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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 14, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CAM COMMERCE SOLUTIONS, INC.
(formerly known as CAM Data Systems, Inc.)
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 7370 95-3866450
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(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
17520 NEWHOPE STREET, FOUNTAIN VALLEY, CALIFORNIA 92708
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(ADDRESS AND TELEPHONE NUMBER, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
-----------------------
GEOFFREY D. KNAPP, CHIEF EXECUTIVE OFFICER
17520 NEWHOPE STREET, FOUNTAIN VALLEY, CALIFORNIA 92708
(714) 241-9241
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(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
COPY TO:
JON R. HADDAN, ESQ.
HADDAN & ZEPFEL LLP
4675 MACARTHUR COURT, SUITE 710
NEWPORT BEACH, CALIFORNIA 92660
(949) 752-6100
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after this Registration Statement is declared 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, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration 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. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title of each Amount Proposed Proposed Amount of
Class of Securities to be Maximum Offering Maximum Aggregate Registration
to be Registered Registered Price Per Share (1) Offering Price (1) Fee
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<S> <C> <C> <C> <C>
Common Stock, par value $0.001 per share 850,000 $13.50 $11,475,000 $3,029.40
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</TABLE>
(1) The proposed maximum offering price per share and maximum aggregate
offering price for the shares being registered hereby is calculated in
accordance with Rule 457(c) under the Securities Act.
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 L933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THE PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PROSPECTUS SUBJECT TO COMPLETION
850,000 SHARES
CAM COMMERCE SOLUTIONS, INC.
(formerly known as CAM DATA SYSTEMS, INC.)
COMMON STOCK
These shares of common stock are being offered by the stockholders who
are named on page 8 of this prospectus under the heading entitled "Selling
Stockholders."
The selling stockholders may sell the shares through public or private
transactions at prevailing market prices at the time of sale or at negotiated
prices. See "Plan of Distribution."
We will not receive any proceeds from the sale of the shares pursuant
to this prospectus, but will bear the costs relating to the registration of the
shares. We will receive proceeds from the exercise, if any, of warrants held by
the selling stockholders. The shares being offered by this prospectus include
shares to be acquired upon the exercise of such warrants.
Our common stock is traded on Nasdaq National Market System under the
symbol "CADA." On April 13, 2000, the closing price for our common stock was
$13.14 per share.
The shares offered in this prospectus involve a high degree of risk.
You should carefully consider the "Risk Factors" beginning on page 3 in
determining whether to purchase shares of our common stock.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE SHARES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS APRIL __, 2000.
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You should rely only on information contained or incorporated by
reference in this prospectus. See "Information Incorporated by Reference" on
page 10. Neither we nor the selling stockholders have authorized any other
person to provide you with information different from that contained in this
prospectus.
The information contained in this prospectus is correct only as of the
date on the cover, regardless of the date this prospectus was delivered to you
or the date on which you acquired any of the shares.
FORWARD-LOOKING STATEMENTS
This prospectus contains "forward-looking statements." These
forward-looking statements include, without limitation, statements about our
market opportunity, our strategies, competition, expected activities and
expenditures as we pursue our business plan, and the adequacy of our available
cash resources. Our actual results could differ materially from those expressed
or implied by these forward-looking statements as a result of various factors,
including the risk factors described in this prospectus.
OUR BUSINESS
We provide total commerce solutions for small to medium size,
traditional as well as web retailers. These solutions are based on our open
architecture software products for managing inventory, point of sale, sales
transaction processing and accounting. In addition to software, these solutions
often include hardware, installation, training, service and consulting provided
by us. Sales, service, research, and development are located in California and
Nevada, while our customers are located throughout the United States. CAM
Commerce Solutions was formed in 1983. Our address is 17520 Newhope Street,
Fountain Valley, California 92708 and our telephone number is (714) 241-9241.
We offer three Turn Key Systems:
(1) THE CAM SYSTEM - designed for hard goods retailers whose
inventory is re- orderable in nature.
(2) THE PROFIT$ SYSTEM - designed for apparel and shoe retailers
whose inventory is seasonable in nature, and color and size
oriented.
(3) THE RETAIL STAR SYSTEM - a Windows-based system designed to
incorporate multiple functions of both the CAM and Profit$
systems.
Our systems offer the ability to obtain: (i) automated pricing of each
item; (ii) billing for charge account customers; (iii) printing of a customer
invoice; (iv) tracking of inventory count on
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an item by item basis; (v) computation of gross profit, dollars and/or
percentage of each item; and (vi) tracking of sales by clerk and department by
hour, day and/or month. In addition, our systems provide full management
reporting including zero sales reports, inventory ranking, overstock and
understock, sales analysis, inventory valuation (cost, average cost and retail)
and other reports. The systems can also provide accounting functions including
accounts receivable, accounts payable, and general ledger.
Our systems integrate Intel-based personal computers, computer point of
sale stations, hand-held and table top barcode laser scanners, terminal or
computer work stations, printers, and our software. Each system is configured to
meet the customer's particular needs and, as a result, the components included
in each system, including the personal computer, printer, point of sale station
and our software, depend on the needs, the size and the industry type of the
customer.
RISK FACTORS
You should carefully consider the following factors and other
information in this prospectus before deciding to invest in our shares. You
should not purchase any of the shares unless you can afford a complete loss of
your investment.
WE MAY NOT BE ABLE TO MAINTAIN OPERATING PROFITABILITY
Our operating results for future periods are subject to all of the
risks and uncertainties inherent in the development and growth of a business. We
anticipate that in the future we will make significant investments in our
operations, particularly to support technological developments and sales
activities and, that as a result, operating expenses will continue to increase.
We intend to make investments on an ongoing basis, primarily from cash generated
from operations, and to the extent necessary, funds available from our line of
credit, as we develop and introduce new products and services and expand into
new markets. There can be no assurance that recent revenue growth is indicative
of future sales growth, if any. There is no assurance that we will be able to
sustain our profitability.
WE MAY NOT BE ABLE TO MAINTAIN OUR RATE OF GROWTH
We experienced rapid sales growth in 1999. This rapid growth in sales
in 1999 was primarily due to an increase in sales to existing customers. We may
not be able to sustain such a growth rate in the future.
WE MAY HAVE DIFFICULTY MANAGING OUR GROWTH
Because we have recently experienced rapid growth, we have experienced
and will continue to experience a strain on our administrative and operations
resources and increased demands on our systems and controls. We anticipate that
continued growth may require us to recruit and hire additional management
personnel. There is no assurance that we will be
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successful at hiring or retaining these personnel. Our ability to manage our
growth successfully will also require us to continue to expand and improve our
operational, management and financial systems and controls. If our management is
unable to manage growth effectively, our business, financial condition and
results of operations may be materially and adversely affected.
OUR QUARTERLY FINANCIAL RESULTS MAY FLUCTUATE SIGNIFICANTLY
We have experienced in the past and may in the future experience
significant fluctuations in our quarterly operating results. Such fluctuations
may be caused by many factors, including, but not limited to: the size and
timing of individual orders; orders of significant size; employee hiring and
retention; lengthy sales and implementation cycles; reduction in demand for
existing products and services and shortening of product life cycles; the timing
of the introduction of new products; product enhancements or services by us or
our competitors; competition and pricing in the industry; market acceptance of
new products; our ability to expand sales; changes in the mix of products and
services sold; our ability to control costs; the mix of distribution channels
through which our products are sold; and general economic conditions. Our
products are typically shipped shortly after orders are received and,
consequently, order backlog at the beginning of any quarter typically represents
only a small portion of that quarter's expected revenues. As a result, product
revenues in any quarter are substantially dependent on orders booked and shipped
in that quarter and revenues for any future quarter are not predictable with any
significant degree of accuracy. Product revenues are also difficult to forecast
because the market for our products is rapidly evolving and the sales and
implementation cycles, from initial evaluation to multiple product purchases and
the provision of support services, vary substantially from customer to customer.
We have in the past experienced and expect to continue to experience quarters or
periods with individual product orders which are significantly larger than
typical product orders, adding to the unpredictability of our revenues. Our
expense levels, however, are based in significant part on our expectations of
future revenues and therefore should remain relatively fixed in the near term as
we attempt to expand our operations. Net income may be disproportionately
affected by an unanticipated decline in revenue for a particular quarter because
a relatively small amount of our expenses varies with our revenue in the near
term. Any of these factors could cause our results of operations to fluctuate
significantly from period to period and on a quarterly basis.
As a result of the above factors, revenues and earnings for any quarter
are subject to significant variation and we believe that period-to-period
comparisons of our results of operations are not necessarily meaningful and
should not be relied upon as indications of future performance. Fluctuations in
operating results may also result in volatility in the price of our common
stock. Accordingly, it is likely that in some future quarter, our total revenues
or operating results will be below the expectations of public market analysts or
investors. In such event, or in the event that adverse conditions prevail or are
perceived to prevail generally or with respect to our business, the price of our
common stock would likely be materially adversely affected.
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WE ARE HEAVILY DEPENDENT ON A FEW KEY PERSONNEL
Our success is dependent, in part, upon the continued services of
certain key executive officers, including Geoffrey D. Knapp, our Chief Executive
Officer, David A. Frosh, our President and Paul Caceres, Jr., our Chief
Financial Officer and Chief Accounting Officer. We believe that our future
success depends to a significant degree upon the continued contributions of our
existing key management, sales and marketing personnel, many of whom would be
difficult to replace. We have entered into employment agreements with certain of
the above individuals. We also believe our future success will also depend
largely upon our ability to attract and retain highly-skilled, managerial, and
sales and marketing personnel. Competition for such personnel is intense, and we
compete in the market for personnel against numerous companies. There can be no
assurance that we will be successful in attracting and retaining skilled
personnel. The loss of certain key employees or our inability to attract and
retain other qualified employees could have a material adverse effect on our
business, financial condition and results of operations.
WE ARE IN A HIGHLY COMPETITIVE MARKET
The market for our products and services is highly competitive, subject
to rapid change and sensitive to new product introductions or enhancements and
marketing efforts by industry participants. We expect to continue to experience
significant and increasing levels of competition in the future. The principal
elements of competition related to our products include price, product features
and performance, compatibility with open systems, quality and reliability, and
level of customer service.
We believe that our use of a Windows-based software product gives us a
competitive advantage because most of our competitors are still selling
DOS-based software products. We anticipate that the number of competitors
offering Windows-based products will grow over the next several years. We
anticipate that competition from these competitors will intensify in the future.
In order to effectively compete against these competitors, we will need to
continue our growth trend and attain sufficient revenues to have the resources
to timely develop new products and services in response to evolving technology
and customer demands and to sell products and services through a broad
distribution channel in competition with these other existing and potential
competitors. No assurance can be given that we will be able to grow sufficiently
to enable us to compete effectively in this marketplace.
Our competitors include many small private companies and dealers
located throughout the United States. There is no assurance that we will be able
to maintain our competitive advantage or that these existing competitors, or new
competitors, will not develop competitive products and services with favorable
pricing. Moreover, we have little or no proprietary barriers to entry that could
keep our competitors from developing similar products or services and
technology, or selling competing products or services in our markets.
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Increased competition from manufacturers or distributors of products
similar to, or competitive with, our products, or from service providers that
provide services similar to our services, could result in price reductions,
reduced margins and loss of market share or could render our technology
obsolete, all of which could have a material adverse effect on our results of
operations and financial condition. There can be no assurance that we will be
able to successfully compete in this marketplace or develop sufficient new
products and services to remain competitive, and any failure to do so could have
a material adverse effect on our results of operations and financial condition.
RISK OF PRODUCT DEFECTS AND PRODUCT LIABILITY
Software products often contain undetected errors when first
introduced. In addition, to the extent that we may have to develop new products
that operate in new environments, such as the Internet, the possibility for
program errors and failures may increase due to factors such as the use of new
technologies or the need for more rapid product development that is
characteristic of the Internet market. Despite pre-release testing by us and by
current and potential customers, there still may be errors in new products, even
after commencement of commercial shipments. The occurrence of such errors could
result in delay in, or failure to achieve, market acceptance of our products,
which could have a material adverse effect on our business and results of
operations.
Although our license agreements with our customers typically contain
provisions designed to limit our exposure to potential product liability claims,
it is possible that such limitation of liability provisions may not be effective
as a result of existing or future laws or unfavorable judicial decisions.
Because our products are used in business-critical applications, any errors or
failures in such products may give rise to product liability claims, which could
have a material adverse effect on our business, financial condition and results
of operations.
VOLATILITY OF COMMON STOCK PRICE
Our common stock has experienced significant price volatility and such
volatility may recur in the future. Factors such as announcements of the
introduction of new products by us or our competitors, quarter-to-quarter
variations in our operating results and the gain or loss of significant orders,
as well as market conditions, may have a significant impact on the market price
of our common stock. Further, the stock market has experienced volatility that
has particularly affected the market prices of securities of many technology
companies and that often has been unrelated or disproportionate to the operating
performance of such companies. These market fluctuations may adversely affect
the price of our common stock. The trading prices of many technology companies'
stocks, including our common stock, reflect price/earnings ratios substantially
above historical norms. The trading price of our common stock may not remain at
or near its current level.
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IT IS LIKELY WE WILL REQUIRE ADDITIONAL CAPITAL.
All of the proceeds of this offering will be received by the selling
stockholders. While we may receive cash from the exercise of warrants to acquire
shares of common stock covered by this prospectus, we cannot be sure that we
will receive any specific amount from such exercise. We may require additional
capital to sustain our business as presently operated, and developments in our
business and possible expansion into other markets could indicate that we will
need to raise additional capital.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares of
common stock offered by this prospectus. All proceeds from such sales will be
for the account of the selling stockholders. However, if the selling
stockholders exercise their warrants to acquire up to 350,000 of the shares of
common stock being offered pursuant to this prospectus, we will receive the
proceeds from such exercise. If all of the warrants are exercised, we will
receive net proceeds of $8,728,125. We plan to use any such net proceeds for
expanded advertising and marketing, and as working capital. The amounts actually
expended for each such use, if any, are at our discretion and may vary
significantly depending upon a number of factors, including, the actual number
of warrants exercised and the timing of each exercise. The warrants are
exercisable for a period of five years from their date of issuance.
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SELLING STOCKHOLDERS
The following table sets forth certain information as of April 13, 2000
regarding the ownership of the common stock by the selling stockholders and as
adjusted to give effect to the sale of the shares offered in this prospectus.
The selling stockholders acquired their shares pursuant to a Units Purchase
Agreement dated as of March 22, 2000 in which we agreed to issue the common
stock and warrants to purchase common stock in two tranches consisting of
$4,000,000 each. The first tranche was funded March 27, 2000. Under the terms of
the purchase agreement, the second tranche will be funded within seven (7) days
after the effectiveness of the registration statement, of which this prospectus
is a part. The funding of the second tranche is not subject to any conditions
within the control of the selling stockholders. The number of shares of common
stock shown as being owned by each selling stockholder includes (i) the shares
of common stock to be issued at the funding of the second tranche, (ii) the
common stock issuable upon exercise of the warrants issued at the funding of the
first tranche, and (iii) the common stock issuable upon exercise of the warrants
to be issued at the funding of the second tranche.
<TABLE>
<CAPTION>
Number of Shares of
Number of Shares of Common Common Stock Owned
Name and Relationship Numbers of Shares of Stock which may be Sold Assuming the Sale of all
to our company, if any Common Stock owned Pursuant to this Prospectus of the Shares Offered Hereby
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<S> <C> <C> <C>
Magellan International, Ltd. 106,250 106,250 -0-
Aspen International, Ltd. 106,250 106,250 -0-
Anegada Fund, Ltd. 63,750 63,750 -0-
Tonga Partners, L.P. 191,250 191,250 -0-
Acqua Wellington Small 106,250 106,250 -0-
Cap Fund Ltd.
The Cutthunk Fund Limited 170,000 170,000 -0-
BiCoastal Consulting Corp. 53,125 53,125 -0-
Amro International, S.A 53,125 53,125 -0-
</TABLE>
The selling stockholders and their affiliates have not held any
positions or office or had any other material relationship with CAM Commerce
Solutions or any of its affiliates within the past three years.
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PLAN OF DISTRIBUTION
The selling stockholders and their pledgees, donees, transferees and
other subsequent owners, may offer their shares at various times in one or more
of the following transactions:
o on any U.S. securities exchange on which our common stock may
be listed at the time of sale
o in the over-the-counter market
o in privately negotiated transactions
o in connection with short sales; or
o in a combination of any of the above transactions
The selling stockholders may offer their shares of common stock at
prevailing market prices at the time of sale, at prices related to those
prevailing market prices, at negotiated prices or at fixed prices.
The selling stockholders may also sell the shares under Rule 144 of the
Securities and Exchange Commission instead of under this prospectus, if Rule 144
is available for those sales.
The transactions in the shares covered by this prospectus may be
effected by one or more of the following methods:
o ordinary brokerage transactions and transactions in which the
broker solicits purchasers;
o purchases by a broker or dealer as principal, and the resale
by that broker or dealer for its account under this
prospectus, including resale to another broker or dealer;
block trades in which the broker or dealer will attempt to
sell the shares as agent but may position and resell a portion
of the block as principal in order to facilitate the
transaction; or
o negotiated transactions between selling stockholders and
purchasers without a broker or dealer.
As of the date of this prospectus, we are not aware of any agreement,
arrangement or understanding between any broker or dealer and any of the selling
stockholders with respect to the offer or sale of the shares under this
prospectus.
We have advised the selling stockholders that during the time each is
engaged in distributing shares covered by this prospectus, each must comply with
the requirements of the Securities Act of 1933 and Rule 10b-5 and Regulation M
under the Securities Exchange Act of 1934. Under those rules and regulations,
they:
o may not engage in any stabilization activity in connection
with our securities;
o must furnish each broker which offers common stock covered by
this prospectus with the number of copies of this prospectus
which are required by each broker; and
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o may not bid for or purchase any of our securities or attempt
to induce any person to purchase any of our securities or
attempt to induce any person to purchase any of our securities
other than as permitted under the Securities Exchange Act of
1934.
Brokers, dealers, underwriters or agents participating in the sale of
the shares of common stock as agents may receive compensation in the form of
commissions, discounts or concessions from the selling stockholders and/or
purchasers of the common stock for whom such broker-dealers may act as agent,
or to whom they may sell as principal, or both (which compensation to a
particular broker-dealer may be less than or in excess of customary
commissions). The selling stockholders and any broker-dealers or other persons
who act in connection with the sale of the common stock may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, and any
commission they receive and proceeds of any sale of such shares may be deemed to
be underwriting discounts and commissions under the Securities Act of 1933.
Neither CAM Commerce Solutions nor the selling stockholders can presently
estimate the amount of such compensation. We do not know of any existing
arrangements between the selling stockholders and any other stockholders,
broker, dealer, underwriter or agent relating to the sale or distribution of the
shares of common stock.
The selling stockholders and any other persons participating in the
sale or distribution of the common stock will be subject to applicable
provisions of the Securities Exchange Act of 1934 and the rules and regulations
thereunder, which provisions may limit the timing of purchases and sales of any
of the common stock by the selling stockholders or any other such persons. The
foregoing may affect the marketability of the common stock.
In connection with the issuance to the selling stockholders of the
shares being offered by this prospectus, we entered into a registration rights
agreement with each of them. The registration statement of which this prospectus
forms a part was filed pursuant to this agreement. We agreed to keep the
registration statement in effect until the earlier of the date when all the
shares being offered by this prospectus have been sold or the date on which such
shares may be sold without restriction pursuant to Rule 144(k) of the Securities
and Exchange Commission.
We will pay all reasonable expenses incidental to the registration,
offering and sale of the common stock to the public, other than any commissions
or discounts of underwriters, broker-dealers or agents and fees of legal counsel
to the selling stockholders in excess of $15,000. We and the selling
stockholders have agreed to indemnify each other against certain liabilities,
including liabilities under the Securities Act of 1933.
INFORMATION INCORPORATED BY REFERENCE AND OTHER AVAILABLE INFORMATION
This prospectus is part of a registration statement on form S-3 that we
filed with the Securities and Exchange Commission. Certain information in the
registration statement has been omitted from this prospectus in accordance with
SEC rules.
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We file annual, quarterly and special reports and other information
with the SEC. You may read and copy the registration statement and any other
document that we file at the SEC's public reference rooms located at Room 1024,
Judiciary Plaza, 450 Fifth Street N.W., Washington, D.C. 20549; 7 World Trade
Center, Suite 1300, New York, New York 10048; and Citicorp Center, 500 West
MadisonStreet, Suite 1400, Chicago, Illinois 60661. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to you free of charge at the SEC's web site at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" certain of our
publicly-filed documents into this prospectus, which means that information
included in those documents is considered part of this prospectus. Information
that we file with the SEC subsequent to the date of this prospectus will
automatically update and supersede this information. We incorporate by reference
the documents listed below and any future filings made with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until
the selling stockholders have sold all the shares.
The following documents filed with the SEC are incorporated by
reference in this prospectus:
(1) our annual report on Form 10-K for the year ended September 30,
1999, filed December 10, 1999;
(2) our quarterly report on Form 10-Q for the three months ended
December 31, 1999, filed on February 10, 2000.
(3) the description of our common stock set forth in our Registration
Statement on Form 8-A as originally filed with the Securities and Exchange
Commission on February 29, 1988;
(4) our current report on Form 8-K, filed on April 10, 2000; and
(5) all documents filed by us under the Securities Exchange Act (e.g.
Forms 10-Q and 8-K) after the date of this prospectus and prior to the
termination of this offering.
We will furnish without charge to you, on written or oral request, a
copy of any or all of the documents incorporated by reference, other than
exhibits to such documents. You should direct any requests for documents to
Secretary, CAM Commerce Solutions, Inc., 17520 Newhope Street, Fountain Valley,
California 92708.
The information relating to CAM Commerce Solutions contained in this
prospectus is not comprehensive and should be read together with the information
contained in the incorporated documents.
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EXPERTS
Ernst & Young LLP, independent auditors, have audited our financial
statements and schedule included in our Annual Report on Form 10-K for the year
ended September 30, 1999, as set forth in their report, which is incorporated in
this registration statement by reference. Our financial statements are
incorporated by reference in reliance upon such report, given on the authority
of such firm as experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters with respect to the legality under Delaware law
of the shares of common stock offered hereby will be passed upon for us by
Haddan & Zepfel LLP, Newport Beach, California.
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NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED 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. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN THE SHARES OF
THE COMMON STOCK OFFERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF ANY OFFER TO BUY THE SHARES OF COMMON STOCK 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 INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
---------------------------
TABLE OF CONTENTS
---------------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Forward-Looking Statements...............................................2
The Business.............................................................2
Risk Factors.............................................................3
Use of Proceeds..........................................................7
The Selling Stockholders.................................................8
Plan of Distribution.....................................................9
Information Incorporated by Reference
and Other Available Information........................................10
Experts.................................................................12
Legal Matters...........................................................12
</TABLE>
850,000 SHARES
COMMON STOCK
CAM COMMERCE
SOLUTIONS, INC.
----------
PROSPECTUS
----------
APRIL __, 2000
<PAGE> 15
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses incurred or to be incurred by the Company in connection
with the preparation and filing of this Registration Statement are estimated to
be as follows:
Printing and duplication expenses $ 2,000.00
Registration fee 3,029.40
Legal fees and expenses 25,000.00
Accounting fees and expenses 5,000.00
Transfer Agent fees 1,000.00
Miscellaneous 1,500.00
----------
Total $37,529.40
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement in connection with specified actions, suits or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation -- a "derivative action"),
if they acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the corporation and, with respect to any
criminal action or proceedings, had no reasonable cause to believe their conduct
was unlawful. A similar standard is applicable in the case of derivative
actions, except that indemnification only extends to expenses (including
attorneys' fees) actually and reasonably incurred in connection with the defense
or settlement of such action, and the statute requires court approval before
there can be any indemnification where the person seeking indemnification has
been found liable to the corporation. The statute provides that it is not
exclusive of other indemnification that may be granted by a corporation's
charter, by- laws, disinterested director vote, stockholder vote, agreement or
otherwise.
Section 102(b)(7) of the Delaware General Corporation Law permits a
provision in the certificate of incorporation of each corporation organized
thereunder, such as CAM Commerce Solutions eliminating or limiting, with certain
exceptions, the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director.
Article SEVENTH of our Certificate of Incorporation includes a
provision that eliminates the personal liability of our directors to the company
or its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability: (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders; (ii) for acts or omissions not
in good faith
II-1
<PAGE> 16
or that involve intentional misconduct or a knowing violation of law; (iii)
under Section 174 of the Delaware General Corporation Law; or (iv) for any
transaction from which the director derived an improper personal benefit.
The foregoing statements are subject to the detailed provisions of
Sections 145 and 102(b) (7) of the Delaware General Corporation Law and of
Article SEVENTH of our Certificate of Incorporation, as applicable.
ITEM 16. EXHIBITS
The following exhibits are filed with this Registration Statement:
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<C> <S>
4.1 Units Purchase Agreement between Registrant and the
Selling Stockholders, dated March 22, 2000 (excluding
exhibits thereto)
4.2 Registration Rights Agreement between Registrant and
the Selling Stockholders, dated March 22, 2000
4.3 Form of Warrant to Purchase Shares of Common Stock
5.1 Opinion of Haddan & Zepfel LLP
23.1 Consent of Ernst & Young LLP
23.2 Consent of Haddan & Zepfel LLP (included as part of
Exhibit 5.1).
</TABLE>
ITEM 17. UNDERTAKINGS.
The undersigned 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 l0(a)(3) of
the Securities Act of l933;
(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;
II-2
<PAGE> 17
(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, including
(but not limited to) any addition or deletion of a managing underwriter.
(2) That, for the purpose of determining any liability under the
Securities Act of l933, 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.
Insofar as indemnification for liabilities arising under the Securities
Act of l933 may be permitted to directors, officers and controlling persons of
the registrant, we have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by us
of expenses incurred or paid by a director, officer or controlling person of our
company 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, we will, unless in the opinion of our counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by us is
against public policy as expressed in the Securities Act 0f 1933and will be
governed by the final adjudication of such issue.
II-3
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Fountain Valley, State of California, on April
13, 2000.
CAM COMMERCE SOLUTIONS, INC.
By: /s/ GEOFFREY D. KNAPP
---------------------------------
Geoffrey D. Knapp,
Chief Executive Officer
By: /s/ PAUL CACERES, JR.
---------------------------------
Paul Caceres, Jr.
Chief Financial Officer and
Chief Accounting Officer
POWER OF ATTORNEY
The registrant and each person whose signature appears below hereby
authorizes the agent for service named in this registration statement, with full
power to act alone, to file one or more amendments (including post-effective
amendments) to this registration statement, which amendments may make such
changes in this registration statement as such agent for service deems
appropriate, and the registrant and each such person hereby appoints such agent
for service as attorney-in-fact, with full power to act alone, to execute in the
name and in behalf of the registrant and any such person, individually and in
each capacity stated below, any such amendments to this registration statement.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ GEOFFREY D. KNAPP Chief Executive Officer and April 13, 2000
- -------------------------------- Chairman of the Board
Geoffrey D. Knapp
/s/ DAVID A. FROSH President and Director April 13, 2000
- --------------------------------
David A. Frosh
/s/ WALTER W. STRAUB Director April 13, 2000
- --------------------------------
Walter W. Straub
/s/ CORLEY PHILLIPS Director April 13, 2000
- --------------------------------
Corley Phillips
Director 2000
- --------------------------------
Scott Broomfield
Director 2000
- --------------------------------
Dr. Fred W. Haney
</TABLE>
II-4
<PAGE> 19
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<C> <S>
4.1 Units Purchase Agreement between Registrant and the
Selling Stockholders, dated March 22, 2000 (excluding
exhibits thereto)
4.2 Registration Rights Agreement between Registrant and
the Selling Stockholders, dated March 22, 2000
4.3 Form of Warrant to Purchase Shares of Common Stock
5.1 Opinion of Haddan & Zepfel LLP
23.1 Consent of Ernst & Young LLP
23.2 Consent of Haddan & Zepfel LLP (included as part of
Exhibit 5.1).
</TABLE>
<PAGE> 1
EXHIBIT 4.1
UNITS PURCHASE AGREEMENT
DATED AS OF MARCH 22, 2000
AMONG
CAM DATA SYSTEMS, INC.
AND
THE PURCHASERS LISTED ON EXHIBIT A
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I Purchase and Sale of Stock..............................................................................1
Section 1.1 Purchase and Sale of Stock.............................................................1
Section 1.2 The Common Shares and Warrant Shares...................................................1
Section 1.3 Purchase Prices, Execution and Closing.................................................2
Section 1.4 Escrow.................................................................................2
Section 1.5 Warrants...............................................................................2
ARTICLE II Representations and Warranties.........................................................................3
Section 2.1 Representation and Warranties of the Company...........................................2
Section 2.2 Representations and Warranties of the Purchasers......................................12
ARTICLE III Covenants............................................................................................12
Section 3.2 Registration and Listing..............................................................12
Section 3.3 Inspection Rights.....................................................................12
Section 3.4 Compliance with Laws..................................................................13
Section 3.5 Keeping of Records and Books of Account...............................................13
Section 3.6 Reporting Requirements................................................................13
Section 3.7 Amendments............................................................................13
Section 3.8 Other Agreements......................................................................13
Section 3.9 Distributions.........................................................................13
Section 3.10 Intentionally Omitted.................................................................17
Section 3.11 Intentionally Omitted.................................................................14
Section 3.12 Regulation S...........................................................................2
Section 3.13 Right of First Refusal................................................................14
Section 3.14 Reservation of Shares.................................................................15
Section 3.15 Transfer Agent Instructions...........................................................15
Section 3.16 Transfer or Resale.....................................................................2
ARTICLE IV Conditions............................................................................................16
Section 4.1 Conditions Precedent to the Obligation of the
Company to Sell the Units at each Closing..........................................16
Section 4.2 Conditions Precedent to the Obligation of the Purchasers to Purchase
the Units at each Closing.........................................................16
ARTICLE V Registration Rights....................................................................................18
ARTICLE VI Stock Certificate Legend..............................................................................19
Section 6.1 Legend................................................................................19
</TABLE>
-i-
<PAGE> 3
TABLE OF CONTENTS (CONT'D)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE VII Termination..........................................................................................20
Section 7.1 Termination by Mutual Consent.........................................................20
Section 7.2 Other Termination. ...................................................................20
Section 7.3 Termination of Closing................................................................20
Section 7.4 Effect of Termination.................................................................20
ARTICLE VIII Indemnification.....................................................................................20
Section 8.1 General Indemnity.....................................................................20
Section 8.2 Indemnification Procedure.............................................................21
ARTICLE IX Miscellaneous.........................................................................................22
Section 9.1 Fees and Expenses.....................................................................22
Section 9.2 Specific Enforcement, Consent to Jurisdiction.........................................22
Section 9.3 Entire Agreement; Amendment...........................................................23
Section 9.5 Waivers...............................................................................24
Section 9.6 Headings..............................................................................24
Section 9.7 Successors and Assigns................................................................24
Section 9.8 No Third Party Beneficiaries..........................................................24
Section 9.9 Governing Law.........................................................................24
Section 9.10 Survival..............................................................................24
Section 9.11 Counterparts..........................................................................25
Section 9.12 Publicity.............................................................................25
Section 9.13 Severability..........................................................................25
Section 9.14 Further Assurances....................................................................25
</TABLE>
-ii-
<PAGE> 4
UNITS PURCHASE AGREEMENT
This UNITS PURCHASE AGREEMENT (the "Agreement") is dated as of March
22, 2000, by and among CAM Data Systems, Inc., a corporation organized under the
laws of the State of Delaware (the "Company") (NASDAQ: "CADA"), and each of the
Purchasers whose names are set forth on Exhibit A hereto (individually, a
"Purchaser" and collectively, the "Purchasers").
WHEREAS, the parties desire that, upon the terms and subject
to the conditions contained herein, the Company shall issue and sell to the
Purchasers and the Purchasers shall purchase up to $8,000,000 of units (the
"Units"), each Unit consisting of (i) one share (a "Common Share") of the
Company's common stock, .$001 par value per share (the "Common Stock"), and (ii)
one warrant to purchase seven-tenths of a Common Share (singularly a "Warrant"
and collectively, the "Warrants"), in substantially the form attached hereto as
Exhibit B; and;
WHEREAS, such purchase and sale will be made in reliance upon
the provisions of Section 4(2) and Rule 506 of Regulation D ("Regulation D") of
the United States Securities Act of 1933 as amended, and regulations promulgated
thereunder (the "Securities Act"), or upon such other exemption from the
registration requirements of the Securities Act as may be available with respect
to any or all of the purchases of Units to be made hereunder.
The parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF STOCK
Section 1.1 Purchase and Sale of Units. Upon the following terms and
subject to the conditions contained herein, the Company shall issue and sell to
the Purchasers and each of the Purchasers shall purchase from the Company the
Units, at a price per unit equal to the greater of (i) the average of the
closing bid prices of the Common Stock during the sixty (60) consecutive trading
days ending on the trading day immediately preceding the Tranche I Closing Date
(as defined hereinafter) and (ii) $16.00. The aggregate purchase price for the
Units shall be $8,000,000 payable in two tranches consisting of $4,000,000 each.
Section 1.2 The Common Shares and Warrant Shares. The Company has
authorized and has reserved and covenants to continue to reserve, free of
preemptive rights and other similar contractual rights of stockholders, a
sufficient number of its authorized but unissued shares of its Common Stock, to
effect the issuance of the Common Shares and exercise of the Warrants. Any
shares of Common Stock issuable upon exercise of the Warrants (and such shares
when issued) are herein referred to as the "Warrant Shares". The Common Shares
and the Warrant Shares are sometimes collectively referred to as the "Shares".
<PAGE> 5
Section 1.3 Purchase Prices, Execution and Closing. In consideration of
and in express reliance upon the representations, warranties, covenants, terms
and conditions of this Agreement, the Company agrees to issue and sell to the
Purchasers and the Purchasers, severally but not jointly, agree to purchase the
Common Shares and Warrants exercisable for that number of Warrant Shares set
forth opposite their respective names on Exhibit A. The aggregate purchase price
of the Common Shares and the Warrants being acquired by each Purchaser is set
forth opposite such Purchaser's name on Exhibit A (each a "Purchase Price", and
collectively referred to as the "Purchase Prices"). The closing of the purchase
and sale of the first tranche of the Units (the "Tranche I Closing") to be
acquired by the Purchasers from the Company shall take place at the offices of
Parker Chapin LLP, The Chrysler Building, 405 Lexington Avenue, New York, New
York 10174 at 10:00 a.m. E.S.T. on (i) the date on which the last to be
fulfilled or waived of the conditions set forth in Article IV hereof and
applicable to the Tranche I Closing shall be fulfilled or waived in accordance
herewith or (ii) such other time and place or on such date as the Purchasers and
the Company may agree upon (the "Tranche I Closing Date"). The closing of the
purchase and sale of the second tranche of $4,000,000 (the "Tranche II Closing")
shall occur within seven (7) days after the Registration Statement (as defined
in the Registration Rights Agreement) has been declared effective (the
"Effectiveness Date") by the Securities and Exchange Commission (the Tranche II
Closing Date"). Each of the Tranche I Closing and the Tranche II Closing are
sometimes referred to as a "Closing" and each of the Tranche I Closing Date and
the Tranche II Closing Date are sometimes referred to as a "Closing Date".
Section 1.4 Escrow. On or before each Closing Date, (a) the Company
shall execute and deliver to the escrow agent (the "Escrow Agent") identified in
the Escrow Agreement attached hereto as Exhibit C (the "Escrow Agreement") all
applicable agreements, documents, instruments and writings required pursuant to
Section 4.2 herein (collectively, the "Closing Documents"), to be delivered by
the Company including, without limitation, certificates for the number of Common
Shares set forth opposite each Purchaser's name on Exhibit A, as applicable,
registered in such Purchaser's name and such Purchaser's Warrants and (b) each
of the Purchasers shall pay by wire transfer of immediately available funds into
escrow in accordance with the Escrow Agreement such Purchaser's Purchase Price,
as applicable, and execute and deliver all applicable agreements, documents,
instruments and writings required pursuant to Section 4.1, to be delivered by
such Purchaser. In regard to each Closing, the Escrow Agent shall give notice
(by telephone or other means) (an "Escrow Agent Notice") to the parties hereto
when the Escrow Agent has received all of the Closing Documents and wire
transfer the funds constituting the Purchase Prices and deliver the other
Closing Documents to the Company pursuant to the terms of the Escrow Agreement.
As soon thereafter as is practicable on each Closing Date, the Escrow Agent
shall deliver the Company Closing Documents to the Purchasers, including
applicable certificates for the Common Shares and the Warrants.
Section 1.5 Warrants. The Warrants shall be divided into separate
warrants and shall be designated callable and non-callable Warrants. The Warrant
Shares subject to the Warrants shall be divided equally among the non-callable
and callable Warrants. Each of the Warrants shall be exercisable for a period of
five (5) years from the date of issuance of such Warrants commencing on the date
six(6) months from the date of issuance and the exercise price of each of the
Warrants shall be equal to the Warrant Price (as defined in the Warrant).
-2-
<PAGE> 6
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representation and Warranties of the Company. The Company
hereby makes the following representations and warranties to the Purchasers:
(a) Organization, Good Standing and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power to own,
lease and operate its properties and assets and to conduct its business as it is
now being conducted and to enter into this Agreement and to perform its
obligations hereunder. The Company does not have any subsidiaries or own
securities of any kind in any other entity. The Company is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature of the business conducted or property owned by it makes such
qualification necessary except for any jurisdiction(s) (alone or in the
aggregate) in which the failure to be so qualified will not have a Material
Adverse Effect (as defined hereinafter) on the Company's financial condition.
For the purposes of this Agreement, "Material Adverse Effect" means any adverse
effect on the business, operations, properties, prospects, or financial
condition of the Company and which is material on a consolidated basis to such
entity or other entities controlling or controlled by such entity.
(b) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and perform this Agreement, the
Escrow Agreement, the Registration Rights Agreement attached hereto as Exhibit D
(the "Registration Rights Agreement"), and the Warrants (collectively, the
"Transaction Documents") and to issue and sell the Shares in accordance with the
terms hereof and the Warrants. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action, and no further consent or
authorization of the Company or its Board of Directors or stockholders is
required. This Agreement has been duly executed and delivered by the Company.
The Registration Rights Agreement will have been duly executed and delivered by
the Company on or before the Tranche I Closing Date. Each of the Transaction
Documents constitutes, or shall constitute when executed and delivered, a valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or affecting
generally the enforcement of, creditor's rights and remedies or by other
equitable principles of general application.
(c) Capitalization. The authorized capital stock of the
Company and the shares thereof currently issued and outstanding as of March 14,
2000 are set forth on Schedule 2.1(c) hereto. All of the outstanding shares of
the Company's Common Stock and any other security of the Company have been duly
and validly authorized. Except as set forth in this Agreement, the Registration
Rights Agreement, the SEC Documents (as hereinafter defined) and as set forth on
Schedule 2.1(c) hereto, no shares of Common Stock or any other securities issued
by the Company are entitled to preemptive rights or registration rights and
there are no outstanding options, warrants, scrip, rights to subscribe to, call
or commitments of any character
-3-
<PAGE> 7
whatsoever relating to, or securities or rights convertible into, any shares of
capital stock of the Company. Furthermore, except as set forth in this Agreement
and the Registration Rights Agreement and as set forth on the SEC Documents,
there are no contracts, commitments, understandings, or arrangements by which
the Company is or may become bound to issue additional shares of the capital
stock of the Company or options, securities or rights convertible into shares of
capital stock of the Company. Except for customary transfer restrictions
contained in agreements entered into by the Company in order to sell restricted
securities or as provided on the SEC Documents), the Company is not a party to
any agreement granting registration or anti-dilution rights to any person with
respect to any of its equity or debt securities. The Company is not a party to,
and it has no knowledge of, any agreement restricting the voting or transfer of
any shares of the capital stock of the Company. Except as set forth on the SEC
Documents, the offer and sale of all capital stock, convertible securities,
rights, warrants, or options of the Company issued prior to the Tranche I
Closing complied with all applicable federal and state securities laws, and no
stockholder has a right of rescission or damages with respect thereto which
would have a Material Adverse Effect on the Company's financial condition or
operating results. The Company has furnished or made available to the Purchasers
true and correct copies of the Company's Articles of Incorporation as in effect
on the date hereof (the "Articles"), and the Company's Bylaws as in effect on
the date hereof (the "Bylaws").
(d) Issuance of Shares. The Common Shares to be issued at each
Closing have been duly authorized by all necessary corporate action and, when
paid for or issued in accordance with the terms hereof, the Common Shares shall
be validly issued and outstanding, fully paid and nonassessable and entitled to
all applicable rights and preferences set forth in the Articles. When the Common
Shares and the Warrant Shares are issued in accordance with the terms of this
Agreement and as set forth in the Warrants, respectively, such shares will be
duly authorized by all necessary corporate action and validly issued and
outstanding, fully paid and non-assessable, and the holders shall be entitled to
all rights accorded to a holder of Common Stock.
(e) No Conflicts. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated herein and therein do not (i) violate any
provision of the Company's Articles or Bylaws, (ii) conflict with, or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, mortgage, deed of trust,
indenture, note, bond, license, lease agreement, instrument or obligation to
which the Company is a party, (iii) create or impose a lien, charge or
encumbrance on any property of the Company under any agreement or any commitment
to which the Company is a party or by which the Company is bound or by which any
of its respective properties or assets are bound, or (iv) result in a violation
of any federal, state, local or foreign statute, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations)
applicable to the Company or by which any property or asset of the Company are
bound or affected, except, in all cases other than violations pursuant to clause
(i) above, for such conflicts, defaults, terminations, amendments, acceleration,
cancellations and violations as would not, individually or in the aggregate,
have a Material Adverse Effect. The business of the Company is not being
conducted in violation of any laws, ordinances or regulations of any
governmental entity, except for possible violations which singularly or in the
aggregate do not and will not have a Material Adverse Effect. The Company
-4-
<PAGE> 8
is not required under federal, state or local law, rule or regulation to obtain
any consent, authorization or order of, or make any filing or registration with,
any court or governmental agency in order for it to execute, deliver or perform
any of its obligations under the Transaction Documents, or issue and sell the
Common Shares and the Warrant Shares in accordance with the terms hereof or
thereof (other than any filings which may be required to be made by the Company
with the Commission or state securities administrators subsequent to a Closing,
and any registration statement which may be filed pursuant hereto); provided
that, for purposes of the representation made in this sentence, the Company is
assuming and relying upon the accuracy of the relevant representations and
agreements of the Purchasers herein.
(f) Commission Documents, Financial Statements. The Company
has provided to the Purchasers prior to the date hereof copies of its annual
report on Form 10-K for the fiscal year ended September 30, 1999, its quarterly
reports for the fiscal quarters ended March 31, 1999, June 30, 1999, and
December 31, 1999 (all such documents are collectively referred to herein as the
"SEC Documents"). The Company has not provided to the Purchasers any material
non-public information or other information which, according to applicable law,
rule or regulation, should have been disclosed publicly by the Company but which
has not been so disclosed, other than with respect to the transactions
contemplated by this Agreement. The financial statements of the Company included
in the SEC Documents comply as to form and substance in all material respects
with applicable accounting requirements and the published rules and regulations
of the Commission or other applicable rules and regulations with respect
thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a consistent basis
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto or (ii) in the case of unaudited
interim statements, to the extent they may not include footnotes or may be
condensed or summary statements), and fairly present in all material respects
the financial position of the Company as of the dates thereof and the results of
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
(g) Intentionally Omitted.
(h) No Material Adverse Change. Since December 31, 1999, the
Company has not experienced or suffered any Material Adverse Effect.
(i) No Undisclosed Liabilities. The Company does not have any
liabilities, obligations, claims or losses (whether liquidated or unliquidated,
secured or unsecured, absolute, accrued, contingent or otherwise) other than
those incurred in the ordinary course of the Company's business since December
31, 1999, and which, individually or in the aggregate, do not or would not have
a Material Adverse Effect.
(j) No Undisclosed Events or Circumstances. No event or
circumstance has occurred or exists with respect to the Company or its business,
properties, prospects, operations or financial condition, which, under
applicable law, rule or regulation, requires public disclosure or announcement
by the Company but which has not been so publicly announced or disclosed.
(k) Intentionally Omitted.
-5-
<PAGE> 9
(l) Intentionally Omitted.
(m) Actions Pending. Except as set forth in the SEC Documents,
(i) there is no action, suit, claim, investigation or proceeding pending or, to
the knowledge of the Company, threatened against the Company which questions the
validity of this Agreement or the transactions contemplated hereby or any action
taken or to be taken pursuant hereto or thereto, other than routine claims and
suits regarding system installations which in the aggregate will not have a
Material Adverse Effect on the Company; (ii) there is no action, suit, claim,
investigation or proceeding pending or, to the knowledge of the Company,
threatened, against or involving the Company or any of its properties or assets
other than routine claims and suits regarding system installations which in the
aggregate will not have a Material Adverse Effect on the Company; and (iii)
there are no outstanding orders, judgments, injunctions, awards or decrees of
any court, arbitrator or governmental or regulatory body against the Company or
any officers or directors of the Company in their capacities as such.
(n) Compliance with Law. The business of the Company has been
and is presently being conducted in accordance with all applicable federal,
state and local governmental laws, rules, regulations and ordinances, except
such that, individually or in the aggregate, do not cause a Material Adverse
Effect. The Company has all franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals necessary for the
conduct of its business as now being conducted by it unless the failure to
possess such franchises, permits, licenses, consents and other governmental or
regulatory authorizations and approvals, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.
(o) Taxes. The Company has accurately prepared and filed all
federal, state and other tax returns required by law to be filed by it, has paid
or made provisions for the payment of all taxes shown to be due and all
additional assessments, and adequate provisions have been and are reflected in
the financial statements of the Company for all current taxes and other charges
to which the Company is subject and which are not currently due and payable.
None of the federal income tax returns of the Company have been audited by the
Internal Revenue Service. The Company has no knowledge of any additional
assessments, adjustments or contingent tax liability (whether federal or state)
pending or threatened against the Company for any period, nor of any basis for
any such assessment, adjustment or contingency.
(p) Certain Fees. The Company has not employed any broker or
finder or incurred any liability for any brokerage or investment banking fees,
commissions, finders' or structuring fees, financial advisory fees or other
similar fees in connection with the Transaction Documents, except as set forth
on Schedule 2.1(p) hereto. All those entities listed on Schedule 2.1(p) hereto
are broker/dealers (i) registered and in good standing with the National
Association of Securities Dealers, Inc. and (ii) registered pursuant to Section
15 of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
(q) Disclosure. To the best of the Company's knowledge,
neither this Agreement or the Schedules hereto nor any other documents,
certificates or instruments furnished to the Purchasers by or on behalf of the
Company in connection with the transactions contemplated by this Agreement
contain any untrue statement of a material fact or omit to state a
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material fact necessary in order to make the statements made herein or therein,
in the light of the circumstances under which they were made herein or therein,
not misleading.
(r) Intentionally Omitted.
(s) Intentionally Omitted.
(t) Intentionally Omitted.
(u) Intentionally Omitted.
(v) Intentionally Omitted.
(w) Securities Act of 1933. The Company has complied and will
comply with all applicable federal and state securities laws in connection with
the offer, issuance and sale of the Common Shares and the Warrants hereunder.
Neither the Company nor anyone acting on its behalf, directly or indirectly, has
or will sell, offer to sell or solicit offers to buy the Common Shares, the
Warrants or similar securities to, or solicit offers with respect thereto from,
or enter into any preliminary conversations or negotiations relating thereto
with, any person, or has taken or will take any action so as to bring the
issuance and sale of the Common Shares and the Warrants under the registration
provisions of the Securities Act and any other applicable federal and state
securities laws. Neither the Company nor any of its affiliates, nor any person
acting on its or their behalf, has engaged in any form of general solicitation
or general advertising (within the meaning of Regulation D under the Securities
Act) in connection with the offer or sale of the Common Shares and the Warrants.
(x) Governmental Approvals. Except for the filing of any
notice prior or subsequent to the Closings that may be required under applicable
state or federal securities laws (which if required, shall be filed on a timely
basis), including, but not limited to, the filing of a registration statement or
statements pursuant to the Registration Rights Agreement, no authorization,
consent, approval, license exemption of, filing or registration with any court
or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is or will be necessary for, or in
connection with, the execution or delivery of the Common Shares, or for the
performance by the Company of its obligations under the Transaction Documents.
(y) Intentionally Omitted.
(z) Absence of Certain Developments. Except as provided in
Schedule 2.1(z) hereto, since December 31, 1999, the Company has not:
(i) issued any stock, bonds or other corporate securities or
any rights, options or warrants with respect thereto;
(ii) borrowed any amount or incurred or become subject to any
liabilities (absolute or contingent) except current liabilities incurred in the
ordinary course of business which are comparable in nature and amount to the
current liabilities incurred in the ordinary course of business during the
comparable portion of its prior fiscal year, as adjusted to reflect the
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current nature and volume of the Company's business;
(iii) discharged or satisfied any lien or encumbrance or paid
any obligation or liability (absolute or contingent), other than current
liabilities paid in the ordinary course of business;
(iv) declared or made any payment or distribution of cash or
other property to stockholders with respect to its stock, or purchased or
redeemed, or made any agreements so to purchase or redeem, any shares of its
capital stock;
(v) sold, assigned or transferred any other tangible assets,
or canceled any debts or claims, except in the ordinary course of business;
(vi) sold, assigned or transferred any patent rights,
trademarks, trade names, copyrights, trade secrets or other intangible assets or
intellectual property rights, or disclosed any proprietary confidential
information to any person except to customers in the ordinary course of business
or to the Purchasers or their representatives;
(vii) suffered any substantial losses or waived any rights of
material value, whether or not in the ordinary course of business, or suffered
the loss of any material amount of prospective business;
(viii) made any changes in employee compensation except in the
ordinary course of business and consistent with past practices;
(ix) made capital expenditures or commitments therefor that
aggregate in excess of $300,000;
(x) entered into any other transaction other than in the
ordinary course of business, or entered into any other material transaction,
whether or not in the ordinary course of business;
(xi) made charitable contributions or pledges in excess of
$25,000;
(xii) suffered any material damage, destruction or casualty
loss, whether or not covered by insurance;
(xiii) experienced any material problems with labor or
management in connection with the terms and conditions of their employment; or
(xiv) entered into an agreement, written or otherwise, to take
any of the foregoing actions.
(aa) Use of Proceeds. The proceeds from the sale of the Common
Shares and the Warrants will be used by the Company for working capital and
general corporate purposes.
(bb) Public Utility Holding Company Act and Investment Company
Act Status. The Company is not a "holding company" or a "public utility company"
as such terms are
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defined in the Public Utility Holding Company Act of 1935, as amended. The
Company is not, and as a result of and immediately upon any Closing will not be,
an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
(cc) ERISA. No liability to the Pension Benefit Guaranty
Corporation has been incurred with respect to any Plan by the Company which is
or would be materially adverse to the Company. The execution and delivery of
this Agreement and the issue and sale of the Common Shares and the Warrants will
not involve any transaction which is subject to the prohibitions of Section 406
of ERISA or in connection with which a tax could be imposed pursuant to Section
4975 of the Internal Revenue Code of 1986, as amended, provided that, if any of
the Purchasers, or any person or entity that owns a beneficial interest in any
of the Purchasers, is an "employee pension benefit plan" (within the meaning of
Section 3(2) of ERISA) with respect to which the Company is a "party in
interest" (within the meaning of Section 3(14) of ERISA), the requirements of
Sections 407(d)(5) and 408(e) of ERISA, if applicable, are met. As used in this
Section 2.1(ac), the term "Plan" shall mean an "employee pension benefit plan"
(as defined in Section 3 of ERISA) which is or has been established or
maintained, or to which contributions are or have been made, by the Company or
by any trade or business, whether or not incorporated, which, together with the
Company, is under common control, as described in Section 414(b) or (c) of the
Code.
(dd) Dilutive Effect. The Company understands and acknowledges
that the number of the Warrant Shares issuable upon exercise of the Warrants
will increase in certain circumstances. The Company further acknowledges that
its obligations to issue the Warrant Shares upon the exercise of the Warrants in
accordance with this Agreement and the Warrants, is, in each case, absolute and
unconditional regardless of the dilutive effect that such issuance may have on
the ownership interest of other stockholders of the Company.
Section 2.2 Representations and Warranties of the Purchasers Each of
the Purchasers hereby makes the following representations and warranties to the
Company with respect solely to itself and not with respect to any other
Purchaser:
(a) Organization and Standing of the Purchasers. If the
Purchaser is an entity, such Purchaser is a corporation, limited liability
company or partnership duly incorporated or organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization, and such Purchaser was not formed for the specific purpose of
acquiring the Units.
(b) Authorization and Power. The Purchaser has the requisite
power and authority to enter into and perform this Agreement, the Registration
Rights Agreement and the Escrow Agreement and to purchase the Common Shares and
the Warrants being sold to it hereunder. The execution, delivery and performance
of this Agreement, the Registration Rights Agreement, the Escrow Agreement and
the documents contemplated hereby by such Purchaser and the consummation by it
of the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate, company or partnership action (if the Purchaser is an
entity), and no further consent or authorization of such Purchaser or its Board
of Directors, stockholders, members, managers or partners, as the case may be,
is required. This Agreement, the Registration Rights Agreement and the Escrow
Agreement will have been duly executed and
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delivered by the Purchasers on the Tranche I Closing Date. Each of this
Agreement, the Registration Rights Agreement and the Escrow Agreement
constitutes, or shall constitute when executed and delivered, a valid and
binding obligation of the Purchaser enforceable against the Purchaser in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, or similar laws relating to, or affecting generally the
enforcement of, creditor's rights, remedies or by other equitable principles of
general application.
(c) No Conflicts. The execution, delivery and performance of
this Agreement, the Registration Rights Agreement, the Escrow Agreement and the
documents contemplated hereby and thereby and the consummation by such Purchaser
of the transactions contemplated hereby and thereby or relating hereto do not
and will not (i) result in a violation of such Purchaser's charter documents,
bylaws, partnership agreement, operating agreement or other organizational
documents, or (ii) conflict with, constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of any
agreement, indenture or instrument to which such Purchaser is a party, or result
in a violation of any law, rule, or regulation, or any order, judgment or decree
of any court or governmental agency applicable to such Purchaser or its
properties (except for such conflicts, defaults and violations as would not,
individually or in the aggregate, have a Material Adverse Effect on such
Purchaser). Such Purchaser is not required to obtain any consent, authorization
or order of, or make any filing or registration with, any court or governmental
agency in order for it to execute, deliver or perform any of its obligations
under this Agreement, the Registration Rights Agreement, the Escrow Agreement or
the documents contemplated hereby and thereby or to purchase the Common Shares
and the Warrants in accordance with the terms hereof, provided that for purposes
of the representation made in this sentence, such Purchaser is assuming and
relying upon the accuracy of the relevant representations and agreements of the
Company herein.
(d) Acquisition for Investment. Such Purchaser is purchasing
the Common Shares and the Warrants solely for its own account for the purpose of
investment and not with a view to or for sale in connection with distribution.
Such Purchaser does not have a present intention to sell the Common Shares or
the Warrants, nor a present arrangement (whether or not legally binding) or
intention to effect any distribution of the Common Shares or the Warrants to or
through any person or entity; provided, however, that by making the
representations herein and subject to Section 2.2(f) below, such Purchaser does
not agree to hold the Common Shares or the Warrants for any minimum or other
specific term and reserves the right to dispose of the Common Shares or the
Warrants at any time in accordance with federal securities laws applicable to
such disposition. Such Purchaser acknowledges that it is able to bear the
financial risks associated with an investment in the Common Shares or the
Warrants and that it has been given full access to such records of the Company
and to the officers of the Company as it has deemed necessary or appropriate to
conduct its due diligence investigation.
(e) Accredited Purchasers. Such Purchaser is an "accredited
investor" as defined in Regulation D promulgated under the Securities Act and is
a resident of the jurisdiction indicated on Exhibit A hereto. Purchaser has such
knowledge and experience in financial and business matters that Purchaser is
capable of evaluating the merits and risks of Purchaser's investment in the
Company.
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(f) Rule 144. Such Purchaser understands that the Common
Shares and Warrants must be held indefinitely unless such Common Shares and the
Warrants are registered under the Securities Act or an exemption from
registration is available. Such Purchaser acknowledges that such person is
familiar with Rule 144 of the rules and regulations of the Commission, as
amended, promulgated pursuant to the Securities Act ("Rule 144"), and that such
person has been advised that Rule 144 permits resales only under certain
circumstances. Such Purchaser understands that to the extent that Rule 144 is
not available, such person will be unable to sell any Common Shares and the
Warrants without either registration under the Securities Act or the existence
of another exemption from such registration requirement.
(g) No Broker-Dealer Affiliation. None of the Purchasers is a
broker-dealer registered with the Commission or an affiliate (as such term is
defined in Rule 144(a) promulgated under the Securities Act) of a broker-dealer
registered with the Commission.
(h) General. Such Purchaser understands that the Shares are
being offered and sold in reliance on a transactional exemption from the
registration requirement of federal and state securities laws and the Company is
relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of such Purchaser set forth
herein in order to determine the applicability of such exemptions and the
suitability of such Purchaser to acquire the Shares. Purchaser understands that
no United States federal or state agency or any government or governmental
agency has passed upon or made any recommendation or endorsement of the Common
Shares and the Warrants.
(i) Opportunities for Additional Information. Purchaser
acknowledges that Purchaser has had the opportunity to ask questions of and
receive answers from, or obtain additional information from, the executive
officers of the Company concerning the financial and other affairs of the
Company, and to the extent deemed necessary in light of Purchaser's personal
knowledge of the Company's affairs, Purchaser has asked such questions and
received answers to the full satisfaction of Purchaser, and Purchaser desires to
invest in the Company.
(j) No General Solicitation. Purchaser acknowledges that the
Common Shares and Warrants were not offered to Purchaser by means of any form of
general or public solicitation or general advertising, or publicly disseminated
advertisements or sales literature, including (i) any advertisement, article,
notice or other communication published in any newspaper, magazine, or similar
media, or broadcast over television or radio, or (ii) any seminar or meeting to
which Purchaser was invited by any of the foregoing means of communications.
(k) No Commissions or Similar Fees. In connection with the
purchase of the Common Shares and Warrants by Purchaser, Purchaser has not and
will not pay, and has no knowledge of the payment of, any commission or other
direct or indirect remuneration to any person or entity for soliciting or
otherwise coordinating the purchase of such securities, except as set forth on
Schedule 2.2(p) hereto. All such persons or entities listed on the Schedule are
duly licensed and/or registered to engage in securities offering and selling
activities (or are exempt from such licensing and/or registration requirements)
under applicable federal laws and the laws of the state(s) in which such
activities have taken place in connection with the transaction contemplated by
this agreement.
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<PAGE> 15
(l) Purchaser's Age and State of Residence. If Purchaser is an
individual, Purchaser is eighteen (18) years of age or older. Purchaser's
current address is (and if Purchaser is an entity, Purchaser's state of
incorporation or organization are) as set forth on the signature page hereof. If
Purchaser is an entity whose accredited investor status is dependent upon each
equity owner of such entity being an accredited investor, each of Purchaser's
equity owners and/or partners has the same state of residence as the Purchaser's
state of organization, and none of Purchaser's equity owners and/or partners has
any present intention of moving from such state of residency.
(m) Reliance by the Company. Purchaser understands fully the
meaning and legal consequences of the provisions herein, and agrees to indemnify
and hold harmless the Company, and each other person, if any subject to
liability because of such person's connection with the Company, against all
actions, claims, losses, damages and liabilities arising out of or based upon
any false representation or warranty herein, or any breach by the undersigned of
any provision hereof, and to reimburse the Company and each such other person
for any legal and other expenses incurred by the Company and each such other
person in connection with investigating, defending, and, if appropriate,
settling any action, claim, loss, damage or liability.
ARTICLE III
COVENANTS
The Company covenants with each of the Purchasers, which covenants are
for the benefit of the Purchasers and their permitted assignees (as defined
herein) as follows:
Section 3.1 Securities Compliance.
(a) The Company shall notify the Commission in accordance with
their rules and regulations, of the transactions contemplated by any of the
Transaction Documents, including filing a Form D with respect to the Common
Shares, Warrants and Warrant Shares as may be required under Regulation D, and
shall take all other necessary action and proceedings as may be required and
permitted by applicable law, rule and regulation, for the legal and valid
issuance of the Common Shares and the Warrant Shares to the Purchasers or
subsequent holders.
(b) The Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of
such Purchasers set forth herein in order to determine the applicability of
federal and state securities laws exemptions and the suitability of such
Purchasers to acquire the Shares and the Warrants.
Section 3.2 Registration and Listing. The Company will cause a
registration statement registering the Common Shares and the Warrant Shares to
be filed no later than 30 days after the Tranche I Closing Date and cause the
registration statement to be declared effective within (i) 120 days after the
Tranche I Closing Date or (ii) five (5) business days of the date on which the
Commission informs the Company that it may request the acceleration of the
effectiveness of the registration statement, whichever date is the earlier, (the
"Effectiveness Date") will comply in all respects with its reporting and filing
obligations under the Exchange Act, will comply with all requirements related to
any registration statement filed pursuant to this Agreement or the
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Registration Rights Agreement, and will not take any action or file any document
(whether or not permitted by the Securities Act or the rules promulgated
thereunder) to terminate or suspend such registration or to terminate or suspend
its reporting and filing obligations under the Exchange Act or Securities Act,
except as permitted herein. The Company will take all action necessary to
continue the listing or trading of its Common Stock on the over-the-counter
electronic bulletin board.
Section 3.3 Intentionally Omitted.
Section 3.4 Compliance with Laws. The Company shall comply with all
applicable laws, rules, regulations and orders, noncompliance with which could
have a Material Adverse Effect.
Section 3.5 Keeping of Records and Books of Account. The Company shall
keep adequate records and books of account, in which complete entries will be
made in accordance with GAAP consistently applied, reflecting all financial
transactions of the Company, and in which, for each fiscal year, all proper
reserves for depreciation, depletion, obsolescence, amortization, taxes, bad
debts and other purposes in connection with its business shall be made.
Section 3.6 Reporting Requirements The Company shall furnish the
following, if and when applicable, to each Purchaser so long as such Purchaser
shall be obligated hereunder to purchase the Common Shares or shall own Common
Shares which, in the aggregate, represent more than 2% of the total combined
voting power of all voting securities then outstanding, provided, however, that
the Company shall not be obligated to furnish the following, if the following
reports have been filed by the Company with the Commission pursuant to the
Commission's "electronic data gathering and retrieval" (EDGAR) service:
(a) Reports filed with the Commission on Form 10-QSB, as soon
as available, and in any event within 15 days after filing such report with the
Commission;
(b) Annual Reports filed with the Commission on Form 10-KSB,
as soon as available, and in any event within 90 days after the end of each
fiscal year of the Company; and
(c) Copies of all notices and information, including without
limitation notices and proxy statements in connection with any meetings, that
are provided to holders of shares of Common Stock, contemporaneously with the
delivery of such notices or information to such holders of Common Stock.
Section 3.7 Intentionally Omitted.
Section 3.8 Other Agreements The Company shall not enter into any
agreement in which the terms of such agreement would restrict or impair the
right or ability to perform of the Company under any Transaction Document.
Section 3.9 Distributions. So long as any Warrants remain outstanding,
the Company agrees that it shall not declare or pay any dividends or make any
distributions to any holder(s) of Common Stock other than stock dividends or
stock splits.
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Section 3.10 Intentionally Omitted.
Section 3.11 Intentionally Omitted.
Section 3.12 Regulation S. The Company covenants and agrees that if the
Company fails to register the Common Shares and the Warrant Shares under the
terms and conditions of the Registration Rights Agreement attached hereto as
Exhibit D or such registration shall no longer be effective, then for so long as
any of the Shares remain outstanding and continue to be "restricted securities"
within the meaning of Rule 144 under the Securities Act, the Company shall, in
order to permit resales of the Shares pursuant to Regulation S under the
Securities Act, (a) continue to file all material required to be filed pursuant
to Section 13(a) or 15(d) of the Exchange Act and (b) not knowingly engage in
directed selling efforts in connection with the resale of securities by any
Purchaser under Regulation S.
Section 3.13 Right of First Refusal.
(a) During the period from the Tranche I Closing Date until
the sixtieth (60th ) day immediately following the Effectiveness Date, the
Company covenants and agrees that it will not, without the prior written consent
of the Purchasers, enter into any subsequent offer or sale to, or exchange with
(or other type of distribution to), any third party (a "Subsequent Financing"),
of Common Stock or any securities convertible or exchangeable into Common Stock,
including debt securities (collectively, the "Financing Securities").
Notwithstanding the foregoing, a Subsequent Financing shall not include any
transaction involving the Company's (i) issuance of any Financing Securities
(other than for cash) in connection with a merger and/or acquisition,
consolidation, sale or disposition of all or substantially all of the Company's
assets, (ii) exchange of capital stock for assets, (iii) public offering at
market, or (iv) issuance of Common Stock or the issuance of options to purchase
Common Stock as such is related to any employee stock ownership plan.
(b) During the one year period immediately following the
Effectiveness Date, the Company covenants and agrees to promptly notify in
writing (a "Rights Notice") a designee of the Purchasers of the terms and
conditions of any proposed Subsequent Financing. The Rights Notice shall
describe, in reasonable detail, the proposed Subsequent Financing, the proposed
closing date of the Subsequent Financing, which shall not be within thirty (30)
calendar days from the date of the Rights Notice, including, without limitation,
all of the terms and conditions thereof. The Rights Notice shall provide the
Purchasers an option (the "Rights Option") during the fifteen (15) calendar day
period following delivery of the Rights Notice (the "Option Period") to purchase
up to $8,000,000, or such greater amount as the Company and the Purchasers may
agree to, of the securities being offered in such Subsequent Financing on the
same, absolute terms and conditions as contemplated by such Subsequent Financing
(the "First Refusal Rights"). Delivery of any Rights Notice constitutes a
representation and warranty by the Company that there are no other material
terms and conditions, arrangements, agreements or otherwise except for those
disclosed in the Rights Notice, to provide additional compensation to any party
participating in any proposed Subsequent Financing, including, but not limited
to, additional compensation based on changes in the Purchase Price or any type
of reset or adjustment of a purchase or conversion price or to issue additional
securities at any time after the closing date of a Subsequent Financing. If the
Company does not receive notice of exercise of the Rights
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Option from the Purchasers within the Option Period, the Company shall have the
right to close the Subsequent Financing on the scheduled closing date with a
third party; provided that all of the terms and conditions of such closing are
the same as those provided to the Purchasers in the Rights Notice. If the
closing of the proposed Subsequent Financing does not occur on that date, any
closing of the contemplated Subsequent Financing or any other Subsequent
Financing shall be subject to all of the provisions of this Section 3.13,
including, without limitation, the delivery of a new Rights Notice.
Section 3.14 Reservation of Shares. So long as any of the Common Shares
or Warrants remain outstanding, the Company shall take all action necessary to
at all times have authorized, and reserved for the purpose of issuance, no less
than 100% of the aggregate number of shares of Common Stock needed to provide
for the issuance of the Common Shares and the Warrant Shares.
Section 3.15 Transfer Agent Instructions. The Company shall issue
irrevocable instructions to its transfer agent, and any subsequent transfer
agent, to issue certificates, registered in the name of each Purchaser or its
respective nominee(s), for the Common Shares and the Warrant Shares in such
amounts as specified from time to time by each Purchaser to the Company upon
issuance of the Common Shares or exercise of the Warrants in the form of Exhibit
E attached hereto (the "Irrevocable Transfer Agent Instructions"). Prior to
registration of the Common Shares and the Warrant Shares under the Securities
Act, all such certificates shall bear the restrictive legend specified in
Section 6.1 of this Agreement. The Company warrants that no instruction other
than the Irrevocable Transfer Agent Instructions referred to in this Section
3.15 will be given by the Company to its transfer agent and that the Shares
shall otherwise be freely transferable on the books and records of the Company
as and to the extent provided in this Agreement and the Registration Rights
Agreement. Nothing in this Section 3.15 shall affect in any way each Purchaser's
obligations and agreements set forth in Section 6.1 to comply with all
applicable prospectus delivery requirements, if any, upon resale of the Shares.
If a Purchaser transfers any Shares or Warrants in compliance with Section 3.16,
the Company shall permit the transfer, and, in the case of the Common Shares and
the Warrant Shares, promptly instruct its transfer agent to issue one (1) or
more certificates in such name and in such denominations as specified by such
Purchaser and, in the case of transfers pursuant to Section 3.16(a) or (c),
without any restrictive legend. The Company acknowledges that a breach by it of
its obligations under this Section 3.15 will cause irreparable harm to the
Purchasers by vitiating the intent and purpose of the transaction contemplated
hereby. Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Section 3.15 will be inadequate and agrees,
in the event of a breach or threatened breach by the Company of the provisions
of this Section 3.15, that the Purchasers shall be entitled, in addition to all
other available remedies, to an order and/or injunction restraining any breach
and requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required.
Section 3.16 Transfer or Resale. Each Purchaser severally, and not
jointly, understands that (i) except as provided in the Registration Rights
Agreement, the sale or resale of the Shares and the Warrants have not been and
are not being registered under the Securities Act or any state securities laws,
and agrees that the Shares and the Warrants may not be transferred unless (a)
the resale of the Shares and Warrants has been registered thereunder; or (b)
Purchaser shall have
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delivered to the Company an opinion of counsel (which opinion shall be in form,
substance and scope customary for opinions of counsel in comparable
transactions) to the effect that the Shares and Warrants to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration; or (c) the Shares and Warrants are sold under Rule 144 promulgated
under the Securities Act (or a successor rule); and (ii) neither the Company nor
any other person is under any obligation to register such Securities under the
Securities Act or any state securities laws (other than pursuant to the
Registration Rights Agreement).
ARTICLE IV
CONDITIONS
Section 4.1 Conditions Precedent to the Obligation of the Company to
Sell the Units at each Closing. The obligation hereunder of the Company to issue
and sell the applicable Common Shares and Warrants to the Purchasers at each
Closing is subject to the satisfaction or waiver, at or before such Closing, of
each of the conditions set forth below. These conditions are for the Company's
sole benefit and may be waived by the Company at any time in its sole
discretion.
(a) Accuracy of Each Purchaser's Representations and
Warranties. The representations and warranties of each Purchaser shall be true
and correct in all material respects as of the date when made and as of each
Closing as though made at that time, except for representations and warranties
that are expressly made as of a particular date, which shall be true and correct
in all material respects as of such date.
(b) Performance by the Purchasers. Each Purchaser shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by such Purchaser at or prior to such Closing, including having
paid by wire transfer of funds into escrow in accordance with this Agreement and
the Escrow Agreement the Purchase Price set forth opposite such Purchaser's name
on Exhibit A under the heading "Purchase Prices" (for a total of $4 million at
each Closing); each Purchaser shall have executed and delivered this Agreement,
the Registration Rights Agreement and the Escrow Agreement to the Escrow Agent
on behalf of the Company. The Escrow Agent shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement and the Escrow Agreement to be performed, satisfied
or complied with by the Escrow Agent at or prior to such Closing, including
delivery of all of the Purchaser's Closing Documents to the Company.
(c) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement.
Section 4.2 Conditions Precedent to the Obligation of the Purchasers to
Purchase the Units at each Closing. The obligation hereunder of each Purchaser
to acquire and pay for the applicable Common Shares and Warrants at each Closing
is subject to the satisfaction or waiver, at or before such Closing, of each of
the conditions set forth below. These conditions are for
-16-
<PAGE> 20
each Purchaser's sole benefit and may be waived by such Purchaser at any time in
its sole discretion.
(a) Accuracy of the Company's Representations and Warranties.
Each of the representations and warranties of the Company shall be true and
correct in all material respects as of the date when made and as of each Closing
as though made at that time (except for representations and warranties that
speak as of a particular date), which shall be true and correct in all material
respects as of such date.
(b) Performance by the Company. The Company shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to each Closing.
(c) No Suspension, Etc. From the date hereof to such Closing
Date, trading in the Company's Common Stock shall not have been suspended by the
Commission, and, at any time prior to such Closing, trading in securities
generally as reported by Bloomberg Financial Markets ("Bloomberg") shall not
have been suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported by Bloomberg, or on the New
York Stock Exchange, nor shall a banking moratorium have been declared either by
the United States, or New York State authorities, nor shall there have occurred
any material outbreak or escalation of hostilities or other national or
international calamity or crisis of such magnitude in its effect on, or any
material adverse change in any financial market which, in each case, in the
judgment of such Purchaser, makes it impracticable or inadvisable to purchase
the Common Shares.
(d) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement.
(e) No Proceedings or Litigation. No action, suit or
proceeding before any arbitrator or any governmental authority shall have been
commenced, and no investigation by any governmental authority shall have been
threatened, against the Company, or any of the officers, directors or affiliates
of the Company seeking to restrain, prevent or change the transactions
contemplated by this Agreement, or seeking damages in connection with such
transactions.
(f) Opinion of Counsel, Etc. At each Closing, the Escrow Agent
on behalf of each Purchaser shall have received an opinion of counsel to the
Company, dated the date of such Closing, in the form of Exhibit F hereto, and
such other certificates and documents as such Purchaser or its counsel shall
reasonably require incident to such Closing.
(g) Registration Rights Agreement. Prior to the Tranche I
Closing, the Company shall have executed and delivered the Registration Rights
Agreement to the Escrow Agent on behalf of each Purchaser.
(h) Stock Certificates. The Company shall have executed and
delivered to the Escrow Agent on behalf of each Purchaser, the stock
certificates (in such denominations as such
-17-
<PAGE> 21
Purchaser shall request) for the Common Shares and the Warrants being purchased
by such Purchaser at such Closing.
(i) Resolutions. Prior to the Tranche I Closing, the Board of
Directors of the Company shall have adopted resolutions consistent with Section
2.1(b) above in a form reasonably acceptable to counsel for the Purchasers (the
"Resolutions").
(j) Reservation of Shares. As of each Closing Date, the
Company shall have reserved out of its authorized and unissued Common Stock,
solely for the purpose of effecting the issuance of the Common Shares and the
exercise of the Warrants, a number of shares of Common Stock equal to at least
100% of the shares of Common Stock which would be issuable upon issuance of the
Common Shares and upon exercise of the Warrants following such Closing (after
giving effect to the Common Shares and Warrants to be issued on such Closing
Date and assuming all such Common Shares and Warrants were fully issuable and
exercisable, as applicable, on such date regardless of any limitation on the
timing or amount of such issuances or exercises).
(k) Transfer Agent Instructions. As of the Tranche I Closing
Date, the Irrevocable Transfer Agent Instructions, in the form of Exhibit E
attached hereto, shall have been delivered to and acknowledged in writing by the
Company's transfer agent.
(l) Secretary's Certificate. At the Tranche I Closing, the
Company shall have delivered to the Escrow Agent on behalf of each Purchaser a
secretary's certificate, dated as of such Closing Date, as to (i) the
Resolutions, (ii) the Articles and (iii) the Bylaws, each as in effect at such
Closing, and (iv) the authority and incumbency of the officers of the Company
executing the Transaction Documents and any other documents required to be
executed or delivered in connection therewith.
(m) Escrow Agreement. Prior to the Tranche I Closing, the
Company shall have executed and delivered the Escrow Agreement to the Escrow
Agent on behalf of each Purchaser.
(n) Officer's Certificate. At each Closing, the Company shall
have delivered to such Purchaser a certificate of an executive officer of the
Company, dated as of such Closing Date, confirming the accuracy of the Company's
representations, warranties and covenants as of such Closing Date and confirming
the compliance by the Company with the conditions precedent set forth in this
Section 4.2 as of such Closing Date.
ARTICLE V
REGISTRATION RIGHTS
At the Tranche I Closing, the Company and each of the Purchasers shall
enter into a Registration Rights Agreement in the form attached hereto as
Exhibit D (the "Registration Rights Agreement").
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<PAGE> 22
ARTICLE VI
STOCK CERTIFICATE LEGEND
Section 6.1 Legend. Each certificate representing the Common Shares,
the Warrants, and the securities issued upon exercise thereof, as applicable and
appropriate, shall be stamped or otherwise imprinted with a legend in the
following form (in addition to any legend required by applicable federal,
provincial or state securities or "blue sky" laws):
THESE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE "SECURITIES")
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") OR STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS REGISTERED UNDER THAT ACT AND UNDER APPLICABLE STATE SECURITIES
LAWS OR CAM DATA SYSTEMS, INC. (THE "COMPANY") SHALL HAVE RECEIVED AN
OPINION IN FORM, SCOPE AND SUBSTANCE REASONABLY ACCEPTABLE TO THE
COMPANY, OF COUNSEL, WHO IS REASONABLY ACCEPTABLE TO THE COMPANY THAT
REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS IS NOT
REQUIRED.
The Company agrees to reissue certificates representing the Shares or
the Warrants, without the legend set forth above if at such time, prior to
making any transfer of any Shares or the Warrants such holder thereof shall give
written notice to the Company describing the manner and terms of such transfer
and removal as the Company may reasonably request and such holder otherwise
complies with the terms of the Transaction Documents and the provisions of this
Section 6.1. The legend set forth above shall be removed and the Company shall
issue a certificate without such legend to the holder of any Shares or Warrants
upon which it is stamped if, unless otherwise required by federal or state
securities laws, (a) the sale of such Shares or Warrants is registered under the
Securities Act (including registration pursuant to Rule 416 thereunder) as
contemplated by the Registration Rights Agreement (b) such holder provides the
Company with an opinion of counsel, in form, substance and scope customary for
opinions of counsel in comparable transactions, to the effect that a sale or
transfer of such Shares or Warrants may be made without registration under the
Securities Act; or (c) such holder provides the Company with reasonable
assurances that such Shares or Warrants can be sold under Rule 144(k). Each
Purchaser agrees that it will only sell Shares or Warrants, including those
represented by a certificate(s) from which the legend has been removed, pursuant
to an effective registration statement, under an exemption from the registration
requirements of the Securities Act or in accordance with Rule 144(k). In the
event the above legend is removed from any Shares or Warrants and the
effectiveness of a registration statement covering such Shares or Warrants is
suspended or the Company determines that a supplement or amendment thereto is
required by applicable securities laws, then upon reasonable advance notice to
such Purchaser the Company may require that the above legend be placed on any
such Shares or Warrants that cannot then be sold pursuant to an effective
registration statement, under an exemption from the registration requirements of
the Securities Act or under Rule 144(k) and such Purchaser shall
-19-
<PAGE> 23
cooperate in the replacement of such legend. Such legend shall thereafter be
removed when such Shares or Warrants may again be sold pursuant to an effective
registration statement, under an exemption from the registration requirements of
the Securities Act or under Rule 144(k). The restrictions on transfer contained
in Section 6.1 shall be in addition to, and not by way of limitation of, any
other restrictions on transfer contained in any other section of this Agreement.
ARTICLE VII
TERMINATION
Section 7.1 Termination by Mutual Consent. This Agreement may be
terminated at any time prior to any Closing by the mutual written consent of the
Company and the Purchasers.
Section 7.2 Other Termination. This Agreement may be terminated by the
action of the Board of Directors of the Company or by any one or more of the
Purchasers at any time if a Closing shall not have been consummated by such
Closing Date, as long as the failure to so consummate is not the fault of the
terminating party.
Section 7.3 Termination of Closing. If a Closing has not occurred on or
prior to the applicable Closing Date, those sections and provisions relating to
such Closing in this Agreement may be terminated by the action of the Board of
Directors of the Company or by any one or more of the Purchasers as long as the
failure to consummate such Closing is not the fault of the terminating party.
Section 7.4 Effect of Termination. In the event of termination by the
Company or any one or more of the Purchasers of this Agreement or any part
hereof, written notice thereof shall forthwith be given to the other party and
the transactions contemplated by this Agreement and the Registration Rights
Agreement shall be terminated without further action by either party. If this
Agreement is terminated as provided in Section 7.1 or 7.2 herein, this Agreement
shall become void and of no further force and effect, except for Sections 9.1
and 9.2, and Article VIII herein. Nothing in this Section 7.4 shall be deemed to
release the Company or any Purchaser from any liability for any breach under
this Agreement or the Registration Rights Agreement, or to impair the rights of
the Company and the Purchasers to compel specific performance by the other party
of its obligations under this Agreement and the Registration Rights Agreement.
ARTICLE VIII
INDEMNIFICATION Section 8.1 General Indemnity. The Company agrees to
indemnify and hold harmless the Purchasers (and their respective directors,
officers, affiliates, agents, successors and assigns) from and against any and
all losses, liabilities, deficiencies, costs, damages and expenses (including,
without limitation, reasonable attorney's fees, charges and disbursements)
incurred by the Purchasers as a result of any inaccuracy in or breach of the
representations, warranties or covenants made by the Company herein. Each
Purchaser severally but not jointly agrees to indemnify and hold harmless the
Company and its directors, officers, affiliates, agents, successors and assigns
from and against any and all losses, liabilities, deficiencies, costs,
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<PAGE> 24
damages and expenses (including, without limitation, reasonable attorneys fees,
charges and disbursements) incurred by the Company as result of any inaccuracy
in or breach of the representations, warranties or covenants made by such
Purchaser herein.
Section 8.2 Indemnification Procedure. Any party entitled to
indemnification under this Article VIII (an "indemnified party") will give
written notice to the indemnifying party of any matters giving rise to a claim
for indemnification; provided, that the failure of any party entitled to
indemnification hereunder to give notice as provided herein shall not relieve
the indemnifying party of its obligations under this Article VIII except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any action, proceeding or claim is brought against an
indemnified party in respect of which indemnification is sought hereunder, the
indemnifying party shall be entitled to participate in and, unless in the
reasonable judgment of the indemnified party a conflict of interest between it
and the indemnifying party may exist with respect of such action, proceeding or
claim, to assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. In the event that the indemnifying party advises an
indemnified party that it will contest such a claim for indemnification
hereunder, or fails, within 30 days of receipt of any indemnification notice to
notify, in writing, such person of its election to defend, settle or compromise,
at its sole cost and expense, any action, proceeding or claim (or discontinues
its defense at any time after it commences such defense), then the indemnified
party may, at its option, defend, settle or otherwise compromise or pay such
action or claim. In any event, unless and until the indemnifying party elects in
writing to assume and does so assume the defense of any such claim, proceeding
or action, the indemnified party's costs and expenses arising out of the
defense, settlement or compromise of any such action, claim or proceeding shall
be losses subject to indemnification hereunder. The indemnified party shall
cooperate fully with the indemnifying party in connection with any negotiation
or defense of any such action or claim by the indemnifying party and shall
furnish to the indemnifying party all information reasonably available to the
indemnified party which relates to such action or claim. The indemnifying party
shall keep the indemnified party fully apprised at all times as to the status of
the defense or any settlement negotiations with respect thereto. If the
indemnifying party elects to defend any such action or claim, then the
indemnified party shall be entitled to participate in such defense with counsel
of its choice at its sole cost and expense. The indemnifying party shall not be
liable for any settlement of any action, claim or proceeding effected without
its prior written consent. Notwithstanding anything in this Article VIII to the
contrary, the indemnifying party shall not, without the indemnified party's
prior written consent, settle or compromise any claim or consent to entry of any
judgment in respect thereof which imposes any future obligation on the
indemnified party or which does not include, as an unconditional term thereof,
the giving by the claimant or the plaintiff to the indemnified party of a
release from all liability in respect of such claim. The indemnification
required by this Article VIII shall be made by periodic payments of the amount
thereof during the course of investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred, so long as the
indemnified party irrevocably agrees to refund such moneys if it is ultimately
determined by a court of competent jurisdiction that such party was not entitled
to indemnification. The indemnity agreements contained herein shall be in
addition to (a) any cause of action or similar rights of the indemnified party
against the indemnifying party or others, and (b) any liabilities the
indemnifying party may be subject to pursuant to the law.
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<PAGE> 25
ARTICLE IX
MISCELLANEOUS
Section 9.1 Fees and Expenses. Each party shall pay the fees and
expenses of its advisors, counsel, accountants and other experts, if any, and
all other expenses, incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement, provided
that the Company shall allocate $40,000, at the Tranche I Closing, from the
aggregate Purchase Prices, to pay for all attorneys fees and expenses (exclusive
of disbursements and out-of-pocket expenses) incurred by the Purchasers in
connection with the preparation, negotiation, execution and delivery of this
Agreement, the Registration Rights Agreement and the transaction contemplated
hereunder. In addition, the Company shall pay all reasonable fees and expenses
incurred by the Purchasers in connection with any amendments, modifications or
waivers of this Agreement or any of the other Transaction Documents. In the
event of a dispute between the Company and any of the Purchasers concerning this
Agreement or any of the other Transaction Documents, the prevailing party in
such dispute shall be awarded all reasonable attorneys' fees and expenses
incurred in connection with such dispute. Notwithstanding anything to the
contrary contained herein, The Company shall pay all stamp or other similar
taxes and duties levied in connection with issuance of the Shares pursuant
hereto.
Section 9.2 Specific Enforcement, Consent to Jurisdiction.
(a) The remedies provided in this Agreement and the
Registration Rights Agreement shall be cumulative and in addition to all other
remedies available under this Agreement and the Registration Rights Agreement,
at law or in equity (including a decree of specific performance and/or other
injunctive relief), no remedy contained herein shall be deemed a waiver of
compliance with the provisions giving rise to such remedy and nothing herein
shall limit a Purchaser's right to pursue actual damages for any failure by the
Company to comply with the terms of this Agreement or the Registration Rights
Agreement. Amounts set forth or provided for herein and therein with respect to
payments, conversion and the like (and the computation thereof) shall be the
amounts to be received by the Purchasers thereof and shall not, except as
expressly provided herein, be subject to any other obligation of the Company (or
the performance thereof). The Company acknowledges that a breach by it of its
obligations hereunder and thereunder will cause irreparable harm to the holders
of the Units and that the remedy at law for any such breach may be inadequate.
The Company therefore agrees that, in the event of any such breach or threatened
breach, the holders of the Units shall be entitled, in addition to all other
available remedies, to an injunction restraining any breach, without the
necessity of showing economic loss and without any bond or other security being
required.
(b) Each of the Company and the Purchasers (i) hereby
irrevocably submits to the jurisdiction of the United States District Court
sitting in the Southern District of New York for the purposes of any suit,
action or proceeding arising out of or relating to this Agreement or the
Registration Rights Agreement and (ii) hereby waives, and agrees not to assert
in any such suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of such court, that the suit, action or proceeding
is brought in an inconvenient forum or that the venue of the suit, action or
proceeding is improper. Each of the Company and the Purchasers consents to
process being served in any such suit, action or proceeding by mailing a copy
thereof to such
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<PAGE> 26
party at the address in effect for notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing in this Section 9.2 shall affect or limit any right to
serve process in any other manner permitted by law.
Section 9.3 Entire Agreement; Amendment. This Agreement contains the
entire understanding of the parties with respect to the matters covered hereby
and, except as specifically set forth herein or in the Transaction Documents,
neither the Company nor any of the Purchasers makes any representations,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by a written instrument
signed by the Company and the Purchasers of at least two-thirds (2/3) of the
Common Shares then outstanding, and no provision hereof may be waived other than
by a written instrument signed by the party against whom enforcement of any such
amendment or waiver is sought. No such amendment shall be effective to the
extent that it applies to less than all of the holders of the Common Shares then
outstanding. No consideration shall be offered or paid to any person to amend or
consent to a waiver or modification of any provision of any of the Transaction
Documents unless the same consideration is also offered to all of the parties to
the Transaction Documents or holders of Common Shares, as the case may be.
Section 9.4 Notices. Any notice, demand, request, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be effective (a) upon hand delivery by telex (with correct answer back
received), telecopy or facsimile at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
If to the Company: CAM Data Systems, Inc.
17520 New Hope Street
Fountain Valley, CA 92708
Attn.: Paul Caceres, Jr.
Tel.: (714) 241-9241
Fax: (714) 241-9893
with copies to:
Haddan & Zepfel LLP
4675 Mac Arthur Court, Suite 710
Newport Beach, California 92660
Attn: Jon R. Haddan, Esq.
Telephone No.: (949) 752-6100
Facsimile No. (949) 752-6161
If to any Purchaser: At the address of such Purchaser as set
forth on Exhibit A to this Agreement, with
copies as specified in writing by such
Purchaser and with copies to:
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<PAGE> 27
with copies to:
Parker Chapin LLP
The Chrysler Building
405 Lexington Avenue
New York, New York 10174
Attn: Christopher S. Auguste, Esq.
Tel.: (212) 704-6000
Fax: (212) 704-6288
Any party hereto may from time to time change its address for notices
by giving at least ten (10) days written notice of such changed address to the
other party hereto.
Section 9.5 Waivers. No waiver by either party of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any other
provisions, condition or requirement hereof, nor shall any delay or omission of
any party to exercise any right hereunder in any manner impair the exercise of
any such right accruing to it thereafter.
Section 9.6 Headings. The article, section and subsection headings in
this Agreement are for convenience only and shall not constitute a part of this
Agreement for any other purpose and shall not be deemed to limit or affect any
of the provisions hereof.
Section 9.7 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and assigns.
After each Closing, the assignment by a party to this Agreement of any rights
hereunder shall not affect the obligations of such party under this Agreement.
Section 9.8 No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
Section 9.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving effect to the choice of law provisions.
Section 9.10 Survival. The representations and warranties of the
Company and the Purchasers contained in: (i) Sections 2.1(o) and (s) shall
survive indefinitely and (ii)those contained in Article II, with the exception
of Sections 2.1(o) and (s), shall survive the execution and delivery hereof and
the applicable Closing until the date three (3) years from [such] Closing Date;
and (iii) the agreements and covenants set forth in Articles I, III, V, VII,
VIII and IX of this Agreement shall survive the execution and delivery hereof
and any Closing hereunder, as applicable, until the Purchasers in the aggregate
beneficially own (determined in accordance with Rule 13d-3 under the Exchange
Act) less than 5% of the total combined voting power of all voting securities
then outstanding, provided, that Sections 3.1, 3.2, 3.4, 3.5, 3.7, 3.8, 3.9, and
3.12 shall not expire until the Registration Statement required by Section 2 of
the Registration
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<PAGE> 28
Rights Agreement is no longer required to be effective under the terms and
conditions of Registration Rights Agreement.
Section 9.11 Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument and shall become effective when counterparts have been signed by each
party and delivered to the other parties hereto, it being understood that all
parties need not sign the same counterpart. In the event any signature is
delivered by facsimile transmission, the party using such means of delivery
shall cause four (4) additional executed signature pages to be physically
delivered to the other parties within five (5) days of the execution and
delivery hereof.
Section 9.12 Publicity. The Company agrees that it will not disclose,
and will not include in any public announcement, the name of the Purchasers,
unless and until such disclosure is required by law or applicable regulation,
and then only to the extent of such requirement.
Section 9.13 Severability. The provisions of this Agreement and the
Registration Rights Agreement are severable and, in the event that any court of
competent jurisdiction shall determine that any one or more of the provisions or
part of the provisions contained in this Agreement or the Registration Rights
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision or part of a provision of this Agreement or the Registration
Rights Agreement shall be reformed and construed as if such invalid or illegal
or unenforceable provision, or part of such provision, had never been contained
herein, so that such provisions would be valid, legal and enforceable to the
maximum extent possible.
Section 9.14 Further Assurances. From and after the date of this
Agreement, upon the request of any Purchaser or the Company, each of the Company
and the Purchasers shall execute and deliver such instruments, documents and
other writings as may be reasonably necessary or desirable to confirm and carry
out and to effectuate fully the intent and purposes of this Agreement, the
Common Shares, the Warrants, the Warrant Shares, and the Registration Rights
Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 29
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorize officer as of the date first above
written.
CAM DATA SYSTEMS, INC.
By: /s/ Paul Caceres, Jr.
----------------------------------------
Name: Paul Caceres, Jr.
Title: Chief Financial Officer
MAGELLAN INTERNATIONAL, LTD.
By: /s/ Anna Marie Lowe
----------------------------------------
Name: Anna Marie Lowe
Title: Director
ASPEN INTERNATIONAL, LTD.
By: /s/ Deirdre M. McCoy
----------------------------------------
Name: Deirdre M. McCoy
Title: Director
ANEGADA FUND, LTD.
By: /s/ Carlo Cannell
----------------------------------------
Name: J. Carlo Cannell
Title: Director
TONGA PARTNERS, L.P.
By: /s/ Carlo Cannell
----------------------------------------
Name: J. Carlo Cannell
Title: General Partner
<PAGE> 30
GEORGE S. SARLO REVOCABLE TRUST
12-23-91
By:
----------------------------------------
Name: George Sarlo
Title: Trustee
ACQUA WELLINGTON SMALL CAP FUND, LTD.
By: /s/ Anthony L.M. Inder Rieden
----------------------------------------
Name:
Title:
THE CUTTYHUNK FUND LIMITED
By: /s/ Geoffrey M. Lewis
----------------------------------------
Name: Geoffrey M. Lewis
Title: Director
BICOASTAL CONSULTING CORP.
By: /s/ Peter T. Benz
----------------------------------------
Name: Peter T. Benz
Title: President
AMRO INTERNATIONAL, S.A.
By: /s/ Michael Klee
----------------------------------------
Name: Michael Klee
Title: Director
<PAGE> 31
EXHIBIT A TO THE
UNITS PURCHASE AGREEMENT
CAM DATA SYSTEMS, INC.
<TABLE>
<CAPTION>
NUMBER OF COMMON SHARES
LIST OF PURCHASERS AND WARRANTS PURCHASE PRICE
- ------------------ ----------------------- --------------
<S> <C> <C>
Magellan International, Ltd. Common Shares: 62,500 $1,000,000
Charlotte House Warrants: 62,500 (to purchase
Charlotte Street 43,750 shares of Common Stock)
Nassau, Bahamas
Tel. no.: 242-323-8884
Fax no.: 242-323-7918
Attn: Anthony L.M. Inder Rieden
Aspen International, Ltd. Common Shares: 62,500 $1,000,000
Charlotte House Warrants: 62,500 (to purchase
Charlotte Street 43,750 shares of Common Stock)
Nassau, Bahamas
Tel. no.: 242-323-8884
Fax no.: 242-323-7918
Attn: Anthony L.M. Inder Rieden
Anegada Fund, Ltd. Common Shares: 37,500 $600,000
c/o Goldman Sachs (Cayman) Trust, Limited Warrants: 37,500 (to purchase
Harbour Centre, 2nd Floor 26,250 shares of Common Stock)
George Town, Grand Cayman
Cayman Islands, B.W.I.
Tel. no.: 415-835-8300
Fax no.: 415-391-5245
Attn: J. Carlo Cannell, Director
Tonga Partners, L.P. Common Shares: 112,500 $1,800,000
600 California Street, 14th Floor Warrants: 112,500 (to purchase
San Francisco, CA 94108 78,750 shares of Common Stock)
Tel. no.: 415-835-8300
Fax no.: 415-391-5245
Attn: J. Carlo Cannell, General Partner
</TABLE>
<PAGE> 32
EXHIBIT A TO THE
UNITS PURCHASE AGREEMENT (CONTINUED)
CAM DATA SYSTEMS, INC.
<TABLE>
<CAPTION>
NUMBER OF COMMON SHARES
LIST OF PURCHASERS AND WARRANTS PURCHASE PRICE
- ------------------ ----------------------- --------------
<S> <C> <C>
Acqua Wellington Small Cap Fund Ltd. Common Shares: 62,500 $1,000,000
c/o MeesPierson Fund Services Warrants: 62,500 (to purchase
(Bahamas) Limited 43,750 shares of Common Stock)
Montague Sterling Centre
P.O. Box SS-6238
Nassau, Bahamas
Tel. no.: 242-394-2700
Fax no.: 242-394-8348
Attn: Anthony L.M. Inder Rieden
The Cuttyhunk Fund Limited Common Shares: 100,000 $1,600,000
c/o Optima Fund Management Warrants: 100,000 (to purchase
1285 Avenue of the Americas 70,000 shares of Common Stock)
New York, New York 10019
Tel. no.: 212-484-3040
Fax no.: 212-484-3001
Attn: Susan Kapusciski/Geoffrey M. Lewis
BiCoastal Consulting Corp. Common Shares: 31,250 $500,000
543 Virginia Avenue Warrants: 31,250 (to purchase
San Mateo, California 94402 21,875 shares of Common Stock)
Tel. no.: 650-340-1074
Fax no.: 650-343-2506
Attn: Peter Benz
Amro International, S.A. Common Shares: 31,250 $500,000
c/o Westminister Securities Warrants: 31,250 (to purchase
100 Park Avenue 21,875 shares of Common Stock)
28th Floor
New York, New York 10017
Tel. no.: 212-376-8750
Fax no.: 212-214-0440
Attn: Thomas Badian
</TABLE>
<PAGE> 1
EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made
and entered into as of March 22, 2000, among CAM Data Systems, Inc., a
corporation organized under the laws of the State of Delaware (the "Company"),
and each of the Purchasers listed on Schedule A attached hereto. Each of the
Purchasers listed on Schedule A attached hereto is referred to herein as a
"Purchaser" and are collectively referred to herein as the "Purchasers."
WHEREAS, the Company is issuing and selling to the Purchasers
and the Purchasers are purchasing from the Company, pursuant to a Units Purchase
Agreement, dated as of the date hereof (the "Purchase Agreement"), between the
Company and the Purchasers, an aggregate value of $8,000,000 of the Company's
Common Stock (as defined below) and Warrants (as defined in the Purchase
Agreement) to purchase up to 350,000 shares of Common Stock; and
WHEREAS, the Company desires to grant to the Purchasers
registration rights as set forth herein with respect to the shares of Common
Stock being purchased under the Purchase Agreement and the shares of Common
Stock issuable upon exercise of the Warrants.
The Company and the Purchasers hereby agree as follows:
1. Definitions.
Capitalized terms used and not otherwise defined herein shall
have the meanings given to such terms in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
"Advice" shall have the meaning set forth in Section 3(m).
"Affiliate" means, with respect to any Person, any other
Person that directly or indirectly controls or is controlled by or under common
control with such Person. For the purposes of this definition, "control," when
used with respect to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms of "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.
"Blackout Period" shall have the meaning set forth in Section
3(n).
"Board" shall have the meaning set forth in Section 3(n).
<PAGE> 2
"Business Day" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions in the
state of California generally are authorized or required by law or other
government actions to close.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's common stock, $.001 par
value per share.
"Effectiveness Date" means with respect to the Registration
Statement the earlier of the 120th day following the Tranche I Closing Date and
the date which is within five (5) days of the date on which the Commission
informs the Company that the Commission (i) will not review the Registration
Statement or (ii) that the Company may request the acceleration of the
effectiveness of the Registration Statement.
"Effectiveness Period" shall have the meaning set forth in
Section 2.
"Event" shall have the meaning set forth in Section 7(e).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Filing Date" means the date the Registration Statement is
filed, which Filing Date shall be no later than 30 days after the Tranche I
Closing Date.
"Holder" or "Holders" means the holder or holders, as the case
may be, from time to time of Registrable Securities, including without
limitation the Purchasers and their assignees.
"Indemnified Party" shall have the meaning set forth in
Section 5(c).
"Indemnifying Party" shall have the meaning set forth in
Section 5(c).
"Liquidated Damages" shall have the meaning set forth in
Section 7(e).
"Losses" shall have the meaning set forth in Section 5(a).
"NASDAQ" means the National Association of Securities Dealers
Automated Quotation System.
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
"Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
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<PAGE> 3
"Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference in such Prospectus.
"Registrable Securities" means (i) the shares of Common Stock
(A) issued pursuant to the Purchase Agreement (the "Common Shares"), (B)
issuable upon exercise of the Warrants (the "Warrant Shares") and (C) issued to
the placement agent as payment of fees in connection with the structuring of the
sale of Units, and upon any stock split, stock dividend, recapitalization or
similar event with respect to such Common Shares and Warrant Shares, and (ii)
any other dividend or other distribution with respect to, conversion or exchange
of, or in replacement of, Registrable Securities; provided, however, that
Registrable Securities shall include (but not be limited to) a number of shares
of Common Stock equal to no less than 100% of the maximum number of shares of
Common Stock which would be issuable pursuant to the issuance of the Common
Shares pursuant to the Purchase Agreement and upon exercise of the Warrants,
assuming such exercise occurred on the Closing Date or the Filing Date,
whichever date would result in the greater number of Registrable Securities.
Notwithstanding anything herein contained to the contrary, such registered
shares of Common Stock shall be allocated among the Holders pro rata based on
the total number of Registrable Securities issued or issuable as of each date
that a Registration Statement, as amended, relating to the resale of the
Registrable Securities is declared effective by the Commission. Notwithstanding
anything contained herein to the contrary, if the actual number of shares of
Common Stock issuable (A) pursuant to the issuance of the Common Shares pursuant
to the Purchase Agreement and (B) upon exercise of the Warrants, exceeds 100% of
the number of shares of Common Stock issuable (1) pursuant to the issuance of
the Common Shares pursuant to the Purchase Agreement and (2) upon exercise of
the Warrants based upon a computation as at the Closing Date or the Filing Date,
the term "Registrable Securities" shall be deemed to include such additional
shares of Common Stock.
"Registration Statement" means the registration statement and
any additional registration statements contemplated by Section 2, including (in
each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference in such
registration statement.
"Rule 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
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<PAGE> 4
"Rule 158" means Rule 158 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as amended.
"Special Counsel" means any special counsel to the Holders,
for which the Holders will be reimbursed by the Company pursuant to Section 4.
"Strategic Business Partner" means (i) an individual who, or
an entity which, introduces the Company to third parties in connection with
potential business arrangements or joint ventures, builds business relationships
with strategic business partners and expands business opportunities, or (ii) an
entity which enters into a strategic alliance, joint venture, partnership or
similar arrangement with the Company, the primary purpose of which is not to
raise equity capital.
2. Registration. On or prior to the Filing Date the Company shall
prepare and file with the Commission a "shelf" Registration Statement covering
all Registrable Securities for an offering to be made on a continuous basis
pursuant to Rule 415, provided, however, that the Company shall not be required
to register any Registrable Securities pursuant to this Section 2 that are
eligible for sale pursuant to Rule 144(k) of the Securities Act. The
Registration Statement shall be on Form S-3 (or on another form appropriate for
such registration in accordance herewith). The Company shall (i) not permit any
securities other than the Registrable Securities to be included in the
Registration Statement and (ii) use its best efforts to cause the Registration
Statement to be declared effective under the Securities Act (including filing
with the Commission a request for acceleration of effectiveness in accordance
with Rule 12dl-2 promulgated under the Exchange Act within five (5) Business
Days of the date that the Company is notified (orally or in writing, whichever
is earlier) by the Commission that a Registration Statement will not be
"reviewed," or not be subject to further review) within ninety (90) days from
the Tranche I Closing Date, but in any event prior to the Effectiveness Date,
and to keep such Registration Statement continuously effective under the
Securities Act until such date as is the earlier of (x) the date when all
Registrable Securities covered by such Registration Statement have been sold or
(y) the date on which the Registrable Securities may be sold without any
restriction pursuant to Rule 144(k) as determined by the counsel to the Company
pursuant to a written opinion letter, addressed to the Company's transfer agent
to such effect (the "Effectiveness Period"). If an additional Registration
Statement is required, for any reason, to be filed because the actual number of
shares of Common Shares and Warrant Shares, exceeds the number of shares of
Common Stock initially registered in respect of the Common Shares and the
Warrant Shares based upon the computation on the Closing Date, the Company shall
have twenty (20) Business Days to file such additional Registration Statement,
and the Company shall
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<PAGE> 5
use its best efforts to cause such additional Registration Statement to be
declared effective by the Commission as soon as possible, but in no event later
than forty-five (45) days after filing.
3. Registration Procedures.
In connection with the Company's registration obligations
hereunder, the Company shall:
(a) Prepare and file with the Commission on or prior to the
Filing Date, a Registration Statement on Form S-3 (or on another form
appropriate for such registration in accordance herewith) in accordance with the
method or methods of distribution thereof as specified by the Holders (except if
otherwise directed by the Holders), and cause the Registration Statement to
become effective and remain effective as provided herein; provided, however,
that not less than five (5) Business Days prior to the filing of the
Registration Statement or any related Prospectus or any amendment or supplement
thereto (including any document that would be incorporated therein by
reference), the Company shall (i) furnish to the Special Counsel, copies of all
such documents proposed to be filed, which documents (other than those
incorporated by reference) will be subject to the review of such Holders and
such Special Counsel, and (ii) at the request of any Holder cause its officers
and directors, counsel and independent certified public accountants to respond
to such inquiries as shall be necessary, in the reasonable opinion of counsel to
such Holders, to conduct a reasonable investigation within the meaning of the
Securities Act. The Company shall not file the Registration Statement or any
such Prospectus or any amendments or supplements thereto to which the Holders of
a majority of the Registrable Securities or any Special Counsel shall reasonably
object in writing within three (3) Business Days of their receipt thereof.
Notwithstanding anything to the contrary contained herein, the Filing Date
and/or Effectiveness Date shall be tolled for such period of review of, and/or
objection to, the Registration Statement, if any, by the Holders or Special
Counsel. These dates shall also be tolled if the SEC ceases to permit the use of
Form S-3 to register all of the Common Shares and Warrant Shares for resale
prior to issuance of all such Shares as is contemplated hereby.
(b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement as may be
necessary to keep the Registration Statement continuously effective as to the
applicable Registrable Securities for the Effectiveness Period and prepare and
file with the Commission such additional Registration Statements in order to
register for resale under the Securities Act all of the Registrable Securities;
(ii) cause the related Prospectus to be amended or supplemented by any required
Prospectus supplement, and as so supplemented or amended to be filed pursuant to
Rule 424 (or any similar provisions then in force) promulgated under the
Securities Act; (iii) respond as promptly as possible to any comments received
from the Commission with respect to the Registration Statement or any amendment
thereto and as promptly as possible provide the Holders' Special Counsel true
and complete copies of all correspondence from and to the Commission relating to
the Registration Statement; and (iv) comply in all material respects with
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<PAGE> 6
the provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by the Registration Statement
during the applicable period in accordance with the intended methods of
disposition by the Holders thereof set forth in the Registration Statement as so
amended or in such Prospectus as so supplemented.
(c) Notify the Special Counsel as promptly as possible (and,
in the case of (i)(A) below, not less than five (5) Business Days prior to such
filing) and (if requested by any such Person) confirm such notice in writing no
later than one (1) Business Day following the day (i)(A) when a Prospectus or
any Prospectus supplement or post-effective amendment to the Registration
Statement is proposed to be filed; (B) when the Commission notifies the Company
whether there will be a "review" of such Registration Statement and whenever the
Commission comments in writing on such Registration Statement and (C) with
respect to the Registration Statement or any post-effective amendment, when the
same has become effective; (ii) of any request by the Commission or any other
Federal or state governmental authority for amendments or supplements to the
Registration Statement or Prospectus or for additional information; (iii) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement covering any or all of the Registrable Securities or the
initiation of any Proceedings for that purpose; (iv) if at any time any of the
representations and warranties of the Company contained in any agreement
contemplated hereby ceases to be true and correct in all material respects; (v)
of the receipt by the Company of any notification with respect to the suspension
of the qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose; and (vi) of the occurrence of any event that makes
any statement made in the Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to the Registration Statement,
Prospectus or other documents so that, in the case of the Registration Statement
or the Prospectus, as the case may be, it will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
The Company shall promptly furnish to Special Counsel, without
charge, (i) any correspondence from the Commission or the Commission's staff to
the Company or its representatives relating to any Registration Statement and
(ii) promptly after the same is prepared and filed with the Commission, a copy
of any written response to the correspondence received from the Commission.
(d) Use its best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of, (i) any order suspending the effectiveness of
the Registration Statement or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.
(e) If requested by the Holders of a majority in interest of
the Registrable Securities, (i) promptly incorporate in a Prospectus supplement
or post-effective amendment to
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<PAGE> 7
the Registration Statement such information as the Company reasonably agrees
should be included therein and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as practicable after the
Company has received notification of the matters to be incorporated in such
Prospectus supplement or post-effective amendment.
(f) Promptly deliver to each Holder and any Special Counsel,
without charge, as many copies of the Registration Statement, Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request; and the Company
hereby consents to the use of such Prospectus and each amendment or supplement
thereto by each of the selling Holders in connection with the offering and sale
of the Registrable Securities covered by such Prospectus and any amendment or
supplement thereto.
(h) Prior to any public offering of Registrable Securities,
use its best efforts to register or qualify or cooperate with the selling
Holders and any Special Counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as the Holders of a majority of
the Registrable Securities reasonably request in writing (in light of their
intended plan of distribution), to keep each such registration or qualification
(or exemption therefrom) effective during the Effectiveness Period and to do any
and all other acts or things necessary or advisable to enable the disposition in
such jurisdictions of the Registrable Securities covered by a Registration
Statement; provided, however, that the Company shall not be required to qualify
generally to do business in any jurisdiction where it is not then so qualified
or to take any action that would subject it to general service of process in any
such jurisdiction where it is not then so subject or subject the Company to any
material tax in any such jurisdiction where it is not then so subject.
(i) Following the effectiveness of the Registration Statement,
cooperate with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold pursuant to a
Registration Statement, which certificates shall be free of all restrictive
legends, and to enable such Registrable Securities to be in such denominations
and registered in such names as any Holder may request prior to any sale of
Registrable Securities.
(j) Upon the occurrence of any event contemplated by Section
3(c)(vi), as promptly as possible, prepare a supplement or amendment, including
a post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
(k) Use its best efforts to cause all Registrable Securities
relating to such Registration Statement to be listed on NASDAQ or any other
stock exchange on which similar
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<PAGE> 8
securities issued by the Company are then listed as and when required pursuant
to the Purchase Agreement.
(l) Comply in all material respects with all applicable rules
and regulation of the Commission and make generally available to its security
holders earning statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 not later than forty-five (45) days after the end of
any twelve (12) month period (or ninety (90) days after the end of any twelve
(12) month period if such period is a fiscal year) commencing on the first day
of the first fiscal quarter of the Company after the effective date of the
Registration Statement, which statement shall conform to the requirements of
Rule 158.
(m) Require each selling Holder to furnish to the Company
information regarding such Holder and the distribution of such Registrable
Securities as is required by law to be disclosed in the Registration Statement,
and the Company may exclude from such registration the Registrable Securities of
any such Holder who fails to furnish such information within a reasonable time
prior to the filing of each Registration Statement, supplemented Prospectus
and/or amended Registration Statement.
If the Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such Holder shall
have the right to require (if such reference to such Holder by name or otherwise
is not required by the Securities Act or any similar federal statute then in
force) the deletion of the reference to such Holder in any amendment or
supplement to the Registration Statement filed or prepared subsequent to the
time that such reference ceases to be required.
Each Holder covenants and agrees that (i) it will not sell any
Registrable Securities under the Registration Statement until it has received
copies of the Prospectus as then amended or supplemented as contemplated in
Section 3(g) and notice from the Company that such Registration Statement and
any post-effective amendments thereto have become effective as contemplated by
Section 3(c) and (ii) it and its officers, directors or Affiliates, if any, will
comply with the prospectus delivery requirements of the Securities Act as
applicable to them in connection with sales of Registrable Securities pursuant
to the Registration Statement.
Each Holder agrees by its acquisition of such Registrable
Securities that, upon receipt of a notice from the Company of the occurrence of
any event of the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv),
3(c)(v) or 3(c)(vi), such Holder will forthwith discontinue disposition of such
Registrable Securities under the Registration Statement until such Holder's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement contemplated by Section 3(j), or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may be
resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration Statement.
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<PAGE> 9
(n) If (i) there is material non-public information regarding
the Company which the Company's Board of Directors (the "Board") reasonably
determines not to be in the Company's best interest to disclose and which the
Company is not otherwise required to disclose, or (ii) there is a significant
business opportunity (including, but not limited to, the acquisition or
disposition of assets (other than in the ordinary course of business) or any
merger, consolidation, tender offer or other similar transaction) available to
the Company which the Board reasonably determines not to be in the Company's
best interest to disclose and which the Company would be required to disclose
under the Registration Statement, then the Company may suspend effectiveness of
a registration statement and suspend the sale of Registrable Securities under a
Registration Statement for a period not to exceed ninety (90) consecutive days,
provided that the Company may not suspend its obligation under this Section 3(n)
for more than one hundred and twenty (120) days in the aggregate during any
twelve (12) month period (each, a "Blackout Period").
4. Registration Expenses
Except for any underwriting fees and discounts and selling
commissions applicable to the sale of Registrable Securities sold by the
Holders, all of which shall be paid by the Holders, all fees and expenses
incident to the performance of or compliance with this Agreement by the Company
shall be borne by the Company whether or not the Registration Statement is filed
or becomes effective and whether or not any Registrable Securities are sold
pursuant to the Registration Statement. The fees and expenses referred to in the
foregoing sentence shall include, without limitation, (i) all registration and
filing fees (including, without limitation, fees and expenses (A) with respect
to filings required to be made with NASDAQ and each other securities exchange or
market on which Registrable Securities are required hereunder to be listed, (B)
with respect to filings required to be made with the Commission, and (C) in
compliance with state securities or Blue Sky laws (including, without
limitation, reasonable fees and disbursements of Special Counsel for the
Holders, subject to Section 4(iii) herein, in connection with Blue Sky
qualifications of the Registrable Securities and determination of the
eligibility of the Registrable Securities for investment under the laws of such
jurisdictions as the Holders of a majority of Registrable Securities may
designate)), (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities and of printing prospectuses if
the printing of prospectuses is requested by the holders of a majority of the
Registrable Securities included in the Registration Statement), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for the
Company and one Special Counsel for the Holders, in the case of the Special
Counsel, to a maximum amount of $15,000, (v) Securities Act liability insurance,
if the Company so desires such insurance, and (vi) fees and expenses of all
other Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement, including, without limitation, the
Company's independent public accountants (including the expenses of any comfort
letters or costs associated with the delivery by independent public accountants
of a comfort letter or comfort letters). In addition, the Company shall be
responsible for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting
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<PAGE> 10
duties), the expense of any annual audit, the fees and expenses incurred in
connection with the listing of the Registrable Securities on any securities
exchange as required hereunder.
5. Indemnification
(a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents and employees of each of them, each
Person who controls any such Holder (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and the officers, directors,
agents and employees of each such controlling Person, to the fullest extent
permitted by applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, costs of preparation
and attorneys' fees) and expenses (collectively, "Losses"), as incurred, arising
out of or relating to any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any Prospectus or any form of
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in the light of the circumstances under which they were
made) not misleading, except to the extent, but only to the extent, that such
untrue statements or omissions are based solely upon information regarding such
Holder furnished in writing to the Company by such Holder expressly for use
therein, which information was reasonably relied on by the Company for use
therein. The Company shall notify the Holders promptly of the institution,
threat or assertion of any Proceeding of which the Company is aware in
connection with the transactions contemplated by this Agreement. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of an Indemnified Party (as defined in Section 5(c) to this Agreement)
and shall survive the transfer of the Registrable Securities by the Holders.
(b) Indemnification by Holders. Each Holder shall, severally
and not jointly, indemnify and hold harmless the Company, the directors,
officers, agents and employees, each Person who controls the Company (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act),
and the directors, officers, agents or employees of such controlling Persons, to
the fullest extent permitted by applicable law, from and against all Losses, as
incurred, arising solely out of or based solely upon any untrue statement of a
material fact contained in the Registration Statement, any Prospectus, or any
form of prospectus, or arising solely out of or based solely upon any omission
of a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in the light of the circumstances under which they were
made) not misleading, to the extent, but only to the extent, that such untrue
statement or omission is contained in or omitted from any information so
furnished in writing by such Holder to the Company specifically for inclusion in
the Registration Statement or such Prospectus and that such information was
reasonably relied upon by the Company for use in the Registration Statement,
such Prospectus or such form of prospectus. Notwithstanding anything to the
contrary contained herein, the Holder shall be liable under this Section 5(b)
for only that amount
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<PAGE> 11
as does not exceed the net proceeds to such Holder as a result of the sale of
Registrable Securities pursuant to such Registration Statement.
(c) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity hereunder
(an "Indemnified Party"), such Indemnified Party promptly shall notify the
Person from whom indemnity is sought (the "Indemnifying Party) in writing, and
the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately
and materially adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; or (2) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3)
the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.
All fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten (10) Business Days of written notice thereof to the
Indemnifying Party (regardless of whether it is ultimately determined that an
Indemnified Party is not entitled to indemnification hereunder; provided, that
the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder).
-11-
<PAGE> 12
(d) Contribution. If a claim for indemnification under Section
5(a) or 5(b) is unavailable to an Indemnified Party because of a failure or
refusal of a governmental authority to enforce such indemnification in
accordance with its terms (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Section 5(c), any reasonable attorneys' or other reasonable fees or expenses
incurred by such party in connection with any Proceeding to the extent such
party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms. Notwithstanding anything to the contrary contained
herein, each Holder shall be liable or required to contribute under this Section
5(c) for only that amount as does not exceed the net proceeds to such Holder as
a result of the sale of Registrable Securities pursuant to such Registration
Statement.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5(d) were determined by pro
rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this
Section are in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties.
-12-
<PAGE> 13
6. Rule 144.
As long as any Holder owns Common Shares, Warrants or Warrant
Shares, the Company covenants to timely file (or obtain extensions in respect
thereof and file within the applicable grace period) all reports required to be
filed by the Company after the date hereof pursuant to Section 13(a) or 15(d) of
the Exchange Act and, if such reports have not been filed by the Company with
the Commission pursuant to the Commission's "electronic data gathering and
retrieval" (EDGAR) service, to promptly furnish the Holders with true and
complete copies of all such filings. As long as any Holder owns Common Shares,
Warrants or Warrant Shares, if the Company is not required to file reports
pursuant to Section 13(a) or 15(d) of the Exchange Act, it will prepare and
furnish to the Holders and make publicly available in accordance with Rule
144(c) promulgated under the Securities Act annual and quarterly financial
statements, together with a discussion and analysis of such financial statements
in form and substance substantially similar to those that would otherwise be
required to be included in reports required by Section 13(a) or 15(d) of the
Exchange Act, as well as any other information required thereby, in the time
period that such filings would have been required to have been made under the
Exchange Act. The Company further covenants that it will take such further
action as any Holder may reasonably request, all to the extent required from
time to time to enable such Person to sell Common Shares and Warrant Shares
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 promulgated under the Securities Act, including
compliance with the provisions of the Purchase Agreement relating to the
transfer of the Common Shares and Warrant Shares. Upon the request of any
Holder, the Company shall deliver to such Holder a written certification of a
duly authorized officer as to whether it has complied with such requirements.
7. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or by a
Holder, of any of their obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any of
its subsidiaries shall on or after the date of this Agreement, enter into any
agreement, except with a Strategic Business Partner, with respect to its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. Neither the Company
nor any of its subsidiaries has previously entered into any agreement currently
in effect granting any registration rights with respect to any of its securities
to any Person, except the Cubig Group LLC. Without limiting the generality of
the foregoing, without
-13-
<PAGE> 14
the written consent of the Holders of a majority of the then outstanding
Registrable Securities, the Company shall not grant to any Person other than to
a Strategic Business Partner the right to request the Company to register any
securities of the Company under the Securities Act unless the rights so granted
are subject in all respects to the prior rights in full of the Holders set forth
herein, and are not otherwise in conflict with the provisions of this Agreement.
(c) No Piggyback on Registrations. Neither the Company nor any
of its security holders (other than the holders of any registration rights as
set forth on Schedule 7(b) hereto and the Holders in such capacity pursuant
hereto) may include securities of the Company in the Registration Statement, and
the Company shall not after the date hereof enter into any agreement, except
with a Strategic Business Partner, providing such right to any of its security
holders, unless the right so granted is subject in all respects to the prior
rights in full of the Holders set forth herein, and is not otherwise in conflict
with the provisions of this Agreement.
(d) Piggy-Back Registrations; Underwritten Offerings. If at
any time when there is not an effective Registration Statement covering (i)
Common Shares or (ii) Warrant Shares, the Company shall determine to prepare and
file with the Commission a registration statement relating to an offering for
its own account or the account of others under the Securities Act of any of its
equity securities, other than on Form S-4 or Form S-8 (each as promulgated under
the Securities Act) or its then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, the Company shall send to each holder of Registrable Securities
written notice of such determination and, if within 30 days after receipt of
such notice, any such holder shall so request in writing (which request shall
specify the Registrable Securities intended to be disposed of by the Holders),
the Company will cause the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to register by
the holder, to the extent requisite to permit the disposition of the Registrable
Securities so to be registered. In any underwritten registration pursuant to
this Section 7(d), the Company shall have the exclusive right to select the
investment bankers and managing underwriters for such registered offering and to
negotiate the underwriting or similar agreement. If at any time after giving
written notice of its intention to register any securities and prior to the
effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register or to
delay registration of such securities, the Company may, at its election, give
written notice of such determination to such holder and, thereupon, (i) in the
case of a determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
not from its obligation to pay expenses in accordance with Section 4 hereof),
and (ii) in the case of a determination to delay registering, shall be permitted
to delay registering any Registrable Securities being registered pursuant to
this Section 7(d) for the same period as the delay in registering such other
securities. The Company shall include in such registration statement all or any
part of such Registrable Securities such holder requests to be registered;
provided, however, that the Company shall not be required to register any
Registrable Securities pursuant to this Section 7(d) that are eligible for sale
pursuant to Rule 144(k) of the Securities Act.
-14-
<PAGE> 15
In connection with any offering involving an underwriting of
shares being issued by the Company, the Company shall not be required under this
Section 7 to include any of the Registrable Securities in such underwriting
unless the Holders accept the terms of the underwriting as agreed upon between
the Company and the underwriter selected by the Company and all other
shareholders participating in such offering. In the case of an underwritten
public offering, if the managing underwriter(s) or underwriter(s) should
reasonably object to the inclusion of the Registrable Securities in such
registration statement, then if the Company after consultation with the managing
underwriter should reasonably determine that the inclusion of such Registrable
Securities, would materially adversely affect the offering contemplated in such
registration statement, and based on such determination recommends inclusion in
such registration statement of fewer or none of the Registrable Securities of
the Holders, then (x) the number of Registrable Securities of the Holders
included in such registration statement shall be reduced pro-rata among such
Holders (based upon the number of Registrable Securities requested to be
included in the registration), if the Company after consultation with the
underwriter(s) recommends the inclusion of fewer Registrable Securities, or (y)
none of the Registrable Securities of the Holders shall be included in such
registration statement, if the Company after consultation with the
underwriter(s) recommends the inclusion of none of such Registrable Securities;
provided, however, that if securities are being offered for the account of other
persons or entities as well as the Company, such reduction shall not represent a
greater fraction of the number of Registrable Securities intended to be offered
by the Holders than the fraction of similar reductions imposed on such other
persons or entities (other than the Company).
(e) Failure to File Registration Statement and Other Events.
The Company and the Holders agree that the Holders will suffer damages if the
Registration Statement is not filed on or prior to the Filing Date and not
declared effective by the Commission on or prior to the Effectiveness Date and
maintained in the manner contemplated herein during the Effectiveness Period.
The Company and the Holders further agree that it would not be feasible to
ascertain the extent of such damages with precision. Accordingly, if (i) unless
the time period is tolled as provided for herein, the Registration Statement is
not filed on or prior to the Filing Date, or is not declared effective by the
Commission on or prior to the Effectiveness Date (or in the event an additional
Registration Statement is filed because the actual number of Common Shares and
Warrant Shares, exceeds the number of shares of Common Stock initially
registered is not filed and declared effective within the time periods set forth
in Section 2, (ii) the Company fails to file with the Commission a request for
acceleration in accordance with Rule 12dl-2 promulgated under the Exchange Act
within five (5) Business Days of the date that the Company is notified (orally
or in writing, whichever is earlier) by the Commission that a Registration
Statement will not be "reviewed," or not subject to further review, (iii) the
Company has breached Section 3(n) of this Agreement (any such failure or breach
being referred to as an "Event"), the Company shall pay as liquidated damages
and not as a penalty ("Liquidated Damages") to each Holder an amount equal to
one percent (1%) of the purchase price paid by such Holder for all shares of
Common Stock purchased and then outstanding pursuant to the Purchase Agreement
for the initial thirty (30) day period following the Event until the applicable
Event has been cured, which shall be pro rated for such period less than thirty
(30) days, and two
-15-
<PAGE> 16
percent (2%) of the purchase price paid by such Holder for all shares of Common
Stock purchased and then outstanding for each additional thirty (30) day period
thereafter until the applicable Event has been cured, which shall be pro rated
for such periods less than 30 days (the "Periodic Amount"). Payments to be made
pursuant to this Section 7(e) shall be due and payable immediately upon demand
in immediately available cash funds or freely tradable shares of Common Stock,
at the option of such Holder. If a Holder elects to receive the Liquidated
Damages in shares of Common Stock, the value of such shares of Common Stock
shall be the lesser of $16.00 per share and the market price of the Common Stock
then in effect. The parties agree that the Periodic Amount represents a
reasonable estimate on the part of the parties, as of the date of this
Agreement, of the amount of damages that may be incurred by the Purchasers if
the Registration Statement is not filed on or prior to the Filing Date or has
not been declared effective by the Commission on or prior to the Effectiveness
Date and maintained in the manner contemplated herein during the Effectiveness
Period or if any other Event as described herein has occurred. Notwithstanding
anything to the contrary contained herein, the Company will not be liable for
Liquidated Damages after one (1) year from the Tranche II Closing Date.
(f) Specific Enforcement, Consent to Jurisdiction.
(i) The Company and the Holders acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement or the Purchase Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement or the Purchase Agreement and to
enforce specifically the terms and provisions hereof or thereof, this being in
addition to any other remedy to which any of them may be entitled by law or
equity.
(ii) Each of the Company and the Holders (i) hereby
irrevocably submits to the jurisdiction of the United States District Court
sitting in the Southern District of New York for the purposes of any suit,
action or proceeding arising out of or relating to this Agreement or the
Purchase Agreement and (ii) hereby waives, and agrees not to assert in any such
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper. Each of the Company and the Holders consents to process being served
in any such suit, action or proceeding by mailing a copy thereof to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing in this Section 7(f) shall affect or limit any right to serve
process in any other manner permitted by law.
(g) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and each of the Holders. Notwithstanding the foregoing, a waiver or consent to
depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders and that does not directly or indirectly
affect the rights of
-16-
<PAGE> 17
other Holders may be given by Holders of at least a majority of the Registrable
Securities to which such waiver or consent relates; provided, however, that the
provisions of this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the immediately preceding sentence.
(h) Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earlier of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice prior to 5:00 p.m., pacific
time, on a Business Day, (ii) the Business Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
telephone number specified for notice later than 5:00 p.m., pacific time, on any
date and earlier than 11:59 p.m., pacific time, on such date, (iii) the Business
Day following the date of mailing, if sent by nationally recognized overnight
courier service or (iv) actual receipt by the party to whom such notice is
required to be given. The addresses for such communications shall be with
respect to each Holder at its address set forth under its name on Schedule A
attached hereto, or with respect to the Company, addressed to:
CAM Data Systems, Inc.
17520 New Hope Street
Fountain Valley, CA 92708
Attn.: Paul Caceres, Jr., Chief Financial Officer
Tel No.: (714) 241-9241
Fax No.: (714) 241-9893
or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of notices to the Company shall be sent to Haddan &
Zepfel LLP, 4675 Mac Arthur Court, Suite 710, Newport Beach, California, Attn:
Jon R. Haddan, Esq., Facsimile No.: (949) 752-6161. Copies of notices to any
Holder shall be sent to the addresses listed on Schedule A attached hereto, if
applicable. Copies of notices to the Purchasers shall be sent to Parker Chapin
LLP, The Chrysler Building, 405 Lexington Avenue, New York, New York 10174,
Attention: Christopher S. Auguste, Esq., Facsimile No.: (212) 704-6288.
(i) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and permitted
assigns and shall inure to the benefit of each Holder and its successors and
assigns. The Company may not assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of each Holder. Each
Holder may assign its rights hereunder in the manner and to the Persons as
permitted under the Purchase Agreement.
(j) Assignment of Registration Rights. The rights of each
Holder hereunder, including the right to have the Company register for resale
Registrable Securities in accordance with the terms of this Agreement, shall be
automatically assignable by each Holder to any
-17-
<PAGE> 18
transferee of such Holder of all or a portion of the shares of the Registrable
Securities if: (i) the Holder agrees in writing with the transferee or assignee
to assign such rights, and a copy of such agreement is furnished to the Company
within a reasonable time after such assignment, (ii) the Company is, within a
reasonable time after such transfer or assignment, furnished with written notice
of (a) the name and address of such transferee or assignee, and (b) the
securities with respect to which such registration rights are being transferred
or assigned, (iii) following such transfer or assignment the further disposition
of such securities by the transferee or assignees is restricted under the
Securities Act and applicable provincial and state securities laws, (iv) at or
before the time the Company receives the written notice contemplated by clause
(ii) of this Section 7(j), the transferee or assignee agrees in writing with the
Company to be bound by all of the provisions of this Agreement, and (v) such
transfer shall have been made in accordance with the applicable requirements of
the Purchase Agreement. In addition, each Holder shall have the right to assign
its rights hereunder to any other Person with the prior written consent of the
Company, which consent shall not be unreasonably withheld. The rights to
assignment shall apply to the Holders (and to subsequent) successors and
assigns.
(k) Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.
(l) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to principles of conflicts of law thereof.
(m) Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
(n) Severability. If any term, provision, covenant or
restriction of this Agreement is held to be invalid, illegal, void or
unenforceable in any respect, the remainder of the terms, provisions, covenants
and restrictions set forth herein shall remain in full force and effect and
shall in no way be affected, impaired or invalidated, and the parties hereto
shall use their reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(o) Headings. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
-18-
<PAGE> 19
(p) Shares Held by the Company and its Affiliates. Whenever
the consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its Affiliates (other than any Holder or transferees or successors or assigns
thereof if such Holder is deemed to be an Affiliate solely by reason of its
holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.
(q) Notice of Effectiveness. Within two (2) business days
after the Registration Statement which includes the Registrable Securities is
ordered effective by the Commission, the Company shall deliver, and shall cause
legal counsel for the Company to deliver, to the transfer agent for such
Registrable Securities (with copies to the Holders whose Registrable Securities
are included in such Registration Statement) confirmation that the Registration
Statement has been declared effective by the Commission in the form attached
hereto as Exhibit A.
[Remainder of Page Intentionally Left Blank]
-19-
<PAGE> 20
IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed by their respective authorized persons as
of the date first indicated above.
CAM DATA SYSTEMS, INC.
By: /s/ Paul Caceres, Jr.
------------------------------------
Name: Paul Caceres, Jr.
Title: Chief Financial Officer
MAGELLAN INTERNATIONAL, LTD.
By: /s/ Anna Marie Lowe
------------------------------------
Name: Anna Marie Lowe
Title: Director
ASPEN INTERNATIONAL, LTD.
By: /s/ Deirdre M. McCoy
------------------------------------
Name: Deirdre M. McCoy
Title: Director
ANEGADA FUND, LTD.
By: /s/ Carlo Cannell
------------------------------------
Name: J. Carlo Cannell
Title: Director
TONGA PARTNERS, L.P.
By: /s/ Carlo Cannell
------------------------------------
Name: J. Carlo Cannell
Title: General Partner
<PAGE> 21
GEORGE S. SARLO REVOCABLE TRUST
12-23-91
By:
------------------------------------
Name: George Sarlo
Title: Trustee
ACQUA WELLINGTON SMALL CAP FUND, LTD.
By: /s/ Anthony L.M. Inder Rieden
------------------------------------
Name: Anthony L.M. Inder Rieden
Title:
THE CUTTYHUNK FUND LIMITED
By: /s/ Geoffrey M. Lewis
------------------------------------
Name: Geoffrey M. Lewis
Title: Director
BICOASTAL CONSULTING CORP.
By: /s/ Peter T. Benz
------------------------------------
Name: Peter T. Benz
Title: President
AMRO INTERNATIONAL, S.A.
By: /s/ Michael Klee
------------------------------------
Name: Michael Klee
Title: Director
<PAGE> 22
SCHEDULE A
PURCHASERS
----------
Magellan International, Ltd.
Charlotte House
Charlotte Street
Nassau, Bahamas
Tel. no.: 242-323-8884
Fax no.: 242-323-7918
Attn: Anthony L.M. Inder Rieden
Aspen International, Ltd.
Charlotte House
Charlotte Street
Nassau, Bahamas
Tel. no.: 242-323-8884
Fax no.: 242-323-7918
Attn: Anthony L.M. Inder Rieden
Anegada Fund, Ltd.
c/o Goldman Sachs (Cayman) Trust, Limited
Harbour Centre, 2nd Floor
George Town, Grand Cayman
Cayman Islands, B.W.I.
Tel. no.: 415-835-8300
Fax no.: 415-391-5245
Attn: J. Carlo Cannell, Director
Tonga Partners, L.P.
600 California Street, 14th Floor
San Francisco, CA 94108
Tel. no.: 415-835-8300
Fax no.: 415-391-5245
Attn: J. Carlo Cannell, General Partner
<PAGE> 23
SCHEDULE A
(CONTINUED)
PURCHASERS
----------
Acqua Wellington Small Cap Fund Ltd.
c/o MeesPierson Fund Services
(Bahamas) Limited
Montague Sterling Centre
P.O. Box SS-6238
Nassau, Bahamas
Tel. no.: 242-394-2700
Fax no.: 242-394-8348
Attn: Anthony L.M. Inder Rieden
The Cuttyhunk Fund Limited
c/o Optima Fund Management
1285 Avenue of the Americas
New York, New York 10019
Tel. no.: 212-484-3040
Fax no.: 212-484-3001
Attn: Susan Kapusciski/Geoffrey M. Lewis
BiCoastal Consulting Corp.
543 Virginia Avenue
San Mateo, California 94402
Tel. no.: 650-340-1074
Fax no.: 650-343-2506
Attn: Peter Benz
Amro International, S.A.
c/o Westminister Securities
100 Park Avenue
28th Floor
New York, New York 10017
Tel. no.: 212-376-8750
Fax no.: 212-214-0440
Attn: Thomas Badian
<PAGE> 24
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[TRANSFER AGENT]
ATTN:______________________
RE: CAM DATA SYSTEMS, INC.
Ladies and Gentlemen:
We are counsel to CAM Data Systems, Inc., a company organized under the
laws of the State of Delaware (the "COMPANY"), and have represented the Company
in connection with that certain Units Purchase Agreement (the "PURCHASE
AGREEMENT") entered into by and among the Company and the buyers named therein
(collectively, the "HOLDERS") pursuant to which the Company issued to the
Holders units consisting of (i) shares (the "Common Shares") of its common
stock, par value $.001 per share (the "COMMON STOCK") and (ii) warrants to
purchase shares of Common Stock (the "WARRANTS"). Pursuant to the Purchase
Agreement, the Company has also entered into a Registration Rights Agreement
with the Holders (the "REGISTRATION RIGHTS AGREEMENT") pursuant to which the
Company agreed, among other things, to register the Registrable Securities (as
defined in the Registration Rights Agreement), including Common Shares and the
shares of Common Stock issuable upon exercise of the Warrants, under the
Securities Act of 1933, as amended (the "1933 ACT"). In connection with the
Company's obligations under the Registration Rights Agreement, on ____________
___, 2000, the Company filed a Registration Statement on Form [S-3] (File No.
333-_____________) (the "REGISTRATION STATEMENT") with the Securities and
Exchange Commission (the "SEC") relating to the Registrable Securities which
names each of the Holders as a selling stockholder thereunder.
In connection with the foregoing, we advise you that a member of the
SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge,
after telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
Very truly yours,
[COMPANY'S COUNSEL]
By:
--------------------------------------
cc: [LIST NAMES OF HOLDERS]
<PAGE> 1
EXHIBIT 4.3
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE
SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR CAM DATA SYSTEMS,
INC. SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL, THAT REGISTRATION OF SUCH
SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED.
[CALLABLE]
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
CAM Data Systems, Inc.
Expires _______ __, 2005
No.: W-__ Number of Shares: __________
Date of Issuance: _______ __, 2000 Exercise Price: $__________
FOR VALUE RECEIVED, subject to the provisions hereinafter set forth,
the undersigned, CAM Data Systems, Inc., a Delaware corporation (together with
its successors and assigns, the "Issuer"), hereby certifies that
___________________ or its registered assigns is entitled to subscribe for and
purchase, during the period specified in this Warrant, up to ___________ shares
(subject to adjustment as hereinafter provided) of the duly authorized, validly
issued, fully paid and non-assessable Common Stock of the Issuer, at an exercise
price per share equal to the Warrant Price then in effect, subject, however, to
the provisions and upon the terms and conditions hereinafter set forth. For
purposes of this Warrant, any references to "dollar(s)", "Dollars" and "$" shall
mean United States Dollars. Capitalized terms used in this Warrant and not
otherwise defined herein shall have the respective meanings specified in Section
7 hereof.
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1. Term. The right to subscribe for and purchase shares of Warrant
Stock represented hereby shall commence on the date six (6) months from the date
of issuance of this Warrant and shall expire at 5:00 p.m., pacific time, on
______ __, 2005 (such period being the "Term").
2. Method of Exercise Payment: Issuance of New Warrant: Transfer and
Exchange.
(a) Time of Exercise. The purchase rights represented by this Warrant
may be exercised in whole or in part at any time and from time to time during
the Term.
(b) Method of Exercise. The Holder hereof may exercise this Warrant, in
whole or in part, by the surrender of this Warrant (with the exercise form
attached hereto duly executed) at the principal office of the Issuer, and by the
payment to the Issuer of an amount of consideration therefor equal to the
Warrant Price in effect on the date of such exercise multiplied by the number of
shares of Warrant Stock with respect to which this Warrant is then being
exercised, payable at such Holder's election by certified or official bank
check.
(c) Issuance of Stock Certificates. In the event of any exercise of the
rights represented by this Warrant in accordance with and subject to the terms
and conditions hereof, (i) the Issuer shall instruct its Transfer Agent within
twenty-four hours (24) of receipt of a notice of exercise and the Warrant Price
to deliver the certificates for the shares of Warrant Stock so purchased, (ii)
the certificates for the shares of Warrant Stock so purchased shall be dated the
date of such exercise and delivered to the Holder hereof within a reasonable
time, not exceeding seven (7) Trading Days after such exercise, and the Holder
hereof shall be deemed for all purposes to be the Holder of the shares of
Warrant Stock so purchased as of the date of such exercise, and (ii) unless this
Warrant has expired, a new Warrant representing the number of shares of Warrant
Stock, if any, with respect to which this Warrant shall not then have been
exercised shall also be issued to the Holder hereof at the Issuer's expense
within such time.
(d) Transferability of Warrant. Subject to Section 2(e), this Warrant
may be transferred by a Holder without the consent of the Issuer. If transferred
pursuant to this paragraph and subject to the provisions of subsection (e) of
this Section 2, this Warrant may be transferred on the books of the Issuer by
the Holder hereof in person or by duly authorized attorney, upon surrender of
this Warrant at the principal office of the Issuer, properly endorsed (by the
Holder executing an assignment in the form attached hereto) and upon payment of
any necessary transfer tax or other governmental charge imposed upon such
transfer. This Warrant is exchangeable at the principal office of the Issuer for
Warrants for the purchase of the same aggregate number of shares of Warrant
Stock, each new Warrant to represent the right to purchase such number of shares
of Warrant Stock as the Holder hereof shall designate at the time of such
exchange. All Warrants issued on transfers or exchanges shall be dated the
Original Issue Date and shall be identical with this Warrant except as to the
number of shares of Warrant Stock issuable pursuant hereto.
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(e) Compliance with Securities Laws.
(i) The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant or the shares of Warrant Stock to be
issued upon exercise hereof are being acquired solely for the Holder's
own account and not as a nominee for any other party, and for
investment, and that the Holder will not offer, sell or otherwise
dispose of this Warrant or any shares of Warrant Stock to be issued
upon exercise hereof except pursuant to an effective registration
statement, or an exemption from registration, under the Securities Act
and any applicable state securities laws.
(ii) Except as provided in paragraph (iii) below, this Warrant
and all certificates representing shares of Warrant Stock issued upon
exercise hereof shall be stamped or imprinted with a legend in
substantially the following form:
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE
UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED,
PLEDGED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE
SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR
CAM DATA SYSTEMS, INC. SHALL HAVE RECEIVED AN OPINION OF ITS
COUNSEL, THAT REGISTRATION OF SUCH SECURITIES UNDER THE
SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED.
(iii) The restrictions imposed by this subsection (e) upon the
transfer of this Warrant or the shares of Warrant Stock to be purchased
upon exercise hereof shall terminate (A) when such securities shall
have been resold pursuant to being effectively registered under the
Securities Act, (B) upon the Issuer's receipt of an opinion of counsel,
in form and substance reasonably satisfactory to the Issuer, addressed
to the Issuer to the effect that such restrictions are no longer
required to ensure compliance with the Securities Act and state
securities laws or (C) upon the Issuer's receipt of other evidence
reasonably satisfactory to the Issuer that such registration and
qualification under state securities laws is not required. Whenever
such restrictions shall cease and terminate as to any such securities,
the Holder thereof shall be entitled to receive from the Issuer (or its
transfer agent and registrar), without expense (other than applicable
transfer taxes, if any), new Warrants (or, in the case of shares of
Warrant Stock, new stock certificates) of like tenor not bearing the
applicable legend required by paragraph (ii) above relating to the
Securities Act and state securities laws.
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(f) Continuing Rights of Holder. The Issuer will, at the time of or at
any time after each exercise of this Warrant, upon the request of the Holder
hereof, acknowledge in writing the extent, if any, of its continuing obligation
to afford to such Holder all rights to which such Holder shall continue to be
entitled after such exercise in accordance with the terms of this Warrant,
provided that if any such Holder shall fail to make any such request, the
failure shall not affect the continuing obligation of the Issuer to afford such
rights to such Holder.
3. Stock Fully Paid: Reservation and Listing of Shares: Covenants.
(a) Stock Fully Paid. The Issuer represents, warrants, covenants and
agrees that all shares of Warrant Stock which may be issued upon the exercise of
this Warrant or otherwise hereunder will, upon issuance following payment
therefor pursuant to the exercise hereof, be duly authorized, validly issued,
fully paid and non-assessable and free from all taxes, liens and charges created
by or through the Issuer. The Issuer further covenants and agrees that during
the period within which this Warrant may be exercised, the Issuer will at all
times have authorized and reserved for the purpose of the issue upon exercise of
this Warrant a sufficient number of shares of Common Stock to provide for the
exercise of this Warrant.
(b) Reservation. If the Issuer shall list any shares of Common Stock on
any securities exchange or market it will, at its expense, list thereon,
maintain and increase when necessary such listing, of, all shares of Warrant
Stock from time to time issued upon exercise of this Warrant or as otherwise
provided hereunder, and, to the extent permissible under the applicable
securities exchange rules, all unissued shares of Warrant Stock which are at any
time issuable hereunder, so long as any shares of Common Stock shall be so
listed. The Issuer will also so list on each securities exchange or market, and
will maintain such listing of, any other securities which the Holder of this
Warrant shall be entitled to receive upon the exercise of this Warrant if at the
time any securities of the same class shall be listed on such securities
exchange or market by the Issuer.
(c) Covenants. The Issuer shall not by any action including, without
limitation, amending the Articles of Incorporation or the by-laws of the Issuer,
or through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such actions as may be necessary or appropriate to protect
the rights of the Holder hereof against dilution (to the extent specifically
provided herein) or impairment. Without limiting the generality of the
foregoing, the Issuer will (i) not permit the par value, if any, of its Common
Stock to exceed the then effective Warrant Price, (ii) take all such action as
may be reasonably necessary in order that the Issuer may validly and legally
issue fully paid and nonassessable shares of Common Stock, free and clear of any
liens, claims, encumbrances and restrictions (other than as provided herein)
upon the exercise of this Warrant and (iii) use its best efforts to obtain all
such authorizations, exemptions or consents from any public regulatory body
having jurisdiction thereof as may be reasonably necessary to enable the Issuer
to perform its obligations under this Warrant.
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(d) Loss, Theft, Destruction of Warrants. Upon receipt of evidence
satisfactory to the Issuer of the ownership of and the loss, theft, destruction
or mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security satisfactory to the Issuer
or, in the case of any such mutilation, upon surrender and cancellation of such
Warrant, the Issuer will make and deliver, in lieu of such lost, stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same number of shares of Common Stock.
(e) Rights and Obligations under the Registration Rights Agreement. The
shares of Warrant Stock are entitled to the benefits and subject to the terms of
the Registration Rights Agreement dated as of even date herewith between the
Issuer and the Holders listed on the signature pages thereof (as amended from
time to time, the "Registration Rights Agreement"). The Issuer shall keep or
cause to be kept a copy of the Registration Rights Agreement, and any amendments
thereto, at its principal office and shall furnish, without charge, copies
thereof to the Holder upon request.
4. Adjustment of Warrant Price and Warrant Share Number. The number and
kind of Securities purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to adjustment from time to time upon the happening of
certain events as follows:
(a) Recapitalization, Reorganization, Reclassification, Consolidation,
Merger or Sale. (i) In case the Issuer after the Original Issue Date shall do
any of the following (each, a "Triggering Event"): (a) consolidate with or merge
into any other Person and the Issuer shall not be the continuing or surviving
corporation of such consolidation or merger, or (b) permit any other Person to
consolidate with or merge into the Issuer and the Issuer shall be the continuing
or surviving Person but, in connection with such consolidation or merger, any
Capital Stock of the Issuer shall be changed into or exchanged for Securities of
any other Person or cash or any other property, or (c) transfer all or
substantially all of its properties or assets to any other Person, or (d) effect
a capital reorganization or reclassification of its Capital Stock, then, and in
the case of each such Triggering Event, proper provision shall be made so that,
upon the basis and the terms and in the manner provided in this Warrant, the
Holder of this Warrant shall be entitled upon the exercise hereof at any time
after the consummation of such Triggering Event, to the extent this Warrant is
not exercised prior to such Triggering Event, to receive at the Warrant Price in
effect at the time immediately prior to the consummation of such Triggering
Event in lieu of the Common Stock issuable upon such exercise of this Warrant
prior to such Triggering Event, the Securities, cash and property to which such
Holder would have been entitled upon the consummation of such Triggering Event
if such Holder had exercised the rights represented by this Warrant immediately
prior thereto, subject to adjustments (subsequent to such corporate action) as
nearly equivalent as possible to the adjustments provided for in Section 4
hereof.
(ii) Notwithstanding anything contained in this Warrant to the
contrary, the Issuer will not effect any Triggering Event unless, prior to the
consummation thereof, each Person (other than the Issuer) which may be required
to deliver any Securities, cash or property upon the
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exercise of this Warrant as provided herein shall assume, by written instrument
delivered to, and reasonably satisfactory to, the Holder of this Warrant, (A)
the obligations of the Issuer under this Warrant (and if the Issuer shall
survive the consummation of such Triggering Event, such assumption shall be in
addition to, and shall not release the Issuer from, any continuing obligations
of the Issuer under this Warrant) and (B) the obligation to deliver to such
Holder such shares of Securities, cash or property as, in accordance with the
foregoing provisions of this subsection (a), such Holder shall be entitled to
receive, and such Person shall have similarly delivered to such Holder an
opinion of counsel for such Person, which counsel shall be reasonably
satisfactory to such Holder, stating that this Warrant shall thereafter continue
in full force and effect and the terms hereof (including, without limitation,
all of the provisions of this subsection (a)) shall be applicable to the
Securities, cash or property which such Person may be required to deliver upon
any exercise of this Warrant or the exercise of any rights pursuant hereto.
(b) Subdivision or Combination of Shares. If the Issuer, at any time
while this Warrant is outstanding, shall subdivide or combine any shares of
Common Stock, (i) in case of subdivision of shares, the Warrant Price shall be
proportionately reduced (as at the effective date of such subdivision or, if the
Issuer shall take a record of holders of its Common Stock for the purpose of so
subdividing, as at the applicable record date, whichever is earlier) to reflect
the increase in the total number of shares of Common Stock outstanding as a
result of such subdivision, or (ii) in the case of a combination of shares, the
Warrant Price shall be proportionately increased (as at the effective date of
such combination or, if the Issuer shall take a record of holders of its Common
Stock for the purpose of so combining, as at the applicable record date,
whichever is earlier) to reflect the reduction in the total number of shares of
Common Stock outstanding as a result of such combination.
(c) Certain Dividends and Distributions. If the Issuer, at any time
while this Warrant is outstanding, shall:
(i) Stock Dividends. Pay a dividend in, or make any other
distribution to its stockholders (without consideration therefor) of,
shares of Common Stock, the Warrant Price shall be adjusted, as at the
date the Issuer shall take a record of the holders of the Issuer's
Capital Stock for the purpose of receiving such dividend or other
distribution (or if no such record is taken, as at the date of such
payment or other distribution), to that price determined by multiplying
the Warrant Price in effect immediately prior to such record date (or
if no such record is taken, then immediately prior to such payment or
other distribution), by a fraction (1) the numerator of which shall be
the total number of shares of Common Stock outstanding immediately
prior to such dividend or distribution, and (2) the denominator of
which shall be the total number of shares of Common Stock outstanding
immediately after such dividend or distribution (plus in the event that
the Issuer paid cash for fractional shares, the number of additional
shares which would have been outstanding had the Issuer issued
fractional shares in connection with said dividends); or
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(d) Intentionally Omitted.
(e) Intentionally Omitted.
(f) Intentionally Omitted.
(g) Intentionally Omitted.
(h) Other Action Affecting Common Stock. In case after the Original
Issue Date the Issuer shall take any action affecting its Common Stock, other
than an action described in any of the foregoing subsections (a) through (g) of
this Section 4, inclusive, and the failure to make any adjustment would not
fairly protect the purchase rights represented by this Warrant in accordance
with the essential intent and principle of this Section 4, then the Warrant
Price shall be adjusted in such manner and at such time as the Board may in good
faith determine to be equitable in the circumstances.
(i) Adjustment of Warrant Share Number. Upon each adjustment in the
Warrant Price pursuant to any of the foregoing provisions of this Section 4, the
Warrant Share Number shall be adjusted, to the nearest one hundredth of a whole
share, to the product obtained by multiplying the Warrant Share Number
immediately prior to such adjustment in the Warrant Price by a fraction, the
numerator of which shall be the Warrant Price immediately before giving effect
to such adjustment and the denominator of which shall be the Warrant Price
immediately after giving effect to such adjustment. If the Issuer shall be in
default under Section 3(c)(i) of this Warrant so that shares issued at the
Warrant Price adjusted in accordance with this Section 4 would not be validly
issued, the adjustment of the Warrant Share Number provided for in the foregoing
sentence shall nonetheless be made and the Holder of this Warrant shall be
entitled to purchase such greater number of shares at the lowest price at which
such shares may then be validly issued under applicable law. Such exercise shall
not constitute a waiver of any claim arising against the Issuer by reason of its
default under Section 3 of this Warrant.
(j) Form of Warrant after Adjustments. The form of this Warrant need
not be changed because of any adjustments in the Warrant Price or the number and
kind of Securities purchasable upon the exercise of this Warrant.
5. Notice of Adjustments. Whenever the Warrant Price or Warrant Share
Number shall be adjusted pursuant to Section 4 hereof (for purposes of this
Section 5, each an "adjustment"), the Issuer shall cause its Chief Financial
Officer to prepare and execute a certificate setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated (including a description of the
basis on which the Board made any determination hereunder), and the Warrant
Price and Warrant Share Number after giving effect to such adjustment, and shall
cause copies of such certificate to be delivered to the Holder of this Warrant
promptly after each adjustment. Any dispute between the Issuer and the Holder of
this Warrant with respect to the matters set forth in such certificate may at
the option of the Holder of this Warrant be submitted to one of the
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national accounting firms currently known as the "big five" selected by the
Holder, provided that the Issuer shall have ten (10) days after receipt of
notice from such Holder of its selection of such firm to object thereto, in
which case such Holder shall select another such firm and the Issuer shall have
no such right of objection. The firm selected by the Holder of this Warrant as
provided in the preceding sentence shall be instructed to deliver a written
opinion as to such matters to the Issuer and such Holder within thirty (30) days
after submission to it of such dispute. Such opinion shall be final and binding
on the parties hereto. The fees and expenses of such accounting firm up to
$5,000 shall be paid by the Issuer.
6. [Intentionally Omitted.](1) The Issuer, at its option, may
call this Warrant by providing the Holder of this Warrant written notice
pursuant to Section 11 (the "Call Notice") at any time or from time to time
after: (i) the Per Share Market Value of the Common Stock has been equal to or
greater than 133% of the Warrant Price for twenty (20) consecutive Trading Days
immediately preceding the date of delivery of the Call Notice (the "Call Notice
Period"); (ii) the Registration Statement has been declared effective and has
been effective for a period of sixty (60) calendar days; and (iii) the
Registration Statement has been effective, without lapse or suspension of any
kind, for a period of forty (40) consecutive Trading Days; provided, however,
that the Issuer may not provide Call Notices for more than twelve and one-half
percent (12.5%) of this Warrant during any thirty (30) day period.]
7. Definitions. For the purposes of this Warrant, the following terms
have the following meanings:
"Board" shall mean the Board of Directors of the Issuer.
"Capital Stock" means and includes (i) any and all shares,
interests, participations or other equivalents of or interests in
(however designated) corporate stock, including, without limitation,
shares of preferred or preference stock, (ii) all partnership interests
(whether general or limited) in any Person which is a partnership,
(iii) all membership interests or limited liability company interests
in any limited liability company, and (iv) all equity or ownership
interests in any Person of any other type.
"Articles of Incorporation" means the Articles of
Incorporation of the Issuer as in effect on the Original Issue Date,
and as hereafter from time to time amended, modified, supplemented or
restated in accordance with the terms hereof and thereof and pursuant
to applicable law.
"Common Shares" has the meaning specified in Section 1.1 of
the Purchase Agreement.
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(1) Each of the Purchasers will receive two warrant certificates with one
of the warrant certificates containing this language.
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"Common Stock" means the Common Stock, par value $.001 per
share, of the Issuer and any other Capital Stock into which such stock
may hereafter be changed.
"Common Stock Equivalent" means any Convertible Security or
warrant, option or other right to subscribe for or purchase any
Additional Shares of Common Stock or any Convertible Security.
"Convertible Securities" means evidences of Indebtedness,
shares of Capital Stock or other Securities which are or may be at any
time convertible into or exchangeable for Additional Shares of Common
Stock. The term "Convertible Security" means one of the Convertible
Securities.
"Governmental Authority" means any governmental, regulatory or
self-regulatory entity, department, body, official, authority,
commission, board, agency or instrumentality, whether federal, state or
local, and whether domestic or foreign.
"Holders" mean the Persons who shall from time to time own any
Warrant. The term "Holder" means one of the Holders.
"Independent Appraiser" means a nationally recognized or major
regional investment banking firm or firm of independent certified
public accountants of recognized standing (which may be the firm that
regularly examines the financial statements of the Issuer) that is
regularly engaged in the business of appraising the Capital Stock or
assets of corporations or other entities as going concerns, and which
is not affiliated with either the Issuer or the Holder of any Warrant.
"Issuer" means CAM Data Systems, Inc., a Delaware corporation,
and its successors.
"Majority Holders" means at any time the Holders of Warrants
exercisable for a majority of the shares of Warrant Stock issuable
under the Warrants at the time outstanding.
"Original Issue Date" means ________ __, 2000.
"Other Common" means any other Capital Stock of the Issuer of
any class which shall be authorized at any time after the date of this
Warrant (other than Common Stock) and which shall have the right to
participate in the distribution of earnings and assets of the Issuer
without limitation as to amount.
"Person" means an individual, corporation, limited liability
company, partnership, joint stock company, trust, unincorporated
organization, joint venture, Governmental Authority or other entity of
whatever nature.
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"Per Share Market Value" means on any particular date (a) the
closing bid price per share of the Common Stock on such date on The
Nasdaq SmallCap Market, the Nasdaq National Market or other registered
national stock exchange on which the Common Stock is then listed or if
there is no such price on such date, then the closing bid price on such
exchange or quotation system on the date nearest preceding such date,
or (b) if the Common Stock is not listed then on The Nasdaq SmallCap
Market, the Nasdaq National Market or any registered national stock
exchange, the closing bid price for a share of Common Stock in the
over-the-counter market, as reported by NASDAQ or in the National
Quotation Bureau Incorporated or similar organization or agency
succeeding to its functions of reporting prices) at the close of
business on such date, or (c) if the Common Stock is not then reported
by the National Quotation Bureau Incorporated (or similar organization
or agency succeeding to its functions of reporting prices), then
average of the "Pink Sheet" quotes for the relevant conversion period,
as determined in good faith by the holder, or (d) if the Common Stock
is not then publicly traded the fair market value of a share of Common
Stock as determined by an Independent Appraiser selected in good faith
by the Majority Holders; provided, however, that the Issuer, after
receipt of the determination by such Independent Appraiser, shall have
the right to select an additional Independent Appraiser, in which case,
the fair market value shall be equal to the average of the
determinations by each such Independent Appraiser; and provided,
further that all determinations of the Per Share Market Value shall be
appropriately adjusted for any stock dividends, stock splits or other
similar transactions during such period. The determination of fair
market value by an Independent Appraiser shall be based upon the fair
market value of the Issuer determined on a going concern basis as
between a willing buyer and a willing seller and taking into account
all relevant factors determinative of value, and shall be final and
binding on all parties. In determining the fair market value of any
shares of Common Stock, no consideration shall be given to any
restrictions on transfer of the Common Stock imposed by agreement or by
federal or state securities laws, or to the existence or absence of, or
any limitations on, voting rights.
"Purchase Agreement" means the Units Purchase Agreement dated
as of ________ __, 2000 among the Issuer and the purchasers a party
thereto.
"Registration Rights Agreement" has the meaning specified in
Section 3(e) hereof.
"Securities" means any debt or equity securities of the
Issuer, whether now or hereafter authorized, any instrument convertible
into or exchangeable for Securities or a Security, and any option,
warrant or other right to purchase or acquire any Security. "Security"
means one of the Securities.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal statute then in effect.
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"Subsidiary" means any corporation at least 50% of whose
outstanding Voting Stock shall at the time be owned directly or
indirectly by the Issuer or by one or more of its Subsidiaries, or by
the Issuer and one or more of its Subsidiaries.
"Term" has the meaning specified in Section 1 hereof.
"Trading Day" means (a) a day on which the Common Stock is
listed on The Nasdaq SmallCap Market, the Nasdaq National Market or
other registered national stock exchange on which the Common Stock has
been listed, or (b) if the Common Stock is not listed on The Nasdaq
SmallCap Market, the Nasdaq National Market or any registered national
stock exchange, a day or which the Common Stock is quoted in the
over-the-counter market, as reported by the OTC Bulletin Board, or (c)
if the Common Stock is not quoted on the OTC Bulletin Board, a day on
which the Common Stock is quoted in the over-the-counter market as
reported by the National Quotation Bureau Incorporated (or any similar
organization or agency succeeding its functions of reporting prices);
provided, however, that in the event that the Common Stock is not
listed or quoted as set forth in (a) and (b) hereof, then Trading Day
shall mean any day except Saturday, Sunday and any day which shall be a
legal holiday or a day on which banking institutions in the of New York
are authorized or required by law or other government action to close.
"Unit Price" means the greater of (i) the average of the Per
Share Market Value of the Common Stock during the sixty (60)
consecutive Trading Days ending on the Trading Day immediately
preceding the Tranche I Closing Date and (ii) $16.00.
"Voting Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however
designated) having ordinary voting power for the election of a majority
of the members of the Board of Directors (or other governing body) of
such corporation, other than Capital Stock having such power only by
reason of the happening of a contingency.
"Warrants" means the Warrants issued and sold pursuant to the
Purchase Agreement, including, without limitation, this Warrant, and
any other warrants of like tenor issued in substitution or exchange for
any thereof pursuant to the provisions of Section 2(c), 2(d) or 2(e)
hereof or of any of such other Warrants.
"Warrant Price" means the Per Share Market Value of the Common
Stock on the Trading Day immediately preceding the Closing Date (as
such term is defined in the Purchase Agreement) plus $1.00, as such
price may be adjusted from time to time as shall result from the
adjustments specified in Section 4 hereof.
"Warrant Share Number" means at any time the aggregate number
of shares of Warrant Stock which may at such time be purchased upon
exercise of this Warrant, after giving effect to all prior adjustments
and increases to such number made or required to be made under the
terms hereof.
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"Warrant Stock" means Common Stock issuable upon exercise of
any Warrant or Warrants or otherwise issuable pursuant to any Warrant
or Warrants.
8. Other Notices. In case at any time:
(A) the Issuer shall make any distributions to the
holders of Common Stock; or
(B) the Issuer shall authorize the granting to all
holders of its Common Stock of rights to subscribe
for or purchase any shares of Capital Stock of any
class or of any Common Stock Equivalents or
Convertible Securities or other rights; or
(C) there shall be any reclassification of the Capital
Stock of the Issuer; or
(D) there shall be any capital reorganization by the
Issuer; or
(E) there shall be any (i) consolidation or merger
involving the Issuer or (ii) sale, transfer or other
disposition of all or substantially all of the
Issuer's property, assets or business (except a
merger or other reorganization in which the Issuer
shall be the surviving corporation and its shares of
Capital Stock shall continue to be outstanding and
unchanged and except a consolidation, merger, sale,
transfer or other disposition involving a
wholly-owned Subsidiary); or
(F) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Issuer
or any partial liquidation of the Issuer or
distribution to holders of Common Stock;
then, in each of such cases, the Issuer shall give written notice to the Holder
of the date on which (i) the books of the Issuer shall close or a record shall
be taken for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take place.
Such notice also shall specify the date as of which the holders of Common Stock
of record shall participate in such dividend, distribution or subscription
rights, or shall be entitled to exchange their certificates for Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, disposition, dissolution, liquidation
or winding-up, as the case may be. Such notice shall be given at least twenty
(20) days prior to the action in question and not less than twenty (20) days
prior to the record date or the date on which
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<PAGE> 13
the Issuer's transfer books are closed in respect thereto. The Issuer shall give
to the Holder notice of all meetings and actions by written consent of its
stockholders, at the same time in the same manner as notice of any meetings of
stockholders is required to be given to stockholders who do not waive such
notice (or, if such actions requires no notice, then two (2) Trading Days
written notice thereof describing the matters upon which action is to be taken).
The Holder shall have the right to send two representatives selected by it to
each meeting, who shall be permitted to attend, but not vote at, such meeting
and any adjournments thereof. This Warrant entitles the Holder to receive copies
of all financial and other information distributed or required to be distributed
to the holders of the Common Stock.
9. Amendment and Waiver. Any term, covenant, agreement or condition in
this Warrant may be amended, or compliance therewith may be waived (either
generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Issuer and the Majority Holders; provided, however, that no such amendment or
waiver shall reduce the Warrant Share Number, increase the Warrant Price,
shorten the period during which this Warrant may be exercised or modify any
provision of this Section 9 without the consent of the Holder of this Warrant.
10. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW.
11. Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earlier of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified for notice prior to 5:00 p.m., pacific time, on a
Trading Day, (ii) the Trading Day after the date of transmission, if such notice
or communication is delivered via facsimile at the facsimile telephone number
specified for notice later than 5:00 p.m., pacific time, on any date and earlier
than 11:59 p.m., pacific time, on such date, (iii) the Trading Day following the
date of mailing, if sent by nationally recognized overnight courier service or
(iv) actual receipt by the party to whom such notice is required to be given.
The addresses for such communications shall be with respect to the Holder of
this Warrant or of Warrant Stock issued pursuant hereto, addressed to such
Holder at its last known address or facsimile number appearing on the books of
the Issuer maintained for such purposes, or with respect to the Issuer,
addressed to:
CAM Data Systems, Inc.
17520 New Hope Street
Fountain Valley, CA 92708
Attn.: Paul Caceres, CFO
Tel No.: (714) 241-9241
Fax No.: (714) 241-9893
or to such other address or addresses or facsimile number or numbers as any such
party may
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<PAGE> 14
most recently have designated in writing to the other parties hereto by such
notice. Copies of notices to the Issuer shall be sent to: Haddan & Zepfel LLP,
4675 Mac Arthur Court, Suite 710, Newport Beach, California 92660, Attention:
Jon R. Haddan, Esq., Facsimile no.: (949) 752-6161. Copies of notices to the
Holder shall be sent to Parker Chapin LLP, The Chrysler Building, 405 Lexington
Avenue, New York, New York 10174, Attention: Christopher S. Auguste, Esq.,
Facsimile no.: (212) 704-6288.
12. Warrant Agent. The Issuer appoints American Stock Transfer & Trust
Company, an agent having an office in New York, New York, for the purpose of
issuing shares of Warrant Stock on the exercise of this Warrant pursuant to
subsection (b) of Section 2 hereof, exchanging this Warrant pursuant to
subsection (d) of Section 2 hereof or replacing this Warrant pursuant to
subsection (d) of Section 3 hereof, or any of the foregoing, and thereafter any
such issuance, exchange or replacement, as the case may be, shall be made at
such office by such agent.
13. Remedies. The Issuer stipulates that the remedies at law of the
Holder of this Warrant in the event of any default or threatened default by the
Issuer in the performance of or compliance with any of the terms of this Warrant
are not and will not be adequate and that, to the fullest extent permitted by
law, such terms may be specifically enforced by a decree for the specific
performance of any agreement contained herein or by an injunction against a
violation of any of the terms hereof or otherwise.
14. Successors and Assigns. This Warrant and the rights evidenced
hereby shall inure to the benefit of and be binding upon the successors and
assigns of the Issuer, the Holder hereof and (to the extent provided herein) the
Holders of Warrant Stock issued pursuant hereto, and shall be enforceable by any
such party.
15. Modification and Severability. If, in any action before any court
or agency legally empowered to enforce any provision contained herein, any
provision hereof is found to be unenforceable, then such provision shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency. If any such provision is not enforceable as set forth in the preceding
sentence, the unenforceability of such provision shall not affect the other
provisions of this Warrant, but this Warrant shall be construed as if such
unenforceable provision had never been contained herein.
16. Headings. The headings of the Sections of this Warrant are for
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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<PAGE> 15
IN WITNESS WHEREOF, the Issuer has executed this Warrant as of the day
and year first above written.
CAM DATA SYSTEMS, INC.
By:
---------------------------------------
Name:
Title:
<PAGE> 16
EXERCISE FORM
CAM DATA SYSTEMS, INC.
The undersigned _______________, pursuant to the provisions of the within
Warrant, hereby elects to purchase _____ shares of Common Stock of CAM Data
Systems, Inc., covered by the within Warrant.
Dated: Signature
-------------------- ----------------------------------
Address
---------------------------------
----------------------------------
ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.
Dated: Signature
-------------------- ----------------------------------
Address
---------------------------------
----------------------------------
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named corporation.
Dated: Signature
-------------------- ----------------------------------
Address
---------------------------------
----------------------------------
FOR USE BY THE ISSUER ONLY:
This Warrant No. W-_____ cancelled (or transferred or exchanged) this _____ day
of ___________, _____, shares of Common Stock issued therefor in the name of
_______________, Warrant No. W-_____ issued for ____ shares of Common Stock in
the name of _______________.
<PAGE> 1
EXHIBIT 5.1
HADDAN & ZEPFEL LLP
Attorneys at Law
4675 MacArthur Court, Suite 710
Newport Beach, California 92660
(949) 752-6100
Facsimile (949) 752-6161
April 13, 2000
CAM Commerce Solutions, Inc.
17520 Newhope Street
Fountain Valley, California 92708
Dear Sirs:
You have requested our opinion with respect to certain matters in
connection with the filing by CAM Commerce Solutions, Inc. (the "Company") of a
Registration Statement on Form S-3 (the "Registration Statement") with the
Securities and Exchange Commission, covering the registration of up to 500,000
shares of the Company's Common Stock (the "Common Shares"), to be issued
pursuant to a Unit Purchase Agreement dated March 22, 2000 (the "Purchase
Agreement"), and 350,000 shares of the Company's Common Stock to be issued upon
exercise of Warrants to be issued pursuant to the Purchase Agreement (the
"Warrant Shares")
In connection with this opinion, we have examined and relied upon the
Registration Statement, the Company's Certificate of Incorporation and Bylaws,
the Purchase Agreement, resolutions of the Company's Board of Directors
authorizing the issuance and sale of the Common Shares, the Warrants and the
Warrant Shares, and the originals or copies certified to our satisfaction of
such records, documents, certificates, memoranda and other instruments as in our
judgment are necessary or appropriate to enable us to render the opinion
expressed below. We have assumed the genuineness and authenticity of all
documents submitted to us as originals, the conformity to originals of all
documents submitted to us as copies thereof and the due execution and delivery
of all documents where due execution and delivery are a prerequisite to the
effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the
opinion that when issued and paid for in the manner described in the Purchase
Agreement, the Common Shares will be validly issued, fully paid, and
nonassessable shares of Common Stock of the Company, and when issued and paid
for in the manner described in the Purchase Agreement and Warrants, the Warrant
Shares will be validly issued, fully paid and nonassessable shares of Common
Stock of the Company.
We consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ HADDAN & ZEPFEL LLP
-----------------------
Haddan & Zepfel LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) of CAM Commerce Solutions, Inc. (formerly
known as CAM Data Systems, Inc.)for the registration of 850,000 shares of its
common stock and the incorporation by reference therein of our report dated
November 5, 1999 with respect to the financial statements and schedule of the
company included in its Annual Report (Form 10-K) for the year ended September
30, 1999 filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Orange County, California
April 10, 2000
