1. On December 10, 2002, Eos International, Inc., a Delaware corporation (“Eos”), Eos Acquisition Corp., a New Jersey corporation and wholly-owned subsidiary of Eos created solely for the purpose of effecting the merger described herein (“EAC”), and I.F.S. of New Jersey, Inc., a New Jersey corporation (“IFS”) entered into an agreement and plan of merger (the “Merger Agreement”) by which EAC will be merged with and into IFS with IFS surviving the merger as a wholly-owned subsidiary of Eos. Under the terms of the Merger Agreement, all of the shares of IFS stock outstanding at the effective time of the merger will be exchanged for 15,988,000 shares of Eos common stock and 1,000 shares of Series E Junior Convertible Preferred Stock in the aggregate. The merger is subject to the approval of the Merger Agreement by the shareholders of IFS and other conditions. The merger will be effected as soon as practicable following approval of the Merger Agreement by IFS shareholders and the satisfaction or waiver of conditions to closing. Management of Eos expects the merger to occur in the fourth quarter of 2002 or early in the first quarter of 2003. 2. On December 10, 2002, Eos, Weichert Enterprises LLC (“Weichert”), and DL Holdings I, LLC (“DL Holdings”), entered into an agreement (the “December 10 Agreement”) to amend (i) the Registration Rights Agreement by and among Eos, Weichert and DL Holdings, dated as of December 14, 2001, as amended, (ii) the Secured $3,500,000 Bridge Loan Promissory Note, dated as of December 14, 2001, as amended, issued by Eos to DL Holdings (the “DL Note”), (iii) the Warrant to purchase common stock of Eos dated as of December 14, 2001, as amended, issued by Eos to DL Holdings, (iv) the Secured $3,000,000 Bridge Loan Promissory Note, dated as of December 14, 2001, as amended, issued by Eos to Weichert (the “Weichert Note,” and along with the DL Note, the “Notes”), and (v) the Warrant to purchase common stock of Eos dated as of December 14, 2001, as amended, issued by Eos to Weichert (collectively, the “Bridge Loan Agreements”). Under the December 10 Agreement, Weichert and DL Holdings shall exchange the Notes for $4.0 million in cash and 1,000 shares of Eos Series D Preferred Stock. The transactions contemplated by the December 10 Agreement are contingent upon Eos effecting (i) the merger with IFS substantially in accordance with the Merger Agreement, and (ii) a private placement of no less than 15 million shares of Eos common stock priced at $0.50 per share. If transactions contemplated by the December 10 Agreement are not effected by January 8, 2003, any party to the December 10 Agreement may terminate the December 10 Agreement without any liability to any other party. However, such termination would not relieve Eos from any liability under the Bridge Loan Agreements. The foregoing description is a summary and is conditioned upon the terms of the agreements referred to herein which are incorporated herein by reference. There can be no assurance and none is given by Eos that the foregoing transaction will occur, occur as scheduled, or occur in accordance with the terms of the agreements described herein. |
