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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 29, 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 DATA SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
DELAWARE 7370 95-3866450
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
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17520 NEWHOPE STREET, FOUNTAIN VALLEY, CALIFORNIA 92708
(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
(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. [ ]
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CALCULATION OF REGISTRATION FEE
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Title of each
Class of Securities Securities Proposed Proposed Amount of
to be to be Maximum Offering Maximum Aggregate Registration
Registered Registered Price Per Share(1) Offering Price(1) Fee
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Common Stock 30,054 $17.34 $531,655 $137.58
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(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 1933 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
30,054 SHARES
CAM DATA SYSTEMS, INC.
COMMON STOCK
These shares of common stock are being offered by the Cubig Group
L.L.C., one of our current shareholders, in a public offering which is not being
underwritten. We issued the shares to Cubig Group L.L.C. in connection with our
purchase from them in December 1999 of a license to distribute their financial
and accounting software known as EZ Cal. The purchase was made under the terms
of an Agreement for Purchase and Sale of Certain of the Assets of the Cubig
Group L.L.C. which provided registration rights for the shares. The shares are
being registered pursuant to such registration rights provisions of such
Agreement.
The selling shareholder may sell the shares covered by this prospectus
on the Nasdaq National Market System and in ordinary brokerage transactions, in
negotiated transactions or otherwise, at prevailing market prices at the time of
sale or at negotiated prices, and may engage a broker or dealer to sell the
shares. For additional information on the selling shareholder's possible methods
of sale, you should refer to the section of this prospectus entitled "Plan of
Distribution." The selling shareholder may be deemed to be an "underwriter" by
the Securities and Exchange Commission within the meaning of the Securities Act
of 1933 in connection with the sale of its shares. We will not receive any
proceeds from the sale of the shares, but will bear the costs relating to the
registration of the shares.
Our common stock is traded on Nasdaq National Market System under the
symbol "CADA." On February 28, 2000, the closing price for our common stock was
$18.00 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 FEBRUARY ___ , 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 9. Neither we nor the selling shareholder 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 above and elsewhere 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 Data
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 successful at hiring or
retaining these personnel. Our ability to manage our growth successfully
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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 its 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
shareholder. 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.
SELLING SHAREHOLDER
Cubic Group L.L.C., the selling shareholder, acquired 30,054 shares of
common stock (the "Shares") in December 1999. The resale of the Shares have been
registered in the registration statement of which this prospectus is a part.
The following table sets forth certain information as of February 22,
2000, regarding the ownership of the common stock by the selling shareholder and
as adjusted to give effect to the sale of the shares offered in this prospectus.
The information relating to the shares being offered hereby represents:
Ownership After Offering
Shares of All Shares Offered
Owned Prior Shares Being Hereby Are Sold
Selling Shareholder to Offering Offered Shares Percent
- ------------------- ----------- --------------- ------ -------
Cubic Group L.L.C. -0- 30,054 -0- -0-
The selling shareholder and members have not held any positions or
office or had any other material relationship with CAM Data or any of its
affiliates within the past three years.
PLAN OF DISTRIBUTION
The shares of common stock are being offered on behalf of the selling
shareholder, and we will not receive any proceeds from the offering. The shares
of common stock may be sold or distributed from time to time by the selling
shareholder, or by pledgees, donees or transferees of, or other successors in
interest to, the selling shareholder, directly to one or more purchasers
(including pledgees) or through brokers, dealers or underwriters who may act
solely as agent or may acquire such shares as principals, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices, or at fixed prices, which may be subject to
change. The sale of the shares of common stock may be effected through one or
more of the following methods: (i) ordinary brokers' transactions, which may
include long or short sales; (ii) transactions involving cross or block trades;
(iii) purchases by brokers, dealers or underwriters as principal and resale by
such purchasers for their own accounts pursuant to this prospectus; (iv) "at the
market" to or through market makers or into established trading markets,
including direct sales to purchasers or sales effected through agents; and (v)
any combination of
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the foregoing, or by any other legally available means. In addition, the selling
shareholder may enter into hedging transactions with broker-dealers who may
engage in short sales of shares of common stock in the course of hedging the
position they assume with the selling shareholder. The selling shareholder also
may enter into option or other transactions with broker-dealers that require the
delivery by such broker-dealers of the shares of common stock, which shares of
common stock may be resold thereafter pursuant to this prospectus. We cannot be
certain that all or any of the shares of common stock will be sold by the
selling shareholder.
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 shareholder 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 shareholder 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. Neither CAM
Data nor the selling shareholder can presently estimate the amount of such
compensation. We do not know of any existing arrangements between the selling
shareholder and any other shareholders, broker, dealer, underwriter or agent
relating to the sale or distribution of the shares of common stock.
The selling shareholder 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 shareholder or any other such persons. The foregoing
may affect the marketability of the common stock.
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 shareholder. We and the selling shareholder 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 ("SEC"). Certain information
in the Registration Statement has been omitted from this prospectus in
accordance with SEC rules.
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
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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 shareholder has 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; and
(4) 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 Data Systems, Inc., 17520 Newhope Street, Fountain Valley,
California 92708.
The information relating to CAM Data contained in this prospectus is
not comprehensive and should be read together with the information contained in
the incorporated documents.
EXPERTS
Our financial statements for the year ended September 30, 1999 which
appear in our Annual Report on Form 10-K have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report on such statements, which
report is included with the statements. Such financial statements and auditors'
report are incorporated herein by reference in reliance upon such report given
on the authority of such firm as experts in accounting and auditing.
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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.
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TABLE OF CONTENTS
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PAGE
Forward-Looking Statements....................................................2
The Business..................................................................2
Risk Factors..................................................................3
The Selling Shareholder.......................................................7
Plan of Distribution..........................................................7
Information Incorporated by Reference and Other Available Information.........9
Experts......................................................................10
Legal Matters................................................................10
30,054 SHARES
COMMON STOCK
CAM DATA SYSTEMS, INC.
-----------
PROSPECTUS
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FEBRUARY ___ , 2000
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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 138.58
Legal fees and expenses 5,000.00
Accounting fees and expenses 2,000.00
Transfer Agent fees 300.00
Miscellaneous 1,500.00
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Total $10,938.58
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ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
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 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.
ITEM 16. EXHIBITS
The following exhibits are filed with this Registration Statement:
Exhibit
Number Description
------ -----------
2.1 Agreement for Purchase and Sale of Certain of the Assets of Cubig
Group L.L.C. dated December 13, 1999 between Registrant and Cubig
Group L.L.C. (excluding exhibits thereto)
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).
II-1
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ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any Prospectus required by Section 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;
(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, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-2
<PAGE> 15
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
February 25, 2000.
CAM DATA SYSTEMS, 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:
SIGNATURE TITLE DATE
s/s Geoffrey D. Knapp Chief Executive Officer and February 25, 2000
- ----------------------- Chairman of the Board
Geoffrey D. Knapp
s/s David A. Frosh President and Director February 25, 2000
- -----------------------
David A. Frosh
s/s Walter W. Straub Director February 25, 2000
- -----------------------
Walter W. Straub
s/s Corley Phillips Director February 25, 2000
- -----------------------
Corley Phillips
- ----------------------- Director February 25, 2000
Scott Broomfield
- ----------------------- Director February 25, 2000
Dr. Fred W. Haney
II-3
<PAGE> 16
Exhibit Index
Exhibit
Number Description
------ -----------
2.1 Agreement for Purchase and Sale of Certain of the Assets of Cubig
Group L.L.C. dated December 13, 1999 between Registrant and Cubig
Group L.L.C. (excluding exhibits thereto)
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).
<PAGE> 1
EXHIBIT 2.1
AGREEMENT FOR PURCHASE AND SALE OF
CERTAIN OF THE ASSETS OF CUBIG GROUP L.L.C.
THIS AGREEMENT (the "Agreement") is made and entered into on December
13, 1999 by and between Cam Data Systems, Inc., a Delaware corporation
("Buyer"), the Cubig Group L.L.C. a California limited liability company
("Seller"), and ___________________________________________, and __________, the
members of Seller (the "Members").
R E C I T A L S
A. Seller is currently engaged in the business of developing,
marketing, distributing, licensing, selling and servicing financial and
accounting software in the United States and abroad (the "Business"). Buyer
desires to purchase the software and certain other assets used by Seller in the
conduct of the Business, for the purpose of carrying on the same, subject to the
grant of a license to Seller to continue the Business on a limited basis.
B. The parties have previously entered into a Letter of Intent setting
forth certain of the basic terms and provisions of the acquisition.
C. The parties desire to enter into this Agreement in order to set
forth the definitive terms and conditions upon which Seller shall sell to Buyer,
and Buyer shall purchase from Seller, the software and certain other assets of
Seller.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties and covenants herein contained, and subject to the
terms and conditions hereinafter set forth, the parties hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 Transfer of Certain Assets. At the "Closing", as hereinafter
defined, held in accordance with Section 2.1 hereof, Seller agrees to sell,
convey, assign, transfer and deliver to Buyer, and Buyer hereby agrees to
purchase, acquire and accept from Seller the following assets (the "Acquired
Assets"):
(a) A fully paid, fully transferable, nonterminable license in the form
of EXHIBIT A hereto (the "Software License") to use, modify, license, market and
distribute the financial and accounting software commonly known as "EZ Cal", and
described in more detail in SCHEDULE 1.1(A) hereto, including, without
limitation, such software's source code, object code, data bases, compilers,
documentation, flow charts, logic diagrams, input and output forms,
specifications, manuals, programmers' notes, and other related intellectual
property (collectively the "Software");
(b) Except as set forth in Sections 1.2(a) and (b) below, all patents,
patent applications, registered trademarks, trademark applications, common law
trademarks, registered service marks, service mark applications, common law
service marks, trade names, service names, copyrights, copyright applications,
know-how, processes proprietary information, trade secrets and technical data
related to the Software ("Intellectual Property Rights");
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(c) The computers, computer equipment, and other property and equipment
of Seller identified in SCHEDULE 1.1(c) hereto; and
(d) All personnel records and related information regarding the
employees of Seller hired by Buyer pursuant to Section 5.8 below.
1.2 Excluded Assets. Only the assets described in Section 1.1 above are
being sold to Buyer. All other assets of Seller (the "Excluded Assets") are
excluded from the sale, including, without limitation, the following:
(a) The "Cubig" name and use thereof;
(b) The EZ Cal brand name and use thereof;
(c) All existing license and distribution agreements related to the
Software;
(d) Accounts receivable, inventories and other general intangibles; and
(e) Customer lists.
1.3 Assumption of Liabilities. Buyer shall have no liability for any
existing or future liabilities of Seller, including, without limitation, the
following:
(a) Any liability of Seller or any entity affiliated with Seller for
any taxes, assessments, charges or fees imposed by any federal, state, municipal
or other governmental authority of whatever nature or character, including,
without limitation, any sales and use taxes for transactions occurring at any
time, any payroll and withholding taxes related any employee or former employee
of Seller for the periods of such employment, any personal property taxes to the
extent attributable to the ownership of Acquired Assets prior to the Closing
Date or the Excluded Assets at any time, and any franchise or income taxes
incurred in connection with the transactions contemplated by this Agreement;
(b) Any interest expense or liability of Seller;
(c) Any obligations of any kind of Seller of any person or entity
affiliated with Seller including, without limitation, trade accounts payable,
current accrued liabilities, general administrative expenses, taxes, interest,
corporate allocations, management fees, assessments or other expenses or
liabilities;
(d) Any duty or obligation of Seller under any warranties, maintenance
or other obligations (including, without limitation, any liability or obligation
with respect to updates, returns or allowances) relating to the Software, sold,
licensed or distributed by Seller at any time;
(e) Liabilities with respect to any alleged or actual injury to person
or damage to property allegedly or actually resulting from the possession or use
of any products manufactured, sold or distributed by Seller at any time;
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(f) Liabilities with respect to any actual or alleged employee or
former employee work-related injury which occurred at any time other than
following the employment of such personnel by Buyer;
(g) Any liability under any pension plan (as defined in Section 3(2) of
the Employee Retirement Income Security Act of 1974, as amended, and rules and
regulations promulgated there-under ("ERISA")) in respect of any vested or
non-vested benefits payable or to become payable thereunder;
(h) Any liability of any kind (including, without limitation, any
accrued payroll liabilities, liabilities in respect of severance and other
benefits, any accrued withholding liabilities and life, medical, accident and
other insurance coverage) relating to any employee or former employee of Seller;
(i) Any duty, obligation or liability relating to any employment,
retainer, agency or consulting agreement or to any director, officer, agent or
employee of Seller for services entered into by or furnished to Seller or any
affiliate or agent of Seller;
(j) Any liability of Seller under any litigation, proceeding or claim
of any nature by any person or entity whether or not such litigation, proceeding
or claim is pending, threatened or asserted before, on or after the Closing;
(k) Liabilities or obligations under or related to any agreement,
instrument or indenture to which Seller is a party or by which Seller is bound;
(l) Liabilities of Seller under the lease of that certain office space
at 424A Cloverleaf Drive, Baldwin Park, California (the "Office Space") which
accrued prior to the Closing;
(m) Liabilities or obligations related to any Excluded Assets
including, without limitation, any liability, fine and/or penalty of any kind
arising out of or relating to hazardous waste and/or non-compliance with
federal, state or local environmental laws, regulations or ordinances
("Environmental Laws"); or
(n) Any other liability (including, without limitation, any long-term
liabilities) not specifically assumed by Buyer.
1.4 Purchase Price. In exchange and as consideration for the Acquired
Assets and in full payment for the purchase, transfer and assignment thereof, at
the Closing, Buyer shall instruct its transfer agent to issue to a stock
certificate representing that number of Buyer's fully paid, non-assessable
shares of common stock, $.001 par value per share, which pursuant to this
Section 1.3 is deemed equal in value to Six Hundred Thousand Dollars ($600,000)
(the "Purchase Price"). For purposes of calculating the Purchase Price, each
share issued shall be deemed to be equal in value to the average closing price
of Buyer's common stock traded on the Nasdaq Stock Market on the 14 trading day
immediately prior to the Closing. The Purchase Price shall be allocated among
the Acquired Assets in accordance with SCHEDULE 1.4 hereto. Each of the parties
hereto agrees to report this transaction for federal tax purposes in accordance
with such allocation.
1.5 Securities Laws Issues. Buyer shall issue the shares of its common
stock to be issued pursuant to Section 1.4 above (the " Shares") pursuant to an
exemption from registration under Section 4(2)
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and/or Regulation D promulgated under the Securities Act of 1933 (the "1933
Act") and applicable state exemptions. Following the Closing, Buyer will file a
registration statement with the Securities and Exchange Commission ("SEC") on
Form S-3 in accordance with Section 7.3 below to register the Shares for resale.
ARTICLE II
CLOSING
2.1 Closing Date. The consummation of the purchase and sale of all of
the Assets (the "Closing") shall be held on the next business day following the
date on which all of the conditions to the respective obligations to the parties
have been fully satisfied or effectively waived (the "Closing Date"), effective
as of the opening of business on such date, at the offices of Haddan & Zepfel
LLP, 4675 MacArthur Court, Suite 710, Newport Beach, California, or at such
other place, date or time, as the parties hereto shall agree upon. If the
Closing does not occur on or before December 15, 1999, each party hereto shall
pay all of its own costs and expenses, and no party hereto shall thereafter have
any further obligation to the other hereunder; provided, however, that no such
termination shall constitute a waiver by either Buyer or Seller who are not in
default of any of its respective representations, warranties, covenants or
obligations hereunder, of any rights or remedies it might have at law or in
equity if the other or Seller's Members are in default of any of its respective
representations, warranties or covenants under this Agreement.
2.2 Transfer of Title and Possession of the Assets. Title to and
possession of the Assets shall be transferred to Buyer on the Closing Date, and
shall be effectuated by execution and delivery by Seller, and receipt and
acceptance by Buyer, of a Bill of Sale and Intellectual Property Transfer
Instrument substantially in the forms attached hereto as EXHIBITS B AND C,
respectively, and the other documents of transfer and conveyance referred to in
Section 6.3 hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND MEMBERS
Except as modified by the SELLER'S DISCLOSURE SCHEDULE delivered by
Seller to Buyer, Seller and its Members jointly and severally represent and
warrant to Buyer as follows:
3.1 Organization and Corporate Power. Seller is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of California. Seller has all requisite corporate power and authority
to conduct its business as now being conducted and to own and lease the
properties which it now owns and leases. The Articles of Organization as amended
to date, certified by the Secretary of State of California, the Operating
Agreement of Seller as amended to date, and the approvals of Seller's Members
and managers authorizing the execution, delivery and performance of this
Agreement, all certified by the managers of Seller, which have previously been
provided to Buyer by Seller, are true and complete copies thereof as currently
in effect.
3.2 Authorization. Seller has full power, legal capacity and authority
to enter into this Agreement, to execute all attendant documents and instruments
contemplated hereby, to sell, transfer and convey the Acquired Assets to Buyer,
and to perform all of its obligations hereunder. This Agreement,
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<PAGE> 5
and each and every other agreement, document and instrument to be executed by
Seller in connection herewith, has been effectively authorized by all necessary
action on the part of the Seller, including without limitation the approvals of
Seller's Members and managers, which authorizations remain in full force and
effect, have been duly executed and delivered by Seller, and no other
authorizations or proceedings on the part of Seller, or otherwise, are required
to authorize this Agreement and/or the transactions contemplated hereby. This
Agreement constitutes the legal, valid and binding obligation of Seller and is
enforceable with respect to Seller in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization, priority
or other laws or court decisions relating to or affecting generally the
enforcement of creditors' rights or affecting generally the availability of
equitable remedies.
3.3 Compliance with Other Agreements. Neither the execution and
delivery of this Agreement, nor the consummation by Seller of any of the
transactions contemplated hereby, or compliance with any of the provisions
hereof, will (i) conflict with or result in a breach of, violation of, or
default under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, lease, credit agreement or other agreement,
document, instrument or obligation (including, without limitation, any of its
charter documents) to which Seller is a party or by which any of the Acquired
Assets may be bound, or (ii) violate any judgment, order, injunction, decree,
statute, rule or regulation applicable to Seller or any of the Acquired Assets.
3.4 No Approvals or Consents. No authorization, consent or approval of
any public body or authority was or is necessary for the consummation by the
Seller of the transactions contemplated by this Agreement.
3.5 Absence of Undisclosed Liabilities; No Adverse Changes. Except as
to matters arising in the ordinary course of its business, (a) Seller has no
liability or obligation (whether accrued, to become due, contingent or
otherwise) which individually or in the aggregate could have a materially
adverse effect on the business, assets, condition (financial or otherwise) or
prospects of Seller, and (b) there has been no materially adverse change in the
condition (financial or otherwise) of Seller or in its assets, liabilities,
properties, business, operations or prospects.
3.6 Title to the Assets. Seller has, and will deliver to Buyer at the
Closing, good and marketable title to all of the Acquired Assets, free and clear
of all title defects, mortgages, pledges, security interests conditional sales
agreements, liens, restrictions or encumbrances whatsoever.
3.7 Assets Necessary for Conduct of Business. The Acquired Assets are
all that is necessary to enable Buyer to conduct the Business. Seller has not
retained any assets which would be necessary for Buyer to conduct the Business.
3.8 Software.
(a) Seller is the sole and exclusive owner of the Software. All
employees, programmers, independent contractors and consultants engaged by
Seller or any predecessor that have worked on the development of the Software
have assigned to the Seller all of their right, title and interest in and to the
work or works produced by them including, without limitation, all copyright and
other intellectual property rights therein.
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(b) The programs which are a part of the Software perform in accordance
with the documentation and all technical and other written materials provided by
Seller to any user of the Software.
(c) SELLER'S DISCLOSURE SCHEDULE sets forth a true and complete list of
all databases, compilers and other items of the Software which Seller does not
own ("Third Party Properties"). Seller has a fully paid up right (by license or
otherwise) to use such items in connection with the sale, distribution or
licensing of the Software. Such right cannot be canceled and is being
transferred in full to Buyer hereunder. Seller has delivered to Buyer true and
correct copies of all agreements allowing it to use Third Party Properties in
connection with the Software.
(d) SCHEDULE 3.8(d) hereto sets forth a list of all current users of
the Software. Seller has provided Buyer with copies of each of the license or
other agreements pursuant to which such parties use the Software. The rights of
such users in the Software will not conflict with Buyer's subsequent marketing,
sale or licensing of the Software to additional parties.
(e) The Software does not infringe, violate or misappropriate any
patent, trademark, trade secret, copyright, software or other intellectual
property rights of any third party. Neither Seller nor any of its Members are
aware of any third party infringing on Seller's rights in the Software.
3.9 Intellectual Property.
(a) SCHEDULE 3.9(a) hereto sets forth an accurate and complete list of
all of the Intellectual Property Rights, identifying with respect to such rights
(1) all patent and patentable applications owned by Seller or any related party,
including the country of filing, filing number, date of issue, expiration date
and title, (2) all registered trademarks and trademark applications, including
country of filing, filing number, date of issue and expiration date, (3) all
common law trademarks, service marks, trade names, copyrights, computer software
and trade secrets, and (4) all license agreements pursuant to which Seller
acquired rights to any Intellectual Property Right and all agreements, oral or
written, pursuant to which Seller is obligated to pay royalties to third parties
with respect to such property. Complete and accurate copies of all agreements
referred to in subsections (4) have been provided to Buyer. There are no other
Intellectual Property Rights, necessary or needed to permit Buyer to own the
Software or conduct the Business. The entire right, title and interest in the
Intellectual Property Rights reside in Seller, there are no actual or claimed
infringements, violations or misappropriations existing by any third party with
respect to the Intellectual Property Rights all Intellectual Property Rights are
valid and enforceable.
(b) The use of the Intellectual Property Rights in the Business does
not infringe, violate or misappropriate any patent, trademark, trade secret,
copyright or other intellectual property rights of any third party or entity.
Neither Seller nor any of its Members is not aware that any third party is
infringing any Intellectual Property Rights.
(c) No licenses, sub-licenses or other agreements relating to the
Intellectual Property Rights, exist which would limit or restrict the rights of
Buyer to operate the Business, or which grant to a third party any rights in any
of the Intellectual Property Rights.
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(d) All trademarks, service marks, trade names and related applications
and registrations thereof and all copyrights and registrations thereof
(collectively the "Trademarks and Copyrights") are valid and enforceable, Seller
has the exclusive right to use the Trademarks and Copyrights in connection with
the Business and there are no oppositions, cancellations or governmental,
arbitral or other proceedings currently pending or threatened that protest the
rights of Seller to use and/or register the Trademarks and Copyrights. Seller
has not, by act or failure to act, including without limitation, by failure to
attach any required notice, transferred any rights to the Intellectual Property
Rights into the public domain.
(e) Seller is not making use of any patentable or unpatentable
invention or any confidential information in the Business in which any present
or past employee of Seller has or has claimed an interest, and neither Seller
nor any of its Members is aware of facts that could reasonably be expected to
give rise to such a claim. There has been no assertion against Seller, and
neither Seller nor any of its Members has knowledge of the assertion against any
of Seller's managers of any conflicting rights to any of the Intellectual
Property Rights. No employee has failed or refused to assign his or her rights
to the Intellectual Property Rights to Seller and no third party retains any
rights to the Intellectual Property Rights transferred hereby.
(f) Seller has provided to Buyer documentation relating to all its
trade secrets, including processes, know-how, computer programs and routines and
other technical data used or usable in the Business or in the operation of the
Software (collectively, the "trade secrets") that is current, accurate, and
sufficient in detail and content to identify and explain such trade secrets, and
to allow their full and proper use by Buyer without reliance on the special
knowledge or memory of others, other than the employees of Buyer. Seller is the
sole owner of each of these trade secrets, free and clear of any liens,
encumbrances, restrictions, or legal or equitable claims of others. Seller has
taken all reasonable security measures to protect the secrecy, confidentiality,
and value of these trade secrets; any of Seller's employees, consultants and any
other persons who, either alone or in concert with others, developed, invented,
discovered, derived, programmed, or designed these trade secrets, or who have
knowledge of or access to information relating to them, have been put on notice
that these secrets are proprietary to Seller and are not to be divulged or
misused. To the best knowledge of Seller, these trade secrets have not been
used, divulged, or appropriated for the benefit of any past or present employees
or other persons, or to the detriment of Seller.
3.10 Confidentiality. Seller has taken all reasonable measure to
protect the confidential and proprietary nature of the Software and Intellectual
Property Rights. All employees, agents, consultants, distributors, independent
contractors, and licensees of Seller have been put on written notice of the
confidential and proprietary nature of the Software and Intellectual Property
Rights and have been required to enter into a written agreement (which in the
case of licensee's may be the license agreement) acknowledging the confidential
nature of and agreeing not to disclose or use the Software and Intellectual
Property Rights other than as permitted by such agreement ("Confidentiality
Agreements"). No Confidentiality Agreement permits the disclosure of any
information which is protected by law as a trade secret or proprietary
information. Each Confidentiality Agreement is in full force and effect,
constitutes a legal, valid and binding obligation on each party thereto, and is
enforceable in accordance with its terms. Seller has not disclosed or otherwise
provided access to any part of the source code for the Software other than to
parties listed on SCHEDULE 3.10 hereto, each of whom has entered into a
Confidentiality Agreement. Neither Seller nor any of its Members are aware of
any third party being in
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breach of, or default under, any Confidentiality Agreement relating to the
Software or Intellectual Property Rights.
3.11 Employees. SCHEDULE 3.11 hereto sets forth the names of each
computer programmer currently employed by Seller, together with their current
compensation, including benefits. Seller does not have any employment contracts
or arrangements or consulting agreements currently in effect. Seller is in
compliance with all applicable state, federal, county and local laws,
regulations, rules and ordinances relating to the employment of labor, including
those relating to wages, hours, collective bargaining, affirmative action and
the payment and withholding of any taxes. Seller has withheld all amounts
required by law or agreement to be withheld from the wages and salaries of its
employees and is not liable for any arrears of any taxes or penalties for
failure to comply with the foregoing.
3.12 Office Lease. Seller has delivered to Buyer a true and correct
copy of the lease of the Office Space (the "Office Lease"), which is in full
force and effect. Seller has the right to sublease the Office Space to Buyer on
a month-to-month basis and has obtained the landlord's consent to such sublease,
if required. Seller has duly performed all of its obligations under the Office
Lease in a timely manner and will continue to do so through the Closing; and no
breach or default, alleged breach or default, or event which would (with the
passage of time, notice or both) constitute a breach or default thereunder by
Seller, (or to the best of Seller's knowledge and that of its Members, any other
party thereto) has occurred or as a result of this Agreement or its performance
will occur. Consummation of the transactions contemplated by this Agreement will
not ( and will not give any party a right to) terminate or modify any material
rights of, or accelerate or augment any material obligation of, Seller under the
Office Lease. There are no disputes, oral agreements, or forbearance programs in
effect as to the Office Lease.
3.13 No Product Liability Claims. No liability claims concerning the
operation of the Software have been asserted or threatened against Seller and
there is no basis known to Seller or its Members for any such claim.
3.14 Tax Matters. Seller has, since its inception, duly filed all
federal, state, county and local tax returns required to have been filed by it
in those jurisdictions where the nature or conduct of its business requires such
filing and where the failure to so file would be materially adverse to Seller.
All federal, state, county and local taxes, including but not limited to those
taxes due with respect to Seller's properties, income, gross receipts, excise,
occupation, franchise, permit, licenses, sales, payroll, and inventory due and
payable as of the date hereof by Seller have been paid.
3.15 No Pending Material Litigation or Proceedings. There are no
actions, suits or proceedings pending or threatened against or affecting Seller
(including actions, suits or proceedings where liabilities may be adequately
covered by insurance) at law or in equity or before or by any federal, state,
municipal or other governmental department, commission, court, board, bureau,
agency or instrumentality, domestic or foreign, or affecting any of the Members
or managers of Seller in connection with the business, operations or affairs of
Seller, which might result in any material adverse change in the Business, or
which question or challenge the sale of the Acquired Assets by Seller to Buyer.
3.16 Compliance with Laws. Seller holds all licenses, franchises,
permits and authorizations necessary for the lawful conduct of its business as
presently conducted, has complied with all applicable
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statutes, laws, ordinances, rules and regulations of all governmental bodies,
agencies and subdivisions having, asserting or claiming jurisdiction over it,
with respect to any part of the conduct of its business and corporate affairs,
where the failure to so comply might have consequences that could materially
adversely affect Seller's condition (financial or otherwise), business, assets,
properties or prospects.
3.17 Environmental Matters. Seller does not, and does not suffer or
permit anyone else to, generate, use, transport, store, release or dispose of
any hazardous substance in violation of any law, regulation, rule or
administrative ordinance. There is no generation, use, transportation,
treatment, storage, release or disposal of any hazardous substance in connection
with the business of Seller or the use of any property or facility of Seller, or
any nearby or adjacent properties which might reasonably be expected to create
liability or require reporting or notification of any governmental agency or
regulatory body. No notice or warning from any governmental agency, regulatory
body or other entity has been given or issued to Seller which has not been cured
by compliance with respect to any failure or alleged failure by Seller to comply
with any law, regulation, rule or administrative ordinance, nor is any such
notice or warning proposed or threatened.
3.18 Disclosure. All facts material to the Acquired Assets and Business
have been disclosed herein, including the exhibits and schedules hereto. Seller
and its Members know of no facts or circumstances that would adversely affect
the carrying on by Buyer of the Business as it is presently conducted. No
representation or warranty by Seller or its Members contained in this Agreement
and no statement contained in any certificate, schedule, list or other writing
furnished or to be furnished to Buyer contains or shall contain any untrue
statement of a material fact or omits or shall omit to state a material fact
necessary in order to make the statement therein not misleading.
3.19 No Brokers. Seller is not obligated for the payment of any fees,
commissions or expenses of any agent, broker, finder, or investment or
commercial banker, or other party in connection with the negotiation, execution
or performance of this Agreement or the transactions contemplated by this
Agreement, except for Global Capital Markets, Inc. as to which Seller shall have
full responsibility and Buyer shall have no liability.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Except as set modified by the BUYER'S DISCLOSURE SCHEDULE, delivered by
Buyer to Seller, Buyer represents and warrants to Seller as follows:
4.1 Organization and Authorization. Buyer is a corporation duly
organized under the laws of the State of Delaware, with full power, corporate or
otherwise, legal capacity and authority to enter into and perform its
obligations under this Agreement, and to execute and deliver all attendant
documents and instruments and to consummate the transactions herein
contemplated, including all attendant acts. The execution and delivery of the
this Agreement, and the consummation by Buyer of the transactions contemplated
hereby, are not in conflict with its Certificate of Incorporation or Bylaws, and
are authorized by the resolutions of the directors of Buyer. No other
proceedings on the part of Buyer are necessary to authorize this Agreement and
the transactions contemplated hereby. This Agreement constitutes the legal,
valid and binding act of Buyer and is enforceable with respect to Buyer in
accordance with its terms, except as enforcement hereof may be limited by
bankruptcy, insolvency,
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reorganization, priority, or other laws relating to or affecting generally the
enforcement of creditors rights or by laws affecting generally the availability
of equitable remedies. Neither the execution and delivery by Buyer nor the
consummation by Buyer of the transactions contemplated by this Agreement, nor
compliance by Buyer with any of the provisions thereof or hereof, will (i)
conflict with or result in a breach or violation of, or default under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, agreement or other instrument or obligation (including, without
limitation, the Articles of Incorporation) to which Buyer is a party or by which
it is bound, or (ii) violate any judgment, order, injunction, decree, statute,
rule or regulation applicable to Buyer or any of its properties or assets.
4.2 Consents. Except for the filing with the SEC of Form D, if so
elected by Buyer, the filing of a registration statement with the SEC on Form
S-3 as contemplated by Section 7.4 below, the filing of applicable notices with
state blue sky securities administrators, and such filings as may be required by
the Nasdaq Stock Market with respect to the Shares, no governmental consents,
approvals or authorizations, and no consents or approvals by any third party,
were or are required to be obtained by Buyer in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
4.3 Validity of Shares. The Shares will, when issued, be duly
authorized, validly issued, fully paid and nonassessable and free of liens and
encumbrances, except for applicable securities laws restrictions on transfer,
including those imposed by Regulation D of Section 4(2) of the 1933 Act and Rule
144 promulgated thereunder, and under applicable state securities laws.
4.4 SEC Filings. Buyer has made available to Seller copies of the
following reports filed with the SEC: (a) its annual report on Form 10-K for the
fiscal year ended September 30, 1998, (b) all quarterly reports on Form 10-Q for
periods after September 30, 1998 and prior to the date of this Agreement, (c)
all reports on Form 8-K, if any, for the same period, and (d) all amendments and
supplements, if any, to such reports (collectively "Buyer's SEC Reports"). As of
their respective filing dates, Buyer's SEC Reports complied as to form in all
material respects with the requirements of the 1933 Act or the Securities and
Exchange Act of 1934 (the "1934 Act") as applicable. Buyer's SEC Reports, this
Agreement, Buyer's exhibits and schedules hereto, and any certificates or
documents to be delivered to Seller by Buyer pursuant to this Agreement, when
taken together, do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements contained
herein and therein, in light of the circumstances under which such statements
were made, not misleading in any material respect.
4.5 No Material Adverse Change. Since the date of Buyer's Report on
Form 10-Q for its fiscal quarter ended June 30, 1999, there has been no material
adverse change in the business, operations or financial condition of Buyer.
4.6 No Brokers. Buyer is not obligated for the payment of any fees,
commissions or expenses of any agent, broker, finder, or investment or
commercial banker, or other party in connection with the negotiation, execution
or performance of this Agreement or the transactions contemplated by this
Agreement.
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ARTICLE V
OBLIGATIONS OF THE PARTIES PRIOR TO CLOSING
The parties hereby agree that between the date hereof and the Closing:
5.1 Access to Properties and Records.
(a) Seller shall provide Buyer and its authorized representatives full
access, during reasonable business hours, in such a manner as not unduly to
disrupt normal business activities, to any and all of the premises, properties,
contracts, books, records and affairs of Seller, and the officers of Seller
shall furnish any and all data and information pertaining to the business of
Seller which Buyer or its authorized representatives may from time to time
reasonably require.
(b) Unless and until the transactions contemplated by this Agreement
have been consummated, each party hereto and their respective representatives
shall hold in confidence all information so obtained and if the transactions
contemplated hereby are not consummated will return all documents hereinabove
referred to and obtained from the other party. Such obligation of
confidentiality shall not extend to any information which as shown to have been
previously (i) known to the party receiving it, (ii) generally known to others
engaged in the trade or business of the party disclosing such information, (iii)
part of public knowledge or literature, or (iv) lawfully received from a third
party.
5.2 Existence, Rights and Franchises. Seller shall take and cause to be
taken all necessary actions to cause Seller to maintain in full force and effect
its existence as a California limited liability company, or its rights,
franchises, customers and good standing. No change shall be made in the Articles
of Organization or Operating Agreement of Seller.
5.3 Insurance. Seller shall take all necessary actions to maintain in
force all of its existing insurance policies, subject only to variations in
amounts required by the ordinary operation of its business.
5.4 Conduct of Business in the Ordinary Course. Seller shall not permit
to be done any act which would result in the breach of any of the covenants of
Seller contained herein or which would cause the representations and warranties
of the Seller contained herein to become untrue or inaccurate as of any date
subsequent to the date hereof. Without limiting the generality of the foregoing,
Seller shall take all necessary actions to (i) operate its business diligently
in the ordinary course of business as an ongoing concern, and to preserve intact
Seller's organization and operations at current levels, to retain the services
of Seller's present employees, and to preserve Seller's relationships with its
suppliers and customers and others having business relationships with Seller;
(ii) maintain in the ordinary course of business all of the Acquired Assets
which are in such condition as of the date hereof; (iii) refrain from selling,
transferring or leasing (except software licenses entered into in the ordinary
course of business) any of the Acquired Assets, or from mortgaging, pledging, or
subjecting to any lien, charge, security interest or encumbrance of any kind any
of the Acquired Assets; (iv) maintain the books, accounts and records of Seller
in the usual, regular and ordinary manner, on a basis consistent with past
practice in recent periods; (v) refrain from entering from modifying, amending,
canceling or terminating any contracts, agreements, leases or
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other commitments presently in force, except as expressly contemplated by this
Agreement, without the prior approval of Buyer; and (vi) refrain from paying any
bonus to any employee or increasing any employee's compensation or benefits.
5.5 Consents. Each of the parties shall use its best efforts to obtain
any and all necessary permits, approvals, qualifications, consents or
authorizations from third parties and governmental authorities which are
required to be obtained prior to the Closing and shall use its best efforts to
make or complete all filings, proceedings and waiting periods required to be
made or completed prior to the Closing.
5.6 Risk of Loss. In the event that all or a material part of the
Acquired Assets are destroyed or substantially damaged prior to the Closing, or
are taken by eminent domain by any governmental entity, Buyer shall be entitled
to elect within five (5) days of notice thereof to terminate this Agreement, in
which case all parties hereto shall pay their own expenses. In the event that
Buyer elects not to terminate this Agreement as provided immediately above,
Buyer shall have a period of fifteen (15) days within which to obtain the
agreement of Seller as to an appropriate adjustment to the Purchase Price for
the Acquired Assets, at the end of which period this Agreement shall terminate
if such further agreement has not been reached, and all parties shall pay their
own expenses.
5.7 Compliance With Bulk Sales Law. At the time of the Closing Seller
shall have complied with and assisted Buyer in complying with any and all
applicable state law provisions, including notice to creditor provisions, with
respect to bulk transfers of assets. Nothing in this Section 5.7 shall estop or
prevent Buyer from asserting as a bar or defense to any action or proceeding
brought under any bulk transfer law that such law is not applicable to the sale
of Assets contemplated by this Agreement.
5.8 Hiring of Seller's Employees. Seller shall terminate all employees
listed on SCHEDULE 5.8 hereto ("Terminated Employees") effective as of the
Closing Date, and shall pay all wages, withholding, social security and other
taxes, unemployment and disability compensation contributions, vacation, sick
leave and other benefits accrued to the Closing Date. Seller shall assist Buyer
in hiring all of the Terminated Employees on the Closing Date on such terms and
conditions of employment as determined by Buyer ("Rehired Employees").
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF THE PARTIES
The respective obligations of the parties hereto to consummate the
transactions contemplated hereby shall be subject to the fulfillment, at or
prior to the Closing, of the following conditions:
6.1 Regulatory Approvals. There shall have been obtained any and all
permits, approvals and qualifications of, and there shall have been made or
completed all filings, proceedings and waiting periods, required by any
governmental body, agency or regulatory authority which, in the reasonable
opinion of counsel to Buyer, are required for the consummation of the
transactions contemplated hereby.
6.2 No Action or Proceeding. No claim, action, suit, investigation or
other proceeding shall be pending or threatened before any court or governmental
agency which presents a substantial risk of
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the restraint or prohibition of the transactions contemplated by this Agreement
or the obtaining of material damages or other relief in connection therewith.
6.3 Obligations of Buyer. The obligation of Buyer hereunder to
consummate the transactions contemplated by this Agreement are expressly subject
to the satisfaction of each of the further conditions set forth below, any or
all of which may be waived by Buyer in whole or in part without prior notice;
provided, however, that no such waiver of a condition shall constitute a waiver
by Buyer of any other condition or of any of its rights or remedies, at law or
in equity, if Seller or its Members shall be in default or breach of any of its
representations, warranties or covenants hereunder:
(a) Seller shall have performed the agreements and covenants required
to be performed by Seller under this Agreement prior to the Closing, there shall
have been no material adverse change in the condition (financial or otherwise),
assets, liabilities, earnings or business of Seller since the date hereof, and
the representations and warranties of the Seller contained herein shall, except
as contemplated or permitted by this Agreement or as qualified in writing dated
as of the date of the Closing delivered by the Seller to Buyer with the approval
of Buyer indicated thereon, be true in all material respects on and as of the
Closing Date as if made on and as of such date, and Buyer shall have received
certificates, dated as of the Closing Date, signed by the chief executive and
financial officers of Seller, reasonably satisfactory to Buyer and its counsel,
to such effect.
(b) Buyer shall have received a certificate of from Seller's Members to
the effect that, except as may be disclosed in this Agreement, any schedules or
exhibits hereto, or in an attachment to such certificate, (i) the Members have
no knowledge of any obligation or liability, or other fact, which has not been
disclosed to Buyer which may reasonably be expected to materially and adversely
affect the business, assets, liabilities, properties or condition (financial or
otherwise) of Buyer with respect to the ownership, use and operation of the
Assets following the Closing, and (ii) the Members will indemnify and hold Buyer
harmless from and against any loss, cost or expense incurred by Buyer as a
consequence of any such obligation, liability or other fact of which the Members
had knowledge but which was not disclosed to Buyer prior to the Closing.
(c) Pursuant to Section 7.1 below, Seller shall have executed and
delivered, effective as of the Closing, a month-to-month sublease of the Office
Space accompanied by the landlord's consent to such sublease, each in form and
substance reasonably satisfactory to Buyer and its counsel.
(d) Seller shall have executed and delivered, effective as of the
Closing, the Bill of Sale and Intellectual Property Transfer Instrument and such
other deeds, bills of sale, endorsements, assignments, and other instruments of
transfer and conveyance as shall be necessary or desirable, in the reasonable
opinion of Buyer's counsel, to transfer unencumbered and absolute ownership of
the Acquired Assets to Buyer.
(e) Those Terminated Employees which Buyer wishes to hire shall have
accepted offers of employment from Buyer on terms acceptable to Buyer.
(f) At the Closing, Seller shall deliver to Buyer the personnel files
and records of the Rehired Employees.
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(g) No event shall have occurred which has or could reasonably be
expected to have a material adverse effect on the Business or the Software.
(h) Buyer shall have completed its due diligence investigation of
Seller and be satisfied with the results of such investigation.
6.4 Obligations of Seller. The obligation of Seller hereunder to
consummate the transactions contemplated by this Agreement is expressly subject
to the satisfaction of each of the further conditions set forth below, any or
all of which may be waived by Seller in whole or in part without prior notice;
provided, however, that no such waiver of a condition shall constitute a waiver
by Seller of any other condition or of any of its rights or remedies, at law or
in equity, if Buyer shall be in default or breach of any of its representations,
warranties or covenants under this Agreement:
(a) Buyer shall have performed the agreements and covenants required to
be performed by Buyer under this Agreement prior to the Closing, there shall
have been no material adverse change in the condition (financial or otherwise),
assets, liabilities, earnings or business of Buyer since the date hereof, and
the representations and warranties of Buyer contained herein shall, except as
contemplated or permitted by this Agreement or as qualified in a writing dated
as of the date of the Closing delivered by the Buyer to Seller with the approval
of the Seller indicated thereon, be true in all material respects on and as of
the date of Closing as if made on and as of such date, and Seller shall have
received a certificate, dated as of the date of Closing, signed by the chief
executive and financial officers of Buyer, reasonably satisfactory to Seller and
its counsel, to such effect.
ARTICLE VII
ADDITIONAL AGREEMENTS OF THE PARTIES
7.1 Office Space. Seller will sublease the Office Space to Buyer on a
month-to-month basis until Buyer has relocated the Rehired Employees to another
facility. The rent under the sublease will be the same as under Seller's lease
of the office space.
7.2 Noncompetition & Non Solicitation.
(a) Except as expressly permitted by the Software License, Seller and
each of its Members agrees that for a period of five (5) years from the date of
the Closing, they shall not compete with or in the Business in the geographic
markets served by Buyer anywhere in the United States in which the Software has
been marketed or the Business has otherwise been carried on prior to the
Closing. In the event that any provision of this section is more restrictive
than permitted by the law of the jurisdiction in which Buyer seeks enforcement
thereof, the provisions of this section shall be limited only to that extent
that a judicial determination finds the same to be unreasonable or otherwise
unenforceable. Moreover, notwithstanding any judicial determination that any
provision of this section is not specifically enforceable, the parties intend
that the Buyer shall nonetheless be entitled to recover monetary damages as a
result of any breach hereof.
(b) For a period of five (5) years following the Closing, Seller will
not hire any of the Rehired Employees, nor will Seller directly or indirectly
induce or encourage or suggest to any Rehired
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Employee that they leave Buyer's employment to accept any offer of employment or
position elsewhere. 7.3 Registration Rights.
(a) Definitions. For the purposes of this Section 7.3 the following
terms have the meanings indicated:
(i) "Registration" refers to a registration effected by preparing
and filing a Registration Statement or Statements in compliance with the 1933
Act and pursuant to Rule 415 under the 1933 Act or any successor rule providing
for offering securities on a continuous basis, if applicable, and the
declaration or ordering of effectiveness of such Registration Statement by the
SEC
(ii) "Registrable Securities" means (i) the Shares, and (ii) any
shares of capital stock issued or issuable, from time to time (with any
adjustments), as a distribution on or in exchange for or otherwise with respect
to the Shares.
(iii) "Registration Statement" means one or more registration
statements of Buyer under the 1933 Act registering all of the Registrable
Securities.
(b) Registration.
(i) Buyer shall use its best efforts to file with the SEC , within 120
days after the after completion of the Closing, a Registration Statement on Form
S-3 (or, if Form S-3 is not then available, on such form of Registration
Statement as is then available to effect a registration of the issuance and/or
the resale of all of the Registrable Securities) covering the resale of the
Registrable Securities. Buyer shall use its best efforts to have the
Registration Statement declared effective as soon as possible. Buyer shall keep
the Registration Statement effective pursuant to Rule 415 under the 1933 Act at
all times until such date as is the earlier of (i) the date on which all of the
Registrable Securities have been sold and (ii) the date on which all of the
Registrable Securities (in the reasonable opinion of counsel to the Company) may
be immediately sold to the public without registration or restriction pursuant
to Rule 144(k) under the 1933 Act (the "Registration Period"). The Registration
Statement (including any amendments or supplements thereto and prospectuses
contained therein and all documents incorporated by reference therein) (i) shall
comply in all material respects with the requirements of the 1933 Act and the
rules and regulations of the SEC promulgated thereunder and (ii) shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein not
misleading. The financial statements of Buyer included in the Registration
Statement or incorporated by reference therein will comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC applicable with respect thereto. Such financial
statements will be prepared in accordance with generally accepted accounting
principles, consistently applied, 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 on summary statements and fairly present
in all material respects the consolidated financial position of Buyer and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to immaterial year-end adjustments).
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(ii) Buyer shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to keep the Registration Statement effective at all times
during the Registration Period, and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of Buyer covered by the Registration Statement until such
time as all of such Registrable Securities have been disposed of in accordance
with the intended methods of disposition by the seller or sellers thereof as set
forth in the Registration Statement.
(iii) Buyer shall furnish to the furnish to Seller such numbers of
copies of a prospectus, including a preliminary prospectus, in conformity with
the requirements of the 1933 Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(iv) As promptly as practicable after becoming aware of such event,
Buyer shall notify Seller of the happening of any event, of which Buyer has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and use its best efforts promptly to
prepare a supplement or amendment to the Registration Statement to correct such
untrue statement or omission, and deliver such number of copies of such
supplement or amendment to Seller as it may reasonably request.
(v) Buyer shall use its best efforts to prevent the issuance of any
stop order or other suspension of effectiveness of the Registration Statement,
and, if such an order is issued, to obtain the withdrawal of such order at the
earliest practicable moment (including in each case by amending or supplementing
the Registration Statement) and to notify Seller of the issuance of such order
and the resolution thereof (and if such Registration Statement is supplemented
or amended, deliver such number of copies of such supplement or amendment to
Seller as it may reasonably request).
(vi) Buyer shall use its best efforts to promptly cause all the
Registrable Securities covered by the Registration Statement to be listed on the
Nasdaq Stock Market.
(c) Obligations of Seller.
In connection with the registration of the Registrable Securities,
Seller shall have the following obligations:
(i) It shall be a condition precedent to the obligations of Buyer
to complete the registration pursuant to this Agreement with respect to the
Registrable Securities that Seller shall furnish to Buyer such information
regarding itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable Securities held by it as shall be reasonably
required to effect the registration of such Registrable Securities and shall
execute such documents in connection with such registration as Buyer may
reasonably request.
(ii) Seller shall cooperate with Buyer as reasonably requested by
Buyer in connection with the preparation and filing of the Registration
Statement hereunder.
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(iii) Seller agree that, upon receipt of any notice from Buyer of
the happening of any event of the kind described in Section 7.3(b)(v)or (vi), it
will immediately discontinue disposition of Registrable Securities pursuant to
the Registration Statement covering such Registrable Securities until receipt of
the copies of the supplemented or amended prospectus contemplated by Section
7.3(b)(v) or (vi) and, if so directed by Buyer, shall deliver to Buyer (at the
expense of Buyer) or destroy (and deliver to Buyer a certificate of destruction)
all copies in Seller's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice.
(d) Expenses of Registration. All reasonable expenses incurred by Buyer
or Seller in connection with registrations, filings or qualifications pursuant
to Section 7.3(b) above, including all registration, listing and qualifications
fees, printers and accounting fees, but excluding underwriting discounts,
commissions and fees and expense of legal counsel to Seller, shall be borne by
Buyer.
(e) Indemnification.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
(i) To the extent permitted by law, Buyer will indemnify, hold
harmless and defend (a) Seller who holds such Registrable Securities, and (b)
the directors, officers, partners, members, employees and agents of the Holder
and each person who controls Seller within the meaning of Section 15 of the 1933
Actor Section 20 of the 1934 Act, if any, (each, an "Indemnified Person"),
against any joint or several losses, claims, damages, liabilities or expenses
(collectively, together with actions, proceedings or inquiries by any regulatory
or self-regulatory organization, whether commenced or threatened, in respect
thereof, "Claims") to which any of them may become subject insofar as such
Claims arise out of or are based upon: (i) any untrue statement or alleged
untrue statement of a material fact in a Registration Statement or the omission
or alleged omission to state therein a material fact required to be stated or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
Buyer files any amendment thereof or supplement thereto with the SEC) or the
omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, or (iii) any violation or alleged
violation by Buyer of the Securities Act, the Exchange Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities (the matters in the foregoing clauses (i) through (iii) being,
collectively, "Violations"). Buyer shall reimburse Seller and each other
Indemnified Person, promptly as such expenses are incurred and are due and
payable, for any reasonable legal fees (for a single counsel for all such
parties) or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a): (i) shall not apply to a Claim arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to Buyer by such Indemnified Person expressly for use in
the Registration Statement or any such amendment thereof or supplement thereto;
(ii) shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of Buyer, which consent
shall not be unreasonably withheld; and (iii) with respect to any preliminary
prospectus, shall not inure to the benefit of any
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Indemnified Person if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected on a timely basis in the
prospectus, as then amended or supplemented, if such corrected prospectus was
timely made available by Buyer, and the Indemnified Person was promptly advised
in writing not to use the incorrect prospectus prior to the use giving rise to a
Violation and such Indemnified Person, notwithstanding such advice, used it.
(ii) In connection with the Registration Statement, Seller agree to
indemnify, hold harmless and defend, to the same extent and in the same manner
set forth in Section the preceding paragraph, Buyer, each of its directors, each
of its officers who signs the Registration Statement, its employees, agents and
each person, if any, who controls Buyer within the meaning of Section 15 of the
1933 Act or Section 20 of the Exchange Act, and any other stockholder selling
securities pursuant to the Registration Statement or any of its directors or
officers or any person who controls such stockholder or underwriter within the
meaning of the 1933 Act or the 1934 Act (collectively and together with an
Indemnified Person, an "Indemnified Party"), against any Claim to which any of
them may become subject, under the Securities Act, the 1934 Actor otherwise,
insofar as such Claim arises out of or is based upon any Violation, in each case
to the extent (and only to the extent) that such Violation occurs in reliance
upon and in conformity with written information furnished to Buyer by Seller
expressly for use in connection with such Registration Statement; and subject to
Section 7.3(e)(iii) Seller will reimburse any legal or other expenses (promptly
as such expenses are incurred and are due and payable) reasonably incurred by
them in connection with investigating or defending any such Claim; provided,
however, that the indemnity agreement contained in this Section 7.3(e)(ii) shall
not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of Seller, which consent shall not be
unreasonably withheld; provided, further, however, that Seller shall be liable
under this Agreement for only that amount as does not exceed the net proceeds
actually received by the Investor as a result of the sale of Registrable
Securities pursuant to the Registration Statement. Notwithstanding anything to
the contrary contained herein, the indemnification agreement contained in this
Section 7.3(e)(ii) with respect to any preliminary prospectus shall not inure to
the benefit of any Indemnified Party if the untrue statement or omission of
material fact contained in the preliminary prospectus was corrected on a timely
basis in the prospectus, as then amended or supplemented, and the Indemnified
Party failed to utilize such corrected prospectus.
(iii) Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 7.3(e) of notice of the commencement of any
action (including any governmental action), such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to made against any
indemnifying party under this Section 7.3(e) deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided, however, that such indemnifying party shall not be
entitled to assume such defense and an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and expenses to be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential conflicts of interest between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding or the actual or potential defendants in, or targets
of, any such action include both the Indemnified Person or the
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Indemnified Party and the indemnifying party and any such Indemnified Person or
Indemnified Party reasonably determines that there may be legal defenses
available to such Indemnified Person or Indemnified Party which are in conflict
with those available to such indemnifying party. The indemnifying party shall
pay for only one separate legal counsel for the Indemnified Persons or the
Indemnified Parties, as applicable, if Seller is entitled to indemnification
hereunder, or by Buyer, if Buyer is entitled to indemnification hereunder, as
applicable. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the Indemnified Person or
Indemnified Party under this Section 6, except to the extent that the
indemnifying party is actually prejudiced in its ability to defend such action.
The indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as such expense, loss, damage or liability is incurred and is due and
payable.
(f) Contribution. To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 7.3(e) to the fullest extent permitted by law; provided,
however, that (i) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault standards
set forth in Section 7.3(e), (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any seller of Registrable Securities who was not
guilty of such fraudulent misrepresentation, and (iii) contribution (together
with any indemnification or other obligations under this Section 7.3 by any
seller of Registrable Securities shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such Registrable Securities.
7.4 Taxes and Expenses.
(a) Except as otherwise expressly provided in (b) immediately below,
each of Seller, on the one hand, and Buyer on the other hand, shall each pay all
of their own respective taxes, attorneys' fees and other costs and expenses
payable in connection with or as a result of the transactions contemplated
hereby and the performance and compliance with all agreements and conditions
contained in this Agreement respectively to be performed or observed by each of
them.
(b) Seller shall pay all income taxes if any, which become due on
account of the sale and transfer of the Assets to Buyer, and Buyer shall pay all
use taxes, if any, which become due on account of the sale and transfer of the
Assets to Buyer, each party reserving the right to contest any assessment of
taxes as a consequence of the sale and transfer of the Assets to Buyer.
(c) Real and personal property taxes and assessments shall be pro-rated
between Seller and Buyer based on a 30-day month and a 360 day year as of the
Closing Date, based upon the latest available tax information.
7.5 Survival of Representations and Warranties. The representations and
warranties of the parties contained herein and in any other document or
instrument delivered by or on behalf of either of the parties hereto shall
survive the Closing and any investigations made by or on behalf of either party
made prior to the Closing.
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7.6 Indemnification. Seller and its Members hereby agree to jointly and
severally indemnify and hold Buyer harmless with respect to (a) any and all
claims, losses, damages, obligations, liabilities and expenses, including
without limitation reasonable legal and other costs and expenses of
investigating and defending any actions or threatened actions, which Buyer may
incur or suffer following the Closing by reason of any breach of any of the
representations, warranties or agreements of Seller or its Members contained
herein, or (b) any obligations or liabilities of Seller or its Members to any
third party which are asserted against Buyer, including, without limitation,
accounts payable, taxes, judgments, liens, encumbrances, and claims arising out
of Seller's licensing or distribution of the Software prior to or following the
Closing. Seller and its Members shall reimburse Buyer for all costs and expenses
for which Buyer is entitled to be indemnified as the same are incurred by Buyer.
7.7 Preservation of Seller's Existence. Seller will not take any action
to commence voluntary bankruptcy proceedings, or take or permit to be taken any
action incident to the dissolution and/or liquidation of Seller for a period of
not less than two (2) years from and after the Closing Date. During such
two-year period, Seller shall cause to be paid any and all debts, obligations
and liabilities of Seller existing at, or incurred following the Closing Date,
other than obligations under the Office Lease that accrue following the Closing
Date.
7.8 Prorations. Any and all payments, costs, charges, fees and expenses
connected with or incurred in the operation of the business, including but not
limited to any taxes, utilities, rents, and other payments under any lease or
contract, shall be prorated between the parties as of the close of business on
the date immediately preceding the Closing. Each of Seller and Buyer shall bear
their pro rata share of such costs and expenses.
ARTICLE VIII
MISCELLANEOUS
8.1 Other Documents. Each of the parties hereto shall execute and
deliver such other and further documents and instruments, and take such other
and further actions, as may be reasonably requested of them for the
implementation and consummation of this Agreement and the transactions herein
contemplated.
8.2 Parties in Interest. This Agreement shall be binding upon and inure
to the benefit of the parties hereto, the heirs, personal representatives,
successors and assigns of the Seller and of Buyer, but shall not confer,
expressly or by implication, any rights or remedies upon any other party.
8.3 Governing Law. This Agreement is made and shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of California.
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8.4 Notices. All notices, requests or demands and other communications
hereunder must be in writing and shall be deemed to have been duly made if
personally delivered or three days after mailing if mailed, first class postage
prepaid, to the parties as follows:
(a) If to Seller, Alan Sheen
Cubig Group L.L.C.
424A Cloverleaf Ave
Baldwin Park, CA 91706
(b) If to Buyer, to: Geoffrey D. Knapp
Cam Data Systems, Inc.
17520 Newhope Street
Fountain Valley, CA 92708
Any party hereto may change its address by written notice to the other party
given in accordance with this Section 8.4.
8.5 Entire Agreement. This Agreement and the exhibits attached hereto
contains the entire agreement between the parties and supersede all prior
agreements, understandings and writings between the parties with respect to the
subject matter hereof and thereof. Each party hereto acknowledges that no
representations, inducements, promises or agreements, oral or otherwise, have
been made by any party, or anyone acting with authority on behalf of any party,
which are not embodied herein or in an exhibit hereto, and that no other
agreement, statement or promise may be relied upon or shall be valid or binding.
Neither this Agreement nor any term hereof may be changed, waived, discharged or
terminated orally. This Agreement may be amended or any term hereof may be
changed, waived, discharged or terminated by an agreement in writing signed by
both the Seller and Buyer.
8.6 Headings. The captions and headings used herein are for convenience
only and shall not be construed as a part of this Agreement.
8.7 Attorneys' Fees. In the event of any litigation between the Seller
and Buyer, the non-prevailing party shall pay the reasonable expenses, including
the attorneys' fees, of the prevailing party in connection therewith.
8.8 Exhibits and Schedules. The terms of all exhibits and schedules
attached hereto or referenced hereby are incorporated herein.
8.9 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original but all of which taken together shall
constitute but one and the same document.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date first above written.
"Seller" "Buyer"
Cubig Group, L.L.C. Cam Data Systems, Inc.
By: /s/ Alan Sheen By: /s/ Geoffrey D. Knapp
--------------------------- -----------------------
Alan Sheen Geoffrey D. Knapp
Chief Executive Officer Chief Executive Officer
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List of Exhibits and Schedules
Exhibit A - Software License
Exhibit B - Bill of Sale
Exhibit C - Intellectual Property Transfer Instrument
Schedule 1.1 - Description of Software & Other Acquired Assets
Schedule 1.4 - Purchase Price Allocation
Schedule 3.8 - Current Software Licensees
Schedule 3.9 - Intellectual Property Rights
Schedule 3.10 - Parties with Access to Source Code
Schedule 3.11 - Employees
Schedule 5.8 - Terminated Employees
<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
February 29, 2000
CAM Data Systems, 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 Data Systems, 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 30,054
shares of the Company's Common Stock (the "Shares"), issued pursuant to an
Agreement for Purchase and Sale of Certain of the Assets of Cubig Group L.L.C.,
dated as of December 13, 1999, between the Company and Cubig Group L.L.C. (the
"Purchase Agreement").
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, 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 the Shares are 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) for the registration of 30,054 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 CAM
Data Systems, Inc. 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
February 25, 2000
