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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13D
Under the Securities Exchange Act of 1934
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MEGADATA CORPORATION
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(Name of Issuer)
Common Stock, Par Value
$.01 per Share 585145105
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(Title of class of securities) (CUSIP number)
G.S. Beckwith Gilbert Dennis J. Block, Esq.
Field Point Capital Management Company Weil Gotshal & Manges
104 Field Point Road 767 Fifth Avenue
Green wich, CT 06830 New York, New York 10153
(203) 629-8757 (212) 310-8000
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(Name, address and telephone number of person authorized to receive
notices and communications)
September 18, 1996
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(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box [_].
Check the following box if a fee is being paid with the statement [x].
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent
of the class of securities described in Item 1; and (2) has filed no
amendment subsequent thereto reporting beneficial ownership of five
percent or less of such class.) (See Rule 13d-7.)
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CUSIP No. 585145105 13D - Page 2
1 NAME OF REPORTING PERSON: G.S. Beckwith Gilbert
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON:
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [_]
(b) [_]
3 SEC USE ONLY
4 SOURCE OF FUNDS:* PF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [_]
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e):
6 CITIZENSHIP OR PLACE OF
ORGANIZATION: United States
NUMBER OF 7 SOLE VOTING POWER: 746,000**
SHARES
BENEFICIALLY 8 SHARED VOTING POWER:
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER: 746,000**
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE
POWER:
11 AGGREGATE AMOUNT BENEFICIALLY
OWNED BY REPORTING PERSON: 746,000**
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_]
EXCLUDES CERTAIN SHARES:
13 PERCENT OF CLASS REPRESENTED BY
AMOUNT IN ROW (11): 32.3%
14 TYPE OF REPORTING PERSON: IN
* SEE INSTRUCTIONS BEFORE FILLING OUT!
** Of these shares, 16,000 shares are held in Mr. Gilbert's
IRA account and 700,000 shares are subject to a warrant.
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Item 1. Security and Issuer
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This statement relates to the shares of Common Stock, par value
$.01 per share (the "Common Stock"), of Megadata Corporation, a New York
corporation (the "Company"), the principal executive offices of which are
located at 35 Orville Drive, Bohemia, New York 11716.
Item 2. Identity and Background
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This statement is being filed by Mr. G.S. Beckwith Gilbert. Mr.
Gilbert's principal occupation is President, Chief Executive Officer and
Director of Field Point Capital Management Company, which is principally
engaged in the business of consulting and merchant banking. His principal
address is 104 Field Point Road, Greenwich, Connecticut 06830. Mr. Gilbert
is a citizen of the United States of America.
During the last five years, Mr. Gilbert has not been convicted in
any criminal proceeding (excluding traffic violations or similar
misdemeanors) and has not been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction as a result of which he
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating actions subject to, federal or
state securities laws or finding any violations with respect to such laws.
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Item 3. Source and Amount of Funds or Other Consideration
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Mr. Gilbert purchased in open market transactions 46,000 shares
of Common Stock for a total consideration of $54,380 (of which 16,000
shares of Common Stock were purchased by Mr. Gilbert's IRA account for
total consideration of $19,730). Mr. Gilbert purchased from the Company,
(1) a secured promissory note in the principal amount of $100,000 (the
"Secured Promissory Note"), (2) a warrant to purchase 700,000 shares of
Common Stock for a term extending to October 15, 1996, subject to extension
(the "700,000 Share Warrant") and (3) a warrant to purchase, subject to
certain conditions, up to a total of 200,000 shares of Common Stock for a
term of three years (the "200,000 Share Warrant"). The cash payments made
by Mr. Gilbert for these shares of Common Stock, the Secured Promissory
Note and the Warrants were derived from his personal funds.
Item 4. Purpose of Transaction
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On September 18, 1996, Mr. Gilbert acquired from the Company the
Secured Promissory Note and the Warrants. The acquisition was consummated
pursuant to the terms of a Securities Purchase Agreement (the "Purchase
Agreement"), dated as of September 18, 1996, between Mr. Gilbert and the
Company.
Mr. Gilbert has acquired his shares of Common Stock and the
Warrants for the purposes of investment and to obtain a significant equity
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interest in the Company. From and after the exercise of the 700,000 Share
Warrant and continuing thereafter for so long as Mr. Gilbert and his
permitted transferees are the beneficial owners of not less than five
percent (5%) of the issued and outstanding shares of Common Stock, the
Company has agreed to use its best efforts to elect, thereafter nominate
for election by the stockholders, cause the election of and thereafter to
continue in office, Mr. Gilbert and one additional person designated by Mr.
Gilbert to serve on the Board of Directors of the Company. If elected as a
director of the Company, Mr. Gilbert intends to participate in and
influence the formulation of the business plans and strategies of the
Company.
The 700,000 Warrant is immediately exercisable for 700,000 shares
of Common Stock, and will expire on October 15, 1996 (subject to extension
to November 30, 1996 if Mr. Gilbert (or any of his permitted transferees)
agrees to increase the amount of loans made to the Company from $100,000 to
$200,000). The exercise price per share is $1.
The 200,000 Share Warrant is exercisable for up to 200,000 shares
of Common Stock. The 200,000 Share Warrant is exercisable only as provided
in the following paragraph and only if the 700,000 Share Warrant is
exercised prior to the exercise of the 200,000 Share Warrant. The warrant
purchase price is $1.25 from the date of original issuance to the close of
business on the first anniversary of such date, $1.50 from the next day
after such first anniversary to the close of business on the second
anniversary of the date of original issuance and $1.75 thereafter.
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If, during the term of the 200,000 Share Warrant, the Company
proposes to effect a financing through the issuance of any debt or equity
security (including, without limitation, through the issuance of any rights
or options to purchase any debt or equity security or any securities that
are exchangeable for or convertible into any debt or equity securities),
the Company will first notify the holder of the 200,000 Share Warrant in
writing of such intent, specifying the details thereof. The holder then
will have a period of 30 days after such notice to provide such financing
through the full or partial exercise of the 200,000 Share Warrant (provided
that the holder must provide 100% of such financing up to the product of
the maximum number of shares that may then be purchased by the holder
thereunder and the warrant purchase price then in effect), during which 30-
day period the Company will not effect such financing with a third party.
The Purchase Agreement provides that for the period commencing on
September 18, 1996 and ending on the fifth anniversary thereof, without the
prior approval of the Company's Board of Directors, Mr. Gilbert and his
permitted transferees (the "Gilbert Entities") will not:
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(i) purchase any shares of Common Stock that would result
in the Gilbert Entities' beneficial ownership exceeding the
greater of 946,000 shares of Common Stock or 45% of the then
outstanding shares of Common Stock;
(ii) commence or participate in any proxy solicitation
involving shares of Common Stock;
(iii) join a partnership, limited partnership, limited
liability company, syndicate, or other group, or otherwise act in
concert with any other person, for the purpose of acquiring,
holding, voting, or disposing of common shares, or otherwise
become a "person" within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934 (in each case other than solely
with any of the Gilbert Entities);
(iv) sell any Common Stock in excess of 10% of the then
outstanding shares to any individual person or group of related
persons; or
(v) fail to have their shares of Common Stock present for
quorum purposes at any meeting of the Company's stockholders.
The foregoing restrictions will terminate and be of no further
force or effect in the event:
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(i) the Company breaches any of its representations and
warranties or obligations to the Gilbert Entities set forth in
any agreement between the Gilbert Entities and the Company;
(ii) the Secured Promissory Note is not paid in full in
accordance with its terms or an Event of Default occurs
thereunder;
(iii) the Company enters into any agreement with a third
party with respect to or announces an intention to effect certain
extraordinary transactions;
(iv) Data Probe, Inc. owns less than 250,000 shares of
Common Stock;
(v) Mr. Bachana voluntarily retires or resigns as the
President of the Company; or
(vi) any event described in clauses (b), (d) or (e) of the
definition of "Event of Default" in the Secured Promissory Note
shall have occurred.
If Mr. Gilbert exercises the 700,000 Share Warrant, the Company
also has agreed to grant to Mr. Gilbert the right to maintain his (and his
permitted transferees') equity and voting interest in the Company in
accordance with the terms of Section 9 of the Purchase Agreement.
Mr. Gilbert and the Company also have entered into a Registration
Rights Agreement, dated September 18, 1996, pursuant to which, among other
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things, the Company has granted Mr. Gilbert and his permitted transferees
certain registration rights with respect to their shares of Common Stock.
Mr. Gilbert and Data Probe, Inc. also have agreed to grant each other a
right of first refusal with respect to sales of Common Stock owned by each
of them, other than sales pursuant to Rule 144 promulgated under the
Securities Act of 1933, as amended.
The foregoing is a summary of certain provisions of the Purchase
Agreement, the Warrants and the Registration Rights Agreement and is
qualified in its entirety by reference to such agreements and Warrants,
which are attached as Exhibits hereto. Subject to the foregoing, Mr.
Gilbert may from time to time seek to acquire additional shares of Common
Stock subject to availability at prices deemed attractive, or dispose of
shares of Common Stock.
Except as set forth above, Mr. Gilbert currently has no other
plans or intentions which could result in or relate to any of the
transactions described in subparagraphs (a) through (j) of Item 4 of
Schedule 13D.
Item 5. Interest in Securities of the Issuer
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(a) Mr. Gilbert beneficially owns 746,000 shares of Common Stock
(including 16,000 shares held in Mr. Gilbert's IRA account and 700,000
shares which may be acquired upon the exercise of the 700,000 Share
Warrant), representing approximately 32.3% of the Company's outstanding
shares of Common Stock (based upon representations made by the Company in
the Purchase Agreement).
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(b) Subject to the provisions of the Purchase Agreement
described in Item 4 above, Mr. Gilbert has sole power to vote or to direct
the vote and sole power to dispose or to direct the disposition of the
746,000 shares of Common Stock beneficially owned by him.
(c) Except for the transactions referred to in Item 4 and as set
forth in Schedule 1 attached hereto, Mr. Gilbert has not effected
transactions in the Common Stock of the Company during the past 60 days.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
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Relationships with Respect to Securities of the Issuer
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Except as noted in Item 4 above, Mr. Gilbert does not have any
contracts, arrangements, understandings or relationships with respect to
any securities of the Company.
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Item 7. Material to be Filed as Exhibits
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1. Securities Purchase Agreement, dated as of September 18,
1996, between G.S. Beckwith Gilbert and Megadata Corporation.
2. Warrant, dated as of September 18, 1996, executed by
Megadata Corporation in favor of G.S. Beckwith Gilbert in respect of
700,000 shares of Common Stock.
3. Warrant, dated as of September 18, 1996, executed by
Megadata Corporation in favor of G.S. Beckwith Gilbert in respect of
200,000 shares of Common Stock.
4. Registration Rights Agreement, dated as of September 18,
1996, between G.S. Beckwith Gilbert and Megadata Corporation.
5. Secured Promissory Note, dated as of September 18, 1996,
made by Megadata Corporation in favor of G.S. Beckwith Gilbert.
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SIGNATURE
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After reasonable inquiry and to the best knowledge and belief of
the undersigned, the undersigned certifies that the information set forth
in this statement is true, complete and correct.
Dated: September 30, 1996 /s/ G.S. BECKWITH GILBERT
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G.S. Beckwith Gilbert
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Schedule 1
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Number of Shares Price Per
Transaction Date Purchased Share *
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8/1/96** 6,000 $1.125
8/2/96** 10,000 $1.250
8/7/96 12,500 $1.125
8/14/96 17,500 $1.125
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Each of the foregoing purchasers were effected in open market transactions.
* Excludes commissions.
** Purchased in Mr. Gilbert's IRA account.
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EXHIBITS INDEX
Material to be Filed as Exhibits
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1. Securities Purchase Agreement, dated as of September 18,
1996, between G.S. Beckwith Gilbert and Megadata Corporation.
2. Warrant, dated as of September 18, 1996, executed by
Megadata Corporation in favor of G.S. Beckwith Gilbert in respect of
700,000 shares of Common Stock.
3. Warrant, dated as of September 18, 1996, executed by
Megadata Corporation in favor of G.S. Beckwith Gilbert in respect of
200,000 shares of Common Stock.
4. Registration Rights Agreement, dated as of September 18,
1996, between G.S. Beckwith Gilbert and Megadata Corporation.
5. Secured Promissory Note, dated as of September 18, 1996,
made by Megadata Corporation in favor of G.S. Beckwith Gilbert.
NYFS01...:\06\45206\0006\139\SCH9266P.26A
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EXHIBIT 1
SECURITIES PURCHASE AGREEMENT
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AGREEMENT, dated as of September 18, 1996, by and between
MEGADATA CORPORATION, a New York corporation ("Seller" or the
"Company"), and G.S. BECKWITH GILBERT (Purchaser").
PREMISES:
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Seller desires to issue and sell to Purchaser, and Purchaser
desires to purchase, (1) a secured promissory note in the principal
amount of $100,000 (the "Secured Promissory Note"), (2) a warrant to
purchase 700,000 shares of common stock, par value $.01 per share, of
Seller (the "Common Stock") for a term extending to October 15, 1996,
subject to extension (the "700,000 Share Warrant") and (3) a warrant
to purchase up to a total of 200,000 shares of Common Stock for a term
of three years (the "200,000 Share Warrant").
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, the parties hereto, intending
to be legally bound, hereby agree as follows:
1. Sale of Promissory Note and Warrants.
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(a) Sale of Promissory Note. On the date hereof, Seller is
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issuing, selling and delivering to Purchaser, and Purchaser is
purchasing from Seller, the Secured Promissory Note.
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(b) Issuance of Warrants. On the date hereof, Seller is
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issuing, selling and delivering to Purchaser, and Purchaser is
purchasing from Seller, the 700,000 Share Warrant and the 200,000
Share Warrant (collectively, the "Warrants") to purchase, in the
aggregate, a total of 900,000 shares of Common Stock (the "Warrant
Shares").
2. Purchase Price; Payment
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(a) Purchase Price. The aggregate purchase price for the
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Secured Promissory Note and Warrants shall be One Hundred Thousand
Dollars ($100,000) (the "Purchase Price").
(b) Payment. The Purchase Price shall be payable by
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Purchaser to Seller by wire transfer in immediately available funds to
an account designated by Seller.
3. Representations and Warranties of Seller. Seller
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hereby represents and warrants to Purchaser as follows and
acknowledges that Purchaser is relying on such representations and
warranties in connection with the transactions provided for herein:
(a) Organization and Good Standing, etc. Seller is a
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corporation duly organized, validly existing and in good standing
under the laws of the State of New York, and has all requisite
corporate power and authority to conduct its business as it is now
conducted, to own or lease all of the properties owned or leased by
it, to enter into and perform this Agreement and the
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Registration Rights Agreement, of even date herewith, between Seller
and Purchaser (the "Registration Rights Agreement") and to issue and
sell the Secured Promissory Note, the Warrants and, upon exercise of
the Warrants in accordance with their terms, the Warrant Shares, and
to otherwise consummate the transactions provided for in this
Agreement and the Warrants. True and complete copies of the
Certificate of Incorporation and By-Laws of Seller (together with all
amendments thereto as of the date hereof) have been previously
delivered to Purchaser. Except as set forth in the Disclosure
Schedule delivered by Seller to Purchaser simultaneously with the
execution of this Agreement (the "Disclosure Schedule"), Seller is
duly licensed or qualified and in good standing as a foreign
corporation in all jurisdictions in which the ownership or lease of
property by it or the conduct of its business makes such licensing or
qualification necessary and where the failure to be so licensed or
qualified would have a material and adverse effect on its business.
(b) Authorization; Execution; Binding Effect. The
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execution, delivery and performance of this Agreement and the
Registration Rights Agreement and the issuance and sale of the Secured
Promissory Note, the Warrants and, upon exercise of the Warrants in
accordance with their terms, the Warrant Shares, and the consummation
of the transactions provided for in this
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Agreement, the Registration Rights Agreement and the Warrants have
been duly authorized by all necessary corporate action on the part of
Seller (including, without limitation, for purposes of Section 912 of
the New York Business Corporation Law) and this Agreement and the
Registration Rights Agreement constitute and, upon the issuance and
delivery of the Warrants, each of the Warrants will constitute, the
legal, valid and binding obligation of Seller enforceable against
Seller in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization or other laws
affecting creditors' rights and by general equity principles.
(c) Capitalization. The authorized capital stock of Seller
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consists of 5,000,000 shares of Common Stock, of which 1,611,600
shares are issued and outstanding at the date hereof. All of the
outstanding shares of Seller are duly authorized, validly issued,
fully paid and nonassessable. Except for this Agreement and the
Warrants, and options to purchase 55,000 shares of Common Stock held
by employees pursuant to the Company's stock option plans, there is no
existing option, warrant, call, commitment or other agreement to which
Seller is a party requiring, and there are no convertible securities
of Seller outstanding which upon conversion would require, the
issuance of any additional shares of Common Stock or other securities
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convertible into shares of Common Stock or any other equity security
of Seller.
(d) [Reserved]
(e) Valid Issuance of Warrant Shares. Upon the issuance of
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the Warrant Shares in accordance with the terms of the Warrants, all
of such shares will be duly authorized, validly issued, fully paid and
nonassessable.
(f) Financial Statements. Seller has delivered to
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Purchaser copies of its consolidated financial statements and
schedules for the three years ended October 31, 1995 certified by
Ghassemi, Phoel & Company, independent certified public accountants.
In addition, Seller has delivered to Purchaser copies of its unaudited
financial statements as at April 30, 1996 and for the six-months then
ended. Each of the foregoing financial statements is complete and
correct in all material respects (subject to normal year-end
adjustments in accordance with generally accepted accounting
principles with respect to the interim financial statements), is in
accordance with the books and records of Seller as of the dates and
for the periods indicated, has been prepared in accordance with
generally accepted accounting principles and in conformity with the
practices consistently applied by Seller in the immediately preceding
fiscal periods, and fairly presents the financial condition, results
of operations and changes in financial
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position of Seller as at the dates and for the periods indicated. For
the purposes hereof, the Consolidated Balance Sheet of Seller as at
April 30, 1996 is referred to as the "Balance Sheet" and April 30,
1996 is referred to as the "Balance Sheet Date".
(g) No Undisclosed Liabilities. Except as set forth in the
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Disclosure Schedule, as at the Balance Sheet Date, Seller did not have
any material obligation, indebtedness or liability of any nature
(whether accrued, absolute, contingent or otherwise, and whether due
or to become due) which is not shown on the Balance Sheet or the notes
thereto or disclosed herein or in any document delivered to the
Purchaser hereunder upon the execution and delivery hereof. Except as
set forth in the Balance Sheet, Seller does not have outstanding any
material obligation, indebtedness or liability, nor knows of any basis
for the assertion against Seller of any such obligation, indebtedness
or liability, of any kind, whether accrued, absolute, contingent or
otherwise, other than as disclosed herein or in a document referred to
herein.
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(h) No Conflicting Agreements or Charter Provisions. The
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execution, delivery and compliance with and performance of the terms
and provisions of this Agreement, the Registration Rights Agreement
and the Warrants, and the issuance of the Secured Promissory Note, the
Warrants and, upon exercise of the Warrants in accordance with their
terms, the Warrant Shares will not conflict with or result in a
breach of the terms, conditions or provisions of, or constitute a
default under, or result in any violation of, (i) the Certificate
of Incorporation or By-Laws of Seller or any resolutions adopted by the
shareholders or the Board of Directors of Seller, (ii) any provision of
any material contract or other material instrument to which Seller is a
party or by which it or any material part of its assets may be bound
or (iii) any order, judgment, decree, statute, law, rule or regulation
to which Seller is subject or by which any material part of its assets
may be bound. The execution and delivery of this Agreement, the
Registration Rights Agreement and the Warrants, the issuance of the
Secured Promissory Note and the Warrants in accordance with the terms
hereof and the issuance of the Warrant Shares in accordance with the
terms of the Warrants will not result in the creation of any lien,
charge or encumbrance upon the business or any material part of the
assets or properties of Seller.
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(i) Default. Seller is not in default or alleged to be in
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default with respect to any judgment, order, writ, injunction or
decree of any court or any federal, state, municipal or other
governmental authority, department, commission, board or agency or
other entity where such default would have a material adverse effect
on the financial condition, results of operations, prospects,
business, properties, assets or liabilities of Seller. Seller is not
in breach or default or alleged to be in breach or default under any
lease, license, contract, agreement, commitment, instrument or
obligation, and Seller does not know of any condition or state of facts
which is likely to cause or create a default or defaults under any such
lease, license, contract, agreement, commitment, instrument or obligation
where such default would have a material adverse effect on the financial
condition, results of operations, prospects, business, properties, assets
or liabilities of Seller. Seller does not know of any other party to any
lease, license, contract, agreement, commitment, instrument or
obligation to which Seller is a party and which is material to
Seller's business that is in default thereunder and, to the best of
Seller's knowledge, there exists no condition or event which, after
notice or lapse of time or both would constitute a default of any
other party to any such lease, license, commitment, contract,
agreement, instrument or obligation.
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(j) Compliance with All Laws. Seller (i) has complied in
------------------------
all material respects with all laws, regulations and orders which are
applicable in any material respect to its business as presently
conducted, (ii) possesses all material permits, licenses and other
governmental approvals, authorizations and orders specifically
applicable to, or necessary for the conduct of its business as
presently conducted and (iii) has obtained
all governmental approvals and all other approvals, consents,
certifications and waivers which are required on the part of Seller to
enter into and perform this Agreement and to issue and sell to
Purchaser the Secured Promissory Note and Warrants and, upon the
exercise of the Warrants in accordance with their terms, the Warrant
Shares, and to otherwise consummate the transactions provided for in
this Agreement and the Warrants.
(k) No Adverse Changes. Since the Balance Sheet Date and
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except as disclosed in the Disclosure Schedule, there has not been,
occurred or arisen (i) any material adverse change in the financial
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condition, results of operations, prospects, business, properties,
assets or liabilities of Seller, (ii) any damage or destruction in the
nature of a casualty loss, whether covered by insurance or not,
adversely affecting any property of Seller material to the financial
condition, results of operations, business, prospects, assets or
liabilities of Seller, (iii) any termination of its contract with any
major customer, (iv) any increase in the base compensation payable or
to become payable by Seller to any of its directors, officers,
management, personnel, consultants or agents whose aggregate
remuneration on an annual basis now exceeds $50,000 or any increase in
benefits under any bonus, insurance, pension or other benefit plan
made for or with any of such persons, (v) to the Company's best
knowledge, any actual or threatened strike or other labor trouble or
dispute which materially and adversely affects, or might materially and
adversely affect, the financial condition, results of operations,
business, prospects, assets or liabilities of Seller, (vi) any direct
or indirect redemption, purchase or other acquisition by Seller of any
shares of capital stock of Seller, any declaration, setting aside or
payment of any dividend or other distribution by Seller in respect of
shares of capital stock of Seller whether in cash, stock or property,
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or any loan to any shareholder other than advances for expenses in the
ordinary course of business to any shareholder in his capacity as an
officer, director or employee of Seller, (vii) any extraordinary loss
(as defined in Opinion No. 30 of the Accounting Principles Board of
the American Institute of Certified Public Accountants and any
amendments or interpretations thereof) suffered by Seller, which,
individually or in the aggregate, is material to Seller, (viii) any
waiver by Seller of any right or rights which, individually or in the
aggregate, would have a material and adverse effect on the financial
condition, results of operations, business, prospects, assets or
liabilities of Seller, (ix) any mortgage on, pledge of or grant of a
security interest in any of the assets of Seller, (x) any obligation
incurred by Seller other than any incurred in the ordinary course of
business and which, individually or in the aggregate with all other
obligations so incurred, is or are not material in amount, or (xi) any
other event, condition or state of facts of any character peculiar to
Seller or to its or their operations and not generally applicable to
private enterprises in the same business as Seller, which materially
adversely affects, or might reasonably be expected in the future to
affect materially and adversely, the financial condition, results
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of operations, business, prospects, assets or liabilities of Seller.
(l) Litigation. Except as disclosed in the Disclosure
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Schedule, there is no action, suit, proceeding or investigation
pending or, to Seller's knowledge, threatened, at law or in equity, in
any court or before or by any federal, state, municipal or other
governmental authority, department, commission, board, agency or other
instrumentality (i) against or affecting Seller which would have a
material adverse effect on Seller, (ii) against or affecting any
officer or director of Seller in their capacity as such or (iii)
affecting this Agreement or the Warrants or any action taken or to be
taken or documents executed or to be executed pursuant to or in
connection with the provisions of this Agreement or the Warrants.
(m) [Reserved]
(n) Disclosures. None of the information concerning Seller
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or its business, condition (financial or otherwise), assets,
properties, prospects, personnel, products, plans and policies
contained herein, in any schedule hereto or in any document referred
to herein or in any schedule hereto or otherwise furnished to the
Purchaser in writing (as the same may have been superseded or
supplemented by any such information subsequently
delivered in writing to Purchaser on or prior to the date hereof)
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contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or
therein taken as a whole, in light of the circumstances existing when
made, misleading in any material respect.
(o) [Reserved]
(p) Taxes. Seller has filed all tax returns and reports
-----
which are required to be filed by it as of the date hereof under the
laws of the United States (including those of any jurisdiction
thereof) and those of any other jurisdiction in which it does business
except to the extent that extensions of time to make such filings have
been granted by the appropriate taxing authorities and those
extensions have not expired. Seller has paid all taxes due and
payable, or has made or will have made necessary accruals for all
current taxes due and payable, for all taxable years ending on or
before the date hereof.
4. Representations and Warranties of Purchaser.
-------------------------------------------
Purchaser hereby represents and warrants to Seller that the
Secured Promissory Note and the Warrants to be purchased by Purchaser
hereunder are being purchased by him or members of his family, a
family trust or an IRA retirement account for
<PAGE>
<PAGE>
Purchaser's benefit or the person referred to in Section 5 designated
by Purchaser to serve and who serves on the Company's Board of
Directors (collectively, a "permitted transferee") solely for his or
their own account, for investment purposes only and not with a view to
the distribution thereof (within the meaning of the Securities Act of
1933, as amended (the "Securities Act)), and Purchaser and any such
permitted transferee has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and
risks of his or their investment as contemplated hereby. Purchaser
hereby acknowledges that the Secured Promissory Note, the Warrants and
the Warrant Shares have not been registered under the Securities Act
or any other securities law and may not be sold in the United States
except pursuant to a registration statement effective under the
Securities Act or pursuant to an exemption from registration under the
Securities Act, and in compliance with all other applicable securities
laws. Purchaser is an "accredited investor" (as defined in the rules
promulgated under the Securities Act) and each permitted transferee
will be an accredited investor. Purchaser's Schedule 13D relating to
the transactions contemplated hereby will be consistent with this
Section 4 and will reflect Purchaser's intent, as a director of the
Company, to participate in and influence the formulation of the
business plans and strategies of the Company.
<PAGE>
<PAGE>
5. Nomination of Purchaser's Board Designees.
-----------------------------------------
(a) From and after the exercise of the 700,000 Share
Warrant and continuing thereafter for so long as Purchaser and its
permitted transferees are the beneficial owners of not less than five
percent (5%) of the issued and outstanding shares of Common Stock,
Seller shall use its best efforts to elect, thereafter nominate for
election by the stockholders, cause the election of and thereafter to
continue in office, Purchaser and one additional person designated by
Purchaser to serve on the Board of Directors of the Company, which
designation shall be made by Purchaser by written notice to Seller of
three candidates, with Purchaser having the right to object to any two
of such three candidates. Simultaneously with the exercise of the
700,000 Share Warrant, Purchaser will be elected as a director of
Seller.
(b) In the event of the resignation, removal, incapacity or
death of Purchaser or a director designated by Purchaser, the Board
shall use its best efforts to elect, or nominate for election by the
stockholders, and thereafter to continue in office, such substitute
director as Purchaser or Purchaser's legal representative may
designate by written notice to Seller in accordance with the
procedures outlined in subsection (a).
<PAGE>
<PAGE>
(c) For the period commencing on the Closing Date and
ending on the fifth anniversary thereof, Purchaser and his affiliates
(as defined in the rules promulgated under the Securities Exchange Act
of 1934, as amended) shall vote all of their shares of Common Stock
for the election of directors and with respect to stockholder
proposals pursuant to Rule 14a-8 under the Securities Exchange Act of
1934, as amended, in accordance with the recommendation of the
Company's Board of Directors.
6. Access. For a period ending on the date that the Secured
------
Promissory Note is paid in full, Seller shall provide Purchaser and
its representatives at the Company's offices with full and complete
access to the books, records and personnel of Seller and the
accountants and legal counsel of Seller at their offices so that
Purchaser and its representatives may undertake a due diligence review
of Seller. No such investigation shall affect the representations and
warranties of Seller made herein.
7. Certain Agreements. (a) For the period commencing on the
------------------
Closing Date and ending on the fifth anniversary thereof, without the
prior approval of the Company's Board of Directors, Purchaser and his
permitted transferees (the "Gilbert Entities") will not:
<PAGE>
<PAGE>
(i) purchase any shares of Common Stock that would
result in the Gilbert Entities' beneficial
ownership exceeding the greater of 946,000 shares of Common
Stock or 45% of the outstanding shares of Common Stock;
(ii) commence or participate in any proxy
solicitation involving shares of Common Stock;
(iii) join a partnership, limited partnership, limited
liability company, syndicate, or other group, or otherwise
act in concert with any other person, for the purpose of
acquiring, holding, voting, or disposing of common shares,
or otherwise become a "person" within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934 (in each
case other than solely with any of the Gilbert Entities);
(iv) sell any Common Stock in excess of 10% of the
then outstanding shares to any individual person or group of
related persons; or
(v) fail to have their shares of Common Stock present
for quorum purposes at any meeting of the Company's
stockholders.
<PAGE>
<PAGE>
(b) The restrictions in subsection (a) shall terminate and
be of no further force or effect in the event:
(i) the Company breaches any of its
representations and warranties or obligations to the
Gilbert Entities set forth in any agreement between the
Gilbert Entities and the Company;
(ii) the Secured Promissory Note is not paid in
full in accordance with its terms or an Event of Default
occurs thereunder;
(iii) the Company enters into any agreement with a
third party with respect to or announces an intention to
effect an Extraordinary Transaction;
(iv) Data Probe, Inc. owns less than 250,000
shares of Common Stock;
(v) Mr. Bachana voluntarily retires or resigns
as the President of the Company; or
(vi) Any event described in clauses (b), (d) or
(e) of the definition of "Event of Default" in the Secured
Promissory Note shall have occurred.
8. Indemnification.
---------------
(a) Seller agrees to indemnify and hold Purchaser and his
affiliates harmless from and against:
<PAGE>
<PAGE>
(i) Any and all liabilities, obligations,
damages, deficiencies and expenses resulting from any
misrepresentation or breach of a representation or warranty
or nonfulfillment of any covenant or agreement on the part
of Seller under the terms of this Agreement.
(ii) All actions, suits, proceedings, demands,
assessments, judgments, costs and expenses, including
reasonable attorneys' fees and disbursements, incident to
the foregoing.
(b) In the event that any legal proceedings shall be
instituted or that any claim or demand shall be asserted by any third
party in respect of which payment may be sought by Purchaser or its
affiliates under the provisions of this Section 8 (referred to in this
Section 8 as the "Indemnitee"), the Indemnitee shall promptly cause
written notice of the assertion of any claim of which it has knowledge
which is covered by this indemnity to be forwarded to Seller (referred
to in this Section 8 as the "Indemnitor"). Indemnitor shall have the
right, at its option and at its own expense, to be represented by
counsel of its choice who must be reasonably satisfactory to
Indemnitee, and to defend against, negotiate, settle or otherwise deal
<PAGE>
<PAGE>
with any proceeding, claim or demand which relates to any loss,
liability, damage or deficiency resulting from a third party claim or
demand indemnified against hereunder; provided, however, that no
-------- -------
settlement shall be made without the prior written consent of
Indemnitee, which consent shall not be unreasonably withheld or
delayed; and provided, further, that Indemnitee may participate in any
-------- -------
such proceeding with counsel of its choice and at its own expense. To
the extent Indemnitor elects not to defend such
proceeding, claim or demand and Indemnitee defends against, settles or
otherwise deals with any such proceeding, claim or demand, which
settlement may be made without the consent of Indemnitor, Indemnitee
will act reasonably and in accordance with its good faith business
judgment. The parties hereto agree to cooperate fully with each other
in connection with the defense, negotiation or settlement of any such
legal proceeding, claim or demand.
Upon any final judgment or award having been rendered by a
court, arbitration board or administrative agency of competent
jurisdiction and the expiration of the time in which the appeal
therefrom, or a settlement having been consummated, or Indemnitee and
Indemnitor having arrived at a mutually binding agreement with respect
to each separate matter indemnified by Indemnitor, Indemnitor shall
forthwith pay all of the sums so owing to Indemnitee by certified or
bank cashier's check, in immediately available funds.
<PAGE>
<PAGE>
9. Maintenance of Purchaser's Interest. If Purchaser
-----------------------------------
exercises the 700,000 Share Warrant, the Company hereby grants to
Purchaser the right to maintain his (and his permitted transferees')
equity and voting interest in the Company as follows:
(a) Except with respect to employee stock options to
acquire shares of Common Stock not in excess of 50,000 shares on
an annual basis ("Allowable Employee Stock Options") and the shares of
Common Stock issuable upon the exercise of the Warrants, not less than
thirty (30) nor more than sixty (60) days prior to any issuance
(whether or not for consideration) or sale of any shares of Common
Stock or any security convertible into shares of Common Stock or any
option, right, warrant or similar instrument to acquire shares of
Common Stock or any security convertible into shares of Common Stock
(hereinafter referred to as "Equity Securities"), the Company shall
notify Purchaser thereof in writing, which notice shall specify the
kind and amount of Equity Securities that the Company intends to issue
or sell and contain a detailed description of the terms of the
proposed issuance or sale (including the proposed issuance or sale
price, if any), and shall offer to Purchaser the opportunity to
<PAGE>
<PAGE>
acquire such number of such Equity Securities as shall allow Purchaser
and his permitted transferees, immediately following the issuance or
sale of all such Equity Securities, to be the beneficial owner, in the
aggregate, of the Purchaser's Proportionate Share Interest (as
hereinafter defined). For the purposes hereof, the "Purchaser's
Proportionate Share Interest" shall mean such number of shares of
Common Stock as shall constitute the percentage of all outstanding
shares of Common Stock beneficially owned by Purchaser and his
permitted transferees immediately prior to the issuance or sale
referred to in the immediately preceding sentence. For the purpose of
computing the Purchaser's Proportionate Share Interest, the following
shall be assumed: (i) the complete conversion of any convertible
securities of the Company and (ii) the exercise and/or purchase of all
shares of Common Stock purchasable pursuant to all options, rights,
warrants or similar instruments relating to shares of Common Stock
(including those held by Purchaser). The per share or equivalent price,
if any, payable by Purchaser, and all other terms and conditions of the
offer to Purchaser, shall be identical to that offered to the other
parties in connection with such issuance or sale; provided, however, that
-------- -------
if the purchase price is to be paid by other parties in kind or is for
<PAGE>
<PAGE>
any other reason of a type of consideration which Purchaser cannot
readily deliver, Purchaser shall nevertheless be entitled to pay the
purchase price in cash, such price to be an amount equal to the
monetary equivalent value to the Company of such consideration in kind
or other consideration which Purchaser cannot readily deliver, as
determined in good faith by Purchaser and the Company. Purchaser
shall have a period of sixty (60) days following the Company's notice
to Purchaser pursuant to this Section 9 within which it may elect to
purchase the Equity Securities offered to him pursuant to this Section
9. Such election may be for all or part of the Equity Securities
offered to Purchaser, may be conditioned
on Purchaser and the Company obtaining any requisite governmental
approvals, consents or certifications (which Purchaser and the Company
shall each covenant to use its best efforts to obtain as promptly as
is practicable) and shall be made by written notice to the Company
within such sixty (60) day period. The closing of the purchase by the
Purchaser of any Equity Securities pursuant to this Section 9 shall
occur (A) at the time and location of the closing of the issuance or
sale of Equity Securities which gave rise to Purchaser's rights under
this Section 9 or (B) at such later time and at such location as may
be specified in Purchaser's written notice of election, which shall be
<PAGE>
<PAGE>
no less than five (5) nor more than thirty (30) days after the date of
such notice; provided, however, that such thirty (30) day period shall
-------- -------
be extended by the period of time necessary for Purchaser or the
Company to obtain any requisite governmental approvals, consents,
certifications or waivers.
(b) Notwithstanding anything to the contrary contained in
Section 9 hereof, in the event that the Company shall issue or sell,
in the aggregate, less than the number of Equity Securities referred
to in the Company's notice to Purchaser pursuant to Section 9 hereof,
the number of Equity Securities to be purchased from the Company at
the closing referred to therein shall be proportionately reduced.
(c) If Purchaser shall not elect to purchase all of the
Equity Securities offered to him pursuant to Section 9 hereof, then
the Company shall, during a period of one hundred twenty (120) days
following Purchaser's notice to the Company pursuant to this Section
9, have the right to sell the number of Equity Securities that
Purchaser has not elected to purchase pursuant to this Section 9 free
and clear of the restrictions of Section 9 hereof at a price and upon
other terms and conditions no more favorable to a purchaser than were
offered to Purchaser pursuant to this Section 9. At the expiration of
such one hundred twenty (120) day period, any issuance or sale of such
Equity Securities shall again be subject to the rights granted to
Purchaser pursuant to this Section 9.
<PAGE>
<PAGE>
(d) Inasmuch as the market for shares of Common Stock of
the Company is limited and Warrants are being sold and purchased in
part in consideration of the provisions contained in this Section 9,
the parties hereto acknowledge and agree that irreparable damage would
result if such provisions were not specifically enforced. Therefore,
the parties consent that the rights and obligations with respect to
the maintenance of Purchaser's interest in accordance with this
Section 9 shall be enforceable by Purchaser in any court of competent
jurisdiction in New York by a decree of specific performance and
consent that injunctive relief may be granted in conjunction
therewith. Such remedies shall be cumulative and not exclusive and shall
be in addition to any other rights or remedies (including, without
limitation, any action for damages) the Purchaser may have under this
Agreement or otherwise.
(e) Any of Purchaser's rights under this Section 9 may be
transferred to any permitted transferee.
(f) The provisions of this Section 9 shall be in addition
to and shall not in any way impair or modify Purchaser's rights under
the 200,000 Share Warrant.
<PAGE>
<PAGE>
10. Notices. Any notices or other communications required
-------
or permitted hereunder shall be sufficiently given if (i) in writing
and personally delivered, (ii) sent by telex provided that "answer-
back" confirmation is received by the sender, or (iii) sent by
registered or certified mail, postage paid, return receipt requested,
in any case addressed as set forth on the signature page hereof.
11. General.
-------
(a) Entire Agreement. This Agreement contains the entire
----------------
understanding of the parties hereto with respect to the subject matter
hereof and there are no restrictions, representations, warranties,
covenants or undertakings of the parties hereto except those expressly
set forth herein or in a document referred to herein delivered to the
Purchasers hereunder upon the execution and delivery hereof.
(b) Survival. The representations, warranties, covenants
--------
and agreements of the parties contained herein shall survive the
execution and delivery of this Agreement for a period of 18 months
from and after the exercise or termination of the 700,000 Share
Warrant, except with respect to claims under the federal securities
laws, in respect of which the applicable statutes of limitation period
shall apply.
<PAGE>
<PAGE>
(c) Further Assurances. The parties hereto each agree to
------------------
execute such other instruments, documents or agreements as may be
reasonably necessary or desirable for the implementation of this
Agreement and the consummation of the transactions contemplated
hereby.
(d) Amendment; Waiver. This Agreement may be amended or
-----------------
waived only by a written instrument signed by the party against whom
enforcement thereof is sought.
(e) Binding Effect; Assignment. This Agreement shall be
--------------------------
binding upon and inure to the benefit of the parties hereto and their
respective successors, legal representatives and assigns, and the
rights of Purchaser hereunder may be assigned to any permitted
transferee.
(f) Section Headings. The section headings contained in
----------------
this Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement.
(g) Governing Law. This Agreement shall be governed by,
-------------
and construed and enforced in accordance with, the laws of the State
of New York, without giving effect to the provisions, policies or
principles thereof respecting conflict or choice of laws.
(h) Severability. If at any time subsequent to the date of
------------
this Agreement, any provision of this Agreement shall be held by any
court of competent jurisdiction to be illegal, void or unenforceable,
such provision shall be of no force or effect but the illegality or
unenforceability of such provision shall have no effect upon or impair
the enforceability of any other provision.
<PAGE>
<PAGE>
(i) Counterparts. This Agreement may be executed in one or
------------
more counterparts, each of which shall be deemed an original but all
of which taken together shall constitute but one and the same
agreement.
(j) Expenses. Seller shall pay the costs and expenses
--------
incurred by Purchaser (including, without limitation, attorneys' fees
and expenses) in connection with the transactions contemplated by this
Agreement.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
35 Orville Drive
Bohemia, New York 11716
MEGADATA CORPORATION
By:
-------------------------------------
Name:
Title:
104 Field Point Road
Greenwich, Connecticut 06830
___________________________
G.S. Beckwith Gilbert
NYFS10...:\06\45206\0006\139\AGR8196M.25D
<PAGE>
EXHIBIT 2
WARRANT NO. 1
THIS WARRANT AND THE COMMON STOCK OR OTHER SECURITY
ISSUABLE THEREFOR HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED, OR ANY OTHER APPLICABLE
REGULATION OR LAW. ACCORDINGLY, NO TRANSFER OF THIS WARRANT
OR ANY SHARE ISSUABLE OR ISSUED UPON EXERCISE HEREOF MAY BE
MADE IN THE UNITED STATES EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT OR AN EXEMPTION FROM
REGISTRATION THEREUNDER AND IN COMPLIANCE WITH ANY OTHER
APPLICABLE SECURITIES LAWS AND THE TERMS HEREOF.
<PAGE>
<PAGE>
To Subscribe for and Purchase Shares of Common Stock of
MEGADATA CORPORATION
No. 1
THIS CERTIFIES that, for value received, G.S. Beckwith
Gilbert (or permitted transferees) is entitled to subscribe for and
purchase from Megadata Corporation, a New York corporation (herein
referred to as the "Company"), at any time, from the date hereof to
5:00 p.m. (New York City time) on October 15, 1996 (subject to
extension to November 30, 1996 if the holder hereof (or any of his
permitted transferees) agrees to increase the amount of loans made to
the Company from $100,000 to $200,000) (the "Expiration Time"),
700,000 duly authorized, validly issued, fully paid and non-assessable
shares of Common Stock ("Common Shares"), par value $.01 per share, of
the Company, or any shares into which such Common Shares shall have
been changed or any stock or other securities resulting from a
reclassification thereof or change thereto (all such shares, stock or
other securities which may be purchased by this Warrant are herein
referred to as the "Shares"), at a per share price of $1.00.
The Company represents that all Shares to which the holder
of this Warrant shall be entitled upon exercise thereof (i) are duly
authorized by the Certificate of Incorporation of the Company, in
accordance with the laws of the State of New York, (ii) have been duly
authorized to be issued upon the exercise of this Warrant, (iii) will
be, when issued in accordance with the terms of this Warrant, duly
authorized,
<PAGE>
<PAGE>
validly issued and fully paid and nonassessable and free and clear of
all taxes, liens, fees, charges and preemptive rights (other than
taxes, liens, fees, charges and rights of others claiming by, and
through, the holder hereof) and (iv) will not at the time of such
exercise be subject to any restrictions on transfer or sale except as
provided by applicable laws and agreements with the Company.
1. Exercise of Warrant. (a) The rights represented by
-------------------
this Warrant may be exercised by the holder hereof, in whole and not
in part, by the surrender of this Warrant, with the purchase form
attached hereto (or reasonable facsimile thereof) duly executed, at
the principal office of the Company at 35 Orville Drive, Bohemia, New
York 11716 (or such other office or agency of the Company as it may
designate by notice in writing to the holder hereof at the address of
such holder appearing on the books of the Company at any time during
the period within which the rights represented by this Warrant may be
exercised) and upon payment as provided in Section 1(b) below. The
Company agrees that the Shares so purchased shall be and will be
deemed to be issued to the holder hereof as the record owner of such
Shares immediately prior to the close of business on the date on which
this Warrant shall have been surrendered and payment made for such
Shares as aforesaid. Certificates for the Shares so purchased shall
be delivered, at the Company's expense (including, without limitation,
the payment by the Company of any applicable issue, stamp or other
taxes), to the holder hereof as
<PAGE>
<PAGE>
promptly as practicable thereafter, but in each case within five (5)
days, after the rights represented by this Warrant shall have been
exercised. Certificates for fractional Shares will not be issued.
(b) Payment of the warrant purchase price for the Shares
purchased upon the exercise of this Warrant shall be made in full (i)
by wire transfer, cash, check, or money order, payable in United
States currency to the order of Company, (ii) by delivering to the
Company the Company's Secured Promissory Note dated the date hereof in
the principal amount of $100,000 and delivered to the original holder
hereof and any subsequent note issued by the Company to the holder
hereof, such notes to be valued at 100% of their principal amount plus
accrued and unpaid interest, or (iii) by any combination of the
foregoing.
2. Transferability of Warrant. This Warrant may be
--------------------------
transferred, in whole or in part, by the original holder hereof to any
member of his family, a family trust or an IRA retirement account for
Purchaser's benefit or any person designated by the holder to serve
and who serves on the Company's Board of Directors (a "permitted
transferee").
<PAGE>
<PAGE>
3. Covenants of the Company. The Company hereby covenants
------------------------
and agrees as follows:
(a) All Shares which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, (i) be validly
issued, fully paid and nonassessable, (ii) be free from any and all
taxes, liens, preemption and other rights of
others, and charges with respect to the issue thereof (other than
transfer taxes, if any, in respect of any transfer occurring
contemporaneously with such issue) and (iii) not be, at the time of
such exercise, subject to any restrictions on transfer or sale except
as provided by applicable law and agreements with the Company.
(b) During the period within which the rights represented
by this Warrant may be exercised, the Company will at all times have
authorized and reserved a sufficient number of Shares to provide for
the exercise of the rights represented by this Warrant.
(c) The Company will pay all stamp taxes attributable to
the initial issuance of Shares issuable upon the exercise of this
Warrant; provided, however, that the Company shall not be required to
-------- -------
pay any tax or taxes which may be payable in respect of any transfer
involved in the issue or delivery of any certificates for Shares or
other securities in a name other than that of the registered holder of
this Warrant or a permitted transferee in respect of which such Shares
or securities are issued.
<PAGE>
<PAGE>
(d) The Company will not, by way of amendment of its
Certificate of Incorporation, through any consolidation, merger,
reorganization, transfer of assets, distribution, issuance or sale of
securities or any other voluntary action or omission avoid or seek to
avoid the observance of any of the terms of this Warrant, but will at
all times in good faith observe and perform
all such terms and take all such action (or refrain from taking such
action) as appropriate in order to protect the rights of the holder of
this Warrant against dilution or other impairment.
4. [Reserved]
5. Warrant Purchase Price; Adjustments. The price at
-----------------------------------
which the Shares are to be purchased hereunder shall be appropriately
adjusted to reflect any stock dividends, splits, combinations or
reclassifications. At no time during the term of this Warrant will
the Company issue (or agree to issue) Shares at below the exercise
price set forth herein.
6. No Fractional Shares. Upon the exercise of this
--------------------
Warrant, Company shall not be required to issue any fractional Shares
or scrip certificates evidencing any fractional interest in Shares.
In any case where, pursuant to the terms of this Warrant, the holder
hereof would be entitled, except for the provisions of this Section 6,
to receive a fractional Share, the number of Shares issuable upon such
exercise shall be rounded to the next larger whole Share.
<PAGE>
<PAGE>
7. Governing Law. This Warrant shall be governed by and
-------------
construed in accordance with the laws of the State of New York.
8. Mutilated or Missing Warrants. Upon receipt of
-----------------------------
evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and, in the case of any such loss, theft
or destruction, upon delivery of a bond or indemnity satisfactory to
the Company, or, in the case of any mutilation, upon surrender
or cancellation of this Warrant, the Company will issue
to the holder hereof a new warrant of like tenor, in lieu
of this Warrant, representing the right to subscribe for and
purchase the number of Shares which may be subscribed for and
purchased hereunder.
IN WITNESS WHEREOF, Megadata Corporation has caused this
Warrant to be signed by its duly authorized officer, and this Warrant
to be dated, September 18, 1996.
MEGADATA CORPORATION
By:
------------------------------------------
<PAGE>
<PAGE>
PURCHASE FORM
(To be signed only upon Exercise of this Warrant)
The undersigned hereby exercises the within Warrant for the
purchase of Shares (as defined in the Warrant) covered by such Warrant
and in accordance with the terms and conditions thereof, and herewith
makes payment of the exercise price in full.
The Company is instructed to issue certificates for such
Shares and any new Warrant to which the undersigned may be entitled on
partial exercise hereof in the name of the undersigned and to deliver
the same at the address indicated.
------------------------------
TYPE OF SHARES
------------------------------
NAME
------------------------------
STREET AND NUMBER
------------------------------
CITY AND STATE
------------------------------
PURCHASER'S SIGNATURE
Signature must conform exactly with
the name of the registered owner on
the front of this Warrant.
<PAGE>
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby sells, assigns
and transfers unto _________________________ the rights represented by
the foregoing Warrant of Megadata Corporation and appoints
______________ attorney to transfer said rights on the books of said
corporation, with full power of substitution in the premises.
------------------------------
Dated:
In the presence of
-------------------------
NYFS10...:\06\45206\0006\139\WAR8196K.26D
<PAGE>
EXHIBIT 3
WARRANT NO. 2
THIS WARRANT AND THE COMMON STOCK OR OTHER SECURITY
ISSUABLE THEREFOR HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED, OR ANY OTHER APPLICABLE
REGULATION OR LAW. ACCORDINGLY, NO TRANSFER OF THIS WARRANT
OR ANY SHARE ISSUABLE OR ISSUED UPON EXERCISE HEREOF MAY BE
MADE IN THE UNITED STATES EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT OR AN EXEMPTION FROM
REGISTRATION THEREUNDER AND IN COMPLIANCE WITH ANY OTHER
APPLICABLE SECURITIES LAWS AND THE TERMS HEREOF.
<PAGE>
<PAGE>
To Subscribe for and Purchase Shares of Common Stock of
MEGADATA CORPORATION
No. 2
THIS CERTIFIES that, for value received, G.S. Beckwith
Gilbert (or permitted transferees) is entitled to subscribe for and
purchase from Megadata Corporation, a New York corporation (herein
referred to as the "Company"), at any time and from time to time, from
the date hereof to 5:00 p.m. (New York City time) on September 18,
1999 (the "Expiration Time"), up to 200,000 duly authorized, validly
issued, fully paid and non-assessable shares of Common Stock ("Common
Shares"), par value $.01 per share, of the Company, or any shares into
which such Common Shares shall have been changed or any stock or other
securities resulting from a reclassification thereof or change thereto
(all such shares, stock or other securities which may be purchased by
this Warrant are herein referred to as the "Shares"), at the price and
upon the terms and conditions and subject to adjustment, all as
hereinafter set forth. This Warrant is exercisable only as provided
in Section 6 hereof and only if the warrant for 700,000 Shares issued
by the Company to the holder on the date hereof (the "700,000 Share
Warrant") is exercised prior to the exercise of this Warrant.
The Company represents that all Shares to which the holder
of this Warrant shall be entitled upon exercise thereof (i) are duly
authorized by the Certificate of Incorporation of the Company, in
accordance with the laws of the State of New
<PAGE>
<PAGE>
York, (ii) have been duly authorized to be issued upon the exercise of
this Warrant from time to time, in whole or in part, (iii) will be,
when issued in accordance with the terms of this Warrant, duly
authorized, validly issued and fully paid and nonassessable and free
and clear of all taxes, liens, fees, charges and preemptive rights
(other than taxes, liens, fees, charges and rights of others claiming
by, and through, the holder hereof) and (iv) will not at the time of
such exercise be subject to any restrictions on transfer or sale
except as provided by applicable laws and agreements with the Company.
1. Exercise of Warrant. (a) The rights represented by
-------------------
this Warrant may be exercised by the holder hereof, by the surrender
of this Warrant, with the purchase form attached hereto (or reasonable
facsimile thereof) duly executed, at the principal office of the
Company at 35 Orville Drive, Bohemia, New York 11716 (or such other
office or agency of the Company as it may designate by notice in
writing to the holder hereof at the address of such holder appearing
on the books of the Company at any time during the period within which
the rights represented by this Warrant may be exercised) and upon
payment as provided in Section 1(b) below. The Company agrees that
the Shares so purchased shall be and will be deemed to be issued to
the holder hereof as the record owner of such Shares immediately prior
to the close of business on the date on which this Warrant shall have
been surrendered and payment made for such Shares as aforesaid.
Certificates for the Shares so purchased shall be
<PAGE>
<PAGE>
delivered, at the Company's expense (including, without limitation,
the payment by the Company of any applicable issue, stamp or other
taxes), to the holder hereof as promptly as practicable thereafter,
but in each case within five (5) days, after the rights represented by
this Warrant shall have been exercised.
(b) Payment of the warrant purchase price for the Shares
purchased upon the exercise of this Warrant shall be made in full by
wire transfer, cash, check, or money order, payable in United States
currency to the order of Company.
(c) The Company will, at the time of or at any time after
each exercise of this Warrant, upon the request of the holder thereof
or of any Shares issued upon any exercise, acknowledge in writing its
continuing obligation to afford to such holder all rights to which
such holder shall continue to be entitled under this Warrant; provided
that, if any such holder shall fail to make any such request, the
failure shall not affect the continuing obligation of the Company to
afford such rights to such holder.
2. Transferability of Warrant. This Warrant may be
--------------------------
transferred, in whole or in part, by the original holder hereof to any
member of his family, a family trust or an IRA retirement account for
Purchaser's benefit or any person designated by the holder to serve
and who serves on the Company's Board of Directors (a "permitted
transferee").
<PAGE>
<PAGE>
3. Covenants of the Company. The Company hereby covenants
------------------------
and agrees as follows:
(a) All Shares which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, (i) be validly
issued, fully paid and nonassessable, (ii) be free from any and all
taxes, liens, preemption and other rights of others, and charges with
respect to the issue thereof (other than transfer taxes, if any, in
respect of any transfer occurring contemporaneously with such issue)
and (iii) not be, at the time of such exercise, subject to any
restrictions on transfer or sale except as provided by applicable law
and agreements with the Company.
(b) During the period within which the rights represented
by this Warrant may be exercised, the Company will at all times have
authorized and reserved a sufficient number of Shares to provide for
the exercise of the rights represented by this Warrant.
(c) The Company will pay all stamp taxes attributable to
the initial issuance of Shares issuable upon the exercise of this
Warrant; provided, however, that the Company shall not be required to
-------- -------
pay any tax or taxes which may be payable in respect of any transfer
involved in the issue or delivery of any certificates for Shares or
other securities in a name other than that of the registered holder of
this Warrant or a permitted transferee in respect of which such Shares
or securities are issued.
<PAGE>
<PAGE>
(d) The Company will not, by way of amendment of its
Certificate of Incorporation, through any consolidation, merger,
reorganization, transfer of assets, distribution, issuance or sale of
securities or any other voluntary action or omission avoid or seek to
avoid the observance of any of the terms of this Warrant, but will at
all times in good faith observe and perform all such terms and take
all such action (or refrain from taking such action) as appropriate in
order to protect the rights of the holder of this Warrant against
dilution or other impairment.
4. Restrictions. [Reserved].
------------
5. Warrant Purchase Price. The warrant purchase price
----------------------
shall be $1.25 from the date of original issuance of this Warrant to
the close of business on the first anniversary of such date, $1.50
from the next day after such first anniversary to the close of
business on the second anniversary of the date of original issuance of
this Warrant and $1.75 thereafter. Such warrant purchase price shall
be appropriately adjusted to reflect any stock dividends, splits,
combinations or reclassifications. At no time during the term of this
Warrant will the Company issue (or agree to issue) Shares at below the
warrant purchase price then in effect, except for Shares issued
pursuant to the 700,000 Share Warrant and Shares issued pursuant to
employee stock options in the ordinary course of business, but not in
excess of 50,000 Shares on an annual basis.
<PAGE>
<PAGE>
6. Prior Notice of Any Financings. If, during the term of
------------------------------
this Warrant, the Company shall propose to effect a
financing through the issuance of any debt or equity security
(including, without limitation, through the issuance of any rights or
options to purchase any debt or equity security or any securities that
are exchangeable for or convertible into any debt or equity
securities), the Company shall first notify the holder of this Warrant
in writing of such intent, specifying the details thereof. The holder
then shall have a period of 30 days after such notice to provide such
financing through the full or partial exercise of this Warrant
(provided that the holder must provide 100% of such financing up to
the product of the maximum number of Shares that may then be purchased
by the holder hereunder and the warrant purchase price then in
effect), during which 30-day period the Company shall not effect such
financing with a third party.
7. No Fractional Shares. Upon the exercise of this
--------------------
Warrant, whether in whole or in part, Company shall not be required to
issue any fractional Shares or scrip certificates evidencing any
fractional interest in Shares. In any case where, pursuant to the
terms of this Warrant, the holder hereof would be entitled, except for
the provisions of this Section 7, to receive a fractional Share, the
number of Shares issuable upon such exercise shall be rounded to the
next larger whole Share.
<PAGE>
<PAGE>
8. Governing Law. This Warrant shall be governed by and
-------------
construed in accordance with the laws of the State of New York.
9. Mutilated or Missing Warrants. Upon receipt of
-----------------------------
evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and, in the case of any such loss, theft
or destruction, upon delivery of a bond or indemnity satisfactory to
the Company, or, in the case of any mutilation, upon surrender or
cancellation of this Warrant, the Company will issue to the holder
hereof a new warrant of like tenor, in lieu of this Warrant,
representing the right to subscribe for and purchase the number of
Shares which may be subscribed for and purchased hereunder.
IN WITNESS WHEREOF, Megadata Corporation has caused this
Warrant to be signed by its duly authorized officer, and this Warrant
to be dated, September 18, 1996.
MEGADATA CORPORATION
By:
------------------------------------------
<PAGE>
<PAGE>
PURCHASE FORM
(To be signed only upon Exercise of this Warrant)
The undersigned hereby exercises the within Warrant for the
purchase of Shares (as defined in the Warrant) covered by such Warrant
and in accordance with the terms and conditions thereof, and herewith
makes payment of the exercise price in full.
The Company is instructed to issue certificates for such
Shares and any new Warrant to which the undersigned may be entitled on
partial exercise hereof in the name of the undersigned and to deliver
the same at the address indicated.
------------------------------
TYPE OF SHARES
------------------------------
NAME
------------------------------
STREET AND NUMBER
------------------------------
CITY AND STATE
------------------------------
PURCHASER'S SIGNATURE
Signature must conform exactly with
the name of the registered owner on
the front of this Warrant.
<PAGE>
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby sells, assigns
and transfers unto _________________________ the rights represented by
the foregoing Warrant of Megadata Corporation and appoints
______________ attorney to transfer said rights on the books of said
corporation, with full power of substitution in the premises.
------------------------------
Dated:
In the presence of
-------------------------
NYFS10...:\06\45206\0006\139\WAR8196P.41C
<PAGE>
EXHIBIT 4
REGISTRATION RIGHTS AGREEMENT
-----------------------------
Registration Rights Agreement, dated as of September 18,
1996, between Megadata Corporation, a New York corporation
("Company"), and G.S. Beckwith Gilbert ("Purchaser").
W I T N E S S E T H :
-------------------
WHEREAS, Company and Purchaser have entered into a
Securities Purchase Agreement, dated as of the date hereof
("Securities Purchase Agreement"), pursuant to which Company has
agreed to issue and sell to Purchaser, and Purchaser has agreed to
purchase from Company, the Warrants (as defined in the Securities
Purchase Agreement); and
WHEREAS, in order to induce Purchaser to enter into the
Securities Purchase Agreement and to purchase such Warrants, Company
has agreed to provide registration rights with respect thereto;
NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained, it is agreed as follows:
1. Definitions. The following terms shall have (unless
-----------
otherwise provided elsewhere in this Registration Rights Agreement)
the following respective meanings (such meanings being equally
applicable to both the singular and plural form of the terms defined):
"Agreement" shall mean this Registration Rights Agreement,
including all amendments, modifications and supplements and any
exhibits or schedules to any of the foregoing, and shall refer to the
Agreement as the same may be in effect at the time such reference
becomes operative.
"Business Day" shall mean any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted to be closed
in the State of New York.
"Commission" shall mean the Securities and Exchange
Commission or any other federal agency then administering the
Securities Act and other federal securities laws.
<PAGE>
<PAGE>
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, or any similar federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in
effect from time to time.
"NASD" shall mean the National Association of Securities
Dealers, Inc., or any successor corporation thereto.
"Person" shall mean any individual, corporation,
partnership, association or other entity.
"Registrable Securities" shall mean any and all securities
of the Company issued pursuant to exercise of the Warrants.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect from
time to time.
2. [Reserved]
3. Incidental Registration. If Company at any time on or
-----------------------
prior to September 18, 2006, proposes to file on its behalf and/or on
behalf of any of its security holders ("the demanding security
holders") a Registration Statement under the Securities Act on any
form (other than a Registration Statement on Form S-4 or S-8 or any
successor form for securities to be offered in a transaction of the
type referred to in Rule 145 under the Securities Act or to employees
of Company pursuant to any employee benefit plan, respectively) for
the general registration of securities to be sold for cash with
respect to its Common Stock or any other class of equity security (as
defined in Section 3(a)(11) of the Exchange Act) of Company, it will
give written notice to all holders of Registrable Securities at least
30 days before the initial filing with the Commission of such
Registration Statement, which notice shall set forth the intended
method of disposition of the securities proposed to be registered by
Company. The notice shall offer to include in such filing the
aggregate number of shares of Registrable Securities as such holders
may request.
Each holder of any such Registrable Securities desiring to
have Registrable Securities registered under this Section 3 shall
advise Company in writing within 30 days after the date of receipt of
such offer from Company, setting forth the amount of such Registrable
Securities for which registration is requested. Company shall
thereupon include in such filing the number of
<PAGE>
<PAGE>
shares of Registrable Securities for which registration is so
requested, subject to the next sentence, and shall use its best
efforts to effect registration under the Securities Act of such
shares. If the managing underwriter of a proposed public offering
shall advise Company in writing that, in its opinion, the distribution
of the Registrable Securities requested to be included in the
registration concurrently with the securities being registered by
Company or such demanding security holder would materially and
adversely affect the distribution of such securities by Company or
such demanding security holder, then all selling security holders
shall reduce the amount of securities each intended to distribute
through such offering on a pro rata basis. Except as otherwise
provided in Section 5 all expenses of such registration shall be borne
by Company.
4. Registration Procedures. If Company is required by the
-----------------------
provisions of Section 3 to use its best efforts to effect the
registration of any of its securities under the Securities Act,
Company will, as expeditiously as possible:
(a) prepare and file with the Commission a
Registration Statement with respect to such securities and use its
best efforts to cause such Registration Statement to become and remain
effective for a period of time required in the managing underwriter's
determination for the disposition of such securities by the holders
thereof;
(b) prepare and file with the Commission such
amendments and supplements to such Registration Statement and the
prospectus used in connection therewith as may be necessary to keep
such Registration Statement effective and to comply with the
provisions of the Securities Act with respect to the sale or other
disposition of all securities covered by such Registration Statement
until such time as all of such securities have been disposed of in a
public offering;
(c) furnish to such selling security holders such
number of copies of a summary prospectus or other prospectus,
including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents, as such
selling security holders may reasonably request;
<PAGE>
<PAGE>
(d) use its best efforts to register or qualify the
securities covered by such Registration Statement under such other
securities or blue sky laws of such jurisdictions within the United
States and Puerto Rico as each holder of such securities shall request
(provided, however, that Company shall not be obligated to qualify as
-------- -------
a foreign corporation to do business under the laws of any
jurisdiction in which it is not then qualified or to file
any general consent to service or process), and do such other
reasonable acts and things as may be required of it to
enable such holder to consummate the disposition in such jurisdiction
of the securities covered by such Registration Statement;
(e) [Reserved]
(f) [Reserved]
(g) enter into customary agreements (including an
underwriting agreement in customary form) and take such other actions
as are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities; and
(h) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, but not
later than 18 months after the effective date of the Registration
Statement, an earnings statement covering the period of at least 12
months beginning with the first full month after the effective date of
such Registration Statement, which earnings statements shall satisfy
the provisions of Section 11(a) of the Securities Act.
It shall be a condition precedent to the obligation of
Company to take any action pursuant to this Agreement in respect of
the securities which are to be registered at the request of any holder
of Registrable Securities that such holder shall furnish to Company
such information regarding the securities held by such holder and the
intended method of disposition thereof as Company shall reasonably
request and as shall be required in connection with the action taken
by Company.
<PAGE>
<PAGE>
5. Expenses. All expenses incurred in complying with this
--------
Agreement, including, without limitation, all registration and filing
fees (including all expenses incident to filing with the NASD),
printing expenses, fees and disbursements of counsel for Company, the
reasonable fees and expenses of counsel for the selling security
holders (selected by those holding a majority of the shares being
registered), expenses of any special audits incident to or required by
any such registration and expenses of complying with the securities or
blue sky laws of any jurisdictions pursuant to Section 4(d), shall be
paid by Company, except that Company shall not be liable for any fees,
discounts or commissions to any underwriter or any fees or
disbursements of counsel for any underwriter in respect of the
securities sold by such holder of Registrable Securities.
6. Indemnification and Contribution.
--------------------------------
(a) In the event of any registration of any
Registrable Securities under the Securities Act pursuant to this
Agreement, Company shall indemnify and hold harmless the holder of
such Registrable Securities, such holder's directors and officers (if
applicable), and each other Person (including each underwriter) who
participated in the offering of such Registrable Securities and each
other Person, if any, who controls such holder or such participating
Person within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such holder
or any such director or officer or participating Person or controlling
Person may become subject under the Securities Act or any other
statute or at common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon (i) any alleged untrue statement of any material fact contained,
on the effective date thereof, in any Registration Statement under
which such securities were registered under the Securities Act, any
preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereto, or (ii) any alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and shall reimburse such
holder or such director, officer or participating Person or
controlling Person for any legal or any other expenses reasonably
incurred by such holder or such director, officer or participating
Person or controlling Person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
--------
however, that Company shall not be liable in any such case to the
-------
<PAGE>
<PAGE>
extent that any such loss, claim, damage or liability arises out of or
is based upon any alleged untrue statement or alleged omission made in
such Registration Statement, preliminary prospectus, prospectus or
amendment or supplement in reliance upon and in conformity with
written information furnished to Company by such holder specifically
for use therein or (in the case of any registration pursuant to
Section 2) so furnished for such purposes by any underwriter. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such holder or such director,
officer or participating Person or controlling Person, and shall
survive the transfer of such securities by such holder.
(b) Each holder of any Registrable Securities, by
acceptance thereof, agrees to indemnify and hold harmless
Company, its directors and officers and each other Person, if any, who
controls Company within the meaning of the Securities Act against any
losses, claims, damages or liabilities, joint or several, to which
Company or any such director or officer or any such Person may become
subject under the Securities Act or any other statute or at common
law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon information
in writing provided to Company by such holder of such Registrable
Securities specifically for use in the following documents and
contained, on the effective date thereof, in any Registration
Statement under which securities were registered under the Securities
Act at the request of such holder, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto.
(c) If the indemnification provided for in this
Section 6 from the indemnifying party is unavailable to an indemnified
party hereunder in respect of any losses, claims, damages, liabilities
or expenses referred to therein, then the indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party
and indemnified parties in connection with the actions which resulted
in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative fault of
such indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any action in question,
<PAGE>
<PAGE>
including any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact, has been made
by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above
shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation
or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 6(c) were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred
to in the immediately preceding paragraph. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
7. Certain Limitations on Registration Rights.
------------------------------------------
Notwithstanding the other provisions of this Agreement, Company shall
not be obligated to register the Registrable Securities of any holder
if, in the opinion of counsel to Company reasonably satisfactory to
the holder and its counsel (or, if the holder has engaged an
investment banking firm, to such investment banking firm and its
counsel), the sale or other disposition of such holder's Registrable
Securities, in the manner proposed by such holder (or by such
investment banking firm), may be effected without registering such
Registrable Securities under the Securities Act; and
8. [Reserved]
9. Miscellaneous.
-------------
(a) No Inconsistent Agreements. Company will not
--------------------------
hereafter enter into any agreement with respect to its securities
which is inconsistent with the rights granted to the holders of
Registrable Securities in this Agreement. Company has not previously
entered into any agreement with respect to any of its securities
granting any registration rights to any person.
<PAGE>
<PAGE>
(b) Remedies. Each holder of Registrable Securities,
--------
in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. Company agrees that
monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this
Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate. In any
action or proceeding brought to enforce any provision of this
Agreement or where any provision hereof is validly asserted as a
defense, the successful party shall be entitled to recover reasonable
attorneys' fees in addition to any other available remedy.
(c) Amendments and Waivers. Except as otherwise
----------------------
provided herein, the provisions of this Agreement may not be amended,
modified or supplemented, and waivers or consents to departure from
the provisions hereof may not be given unless Company has obtained the
written consent of holders of at least a majority of the Registrable
Securities then outstanding.
(d) Notice Generally. Any notice, demand, request,
----------------
consent, approval, declaration, delivery or other communication
hereunder to be made pursuant to the provisions of this Agreement
shall be made in accordance with the Security Purchase Agreement.
(e) Successors and Assigns. This Agreement shall
----------------------
inure to the benefit of and be binding upon the successors of each of
the parties hereto and any permitted transferee (as defined in the
Securities Purchase Agreement).
(f) Headings. The headings in this Agreement are for
--------
convenience of reference only and shall not limit or otherwise affect
the meaning hereof.
(g) Governing Law. This Agreement shall be governed
-------------
by the laws of the State of New York, without regard to the provisions
thereof relating to conflict of laws.
(h) Severability. Wherever possible, each provision
------------
of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or
the remaining provisions of this Agreement.
<PAGE>
<PAGE>
(i) Entire Agreement. This Agreement, together with
----------------
the Securities Purchase Agreement, represents the complete agreement
and understanding of the parties hereto in respect of the subject
matter contained herein and therein. This Agreement supersedes all
prior agreements and understandings between the parties with respect
to the subject matter hereof.
IN WITNESS WHEREOF, Company and Purchaser have executed this
Agreement as of the date first above written.
MEGADATA CORPORATION
By:_________________________________
Name:
Title:
---------------------------------
G.S. Beckwith Gilbert
NYFS10...:\06\45206\0006\139\REG8196N.21C
<PAGE>
EXHIBIT 5
SECURED PROMISSORY NOTE
-----------------------
$100,000 New York, New York
September 18, 1996
FOR VALUE RECEIVED, the undersigned, MEGADATA
CORPORATION, a New York corporation (hereinafter referred to as
"Borrower"), hereby unconditionally PROMISES TO PAY to the order
of G.S. BECKWITH GILBERT ("Lender"), or his permitted assigns, to
an account designated by Lender, in lawful money of the United
States of America and in immediately available funds, the
principal amount of ONE HUNDRED THOUSAND DOLLARS ($100,000),
together with interest on the unpaid principal amount of this
Note outstanding from time to time from the date hereof, at an
annual rate of 9% calculated on the basis of a 360-day year.
If the warrant to purchase 700,000 shares of common
stock of Borrower issued to Lender on the date hereof expires
unexercised, the principal amount of the indebtedness evidenced
hereby together with all accrued interest shall be payable on or
prior to March 18, 1997. Notwithstanding the foregoing, the
principal amount of the indebtedness evidenced hereby together
with all accrued interest shall be immediately due and payable
upon written notice to Borrower from Lender upon the happening of
any of the following Events of Default:
(a) Any representation or warranty in the Securities
Purchase Agreement, dated the date hereof, between Borrower and
Lender shall be untrue or incorrect in any material respect;
(b) Any of the assets of Borrower shall be attached,
seized, levied upon or subjected to a writ or distress warrant,
or come within the possession of any receiver, trustee, custodian
or assignee for the benefit of creditors of Borrower and shall
remain unstayed or undismissed for thirty (30) consecutive days;
or any person other than Borrower shall apply for the appointment
of a receiver, trustee or custodian for any of the assets of
Borrower and shall remain unstayed or undismissed for thirty (30)
consecutive days; or Borrower shall have concealed, removed or
permitted to be concealed or removed, any part of its property,
with intent to hinder, delay or defraud its creditors or any of
them or made or suffered a transfer of any of its property or the
<PAGE>
<PAGE>
incurring of an obligation which may be fraudulent under any
bankruptcy, fraudulent conveyance or other similar law;
(c) A case or proceeding shall have been commenced
against Borrower in a court having competent jurisdiction seeking
a decree or order in respect of Borrower (i) under title 11 of
the United States Code, as now constituted or hereafter amended,
or any other applicable federal, state or foreign bankruptcy or
other similar law, (ii) appointing a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar
official) of Borrower or of any substantial part of its
properties, or (iii) ordering the winding-up or liquidation of
the affairs of Borrower and such case or proceeding shall remain
undismissed or unstayed for thirty (30) consecutive days or such
court shall enter a decree or order granting the relief sought in
such case or proceeding;
(d) Borrower shall (i) file a petition seeking relief
under title 11 of the United States Code, as now constituted or
hereafter amended, or any other applicable federal, state or
foreign bankruptcy or other similar law, (ii) consent to the
institution of proceedings thereunder or to the filing of any
such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) of Borrower or of any
substantial part of its properties, (iii) fail generally to pay
its debts as such debts become due, or (iv) take any corporate
action in furtherance of any such action;
(e) Final judgment or judgments (after the expiration
of all times to appeal therefrom) for the payment of money in
excess of $100,000 in the aggregate shall be rendered against
Borrower and the same shall not be vacated, stayed, bonded, paid
or discharged for a period of thirty (30) days; or
(f) Any other event shall have occurred which would
have a material adverse effect on Borrower or its assets or
financial condition in Lender's reasonable judgment and Lender
shall have given Borrower at least twenty (20) days notice
thereof.
As security for any and all liabilities of the Borrower
to Lender, now existing or hereafter arising hereunder, or
otherwise, Lender is hereby given a lien upon and a security
interest in any and all moneys or other property (i.e., goods and
merchandise, as well as any and all documents relative thereto;
also, funds, securities, choses in action and any and all other
forms of property whether real, personal or mixed, and any right,
<PAGE>
<PAGE>
title or interest of the Borrower therein or thereto), and/or the
proceeds thereof, including (without limitation of the foregoing)
that in safekeeping or in which Borrower may have any interest,
except for any real estate and equipment on which John Keller has
been granted a first lien remaining in effect. In the event of
the happening of any one or more Events of Default, Lender shall
have all of the rights and remedies provided to a secured party
by the Uniform Commercial Code in effect in New York State at
that time and, in addition thereto, the Borrower further agrees
that (1) in the event that notice is necessary, written notice
delivered to the Borrower at its principal executive offices
three business days prior to the date of public sale of the
property subject to the lien and security interest created herein
or prior to the date after which private sale or any other
disposition of said property will be made shall constitute
reasonable notice, but notice given in any other reasonable
manner or at any other reasonable time shall be sufficient, (2)
in the event of sale or other disposition of such property,
Lender may apply the proceeds of any such sale or disposition to
the satisfaction of Lender's reasonable attorneys' fees, legal
expenses and other costs and expenses incurred in connection with
the retaking, holding, preparing for sale, and selling of the
property, and (3) without precluding any other methods of sale,
the sale of property shall have been made in a commercially
reasonable manner if conducted in conformity with reasonable
commercial practices of banks disposing of similar property, but
in any event, Lender may sell at his option on such terms as he
may choose without assuming any credit risk and without any
obligation to advertise.
If any payment on this Note becomes due and payable on
a day other than a business day, the maturity thereof shall be
extended to the next succeeding business day and interest thereon
shall be payable at the then applicable rate during such
extension.
Demand, presentment, protest and notice of nonpayment
and protest are hereby waived by Borrower.
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This Note has been executed, delivered and accepted in
the State of New York and shall be interpreted, governed by, and
construed in accordance with, the laws of the State of New York.
MEGADATA CORPORATION
By:__________________________
Title:
NYFS10...:\06\45206\0006\139\NTS8196L.09D
