SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 20, 1996
Lafayette Industries, Inc.
(Exact name of Registrant as Specified in its Charter)
Delaware 0-25384 11-3190678
State or other jurisdiction (Commission (IRS Employer
of incorporation File No.) Identification No.)
66A Otis Street, West Babylon, New York 11704
(Address of Principal Executive Office)
Registrant's telephone number, including area code: (516) 253-0808.
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Item 1. Changes in Control of Registrant.
On December 20, 1996, SIS Capital Corp. ("SISC"), a wholly-owned
subsidiary of Consolidated Technology Group Ltd. ("Consolidated"), DLB, Inc.
("DLB") and Lewis S. Schiller, the sole stockholders of SES Holdings Corp.
("SESH"), transferred all of the issued and outstanding capital stock of SESH to
the Registrant pursuant to an agreement dated as of December 20, 1996, among
SISC, DLB, Mr. Schiller and the Registrant, in exchange for shares of two
newly-created series of the Registrant's preferred stock, the Series A
Convertible Preferred Stock ("Series A Preferred Stock") and the Series B
Redeemable Preferred Stock ("Series B Preferred Stock"). SISC received 80% of
the shares of Series A Preferred Stock and all of the shares of Series B
Preferred Stock. DLB and Schiller, each of whom owned 10% of the outstanding
common stock of SESH, did not receive the shares of Series A Preferred Stock
issuable in respect of their shares of SESH common stock, but received the right
to receive, at the time the Registrant's common stock is issuable to SISC upon
conversion of its Series A Preferred Stock, the number of shares of Common Stock
which would have been issuable to them if they held the Series A Preferred Stock
issuable in respect of their shares of SESH common stock. In addition, SISC
holds a warrant to acquire, for nominal consideration, 15% of the common stock
of each of SESH's subsidiaries under certain conditions. The transaction
pursuant to which the Registrant acquired all of the outstanding capital stock
of SESH is referred to as the "SESH Transaction."
SESH's common stock was owned by SISC (80%), DLB (10%) and Mr. Schiller
(10%). DLB is owned by Ms. Carol Schiller, wife of Mr. Lewis S. Schiller, the
chairman of the board and chief executive officer of Consolidated, SISC and
SESH. Mr. Schiller disclaims beneficial interest in DLB or in any securities
owned by DLB. Mr. Schiller acquired his stock in SESH pursuant to his employment
agreement with Consolidated.
Although the Series A Preferred Stock is entitled to one vote per
share, upon the conversion of the Series A Preferred Stock, SISC, DLB and Mr.
Schiller would receive such number of shares of Common Stock as equals 65% of
the outstanding Common Stock, on a fully-diluted basis after giving effect to
the issuance of the Registrant's Common Stock upon such conversion and all
shares of the Registrant's Common Stock reserved for issuance, including shares
reserved for issuance pursuant to certain anticipated financings, including the
Regulation S financing described in "Item 9. Sales of Equity Securities Pursuant
to Regulation S." Accordingly, the issuance of the Series A Preferred Stock may,
and the issuance of the Common Stock upon conversation of the Series A Preferred
Stock is expected to, result in a change in control of the Registrant.
The Series B Preferred Stock has an aggregate redemption price of $6.75
million. The Registrant has the obligation to apply to the redemption of the
Series B Preferred Stock (a) 25% of the proceeds from the sale of equity
securities sold by the Registrant subsequent to March 1, 1997 and (b) 25% of the
amount by which the greater of (i) income before income taxes and (ii) cash flow
from operations exceeds $250,000. The redemption price of the Series B Preferred
Stock reflects the principal amount of funds advanced by SISC to SESH which were
exchanged for shares of SESH preferred stock prior to the transaction.
See "Item 2. Acquisition or Disposition of Assets" for information
relating to a change in the composition of the Company's board of directors and
"Item 4. Change in Registrant's Certifying Accountants" for information relating
to a change in the Registrant's certifying accountants.
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Item 2. Acquisition or Disposition of Assets.
Pursuant to the SESH Transaction, the Registrant acquired all of the
issued and outstanding capital stock of SESH. SESH, through its subsidiaries, is
engaged in various high-tech manufacturing businesses, including prepaid
telephone calling card dispensing machines, bill-paying kiosks, customized
vending machines, various avionic and electro-optical instruments and a leading
brand of professional speakers. Following the acquisition, the business of SESH
has become the Registrant's principal business. The Registrant's prior principal
business, which was principally the manufacture and sale of store fixtures, has
been discontinued. The Registrant's manufacturing facilities, which are located
in Mexico, have been seized by the landlord. Although the Registrant is
contesting the seizure, no assurance can be given that the Registrant can or
will be able to continue its store fixture business.
For the nine months ended September 30, 1996 and the year ended
December 31, 1995, SESH and its subsidiaries had combined revenues of $4.9
million and $6.7 million, respectively, on which they sustained net losses of
$1.2 million and $3.7 million, respectively. This financial information includes
the operations of WWR Technology, Inc. ("WWR"), a subsidiary of SESH, for such
periods although the stock of WWR was owned by SESH for only a portion of such
periods.
For the year ended December 31, 1995, the Registrant reported net sales
of $16.6 million and a net loss of $1.9 million, or $1.38 per share, of which
$1.2 million, or $.86 per share, was from discontinued subsidiaries. The
Registrant is preparing an amendment to its Form 10-QSB for the nine months
ended September 30, 1996 to reflect the discontinuation of the Mexican
subsidiary. It is anticipated that such amendment will reflect net sales for the
nine months ended September 30, 1996 of approximately $4.0 million from
continuing operations and a net loss of approximately $6.4 million, or $1.79 per
share, of which a loss of $1.6 million, or $.45 per share, is from continuing
operations and $4.8 million, or $1.34 per share, is from the discontinued
subsidiaries.
Subsequent to the completion of the transaction, in January 1997, the
Registrant's board of directors was expanded to seven, and Messrs. Lewis S.
Schiller, E. Gerald Kay, Norman J. Hoskin and Arnold Pollard were elected to the
board. In addition, Mr. Schiller was elected as chairman and chief executive
officer and Mr. James L. Conway was elected as President. Messrs. Colin Halpern,
Bernard Goldman and Robert Jessen, who were directors of the Registrant,
continue as directors of the Registrant. Messrs. Joseph A. Rubino, James Harvey
and Nancy Gillon resigned from the board.
Mr. Lewis S. Schiller is chairman of the board, chief executive officer
and a director of SESH. Mr. Schiller is chairman of the board and chief
executive officer of the Registrant. Mr. Schiller is also chairman of the board,
chief executive officer and a director of Netsmart Technologies, Inc.
("Netsmart"), a majority- owned publicly traded subsidiary of Consolidated that
markets health information systems and other network based software systems, and
Trans Global Services, Inc. ("Trans Global"), a majority-owned publicly-traded
subsidiary of SISC which is engaged in providing contract engineering services.
Mr. Schiller is also a director and chairman of the board and/or chief executive
officer of other subsidiaries of the Registrant. Mr. Schiller has held his
positions with Consolidated for more than the past five years. Mr. Schiller
devotes a significant portion of his time to the business of Consolidated and
its other subsidiaries, and he devotes only a portion of his time to the
business of SESH.
Mr. E. Gerald Kay has been chairman of the board and chief executive
officer of Chem International, Inc., a pharmaceutical manufacturer, Manhattan
Drug Co., Inc., a wholesaler of pharmaceutical products, The Vitamin Factory,
Inc., a chain of retail vitamin stores, and Connaught Press, Inc., a publisher
for more
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than the past five years. From 1988 to 1990 he was also president and a director
of The Rexall Group, Inc., a distributor of Rexall brand products. Mr. Kay was
also a director of Netsmart from 1994 until December 1996, and is a director of
Trans Global and other subsidiaries of the Registrant..
Mr. Norman J. Hoskin is chairman of Atlantic Capital Group, a financial
advisory services company, a position he has held for more than the past five
years. He is also chairman of the board and a director of Tapistron
International, Inc., a high tech manufacturer of carpeting, and is a director of
Consolidated, Netsmart, Trans Global, Aqua Care Systems, Inc., a water media
filtration and remediation company, and Spintek Gaming, Inc., a manufacturer of
gaming equipment. He is also a director of other subsidiaries of the Registrant.
Mr. Arnold Pollard is a retired executive. From 1992 to 1993, he was
president of Summit Associates, an exporter, and, from 1985 to 1992, he was
president of Best Personnel, Inc. and Best Consulting Associates, temporary and
permanent placement agencies.
Mr. James L. Conway has been president of SESH and S-Tech Corporation,
a wholly-owned subsidiary of SESH, since 1993. He is also president of Netsmart,
a position he has held since January 1996. From 1990 to 1993, he was president
of General Technologies Group, Ltd., as debtor in possession following its
filing under Chapter 11 of the Bankruptcy Act. Mr. Conway devotes approximately
50% of his time to the business of each of Netsmart and SESH. Mr. Conway is also
president and a director of Netsmart.
SESH has an agreement pursuant to which SESH is to pay a The Trinity
Group, Inc., a wholly-owned subsidiary of the Registrant, a monthly management
fee of $25,000 for the five-year period commencing January 1, 1997.
Item 4. Changes in Registrant's Certifying Accountant.
In connection with the SESH Transaction, the independent accountant for
SESH, Moore Stephens, P.C., became the independent accountants for the
Registrant. Moore Stephens, P.C. has been the independent accountant for SESH
since prior to 1993 and was appointed by the board of directors as the
Registrant's independent accountant following completion of the SESH Transaction
as the Registrants independent accountants. As a result of the SESH Transaction,
the principal business of the Registrant became the business of SESH.
Furthermore, the transaction is being accounted for as a reverse merger, with
SESH being the surviving entity. As a result, commencing with the Registrant's
Form 10-KSB for the year ended December 31, 1996, the historical financial
statements of the Registrant will be the historical financial statements of SESH
and not those of the business operated by the Registrant prior to the SESH
Transaction.
The Registrant's former accountants were Lazar, Levine & Co. There were
no disagreements with Lazar, Levine & Co., whether or not resolved, on any
matter of accounting principles or practices, financial statement disclosure or
auditing scope or procedure. The report of Lazar, Levine & Co. for the financial
statements for the year ended December 31, 1995 was included in the Registrant's
annual report on Form 10-KSB for the year ended December 31, 1994. Such report
included an explanatory paragraph concerning the ability of the Registrant to
continue as a going concern.
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Item 7. Financial Statements and Exhibits.
1. Consolidated financial statements of SES Holdings Corp.(1)
Report of Independent Certified Public Accountants
Balance Sheets
Statements of Income and Retained Earnings
Statements of Cash Flows
Notes to Combined Financial Statements
2. The pro forma financial statements of the Registrant and SESH.(1)
3.1 Agreement (the "Agreement") dated as of December 20, 1996, by and
among SIS Capital Corp., DLB, Inc., Lewis S. Schiller and Lafayette
Industries, Inc.
3.2 Exhibits to the Agreement(1)
3.3 Certificate of Designation of Lafayette Industries, Inc. setting
forth the rights, preferences and privileges of the holders of the
Series A Convertible Preferred Stock and the Series B Redeemable
Preferred Stock.
3.4 Agreement dated as of December 1, 1996, between SES Holdings Corp.
and The Trinity Group, Inc.
3.5 Form of Regulation S Subscription Agreement.(1)
(1) To be filed by amendment.
Item 9. Sales of Equity Securities Pursuant to Regulation S.
On January 21, 1997, the Registrant sold an aggregate of 4,000,000
shares of Common Stock at $.25 per share, for an aggregate of $1.0 million to
the following offshore investors pursuant to Regulation S of the Securities Act
of 1933, as amended, each of which purchased 1,000,000 shares of Common Stock
for $250,000: Unilinks Limited, Vialli Limited, Winforton Limited and Minerco
Holdings Inc. No underwriter was involved in connection with such issuances and
no brokerage or underwriting fees or commissions were paid.
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SIGNATURE
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.
LAFAYETTE INDUSTRIES, INC.
LEWIS S. SCHILLER
-----------------
Date: January 30, 1997 Lewis S. Schiller
Chairman and Chief Executive Officer
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Exhibit 3.1
SES HOLDINGS CORP.
STOCK PURCHASE AGREEMENT
dated as of December 20, 1996
by and among
LAFAYETTE INDUSTRIES, INC.
as Purchaser
and
SIS CAPITAL CORP.;
DLB, INC.; and
LEWIS S. SCHILLER
as Sellers
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TABLE OF CONTENTS
Section
ARTICLE I CERTAIN DEFINITIONS ................................. 1
1.1 Acquired Companies.................................................. 1
1.2 Closing Date ....................................................... 1
1.3 Closing Place ...................................................... 1
1.4 Contract ............................................................2
1.5 Encumbrance......................................................... 2
1.6 Legal Requirement................................................... 2
1.7 Organizational Documents............................................ 2
1.8 Subsidiaries........................................................ 2
ARTICLE II SALE AND PURCHASE OF SHARES .......................... 2
2.1 Sale of Shares...................................................... 2
2.2 Consideration ...................................................... 2
ARTICLE III THE CLOSING........................................... 3
3.1 Sellers' Closing Documents ......................................... 3
3.2 Purchaser's Closing Documents ...................................... 3
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS............. 3
4.1 Legal Authority.................................................... 3
4.2 Organization and Standing ......................................... 4
4.3 Absence of Restrictions............................................ 4
4.4 Capitalization..................................................... 4
4.5 Financial Statements .............................................. 4
4.6 No Material Adverse Change......................................... 5
4.7 Title to Assets; Encumbrances...................................... 5
4.8 Conditions of Assets............................................... 5
4.9 Real Estate Leases ................................................ 5
4.10 Contracts ......................................................... 5
4.11 No Undisclosed Liabilities......................................... 5
4.12 Litigation, Etc.................................................... 5
4.13 Taxes and Reports.................................................. 6
4.14 Compliance with Applicable Laws.................................... 6
4.15 Intangible Assets.................................................. 6
4.16 Officers, Directors and Employee Benefit Plans..................... 6
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4.17 Insurance.......................................................... 6
4.18 Books and Records.................................................. 6
4.19 Environmental and Occupational Safety Matters...................... 6
4.20 Labor Relations; Compliance........................................ 7
5.21 Subsidiaries of the Company........................................ 8
5.22 Representation of All Material Facts............................... 8
5.23 Brokers, Finders and Consultants................................... 8
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER .......... 8
5.1 Organization and Standing ......................................... 8
5.2 Authorization ..................................................... 8
5.3 Absence of Restrictions ........................................... 9
5.4 Stock Granted As Consideration..................................... 9
5.5 Brokers, Finders and Consultants .................................. 9
5.6 Capitalization .................................................... 9
5.7 Subsidiaries ...................................................... 9
5.8 Compliance with Securities Act .................................... 9
5.9 Delivery of Information to Sellers ................................ 9
5.10 Investigations; Delisting ......................................... 10
5.11 Contracts and Undertakings ........................................ 10
5.12 Accuracy and Completeness of Representations ...................... 10
5.13 Material Developments ............................................. 10
ARTICLE VI INDEMNIFICATION ...................................... 10
6.1 Survival; Right to Indemnification Not Affected by Knowledge....... 10
6.2 Indemnification and Payment of Damages by Sellers.................. 11
6.3 Indemnification and Payment of Damages by Purchaser.................12
6.4 Time Limitations....................................................12
6.5 Limitations on Amount -- Sellers....................................12
6.6 Limitations on Amount -- Purchaser..................................12
6.7 Procedures for Indemnification -- Third Party Claims................12
6.8 Procedure for Indemnification -- Other Claims.......................14
ARTICLE VII MISCELLANEOUS PROVISIONS ..............................14
7.1 Expenses............................................................14
7.2 Public Announcements................................................14
7.3 Notices ...........................................................14
7.4 Jurisdiction; Service of Process....................................15
7.5 Further Assurances..................................................15
7.6 Waiver ...........................................................15
7.7 Assignment and Bidding Effect.......................................15
7.8 Captions and Headings...............................................16
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7.9 Counterparts........................................................16
7.10 Entire Agreement....................................................16
EXHIBITS
Exhibit A Lafayette's Series A Convertible Preferred Stock
Exhibit B Lafayette's Series B Redeemable Preferred Stock
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SES HOLDINGS CORP.
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into as of this 20th day of
December, 1996, by and among Lafayette Industries, Inc., a Delaware corporation
("Purchaser"); SIS Capital Corp., a Delaware corporation ("SIS"); DLB, Inc., a
Delaware corporation ("DLB") and Lewis S. Schiller, a resident of New York
("Schiller") (SIS, DLB and Schiller are collectively referred to herein as
"Sellers" and individually as a "Seller").
W I T N E S S E T H:
WHEREAS, Sellers are the record and beneficial owners of all of the
issued and outstanding shares (the "SES Shares") of capital stock of SES
Holdings Corp., a Delaware corporation (the "Company"); and
WHEREAS, the SES Shares consist of 1,500 shares of Common Stock
("SES Common Stock") and 500 shares of Preferred Stock ("SES Preferred
Stock"); and
WHEREAS, the Company owns all of the issued and outstanding
capital stock of the following companies: S-Tech, Inc.; Sequential Electronic
Systems, Inc.; FMX Corporation; Televend, Inc. and WWR Technology, Inc.; and
WHEREAS, the Sellers desire to sell, and Purchaser desires to purchase,
the SES Shares on the terms and conditions herein contained.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, and subject to the conditions hereinafter set forth, the
parties, intending to be legally bound, hereby represent, warrant, covenant and
agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Unless otherwise stated in this Agreement, the following terms shall
have the following meanings:
1.1 Acquired Companies means the Company and its Subsidiaries (as
defined in Section 1.8), collectively.
1.2 Closing Date means the date on which this Agreement is executed,
it being the intent of the parties that there be a simultaneous execution of
this Agreement and consummation of the transaction contemplated hereby.
1.3 Closing Place means the offices of Reed Smith Shaw & McClay, 375
Park Avenue, Suite 301, New York, New York or such other place as the parties
hereto may mutually agree to in writing.
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1.4 Contract means any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding (a) under which any Acquired Company has or may acquire any
rights; (b) under which any Acquired Company has or may become subject to any
obligation or liability; or (c) by which any Acquired Company or any of the
assets owned or used by it is or may become bound.
1.5 Encumbrance means any mortgage, easement, right of way, charge,
claim, community property interest, condition, equitable interest, lien, option,
pledge, security interest, right of first refusal, or restriction or adverse
claim of any kind, including any restriction on use, voting, transfer, receipt
of income, or exercise of any other attribute of ownership, or any other
encumbrance or exception to title of any kind.
1.6 Legal Requirement means any federal, state, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, court order, consent,
decree, regulation, license, permit, statute or treaty.
1.7 Organizational Documents means (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) the certificate of organization and limited liability company
agreement of a limited liability company; (e) any charter or similar document
adopted or filed in connection with the creation, formation, or organization of
an entity; and (f) any amendment to any of the foregoing.
1.8 Subsidiaries means the following corporations: S-Tech, Inc.;
Sequential Electronic Systems, Inc.; FMX Corporation; Televend, Inc. and WWR
Technology, Inc.
ARTICLE II
SALE AND PURCHASE OF SHARES
2.1 Sale of Shares. Subject to the terms and conditions of this
Agreement, Sellers hereby sell, transfer, assign and deliver to Purchaser, and
Purchaser hereby purchases, acquires and accepts from Sellers, all of Sellers'
right, title and interest in and to the SES Shares, of which 1,500 shares of
Common Stock are owned by Sellers and 500 shares of Preferred Stock are owned by
SIS.
2.2 Consideration. The consideration for the Shares shall be: (i) One
Thousand (1,000) shares of Purchaser's Series A Convertible Preferred Stock (the
"Series A Preferred Stock"), which shall be issued in respect of the SES Common
Stock and (ii) One Thousand (1,000) shares of Purchaser's Series B Redeemable
Preferred Stock (the "Series B Preferred Stock"), which shall be issued in
respect of the SES Preferred Stock. Immediately following the Closing, the
shares of SES Preferred Stock will be cancelled by Purchaser. The terms and
conditions of the Series A Preferred Stock are attached hereto as Exhibit A and
the terms and conditions of the Series B Preferred Stock are attached hereto as
Exhibit B. Notwithstanding the foregoing, no shares of Series A Preferred Stock
shall be issued to Schiller or DLB at the Closing. In lieu of such delivery, at
such time as the Series A Preferred Stock shall be converted into Purchaser's
Common Stock as provided in said Exhibit A (or at such earlier date as Schiller
or DLB may request), Purchaser shall deliver to Schiller and DLB such
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number of shares of Purchaser's Common Stock as would be issueable upon
conversion of the shares of Series A Preferred Stock issued to them if they
received such shares at the Closing.
ARTICLE III
THE CLOSING
3.1 Sellers' Closing Documents. On the Closing Date, Sellers shall
deliver to Purchaser the following closing documents:
(a) SES Shares. Certificates representing the SES
Shares, duly endorsed (or accompanied by duly
executed stock powers) for transfer to Purchaser; and
(b) Other Documents. Such other documents, instruments
or confirmations as may be reasonably required by
Purchaser to fully effect and consummate the
transaction contemplated hereby.
3.2 Purchaser's Closing Documents. On the Closing Date,
Purchaser shall deliver to Sellers the following closing documents:
(a) The Series A Preferred Stock and Series B Preferred
Stock. Duly executed stock certificates representing
the Series A Preferred Stock and Series B Preferred
Stock, free and clear of any and all Encumbrances,
which will become effective upon Purchaser's filing
of a Certificate of Designation with the Delaware
Secretary of State within three (3) business days
after the date hereof; and
(b) Other Documents. Such other documents, instruments
or confirmations as may be reasonably required by
Sellers to fully effect and consummate the
transaction contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller represents and warrants to Purchaser that, to the best of
such Seller's knowledge (except as to Sections 4.1 and 4.4 and the first
sentence of Section 4.2 of this Agreement, as to which the representation shall
not be limited to best knowledge) as follows:
4.1 Legal Authority. SIS and DLB are corporations duly organized,
validly existing and in good standing under the laws of their respective states
of incorporation, and have the power and authority to carry on their businesses
as they are now being conducted. Each Seller has the legal capacity to execute
and deliver this Agreement, perform the covenants on their part herein
contained, consummate the transaction contemplated hereby and execute and
deliver all documents and instruments to be executed and delivered by them
pursuant hereto. When executed and delivered, this
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Agreement and all such documents and instruments will constitute valid and
binding obligations on each Seller, enforceable against them in accordance with
their respective terms.
4.2 Organization and Standing. Schedule 4.2 contains a complete and
accurate list for each Acquired Company of its full corporate name, its
jurisdiction of incorporation, all other jurisdictions in which it is authorized
to do business, and its capitalization (including the identity of each
stockholder and the number of shares held by each). Each Acquired Company is a
corporation duly organized, validly existing and in good standing under the laws
of its respective state of incorporation and has the full corporate power and
authority to carry on its business as it is now being conducted, to own or use
the properties and assets that it purports to own or use, and to perform all of
its obligations.
4.3 Absence of Restrictions. The execution and delivery of this
Agreement and the performance of or compliance with the terms and provisions of
this Agreement and all documents and instruments contemplated hereby will not
violate, conflict with, or result in a breach of, any of the terms, conditions
or provisions of the Organizational Documents of the Acquired Companies, any
Contract, and, to its knowledge Legal Requirement, or other restriction of any
kind or character to which a Seller or any of the Acquired Companies are a party
or by which any of them may be bound, and will not constitute a default
thereunder or permit acceleration of performance or result in the declaration or
imposition of an Encumbrance of any nature whatsoever upon the assets of a
Seller or any of the Acquired Companies.
4.4 Capitalization. The authorized equity securities of the Company
consist of 1,500 shares of SES Common Stock, with no par value, all of are
issued and outstanding and 500 shares of SES Preferred Stock, all of which are
outstanding. Such shares of SES Common Stock and SES Preferred Stock constitute
the SES Shares. SIS is the record and beneficial owner and holder of 1,200
shares of SES Common Stock and 500 shares of SES Preferred Stock, and Schiller
and DLB are each the owners of 150 shares of SES Common Stock, in each case free
and clear of any Encumbrances. With the exception of the SES Shares (which are
owned by the Sellers) and warrants to purchase stock in each of the
Subsidiaries, all of the outstanding equity securities and other securities of
each Acquired Company are owned of record and beneficially by one or more of the
Acquired Companies, free and clear of any Encumbrances. No legend or other
reference to any purported Encumbrance appears on any certificate representing
equity securities of an Acquired Company. All of the outstanding equity
securities of each Acquired Company have been duly authorized and validly issued
and are fully paid and nonassessable. There are no contracts relating to the
issuance, sale, or transfer of any equity securities or other securities of any
Acquired Company, except as set forth in this Paragraph 4.4. None of the
outstanding equity securities or other securities of any Acquired Company was
issued in violation of the Securities Act of 1933, as amended, or any other
Legal Requirement.
4.5 Financial Statements. Attached as Schedule 4.5 are financial
statements for the Acquired Companies for the periods set forth in such
Schedule. Such financial statements and notes fairly present the financial
condition and the results of operations, changes in stockholders' equity, and
cash flow of the Acquired Companies as of the respective dates of and for the
periods referred to in such financial statements, all in accordance with GAAP.
The financial statements referred to
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in this Section reflect the consistent application of such accounting principles
throughout the periods involved. No financial statements of any entity other
than the Acquired Companies are required by GAAP to be included in the
consolidated financial statements of the Company.
4.6 No Material Adverse Change. Since the date of the Balance Sheet,
there has not been any material adverse change in the business, operations,
properties, prospects, assets, or condition of any Acquired Company, and, to the
best of Sellers' knowledge, no event has occurred or circumstance exists that
may result in such a material adverse change.
4.7 Title to Assets; Encumbrances. Schedule 4.7 completely and
accurately lists and describes all of the material properties and assets of the
Acquired Companies, including those assets which are reflected on the Balance
Sheet and Interim Balance Sheet. The Acquired Companies have good and marketable
title to all of the properties and assets used in their businesses free and
clear of Encumbrances, except as set forth in Schedule 4.7. None of the assets
used in the business operations of the Acquired Companies are owned by the
Sellers.
4.8 Condition of Assets. All machinery, equipment, materials, supplies
and other personal property of the Company are in good operating condition and
repair, subject to normal wear and tear. The assets are sufficient for the
continued conduct of the Acquired Companies' businesses after the Closing Date
in substantially the same manner as conducted prior to the Closing Date.
4.9 Real Estate Leases. Schedule 4.9 contains a true and complete list
of all leases and subleases to the facilities used by the Acquired Companies
(the "Leases") together with complete copies thereof. Each Lease is valid,
subsisting and enforceable in accordance with its terms, and neither the
Acquired Companies nor any other party to any of the Leases is in default or in
arrears in the performance or satisfaction of any agreement or condition on its
part to be performed or satisfied under any such Lease, nor has any of the
Acquired Companies given or received any notice of any claimed default.
4.10 Contracts. Schedule 4.10 is a true and complete list of all
Contracts of the Acquired Companies together with complete copies thereof,
except for Leases and Contracts which are terminable on thirty (30) days notice
or less by an Acquired Company without penalty or premium. Each such Contract in
Schedule 4.10 is in full force and effect. The Acquired Companies have complied
in all material respects with all provisions of such Contracts and the
commitments required to be complied with by therein, and they are not in
material default under any thereof.
4.11 No Undisclosed Liabilities. The Acquired Companies have no
material liabilities or obligations of any nature except for: (a) liabilities or
obligations reflected or reserved against in the Balance Sheet or Interim
Balance Sheet, (b) current liabilities incurred in the ordinary course of
business since the date of the Balance Sheet and Interim Balance Sheet, and (c)
those liabilities and obligations set forth on Schedule 4.11.
4.12 Litigation, Etc. Except as set forth in Schedule 4.12, there are
no judgments of record, nor any litigation or administrative actions pending
against or relating to any Seller, the SES Shares or the Acquired Companies.
Sellers do not know or have reasonable grounds to know of any basis for
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any such action, or any governmental investigation, relating to the Seller, the
SES Shares or the Acquired Companies.
4.13 Taxes and Reports. Sellers and the Acquired Companies have
properly and accurately filed all federal, state and local tax returns which are
required by law to be filed and has paid all taxes due and all assessments and
notices of deficiency, if any, received with respect thereto.
4.14 Compliance with Applicable Laws. The Acquired Companies have in
effect, or applied for, any and all licenses in those states where the nature of
its businesses requires licenses. The Acquired Companies have been and are
operating in material compliance with all applicable federal, state and local
laws, ordinances and license requirements.
4.15 Intangible Assets. Schedule 4.15 contains a true and correct list
of all copyrights, trademarks, trade names, service marks, licenses, patents,
permits, privileges and other similar intangible property rights and interests
applied for, issued to or owned by the Acquired Companies. ("Intangible
Assets"). All of the Intangible Assets which are issued to or owned by the
Acquired Companies are valid and in good standing and uncontested. To the best
of Sellers' knowledge, the Company is not infringing upon or otherwise acting
adversely to any intangible property rights owned by any other parties.
4.16 Officers, Directors and Employee Benefit Plans. Schedule 4.16
contains the names of all persons who are officers and directors of the Acquired
Companies as of the date hereof, together with a statement of the full amount
paid or payable to each person for services, together with any applicable bonus
arrangements or other material compensation plan, and expenses and the basis
therefor. Except as listed, described and attached in Schedule 4.16, none of the
Acquired Companies is a party to any plans, contracts, programs or arrangements,
including, but not limited to, employment agreements and pension, profit
sharing, stock purchase, stock option, severance, hospitalization and insurance
plans, other employee benefit plans, programs or arrangements.
4.17 Insurance. All assets used in the business operations of the
Acquired Companies are fully insured and the Acquired Companies have maintained
and are maintaining adequate general liability, product liability and statutory
workmen's and unemployment compensation insurance coverage. Sellers have
furnished Purchaser in Schedule 4.17 copies all of its insurance policies. All
such insurance policies are in full force and effect and all premiums due
thereon have been paid.
4.18 Books And Records. The books of account and other corporate
records of the Acquired Companies are complete and correct, have been
consistently maintained in accordance with generally accepted accounting and
business practices and the matters contained therein are accurately reflected in
the Balance Sheet and Interim Balance Sheet, to the extent appropriate. Sellers
have furnished to Purchaser true and correct copies of the Acquired Companies'
Organizational Documents. The minute books and stock books of the Acquired
Companies have been made available to Purchaser and are correct and complete as
of the date hereof.
4.19 Environmental and Occupational Safety Matters. Except as set
forth in Schedule 4.19:
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(a) No investigations, citations, notices or complaints
relating to any Acquired Company's assets (including without limitation, any
leased property, real and personal) or the operation of any Acquired Company
have been filed, issued, commenced, to the knowledge of any of the Acquired
Companies, or threatened by governmental entities or are currently pending, nor
have any legal proceedings been commenced or, to the knowledge of any of the
Acquired Companies, are presently threatened by private parties or are currently
pending with respect to alleged violations of any rules or laws governing
environmental or occupational health and safety matters relating to an Acquired
Company's assets (including without limitation, any leased property, real and
leased) or the operation of any Acquired Company; and
(b) The Acquired Companies' assets (including without
limitation, any leased property, real and personal) and their uses are, and at
all times have been, in material compliance with, and all of the Acquired
Companies have, and at all times have been, in material compliance with, and the
Acquired Companies are, and at all times have been, in material compliance with
all laws and regulations governing environmental or occupational health and
safety matters. To the best of their knowledge, none of the Acquired Companies
are required to remove or take any other remedial action, repair, construction
or capital expenditure in order to maintain such compliance; and
(c) No hazardous or toxic materials, substances, pollutants,
contaminants or wastes, except to the extent that present laws and regulations
would not require remedial action to be taken with respect thereto, are present
on the premises at which any of the Acquired Companies are located or the
buildings thereon; and
(d) No hazardous or toxic materials, substances, pollutants,
contaminants or wastes, have been released, disposed of, discharged, spilled,
placed or applied on or below the surface of the premises on which any of the
Acquired Companies are located, except to the extent that present laws and
regulation would not restrict such release or discharge. Sellers have no
knowledge of any other information relating to any environmental or occupational
health and safety matters for or about the operation of the Acquired Company
which is not contained, or referred to, in Schedule 4.19.
4.20 Labor Relations; Compliance. Except as indicated in Schedule
4.20, no Acquired Company has been or is a party to any collective bargaining or
other labor Contract. Except as indicated in Schedule 4.20, there has not been,
there is not presently pending or existing, and to the knowledge of Sellers and
the Acquired Companies there is not threatened, (a) any strike, slowdown,
picketing, work stoppage, or employee grievance process, (b) any proceeding
against or affecting any Acquired Company relating to the alleged violation of
any Legal Requirement pertaining to labor relations or employment matters,
including any charge or complaint filed by an employee or union with the
National Labor Relations Board, the Equal Employment Opportunity Commission, or
any comparable governmental body, organizational activity, or other labor or
employment dispute against or affecting any of the Acquired Companies or their
premises, or (c) any application for certification of a collective bargaining
agent. No event has occurred or circumstance exists that could provide the basis
for any work stoppage or other labor dispute. There is no lockout of any
employees by any Acquired Company, and no such action is contemplated by any
Acquired Company. Each Acquired Company has complied in all material respects
with all Legal
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Requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closing. No Acquired Company is liable for the payment of any
compensation, damages, taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements.
4.21 Subsidiaries of the Company. Except for those entities defined in
Section 1.8 hereof, the Company: (a) has no subsidiaries; (b) does not control
any other corporation or business entity; or (c) does not own any securities or
interest of any nature in any other corporation, general or limited partnership,
business trust, limited liability company or other entity or business enterprise
of any nature. None of the Subsidiaries: (a) control any other corporation or
business entity; or (b) own any securities or interest of any nature in any
other corporation, general or limited partnership, business trust, limited
liability company or other entity or business enterprise of any nature, except
for the ownership by FMX Corporation, a Delaware corporation, of all or
substantially all of the stock of a New York corporation of a similar name.
4.22 Representation Of All Material Facts. All material facts known to
any of the Sellers relating to the businesses and financial condition of the
Company and the sale of the Shares has been disclosed in writing to Purchaser.
No statement contained in this Agreement or in any of the Schedules attached
hereto or in any document or instrument delivered or to be delivered by Sellers
pursuant hereto or in connection with the transaction contemplated hereby
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact, necessary to make the statements contained
therein not misleading. A "material fact" for purposes hereof includes such fact
or facts which would influence a reasonable man's decision to purchase or sell
the Shares.
4.23 Brokers, Finders and Consultants. Neither this Agreement nor the
transaction contemplated by this Agreement was induced or procured through any
person, firm, corporation or other entity acting on behalf of, or representing
any of the Sellers or the Company as broker, finder, investment banker,
financial advisor or any similar capacity.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Sellers that, to the best of
Purchaser's knowledge (except as to Sections 5.1, 5.2 and 5.6 of this Agreement,
as to which the representation shall not be limited to best knowledge) to the
best of its knowledge as follows:
5.1 Organization and Standing. Purchaser is a corporation duly
organized, existing and in good standing under the laws of the state of
Delaware.
5.2 Authorization. Purchaser has full power and authority to enter
into this Agreement and to perform the transaction contemplated hereby. All
necessary corporate action, including the adoption of resolutions by the Board
of Directors, has been taken by Purchaser to authorize Purchaser
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to execute this Agreement and to carry out the terms and provisions hereof. When
executed and delivered, this Agreement will constitute valid and binding
obligations of Purchaser.
5.3 Absence of Restrictions. No unwaived contract, agreement or other
instrument or condition exists which restricts or limits the Purchaser in
consummating the transaction contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby and fulfillment of the terms hereof do not conflict with and will not
result in the breach of or default, or in any occurrence which with a lapse of
time or action by a third party could result in a default, with respect to any
of the terms, conditions or provisions of any indenture, contract, agreement,
lease or other instrument by which Purchaser is bound.
5.4 Stock Granted As Consideration. The Series A Preferred Stock and
Series B Preferred Stock have been duly authorized and will be validly issued,
fully paid and nonassessable upon Purchaser filing the Certificate of
Designation with the Delaware Secretary of State within the three (3) business
days after the date hereof.
5.5 Brokers, Finders and Consultants. Neither this Agreement nor the
transaction contemplated by this Agreement was induced or procured through any
person, firm, corporation or other entity acting on behalf of, or representing
the Purchaser as broker, finder, investment banker, financial adviser or in any
similar capacity.
5.6 Capitalization. The duly authorized capital stock of Purchaser
consists of 20,000,000 shares of which 5,489,918 shares of Common Stock are
issued and outstanding. All of such shares are duly authorized, validly issued,
fully paid and nonassessable. Except as set forth on Schedule 5.6, there are no
other securities of Purchaser or of any other entity convertible into capital
stock of Purchaser, and there are no options, calls, warrants or rights of any
character whatsoever or any agreement to grant the same to purchase or to
otherwise acquire from Purchaser any shares of its capital stock.
5.7 Subsidiaries. Except as disclosed on the attached Schedule 5.7,
Purchaser (a) has no subsidiaries; (b) does not control any other corporation or
business entity; or (c) does not own any securities or interest of any nature in
any other corporation, general or limited partnership, business trust, limited
liability company or other entity or business enterprise of any nature.
5.8 Compliance with Securities Act. To the best of Purchaser's
knowledge, sales of Purchaser's shares of Common Stock and other securities to
its shareholders prior to the date of this Agreement were made either pursuant
to valid exemptions from the registration requirements of the Securities Act of
1933, as amended (the "1933 Act"), or pursuant to effective registration
statements. To the best of Purchaser's knowledge, no proceedings for a stop
order have been instituted, are pending, or are threatened, and no grounds exist
for the suspension of any of Purchaser's registration statements.
5.9 Delivery of Information to Sellers. To the best of Purchaser's
knowledge, all of Purchaser's documents that were at any time filed with the
Securities and Exchange Commission including, without limitation, any
registration statements, any Quarterly Reports on Form 10-QSB,
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Annual Reports on Form 10-KSB, and all Form 8-K filings ("Public Filings"), were
properly filed, materially comply with the requirements of the 1933 Act and the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder with respect to such registration statements and reports
and did not contain any untrue statement of a material fact or fail to state any
material fact required to be stated therein or necessary to make the statements
made therein not misleading.
5.10 Investigations; Delisting. To the best of Purchaser's knowledge,
there is not pending or threatened any investigation of Purchaser by Nasdaq, the
Securities and Exchange Commission or any state securities commission. Except as
set forth on Schedule 5.10, there has been no formal written notice that
Purchaser's securities are being reviewed for delisting by Nasdaq or that
trading may be suspended by any state.
5.11 Contracts and Undertakings. To the best of Purchaser's knowledge,
other than this Agreement, there are no material contracts, agreements, leases,
licenses, arrangements, commitments and undertakings to which Purchaser is a
party or by which it or its property is bound, except as described in the Public
Filings. Each of such contracts, agreements, leases, licenses, arrangements,
commitments and undertakings is valid, binding and in full force and effect.
Purchaser is not in material default, or, to its knowledge, alleged to be in
material default, under any contract, agreement, lease, license, commitment,
instrument or obligation ant to the knowledge of Purchaser, no other party to
any contract, agreement, lease, license, commitment, instrument or obligation to
which Purchaser is a party is in default thereunder nor, to the knowledge of
Purchaser, does there exist any condition or event which, after notice or lapse
of time or both, would constitute a default by any party to any such contract,
agreement, lease, license, commitment, instrument or obligation, except as
described in the Public Filings.
5.12 Accuracy and Completeness of Representations. To the best of
Purchaser's knowledge, it has disclosed to Sellers all facts material to the
properties, assets, liabilities and business of Purchaser. No representation or
warranty by the Purchaser to Sellers in this Agreement, or in any statement,
certificate, schedule or other document furnished to Purchaser pursuant hereto
or in connection with the transactions contemplated hereby is false or
inaccurate in any material respect or contains any untrue statement of a
material fact or omits to state any fact necessary to make the statements
contained herein or therein no misleading.
5.13 Material Developments. To the best of Purchaser's knowledge, no
events have occurred since the last Public Filing that would be required to be
disclosed in a Public Filing, if such Public Filing had been due for filing on
the date hereof.
ARTICLE VI
INDEMNIFICATION
6.1 Survival; Right to Indemnification Not Affected by Knowledge. All
representations, warranties, covenants, and obligations in this Agreement will
survive the Closing. The right to indemnification, payment of damages or other
remedy based on such representations,
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warranties, covenants, and obligations will not be affected by any investigation
conducted with respect to, or any knowledge acquired (or capable of being
acquired) at any time, whether before or after the execution and delivery of
this Agreement or the Closing Date, with respect to the accuracy or inaccuracy
of or compliance with, any such representation, warranty, covenant, or
obligation. The waiver of any condition based on the accuracy of any
representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification, payment of
damages, or other remedy based on such representations, warranties, covenants,
and obligations.
6.2 Indemnification and Payment of Damages by Sellers. Sellers will
indemnify and hold harmless Purchaser and the Acquired Companies (collectively,
the "Indemnified Persons") for, and will pay to the Indemnified Persons the
amount of, any loss, liability, claim, damage (including incidental and
consequential damages), expense (including costs of investigation and defense
and reasonable attorneys' fees) or diminution of value, whether or not involving
a third-party claim (collectively, "Damages"), arising, directly or indirectly,
from or in connection with:
(a) any material breach of any representation or warranty
made by a Seller in this Agreement;
(b) any material breach by a Seller of any covenant or
obligation in this Agreement;
(c) any product shipped or manufactured by, or any services
provided by, any Acquired Company prior to the Closing Date;
(d) any environmental, health, and safety liabilities arising
out of or relating to: (i) (A) the ownership, operation, or
condition at any time on or prior to the Closing Date of the
properties and assets (whether real, personal, or mixed and
whether tangible or intangible) in which a Seller or any
Acquired Company has or had an interest, or (B) any hazardous
materials or other contaminants that were present on the
properties and assets at any time on or prior to the Closing
Date; or (ii) (A) any hazardous materials or other
contaminants, wherever located, that were, or were allegedly,
generated, transported, stored, treated, released, or
otherwise handled by a Seller or any Acquired Company or by
any other entity for whose conduct they are or may be held
responsible at any time on or prior to the Closing Date, or
(B) any hazardous activities that were, or were allegedly,
conducted by a Seller or any Acquired Company or by any other
entity for whose conduct they are or may be held responsible;
(e) any release of hazardous material or any violation of any
environmental law on or prior to the Closing Date by a Seller,
an Acquired Company or any other person or entity for whose
conduct they are or may be held liable; or
(f) any claim by any person or entity for brokerage or
finder's fees or commissions or similar payments based upon
any agreement or understanding alleged to
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have been made by any such person or entity with a Seller or
any Acquired Company in connection with any of the
transactions contemplated by this Agreement.
The remedies provided in this Section 6.2 will not be exclusive of or limit any
other remedies that may be available to Purchaser or the other Indemnified
Persons.
6.3 Indemnification and Payment of Damages by Purchaser. Purchaser
will indemnify and hold harmless Sellers, and will pay to Sellers the amount of
any Damages arising, directly or indirectly, from or in connection with (a) any
material breach of any representation or warranty made by Purchaser in this
Agreement or in any certificate delivered by Purchaser pursuant to this
Agreement, (b) any material breach by Purchaser of any covenant or obligation of
Purchaser in this Agreement, or (c) any claim by any person or entity for
brokerage or finder's fees or commissions or similar payments based upon any
agreement or understanding alleged to have been made by such person or entity
with Purchaser in connection with any of the transactions contemplated by this
Agreement.
6.4 Time Limitations. Sellers will have no liability (for
indemnification or otherwise) with respect to any representation or warranty, or
covenant or obligation to be performed and complied with prior to the Closing
Date, other than those in Sections 4.4, unless on or before the completion of
Purchaser's audited financial statements for fiscal year ending December 31,
1997 Purchaser notifies Sellers of a claim specifying the factual basis of that
claim in reasonable detail to the extent then known by Purchaser; a claim with
respect to Section 4.4, or a claim for indemnification or reimbursement not
based upon any representation or warranty or any covenant or obligation to be
performed and complied with prior to the Closing Date, may be made at any time.
Purchaser will have no liability (for indemnification or otherwise) with respect
to any representation or warranty, or covenant or obligation to be performed and
complied with prior to the Closing Date, unless on or before December 31, 1998
Sellers notify Purchaser of a claim specifying the factual basis of that claim
in reasonable detail to the extent then known by Sellers.
6.5 Limitations on Amount -- Sellers. Sellers will have no liability
(for indemnification or otherwise) with respect to the matters described in
Section 6.1 until the total of all Damages exceeds $500,000, and the total
liability shall be the amount by which such damages exceed $500,000.
6.6 Limitations on Amount -- Purchaser. Purchaser will have no
liability (for indemnification or otherwise) with respect to the matters
described in Section 6.3 until the total of all Damages with respect to such
matters exceeds $500,000, and the total liability shall be the amount by which
such Damages exceed $500,000.
6.7 Procedures for Indemnification -- Third Party Claims.
(a) Promptly after receipt by an indemnified party under
Section 6.2 or 6.3 of notice of the commencement of any proceeding
against it, such indemnified party will, if a claim is to be made
against an indemnifying party under such Section, give notice to the
indemnifying party of the commencement of such claim, but the failure
to notify the
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indemnifying party will not relieve the indemnifying party of any
liability that it may have to any indemnified party, except to the
extent that the indemnifying party demonstrates that the defense of
such action is prejudiced by the indemnifying party's failure to give
such notice.
(b) If any proceeding referred to in Section 6.7(a) is
brought against an indemnified party and it gives notice to the
indemnifying party of the commencement of such proceeding, the
indemnifying party will, unless the claim involves Taxes, be entitled
to participate in such proceeding and, to the extent that it wishes
(unless (i) the indemnifying party is also a party to such proceeding
and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party
fails to provide reasonable assurance to the indemnified party of its
financial capacity to defend such proceeding and provide
indemnification with respect to such proceeding), to assume the defense
of such Proceeding with counsel satisfactory to the indemnified party
and, after notice from the indemnifying party to the indemnified party
of its election to assume the defense of such Proceeding, the
indemnifying party will not, as long as it diligently conducts such
defense, be liable to the indemnified party under this Article VI for
any fees of other counsel or any other expenses with respect to the
defense of such proceeding, in each case subsequently incurred by the
indemnified party in connection with the defense of such proceeding,
other than reasonable costs of investigation. If the indemnifying party
assumes the defense of a proceeding, (i) it will be conclusively
established for purposes of this Agreement that the claims made in that
proceeding are within the scope of and subject to indemnification; (ii)
no compromise or settlement of such claims may be effected by the
indemnifying party without the indemnified party's consent unless (A)
there is no finding or admission of any violation of Legal Requirements
or any violation of the rights of any Person and no effect on any other
claims that may be made against the indemnified party, and (B) the sole
relief provided is monetary damages that are paid in full by the
indemnifying party; and (iii) the indemnified party will have no
liability with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to an indemnifying
party of the commencement of any proceeding and the indemnifying party
does not, within ten days after the indemnified party's notice is
given, give notice to the indemnified party of its election to assume
the defense of such proceeding, the indemnifying party will be bound by
any determination made in such proceeding or any compromise or
settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
proceeding may adversely affect it or its affiliates other than as a
result of monetary damages for which it would be entitled to
indemnification under this Agreement, the indemnified party may, by
notice to the indemnifying party, assume the exclusive right to defend,
compromise, or settle such proceeding, but the indemnifying party will
not be bound by any determination of a proceeding so defended or any
compromise or settlement effected without its consent (which may not be
unreasonably withheld).
(d) Each Seller hereby consents to the non-exclusive
jurisdiction of any court in which a proceeding is brought against any
Indemnified Person for purposes of any claim that
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an Indemnified Person may have under this Agreement with respect to
such proceeding or the matters alleged therein, and agree that process
may be served on Sellers with respect to such a claim anywhere in the
world.
6.8 Procedure for Indemnification -- Other Claims. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
ARTICLE VII
MISCELLANEOUS PROVISIONS
7.1 Expenses. Purchaser shall pay the reasonable expenses of each
party provided that the transaction shall be consummated. In the event that the
transaction fails to be completed, each of the parties to this Agreement shall
be responsible and liable for its own expenses incurred in connection with this
Agreement and the transactions contemplated by this Agreement.
7.2 Public Announcements. Any public announcement or similar publicity
with respect to this Agreement will be issued, if at all, at such time and in
such manner as Purchaser and Sellers mutually shall determine. Sellers and
Purchaser will consult with each other concerning the means by which the
Acquired Companies' employees, customers, and suppliers and others having
dealings with the Acquired Companies will be informed of the transactions
contemplated by this Agreement, and Purchaser will have the right to be present
for any such communication.
7.3 Notices. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by registered or certified mail, return receipt requested, or (c) when
received by the addressee, if sent by a nationally recognized overnight delivery
service (receipt requested), in each case to the appropriate addresses and
telecopier numbers set forth below (or to such other addresses and telecopier
numbers as a party may designate by notice to the other parties):
If any Seller: c/o SIS Capital Corp.
Attn: Mr. Lewis S. Schiller
160 Broadway, 9th Floor
New York, New York 10038
With a copy to: Heller Horowitz & Feit, P.C.
292 Madison Avenue
New York, NY 10017
Attn: Louis A. Brilleman, Esq.
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If to Purchaser: Lafayette Industries, Inc.
140 Hinsdale Street
Brooklyn, New York 11207
With a copy to: Reed Smith Shaw & McClay
1301 K Street, N.W.
Suite 1100 - East Tower
Washington, D.C. 20036
Attn: Jay L. Halpern, Esq.
Any such notice, or any payment required hereunder, shall be deemed to have been
received on the date of delivery, if delivered personally, or three (3) business
days following deposit in the mail, if mailed.
7.4 Jurisdiction; Service of Process. Any action or proceeding seeking
to enforce any provision of, or based on any right arising out of, this
Agreement may be brought against any of the parties in the courts of the State
of New York or, if it has or can acquire jurisdiction, in the United States
District Court for the Southern District of New York, and each of the parties
consents to the jurisdiction of such courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection to venue laid
therein. Process in any action or proceeding referred to in the preceding
sentence may be served on any party anywhere in the world.
7.5 Further Assurances. The parties agree (a) to furnish upon request
to each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
7.6 Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
7.7 Assignment and Binding Effect. This Agreement shall not be
assignable without the prior written consent of the other party hereto. This
Agreement shall bind and inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, successors, and assigns.
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7.8 Captions and Headings. The captions and headings contained herein
are inserted for convenient reference only, are not a part hereof and the same
shall not limit or construe the provisions to which they apply.
7.9 Counterparts. This Agreement may be executed by facsimile
transmission in multiple copies, each of which shall be deemed an original.
7.10 Entire Agreement. This Agreement contains the entire
understanding between the parties hereto with respect to the transactions
contemplated hereby, and it may not be amended, modified, or altered except by
an instrument in writing signed by the party to be charged.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
ATTEST: SIS Capital Corp., Inc.
____________________________ By:___________________________
Name:
Its:
ATTEST: DLB, Inc.
____________________________ By:___________________________
Name:
Its:
WITNESS: Lewis S. Schiller:
____________________________ By:___________________________
ATTEST: Lafayette Industries, Inc.
____________________________ By:___________________________
Name:
Its:
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<PAGE>
Exhibit 3.3
CERTIFICATE OF DESIGNATION
OF
LAFAYETTE INDUSTRIES, INC.
Class A Convertible Preferred Stock and
Class B Redeemable Preferred Stock
Pursuant to Section 151(g) of the Delaware General Corporation Law,
Lafayette Industries, Inc., a Delaware corporation (the "Corporation"), does
hereby certify as follows:
1. The following resolution was duly adopted by the Board of
Directors of the Corporation on December 20, 1996:
RESOLVED, that pursuant to Article IV of the Certificate of
Incorporation of this Corporation, there be created from the capital
stock, par value $.01 per share, two classes of capital stock as
follows: (a) a class consisting of one thousand (1,000) shares, to be
designated as the Class A Convertible Preferred Stock ("Class A
Preferred Stock"), the holders of such shares to have the rights,
preferences and privileges set forth in the Statement of Designation
attached as Exhibit A to this Resolution, and (b) a class consisting of
one thousand (1,000) shares, to be designated as the Class B Redeemable
Preferred Stock ("Class B Preferred Stock"), the holders of such shares
to have the rights, preferences and privileges set forth in the
Statement of Designation attached as Exhibit B to this Resolution; and
be it further
RESOLVED, that the officers of this Corporation be, and they
hereby are, authorized and empowered to execute and file with the
Secretary of State of the State of Delaware, a certificate of
designation setting forth the rights, preferences and privileges of the
holders of the Class A Preferred Stock and Class B Preferred Stock.
2. Set forth as Exhibits to this Certificate of Designation are
true and correct copies of Exhibits A and B to the resolution duly adopted by
the Board of Directors of the Corporation on December 20, 1996, setting forth
the rights, preferences and privileges of the holders of the Class A Preferred
Stock and Class B Preferred Stock, respectively.
IN WITNESS WHEREOF, Lafayette Industries, Inc. has caused this
certificate to be signed by the chairman of the board and attested by its
secretary this day of January, 1997.
By:________________________________________
ATTEST: Lewis S. Schiller, Chairman of the Board
__________________________
Grazyna B. Wnuk, Secretary
<PAGE>
Exhibit A
STATEMENT OF DESIGNATION
The designation of, the number of shares constituting, and the rights,
preferences, privileges and restrictions relating to, the Class A Convertible
Preferred Stock are as follows:
1. Designation and Number of Shares. The designation of this
class of one thousand (1,000) shares of capital stock, par value $.01 per share,
created by the Board of Directors of the Corporation pursuant to the authority
granted to it by the certificate of incorporation of the Corporation is "Class A
Convertible Preferred Stock," which is hereinafter referred to as the "Class A
Preferred Stock." In the event that the Corporation does not issue the maximum
number of shares of Class A Preferred Stock or in the event of the conversion of
shares of Class A Preferred Stock into this Corporation's common stock, par
value $.01 per share ("Common Stock"), pursuant to Paragraph 4 of this Statement
of Designation, or in the event that the Corporation shall acquire (whether by
purchase, redemption or otherwise) and cancel any shares of Class A Preferred
Stock, the Corporation may, from time to time, by resolution of the Board of
Directors, reduce the number of shares of Class A Preferred Stock authorized,
provided, that no such reduction shall reduce the number of authorized shares to
a number which is less than the number of shares of Class A Preferred Stock then
issued or reserved for issuance. The number of shares by which the Class A
Preferred Stock is reduced shall have the status of authorized but unissued
shares of capital stock, or, if the Corporation's certificate of incorporation
shall provide for preferred stock, unissued shares of preferred stock, in either
case without designation as to class or series until such stock is once more
designated as part of a particular class or series by the Corporation's Board of
Directors. The Class A Preferred Stock shall be on a parity with the Class B
Redeemable Preferred Stock as to dividends and upon liquidation, dissolution and
winding up.
2. Dividend Rights.
(a) (i) The holders of the Class A Preferred Stock shall be
entitled to receive, when and as declared by the Board of Directors, out of
funds of this Corporation legally available therefor or as otherwise provided in
this Statement of Designation, annual dividends at the rate of one hundred and
00/100 dollars ($100.00) per share of Class A Preferred Stock, subject to the
provisions of Paragraph 2(c) of this Statement of Designation. Such dividends,
to the extent declared, shall be payable in equal semiannual instalments of
fifty and 00/100 dollars ($50.00) on the first day of July and the first day of
January (the first day of July and the first day of January of any particular
year each referred to as a "Dividend Payment Date"), commencing July 1, 1997, to
the holders of record on the preceding June 15 and December 15, respectively.
Each six-month period ending on the date immediately prior to a Dividend Payment
Date is referred to as a "dividend period." Dividends on the Class A Preferred
Stock are non-cumulative, and no holder of Class A Preferred Stock shall be
entitled to any dividends for any dividend period unless a dividend for such
dividend period shall have been declared by the Board of Directors on or prior
to the last day of such dividend period. To the extent declared, dividends shall
be payable at the option of the Corporation either in cash or in shares of
Common Stock.
(ii) If the Board of Directors determines to make payment
in shares of Common Stock, the number of shares constituting such payment shall
be determined by dividing the dividend payable per share of Common Stock by the
value of one share of Common Stock. No fractional shares shall be issued, the
Corporation shall pay cash equal to the value of any fractional shares which
would otherwise be payable. The value per share of Common Stock, for purposes of
determining the number of shares of Common Stock to be issued in payment of the
dividend and the amount payable with respect to any fractional shares shall be
determined as follows. If the Common Stock is listed on the New York or American
Stock Exchange or
<PAGE>
admitted to unlisted trading privileges on either of such exchanges or is traded
on The Nasdaq Stock Market or other automated quotation system which provides
information as to the last sale price, the value shall be the average of the
reported last sale price of one share of Common Stock on such exchange or market
for the five trading days preceding the record date for determining holders of
Class A Preferred Stock entitled to dividends, or if no such sale is made on any
of such days, the average of the closing bid and asked prices for such day on
such exchange or market shall be used. If the Common Stock is not so listed or
admitted to unlisted trading privileges, the value shall be the average of the
mean of the reported last bid and asked prices of one share of Common Stock as
reported by Nasdaq or the National Quotation Bureau, Inc. or other similar
reporting service selected by the Company's board of directors, for such five
trading day period. If the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and asked prices are not so reported, the value of
one share of Common Stock shall be an amount, not less than book value,
determined in such reasonable manner as may be prescribed by the Board of
Directors.
(b) Any dividend or distribution which is part of the
liquidation, dissolution or winding up of the Corporation shall be governed by
the provisions of Paragraph 6 of this Statement of Designation and not by this
Paragraph 2.
(c) As long as any shares of Class A Preferred Stock are
outstanding, no dividends (other than a dividend consisting of shares of any
series or class of capital stock ranking junior to Class A Preferred Stock as to
both dividends and payments in the event of voluntary or involuntary
dissolution, liquidation or winding up), shall be declared or paid or set aside
for payment and no other distribution shall be declared or made upon any such
junior series or class of capital stock ranking junior to Class A Preferred
Stock as to both dividends and payments in the event of voluntary or involuntary
dissolution, liquidation or winding up, and no such junior series or class of
capital stock or any class or series of Preferred Stock on a parity with Class A
Preferred Stock as to both dividends and payments in the event of voluntary and
involuntary dissolution, liquidation or winding up shall be redeemed, purchased
or otherwise acquired for any consideration by the Corporation or by any
subsidiary (which shall mean any corporation or entity, the majority of voting
power to elect directors of which is held directly or indirectly by the
Corporation), except by conversion into or exchange for any such junior series
or class of capital stock; unless, in each case, (i) the dividends on the Class
A Preferred Stock for the dividend period during which the record date for such
other series or class of capital stock occurs shall have been declared by the
Board of Directors and paid or payment shall have been provided for or (ii) the
holders of a majority of the shares of Class A Preferred Stock then outstanding
shall consent thereto. If dividends are declared with respect to the Class A
Preferred stock and such declared dividends are not paid in full upon the shares
of Class A Preferred Stock and any other class or series of capital stock
ranking on a parity as to dividends with the Class A Preferred Stock, all
dividends declared upon shares of Class A Preferred Stock and such other class
or series of capital stock shall be declared pro rata so that the amount of
dividends declared per share on the Class A Preferred Stock and all such other
classes or series of capital stock ranking on a parity as to dividends with the
Class A Preferred Stock shall in all cases bear to each other the same ratio
that the accrued dividends per share on the shares of Class A Preferred Stock
and such other class or series of capital stock bear to each other. Holders of
shares of Class A Preferred Stock shall not be entitled to dividends thereon,
whether payable in cash, property or stock, in excess of the total amount of
dividends previously declared by the Board of Directors thereon, as provided in
this Statement of Designation. No dividend on Class A Preferred Stock shall be
declared or paid or set apart for payment with respect to any dividend payment
date unless full dividends, including accumulated dividends, if any, on any
series or class of capital stock ranking, as to dividends, prior to Class A
Preferred Stock which are to have been paid on or prior to such dividend payment
date have been or contemporaneously are declared and paid or declared and a
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<PAGE>
sum sufficient for payment thereof has been set aside for all dividend periods
for such series or class terminating on or prior to such dividend payment date.
(d) No dividends shall be deemed to "accrue" on any share of
Class A Preferred Stock at any dividend payment date unless such dividend shall
have been declared by the Board of Directors prior to such dividend payment
date.
3. Voting Rights.
(a) Except as otherwise required by law and the rights of any
holders of any class or series of capital stock hereafter created by the Board
of Directors pursuant to the Certificate of Incorporation of this Corporation,
the holders of shares of Class A Preferred Stock shall vote together with the
Common Stock, as if the Common Stock and the Class A Preferred Stock were a
single class, with the holders of the Class A Preferred Stock having one (1)
vote per share of Class A Preferred Stock.
(b) In addition to the voting rights set forth in Paragraph
3(a) of this Statement of Designation, the holders of the Class A Preferred
Stock shall have the right, voting as a single class, to elect one director of
the Corporation.
(c) In the event that, pursuant to applicable law or Paragraph
3(b) of this Statement of Designation, the holders of the Class A Preferred
Stock are required to vote as a single class, separate and apart from the Common
Stock, each holder of Class A Preferred Stock shall be entitled to one vote per
share of Class A Preferred Stock on such matters.
(d) The Corporation is not restricted from creating other
classes or series of Preferred Stock which may be senior or junior to or on a
parity with the Class A Preferred Stock as to dividends and/or on the voluntary
or involuntary dissolution, liquidation or winding up of the Corporation without
the consent of the holders of the Class A Preferred Stock.
4. Automatic Conversion into Common Stock.
(a) Each share of Class A Preferred Stock will, without any
action on the part of the holder thereof, automatically become and be converted
into shares of Common Stock at the conversion rate hereinafter defined (the
"Conversion Rate") upon the later to occur of (i) February 19, 1997 or (ii) the
date of the filing of a Certificate of Amendment to the Certificate of
Incorporation of the Corporation increasing the number of authorized shares of
Common Stock to at least eighty million (80,000,000) shares (the "Certificate of
Amendment"), such number of shares being subject to adjustment in the event of
any combination of shares or reverse split of the Common Stock of the
Corporation. The date on which the shares of Class A Preferred Stock are
converted is referred to as the "conversion date."
(b) The Conversion Rate shall mean the number of shares of
Common Stock issuable upon conversion of one (1) share of Class A Preferred
Stock. The Conversion Rate shall be such number of shares of Common Stock as is
determined by multiplying the Fully Diluted Number of Shares by
thirteen-sevenths (13/7) and dividing the result by one thousand (1,000). The
Fully Diluted Number of Shares shall mean the total of (i) all shares of Common
Stock which are issued and outstanding, plus (ii) all shares of Common Stock
that are issuable upon exercise or conversion of all outstanding options,
warrants, convertible notes, debentures or other evidences of indebtedness,
convertible Preferred Stock (other than the Class A Preferred Stock) or
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<PAGE>
other convertible securities, plus (iii) all shares of Common Stock issuable
pursuant to any stock option or purchase or incentive plan which were not
included in clause (ii), plus (iv) all shares of Common Stock issuable pursuant
to any agreements or understandings, regardless of whether such issuance is
subject to conditions or contingencies, plus (v) all shares of Common Stock
which are otherwise reserved for issuance.
(c) Upon conversion of the Class A Preferred Stock pursuant to
Paragraph (4)(a) of this Statement of Designations, each share of Class A
Preferred Stock shall automatically, and without any action on the part of the
holder, become and be converted into shares of Common Stock, each certificate
representing such shares of Class A Preferred Stock shall be deemed to represent
the number of shares of Common Stock into which the number of shares of Class A
Preferred Stock previously represented by such certificate have been converted
and the Corporation shall so advise each holder of Class A Preferred Stock,
provided, that the failure to so advise the holders shall not have any effect
upon the automatic conversion of the Class A Preferred Stock. As promptly as
practicable on or after the conversion date, the Corporation or its transfer
agent shall issue and shall deliver a certificate or certificates representing
in the aggregate the total number of shares of Common Stock issuable upon such
conversion to the person or persons entitled to receive the same; provided, that
delivery of a certificate shall be deferred until receipt by the Corporation of
the certificate for the shares of Class A Preferred Stock being converted. If,
on the conversion date, there shall be declared but unpaid dividends on the
Class A Preferred Stock and the record date for such dividends shall precede the
conversion date, the Corporation shall, on the payment date for such dividends,
pay to the holder of the Class A Preferred Stock on the record date the amount
of such unpaid dividends; provided, however, that no dividends shall be paid,
whether or not declared, if the record date for such dividends shall occur after
the conversion date. The Corporation may retain, and not distribute to the
holders of Class A Preferred Stock which shall have been converted into Common
Stock, any dividends or distributions payable to the holders of Common Stock of
record on a date subsequent to the date of such conversion until the Corporation
shall have received the certificates representing the shares of Class A
Preferred Stock so converted. No fractional shares of Common Stock shall be
issued. If any fractional shares of Common Stock are issuable to any holder of
shares of Class A Preferred Stock pursuant to this Paragraph 4(c), the number of
shares shall be rounded up to the next higher whole number of shares.
(d) The Common Stock issuable upon conversion of the Class A
Preferred Stock shall, when so issued, be duly and validly authorized and
issued, fully paid and nonassessable.
5. Redemption. The Class A Preferred Stock may not be redeemed
by the Corporation.
6. Liquidation Rights.
(a) (i) In the event of the liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, holders of the
Class A Preferred Stock shall be entitled to receive one hundred and 00/100
dollars ($100.00) per share, plus declared and unpaid dividends, before any
payment or distribution upon dissolution, liquidation or winding up shall be
made on any series or class of capital stock ranking junior to Class A Preferred
Stock as to such payment or distribution, and after all such payments or
distributions have been made on any series or class of capital stock ranking
senior to the Class A Preferred Stock as to such payment or distribution.
(ii) After payment of the preference set forth in
Paragraph 6(a)(i) of this Statement of Designation, the holders of the Class A
Preferred Stock shall have no further rights on liquidation, dissolution or
winding up.
- 4 -
<PAGE>
(b) The sale, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all or substantially all
of the property and assets of the Corporation shall be deemed a voluntary
dissolution, liquidation or winding up of the Corporation for purposes of this
Paragraph 6, except that the merger or consolidation of the Corporation into any
other corporation or the sale by the Corporation of all or substantially all of
its assets shall not be deemed to be a dissolution, liquidation or winding up,
voluntary or involuntary, for the purposes of this Paragraph 6 if either (i) the
holders of all shares of Class A Preferred Stock outstanding upon the
effectiveness of such merger or consolidation shall have the right, upon such
effectiveness, to receive for each share of Class A Preferred Stock held by them
upon such effectiveness, one share of preferred stock of the resulting or
surviving corporation or purchaser or the parent of any such corporation, which
shares shall have, to the extent practicable, dividend and voting rights and
rights upon dissolution, liquidation or winding up reasonably equivalent to
those of such shares of Class A Preferred Stock, (ii) each holder of the shares
of Class A Preferred Stock shall be entitled to receive upon the effectiveness
of such merger or consolidation in exchange for such holder's shares of Class A
Preferred Stock the number of shares of stock or other securities or property
receivable upon such merger or consolidation, as the case may be, as such holder
would have received had it converted its Class A Preferred Stock into Common
Stock immediately prior to such merger or consolidation, or (iii) the merger,
consolidation or sale or other transaction was approved by the holders of a
majority of the shares of Class A Preferred Stock then outstanding either at a
meeting of such stockholders or by a written consent in lieu of a meeting. Any
merger in which the Corporation shall be the surviving corporation shall not be
deemed a dissolution, liquidation or winding up of the Corporation.
(c) In the event the assets of the Corporation available for
distribution to the holders of shares of Class A Preferred Stock upon
dissolution, liquidation or winding up of the Corporation, whether voluntary or
involuntary, shall be insufficient to pay in full all amounts to which such
holders are entitled pursuant to Paragraph 6(a)(i) of this Statement of
Designation, no such distribution shall be made on account of any shares of any
other class or series of capital stock of the Corporation ranking on a parity
with the shares of Class A Preferred Stock upon such dissolution, liquidation or
winding up unless proportionate distributive amounts shall be paid on account of
the shares of Class A Preferred Stock, ratably, in proportion to the full
distributable amounts for which holders of all such parity shares are
respectively entitled upon such dissolution, liquidation or winding up.
7. Rank of Class or Series. For purposes of this Statement of
Designation, any stock of any class or series of the Corporation shall be deemed
to rank:
(a) prior to the shares of Class A Preferred Stock, as to
dividends or upon liquidation, dissolution or winding up, as the case may be, if
the holders of such class or classes shall be entitled to the receipt of
dividends or of amounts distributable upon dissolution, liquidation or winding
up of the Corporation, as the case may be, in preference or priority to the
holders of shares of Class A Preferred Stock;
(b) on a parity with shares of Class A Preferred Stock, as to
dividends or upon liquidation, dissolution or winding up, as the case may be,
whether or not the dividend rates, dividend payment dates or redemption or
liquidation prices per share or sinking fund provisions, if any, be different
from those of Class A Preferred Stock, if the holders of such stock shall be
entitled to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case may be,
in proportion to their respective dividend rates or liquidation prices, without
preference or priority, one over the other, as between the holders of such stock
and the holders of shares of Class A Preferred Stock;
- 5 -
<PAGE>
(c) junior to shares of Class A Preferred Stock as to
dividends or upon liquidation, dissolution or winding up, as the case may be, if
such class shall be Common Stock or if the holders of shares of Class A
Preferred Stock shall be entitled to receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the Corporation, as
the case may be, in preference or priority to the holders of shares of such
class or classes.
8. No Preemptive Rights. No holder of the Class A Preferred Stock
shall, as such holder, be entitled as of right to purchase or subscribe for any
shares of stock of the Corporation of any class or any series now or hereafter
authorized or any securities convertible into or exchangeable for any shares, or
any warrants, options, rights or other instruments evidencing rights to
subscribe for or purchase any such shares, whether such shares, securities,
warrants, options, rights or other instruments be unissued or issued and
thereafter acquired by the Corporation.
9. Transfer Agent and Registrar. The Corporation may appoint a
transfer agent and registrar for the issuance, transfer and conversion of the
Class A Preferred Stock and for the payment of dividends to the holders of the
Class A Preferred Stock.
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<PAGE>
Exhibit B
STATEMENT OF DESIGNATION
The designation of, the number of shares constituting, and the rights,
preferences, privileges and restrictions relating to, the Class B Redeemable
Preferred Stock are as follows:
1. Designation and Number of Shares. The designation of this
class of one thousand (1,000) shares of capital stock, par value $.01 per share,
created by the Board of Directors of the Corporation pursuant to the authority
granted to it by the certificate of incorporation of the Corporation is "Class B
Redeemable Preferred Stock," which is hereinafter referred to as the "Class B
Preferred Stock." In the event that the Corporation does not issue the maximum
number of shares of Class B Preferred Stock or in the event that the Corporation
shall acquire (whether by purchase, redemption or otherwise) and cancel any
shares of Class B Preferred Stock, the Corporation may, from time to time, by
resolution of the Board of Directors, reduce the number of shares of Class B
Preferred Stock authorized, provided, that no such reduction shall reduce the
number of authorized shares to a number which is less than the number of shares
of Class B Preferred Stock then issued or reserved for issuance. The number of
shares by which the Class B Preferred Stock is reduced shall have the status of
authorized but unissued shares of capital stock, or, if the Corporation's
certificate of incorporation shall provide for preferred stock, unissued shares
of such preferred stock, in either case without designation as to class or
series until such stock is once more designated as part of a particular class or
series by the Corporation's Board of Directors. The Class B Preferred Stock
shall be on a parity with the Class A Convertible Preferred Stock as to
dividends and upon liquidation, dissolution and winding up.
2. Dividend Rights.
(a) The holders of the Class A Preferred Stock shall be
entitled to receive, when and as declared by the Board of Directors, out of
funds of this Corporation legally available therefor or as otherwise provided in
this Statement of Designation, annual dividends at the rate of one hundred and
00/100 dollars ($100.00) per share of Class B Preferred Stock, subject to the
provisions of Paragraph 2(c) of this Statement of Designation. Such dividends,
to the extent declared, shall be payable in equal semiannual instalments of
fifty dollars ($50.00) on the first day of July and the first day of January
(the first day of July and the first day of January of any particular year each
referred to as a "Dividend Payment Date"), commencing July 1, 1997, to the
holders of record on the preceding June 15 and December 15, respectively. Each
six-month period ending on the date immediately prior to a Dividend Payment Date
is referred to as a "dividend period." Dividends on the Class B Preferred Stock
are non-cumulative, and no holder of Class B Preferred Stock shall be entitled
to any dividends for any dividend period unless a dividend for such dividend
period shall have been declared by the Board of Directors on or prior to the
last day of such dividend period. To the extent declared, dividends shall be
payable at the option of the Corporation either in cash or in shares of Common
Stock.
(ii) If the Board of Directors determines to make payment
in shares of Common Stock, the number of shares constituting such payment shall
be determined by dividing the dividend payable per share of Common Stock by the
value of one share of Common Stock. No fractional shares shall be issued, the
Corporation shall pay cash equal to the value of any fractional shares which
would otherwise be payable. The value per share of Common Stock, for purposes of
determining the number of shares of Common Stock to be issued in payment of the
dividend and the amount payable with respect to any fractional shares shall be
determined as follows. If the Common Stock is listed on the New York or American
Stock Exchange or admitted to unlisted trading privileges on either of such
exchanges or is traded on The Nasdaq Stock Market or other automated quotation
system which provides information as to the last sale price, the value shall be
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<PAGE>
the average of the reported last sale price of one share of Common Stock on such
exchange or market for the five trading days preceding the record date for
determining holders of Class B Preferred Stock entitled to dividends, or if no
such sale is made on any of such days, the average of the closing bid and asked
prices for such day on such exchange or market shall be used. If the Common
Stock is not so listed or admitted to unlisted trading privileges, the value
shall be the average of the mean of the reported last bid and asked prices of
one share of Common Stock as reported by Nasdaq or the National Quotation
Bureau, Inc. or other similar reporting service selected by the Company's board
of directors, for such five trading day period. If the Common Stock is not so
listed or admitted to unlisted trading privileges and bid and asked prices are
not so reported, the value of one share of Common Stock shall be an amount, not
less than book value, determined in such reasonable manner as may be prescribed
by the Board of Directors.
(b) Any dividend or distribution which is part of the
liquidation, dissolution or winding up of the Corporation shall be governed by
the provisions of Paragraph 6 of this Statement of Designation and not by this
Paragraph 2.
(c) As long as any shares of Class B Preferred Stock are
outstanding, no dividends (other than a dividend consisting of shares of any
series or class of capital stock ranking junior to Class B Preferred Stock as to
both dividends and payments in the event of voluntary or involuntary
dissolution, liquidation or winding up), shall be declared or paid or set aside
for payment and no other distribution shall be declared or made upon any such
junior series or class of capital stock ranking junior to Class B Preferred
Stock as to both dividends and payments in the event of voluntary or involuntary
dissolution, liquidation or winding up, and no such junior series or class of
capital stock or any class or series of Preferred Stock on a parity with Class B
Preferred Stock as to both dividends and payments in the event of voluntary and
involuntary dissolution, liquidation or winding up shall be redeemed, purchased
or otherwise acquired for any consideration by the Corporation or by any
subsidiary (which shall mean any corporation or entity, the majority of voting
power to elect directors of which is held directly or indirectly by the
Corporation), except by conversion into or exchange for any such junior series
or class of capital stock; unless, in each case, (i) the dividends on the Class
B Preferred Stock for the dividend period during which the record date for such
other series or class of capital stock occurs shall have been declared by the
Board of Directors and paid or payment shall have been provided for or (ii) the
holders of a majority of the shares of Class B Preferred Stock then outstanding
shall consent thereto. If dividends are declared with respect to the Class B
Preferred stock and such declared dividends are not paid in full upon the shares
of Class B Preferred Stock and any other class or series of capital stock
ranking on a parity as to dividends with the Class B Preferred Stock, all
dividends declared upon shares of Class B Preferred Stock and such other class
or series of capital stock shall be declared pro rata so that the amount of
dividends declared per share on the Class B Preferred Stock shall in all cases
bear to each other the same ratio that the accrued dividends per share on the
shares of Class B Preferred Stock and such other class or series of capital
stock bear to each other. Holders of shares of Class B Preferred Stock shall not
be entitled to dividends thereon, whether payable in cash, property or stock, in
excess of the total amount dividends previously declared by the Board of
Directors thereon, as provided in this Statement of Designation. No dividend on
Class B Preferred Stock shall be declared or paid or set apart for payment with
respect to any dividend payment date unless full dividends, including
accumulated dividends, if any, on any series or class of capital stock ranking,
as to dividends, prior to Class B Preferred Stock which are to have been paid on
or prior to such dividend payment date have been or contemporaneously are
declared and paid or declared and a sum sufficient for payment thereof has been
set aside for all dividend periods for such series or class terminating on or
prior to such dividend payment date.
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<PAGE>
(d) No dividends shall be deemed to "accrue" on any share of
Class B Preferred Stock at any dividend payment date unless such dividend shall
have been declared by the Board of Directors prior to such dividend payment
date.
3. Voting Rights.
(a) Except as otherwise provided by law, holders of Class B
Preferred Stock shall not be entitled to any voting rights.
(b) The Corporation is not restricted from creating any other
class or series of capital stock which may be senior or junior to or on a parity
with the Class B Preferred Stock as to dividends and or on the voluntary or
involuntary dissolution, liquidation or winding up of the Corporation without
the consent of the holders of the Class B Preferred Stock.
4. Redemption.
(a) The Corporation may, at any time commencing March 1, 1997,
redeem the Class B Preferred Stock in whole at any time or in part from time to
time upon not less than ten (10) nor more than sixty (60) days' prior written
notice at the redemption price per share of six thousand seven hundred fifty and
00/100 dollars ($6,750.00) per share of Class B Preferred Stock. The Corporation
is not required to provide for the redemption of any shares of Class B Preferred
Stock through the operation of a sinking fund.
(b) Until all of the shares of the Class B Preferred Stock
shall have been redeemed, the Corporation shall apply twenty-five percent (25%)
of the net proceeds from any sale of equity securities (including stock issued
on the exercise of any warrants or options, whether presently outstanding or
hereafter issued, and stock issued in connection with a public offering or
private placement of securities, but excluding stock issued in an acquisition or
in connection with the purchase of assets) of the Corporation occurring after
March 1, 1997 to the redemption of shares of the Class B Preferred Stock. Net
proceeds shall mean the gross proceeds less any underwriting, brokerage, finders
or investment banking fee, discount, expense allowance (whether or not
accountable), consulting contract or other similar payments however designated,
provided, that, for purposes of determining net proceeds no value shall be given
to any securities issued or transferred to the underwriter, broker, finder or
investment banker.
(c) Until all of the shares of Class B Preferred Stock shall
have been redeemed, for each calendar year commencing with the year ended
December 31, 1997, the Corporation shall apply to the redemption of the Class B
Preferred Stock an amount equal to twenty-five percent (25%) of the amount by
which the greater of (a) the Corporation's income before taxes, determined in
accordance with generally accepted accounting principles consistently applied,
or (b) the Corporation's cash flow from operations, determined in accordance
with generally accepted accounting principles consistently applied, less
interest other than interest owed to the Corporation's parent or any affiliate,
exceeds $250,000 to the redemption of shares of Class B Preferred Stock.
(d) The date on which the Corporation is to redeem any Class B
Preferred Stock pursuant to Paragraph 4(a) is referred to as the "Redemption
Date" with respect to the shares of Class B Preferred Stock being redeemed. From
and after the close of business on the business day immediately preceding the
Redemption Date, any shares of Class B Preferred Stock as to which the
Corporation shall have exercised its right of redemption shall cease to have any
voting, dividend or other rights, and the holder of such shares shall
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<PAGE>
only have the right to receive payment of the redemption price; provided,
however, that this Paragraph 4(b) shall not apply if the Corporation shall
default in the payment of the redemption price.
(e) In the event that the Corporation redeems only a portion
of the Class B Preferred Stock, the Corporation shall redeem such shares in a
manner which approximates a pro rata redemption of the holders of the Class B
Preferred Stock, and in making such redemption, the Corporation may fully redeem
holders of Class B Preferred Stock whose holdings are insubstantial relative to
the number of Class B Preferred Stock being redeemed.
(f) The number of shares of Class B Preferred Stock to be
redeemed pursuant to Paragraphs 4(b) and (c) of this Statement of Designation
shall be determined by dividing the amount to be applied to the redemption of
shares of Class B Preferred Stock by the redemption price per share set forth in
Paragraph 4(a) of this Statement of Designation. In the event that the number of
shares of Class B Preferred Stock to be redeemed pursuant to said Paragraphs
4(b) and (c) is not an integral number of shares, the total number of shares of
Class B Common Stock to be redeemed shall be increased to the next higher
integral number of shares.
(g) If any dividends shall have been declared by the Board of
Directors on Class B Preferred Stock and are in arrears, no purchase or
redemption shall be made of any stock ranking junior to or on a parity with
Class B Preferred Stock as to dividends or upon liquidation, dissolution or
winding up (other than a purchase or redemption made by issuance for delivery of
such junior stock); provided, however, that any monies theretofore deposited in
any sinking fund with respect to any class or series of capital stock of the
Corporation in compliance with the provisions of such sinking fund thereafter
may be applied to the purchase or redemption of such Preferred Stock in
accordance with the terms of such sinking fund regardless of whether at the time
of such application the full amount of all dividends that have been declared
upon shares of Class B Preferred Stock shall have been paid or set aside for
payment; and provided, further, that the foregoing shall not prevent the
purchase of shares of Preferred Stock ranking on a parity with Class B Preferred
Stock as to dividends and upon liquidation, dissolution or winding up pursuant
to a purchase or exchange offer made on the same terms to the holders of all the
outstanding Preferred Stock so ranking on a parity with Class B Preferred Stock
as to dividends and upon liquidation, dissolution or winding up.
(h) Any shares of Class B Preferred Stock which shall at any
time have been redeemed shall, after such redemption, have the status of
authorized but unissued shares of capital stock, or, if the Corporation's
certificate of incorporation shall provide for the issuance of preferred stock,
of authorized but unissued shares of preferred stock, in either case without
designation as to class or series until such stock is once more designated as
part of a particular class or series by the Corporation's Board of Directors.
5. Liquidation Rights.
(a) (i) In the event of the liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, holders of the
Class B Preferred Stock shall be entitled to receive out of the assets of the
Corporation an amount per share equal to six and 75/100 dollars ($6.75) plus the
full amount of any declared and unpaid dividends before any payment or
distribution upon dissolution, liquidation or winding up shall be made on any
series or class of capital stock ranking junior to Class B Preferred Stock as to
such payment or distribution, and after all such payments or distributions have
been made on any series or class of capital stock ranking senior to the Class B
Preferred Stock as to such payment or distribution.
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<PAGE>
(ii) After payment in full of the preference set forth in
Paragraph 5(a)(i) of this Statement of Designation, the holders of the Class B
Preferred Stock shall have no further rights on liquidation, dissolution or
winding up.
(b) The sale, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all or substantially all
of the property and assets of the Corporation shall be deemed a voluntary
dissolution, liquidation or winding up of the Corporation for purposes of this
Paragraph 5, except that the merger or consolidation of the Corporation into any
other corporation or the sale by the Corporation of all or substantially all of
its assets shall not be deemed to be a dissolution, liquidation or winding up,
voluntary or involuntary, for the purposes of this Paragraph 5 if either (i) the
holders of all shares of Class B Preferred Stock outstanding upon the
effectiveness of such merger or consolidation shall have the right, upon such
effectiveness, to receive for each share of Class B Preferred Stock held by them
upon such effectiveness, one share of preferred stock of the resulting or
surviving corporation or purchaser or the parent of any such corporation, which
shares shall have, to the extent practicable, dividend and voting rights and
rights upon dissolution, liquidation or winding up reasonably equivalent to
those of such share of Class B Preferred Stock or (ii) the merger, consolidation
or sale or other transaction was approved by the holders of a majority of the
shares of Class B Preferred Stock then outstanding either at a meeting of such
stockholders or by a written consent in lieu of a meeting. Any merger in which
the Corporation shall be the surviving corporation shall not be deemed a
dissolution, liquidation or winding up of the Corporation.
(c) In the event the assets of the Corporation available for
distribution to the holders of shares of Class B Preferred Stock upon
dissolution, liquidation or winding up of the Corporation, whether voluntary or
involuntary, shall be insufficient to pay in full all amounts to which such
holders are entitled pursuant to Paragraph 5(a)(i) of this Statement of
Designation, no such distribution shall be made on account of any shares of any
other class or series of capital stock of the Corporation ranking on a parity
with the shares of Class B Preferred Stock upon such dissolution, liquidation or
winding up unless proportionate distributive amounts shall be paid on account of
the shares of Class B Preferred Stock, ratably, in proportion to the full
distributable amounts for which holders of all such parity shares are
respectively entitled upon such dissolution, liquidation or winding up.
(d) Upon the dissolution, liquidation or winding up of the
Corporation, the holders of shares of Class B Preferred Stock then outstanding
shall be entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders all amounts to which such holders are entitled
pursuant to Paragraph 5(a)(i) of this Statement of Designation before any
payment shall be made to the holders of any class of capital stock of the
Corporation ranking junior upon liquidation to Class B Preferred Stock.
6. Rank of Class or Series. For purposes of this Statement of
Designation, any stock of any series or class of the Corporation shall be deemed
to rank:
(a) prior to the shares of Class B Preferred Stock, as to
dividends or upon liquidation, dissolution or winding up, as the case may be, if
the holders of such class or classes shall be entitled to the receipt of
dividends or of amounts distributable upon dissolution, liquidation or winding
up of the Corporation, as the case may be, in preference or priority to the
holders of shares of Class B Preferred Stock;
(b) on a parity with shares of Class B Preferred Stock, as to
dividends or upon liquidation, dissolution or winding up, as the case may be,
whether or not the dividend rates, dividend payment dates or redemption or
liquidation prices per share or sinking fund provisions, if any, be different
from those of Class
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<PAGE>
B Preferred Stock, if the holders of such stock shall be entitled to the receipt
of dividends or of amounts distributable upon dissolution, liquidation or
winding up of the Corporation, as the case may be, in proportion to their
respective dividend rates or liquidation prices, without preference or priority,
one over the other, as between the holders of such stock and the holders of
shares of Class B Preferred Stock;
(c) junior to shares of Class B Preferred Stock as to
dividends or upon liquidation, dissolution or winding up, as the case may be, if
such class shall be Common Stock or if the holders of shares of Class B
Preferred Stock shall be entitled to receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the Corporation, as
the case may be, in preference or priority to the holders of shares of such
class or classes.
7. No Preemptive Rights. No holder of the Class B Preferred Stock
shall, as such holder, be entitled as of right to purchase or subscribe for any
shares of stock of the Corporation of any class or series now or hereafter
authorized or any securities convertible into or exchangeable for any shares, or
any warrants, options, rights or other instruments evidencing rights to
subscribe for or purchase any such shares, whether such shares, securities,
warrants, options, rights or other instruments be unissued or issued and
thereafter acquired by the Corporation.
8. Transfer Agent and Registrar. The Corporation may appoint a
transfer agent and registrar for the issuance, transfer and conversion of the
Class B Preferred Stock and for the payment of dividends to the holders of the
Class B Preferred Stock.
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<PAGE>
Exhibit 3.4
MANAGEMENT SERVICES AGREEMENT
AGREEMENT, dated as of the 1st day of December, 1996, by and between
SES Holdings Corp., a Delaware corporation with offices located at 66A Otis
Street, West Babylon, New York 11704 (the "Company"), and The Trinity Group,
Inc., a Delaware corporation with offices at 160 Broadway, New York, New York
10038 ("Trinity").
W I T N E S S E T H:
WHEREAS, Trinity is engaged in the business of providing management
services to businesses and has been providing such services to the Company on an
ongoing basis; and
WHEREAS, the Company desires to engage Trinity to provide management
services to it, and Trinity is willing to provide such services on and subject
to the terms of this Agreement;
WHEREFORE, the parties do hereby agree as follows:
1. (a) The Company hereby engages Trinity to perform Services,
as hereinafter defined, during the five-year period commencing on January 1,
1997. The Services shall be performed by such persons as shall be designated
from time to time by Trinity.
(b) The services ("Services") to be performed by Trinity
shall include, but not be limited to, services relating to the development and
implementation of the Company's marketing plan, the review and analysis of
expansion opportunities, review and evaluation of financing arrangements and
potential acquisitions and other similar services as may be requested from time
to time by the Company. Officers of or other persons employed or engaged by
Trinity may, if requested by the Company, serve as officers of the Company. If
persons who are otherwise employed by Trinity serve as officers or employees of
the Company, no separate compensation shall be paid to them.
2. The Services being performed by Trinity shall be performed at
its offices, at the Company's offices or at such other location as Trinity shall
deem appropriate.
3. In consideration of the Services rendered and to be rendered by
Trinity, the Company shall pay Trinity compensation at the rate of twenty five
thousand dollars ($25,000) per month, commencing January 1, 1997. Payment for
each month shall be due on the first day of the month.
4. The Company shall reimburse Trinity for all reasonable and
necessary expenses incurred by Trinity on behalf of the Company upon
presentation of appropriate vouchers and back-up documentation.
5. Trinity acknowledges that in connection with the Services
rendered pursuant to this Agreement, Trinity may have access to confidential and
proprietary technical information which belongs to the Company and/or its
subsidiaries. Confidential information for purposes of this Paragraph 5 shall
mean technical proprietary information which is expressly marked as confidential
and which relates to the Company's proprietary products and technology. Trinity
agrees to treat as confidential and proprietary, and not use or assist others in
using, such information other than as required by this Agreement or is necessary
for the performance of Services contemplated by this Agreement. Any permitted
disclosure which may be necessary in connection with the performance of Services
pursuant to this Agreement shall be made only on a need-to-know basis to a
person who has agreed to be bound by the confidentiality provisions of this
Paragraph 5. The obligations of confidentiality shall not apply to any
information which (a) is received by Trinity from another party not under an
obligation of confidentiality, (b) becomes public knowledge in the industry
other than as a result of a violation of an obligation of confidentiality, or
(c) is required to be disclosed pursuant to law or legal process. In the event
that Trinity breaches its obligations of confidentiality pursuant to this
Paragraph 5, Trinity consents to the entry of preliminary and permanent
injunctions
<PAGE>
by a court of competent jurisdiction prohibiting such party from any violation
or threatened violation of these provisions and compelling Trinity to comply
with these provisions. This Paragraph 5 shall not affect or limit, and the
injunctive relief provided in this Paragraph 5 shall be in addition to, any
other remedies available to the Company or any of its subsidiaries, whether
wholly or partially owned by the Company at law or in equity.
6. In all matters relating to this Agreement, the Company and
Trinity shall act as independent contractors, neither shall be the employee of
the other, and each shall assume any and all liability for its own acts. Neither
the Company not Trinity shall have any authority to assume or create
obligations, express or implied, on behalf of the other party or any subsidiary
or affiliate of the other party, and neither party shall have any authority to
represent any other party as its agent, employee, partner or in any other
capacity. Any action taken on behalf of the Company by any individual who is an
officer or employee of the Company as well as an officer or employee of Trinity
shall be deemed for all purposes as the action by the Company.
7. (a) This Agreement constitutes the entire agreement and
understanding of the parties, superseding any and all prior written and prior
and contemporaneous oral agreements, understandings and letters of intent, and
may not be modified or amended nor may any right be waived except by a writing
which expressly refers to this Agreement, states that it is a modification,
amendment or waiver and is signed by both parties in the case of a modification
or amendment or the party to be charged in the case of a waiver. No course of
conduct or dealing and no trade custom or usage shall be construed to modify or
amend any of the provisions of this Agreement. The failure of any of the parties
to this Agreement to enforce any provision of this Agreement on any occasion
shall not be deemed to be a waiver of any preceding or succeeding breach of such
provision or of any other provision.
(b) This Agreement, and the respective rights, duties and
obligations of the parties pursuant to this Agreement, shall be governed and
construed in accordance with the laws of the State of New York applicable to
agreements executed and to be performed wholly within such State. Each of the
parties hereby (i) irrevocably consents and agrees that any legal or equitable
action or proceeding arising under or in connection with this Agreement shall be
brought exclusively in any Federal or state court in the County of New York,
State of New York, and (ii) by execution and delivery of this Agreement,
irrevocably submits to and accepts, with respect to its properties and assets,
generally and unconditionally, the jurisdiction of the aforesaid courts.
(c) This Agreement shall bind and inure to the benefit of the
parties, and their respective executors, administrators, successors and assigns.
(d) Any notice under the provisions of this Agreement shall be
given in writing and by hand, overnight courier or messenger service, against
signed receipt or acknowledgment of receipt, registered or certified mail,
return receipt requested, or telecopier or similar means of communication if
confirmed by mail as provided in this Paragraph 7(d), to the parties at their
respective addresses set forth at the beginning of this Agreement or by
telecopier to the Company at (516) 253-0135 or to Trinity at (212) 233-5023.
Notices to the parties shall be sent to the attention of the person executing
this Agreement on behalf of such party. Either party may, by like notice, change
the person, address or telecopier number to which notice should be sent.
(e) If any provision of this Agreement is found to be void or
unenforceable by a court of competent jurisdiction, the remaining provisions of
this Agreement, shall, nevertheless, be binding upon the parties with the same
force and effect as though the unenforceable part has been severed and deleted.
(f) Each of the parties to this Agreement shall execute and
deliver to the other party, without charge to the other party, any further
instruments and documents and take such other action as may be requested by the
other party in order to provide for the other party the benefits of this
Agreement.
(g) All references to the masculine, feminine and neuter
genders shall include the other genders, the singular shall include the plural,
and the plural shall include the singular.
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<PAGE>
(h) This Agreement may be executed in one or more counterparts,
all of which shall be deemed to be duplicate originals.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
SES HOLDINGS CORP.
By:__________________________
James L. Conway, President
THE TRINITY GROUP, INC.
By:___________________________________
Lewis S. Schiller, Chairman and CEO
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