLOWS:
1. The Combination Agreement is hereby terminated in all
respects. Without limiting the generality of the foregoing
(or the provisions of Section 7 hereof), the provisions of
Sections 8.3 and 8.4 of the Combination Agreement shall have
no further force or effect; and the parties further
acknowledge that all provisions of the roadmap letter dated
August 6, 1997 executed by the parties shall similarly have
no further force and effect. Notwithstanding the foregoing,
no such termination shall affect the obligations contained in
the Confidentiality Agreement dated August 6, 1997 between
Telepanel and ERS, it being acknowledged, however, that the
"Blackout Period" thereunder has terminated. <PAGE>
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2. The JDA is hereby terminated, and the references thereto
contained in the Shareholders Agreement dated February 3,
1998 among the parties hereto are hereby deleted. The parties
expressly agree that, for purposes of the JDA, such agreement
shall be deemed terminated pursuant to clause (ii) of
paragraph (a) of Article V thereof, and, without limiting any
provision of paragraph (c) of Article V of the JDA, the
rights and obligations of the parties under the Note, the
Guarantee, the Security, and the provisions of the JDA
referenced therein (insofar as so referenced), without
limitation extending to the final paragraph of paragraph
(d)(i), and the provisions of paragraph (d)(ii) and (e), of
Article IV of the JDA, will survive, as modified and amended
as stipulated in sections 5 and 6 of this Agreement.
3. The JV herewith delivers to ERS the amount of U.S.$34,833.34,
by wire transfer to ERS' Account No. 9393756802 at Fleet Bank
(ABA No. 011900571), in payment of interest heretofore due
and payable on the Note through and including April 1, 1998.
The parties hereby acknowledge that payments under the Note
shall hereinafter be made by wire transfer to the foregoing
account, or in such other manner as the holder of the Note
may hereafter designate in writing to the JV.
4. ERS waives any default under the Note, the Guarantee and the
Security relating to any interest payment that would
otherwise have become due and payable under the terms of the
Note prior to the date of this Agreement, and ERS
acknowledges that the termination of the JDA as aforesaid
will not constitute an event of default within the meaning of
the Note.
5. (a) The Note, the Guarantee and the Security are collectively
amended to provide that any reference, or incorporation by
reference, to the phrase "within 180 days after the
expiration or termination of the Term" as contained in
paragraph (d)(ii) of Article IV of the JDA, shall be deemed
a reference, or incorporation by reference, as the case may
be, to "on or before October 5, 1998".
(b) The last two sentences of paragraph (d)(i) of Article IV
of the JDA are hereby deleted and shall have no further force
or effect. Clause (x) first appearing in paragraph (d)(ii) of
Article IV of the JDA is hereby deleted and shall have no
further force or effect.
(c) Paragraph (c) of Section 5.1 of the Note is hereby
amended to read as follows:
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"if default shall be made by the Joint Venture,
Telepanel or any subsidiary of Telepanel in the
performance or observance of any of the other
covenants, agreements or conditions under the
provisions of the Joint Distribution Agreement
that remain in effect (other than the provisions
of Articles IX(a) or XI thereof), or under this
Note, the Guarantee, the Security Agreement or the
Joint Venture Documentation (as defined in the
Joint Distribution Agreement), on the date which
falls 30 days thereafter;"
6. For greater certainty, there will be no liability on the part
of ERS, Telepanel or the JV under any of the Combination
Documentation for the payment of any break-up fees including,
without limitation, any Additional Amount, within the meaning
of the JDA, and any amount in respect of any ERS or Telepanel
Competing Transaction, within the meaning of the Combination
Documentation.
7. (a) ERS hereby remises, releases and forever discharges
Telepanel, the JV, and each of its and their subsidiaries,
and their respective officers, directors, employees and
shareholders, and their respective successors and assigns
(collectively, the "Telepanel Released Parties"), of and from
any and all manner of actions and causes of action, suits,
debts, dues, accounts, bonds, covenants, contracts,
controversies, agreements, promises, judgments, claims,
damages and demands whatsoever, at law or in equity, that it
has, or at any time had, or that it hereafter can, shall or
may have against the Telepanel Released Parties, and each of
them, but only to the extent they arise solely from the
Combination Agreement, regardless of when any of the
foregoing may accrue or may have accrued. For the purposes
of clarity, the foregoing release shall have no effect on, or
release, the provisions of the Note, the Guaranty or the
Security, or the provisions of the JDA not terminated as
aforesaid.
(b) Telepanel and the JV each hereby remises, releases and
forever discharges ERS, its subsidiaries and their respective
officers, directors and employees and stockholders, and their
respective successors and assigns (collectively, the "ERS
Released Parties"), of and from any and all manner of actions
and causes of action, suits, debts, dues, accounts, bonds,
covenants, contracts, controversies, agreements, promises,
judgments, claims, damages and demands whatsoever, at law or
in equity, that it has, or at any time had, or that it
hereafter can, shall or may have against the ERS Released
Parties, and each of them, but only to the extent they arise
solely from the Combination Agreement, regardless of when any
of the foregoing may accrue or may have accrued. For the
purposes of clarity, the foregoing release shall have no
effect on, or release, the provisions of the Note, the
Guaranty or the Security, or the provisions of the JDA not
terminated as aforesaid.<PAGE>
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8. This Agreement may be executed in any number of counterparts,
each of which will be an original as regards any party whose
signature appears thereon and all of which together will
constitute one and the same instrument. This Agreement will
become binding when one or more counterparts hereof,
individually or taken together, will bear the signatures of
all the parties reflected hereon as signatories.
IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS AGREEMENT WITH
EFFECT AS OF THE DATE FIRST ABOVE WRITTEN.
ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC.
By s/Norton Garfinkle
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Chairman
TELEPANEL SYSTEMS INC.
By s/Christopher Skillen
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President and Chief Executive
Officer
TELEPANEL/ERS JOINT VENTURE, INC.
By s/Christopher Skillen
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President
