SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 5)
NESTOR, INC.
(Name of Issuer)
COMMON STOCK, PAR VALUE $.01
(Title of Class and Securities)
64107410
(CUSIP Number of Class of Securities)
Bruce W. Schnitzer
Wand (Nestor) Inc.
630 Fifth Avenue, Suite 2435,
New York, NY 10111
(212) 632-3795
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
Copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
(212) 735-3000
ATTN: Nancy Henry
March 7, 1996
(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 Statement because of Rule 13d-1(b)(3) or
(4), check the following: ( )
Check the following box if a fee is being paid with this
Statement: ( )
SCHEDULE 13D
CUSIP NO. 64107410 PAGE ____ OF ____
PAGES
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
WAND/NESTOR INVESTMENTS L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ( )
(b) ( )
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) ( )
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
7 SOLE VOTING POWER
3,582,138
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 3,582,138
PERSON
WITH
10 SHARED DISPOSITIVE POWER
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,582,138
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES* ( )
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
31.29%
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
SCHEDULE 13D
CUSIP NO. 64107410 PAGE ____ OF ____
PAGES
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
WAND/NESTOR INVESTSMENTS II L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ( )
(b) ( )
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) ( )
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
7 SOLE VOTING POWER
382,536
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 382,536
PERSON
WITH
10 SHARED DISPOSITIVE POWER
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
382,536
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES* ( )
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.59%
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
SCHEDULE 13D
CUSIP NO. 64107410 PAGE ____ OF ____
PAGES
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
WAND/NESTOR INVESTMENTS III L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ( )
(b) ( )
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) ( )
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
7 SOLE VOTING POWER
1,756,696
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 1,756,696
PERSON
WITH
10 SHARED DISPOSITIVE POWER
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,756,696
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES* ( )
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.22%
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
SCHEDULE 13D
CUSIP NO. 64107410 PAGE ____ OF ____
PAGES
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
WAND (NESTOR) INC.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ( )
(b) ( )
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) ( )
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
7 SOLE VOTING POWER
5,721,370
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 5,721,370
PERSON
WITH
10 SHARED DISPOSITIVE POWER
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,721,370
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES* ( )
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
42.37%
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
SCHEDULE 13D
CUSIP NO. 64107410 PAGE ____ OF ____
PAGES
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
MR. BRUCE W. SCHNITZER
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ( )
(b) ( )
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) ( )
6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES OF AMERICA
7 SOLE VOTING POWER
5,721,370
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 5,721,370
PERSON
WITH
10 SHARED DISPOSITIVE POWER
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,721,370
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES* ( )
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
42.37%
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
The Statement on Schedule 13D filed on August
15, 1994, and amended on April 18, 1995, July 12, 1995,
October 5, 1995 and February 13, 1996, with respect to
the common stock, par value $.01 per share (the "Common
Stock") of Nestor, Inc., a Delaware corporation (the
"Company"), is hereby further amended as follows:
Item 3. Source and Amount of Funds or Other Consideration.
Item 3 is hereby supplemented as follows:
Pursuant to a Securities Purchase Agreement,
dated as of March 7, 1996 (the "March Securities Purchase
Agreement") between the Company and the Wand/Nestor
Partnership, the Wand/Nestor Partnership purchased (1)
777 shares of a new class of convertible preferred stock
of the Company, par value $1.00 per share, designated as
Series G (the "Series G Preferred Stock") and (2) related
warrants to purchase up to an aggregate of 225,330 shares
of Company Common Stock at an initial exercise price of
$1.25 per share (the "Series G Warrant") for an aggregate
cash purchase price of $777,000. The Series G Warrant is
exercisable after July 1, 1996. Copies of the March
Securities Purchase Agreement, the Amended Certificate of
Powers, Designations, Preferences and Special Rights of
the Series G Preferred Stock and the Series G Warrant are
attached hereto as Exhibits 1, 3 and 4, respectively.
The sale of the Series G Preferred Stock and
the Series G Warrant to the Wand/Nestor Partnership
described above was consummated on March 7, 1996. All of
the consideration for the purchase was provided by the
partners of the Wand/Nestor Partnership participating in
the ownership of this investment.
Item 4. Purpose of the Transaction.
Item 4 is hereby supplemented as follows:
The Wand/Nestor Partnership acquired the Series
G Preferred Stock and the Series G Warrant for
investment.
Upon consummation of the purchase of the Series
G Preferred Stock and the Series G Warrant, the Company,
the Wand/Nestor Partnership, the Wand/Nestor II
Partnership, the Wand/Nestor III Partnership and certain
other securityholders of the Company entered into
Amendment No. 1 to the Amended and Restated Registration
Rights Agreement, a copy of which is attached hereto as
Exhibit 2.
None of the Filing Persons, or, to the best
knowledge of the Filing Persons, Mr. Callard, has any
plans or proposals which relate to, or could result in,
any of the matters referred to in paragraphs (b) through
(j) of Item 4 of Schedule 13D, except, as discussed more
fully in Item 6 below, the terms of the March Securities
Purchase Agreement and the Series G Preferred Stock
provide for representation of the Wand/Nestor Partnership
on the Company's Board of Directors.
Item 5. Interest in Securities of the Issuer.
Item 5(a) is hereby amended as follows:
(a) As of the date hereof, as a result of the
consummation on March 7, 1996 of the transactions
contemplated by the March Securities Purchase Agreement,
the Wand/Nestor Partnership, the Wand/Nestor II
Partnership and the Wand/Nestor III Partnership may each
be deemed pursuant to the Exchange Act and the rules and
regulations promulgated thereunder to beneficially own,
respectively, approximately 31.29%, 4.59% and 18.22% of
the outstanding shares of Common Stock of the Company.
As of the date hereof, as a result of the relationships
and stock ownership discussed above, the General Partner
and Mr. Schnitzer may each be deemed, pursuant to the
Exchange Act and the rules and regulations promulgated
thereunder, to beneficially own approximately 42.37% of
the outstanding shares of Common Stock of the Company.
Except as set forth in this Item 5(a), none of the Filing
Persons or, to the best knowledge of the Filing Persons,
Mr. Callard, beneficially owns any shares of Company
Common Stock.
Item 5(b) is hereby amended as follows:
(b) The Wand/Nestor Partnership and the
Wand/Nestor II Partnership each has sole power to vote or
direct the vote and sole power to dispose or direct the
disposition of the shares of Company Common Stock
beneficially owned by it as a consequence of its
ownership, of record and beneficially, of Common Stock,
Series D Preferred Stock, Series H Preferred Stock,
Series F Preferred Stock, Series G Preferred Stock and
the several warrants to acquire Common Stock. The
Wand/Nestor III Partnership has sole power to vote or
direct the vote and sole power to dispose or direct the
disposition of shares of Company Common Stock
beneficially owned by it as a consequence of its
ownership, of record and beneficially, of Common Stock,
Series D Preferred Stock, Series E Preferred Stock and
warrants to acquire Common Stock of the Company. By
virtue of their relationship to the Wand/Nestor
Partnership, the Wand/Nestor II Partnership and the
Wand/Nestor III Partnership, the General Partner and Mr.
Schnitzer may each be deemed to have concurrent indirect
power to vote or to direct the vote and to dispose or to
direct the disposition of all such shares. Holders of
Series D Preferred Stock, Series F Preferred Stock,
Series G Preferred Stock and Series H Preferred Stock are
entitled to vote on all matters as to which shareholders
of the Company are entitled to vote, with each holder
entitled to cast a number of votes equal to the greatest
number of whole shares of Common Stock into which such
holder's shares of Series D Preferred Stock, Series F
Preferred Stock, Series G Preferred Stock and Series H
Preferred Stock could be converted.
(c) Pursuant to the Securities Purchase and
Exchange Agreement described in Amendment No. 4 to this
Schedule 13D, the Company sold Series F Preferred Stock
and related Warrants to the Wand/Nestor Partnership and
the Wand/Nestor II Partnership in a private placement
transaction. Except for the transactions related to the
consummation of the Securities Purchase and Exchange
Agreement and the March Securities Purchase Agreement,
none of the Filing Persons, nor, to the best knowledge of
the Filing Persons, Mr. Callard has effected any
transactions in Common Stock of the Company during the
past 60 days.
Item 6. Contracts, Understandings or Relationships with
respect to Securities of the Issuer.
Item 6 is hereby supplemented as follows:
Upon consummation of the March Securities
Purchase Agreement, the Company, the Wand/Nestor
Partnership, the Wand/Nestor II Partnership, the
Wand/Nestor III Partnership and certain other
stockholders of the Company entered into Amendment No. 1
to the Amended and Restated Registration Rights Agreement
dated as of March 7, 1996, a copy of which is attached
hereto as Exhibit 2.
Item 7. Material to Be Filed as Exhibits.
Exhibit 1 - March Securities Purchase
Agreement, dated as of March 7,
1996, between the Company and
the Wand/Nestor Partnership
Exhibit 2 - Amendment No. 1 to the Amended
and Restated Registration Rights
Agreement, dated as of March 7,
1996
Exhibit 3 - Amended Certificate of Powers,
Designations, Preferences and
Special Rights of Series G
Convertible Preferred Stock of
the Company
Exhibit 4 - Common Stock Purchase Warrant
No. W-Y, respecting 225,330
shares of Company Common Stock,
dated March 7, 1996 and issued
to the Wand/Nestor Partnership
in connection with its purchase
of Series G Preferred Stock
Exhibit 5 - Joint Filing Agreement
SIGNATURE
After reasonable inquiry and to the best of its
knowledge and belief, the undersigned certifies that the
information set forth in this Statement is true, complete
and correct.
Dated: March 12, 1996
WAND/NESTOR INVESTMENTS L.P.
By: WAND (NESTOR) INC.,
as general partner
By: /s/ Bruce W. Schnitzer
Name: Bruce W. Schnitzer
Title: Chairman
SIGNATURE
After reasonable inquiry and to the best of its
knowledge and belief, the undersigned certifies that the
information set forth in this Statement is true, complete and
correct.
Dated: March 12, 1996
WAND/NESTOR INVESTMENTS II L.P.
By: WAND (NESTOR) INC.,
as general partner
By: /s/ Bruce W. Schnitzer
Name: Bruce W. Schnitzer
Title: Chairman
SIGNATURE
After reasonable inquiry and to the best of its
knowledge and belief, the undersigned certifies that the
information set forth in this Statement is true, complete and
correct.
Dated: March 12, 1996
WAND/NESTOR INVESTMENTS III L.P.
By: WAND (NESTOR) INC.,
as general partner
By: /s/ Bruce W. Schnitzer
Name: Bruce W. Schnitzer
Title: Chairman
SIGNATURE
After reasonable inquiry and to the best of its
knowledge and belief, the undersigned certifies that the
information set forth in this Statement is true, complete and
correct.
Dated: March 12, 1996
WAND (NESTOR) INC.
By: /s/ Bruce W. Schnitzer
Name: Bruce W. Schnitzer
Title: Chairman
SIGNATURE
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set forth
in this Statement is true, complete and correct.
Dated: March 12, 1996
By: /s/ Bruce W. Schnitzer
Name: Bruce W. Schnitzer
EXHIBIT INDEX
Exhibit No. Exhibit Name Page No.
1 March Securities Purchase
Agreement, dated as of March 7,
1996, between the Company and the
Wand/Nestor Partnership . . . . . . . . . . . .
2 Amendment No. 1 to Amended and
Restated Registration Rights
Agreement, dated as of March 7,
1996 . . . . . . . . . . . . . . . . . . . . . .
3 Amended Certificate of Powers,
Designations, Preferences and
Special Rights of Series G
Convertible Preferred Stock of
the Company . . . . . . . . . . . . . . . . . .
4 Common Stock Purchase Warrant No.
W-Y, respecting 225,330 shares of
Company Common Stock, dated March
7, 1996 and issued to the
Wand/Nestor Partnership in
connection with its purchase of
Series G Preferred Stock . . . . . . . . . . . .
5 Joint Filing Agreement . . . . . . . . . . . . .
EXHIBIT 1
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT
("Agreement") is made as of the 7th day of March, 1996 by
and among Nestor, Inc., a Delaware corporation (the
"Company") and Wand/Nestor Investments L.P., a Delaware
limited partnership (the "Purchaser").
RECITALS
A. The Purchaser currently owns the following
securities of the Company: (1) common stock, par value
$.01 per share ("Company Common Stock"); (2) Series H
Convertible Preferred Stock, par value $1.00 per share
("Series H Preferred Stock"); (3) Series D Convertible
Preferred Stock, par value $1.00 per share ("Series D
Preferred Stock"); (4) Series F Convertible Preferred
Stock, par value $1.00 per share ("Series F Preferred
Stock"); (5) certain common stock purchase warrants to
purchase shares of Company Common Stock at various
exercise prices (the "Old Warrants").
B. The Company desires to sell to the
Purchaser, and the Purchaser desires to purchase from the
Company, (1) 777 shares of a new class of convertible
preferred stock of the Company, par value $1.00 per share
(the "Series G Preferred Stock") having the terms set
forth in the Company's Certificate of Designation of the
Terms of the Series G Preferred Stock in the form set
forth as Exhibit I, and (2) Warrants to purchase up to an
aggregate of 225,330 shares of Company Common Stock in
the form set forth as Exhibit II (the "New Warrants");
C. Concurrently herewith the Company, the
Purchaser and certain other parties are entering into the
Amended and Restated Registration Agreement, dated as of
March 7, 1996, in the form set forth as Exhibit III (the
"Registration Rights Agreement").
D. Concurrently with the consummation of this
Agreement the Company will enter into the amendments (the
"Revised Agreements") set forth on Exhibit IV hereto to
certain existing agreements and securities of the Company
for the purpose of conforming such agreements and
securities to the terms of securities to be issued
pursuant to this Agreement.
NOW, THEREFORE, in consideration of the mutual
covenants contained herein, and of other good and
valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, each
intending to be legally bound, do hereby agree as
follows:
1. SALE AND PURCHASE OF COMPANY SECURITIES; OTHER
TRANSACTIONS.
The Company has authorized the issuance and
sale to the Purchaser, (i) 777 shares (the "Series G
Preferred Shares") of the Series G Preferred Stock and
(ii) the New Warrants. Subject to the terms and
conditions herein set forth, the Company will issue and
sell to the Purchaser, and the Purchaser will purchase
from the Company, at the Closing (as defined below) the
Series G Preferred Shares and the New Warrants. The
aggregate purchase price for the Series G Preferred
Shares and New Warrant shall be $777,000 in cash (the
"Series G Purchase Price").
2. CLOSING.
(a) Subject to the applicable provisions of
Sections 7, 8, and 9 hereof, the closing of the sale of
the Series G Preferred Shares and the New Warrants (the
"Closing") shall take place at the offices of Skadden,
Arps, Slate, Meagher & Flom, 919 Third Avenue, New York,
New York 10022, as soon as practicable following the
satisfaction or waiver of the applicable conditions set
forth in Sections 7, 8 and 9 hereof.
(b) At the Closing, (i) the Company shall
deliver to the Purchaser certificates evidencing the
respective number of Series G Preferred Shares and New
Warrants to be purchased by the Purchaser, (ii) the
Purchaser shall deliver to the Company the Series G
Purchase Price by wire transfer of immediately available
funds to an account designated by the Company, and (iii)
the parties shall make such other deliveries as are
contemplated hereby.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to
the Purchaser as follows:
(a) Organization, Standing and Power of the
Company. The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of
the State of Delaware. The Company has all requisite
power and authority to own, lease and operate its
properties, assets and business and to conduct its
business as now being conducted and is duly qualified to
do business as a foreign corporation in good standing in
those jurisdictions, other than the state of its
incorporation, in which the nature of the business
conducted or property owned by it makes such
qualification necessary, except for any failures so to
qualify which would not have, individually or in the
aggregate, a material adverse effect on the business,
condition or results of operations of the Company (a
"Company Material Adverse Effect").
(b) Authority; Enforceability; No Conflict.
The Company has all requisite corporate power and
authority to enter into this Agreement, the Registration
Rights Agreement, the New Warrants and the Revised
Agreements (such agreements other than this Agreement are
collectively referred to hereafter as the "Related
Agreements") to issue and sell the Series G Preferred
Shares and the New Warrants, and to carry out its
obligations hereunder and under the Related Agreements.
The execution, delivery and performance of this Agreement
and the Related Agreements by the Company and the
issuance and sale of the Series G Preferred Shares and
the New Warrants by the Company have been duly and
validly authorized by all requisite corporate proceedings
on the part of the Company. This Agreement is, and the
Related Agreements when executed and delivered by the
Company will be, and when issued and sold each of the New
Warrants will be, a valid and binding obligation of the
Company, enforceable against it in accordance with its
terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium,
rehabilitation, liquidation, conservatorship,
receivership or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii)
the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
Subject to the receipt of the consents or approvals set
forth in Section 3(b) of the disclosure schedule
delivered by the Company to the Purchasers concurrently
with the execution and delivery of this Agreement (the
"Disclosure Schedule"), the execution and delivery of
this Agreement and each Related Agreement by the Company
do not, and the consummation by the Company of the
transactions contemplated hereby and thereby will not,
the issuance and sale of the Series G Preferred Shares
and the New Warrants will not, and the performance by the
Company of its obligations under the terms of the
Preferred Shares and the New Warrants will not, result in
or constitute: (i) a default, breach or violation of or
under the Certificate of Incorporation or the By-laws of
the Company, or (ii) a default, breach or violation of or
under any mortgage, deed of trust, indenture, note, bond,
license, lease agreement or other instrument or
obligation to which the Company is a party or by which
any of their properties or assets are bound, except for
any defaults, breaches or violations which would not
have, individually or in the aggregate, a Company
Material Adverse Effect, or (iii) a violation of any
statute, rule, regulation, order, judgment or decree of
any court, public body or authority by which the Company
or any of its properties or assets are bound, except for
any violations which would not have, individually or in
the aggregate, a Company Material Adverse Effect, or (iv)
an event which (with notice or lapse of time or both)
would permit any person to terminate, accelerate the
performance required by, or accelerate the maturity of,
any indebtedness or obligation of the Company under any
agreement or commitment to which the Company is a party
or by which the Company is bound or by which any of its
properties or assets are bound, except for any
accelerations or terminations which would not have,
individually or in the aggregate, a Company Material
Adverse Effect, or (v) the creation or imposition of any
lien, charge or encumbrance on any property of the
Company under any agreement or commitment to which the
Company is a party or by which the Company is bound or by
which any of its respective properties or assets are
bound, except for any liens, charges or encumbrances
which would not have, individually or in the aggregate, a
Company Material Adverse Effect, or (vi) an event which
would require any consent under any agreement to which
the Company is a party or by which the Company is bound
or by which any of its respective properties or assets
are bound, except for any consents which, if not
received, would not have, individually or in the
aggregate, a Company Material Adverse Effect.
(c) Capitalization. The authorized capital
stock of the Company consists of (i) 30,000,000 shares of
Common Stock, par value $.01 per share, of which
7,958,786 shares (excluding shares held in treasury) are
outstanding and 10,000,000 shares of preferred stock, par
value $1.00 per share (the "Preferred Stock"), of which
(i) 452,064 shares of Series A Preferred Stock, par value
$1.00 per share (the "Series A Preferred Stock"), of
which 452,064 shares are outstanding; (ii) 2,290,000
shares of Series B Preferred Stock, par value $1.00 per
share, of which 2,290,000 shares are outstanding; (iii)
186,671 shares of Series D Preferred Stock, par value
$1.00 per share, (the "Series D Preferred Stock"), of
which 186,671 shares are outstanding; (iv) 1,444 shares
of Series E Preferred Stock, of which 1,444 shares are
outstanding; (v) 599 shares of Series F Preferred Stock,
of which 599 shares are outstanding; (vi) 777 shares of
Series G Preferred Stock, of which no shares are
outstanding; and (vii) 2,026 shares of Series H Preferred
Stock, of which 2,026 shares are outstanding. All of the
outstanding shares of Common Stock, Series A Preferred
Stock, Series B Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock, Series F Preferred Stock
and Series H Preferred Stock have been duly authorized
and validly issued, and are fully paid and non-
assessable. Immediately following the Closing, (i)
7,958,786 shares of Common Stock will be outstanding;
(ii) 452,064 shares of Series A Preferred Stock will be
outstanding; (iii) 2,290,000 shares of Series B Preferred
Stock will be outstanding; (iv) no shares of Series C
Preferred Stock will be outstanding; (v) 186,671 shares
of Series D Preferred Stock will be outstanding; (vi)
1,444 shares of Series E Preferred Stock will be
outstanding; (vii) 599 shares of Series F Preferred Stock
will be outstanding; (viii) 777 shares of Series G
Preferred Stock will be outstanding, and (ix) 2,026
shares of Series H Stock will be outstanding. Except for
the outstanding shares of Series A Preferred Stock,
Series B Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series F Preferred Stock and
Series H Preferred Stock, and except as set forth in
Section 3(c) of the Disclosure Schedule, there are no
outstanding preemptive, conversion or other rights,
options, warrants or agreements granted or issued by or
binding upon the Company for the purchase or acquisition
of any shares of capital stock of the Company or any
other securities convertible into, exchangeable for or
evidencing the right to subscribe for any shares of such
capital stock. The Company is not subject to any
obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any shares of the capital
stock of the Company or any convertible securities,
rights or options of the type described in the preceding
sentence. The Company is not a party to, and does not
have knowledge of, any agreement expressly restricting
the transfer of any shares of the capital stock of the
Company.
(d) No Subsidiaries or Other Ventures. The
Company has no subsidiaries. Except as set forth in
Section 3(d)(i) of the Disclosure Schedule, the Company
does not own, directly or indirectly, any interest in any
corporation, partnership, joint venture, association or
other entity.
(e) Status of Shares. The Preferred Shares to
be issued at the Closing have been duly authorized by all
necessary corporate action on the part of the Company.
When issued and paid for as provided in this Agreement,
the Series G Preferred Shares will be validly issued and
outstanding, fully paid and nonassessable, and the
issuance of such Series G Preferred Shares is not and
will not be subject to preemptive rights of any other
stockholder of the Company. The shares of Common Stock
to be issued upon conversion of the Series G Preferred
Shares and upon exercise of the New Warrants have been
duly authorized by all necessary corporate action on the
part of the Company and, as of the Closing, will be duly
reserved for issuance. When the shares of Common Stock
are issued upon conversion of the Series G Preferred
Shares and upon exercise of the New Warrants, such shares
will be validly issued and outstanding, fully paid and
nonassessable and the issuance of such shares will not be
subject to preemptive rights of any other stockholder of
the Company.
(f) Financial Statements. (1) The Company has
heretofore delivered or made available to the Purchaser
the audited consolidated balance sheets at June 30, 1995,
1994 and 1993 of the Company and the related consolidated
statements of income, stockholders' equity and cash flows
for the years then ended, including the related notes and
auditor's report thereon (the "Financial Statements").
The Financial Statements (i) present fairly the
consolidated financial condition of the Company at the
dates thereof and present fairly its consolidated results
of operations and cash flows for the years then ended and
(ii) have been prepared in conformity with generally
accepted accounting principles ("GAAP") applied
consistently with respect to the immediately preceding
fiscal year period except as set forth in the notes to
the Financial Statements or in the auditor's report
thereon.
(2) The Company has heretofore delivered or
made available to the Purchaser the unaudited
consolidated balance sheet at December 31, 1995 of the
Company (the "December Balance Sheet") and the related
consolidated statements of income and cash flows for the
three months then ended (such December Balance Sheet and
related consolidated statements, collectively, the
"December Financial Statements"), each of which (i)
presents fairly, in all material respects, the
consolidated financial condition of the Company at
December 31, 1995, and presents fairly its consolidated
results of operations and cash flows for the six months
then ended and (ii) has been prepared in compliance with
all of the requirements of Section 15(d) of the
Securities Exchange Act of 1934, as amended, (the
"Exchange Act") and the applicable rules and regulations
thereunder.
(g) SEC Reports. The Company has filed all
reports, statements, forms and documents with the
Securities Exchange Commission ("SEC") that it was
required to file since December 31, 1990 (the "SEC
Reports"), all of which have complied in all material
respects with all applicable requirements of the
Securities Act of 1933, as amended (the "Securities
Act"), and the Exchange Act. As of their respective
dates, each such report, statement, form or document,
including without limitation any financial statements or
schedules included therein, did not contain any untrue
statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances
under which they were made, not misleading.
(h) Liabilities. As of the date hereof,
except (i) as set forth on the December Balance Sheet,
(ii) as set forth in Section 3(h) of the Disclosure
Schedule or (iii) for liabilities or obligations which
were incurred after December 31, 1995 in the ordinary
course of business and consistent with past practices,
the Company has no liabilities, obligations, claims or
losses (whether liquidated or unliquidated, secured or
unsecured, absolute, accrued, contingent or otherwise)
that would be required to be disclosed on a consolidated
balance sheet of the Company (including the notes
thereto) in conformity with GAAP.
(i) Indebtedness of the Company. Section 3(i)
of the Disclosure Schedule sets forth all outstanding
secured and unsecured Indebtedness (as defined
hereinafter) of the Company in excess of $50,000 in any
individual case, or for which the Company has
commitments, on the date of this Agreement. The Company
is not in default with respect to any such Indebtedness.
"Indebtedness" means at any time, (i) all indebtedness
for borrowed money, (ii) all obligations evidenced by
bonds, debentures, notes or other similar instruments,
(iii) all reimbursement obligations and other liabilities
under letters of credit, (iv) all obligations to pay the
deferred purchase price of property or services, other
than normal trade creditors in the ordinary course, (v)
all obligations in respect of capitalized leases, (vi)
all guarantees and contractual obligations of the
Company, contingent or otherwise, with respect to any
indebtedness or obligation of another, and (vii) all
obligations of the Company secured by any mortgage,
pledge, lien, security interest or other encumbrance on
any asset or property of the Company, whether or not such
obligation has been assumed.
(j) Title to Properties; Liens. The Company
does not own any real property. Section 3(j) of the
Disclosure Schedule correctly describes all real property
leased by the Company, together with a description of the
lease payment obligations and lease termination
provisions relating thereto. The Company enjoys peaceful
and undisturbed possession under all leases necessary in
any material respect for the operation of its properties
and assets, and all such leases are valid and subsisting
and are in full force and effect.
(k) Actions Pending. There is no action, suit,
claim, investigation or proceeding pending or, to the
knowledge of the Company, threatened, against the Company
which questions the validity of this Agreement or the
Related Agreements or any action taken or to be taken
pursuant hereto or thereto. There is no action, suit,
claim, investigation or proceeding pending or, to the
knowledge of the Company, threatened, against or
involving the Company or any of its properties or assets.
There are no outstanding orders, judgments, injunctions,
awards or decrees of any court, arbitrator or
governmental or regulatory body against the Company.
(l) Compliance with Law. The business of the
Company has been and is presently being conducted so as
to comply with all applicable federal, state, and local
governmental laws, rules, regulations and ordinances.
The Company has all material franchises, permits,
licenses, consents and other governmental or regulatory
authorizations and approvals necessary for the conduct of
its business as now being conducted by it, and the
Company is in compliance therewith except for any non-
compliances which would not, individually or in the
aggregate, have a Company Material Adverse Effect.
(m) No Violations. Except as disclosed in
Section 3(m) of the Disclosure Schedule, the Company is
not in violation of or default under (i) any term of its
Certificate of Incorporation or By-Laws, (ii) any of its
contracts or agreements or under any instrument by which
the Company is bound, or (iii) any outstanding indenture
or other debt instrument or with respect to the payment
of principal of or interest on any outstanding
obligations for borrowed money.
(n) Taxes.
(i) The Company has duly and timely
filed, or caused to be filed, and will duly and
timely file, or cause to file, with the appropriate
taxing authority all Tax Returns (as defined below)
required to be filed on or before the date hereof by
or with respect to the Company and such Tax Returns
were or will be true, correct and complete in all
material respects when filed.
(ii) The Company has paid or caused to be
paid in full or has made adequate provision for on
its balance sheet all material Taxes (as defined
below) shown to be due on such Tax Returns. There
are no liens for Taxes upon the assets of either the
Company except for statutory Liens for current Taxes
not yet due.
(iii) None of the Tax Returns filed by or
on behalf of the Company has been examined by the
appropriate taxing authorities.
(iv) Except as set forth in Schedule
3(n)(iv) hereto, the Company has not received any
notice of deficiency or assessment from any taxing
authority with respect to liabilities or obligations
for Taxes with respect to the Company which has not
been fully paid or finally settled, and any such
deficiency or assessment shown in Schedule 3(n)(iv)
hereto is being contested in good faith through
appropriate proceedings. The Company has not given
any outstanding waivers or comparable consents
extending the application of the statute of
limitations with respect to any Taxes or Tax Returns
with respect to the Company.
(v) The Company has complied in all
material respects with all applicable laws, rules
and regulations relating to the payment and
withholding of payroll and employment taxes and
have, within the time and in the manner prescribed
by law, withheld from employee wages and paid over
to the proper governmental authorities all material
payroll and employment taxes required to be so
withheld and paid over.
(vi) No audit or other administrative
proceeding or court proceeding which is material to
the financial condition of Company is presently
pending with regard to any Taxes or Tax Returns.
(vii) The amount and character of the tax
loss carryforwards as set forth in the Company's
financial statements for the year ending June 30,
1995 are materially accurate and, to the Company's
best knowledge, are not subject to any "Section 382
limitation" under Section 382 of the Code, and any
regulations promulgated thereunder. To the
Company's best knowledge, at the Closing Date, the
issuance of the Preferred Shares, the Warrants and
the Fee Warrants in accordance with the terms of
this Agreement and the Related Agreements will not
result in an "ownership change" under Section 382 of
the Code, and any regulations promulgated
thereunder. As of the Closing Date, the Company
shall not have any plan or intention to take any
action after the Closing Date, which to its best
knowledge would result in an "ownership change"
under Section 382 of the Code and any regulations
promulgated thereunder.
(viii) For purposes of this Agreement,
"Taxes" shall mean any and all taxes, charges, fees,
levies or other like assessments (and all related
interest, additions to tax and penalties),
including, but not limited to, income, transfer,
gains, gross receipts, excise, inventory, property
(real, personal or intangible), custom, duty, sales,
use, license, withholding, payroll, employment,
capital stock and franchise taxes, imposed by the
United States, or any state, local or foreign taxing
authority, whether computed on a unitary, combined
or any other basis and "Tax Return" shall mean any
report, return or other information filed with any
taxing authority with respect to Taxes imposed upon
or attributable to the operations of the Company.
(o) ERISA. Section 3(o) of the Disclosure
Schedule contains a true and complete list of each
employee benefit plan, as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and any other bonus, severance or
termination pay, stock option or stock purchase,
incentive pay or other plan, program or arrangement
covering present or former employees of the Company which
is maintained or contributed to by the Company or any of
its subsidiaries (the "Plans"). None of the Plans is
subject to the provisions of Title IV of ERISA, and none
of the Plans is a multiemployer Plan as defined in
Section 3(37) of ERISA (a "Multiemployer Plan"). The
Company has not incurred (directly or indirectly) any
liability to the Pension Benefit Guaranty Corporation or
with respect to a Multiemployer Plan. None of the Plans
is subject to the minimum funding standards set forth in
Section 302 of ERISA or Section 412 of the Internal
Revenue Code of 1986, as amended (the "Code"). None of
the Company or any of its officers or employees has
engaged in a "prohibited transaction" as defined in
Section 406 of ERISA or Section 4975 of the Code with
respect to any Plan which would subject any of such
parties to a civil penalty under Section 502(i) of ERISA
or an excise tax under Section 4975 of the Code. Each of
the Plans has been operated in all material respects in
accordance with applicable law, including ERISA and the
Code. None of the Plans is an employee welfare plan, as
defined in Section 3(1) of ERISA, which provides health
or life insurance benefits to employees of the Company
following their retirement (other than coverage mandated
by applicable law). Each Plan that is intended to be
qualified under Section 401(a) of the Code is so
qualified.
(p) Absence of Specified Changes. Except as
set forth in Section 3(p) of the Disclosure Schedule,
during the period from June 30, 1995 to the date hereof,
there has not been any:
(1) material adverse change in the
business, condition or results of operations of the
Company;
(2) transactions involving the Company
except in the ordinary course of business;
(3) change in accounting principles,
methods or practices of the Company;
(4) amendment to the Certificate of
Incorporation or By-Laws of the Company; or
(5) agreement or understanding to take
any of the actions described above in this paragraph.
(q) Certain Fees. No broker's, finder's or
financial advisory fees or commissions will be payable by
the Company with respect to the transactions contemplated
by this Agreement and the Related Agreements.
(r) Use of Proceeds. The Company will apply
the proceeds from the sale of the Series G Preferred
Shares and the New Warrants to general working capital
purposes.
(s) Intellectual Property Rights.
(i) The Company is the owner of or has
rights to use (including the right to sue for past
infringement) the intellectual and similar property
of every kind and nature used at any time in or
necessary for the conduct of its business, including
without limitation, (A) Patents (meaning all United
States and foreign patents and patent applications,
patent disclosures and inventions, and all patents
issued upon said patent applications or based upon
said disclosures and inventions, including all
reissues, divisions, continuations, continuations-
in-part, substitutions, extensions or renewals of
any of the foregoing), (B) Trademarks (meaning all
United States, any political subdivision thereof,
and foreign trademarks, service marks, trade names,
corporate names, company names, business names,
fictitious business names, trade styles, logos,
designs and general intangibles of like nature, all
registrations and recordings thereof, and all
applications in connection therewith, including
registrations, recordings and applications in the
United States Patent and Trademark Office (the
"PTO"), any State of the United States or any other
country or jurisdiction or any political subdivision
thereof, and all goodwill symbolized thereby and/or
associated therewith and all extensions or renewals
thereof,), (C) Copyrights (meaning all copyrights,
United States and foreign copyright registrations,
and applications to register copyrights), (D)
inventions, formulae, processes, designs, know-how,
show-how or other data or information, (E)
confidential or proprietary technical and business
information, processes and trade secrets, (F)
computer software and databases (including all
embodiments or fixations thereof and related
documentation, registrations and franchises, and all
additions, improvements, enhancements, updated and
accessions thereto), (G) all technical manuals and
documentation made or used in connection with any of
the foregoing, and (H) all licenses and rights with
respect to the foregoing or property of like nature,
in each case as any of the foregoing have been at
any time used in or necessary for the conduct of the
business of the Company (collectively, the
"Intellectual Property Rights").
(ii) Section 3(s)(ii) of the Disclosure
Schedule sets forth a complete and accurate list of
all Copyrights, Patents, and Trademarks owned by or
under obligation of assignment to the Company. Each
owner identified thereon is listed in the records of
the appropriate United States, State or foreign
agency as the sole owner of record.
(iii) Section 3(s)(iii) of the Disclosure
Schedule sets forth a complete and accurate list of
(a) all material agreements and (b) all other
agreements entered into since January 1, 1990, in
each case between the Company and any third party
granting any right to use or practice any rights
under any Intellectual Property Right (collectively,
the "Intellectual Property Licenses"), except for
single-user licenses granting the right to use on a
single personal computer a single copy of
application software incorporating any of the
Company's Intellectual Property Rights.
(iv) There is no restriction or limitation
on the right of the Company to transfer any of the
Intellectual Property Rights.
(v) No trade secret, formula, process,
invention, design, know-how, show-how or any other
confidential information relating to the Company's
business has been disclosed or authorized to be
disclosed to any third party unless any such third
party has entered into, or is bound by, a
confidentiality agreement that is sufficient to
protect fully the Company's proprietary interest and
right in and to such Intellectual Property Right.
(vi) The use of the Intellectual Property
Rights by the Company is not in conflict with the
rights of others. There are no pending legal or
governmental proceedings, including oppositions,
interferences, proceedings or suits, relating to the
Intellectual Property Rights, and, to the best
knowledge of the Company, no such proceedings are
threatened. To the best knowledge of the Company,
the conduct of the business of the Company and the
exercise of the Intellectual Property Rights does
not infringe upon or otherwise violate, and the
exercise of any rights granted to the Company under
any Intellectual Property License would not infringe
upon or violate any intellectual property rights of
any third party. To the best knowledge of the
Company, except as set forth in Section 3(s)(vi), no
person is infringing upon or otherwise violating any
of the Intellectual Property Rights. None of the
Company or its affiliates has received notice of any
claims, and there are no pending claims, of any
persons relating to the scope, ownership or use of
any of the Intellectual Property Rights.
(vii) Each copyright registration,
patent, and registered trademark and application
therefor listed in Section 3(s)(ii) of the
Disclosure Schedule is valid, subsisting and in
proper form, and has been duly maintained, including
the submission of all necessary filings in
accordance with the legal and administrative
requirements of the appropriate jurisdictions.
There have been no failures in complying with such
requirements. Except as provided in Section
3(s)(ii) of the Disclosure Schedule, no such
Copyright, Patent or Trademark has lapsed and there
has been no cancellation or abandonment thereof.
(viii) With respect to each patent and
patent application listed in Section 3(s) of the
Disclosure Schedule, there are no defects of form in
the preparation or filing of the applications
thereof. Each pending application is being
diligently prosecuted. During the prosecution of
each Patent, (A) all pertinent prior art references
known to the Company or its counsel was properly
disclosed to the PTO, and (B) neither such counsel
nor the Company made any misrepresentation to, or
concealed any material fact from, the PTO.
(ix) The execution and delivery of this
Agreement and the Related Agreements and the taking
of the actions contemplated hereby and thereby will
not alter any of the rights of the Company in or to
the Intellectual Property Rights.
(t) Environmental Matters. The Company is in
compliance with the provisions of all federal, state and
local laws relating to pollution or protection of the
environment applicable to it or to real property leased
by it or to the use, operation or occupancy thereof,
except for violations or liabilities which individually
or in the aggregate could not reasonably be expected to
have a Company Material Adverse Effect. The Company has
not engaged in any activity in violation of any provision
of any federal, state or local law relating to pollution
or protection of the environment, which violation could
reasonably be expected to have a Company Material Adverse
Effect. The Company has no liability, absolute or
contingent, under any federal, state or local law
relating to pollution or protection of the environment,
except for liabilities which individually or in the
aggregate could not reasonably be expected to have a
Company Material Adverse Effect.
(u) Registration Rights. Except as set forth
in Section 3(u) of the Disclosure Schedule, the Company
is not a party to any agreement granting registration
rights to any person with respect to any of its equity or
debt securities.
(v) Agreements. Section 3(v) of the
Disclosure Schedule contains a list of each agreement or
instrument (including any and all amendments thereto) to
which the Company is a party as of the date hereof and
which is or, immediately following the consummation of
the transactions contemplated by this Agreement, will be,
material to the business, condition or results of
operations of the Company. Each such agreement or
instrument (including any and all amendments thereto) is
in full force and effect and constitutes a legal, valid
and binding obligation of (i) the Company and (ii) to the
best knowledge of the Company, the other respective
parties thereto, and, to the best knowledge of the
Company, no person is in default or breach of (with or
without the giving of notice or the passage of time) any
such agreement or instrument.
(w) Availability of Documents. Section 3(w)
of the Disclosure Schedule contains a true, correct and
complete copy of the Company's Certificate of
Incorporation, together with all amendments thereto. The
Company has also heretofore provided or made available to
the Purchaser an accurate copy of its by-laws and has
heretofore made available for inspection by the Purchaser
all written agreements, arrangements, commitments and
documents referred to herein or in the Disclosure
Schedule, in each case, together with all amendments and
supplements thereto. The Company has heretofore made
available for inspection by the Purchaser its corporate
minute books. Such corporate minute books contain the
minutes of all the meetings of stockholders, board of
directors and any committees thereof which have been held
since the Company's date of incorporation and all written
consents to action executed in lieu thereof.
(x) Business Relations. To the knowledge of
the Company, no client, customer or supplier will cease
to do business with the Company due to the consummation
of the transactions contemplated by this Agreement or the
Related Agreements.
(y) Interest in Competitors, Suppliers,
Customers, etc. Except as set forth on Section 3(y) of
the Disclosure Schedule or with respect to the ownership
of less than 1% of the outstanding publicly traded
securities of an entity, neither the Company nor its
officers, directors, or affiliates have any ownership
interest in any competitor, supplier, customer or
franchisee of the Company.
(z) Private Offering. Assuming the accuracy
of the Purchaser's representations set forth in Section
4(c) herein, the offer and sale of the Series G Preferred
Shares and the New Warrants hereunder is exempt from the
registration and prospectus delivery requirements of the
Securities Act. Neither the Company nor any person
acting on behalf of it has taken or will take any action
which would subject the offering and issuance of any of
such securities to the provisions of Section 5 of the
Securities Act or to the provisions of any securities
law, rule or regulation of any applicable jurisdiction.
(aa) Disclosure. No representation or
warranty to Purchaser contained in this Agreement and no
statement contained in the Disclosure Schedule or any
Officer's Certificate of the Company furnished pursuant
to the provisions hereof, contains any untrue statement
of a material fact or omits to state a material fact
necessary in order to make the statements contained
therein not misleading.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
Each Purchaser represents and warrants,
severally and not jointly, to the Company as follows:
(a) Organization and Standing of the
Purchasers. The Purchaser is a partnership duly
organized, validly existing and in good standing (to the
extent such concept exists) under the laws of the
jurisdiction of its organization.
(b) Authority; Enforceability; No Conflict.
The Purchaser has all requisite power and authority
(corporate or otherwise) to enter into this Agreement and
to carry out its obligations hereunder. The execution,
delivery and performance of this Agreement by the
Purchaser have been duly and validly authorized by all
requisite partnership proceedings on the part of the
Purchaser. This Agreement is a valid and binding
obligation of the Purchaser, enforceable against it in
accordance with its terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium, rehabilitation, liquidation,
conservatorship, receivership or other similar laws now
or hereafter in effect relating to creditors' rights
generally and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be
brought. The execution and delivery of this Agreement by
the Purchaser do not, and consummation by the Purchaser
of the transactions contemplated hereby will not, result
in or constitute (i) a default, breach or violation of or
under the organizational documents of the Purchaser, or
(ii) a default, breach or violation of or under any
mortgage, deed of trust, indenture, note, bond, license,
lease agreement or other instrument or obligation to
which the Purchaser is a party or by which any of its
properties or assets are bound, except for any defaults,
breaches or violations which would not, individually or
in the aggregate, have a material adverse effect on the
Purchaser or prevent or materially delay the consummation
by the Purchaser of the transactions contemplated hereby,
or (iii) a violation of any statute, rule, regulation,
order, judgment or decree of any court, public body or
authority, except for any violations which would not,
individually or in the aggregate, have a material adverse
effect on the Purchaser or prevent or materially delay
the consummation by the Purchaser of the transactions
contemplated hereby.
(c) Acquisition for Investment. The Purchaser
is either an "accredited investor," as that term is
defined in SECTION230.501(a) of the rules and regulations
promulgated by the SEC under the 1933 Act or a person
described in SECTION230.506(b)(ii) of such rules and
regulations. The Purchaser is acquiring the Series G
Preferred Shares and the New Warrants solely for its own
account for the purpose of investment and not with a view
to or for sale in connection with any distribution
thereof, and has no present intention or plan to effect
any distribution of such Series G Preferred Shares or the
New Warrants. The Purchaser acknowledges that it is able
to bear the financial risks associated with an investment
in the Series G Preferred Shares and New Warrants. The
Series G Preferred Shares and New Warrants may bear a
legend to the following effect:
"THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE IN
RELIANCE ON CERTAIN EXEMPTIONS FROM
REGISTRATION THEREUNDER. THE SALE,
PLEDGE, HYPOTHECATION OR OTHER
TRANSFER OF SUCH SECURITIES IS
SUBJECT TO COMPLIANCE WITH APPLICABLE
SECURITIES LAWS AND REGULATIONS AND
CERTAIN RESTRICTIONS AND CONDITIONS
CONTAINED IN A CERTAIN SECURITIES
PURCHASE AGREEMENT AND RELATED
AGREEMENTS DATED AS OF MARCH 7, 1996.
THE HOLDER OF THIS CERTIFICATE BY
ACCEPTANCE HEREOF AGREES TO BE BOUND
BY SUCH RESTRICTIONS AND CONDITIONS.
A COPY OF THE SECURITIES PURCHASE AND
EXCHANGE AGREEMENT IS ON FILE WITH
THE SECRETARY OF THE COMPANY."
5. CONDUCT OF BUSINESS OF THE COMPANY.
Except as expressly contemplated by this
Agreement or the Related Agreements, during the period
from the date hereof through the Closing, the Company
will conduct its operations according to its ordinary
course of business and consistent with past practice, and
the Company will use its best efforts to preserve intact
its business organization, to keep available the services
of its officers and employees and to maintain existing
relationships with customers and others having business
relationships with it. Without limiting the generality
of the foregoing, and except as otherwise expressly
contemplated by this Agreement or the Related Agreements
or as set forth in Section 5 of the Disclosure Schedule,
prior to the Closing, the Company will not, without the
prior written consent of the Purchaser:
(a) amend its Certificate of Incorporation or
By-Laws;
(b) (i) except in accordance with the existing
terms of the convertible securities, warrants, options
and other agreements disclosed on Section 3(c) of the
Disclosure Schedule, authorize for issuance, issue, sell,
deliver or agree or commit to issue, sell or deliver
(whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase
or otherwise) any securities of any class, or (ii) amend
in any respect any of the terms of any such securities
outstanding as of the date hereof, except to the extent
required by the express terms on the date hereof of such
securities;
(c) split, combine or reclassify any shares of
its capital stock, declare, set aside or pay any dividend
or other distribution (whether in cash, stock, or
property or any combination thereof) in respect of its
capital stock (except for dividends on the existing
preferred stock in accordance with its terms), or redeem,
retire, repurchase or otherwise acquire, directly or
indirectly, any of its securities or adopt a plan of
complete or partial liquidation or resolutions providing
for or authorizing any such liquidation;
(d) incur any additional Indebtedness, except
for short-term borrowings or other Indebtedness incurred
in the ordinary course of business, or mortgage or pledge
any of its assets, tangible or intangible;
(e) acquire, sell, lease or dispose of any
assets outside the ordinary course of business;
(f) make any change in any of the accounting
principles or practices, methods or practices or business
policies used by it;
(g) acquire (by merger, consolidation, or
acquisition of stock or assets) any corporation,
partnership or other business organization or division
thereof;
(h) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, contingent
or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business
consistent with past practice or, in accordance with
their terms, of liabilities reflected or reserved against
in the September Balance Sheet (or the notes thereto) or
incurred in the ordinary course of business consistent
with past practice;
(i) increase the compensation payable to the
officers and employees of the Company, except for
increases in salary or wages (a) in accordance with past
practice or (b) in conjunction with promotions or other
changes in job status in the ordinary course of business;
(j) pay, loan or advance any amounts to,
transfer or lease any properties or assets to or enter
into any contract or agreement with any officers,
directors, employees or shareholders of the Company,
except with respect to directors' fees and compensation
to officers and employees at rates in accordance with
past practice, and except with respect to reimbursable
business expenses of a nature and in amounts reasonably
related to the requirements of the business of the
Company;
(k) waive or release any rights of material
value or terminate or fail to renew any material
contract; or
(l) take, or agree in writing or otherwise to
take, directly or indirectly, any of the actions
described in Sections 5(a) through 5(k).
6. ADDITIONAL AGREEMENTS.
(a) Access to Information; Confidentiality.
From the date hereof to the Closing, the Company shall
afford the officers, employees and agents of the
Purchaser access during normal business hours to the
Company's officers, employees, agents, properties,
offices and all books and records of the Company, and
shall furnish the Purchaser with all financial, operating
and other data and information concerning the Company as
the Purchaser, through its officers, employees or agents,
may request and shall cooperate fully with the Purchaser
and its representatives in their examination of the
Company.
The Purchaser will, and will cause its
affiliates, partners, directors, officers, employees,
agents, representatives and financial advisors
(collectively, "Representatives") to, hold in strict
confidence all Confidential Information (as hereinafter
defined), and not disclose the same to any person without
the prior consent of the Company, unless compelled to
disclose any such Confidential Information by judicial or
administrative process or, in the written opinion of
their counsel, by other requirements of law. Prior to
disclosing any Confidential Information to any such
person, the Purchaser will inform such person and its
representatives of the confidential nature thereof and
will obtain from such person its agreement to be bound by
the provisions of this paragraph as if references herein
to the Purchaser were references to such person. If
this Agreement is terminated, the Purchaser will promptly
return to the Company or destroy all documents (including
all copies thereof) furnished by the Company and received
by the Purchaser or any of its Representatives containing
such Confidential Information. For purposes hereof,
"Confidential Information" shall mean all confidential
nonpublic information concerning the Company that the
Purchaser obtains from the Company, or its
representatives, excluding any such information that
subsequently becomes publicly available (other than
directly or indirectly through acts of the Purchaser.)
(b) Best Efforts. Subject to the terms and
conditions herein provided, each of the parties hereto
agrees to use its best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all
things reasonably necessary, proper or advisable under
applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement
and the Related Agreements as promptly as practicable. In
case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this
Agreement and the Related Agreements, the proper officers
and directors of each party hereto shall take all such
necessary action.
(c) Public Announcements. The Purchaser and
the Company will consult with each other before issuing
any press release or otherwise making any public
statements with respect to the transactions contemplated
by this Agreement and the Related Agreements, and shall
not issue any such press release or make any such public
statement prior to such consultation, except as may be
required by applicable law. Except as may be required by
applicable law, the Company shall not disclose the
identify of the Purchaser in any such press release or
other public statement without the prior written consent
of the Purchaser.
(d) Supplements to Disclosure Schedule. Prior
to the Closing, the Company will supplement or amend the
Disclosure Schedule with respect to any matter hereafter
arising which, if existing or occurring at the date of
this Agreement, would have been required to be set forth
or described in the Disclosure Schedule. No supplement
or amendment of the Disclosure Schedule made pursuant to
this section shall be deemed to cure any breach of any
representation or warranty made in this Agreement unless
the Purchaser specifically agrees thereto in writing.
(e) Directors. For so long as the Purchaser
and its affiliates shall own, in the aggregate, Common
Stock (or Preferred Stock convertible into Common Stock)
equal to or exceeding five percent of the then
outstanding Common Stock of the Company, the Purchaser
and its affiliates shall be entitled to propose two
candidates (the "Purchaser Designees") for election to
the Board of Directors of the Company. Subject to its
fiduciary duties to shareholders, the Company will
recommend to its shareholders that the Purchaser
Designees be elected to the Company's Board of Directors.
7. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE
COMPANY TO SELL THE PREFERRED SHARES AND WARRANTS
AND OF THE PURCHASERS TO PURCHASE THE PREFERRED
SHARES AND WARRANTS.
The respective obligations hereunder of the
Company to issue and sell the Series G Preferred Shares
and New Warrants and of the Purchaser to purchase the
Series G Preferred Shares and New Warrants are subject to
the satisfaction, at or before the Closing, of each of
the following conditions set forth in paragraphs (a)
through (c) below.
(a) Consents. The consents and approvals set
forth in Section 3(b) of the Disclosure Schedule shall
have been obtained.
(b) No Injunction. No statute, rule,
regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or enforced
by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of
the transactions contemplated by this Agreement.
(c) Related Agreements. The Related
Agreements shall have been executed and delivered by the
parties thereto.
8. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE
COMPANY TO SELL THE PREFERRED SHARES AND WARRANTS.
The obligation hereunder of the Company to sell
the Series G Preferred Shares and New Warrants to the
Purchaser is further subject to the satisfaction, at or
before the Closing, of each of the following conditions
set forth in paragraphs (a) and (b) below. These
conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion.
(a) Accuracy of the Purchaser's
Representations and Warranties. The representations and
warranties of the Purchaser shall be true and correct in
all material respects as of the date when made and as of
the Closing as though made at that time (except for
representations and warranties that speak as of a
particular date).
(b) Performance by the Purchaser. The
Purchaser shall have performed, satisfied and complied in
all material respects with all covenants, agreements and
conditions required by this Agreement to be performed,
satisfied or complied with by the Purchaser at or prior
to the Closing.
9. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE
PURCHASER TO PURCHASE THE PREFERRED SHARES AND
WARRANTS.
The obligation of the Purchaser hereunder to
acquire and pay for the Series G Preferred Shares and New
Warrants is subject to the satisfaction, at or before the
Closing, of each of the following conditions set forth in
paragraphs (a) through (e) below. These conditions are
for the Purchaser's sole benefit and may be waived by the
Purchaser at any time in its sole discretion.
(a) Accuracy of the Company's Representations
and Warranties. The representations and warranties of
the Company shall be true and correct in all material
respects as of the date when made and as of the Closing
as though made at that time (except for representations
and warranties that speak as of a particular date).
(b) Performance by the Company. The Company
shall have performed, satisfied and complied in all
material respects with all covenants, agreements and
conditions required by this Agreement to be performed,
satisfied or complied with by the Company at or prior to
the Closing.
(c) Legal Opinions. The Purchaser shall have
received the opinion of Baer Marks & Upham, substantially
in the form set forth in Exhibit V hereto.
(d) Compliance with Securities Laws. The
offering and sale by the Company, at or prior to the
Closing, of the Series G Preferred Shares and New
Warrants shall have been made in compliance with all
applicable requirements of federal and state securities
laws and each Purchaser shall have received evidence
thereof in form and substance reasonably satisfactory to
it.
(e) No Offerings. Neither the Company nor any
of its subsidiaries shall have offered, placed or sold,
or caused or agreed to be offered, placed or sold, any
securities or other obligations other than as part of the
contemplated sale of the Series G Preferred Shares and
New Warrants and the capital structure as reflected
herein.
(f) Regulatory Approvals. All regulatory
approvals shall have been obtained by the Purchaser.
10. TERMINATION.
(a) Right To Terminate. Notwithstanding
anything to the contrary set forth in this Agreement,
this Agreement may be terminated and the transactions
contemplated herein abandoned at any time prior to the
Closing:
(i) at any time by mutual written consent
of the Company and the Purchaser;
(ii) by either the Company or the
Purchaser if the Closing shall not have occurred by April
1, 1996; provided, however, that the right to terminate
this Agreement under this Section 10(a)(ii) shall not be
available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or
resulted in, the failure of the Closing to occur on or
before such date; or
(iii) by either the Company or the
Purchaser if a court of competent jurisdiction shall have
issued an order, decree or ruling permanently
restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, and such
order, decree, ruling or other action shall have become
final and nonappealable.
(b) Obligations to Cease. In the event that
this Agreement shall be terminated pursuant to Section
10(a) hereof, all obligations of the parties hereto under
this Agreement shall terminate and there shall be no
liability of any party hereto to any other party except
that (i) the provisions of the second paragraph of
Section 6(a), Section 11, and Section 12(g) shall
survive, and shall be and remain in full force and effect
and (ii) nothing herein will relieve any party from
liability for any willful breach of this Agreement.
11. INDEMNIFICATION.
(a) General Indemnity. The Company agrees to
indemnify and save harmless the Purchaser (and its
directors, officers, partners, affiliates,
representatives, advisors, successors and assigns) from
and against any and all losses, liabilities,
deficiencies, costs, damages and expenses (including,
without limitation, interest, penalties, reasonable
attorneys' fees, charges and disbursements) incurred by
the Purchaser as a result of (i) any breach of the
representations, warranties or covenants made by the
Company herein or in the Related Agreements or (ii) any
action, proceeding or claim commenced or threatened by a
third party in connection with this Agreement, the
Related Agreements and the transactions contemplated
hereby and thereby. The Purchaser agrees to indemnify
and save harmless the Company (and its directors,
officers, partners, affiliates, representatives,
advisors, successors and assigns) from and against any
and all losses, liabilities, deficiencies, costs, damages
and expenses (including, without limitation, interest,
penalties, reasonable attorneys' fees, charges and
disbursements) incurred by the Company as a result of any
breach of the representations, warranties or covenants
made by the Purchaser herein or in the Related
Agreements. No party shall be entitled to
indemnification hereunder unless and until the aggregate
amount of such party's indemnification claims exceeds
$15,000 and then to the full extent of such claims.
(b) Indemnification Procedure. Any party
entitled to indemnification under this Section 11 (an
"indemnified party") will give prompt written notice to
the indemnifying party of any claim with respect to which
it seeks indemnification promptly after the discovery by
such party of any matters giving rise to a claim for
indemnification; provided that the failure of any party
entitled to indemnification hereunder to give notice as
provided herein shall not relieve the indemnifying party
of its obligations under this Section 11 except to the
extent that the indemnifying party is actually prejudiced
by such failure to give notice. In case any action,
proceeding or claim is brought against an indemnified
party in respect of which indemnification is sought
hereunder, the indemnifying party shall be entitled to
participate in and, unless in the reasonable judgment of
the indemnified party a conflict of interest between it
and the indemnifying party may exist in respect of such
action, proceeding or claim, to assume the defense
thereof, with counsel reasonably satisfactory to the
indemnified party. In the event that the indemnifying
party advises an indemnified party that it will contest
such a claim for indemnification hereunder, or fails,
within thirty (30) days of receipt of any indemnification
notice to notify, in writing, such person of its election
to defend, settle or compromise, at its sole cost and
expense, any action, proceeding or claim (or discontinues
its defense at any time after it commences such defense),
then the indemnified party may, at its option, defend,
settle or otherwise compromise or pay such action or
claim. In any event, unless and until the indemnifying
party elects in writing to assume and does so assume the
defense of any such claim, proceeding or action, the
indemnified party's costs and expenses arising out of the
defense, settlement or compromise of any such action,
claim or proceeding shall be losses subject to
indemnification hereunder. The indemnified party shall
cooperate fully with the indemnifying party in connection
with any negotiation or defense of any such action or
claim by the indemnifying party and shall furnish to the
indemnifying party all information reasonably available
to the indemnified party which relates to such action or
claim. The indemnifying party shall keep the indemnified
party fully apprised at all times as to the status of the
defense or any settlement negotiations with respect
thereto. If the indemnifying party elects to defend any
such action or claim, then the indemnified party shall be
entitled to participate in such defense with counsel of
its choice at its sole cost and expense. The
indemnifying party shall not be liable for any settlement
of any action, claim or proceeding effected without its
written consent, provided, however, that the indemnifying
party shall not unreasonably withhold, delay or condition
its consent. Anything in this Section 11 to the contrary
notwithstanding, the indemnifying party shall not,
without the indemnified party's prior written consent,
settle or compromise any claim or consent to entry of any
judgment in respect thereof which imposes any future
obligation on the indemnified party or which does not
include, as an unconditional term thereof, the giving by
the claimant or the plaintiff to the indemnified party of
a release from all liability in respect of such claim.
The indemnification required by this Section 11 shall be
made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when
bills are received or expense, loss, damage or liability
is incurred. The indemnity agreements contained herein
shall be in addition to (i) any cause of action or
similar right of the indemnified party against the
indemnifying party or others, and (ii) any liabilities
the indemnifying party may be subject to pursuant to the
law.
12. MISCELLANEOUS.
(a) Brokers. The Company and the Purchaser
represent and warrant to each other that they have not
taken any action which will result in any liability of
the other to pay any broker's or finder's fee with
respect to this Agreement or the transactions
contemplated hereby.
(b) Expenses. Each party hereto shall pay its
own fees and expenses incurred in connection with this
Agreement except that, simultaneously with the closing of
the purchase of the Series G Preferred Shares, the
Company shall pay the reasonable out-of-pocket fees and
expenses, up to a maximum amount of $10,000, incurred by
the Purchaser in connection with this Agreement, the
Related Agreements and the transactions contemplated
hereby and thereby, including the reasonable fees and
expenses of Skadden, Arps, Slate, Meagher & Flom in its
capacity as Purchasers' legal counsel.
(c) Survival of Representations, Warranties
and Covenants. The representations and warranties set
forth herein shall survive the Closing until sixty days
after the Company shall have delivered to the Purchaser
the audited financial statements of the Company and its
consolidated subsidiaries (if any) for the fiscal year
ended June 30, 1997, certified by the Company's
independent public accountants; provided that the
representations and warranties shall survive such date to
the extent written notice of any breach thereof is given
on or prior to such date and representations and
warranties relating to Taxes shall survive until a date
which is six months after the expiration of the
applicable statute of limitations. The covenants of the
Company set forth herein shall endure for so long as the
Purchaser shall continue as a stockholder of the Company
or for such shorter period as may be specified herein.
(d) Assignment and Binding Effect. Neither
the Company nor the Purchaser shall assign all or any
part of this Agreement without the prior written consent
of the other; provided, however, that the Purchaser,
without such prior written consent, may assign its rights
hereunder to any entity or entities directly or
indirectly controlled by, or under common control with,
it; provided, further, that no such assignment shall
relieve the Purchaser of its obligations under this
Agreement. This Agreement shall be binding upon and
inure to the benefit of the permitted successors and
assigns of the parties pursuant to this paragraph.
(e) Headings. Subject headings are included
for convenience only and shall not affect the
interpretation of any provisions of this Agreement.
(f) Notices. Any notice, demand, request,
waiver, or other communication under this Agreement shall
be in writing and shall be deemed to have been duly given
on the date of service if personally served or on the
third day after mailing if mailed to the party to whom
notice is to be given, by first class mail, registered,
return receipt requested, postage prepaid and addressed
as follows:
To the Company: Nestor, Inc.
One Richmond Square
Providence, Rhode Island 02906
Attention: Chief Executive Officer
With copies to: Baer Marks & Upham
805 Third Avenue
New York, NY 10022-7513
Attention: Herbert S. Meeker, Esq.
To the Wand (Nestor) Inc.
Purchaser: c/o Wand Partners Inc.
630 Fifth Avenue
Suite 2435
New York, New York 10111
Attention: Bruce W. Schnitzer
With a copy to: Skadden, Arps, Slate,
Meagher & Flom
919 Third Avenue
New York, New York 10022-3897
Attention: Nancy L. Henry, Esq.
(g) Governing Law. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS
OF THE STATE OF DELAWARE AS APPLIED TO CONTRACTS MADE AND
TO BE PERFORMED ENTIRELY IN THE STATE OF DELAWARE.
(h) Entire Agreement. This Agreement,
including the Exhibits and Schedules hereto, sets forth
the entire understanding and agreement of the parties
hereto relating to the matters set forth herein and
supersedes any and all other understandings, negotiations
or agreements between the parties hereto relating to the
matters set forth herein.
(i) Counterparts. This Agreement may be
executed in counterparts, each of which shall be deemed
an original, and all of which together shall constitute a
single agreement.
(j) Severability. In the event that any one
or more of the provisions contained in this Agreement
shall for any reason be held to be invalid, illegal or
unenforceable, the same shall not affect any other
provision of this Agreement, but this Agreement shall be
construed in a manner which, as nearly as possible,
reflects the original intent of the parties.
(k) Words in Singular and Plural Form. Words
used in the singular form in this Agreement shall be
deemed to import the plural, and vice versa, as the sense
may require.
(l) Amendment and Modification. This
Agreement may be amended or modified only by written
agreement executed by all parties hereto.
(m) Waiver. At any time prior to the Closing,
any party hereto may (i) extend the time for the
performance of any of the obligations or other acts of
any other party hereto, (ii) waive any inaccuracies in
the representations and warranties contained herein or in
any document delivered pursuant hereto, and (iii) waive
compliance with any of the agreements or conditions
contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by
the party granting such waiver but such waiver or failure
to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or
future failure.
(n) Specific Enforcement. The Purchaser and
the Company acknowledge and agree that irreparable damage
would occur in the event that any of the provisions of
this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to
an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the
United States or any state thereof having jurisdiction,
this being in addition to any other remedy to which they
may be entitled at law or equity.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first set forth
above.
NESTOR, INC.
By: /s/ David Fox
Name: David Fox
Title: President and Chief
Executive Officer
WAND/NESTOR INVESTMENTS L.P.
By: WAND (NESTOR) INC.
as General Partner
By: /s/ Malcolm P. Appelbaum
Name: Malcolm P. Appelbaum
Title: Vice President
SCHEDULE I
SECURITIES TO BE PURCHASED BY WAND/NESTOR INVESTMENTS L.P.
Security Purchase Price
777 Shares of Series G $777,000
Preferred Stock (together
with detachable Warrants to
purchase 225,330 shares of
Common Stock)
EXHIBIT 2
NESTOR, INC.
AMENDMENT NO. 1
dated as of March 7, 1996
to
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
Dated as of January 31, 1996
The undersigned parties, in consideration of
the agreements herein set forth and for other valuable
consideration, the receipt and adequacy of which are
hereby acknowledged, hereby agree to the following
amendments to the Amended and Restated Registration
Rights Agreement dated as of January 31, 1996 (the
"Nestor Registration Rights Agreement"):
1. As used in the Nestor Registration Rights
Agreement, the term "Series G Preferred Stock" shall mean
the 777 shares of Series G Convertible Preferred Stock
par value $1.00 per share of the Company created pursuant
to the Amended Certificate of Powers, Designations,
Preferences and Special Rights filed March 6, 1996 with
the Secretary of State of the State of Delaware.
2. The following defined term is added to
Section 3 of the Nestor Registration Rights Agreement:
March 7 1996 Securities Purchase Agreement:
The Securities Purchase Agreement, dated as of
March 7, 1996, by and between the Company and
the Wand/Nestor I Partnership.
3. The term "Warrants" is deleted from Section
3 of the Nestor Registration Rights Agreement and is
replaced in its entirety by the following term:
Warrants: The Common Stock Purchase Warrants
of the Company issued (a) to the Wand/Nestor I
Partnership and the Wand/Nestor II Partnership
pursuant to the Securities Purchase Agreement
and the Revised Standby Agreement (and any
Warrants issued in substitution or transfer
thereof), (b) to Wand Partners L.P. and Hill &
Partners in connection with the Letter of
Engagement (and any Warrants issued in
substitution or transfer thereof), (c) to the
Wand/Nestor I Partnership, the Wand/Nestor II
Partnership and the Wand/Nestor III Partnership
pursuant to the Purchase and Exchange Agreement
(and any Warrants issued in substitution or
transfer thereof), and to the Wand/Nestor I
Partnership pursuant to the March 7, 1996
Securities Purchase Agreement (and any Warrants
issued in substitution or transfer thereof).
4. Except as herein amended, all terms,
provisions and conditions of the Nestor Registration
Rights Agreement shall continue in full force and effect
and shall remain enforceable and binding in accordance
with their terms.
5. This Amendment No. 1 may be executed in any
number of identical counterparts, each of which shall for
all purposes be deemed an original and all of which
constitute, collectively, one agreement.
6. This Amendment No. 1 shall be governed by
and construed in accordance with the laws of the State of
Delaware.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement, effective as of the date and
year first above written.
NESTOR, INC.
By:/s/ David Fox
Name: David Fox
Title: President
WAND/NESTOR INVESTMENTS L.P.
By: Wand (Nestor) Inc.
as general partner
By:/s/ Malcolm P. Appelbaum
Name: Malcolm P. Appelbaum
Title: Vice President
WAND/NESTOR INVESTMENTS II L.P.
By: Wand (Nestor) Inc.
as general partner
By: /s/ Malcolm P. Appelbaum
Name: Malcolm P. Appelbaum
Title: Vice President
WAND/NESTOR INVESTMENTS III L.P.
By: Wand (Nestor) Inc.
as general partner
By:/s/ Malcolm P. Appelbaum
Name: Malcolm P. Appelbaum
Title: Vice President
WAND PARTNERS L.P.
By: Wand Partners Inc.
as general partner
By:/s/ Bruce W. Schnitzer
Name: Bruce W. Schnitzer
Title: Chairman
HILL & PARTNERS
By:/s/ Thomas F. Hill
Name: Thomas F. Hill
Title:
EXHIBIT 3
NESTOR, INC.
AMENDED
CERTIFICATE OF POWERS, DESIGNATIONS,
PREFERENCES AND SPECIAL RIGHTS
OF SERIES G CONVERTIBLE PREFERRED STOCK
PURSUANT TO SECTION 151 OF THE
GENERAL CORPORATION LAW OF THE
STATE OF DELAWARE
* * * * * *
Nestor, Inc. (the "Company"), a corporation organized and
existing under the General Corporation Law of the State
of Delaware, does hereby certify that pursuant to the
provisions of Section 151 of the General Corporation Law
of the State of Delaware, the Board of Directors of the
Company, by action taken on March 5, 1996, adopted the
following resolution, which resolution remains in full
force and effect as of the date hereof;
WHEREAS, the Company filed a Certificate of Powers,
Designations, Preferences and Special Rights with the
Secretary of State of the State of Delaware on January
30, 1996, designating 401 shares of the Company's
authorized preferred stock as "Series G Convertible
Preferred Stock"; and
WHEREAS, none of the shares of the Series G Convertible
Preferred Stock have been issued; and
WHEREAS, it is the desire of the Board of Directors,
pursuant to its aforesaid authority, to amend the terms
of the Series G Convertible Preferred Stock;
NOW, THEREFORE, BE IT RESOLVED, that the Company's
Certificate of Powers, Designations, Preferences and
Special Rights of the Series G Convertible Preferred
Stock is hereby amended and restated, to have the terms
and provisions set forth below:
Designation, Amount and Rank. Seven hundred seventy-
seven (777) shares of a convertible preferred stock,
$1.00 par value per share, shall constitute a series of
such preferred stock designated as "Series G Convertible
Preferred Stock" (the "Series G Preferred Stock"). With
respect to dividend rights, redemption rights and rights
on liquidation, winding up and dissolution, the Series G
Preferred Stock shall rank pari passus with the Series F
Preferred Stock and shall rank prior to the Series A
Preferred Stock, the Series B Preferred Stock, the Series
D Preferred Stock, the Series E Preferred Stock, the
Series H Preferred Stock, the Common Stock and any other
class of capital stock or series of preferred stock
hereafter created. The Series G Preferred Stock shall be
issued pursuant to the following additional terms and
conditions:
1. Series G Preferred Stock.
1.1. Definitions.
As used herein, unless the context otherwise
requires, the following terms have the following
meanings:
1.1.1. "Additional Director" means any
director whom holders of shares of Series F Preferred
Stock and Series G Preferred Stock shall be entitled to
elect by virtue of the provisions of Section 1.4.2
hereof.
1.1.2. "Additional Shares of Common Stock"
means all shares (including treasury shares) of Common
Stock issued or sold (or, pursuant to Sections 1.7.3 or
1.7.4, deemed to be issued) by the Company after the date
hereof, whether or not subsequently reacquired or retired
by the Company other than (a) the issuance of shares upon
conversion of the Preferred Stock; (b) shares issued upon
the exercise of the Currently Outstanding Warrants; (c)
shares issued upon the exercise of the Warrants; (d)
shares to be issued pursuant to Company sponsored
employee benefit and compensation arrangements, but not
to exceed 2,000,000 (subject to equitable adjustment in
the event of any combination, reclassification, stock
split, dividend or recapitalization of the Company); and
(e) such additional number of shares, if any, as may
become issuable upon the conversion or exercise of any of
the securities referred to in the foregoing clauses (a)
through (d) and by reason of adjustments required
pursuant to anti-dilution provisions applicable to such
Preferred Stock as in effect on the date hereof, but only
if and to the extent that such adjustments are required
as the result of the original issuance of such Series F
Preferred Stock.
1.1.3. "Book Value Event" means the end of any
fiscal quarter of the Company if the fully diluted book
value per share of Common Stock of the Company determined
in accordance with generally accepted accounting
principles exceeds $.70.
1.1.4. "Business Day" means any day other than
a Saturday or a Sunday or a day on which commercial
banking institutions in the City of New York are
authorized by law or other governmental action to be
closed. Any reference to "days" (unless Business Days
are specified) shall mean calendar days.
1.1.5. "Common Stock" means the Company's
Common Stock, $.01 par value, such term to include any
stock into which such Common Stock shall have been
changed or any stock resulting from any reclassification
of such Common Stock, and all other stock of any class or
classes (however designated) of the Company the holders
of which have the right, without limitation as to amount,
either to all or to a share of the balance of current
dividends and liquidating dividends after the payment of
dividends and distributions on any shares entitled to
preference.
1.1.6. "Conversion Price" means (a) $1.25,
subject to adjustment pursuant to Sections 1.7 and 1.9
hereof or (b) if the Company has not on or before July
31, 1996 entered into a definitive agreement with a party
with which it is currently negotiating, such agreement to
contemplate an ongoing revenue stream to the Company,
based on commercial exploitation of the Company's fraud
detection technology or intelligent character recognition
technology, and to require a non-refundable payment to
the Company upon execution of at least $500,000 (if the
transaction involves the Company's fraud detection
technology), or $1.2 million (if the transaction involves
the Company's intelligent character recegnition
technology), any such payment to be not primarily in
consideration of any requirement that the Company render
services, then the Conversion Price shall automatically
be reduced to $.75, subject to adjustment pursuant to
Sections 1.7 and 1.9 hereof. For purposes of this
paragraph 1.1.6, any prepaid royalty relating to the use
of the Company's fraud-detection technology shall not be
deemed to be a refundable payment.
1.1.7. "Convertible Securities" means any
evidences of indebtedness, shares of stock (other than
Common Stock) or other securities directly or indirectly
convertible into or exchangeable for additional shares of
Common Stock.
1.1.8. "Current Market Price" means on any
date specified herein, the average daily Market Price
during the period of the most recent twenty (20) days,
ending on such date, on which the national securities
exchanges were open for trading, except that if no Common
Stock is then listed or admitted to trading on any
national securities exchange or quoted in the over-the-
counter market, the Current Market Price shall be the
Market Price on such date.
1.1.9. "Currently Outstanding Warrants" means
the common stock purchase warrants and non-qualified
options listed below for the purchase of an aggregate of
3,315,650 shares (subject to adjustment as provided in
such Warrants) of the Common Stock (based on the current
capitalization of the Company):
(A) Outstanding warrants to Purchase 689,375
shares of the Common Stock of the Company at
$3.00 per share expiring at various times in
1996;
(B) Other outstanding warrants and non-
qualified options to purchase 206,000 shares of
the Common Stock of the Company at prices
between $1.00 per share and $4.625 per share
expiring in 1996, 1997 and 1999;
(C) Warrant No. W-D, dated August 11, 1994,
respecting 210,000 shares of Common Stock;
(D) Warrant No. W-F, dated August 11, 1994,
respecting 15,000 shares of Common Stock;
(E) Warrant No. W-G, dated August 11, 1994,
respecting 15,000 shares of Common Stock;
(F) Warrant No. W-H, dated August 11, 1994,
respecting 5,000 shares of Common Stock;
(G) Warrant No. W-I, dated August 11, 1994,
respecting 5,000 shares of Common Stock;
(H) Warrant No. W-E, dated August 11, 1994,
respecting 130,000 shares of Common Stock;
(I) Warrant No. W-J, dated August 11, 1994,
respecting 15,000 shares of Common Stock;
(J) Warrant No. W-K, dated August 11, 1994,
respecting 5,000 shares of Common Stock;
(K) Warrant No. W-N, dated October 5, 1995,
respecting 928,000 shares of Common Stock;
(L) Warrant No. W-O, dated October 5, 1995,
respecting 72,000 shares of Company Common
Stock;
(M) Warrant No. W-P, dated August 11, 1994,
respecting 215,000 shares;
(N) Warrant No. W-Q, dated October 5, 1995,
respecting 649,600 shares of Company Common
Stock;
(O) Warrant No. W-R, dated October 5, 1995,
respecting 50,400 shares of Company Common
Stock; and
(P) Warrants to purchase 105,275 shares of Common
Stock at an exercise price of $2.00 per share,
expiring September 1998.
1.1.10. "Dividend Payment Date" means March
31, June 30, September 30 and December 31 of each year,
commencing March 31, 1996.
1.1.11. "Dividend Period" means each of the
periods commencing January 1 and ending March 31 of any
year, commencing April 1 and ending June 30 of any year,
commencing July 1 and ending September 30 of any year and
commencing October 1 and ending December 31 of any year.
1.1.12. "Four-Dividend Default" means any time
when the Company is in default in the payment of cash
dividends on the Series F Preferred Stock and Series G
Preferred Stock for any four (4) consecutive Dividend
Periods occurring after the date on which the Restricted
Period ends or for any four Dividend Periods within any
eight (8) consecutive Dividend Periods after such date.
1.1.13. "Lender Default" means any time when
(i) the Company shall violate the provisions of or be in
default under the terms of any loan or other agreement
relating to indebtedness of the Company or its
subsidiaries or (ii) a judgement shall be entered against
the Company or any of its subsidiaries, in an amount
exceeding $50,000 for failure to pay trade creditors or
indebtedness and such judgment shall remain unpaid for
more than sixty days.
1.1.14. "Mandatory Redemption Date" means the
Mandatory Redemption Date stated in Section 1.5.2 hereof.
1.1.15. "Market Price" means on any date
specified herein, the amount per share of the Common
Stock, equal to (a) the last sale price of such Common
Stock, regular way, on such date or, if no such sale
takes place on such date, the average of the closing bid
and asked prices thereof on such date, in each case as
officially reported on the principal national securities
exchange on which such Common Stock is then listed or
admitted to trading, or (b) if such Common Stock is not
then listed or admitted to trading on any national
securities exchange but is designated as a national
market system security by the NASD, the last trading
price of the Common Stock on such date, or (c) if there
shall have been no trading on such date or if the Common
Stock is not so designated, the average of the closing
bid and asked prices of the Common Stock on such date as
shown by the NASD automated quotation system, or (d) if
such Common Stock is not then listed or admitted to
trading on any national securities exchange or quoted in
the over-the-counter market, the value as determined by
any firm of independent public accountants of recognized
standing selected by the Board of Directors of the
Company (and approved by the holders of a majority of the
outstanding shares of Series F Preferred Stock and Series
G Preferred Stock) as of the last day of any month ending
within thirty (30) days preceding the date as of which
the determination is to be made.
1.1.16. "Options" means rights, options or
warrants to subscribe for, purchase or otherwise acquire
either Additional Shares of Common Stock or Convertible
Securities.
1.1.17. "Other Securities" means any stock
(other than Common Stock) and other securities of the
Company or any other Person (corporate or otherwise)
which the holders of Preferred Stock at any time shall be
entitled to receive, or shall have received, upon the
conversion of Preferred Stock, in lieu of or in addition
to Common Stock, or which at any time shall be issuable
or shall have been issued in exchange for or in
replacement of Common Stock or Other Securities.
1.1.18. "Person" means a corporation, an
association, a partnership, an organization, a business,
an individual, a government or political subdivision
thereof or a governmental agency.
1.1.19. "Preferred Stock" means, collectively,
the Series A Preferred Stock, the Series B Preferred
Stock, the Series D Preferred Stock, the Series E
Preferred Stock, the Series F Preferred Stock, the Series
G Preferred Stock and the Series H Preferred Stock.
1.1.20. "Redemption Date" means any date fixed
for redemption of shares of Series F Preferred Stock and
Series G Preferred Stock pursuant to the provisions of
Section 1.5 hereof.
1.1.21. "Redemption Notice" means the written
notice of redemption contemplated by Section 1.5.5
hereof.
1.1.22. "Restricted Period" shall mean the
period beginning on the date of original issue of any
shares of Series G Preferred Stock and ending on
September 30, 1997.
1.1.23. "Securities Act" means the Securities
Act of 1933, as amended.
1.1.24. "Series A Preferred Stock" means the
Series A Convertible Preferred Stock, $1.00 par value, of
the Company created pursuant to a Certificate of
Designation filed August 30, 1990 with the Secretary of
State of the State of Delaware.
1.1.25. "Series B Preferred Stock" means the
Series B Convertible Preferred Stock, $1.00 par value, of
the Company created pursuant to a Certificate of
Designation filed June 10, 1992 with the Secretary of
State of the State of Delaware.
1.1.26. "Series D Preferred Stock" means the
Series D Convertible Preferred Stock, $1.00 par value, of
the Company created pursuant to a Certificate of
Designation filed August 9, 1995 with the Secretary of
State of the State of Delaware.
1.1.27. "Series E Preferred Stock" means the
Series E Convertible Preferred Stock, $1.00 par value, of
the Company created pursuant to a Certificate of
Designation filed January 30, 1996 with the Secretary of
State of the State of Delaware.
1.1.28. "Series F Preferred Stock" means the
Series F Convertible Preferred Stock, $1.00 par value, of
the Company created pursuant to a Certificate of
Designation filed January 30, 1996 with the Secretary of
State of the State of Delaware.
1.1.29. "Series G Preferred Stock" means the
Series G Convertible Preferred Stock, $1.00 par value, of
the Company created pursuant to the Amended Certificate
of Designation filed March 6, 1996 with the Secretary of
State of the State of Delaware.
1.1.30. "Series H Preferred Stock" means the
Series H Convertible Preferred Stock, $1.00 par value, of
the Company created pursuant to a Certificate of
Designation filed January 30, 1996 with the Secretary of
State of the State of Delaware.
1.1.31. "Special Redemption Event" has the
meaning set forth in Section 1.5.3.
1.1.32. "Special Series G Voting Rights" means
the special voting rights which holders of the Series G
Preferred Stock are entitled to exercise by virtue of the
provisions of Section 1.4.2 hereof.
1.1.33. "Stated Value" per share means (i)
with respect to the Series A Preferred Stock, two dollars
($2.00), (ii) with respect to the Series B Preferred
Stock, one dollar ($1.00), (iii) with respect to the
Series D Preferred Stock, one dollar and fifty cents
($1.50), (iv) with respect to the Series E Preferred
Stock, One Thousand Dollars ($1,000) plus all accumulated
and unpaid dividends, if any, added thereto and minus all
amounts paid in cash in respect of such previously
accumulated and unpaid dividends that were originally
added to Stated Value, (v) with respect to the Series F
Preferred Stock, One Thousand Dollars ($1,000) plus all
accumulated and unpaid dividends, if any, added thereto
pursuant to Section 1.2.2 and minus all amounts paid in
cash in respect of such previously accumulated and unpaid
dividends that were originally added to such Stated Value
pursuant to Section 1.2.2., (vi) with respect to the
Series G Preferred Stock, One Thousand Dollars ($1,000)
plus all accumulated and unpaid dividends, if any, added
thereto pursuant to Section 1.2.2 and minus all amounts
paid in cash in respect of such previously accumulated
and unpaid dividends that were originally added to such
Stated Value pursuant to Section 1.2.2, and (vii) with
respect to the Series H Preferred Stock, One Thousand
Dollars ($1,000) plus all accumulated and unpaid
dividends, if any, added thereto and minus all amounts
paid in cash in respect of such previously accumulated
and unpaid dividends that were originally added to Stated
Value.
1.1.34. "Two-Dividend Default" means any time
when the Company is in default in the payment of cash
dividends on the Series F Preferred Stock and the Series
G Preferred Stock for any two (2) consecutive Dividend
Periods occurring after the date on which the Restricted
Period ends or for any two Dividend Periods within any
six (6) consecutive Dividend Periods occurring after such
date.
1.1.35. "Unpaid Dividends" means all dividends
with respect to the Series F Preferred Stock and Series G
Preferred Stock which have accrued but which have not
been either paid in cash or added to the Stated Value
thereof pursuant to Section 1.2.2.
1.1.36. "Warrants" means common stock purchase
warrants to acquire an aggregate of 399,040 shares
(subject to adjustment as provided in such warrants)
issued in connection with the purchase of the Series G
Preferred Stock and Series F Preferred Stock.
1.2. Dividends.
1.2.1. The holder of each issued and
outstanding share of Series F Preferred Stock and the
Series G Preferred Stock shall be entitled to receive,
out of the funds of the Company legally available for
such purpose, when, as and if declared by the Board of
Directors of the Company, before any dividend shall be
declared, paid or set aside, or any other distribution
shall be declared or made, upon the Common Stock or any
other class or series of stock of the Company, dividends
in cash at a dividend rate of nine percent (9.0%) per
annum of the Stated Value per share of Series F Preferred
Stock and Series G Preferred Stock, calculated on a daily
basis, for each Dividend Period or portion thereof during
which such Series F Preferred Stock and Series G
Preferred Stock are outstanding. Notwithstanding the
foregoing, the Company may pay dividends in the form of
Common Stock (with fractional shares to be paid in cash)
pursuant to the terms of the Series D Preferred Stock.
1.2.2. Notwithstanding anything to the
contrary herein provided, in the event that any portion
of the quarterly dividend for a Dividend Period on the
Series F Preferred Stock and Series G Preferred Stock is
not declared and paid in cash on any Dividend Payment
Date, the amount of such accrued dividend which is not so
paid shall be accumulated and shall automatically be
added to the Stated Value of such share on such date.
Accumulated dividends on shares of Series F Preferred
Stock and Series G Preferred Stock that have previously
been added to the Stated Value thereof pursuant to the
terms hereof may not thereafter be paid in cash except
upon redemption by the Company. Unpaid dividends shall
not bear interest but, to the extent accumulated and
added to the Stated Value, shall continue to accrue
dividends on a daily basis. Accumulated dividends on any
share of Series F Preferred Stock and Series G Preferred
Stock which are added to the Stated Value thereof
pursuant to the terms hereof shall not be deemed to be in
arrears for any purpose whatsoever. Any dividends that
have accrued on the Series F Preferred Stock and Series G
Preferred Stock but have not yet been added to the Stated
Value thereof shall constitute Unpaid Dividends.
Notwithstanding anything to the contrary herein provided,
no cash dividends shall be paid with respect to the
Common Stock, the Series A Preferred Stock, the Series B
Preferred Stock, the Series D Preferred Stock, the Series
E Preferred Stock or the Series H Preferred Stock at any
time when there are Unpaid Dividends with respect to the
Series F Preferred Stock and the Series G Preferred
Stock.
1.2.3. Dividends payable with respect to the
Series F Preferred Stock and the Series G Preferred Stock
shall be calculated on the basis of a 360-day year
consisting of twelve (12) months of thirty (30) days each
and shall be payable on each Dividend Payment Date to the
holders of record of the Series F Preferred Stock and the
Series G Preferred Stock at the close of business on the
date specified by the Board of Directors of the Company;
provided, however, that no such record date shall be more
than thirty (30) days nor less than ten (10) days prior
to the respective Dividend Payment Date. Dividends on
shares of Series F Preferred Stock and the Series G
Preferred Stock shall accrue from the date of original
issue of such shares of Series F Preferred Stock or
Series G Preferred Stock. Such dividends will accrue
whether or not they have been declared and whether or not
there are profits, surplus or other funds of the Company
legally available for the payment of dividends. The date
on which the Company originally issues any share of
Series F Preferred Stock or Series G Preferred Stock will
be deemed to be its "date of original issue" regardless
of the number of times transfer of such share is made on
the stock records maintained by or for the Company.
1.2.4. All dividends paid or added to Stated
Value, as the case may be, with respect to shares of the
Series F Preferred Stock or Series G Preferred Stock
shall be paid or added to Stated Value, as the case may
be, ratably (based on the respective Stated Values plus
Unpaid Dividends of the Series F Preferred Stock and
Series G Preferred Stock) with respect to such shares to
the holders entitled thereto.
1.2.5. So long as any shares of the Series F
Preferred Stock or Series G Preferred Stock are
outstanding, the Company shall not declare, pay or set
apart for payment any dividend or other distribution on
any of the Company's Common Stock, or Preferred Stock
(other than the Series F Preferred Stock, Series G
Preferred Stock, Series E Preferred Stock and Series H
Preferred Stock) or make any payment on account of, or
set apart for payment money for a sinking fund or other
similar fund for the purchase, redemption or other
retirement of, any of the Common Stock, or Preferred
Stock (other than the Series F Preferred Stock or Series
G Preferred Stock) or any warrants, rights, calls or
options exercisable for any of the Common Stock or make
any distribution in respect thereof, either directly or
indirectly, and whether in cash, obligations or shares of
the Company or other property (other than distributions
or dividends in stock to the holders of such stock), and
shall not permit any Person directly or indirectly
controlled by the Company to purchase or redeem any of
the Common Stock or Preferred Stock (other than the
Series F Preferred Stock and Series G Preferred Stock) or
any warrants, rights, calls or options exercisable for
any of the Common Stock, unless prior to or concurrently
with such declaration, payment, setting apart for
payment, purchase or distribution, as the case may be,
all funds then required for the mandatory redemption of
shares of the Series F Preferred Stock and Series G
Preferred Stock pursuant to Section 1.5.2 hereof, shall
have been paid or be paid, and all Unpaid Dividends on
shares of the Series F Preferred Stock and Series G
Preferred Stock not paid in cash, shall have been paid in
cash or be paid in cash. Notwithstanding the foregoing,
the Company may declare and pay dividends in the form of
Common Stock (with fractional shares to be paid in cash)
pursuant to the terms of the Series D Preferred Stock.
1.3. Rights on Liquidation, Dissolution or
Winding-Up.
1.3.1. In the event of any liquidation,
dissolution or winding-up of the Company (including,
without limitation, a liquidation or reorganization under
Chapter 7 or 11 of Title 11 of the United States Code, as
amended), the holders of shares of the Series F Preferred
Stock and Series G Preferred Stock then issued and
outstanding shall be entitled to be paid out of the
assets of the Company available for distribution to its
stockholders, before any payment shall be made to the
holders of Common Stock or of shares of any other class
or series of stock of the Company, an amount equal to the
Stated Value per share, plus an amount equal to any
Unpaid Dividends to and including the date of
distribution with respect to such shares. If, upon any
liquidation, dissolution or winding-up of the Company
(including, without limitation, a liquidation or
reorganization under Chapter 7 or 11 of Title 11 of the
United States Code, as amended), the assets of the
Company available for distribution to its stockholders
shall be insufficient (a "Liquidation Insufficiency") to
pay the holders of shares of the Series F Preferred Stock
and the Series G Preferred Stock the full amounts to
which they shall respectively be entitled, the holders of
shares of the Series F Preferred Stock and the Series G
Preferred Stock shall be entitled to receive all the
assets of the Company available for distribution and each
such holder of shares of the Series F Preferred Stock and
the Series G Preferred Stock shall share in any
distribution in the proportion which the aggregate Stated
Values of the shares of the Series F Preferred Stock
(plus all Unpaid Dividends thereon) and the Series G
Preferred Stock (plus all Unpaid Dividends thereon) held
by such holder of the Series F Preferred Stock or Series
G Preferred Stock bears to the aggregate Stated Values of
all shares of the Series F Preferred Stock (plus all
Unpaid Dividends thereon) and Series G Preferred Stock
(plus all Unpaid Dividends thereon) then outstanding. If
there is no Liquidation Insufficiency and payment shall
have been made to the holders of shares of the Series F
Preferred Stock and Series G Preferred Stock of the full
amount to which they shall be entitled, then the holders
of shares of the Series F Preferred Stock and Series G
Preferred Stock shall be entitled to receive no further
distributions thereon and the holders of shares of the
Series A Preferred Stock, the Series E Preferred Stock
and the Series H Preferred Stock shall be entitled to
receive an amount equal to the Stated Value (plus all
Unpaid Dividends thereon) per share thereof. After
payment shall have been made to the holders of shares of
the Series A Preferred Stock, the Series E Preferred
Stock and the Series H Preferred Stock of the full
amounts to which they shall be entitled, the holders of
shares of the Common Stock and of shares of any other
class of stock of the Company, if any, shall be entitled
to share, according to their respective rights and
preferences, in all remaining assets of the Company
available for distribution to its stockholders.
1.4. Voting Power.
1.4.1. Except as otherwise expressly provided
herein or as required by law, (i) each holder of
Series G Preferred Stock shall be entitled to vote on all
matters as to which stockholders of the Company are
entitled to vote, and (ii) each holder of Series G
Preferred Stock shall be entitled to cast a number of
votes equal to the greatest number of whole shares of
Common Stock into which such holder's shares of Series G
Preferred Stock could be converted, pursuant to the
provisions of Section 1.6 hereof, at the record date for
the determination of stockholders entitled to vote on
such matter or, if no such record date is established, at
the date such vote is taken or any written consent of
stockholders is solicited. Except as otherwise expressly
provided herein or as required by law, the holders of
shares of Series B Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock, Series F Preferred
Stock, Series G Preferred Stock, Series H Preferred Stock
and Common Stock shall be entitled to vote together as a
class with respect to all matters as to which such
stockholders of the Company are entitled to vote.
1.4.2. In the event that at any time there
shall occur a Two-Dividend Default, then immediately upon
the happening of such Two-Dividend Default and until such
Two-Dividend Default and all defaults in the payment of
quarterly dividends on the Series F Preferred Stock and
Series G Preferred Stock subsequent to and occurring
while such Two-Dividend Default exists shall be cured,
the number of directors constituting the Board of
Directors of the Company shall, without further action,
be increased by two and the holders of Series F Preferred
Stock and Series G Preferred Stock shall have, in
addition to the other voting rights set forth herein, the
exclusive right, voting together separately as a single
class, to elect two directors of the Company to fill such
newly created directorship, the remaining directors to be
elected by the class or classes of stock (including the
Series F Preferred Stock and Series G Preferred Stock)
entitled to vote therefor, at each meeting of
stockholders held for the purpose of electing directors.
In the event that at any time there shall occur a Four-
Dividend Default or a Lender Default, then immediately on
the happening of such Four-Dividend Default or Lender
Default and until such Lender Default or Four-Dividend
Default and all defaults in the payment of quarterly
dividends on the Series F Preferred Stock and Series G
Preferred Stock subsequent to and occurring while such
Four-Dividend Default exists shall be cured, then the
number of directors constituting the Board of Directors
of the Company shall, without further action, be further
increased by four in the case of a Four Dividend Default
or in the case of a Lender Default, and the holders of
Series F Preferred Stock and Series G Preferred Stock
shall have, in addition to the other voting rights set
forth herein, the exclusive right, voting together
separately as a single class, to elect directors of the
Company to fill such newly created directorships, the
remaining directors to be elected by the class or classes
of stock (including the Series G Preferred Stock)
entitled to vote therefor, at each meeting of
stockholders held for the purpose of electing directors.
During the existence of a Four Dividend Default, a
majority of the Directors not elected by the holders of
the Series F Preferred Stock and Series G Preferred Stock
(or their affiliates) shall have the right to declare and
pay dividends on the Series F Preferred Stock and Series
G Preferred Stock out of funds legally available for the
payment of such dividends. Notwithstanding the foregoing
provisions of this Section 1.4.2, upon payment in full of
all quarterly dividends on the Series F Preferred Stock
and Series G Preferred Stock coming due subsequent to a
Four-Dividend Default and the dividend which resulted in
the Four-Dividend Default, so that no more than three
consecutive quarterly dividends on the Series F Preferred
Stock and Series G Preferred Stock remain in default, the
Special Series G Voting Rights of the holders of Series F
Preferred Stock and Series G Preferred Stock shall be
reduced so that they have the right, voting separately as
a class, to elect two Additional Directors of the
Company. Notwithstanding the foregoing provisions of
this Section 1.4.2, upon payment in full of (i) all
quarterly dividends on the Series F Preferred Stock and
Series G Preferred Stock coming due subsequent to a Two-
Dividend Default and the dividend which resulted in the
Two-Dividend Default, (ii) upon payment in full of all
quarterly dividends on the Series F Preferred Stock and
Series G Preferred Stock coming due subsequent to a Four-
Dividend Default and three of the dividends which
resulted in a Four-Dividend Default, so that, in each
case, no more than one quarterly dividend remains in
default, and (iii) upon payment in full or cure of any
Lender Defaults, the Special Series G Voting Rights shall
terminate. Upon any termination of the aforesaid Special
Series G Voting Rights, the term of office of each
director elected by the holders of the Series F Preferred
Stock and Series G Preferred Stock pursuant to this
Section 1.4.2 then in office shall thereupon terminate
and upon such termination the number of directors
constituting the Board of Directors shall, by resolution
of the Board of Directors, be reduced accordingly,
subject always to the subsequent increase of the number
of directors from time to time pursuant to this Section
1.4.2 in the event of the periodic future vesting of the
right of the holders of the Series F Preferred Stock and
Series G Preferred Stock to elect Additional Directors.
The term of office of any director elected by the holders
of the Series F Preferred Stock and Series G Preferred
Stock pursuant to this Section 1.4.2 shall terminate upon
the earlier of the termination of the Special Series G
Voting Rights and the election of a successor to such
director at any meeting of holders of the Series F
Preferred Stock and Series G Preferred Stock for the
purpose of electing directors.
1.4.3. Special Series G Voting Rights may be
exercised either at a special meeting of holders of the
Series F Preferred Stock and Series G Preferred Stock, or
at any annual or special meeting of stockholders of the
Company, or may be exercised by the written consent of
holders of the Series F Preferred Stock and Series G
Preferred Stock pursuant to the Delaware General
Corporation Law.
1.4.4. At any time when Special Series G
Voting Rights pursuant to Section 1.4.2 above shall have
vested in holders of the Series F Preferred Stock and
Series G Preferred Stock, and if such rights shall have
not already been initially exercised, a proper officer of
the Company shall, upon the written request of any holder
of record of the Series F Preferred Stock and Series G
Preferred Stock then outstanding, addressed to the
secretary of the Company, call a special meeting of
holders of the Series F Preferred Stock and Series G
Preferred Stock for the purpose of electing directors.
Such meeting shall be held at the earliest practicable
date upon the notice required for annual meetings of the
stockholders at the place for holding annual meetings of
the stockholders of the Company or, if none, at a place
designated by the secretary of the Company. If such a
meeting shall not be called by the proper officer of the
Company within ten (10) days after the personal service
of such written request upon the secretary of the
Company, or within ten (10) days after mailing the same
within the United States, by first-class registered mail,
addressed to the secretary of the Company at the
Company's principal office (such mailing to be evidenced
by registry receipt issued by the postal authorities),
then the holders of record of ten percent (10%) of the
shares of the Series F Preferred Stock or Series G
Preferred Stock then outstanding may designate in writing
a holder of Series F Preferred Stock or Series G
Preferred Stock to call such meeting at the expense of
the Company, and such meeting may be called by such
person so designated upon the notice required for annual
meetings of stockholders and shall be held at the same
place as is elsewhere provided in this Section 1.4.4.
Any holder of Series F Preferred Stock and Series G
Preferred Stock shall have access to the stock books of
the Company for the purpose of causing a meeting of
holders of Series F Preferred Stock and Series G
Preferred Stock to be called pursuant to the provisions
hereof.
1.4.5. At any meeting held for the purpose of
electing directors at which the holders of Series F
Preferred Stock and Series G Preferred Stock shall have
the right to elect directors as provided herein, the
presence in person or by proxy of the holders of twenty-
five percent (25%) of the then outstanding shares of
Series F Preferred Stock and Series G Preferred Stock
shall be required and shall be sufficient to constitute a
quorum of such class for the election of directors by
such series. In the absence of a quorum of the holders
of Series F Preferred Stock and Series G Preferred Stock
entitled to vote for the election of directors, a
majority of the holders present in person or by proxy of
such Series shall have the power to adjourn the meeting
for the election of directors which the holders of such
Series are entitled to elect, from time to time, without
notice other than announcement at the meeting, until a
quorum shall be present.
1.4.6. Unless the vote of the holders of a
greater number of shares of this Series G Preferred Stock
shall then be required by law, the consent of the holders
of at least 66-2/3% of all of the shares of this Series G
Preferred Stock at the time outstanding, voting together
as a separate class, shall be necessary for authorizing,
effecting or validating any of the following:
(a) the creation, authorization or issue of
any shares of any class or series of stock of the Company
ranking prior to, or pari passu with, the shares of this
Series G Preferred Stock as to dividends or upon
liquidation or otherwise, or the reclassification of any
authorized stock of the Company into any such prior
shares, or the creation, authorization or issue of any
obligation or security convertible into or evidencing the
right to purchase any such prior shares;
(b) the amendment, alteration or repeal of any
of the provisions of the Certificate of Incorporation or
of any certificate amendatory thereof or supplemental
thereto so as to affect adversely the preferences,
rights, powers or privileges of this Series G Preferred
Stock; and
(c) the issuance or assumption of any debt
greater than $250,000 (provided, however, if the Company
has previously redeemed a portion of the Series F
Preferred Stock and the Series G Preferred Stock, then
this amount may be increased up to a maximum amount
obtained by multiplying $250,000 by a fraction that is
the inverse of the percentage of the Series F Preferred
Stock and Series G Preferred Stock that remains
outstanding after such redemption).
1.5. Redemption.
1.5.1. Optional Redemption. The Company shall
have the right to redeem all or part of the Series G
Preferred Stock upon not less than ten (10) days prior
written notice to the holders of the Series G Preferred
Stock.
No shares of Series G Preferred Stock shall be
redeemed pursuant to this Section 1.5.1 unless
concurrently therewith shares of Series F Preferred Stock
are redeemed on a pro rata basis (based on the respective
Stated Values plus Unpaid Dividends of the Series F
Preferred Stock and the Series G Preferred Stock) and no
shares of Series F Preferred Stock shall be redeemed
unless concurrently therewith shares of Series G
Preferred Stock are redeemed on a pro rata basis (based
on the respective Stated Values plus Unpaid Dividends of
the Series F Preferred Stock and the Series G Preferred
Stock).
In the event of optional redemption by the
Company within sixty days following any occurrence of a
Book Value Event shares of Series F Preferred Stock and
Series G Preferred Stock shall be redeemed at a
redemption price equal to the Stated Value per share,
plus all Unpaid Dividends payable with respect to such
shares as of the date fixed for redemption, without
interest. In the event of optional redemption by the
Company prior to August 1, 2004 in the absence of the
existence of a Book Value Event, shares of Series F
Preferred Stock and Series G Preferred Stock shall be
redeemed at a redemption price equal to 109% of the
Stated Value per share, plus all Unpaid Dividends payable
with respect to such shares as of the date fixed for
redemption without interest. In either circumstance,
such redemption price shall be paid in cash.
1.5.2. Mandatory Redemption. The Company
shall redeem all (but not less than all) shares of Series
F Preferred Stock and the Series G Preferred Stock on
August 1, 2004 (the "Mandatory Redemption Date") at a
cash redemption price equal to the Stated Value per share
of such Series F Preferred Stock and Series G Preferred
Stock, plus all Unpaid Dividends on each such share up to
and including the date of redemption.
Payment shall be applied to the redemption of
the shares of Series F Preferred Stock and the Series G
Preferred Stock, pro rata (based on the respective Stated
Values plus Unpaid Dividends) among the holders of all
outstanding shares of the Series F Preferred Stock and
the Series G Preferred Stock on the Mandatory Redemption
Date and shall be paid to each such holder upon surrender
of the certificate or certificates evidencing such shares
to be redeemed to the secretary of the Company.
1.5.3. Special Redemption. (a) Upon the
occurrence of any Special Redemption Event (as
hereinafter defined, each holder of Series F Preferred
Stock and Series G Preferred Stock shall have the right
to require that the Company redeem, to the extent the
Company lawfully may do so, all or a portion of the
shares of Series F Preferred Stock and Series G Preferred
Stock held by such holder, at a redemption price in cash
equal to the Stated Value per share (plus all Unpaid
Dividends thereon to the redemption date). No shares of
Series F Preferred Stock shall be redeemed pursuant to
this Section 1.5.3 unless concurrently therewith shares
of Series G Preferred Stock are redeemed on a pro rata
basis (based on the respective Stated Values plus Unpaid
Dividends of the Series F Preferred Stock and the Series
G Preferred Stock) and no shares of Series G Preferred
Stock shall be redeemed pursuant to this Section 1.5.3
unless concurrently therewith shares of Series F
Preferred Stock are redeemed on a pro rata basis (based
on the respective Stated Values plus Unpaid Dividends of
the Series F Preferred Stock and the Series G Preferred
Stock).
(b) Within five Business Days following any
Special Redemption Event (as hereinafter defined), the
Company will mail to each holder of Series F Preferred
Stock and Series G Preferred Stock a notice (the "Special
Redemption Event Notice") (i) stating that a Special
Redemption Event has occurred; (ii) setting forth a
purchase date (the "Special Redemption Date"), which
shall be no earlier than 20 Business Days nor later than
30 Business Days from the date the Special Redemption
Event Notice is mailed; (iii) setting forth the
Conversion Price then in effect with respect to such
shares of Series F Preferred Stock and Series G Preferred
Stock, pursuant to the provisions of Section 1.6 hereof;
and (iv) setting forth the instructions reasonably
determined by the Company, consistent with this Section
1.5.3 and applicable law, that a holder must follow in
order to require the redemption of his Series F Preferred
Stock and Series G Preferred Stock. Holders of Series F
Preferred Stock and Series G Preferred Stock seeking to
require that the Company redeem their shares will be
required to surrender their shares to the Company prior
to the close of business on the third Business Day prior
to the Special Redemption Date.
(c) Immediately prior to the redemption of any
shares of Series F Preferred Stock and Series G Preferred
Stock pursuant to this Section 1.5.3., the Company shall
declare and pay a cash dividend on all outstanding shares
of Series F Preferred Stock and Series G Preferred Stock
in an amount equal to the aggregate amount of all
accumulated and unpaid dividends that have been added to
the Stated Value thereof and all accrued Unpaid Dividends
thereon to the Special Redemption Date. Upon the Special
Redemption Date, the redemption price of such shares
shall be payable to the order of the person whose name
appears on the certificate or certificates representing
such shares as the owner thereof and each surrendered
certificate shall be cancelled. From and after the date
the Company shall irrevocably deposit an amount equal to
the redemption price of the shares of Series F Preferred
Stock and Series G Preferred Stock to be redeemed in
trust for the holders of such shares with a bank having
capital and surplus in excess of $100 million, which bank
shall be named in the Special Redemption Event Notice,
all rights of the holders of the Series F Preferred Stock
and Series G Preferred Stock, except the right to receive
such redemption price without interest upon surrender of
their certificate or certificates, shall cease with
respect to such shares, and such shares shall not
thereafter be transferred on the books of the Company or
be deemed to be outstanding for any purpose whatsoever.
(d) "Special Redemption Event" shall mean:
(i) consummation of any merger,
reorganization or consolidation transaction
involving the Company;
(ii) the acquisition by purchase or
otherwise of a controlling interest in the
business or assets of, or the stock or other
evidence of beneficial ownership of, any other
Person if consummation of such transaction
results in a transfer of ownership of a
majority of the voting securities of the
Company to such other Person or its
stockholders;
(iii) except in connection with the
execution of the agreement contemplated by
Section 1.1.6(b) hereof, the sale, lease,
conveyance, transfer, exchange, encumbrance or
other disposition, in one transaction or a
series of related transactions, of more than
25% of the assets of the Company; or
(iv) the sale or other disposition of
voting securities of the Company, in a
transaction or a series of related
transactions, if consummation of such
transaction or transactions results in a
transfer of ownership of a majority of the
voting securities of the Company.
1.5.4. With respect to any optional redemption
of Series G Preferred Stock, each redemption of Series G
Preferred Stock shall be made so that the number of
shares of Series G Preferred Stock held by each
registered holder thereof shall be reduced in an amount
which shall bear the same ratio to the total number of
shares of Series G Preferred Stock being so redeemed as
the number of shares of Series G Preferred Stock then
held by such holder bears to the aggregate number of
shares of Series G Preferred Stock then outstanding.
1.5.5. Except as otherwise provided herein, at
least twenty (20) days before any Redemption Date (ten
(10) days if such redemption is in connection with a Book
Value Event), a Redemption Notice shall be mailed,
postage prepaid, to each holder of record of the Series F
Preferred Stock and Series G Preferred Stock which is to
be redeemed, at its address shown on the records of the
Company; provided, however, that the Company's failure to
give such Redemption Notice shall in no way affect its
obligation to redeem the shares of Series F Preferred
Stock and Series G Preferred Stock as provided herein.
The Redemption Notice shall set forth:
(i) the number of shares of Series G
Preferred Stock held by the holder which shall
be redeemed by the Company, and the total
number of shares of Series F Preferred Stock
and Series G Preferred Stock held by all
holders of such series to be so redeemed;
(ii) the Redemption Date and the
redemption price;
(iii) that the holder is to surrender to
the Company, at the place designated therein,
its certificate or certificates representing
the shares of Series F Preferred Stock and
Series G Preferred Stock to be redeemed;
(iv) the Conversion Price then in effect
with respect to such shares of Preferred Stock,
pursuant to the provisions of Section 1.6
hereof; and
(v) that the conversion rights of shares
of Series F Preferred Stock and Series G
Preferred Stock to be redeemed shall terminate
at the close of business on the date prior to
the Redemption Date.
1.5.6. Each holder of shares of Series F
Preferred Stock and Series G Preferred Stock to be
redeemed shall surrender the certificate or certificates
representing such shares to the Company at the place
designated in the Redemption Notice and thereupon the
applicable redemption price for such shares shall be paid
to the order of the Person whose name appears on such
certificate or certificates and each surrendered
certificate shall be cancelled and retired.
1.5.7. From and after the Redemption Date, no
shares of Series F Preferred Stock and Series G Preferred
Stock thereupon subject to redemption shall be entitled
to any further accrual of any dividends pursuant to
Section 1.2 hereof or to the conversion provisions set
forth in Section 1.6 hereof; provided, however, that
sufficient funds for payment of the redemption price for
the shares of Series F Preferred Stock and Series G
Preferred Stock to be redeemed are deposited or held and
set apart for that purpose at the place of payment on or
prior to the Redemption Date.
1.5.8. If the Redemption Notice shall have
been mailed as provided herein, and if on or before the
Redemption Date specified in such notice the
consideration necessary for such redemption shall have
been set apart so as to be available therefor, then on
and after the close of business on the Redemption Date
the shares of Series F Preferred Stock and Series G
Preferred Stock called for redemption, notwithstanding
that any certificate therefor shall not have been
surrendered for cancellation, shall no longer be deemed
outstanding, and all rights with respect to such shares
shall forthwith cease and terminate, except only the
right of the holders thereof to receive upon surrender of
their certificates the consideration payable upon
redemption thereof. In case fewer than all the shares
represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed
shares without cost to the holder thereof.
1.6. Conversion Rights.
1.6.1. After June 30, 1996, each holder of the
shares of Series G Preferred Stock shall have the right,
at the election of such holder, exercised at any time and
from time to time, to convert, subject to the terms and
provisions hereof, all or any portion of such shares of
Series G Preferred Stock into fully paid and non-
assessable shares of Common Stock of the Company or any
capital stock or other securities into which such Common
Stock shall have been changed or any capital stock or
other securities resulting from a reclassification
thereof. Such conversion of Series G Preferred Stock to
shares of Common Stock shall be made at the Conversion
Price, subject to adjustment from time to time as set
forth herein. Series G Preferred Stock may be converted
by the holder thereof during normal business hours on any
Business Day by surrender of the required number of
shares of Series G Preferred Stock, accompanied by
written evidence of the holder's election to convert such
holder's Series G Preferred Stock or portion thereof, to
the Company at its principal executive offices. Payment
of the Conversion Price for the shares of Common Stock
specified in such election shall be made by applying
shares of Series G Preferred Stock, valued at the Stated
Value per share. Payment of Unpaid Dividends, if any,
applicable to such converted shares of Series F Preferred
Stock shall be made in accordance with Section 1.6.4.
1.6.2. Upon the conversion of Series G
Preferred Stock, the holders of such Series G Preferred
Stock shall surrender the certificates representing such
shares at the office of the Company. The Company shall
not be obligated to issue certificates evidencing the
shares of Common Stock issuable upon such conversion (or
to pay any Unpaid Dividends in connection with such
conversion) unless certificates evidencing such shares of
Series G Preferred Stock being converted are either
delivered to the Company or the holder notifies the
Company that such certificates have been lost, stolen, or
destroyed and delivers to the Company an agreement
satisfactory to the Company to indemnify the Company from
any loss incurred by it in connection therewith.
1.6.3. Each conversion of Series G Preferred
Stock shall be deemed to have been effected immediately
prior to the close of business on the Business Day on
which such Series G Preferred Stock shall have been
surrendered to the Company as provided herein, and such
conversion shall be at the Conversion Price in effect at
such time. On each such day that the conversion of
shares of Series G Preferred Stock is deemed effected,
the person or persons in whose name or names any
certificate or certificates for shares of Common Stock
are issuable upon such conversion shall be deemed to have
become the holder or holders of record thereof.
1.6.4. As promptly as practical after the
conversion of shares of Series G Preferred Stock, in
whole or in part, and in any event within five (5)
Business Days thereafter, the Company at its expense
(including the payment by it of any applicable issue,
stamp or other taxes, other than any income taxes and
other than any taxes arising by reason of issuance of
shares of Common Stock to any person other than such
holder) will cause to be issued in the name of and
delivered to the holder thereof or as such holder may
direct, (i) a certificate or certificates for the number
of shares of Common Stock to which such holder shall be
entitled upon such conversion plus, in lieu of any
fractional shares to which such holder would otherwise be
entitled, cash in an amount equal to the same fraction of
the Current Market Price per share of Common Stock and
(ii) Unpaid Dividends, if any, applicable as of the time
of conversion to those shares of Preferred Stock which
are converted. Such Unpaid Dividends shall be paid in
cash, without interest. In case fewer than all the
shares of Series G Preferred Stock represented by any
surrendered certificate are converted into Common Stock,
a new certificate representing the shares of Series G
Preferred Stock not converted shall be issued without
cost to the holder thereof.
1.7. Anti-Dilution Adjustments. The number of
shares of Common Stock issuable upon any conversion
provided for in Section 1.6 shall be subject to
adjustment, from time to time, in accordance with the
following provisions:
1.7.1. Issuance of Additional Shares of Common
Stock. In case the Company at any time or from time to
time after the date hereof shall issue or sell Additional
Shares of Common Stock (including Additional Shares of
Common Stock deemed to be issued pursuant to Section
1.7.3 or 1.7.4) without consideration or for a
consideration per share less than the Conversion Price in
effect immediately prior to such issue or sale, then, in
each such case, subject to Section 1.7.8, such Conversion
Price shall be reduced, concurrently with such issue or
sale, to a price (calculated to the nearest .001 of a
cent) equal to the consideration per share paid for such
additional shares of Common Stock.
1.7.2. Adjustment of Conversion Price Upon
Extraordinary Dividends and Distributions. In case the
Company at any time or from time to time after the date
hereof shall declare, order, pay or make a dividend or
other distribution (including, without limitation, any
distribution of other or additional stock or other
securities or property or Options by way of dividend or
spin-off, reclassification, recapitalization or similar
corporate rearrangement) on the Common Stock, other than
a dividend payable in Additional Shares of Common Stock,
then, and in each such case, subject to Section 1.7.8,
the Conversion Price in effect immediately prior to the
close of business on the record date fixed for the
determination of holders of any class of securities
entitled to receive such dividend or distribution shall
be reduced, effective as of the close of business on such
record date, to a price (calculated to the nearest .001
of a cent) determined by multiplying such Conversion
Price by a fraction
(a) the numerator of which shall be the
Current Market Price in effect on such record date or, if
the Common Stock trades on an ex-dividend basis, on the
date prior to the commencement of ex-dividend trading,
less the amount of such dividend or distribution (as
determined in good faith by the Board of Directors of the
Company) applicable to one share of Common Stock,
(b) the denominator of which shall be such
Current Market Price,
provided that, in the event that the amount of such
dividend as so determined is equal to or greater than 25%
of such Current Market Price or in the event that such
fraction is less than three fourths (3/4), in lieu of the
foregoing adjustment, adequate provision shall be made so
that the holders of the Series G Preferred Stock shall
receive, in the same form and at the same time such
dividend is payable to holders of Common Stock, a pro
rata share of such dividend based upon the maximum number
of shares of Common Stock at the time issuable to such
holders upon conversion of such Series G Preferred Stock.
1.7.3. Treatment of Options and Convertible
Securities. In case the Company at any time or from time
to time after the date hereof shall issue, sell, grant or
assume, or shall fix a record date for the determination
of holders of any class of securities entitled to
receive, any Options or Convertible Securities, then and
in each such case, the maximum number of Additional
Shares of Common Stock (as set forth in the instrument
relating thereto, without regard to any provisions
contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options or, in
the case of Convertible Securities and Options therefor,
the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of
Common Stock issued as of the time of such issue, sale,
grant or assumption or, in case such a record date shall
have been fixed, as of the close of business on such
record date (or, if the Common Stock trades on an ex-
dividend basis, on the date prior to the commencement of
ex-dividend trading), provided that such Additional
Shares of Common Stock shall not be deemed to have been
issued unless the consideration per share (determined
pursuant to Section 1.7.5) of such shares would be less
than the Conversion Price in effect on the date of and
immediately prior to such issue, sale, grant or
assumption or immediately prior to the close of business
on such record date (or, if the Common Stock trades on an
ex-dividend basis, on the date prior to the commencement
of ex-dividend trading), as the case may be, and
provided, further, that in any such case in which
Additional Shares of Common Stock are deemed to be issued
(a) no further adjustment of the Conversion
Price shall be made upon the subsequent issue or sale of
Convertible Securities or shares of Common Stock upon the
exercise of such Options or the conversion or exchange of
such Convertible Securities;
(b) if such Options or Convertible Securities
by their terms provide, with the passage of time or
otherwise, for any increase in the consideration payable
to the Company, or decrease in the number of Additional
Shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof (by change of rate or
otherwise), the Conversion Price computed upon the
original issue, sale, grant or assumption thereof (or
upon the occurrence of the record date, or date prior to
the commencement of ex-dividend trading, as the case may
be, with respect thereto), and any subsequent adjustments
based thereon, shall, upon any such increase or decrease
becoming effective, be recomputed to reflect such
increase or decrease insofar as it affects such Options,
or the rights of conversion or exchange under such
Convertible Securities, which are outstanding at such
time;
(c) upon the expiration (or purchase by the
Company and cancellation or retirement) of any such
Options which shall not have been exercised or the
expiration of any rights of conversion or exchange under
any such Convertible Securities which shall not have been
exercised (or purchase by the Company and cancellation or
retirement of any such Convertible Securities the rights
of conversion or exchange under which shall not have been
exercised), the Conversion Price computed upon the
original issue, sale, grant or assumption (or upon the
occurrence of the record date, or date prior to the
commencement of ex-dividend trading, as the case may be,
with respect thereto), and any subsequent adjustments
based thereon, shall, upon such expiration (or such
cancellation or retirement, as the case may be), be
recomputed as if:
(i) in the case of Options for Common
Stock or Convertible Securities, the only
Additional Shares of Common Stock issued or
sold were the Additional Shares of Common
Stock, if any, actually issued or sold upon the
exercise of such Options or the conversion or
exchange of such Convertible Securities and the
consideration received therefor was the
consideration actually received by the Company
for the issue, sale, grant or assumption of all
such Options, whether or not exercised, plus
the consideration actually received by the
Company upon such exercise, or for the issue or
sale of all such Convertible Securities which
were actually converted or exchanged, plus the
additional consideration, if any, actually
received by the Company upon such conversion or
exchange, and
(ii) in the case of Options for
Convertible Securities, only the Convertible
Securities, if any, actually issued or sold
upon the exercise of such Options were issued
at the time of the issue, sale, grant or
assumption of such Options, and the
consideration received by the Company for the
Additional Shares of Common Stock deemed to
have then been issued was the consideration
actually received by the Company for the issue,
sale, grant or assumption of all such Options,
whether or not exercised, plus the
consideration deemed to have been received by
the Company (pursuant to Section 1.7.5) upon
the issue or sale of such Convertible
Securities with respect to which such Options
were actually exercised;
(d) no readjustment pursuant to subdivision
(b) or (c) above shall have the effect of increasing the
Conversion Price by an amount in excess of the amount of
the adjustment thereof originally made in respect of the
issue, sale, grant or assumption of such Options or
Convertible Securities; and
(e) in the case of any such Options which
expire by their terms not more than thirty (30) days
after the date of issue, sale, grant or assumption
thereof, no adjustment of the Conversion Price shall be
made until the expiration or exercise of all such
Options, whereupon such adjustment shall be made in the
manner provided in subdivision (c) above.
1.7.4. Treatment of Stock Dividends, Stock
Splits, etc. In case the Company at any time or from
time to time after the date hereof shall declare or pay
any dividend on the Common Stock payable in Common Stock,
or shall effect a subdivision of the outstanding shares
of Common Stock into a greater number of shares of Common
Stock (by reclassification or otherwise than by payment
of a dividend in Common Stock), then, and in each such
case, Additional Shares of Common Stock shall be deemed
to have been issued (a) in the case of any such dividend,
immediately after the close of business on the record
date for the determination of holders of any class of
securities entitled to receive such dividend, or (b) in
the case of any such subdivision, at the close of
business on the date immediately prior to the day upon
which such corporate action becomes effective.
1.7.5. Computation of Consideration. For the
purposes of this Section 1.7,
(a) the consideration for the issue or sale of
any Additional Shares of Common Stock shall, irrespective
of the accounting treatment of such consideration,
(i) insofar as it consists of cash, be
computed at the net amount of cash received by
the Company, without deducting any expenses
paid or incurred by the Company or any
commissions or compensation paid or concessions
or discounts allowed to underwriters, dealers
or others performing similar services in
connection with such issue or sale,
(ii) insofar as it consists of property
(including securities) other than cash, be
computed at the fair value thereof at the time
of such issue or sale, as determined in good
faith by the Board of Directors of the Company
(subject to confirmation by a firm of
independent certified public accountants of
recognized standing approved by the holders of
a majority of the Series F Preferred Stock and
Series G Preferred Stock), and
(iii) in case Additional Shares of Common
Stock are issued or sold together with other
stock or securities or other assets of the
Company for a consideration which covers both,
be the portion of such consideration so
received, computed as provided in clauses (i)
and (ii) above, allocable to such Additional
Shares of Common Stock, all as determined in
good faith by the Board of Directors of the
Company (subject to confirmation by a firm of
independent certified public accountants of
recognized standing approved by the holders of
a majority of the Series F Preferred Stock and
Series G Preferred Stock);
(b) Additional Shares of Common Stock deemed
to have been issued pursuant to Section 1.7.3, relating
to Options and Convertible Securities, shall be deemed to
have been issued for a consideration per share determined
by dividing
(i) the total amount, if any, received
and receivable by the Company as consideration
for the issue, sale, grant or assumption of the
Options or Convertible Securities in question,
plus the minimum aggregate amount of additional
consideration (as set forth in the instruments
relating thereto, without regard to any
provision contained therein for a subsequent
adjustment of such consideration to protect
against dilution) payable to the Company upon
the exercise in full of such Options or the
conversion or exchange of such Convertible
Securities or, in the case of Options for
Convertible Securities, the exercise of such
Options for Convertible Securities and the
conversion or exchange of such Convertible
Securities, in each case computing such
consideration as provided in the foregoing
subdivision (a),
by
(ii) the maximum number of shares of
Common Stock (as set forth in the instruments
relating thereto, without regard to any
provision contained therein for a subsequent
adjustment of such number to protect against
dilution) issuable upon the exercise of such
Options or the conversion or exchange of such
Convertible Securities; and
(c) Additional Shares of Common Stock deemed
to have been issued pursuant to Section 1.7.4, relating
to stock dividends, stock splits, etc., shall be deemed
to have been issued for no consideration.
1.7.6. Adjustments for Combinations, etc. In
case the outstanding shares of Common Stock shall be
combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common
Stock, the Conversion Price in effect immediately prior
to such combination or consolidation shall, concurrently
with the effectiveness of such combination or
consolidation, be proportionately increased.
1.7.7. Dilution in Case of Other Securities.
In case any Other Securities shall be issued or sold or
shall become subject to issue or sale upon the conversion
or exchange of any stock (or Other Securities) of the
Company (or any issuer of Other Securities or any other
Person referred to in Section 1.8) or to subscription,
purchase or other acquisition pursuant to any Options
issued or granted by the Company (or any such other
issuer or Person) for a consideration such as to dilute,
on a basis consistent with the standards established in
the other provisions of this Section 1.7, the conversion
rights granted to holders of Series G Preferred Stock,
then, and in each such case, the computations,
adjustments and readjustments provided for in this
Section 1.7 with respect to the Conversion Price shall be
made as nearly as possible in the manner so provided and
applied to determine the amount of Other Securities from
time to time receivable upon the conversion of the shares
of Series G Preferred Stock, so as to protect the holders
of the Series G Preferred Stock against the effect of
such dilution.
1.7.8. Minimum Adjustment of Conversion Price.
If the amount of any adjustment of the Conversion Price
required pursuant to this Section 1.7 would be less than
one-half of one percent (1%) of the Conversion Price in
effect at the time such adjustment is otherwise so
required to be made, such amount shall be carried forward
and adjustment with respect thereto 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 at least one-half of
one percent (1%) of such Conversion Price.
1.8. Consolidation, Merger, etc.
1.8.1. Adjustments for Consolidation, Merger,
Sale of Assets, Reorganization, etc. In case the Company
after the date hereof (a) shall consolidate with or merge
into any other Person and shall not be the continuing or
surviving corporation of such consolidation or merger, or
(b) shall permit any other Person to consolidate with or
merge into the Company and the Company shall be the
continuing or surviving Person but, in connection with
such consolidation or merger, the Common Stock or Other
Securities shall be changed into or exchanged for stock
or other securities of any Other Person or cash or any
other property, or (c) shall transfer all or
substantially all of its properties or assets to any
other Person, or (d) shall effect a capital
reorganization or reclassification of the Common Stock or
Other Securities (other than a capital reorganization or
reclassification resulting in the issue of Additional
Shares of Common Stock for which adjustment in the
Conversion Price is provided in subsection 1.7.1 or
1.7.2), then, and in the case of each such transaction,
proper provision shall be made so that, upon the basis
and the terms and in the manner provided herein, the
holders of shares of Series G Preferred Stock, upon the
conversion thereof at any time after the consummation of
such transaction, shall be entitled to receive (at the
aggregate Conversion Price in effect at the time of such
consummation for all Common Stock or Other Securities
issuable upon such exercise immediately prior to such
consummation), in lieu of the Common Stock or Other
Securities issuable upon such exercise prior to such
consummation, the highest amount of securities, cash or
other property to which such holder would actually have
been entitled as a stockholder upon such consummation if
such holder had exercised the conversion rights
pertaining to the Series G Preferred Stock immediately
prior thereto.
1.8.2. Assumption of Obligations.
Notwithstanding anything to the contrary herein provided,
the Company will not effect any of the transactions
described in subsections (a) through (d) of Section 1.8.1
unless, prior to the consummation thereof, each Person
(other than the Company) which may be required to deliver
any stock, securities, cash or property upon the
conversion of shares of Series G Preferred Stock as
provided herein shall assume, by written instrument
delivered to, and reasonably satisfactory to, the holders
of the Series G Preferred Stock (a) the obligations of
the Company with respect to the Series G Preferred Stock
(and if the Company shall survive the consummation of
such transaction, such assumption shall be in addition
to, and shall not release the Company from, any
continuing obligations of the Company with respect to the
Series G Preferred Stock), and (b) the obligation to
deliver to such holder such shares of stock, securities,
cash or property as, in accordance with the foregoing
provisions of this Section 1.8, such holder may be
entitled to receive, and such Person shall have similarly
delivered to such holders of Series G Preferred Stock an
opinion of counsel for such Person, which counsel shall
be reasonably satisfactory to such holders, stating that
the rights and privileges of the Series G Preferred Stock
shall thereafter continue in full force and effect and
the terms thereof (including, without limitation, all of
the provisions of this Section 1.8) shall be applicable
to the stock, securities, cash or property which such
Person may be required to deliver upon any conversion of
shares of Series G Preferred Stock or the exercise of any
rights pursuant hereto.
1.9. Other Dilutive Events. In case any event
shall occur as to which the provisions of Section 1.7 or
Section 1.8 are not strictly applicable but the failure
to make any adjustment would not fairly protect the
conversion rights pertaining to shares of Series G
Preferred Stock in accordance with the essential intent
and principles of such sections, then, in each such case,
the Company shall appoint a firm of independent certified
public accountants of recognized national standing (such
firm to be subject to the approval of the holders of a
majority of the Series F Preferred Stock and the Series G
Preferred Stock), which shall give their opinion
regarding the adjustment, if any, on a basis consistent
with the essential intent and principles established in
Sections 1.7 and 1.8, necessary to preserve, without
dilution, the conversion rights of the Series F Preferred
Stock and the Series G Preferred Stock. Upon receipt of
such opinion, the Company will promptly mail a copy
thereof to each holder of Series F Preferred Stock and
the Series G Preferred Stock and shall make the
adjustments described therein.
1.10. No Dilution or Impairment. The Company
will not, by amendment of its certificate of
incorporation or by-laws or through any consolidation,
merger, reorganization, transfer of assets, dissolution,
issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or
performance of any of the terms of the Series G Preferred
Stock, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order
to protect the rights of the holders of shares of Series
G Preferred Stock against dilution or other impairment.
Without limiting the generality of the foregoing, the
Company (a) will not permit the par value of any shares
of stock receivable upon the conversion of Series G
Preferred Stock to exceed the amount payable therefor
upon such exercise, (b) will take all such action as may
be necessary or appropriate in order that the Company may
validly and legally issue fully paid and non-assessable
shares of stock on the conversion of the shares of Series
G Preferred Stock from time to time outstanding, and (c)
will not take any action which results in any adjustment
of the Conversion Price if the total number of shares of
Common Stock (or Other Securities) issuable after the
action upon the conversion of all of the outstanding
shares of Series G Preferred Stock would exceed the total
number of shares of Common Stock (or Other Securities)
then authorized by the Company's certificate of
incorporation and available for the purpose of issue upon
such exercise.
1.11. Accountants' Report as to Adjustments.
In each case of any adjustment or readjustment in the
shares of Common Stock (or Other Securities) issuable
upon the conversion of shares of Series G Preferred
Stock, the Company at its expense will promptly compute
such adjustment or readjustment in accordance with the
terms hereof and cause independent certified public
accountants of recognized standing (such firm to be
subject to the approval of the holders of a majority of
the outstanding Series F Preferred Stock and Series G
Preferred Stock) selected by the Company to verify such
computation and prepare a report setting forth such
adjustment or readjustment and showing in reasonable
detail the method of calculation thereof and the facts
upon which such adjustment or readjustment is based,
including a statement of (a) the consideration received
or to be received by the Company for any Additional
Shares of Common Stock issued or sold or deemed to have
been issued, (b) the number of shares of Common Stock
outstanding or deemed to be outstanding, and (c) the
Conversion Price in effect immediately prior to such
issue or sale and as adjusted and readjusted (if required
by Section 1.7) on account thereof. The Company will
forthwith mail a copy of each such report to each holder
of shares of Series F Preferred Stock and Series G
Preferred Stock and will, upon the written request at any
time of any holder of shares of Series F Preferred Stock
and Series G Preferred Stock, furnish to such holder a
like report setting forth the Conversion Price at the
time in effect and showing in reasonable detail how it
was calculated. The Company will also keep copies of all
such reports at its principal office and will cause the
same to be available for inspection at such office during
normal business hours by any holder of Series F Preferred
Stock and Series G Preferred Stock or any prospective
purchaser of Series F Preferred Stock or Series G
Preferred Stock designated by the holder thereof.
1.12. Notices of Corporate Action. In the
event of
(a) any taking by the Company of a record of
the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to
receive any dividend (other than dividends payable with
respect to the Series F Preferred Stock and Series G
Preferred Stock) or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares
of stock of any class or any other securities or
property, or to receive any other right, or
(b) any capital reorganization of the Company,
any reclassification or recapitalization of the capital
stock of the Company or any consolidation or merger
involving the Company and any other Person or any
transfer of all or substantially all of the assets of the
Company to any other Person, or
(c) any voluntary or involuntary dissolution,
liquidation or winding-up of the Company,
the Company will mail to each holder of shares of Series
F Preferred Stock and Series G Preferred Stock a notice
specifying (i) the date or expected date on which any
such record is to be taken for the purpose of such
dividend, distribution or right, and the amount and
character of such dividend, distribution or right, and
(ii) the date or expected date on which any such
reorganization, reclassification, recapitalization,
consolidation, merger, transfer, dissolution, liquidation
or winding-up is to take place and the time, if any such
time is to be fixed, as of which the holders of record of
Common Stock (or Other Securities) shall be entitled to
exchange their shares of Common Stock (or Other
Securities) for the securities or other property
deliverable upon such reorganization, reclassification,
recapitalization, consolidation, merger, transfer,
dissolution, liquidation or winding-up.
1.13. Retirement of Converted or Redeemed
Shares. No share or shares of Series G Preferred Stock
acquired by the Company by reason of optional or
mandatory redemption, purchase, conversion or otherwise
shall be re-issued and all such shares shall be
cancelled, retired and eliminated from the shares which
the Company shall be authorized to issue. The Company
may from time to time take such appropriate corporate
action as may be necessary to reduce the authorized
number of shares of Series G Preferred Stock accordingly.
FURTHER RESOLVED, that, before the Company shall issue
any shares of Series G Preferred Stock, a certificate
pursuant to Section 151 of the DGCL shall be made,
executed, acknowledged, filed, and recorded in accordance
with the provisions of Section 103 and 151 of the DGCL,
and the proper officers of the Company be, and they
hereby are, authorized and directed to do all acts and
things which may be necessary or proper in their opinion
to carry into effect the purposes and intent of this and
the foregoing resolutions.
IN WITNESS WHEREOF, the Company has caused this Certificate to
be signed in its name and on its behalf and attested on this
6th day of March, 1996 by duly authorized officers of this
Corporation.
NESTOR, INC.
By: /s/ David Fox
Name: David Fox
Title: President and Chief
Executive Officer
EXHIBIT 4
WAND I REGULAR WARRANT (NO. 2)
________________________________________________________
NESTOR, INC.
Common Stock Purchase Warrant
Dated as of March 7, 1996
_________________________________________________________
[THIS WARRANT AND ANY SHARES ACQUIRED UPON THE
EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED
OF EXCEPT WHILE A REGISTRATION UNDER SUCH ACT IS IN
EFFECT OR PURSUANT TO AN EXEMPTION THEREFROM UNDER
SUCH ACT. THIS WARRANT AND SUCH SHARES MAY BE
TRANSFERRED ONLY IN COMPLIANCE WITH THE CONDITIONS
SPECIFIED IN THIS WARRANT.]
TABLE OF CONTENTS
1. Exercise of Warrant . . . . . . . . . . . . . . 2
1.1. Manner of Exercise . . . . . . . . . . . . 2
1.2. When Exercise Effective . . . . . . . . . 2
1.3. Delivery of Stock Certificates, etc. . . . 3
1.4. Company to Reaffirm Obligations . . . . . . 3
1.5. Payment by Application of Shares
Otherwise Issuable . . . . . . . . . . . . 3
2. Adjustment of Common Stock Issuable Upon
Exercise . . . . . . . . . . . . . . . . . . . . 4
2.1. General; Warrant Price . . . . . . . . . . 4
2.2. Adjustment of Warrant Price . . . . . . . . 5
2.2.1 Issuance of Additional Shares of
Common Stock . . . . . . . . . . 5
2.2.2 Extraordinary Dividends and
Distributions . . . . . . . . . . 5
2.3. Treatment of Options and Convertible
Securities . . . . . . . . . . . . . . . . 6
2.4. Treatment of Stock Dividends, Stock
Splits, etc. . . . . . . . . . . . . . . . 8
2.5. Computation of Consideration . . . . . . . 9
2.6. Adjustments for Combinations, etc. . . . . 10
2.7. Dilution in Case of Other Securities . . . 10
2.8. Minimum Adjustment of Warrant Price . . . . 11
3. Consolidation, Merger, etc . . . . . . . . . . . 11
3.1. Adjustments for Consolidation, Merger,
Sale of Assets, Reorganization, etc. . . . 11
3.2. Assumption of Obligations . . . . . . . . . 12
4. Other Dilutive Events . . . . . . . . . . . . . 13
5. No Dilution or Impairment . . . . . . . . . . . 13
6. Accountants' Report as to Adjustments . . . . . 14
7. Notices of Corporate Action . . . . . . . . . . 14
8. Registration of Common Stock . . . . . . . . . . 15
9. Restrictions on Transfer . . . . . . . . . . . . 16
9.1. Restrictive Legends . . . . . . . . . . . 16
10. Availability of Information . . . . . . . . . . 17
11. Reservation of Stock, etc. . . . . . . . . . . . 17
12. Registration and Transfer of Warrants, etc. . . 18
12.1. Warrant Register; Ownership of Warrants . 18
12.2. Transfer and Exchange of Warrants . . . . 18
12.3. Replacement of Warrants . . . . . . . . . 18
13. Registration Rights . . . . . . . . . . . . . . 19
14. Definitions . . . . . . . . . . . . . . . . . . 19
15. Remedies . . . . . . . . . . . . . . . . . . . . 23
16. No Rights or Liabilities as Stockholder. . . . 23
17. Notices . . . . . . . . . . . . . . . . . . . . 23
18. Amendments . . . . . . . . . . . . . . . . . . . 24
19. Expiration . . . . . . . . . . . . . . . . . . . 24
20. Descriptive Headings . . . . . . . . . . . . . . 24
21. Governing Law . . . . . . . . . . . . . . . . . 24
22. Judicial Proceedings; Waiver of Jury . . . . . . 24
EXHIBIT A . . . . . . . . . . . . . . . . . . . . . . 26
FORM OF SUBSCRIPTION . . . . . . . . . . . . . . . . 27
FORM OF ASSIGNMENT . . . . . . . . . . . . . . . . . 28
Wand I Regular Warrant (No. 2)
NESTOR, INC.
Common Stock Purchase Warrant
New York, New York
No. W-Y March 7, 1996
Nestor, Inc. (the "Company"), a Delaware
corporation, for value received, hereby certifies that
Wand/Nestor Investments L.P. ("Wand"), or registered
assigns, is entitled to purchase from the Company 225,330
duly authorized, validly issued, fully paid and
nonassessable shares of Common Stock, par value $.01 per
share (the "Common Stock"), of the Company at the
purchase price per share of $1.25 (provided, however, if
the Company has not on or before July 31, 1996 entered
into a definitive agreement with a party with which it is
currently negotiating, such agreement to contemplate an
ongoing revenue stream to the Company, based on
commercial exploitation of the Company's fraud detection
technology or intelligent character recognition
technology, and to require a non-refundable payment to
the Company upon execution of at least $500,000 (if the
transaction involves the Company's fraud detection
technology) or $1.2 million (if the transaction involves
the Company's intelligent character recognition
technology), any such payment to be not primarily in
consideration of any requirement that the Company render
services, then the purchase price shall automatically be
reduced to $.75), at any time or from time to time prior
to 5:00 P.M., New York City time, on August 1, 2004 (or
such later date as may be determined pursuant to section
19), all subject to the terms, conditions and adjustments
set forth below in this Warrant. For purposes of this
paragraph, any prepaid royalty relating to the use of the
Company's fraud-detection technology shall not be deemed
to be a refundable payment.
This Warrant is being issued by the Company in
consideration of Wand's performance of its obligations
pursuant to the Securities Purchase Agreement dated as of
March 7, 1996 by and between the Company and Wand (the
"Purchase and Exchange Agreement"). Certain capitalized
terms used in this Warrant are defined in section 14;
references to an "Exhibit" are, unless otherwise
specified, to one of the Exhibits attached to this
Warrant and references to a "section" are, unless
otherwise specified, to one of the sections of this
Warrant.
1. Exercise of Warrant.
1.1. Manner of Exercise. This Warrant may be
exercised after June 30, 1996 by the holder hereof, in
whole or in part, during normal business hours on any
Business Day, by surrender of this Warrant to the Company
at its principal office, accompanied by a subscription
substantially in the form attached to this Warrant (or a
reasonable facsimile thereof) duly executed by such
holder and accompanied by payment, in cash, by certified
or official bank check payable to the order of the
Company, or in the manner provided in Section 1.5, in the
amount obtained by multiplying (a) the number of shares
of Common Stock (without giving effect to any adjustment
thereof) designated in such subscription by (b) $1.25
(provided, however, if the Company has not on or before
July 31, 1996 entered into a definitive agreement with a
party with which it is currently negotiating, such
agreement to contemplate an ongoing revenue stream to the
Company, based on commercial exploitation of the
Company's fraud detection technology or intelligent
character recognition technology, and to require a non-
refundable payment to the Company upon execution of at
least $500,000 (if the transaction involves the Company's
fraud detection technology) or $1.2 million (if the
transaction involves the Company's intelligent character
recognition technology), any such payment to be not
primarily in consideration of any requirement that the
Company render services, then the purchase price shall
automatically be reduced to $.75), and such holder shall
thereupon be entitled to receive the number of duly
authorized, validly issued, fully paid and nonassessable
shares of Common Stock (or Other Securities) determined
as provided in sections 2 through 4. For purposes of
this paragraph 1.1, any prepaid royalty relating to the
use of the Company's fraud-detection technology shall not
be deemed to be a refundable payment.
1.2. When Exercise Effective. Each exercise
of this Warrant shall be deemed to have been effected
immediately prior to the close of business on the
Business Day on which this Warrant shall have been
surrendered to the Company as provided in section 1.1,
and at such time the Person or Persons in whose name or
names any certificate or certificates for shares of
Common Stock (or Other Securities) shall be issuable upon
such exercise as provided in section 1.3 shall be deemed
to have become the holder or holders of record thereof.
1.3. Delivery of Stock Certificates, etc. As
soon as practicable after each exercise of this Warrant,
in whole or in part, and in any event within five
Business Days thereafter, the Company at its expense
(including the payment by it of any applicable issue
taxes) will cause to be issued in the name of and
delivered to the holder hereof or, subject to section 9,
as such holder (upon payment by such holder of any
applicable transfer taxes) may direct,
(a) a certificate or certificates for the
number of duly authorized, validly issued, fully
paid and nonassessable shares of Common Stock (or
Other Securities) to which such holder shall be
entitled upon such exercise plus, in lieu of any
fractional share to which such holder would
otherwise be entitled, cash in an amount equal to
the same fraction of the Market Price per share on
the Business Day next preceding the date of such
exercise, and
(b) in case such exercise is in part only, a
new Warrant or Warrants of like tenor, calling in
the aggregate on the face or faces thereof for the
number of shares of Common Stock equal (without
giving effect to any adjustment thereof) to the
number of such shares called for on the face of this
Warrant minus the number of such shares designated
by the holder upon such exercise as provided in
section 1.1.
1.4. Company to Reaffirm Obligations. The
Company will, at the time of each exercise of this
Warrant, upon the request of the holder hereof,
acknowledge in writing its continuing obligation to
afford to such holder all rights (including, without
limitation, any rights to registration, pursuant to the
Registration Rights Agreement referred to in section 8,
of the shares of Common Stock or Other Securities issued
upon such exercise) to which such holder shall continue
to be entitled after such exercise in accordance with the
terms of this Warrant, provided that if the holder of
this Warrant shall fail to make any such request, such
failure shall not affect the continuing obligation of the
Company to afford such rights to such holder.
1.5. Payment by Application of Shares
Otherwise Issuable. Upon any exercise of this Warrant,
the holder hereof may, at its option, instruct the
Company, by written notice accompanying the surrender of
this Warrant at the time of such exercise, to apply to
the payment required by section 1.1 such number of the
shares of Common Stock otherwise issuable to such holder
upon such exercise as shall be specified in such notice,
in which case an amount equal to the excess of the
aggregate Current Market Price of such specified number
of shares on the date of exercise over the portion of the
payment required by section 1.1 attributable to such
shares shall be deemed to have been paid to the Company
and the number of shares issuable upon such exercise
shall be reduced by such specified number.
2. Adjustment of Common Stock Issuable Upon
Exercise.
2.1. General; Warrant Price. The number of
shares of Common Stock which the holder of this Warrant
shall be entitled to receive upon each exercise hereof
shall be determined by multiplying the number of shares
of Common Stock which would otherwise (but for the
provisions of this section 2) be issuable upon such
exercise, as designated by the holder hereof pursuant to
section 1.1, by the fraction of which (a) the numerator
is the price then applicable pursuant to section 1.1(b)
of this Warrant and (b) the denominator is the Warrant
Price in effect on the date of such exercise. The
"Warrant Price" shall initially be $1.25 per share,
provided, however, if the Company has not on or before
July 31, 1996 entered into a definitive agreement with a
party with which it is currently negotiating, such
agreement to contemplate an ongoing revenue stream to the
Company, based on commercial exploitation of the
Company's fraud detection technology or intelligent
character recognition technology, and to require a non-
refundable payment to the Company upon execution of at
least $500,000 (if the transaction involves the Company's
fraud detection technology) or $1.2 million (if the
transaction involves the Company's intelligent character
recognition technology), any such payment to be not
primarily in consideration of any requirement that the
Company render services, then the Warrant Price shall
automatically be reduced to $.75. The Warrant Price
shall be adjusted and readjusted from time to time as
further provided in this section 2 and, as so adjusted or
readjusted, shall remain in effect until a further
adjustment or readjustment thereof is required by this
section 2. For purposes of this paragraph 2.1, any
prepaid royalty relating to the use of the Company's
fraud-detection technology shall not be deemed to be a
refundable payment.
2.2. Adjustment of Warrant Price.
2.2.1 Issuance of Additional Shares of Common
Stock. In case the Company at any time or from time to
time after the date hereof shall issue or sell Additional
Shares of Common Stock (including Additional Shares of
Common Stock deemed to be issued pursuant to section 2.3
or 2.4) without consideration or for a consideration per
share less than the Warrant Price in effect immediately
prior to such issue or sale, then, and in each such case,
subject to section 2.8, such Warrant Price shall be
reduced, concurrently with such issue or sale, to a price
(calculated to the nearest .001 of a cent) equal to the
consideration per share paid for such Additional Shares
of Common Stock.
2.2.2 Extraordinary Dividends and
Distributions. In case the Company at any time or from
time to time after the date hereof shall declare, order,
pay or make a dividend or other distribution (including,
without limitation, any distribution of other or
additional stock or other securities or property or
Options by way of dividend or spin-off, reclassification,
recapitalization or similar corporate rearrangement) on
the Common Stock, other than a dividend payable in (a)
Additional Shares of Common Stock or (b) cash dividends
during any fiscal year of the Company that do not exceed
twenty percent (20%) of the after tax earnings per share
of the Common Stock for the immediately preceding fiscal
year of the Company, then, and in each such case, subject
to section 2.8, the Warrant Price in effect immediately
prior to the close of business on the record date fixed
for the determination of holders of any class of
securities entitled to receive such dividend or
distribution shall be reduced, effective as of the close
of business on such record date, to a price (calculated
to the nearest .001 of a cent) determined by multiplying
such Warrant Price by a fraction
(x) the numerator of which shall be the
Current Market Price in effect on such record date
or, if the Common Stock trades on an ex-dividend
basis, on the date prior to the commencement of ex-
dividend trading, less the amount of such dividend
or distribution (as determined in good faith by the
Board of Directors of the Company, subject to
confirmation by a firm of independent certified
public accountants of recognized national standing
approved by Wand/Nestor Investments L.P.) applicable
to one share of Common Stock, and
(y) the denominator of which shall be such
Current Market Price.
2.3. Treatment of Options and Convertible
Securities. In case the Company at any time or from time
to time after the date hereof shall issue, sell, grant or
assume, or shall fix a record date for the determination
of holders of any class of securities entitled to
receive, any Options or Convertible Securities, then, and
in each such case, the maximum number of Additional
Shares of Common Stock (as set forth in the instrument
relating thereto, without regard to any provisions
contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options or, in
the case of Convertible Securities and Options therefor,
the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of
Common Stock issued as of the time of such issue, sale,
grant or assumption or, in case such a record date shall
have been fixed, as of the close of business on such
record date (or, if the Common Stock trades on an ex-
dividend basis, on the date prior to the commencement of
ex-dividend trading), provided that such Additional
Shares of Common Stock shall not be deemed to have been
issued unless the consideration per share (determined
pursuant to section 2.5) of such shares would be less
than the Warrant Price in effect on the date of and
immediately prior to such issue, sale, grant or
assumption or immediately prior to the close of business
on such record date (or, if the Common Stock trades on an
ex-dividend basis, on the date prior to the commencement
of ex-dividend trading), as the case may be, and
provided, further, that in any such case in which
Additional Shares of Common Stock are deemed to be issued
(a) no further adjustment of the Warrant Price
shall be made upon the subsequent issue or sale of
Convertible Securities or shares of Common Stock
upon the exercise of such Options or the conversion
or exchange of such Convertible Securities;
(b) if such Options or Convertible Securities
by their terms provide, with the passage of time or
otherwise, for any increase in the consideration
payable to the Company, or decrease in the number of
Additional Shares of Common Stock issuable, upon the
exercise, conversion or exchange thereof (by change
of rate or otherwise), the Warrant Price computed
upon the original issue, sale, grant or assumption
thereof (or upon the occurrence of the record date,
or date prior to the commencement of ex-dividend
trading, as the case may be, with respect thereto),
and any subsequent adjustments based thereon, shall,
upon any such increase or decrease becoming
effective, be recomputed to reflect such increase or
decrease insofar as it affects such Options, or the
rights of conversion or exchange under such
Convertible Securities, which are outstanding at
such time;
(c) upon the expiration (or purchase by the
Company and cancellation or retirement) of any such
Options which shall not have been exercised or the
expiration of any rights of conversion or exchange
under any such Convertible Securities which (or
purchase by the Company and cancellation or
retirement of any such Convertible Securities the
rights of conversion or exchange under which) shall
not have been exercised, the Warrant Price computed
upon the original issue, sale, grant or assumption
thereof (or upon the occurrence of the record date,
or date prior to the commencement of ex-dividend
trading, as the case may be, with respect thereto),
and any subsequent adjustments based thereon, shall,
upon such expiration (or such cancellation or
retirement, as the case may be), be recomputed as
if:
(i) in the case of Options for Common
Stock or Convertible Securities, the only
Additional Shares of Common Stock issued or
sold were the Additional Shares of Common
Stock, if any, actually issued or sold upon the
exercise of such Options or the conversion or
exchange of such Convertible Securities and the
consideration received therefor was the
consideration actually received by the Company
for the issue, sale, grant or assumption of all
such Options, whether or not exercised, plus
the consideration actually received by the
Company upon such exercise, or for the issue or
sale of all such Convertible Securities which
were actually converted or exchanged, plus the
additional consideration, if any, actually
received by the Company upon such conversion or
exchange, and
(ii) in the case of Options for
Convertible Securities, only the Convertible
Securities, if any, actually issued or sold
upon the exercise of such Options were issued
at the time of the issue, sale, grant or
assumption of such Options, and the
consideration received by the Company for the
Additional Shares of Common Stock deemed to
have then been issued was the consideration
actually received by the Company for the issue,
sale, grant or assumption of all such Options,
whether or not exercised, plus the
consideration deemed to have been received by
the Company (pursuant to section 2.5) upon the
issue or sale of such Convertible Securities
with respect to which such Options were
actually exercised;
(d) no readjustment pursuant to subdivision
(b) or (c) above shall have the effect of increasing
the Warrant Price by an amount in excess of the
amount of the adjustment thereof originally made in
respect of the issue, sale, grant or assumption of
such Options or Convertible Securities; and
(e) in the case of any such Options which
expire by their terms not more than 30 days after
the date of issue, sale, grant or assumption
thereof, no adjustment of the Warrant Price shall be
made until the expiration or exercise of all such
Options, whereupon such adjustment shall be made in
the manner provided in subdivision (c) above.
2.4. Treatment of Stock Dividends, Stock
Splits, etc. In case the Company at any time or from
time to time after the date hereof shall declare or pay
any dividend on the Common Stock payable in Common Stock,
or shall effect a subdivision of the outstanding shares
of Common Stock into a greater number of shares of Common
Stock (by reclassification or otherwise than by payment
of a dividend in Common Stock), then, and in each such
case, Additional Shares of Common Stock shall be deemed
to have been issued (a) in the case of any such dividend,
immediately after the close of business on the record
date for the determination of holders of any class of
securities entitled to receive such dividend, or (b) in
the case of any such subdivision, at the close of
business on the day immediately prior to the day upon
which such corporate action becomes effective.
2.5. Computation of Consideration. For the
purposes of this section 2,
(a) the consideration for the issue or sale of
any Additional Shares of Common Stock shall,
irrespective of the accounting treatment of such
consideration,
(i) insofar as it consists of cash, be
computed at the net amount of cash received by
the Company, without deducting any expenses
paid or incurred by the Company or any
commissions or compensation paid or concessions
or discounts allowed to underwriters, dealers
or others performing similar services in
connection with such issue or sale,
(ii) insofar as it consists of property
(including securities) other than cash, be
computed at the fair value thereof at the time
of such issue or sale, as determined in good
faith by the Board of Directors of the Company
(subject to confirmation by a firm of
independent certified public accountants of
recognized standing approved by Wand/Nestor
Investments L.P.), and
(iii) in case Additional Shares of Common
Stock are issued or sold together with other
stock or securities or other assets of the
Company for a consideration which covers both,
be the portion of such consideration so
received, computed as provided in clauses (i)
and (ii) above, allocable to such Additional
Shares of Common Stock, all as determined in
good faith by the Board of Directors of the
Company (subject to confirmation by a firm of
independent certified public accountants of
recognized standing approved by Wand/Nestor
Investments L.P.);
(b) Additional Shares of Common Stock deemed
to have been issued pursuant to section 2.3,
relating to Options and Convertible Securities,
shall be deemed to have been issued for a
consideration per share determined by dividing
(i) the total amount, if any, received
and receivable by the Company as consideration
for the issue, sale, grant or assumption of the
Options or Convertible Securities in question,
plus the minimum aggregate amount of additional
consideration (as set forth in the instruments
relating thereto, without regard to any
provision contained therein for a subsequent
adjustment of such consideration to protect
against dilution) payable to the Company upon
the exercise in full of such Options or the
conversion or exchange of such Convertible
Securities or, in the case of Options for
Convertible Securities, the exercise of such
Options for Convertible Securities and the
conversion or exchange of such Convertible
Securities, in each case computing such
consideration as provided in the foregoing
subdivision (a),
by
(ii) the maximum number of shares of
Common Stock (as set forth in the instruments
relating thereto, without regard to any
provision contained therein for a subsequent
adjustment of such number to protect against
dilution) issuable upon the exercise of such
Options or the conversion or exchange of such
Convertible Securities; and
(c) Additional Shares of Common Stock deemed
to have been issued pursuant to section 2.4,
relating to stock dividends, stock splits, etc.,
shall be deemed to have been issued for no
consideration.
2.6. Adjustments for Combinations, etc. In
case the outstanding shares of Common Stock shall be
combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common
Stock, the Warrant Price in effect immediately prior to
such combination or consolidation shall, concurrently
with the effectiveness of such combination or
consolidation, be proportionately increased.
2.7. Dilution in Case of Other Securities. In
case any Other Securities shall be issued or sold or
shall become subject to issue or sale upon the conversion
or exchange of any stock (or Other Securities) of the
Company (or any issuer of Other Securities or any other
Person referred to in section 3) or to subscription,
purchase or other acquisition pursuant to any Options
issued or granted by the Company (or any such other
issuer or Person) for a consideration such as to dilute,
on a basis consistent with the standards established in
the other provisions of this section 2, the purchase
rights granted by this Warrant, then, and in each such
case, the computations, adjustments and readjustments
provided for in this section 2 with respect to the
Warrant Price shall be made as nearly as possible in the
manner so provided and applied to determine the amount of
Other Securities from time to time receivable upon the
exercise of the Warrants, so as to protect the holders of
the Warrants against the effect of such dilution.
2.8. Minimum Adjustment of Warrant Price. If
the amount of any adjustment of the Warrant Price
required pursuant to this section 2 would be less than
one percent (1%) of the Warrant Price in effect at the
time such adjustment is otherwise so required to be made,
such amount shall be carried forward and adjustment with
respect thereto 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 at least one percent (1%) of such Warrant
Price.
3. Consolidation, Merger, etc.
3.1. Adjustments for Consolidation, Merger,
Sale of Assets, Reorganization, etc. In case the Company
after the date hereof (a) shall consolidate with or merge
into any other Person and shall not be the continuing or
surviving corporation of such consolidation or merger, or
(b) shall permit any other Person to consolidate with or
merge into the Company and the Company shall be the
continuing or surviving Person but, in connection with
such consolidation or merger, the Common Stock or Other
Securities shall be changed into or exchanged for stock
or other securities of any other Person or cash or any
other property, or (c) shall transfer all or
substantially all of its properties or assets to any
other Person, or (d) shall effect a capital
reorganization or reclassification of the Common Stock or
Other Securities (other than a capital reorganization or
reclassification resulting in the issue of Additional
Shares of Common Stock for which adjustment in the
Warrant Price is provided in section 2.2.1 or 2.2.2),
then, and in the case of each such transaction, proper
provision shall be made so that, upon the basis and the
terms and in the manner provided in this Warrant, the
holder of this Warrant, upon the exercise hereof at any
time after the consummation of such transaction, shall be
entitled to receive (at the aggregate Warrant Price in
effect at the time of such consummation for all Common
Stock or Other Securities issuable upon such exercise
immediately prior to such consummation), in lieu of the
Common Stock or Other Securities issuable upon such
exercise prior to such consummation, the highest amount
of securities, cash or other property to which such
holder would actually have been entitled as a shareholder
upon such consummation if such holder had exercised the
rights represented by this Warrant immediately prior
thereto, subject to adjustments (subsequent to such
consummation) as nearly equivalent as possible to the
adjustments provided for in sections 2 through 4.
3.2. Assumption of Obligations.
Notwithstanding anything contained in the Warrants or in
the Purchase Agreement to the contrary, the Company will
not effect any of the transactions described in clauses
(a) through (d) of section 3.1 unless, prior to the
consummation thereof, each Person (other than the
Company) which may be required to deliver any stock,
securities, cash or property upon the exercise of this
Warrant as provided herein shall assume, by written
instrument delivered to, and reasonably satisfactory to,
the holder of this Warrant, (a) the obligations of the
Company under this Warrant (and if the Company shall
survive the consummation of such transaction, such
assumption shall be in addition to, and shall not release
the Company from, any continuing obligations of the
Company under this Warrant), (b) the obligations of the
Company under the Registration Rights Agreement and (c)
the obligation to deliver to such holder such shares of
stock, securities, cash or property as, in accordance
with the foregoing provisions of this section 3, such
holder may be entitled to receive, and such Person shall
have similarly delivered to such holder an opinion of
counsel for such Person, which counsel shall be
reasonably satisfactory to such holder, stating that this
Warrant shall thereafter continue in full force and
effect and the terms hereof (including, without
limitation, all of the provisions of this section 3)
shall be applicable to the stock, securities, cash or
property which such Person may be required to deliver
upon any exercise of this Warrant or the exercise of any
rights pursuant hereto.
4. Other Dilutive Events. In case any event
shall occur as to which the provisions of section 2 or
section 3 are not strictly applicable but the failure to
make any adjustment would not fairly protect the purchase
rights represented by this Warrant in accordance with the
essential intent and principles of such sections, then,
in each such case, the Company shall appoint a firm of
independent certified public accountants of recognized
national standing (such firm to be subject to the
approval of Wand/Nestor Investments L.P.), which shall
give their opinion regarding the adjustment, if any, on a
basis consistent with the essential intent and principles
established in sections 2 and 3, necessary to preserve,
without dilution, the purchase rights represented by this
Warrant. Upon receipt of such opinion, the Company will
promptly mail a copy thereof to the holder of this
Warrant and shall make the adjustments described therein.
5. No Dilution or Impairment. The Company
will not, by amendment of its certificate of
incorporation or through any consolidation, merger,
reorganization, transfer of assets, dissolution, issue or
sale of securities or any other voluntary action, avoid
or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in
the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holder
of this Warrant against dilution or other impairment.
Without limiting the generality of the foregoing, the
Company (a) will not permit the par value of any shares
of stock receivable upon the exercise of this Warrant to
exceed the amount payable therefor upon such exercise,
(b) will take all such action as may be necessary or
appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of
stock on the exercise of the Warrants from time to time
outstanding, and (c) will not take any action which
results in any adjustment of the Warrant Price if the
total number of shares of Common Stock (or Other
Securities) issuable after the action upon the exercise
of all of the Warrants would exceed the total number of
shares of Common Stock (or Other Securities) then
authorized by the Company's certificate of incorporation
and available for the purpose of issue upon such
exercise.
6. Accountants' Report as to Adjustments. In
each case of any adjustment or readjustment in the shares
of Common Stock (or Other Securities) issuable upon the
exercise of this Warrant, the Company at its expense will
promptly compute such adjustment or readjustment in
accordance with the terms of this Warrant and cause
independent certified public accountants of recognized
standing (such firm to be subject to the approval of
Wand/Nestor Investments L.P.) selected by the Company to
verify such computation and prepare a report setting
forth such adjustment or readjustment and showing in
reasonable detail the method of calculation thereof and
the facts upon which such adjustment or readjustment is
based, including a statement of (a) the consideration
received or to be received by the Company for any
Additional Shares of Common Stock issued or sold or
deemed to have been issued, (b) the number of shares of
Common Stock outstanding or deemed to be outstanding, and
(c) the Warrant Price in effect immediately prior to such
issue or sale and as adjusted and readjusted (if required
by section 2) on account thereof. The Company will
forthwith mail a copy of each such report to each holder
of a Warrant and will, upon the written request at any
time of any holder of a Warrant, furnish to such holder a
like report setting forth the Warrant Price at the time
in effect and showing in reasonable detail how it was
calculated. The Company will also keep copies of all
such reports at its principal office and will cause the
same to be available for inspection at such office during
normal business hours by any holder of a Warrant or any
prospective purchaser of a Warrant designated by the
holder thereof.
7. Notices of Corporate Action. In the event
of
(a) any taking by the Company of a record of
the holders of any class of securities for the
purpose of determining the holders thereof who are
entitled to receive any dividend (other than a
regular periodic dividend payable in cash out of
earned surplus in an amount not exceeding the amount
of the immediately preceding cash dividend for such
period) or other distribution, or any right to
subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities
or property, or to receive any other right, or
(b) any capital reorganization of the Company,
any reclassification or recapitalization of the
capital stock of the Company or any consolidation or
merger involving the Company and any other Person or
any transfer of all or substantially all the assets
of the Company to any other Person, or
(c) any voluntary or involuntary dissolution,
liquidation or winding-up of the Company,
the Company will mail to each holder of a Warrant a
notice specifying (i) the date or expected date on which
any such record is to be taken for the purpose of such
dividend, distribution or right, and the amount and
character of such dividend, distribution or right, and
(ii) the date or expected date on which any such
reorganization, reclassification, recapitalization,
consolidation, merger, transfer, dissolution, liquidation
or winding-up is to take place and the time, if any such
time is to be fixed, as of which the holders of record of
Common Stock (or Other Securities) shall be entitled to
exchange their shares of Common Stock (or Other
Securities) for the securities or other property
deliverable upon such reorganization, reclassification,
recapitalization, consolidation, merger, transfer,
dissolution, liquidation or winding-up. Such notice
shall be mailed at least 45 days prior to the date
therein specified.
8. Registration of Common Stock. If any
shares of Common Stock required to be reserved for
purposes of exercise of this Warrant require registration
with or approval of any governmental authority under any
federal or state law (other than the Securities Act)
before such shares may be issued upon exercise, the
Company will, at its expense and as expeditiously as
possible, use its best efforts to cause such shares to be
duly registered or approved, as the case may be. The
shares of Common Stock (and Other Securities) issuable
upon exercise of this Warrant (or upon conversion of any
shares of Common Stock issued upon such exercise) shall
constitute Registrable Securities (as such term is
defined in the Registration Rights Agreement). Each
holder of this Warrant shall be entitled to all of the
benefits afforded to a holder of any such Registrable
Securities under the Registration Rights Agreement and
such holder, by its acceptance of this Warrant, agrees to
be bound by and to comply with the terms and conditions
of the Registration Rights Agreement applicable to such
holder as a holder of such Registrable Securities. At
any such time as Common Stock is listed on any national
securities exchange, the Company will, at its expense,
obtain promptly and maintain the approval for listing on
each such exchange, upon official notice of issuance, the
shares of Common Stock issuable upon exercise of the then
outstanding Warrants and maintain the listing of such
shares after their issuance; and the Company will also
list on such national securities exchange, will register
under the Exchange Act and will maintain such listing of,
any Other Securities that at any time are issuable upon
exercise of the Warrants, if and at the time that any
securities of the same class shall be listed on such
national securities exchange by the Company.
9. Restrictions on Transfer.
9.1. Restrictive Legends. Except as otherwise
permitted by this section 9, each Warrant (including each
Warrant issued upon the transfer of any Warrant) shall be
stamped or otherwise imprinted with a legend in
substantially the following form:
"THE WARRANT REPRESENTED BY THIS
CERTIFICATE (AND THE SHARES OF COMMON STOCK OR
OTHER SECURITIES ISSUABLE UPON EXERCISE OF SUCH
WARRANT) HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE IN RELIANCE ON
CERTAIN EXEMPTIONS FROM REGISTRATION
THEREUNDER. THE SALE, PLEDGE, HYPOTHECATION OR
OTHER TRANSFER OF SUCH WARRANT (AND OF SUCH
SHARES OF COMMON STOCK OR OTHER SECURITIES) IS
SUBJECT TO COMPLIANCE WITH APPLICABLE
SECURITIES LAWS AND REGULATIONS AND CERTAIN
RESTRICTIONS AND CONDITIONS CONTAINED IN A
CERTAIN SECURITIES PURCHASE AGREEMENT AND
RELATED AGREEMENTS DATED AS OF MARCH 7, 1996.
THE HOLDER OF THIS CERTIFICATE BY ACCEPTANCE
HEREOF AGREES TO BE BOUND BY SUCH RESTRICTIONS
AND CONDITIONS. A COPY OF THE PURCHASE
AGREEMENT IS ON FILE WITH THE SECRETARY OF THE
COMPANY."
Except as otherwise permitted by this section 9, each
certificate for Common Stock (or Other Securities) issued
upon the exercise of any Warrant, and each certificate
issued upon the transfer of any such Common Stock (or
Other Securities), shall be stamped or otherwise
imprinted with a legend in substantially the following
form:
"THE SHARES OF STOCK REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE IN RELIANCE ON
CERTAIN EXEMPTIONS FROM REGISTRATION
THEREUNDER. THE SALE, PLEDGE, HYPOTHECATION OR
OTHER TRANSFER OF SUCH SHARES IS SUBJECT TO
COMPLIANCE WITH APPLICABLE SECURITIES LAWS AND
REGULATIONS AND CERTAIN RESTRICTIONS AND
CONDITIONS CONTAINED IN A CERTAIN SECURITIES
PURCHASE AND EXCHANGE AGREEMENT DATED AS OF
MARCH 7, 1996. THE HOLDER OF THIS CERTIFICATE
BY ACCEPTANCE HEREOF AGREES TO BE BOUND BY SUCH
RESTRICTIONS AND CONDITIONS. A COPY OF THE
SECURITIES PURCHASE AND EXCHANGE AGREEMENT IS
ON FILE WITH THE SECRETARY OF THE COMPANY."
10. Availability of Information. The Company
shall timely file the reports required to be filed by it
under the Securities Act and the Exchange Act (including
but not limited to the reports under sections 13 and
15(d) of the Exchange Act referred to in subparagraph (c)
of Rule 144 adopted by the Commission under the
Securities Act) and the rules and regulations adopted by
the Commission thereunder (or, if the Company is not
required to file such reports, will, upon the request of
any holder of Registrable Securities, make publicly
available other information) and will take such further
action as any holder of Registrable Securities may
reasonably request, all to the extent required from time
to time to enable such holder to sell Registrable
Securities without registration under the Securities Act
within the limitation of the exemptions provided by (a)
Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission. Upon the
request of any holder of Registrable Securities, the
Company will deliver to such holder a written statement
as to whether it has complied with the requirements of
this section 10.
11. Reservation of Stock, etc. The Company
will at all times reserve and keep available, solely for
issuance and delivery upon exercise of the Warrants, the
number of shares of Common Stock (or Other Securities)
from time to time issuable upon exercise of all Warrants
at the time outstanding. All shares of Common Stock (or
Other Securities) issuable upon exercise of any Warrants
shall be duly authorized and, when issued upon such
exercise, shall be validly issued and, in the case of
shares, fully paid and nonassessable with no liability on
the part of the holders thereof.
12. Registration and Transfer of Warrants,
etc.
12.1. Warrant Register; Ownership of Warrants.
The Company will keep at its principal office a register
in which the Company will provide for the registration of
Warrants and the registration of transfers of Warrants.
The Company may treat the Person in whose name any
Warrant is registered on such register as the owner
thereof for all other purposes, and the Company shall not
be affected by any notice to the contrary, except that,
if and when any Warrant is properly assigned in blank,
the Company may (but shall not be obligated to) treat the
bearer thereof as the owner of such Warrant for all
purposes. Subject to section 9, a Warrant, if properly
assigned, may be exercised by a new holder without a new
Warrant first having been issued.
12.2. Transfer and Exchange of Warrants. Upon
surrender of any Warrant for registration of transfer or
for exchange to the Company at its principal office, the
Company at its expense will (subject to compliance with
section 9, if applicable) execute and deliver in exchange
therefor a new Warrant or Warrants of like tenor, in the
name of such holder or as such holder (upon payment by
such holder of any applicable transfer taxes) may direct,
calling in the aggregate on the face or faces thereof for
the number of shares of Common Stock called for on the
face or faces of the Warrant or Warrants so surrendered.
12.3. Replacement of Warrants. Upon receipt
of evidence reasonably 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
of any Warrant, upon delivery of an indemnity bond in
such reasonable amount as the Company may determine or,
in the case of any such mutilation, upon the surrender of
such Warrant for cancellation to the Company at its
principal office, the Company at its expense will execute
and deliver, in lieu thereof, a new Warrant of like
tenor.
13. Registration Rights. The Purchaser or any
assignee of this Warrant shall be entitled to all rights
and benefits regarding the registration of Common Stock
and Registrable Securities set forth in the Registration
Rights Agreement.
14. Definitions. As used herein, unless the
context otherwise requires, the following terms have the
following respective meanings:
Additional Shares of Common Stock: All shares
(including treasury shares) of Common Stock issued or
sold (or, pursuant to section 2.3 or 2.4, deemed to be
issued) by the Company after the date hereof, whether or
not subsequently reacquired or retired by the Company,
other than
(a) the issuance of shares upon conversion of
the Company's Series A, Series B, Series D, Series
E, Series F, Series G and Series H Convertible
Preferred Stock,
(b) Shares issued upon the exercise of the
common stock purchase warrants and non-qualified
options listed in Exhibit A hereto, providing for
the purchase of an aggregate of 1,000,650 shares of
Common Stock (based on the current capitalization of
the Company);
(c) shares issued upon the exercise of the
Warrants,
(d) not to exceed 2,000,000 shares (subject to
equitable adjustment in the event of any
combination, reclassification, stock split, dividend
or recapitalization of the Company) issued upon the
exercise of options granted or to be granted under
the Company's stock option plans as in effect on the
date hereof or under any other employee stock
option, compensation or purchase plan or plans
adopted or assumed after such date,
(e) such additional number of shares as may
become issuable upon the exercise of any of the
securities referred to in the foregoing clauses (a)
through (d) by reason of adjustments required
pursuant to anti-dilution provisions applicable to
such securities as in effect on the date hereof, but
only if and to the extent that such adjustments are
required as the result of the original issuance of
the Warrants, and
(f) such additional number of shares as may
become issuable upon the exercise or conversion of
any of the securities referred to in the foregoing
clauses (a) through (d) by reason of adjustments
required pursuant to anti-dilution provisions
applicable to such securities as in effect on the
date hereof, in order to reflect any subdivision or
combination of Common Stock, by reclassification or
otherwise, or any dividend on Common Stock payable
in Common Stock.
Business Day: Any day other than a Saturday or
a Sunday or a day on which commercial banking
institutions in the City of New York are authorized by
law to be closed. Any reference to "days" (unless
Business Days are specified) shall mean calendar days.
Commission: The Securities and Exchange
Commission or any other federal agency at the time
administering the Securities Act.
Common Stock: As defined in the introduction
to this Warrant, such term to include any stock into
which such Common Stock shall have been changed or any
stock resulting from any reclassification of such Common
Stock, and all other stock of any class or classes
(however designated) of the Company the holders of which
have the right, without limitation as to amount, either
to all or to a share of the balance of current dividends
and liquidating dividends after the payment of dividends
and distributions on any shares entitled to preference.
Company: As defined in the introduction to
this Warrant, such term to include any corporation which
shall succeed to or assume the obligations of the Company
hereunder in compliance with section 3.
Convertible Securities: Any evidences of
indebtedness, shares of stock (other than Common Stock)
or other securities directly or indirectly convertible
into or exchangeable for Additional Shares of Common
Stock.
Current Market Price: On any date specified
herein, the average daily Market Price during the period
of the most recent 20 days, ending on such date, on which
the national securities exchanges were open for trading,
except that if no Common Stock is then listed or admitted
to trading on any national securities exchange or quoted
in the over-the-counter market, the Current Market Price
shall be the Market Price on such date.
Exchange Act: The Securities Exchange Act of
1934, or any similar federal statute, and the rules and
regulations of the Commission thereunder, all as the same
shall be in effect at the time.
Market Price: On any date specified herein,
the amount per share of the Common Stock, equal to (a)
the last sale price of such Common Stock, regular way, on
such date or, if no such sale takes place on such date,
the average of the closing bid and asked prices thereof
on such date, in each case as officially reported on the
principal national securities exchange on which such
Common Stock is then listed or admitted to trading, or
(b) if such Common Stock is not then listed or admitted
to trading on any national securities exchange but is
designated as a national market system security by the
NASD, the last trading price of the Common Stock on such
date, or (c) if there shall have been no trading on such
date or if the Common Stock is not so designated, the
average of the closing bid and asked prices of the Common
Stock on such date as shown by the NASD automated
quotation system, or (d) if such Common Stock is not then
listed or admitted to trading on any national exchange or
quoted in the over-the-counter market, the value as
determined by a firm of independent public accountants of
recognized standing selected by the Board of Directors of
the Company, and approved by Wand/Nestor Investments
L.P., as of the last day of any month ending within 30
days preceding the date as of which the determination is
to be made.
NASD: The National Association of Securities
Dealers, Inc.
Options: Rights, options or warrants to
subscribe for, purchase or otherwise acquire either
Additional Shares of Common Stock or Convertible
Securities.
Other Securities: Any stock (other than Common
Stock) and other securities of the Company or any other
Person (corporate or otherwise) which the holders of the
Warrants at any time shall be entitled to receive, or
shall have received, upon the exercise of the Warrants,
in lieu of or in addition to Common Stock, or which at
any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other
Securities pursuant to section 3 or otherwise.
Person: A corporation, an association, a
partnership, an organization, a business, an individual,
a government or political subdivision thereof or a
governmental agency.
Purchase and Exchange Agreement: The
Securities Purchase and Exchange Agreement, dated as of
January 31, 1996, by and among the Company, Wand and
certain affiliates of Wand.
Registrable Securities: As defined in Section
3 of the Registration Rights Agreement.
Registration Rights Agreement: The Amended and
Restated Registration Rights Agreement dated as of
January 31, 1996, substantially in the form of Exhibit IX
to the Purchase and Exchange Agreement, as further
amended as of March 7, 1996.
Securities Act: The Securities Act of 1933, or
any similar federal statute, and the rules and
regulations of the Commission thereunder, all as the same
shall be in effect at the time.
Securities Purchase Agreement: The Securities
Purchase Agreement, dated as of March 7, 1996, by and
between Wand and the Company.
Transfer: Any sale, assignment, pledge or
other disposition of any security, or of any interest
therein, which could constitute a "sale" as that term is
defined in section 2(3) of the Securities Act.
Wand: As defined in section 1, and its
successors and assigns.
Warrant Price: As defined in section 2.1.
Warrants: (a) Those certain Common Stock
Purchase Warrants, initially providing for the
acquisition of an aggregate of 400,000 shares of Common
Stock, originally issued pursuant to the Letter of
Engagement, dated April 26, 1994, among the Company, Hill
& Partners and Wand Partners Inc. (and any warrants
issued in substitution therefor), (b) those certain
Common Stock Purchase Warrants, initially providing for
the acquisition of 1,700,000 shares of Common Stock,
originally issued to Wand/Nestor Investments L.P. and
Wand/Nestor Investments II L.P. as the "New Warrant" and
the "Fee Warrant" pursuant to the Revised Standby
Agreement (and any warrants issued in substitution
therefor) and (c) those certain Common Stock Purchase
Warrants, initially providing for the acquisition of
399,040 shares of Common Stock, originally issued in
connection with sale of the Series F Convertible
Preferred Stock and Series G Convertible Preferred Stock
of the Company pursuant to the Purchase and Exchange
Agreement (and any warrants issued in substitution
therefor) and the Securities Purchase Agreement (and any
warrants issued in substitution therefor).
15. Remedies. The Company stipulates that the
remedies at law of the holder of this Warrant in the
event of any default or threatened default by the Company
in the performance of or compliance with any of the terms
of this Warrant are not and will not be adequate and
that, to the fullest extent permitted by law, such terms
may be specifically enforced by a decree for the specific
performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof
or otherwise.
16. No Rights or Liabilities as Stockholder.
Nothing contained in this Warrant shall be construed as
conferring upon the holder hereof any rights as a
stockholder of the Company or as imposing any obligation
on such holder to purchase any securities or as imposing
any liabilities on such holder as a stockholder of the
Company, whether such obligation or liabilities are
asserted by the Company or by creditors of the Company.
17. Notices. All notices and other
communications under this Warrant shall be in writing and
shall be delivered, or mailed by registered or certified
mail, return receipt requested, by a nationally
recognized overnight courier, postage prepaid, addressed
(a) if to any holder of any Warrant, at the registered
address of such holder as set forth in the register kept
at the principal office of the Company, or (b) if to the
Company, to the attention of its President at its
principal office, provided that the exercise of any
Warrant shall be effective in the manner provided in
section 1.
18. Amendments. This Warrant and any term
hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the party
against which enforcement of such change, waiver,
discharge or termination is sought.
19. Expiration. The Company will give the
holder of this Warrant not less than six weeks nor more
than two months notice of the expiration of the right to
exercise this Warrant. The right to exercise this
Warrant shall expire at 5:00 p.m., New York City time, on
August 1, 2004, unless the Company shall fail to give
such notice as aforesaid, in which event the right to
exercise this Warrant shall not expire until a date six
weeks after the date on which the Company shall give the
holder hereof notice of the expiration of the right to
exercise this Warrant.
20. Descriptive Headings. The headings in
this Agreement are for purposes of reference only and
shall not limit or otherwise affect the meaning hereof.
21. GOVERNING LAW. THIS WARRANT SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS
OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE
OF DELAWARE, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF
LAWS.
22. Judicial Proceedings; Waiver of Jury. Any
judicial proceeding brought against the Company with
respect to this Warrant may be brought in any court of
competent jurisdiction in the State of New York or of the
United States of America for the Southern District of New
York and, by execution and delivery of this Agreement,
the Company (a) accepts, generally and unconditionally,
the nonexclusive jurisdiction of such courts and any
related appellate court, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with
this Warrant, subject to any rights of appeal, and (b)
irrevocably waives any objection the Company may now or
hereafter have as to the venue of any such suit, action
or proceeding brought in such a court or that such court
is an inconvenient forum. The Company hereby waives
personal service of process and consents, that service of
process upon it may be made by certified or registered
mail, return receipt requested, at its address specified
or determined in accordance with the provisions of
section 17, and service so made shall be deemed completed
on the third Business Day after such service is deposited
in the mail or, if earlier, when delivered. Nothing
herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right of
any holder of any Warrant to bring proceedings against
the Company in the courts of any other jurisdiction. THE
COMPANY HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY, OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS
WARRANT OR THE RELATIONSHIP ESTABLISHED HEREUNDER.
NESTOR, INC.
By: /s/ David Fox
Title: President and
Chief Executive Officer
EXHIBIT A
CURRENTLY OUTSTANDING WARRANTS
The Company has currently outstanding: (a) warrants to
Purchase 299,375 shares of the Common Stock of the
Company at $3.00 per share expiring on March 31, 1996,
(b) other warrants to purchase 105,275 shares of Common
Stock of the Company at $2.00 per share expiring in 1998,
and (c) other warrants and non-qualified options to
purchase 138,000 shares of the Common Stock of the
Company at prices between $1.20 per share and $4.625 per
share expiring in 1996, 1997 and 1999. These warrants
are issued as follows:
Underlying Exercise
Shares of Price per
Common Share of
Warrant Holders Stock Common Stock Expiration
Purchasers of Series 299,375 $3.00 August 31, 1996
B Convertible Preferred Stock
Purchasers of Series 105,275 2.00 September 28,1998
D Convertible Preferred Stock
Assignees of Reich & Co., Inc.:
James Gerson 38,667 $1.20 June 30, 1997
Rodd Macklin 5,800 $1.20 June 30, 1997
One Hundred Pearl Ltd. 71,533 $1.20 June 30, 1997
Hampshire Securities Corp. 2,000 $1.20 June 30, 1997
Officers and Directors of Nestor,
Inc.:
Sam Albert 10,000 $4.625 April 30, 1996
Sam Albert 10,000 $1.30 February 23, 1997
TOTAL 541,850
FORM OF SUBSCRIPTION
[To be executed only upon exercise of Warrant]
To NESTOR, INC.;
The undersigned registered holder of the within Warrant
hereby irrevocably exercises such Warrant for, and
purchases thereunder, ______(1) shares of Common Stock of
Nestor, Inc. and herewith makes payment of $
therefor, and requests that the certificates for such
shares be issued in the name of, and delivered to
, whose address is .
Dated:
(Signature must conform in all
respects to name of holder as
specified on the face of
Warrant)
(Street Address)
(City)(State)(Zip Code)
___________________
1 Insert here the number of shares called for on the
face of this Warrant (or, in the case of a partial
exercise, the portion thereof as to which this
Warrant is being exercised), in either case without
making any adjustment for Additional Shares of
Common Stock or any other stock or other securities
or property or cash which, pursuant to the
adjustment provisions of this Warrant, may be
delivered upon exercise. In the case of partial
exercise, a new Warrant or Warrants will be issued
and delivered, representing the unexercised portion
of the Warrant, to the holder surrendering the
Warrant.
FORM OF ASSIGNMENT
[To be executed only upon transfer of Warrant]
For value received, the undersigned registered holder of
the within Warrant hereby sells, assigns and transfers
unto the right represented by such Warrant
to purchase shares of Common Stock of Nestor,
Inc. to which such Warrant relates, and appoints
Attorney to make such transfer on the books of
Nestor, Inc. maintained for such purpose, with full power
of substitution in the premises.
Dated:
(Signature must conform in all
respects to name of holder as
specified on the face of
Warrant)
(Street Address)
(City)(State)(Zip Code)
Signed in the presence of:
EXHIBIT 5
JOINT FILING AGREEMENT
The undersigned, and each of them, do hereby agree
and consent to the filing of a single statement on behalf of
all of them on Schedule 13D and amendments thereto, in
accordance with the provisions of Rule 13d-1(f)(1) of the
Securities Exchange Act of 1934.
Dated: March 12, 1996
By: /s/ Bruce W. Schnitzer
Name: Bruce W. Schnitzer
WAND (NESTOR) INC.
By: /s/ Bruce W. Schnitzer
Name: Bruce W. Schnitzer
Title: Chairman
WAND/NESTOR INVESTMENTS L.P.
By: Wand (Nestor) Inc., as
General Partner
By: /s/ Bruce W. Schnitzer
Name: Bruce W. Schnitzer
Title: Chairman
WAND/NESTOR INVESTMENTS II L.P.
By: Wand (Nestor) Inc., as
General Partner
By: /s/ Bruce W. Schnitzer
Name: Bruce W. Schnitzer
Title: Chairman
WAND/NESTOR INVESTMENTS III L.P.
By: Wand (Nestor) Inc., as
General Partner
By: /s/ Bruce W. Schnitzer
Name: Bruce W. Schnitzer
Title: Chairman
