<PAGE> 1
Signed and page numbered in accordance with Rule 0-3(b). Page 1 of 5.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 5)
AW Computer Systems, Inc.
-------------------------
(Name of Issuer)
Class A Common Shares
------------------------------
(Title of Class of Securities)
002448108
---------
(CUSIP Number)
Vincent G. Vidas, 730 Lippincott Avenue, Moorestown, New Jersey 08057
609-234-6700
---------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
December 3, 1997
----------------
(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: [ ]
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for the parties to whom copies are to
be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE> 2
Signed and page numbered in accordance with Rule 0-3(b). Page 2 of 5.
CUSIP NO. 002448108
<TABLE>
<S> <C> <C>
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
Vincent G. Vidas
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: [ ](a)
[ ](b)
3. SEC USE ONLY:
4. SOURCE OF FUNDS:
OO
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e): [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
USA
7. SOLE VOTING POWER:
472,574*
NUMBER OF 8. SHARED VOTING POWER:
SHARES None
BENEFICIALLY
OWNED BY EACH 9. SOLE DISPOSITIVE POWER:
REPORTING 472,574*
PERSON WITH
10. SHARED DISPOSITIVE POWER:
None
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
472,574*
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: [ ]*
13. PERCENT OF CLASS REPRESENTED BY AMOUNT OF ROW (11):
7.08%
14. TYPE OF REPORTING PERSON:
IN
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT BOTH SIDES OF THE COVER PAGE, RESPONSES TO
ITEM 1-7 (INCLUDING) EXHIBITS) OF THE SCHEDULE, AND
THE SIGNATURE ATTESTATION.
* Does not include 100,000 shares which Mr. Vidas has the right to acquire upon
exercise of a Warrant dated May 6, 1997, or 75,000 shares which Mr. Vidas has
the right to acquire upon exercise of a Warrant dated December 3, 1997, neither
of which is exercisable within the next 60 days and with respect to which Mr.
Vidas would have sole voting and dispositive powers.
<PAGE> 3
Signed and page numbered in accordance with Rule 0-3(b). Page 3 of 5.
Item 3. Source and Amount of Funds or Other Consideration
On December 3, 1997, Mr. Vidas purchased certain units from the
Company consisting in part of a warrant to acquire 75,000 shares of
Class A Common Shares (the "Common Shares") in a private offering by
the Company. Pursuant to the terms of the Subscription Agreement for
the units, the warrant may not be exercised unless a current
prospectus covering Class A common shares upon exercise of the warrant
has been filed with the Securities and Exchange Commission and such
shares have been registered or qualified or deemed exempt under the
state securities laws of the state of residence of the warrant holder.
The warrant, which is not exercisable within the 60-day period
following filing of this Schedule 13D, is exercisable at a price of
$.40 per Class A Common Share. The aggregate purchase price for the
units was $25,000, which Mr. Vidas paid from personal funds.
Item 4. Purpose of Transaction
On December 3, 1997, Mr. Vidas purchased certain units from the
Company consisting in part of a warrant to acquire 75,000 shares of
Class A Common Shares in a private offering by the Company. Mr.
Vidas' investment in the Company is held as a passive investment. Mr.
Vidas may acquire additional shares of the Company if further shares
can be acquired upon terms satisfactory to Mr. Vidas. Mr. Vidas
intends to review his investment position from time to time.
Depending upon such review, market and business conditions and other
factors, Mr. Vidas may choose to increase his position, maintain his
present level of investment or sell all or a portion of his investment
in the Company.
Item 5. Interest in Securities of the Issuer
(a) Mr. Vidas beneficially owns 472,574* Common Shares of the
Company, including 162,500 shares which Mr. Vidas has the
right to acquire within 60 days pursuant to options but which
does not include 175,000 shares which Mr. Vidas has the right
to acquire pursuant to certain warrants which are not
exercisable within the next 60-days. Such 472,574 shares
represent 7.08% of such class of securities issued and
outstanding on December 23, 1997, and which together with the
shares acquirable upon exercise of the warrants, would
represent 9.71% of such class of securities issued and
outstanding on December 23, 1997, were the warrants currently
exercisable.
(b) Mr. Vidas has the sole power to vote or to direct the vote of
310,074 Common Shares. The 162,500 Common Shares held subject
to options do not carry any voting rights unless and until the
options are exercised. The 175,000 Common Shares held subject
to certain warrants do not carry any voting rights unless and
until the warrants are exercised. Mr. Vidas has the sole
power to dispose or to direct the disposition of 310,074
Common Shares, the options to purchase 162,500 Common Shares,
and the warrants to purchase 175,000 Common Shares.
<PAGE> 4
Signed and page numbered in accordance with Rule 0-3(b). Page 4 of 5.
(c) On December 3, 1997, Mr. Vidas purchased certain units
consisting in part of a warrant to purchase 75,000 Common
Shares in a private offering by the Company. The exercise
price of each Common Share subject to the warrant is $0.40 and
the term of the warrant is for a period of two years from the
date of grant.
Except for the transaction reported above, Mr. Vidas has
effected no other transactions in the Common Shares since his
most recent filing on Schedule 13D with the Securities and
Exchange Commission on November 4, 1997.
(d) Not Applicable.
(e) Not Applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer
A copy of the Warrant is filed herewith.
In addition to the terms and conditions of the Warrant, the
Warrant is further subject to the following restriction on exercise
set forth in a certain Subscription Agreement between the Issuer and
Mr. Vidas:
"Current Registration Statement and Blue Sky
Qualification or Exemption Required for Exercise of
Warrants. No Warrants may be exercised unless at the
time of exercise the Company has filed with the
Commission a current prospectus covering Class A
Common Shares upon exercise of such Warrant, and such
shares have been registered or qualified or deemed to
be exempt under the securities laws of the state of
residence of the holder of such Warrant."
Item 7. Material to be Filed as Exhibits
Warrant dated December 3, 1997.
<PAGE> 5
Signed and page numbered in accordance with Rule 0-3(b). Page 5 of 5.
SIGNATURE
After reasonable inquiry and to the best of his knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Date: December 29, 1997 /s/ Vincent G. Vidas
---------------------------------
Vincent G. Vidas
<PAGE> 6
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND
NEITHER THIS WARRANT NOR ANY INTEREST THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT AND THE RULES AND REGULATIONS THEREUNDER. BY ITS
ACCEPTANCE HEREOF, THE HOLDER OF THIS WARRANT REPRESENTS THAT IT IS ACQUIRING
THIS WARRANT FOR INVESTMENT AND AGREES TO COMPLY IN ALL RESPECTS WITH ANY
APPLICABLE STATE SECURITIES LAWS COVERING THE PURCHASE OF THIS WARRANT AND
RESTRICTING ITS TRANSFER, COPIES OF WHICH MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS WARRANT TO THE SECRETARY OF THIS
COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICE AT 9000A COMMERCE PARKWAY, MOUNT
LAUREL, NEW JERSEY 08054.
Dated: December 3, 1997
WARRANT
To purchase up to 75,000 Class A Common Shares
AW COMPUTER SYSTEMS, INC.
Expiring December 2, 1999
THIS IS TO CERTIFY THAT, for value received, Vincent G. Vidas,
or registered assigns (the "Holder"), is entitled, subject to certain conditions
set forth in Section 1.01 hereof, to purchase from AW COMPUTER SYSTEMS, INC., a
New Jersey corporation (the "Company"), at any time or from time to time after
9:00 a.m., New York City time, on December 3, 1997 and prior to 5:00 p.m. New
York City time, on December 2, 1999, at the Company's principal executive
office, at the Exercise Price, up to the number of Class A Common Shares, $.01
par value per share (the "Common Stock"), of the Company shown above, all
subject to adjustment and upon the terms and conditions as hereinafter provided,
and is entitled also to exercise the other appurtenant rights, powers and
privileges hereinafter described.
This Warrant is one of one or more warrants (the "Warrants")
of the same form and having the same terms as this Warrant, entitling
the holders initially to purchase up to an aggregate of 75,000 shares of Common
Stock, which warrants were issued along with shares of Series A 10% Redeemable
Preferred Stock (the "Series A Preferred Stock") in connection with the Series
A Preferred Stock Financing and related matters.
Certain terms used in this Warrant are defined in Article IV
hereof.
<PAGE> 7
ARTICLE I
METHOD OF EXERCISE
1.01. Method of Exercise. To exercise this Warrant in whole
or in part, the Holder shall deliver to the Company, at the Company's principal
executive office (a) this Warrant, (b) a written notice of such Holder's
election to exercise this Warrant, which notice shall specify the number of
shares of Common Stock to be purchased, but in no event less than 100 shares,
the denominations of the share certificate or certificates desired and the name
or names in which such certificates are to be registered, and (c) payment of
the Exercise Price with respect to such shares. Such payment may be made, at
the option of the Holder, in cash, by certified or bank cashier's check, money
order or wire transfer, or in any other manner consented to in writing by the
Company, or any combination thereof.
The Company shall, as promptly as practicable after receipt of
the items required by the previous paragraph, execute and deliver or cause to
be executed and delivered, in accordance with such notice, a certificate or
certificates representing the aggregate number of shares of Common Stock
specified in said notice. The share certificate or certificates so delivered
shall be in such denominations as may be specified in such notice or, if such
notice shall not specify denominations, in denominations of 100 shares each,
and shall be issued in the name of the Holder or such other name as shall be
designated in such notice. Such certificate or certificates shall be deemed to
have been issued, and such Holder or Holders or any other person so designated
to be named therein shall be deemed for all purposes to have become a Holder of
record of such shares, as of the date the aforementioned notice is received by
the Company. If this Warrant shall have been exercised only in part, the
Company shall, at the time of delivery of the certificate or certificates,
deliver to the Holder a new Warrant evidencing the right to purchase the
remaining shares of Common Stock called for by this Warrant which new Warrant
shall in all other respects be identical with this Warrant, or, at the request
of the Holder, appropriate notations may be made on this Warrant which shall
then be returned to the Holder. The Company shall pay all expenses, taxes and
other charges payable in connection with the preparation, issuance and delivery
of share certificates and new Warrants, except that, if share certificates or
new Warrants shall be registered in a name or names other than the name of the
Holder, funds sufficient to pay all transfer taxes, if any, payable as a result
of such transfer shall be paid by the Holder at the time of delivering the
aforementioned notice of exercise or promptly upon receipt of a written request
of the Company for payment.
1.02. Shares To Be Fully Paid and Nonassessable. All shares
of Common Stock issued upon the exercise of this Warrant shall be validly
issued, fully paid and nonassessable and, if the Common Stock is then eligible
for listing on any national securities exchanges (as defined in the Exchange
Act), or quoted on NASDAQ, shall be duly listed or quoted thereon, as the case
may be.
1.03. No Fractional Shares To Be Issued. The Company shall
not be required to issue fractions of shares of Common Stock upon exercise of
this
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<PAGE> 8
Warrant. If any fractions of a share would, but for this Section, be issuable
upon any exercise of this Warrant, in lieu of such fractional share the Company
shall pay to the holder, in cash, an amount equal to the same fraction of the
Market Price per share of Common Stock for the Trading Day immediately prior to
the date of such exercise.
1.04. Share Legend. Each certificate for shares of Common
Stock issued upon exercise of this Warrant, unless at the time of exercise such
shares are registered under the Act, shall bear the following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 AND NEITHER SUCH SHARES OF THE COMMON STOCK NOR ANY
INTEREST THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
AN EXEMPTION THEREFROM UNDER SAID ACT AND THE RULES AND
REGULATIONS THEREUNDER. BY ITS ACCEPTANCE HEREOF, THE HOLDER
OF SUCH SHARES OF COMMON STOCK CERTIFICATE REPRESENTS THAT IT
IS ACQUIRING THIS COMMON STOCK FOR INVESTMENT AND AGREES TO
COMPLY IN ALL RESPECTS WITH ANY APPLICABLE STATE SECURITIES
LAWS, AND THE WARRANT RELATING TO THIS COMMON STOCK ISSUED
PURSUANT TO SUCH WARRANT, COVERING THE PURCHASE OF THIS COMMON
STOCK AND RESTRICTING THEIR TRANSFER, COPIES OF WHICH MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF
RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THIS COMPANY AT
ITS PRINCIPAL EXECUTIVE OFFICE AT 9000A COMMERCE PARKWAY,
MOUNT LAUREL, NEW JERSEY 08054.
Any certificate issued at any time in exchange or substitution
for any certificate bearing such legend (except a new certificate issued upon
completion of a public distribution pursuant to a registration statement under
the Act) shall also bear such legend unless, in the opinion of counsel
reasonably acceptable to the Company, the securities represented thereby need
no longer be subject to restrictions on resale under the Act.
ARTICLE II
EXCHANGES, TRANSFERS AND REPLACEMENTS
2.01. Exchange and Registration or Transfer of Warrants.
Provided, in the opinion of counsel reasonably acceptable to the Company, the
following is permitted under the Act, the holder of this Warrant may, at its
option, surrender this Warrant at the principal executive office of the Company
and receive in exchange therefor a Warrant or Warrants, each for 100 shares of
Common Stock or an integral multiple thereof, for the same aggregate number of
shares of Common Stock as the Warrant or Warrants so surrendered for exchange
and registered to such person or persons as may be designated by such holder.
This Warrant may be divided or combined with other Warrants
upon presentation hereof and of any Warrant or Warrants with which this Warrant
is
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<PAGE> 9
to be combined at the principal executive office of the Company, together with
a written notice specifying the names and denominations in which the new
Warrant or Warrants are to be issued, signed by the holders hereof and thereof
or their respective duly authorized agents or attorneys. Subject to compliance
with this Section 2.01 as to any transfer which may be involved in the division
or combination, the Company shall execute and deliver a new Warrant or Warrants
to be divided or combined in accordance with such notice.
The Company shall keep, at said principal office, a register
in which, subject to such reasonable regulations as it may prescribe, the
Company shall register or cause to be registered Warrants and shall register or
cause to be registered the transfer of the Warrants as provided in this Section
2.01. Such register shall be in written form. Upon due presentment for
registration of transfer of any Warrants at such office, the Company shall
execute and register or cause to be registered and deliver in the name of the
transferee or transferees a new Warrant or Warrants for an equal aggregate
number of Shares.
The Company shall pay any tax or other governmental charge
that may be imposed in connection with any exchange of Warrants not involving a
transfer, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with a
transfer of Warrants.
2.02. Loss, Theft or Destruction of Warrant Certificates.
Upon receipt of evidence satisfactory to the Company of the loss, theft,
destruction or mutilation of any Warrant and, in the case of any such loss,
theft or destruction, upon receipt of indemnity or security satisfactory to the
Company (the original Warrantholder's or any other institutional
Warrantholder's undertaking being satisfactory indemnity in the event of loss,
theft, destruction or mutilation of any Warrant owned by such institutional
holder), or, in the case of any such mutilation, upon surrender and
cancellation of the Warrant, the Company will make and deliver, in lieu of such
lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and
representing the right to purchase the same aggregate number of shares of
Common Stock.
2.03. Change of Principal Executive Office. In the event the
Company shall change the address of its principal executive office, the Company
shall give the holder of this Warrant notice five (5) calendar days prior to
such change.
ARTICLE III
ANTIDILUTION PROVISIONS
3.01 Adjustments Generally. The Exercise Price and the
number of shares of Common Stock (or other securities or property) issuable
upon exercise of this Warrant shall be subject to adjustment from time to time
upon the occurrence of certain events, as provided in this Article III.
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<PAGE> 10
3.02 Common Stock Reorganization. If the Company shall
subdivide its outstanding shares of Common Stock into a greater number of
shares or consolidate its outstanding shares of Common Stock into a smaller
number of shares (any such event being called a "Common Stock Reorganization"),
then (a) the Exercise Price shall be adjusted, effective immediately after the
record date at which the holders of shares of Common Stock are determined for
purposes of such Common Stock Reorganization, to a price determined by
multiplying the Exercise Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of shares of Common
Stock outstanding on such record date before giving effect to such Common Stock
Reorganization and the denominator of which shall be the number of shares of
Common Stock outstanding after giving effect to such Common Stock
Reorganization, and (b) the number of shares of Common Stock subject to
purchase upon exercise of this Warrant shall be adjusted, effective at such
time, to a number determined by multiplying the number of shares of Common
Stock subject to purchase immediately before such Common Stock Reorganization
by a fraction, the numerator of which shall be the number of shares then
outstanding after giving effect to such Common Stock Reorganization and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately before such Common Stock Reorganization.
3.03 Special Dividends. If the Company shall issue or
distribute to all or substantially all holders of shares of Common Stock
evidences of indebtedness, any other securities of the Company, or any cash,
property or other assets, and if such issuance or distribution does not
constitute a cash dividend or distribution out of surplus or net profits
legally available therefor, or a Common Stock Reorganization (any such
nonexcluded event being herein called a "Special Dividend"), the Exercise Price
shall be adjusted, effective immediately after the record date at which the
holders of shares of Common Stock are determined for purposes of such Special
Dividend, to a price determined by multiplying the Exercise Price then in
effect by a fraction, the numerator of which shall be the Market Price per
share of Common Stock on such record date less the then fair market value (as
reasonably determined in good faith by the Board of Directors of the Company)
of the evidences of indebtedness, securities or property or other assets issued
or distributed in such Special Dividend with respect to one share of Common
Stock, and the denominator of which shall be the Market Price per share of
Common Stock on such record date.
3.04 Capital Reorganizations. If there shall be any
consolidation or merger to which the Company is a party, other than a
consolidation or a merger in which the Company is a continuing corporation and
which does not result in any reclassification of, or change (other than a
Common Stock Reorganization or a change in par value) in, outstanding shares of
Common Stock, or any sale or conveyance of the property of the Company as an
entirety or substantially as an entirety (any such event being called a
"Capital Reorganization"), then effective upon the effective date of such
Capital Reorganization, the Holder shall have the right to purchase, upon
exercise of this Warrant, the kind and amount of shares of stock and other
securities and property (including in cash) which the Holder would have owned
or have been entitled to receive after such Capital Reorganization if this
Warrant had been exercised immediately prior to such Capital Reorganization.
As a condition to
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<PAGE> 11
effecting any Capital Reorganization, the Company or the successor or surviving
corporation, as the case may be, shall execute and deliver to each
Warrantholder an agreement as to the Warrantholders' rights in accordance with
this Section 3.04, providing for subsequent adjustments as nearly equivalent as
may be practicable to the adjustments provided for in this Article III. The
provisions of this Section 3.04 shall similarly apply to successive Capital
Reorganizations.
3.05. Certain Other Events. If any event occurs as to which
the foregoing provisions of this Article III are not strictly applicable or, if
strictly applicable, would not, in the good faith judgment of the Board of
Directors of the Company, fairly protect the purchase rights of the Warrants in
accordance with the essential intent and principles of such provisions, then
such Board shall make such adjustments in the application of such provisions,
in accordance with such essential intent and principles, as shall be reasonably
necessary, in the good faith opinion of such Board, to protect such purchase
rights as aforesaid, but in no effect of increasing the Exercise Price or
decreasing the number event shall any such adjustment have the of shares of
Common Stock subject to purchase upon exercise of this Warrant.
3.06. Adjustment Rules. (a) Any adjustments pursuant to
this Article III shall be made successively whenever an event referred to
therein shall occur.
(b) If the Company shall set a record date to determine the
holders of shares of Common Stock for purposes of a Common Stock Reorganization
or Capital Reorganization, and shall legally abandon such action prior to
effecting such action, then no adjustment shall be made pursuant to this
Article III in respect of such action.
(c) All calculations under this Article III shall be made to
the nearest cent or to the nearest one hundredth (1/100th) of a share, as the
case may be. Notwithstanding any provision of this Article III to the
contrary, no adjustment in the Exercise Price shall be made if the amount of
such adjustment would be less than $0.05, but any such amount shall be carried
forward and an adjustment with respect thereto shall be made at the time of and
together with any subsequent adjustment which, together with such amount and
any other amount or amounts so carried forward, shall aggregate $0.05 or more.
(d) In any case in which the provisions of this Article III
shall require that an adjustment shall become effective immediately after a
record date for an event, the Company may defer until the occurrence of such
event (i) issuing to the holder of any Warrant exercised after such record date
and before the occurrence of such event the additional shares of Common Stock
issuable upon such conversion by reason of the adjustment required by such
event over and above the shares of Common Stock issuable upon such conversion
before giving effect to such adjustment and (ii) paying to such holder any
amount of cash in lieu of a fractional share of Common Stock pursuant to
Section 1.03; provided that the Company upon request shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder's
rights to receive such additional shares, and such cash, upon the occurrence of
the event requiring such adjustment.
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<PAGE> 12
3.07 Proceedings Prior to Any Action Requiring Adjustment.
As a condition precedent to the taking of any action which would require an
adjustment pursuant to this Article III, the Company shall take any action
which may be necessary in order that the Company may thereafter validly and
legally issue as fully paid and nonassessable all shares of Common Stock which
the holders of Warrants are entitled to receive upon exercise thereof.
3.08 Statement Regarding Adjustment. Whenever the Exercise
Price or the number of shares received upon exercise of the Warrants shall be
adjusted as provided in Article III, the Company shall forthwith file, at the
office of any transfer agent for the Warrants and at the principal office of
the Company, a statement showing in detail the facts requiring such adjustment
and the Exercise Price and the number of shares received upon exercise of the
Warrants that shall be in effect after such adjustment, and the Company shall
also cause a copy of such statement to be sent by mail, first class postage
prepaid, to each holder of Warrants, at its address appearing on the Company's
records. Each such statement shall be signed by the Company's independent
public accountants. Where appropriate, such copy may be given in advance and
may be included as part of a notice required to be mailed under the provisions
of Section 3.08. Failure to give such notice, or any defect therein, shall not
affect the legality or validity of any such action.
3.09 Notice to Holders. In the event the Company shall
propose to take any action of the type described in Article III (but only if
the action of the type described in Article III would result in an adjustment
in the Exercise Price or the number of shares received upon exercise of the
Warrants), or to declare any cash dividends or distribution out of surplus or
net profits legally available therefor, the Company shall give notice to each
Warrantholder in the manner set forth in Section 3.09, which notice shall
specify the record date, if any, with respect to any such action and the
approximate date on which such action is to take place. Such notice shall also
set forth such facts with respect thereto as shall be reasonably necessary to
indicate the effect of such action (to the extent such effect may be known at
the date of such notice) on the Exercise Price and the number, kind or class of
shares or other securities or property which shall be deliverable or
purchasable upon the occurrence of such action or deliverable upon exercise of
the Warrants. In the case of any action which would require the fixing of a
record date, such notice shall be given at least 15 days prior to the date so
fixed, and in case of all other action, such notice shall be given at least 20
days prior to the taking of such proposed action. Failure to give such notice,
or any defect therein, shall not affect the legality or validity of any such
action.
ARTICLE IV
DEFINITIONS
The following terms, as used in this Warrant, have the
following respective meanings:
"Act" means the Securities Act of 1933, as amended, and any
similar or successor Federal statute, and the rules and regulations of the
Securities
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<PAGE> 13
and Exchange Commission (or its successor) thereunder, all as the same shall be
in effect at the time.
The "November 1997 Series A Preferred Stock Financing" shall
mean the financing as of November 28, 1997 whereby the Company is seeking up to
$1,000,000 in exchange for the issuance of up to 1,000 Units consisting of
Series A Preferred Stock and related warrants.
"Capital Reorganization" shall have the meaning set forth in
Section 3.04 hereof.
"Closing Price" on any day means (a) if the Common Stock is
listed or admitted for trading on a national securities exchange, the reported
last sales price regular way or, if no such reported sale occurs on such day,
the average of the closing bid and asked prices regular way on such day, in
each case on the principal national securities exchange on which the Common
Stock is listed or admitted to trading, (b) if the Common Stock is not listed
or admitted to trading on any national securities exchange, the average of the
closing bid and asked prices in the over-the- counter market on such day as
reported by NASDAQ or any comparable system or, if not so reported, as reported
by any New York Stock Exchange member firm selected by the Company for such
purpose or (c) if no such quotations are available on such day, the fair market
value of one share of Common Stock on such day as determined in good faith by
the Board of Directors of the Company.
"Common Stock" shall have the meaning set forth in the first
paragraph of this Warrant, subject to adjustment pursuant to Article III.
"Common Stock Reorganization" shall have the meaning set forth
in Section 3.02 hereof.
"Company" shall have the meaning set forth in the first
paragraph of this Warrant.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any similar or successor Federal statute, and the rules and
regulations of the Securities and Exchange Commission (or its successor)
thereunder, all as the same shall be in effect at the time.
"Exercise Price" means U.S.$0.40 per share of Common Stock,
subject to adjustment pursuant to Article III hereof.
"Holder" shall have the meaning set forth in the first
paragraph of this Warrant.
"Market Price" on any day means the average of the daily
Closing Prices of a share of Common Stock for the 20 consecutive Trading Days
ending on the most recent Trading Day for which a closing price is available
and if the Common Stock is not then publicly traded Market Price shall be
determined in good faith by the Board of Directors of the Company.
"NASD" means The National Association of Securities Dealers,
Inc.
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"NASDAQ" means The National Association of Securities Dealers,
Inc. Automated Quotation System.
"Registrable Securities" means 100% of the number of shares of
the Company's Common Stock issuable upon exercise of this Warrant issued as
part of the Units pursuant to the Series A Preferred Stock Financing.
"Securities Act" means the Securities Act of 1933.
"Total Warrant Shares" means the number of shares of Common
Stock set forth on the face of this Warrant, subject to adjustment pursuant to
Article III.
"Trading Day" means (a) if the Common Stock is listed or
admitted to trading on a national securities exchange, a day on which the
principal national securities exchange on which the Common Stock is listed or
admitted to trading is open for business or (b) if the Common Stock is not so
listed or admitted to trading, a day on which any New York Stock Exchange
member firm is open for business.
"Warrantholder" means a holder of a Warrant.
"Warrants" shall have the meaning set forth in the second
paragraph of this Warrant.
"Warrant Common Stock" means the resulting Common Stock from
the exercise of the warrant.
ARTICLE V
REDEMPTION AND CANCELLATION OF WARRANTS
5.01 Redemption of Warrants. The Warrants are not redeemable
by the Company and the Company has no rights to purchase or otherwise acquire
the Warrants.
5.02 Cancellation of Warrants. The Company shall cancel any
Warrant surrendered for transfer, exchange or exercise.
ARTICLE VI
REGISTRATION RIGHTS
6.01 Registration Rights. The Company shall be required
to file a registration statement covering the Registrable Securities with the
Securities and Exchange Commission within one year from the aforesaid closing
date. In connection with any such registration, the Company shall:
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(a) promptly (but not less than thirty (30) days prior to the
filing of any registration statement) give written notice thereof (which shall
include a list of the jurisdictions, if any, in which the Company intends to
register or qualify such securities under the applicable blue sky or other
state securities laws) to each Holder or holder of Warrant Common Stock;
(b) use its best efforts to effect such registration and any
qualification and compliance relating thereto, including, without limitation,
the execution of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities laws and
appropriate compliance with the Securities Act and any other governmental
requirements or regulations as would permit or facilitate:
(i) the sale and distribution of all Warrant Common
Stock; and
(ii) the exercise of the Warrant (to the extent not
expired) to the extent outstanding and the sale and distribution of all Warrant
Common Stock issued upon such exercise.
6.02 Blue Sky Qualification. The Company shall only be
required to register or qualify the Warrant or the Warrant Common Stock in such
jurisdictions as it shall determine in its sole discretion and each Holder
agrees only to offer or sell or exercise the Warrant or the Warrant Common
Stock in such jurisdictions as the same shall be so registered or qualified.
6.03 Expenses. The Company shall bear all expenses in
connection with such registration, qualification and compliance under this
Section 6, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of the Company's counsel and of a
singe firm of legal counsel retained by the Holders or holders of Warrant
Common Stock and expenses of any audits incident to or required by any such
registration, qualification and compliance, provided, that the Company shall
not, in any event, be required to bear the cost of any commissions and
compensation paid, and concessions and discounts allowed to, underwriters,
dealers or others performing similar functions in connection with the sale and
distribution of the Warrant or Warrant Common Stock sold by any holders
thereof.
6.04 Indemnification. (a) If Registrable Securities are
included in a Registration Statement, the Company will indemnify the Holder
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on (A) any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus, offering circular or
other document (including any related registration statement, notification or
the like) incident to any such registration, qualification or compliance, or
(B) any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or
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(C) any violation by the Company of any rule or regulation promulgated under
the Act applicable to the Company and relating to action or inaction required
of the Company in connection with any registration, qualification or
compliance, and will reimburse the Holder for any legal and any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, provided that the Company will not be
liable in any such case to the extent that any such claim, loss, damage or
liability arises out of or is based on any untrue statement or omission based
upon written information furnished to the Company by the Holder specifically
for use therein.
(b) Each party entitled to indemnification under this Section
6.04 (sometimes referred to as the "Indemnified Party") shall give notice to
the party required to provide indemnification (the "Indemnifying Party")
promptly after such Indemnified Party has actual knowledge of any claim as to
which indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting therefrom,
provided that counsel for the Indemnifying Party, who shall conduct the defense
of such claim or litigation, shall be approved by the Indemnified Party (whose
approval shall not be unreasonably withheld), and the Indemnified Party may
participate in such defense at such party's expense, and provided further that
unless such failure materially and adversely affects the rights or abilities of
the Indemnifying Party to defend such action, the failure of any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying
Party of its obligations under this Section 6.04. No Indemnifying Party, in
the defense of any such claim or litigation, shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such Indemnified Party of a release from all
liability with respect to such claim or litigation. If any such Indemnified
Party shall have reasonably concluded that there may be one or more legal
defenses available to such Indemnified Party which is different from or
additional to those available to the Indemnifying Party, or that such claim or
litigation involves or could have an effect upon matters beyond the scope of
the indemnity agreement provided in this Section 6.04, the Indemnifying Party
shall not have the right to assume the defense of such action on behalf of such
Indemnified Party and such Indemnifying Party shall reimburse such Indemnified
Party for that portion of the fees and expenses of any counsel retained by the
Indemnified Party which is reasonably related to the matters covered by the
indemnity agreement provided in this Section 6.04.
(c) If the indemnification provided for in this Section 6.04
shall for any reason be unenforceable by an indemnified party, although
otherwise available in accordance with its terms, then each indemnifying party
shall, in lieu of indemnifying such indemnified party, contribute to the amount
paid or payable by such indemnified party as a result of the losses, claims,
damages, liabilities or expenses with respect to which such indemnified party
has claimed indemnification, in such proportion as is appropriate to reflect
the relative fault of the indemnified party on the one hand and the
indemnifying party on the other in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or expenses, as
well as any other relevant equitable considerations. The Company and each
Holder agree
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<PAGE> 17
that it would not be just and equitable if contribution pursuant hereto were to
be determined by pro rata allocation or by any other method of allocation which
does not take into account such equitable considerations. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages,
liabilities or expenses referred to herein shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending against any action or claim which is the
subject hereof. No person guilty of fraudulent misrepresentation shall be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation.
6.05 Information by the Investor. The Holder shall furnish
in writing to the Company such information regarding the Holder and the
distribution proposed by the Holder as the Company may request in writing and
as shall be required in connection with any registration, qualification or
compliance referred to in this Article VI.
6.06 Notification; Continuation of Effectiveness. In the
case of each registration, qualification and compliance pursuant to this
Section 6, the Company will keep all Holders and all holders of Warrant Common
Stock promptly advised in writing as to the initiation of proceedings for such
registration, qualification and compliance and as to the completion thereof,
and will advise, upon request, of the progress of such proceedings. The
Company will, at its expense, keep such registration, qualification and
compliance effective, unless otherwise noted herein, for a period of twelve
months, or in each case for such longer period as may be required by the Act,
by such action as may be necessary or appropriate to permit the exercise or
sale and distribution during such period of any Warrant not theretofore
exercised or sold and distributed and the sale or distribution of Warrant
Common Stock not theretofore sold or distributed including, without limitation,
the filing of post-effective amendments and supplements to any registration
statement or prospectus necessary to keep the registration current and further
qualification under any applicable blue sky or other state securities law, all
as requested by any Holder or holder of Warrant Common Stock with respect to
which such registration is being effected.
6.07 Transfer of Registration Rights. The rights to cause
the Company to register securities granted by the Company under this Article VI
may be assigned by the Holder to a transferee or assignee of all or less than
all the Registrable Securities, provided that such transfer may otherwise be
effected in accordance with applicable securities laws and that the Company is
given written notice, as provided in Article VI.
6.08 Prospectuses, etc. The Company will, at its expense,
furnish to each Holder or holder of Warrant Common Stock with respect to which
registration has been effected, such number of prospectuses, offering circulars
and other documents incident to such registration and related qualification or
compliance as such holder from time to time may reasonably request.
6.09 Listing on Securities Exchanges, etc. The Company will,
at its expense, promptly list on each national securities exchange, or NASDAQ,
on which Common Stock is at the time listed, upon official notice of issuance
upon
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the exercise of the Warrant, and maintain such listing of, all shares of Common
Stock from time to time issuable upon the exercise of the Warrant, and when and
if required by the Securities Exchange Act of 1934 (or any similar statute then
in effect) will register thereunder all shares of Common Stock from time to
time so issuable.
6.10 Underwritten Offerings. In the event any registration
under this Article VI is underwritten and the managing underwriter determines
in writing that the inclusion of all Registrable Securities that are to be
included would materially interfere with the successful completion thereof in
the reasonable judgment of such managing underwriter, then the number of
Registrable Securities to be included may be reduced on the same basis as other
selling stockholders in such registration.
ARTICLE VII
MISCELLANEOUS
7.01 Notices. All notices, requests and other communications
provided for herein shall be in writing, and shall be deemed to have been made
or given when delivered or mailed, first class, postage prepaid, or sent by
telex or other telegraphic communications equipment. Such notices and
communications shall be addressed:
(a) if to the Company, to
9000A Commerce Parkway
Mount Laurel, New Jersey 08054
Attention: Michael P. Lutze, Secretary; or
(b) if to the Holder, to its address as shown on the
registry books maintained pursuant to Section 2.01;
or in any of the foregoing cases at such other
address as such Person may hereafter specify for such
purpose by notice to the other Persons referred to
above.
7.02 Waivers; Amendments. No failure or delay of the Holder
in exercising any right, power or privilege, hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise thereof, or any
abandonment or discontinuance of steps to enforce such a right, power or
privilege, preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. The rights and remedies of the Holder
are cumulative and not exclusive of any rights or remedies which it would
otherwise have. The provisions of this Warrant may be amended, modified or
waived if, but only if, such amendment, modification or waiver is in writing
and is signed by a majority of the holders of the Warrants; provided that no
amendment, modification or waiver may change the exercise price of (including
without limitation any adjustments or any provisions with respect to
adjustments, the expiration of or the manner of exercising the Warrants)
without the consent in writing of all of the holders of the Warrants
outstanding.
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<PAGE> 19
7.03 Governing Law. This Warrant shall be construed in
accordance with and governed by the laws of the State of New York applicable to
contracts made and to be fully performed therein.
7.04 Survival of Agreements; Representations and Warranties,
etc. All warranties, representations and covenants made by the Company herein
or in any certificate or other instrument delivered by or on behalf of it in
connection herewith or the Notes shall be considered to have been relied upon
by the Holder and shall survive the issuance and delivery of the Warrants and
the shares of Common Stock issuable upon exercise of this Warrant, and shall
continue in full force and effect so long as this Warrant is outstanding. All
statements in any such certificate or other instrument shall constitute
representations and warranties hereunder.
7.05 Covenants To Bind Successor and Assigns. All the
covenants, stipulations, promises and agreements in this Warrant contained by
or on behalf of the Company shall bind its successors and assigns, whether or
not so expressed.
7.06 Severability. In case any one or more of the provisions
contained in this Warrant shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected or
impaired in such jurisdiction and shall not invalidate or render illegal or
unenforceable such provision in any other jurisdiction.
7.07 Headings. The headings used herein are for convenience
of reference only and shall not be deemed to be a part of this Warrant.
7.08 No Rights as Stockholder. This Warrant shall not
entitle the Holder to any rights as a stockholder of the Company.
7.09 Pronouns. The pronouns "it" and "its" herein shall be
deemed to mean "he" or "his", as the context requires.
IN WITNESS WHEREOF, AW Computer Systems, Inc. has caused this
Warrant to be executed in its corporate name by one of its officers thereunto
duly authorized, and its corporate seal to be hereunto affixed, attested by its
Secretary or an Assistant Secretary, all as of the day and year first above
written.
AW COMPUTER SYSTEMS, INC.
By: /s/ CHARLES WELCH
----------------------------
Charles Welch, President
Attest:
/s/ CHARLES F. TRAPP
- -------------------------------
Asst. Secretary
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<PAGE> 20
SUBSCRIPTION FORM
To Be Executed by the Registered Holder
in Order to Exercise Warrants
The undersigned Registered Holder hereby irrevocably elects to exercise
________ Warrants represented by this Warrant Certificate, and to purchase the
securities issuable upon the exercise of such Warrants, and requests that
certificates for such securities shall be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
[please print or type name and address]
and be delivered to
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
[please print or type name and address]
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
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------------------------------------------------
------------------------------------------------
------------------------------------------------
Address
------------------------------------------------
Taxpayer Identification Number
------------------------------------------------
Signature Guaranteed
------------------------------------------------
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<PAGE> 22
ASSIGNMENT
To Be Executed by the Registered Holder
in Order to Assign Warrants
FOR VALUE RECEIVED,___________________________________________ hereby sells,
assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
[please print or type name and address]
_________________________________ of the Warrants represented by this Warrant
Certificate, and hereby irrevocably constitutes and appoints
___________________________ Attorney to transfer this Warrant Certificate on
the books of the Company, with full power of substitution in the premises.
Dated:
------------------------ ----------------------------------
Signature Guaranteed
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE
GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE
AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR
MIDWEST STOCK EXCHANGE.
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