<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 13, 1996
REGISTRATION STATEMENT NO. 33-
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
____________________
BARRISTER INFORMATION SYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)
NEW YORK 16-1176561
(State of other jurisdiction (I.R.S. employer
of incorporation or organization) identification number)
BARRISTER INFORMATION SYSTEMS CORPORATION
465 MAIN STREET, SUITE 700
BUFFALO, NEW YORK 14203-1788
(716) 845-5010
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
HENRY P. SEMMELHACK
BARRISTER INFORMATION SYSTEMS CORPORATION
President and Chief Executive Officer
465 Main Street, Suite 700
Buffalo, New York 14203-1788
(716) 845-5010
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
____________________
COPIES TO:
JAMES R. TANENBAUM, ESQ.
STROOCK & STROOCK & LAVAN
Seven Hanover Square
New York, New York 10004-2696
____________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
____________________
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
____________________
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Each Proposed Maximum Proposed Maximum Amount of
Class of Securities Amount to be Aggregate Price Aggregate Registration
to be Registered Registered(1) Per Unit(2) (3) Offering Price Fee
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$1.75 Warrants 750,000 Warrants $1.75 $1,312,500 $ 452.59
Shares of Common 750,000 Shares $1.81 $1,357,500 $ 468.10
Stock, $.24 par value,
issuable upon exercise
$2.25 Warrants 750,000 Warrants $2.25 $1,687,500 $ 586.90
Shares of Common 750,000 Shares $1.81 $1,357,500 $ 468.10
Stock, $.24 par value,
issuable upon exercise
Placement Agent Warrants 250,000 Warrants $1.365 $ 341,250 $ 117.67
Shares of Common 250,000 Shares $1.81 $ 452,500 $ 156.03
Stock, $.24 par value,
issuable upon exercise
Shares of Common 2,000,000 Shares $1.81 $3,620,000 $1,248.28
Stock, $.01 par value,
<FN>
(1) Represents the number of shares of Common Stock initially issuable
upon exercise of the warrants. This Registration Statement also
includes such indeterminable number of additional shares of Common
Stock as may be issuable upon exercise of the warrants as a result of
antidilution provisions contained therein.
(2) The maximum aggregate price per unit of the warrants has been
calculated pursuant to Rule 457(g).
(3) The maximum aggregate price per unit of the Common Stock has been
calculated pursuant to Rule 457(c). Estimated solely for purposes of
calculating the registration fee.
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
____________________
<PAGE> 3
SUBJECT TO COMPLETION, DATED MAY 13, 1996
PROSPECTUS
- ----------
BARRISTER INFORMATION SYSTEMS CORPORATION
1,750,000 WARRANTS
AND
1,750,000 SHARES OF COMMON STOCK
ISSUABLE UPON EXERCISE OF THE WARRANTS
AND
2,000,000 SHARES OF COMMON STOCK
This Prospectus relates to the following securities of Barrister
Information Systems Corporation (the "Company"): (i) 750,000 warrants each to
purchase one share of the Company's common stock, $0.24 par value per share
(the "Common Stock"), exercisable at $1.75 (the "$1.75 Warrants"), subject to
adjustment in certain circumstances, (ii) the 750,000 shares of Common Stock
underlying the $1.75 Warrants, (iii) 750,000 warrants each to purchase one
share of Common Stock, exercisable at $2.25 (the "$2.25 Warrants"), subject to
adjustment in certain circumstances, (iv) 750,000 shares of Common Stock
underlying the $2.25 Warrants, (v) 250,000 warrants issued to a placement agent
(the "Placement Agent's Warrants") in connection with an offering of securities
by the Company, each to purchase one share of the Company's common stock,
exercisable at $1.365, subject to adjustment in certain circumstances, (vi)
250,000 shares of Common Stock underlying the Placement Agent's Warrants, and
(vii) 2,000,000 shares of Common Stock (the "Initial Common Stock").
Collectively, the $1.75 Warrants, the $2.25 Warrants and the Placement Agent's
Warrants are referred to herein as the "Warrants." The shares of Common Stock
underlying the Warrants are referred to herein as the "Underlying Common
Stock." The $1.75 Warrants and the $2.25 Warrants expire on March 29, 1998.
The Placement Agent Warrants expire on March 29, 2001. See "Description of
Capital Stock."
The Warrants and the Initial Common Stock are being offered, from time
to time, pursuant to this Prospectus, by or for the account of the holders
thereof (the "Selling Securityholders"). See "Selling Securityholders" and
"Plan of Distribution." The Underlying Common Stock is being offered by the
Company upon the exercise of the Warrants. The Company will receive the
proceeds from the exercise of the Warrants; however, the Company will not
receive any proceeds from sales of the Warrants, the Underlying Common Stock or
the Initial Common Stock by or for the accounts of the Selling Securityholders.
See "Use of Proceeds."
The Selling Securityholders have advised the Company that sales of the
Warrants, the Initial Common Stock and the Underlying Common Stock may be made
from time to time by or for the account of the Selling Securityholders in
ordinary transactions to or through one or more brokers or dealers in the
over-the-counter market or otherwise at prices and on terms then prevailing or
at prices related to the then current market price, or in negotiated
transactions. The aggregate proceeds to the Selling Securityholders from the
sale of the Warrants, the Initial Common Stock and the Underlying Common Stock
offered by the Selling Securityholders hereby will be the purchase price of the
Warrants, of the Initial Common Stock or of the Underlying Common Stock, less
any commissions. For information concerning indemnification arrangements
between the Company and the Selling Securityholders, see "Plan of
Distribution."
The Selling Securityholders and any brokers, dealers, agents or
underwriters that participate with the Selling Securityholders in the
distribution of the Warrants, the Initial Common Stock or the Underlying Common
Stock may be deemed to be "underwriters" within the meaning of the Securities
Act of 1933, as amended (the "Securities Act"), in which event any commission
or concessions received by such brokers, dealers, agents or underwriters and
any profit on the resale of the Warrants, the Initial Common Stock or the
Underlying Common Stock purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
Information concerning the Selling Securityholders may change from time
to time and will be set forth in supplements to this Prospectus.
SEE "RISK FACTORS" ON PAGES 3 TO 5 FOR A DISCUSSION OF CERTAIN MATERIAL FACTORS
WHICH SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE WARRANTS OR
THE COMMON STOCK OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Company's Common Stock trades on the American Stock Exchange (the
"AMEX") under the symbol "BIS." The reported closing bid price of the Common
Stock on the AMEX on May 2, 1996 was $ 1.81 per share.
-------------------
The date of this Prospectus is May 13, 1996
<PAGE> 4
AVAILABLE INFORMATION
The Company's principal executive offices are located at 465 Main
Street, Suite 700, Buffalo, New York 14203-1788, telephone (716) 845- 5010.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities of the Commission located at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at the New
York Regional Office of the Commission, Seven World Trade Center, Suite 1300,
New York, New York 10048, and at the Chicago Regional Office of the
Commission, 500 West Madison Street, Suite 1400, Chicago, Illinois 60621.
Copies of such materials may be obtained at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. Such reports and other information may also be inspected at the offices
of the American Stock Exchange, 86 Trinity Place, New York, New York
10006-1881.
The Company has filed with the Commission a Registration Statement on
Form S-3 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the registration of the
Warrants and the Underlying Common Stock offered hereby. This Prospectus does
not contain all of the information set forth in the Registration Statement and
the exhibits thereto, certain portions of which have been omitted as permitted
by the rules and regulations of the Commission. Statements contained in this
Prospectus or in any document incorporated by reference herein as to the
contents of any contract or documents referred to herein or therein are not
necessarily complete and, in each instance, reference is made to the copy of
such documents filed as an exhibit to the Registration Statement or such other
documents, which may be obtained from the Commission as indicated above upon
payment of the fees prescribed by the Commission. Each such statement is
qualified in its entirety by such reference.
INCORPORATION BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are incorporated by reference herein:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1995;
2. The Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended June 30, 1995, September 29, 1995 and December 29, 1995.
3. The Company's 1996 Proxy Statement dated February 16, 1996, for
Special Meeting of Shareholders on March 6, 1996.
4. The description of the Company's Common Stock contained in the
Registration Statement on Form 8-A dated July 14, 1987.
In addition, each document filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Warrants and the
Underlying Common Stock offered hereby shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date such
document is filed with the Commission.
Any statement contained herein, or any document, all or a portion of
which is incorporated or deemed to be incorporated by reference herein, shall
be deemed to be modified or superseded for purposes of the Registration
Statement and this Prospectus to the extent that a statement contained herein,
or in any subsequently filed document that also is or is deemed to be
incorporated by reference herein, or in any subsequently filed document that
also is or is deemed to be incorporated by reference herein, modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded to constitute part of the
Registration Statement or this Prospectus. All information appearing in this
Prospectus is qualified in its entirety by the information and financial
statements (including notes thereto) appearing in the documents incorporated
herein by reference. This Prospectus incorporates documents by reference which
are not presented herein or delivered herewith. These documents (other than
exhibits thereto) are available without charge, upon written or oral request by
any person to whom this Prospectus has been delivered, from Mark C. Donadio,
Secretary and General Counsel, 465 Main Street, Suite 700, Buffalo, New York
14203-1788, telephone (716) 845-5010.
<PAGE> 5
THE COMPANY
The Company was formed in 1972 as the Office Automation Division of
Comptek Research, Inc. ("Comptek") for the purpose of developing computer
software for the legal market. Since that time, the Company has become a
national supplier of computer systems, software and services to the legal
market place. In addition, the Company has developed a National Service
Organization to provide equipment maintenance. While initially the Company
focused primarily providing computer software to attorneys and law firms, it
now provides computer software and services to a variety of professional
services organizations, as well as Fortune 1000 businesses. The Company
provides equipment services throughout the general business market.
On March 26, 1982, the Office Automation Division was incorporated
under the laws of the State of New York as Barrister Information Systems
Corporation and was spun off to the Comptek shareholders as a separate company.
In July, 1985, the Company sold Common Stock in its initial public offering.
The Company's shares are currently traded on the American Stock Exchange under
the symbol "BIS."
The Company's headquarters are at 465 Main Street, Suite 700, Buffalo,
New York 14203, telephone (716) 845-5010. In addition, the Company has a
number of sales and service offices throughout the United States.
RISK FACTORS
An investment in the securities being offered by this Prospectus
involves a high degree of risk. Accordingly, prospective investors should
consider carefully the following risk factors, in addition to the other
information concerning the Company and its business included or incorporated by
reference herein, before purchasing any of the securities offered hereby.
HISTORY OF LOSSES
Since the fiscal year ended March 31, 1989, the Company has experienced
substantial losses and negative cash flow. The Company's software and
equipment services business were severely affected by a recession in the law
firm market after 1987 and a simultaneous shift in the market from minicomputer
systems to personal computers and networks. The Company was incorporated in
March 1982 and its revenues grew to over $37 million by the fiscal year ended
March 31, 1988. Since that time, the Company's revenues have fallen for each
subsequent fiscal year to approximately $15 million in Fiscal 1995 and each
year has shown a loss. Revenues for the fiscal year ended March 31, 1995 were
$15,327,000, a decline of $2,445,000 from the previous fiscal year. Even
though the Company has experienced five (5) profitable quarters out of the past
six (6) quarters, the profits have been small and the Company still experiences
negative cash flows. There can be no assurance that the Company will achieve
positive cash flows or profitability in the future.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING
The Company's ability to meet its cash requirements is currently
dependent on its ability to operate on a profitable basis and on the continued
support of its major creditor, BIS Partners, L.P. ("BIS Partners"), which is
comprised of members of the Company's management, among others. There can be
no assurance that the Company will operate on a profitable basis or that BIS
Partners, L.P. will continue to support the Company's cash requirements. The
Company does business in the highly competitive and volatile software and
service markets where new products or services, contract losses or
cancellations or increased expenses can have a serious and unpredictable effect
on capital requirements. In the event that additional financing is needed,
there can be no assurance that such funding will be available on acceptable
terms or at all. If additional funds are raised by issuing equity securities,
further ownership dilution to the then existing shareholders of the Company
will result. In the event that adequate funds are not available, the Company's
business may be adversely affected.
<PAGE> 6
MARKETING
To be successful, the Company must maximize the marketing and
distribution of its products and services to the greatest number of potential
customers. To that end, the Company recently hired new sales managers for both
its Services and Software Divisions; however, strengthening the Company's
marketing efforts will require the Company to commit significant additional
resources to its marketing efforts. There can be no assurances that the
efforts of the newly hired personnel or the commitment of the additional funds
will increase Company revenues. Because of the Company's history of losses and
lack of capital, it has had limited marketing ability to date. The Company
plans to market its products to law firms, consulting firms, accounting firms
and large corporations through direct and indirect sales channels, and to work
with industry consultants to obtain their recognition and support. The
Company's ability to improve the productivity of its sales force, increase its
market share and penetrate the "Fortune 1000" market will have a direct effect
on the Company's profitability and cash flow. There can be no guarantee that
the Company's products will attain wider market acceptance.
DEPENDENCE UPON CUSTOMERS
The Company's largest customer is IBM which accounts for approximately
30% of the Company's estimated Fiscal 1996 revenues. Failure to maintain this
business relationship at current levels could have a material adverse effect on
the Company.
RELIANCE ON THIRD PARTIES
The Services and Software Divisions of the Company rely on and will
continue to rely on the products and services of various third parties. The
Service Division has a relationship with manufacturers such as IBM, Hewlett
Packard, Digital Equipment Corporation and others for certification and
authorization to do maintenance on the warranted equipment of those vendors.
The Service Division must also have access to spare parts from various sources
of such parts as Micro Exchange, Hewlett Packard, COMPAQ and others. Further,
the Services Division relies on various subcontractors throughout the country
to enable it to meet its service contract obligations. Failure to maintain
these relationships could have a material effect on the Company's business.
RELIANCE ON MICROSOFT
The Software Division of the Company relies on companies such as
Microsoft, Intel, and IBM to continue to provide market leadership and products
and services which are generally in demand. The Company's new product,
Javelan, relies on Microsoft products such as Windows 3.1, Windows '95, NT
Workstation, NT Server, and SQL Server 6.0. Failure of the current or future
releases of these products to attract market demand could have a material
adverse affect on the Company's ability to sell its products. The Company
believes that Microsoft products will continue to be in strong demand in the
future and has aligned its product, Javelan, to be compatible with and to rely
upon Microsoft's products and capabilities. In the event that the market for
Microsoft products disappears, there can be no assurance that the Company would
be able to adapt its products to be compatible with other systems, or that such
adaptation would be commercially feasible.
TECHNOLOGY
The Company has invested heavily in its Software Division to produce
the Javelan Windows based product. In order to increase the sales of its
products, the Company must stay current with the technologies of Windows, the
World Wide Web, Internet and others. Failure of the Company to keep up with
innovations in this technology could have a material adverse affect on the
Company's business. Further, changes in technology could require substantial
investments and capital which may not be available to the Company.
<PAGE> 7
TECHNOLOGICAL CHANGE; NEW PRODUCTS
In the computer software industry, technological development is
expected to continue. There can be no assurance that the Company will have the
capital to keep pace with technology shifts. The Company believes that its
future success will depend upon its ability to develop, market and introduce
products which meet changing technology and user needs on a cost effective and
timely basis. There can be no assurance that technological changes in the
computer industry will not adversely affect the marketing of Javelan, render it
obsolete or that the Company will be able to respond to technological
developments. Certain of the Company's competitors have, or may have,
substantially greater resources than the Company to devote to further
technological and new product developments.
COMPETITION
The market for legal and professional accounting and management
software systems is highly competitive. While the Company faces different
competitors at different levels of the market, the principal and most frequent
challenges come from two companies in the law firm market, CMS/Data Corporation
("CMS") and Elite Information Systems ("Elite Information Systems"). CMS/Open
and the Elite System are products of these companies and both directly compete
with Javelan. While management believes Javelan has certain technology,
performance and price advantages over both of these competitors, both CMS and
Elite Information Systems currently have greater capital and marketing
resources than the Company. There is no assurance that the Company can
continue to maintain any advantage that currently exists, or that the Company's
products will be competitive with existing or future products or product
services of such competitors.
DEPENDENCE ON KEY EMPLOYEES
The Company is dependent on its President and Chairman, Henry P.
Semmelhack, and on its Vice President of Finance and Treasurer, Richard P.
Beyer and, to a lesser extent, on certain other key members of its management
operations and development staff, the loss of whose services could materially
affect the Company's ability to conduct business. Recruiting additional
qualified sales and technical personnel will be important to the Company's
success. Although the Company believes that it can attract skilled and
experienced management, sales and technical personnel, there can be no
assurance that the Company will be able to retain such personnel on acceptable
terms.
INTELLECTUAL PROPERTY
The Company's future success depends in part on its continued ability
to protect its intellectual property and to maintain the proprietary nature of
its technology. The Company's intellectual property is composed of its
software technology, the interest nature of which is contained in source and
object code. Source and object code access is limited to certain Research &
Development (R&D) employees and the Secretary of the Company, all of whom have
executed strict written non-disclosure, non-competition agreements. Source and
object code itself is maintained offsite in a protected vault. Additionally,
the Company copyrights its software and publications and maintains as trade
secrets all of its confidential and proprietary business and technological
information. The Company maintains a trade secret protection policy, restricts
access onsite and keeps track of the dissemination of proprietary and
confidential documents, such as product and user's manuals which are also
protected by signed, non-disclosure agreements. If the Company's efforts to
protect its intellectual property in this manner prove unsuccessful there can
be no assurance that the Company will be able to adequately protect its
technology. In addition, there can be no assurances that third parties have
not or will not independently develop or copyright technologies that are
substantially equivalent or superior to the Company's technology and which do
not infringe the Company's copyrights.
ONGOING LITIGATION
The Company is involved in litigation arising in the normal course of
its business, none of which the Company deems to be material. In addition, the
Company believes that the claims against it will be fully covered by the
Company's insurance policies.
<PAGE> 8
USE OF PROCEEDS
The Company will receive the proceeds from the exercise of the
Warrants, if any Warrants are exercised. The Company expects to use these
proceeds for working capital and general corporate purposes.
The Company will not receive any proceeds from the sale by the Selling
Securityholders of the Warrants, the Initial Common Stock or the Underlying
Common Stock. All proceeds from the sales thereof are solely for the account of
the Selling Securityholders.
DETERMINATION OF OFFERING PRICE
There is no established public trading market for the
Warrants. The Warrants have been valued at their respective exercise prices.
The exercise prices of the various Warrants were determined through negotiation
between the Company and the purchasers, based on the average closing bid price
of the Company's Common Stock on the AMEX, at the time of the issuance of such
securities.
DILUTION
The net tangible book value of the Company's Common Stock as
of March 29, 1995, as adjusted for the sale of 2,000,000 shares of Common Stock
on March 29, 1996 was approximately $1,830,000, or $.22 per share. Without
taking into account any other changes in the net tangible book value after that
date, other than those resulting from the exercise of the 1,750,000 Warrants,
the pro forma net tangible book value of the Company at that date would have
been $5,171,250, or $.52 per share, representing an immediate increase in net
tangible book value of $.29 per share to present shareholders and an immediate
dilution of between $.835 and $1.72 per share to new investors.
SELLING SECURITYHOLDERS
The following table sets forth certain information regarding
beneficial ownership of Warrants and/or Common Stock of each Selling
Securityholder and as adjusted to give effect to the sale of the securities
offered hereby. The securities are being registered to permit public secondary
trading and may be offered for resale from time to time. See "Plan of
Distribution."
<TABLE>
<CAPTION>
Number of Shares of
Number of Warrants Common Stock Beneficial Ownership
Name of Selling Securityholder Beneficially Owned Beneficially Owned After Offering
------------------------------ ------------------ ----------------------- ---------------------------------
<S> <C> <C> <C>
Number of - 1
Number of Shares of
Warrants Common Stock
--------- ------------
Brebar Investments Ltd.(1) 1,500,000 2,000,000
<FN>
______________________________
1 Brebar Investments has filed a Schedule 13D claiming sole voting and
dispositive power with respect to 2,000,000 shares of the Company's
Common Stock.
</TABLE>
<PAGE> 9
PLAN OF DISTRIBUTION
The Warrants, the Initial Common Stock or the Underlying
Common Stock may be sold from time to time to purchasers directly by any of the
Selling Securityholders, or, alternatively, any of the Selling Securityholders
may from time to time offer the Warrants, the Initial Common Stock or the
Underlying Common Stock through underwriters, brokers, dealers or agents, who
may receive compensation in the form of underwriting discounts, concessions or
commissions from the Selling Securityholders and/or purchasers of the Warrants,
the Initial Common Stock or the Underlying Common Stock for whom they may act
as agent. Selling Securityholders may from time to time sell or distribute the
Warrants, the Initial Common Stock or the Underlying Common Stock through
privately negotiated transactions, including in distributions to stockholders,
partners or other persons affiliated with one or more Selling Securityholder.
The distribution of the Underlying Common Stock may be
effected from time to time in one or more transactions (which may involve
crosses or block transactions) (i) in the over-the-counter market, or (ii) in
transactions otherwise than on the over-the-counter market. Sales will be made
at prices and on terms then prevailing or at prices related to the current
market price, or in negotiated transactions.
A Selling Securityholder and any brokers, dealers or agents
that participate in the distribution of the Warrants, the Initial Common Stock
or the Underlying Common Stock pursuant to the Registration Statement of which
this Prospectus is a part will be required to deliver such Prospectus to
purchasers and might be deemed to be underwriters. Any profit on the sale of
such Warrants, the Initial Common Stock or Underlying Common Stock received by
a Selling Securityholder or by any broker, dealer or agent might be deemed to
be underwriting discounts and commissions under the Securities Act. The
Company will receive proceeds from the exercise of the Warrants. The Company
will not receive any proceeds from the sale of the Warrants, the Initial Common
Stock or the Underlying Common Stock.
Under the Exchange Act and applicable rules and regulations
promulgated thereunder, any person engaged in a distribution of any of the
Warrants, the Initial Common Stock or the Underlying Common Stock may not
simultaneously engage in market making activities with respect to the Common
Stock for a period, depending upon the circumstance, of either two days or nine
days prior to the commencement of such distribution. In addition, without
limiting the foregoing, the Selling Securityholder will be subject to
applicable provisions of the Exchange Act and the rules and regulations
promulgated thereunder, including without limitation, Rules 10b-6 or 10b-7,
which provisions may limit the timing to purchases and sales of any of the
Warrants, the Initial Common Stock or the Underlying Common Stock by the
Selling Securityholders.
Under the securities laws of certain states, the Warrants, the
Initial Common Stock and the Underlying Common Stock may be sold in such states
only through registered or licensed brokers or dealers. In addition, in
certain states the Warrants, the Initial Common Stock or the Underlying Common
Stock may not be sold unless the Warrants, the Initial Common Stock or the
Underlying Common Stock have been registered or qualify for sale in such state
or an exemption from registration or qualification is available and is complied
with. The Company has agreed to indemnify the Selling Securityholders against
certain liabilities under the Securities Act.
DESCRIPTION OF CAPITAL STOCK
The following summary of certain provisions of the Company's Common
Stock, Preferred Stock and Warrants do not purport to be complete and is
subject to, and is qualified in its entirety by, the provisions of (i) the
Company's Certificate of Incorporation, as amended, (ii) the certificate of
designations pertaining to each series of preferred stock, and (iii) the
relevant warrant agreements.
The Company is authorized to issue 20,000,000 shares of Common Stock,
$0.24 per value, and 2,000,000 shares of Preferred Stock, $1.00 stated value.
As of April 30, 1996, 8,197,970 shares of Common Stock were outstanding. The
Company has no preferred stock outstanding.
<PAGE> 10
COMMON STOCK
The holders of Common Stock are entitled to one vote per share for the
election of directors, and are not entitled to cumulate their votes. The
holders of Common Stock are entitled to receive dividends when, as and if
declared by the Board of Directors out of funds legally available therefor
after the payment of dividends on any outstanding Preferred Stock. In the
event of liquidation, dissolution or winding up of the Company, subject to the
prior rights of the holders of any issued Series of Preferred Stock the holders
of Common Stock are entitled to share ratably in all assets remaining available
for distribution. Holders of shares of Common Stock, as such, have no
conversion, pre-emptive or other subscription rights, and there are no
redemption provisions applicable to the Common Stock.
On March 6, 1996, the Company's shareholders approved an amendment to
the Company's Certificate of Incorporation providing for an increase in the
Company's authorized Common Stock to 20,000,000 shares.
PREFERRED STOCK
The Company is authorized to issue up to 2,000,000 shares of Preferred
Stock, $1.00 stated value per share, from time to time. The Company currently
has four authorized classes of preferred stock, as described below.
The Series A cumulative preferred stock (the "Series A Preferred
Stock") is non-voting, has liquidation preference rights over the series C
Preferred Stock and the Common Stock and is redeemable by the Company at any
time for $1,000 per share. Each share of Series A Preferred Stock is
convertible into 500 shares of Common Stock. There are no outstanding shares
of Series A Preferred Stock.
The Series B cumulative preferred stock (the "Series B Preferred
Stock") carries voting rights, with each share of Series B Preferred Stock
having voting rights corresponding to 240 shares of Common Stock and
participates equally and ratably in payment of dividends with the Common Stock.
There are no outstanding shares of Series B Preferred Stock.
The Series C cumulative preferred stock (the "Series C Preferred
Stock") is non-voting, has liquidation preference rights over the Common Stock,
but has no redemption or conversion rights. There are no outstanding shares of
Series C Preferred Stock.
Each share of Series D preferred stock (the "Series D Preferred Stock")
carries voting rights, with each share of Series D Preferred Stock having
rights corresponding to 500 shares of Common Stock and participates equally and
ratably in payment of dividends with the Common Stock. There are no
outstanding shares of Series D Preferred Stock.
BIS PARTNERS WARRANTS
On August 31, 1995, the Company entered into a modification to an
agreement (the "Recast Loan Agreement") with BIS Partners, L.P. ("BIS
Partners") whereby BIS Partners agreed to forgive $450,000 in debt owed by the
Company to BIS Partners under the Recast Loan Agreement in exchange for
warrants (the "BIS Warrants") to purchase up to 450,000 shares of Common Stock
at $1-15/16 per share, the closing bid price on August 31, 1995. The BIS
Warrants are exercisable for a period of ten (10) years from August 31, 1995.
The shares issued pursuant to the BIS Warrants will not be registered under the
Securities and Exchange Act of 1933, as amended (the "Act"), and will bear a
legend to that effect.
In the event of any reclassification, capital reorganization or other
similar change of outstanding Common Stock, any consolidation or merger
involving the Company or a sale, lease or conveyance to another corporation of
the property of the Company as, or substantially as, an entirety, each BIS
Warrant will thereupon become exercisable only for the kind and number of
shares of stock or other securities or property of the Company, or of the
successor corporation resulting from such merger of consolidation to which a
holder of the Common Stock deliverable upon exercise of such BIS Warrant would
have been entitled upon such reclassification, reorganization, consolidation,
merger or sale if the BIS Warrant had been exercised immediately prior to such
transaction. In such cases, appropriate adjustments, as determined by the
Board of Directors, shall be made in the application of the provisions of the
BIS Warrants with respect to the rights and interests of the holder after such
transaction to the end that provision of the BIS Warrants including adjustment
of the exercise price then in effect and the number of shares purchasable on
exercise of the warrants, but without any change in the aggregate exercise
price, shall be applicable after that event, as near as reasonably may be, in
relation to any shares or to the securities or property deliverable after the
transaction on exercise of the BIS Warrants.
<PAGE> 11
For the life of the BIS Warrants, the BIS Warrants holders have the
opportunity to benefit from a rise in the market price of the Common Stock
without assuming the risk of ownership of the shares of Common Stock issuable
upon the exercise of the BIS Warrants, with a resulting dilution in the
interests of the Company's shareholders by reason of exercise of the BIS
Warrants at a time when the exercise price is less than the market price for
the Common Stock. Further, the terms on which the Company could obtain
additional capital during the life of the BIS Warrants may be adversely
affected. The BIS Warrants holders may be expected to exercise their BIS
Warrants at a time when the Company would, in all likelihood, be able to obtain
needed capital by an offering of Common Stock on terms more favorable than
those provided for by the BIS Warrants.
THE WARRANTS
Both the $1.75 Warrants and the $2.25 Warrants were issued pursuant to
agreements, dated March 29, 1996 (the "Warrant Agreements"), between the
Company and American Stock Transfer & Trust Company, as Warrant Agent (the
"Warrant Agent"), containing identical terms. The Warrants are evidenced by
warrant certificates in registered form. The following discussion of the
material terms and provisions of the Warrants is qualified in its entirety by
reference to the detailed provisions of the Warrant Agreements annexed as
exhibits hereto.
Each Warrant entitles the holder to purchase, at any time from the date
of the Warrant Agreements and ending at 3:30 p.m. Eastern time two years from
the date of the Warrant Agreements, one share of Common Stock at an exercise
price equal to $1.75 per whole share in the case of the $1.75 Warrants, and
$2.25 per whole share in the case of the $2.25 Warrants, subject to certain
adjustments. The exercise price of the Warrants and the number of shares of
Common Stock underlying such Warrants are subject to adjustment for stock
splits, stock dividends, discounted transactions and similar events. The
Warrants may be exercised in whole or in part at any time on or after the date
on which this Registration Statement becomes effective (the "Registration
Date"); provided, however, that if the Warrant holders have exercised the
Warrants prior to the Registration Date, the underlying shares of Common Stock
have been appropriately legended. Unless exercised, the Warrants will
automatically expire two years from the date of the Warrant Agreement.
In the event of any reclassification, capital reorganization or other
similar change of outstanding Common Stock, any consolidation or merger
involving the Company (other than a consolidation or merger which does not
result in any reclassification, capital reorganization or other similar change
in the outstanding Common Stock), or a sale, lease or conveyance to another
corporation of the property of the Company as, or substantially as, an
entirety, each Warrant will thereupon become exercisable only for the kind and
number of shares of stock or other securities, assets or cash to which a holder
of the number of shares of Common Stock issuable (at the time of such
reclassification, reorganization, consolidation, merger or sale) upon exercise
of such Warrant would have been entitled upon such reclassification,
reorganization, consolidation, merger or sale. In the case of a cash merger of
the Company into another corporation or any other cash transaction of the type
mentioned above, the effect of these provisions would be that the holder of a
Warrant would thereafter be limited to exercising such Warrant at the exercise
price in effect at such time for the amount of cash per share that a Warrant
holder would have received had such holder exercised such Warrant and received
Common Stock immediately prior to the effective date of such cash merger or
transaction. Depending upon the terms of such cash merger or transaction, the
aggregate amount of cash so received could be more or less than the exercise
price of the Warrant.
If the Company issues or sells shares of Common Stock, including shares
held in the Company's treasury and shares of Common Stock issued upon the
exercise of any options, rights or warrants to subscribe for shares of Common
Stock and shares of Common Stock issued upon the direct or indirect conversion
or exchange of securities for shares of Common Stock, for a consideration per
share less than both the Current Market Price per share of Common Stock on the
trading day immediately preceding such issuance or sale and the Warrant Price
in effect immediately prior to such issuance or sale, or without consideration,
than forthwith upon such issuance or sale, the Warrant Price shall (until
another such issuance or sale) be reduced to the price (calculated to the
nearest full cent) determined by multiplying the Warrant Price in effect
immediately prior to such issuance or sale by a fraction, the numerator of
which shall be the sum of (1) the number of shares of Common Stock outstanding
immediately prior to such issuance or sale multiplied by the Warrant Price
immediately prior to such issuance or sale plus (2) the consideration received
by the Company upon such issuance or sale, and the denominator of which shall
be the product of (x) the total number of shares of Common Stock outstanding
immediately after such issuance or sale, multiplied by (y) the Warrant Price
immediately prior to such issuance or sale.
Each holder of a Warrant may exercise such Warrant by surrendering the
certificate evidencing such Warrant, with the subscription form on the reverse
side of such certificate properly completed and executed, together with payment
of the exercise price, to the Warrant Agent at its office maintained for that
purpose. Such office is currently the principal corporate office of the
<PAGE> 12
Warrant Agent in New York, New York. The exercise price will be payable by
certified check, cash, or money order payable in United States dollars to the
order of the Company. If less than all the Warrants evidenced by a Warrant
certificate are exercised, a new certificate will be issued for the remaining
number of Warrants. Certificates evidencing the Warrants may be exchanged for
new certificates of different denominations by presenting the Warrant
certificates at the office of the Warrant Agent.
The Warrant Agreement contains provisions permitting the Company and
the Warrant Agent, without the consent of any Warrant holder, to supplement the
Warrant Agreement in order to cure any ambiguity, to correct any provision
contained therein which may be defective or inconsistent with any other
provisions therein, or to make any other provisions which the Company and the
Warrant Agent may deem necessary or desirable and which do not adversely affect
the interests of the Warrant holders.
For the life of the Warrants, the Warrant holders have the opportunity
to benefit from a rise in the market price of the Common Stock without assuming
the risk of ownership of the shares of Common Stock issuable upon the exercise
of the Warrants, with a resulting dilution in the interests of the Company's
shareholders by reason of exercise of Warrants at a time when the exercise
price is less than the market price for the Common Stock. Further, the terms
on which the Company could obtain additional capital during the life of the
Warrants may be adversely affected. The Warrant holders may be expected to
exercise their Warrants at a time when the Company would, in all likelihood, be
able to obtain needed capital by an offering of Common Stock on terms more
favorable than those provided for by the Warrants.
The holders of the Warrants do not have any of the rights or privileges
of shareholders of the Company, including voting rights and rights to receive
dividends, prior to exercise of the Warrants. The Company has reserved out of
its authorized but unissued shares a sufficient number of shares of Common
Stock for issuance on exercise of the Warrants. The Common Stock issuable on
exercise of the Warrants will be, when issued, duly authorized, validly issued,
fully paid and nonassessable.
Redemption
The Warrants are redeemable, as a whole or in part, by the Company at a
price of $.05 per Warrant upon not less than 30 days' written notice to the
holders of the Warrants. The $1.75 Warrants are redeemable by the Company on
or after the later of the date 90 days after May 9, 1996 or the Registration
Date, provided that the closing bid price of the Common Stock has been at least
$2.50 for a period of 20 consecutive trading-days ending on the third day prior
to the date on which the Company gives notice of redemption and provided
further that the Registration Statement is effective at the time of redemption.
The $2.25 Warrants shall be redeemable by the Company on or after the later of
the date 90 days after the redemption of all of the $1.75 Warrants or a date
180 days from May 9, 1996, provided that the closing bid price for a period of
20 consecutive trading-days ending on the third day prior to the date on which
the Company gives notice of redemption has been at least $3.125 and provided
further that the Registration Statement is effective at the time of redemption.
The Warrants will be exercisable until the close of business on the day
immediately preceding the date fixed for redemption.
REGISTRATION
The Company agrees that, for each month (with partial months being
pro-rated) after the 180-day period following the Subscription Date during
which the Registration Statement has not yet been declared effective, the
Company will pay the Purchaser (or the relevant subsequent transferee) holding
the Common Stock and/or the Warrants, a penalty payment of 2.0% of the
aggregate purchase price paid by each purchaser therefor; provided, however,
that the Company shall not be responsible for the penalty payments if the
Registration Statement has failed to become effective solely due to a policy or
expressed guidance from the Securities and Exchange Commission such that the
Warrants or Warrant Shares are not eligible for registration, which shall have
the effect of prohibiting or delaying the effectiveness of such Registration
Statement.
<PAGE> 13
PLACEMENT AGENT WARRANTS
As part of the consideration to the Placement Agent for its services
rendered in connection with the Company's Regulation S offering of the Common
Stock and Warrants, the Company granted to the Placement Agent certain warrants
(the "Placement Agent Warrants") to purchase up to 250,000 shares of Common
Stock at any time after the first anniversary of the issue date of the Warrants
until March 29, 2001 at an exercise price of 120% of the average closing bid
price of the Company's Common Stock calculated over the twenty-day trading
period prior to the Subscription Date, subject to certain adjustments. The
Placement Agent Warrants contain antidilution provisions in the event of any
recapitalization, split-ups of shares, discounted transactions or certain stock
dividends, as well as certain registration rights. The Placement Agent
Warrants also contain provisions for a "cashless exercise." The Placement
Agent Warrants have not been transferred, sold, assigned or hypothecated, in
part or in whole (other than by will or pursuant to the laws of descent and
distribution) except to officers of the Placement Agent. The Company has
agreed that, upon request of the then holder(s) of a majority of the Placement
Agent Warrants and the underlying securities, if issued, which were originally
issued to the Placement Agent or its designees, made at any time within the
period commencing two years and ending five years after the closing date of the
offering, the Company will file at its sole expense (other than seller's
commissions and expenses of seller's counsel or others hired by seller), no
more than once, a registration statement under the Act registering or
qualifying the shares underlying the Placement Agent Warrants for public sale.
The Company has also agreed, with certain limitations, that if, at any time
within the period commencing two years and ending five years after the Closing
Date, it should file a registration statement with the Commission pursuant to
the Act, the Company, at its own expense (other than seller's commissions and
seller's counsel and others hired by seller), will offer to said holder(s) the
opportunity to register or qualify the shares underlying the Placement Agent
Warrants.
For the life of the Placement Agent Warrants, the holders thereof are
given the opportunity to profit from a rise in the market price of the Common
Stock which may result in a dilution of the interest of the shareholders. The
Company may find it more difficult to raise additional equity capital if it
should be needed for the business of the Company while the Placement Agent
Warrants are outstanding. At any time when the holders thereof might be
expected to exercise them, the Company would probably be able to obtain
additional equity capital on terms more favorable than those provided by the
Placement Agent Warrants. Any profit realized on the sale of the securities
issuable upon the exercise of the Placement Agent Warrants may be deemed
additional underwriting compensation. As described above, the Company has
granted to the Placement Agent certain registration rights with respect to the
Placement Agent Warrants and the securities issuable thereunder.
<PAGE> 14
LEGAL MATTERS
The statements made as to matters of law and legal conclusions
in the documents incorporated by reference into this Prospectus and under
"Description of Capital Stock" herein have been reviewed by Stroock & Stroock &
Lavan, New York, New York.
EXPERTS
The audited financial statements and the related supplemental
schedules incorporated by reference into this Prospectus and in the
Registration Statement of which this Prospectus forms a part, to the extent and
for the periods indicated in their reports, have been incorporated by reference
in reliance upon the reports of KPMG Peat Marwick, independent public
accountants, incorporated by reference herein upon the authority of said firm
as experts in accounting and auditing.
<PAGE> 15
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY
SELLING SECURITYHOLDER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE SECURITIES
OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO,
OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS, NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT ANY INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
_______________________________
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain
Documents By Reference . . . . . . . . . . . . . . . . . . . . . . . . 2
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Selling Securityholder . . . . . . . . . . . . . . . . . . . . . . . . 6
Description of Securities . . . . . . . . . . . . . . . . . . . . . . . 7
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . 23
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
BARRISTER INFORMATION
SYSTEMS CORPORATION
Warrants
Common Stock
________________________
PROSPECTUS
________________________
May 13, 1996
<PAGE> 16
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
-------------------------------------------
The following table sets forth the costs and expenses payable
by the Company in connection with this Registration Statement. All amounts are
estimates except the registration fees.
<TABLE>
<S> <C>
Registration Fees $ 3492.67
Legal Expenses $ 20,000
Trustee's Fees N/A
Accounting Fees $ 2,000.00
Miscellaneous $ 500.00
TOTAL $25,992.67
=========
</TABLE>
Item 15. Indemnification of Directors and Officers
-----------------------------------------
Section 722 of the New York Business Corporation Law permits
indemnification of directors, officers and employees of a corporation under
certain conditions and subject to certain limitations. The Company's Articles
of Incorporation and By-laws provide the maximum indemnification allowed by
Section 722.
Item 16. Exhibits
--------
4.1 Warrant Agreement (relating to the $1.75 Warrants) dated as of March
29, 1996 by and between the Company and American Stock Transfer and
Trust Company as Warrant Agent.
4.2 Warrant Agreement (relating to the $2.25 Warrants) dated as of March
29, 1996 by and between the Company and American Stock Transfer and
Trust Company as Warrant Agent.
4.3 Warrant Agreement dated as of March 29, 1996 by and between the
Company and Strasbourger Pearson Tulcin Wolff Incorporated.
4.4 BIS Partners Agreement (incorporated by reference to the Company's
Form 10K for the year ended March 31, 1992).
5 Opinion of Mark C. Donadio, Esq. as to the legality of the securities.
23 Independent Auditor's Consent
Item 17. Undertakings
------------
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, as amended
(the "Act");
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the
registration statement (or the most recent post-
effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in
the information set forth in the registration
statement;
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in the registration statement or any
material change to such information in the
registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or furnished to
the Commission by the registrant pursuant to Section 13 of Section 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
<PAGE> 17
The undersigned registrant hereby further undertakes that, for
purposes of determining any liability under the Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby further undertakes to deliver or
cause to be delivered with the prospectus, to each person to whom the
prospectus is sent or given, the latest annual report to security holders that
is incorporated by reference in the prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act;
and, where interim financial information required to be presented by Article 3
of Regulation S-X are not set forth in the prospectus, to deliver, or cause to
be delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
The undersigned registrant hereby undertakes that (1) for the purpose
of determining any liability under the Act, the information omitted from the
form of prospectus filed as a part of this Registration Statement in reliance
upon Rule 430A and contained in a form of prospectus filed pursuant to Rules
424(b)(1), 424(b)(4) or 497(h) under the Act shall be deemed to be a part of
this registration statement at the time it was declared effective, and (2) for
the purpose of determining any liability under the Act, each post-effective
amendment, if any, that contains a form of prospectus shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
<PAGE> 1
Exhibit 4.1
[$1.75 Warrants]
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of March 29, 1996 between Barrister
Information Systems Corporation, a New York corporation, and American Stock
Transfer & Trust Company, a New York corporation (hereinafter called the
"Warrant Agent").
Barrister Information Systems Corporation (hereinafter called
the "Company") proposes to issue redeemable warrants, which shall be known as
the "$1.75 Warrants" (hereinafter called the "Warrants"). Each Warrant
entitles the holder thereof to purchase, on or after the Registration Date (as
defined) within 24 months from the offering date, one share of Common Stock,
par value $.24 per share (the "Common Stock"), at a purchase price of $1.75 per
whole share, unless previously redeemed by the Company. The Warrant Agent, at
the request of the Company, has agreed to act as the agent of the Company in
connection with the issuance, registration, transfer, exchange, and exercise of
Warrants.
The Company has agreed, pursuant to the terms of an Offshore
Securities Subscription Agreement (the "Subscription Agreement"), to sell the
Warrants to persons who are not "U.S. Persons" (as such term is defined in
Regulation S promulgated by the United States Securities and Exchange
Commission (the "SEC") pursuant to the Securities Act of 1933, as amended (the
"Securities Act") in transactions that meet the requirements of Regulation S.
The Warrants will be held by the Escrow Agent appointed by the Company and
released from escrow on a date (the "Exchange Date") not earlier than 40 days
after the applicable closing date pursuant to the Subscription Agreement.
Pursuant to the terms of the Subscription Agreement, the
Company has agreed to have declared effective a registration statement
registering the exercise of the Warrants and the underlying Common Stock (the
"Warrant Shares") pursuant to the Securities Act of 1933, as amended, within
180 days of the issue date hereof. The date on which such Registration
Statement is declared effective is hereinafter referred to as the "Registration
Date." The Warrants are exercisable on and after the Registration Date;
provided, however, that the Warrant holders may decide to exercise the Warrants
prior to the Registration Date, at their option, in which event the underlying
shares of Common Stock will be appropriately legended to reflect that the
Common Stock has been issued pursuant to Regulation S.
NOW, THEREFORE, in consideration of the premises and mutual
agreements herein set forth:
<PAGE> 2
SECTION 1. Appointment of Warrant Agent. The Company hereby
appoints the Warrant Agent to act as agent for the Company in accordance with
the instructions hereinafter set forth in this Agreement, and the Warrant Agent
hereby accepts such appointment. The Company may from time to time appoint
such Co-Warrant Agents as it may deem necessary or desirable. The Company
shall promptly notify the Warrant Agent from time to time in writing of the
number of Warrants to be issued and furnish written instructions in connection
therewith.
SECTION 2. Form of Warrant Certificates. The Warrant
Certificates (and the forms of election to purchase shares and of assignment to
be printed on the reverse thereof) shall be substantially of the tenor and
purport recited in Exhibit A hereto and may have such letters, numbers or other
marks of identification or designation and such legends, summaries or
endorsements printed, lithographed or engraved thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Warrant
Agreement, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Warrants may from time to time be listed, or to conform
to usage. The Warrant Certificates shall be dated as of the date of issuance
thereof by the Warrant Agent, either upon initial issuance or upon transfer or
exchange, and initially shall entitle the holders thereof to purchase one share
of Common Stock, but the number of such shares and the purchase price per share
of Common Stock shall be subject to adjustments as provided herein.
SECTION 3. Countersignature and Registration. The Warrant
Certificates shall be executed on behalf of the Company by the Chairman of the
Board and Chief Executive Officer, by facsimile signature, and shall be
attested by the President or the Secretary of the Company by facsimile
signature. The Warrant Certificates shall be manually countersigned by the
Warrant Agent and shall not be valid for any purpose unless so countersigned.
In case any officer of the Company who shall have signed any of the Warrant
Certificates shall cease to be such officer of the Company before
countersignature by the Warrant Agent and issuance and delivery by the Company,
such Warrant Certificates, nevertheless, may be countersigned by the Warrant
Agent, issued and delivered with the same force and effect as though the person
who signed such Warrant Certificates had not ceased to be such officer of the
Company; and any Warrant Certificates may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Warrant
Certificates, shall be a proper officer of the Company to sign such Warrant
Certificates, although at the date of the execution of this Warrant Agreement
any such person was not such an officer.
The Warrant Agent will keep or cause to be kept, at one of its
offices in the City of New York, State of New York,
<PAGE> 3
books for registration and transfer of the Warrant Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Warrant Certificates, the number of Warrants evidenced on its
face by each of the Warrant Certificates, and the date of each of the Warrant
Certificates.
The Warrant Agent shall countersign a Warrant Certificate only
(a) upon initial issuance of the Warrants in accordance with the written order
signed by the Chairman of the Board and Chief Executive Officer, the President
or any Vice President or (b) upon exchange, transfer or substitution for one or
more previously countersigned Warrant Certificates as hereinafter provided.
SECTION 4. Transfer and Exchange. Subject to Section 6
hereof, the Warrant Agent shall, from time to time, register the transfer of
any outstanding Warrant Certificate upon the books to be maintained by the
Warrant Agent for that purpose, upon surrender thereof for transfer properly
endorsed or accompanied by appropriate instruments of transfer and written
instructions for transfer. Upon any such registration of transfer, a new
Warrant Certificate shall be issued to the transferee and the surrendered
Warrant Certificate shall be canceled by the Warrant Agent. Any Warrant
Certificate may be exchanged at the option of the holder thereof at any time on
or after the Exchange Date, upon surrender at the office of the Warrant Agent
specified in Section 22 hereof, for another Warrant Certificate, or other
Warrant Certificates of different denominations, representing in the aggregate
the right to purchase a like number of shares of Common Stock. No fractional
Warrant Certificates will be issued. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Warrant Certificates.
SECTION 5. Common Stock and Warrant Common Stock. As
hereinafter used in this Agreement, Common Stock shall mean stock of the
Company of any class, whether now or hereafter authorized, which has the right
to participate in the distribution of either earnings or assets of the Company
without limit as to amount or percentage, and Warrant Common Stock shall mean
only Common Stock, and stock of any other class into which such presently
authorized Common Stock may hereafter be changed, issuable upon exercise of
Warrant. In case, by reason of the operation of Section 7, the Warrants shall
entitle the registered holders thereof to purchase any other shares of stock or
other securities or property of the Company or of any other corporation, any
reference in this Agreement to the exercise of Warrants shall be deemed to
refer to and include the purchase of such other shares of stock or other
securities or property upon such exercise.
SECTION 6. Warrant Price and Stock Conversion Date of
Warrants. The registered holder of any Warrant Certificate may
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exercise the Warrants evidenced thereby in whole or in part at any time on or
after the Registration Date; provided, however that the Warrant holders may
decide to exercise the Warrants prior to the Registration Date, at their
option, subject to the provisions of Section 9 hereof, upon surrender of the
Warrant Certificate with the form of election to purchase on the reverse side
thereof duly executed, to the Warrant Agent at the principal office of the
Warrant Agent in the City of New York, State of New York, together with payment
of the purchase price for each share of Common Stock as to which the Warrants
are exercised, at or prior to 3:30 p.m. Eastern Standard Time on March 29, 1998
(the "Exercise Date").
The purchase price for each share of Common Stock pursuant to
the exercise of a Warrant (the "Warrant Price") shall be $1.75 during the
period from the date hereof until the Exercise Date, in each case as adjusted
pursuant to Section 7 hereof, and shall be payable in lawful money of the
United States of America.
SECTION 7. Warrant Adjustments. The Warrant Price and the
number of shares purchasable upon exercise of a Warrant shall be subject to
adjustment as follows:
(a) Stock Dividends, Subdivisions, Combinations and
Reclassifications. In case the Company shall at any time after the date of
this Agreement (i) declare a dividend on the Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, (iii) combine the
outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its capital stock in a reclassification of the Common Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing corporation), the Warrant Price
in effect at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and/or the number
and kind of shares of capital stock issuable upon exercise of the Warrants on
such date shall be proportionately adjusted so that the holder of any Warrant
exercised after such time shall be entitled to receive the aggregate number and
kind of shares of capital stock which, if such Warrant had been exercised
immediately prior to such date and at a time when the Common Stock transfer
books of the Company were open, such holder would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. Such adjustment shall be made successively
whenever any event listed above shall occur.
(b) Subscriptions. If at any time after the date hereof the
Company shall fix a record date for the issuance of rights or warrants or
options to all holders of its Common Stock, entitling them (for a period
expiring within 45 days after the record date mentioned below) to subscribe for
or to purchase shares of Common Stock (or securities convertible into
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shares of Common Stock) or having a conversion price or exercise price per
share of Common Stock (if a security is convertible into or exercisable for
Common Stock) at a price per share less than the Current Market Price per share
of Common Stock on such record date (as determined in the manner prescribed in
Section 8 hereof) the Warrant Price shall be decreased to an amount determined
by multiplying such Warrant Price in effect immediately prior to such record
date by a fraction, the numerator of which is the sum of (x) the total number
of shares of Common Stock (including such number of shares of Common Stock as
would be issuable upon conversion or exercise of all securities or options
convertible into or exercisable for shares of Common Stock) outstanding
immediately prior to such record date plus the number of shares of Common Stock
which the aggregate offering price of the total number of shares of Common
Stock so to be offered (or the aggregate conversion price or exercise price of
the convertible securities so to be offered) would purchase at such Current
Market Price per share and the denominator of which shall be the number of
shares of Common Stock outstanding (including such number of shares of Common
Stock as would be issuable upon conversion or exercise of all securities or
options convertible into or exercisable for shares of Common Stock) immediately
prior to the record date plus the number of additional shares of Common Stock
to be offered for subscription or purchase (or into which the convertible
securities so to be offered are convertible or exercisable). In case such
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined by the Board of Directors of the Company, whose determination shall
be conclusive, and described in a statement filed with the Warrant Agent. Such
adjustment shall be made successively whenever such a record date is fixed; and
in the event that such rights or warrants are not so issued, the Warrant Price
shall again be adjusted to be the price which would then be in effect if such
record date had not been fixed.
(c) Distributions. If at any time after the date hereof
the Company shall fix a record date for the making of a distribution to all
holders of its Common Stock of evidences of its indebtedness or assets
(excluding cash distributions made as a dividend payable out of earnings or out
of surplus legally available for dividends under the laws of the jurisdiction
of the Company) or rights to subscribe (excluding those referred to in
subsection (b) above), then in each case the Warrant Price in effect
immediately prior to such record date shall be decreased to an amount
determined by multiplying such Warrant Price by a fraction, the numerator of
which is the Current Market Price per share on such record date less the then
fair market value per share (as determined by the Board of Directors of the
Company, whose determination shall be conclusive, and described in a statement
filed with the Warrant Agent) of the assets or evidences of indebtedness so
distributed or of such subscription rights and the denominator of which is the
Current Market Price
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per share at such date. The number of shares purchasable on such record date
shall be increased to a number of shares equal to (i) the number of shares
purchasable at the date of such distribution multiplied by the Warrant Price in
effect immediately prior to the adjustment required by the preceding sentence,
divided by (ii) the adjusted Warrant Price computed pursuant to the preceding
sentence. Such adjustments shall be made successively whenever such a record
date is fixed; and in the event that such distribution is not so made, the
Warrant Price shall again be adjusted to the Warrant Price which would then be
in effect if such record date had not been fixed.
(d) Consolidation, Merger or Sale of Assets. If, prior
to the exercise of any Warrants, the Company shall at any time consolidate with
or merge into another corporation, the holder of any Warrants will thereafter
receive, upon the exercise thereof in accordance with the terms of this
Agreement, the securities or property to which the holder of the number of
shares of Common Stock then deliverable upon the exercise or conversion of such
Warrants would have been entitled upon such consolidation or merger, and the
Company shall take such steps in connection with such consolidation or merger
as may be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to any securities or
property thereafter deliverable upon the exercise of the Warrants. The Company
or the successor corporation, as the case may be, shall execute and deliver to
the Warrant Agent a supplemental agreement so providing. A sale of all or
substantially all the assets of the Company for a consideration (apart from the
assumption of obligations) consisting primarily of securities shall be deemed a
consolidation or merger for the foregoing purposes. The provisions of this
subsection (d) shall similarly apply to successive mergers or consolidations or
sales or other transfers.
(e) Discounted Transactions; Computation of Adjusted Price.
Except as hereinafter provided, in case the Company shall, at any time after
the date of closing of the sale of Securities pursuant to the Offering (the
"Closing Date"), issue or sell any shares of Common Stock, including shares
held in the Company's treasury and shares of Common Stock issued upon the
exercise of any options, rights or warrants to subscribe for shares of Common
Stock and shares of Common Stock issued upon the direct or indirect conversion
or exchange of securities for shares of Common Stock, for a consideration per
share less than the Current Market Price per share of Common Stock on the
trading day immediately preceding such issuance or sale, or without
consideration, then forthwith upon such issuance or sale, the Warrant Price
shall (until another such issuance or sale) be reduced to the price (calculated
to the nearest full cent) determined by multiplying the Warrant Price in effect
immediately prior to such issuance or sale by a fraction, the numerator of
which shall be the sum of (1) the number of shares
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of Common Stock outstanding immediately prior to such issuance or sale
multiplied by the Warrant Price immediately prior to such issuance or sale plus
(2) the consideration received by the Company upon such issuance or sale, and
the denominator of which shall be the product of (x) the total number of shares
of Common Stock outstanding immediately after such issuance or sale, multiplied
by (y) the Warrant Price immediately prior to such issuance or sale.
(f) Calculations to the Nearest Cent and One-Hundredth of a
Share. No adjustment in the Warrant Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason of this Section 7(f)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 7 shall be made
to the nearest cent and to the nearest one-hundredth of a share as the case may
be. Notwithstanding the first sentence of this subsection (f), any adjustment
required by this Section 7 shall be made no later than the earlier of six
months from the date of the transaction which mandates such adjustment or the
expiration of the right to exercise any Warrant.
(g) Notice of Warrant Adjustment. Whenever the Warrant
Price or the number of shares purchasable upon exercise of a Warrant shall be
adjusted as provided in this Section 7, the Company shall forthwith file with
the Warrant Agent a certificate, signed by a firm of independent public
accountants, showing in detail the facts requiring such adjustment and the
Warrant Price and number of shares so purchasable that will be effective after
such adjustment. The Company shall also cause a notice setting forth any
adjustments to be sent by mailing first class, postage prepaid, to each
registered holder of a Warrant or Warrants at its address appearing on the
Warrant register and, at its option, may cause a copy of such notice to be
published once in an English language newspaper of general circulation in the
City of New York, New York. The Warrant Agent shall have no duty with respect
to any certificate filed with it except to keep the same on file and available
for inspection by registered holders of Warrants during reasonable business
hours. The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of a Warrant to determine whether any facts exist
which may require any adjustment of the Warrant Price, or with respect to the
nature of any adjustment of the Warrant Price when made, or with respect to the
method employed in making such adjustment.
(h) Other Notices. In case the Company after the date
hereof shall propose to take any action of the type described in subsections
(b), (c), (d) and (e) of this Section 7, the Company shall file with the
Warrant Agent a certificate, signed by the President or any Vice President of
the Company and by its Treasurer or Assistant Treasurer or Secretary or
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<PAGE> 8
Assistant Secretary specifying, in the case of any action of the type specified
in subsections (d) or (e), the date on which such action shall take place and
shall also set forth such facts with respect thereto as shall be reasonably
necessary to indicate the effect of such action (to the extent such facts may
be known on the date of such notice) on the Warrant Price and the number, or
kind, or class of shares or other securities or property which shall be
purchasable upon exercise of Warrants. Such notice shall be given in the case
of any action of the type specified in subsections (b) and (c), at least 10
days prior to the record date with respect thereto and in the case of any
action of the type specified in subsections (d) or (e) at least 10 days prior
to the taking of such proposed action. The Company shall also cause a notice
setting forth any adjustments to be sent by mailing first class, postage
prepaid, to each registered holder of a Warrant Certificate or Warrant
Certificates at its address appearing on the Warrant register and, at its
option, may cause a copy of such notice to be published once in an English
language newspaper of general circulation in the City of New York, New York.
Failure to give such notice or any defect therein shall not affect the legality
or validity of such action.
(i) No Change in Warrant Terms on Adjustment.
Irrespective of any of the adjustments in the Warrant Price or the number of
shares of Warrant Common Stock, Warrant Certificates theretofore or thereafter
issued may continue to express the same prices and number of shares as are
stated in a similar Warrant Certificate issuable initially, or at some
subsequent time, pursuant to this Agreement and such number of Shares specified
therein shall be deemed to have been so adjusted.
(j) Treasury Shares. Shares of Common Stock at any time
owned by the Company shall not be deemed to be outstanding for purposes of any
computation under this Section 7.
(k) Optional Reduction in Warrant Price. Anything in
this Section 7 to the contrary notwithstanding, the Company shall be entitled
to make such reductions in the Warrant Price, in addition to those adjustments
required by this Section 7, as it in its sole discretion shall determine to be
necessary in order that any consolidation or subdivision of the Common Stock,
issuance wholly for cash of any Common Stock at less than the Current Market
Price, issuance wholly for cash of Common Stock or securities which by their
terms are convertible into or exchangeable for Common Stock, stock dividend,
issuance of rights, options or warrants referred to hereinabove in this Section
7, hereinafter made by the Company to its common stockholders, shall not be
taxable to them.
(l) The Company may, at its option, at any time during the
term of the Warrants, reduce the then current
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<PAGE> 9
Exercise Price to any amount deemed appropriate by the Board of Directors of
the Company, for any length of time.
(m) It shall be understood that for all calculations made
pursuant to this section, in the case of a floating convertible instrument, the
calculation should be made based on the maximum number of shares of Common
Stock into which such instrument is convertible. It shall be further
understood that the provisions of paragraph (e) of this Section 7 shall not
apply to the issuance of shares upon the exercise of any pre-existing warrants
nor shall they apply to the exercise of the Placement Agent's Warrants.
SECTION 8. Current Market Price. For all purposes of this
Agreement, the Current Market Price per share of Common Stock on any date shall
be deemed to be the average of the daily closing prices for the thirty
consecutive business days commencing before such date. The closing price for
each day shall be (a) if the Common Stock shall be listed or admitted to
trading on the American Stock Exchange, the closing price on the AMEX
Consolidated Listing (or any successor composite tape recording transactions on
the American Stock Exchange) or, if such a composite tape shall not be in use
or shall not report transactions in the Common Stock, or if the Common Stock
shall be listed on a stock exchange other than the American Stock Exchange, the
last reported sales price regular way on the principal national securities
exchange on which the Common Stock shall be listed or admitted to trading
(which shall be the national securities exchange on which the greatest number
of shares of the Common Stock has been traded during such thirty consecutive
business days), or, in either case, if there is no transaction on any such day,
the average of the bid and asked prices regular way on such day, or (b) if the
Common Stock shall not be listed or admitted to trading on any national
securities exchange, the closing price, if reported, or, if the closing price
is not reported, the average of the closing bid and asked prices, as reported
by the National Association of Securities Dealers Automated Quotation (Nasdaq)
National Market or a similar source selected from time to time by the Company
for the purpose. If on any such date the shares of Common Stock are not quoted
by any such source, the fair value of such shares on such date, as determined
by the Board of Directors of the Company, shall be used.
SECTION 9. Exercise of Warrants. Subject to the provisions
of this Agreement, each registered holder of Warrants shall have the right,
which may be exercised at any time on or after the Registration Date or, at the
option of the Warrant holder, prior to the Registration Date, subject to the
conditions stated in this Section 9, as in such Warrant Certificates expressed,
to purchase from the Company (and the Company shall issue and sell to such
registered holders of Warrants) all or part of the number of fully paid and
nonassessable shares of Warrant Common Stock specified in such
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Warrant Certificates (subject to the adjustments as herein provided), upon
surrender to the Company at the office of the Warrant Agent specified in
Section 22 hereof, of such Warrant Certificates with the exercise form on the
reverse thereof duly filled in and signed, and upon payment to the Warrant
Agent to the account of the Company of the Warrant Price for the number of
shares of Warrant Common Stock in respect of which such Warrants are then
exercised. The date of exercise of any Warrant shall be deemed to be the date
of its receipt by the Warrant Agent duly filled in and signed and accompanied
by proper funds as hereinafter provided. Payment of such Warrant Price may be
made in cash, or by certified or official bank check. No adjustment shall be
made for any cash dividends on shares of Warrant Common Stock issuable upon
exercise of a Warrant. Upon such surrender of Warrants, and payment of the
Warrant Price as aforesaid, the Company shall issue and cause to be delivered
with all reasonable dispatch to or upon the written order of the registered
holder of such Warrants and in such name or names as such registered holder may
designate, a certificate or certificates for the number of full shares of
Warrant Common Stock so purchased upon the exercise of such Warrants together
with cash as provided in Section 12 of this Agreement, in respect of any
fraction of a share of such stock issuable upon such surrender; provided that
any shares of Warrant Common Stock issued upon the exercise of the Warrants
prior to the Registration Date shall bear an appropriate legend to the effect
that such shares are unregistered.
Each person in whose name any certificate for shares of Common
Stock is issued upon the exercise of Warrants shall for all purposes be deemed
to have become the holder of record of the Common Stock represented thereby on,
and such certificate shall be dated, the date upon which the Warrant
Certificate evidencing such Warrants was duly surrendered and payment of the
Warrant Price (and any applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the Common
Stock transfer books of the Company are closed, such person shall be deemed to
have become the record holder of such shares on, and such certificate shall be
dated, the next succeeding business day on which the Common Stock transfer
books of the Company are open.
SECTION 10. Unexercised Warrants. To the extent that any
Warrant Certificates remain outstanding at the expiration of the period during
which the Warrants are exercisable, the unexercised Warrants represented
thereby shall be deemed null and void.
SECTION 11. Redemption. The Warrants will be redeemable, at
any time on or after the date 90 days from the later of the Exchange Date or
the Registration Date, whichever is later, as a whole or in part, by the
Company at a price of $.05 per Warrant, upon not less than 30 days' written
notice to the holders of the Warrants; provided that the closing bid price
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of the Common Stock has been at least $2.50 for a period of 20 consecutive
trading days ending on the third day prior to the date on which the Company
gives notice of redemption and provided further that the Registration Statement
is effective at the time of redemption. The Warrants will be exercisable until
the close of business on the business day immediately preceding the date fixed
for redemption.
SECTION 12. Elimination of Fractions. The Company shall not
be required to issue fractional shares of stock upon any exercise of Warrants.
As to any final fraction of a share which the same registered holder of one or
more Warrants, the rights under which are exercised in the same transaction or
series of related transactions, would otherwise be entitled to purchase upon
such exercise, the Company shall pay a cash adjustment in respect of such final
fraction in an amount equal to the same fraction of the Current Market Price
(as determined in the manner prescribed in Section 8 hereof) on the business
day which next precedes the day of exercise.
SECTION 13. Issue Taxes. The Company will pay documentary
stamp taxes, if any, attributable to the initial issuance of shares of Warrant
Common Stock upon the exercise of any Warrant; provided, however, that neither
the Company nor the Warrant Agent shall be required to pay any tax or taxes
which may be payable in respect of any transfer involved in the issue or
delivery of any certificates for shares of Warrant Common Stock in a name other
than that of the registered holder of Warrants, in respect of which such shares
are initially issued.
SECTION 14. Reservation of Shares. The Company shall at all
times reserve and keep available out of its authorized but unissued stock, for
the purpose of effecting the issuance of stock upon exercise of Warrants, such
number of shares of its duly authorized Warrant Common Stock as shall from time
to time be sufficient to effect the issuance of shares of Warrant Common Stock
upon exercise of all Warrants at the time outstanding.
SECTION 15. Merger or Consolidation or Change of Name of
Warrant Agent. Any corporation into which the Warrant Agent may be merged or
with which it may be consolidated, or any corporation resulting from any merger
or consolidation to which the Warrant Agent shall be a party, or any
corporation succeeding to the corporate trust business of the Warrant Agent,
shall be the successor to the Warrant Agent hereunder without the execution or
filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding. In the case of
Warrants which have been countersigned by the Warrant Agent, but not delivered
at the time any such successor to the Warrant Agent succeeds to the agency
created by this Agreement, any such successor may adopt the countersignature of
the original Warrant Agent and deliver such Warrants so countersigned; and in
case at that time any of the Warrants shall not have been countersigned, any
successor to
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the Warrant Agent may countersign such Warrants either in the name of the
predecessor Warrant Agent or in the name of the successor Warrant Agent; and in
all such cases such Warrants shall have the full force and effect provided in
the Warrants and in this Agreement.
In case at any time the name of the Warrant Agent shall be
changed and at such time any of the Warrants shall have been countersigned but
not delivered, the Warrant Agent may adopt the countersignature under its prior
name and deliver Warrant Certificates so countersigned, and in case at that
time any of the Warrant Certificates shall not have been countersigned, the
Warrant Agent may countersign such Warrant Certificates either in its prior
name or in its changed name; and in all such cases such Warrant Certificates
shall have the full force and effect provided in the Warrant Certificates and
in this Agreement.
SECTION 16. Disposition of Proceeds on Exercise of Warrants,
etc. (a) The Warrant Agent shall account promptly to the Company with respect
to Warrants exercised and concurrently pay to the Company all moneys received
by the Warrant Agent for the purchase of shares of Common Stock through the
exercise of such Warrants.
(b) The Warrant Agent shall keep copies of this Agreement
available for inspection by holders of Warrants during normal business hours at
its office specified in Section 22 hereof.
SECTION 17. Supplements and Amendments. The parties hereto
may from time to time supplement or amend this Agreement without the approval
of any holders of Warrants to cure any ambiguity or to correct or supplement
any provision contained in this Agreement which may be defective or
inconsistent with any other provision contained herein, or to make such other
provisions with respect to any change or any supplemental agreement as the
parties may deem necessary or desirable and which shall not materially
adversely affect the interests of the registered holders of the Warrants.
SECTION 18. Mutilated or Missing Warrant Certificates. If
any Warrant shall be mutilated, lost, stolen or destroyed the Warrant Agent
shall deliver a new Warrant Certificate of like tenor and denomination in
exchange and substitution therefor upon surrender and cancellation of the
mutilated Warrant Certificate or, in the case of a lost, stolen or destroyed
Warrant Certificate, upon receipt of evidence satisfactory to the Company and
the Warrant Agent of the loss, theft or destruction of such Warrant Certificate
and, in either case, upon receipt of such indemnity as the Company and the
Warrant Agent may reasonably require. Applicants for substitute Warrant
Certificates shall also comply with such other reasonable regulations and pay
such other reasonable charges as
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the Warrant Agent or the Company may prescribe. Any such new Warrant
Certificate shall constitute an original contractual obligation of the Company,
whether or not the allegedly lost, stolen, mutilated or destroyed Warrant
Certificate shall be at any time enforceable by anyone.
SECTION 19. Duties of the Warrant Agent. The Warrant Agent
undertakes the duties and obligations imposed by this Warrant Agreement upon
the following terms and conditions, by all of which the Company and the holders
of Warrants, by their acceptance thereof, shall be bound:
(a) The Warrant Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in this Agreement
or in the Warrant Certificates (except its countersignature thereof and except
such as describes the Warrant Agent or action taken or to be taken by it) or be
required to verify the same, but all such statements and recitals are and shall
be deemed to have been made by the Company only. The Warrant Agent shall not
be under any responsibility in respect of the validity of this Agreement or the
execution and delivery hereof or in respect of the validity or execution of any
Warrant Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition
contained in this Agreement or in any Warrant Certificate to be complied with
by the Company; nor shall it be responsible for the making of any adjustment in
the Warrant Price or the number of shares issuable upon the exercise of a
Warrant required under the provisions of Section 7 or responsible for the
manner, method or amount of any such change or the ascertaining of the
existence of facts that would require any such change; nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares to be issued pursuant to this
Agreement or any Warrant or as to whether any shares will, when issued, be
validly issued and fully paid and non-assessable.
(b) The Warrant Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys, agents or employees, and the Warrant
Agent shall not be answerable or accountable for any act, default, neglect or
misconduct of any such attorneys, agents or employees or for any loss to the
Company resulting from such neglect or misconduct, provided reasonable care had
been exercised in the selection and continued employment thereof.
(c) The Warrant Agent may consult at any time with legal
counsel satisfactory to it (who may be legal counsel for the Company) and the
advice of such counsel shall be full and complete authorization and protection
to the Warrant Agent as to any action taken or omitted by it in good faith and
in accordance with such advice.
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(d) The Warrant Agent shall incur no liability or
responsibility to the Company or to any holder of a Warrant Certificate for any
action taken in reliance on any notice, resolution, waiver, consent, order,
certificate, or other paper, document or instrument believed by it to be
genuine and to have been signed, sent or presented by the proper party or
parties.
(e) The Company agrees to pay to the Warrant Agent
reasonable compensation for all services rendered by the Warrant Agent in the
execution of this Warrant Agreement, to reimburse the Warrant Agent for all
expenses (including reasonable counsel fees), taxes and governmental charges
and other charges of any kind and nature incurred by the Warrant Agent in the
execution of this Warrant Agreement and to indemnify the Warrant Agent and save
it harmless against any and all liabilities, including judgments, costs and
reasonable counsel fees, for anything done or omitted by the Warrant Agent in
the execution of this Warrant Agreement except as a result of the Warrant
Agent's negligence, willful misconduct or bad faith.
(f) The Warrant Agent and any stockholder, director,
officer or employee of the Warrant Agent may buy, sell, or deal in any of the
Warrants or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not Warrant Agent under this Warrant Agreement. Nothing herein shall
preclude the Warrant Agent from acting in any other capacity for the Company or
for any other legal entity.
(g) The Warrant Agent shall act hereunder solely as agent
for the Company and in a ministerial capacity, and its duties shall be
determined solely by the provisions hereof. The Warrant Agent shall not be
liable for anything which it may do or refrain from doing in connection with
this Agreement except for its own negligence, willful misconduct or bad faith.
SECTION 20. Change of Warrant Agent. The Warrant Agent may
resign and be discharged from its duties under this Agreement upon 30 days'
notice in writing mailed to the Company by registered or certified mail, and to
the holders of the Warrant Certificates by first- class mail. The Company may
remove the Warrant Agent or any successor Warrant Agent upon 30 days' notice in
writing, mailed to the Warrant Agent or successor Warrant Agent, as the case
may be, and to each transfer agent of the Common Stock by registered or
certified mail, and to the holders of the Warrant Certificates by first-class
mail. If the Warrant Agent shall resign or be removed or shall otherwise
become incapable of acting, the Company shall appoint a successor to the
Warrant Agent. If the Company shall fail to make such appointment within a
period of 30 days after such removal or after it has been notified in writing
of such resignation or incapacity by the resigning or incapacitated
- 14 -
<PAGE> 15
Warrant Agent or by the holder of a Warrant Certificate (who shall, with such
notice, submit such holder's Warrant Certificate for inspection by the
Company), then the registered holder of any Warrant Certificate may apply to
any court of competent jurisdiction for the appointment of a new Warrant Agent.
Any successor Warrant Agent, whether appointed by the Company or by such a
court, shall be a corporation organized and doing business under the laws of
the United States or of the State of New York, in good standing, having its
principal office in the City of New York, New York which is authorized under
such laws to exercise corporate trust powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Warrant Agent a combined capital and surplus of at least
$5,000,000. After appointment, the successor Warrant Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Warrant Agent without further act or deed; but the
predecessor Warrant Agent shall deliver and transfer to the successor Warrant
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of such appointment the Company shall file notice
thereof in writing with the predecessor Warrant Agent and each transfer agent
of the Common Stock, and mail a notice thereof in writing to the registered
holders of the Warrant Certificates. Failure to give any notice provided for
in this Section 20, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Warrant Agent or the
appointment of the successor Warrant Agent, as the case may be.
SECTION 21. Identity of Transfer Agent. Forthwith upon the
appointment of any subsequent Transfer Agent for shares of the Common Stock,
the Company will file with the Warrant Agent a statement setting forth the name
and address of such Transfer Agent.
SECTION 22. Notices. Any notice pursuant to this Agreement
to be given by the Warrant Agent or by the registered holder of any Warrant to
the Company shall be sufficiently given if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing by the Company
with the Warrant Agent) as follows:
Barrister Information Systems Corporation
465 Main Street
Buffalo, New York 14203
Attention: Mark C. Donadio
Any notice pursuant to this Agreement to be given by the Company or by the
registered holder of any Warrant to the Warrant Agent shall be sufficiently
given if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing by the Warrant Agent with the Company) as follows:
- 15 -
<PAGE> 16
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
Attention: Wilbert Myles
SECTION 23. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Warrant Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
SECTION 24. GOVERNING LAW. THIS AGREEMENT AND EACH WARRANT
ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF NEW
YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
SECTION 25. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation other than
the Company, the Warrant Agent and the registered holders of the Warrant
Certificates any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of
the Company, the Warrant Agent and the registered holders of the Warrant
Certificates.
SECTION 26. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Warrant Agreement to be executed and delivered as of the day and year first
above written.
<TABLE>
<S> <C>
BARRISTER INFORMATION
SYSTEMS CORPORATION
By:_________________________
Name: Henry P. Semmelhack
Title: Chairman and President
Attest:
____________________________
Its:_____________________
AMERICAN STOCK TRANSFER &
TRUST COMPANY
as Warrant Agent
</TABLE>
- 16 -
<PAGE> 17
<TABLE>
<S> <C>
By:_________________________
Name: Herb Lemmer
Title: Vice President and
General Counsel
Attest:
____________________________
Its:_____________________
</TABLE>
- 17 -
<PAGE> 18
EXHIBIT A
EXERCISABLE AT ANY TIME AT OR PRIOR TO
3:30 P.M. NEW YORK, EASTERN STANDARD TIME
ON MARCH 29, 1998
WARRANT CERTIFICATE
BARRISTER INFORMATION SYSTEMS CORPORATION
NO. W-___________ CERTIFICATE FOR _____ WARRANTS
[THIS WARRANT HAS NOT BEEN AND WILL NOT BE REGISTERED IN CONNECTION WITH ITS
ISSUANCE UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS WARRANT NOR ANY
INTEREST OR PARTICIPATION THEREIN MAY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OF AMERICA (INCLUDING
THE STATES AND THE DISTRICT OF COLUMBIA), ITS TERRITORIES, ITS POSSESSIONS AND
OTHER AREAS SUBJECT TO ITS JURISDICTION (THE "UNITED STATES") OR TO ANY
CITIZEN, NATIONAL OR RESIDENT OR OTHER ENTITY CREATED OR ORGANIZED IN OR UNDER
THE LAWS OF THE UNITED STATES OR ANY POLITICAL SUBDIVISION THEREOF OR TO ANY
ESTATE OR TRUST THE INCOME OF WHICH IS SUBJECT TO UNITED STATES FEDERAL INCOME
TAXATION REGARDLESS OF ITS SOURCE OR TO ANY OTHER PERSON DEEMED A U.S. PERSON
UNDER REGULATION S OF THE SECURITIES ACT ("U.S. PERSONS"), EXCEPT TO AND MAY
NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO U.S. PERSONS EXCEPT IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
OR IN A TRANSACTION REGISTERED UNDER THE SECURITIES ACT.]
This certifies that _____________________________ or
registered assigns is the registered holder of the number of Warrants set forth
above, and is entitled, upon surrender of this Warrant Certificate at the
office of American Stock Transfer & Trust Company, Warrant Agent (or any
successor as such Warrant Agent), in the City of New York, New York, at any
time on or after the Registration Date, or prior to the Registration Date, at
their option and subject to the provisions set forth in the Warrant Agreement
hereinafter referred to and at or prior to 3:30 p.m. Eastern Standard Time on
March 29, 1998, to purchase one share of Common Stock, par value $0.24, of
Barrister Information Systems Corporation, a New York corporation (the
"Company"), at the price of $1.75 per whole share, per Warrant, unless
previously redeemed by the Company.
The applicable per share purchase price shown above and the
number of shares issuable upon exercise of the Warrants represented by this
Warrant Certificate are subject to adjustment for the occurrence of certain
events, including stock dividends and split- ups, combinations,
reorganizations, reclassifications, consolidations, mergers or sales of
<PAGE> 19
properties and assets, upon the issuance of certain rights or warrants to
holders of Common Stock or the distribution to such holders of assets or
indebtedness and upon consummation of certain discounted sales, as set forth in
the Warrant Agreement hereinafter referred to. A complete statement with
respect to such adjustments and to other terms and conditions pertaining to the
Warrants is contained in the Warrant Agreement, dated as of March 26, 1996,
between the Company and American Stock Transfer & Trust Company, Warrant Agent,
a copy of which may be examined by the registered holder hereof at the office
of the Warrant Agent.
To exercise the Warrants represented by this Warrant
Certificate the form of election to purchase on the reverse hereof must be duly
executed and the accompanying instructions for the registration and delivery of
the stock must be filled in.
At any time on or after the Exchange Date, the Warrants
represented by this Warrant Certificate are transferable (subject to the
conditions set forth in the preceding paragraphs) at the office in the City of
New York, New York of the Warrant Agent (or of its successor as Warrant Agent)
by the registered holder thereof in person or by attorney duly authorized in
writing, upon surrender of this Warrant Certificate. Upon any such transfer, a
new Warrant Certificate, representing the right to purchase a like number of
shares of the Company's Common Stock, will be issued to the transferee in
exchange for this Warrant Certificate.
This Warrant Certificate and similar Warrant Certificates when
surrendered at the office in the City of New York, New York of the Warrant
Agent (or of its successor as Warrant Agent) by the registered holder hereof in
person or by attorney duly authorized in writing may be exchanged for another
Warrant Certificate or Warrant Certificates, representing in the aggregate the
right to purchase a like number of shares of the Company's Common Stock.
If the Warrants evidenced by this Warrant Certificate remain
outstanding at the expiration of the period during which Warrants are
exercisable, as set forth in the first paragraph of this Warrant Certificate,
such Warrants shall thereupon be deemed null and void.
No fractional shares of Common Stock will be issued upon the
exercise of any Warrant or Warrants evidenced hereby, but in lieu thereof, a
cash payment will be made, as provided in the Warrant Agreement. Shares of
Common Stock issued upon the exercise of any Warrant or Warrants evidenced
hereby prior to the Registration Date shall bear an appropriate legend to the
effect that such shares are unregistered.
2
<PAGE> 20
No holder of this Warrant Certificate shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Common
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Warrant
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action (whether upon any recapitalization, issue of
stock, reclassification of stock, change of par value, consolidation, merger,
conveyance, or otherwise) or, except as provided in the Warrant Agreement, to
receive notice of meetings, or to receive dividends or subscription rights or
otherwise, until the Warrant or Warrants evidenced by this Warrant Certificate
shall have been exercised as provided in the Warrant Agreement.
<TABLE>
<S> <C>
BARRISTER INFORMATION
SYSTEMS CORPORATION
By: ________________________
Name: Henry P. Semmelhack
Title: Chairman and President
Attest:
_____________________________
Secretary
This Warrant Certificate is not valid until countersigned by
the Warrant Agent.
Dated: Countersigned:
________________________,
as Warrant Agent,
By:_________________________
Authorized Officer
</TABLE>
3
<PAGE> 21
FORM OF EXERCISE
(FORM OF EXERCISE TO BE EXECUTED BY THE WARRANT
HOLDER AT THE TIME OF EXERCISE)
To [Warrant Agent] or its successor as Warrant Agent:
The undersigned, holder of the within Warrant Certificate,
hereby (1) irrevocably exercises the undersigned's right to purchase _________
shares of Common Stock, par value $0.24 per share, of Barrister Information
Systems Corporation (the "Company") which the undersigned is entitled to
purchase under the terms of the within Warrant Certificate, or such other
securities as the undersigned shall be entitled to purchase under the terms of
the Warrant Agreement referred to in such Warrant Certificate by reason of the
occurrence of certain events specified therein, and (2) elects to make payment
in full for the number of shares of Common Stock so purchased by payment of
$______ in cash or by certified or official bank check.
Please issue the certificate for shares of Common Stock in the
name of, and pay any cash for any fractional share to:
________________________________________________________________
Print or type name
________________________________________________________________
Social Security or other Identifying Number
________________________________________________________________
Street Address
________________________________________________________________
City State Zip Code
If such number of shares shall not be all the shares purchasable upon the
exercise of the Warrants evidenced by this Warrant Certificate, a new Warrant
Certificate for the balance of such Warrants remaining unexercised shall be
registered in the name of and delivered to:
Please insert social security
or other identifying number:
________________________________________________________________________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
<TABLE>
<S> <C>
Dated: _______________ _____________________________________________________________________
Signature
(Signature must conform in all respects to name of holder
holder as specified on the face of the Warrant Certificate)
(Signature Medallion Guaranteed): ___________________________ Date: ___________________
</TABLE>
(If the Common Stock, cash in lieu of fractional shares, or Warrants for any
unexercised balance are to be issued or paid to a person other than the person
in whose name the within Warrant is registered, or if otherwise requested by
the Company or the Warrant Agent, a signature Medallion guarantee is required.)
<PAGE> 22
ASSIGNMENT
(FORM OF ASSIGNMENT TO BE EXECUTED IF WARRANT
HOLDER DESIRES TO TRANSFER WARRANT)
FOR VALUE RECEIVED, __________________________________ hereby
sells, assigns, and transfer unto ____________________ this Warrant Certificate
together with all right, title or interest therein and does hereby irrevocably
appoint ___________________ attorney to transfer the within Warrant Certificate
on the books of the Warrant Agent with full power of substitution in the
premises.
<TABLE>
<S> <C>
Dated: _______________ _____________________________________________________________________
Signature
(Signature must conform in all respects to name of holder
holder as specified on the face of the Warrant Certificate)
(Signature Medallion Guaranteed): ___________________________ Date: ___________________
</TABLE>
<PAGE> 1
Exhibit 4.2
[$2.25 Warrants]
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of March 29, 1996 between Barrister
Information Systems Corporation, a New York corporation, and American Stock
Transfer & Trust Company, a New York corporation (hereinafter called the
"Warrant Agent").
Barrister Information Systems Corporation (hereinafter called
the "Company") proposes to issue redeemable warrants, which shall be known as
the "$2.25 Warrants" (hereinafter called the "Warrants"). Each Warrant
entitles the holder thereof to purchase, on or after the Registration Date (as
defined) within 24 months from the offering date, one share of Common Stock,
par value $.24 per share (the "Common Stock"), at a purchase price of $2.25 per
whole share, unless previously redeemed by the Company. The Warrant Agent, at
the request of the Company, has agreed to act as the agent of the Company in
connection with the issuance, registration, transfer, exchange, and exercise of
Warrants.
The Company has agreed, pursuant to the terms of an Offshore
Securities Subscription Agreement (the "Subscription Agreement"), to sell the
Warrants to persons who are not "U.S. Persons" (as such term is defined in
Regulation S promulgated by the United States Securities and Exchange
Commission (the "SEC") pursuant to the Securities Act of 1933, as amended (the
"Securities Act") in transactions that meet the requirements of Regulation S.
The Warrants will be held by the Escrow Agent appointed by the Company and
released from escrow on a date (the "Exchange Date") not earlier than 40 days
after the applicable closing date pursuant to the Subscription Agreement.
Pursuant to the terms of the Subscription Agreement, the
Company has agreed to have declared effective a registration statement
registering the exercise of the Warrants and the underlying Common Stock (the
"Warrant Shares") pursuant to the Securities Act of 1933, as amended, within
180 days of the issue date hereof. The date on which such Registration
Statement is declared effective is hereinafter referred to as the
<PAGE> 2
"Registration Date." The Warrants are exercisable on and after the
Registration Date; provided, however, that the Warrant holders may decide to
exercise the Warrants prior to the Registration Date, at their option, in which
event the underlying shares of Common Stock will be appropriately legended
reflect that the Common Stock has been issued pursuant to Regulation S.
NOW, THEREFORE, in consideration of the premises and mutual
agreements herein set forth:
SECTION 1. Appointment of Warrant Agent. The Company hereby
appoints the Warrant Agent to act as agent for the Company in accordance with
the instructions hereinafter set forth in this Agreement, and the Warrant Agent
hereby accepts such appointment. The Company may from time to time appoint
such Co-Warrant Agents as it may deem necessary or desirable. The Company
shall promptly notify the Warrant Agent from time to time in writing of the
number of Warrants to be issued and furnish written instructions in connection
therewith.
SECTION 2. Form of Warrant Certificates. The Warrant
Certificates (and the forms of election to purchase shares and of assignment to
be printed on the reverse thereof) shall be substantially of the tenor and
purport recited in Exhibit A hereto and may have such letters, numbers or other
marks of identification or designation and such legends, summaries or
endorsements printed, lithographed or engraved thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Warrant
Agreement, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Warrants may from time to time be listed, or to conform
to usage. The Warrant Certificates shall be dated as of the date of issuance
thereof by the Warrant Agent, either upon initial issuance or upon transfer or
exchange, and initially shall entitle the holders thereof to purchase one share
of Common Stock, but the number of such shares and the purchase price per share
of Common Stock shall be subject to adjustments as provided herein.
SECTION 3. Countersignature and Registration. The Warrant
Certificates shall be executed on behalf of the Company
<PAGE> 3
by the Chairman of the Board and Chief Executive Officer, by facsimile
signature, and shall be attested by the President or the Secretary of the
Company by facsimile signature. The Warrant Certificates shall be manually
countersigned by the Warrant Agent and shall not be valid for any purpose
unless so countersigned. In case any officer of the Company who shall have
signed any of the Warrant Certificates shall cease to be such officer of the
Company before countersignature by the Warrant Agent and issuance and delivery
by the Company, such Warrant Certificates, nevertheless, may be countersigned
by the Warrant Agent, issued and delivered with the same force and effect as
though the person who signed such Warrant Certificates had not ceased to be
such officer of the Company; and any Warrant Certificates may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Warrant Certificates, shall be a proper officer of the Company to sign
such Warrant Certificates, although at the date of the execution of this
Warrant Agreement any such person was not such an officer.
The Warrant Agent will keep or cause to be kept, at one of its
offices in the City of New York, State of New York, books for registration and
transfer of the Warrant Certificates issued hereunder. Such books shall show
the names and addresses of the respective holders of the Warrant Certificates,
the number of Warrants evidenced on its face by each of the Warrant
Certificates, and the date of each of the Warrant Certificates.
The Warrant Agent shall countersign a Warrant Certificate only
(a) upon initial issuance of the Warrants in accordance with the written order
signed by the Chairman of the Board and Chief Executive Officer, the President
or any Vice President or (b) upon exchange, transfer or substitution for one or
more previously countersigned Warrant Certificates as hereinafter provided.
SECTION 4. Transfer and Exchange. Subject to Section 6
hereof, the Warrant Agent shall, from time to time, register the transfer of
any outstanding Warrant Certificate upon the books to be maintained by the
Warrant Agent for that purpose, upon surrender thereof for transfer properly
endorsed or accompanied by appropriate instruments of transfer and written
instructions for transfer. Upon any such registration of
- 3 -
<PAGE> 4
transfer, a new Warrant Certificate shall be issued to the transferee and the
surrendered Warrant Certificate shall be canceled by the Warrant Agent. Any
Warrant Certificate may be exchanged at the option of the holder thereof at any
time on or after the Exchange Date, upon surrender at the office of the Warrant
Agent specified in Section 22 hereof, for another Warrant Certificate, or other
Warrant Certificates of different denominations, representing in the aggregate
the right to purchase a like number of shares of Common Stock. No fractional
Warrant Certificates will be issued. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Warrant Certificates.
SECTION 5. Common Stock and Warrant Common Stock. As
hereinafter used in this Agreement, Common Stock shall mean stock of the
Company of any class, whether now or hereafter authorized, which has the right
to participate in the distribution of either earnings or assets of the Company
without limit as to amount or percentage, and Warrant Common Stock shall mean
only Common Stock, and stock of any other class into which such presently
authorized Common Stock may hereafter be changed, issuable upon exercise of
Warrant. In case, by reason of the operation of Section 7, the Warrants shall
entitle the registered holders thereof to purchase any other shares of stock or
other securities or property of the Company or of any other corporation, any
reference in this Agreement to the exercise of Warrants shall be deemed to
refer to and include the purchase of such other shares of stock or other
securities or property upon such exercise.
SECTION 6. Warrant Price and Stock Conversion Date of
Warrants. The registered holder of any Warrant Certificate may exercise the
Warrants evidenced thereby in whole or in part at any time on or after the
Registration Date; provided, however that the Warrant holders may decide to
exercise the Warrants prior to the Registration Date, at their option, subject
to the provisions of Section 9 hereof, upon surrender of the Warrant
Certificate with the form of election to purchase on the reverse side thereof
duly executed, to the Warrant Agent at the principal office of the Warrant
Agent in the City of New York, State of New York, together with payment of the
purchase price for each share of Common Stock as to which the Warrants are
- 4 -
<PAGE> 5
exercised, at or prior to 3:30 p.m. Eastern Standard Time on March 29, 1998
(the "Exercise Date").
The purchase price for each share of Common Stock pursuant to
the exercise of a Warrant (the "Warrant Price") shall be $2.25 during the
period from the date hereof until the Exercise Date, in each case as adjusted
pursuant to Section 7 hereof, and shall be payable in lawful money of the
United States of America.
SECTION 7. Warrant Adjustments. The Warrant Price and the
number of shares purchasable upon exercise of a Warrant shall be subject to
adjustment as follows:
(a) Stock Dividends, Subdivisions, Combinations and
Reclassifications. In case the Company shall at any time after the date of
this Agreement (i) declare a dividend on the Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, (iii) combine the
outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its capital stock in a reclassification of the Common Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing corporation), the Warrant Price
in effect at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and/or the number
and kind of shares of capital stock issuable upon exercise of the Warrants on
such date shall be proportionately adjusted so that the holder of any Warrant
exercised after such time shall be entitled to receive the aggregate number and
kind of shares of capital stock which, if such Warrant had been exercised
immediately prior to such date and at a time when the Common Stock transfer
books of the Company were open, such holder would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. Such adjustment shall be made successively
whenever any event listed above shall occur.
(b) Subscriptions. If at any time after the date hereof the
Company shall fix a record date for the issuance of rights or warrants or
options to all holders of its Common Stock, entitling them (for a period
expiring within 45 days after the record date mentioned below) to subscribe for
or to
- 5 -
<PAGE> 6
purchase shares of Common Stock (or securities convertible into shares of
Common Stock) or having a conversion price or exercise price per share of
Common Stock (if a security is convertible into or exercisable for Common
Stock) at a price per share less than the Current Market Price per share of
Common Stock on such record date (as determined in the manner prescribed in
Section 8 hereof) the Warrant Price shall be decreased to an amount determined
by multiplying such Warrant Price in effect immediately prior to such record
date by a fraction, the numerator of which is the sum of (x) the total number
of shares of Common Stock (including such number of shares of Common Stock as
would be issuable upon conversion or exercise of all securities or options
convertible into or exercisable for shares of Common Stock) outstanding
immediately prior to such record date plus the number of shares of Common Stock
which the aggregate offering price of the total number of shares of Common
Stock so to be offered (or the aggregate conversion price or exercise price of
the convertible securities so to be offered) would purchase at such Current
Market Price per share and the denominator of which shall be the number of
shares of Common Stock outstanding (including such number of shares of Common
Stock as would be issuable upon conversion or exercise of all securities or
options convertible into or exerciseable for shares of Common Stock)
immediately prior to the record date plus the number of additional shares of
Common Stock to be offered for subscription or purchase (or into which the
convertible securities so to be offered are convertible or exercisable). In
case such subscription price may be paid in a consideration part or all of
which shall be in a form other than cash, the value of such consideration shall
be as determined by the Board of Directors of the Company, whose determination
shall be conclusive, and described in a statement filed with the Warrant Agent.
Such adjustment shall be made successively whenever such a record date is
fixed; and in the event that such rights or warrants are not so issued, the
Warrant Price shall again be adjusted to be the price which would then be in
effect if such record date had not been fixed.
(c) Distributions. If at any time after the date hereof
the Company shall fix a record date for the making of a distribution to all
holders of its Common Stock of evidences of its indebtedness or assets
(excluding cash distributions made as a dividend payable out of earnings or out
of surplus legally
- 6 -
<PAGE> 7
available for dividends under the laws of the jurisdiction of the Company) or
rights to subscribe (excluding those referred to in subsection (b) above), then
in each case the Warrant Price in effect immediately prior to such record date
shall be decreased to an amount determined by multiplying such Warrant Price by
a fraction, the numerator of which is the Current Market Price per share on
such record date less the then fair market value per share (as determined by
the Board of Directors of the Company, whose determination shall be conclusive,
and described in a statement filed with the Warrant Agent) of the assets or
evidences of indebtedness so distributed or of such subscription rights and the
denominator of which is the Current Market Price per share at such date. The
number of shares purchasable on such record date shall be increased to a number
of shares equal to (i) the number of shares purchasable at the date of such
distribution multiplied by the Warrant Price in effect immediately prior to the
adjustment required by the preceding sentence, divided by (ii) the adjusted
Warrant Price computed pursuant to the preceding sentence. Such adjustments
shall be made successively whenever such a record date is fixed; and in the
event that such distribution is not so made, the Warrant Price shall again be
adjusted to the Warrant Price which would then be in effect if such record date
had not been fixed.
(d) Consolidation, Merger or Sale of Assets. If, prior
to the exercise of any Warrants, the Company shall at any time consolidate with
or merge into another corporation, the holder of any Warrants will thereafter
receive, upon the exercise thereof in accordance with the terms of this
Agreement, the securities or property to which the holder of the number of
shares of Common Stock then deliverable upon the exercise or conversion of such
Warrants would have been entitled upon such consolidation or merger, and the
Company shall take such steps in connection with such consolidation or merger
as may be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to any securities or
property thereafter deliverable upon the exercise of the Warrants. The Company
or the successor corporation, as the case may be, shall execute and deliver to
the Warrant Agent a supplemental agreement so providing. A sale of all or
substantially all the assets of the Company for a consideration (apart from the
assumption of obligations) consisting primarily of securities shall be deemed a
- 7 -
<PAGE> 8
consolidation or merger for the foregoing purposes. The provisions of this
subsection (d) shall similarly apply to successive mergers or consolidations or
sales or other transfers.
(e) Discounted Transactions; Computation of Adjusted Price.
Except as hereinafter provided, in case the Company shall, at any time after
the date of closing of the sale of Securities pursuant to the Offering (the
"Closing Date"), issue or sell any shares of Common Stock, including shares
held in the Company's treasury and shares of Common Stock issued upon the
exercise of any options, rights or warrants to subscribe for shares of Common
Stock and shares of Common Stock issued upon the direct or indirect conversion
or exchange of securities for shares of Common Stock, for a consideration per
share less than the Current Market Price per share of Common Stock on the
trading day immediately preceding such issuance or sale, or without
consideration, then forthwith upon such issuance or sale, the Warrant Price
shall (until another such issuance or sale) be reduced to the price (calculated
to the nearest full cent) determined by multiplying the Warrant Price in effect
immediately prior to such issuance or sale by a fraction, the numerator of
which shall be the sum of (1) the number of shares of Common Stock outstanding
immediately prior to such issuance or sale multiplied by the Warrant Price
immediately prior to such issuance or sale plus (2) the consideration received
by the Company upon such issuance or sale, and the denominator of which shall
be the product of (x) the total number of shares of Common Stock outstanding
immediately after such issuance or sale, multiplied by (y) the Warrant Price
immediately prior to such issuance or sale.
(f) Calculations to the Nearest Cent and One-Hundredth of a Share.
No adjustment in the Warrant Price shall be required unless such adjustment
would require an increase or decrease of at least 1% in such price; provided,
however, that any adjustments which by reason of this Section 7(f) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 7 shall be made to
the nearest cent and to the nearest one-hundredth of a share as the case may
be. Notwithstanding the first sentence of this subsection (f), any adjustment
required by this Section 7 shall be made no later
- 8 -
<PAGE> 9
than the earlier of six months from the date of the transaction which mandates
such adjustment or the expiration of the right to exercise any Warrant.
(g) Notice of Warrant Adjustment. Whenever the Warrant
Price or the number of shares purchasable upon exercise of a Warrant shall be
adjusted as provided in this Section 7, the Company shall forthwith file with
the Warrant Agent a certificate, signed by a firm of independent public
accountants, showing in detail the facts requiring such adjustment and the
Warrant Price and number of shares so purchasable that will be effective after
such adjustment. The Company shall also cause a notice setting forth any
adjustments to be sent by mailing first class, postage prepaid, to each
registered holder of a Warrant or Warrants at its address appearing on the
Warrant register and, at its option, may cause a copy of such notice to be
published once in an English language newspaper of general circulation in the
City of New York, New York. The Warrant Agent shall have no duty with respect
to any certificate filed with it except to keep the same on file and available
for inspection by registered holders of Warrants during reasonable business
hours. The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of a Warrant to determine whether any facts exist
which may require any adjustment of the Warrant Price, or with respect to the
nature of any adjustment of the Warrant Price when made, or with respect to the
method employed in making such adjustment.
(h) Other Notices. In case the Company after the date
hereof shall propose to take any action of the type described in subsections
(b), (c), (d) and (e) of this Section 7, the Company shall file with the
Warrant Agent a certificate, signed by the President or any Vice President of
the Company and by its Treasurer or Assistant Treasurer or Secretary or
Assistant Secretary specifying, in the case of any action of the type specified
- 9 -
<PAGE> 10
in subsections (d) or (e), the date on which such action shall take place and
shall also set forth such facts with respect thereto as shall be reasonably
necessary to indicate the effect of such action (to the extent such facts may
be known on the date of such notice) on the Warrant Price and the number, or
kind, or class of shares or other securities or property which shall be
purchasable upon exercise of Warrants. Such notice shall be given in the case
of any action of the type specified in subsections (b) and (c), at least 10
days prior to the record date with respect thereto and in the case of any
action of the type specified in subsections (d) or (e) at least 10 days prior
to the taking of such proposed action. The Company shall also cause a notice
setting forth any adjustments to be sent by mailing first class, postage
prepaid, to each registered holder of a Warrant Certificate or Warrant
Certificates at its address appearing on the Warrant register and, at its
option, may cause a copy of such notice to be published once in an English
language newspaper of general circulation in the City of New York, New York.
Failure to give such notice or any defect therein shall not affect the legality
or validity of such action.
(i) No Change in Warrant Terms on Adjustment.
Irrespective of any of the adjustments in the Warrant Price or the number of
shares of Warrant Common Stock, Warrant Certificates theretofore or thereafter
issued may continue to express the same prices and number of shares as are
stated in a similar Warrant Certificate issuable initially, or at some
subsequent time, pursuant to this Agreement and such number of Shares specified
therein shall be deemed to have been so adjusted.
(j) Treasury Shares. Shares of Common Stock at any time
owned by the Company shall not be deemed to be outstanding for purposes of any
computation under this Section 7.
(k) Optional Reduction in Warrant Price. Anything in
this Section 7 to the contrary notwithstanding, the Company shall be entitled
to make such reductions in the Warrant Price, in addition to those adjustments
required by this Section 7, as it in its sole discretion shall determine to be
necessary in order that any consolidation or subdivision of the Common Stock,
issuance wholly for cash of any Common Stock at less than the Current Market
Price, issuance wholly for cash of Common Stock or securities which by their
terms are convertible into or exchangeable for Common Stock, stock dividend,
issuance of rights, options or warrants referred to hereinabove in this Section
7, hereinafter made by the Company to its common stockholders, shall not be
taxable to them.
- 10 -
<PAGE> 11
(l) The Company may, at its option, at any time during the
term of the Warrants, reduce the then current Exercise Price to any amount
deemed appropriate by the Board of Directors of the Company, for any length of
time.
(m) It shall be understood that for all calculations made
pursuant to this section, in the case of a floating convertible instrument, the
calculation should be based on the maximum number of shares of Common Stock
into which such instrument is convertible. It shall be further understood that
the provisions of paragraph (e) of this Section 7 shall not apply to the
issuance of shares upon the exercise of any pre-existing warrants nor to the
exercise of the $1.75 Warrants or the Placement Agent's Warrants.
SECTION 8. Current Market Price. For all purposes of this
Agreement, the Current Market Price per share of Common Stock on any date shall
be deemed to be the average of the daily closing prices for the thirty
consecutive business days commencing before such date. The closing price for
each day shall be (a) if the Common Stock shall be listed or admitted to
trading on the American Stock Exchange, the closing price on the
[AMEX]-Consolidated Tape (or any successor composite tape recording
transactions on the American Stock Exchange) or, if such a composite tape shall
not be in use or shall not report transactions in the Common Stock, or if the
Common Stock shall be listed on a stock exchange other than the American Stock
Exchange, the last reported sales price regular way on the principal national
securities exchange on which the Common Stock shall be listed or admitted to
trading (which shall be the national securities exchange on which the greatest
number of shares of the Common Stock has been traded during such thirty
consecutive business days), or, in either case, if there is no transaction on
any such day, the average of the bid and asked prices regular way on such day,
or (b) if the Common Stock shall not be listed or admitted to trading on any
national securities exchange, the closing price, if reported, or, if the
closing price is not reported, the average of the closing bid and asked prices,
as reported by the National Association of Securities Dealers Automated
Quotation (Nasdaq) National Market or a similar source selected from time to
time by the Company for the purpose. If on any such date the shares of Common
Stock are not quoted by any such source, the fair value of such shares on such
- 11 -
<PAGE> 12
date, as determined by the Board of Directors of the Company, shall be used.
SECTION 9. Exercise of Warrants. Subject to the provisions
of this Agreement, each registered holder of Warrants shall have the right,
which may be exercised at any time on or after the Date or,at the option of the
Warrant holder, prior to the Registration Date, subject to the conditions
stated in this Section 9, as in such Warrant Certificates expressed, to
purchase from the Company (and the Company shall issue and sell to such
registered holders of Warrants) all or part of the number of fully paid and
nonassessable shares of Warrant Common Stock specified in such Warrant
Certificates (subject to the adjustments as herein provided), upon surrender to
the Company at the office of the Warrant Agent specified in Section 22 hereof,
of such Warrant Certificates with the exercise form on the reverse thereof duly
filled in and signed, and upon payment to the Warrant Agent to the account of
the Company of the Warrant Price for the number of shares of Warrant Common
Stock in respect of which such Warrants are then exercised. The date of
exercise of any Warrant shall be deemed to be the date of its receipt by the
Warrant Agent duly filled in and signed and accompanied by proper funds as
hereinafter provided. Payment of such Warrant Price may be made in cash, or by
certified or official bank check. No adjustment shall be made for any cash
dividends on shares of Warrant Common Stock issuable upon exercise of a
Warrant. Upon such surrender of Warrants, and payment of the Warrant Price as
aforesaid, the Company shall issue and cause to be delivered with all
reasonable dispatch to or upon the written order of the registered holder of
such Warrants and in such name or names as such registered holder may
designate, a certificate or certificates for the number of full shares of
Warrant Common Stock so purchased upon the exercise of such Warrants together
with cash as provided in Section 12 of this Agreement, in respect of any
fraction of a share of such stock issuable upon such surrender; provided that
any shares of Warrant Common Stock issued upon the exercise of the Warrants
prior to the Registration Date shall bear an appropriate legend to the effect
that such shares are unregistered.
Each person in whose name any certificate for shares of Common
Stock is issued upon the exercise of Warrants shall for all purposes be deemed
to have become the holder of record
- 12 -
<PAGE> 13
of the Common Stock represented thereby on, and such certificate shall be
dated, the date upon which the Warrant Certificate evidencing such Warrants was
duly surrendered and payment of the Warrant Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Common Stock transfer books of the Company are
closed, such person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding business
day on which the Common Stock transfer books of the Company are open.
SECTION 10. Unexercised Warrants. To the extent that any
Warrant Certificates remain outstanding at the expiration of the period during
which the Warrants are exercisable, the unexercised Warrants represented
thereby shall be deemed null and void.
SECTION 11. Redemption. The Warrants will be redeemable, at
any time on or after the date 90 days from the redemption by the Company of all
of the outstanding $1.75 Warrants or the date 180 days from the Exchange Date,
whichever is later, as a whole or in part, by the Company at a price of $.05
per Warrant, upon not less than 30 days' written notice to the holders of the
Warrants; provided that the closing bid price of the Common Stock has been at
least $3.125 for a period of 20 consecutive trading days ending on the third
day prior to the date on which the Company gives notice of redemption and
provided further that the Registration Statement is effective at the time of
redemption. The Warrants will be exercisable until the close of business on
the business day immediately preceding the date fixed for redemption.
SECTION 12. Elimination of Fractions. The Company shall not
be required to issue fractional shares of stock upon any exercise of Warrants.
As to any final fraction of a share which the same registered holder of one or
more Warrants, the rights under which are exercised in the same transaction or
series of related transactions, would otherwise be entitled to purchase upon
such exercise, the Company shall pay a cash adjustment in respect of such final
fraction in an amount equal to the same fraction of the Current Market Price
(as determined in the manner prescribed in Section 8 hereof) on the business
day which next precedes the day of exercise.
- 13 -
<PAGE> 14
SECTION 13. Issue Taxes. The Company will pay documentary
stamp taxes, if any, attributable to the initial issuance of shares of Warrant
Common Stock upon the exercise of any Warrant; provided, however, that neither
the Company nor the Warrant Agent shall be required to pay any tax or taxes
which may be payable in respect of any transfer involved in the issue or
delivery of any certificates for shares of Warrant Common Stock in a name other
than that of the registered holder of Warrants, in respect of which such shares
are initially issued.
SECTION 14. Reservation of Shares. The Company shall at all
times reserve and keep available out of its authorized but unissued stock, for
the purpose of effecting the issuance of stock upon exercise of Warrants, such
number of shares of its duly authorized Warrant Common Stock as shall from time
to time be sufficient to effect the issuance of shares of Warrant Common Stock
upon exercise of all Warrants at the time outstanding.
SECTION 15. Merger or Consolidation or Change of Name of
Warrant Agent. Any corporation into which the Warrant Agent may be merged or
with which it may be consolidated, or any corporation resulting from any merger
or consolidation to which the Warrant Agent shall be a party, or any
corporation succeeding to the corporate trust business of the Warrant Agent,
shall be the successor to the Warrant Agent hereunder without the execution or
filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding. In the case of
Warrants which have been countersigned by the Warrant Agent, but not delivered
at the time any such successor to the Warrant Agent succeeds to the agency
created by this Agreement, any such successor may adopt the countersignature of
the original Warrant Agent and deliver such Warrants so countersigned; and in
case at that time any of the Warrants shall not have been countersigned, any
successor to the Warrant Agent may countersign such Warrants either in the name
of the predecessor Warrant Agent or in the name of the successor Warrant Agent;
and in all such cases such Warrants shall have the full force and effect
provided in the Warrants and in this Agreement.
In case at any time the name of the Warrant Agent shall be
changed and at such time any of the Warrants shall have been countersigned but
not delivered, the Warrant Agent may
- 14 -
<PAGE> 15
adopt the countersignature under its prior name and deliver Warrant
Certificates so countersigned, and in case at that time any of the Warrant
Certificates shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its
changed name; and in all such cases such Warrant Certificates shall have the
full force and effect provided in the Warrant Certificates and in this
Agreement.
SECTION 16. Disposition of Proceeds on Exercise of Warrants,
etc. (a) The Warrant Agent shall account promptly to the Company with respect
to Warrants exercised and concurrently pay to the Company all moneys received
by the Warrant Agent for the purchase of shares of Common Stock through the
exercise of such Warrants.
(b) The Warrant Agent shall keep copies of this Agreement
available for inspection by holders of Warrants during normal business hours at
its office specified in Section 22 hereof.
SECTION 17. Supplements and Amendments. The parties hereto
may from time to time supplement or amend this Agreement without the approval
of any holders of Warrants to cure any ambiguity or to correct or supplement
any provision contained in this Agreement which may be defective or
inconsistent with any other provision contained herein, or to make such other
provisions with respect to any change or any supplemental agreement as the
parties may deem necessary or desirable and which shall not materially
adversely affect the interests of the registered holders of the Warrants.
SECTION 18. Mutilated or Missing Warrant Certificates. If
any Warrant shall be mutilated, lost, stolen or destroyed the Warrant Agent
shall deliver a new Warrant Certificate of like tenor and denomination in
exchange and substitution therefor upon surrender and cancellation of the
mutilated Warrant Certificate or, in the case of a lost, stolen or destroyed
Warrant Certificate, upon receipt of evidence satisfactory to the Company and
the Warrant Agent of the loss, theft or destruction of such Warrant Certificate
and, in either case, upon receipt of such indemnity as the Company and the
Warrant Agent may reasonably require. Applicants for substitute
- 15 -
<PAGE> 16
Warrant Certificates shall also comply with such other reasonable regulations
and pay such other reasonable charges as the Warrant Agent or the Company may
prescribe. Any such new Warrant Certificate shall constitute an original
contractual obligation of the Company, whether or not the allegedly lost,
stolen, mutilated or destroyed Warrant Certificate shall be at any time
enforceable by anyone.
SECTION 19. Duties of the Warrant Agent. The Warrant Agent
undertakes the duties and obligations imposed by this Warrant Agreement upon
the following terms and conditions, by all of which the Company and the holders
of Warrants, by their acceptance thereof, shall be bound:
(a) The Warrant Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in this Agreement
or in the Warrant Certificates (except its countersignature thereof and except
such as describes the Warrant Agent or action taken or to be taken by it) or be
required to verify the same, but all such statements and recitals are and shall
be deemed to have been made by the Company only. The Warrant Agent shall not
be under any responsibility in respect of the validity of this Agreement or the
execution and delivery hereof or in respect of the validity or execution of any
Warrant Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition
contained in this Agreement or in any Warrant Certificate to be complied with
by the Company; nor shall it be responsible for the making of any adjustment in
the Warrant Price or the number of shares issuable upon the exercise of a
Warrant required under the provisions of Section 7 or responsible for the
manner, method or amount of any such change or the ascertaining of the
existence of facts that would require any such change; nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares to be issued pursuant to this
Agreement or any Warrant or as to whether any shares will, when issued, be
validly issued and fully paid and non-assessable.
(b) The Warrant Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys, agents
- 16 -
<PAGE> 17
or employees, and the Warrant Agent shall not be answerable or accountable for
any act, default, neglect or misconduct of any such attorneys, agents or
employees or for any loss to the Company resulting from such neglect or
misconduct, provided reasonable care had been exercised in the selection and
continued employment thereof.
(c) The Warrant Agent may consult at any time with legal
counsel satisfactory to it (who may be legal counsel for the Company) and the
advice of such counsel shall be full and complete authorization and protection
to the Warrant Agent as to any action taken or omitted by it in good faith and
in accordance with such advice.
(d) The Warrant Agent shall incur no liability or
responsibility to the Company or to any holder of a Warrant Certificate for any
action taken in reliance on any notice, resolution, waiver, consent, order,
certificate, or other paper, document or instrument believed by it to be
genuine and to have been signed, sent or presented by the proper party or
parties.
(e) The Company agrees to pay to the Warrant Agent
reasonable compensation for all services rendered by the Warrant Agent in the
execution of this Warrant Agreement, to reimburse the Warrant Agent for all
expenses (including reasonable counsel fees), taxes and governmental charges
and other charges of any kind and nature incurred by the Warrant Agent in the
execution of this Warrant Agreement and to indemnify the Warrant Agent and save
it harmless against any and all liabilities, including judgments, costs and
reasonable counsel fees, for anything done or omitted by the Warrant Agent in
the execution of this Warrant Agreement except as a result of the Warrant
Agent's negligence, willful misconduct or bad faith.
(f) The Warrant Agent and any stockholder, director,
officer or employee of the Warrant Agent may buy, sell, or deal in any of the
Warrants or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not Warrant Agent under this Warrant Agreement. Nothing herein shall
preclude the Warrant Agent from acting in any other capacity for the Company or
for any other legal entity.
- 17 -
<PAGE> 18
(g) The Warrant Agent shall act hereunder solely as agent
for the Company and in a ministerial capacity, and its duties shall be
determined solely by the provisions hereof. The Warrant Agent shall not be
liable for anything which it may do or refrain from doing in connection with
this Agreement except for its own negligence, willful misconduct or bad faith.
SECTION 20. Change of Warrant Agent. The Warrant Agent may
resign and be discharged from its duties under this Agreement upon 30 days'
notice in writing mailed to the Company by registered or certified mail, and to
the holders of the Warrant Certificates by first- class mail. The Company may
remove the Warrant Agent or any successor Warrant Agent upon 30 days' notice in
writing, mailed to the Warrant Agent or successor Warrant Agent, as the case
may be, and to each transfer agent of the Common Stock by registered or
certified mail, and to the holders of the Warrant Certificates by first-class
mail. If the Warrant Agent shall resign or be removed or shall otherwise
become incapable of acting, the Company shall appoint a successor to the
Warrant Agent. If the Company shall fail to make such appointment within a
period of 30 days after such removal or after it has been notified in writing
of such resignation or incapacity by the resigning or incapacitated Warrant
Agent or by the holder of a Warrant Certificate (who shall, with such notice,
submit such holder's Warrant Certificate for inspection by the Company), then
the registered holder of any Warrant Certificate may apply to any court of
competent jurisdiction for the appointment of a new Warrant Agent. Any
successor Warrant Agent, whether appointed by the Company or by such a court,
shall be a corporation organized and doing business under the laws of the
United States or of the State of New York, in good standing, having its
principal office in the City of New York, New York which is authorized under
such laws to exercise corporate trust powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Warrant Agent a combined capital and surplus of at least
$5,000,000. After appointment, the successor Warrant Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Warrant Agent without further act or deed; but the
predecessor Warrant Agent shall deliver and transfer to the successor Warrant
Agent any property at the time held by it hereunder, and execute and deliver
any further
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<PAGE> 19
assurance, conveyance, act or deed necessary for the purpose. Not later than
the effective date of such appointment the Company shall file notice thereof in
writing with the predecessor Warrant Agent and each transfer agent of the
Common Stock, and mail a notice thereof in writing to the registered holders of
the Warrant Certificates. Failure to give any notice provided for in this
Section 20, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Warrant Agent or the appointment
of the successor Warrant Agent, as the case may be.
SECTION 21. Identity of Transfer Agent. Forthwith upon the
appointment of any subsequent Transfer Agent for shares of the Common Stock,
the Company will file with the Warrant Agent a statement setting forth the name
and address of such Transfer Agent.
SECTION 22. Notices. Any notice pursuant to this Agreement
to be given by the Warrant Agent or by the registered holder of any Warrant to
the Company shall be sufficiently given if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing by the Company
with the Warrant Agent) as follows:
Barrister Information Systems Corporation
465 Main Street
Buffalo, New York 14203
Attention: Mark C. Donadio
Any notice pursuant to this Agreement to be given by the Company or by the
registered holder of any Warrant to the Warrant Agent shall be sufficiently
given if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing by the Warrant Agent with the Company) as follows:
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
Attention: Wilber Myles
SECTION 23. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the
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<PAGE> 20
Company or the Warrant Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
SECTION 24. GOVERNING LAW. THIS AGREEMENT AND EACH WARRANT
ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF NEW
YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
SECTION 25. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation other than
the Company, the Warrant Agent and the registered holders of the Warrant
Certificates any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of
the Company, the Warrant Agent and the registered holders of the Warrant
Certificates.
SECTION 26. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Warrant Agreement to be executed and delivered as of the day and year first
above written.
<TABLE>
<S> <C>
BARRISTER INFORMATION
SYSTEMS CORPORATION
By:_________________________
Name: Henry P. Semmelhack
Title: Chairman and President
Attest:
____________________________
Its:_____________________
AMERICAN STOCK TRANSFER &
TRUST COMPANY
</TABLE>
- 20 -
<PAGE> 21
<TABLE>
<S> <C>
as Warrant Agent
By:_________________________
Name: Herb Lemmer
Title: Vice President and
General Counsel
Attest:
____________________________
Its:_____________________
</TABLE>
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<PAGE> 22
EXHIBIT A
EXERCISABLE AT ANY TIME AT OR PRIOR TO
3:30 P.M. NEW YORK, EASTERN STANDARD TIME
ON MARCH 29, 1998
WARRANT CERTIFICATE
BARRISTER INFORMATION SYSTEMS CORPORATION
NO. W-_____________ CERTIFICATE FOR ____ WARRANTS
[THIS WARRANT HAS NOT BEEN AND WILL NOT BE REGISTERED IN CONNECTION WITH ITS
ISSUANCE UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS WARRANT NOR ANY
INTEREST OR PARTICIPATION THEREIN MAY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OF AMERICA (INCLUDING
THE STATES AND THE DISTRICT OF COLUMBIA), ITS TERRITORIES, ITS POSSESSIONS AND
OTHER AREAS SUBJECT TO ITS JURISDICTION (THE "UNITED STATES") OR TO ANY
CITIZEN, NATIONAL OR RESIDENT OR OTHER ENTITY CREATED OR ORGANIZED IN OR UNDER
THE LAWS OF THE UNITED STATES OR ANY POLITICAL SUBDIVISION THEREOF OR TO ANY
ESTATE OR TRUST THE INCOME OF WHICH IS SUBJECT TO UNITED STATES FEDERAL INCOME
TAXATION REGARDLESS OF ITS SOURCE OR TO ANY OTHER PERSON DEEMED A U.S. PERSON
UNDER REGULATION S OF THE SECURITIES ACT ("U.S. PERSONS"), EXCEPT TO AND MAY
NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO U.S. PERSONS EXCEPT IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
OR IN A TRANSACTION REGISTERED UNDER THE SECURITIES ACT.]
This certifies that _____________________________ or
registered assigns is the registered holder of the number of Warrants set forth
above, and is entitled, upon surrender of this Warrant Certificate at the
office of American Stock Transfer & Trust Company, Warrant Agent (or any
successor as such Warrant Agent), in the City of New York, New York, at any
time on or after the Registration Date, or prior to the Registration Date, at
their option and subject to the provisions set forth in the Warrant Agreement
hereinafter referred to and at or prior to 3:30 p.m. Eastern Standard Time on
March 29, 1998, to purchase one share of Common Stock, par value $0.24, of
Barrister Information Systems Corporation, a New York
<PAGE> 23
corporation (the "Company"), at the price of $2.25 per whole share, per
Warrant, unless previously redeemed by the Company.
The applicable per share purchase price shown above and the
number of shares issuable upon exercise of the Warrants represented by this
Warrant Certificate are subject to adjustment for the occurrence of certain
events, including stock dividends and split-ups, combinations,
reorganizations, reclassifications, consolidations, mergers or sales of
properties and assets, upon the issuance of certain rights or warrants to
holders of Common Stock or the distribution to such holders of assets or
indebtedness and upon consummation of certain discounted sales, as set forth in
the Warrant Agreement hereinafter referred to. A complete statement with
respect to such adjustments and to other terms and conditions pertaining to the
Warrants is contained in the Warrant Agreement, dated as of March 29, 1996,
between the Company and American Stock Transfer & Trust Company, Warrant Agent,
a copy of which may be examined by the registered holder hereof at the office
of the Warrant Agent.
To exercise the Warrants represented by this Warrant
Certificate the form of election to purchase on the reverse hereof must be duly
executed and the accompanying instructions for the registration and delivery of
the stock must be filled in.
At any time on or after the Exchange Date, the Warrants
represented by this Warrant Certificate are transferable (subject to the
conditions set forth in the preceding paragraphs) at the office in the City of
New York, New York of the Warrant Agent (or of its successor as Warrant Agent)
by the registered holder thereof in person or by attorney duly authorized in
writing, upon surrender of this Warrant Certificate. Upon any such transfer, a
new Warrant Certificate, representing the right to purchase a like number of
shares of the Company's Common Stock, will be issued to the transferee in
exchange for this Warrant Certificate.
This Warrant Certificate and similar Warrant Certificates when
surrendered at the office in the City of New York, New York of the Warrant
Agent (or of its successor as Warrant Agent) by the registered holder hereof in
person or by
2
<PAGE> 24
attorney duly authorized in writing may be exchanged for another Warrant
Certificate or Warrant Certificates, representing in the aggregate the right to
purchase a like number of shares of the Company's Common Stock.
If the Warrants evidenced by this Warrant Certificate remain
outstanding at the expiration of the period during which Warrants are
exercisable, as set forth in the first paragraph of this Warrant Certificate,
such Warrants shall thereupon be deemed null and void.
No fractional shares of Common Stock will be issued upon the
exercise of any Warrant or Warrants evidenced hereby, but in lieu thereof, a
cash payment will be made, as provided in the Warrant Agreement. Shares of
Common Stock issued upon the exercise of any Warrant or Warrants evidenced
hereby prior to the Registration Date shall bear an appropriate legend to the
effect that such shares are unregistered.
No holder of this Warrant Certificate shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Common
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Warrant
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action (whether upon any recapitalization, issue of
stock, reclassification of stock, change of par value, consolidation, merger,
conveyance, or otherwise) or, except as provided in the Warrant Agreement, to
receive notice of meetings, or to receive dividends or subscription rights or
otherwise, until the Warrant or Warrants evidenced by this Warrant Certificate
shall have been exercised as provided in the Warrant Agreement.
BARRISTER INFORMATION
SYSTEMS CORPORATION
By: ___________________________
Name: Henry P. Semmelhack
Title: Chairman and President
3
<PAGE> 25
Attest:
_____________________________
Secretary
This Warrant Certificate is not valid until countersigned by
the Warrant Agent.
Dated: Countersigned:
________________________,
as Warrant Agent,
By:_________________________
Authorized Officer
4
<PAGE> 26
FORM OF EXERCISE
(FORM OF EXERCISE TO BE EXECUTED BY THE WARRANT
HOLDER AT THE TIME OF EXERCISE)
To [Warrant Agent] or its successor as Warrant Agent:
The undersigned, holder of the within Warrant Certificate,
hereby (1) irrevocably exercises the undersigned's right to purchase _________
shares of Common Stock, par value $0.24 per share, of Barrister Information
Systems Corporation (the "Company") which the undersigned is entitled to
purchase under the terms of the within Warrant Certificate, or such other
securities as the undersigned shall be entitled to purchase under the terms of
the Warrant Agreement referred to in such Warrant Certificate by reason of the
occurrence of certain events specified therein, and (2) elects to make payment
in full for the number of shares of Common Stock so purchased by payment of
$______ in cash or by certified or official bank check.
Please issue the certificate for shares of Common Stock in the
name of, and pay any cash for any fractional share to:
________________________________________________________________
Print or type name
________________________________________________________________
Social Security or other Identifying Number
________________________________________________________________
Street Address
________________________________________________________________
City State Zip Code
If such number of shares shall not be all the shares purchasable upon the
exercise of the Warrants evidenced by this Warrant Certificate, a new Warrant
Certificate for the balance of such Warrants remaining unexercised shall be
registered in the name of and delivered to:
Please insert social security
or other identifying number:
________________________________________________________________________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: _______________ __________________________________________________
<PAGE> 27
_________________________________________________________
Signature
(Signature must conform in all respects to name of holder
holder as specified on the face of the Warrant Certificate)
(Signature Medallion Guaranteed): ___________________________ Date: __________
(If the Common Stock, cash in lieu of fractional shares, or Warrants for any
unexercised balance are to be issued or paid to a person other than the person
in whose name the within Warrant is registered, or if otherwise requested by
the Company or the Warrant Agent, a signature Medallion guarantee is required.)
<PAGE> 28
ASSIGNMENT
(FORM OF ASSIGNMENT TO BE EXECUTED IF WARRANT
HOLDER DESIRES TO TRANSFER WARRANT)
FOR VALUE RECEIVED, __________________________________ hereby
sells, assigns, and transfer unto ____________________ this Warrant Certificate
together with all right, title or interest therein and does hereby irrevocably
appoint ___________________ attorney to transfer the within Warrant Certificate
on the books of the Warrant Agent with full power of substitution in the
premises.
Dated: ___________ ___________________________________________________________
Signature
(Signature must conform in all respects to name of
holder as specified on the face of the Warrant Certificate)
(Signature Medallion Guaranteed):_______________________ Date: ______________
<PAGE> 1
Exhibit 4.3
- ------------------------------------------------------------------------------
WARRANT AGREEMENT
By and Between
BARRISTER INFORMATION SYSTEMS CORPORATION
and
STRASBOURGER PEARSON TULCIN WOLFF INCORPORATED
Dated as of March 29, 1996
----------------------------------------------------------------
<PAGE> 2
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of March 29, 1996 by and between
BARRISTER INFORMATION SYSTEMS CORPORATION, a New York corporation (the
"Company"), and STRASBOURGER PEARSON TULCIN WOLFF INCORPORATED (the "Placement
Agent").
The Company proposes to issue to the Placement Agent warrants
as hereinafter described (the "Placement Agent Warrants") to purchase up to an
aggregate of 250,000 shares, subject to adjustment as provided in Section 8
hereof (such shares, as adjusted, being hereinafter referred to as the
"Shares") of the Company's Common Stock, par value $.24 per share (the "Common
Stock"), each Placement Agent Warrant entitling the holder thereof to purchase
one share of Common Stock. All capitalized terms used herein and not otherwise
defined herein shall have the same meanings as in that certain Placement Agency
Agreement, of even date herewith, by and between the Company and the Placement
Agent (the "Placement Agency Agreement").
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth and for other good and valuable
consideration, the parties hereto agree as follows;
1. ISSUANCE OF WARRANTS; FORM OF WARRANT. The Company will
issue, sell and deliver the Placement Agent Warrants to the Placement Agent or
its bona fide officers and/or directors and/or affiliates or designees. The
form of the Placement Agent Warrant and the form of election to purchase Shares
to be attached thereto shall be substantially as set forth on Exhibit A
attached hereto. The Placement Agent Warrants shall be executed on behalf of
the Company by the manual or facsimile signature of the present or any future
Chairman of the Board, Chief Executive Officer or any Vice President of the
Company, and attested by the manual or facsimile signature of the present or
any future Secretary or Assistant Secretary of the Company.
2. REGISTRATION. The Placement Agent Warrants shall be
numbered and shall be registered in a Placement Agent Warrant register to be
maintained by the Company (the "Placement Agent
<PAGE> 3
Warrant Register"). The Company shall be entitled to treat the registered
holder of any Placement Agent Warrant on the Placement Agent Warrant Register
(the "Holder") as the owner in fact thereof for all purposes and shall not be
bound to recognize any equitable or other claim to or interest in such
Placement Agent Warrant on the part of any other person, and shall not be
liable for any registration of transfer of the Placement Agent Warrants which
are registered or are to be registered in the name of a fiduciary or the
nominee of a fiduciary unless made with the actual knowledge that a fiduciary
or nominee is committing a breach of trust in requesting such registration of
transfer, or with such knowledge of such facts that its participation therein
amounts to bad faith. The Placement Agent Warrants shall be registered
initially in the names of "Phillip Neiman" and "Laurie Hunter" with each
receiving 125,000 warrants provided, however, that the Placement Agent may
designate that all or a portion of the Placement Agent Warrants be issued in
varying amounts directly to its bona fide officers and/or directors, and not to
the Placement Agent. Such designation will only be made by the Placement Agent
if it determines that such issuances would not violate the rules of the
National Association of Securities Dealers, Inc. (the "NASD") relating to the
review of corporate financing arrangements.
3. TRANSFER OF WARRANTS. The Placement Agent Warrants will
not be sold, transferred, assigned or hypothecated, in part or in whole (other
than by will or pursuant to the laws of descent and distribution), except to
bona fide officers or affiliates or designees of the Placement Agent and only
upon delivery thereof duly endorsed by the Holder or by his duly authorized
attorney or representative, or accompanied by proper evidence of succession,
assignment or authority to transfer. Furthermore, if any Placement Agent
Warrants are transferred after two years following their issue date, such
warrants shall be exercised immediately upon transfer, and if not exercised
immediately upon transfer, such warrants shall lapse. In all cases of transfer
by an attorney, the original power of attorney, duly approved, or an official
copy thereof, duly certified, shall be deposited with the Company. In case of
transfer by executors, administrators, guardians or other legal
representatives, duly authenticated evidence of their authority shall be
produced, and may be
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<PAGE> 4
required to be deposited with the Company in its discretion. Upon any
registration of transfer, the Company shall deliver a new Placement Agent
Warrant or Placement Agent Warrants to the persons entitled thereto. The
Placement Agent Warrants may be exchanged at the option of the Holder thereof
for another Placement Agent Warrant, or other Placement Agent Warrants, of
different denominations, of like tenor and representing in the aggregate the
right to purchase a like number of shares of Common Stock upon surrender to the
Company or its duly authorized agent. Notwithstanding the foregoing, the
Company shall have no obligation to cause the Placement Agent Warrants to be
transferred on its books to any person, if such transfer would violate the
Securities Act of 1933, as amended (the "Act") or any applicable state
securities laws.
4. TERM OF WARRANTS; EXERCISE OF WARRANTS. (a) Each
Placement Agent Warrant entitles the registered owner thereof to purchase one
Share at a purchase price of $1.365 per Share (the "Exercise Price") at any
time from the first anniversary of the issue date of the Warrants until 5:00
p.m., Eastern Standard Time, on March 29, 2001 (the "Warrant Expiration Date").
Prior to the Warrant Expiration Date, the Company will not take any action
which would terminate the Placement Agent Warrants. The Exercise Price and the
Shares issuable upon exercise of the Placement Agent Warrants are subject to
adjustment upon the occurrence of certain events, pursuant to the provisions of
Section 8 of this Agreement. Subject to the provisions of this Agreement, each
Holder shall have the right, which may be exercised as set forth in such
Placement Agent Warrants, to purchase from the Company (and the Company shall
issue and sell to such Holder) the number of fully paid and nonassessable
shares of Common Stock specified in such Placement Agent Warrant as follows:
(i) Upon surrender to the Company, or its duly authorized
agent, of such Placement Agent Warrants with the form of election to
purchase attached thereto duly completed and signed, with signatures
guaranteed by a member firm of a national securities exchange, a
commercial bank or trust company located in the United States or a
member of the NASD and upon payment to the Company of the Exercise
Price, as adjusted in accordance with the provisions of Section 8 of
this Agreement, for the number
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<PAGE> 5
of Shares in respect of which such Placement Agent Warrants are then
exercised. Payment of such Exercise Price may be made in cash or by
cashier's check payable to the order of the Company. No adjustment
shall be made for any dividends on any Shares issuable upon exercise
of a Placement Agent Warrant; or
(ii) Upon surrender to the Company, or its duly authorized agent,
of such Placement Agent Warrants with the form of cashless exercise
attached thereto (a "Cashless Exercise"), duly completed and signed,
with signatures guaranteed by a member firm of a national securities
exchange, a commercial bank or trust company located in the United
States or a member of the NASD. Such surrender shall be deemed a
waiver of the obligation of the Holder to pay all or any portion of
the Exercise Price. In the event of a Cashless Exercise, the Holder
shall receive that number of shares of Common Stock determined by
multiplying the number of Shares in respect of which such Placement
Agent Warrants are then exercised by a fraction, the numerator of
which shall be an amount equal to the Current Market Price (as such
term is defined in Section 8(d) hereof) per share of Common Stock less
the Exercise Price, as adjusted in accordance with the provisions of
Section 8 of this Agreement, and the denominator of which shall be the
Current Market Price per share of Common Stock. Notwithstanding the
foregoing, in the event that a Cashless Exercise would, at any time
the Placement Agent Warrants remain outstanding, reasonably be deemed
by the Company's independent certified public accountants to give rise
to a charge to the Company's earnings for reporting purposes (which
determination shall be evidenced by an opinion of such independent
certified accountants, in a form reasonably satisfactory to the
Holder), the Holder shall not be entitled to use a Cashless Exercise.
(b) Upon each surrender of the Placement Agent Warrants in
accordance with Section 4(a)(i) or 4(a)(ii) hereof, the Company shall issue and
cause to be delivered with all reasonable dispatch to or upon the written order
of the Holder of such Placement Agent Warrants and in such name or names as
such Holder may designate (so long as surrender or transfer would not violate
the Act or any applicable state securities
-4-
<PAGE> 6
laws), a certificate or certificates for the number of full Shares so purchased
upon the exercise of such Placement Agent Warrants, together with cash, as
provided in Section 9 of this Agreement, in respect of any fractional Shares
otherwise issuable upon such surrender. Such certificate or certificates shall
be deemed to have been issued and any person so designated to be named therein
shall be deemed to have become a holder of record of such Shares as of the date
of the surrender of the Placement Agent Warrants as aforesaid (and payment of
the Exercise Price with respect to Section 4(a)(i) hereof); provided, however,
that if, at the date of surrender of such Placement Agent Warrants, the
transfer books for the Common Stock or other class of securities issuable upon
the exercise of such Placement Agent Warrants shall be closed, the certificates
for the Shares shall be issuable as of the date on which such books shall next
be opened (whether before, on or after the Warrant Expiration Date) and until
such date the Company shall be under no duty to deliver any certificate for
such Shares; provided, further, however, that the transfer books of record,
unless otherwise required by law, shall not be closed at any one time for a
period longer than twenty (20) days. The rights of purchase represented by the
Placement Agent Warrants shall be exercisable, at the election of the Holders
thereof, either in full or from time to time in part and, in the event that any
Placement Agent Warrant is exercised in respect of less than all of the Shares
issuable upon such exercise at any time prior to the Warrant Expiration Date, a
new Placement Agent Warrant or Placement Agent Warrants will be issued for the
remaining number of Shares specified in the Placement Agent Warrant so
surrendered.
5. PAYMENT OF TAXES. The Company will pay all documentary
stamp taxes, if any, attributable to the issuance of Shares upon the exercise
of the Placement Agent Warrants; provided, however, that the Company shall not
be required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issue or delivery of any certificates for Shares in a
name other than that of the Holder of the Placement Agent Warrants in respect
of which such Shares are issued.
6. MUTILATED OR MISSING WARRANTS. In case any of the
Placement Agent Warrants shall be mutilated, lost, stolen or destroyed, the
Company may, in its discretion, issue and deliver
-5-
<PAGE> 7
in exchange and substitution for and upon cancellation of the mutilated
Placement Agent Warrant, or in lieu of and substitution for the Placement Agent
Warrant lost, stolen or destroyed, a new Placement Agent Warrant of like tenor
and representing an equivalent right or interest, but only upon receipt of
evidence reasonably satisfactory to the Company of such mutilation, loss, theft
or destruction of such Placement Agent Warrant and indemnity, unless mutilated,
also reasonably satisfactory to the Company, indemnifying the Company for any
claims arising under a Placement Agent Warrant that has been lost, stolen or
destroyed. An applicant for such substitute Placement Agent Warrants shall
also comply with such other reasonable regulations and pay such other
reasonable charges as the Company may prescribe.
7. RESERVATION OF SHARES, ETC. There have been reserved, and
the Company shall at all times keep reserved, out of the authorized and
unissued Common Stock, a number of shares of Common Stock sufficient to provide
for the exercise of the rights of purchase represented by the outstanding
Placement Agent Warrants. American Stock Transfer & Trust Company, transfer
agent for the Common Stock (the "Transfer Agent"), and every subsequent
transfer agent, if any, for the Company's securities issuable upon the exercise
of the Placement Agent Warrants will be irrevocably authorized and directed at
all times until the Warrant Expiration Date to reserve such number of
authorized and unissued shares as shall be required for such purpose. The
Company will keep a copy of this Agreement on file with the Transfer Agent and
with every subsequent transfer agent for any shares of the Company's securities
issuable upon the exercise of the Placement Agent Warrants. The Company will
supply the Transfer Agent or any subsequent transfer agent with duly executed
certificates for such purpose and will itself provide or otherwise make
available any cash which may be distributable as provided in Section 9 of this
Agreement. All Placement Agent Warrants surrendered in the exercise of the
rights thereby evidenced shall be canceled, and such canceled Placement Agent
Warrants shall constitute sufficient evidence of the number of Shares that have
been issued upon the exercise of such Placement Agent Warrants. No shares of
Common Stock shall be subject to reservation in respect of unexercised
Placement Agent Warrants subsequent to the Warrant Expiration Date.
-6-
<PAGE> 8
8. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF SHARES.
The Exercise Price and the number and kind of securities issuable upon exercise
of each Placement Agent Warrant shall be subject to adjustment from time to
time upon the happening of certain events, as follows:
(a) In case the Company shall (i) declare a
dividend on its Common Stock in shares of Common Stock or make a distribution
in Common Stock, (ii) subdivide its outstanding Common Stock, (iii) combine its
outstanding Common Stock into a smaller number of shares of Common Stock or
(iv) issue by reclassification of its Common Stock other securities of the
Company (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing corporation), the number of
Shares purchasable upon exercise of each Placement Agent Warrant immediately
prior thereto shall be adjusted so that the Holder of each Placement Agent
Warrant shall be entitled to receive the kind and number of Shares or other
securities of the Company which he would have owned or have been entitled to
receive after the happening of any of the events described above, had such
Placement Agent Warrant been exercised immediately prior to the happening of
such event or any record date with respect thereto. An adjustment made
pursuant to this paragraph (a) shall become effective immediately after the
effective date of such event.
(b) In case the Company shall issue rights,
options or warrants to all holders of its Common Stock, without any charge to
such holders, entitling them (for a period expiring within 45 days after the
record date mentioned below in this paragraph (b)) to subscribe for or to
purchase shares of Common Stock at a price per share that is lower at the
record date mentioned below than the Current Market Price per share of Common
Stock, the number of Shares thereafter purchasable upon exercise of each
Placement Agent Warrant shall be determined by multiplying the number of Shares
theretofore purchasable upon exercise of each Placement Agent Warrant by a
fraction, of which the numerator shall be the number of shares of
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<PAGE> 9
Common Stock outstanding on such record date plus the number of additional
Common Stock offered for subscription or purchase, and of which the denominator
shall be the number of shares of Common Stock outstanding on such record date
plus the number of shares which the aggregate offering price of the total
number of shares of Common Stock so offered would purchase at the Current
Market Price per share of Common Stock. Such adjustment shall be made whenever
such rights, options or warrants are issued, and shall become effective on the
date of issuance.
(c) In case the Company shall distribute to all
holders of its shares of Common Stock shares of stock (other than Common Stock)
or evidences of its indebtedness or assets (excluding cash dividends payable
out of consolidated earnings or retained earnings and dividends or
distributions referred to in paragraph (a) above) or rights, options or
warrants or convertible or exchangeable securities containing the right to
subscribe for or purchase shares of Common Stock (excluding those referred to
in paragraph (b) above), then in each case the number of Shares thereafter
issuable upon the exercise of each Placement Agent Warrant shall be determined
by multiplying the number of Shares theretofore issuable upon the exercise of
each Placement Agent Warrant, by a fraction, of which the numerator shall be
the Current Market Price per share of Common Stock on the record date mentioned
below in this paragraph (c), and of which the denominator shall be the Current
Market Price per share of Common Stock on such record date, less the then fair
value (as determined by the Board of Directors of the Company, whose
determination shall be conclusive) of the portion of the shares of stock (other
than Common Stock) or assets or evidences of indebtedness so distributed or of
such subscription rights, options or warrants, or of such convertible or
exchangeable securities, applicable to one share of Common Stock. Such
adjustment shall be made whenever any such distribution is made, and shall
become effective on the date of distribution.
(d) For the purpose of any computation under this
Agreement, the Current Market Price per share of Common Stock at any date shall
be the average of the daily closing prices for fifteen (15) consecutive trading
days commencing twenty (20) trading days before the date of such computation.
The closing price for each day shall be the last reported sale price regular
way or, in case no such reported sale takes place on such day, the average of
the closing bid and asked prices regular way for such day, in either case on
the principal national securities exchange on which the shares are listed or
admitted to trading, or if they are not listed or admitted to trading on any
national securities exchange, but are traded in
-8-
<PAGE> 10
the over-the-counter market, the closing sale price of the Common Stock or, in
case no sale is publicly reported, the average of the representative closing
bid and asked quotations for the Common Stock on the National Association of
Securities Dealers Automated Quotations ("NASDAQ") system or any comparable
system, or if the Common Stock is not listed on the NASDAQ system or a
comparable system, the closing sale price of the Common Stock or, in case no
sale is publicly reported, the average of the closing bid and asked prices as
furnished by two members of the NASD selected from time to time by the Company
for that purpose.
(e) Except as hereinafter provided, in case the
Company shall, at any time after the date of closing of the sale of Securities
pursuant to the offering (the "Closing Date"), issue or sell any shares of
Common Stock including shares held in the Company's treasury and shares of
Common Stock issued upon the exercise of any options, rights or warrants to
subscribe for shares of Common Stock and shares of Common Stock issued upon the
direct or indirect conversion or exchange of securities for shares of Common
Stock, for a consideration per share less than both the Current Market Price
per share of Common Stock on the trading day immediately preceding such
issuance or sale and the warrant exercise price in effect immediately prior to
such issuance or sale, or without consideration, than forthwith upon such
issuance or sale, the warrant exercise price shall (until another such issuance
or sale) be reduced to the price (calculated to the nearest full cent)
determined by multiplying the warrant exercise price in effect immediately
prior to such issuance or sale by a fraction, the numerator of which shall be
the sum of (1) the number of shares of Common Stock outstanding immediately
prior to such issuance or sale multiplied by the warrant exercise price
immediately prior to such issuance or sale plus (2) the consideration received
by the Company upon such issuance or sale, and the denominator of which shall
be the product of (x) the total number of shares of Common Stock outstanding
immediately after such issuance or sale, multiplied by (y) the warrant exercise
price immediately prior to such issuance or sale.
(f) No adjustment in the number of Shares
purchasable hereunder shall be required unless such adjustment would require an
increase or decrease of at least one percent
-9-
<PAGE> 11
(1%) in the number of Shares purchasable upon the exercise of each Placement
Agent Warrant; provided, however, that any adjustments which by reason of this
paragraph (e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment, but not later than three years after
the happening of the specified event or events. All calculations shall be made
to the nearest one thousandth of a share. Anything in this Section 8 to the
contrary notwithstanding, the Company shall be entitled, but shall not be
required, to make such changes in the number of Shares purchasable upon the
exercise of each Placement Agent Warrant, in addition to those required by this
Section 8, as it in its discretion shall determine to be advisable in order
that any dividend or distribution in shares of Common Stock, subdivision,
reclassification or combination of shares of Common Stock, issuance of rights,
warrants or options to purchase Common Stock, or distribution of shares of
stock other than Common Stock, evidences of indebtedness or assets (other than
distributions of cash out of consolidated earnings or retained earnings) or
convertible or exchangeable securities hereafter made by the Company to the
holders of its Common Stock shall not result in any tax to the holders of its
Common Stock or securities convertible into Common Stock.
(g) Whenever the number of Shares purchasable upon
the exercise of each Placement Agent Warrant is adjusted, as herein provided,
the Exercise Price shall be adjusted by multiplying the Exercise Price in
effect immediately prior to such adjustment by a fraction, of which the
numerator shall be the number of Shares purchasable upon the exercise of each
Placement Agent Warrant immediately prior to such adjustment, and of which the
denominator shall be the number of Shares so purchasable immediately
thereafter.
(h) For the purpose of this Section 8, the term
"shares of Common Stock" shall mean (i) the class of stock designated as the
Common Stock of the Company at the date of this Agreement or (ii) any other
class of stock resulting from successive changes or reclassifications of such
shares consisting solely of changes in par value, or from no par value to par
value, or from par value to no par value. In the event that at any time, as a
result of an adjustment made pursuant to paragraph (a) above, the Holders shall
become entitled to
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<PAGE> 12
purchase any shares of capital stock of the Company other than Common Stock,
thereafter the number of such other shares so purchasable upon exercise of each
Placement Agent Warrant and the Exercise Price of such Shares shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent
as practicable to the provisions with respect to the Shares contained in
paragraphs (a) through (f), inclusive, and paragraphs (h) through (m),
inclusive, of this Section 8, and the provisions of Sections 4, 5, 7 and 10,
with respect to the Shares, shall apply on like terms to any such other shares.
(i) Upon the expiration of any rights, options,
warrants or conversion rights or exchange privileges, if any thereof shall not
have been exercised, the Exercise Price and the number of shares of Common
Stock purchasable upon the exercise of each Placement Agent Warrant shall, upon
such expiration, be readjusted and shall thereafter be such as it would have
been had it originally been adjusted (or had the original adjustment not been
required, as the case may be) as if (i) the only shares of Common Stock so
issued were the Common Stock, if any, actually issued or sold upon the exercise
of such rights, options, warrants or conversion rights or exchange privileges
and (ii) such Common Stock, if any, were issued or sold for the consideration
actually received by the Company upon such exercise plus the aggregate
consideration, if any, actually received by the Company for the issuance, sale
or grant of all of such rights, options, warrants or conversion rights or
exchange privileges whether or not exercised; provided, however, that no such
readjustment shall have the effect of increasing the Exercise Price by an
amount in excess of the amount of the adjustment initially made in respect to
the issuance, sale or grant of such rights, options, warrants or conversion
rights or exchange privileges.
(j) The Company may, at its option, at any time
during the term of the Placement Agent Warrants, reduce the then current
Exercise Price to any amount deemed appropriate by the Board of Directors of
the Company, for any length of time.
(k) Whenever the number of Shares issuable upon
the exercise of each Placement Agent Warrant or the Exercise Price of such
Shares is adjusted, as herein provided, the Company shall promptly mail by
first class mail postage prepaid,
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<PAGE> 13
to each Holder notice of such adjustment or adjustments at such Holder's
address appearing on the Placement Agent Warrant Register. The Chief Financial
Officer of the Company shall make any computation required by this Section 8
and shall execute a certificate (the "CFO Certificate") setting forth the
number of Shares issuable upon the exercise of each Placement Agent Warrant and
the Exercise Price of such Shares after such adjustment, setting forth a brief
statement of the facts requiring such adjustment and setting forth the
computation by which such adjustment was made. Each Holder shall have the
right to inspect the CFO Certificate during reasonable business hours. In the
event that a Holder shall dispute the determination set forth in the CFO
Certificate, the Company shall retain, at its expense, a firm of independent
public accountants (who may be regular accountants employed by the Company) to
make the required computation and to prepare a certificate which shall set
forth the information required in the CFO Certificate. Such certificate shall
be conclusive on the correctness of such adjustment and each Holder shall have
the right to inspect such certificate during reasonable business hours.
(l) Except as provided in this Section 8, no
adjustment in respect of any dividends shall be made during the term of a
Placement Agent Warrant or upon the exercise of a Placement Agent Warrant.
(m) In case of any consolidation of the Company
with or merger of, the Company with or into another corporation or in case of
any sale or conveyance to another corporation of the property of the Company as
an entirety or substantially as an entirety, the Company or such successor or
purchasing corporation (or an affiliate of such successor or purchasing
corporation), as the case may be, agrees that each Holder shall have the right
thereafter upon payment of the Exercise Price in effect immediately prior to
such action to purchase upon exercise of each Placement Agent Warrant the kind
and amount of shares and other securities and property (including cash) which
he would have owned or have been entitled to receive after the happening of
such consolidation, merger, sale or conveyance had such Placement Agent Warrant
been exercised immediately prior to such action. The provisions of this
paragraph (l) shall
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<PAGE> 14
similarly apply to successive consolidations, mergers, sales or conveyances.
(n) Notwithstanding any adjustment in the
Exercise Price or the number or kind of shares purchasable upon the exercise of
the Placement Agent Warrants pursuant to this Agreement, certificates for the
Placement Agent Warrants issued prior or subsequent to such adjustment may
continue to express the same price and number and kind of Shares as are
initially issuable pursuant to this Agreement.
(o) It shall be understood that for all
calculations made pursuant to this Section, in the case of a floating
convertible instrument, the calculation shoulc be based on the maximum number
of shares of Common Stock into which such instrument is convertible. It shall
be further understood that the provisions of paragraph (e) shall not apply to
the issuance of shares upon the exercise of any pre-existing warrants nor to
the exercise of the $2.25 Warrants or the $1.75 Warrants.
9. FRACTIONAL INTERESTS. The Company shall not be
required to issue fractions of Shares on the exercise of the Placement Agent
Warrants. If more than one Placement Agent Warrant shall be presented for
exercise in full at the same time by the same Holder, the number of Shares
which shall be issuable upon the exercise thereof shall be computed on the
basis of the aggregate number of Shares issuable on exercise of the Placement
Agent Warrants so presented. If any fraction of a Share would, except for the
provisions of this Section 9, be issuable on the exercise of any Placement
Agent Warrant (or specified portions thereof), the Company shall purchase such
fraction for an amount in cash equal to the same fraction of the Current Market
Price per share of Common Stock on the date of exercise.
10. REGISTRATION RIGHTS.
(a) DEMAND REGISTRATION RIGHTS. The Company
covenants and agrees with the Placement Agent and any other or subsequent
Holders of the Registrable Securities (as defined in paragraph (d) of this
Section 10) that, upon written request of the then Holder(s) of at least a
majority of the aggregate of the Registrable Securities which were originally
issued on the date hereof to the Placement Agent or its designees made at any
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<PAGE> 15
time within the period commencing two years and ending five years after the
issue date, the Company will file as promptly as practicable and, in any event,
within 45 days after receipt of such written request, at its sole expense, no
more than once a new Registration Statement under the Act, registering or
qualifying the Registrable Securities for sale. Within fifteen (15) days after
receiving any such notice, the Company shall give notice to the other Holders
of the Registrable Securities at the addresses appearing on the Placement Agent
Warrant Register advising that the Company is proceeding with such Registration
Statement and offering to include therein the Registrable Securities of such
Holders. The Company shall not be obligated to any such other Holder unless
such other Holder shall accept such offer by notice in writing to the Company
within ten (10) days thereafter. The Company will use its best efforts,
through its officers, directors, auditors and counsel in all matters necessary
or advisable, to file and cause to become effective such Registration Statement
as promptly as practicable and for a period of two years thereafter to reflect
in the Registration Statement financial statements which are prepared in
accordance with Section 10(a)(3) of the Act and any facts or events arising
that, individually, or in the aggregate, represent a fundamental and/or
material change in the information set forth in the Registration Statement to
enable any Holders of the Placement Agent Warrants to exercise such Placement
Agent Warrants and sell Shares, or to enable any holders of Shares to sell such
Shares, during said two-year period. If any registration pursuant to this
paragraph (a) is an underwritten offering, the Holders of a majority of the
Registrable Securities to be included in such registration shall be entitled to
select the underwriter or managing underwriter (in the case of a syndicated
offering) of such offering.
Notwithstanding the foregoing paragraph, (a) the Company shall
not be required to file a registration statement to include Shares pursuant to
this Section 10(a) if an opinion of counsel, reasonably satisfactory to counsel
for the Placement Agent, that the Shares proposed to be disposed of may be
transferred pursuant to the provisions of Rule 144 under the Act shall have
been delivered to the Company and the Placement Agent, (b) if in the good faith
judgment of the Company's Board of Directors there is a material development
relating to the Company that has not been disclosed to the general public, the
-14-
<PAGE> 16
Company may delay the filing of any registration statement requested pursuant
to this Section 10(a) until the earlier to occur of 90 days following the date
of such written request for registration or the first filing by the Company
following such written request of a Form 10-K or Form 10-Q, and (c) if in the
good faith judgment of the Company's principal investment banker a delay is
necessary in order not to affect in an adverse manner any Financing Efforts (as
defined in paragraph (d) of this Section 10) being undertaken by the Company,
the Company may delay the filing of any registration statement requested
pursuant to this Section 10(a) to a date not more than 30 days following the
completion of such Financing Efforts.
(b) PIGGYBACK REGISTRATION RIGHTS. The Company
covenants and agrees with the Placement Agent and any other Holders or
subsequent Holders of the Registrable Securities that if, at any time within
the period commencing two years and ending five years after the Effective Date,
it proposes to file a Registration Statement with respect to any class of
security under the Act in a primary registration on behalf of the Company
and/or in a secondary registration on behalf of holders of such securities and
the registration form to be used may be used for registration of the
Registrable Securities, the Company will give prompt written notice (which, in
the case of a Registration Statement or notification pursuant to the exercise
of demand registration rights other than those provided in Section 10(a) of
this Agreement, shall be within ten (10) business days after the Company's
receipt of notice of such exercise) to, the Holders of Registrable Securities
(regardless of whether some of the Holders shall have theretofore availed
themselves of the right provided in Section 10(a) of this Agreement) at the
addresses appearing on the records of the Company of its intention to file a
Registration Statement and will offer to include in such registration statement
to the maximum extent possible such number of Registrable Securities with
respect to which the Company has received written requests for inclusion
therein within ten (10) days after the giving of notice by the Company. All
registrations requested pursuant to this Section 10(b) are referred to herein
as "Piggyback Registrations." This paragraph is not applicable to a
Registration Statement filed by the Company with the Commission on Forms S-4 or
S-8 or any successor forms.
-15-
<PAGE> 17
(i) PRIORITY ON PRIMARY REGISTRATIONS. If a
Piggyback Registration includes an underwritten primary registration
on behalf of the Company and the underwriter(s) for the offering being
registered by the Company shall determine in good faith and advise the
Company in writing that in its/their opinion the number of Registrable
Securities requested to be included in such registration exceeds the
number that can be sold in such offering without materially adversely
affecting the distribution of such securities by the Company, the
Company will include in such registration (A) first, the securities
that the Company proposes to sell and (B) second, other securities
requesting registration (including the Registrable Securities),
apportioned pro rata among the Holders of Registrable Securities and
the holders of other securities requesting registration.
(ii) PRIORITY ON SECONDARY REGISTRATIONS. If a
Piggyback Registration consists only of an underwritten secondary
registration on behalf of a holder of securities of the Company (other
than pursuant to Section 10(a)), and the underwriter(s) for the
offering being registered by the Company advise the Company in writing
that in its/their opinion the number of Registrable Securities
requested to be included in such registration exceeds the number which
can be sold in such offering without materially adversely affecting
the distribution of such securities by the Company, the Company will
include in such registration (A) first, the securities requested to be
included therein by the holders requesting such registration and the
Registrable Securities requested to be included in such registration
above, pro rata, among all such holders on the basis of the number of
shares requested to be included by each such holder and (B) second,
other securities requested to be included in such registration.
Notwithstanding the foregoing, if any such
underwriter(s) shall determine in good faith and advise the Company in
writing that the distribution of the Registrable Securities requested
to be included in the registration
-16-
<PAGE> 18
concurrently with the securities being registered by the Company would
materially adversely affect the distribution of such securities by the
Company, then the Holders of such Registrable Securities shall not
participate in the Company's distribution by the underwriter(s) and
shall delay their offering and sale for such period ending on the
earliest of (1) 90 days following the effective date of the Company's
registration statement, (2) the day upon which the underwriting
syndicate, if any, for such offering shall have been disbanded or (3)
such date as the Company, managing underwriter and Holders of
Registrable Securities shall not participate in the Company's
distribution by the underwriter(s) and shall otherwise agree. In the
event of such delay, the Company shall file such supplements,
post-effective amendments and take any such other steps as may be
necessary to permit such Holders to make their proposed offering and
sale for a period of 120 days immediately following the end of such
period of delay. If any party disapproves of the terms of any such
underwriting, it may elect to withdraw therefrom by written notice to
the Company, the underwriter, and the Placement Agent.
Notwithstanding the foregoing, the Company shall not be required to
file a registration statement to include Shares pursuant to this
Section 10(b) if an opinion of counsel, reasonably satisfactory to
counsel for the Placement Agent, that the Shares proposed to be
disposed of may be transferred pursuant to the provisions of Rule 144
under the Act shall have been delivered to the Company and the
Placement Agent.
(c) ACTION TO BE TAKEN BY THE COMPANY. In
connection with the registration of Registrable Securities in accordance with
paragraphs (a) or (b) of this Section 10, the Company agrees to:
(i) Bear the expenses of any registration or
qualification under paragraphs (a) or (b) of this Section 10,
including, but not limited to, legal, accounting and printing fees;
provided, however, that in no event shall the Company be obligated to
pay (A) any fees and disbursements of special counsel for Holders of
Registrable Securities, or (B) any underwriters' discount or
commission in respect of such Registrable Securities, or (C) upon the
-17-
<PAGE> 19
exercise of the demand registration right provided for in paragraph
(a) of this Section 10, the cost of any liability or similar insurance
required by an underwriter, to the extent that such costs are
attributable solely to the offering of such Registrable Securities,
payment of which shall, in each case, be the sole responsibility of
the Holders of the Registrable Securities; and
(ii) Use its best efforts to register or qualify the
Registrable Securities for offer or sale under state securities or
Blue Sky laws of jurisdictions in which the Placement Agent shall
reasonably request and to do any and all other acts and things which
may be necessary or advisable to enable the holders to consummate the
proposed sale, transfer or other disposition of such securities in any
jurisdiction; and
(iii) Enter into a cross-indemnity agreement, in
customary form, with each underwriter, if any, and each holder of
securities included in such Amendment or Registration Statement.
(d) For purposes of this Section 10, (i) the term
"Holder" shall include holders of Shares, (ii) the term "Registrable
Securities" shall mean the Shares issuable or issued upon exercise of the
Placement Agent Warrants, and (iii) the term "Financing Effort" shall mean a
financing undertaken by the Company pursuant to a filed registration statement
or pursuant to an executed letter of intent or similar agreement whereupon the
Company reasonably contemplates the commencement of marketing within fourteen
days from the date thereof. Nothing in this Section 10, however, shall be
deemed to require the Company to register the Placement Agent Warrants, it
being understood that the registration rights granted hereby relate only to the
Shares issuable or issued upon exercise of the Placement Agent Warrants and any
securities issued in substitution or exchange therefor.
11. NOTICES TO HOLDERS.
(a) Nothing contained in this Agreement or in any
of the Placement Agent Warrants shall be construed as conferring upon the
Holders thereof the right to vote or to
-18-
<PAGE> 20
receive dividends or to consent or to receive notice as shareholders in respect
of the meetings of shareholders or the election of directors of the Company or
any other matter, or any rights whatsoever as shareholders of the Company;
provided, however, that in the event that a meeting of shareholders shall be
called to consider and take action on a proposal for the voluntary dissolution
of the Company, other than in connection with a consolidation, merger or sale
of all, or substantially all, of its property, assets, business and good will
as an entirety, then and in that event the Company shall cause a notice thereof
to be sent by first-class mail, postage prepaid, at least twenty (20) days
prior to the date filed as a record date or the date of closing the transfer
books in relation to such meeting, to each registered Holder of the Placement
Agent Warrants at such Holder's address appearing on the Placement Agent
Warrant Register; but failure to mail or to receive such notice or any defect
therein or in the mailing thereof shall not affect the validity of any action
taken in connection with such voluntary dissolution. If such notice shall have
been so given and if such a voluntary dissolution shall be authorized at such
meeting or any adjournment thereof, then from and after the date on which such
voluntary dissolution shall have been duly authorized by the shareholders, the
purchase rights represented by the Placement Agent Warrants and all other
rights with respect thereto shall cease and terminate.
(b) In the event the Company intends to make any
distribution on its Common Stock (or other securities which may be issuable in
lieu thereof upon the exercise of the Placement Agent Warrants), including,
without limitation, any such distribution to be made in connection with a
consolidation or merger in which the Company is the continuing corporation, or
to issue subscription rights or warrants to holders of its Common Stock, the
Company shall cause a notice of its intention to make such distribution to be
sent by first-class mail, postage prepaid, at least twenty (20) days prior to
the date fixed as a record date or the date of closing the transfer books in
relation to such distribution, to each registered Holder of the Placement Agent
Warrants at such Holder's address appearing on the Placement Agent Warrant
Register, but failure to mail or to receive such notice or any defect therein
or in the mailing thereof shall not affect the validity of any action taken in
connection with such distribution.
-19-
<PAGE> 21
12. NOTICES. Any notice pursuant to this Agreement to be
given or made by the Holder of any Placement Agent Warrant and/or the holder of
any Share to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed as follows or to such other
address as the Company may designate by notice given in accordance with this
Section 12, to the Holders of Placement Agent Warrants and/or the holders of
Shares:
Barrister Information Systems Corporation
465 Main Street
Buffalo, New York 14203
Attention: Mark C. Donadio
Notices or demands authorized by this Agreement to be
given or made by the Company to or on the Holder of any Placement Agent Warrant
and/or the holder of any Share shall be sufficiently given or made (except as
otherwise provided in this Agreement) if sent by first-class mail, postage
prepaid, addressed to such Holder or such holder of Shares at the address of
such Holder or such holder of Shares as shown on the Placement Agent Warrant
Register or the books of the Company, as the case may be.
13. GOVERNING LAW. This Agreement and each Placement
Agent Warrant issued hereunder shall be governed by and construed in accordance
with the substantive laws of the State of New York. The Company hereby agrees
to accept service of process by notice given to it pursuant to the provisions
of Section 12.
14. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original; but such counterparts together shall constitute but one and the same
instrument.
-20-
<PAGE> 22
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day, month and year first above
written.
<TABLE>
<S> <C>
BARRISTER INFORMATION SYSTEMS
CORPORATION
By:
----------------------
Attest:
- ------------------
STRASBOURGER PEARSON TULCIN WOLFF
INCORPORATED
By:
---------------------------
Attest:
- ------------------
</TABLE>
-21-
<PAGE> 23
EXHIBIT A
No. ________ 125,000 Warrants
VOID AFTER 5:00 P.M. EASTERN STANDARD TIME
ON MARCH 29, 2001
BARRISTER INFORMATION SYSTEMS CORPORATION
Warrant Certificate
THIS CERTIFIES THAT for value received [Phillip Neiman]
[Laurie Hunter] or registered assigns, is the owner of the number of warrants
set forth above, each of which entitles the owner thereof to purchase at any
time from March 29, 1996, until 5:00 p.m., Eastern Standard Time on March 29,
2001 (the "Warrant Expiration Date"), one fully paid and nonassessable share of
Common Stock, par value $.24 per share (the "Common Stock"), of Barrister
Information Systems Corporation, a New York corporation (the "Company"), at the
purchase price of $1.365 per share (the "Exercise Price") upon presentation and
surrender of this Warrant Certificate with either the Form of Election to
Purchase or Form of Cashless Exercise duly executed. The number of Warrants
evidenced by this Warrant Certificate (and the number of shares which may be
purchased upon exercise thereof) set forth above, and the Exercise Price per
share set forth above, are the number and Exercise Price as of the date of
original issuance of the Warrants, based on the shares of Common Stock of the
Company as constituted at such date. As provided in the Warrant Agreement
referred to below, the Exercise Price and the number or kind of shares which
may be purchased upon the exercise of the Warrants evidenced by this Warrant
Certificate are, upon the happening of certain events, subject to modification
and adjustment.
This Warrant Certificate is subject to, and entitled to the
benefits of, all of the terms, provisions and conditions of an agreement dated
as of March 29, 1996 (the "Warrant Agreement") between the Company and
Strasbourger Pearson Tulcin Wolff Incorporated which Warrant Agreement is
hereby incorporated herein by reference and made a part hereof and to which
Warrant Agreement reference is hereby made for a full description of the
A-1
<PAGE> 24
rights, limitations of rights, duties and immunities hereunder of the Company
and the holders of the Warrant Certificates. Copies of the Warrant Agreement
are on file at the principal office of the Company.
This Warrant Certificate, with or without other Warrant
Certificates, upon surrender at the principal office of the Company, may be
exchanged for another Warrant Certificate or Warrant Certificates of like tenor
and date evidencing Warrants entitling the holder to purchase a like aggregate
number of shares of Common Stock as the Warrants evidenced by the Warrant
Certificate or Warrant Certificates surrendered entitled such holder to
purchase. If this Warrant Certificate shall be exercised in part, the holder
hereof shall be entitled to receive upon surrender hereof another Warrant
Certificate or Warrant Certificates for the number of whole Warrants not
exercised.
No fractional shares of Common Stock will be issued upon the
exercise of any Warrant or Warrants evidenced hereby, but in lieu thereof a
cash payment will be made, as provided in the Warrant Agreement.
No holder of this Warrant Certificate shall be entitled to
vote or receive dividends or be deemed the holder of Common Stock, any other
securities of the Company which may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained in the Warrant Agreement
or herein be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issue of stock, reclassification of stock, change of par
value or change of stock to no par value, consolidation, merger, conveyance, or
otherwise) or, except as provided in the Warrant Agreement, to receive notice
of meetings, or to receive dividends or subscription rights or otherwise, until
the Warrant or Warrants evidenced by this Warrant Certificate shall have been
exercised and the shares shall have become deliverable as provided in the
Warrant Agreement.
If this Warrant shall be surrendered for exercise within any
period during which the transfer books for the
A-2
<PAGE> 25
Company's Common Stock or other class of stock purchasable upon the exercise of
this Warrant are closed for any purpose, the Company shall not be required to
make delivery of certificates for shares purchasable upon such exercise until
the date of the reopening of said transfer books.
IN WITNESS WHEREOF, BARRISTER INFORMATION SYSTEMS CORPORATION
has caused the signature (or facsimile signature) of its Chairman of the Board
and Chief Executive Officer and its Secretary to be printed hereon.
Dated: March __, 1996
<TABLE>
<S> <C>
BARRISTER INFORMATION SYSTEMS
CORPORATION
By: _________________________
Name:
Title:
Attest:
_____________________________
Name:
Title:
</TABLE>
A-3
<PAGE> 26
FORM OF
ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Warrant Certificate in
accordance with Section 4(a)(i) of the Warrant Agreement.)
TO: BARRISTER INFORMATION SYSTEMS CORPORATION
The undersigned hereby irrevocably elects to exercise Warrants
represented by this Warrant Certificate to purchase the shares of Common Stock
issuable upon the exercise of such Warrants and payment of the Exercise Price
therefor in accordance with Section 4(a)(i) of the Warrant Agreement and
requests that certificates for such shares to be issued in the name of:
Please insert social security or other
identifying number
________________________________________
________________________________________
_________________________________________________________________
(Please print name and address)
_________________________________________________________________
If such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, a new Warrant Certificate for the balance remaining of
such Warrants shall be registered in the name of and delivered to:
Please insert social security number or other
identifying number
________________________________________
________________________________________
_________________________________________________________________
(Please print name and address)
_________________________________________________________________
Dated: ______________, ____
<PAGE> 27
<TABLE>
<S> <C>
_______________________________________________________________________
Signature
(Signature must conform in all respects to name of holder as specified
on the face of this Warrant Certificate)
Signature Guaranteed:
</TABLE>
<PAGE> 28
FORM OF CASHLESS EXERCISE
(To be executed if holder desires to exercise
the Warrant Certificate in accordance
with Section 4(a)(ii) of the Warrant Agreement)
TO: BARRISTER INFORMATION SYSTEMS CORPORATION
The undersigned hereby irrevocably elects a Cashless Exercise of the
Warrants represented by this Warrant Certificate to purchase the shares of
Common Stock issuable upon the exercise of such Warrants in accordance with
Section 4(a)(ii) of the Warrant Agreement and requests that certificates for
such shares be issued in the name of:
Please insert Social Security or
other identifying number
___________________________________
___________________________________
___________________________________________________________________
(Please print name and address)
__________________________________________________________________
If such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, a new Warrant Certificate for the balance remaining of
such Warrants shall be registered in the name of and delivered to:
Please insert Social Security or
other identifying number
___________________________________
___________________________________
___________________________________________________________________
(Please print name and address)
<PAGE> 29
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------
Dated: ,
---------- ---- --------------------------------
Signature
(Signature must conform in all
respects to name of holder as
specified on the back of this
Warrant Certificate)
Signature Guaranteed:
</TABLE>
<PAGE> 30
FORM OF
ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
Warrant Certificates.)
FOR VALUE RECEIVED, ________________________ hereby sells,
assigns and transfers unto this Warrant Certificate, together with all right,
title and interest herein, and does hereby irrevocably constitute and appoint
________________, to transfer the within Warrant Certificate on the books of
the within-named Company, with full power of substitution.
Dated: _______________, ____
Signature __________________
Signature Guaranteed:
NOTICE
The signature of the foregoing Assignment must correspond to
the name as written upon the face of this Warrant Certificate in every
particular, without alteration or enlargement or any change whatsoever.
<PAGE> 1
Exhibit 5
May 13, 1996
Barrister Information Systems Corporation
465 Main Street, Suite 700
Buffalo, NY 14203-1788
Gentlemen:
In my capacity as counsel for Barrister Information Systems
Corporation, a New York corporation ("Barrister"), I have examined the
Registration Statement on Form S-3 (the "Registration Statement"), in the form
being filed by Barrister with Securities and Exchange Commission under the
provisions of the Securities Act of 1933, as amended, on May 13, 1996, relating
to up to 1,750,000 Warrants, 1,750,000 shares of its Common Stock, par value
$.24 per share, (the "Common Stock") issuable upon exercise of the Warrants and
2,000,000 shares of its Common Stock, par value $.24 per share. The Warrants
and Common Stock are collectively referred to as the "Offered Securities".
In rendering this opinion, I have examined copies of the Amended and
Restated Certificate of Incorporation (the "Certificate of Incorporation") and
Amended and Restated By-Laws of the Company, each as amended to the date
hereof, the Registration Statement, and orginals or copies of such other
corporate minutes, records, agreements and other instruments of the Company,
certificates of public officials and other documents and have made such
examinations of law, as I have deemed necessary to form the basis of the
opinion hereinafter expressed. In my examination of such materials, I have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals and the conformity to original documents of all
copies submitted to me. As to various questions of fact material to such
opinion, I have relied, to the extent I deemed appropriate, upon
representations, statements and certificates of officers and representatives
of the Company and others.
I express no opinion except as to the laws of the State of New York.
Upon the basis of the foregoing, I am of the opinion that:
(i) The Warrants have been duly authorized by the Company and
constitute legally valid and binding obligations of the Company. The 2,000,000
shares of Common Stock have been duly authorized and validly issued by the
Company and are fully paid and non-assessable.
(ii) The 1,750,000 shares of Common Stock issuable upon exercise of
the Warrants have been duly authorized, and upon issuance, delivery and payment
therefor in the manner contemplated by the Registration Statement, will be
validly issued, fully paid and non-assessable.
<PAGE> 2
The offered Securities are to be issued, separately or together, and
are to be sold from time to time as set forth in the Registration Statement,
the Prospectus contained therein (the "Prospectus") and any amendments or
supplements thereto.
I hereby consent to be named in the Registration Statement and in the
Prospectus under the caption "Legal Matters" which forms part of the
Registration Statement. In givng such consent, I do not admit hereby that I
come within the category of persons whose consent is required under Section 7
of the Securities Act of 1933, as amended, or under the Rules and Regulations
of the Securities and Exchange Commission promulgated thereunder.
Very truly yours,
Mark C. Donadio
Secretary and General Counsel
MCD:ran/458
<PAGE> 1
Exhibit 23
Independent Auditors' Consent
-----------------------------
The Board of Directors
Barrister Information Systems Corporation
465 Main Street, Suite 700
Buffalo, NY 14203-1788
We consent to the use of our reports incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the Prospectus.
KPMG Peat Marwick LLP
Buffalo, New York
May 10, 1996
