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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
Computer Integration Corp.
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(Name of Issuer)
Common Stock, Par Value $.001 Per Share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
205171 10 1
-----------------------------------
(CUSIP Number)
Codinvest Limited
c/o M.L. Argand
6 Rue Bellot
Geneva, Switzerland
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
July 24, 1997
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box.[ ]
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purposes of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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SCHEDULE 13D
CUSIP NO. 205171 10 1 PAGE 2 OF 7 PAGES
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1 NAME OF REPORTING PERSON
S.S. OF ABOVE PERSON
Codinvest Limited
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
British Virgin Islands
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7 SOLE VOTING POWER
NUMBER OF 4,672,897
SHARES -------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
-0-
OWNED BY
------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 4,672,897
PERSON ------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
-0-
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,672,897
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
33.5%
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14 TYPE OF REPORTING PERSON*
CO
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ITEM 1. SECURITY AND ISSUER
The class of securities to which this statement relates is the
Common Stock, par value $.001 per share (the "Common Stock"), of
Computer Integration Corp., a Delaware corporation (the "Issuer"), the
principal executive offices of which are located at 2425 Crownpoint
Executive Drive, Charlotte, North Carolina 28227.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(c),(f) This statement is being filed on behalf of Codinvest
Limited, a British Virgin Islands corporation ("Codinvest"). Codinvest
is engaged in the principal business of acquiring and holding securities
for investment purposes. The principal offices of Codinvest are located
at Road Town, P.O. Box 3126, Tortola, British Virgin Islands.
(d) None.
(e) None.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Beneficial ownership of the reported securities was acquired by
Codinvest through the use of $5,000,000 in working capital.
ITEM 4. PURPOSE OF TRANSACTION
On May 15, 1997, the Issuer and Chartwell Group Inc., a Texas
corporation ("Chartwell") entered into a Stock Purchase Agreement (the
"Stock Agreement"), pursuant to which the Issuer agreed to sell to
Chartwell or its assignees 6,950,000 shares (the "Shares") of the
Issuer's Common Stock for a purchase price of $7,436,500. In addition,
the Issuer agreed to grant to Chartwell or its assignees common stock
purchase warrants (the "Warrants") to acquire 300,000 shares of Common
Stock of the Issuer. The Stock Agreement and the Warrant Agreements are
attached hereto as Exhibits 1 and 2, respectively, and are incorporated
herein by reference.
The Stock Agreement provides that Chartwell or its assignees have
the right, for one year after the Closing Date (July 24, 1997), to
require the Issuer to use its best efforts to cause and maintain the
election of up to four nominees of Chartwell or its assignees. The
Issuer agreed, as part of the transaction, that the board of directors
would consist of no more than eight directors.
Pursuant to its assignment rights under the Stock Agreement,
Chartwell assigned its rights to purchase 4,672,897 of the Shares to
Codinvest, 1,000,000 of the Shares to Robert V. Johnson IV ("Johnson"),
and the balance of 1,277,103 of the Shares to six other investors
(collectively, Johnson and the six other investors are referred to as
the
Page 3
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"Assignees"). In connection with the assignments, Chartwell assigned to
Codinvest the right to require the Issuer to use its best efforts to
cause and maintain the election of up to three nominees to the Board of
Directors, and to the Assignees, the right to elect one nominee. If
necessary to create a vacancy for the director to be designated by the
Assignees, Codinvest will cause one of the directors it is entitled to
designate to resign from the Board so that the Assignee's director can
be elected to fill the vacancy. The letter agreement dated July 24,
1997 reflecting this arrangement is attached hereto as Exhibit 3 and is
incorporated herein by reference.
Codinvest nominated three members of the Board of Directors (John
Paget, Michael Santry and Matthew Waller), each of whom took office on
the Closing Date.
Chartwell assigned 100,000 of the Warrants to each of three
individuals: Michael G. Santry, Chairman of the Board of Chartwell;
Darryl D. Pounds, President of Chartwell; and Matthew Waller, a
consultant to Chartwell. The exercise price of the Warrants is $1.13
per share, and the Warrants are exercisable until June 30, 2004. The
Warrants are immediately exercisable.
Codinvest is engaged in the principal business of acquiring and
holding securities for investment purposes. The above transactions were
entered into by Codinvest for investment purposes and to provide the
Issuer with additional capital. Codinvest beneficially owns 4,672,897
shares (33.5% of the issued and outstanding shares). Codinvest or its
representatives have and will continue to have discussions with
management and other shareholders of the Issuer concerning various
operational and financial aspects of the Issuer's business. Depending
on market conditions and other factors that Codinvest, its officers,
directors and controlling shareholders may deem material to an
investment decision, Codinvest and/or such individuals may purchase
additional shares of the Common Stock in the open market or in private
transactions. Depending on these same factors, such persons may sell
all or a portion of the Shares that they now own or may hereafter
acquire on the open market or in private transactions.
Except as described above, Codinvest has no present plans or
proposals to:
(a) acquire additional securities of the Issuer or to dispose
of any securities of the Issuer;
(b) enter into, or cause the Issuer or any of its subsidiaries
to enter into, any extraordinary corporate transactions;
(c) enter into or cause the Issuer or any of its subsidiaries
to sell or transfer a material amount of its assets;
(d) change the present board of directors or management of the
Issuer, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board, except as
described above;
(e) change the present capitalization or dividend policy of
the Issuer;
(f) make any other material change in the Issuer's business or
corporate structure;
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(g) make any change in the Issuer's charter or bylaws or other
actions which may impede the acquisition of control of the Issuer by any
person;
(h) cause a class of securities of the Issuer to be delisted
from a national securities exchange or to cease to be authorized to be
quoted in an inter-dealer quotation system of a registered national
securities association;
(i) cause a class of equity securities of the Issuer to become
eligible for termination of registration pursuant to Section 12(g)(4) of
the Securities Exchange Act of 1934; or
(j) any action similar to those described above.
Codinvest reserves the right to modify its plans and proposals
described in this Item 4. Subject to applicable laws and regulations,
Codinvest may formulate plans or proposals that may result in the
occurrence of an event set forth in (a) through (j) above or in Item 4
of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
According to information provided to Codinvest by the Issuer,
there are 13,938,940 shares of Common Stock outstanding. The following
table sets forth certain information regarding the beneficial ownership
of the Common Stock owned by Codinvest.
Shares of Common Stock
----------------------
(a) Beneficial Ownership: 4,672,897
Percentage Ownership: 33.5%
Under Rule 13d-5(b) promulgated by the Securities and Exchange
Commission, Codinvest may be viewed as a member of a group with
Chartwell and its affiliates. Codinvest disclaims that there is such a
group.
(b) Sole Voting Power: 4,672,897
Shared Voting Power: -0-
Sole Disposition Power: 4,672,897
Shared Disposition Power: -0-
(c) Other than as described elsewhere in Items 3 and 4 of this
Schedule 13D, none.
(d) None.
(e) Not applicable.
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ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
See Item 4 above.
The Stock Agreement provides that promptly following the closing
of the transaction contemplated thereby, the Issuer will, at its
expense, prepare and file a Registration Statement on the appropriate
form then available to the Issuer, and use its best efforts to effect
the registration for resale by certain holders of registrable
securities, including Codinvest (the "Registrable Securities"). The
Issuer has agreed to use its best efforts to keep such Registration
Statement effective under Rule 415 under the Securities Act of 1933, as
amended, until none of the holders of Registrable Securities hold such
Registrable Securities any longer. The holders of Registrable
Securities will also be entitled to "piggyback" on the registration of
Shares. In connection with the registrations, the Issuer, Codinvest,
Johnson and the Assignees agreed to mutually indemnify each other
against certain liabilities, including liabilities under the federal
securities laws.
To the best knowledge of the undersigned, there are no other
contracts, arrangements, understandings or relationships (legal or
otherwise) among the persons named in Item 2 and between such person and
any person with respect to any securities of the Issuer, including but
not limited to transfer or voting of any of the securities, finder's
fees, joint ventures, loan or option agreement, puts or calls,
guarantees of profits, division of profits or loss, or the giving or
withholding of proxies other than those contained in the Agreements
referenced above. Codinvest has granted to Michael G. Santry, Chairman
of the Board of Chartwell, a power of attorney limited to the execution
of this Schedule 13D on behalf of Codinvest Limited.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
1. Stock Purchase Agreement dated as of May 15, 1997, between
the Issuer and Chartwell.
2. Common Stock Purchase Warrant Agreements between the
Issuer and Messrs. Pounds and Santry.
3. Letter Agreement between Chartwell and the Assignees,
dated July 24, 1997.
4. Power of Attorney referred to in Item 6.
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After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: August 1, 1997 CODINVEST LIMITED
/s/ Michael G. Santry
--------------------------------------
By: Michael G. Santry,
by Power of Attorney granted by
Codinvest Limited
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- ------------
<S> <C>
1. Stock Purchase Agreement dated as of May 15, 1997, between
the Issuer and Chartwell.
2. Common Stock Purchase Warrant Agreements between the
Issuer and Messrs. Pounds and Santry.
3. Letter Agreement between Chartwell and the Assignees,
dated July 24, 1997.
4. Power of Attorney referred to in Item 6.
</TABLE>
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EXHIBIT 1
STOCK PURCHASE AGREEMENT
This Purchase Agreement (the "Agreement") is entered into as of May 15,
1997, by and among Computer Integration Corp., a Delaware corporation (the
"Company"), and Chartwell Group, Inc., a Texas corporation ("Buyer").
In consideration of the mutual promises, representations, warranties,
covenants, and conditions set forth in this Agreement, the receipt and adequacy
of which all the parties to this Agreement acknowledge, the parties mutually
agree as follows:
ARTICLE I.
AUTHORIZATION AND SALE OF SHARES
1.1 Authorization and Sale of Shares.
(a) The Company will take all requisite corporate action to
authorize the issuance and sale of 6,950,000 shares (the "Shares") of
Common Stock, $.001 par value per share ("Common Stock"), to Buyer in
accordance with the terms of this Agreement.
(b) Upon the terms and subject to the conditions herein
contained, at the Closing, the Company will issue and sell to Buyer, and
Buyer will purchase from the Company the Shares for a purchase price
(the "Purchase Price") of $7,436,500 or $1.07 per share.
1.2 Closing. The Closing of the sale and purchase of the Shares
under this Agreement (the "Closing") will occur at 10:00 a.m. on June 30, 1997
at the offices of Hughes & Luce, L.L.P., 1717 Main Street, Suite 2800, Dallas,
Texas 75201, or at such other time and place as the parties may mutually agree.
1.3 Closing Deliveries. At the Closing, Buyer will pay the Purchase
Price by wire transfer of immediately available funds to an account specified
in writing by the Company at least two days prior to the Closing, and the
Company will deliver to Buyer certificates representing the Shares.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Buyer as follows:
2.1 Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the state of Delaware
and has full corporate power to own its properties and to conduct its business
as presently conducted. The Company is qualified or licensed to do business as
a foreign corporation in each state or other jurisdiction where it is required
to be
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so qualified or licensed, except where the failure to so qualify or be licensed
would not have a material adverse effect on the condition (financial or
otherwise), assets, business, results of operations or prospects of the Company
and its subsidiaries, taken as a whole (a "Material Adverse Effect").
2.2 Authority. The Company has all requisite corporate power and
authority to execute, deliver and perform this Agreement. The execution,
delivery and performance of this Agreement by the Company has been duly
authorized by all necessary action, corporate or otherwise, on the part of the
Company. This Agreement has been duly executed and delivered by the Company
and is a legal, valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms.
2.3 Minute Books. The Company has made available to Buyer or its
designated assignees true, correct and complete copies of the charter
documents, bylaws, minute books and stock transfer records of the Company. The
minute books of the Company contain minutes or consents reflecting all actions
taken by the directors (including any committees) and stockholders of the
Company.
2.4 Capitalization. The authorized capital stock of the Company
consists solely of 20 million shares of Common Stock, of which 6,988,940 shares
are issued and outstanding and two million shares of Preferred Stock, of which
19,035.85 shares of Series D (convertible into 761,434 shares of Common Stock)
and 125 shares of Series E (convertible into 500,000 shares of Common Stock)
are issued and outstanding. Except as otherwise provided in or contemplated by
this Agreement, all of the issued and outstanding shares of the capital stock
are validly issued, fully paid and nonassessable and were issued free and clear
of preemptive or similar rights. Except as set forth in Schedule 2.4, as
otherwise provided in or contemplated by this Agreement or as disclosed in the
SEC Filings (as defined in Section 2.14), there are no outstanding options,
warrants, convertible securities or other rights, agreements, arrangements or
commitments obligating the Company or any other Person (as defined in Section
2.12) to issue or sell any securities or ownership interests in the Company.
There are no voting agreements, voting trusts or similar agreements binding the
Company or that will be applicable to any of the Shares. All of the
outstanding ownership interests of the Company have been offered and sold in
compliance with all applicable securities laws, rules and regulations.
2.5 Issuance of Shares. The issuance, sale and delivery of the
Shares in accordance with this Agreement have been duly authorized by all
necessary corporate action on the part of the Company, subject only to the
conditions set forth in Section 5.2. The Shares when so issued, sold, and
delivered against payment therefor in accordance with the provisions of this
Agreement will be duly and validly issued, fully paid and non-assessable.
2.6 No Violation. Except as described in Schedule 2.6, neither the
execution or delivery of this Agreement nor the consummation of the
transactions contemplated hereby, including without limitation the sale of the
Shares to Buyer, will conflict with or result in the breach of any term or
provision of, or violate, or constitute a default under, or result in the
creation of any liens, security interest, liability, claim, encumbrances or
contingencies of any nature (collectively "Liens") on the Company's assets
pursuant to, or require the consent of any Person or relieve any
<PAGE> 3
third party of any obligation to the Company or give any third party the right
to terminate or accelerate any obligation under, any charter provision, bylaw,
agreement that is material to the Company, or any material permit, license,
authorization, approval, quality certification, franchise or right
(collectively, "Permits") order, law or regulation to which the Company is a
party or by which the Company, or any of its assets is in any way bound or
obligated.
2.7 Governmental Consents. Except as described in Schedule 2.7, no
consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any governmental or quasi-governmental
agency, authority, commission, board or other body (collectively, a
"Governmental Body") is required on the part of the Company in connection with
the transactions contemplated by this Agreement.
2.8 Financial Statements.
(a) Attached as Schedule 2.8 are true and complete copies of
(i) the most recent draft of the preliminary unaudited, consolidated
balance sheet of the Company (the "Latest Balance Sheet") as of March
31, 1997 (the "Latest Balance Sheet Date") and the related unaudited,
consolidated statements of operations and cash flow for the nine months
then ended and (ii) the audited, consolidated balance sheets of the
Company as of June 30, 1995 and 1996 and the related audited,
consolidated statements of operations and cash flow for the 12 months
then ended (collectively, the "Financial Statements").
(b) The Financial Statements present fairly the financial
condition of the Company, on a consolidated basis (reflecting all
appropriate intercompany eliminations and adjustments), at the dates
specified and the results of its operations for the periods specified
and have been prepared in accordance with generally accepted accounting
principles in the Unites States, consistently applied, (i) except as
otherwise disclosed in the Financial Statements or in the SEC Filings,
and (ii) except that the interim Financial Statements (which do not
include a statement of cash flow) are subject to the absence of footnote
disclosure and to changes resulting from normal period-end adjustments
for recurring accruals, which will not be material individually or in
the aggregate. The Financial Statements do not contain any items of a
special or nonrecurring nature, except as expressly stated therein. The
Financial Statements have been prepared from the books and records of
the Company, which accurately and fairly reflect all the transactions
of, acquisitions and dispositions of assets by, and incurrence of
liabilities by the Company. All accounts receivable reflected on the
Latest Balance Sheet arose in the ordinary course of business and, in
the aggregate, are fully collectible in the ordinary course of business,
without resort to litigation, at the face amount thereof, less any
reserve reflected in the Latest Balance Sheet, and will not be subject
to counterclaim, set-off or other reduction.
2.9 Absence of Undisclosed Liabilities. The Company has no material
direct or indirect debts, obligations or liabilities of any nature, whether
absolute, accrued, contingent, liquidated or otherwise, and whether due or to
become due, asserted or unasserted, known or unknown (collectively,
"Liabilities"), except for (i) Liabilities specifically identified in the
Latest Balance Sheet, (ii) obligations incurred or to be performed in the
ordinary course of business consistent with past practice, and (iii) items
specifically disclosed in the SEC Filings.
<PAGE> 4
2.10 Absence of Material Adverse Change. Since the Latest Balance
Sheet Date, except as specifically contemplated by this Agreement or as set
forth on Schedule 2.10, there has not been: (a) any material adverse change in
the condition (financial or otherwise), results of operations, business,
prospects, assets or Liabilities of the Company or with respect to the manner
in which the Company conducts its business or operations; (b) any payment or
transfer of assets (including without limitation any dividend, stock repurchase
or other distribution and any repayment of indebtedness) to any stockholder;
(c) any breach or default (or event that with notice or lapse of time would
constitute a breach or default), termination or threatened termination under
any agreement that is material to the Company; (d) any material theft, damage,
destruction, casualty loss, condemnation or eminent domain proceeding affecting
the Company's assets, whether or not covered by insurance; (e) any sale,
assignment or transfer of any of the assets of the Company, except in the
ordinary course of business and consistent with past practices; (f) any waiver
by the Company of any material rights related to the Company's business,
operations or assets; (g) issued any stock, bonds or other corporate
securities; (h) borrowed or refinanced any amount or incurred any material
Liabilities, other than revolving credit facility borrowings and trade payables
incurred in the ordinary course of business consistent with past practices; (i)
mortgaged, pledged or subjected to lien any of its assets, tangible or
intangible, other than liens for current real property taxes not yet due and
payable; (j) sold, assigned or transferred any intellectual property rights or
other intangible assets; (k) made any material increase in the compensation
(including, without limitation, the rate of commissions) payable to, or any
payment of a material cash bonus to any director, officer, employee of, or
consultant or agent to, the Company or any of its subsidiaries or any other
material change in the terms or conditions of any employment relationship; (l)
announced any plan or legally binding commitment to create any employee benefit
plan, program or arrangement; (m) eliminated the vesting conditions or
otherwise accelerated the payment of any compensation, including any stock
options; (n) any other transaction, agreement or commitment entered into by the
Company affecting the Company's business, operations or assets, except in the
ordinary course of business and consistent with past practices; or (o) except
in connection with this Agreement and the transactions contemplated hereby,
entered into any agreement, letter of intent or similar undertaking to take any
of the actions listed in clauses (a) through (o) above.
2.11 Taxes. All required federal, state, local and other tax returns,
notices and reports (including without limitation income, property, sales, use,
franchise, withholding, social security and unemployment tax returns) relating
to or involving transactions with the Company have been accurately prepared and
duly and timely filed, and all taxes required to be paid with respect to the
periods covered by any such returns have been timely paid. The Company has
established reserves that are adequate for the payment of all taxes not yet due
and payable with respect to the results of operations of the Company and its
subsidiaries through the date of this Agreement and the date of Closing. No
tax deficiency has been proposed or assessed against the Company, and no
Company has executed any waiver of any statute of limitations on the assessment
or collection of any tax. Except as set forth on Schedule 2.11, no tax audit,
action, suit, proceeding, investigation or claim is now pending or, to the
knowledge of the Company, threatened against the Company, and no issue or
question has been raised (and is currently pending) by any taxing authority in
connection with the Company's tax returns or reports. The Company has withheld
or collected from each payment made to each of its employees the full amount of
all taxes required to be withheld or collected
<PAGE> 5
therefrom and has paid or will timely pay the same to the proper tax receiving
officers or authorized depositories.
2.12 Litigation. Except as described in Schedule 2.12 or as set forth
in the SEC Filings, there are currently no pending or, to the knowledge of the
Company, threatened lawsuits, administrative proceedings or reviews, or formal
or informal complaints or investigations by any individual, corporation,
partnership, association, limited liability company, Governmental Body or other
entity (collectively, a "Person") against or relating to the Company or any
director, employee or agent of the Company (in their capacities as such) or to
which any assets of the Company are subject. The Company is not subject to or
bound by any currently existing judgment, order, writ, injunction or decree.
2.13 Compliance with Laws. The Company has complied in all material
respects with, and the use, operation and maintenance of the Company assets
comply in all material respects with, and none of the Company, its assets nor
the use, operation or maintenance of such assets is in material violation or
contravention of, any applicable statute, law, ordinance, decree, order, rule
or regulation of any Governmental Body, including without limitation all
federal, state and local laws relating to occupational health and safety,
employment and labor matters.
2.14 SEC Filings. The Company has filed all forms, reports and
documents required to be filed with the Securities and Exchange Commission (the
"SEC") since June 30, 1996, and the Company has made available to Buyers, as
filed with the SEC, complete and accurate copies of (i) the Annual Report of
the Company on Form 10-K for the year ended June 30, 1996, and (ii) all other
reports, statements and registration statements (including Current Reports on
Form 8-K) filed by the Company with the SEC since June 30, 1996, in each case
including all amendments and supplements (collectively, the "SEC Filings").
The SEC Filings (including, without limitation, any financial statements or
schedules included therein) (i) were prepared in compliance with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the rules and regulations thereunder, as the case may be, and (ii) did not at
the time of filing (or if amended, supplemented or superseded by a filing prior
to the date hereof, on the date of such filing) contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
2.15 Offering of the Shares. Neither the Company nor any person
authorized or employed by the Company as agent, broker, dealer or otherwise in
connection with the offering or sale of the Shares or any similar securities of
the Company has offered any such securities for sale to, or solicited any
offers to buy any such securities from, or otherwise approached or negotiated
with respect thereto with any person or persons, under circumstances that
involved the use of any form of general advertising or solicitation as such
terms are defined in Regulation D of the Securities Act; and, assuming the
accuracy of the representations and warranties of Buyers set forth in Article
III, neither the Company nor any person acting on the Company's behalf has
taken or will take any action (including, without limitation, any offer,
issuance or sale of any securities of the Company under circumstances which
might require the integration of such transactions with the sale of the Shares
under the Securities Act or the rules and regulations of the SEC thereunder)
<PAGE> 6
which would subject the offering, issuance or sale of the Shares to Buyer to
the registration provisions of the Securities Act.
2.16 Registration Rights. Except as set forth on Schedule 2.16 or as
provided in this Agreement or the Warrant Agreement, the Company is not under
any obligation to register any securities under the Securities Act or any
similar state law.
2.17 No Misrepresentations. The Company has disclosed to Buyer or its
designated assignees all material facts and information known to it regarding
the Company's condition (financial or otherwise), assets, business, results of
operations and prospects. The representations, warranties and statements made
by the Company in or pursuant to this Agreement (including the Schedules
hereto) are true, complete and correct in all material respects and do not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make any such representation, warranty or statement, under
the circumstances in which it is made, not misleading.
2.18 Brokers. Except as set forth on Schedule 2.18 hereto, all
negotiations relative to this Agreement and the transactions contemplated
hereby have been carried on by the Company directly with Buyer, its agents or
its affiliates without the intervention of any Person on behalf of the Company
in such manner as to give rise to any valid claim by any other Person against
Buyer for a finder's fee, brokerage commission or similar payment.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Company as follows:
3.1 Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas and has full
corporate power to own its properties and to conduct business.
3.2 Authority. Buyer has all requisite corporate power and authority
to execute, deliver and perform this Agreement. The execution, delivery and
performance of this Agreement by Buyer has been duly authorized by all
necessary action, corporate or otherwise, on the part of Buyer. This Agreement
has been duly executed and delivered by Buyer and is a legal, valid and binding
agreement of Buyer, enforceable against Buyer in accordance with its terms.
3.3 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any Governmental Body is required on the part of Buyer in
connection with the transactions contemplated by this Agreement.
3.4 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by Buyer directly with
the Company, its agents or its affiliates without the intervention of any
Person on behalf of the Company in such manner as to give rise to any valid
claim by any other Person against the Company for a finder's fee, brokerage
commission or similar payment.
<PAGE> 7
3.5 Investment Intent; Accredited Investor. Buyer is acquiring the
Shares for investment for Buyer's account only and not with a view to, or for
resale in connection with, any "distribution" thereof within the meaning of the
Securities Act. Buyer represents that it is an "accredited investor" as that
term is defined in Rule 501 of Regulation D promulgated under the Securities
Act.
3.6 Restricted Securities. Buyer acknowledges that the Shares are
being issued to Buyer without registration under the Securities Act or any
applicable state securities laws and that the Shares must be held indefinitely
unless they are subsequently registered under the Securities Act or an
exemption from such registration is available. Buyer acknowledges that the
Shares will bear a restrictive legend preventing transfer except in accordance
with the Securities Act.
ARTICLE IV.
ADDITIONAL COVENANTS
4.1 Financial Statements and Reports; Additional Information. The
Company will deliver to Buyer:
(a) Through and including the Closing, as promptly as
available, but in any event within 30 days after the end of each month,
a balance sheet and a statement of income for each such month unaudited,
but certified by the Company's president or principal financial officer.
(b) For a period of one year following the Closing, within 45
days after the end of each quarter of each fiscal year (other than the
last quarter in each fiscal year) a consolidated balance sheet of the
Company as at the end of each such period and consolidated statements of
income and changes in financial condition of the Company for each such
quarter, prepared in accordance with generally accepted accounting
principles applied on a consistent basis, certified to be true, correct
and complete (subject to normal year-end adjustments) by Company's
president or the principal financial officer.
(c) For a period of one year following the Closing, within 90
days after the end of each fiscal year a consolidated balance sheet of
the Company, as at the end of such fiscal period and consolidated
statements of income and changes in financial position and stockholders'
equity of the Company for such fiscal period prepared in accordance with
generally accepted accounting principles consistently applied audited by
an independent certified public accounting firm of recognized national
standing selected by the Company's Board of Directors.
(d) For a period of one year following the Closing, promptly
upon filing, copies of all registration statements, prospectuses,
periodic reports and other documents filed by the Company with the SEC.
Delivery of filings that the Company makes with the SEC containing such
statements or information within the specified time frame will be deemed to
satisfy the Company's obligations under this Section 4.1.
<PAGE> 8
4.2 Directors of the Company. For one year after the Closing Date,
the Company will use its best efforts to cause and maintain the election to the
Board of Directors of four nominees of Buyer reasonably satisfactory to the
Company (the "Buyer Nominees") and provide that the Board of Directors will
consist of no more than eight members. If a board vacancy occurs during such
period as a result of resignation, death, removal or otherwise, each of the
Company and Buyer agree to use their best efforts to cause the directors they
have respectively nominated for election to the Board to vote for the election
of a director to fill such vacancy who is nominated by the Buyer Nominees, if
the director who has created the vacancy was a Buyer Nominee, or of a director
to fill such vacancy who is nominated by the Company, if the director who has
created the vacancy was not a Buyer Nominee. Buyer will identify to the
Company its Buyer Nominees, and each of Buyer and the Company will identify to
the other any nominee to fill a vacancy, at least 14 days prior to the
nominee's expected election to the Board.
4.3 Access to Information. Through and including the Closing, the
Company will permit Buyer or its representatives to visit and inspect the
Company's properties, to examine the Company's books of account and records,
and to discuss the Company's affairs, finances, and accounts with its officers,
all at such reasonable times as may be requested by Buyer.
4.4 Use of Proceeds. The proceeds received by the Company from the
sale of the Shares pursuant to this Agreement will be used for repayment of
corporate indebtedness, working capital and other general corporate purposes .
4.5 President. Buyer has the right to designate one individual for
the position of President and Chief Executive Officer, subject to the approval
of the Company's board of directors, which will not be unreasonably withheld.
Upon such approval, the Company will employ such designee as its President and
Chief Executive Officer upon terms and conditions reasonably acceptable to the
Board of Directors. Buyer will identify its proposed designee for such offices
to the Company by May 31, 1997.
4.6 Negative Covenants. Except as set forth on Schedule 4.6, prior
to Closing, the Company will not, and will not permit any subsidiary, directly
or indirectly, to do any of the following acts without the prior written
approval of Buyer:
(a) Except as set forth in Article VII or pursuant to the
exercise of currently outstanding stock options or the conversion of
currently outstanding preferred stock, issue shares of capital stock or
securities that may be converted, directly or indirectly, into the
capital stock of the Company;
(b) Sell, transfer or otherwise dispose of any of its assets
other than in the ordinary course of business or commence any
proceedings with respect to the same and in no event sell assets worth
more than $100,000 in the aggregate, other than sales from inventory in
the ordinary course of business;
(c) Authorize, incur, guarantee, issue or permit to exist any
indebtedness for borrowed money or any other bond, debenture, note or
other evidence of indebtedness
<PAGE> 9
except for (i) existing debt, (ii) accounts payable incurred in the
ordinary course of business, or (iii) other short-term indebtedness
aggregating less than $100,000;
(d) Make or incur any expenditures or purchases which are
required to be capitalized in accordance with generally accepted
accounting principles in excess of $250,000;
(e) Make any payment on any debt currently or hereinafter owed
to any current or former officer, employee or director of the Company or
any affiliate thereof, other than salary or reimbursable business
expenses incurred in the ordinary course of business consistent with
prior practices;
(f) Make or permit to exist any investment including any loan,
advance, extension of credit or contribution of capital to any Person,
or any ownership of stocks, notes, debentures, or other securities of
any Person except (i) trade receivables arising in the ordinary course
of business and under terms which contemplate full payment within 60
days or such other term as is commercially reasonable in view of the
size and financial strength of the customer; (ii) notes or other
securities in connection with any bona fide settlement of trade
receivables owing in the ordinary course of its business; (iii) direct
obligations of the United States or other obligations guaranteed by the
United States or any agency thereof, solely for investment purposes,
provided the same will mature within six months; or (iv) certificates of
deposit or bankers acceptances;
(g) Except pursuant to the exercise of currently outstanding
stock options or the conversion of currently outstanding preferred
stock, issue, deliver or agree to issue or deliver any stock, bonds or
other corporate securities of the Company, whether authorized or
unissued or held in the treasury, or grant or agree to grant any
subscriptions, options, warrants, rights or other agreements or
commitments obligating the Company to issue additional shares of its
capital stock or any securities convertible into or having the right to
purchase shares of its capital stock, except as set forth in Article
VII;
(h) Declare or make any payment of dividends or distributions
of any kind whatsoever to the holders of the Company's capital stock or
repurchase or accept as treasury stock any capital stock of the Company;
(i) Enter or agree to enter into any agreement or arrangement
granting any preferential rights to purchase any of its assets,
properties or rights or requiring the consent of any party to the
transfer and assignment of any such asset, property or right, other than
from inventory in the ordinary course of business;
(j) Make any loan, accrual or arrangement for or payment of
bonuses or special compensation of any kind or severance or termination
pay to any of its present or former officers or employees;
<PAGE> 10
(k) Merge or consolidate with any other corporation or entity
or acquire a material amount of assets constituting all or substantially
all of the business or assets of any corporation or entity;
(l) Except as otherwise contemplated herein, make any change
in its charter documents or bylaws;
(m) Solicit or initiate (including by furnishing any
information concerning the business, financial condition, properties or
assets of the Company) discussions, inquiries or proposals for the
purpose or with the intention of leading to any proposal or offer to
acquire any material assets or the business or any capital stock of the
Company, whether by merger, purchase, purchase of assets or other
similar transaction and the Company will immediately notify Buyer of the
receipt of any such inquiry, proposal or offer it may receive from a
third party; or
(n) Commit itself to do any of the foregoing.
4.7 Notification of Certain Matters. Through and including the
Closing, the Company will give prompt notice to Buyer, and Buyer will give
prompt notice to the Company, of (a) the occurrence, or failure to occur, of
any event that such party believes would be likely to cause (i) any of its
representations or warranties contained in this Agreement to be untrue or
inaccurate in any material respect or (ii) any covenant, condition or agreement
contained in this Agreement not to be complied with or satisfied and (b) any
failure of the Company or Buyer, as the case may be, or any officer, director,
employee or agent thereof, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided that
failure to give such notice will not constitute a waiver of any defense that
may be validly asserted.
4.8 Public Announcements. Preceding the execution of this Agreement,
Buyer and the Company have prepared the press release attached hereto as
Exhibit B disclosing this Agreement, and have agreed on the timing and manner
of dissemination of the release. Prior to the Closing Date, each of the
Company and Buyer agrees that it will not issue or release any other press
release or otherwise make any public statement with respect to this Agreement
(including the Exhibits and Schedules hereto) or the transactions contemplated
hereby without the prior written consent of the other party, which consent will
not be unreasonably withheld or delayed; provided that such disclosure can be
made without obtaining such prior consent if (i) the disclosure is required by
law or by obligations imposed pursuant to any listing agreement with any
national securities exchange and (ii) the party making such disclosure has
first used its best efforts to consult with the other party about the form and
substance of such disclosure.
4.9 Consents and Approvals. Prior to the Closing Date, the Company
will promptly apply for or otherwise seek and use its best efforts to obtain
all authorizations, consents, waivers and approvals (whether by or from any
Person) as may be required in connection with the consummation of this
Agreement and the transactions contemplated hereby.
4.10 Fulfillment of Conditions by the Company. The Company agrees not
to take any action that would cause the conditions or the obligations of the
parties to effect the transactions
<PAGE> 11
contemplated hereby not to be fulfilled, including without limitation by taking
or causing to be taken any action that would cause the representations and
warranties made by the Company herein not to be true and correct as of the
Closing. The Company will take all reasonable steps within its power to cause
to be fulfilled the conditions precedent to Buyer's obligations to consummate
the transactions contemplated hereby that are dependent on the actions of the
Company.
4.11 Fulfillment of Conditions by Buyer. Buyer agrees not to take any
action that would cause the conditions or the obligations of the parties to
effect the transactions contemplated hereby not to be fulfilled, including
without limitation by taking or causing to be taken any action that would cause
the representations and warranties made by Buyer herein not to be true and
correct as of the Closing. Buyer will take all reasonable steps within its
power to cause to be fulfilled the conditions precedent to the Company's
obligations to consummate the transactions contemplated hereby that are
dependent on the actions of Buyer.
4.12 Financing. Buyer agrees to use commercially reasonable efforts
to obtain financing sufficient to purchase the Shares. On or before May 31,
1997, Buyer will disclose to the Company its potential sources of financing for
the Purchase Price.
4.13 Confidentiality. Buyer and the Company agree to abide by the
terms of the Confidentiality Agreement, dated February 4, 1997, between Buyer
and the Company (the "Confidentiality Agreement") for so long as the
Confidentiality Agreement remains in effect.
4.14 Resale Provisions. Buyer agrees to use commercially reasonable
efforts to persuade any assignee of its rights under this Agreement (i) not to
sell, dispose or otherwise transfer the Shares such assignee would purchase for
a period of one year following the Closing, except to such assignee's
affiliates (as defined in Section 8.3) and (ii) not to sell, dispose or
otherwise transfer the Shares in a block trade to a known competitor of the
Company.
ARTICLE V.
CONDITIONS TO CLOSING
5.1 Conditions to Buyer's Obligations. The obligations of Buyer are
subject to the fulfillment at or prior to the Closing of the following
conditions:
(a) The representations and warranties made by the Company in
Article II will be true and correct in all material respects as of the
Closing Date with the same force and effect as though such
representations and warranties had been made on and as of said date; and
the Company's business and assets will not have been materially
adversely affected prior to the Closing Date; and the Company will have
performed all obligations and conditions in this Agreement required to
be performed or observed by it or them prior to or on the respective
Closing Date.
(b) The Company will have delivered to Buyer a certificate
dated as of the Closing Date signed by its President and certifying that
the conditions specified in this Sections 5.1 have been fulfilled.
<PAGE> 12
(c) Buyer Nominees (previously identified to the Company as
set forth in Section 4.2) will be duly elected to the Board of Directors
as of the Closing Date.
(d) The Company has entered into a Warrant Agreement with
Buyer or its designees substantially in the form of Exhibit A (the
"Warrant Agreement").
(e) There is no pending or threatened litigation in any court
or any proceeding before or by any Governmental Body against the Company
or Buyer to restrain or prohibit or obtain damages or other relief with
respect to this Agreement or the consummation of the transactions
contemplated hereby.
(f) All necessary contractual and governmental consents,
approvals, orders or authorizations have been obtained and all necessary
contractual or governmental notices have been given.
(g) The Company has delivered to Buyer a legal opinion of its
counsel, in form and substance satisfactory to Buyer and its counsel.
(h) Buyer has received financing for the Purchase Price, on
terms and conditions satisfactory to Buyer in its sole discretion.
(i) The Company has received a customary fairness opinion from
a recognized investment banking firm stating that the purchase of the
Shares by Buyer pursuant to this Agreement is fair to the Company's
stockholders from a financial point of view.
(j) Buyer's designee President and Chief Executive Officer
shall have delivered written notice of resignation to his prior employer
and shall have entered into a reasonable and customary employment
agreement with the Company.
5.2 Conditions to Obligations of the Company. The obligations of the
Company under this Agreement are subject to the fulfillment at or prior to the
Closing of the following conditions:
(a) All representations and warranties of Buyer contained in
this Agreement are true and correct in all material respects at and as
of the Closing with the same effect as though such representations and
warranties were made at and as of the Closing.
(b) Buyer has performed and complied with the covenants and
agreements and satisfied the conditions required by this Agreement to be
performed, complied with or satisfied by it at or prior to the Closing.
(c) There is no pending or threatened litigation in any court
or any proceeding before or by any Governmental Body against the Company
or Buyer to restrain or prohibit or obtain damages or other relief with
respect to this Agreement or the consummation of the transactions
contemplated hereby.
<PAGE> 13
(d) All necessary governmental consents, approvals, orders or
authorizations have been obtained and all necessary governmental notices
have been given.
(e) The Company has received a customary fairness opinion from
a recognized investment banking firm stating that the purchase of the
Shares by Buyer pursuant to this Agreement is fair to the Company's
stockholders from a financial point of view.
(f) Buyer's designee President and Chief Executive Officer
shall have delivered written notice of resignation to his prior employer
and shall have entered into a reasonable and customary employment
agreement with the Company.
ARTICLE VI.
REGISTRATION RIGHTS
6.1 Definitions.
As used in this Article VI, the following capitalized terms will have
the following meanings:
"Holder" will mean Buyer and any of its permitted transferees who own
Registrable Securities.
"Prospectus" will mean the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments to the
Registration Statement of which such Prospectus is a part, and all material
incorporated by reference in such Prospectus.
"Registrable Securities" will mean the Shares, but only so long as they
remain Restricted Securities.
"Registration Expenses" will have the meaning assigned to such term in
Section 6.7.
"Registration Statement" means any registration statement of the Company
which covers any of the Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits, and
all material incorporated by reference in such Registration Statement.
"Restricted Securities" means the Registrable Securities, other than
those Registrable Securities (i) that have been effectively registered under
the Securities Act and disposed of in accordance with the Registration
Statement covering them or (ii) that are eligible in total for resale under
Rule 144 of the Securities Act (or any successor rule or regulation).
<PAGE> 14
6.2 Securities Subject to Article VI. The securities entitled to the
benefits of this Article VI are the Registrable Securities.
6.3 Registration. Promptly following the Closing, the Company will
(i) prepare and file a Registration Statement on the appropriate form then
available to the Company, and use its best efforts to effect the registration
for resale by the Holders thereof of all the Registrable Securities, and (ii)
prepare and file with the Nasdaq Stock Market an notification form for the
listing of additional securities for the purpose of listing the Shares on the
Nasdaq Stock Market. The Company will use its best efforts to keep such
Registration Statement effective under Rule 415 under the Securities Act until
no Holders hold Registrable Securities. Each Holder agrees that if the Company
determines that there are material developments that require the filing of a
post-effective amendment to the Registration Statement, then each Holder
registering Registrable Securities thereunder agrees to refrain from selling
any Registrable Securities until the post-effective amendment is declared
effective. The Company agrees to file and attempt to have declared effective
such post-effective amendment as soon as possible.
6.4 Piggyback Registration Rights.
(a) If the Company at any time or from time to time subsequent
to the date of this Agreement proposes to register any securities under
the Securities Act either for its own account or the account of any
selling stockholders (other than pursuant to Section 6.3 and other than
pursuant to a registration statement on Forms S-4 or S-8 or any
successor or similar forms), it will give written notice to each of the
Holders of Registrable Securities of its intention at least 20 days in
advance of the filing of any registration statement with respect
thereto. Upon the written request of any of the Holders of Registrable
Securities given within 15 days after receipt of such notice, the
Company, subject to Section 6.4(b), will cause the Registrable
Securities requested by the Holders to be registered, to be so
registered.
(b) Underwritten Offerings.
(i) In the case of an underwritten offering by the
Company of securities, the Company will, with respect to
Registrable Securities that a Holder of Registrable Securities
then desires to sell, enter into an underwriting agreement with
the same underwriters engaged by the Company with respect to
securities being offered by the Company and cause such
underwriters to include in any such underwriting all of the
Securities that a Holder of Registrable Securities then desires
to sell; provided that such underwriting agreement is in
substantially the same form as the underwriting agreement that
the Company enters into in connection with the primary offering
it is making.
(ii) If the managing underwriter with respect to an
offering pursuant to this Section 6.4 requests that the number of
shares of Registrable Securities of the Holder that are entitled
to be registered pursuant to this Section 6.4 be reduced because
of marketing factors, then the shares of Registrable Securities
of the Holders that they wish to register pursuant to this
Section 6.4
<PAGE> 15
will be reduced by such amount as the managing underwriter may
determine, which reduced number of shares of Registrable
Securities will be included on a pro rata basis among the Holders
of Registrable Securities who are participating in such offering.
(iii) Selection of Underwriters and Counsel. If any
registration hereunder is to be an underwritten offering with
respect to any issue of Registrable Securities, the Company will
have the right to select the investment banker or bankers and
manager or managers to administer the related offering; provided
that, such investment banker(s) or manager(s) will each be either
(i) nationally recognized investment banking firms, (ii) regional
investment banking firms nationally recognized for their
expertise and experience in financings of companies in the
computer distribution business or (iii) an investment banking
firm approved by a majority in interest of the Holders.
6.5 Information. Upon making a request pursuant to Section 6.3 or
6.4, the Holder(s) of Registrable Securities will specify the number of shares
of Registrable Securities to be registered and will also specify the intended
method of disposition thereof. The Company may require the Holders to furnish
to the Company such information regarding themselves and the distribution of
Registrable Securities as the Company may from time to time reasonably request
in order to comply with the Securities Act. The Holders agree to notify the
Company as promptly as practicable of any inaccuracy or change in information
they have previously furnished to the Company.
6.6 Registration Procedures. If and whenever the Company is required
by the provisions of Section 6.3 or 6.4 to effect a registration under the
Securities Act, the Company will, at its expense, as expeditiously as
practicable:
(a) In accordance with the Securities Act and the rules and
regulations of the SEC, prepare and file with the SEC as expeditiously
as possible (but in no event later than 30 days after the Closing, in
the case of registration under Section 6.3 or after request from
Holder(s) pursuant to the terms of Section 6.4) a Registration Statement
in the form of an appropriate registration statement with respect to the
Registrable Securities and use its best efforts to cause such
Registration Statement to become and remain continuously effective until
all of the Registrable Securities covered by such Registration Statement
have been sold in accordance with the intended methods of disposition of
the seller or sellers set forth in such Registration Statement. The
Company will prepare and file with the SEC such amendments to such
Registration Statement and supplements to the Prospectus contained
therein as may be necessary to keep such Registration Statement
effective and such Registration Statement and Prospectus accurate and
complete during such period;
(b) Furnish to the Holders participating in such registration
such reasonable number of copies of the Registration Statement and
Prospectus and such other documents
<PAGE> 16
as such Holders may reasonably request in order to facilitate the public
offering of the Registrable Securities;
(c) Use its reasonable efforts to register or qualify the
Registrable Securities covered by such Registration Statement under such
state securities or blue sky laws of such jurisdictions as such Holders
may reasonably request; provided that the Company will not be obligated
to file any general consent to service of process or to qualify as a
foreign corporation in any jurisdiction in which it is not so qualified
or to subject itself to taxation in connection with any such
registration or qualification of such Shares;
(d) Notify the Holders participating in such registration,
promptly after it receives notice thereof, of the date and time when
such Registration Statement and each post-effective amendment thereto
has become effective or a supplement to any Prospectus forming a part of
such Registration Statement has been filed;
(e) Notify the Holders participating in such registration
promptly of any request by the SEC for the amending or supplementing of
such Registration Statement or Prospectus or for additional information;
(f) Prepare and promptly file with the SEC and promptly notify
the Holders participating in such registration of the filing of such
amendments or supplements to such Registration Statement or Prospectus
as may be necessary to correct any statements or omissions if, at the
time when a Prospectus relating to such Securities is required to be
delivered under the Securities Act, any event has occurred as the result
of which any such Prospectus or any other Prospectus then in effect may
include an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading;
(g) Advise the Holders participating in such registration,
promptly after it receives notice or obtains knowledge thereof, of the
issuance of any stop order by the SEC suspending the effectiveness of
such Registration Statement or the initiation or threatening of any
proceeding for that purpose and promptly use its best efforts to prevent
the issuance of any stop order or to obtain its withdrawal if such stop
order should be issued; and
(h) Otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make generally
available to the Company's security holders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act, no
later than 45 days after the end of any 12-month period (or 90 days, if
such a period is a fiscal year) beginning with the first month of the
Company's first fiscal quarter commencing after the effective date of
the applicable Registration Statement.
6.7 Expenses of Registration. All expenses of the Company incident to
the Company's performance of or compliance with the provisions of this Article
VI ("Registration Expenses") will be borne by the Company including without
limitation:
<PAGE> 17
(a) All registration and filing fees;
(b) Fees and expenses of compliance with all securities or
blue sky laws (including the reasonable fees and disbursements of
counsel for the Company in connection with blue sky qualifications of
the Registrable Securities; provided that the Company will not be
required to consent to general service of process in any such state);
(c) Printing, messenger, telephone and delivery expenses; and
(d) Fees and disbursements of counsel for the Company and its
independent auditors.
Nothing in this Section 6.7 will be deemed to require the Company to pay
any underwriting discounts, selling commissions or similar fees applicable to
Registrable Securities if the applicable registration results in an
underwritten public offering of all or any portion of the Registrable
Securities.
In addition, the Company will pay the reasonable fees and disbursements
of one counsel selected by the Holders registering Registrable Securities in
any such Registration Statement incurred in connection with the offering
contemplated by such Registration Statement.
6.8 Indemnification and Contribution.
(a) Indemnification by the Company. Whenever, pursuant to
Section 6.3 or 6.4, a Registration Statement relating to the Registrable
Securities is filed under the Securities Act, the Company will (except
as to matters covered by Section 6.8(b)) indemnify and hold harmless
each Holder participating in the registration, each of their officers,
directors and employees, and each person, if any, who controls any such
Person (collectively, the "Holder Indemnitees" and, individually, a
"Holder Indemnitee"), against any losses, claims, damages or
liabilities, joint or several, to which such Holder Indemnitees may
become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in such Registration Statement,
or Prospectus contained therein, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, and will reimburse each
Holder Indemnitee for all legal or other expenses reasonably incurred by
it in connection with investigating or defending against such loss,
claim, damage, liability or action.
(b) Indemnification by Holders. Each Holder participating in
such registration will indemnify and hold harmless the Company, each of
its directors, each of its officers and each other person, if any, who
controls the Company, within the meaning of the Securities Act
(collectively, the "Company Indemnitees" and, individually, a "Company
Indemnitee") and each other Holder Indemnitee against all losses,
claims, damages or liabilities, joint or several, to which any of the
Company Indemnitees or the
<PAGE> 18
other Holder Indemnitees may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in
such Registration Statement, or Prospectus contained therein, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, but only if, and to the extent that, such statement or
omission was in reliance upon and in conformity with information
furnished to the Company by such Holder for use in the preparation
thereof.
(c) Indemnification Procedures. Promptly after receipt by a
Holder Indemnitee or a Company Indemnitee (collectively, "Indemnitees"
and, individually, an "Indemnitee") under Section 6.8(a) or 6.8(b) of
notice of the commencement of any action, such Indemnitee will, if a
claim in respect thereof is to be made against the indemnifying party
under such clause, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying
party will not relieve the indemnifying party from any liability which
it may have to any Indemnitee otherwise than under such clauses except
to the extent that the indemnifying party has been prejudiced by the
failure to receive such notice. In case any such action is brought
against any Indemnitee, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate in, and, to the extent that it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such Indemnitee, and
after written notice from the indemnifying party to such Indemnitee of
its election to assume the defense thereof, the indemnifying party will
not be liable to such Indemnitee under such clause for any legal or
other expenses subsequently incurred by such Indemnitee in connection
with the defense thereof other than reasonable costs of investigation;
provided that the Indemnitee will have the right to employ one counsel
to represent such Indemnitee if, in the reasonable judgment of such
Indemnitee (based on the written opinion of counsel), it is advisable
for such party to be represented by separate counsel because a conflict
of interest exists between such indemnified and indemnifying party in
respect of such claim, and in that event the reasonable fees and
expenses of such separate counsel will be paid by the indemnifying
party. Notwithstanding the foregoing, if the Company is an Indemnitee,
the Company will designate the one counsel, and in all other
circumstances, the one counsel will be designated by a majority in
interest based upon the Registrable Securities of the Indemnities. For
purposes of this Section 6.8 the terms "control," and "controlling
person" have the meanings which they have under the Securities Act.
(d) Contribution. If for any reason the foregoing indemnity is
unavailable, or is insufficient to hold harmless an Indemnitee, then the
indemnifying party will contribute to the amount paid or payable by the
Indemnitee as a result of such losses, claims, damages, liabilities or
expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party on the one hand and
the Indemnitee on the other from the registration or (ii) if the
allocation provided by clause (i) above is not permitted by applicable
law, or provides a lesser sum to the Indemnitee than the
<PAGE> 19
amount hereinafter calculated, in such proportion as is appropriate to
reflect not only the relative benefits received by the indemnifying
party on the one hand and the Indemnitee on the other but also the
relative fault of the indemnifying party and the Indemnitee as well as
any other relevant equitable considerations. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
6.9 Transfer of Registration Rights. The rights under this Article
VI may be assigned by a Holder to a transferee or assignee of any of such
Holder's Restricted Securities.
6.10 Rule 144 Reporting. With a view to making available to Buyer the
benefits of certain rules and regulations of the SEC which may permit the sale
of the Restricted Securities to the public without registration, the Company
agrees to use its best efforts to:
(a) Make and keep public information available, as these terms
are understood and defined in Rule 144 under the Securities Act at all
times after the Closing;
(b) File with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the
Exchange Act; and
(c) Furnish to Buyer forthwith upon Buyer's request (i) a
written statement by the Company as to its compliance with the public
information requirements of Rule 144 under the Act (ii) a copy of the
most recent annual or quarterly report of the Company, and (iii) such
other reports and documents as may be reasonably requested in availing
Buyer of any rule or regulation of the SEC permitting the sale of any
such securities without registration.
ARTICLE VII.
RIGHTS OFFERING
For a period of three years following the Closing, in the event the
Company elects to raise capital by issuing debt or equity securities, the
Company agrees to do so by issuing rights to its common shareholders, which
rights shall entitle such common shareholders to purchase their pro rata share
of such offered securities. To the extent any common shareholders do not so
exercise their rights to purchase the offered securities, the Company may offer
such securities to third parties.
ARTICLE VIII.
MISCELLANEOUS
8.1 Termination. This Agreement and the transactions contemplated
hereby may be terminated and abandoned (a) at any time prior to the Closing by
mutual written consent of Buyer and the Company; (b) by either Buyer or the
Company if a condition to performance by the terminating party hereunder has
not been satisfied or waived prior to June 30, 1997; provided, however, that in
Buyer's sole discretion, such date may be extended for Buyer's benefit for up
to
<PAGE> 20
fifteen days; or (c) on or before the thirtieth day following the date hereof
by Buyer or the Company, if Buyer has not then completed its due diligence
review of the legal, business, financial, operational, and technical affairs of
the Company or the results of such due diligence are not satisfactory to Buyer
in its sole discretion. Notwithstanding the foregoing clause (b), (i) Buyer may
not terminate this Agreement if the event giving rise to its termination right
results from Buyer's willful failure to perform or observe any of its covenants
or agreements set forth herein or if Buyer is, at such time, in breach of this
Agreement, and (ii) the Company may not terminate this Agreement if the event
giving rise to its termination right results from the willful failure of the
Company to perform or observe any of its covenants or agreements set forth
herein or if the Company is, at such time, in breach of this Agreement.
8.2 Survival. The representations, warranties, covenants and
agreements made in this Agreement will survive the Closing and any
investigation made by Buyer until 60 days following the termination of any
applicable statute of limitation. All statements as to factual matters
contained in any certificate or other instrument delivered by or on behalf of
the Company pursuant to this Agreement will be deemed to be representations and
warranties by the Company under this Agreement as of the date of such
certificate or instrument.
8.3 Binding Nature and Assignment. Except as otherwise provided in
this Agreement, this Agreement will be binding on the parties to this Agreement
and their respective successors and assigns, but neither party hereto may, or
will have the power to, assign this Agreement without the prior written consent
of the other. Notwithstanding the foregoing, Buyer may assign any or all of
its rights under this Agreement to an affiliate or affiliates of Buyer without
the consent of the Company and Buyer may assign this Agreement to any other
person with the consent of the Company, which consent will not be unreasonably
withheld. Buyer will identify any proposed non-affiliate assignees to the
Company by May 31, 1997. As used in this Section 8.3 "affiliate" of a party
will mean (i) any Person controlled by, controlling or under common control of
such party, (ii) members of a party's immediate family or any entity controlled
by or established for the benefit of such Persons, or (iii) employees of a
party, affiliates of a party, or affiliates of such employees.
8.4 Entire Agreement; Amendment. This Agreement and the other
documents delivered pursuant to this Agreement constitute the full and entire
understanding and agreement between the parties and hereby supersedes and
renders null and void all prior agreements and understandings with regard to
the subjects hereof and thereof other than the Confidentiality Agreement, which
will continue in accordance with its terms. Neither this Agreement nor any
term of this Agreement may be amended, waived, discharged, or terminated
orally, but only by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought.
8.5 Notices. All notices that are required or may be given pursuant
to this Agreement must be in writing and delivered personally, by a recognized
courier service, by a recognized overnight delivery service, by telecopy or by
registered or certified mail, postage prepaid, to the parties at the following
addresses (or to the attention of such other person or such other address as
any party may provide to the other parties by notice in accordance with this
Section 8.5):
<PAGE> 21
If to Buyer:
Chartwell Group, Inc.
5950 Berkshire Lane
Suite 1650
Dallas, Texas 75225
Attn: Michael G. Santry
Telecopy: (214) 361-9874
If to the Company:
Computer Integration Corp.
2425 Crownpoint Executive Drive
Charlotte, North Carolina 28227
Attn: Samuel C. McElhaney
Telecopy: 704-847-9611
Any such notice or other communication will be deemed to have been given
and received (whether actually received or not) on the day it is personally
delivered or delivered by courier or overnight delivery service or sent by
telecopy or, if mailed, when actually received.
8.6 Further Assurances. Each party agrees to execute any and all
documents and to perform such other acts as may be necessary or expedient to
further the purposes of this Agreement and the transactions contemplated
hereby.
8.7 Counterparts. This Agreement may be executed in one or more
counterparts for the convenience of the parties hereto, all of which together
will constitute one and the same instrument.
8.8 GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF TEXAS,
WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAW RULE OR PRINCIPLE THAT MIGHT
REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
8.9 Dispute Resolution. If any dispute arises out of this Agreement
or any of the other documents to be delivered hereunder, the parties agree not
to commence any lawsuit with respect to such dispute until the following
procedures have been completed:
(a) The party believing a dispute to exist will give the other
parties written notice thereof, setting forth in reasonable detail the
facts alleged to give rise to such dispute, the relevant contractual
provisions, the nature of any claimed default or breach and a statement
of the manner in which such party believes the dispute should be
resolved.
(b) Within 20 days after receipt of such notice, each party
against whom relief is sought in connection with such dispute will
deliver a written response, setting forth in reasonable detail its view
of the facts alleged to give rise to such dispute, the relevant
<PAGE> 22
contractual provisions, the nature of the claimed default or breach and
a statement of the manner in which such party believes the dispute
should be resolved.
(c) If the parties do not agree on the manner in which the
dispute should be resolved, they will arrange to hold a meeting within
10 days after delivery of the response. Each party will have in
attendance at such meeting a representative with authority to bind the
represented party to any agreement resolving the dispute. At the
meeting (and any adjournments thereof), the parties will negotiate in
good faith in an attempt to agree as to whether a dispute exists, the
exact nature of the dispute and the manner in which the dispute should
be resolved. If deemed appropriate by the parties, a professional
mediator may be engaged to assist in resolving the dispute. Any
resolution of the dispute will be evidenced by a written agreement
setting forth in reasonable detail the actions to be taken by each
party. If no such written agreement is reached within 30 days after the
first meeting, the parties may pursue any legal remedies available to
them with respect to such dispute.
8.10 Expenses. The Company will pay all costs and expenses that it
incurs with respect to the negotiation, execution, delivery, and performance of
this Agreement, and the Company will reimburse Buyer for its reasonable
out-of-pocket expenses (which will not include legal fees) in connection with
this transaction; that, provided before incurring expenses that would
reasonably be expected to exceed $10,000, Buyer will provide prior notice to
the Company and obtain the Company's consent.
8.11 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any holder of the Shares upon any breach or default
of the Company under this Agreement, will impair any such right, power or
remedy of such holder nor will it be construed to be a waiver of any such
breach or default, or an acquiescence therein, or in any similar breach or
default thereafter occurring; nor will any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any holder of any breach or default under this
Agreement, or any waiver on the part of any holder of any provisions or
conditions of this Agreement, must be in writing and will be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement, or by law, equity or otherwise afforded to any party hereto or
any holder of the Shares, will be cumulative and not alternative.
8.12 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
8.13 Severability. If any provision of this Agreement is declared or
found to be illegal, unenforceable or void, in whole or in part, then both
parties will be relieved of all obligations arising under such provision, but
only to the extent that it is illegal, unenforceable or void, it being the
intent and agreement of the parties that this Agreement will be deemed amended
by modifying such provision to the extent necessary to make it legal and
enforceable while preserving its intent or, if that is not possible, by
substituting therefor another provision that is legal and enforceable and
achieves the same objectives.
<PAGE> 23
8.14 Indemnification. The Company agrees to indemnify, defend and
hold harmless Buyer and its directors, officers, employees and agents from and
against any and all losses, liabilities, damages, judgments, claims,
deficiencies or expenses (including interest, penalties, attorneys' fees and
expenses, and amounts paid in settlement), arising out of third-party claims or
otherwise, to which Buyer may become subject insofar as such loss, liability,
damage, judgment, claim, deficiency or expense arises out of, or is based upon
or relates to a law suit, investigation or proceeding brought or threatened in
connection with, this Agreement, a breach or inaccuracy, or any alleged breach
or inaccuracy of any of the Company's representations, warranties, covenants or
agreements contained in this Agreement or any of the Company's certificates or
schedules related hereto, or any transaction contemplated by this Agreement.
(Remainder of this page intentionally left blank.)
<PAGE> 24
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
COMPUTER INTEGRATION CORP:
By: /s/ Samuel C. McElhaney
------------------------
Name: Samuel C. McElhaney
Title: Chief Executive Officer
CHARTWELL GROUP, INC.
By: /s/ Michael G. Santry
----------------------
Name: Michael G. Santry
Title: Chairman of the Board
<PAGE> 25
Schedules
2.6 Contractual Consents
2.7 Governmental Consents
2.8 Financial Statements
2.10 Certain Changes
2.11 Taxes
2.12 Litigation
2.16 Registration Rights
2.18 Brokers
4.6 Exceptions to Negative Covenants
Exhibits
A Warrant Agreement
B Press Release
<PAGE> 1
EXHIBIT 2
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES ACT OF ANY STATE (COLLECTIVELY, THE "ACTS").
NEITHER THIS WARRANT NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT WITH RESPECT HERETO UNDER ALL OF THE APPLICABLE ACTS, OR
AN OPINION OF COUNSEL SATISFACTORY TO COMPUTER INTEGRATION CORP. TO THE EFFECT
THAT SUCH REGISTRATIONS ARE NOT REQUIRED.
COMPUTER INTEGRATION CORP.
COMMON STOCK PURCHASE WARRANT
THIS IS TO CERTIFY THAT, COMPUTER INTEGRATION CORP., a Delaware
corporation (the "Company"), hereby grants to Michael G. Santry, a Warrant to
purchase 100,000 shares of the duly authorized, validly issued, fully paid and
nonassessable shares of Common Stock, $.001 par value, of the Company (the
"Common Stock"), at a purchase price per share of $1.13 (the "Exercise Price"),
and to exercise the other appurtenant rights, powers and privileges hereinafter
set forth. The number of shares of the Common Stock purchasable hereunder and
the Exercise Price are subject to adjustment in accordance with Article III
hereof. This Warrant shall expire at 5:00 p.m., Dallas, Texas time, on June
30, 2004 (the "Maturity").
Certain capitalized terms used in this Warrant are defined in Article V
hereof.
ARTICLE I
EXERCISE OF WARRANT
1.1 Method of Exercise. This Warrant may be exercised in whole or in
part at any time or from time to time on or after the date hereof and prior to
Maturity on any date that is a Business Day; provided, however, that the
minimum number of shares of Common Stock for which this Warrant may be
exercised in part is 3,000 shares, which number is subject to adjustment in
accordance with Article III hereof. To exercise this Warrant, in whole or
part, the holder hereof shall deliver to the Company, at the Warrant Office
designated in Section 2.1, (a) a written notice in the form of the Subscription
Notice attached as Exhibit A hereto, stating therein the election of such
holder to exercise this Warrant in the manner provided in the Subscription
Notice, (b) payment in full of the Exercise Price (in the manner described
below) for all Warrant
<PAGE> 2
Shares purchased hereunder, and (c) this Warrant. This Warrant shall be deemed
to be exercised on the date of receipt by the Company of the Subscription
Notice, accompanied by payment for the Warrant Shares and surrender of this
Warrant, as aforesaid, and such date is referred to herein as the "Exercise
Date". Upon such exercise, the Company shall within three Business Days issue
and deliver to such holder a certificate for the full number of the Warrant
Shares or Other Securities purchased by such holder hereunder, against the
receipt by the Company of the total Exercise Price payable for all the Warrant
Shares so purchased. Payment of the Exercise Price shall be made by either (i)
certified or official bank check, (ii) cancellation of any debt owed by the
Company to the holder hereof, or (iii) surrendering of Warrant Shares or other
shares of Common Stock valued at the current Fair Market Value. If the holder
surrenders a combination of cash, cancellation of any debt, or Warrant Shares
or other shares of Common Stock, the holder shall specify the respective number
of Warrant Shares to be purchased with each form of consideration, and the
foregoing provisions shall be applied to each form of consideration with the
same effect as if this Warrant were being separately exercised with respect to
each form of consideration. The Person in whose name the certificate(s) for
Common Stock is to be issued shall be deemed to have become a holder of record
of such Common Stock on the Exercise Date. If this Warrant has been exercised
in part, the Company shall deliver to the holder a new Warrant evidencing the
rights of such holder to purchase a number of Warrant Shares with respect to
which this Warrant has not been exercised, which new Warrant shall, in all
other respects, be identical with this Warrant, or, at the option of the
Company, appropriate notation may be made on this Warrant and this Warrant
returned to such holder. The issuance of any Common Stock or Other Securities
upon the exercise of the Warrant shall be made without charge to any holder for
any tax, other than income taxes assessed on such holder, in respect of such
issuance.
1.2 Fractional Shares. In lieu of any fractional shares of Common
Stock which would otherwise be issuable upon exercise of this Warrant, the
Company shall issue a certificate for the next higher number of whole shares of
Common Stock for any fraction of a share which is one-half or greater. No
shares shall be issued for less than one-half of a share of Common Stock.
ARTICLE II
WARRANT OFFICE; TRANSFER
2.1 Warrant Office. The Company shall maintain an office for certain
purposes specified herein (the "Warrant Office"), which office shall initially
be the Company's office at 2425 Crownpoint Executive Drive, Charlotte, North
Carolina 28227, and may subsequently be such other office of the Company or of
any transfer agent of the Common Stock in the continental United States as to
which written notice has previously been given to the holder of this Warrant.
The Company shall maintain, at the Warrant Office, a register for the Warrant,
in which the Company shall record the name and address of the person in whose
name this Warrant has been issued, as well as the name and address of each
permitted assignee of the rights of the registered owner hereof.
2.2 Ownership of Warrant. The Company may deem and treat the person
in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall
<PAGE> 3
not be affected by any notice to the contrary, until presentation of this
Warrant for registration of transfer as provided in this Article II.
2.3 Transfer and Exchange. The Warrant and all options and rights
under the Warrant are transferable, as to all or any part of the number of
issuable Warrant Shares purchasable upon its exercise, by the holders of the
Warrants, in person or by duly authorized attorney, on the books of the Company
upon surrender of the Warrant at the principal offices of the Company, together
with the form of transfer authorization attached to the Warrant duly executed.
Absent any such transfer, the Company may deem and treat the registered holders
of the Warrant at any time as the absolute owners of the Warrants for all
purposes and shall not be affected by any notice to the contrary. If any
Warrant is transferred in part, the Company shall, at the time of surrender of
such Warrant, issue to the transferee a Warrant covering the number of issuable
Warrant Shares transferred and to the transferor a Warrant covering the number
of issuable Warrant Shares not transferred.
2.4 Restrictions on Exercise and Transfer of Warrants. The Company
agrees to maintain at the Warrant Office books for the registration and
transfer of this Warrant. The Company, from time to time, shall register the
transfer of this Warrant in such books upon surrender of this Warrant at the
Warrant Office properly endorsed or accompanied by appropriate instruments of
transfer and written instructions for transfer satisfactory to the Company.
2.5 Expenses of Delivery of Warrants. The Company shall pay all
expenses, taxes and other charges payable in connection with the preparation,
issuance and delivery of Warrants and related Warrant Shares hereunder.
2.6 Compliance with Securities Laws. The holder hereof understands
and agrees that the following restrictions and limitations shall be applicable
to all Warrant Shares and resales or other transfers of such Warrant Shares
pursuant to the Securities Act:
(a) The holder hereof agrees that the Warrant Shares shall not
be sold or otherwise transferred unless the Warrant Shares are
registered under the Securities Act and state securities laws or are
exempt therefrom.
(b) Unless then covered by an effective registration statement
registering the resale of such Warrant Shares, upon issuance, a legend
in substantially the following form has been or shall be placed on the
certificate(s) evidencing the Warrant Shares:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or any state securities
act. The shares have been acquired for investment and may not be sold,
transferred, pledged or hypothecated unless (i) they shall have been
registered under the Securities Act of 1933, as amended, and any
applicable state securities act, or (ii) Computer Integration Corp.
shall have been furnished with an opinion of counsel, satisfactory to
counsel for Computer Integration Corp., that registration is not
required under any of such acts."
<PAGE> 4
ARTICLE III
ANTI-DILUTION PROVISIONS
3.1 Adjustments to Number of Shares Purchasable.
(a) The Warrants shall be exercisable for the number of shares
of Common Stock in such manner that, following the complete and full
exercise of the Warrant of each holder, the amount of Common Stock
issued to all holders shall equal 100,000 shares of Common Stock, as
adjusted, to the extent necessary, to give effect to the following
events:
(i) In case at any time or from time to time, the
holders of any class of Common Stock or Common Stock Equivalent
have received, or (on or after the record date fixed for the
determination of shareholders eligible to receive) have become
entitled to receive, without payment therefor:
(A) consideration (other than cash) by way of
dividend or distribution; or
(B) consideration (including cash) by way of
spin-off, split-up, reclassification (including any
reclassification in connection with a consolidation or
merger in which the Company is the surviving corporation),
recapitalization, combination of shares into a smaller
number of shares, or similar corporate restructuring;
other than additional shares of Common Stock issued as a
stock dividend or in a stock-split (adjustments in respect of
which are provided for in Sections 3.1(a)(ii) and (iii)), then,
and in each such case, the holders, on the exercise of the
Warrants, shall be entitled to receive for each share of Common
Stock issuable under the Warrants as of the record date fixed for
such distribution, the greatest per share amount of consideration
received by any holder of any class of Common Stock or Common
Stock Equivalent or to which such holder is entitled. All such
consideration receivable upon exercise of the Warrant with
respect to such a distribution shall be deemed to be outstanding
and owned by such holder for purposes of determining the amount
of consideration to which such holder is entitled upon exercise
of the Warrant with respect to any subsequent distribution.
(ii) If at any time there occurs any stock split, stock
dividend, reverse stock split, or other subdivision of the Common
Stock, then the number of shares of Common Stock to be received
by the holder of the Warrant and the Exercise Price, subject to
the limitations set forth in this Agreement, shall be
proportionately adjusted.
<PAGE> 5
(iii) In case of any reclassification or change of
outstanding shares of any class of Common Stock or Common Stock
Equivalent (other than a change in par value, or from par value
to no par value, or from no par value to par value), or in the
case of any consolidation of the Company with, or merger or share
exchange of the Company with or into, another Person, or in case
of any sale of all or a majority of the property, assets,
business, income or revenue generating capacity, or goodwill of
the Company, the Company, or such successor or other Person, as
the case may be, shall provide that the Holder of the Warrant
shall thereafter be entitled to receive the highest per share
kind and amount of consideration received or receivable
(including cash) upon such reclassification, change,
consolidation, merger, share exchange, or sale by any holder of
any class of Common Stock or Common Stock Equivalent that the
Warrant entitles the holder to receive immediately prior to such
reclassification, change, consolidation, merger, share exchange,
or sale (as adjusted pursuant to Section 3.1(a)(i) and otherwise
in this Agreement). Any such successor Person, which thereafter
shall be deemed to be the Company for purposes of the Warrants,
shall provide for adjustments that are as nearly equivalent as
may be possible to the adjustments provided for by this Section
3.1.
(iv) If at any time the Company issues or sells any
shares of any Common Stock or any Common Stock Equivalent at a
per unit or share consideration (which consideration shall
include the price paid upon issuance plus the minimum amount of
any exercise, conversion, or similar payment made upon exercise
or conversion of any Common Stock Equivalent) less than the
Exercise Price or the then current Fair Market Value per share of
Common Stock immediately prior to the time such Common Stock or
Common Stock Equivalent is issued or sold, excluding (x) up to
1,800,000 shares of Common Stock issuable to employees performing
services for the Company pursuant to stock option, stock grant or
similar stock incentive plans or arrangements approved by the
Board of Directors, and (y) up to 1,261,434 shares of Common
Stock issuable upon conversion of 19,035.85 shares of Series D
Preferred Stock and 125 shares of Series E Preferred Stock issued
and outstanding on the date hereof (the "Additional Securities"),
then:
(A) the Exercise Price shall be reduced to the
lower of the prices calculated by:
(I) dividing (x) an amount equal to the
sum of (1) the number of shares of Common Stock
outstanding on a fully diluted basis immediately
prior to such issuance or sale multiplied by the
then existing Exercise Price plus (2) the aggregate
consideration, if any, received by the Company upon
such issuance or sale, by (y) the total number of
shares of Common Stock outstanding immediately
after such issuance or sale on a fully diluted
basis; and
<PAGE> 6
(II) multiplying the then existing
Exercise Price by a fraction, the numerator of
which is (x) the sum of (1) the number of shares of
Common Stock outstanding on a fully diluted basis
immediately prior to such issuance or sale,
multiplied by the Fair Market Value per share of
Common Stock immediately prior to such issuance or
sale, plus (2) the aggregate consideration received
by the Company upon such issuance or sale, (y)
divided by the total number of shares of Common
Stock outstanding on a fully diluted basis
immediately after such issuance or sale, and the
denominator of which is the Fair Market Value per
share of Common Stock immediately prior to such
issuance or sale (for purposes of this subsection
(II), the date as of which the Fair Market Value
per share of Common Stock shall be computed shall
be the earlier of the date upon which the Company
(aa) enters into a firm contract for the issuance
of such shares, or (bb) issues such shares); and
(B) the number of shares of Common Stock for
which any of the Warrants may be exercised at the Exercise
Price resulting from the adjustment described in
subsection (A) above shall be equal to the product of the
number of shares of Common Stock purchasable under such
Warrants immediately prior to such adjustment, multiplied
by a fraction, the numerator of which is the Exercise
Price in effect immediately prior to such adjustment and
the denominator of which is the Exercise Price resulting
from such adjustment.
(v) In case any event occurs as to which the preceding
Sections 3.1(a)(i) through (iv) are not strictly applicable, but
as to which the failure to make any adjustment would not fairly
protect the purchase rights represented by the Warrants in
accordance with the essential intent and principles of this
Agreement, then, in each such case, the holder may appoint an
independent investment bank or firm of independent public
accountants, which shall give its opinion as to the adjustment,
if any, on a basis consistent with the essential intent and
principles established in this Agreement, necessary to preserve
the purchase rights represented by the Warrants. Upon receipt of
such opinion, the Company shall promptly deliver a copy of such
opinion to the holder and shall make the adjustments described in
such opinion. The fees and expenses of such investment bank or
independent public accountants shall be borne by the Company.
(b) The Company shall not by any action including, without
limitation, amending, or permitting the amendment of, the charter
documents, bylaws, or similar instruments of the Company or through any
reorganization, reclassification, transfer of assets, consolidation,
merger, share exchange, dissolution, issue or sale of securities, or any
other similar voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Agreement or the Warrants, but
shall at all times in good faith assist in the carrying out of all such
terms and in the taking of all such actions as may be
<PAGE> 7
necessary or appropriate to protect the rights of the holders against
impairment or dilution. Without limiting the generality of the
foregoing, the Company shall (i) take all such action as may be
necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of Common Stock and
Other Securities, free and clear of all liens, encumbrances, equities,
and claims and (ii) use its best efforts to obtain all such
authorizations, exemptions, or consents from any public regulatory body
having jurisdiction as may be necessary to enable the Company to perform
its obligations under the Warrants. Without limiting the generality of
the foregoing, the Company represents and warrants that the board of
directors of the Company has determined the Exercise Price to be
adequate and the issuance of the Warrants to be in the best interests of
the Company.
(c) Any calculation under this Section 3.1 shall be made to
the nearest one ten-thousandth of a share and the number of issuable
Warrant Shares resulting from such calculation shall be rounded up to
the next whole share of Common Stock or Other Securities comprising
issuable Warrant Shares.
(d) The Company shall not, and shall not permit any Subsidiary
to, issue any Capital Stock other than, Common Stock and Common Stock
Equivalents.
3.2 Costs. The Company shall pay all documentary, stamp, transfer or
other transactional taxes attributable to the issuance or delivery of Warrant
Shares upon exercise of this Warrant.
3.3 Reservations of Shares. The Company shall reserve at all times
so long as this Warrant remains outstanding, free from preemptive rights, out
of its treasury Common Stock or its authorized but unissued shares of Common
Stock, or both, solely for the purposes of effecting the exercise of this
Warrant, sufficient shares of Common Stock to provide for the exercise hereof.
3.4 Valid Issuance. All shares of Common Stock which may be issued
upon exercise of this Warrant shall upon issuance by the Company be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issuance thereof attributable to any act or
omission by the Company, and the Company shall take no action which shall cause
a contrary result (including without limitation, any action which would cause
the Exercise Price to be less than the par value, if any, of the Common Stock).
ARTICLE IV
REGISTRATION RIGHTS
4.1 Definitions.
As used in this Article IV, the following capitalized terms shall have
the following meanings:
<PAGE> 8
"Holder" shall mean Buyer and any of its permitted transferees who own
Registrable Securities.
"Prospectus" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments to the
Registration Statement of which such Prospectus is a part, and all material
incorporated by reference in such Prospectus.
"Registrable Securities" shall mean all Warrant Shares, but only so long
as they remain Restricted Securities.
"Registration Expenses" shall have the meaning assigned to such term in
Section 4.7.
"Registration Statement" means any registration statement of the Company
which covers any of the Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits, and
all material incorporated by reference in such Registration Statement.
"Restricted Securities" means the Registrable Securities, other than
those Registrable Securities (i) that have been effectively registered under
the Securities Act and disposed of in accordance with the Registration
Statement covering them or (ii) that are eligible in total for resale under
Rule 144 of the Securities Act (or any successor rule or regulation).
4.2 Securities Subject to Article IV. The securities entitled to the
benefits of this Article IV are the Registrable Securities.
4.3 Registration. Promptly following the Closing, the Company shall
(i) prepare and file a Registration Statement on the appropriate form then
available to the Company, and use its best efforts to effect the registration
for resale by the Holders thereof of all the Registrable Securities, and (ii)
prepare and file with the Nasdaq Stock Market an notification form for the
listing of additional securities for the purpose of listing the Shares on the
Nasdaq Stock Market. The Company shall use its best efforts to keep such
Registration Statement effective under Rule 415 under the Securities Act until
no Holders hold Registrable Securities. Each Holder agrees that if the Company
determines that there are material developments that require the filing of a
post-effective amendment to the Registration Statement, then each Holder
registering Registrable Securities thereunder agrees to refrain from selling
any Registrable Securities until the post-effective amendment is declared
effective. The Company agrees to file and attempt to have declared effective
such post-effective amendment as soon as possible.
<PAGE> 9
4.4 Piggyback Registration Rights.
(a) If the Company at any time or from time to time subsequent
to the date of this Agreement proposes to register any securities under
the Securities Act either for its own account or the account of any
selling stockholders (other than pursuant to Section 4.3 and other than
pursuant to a registration statement on Forms S-4 or S-8 or any
successor or similar forms), it shall give written notice to each of the
Holders of Registrable Securities of its intention at least 20 days in
advance of the filing of any registration statement with respect
thereto. Upon the written request of any of the Holders of Registrable
Securities given within 15 days after receipt of such notice, the
Company, subject to Section 4.4(b), shall cause the Registrable
Securities requested by the Holders to be registered, to be so
registered.
(b) Underwritten Offerings.
(i) In the case of an underwritten offering by the
Company of securities, the Company shall, with respect to
Registrable Securities that a Holder of Registrable Securities
then desires to sell, enter into an underwriting agreement with
the same underwriters engaged by the Company with respect to
securities being offered by the Company and cause such
underwriters to include in any such underwriting all of the
Securities that a Holder of Registrable Securities then desires
to sell; provided, however, that such underwriting agreement is
in substantially the same form as the underwriting agreement that
the Company enters into in connection with the primary offering
it is making.
(ii) If the managing underwriter with respect to an
offering pursuant to this Section 4.4 requests that the number of
shares of Registrable Securities of the Holder that are entitled
to be registered pursuant to this Section 4.4 be reduced because
of marketing factors, then the shares of Registrable Securities
of the Holders that they wish to register pursuant to this
Section 4.4 shall be reduced by such amount as the managing
underwriter may determine, which reduced number of shares of
Registrable Securities shall be included on a pro rata basis
among the Holders of Registrable Securities who are participating
in such offering.
(iii) Selection of Underwriters and Counsel. If any
registration hereunder is to be an underwritten offering with
respect to any issue of Registrable Securities, the Company shall
have the right to select the investment banker or bankers and
manager or managers to administer the related offering; provided
that, such investment banker(s) or manager(s) shall each be
either (i) nationally recognized investment banking firms, (ii)
regional investment banking firms nationally recognized for their
expertise and experience in financings of companies in the
computer distribution business or (iii) an investment banking
firm approved by a majority in interest of the Holders.
<PAGE> 10
4.5 Information. Upon making a request pursuant to Section 4.3 or
4.4, the Holder(s) of Registrable Securities shall specify the number of shares
of Registrable Securities to be registered and shall also specify the intended
method of disposition thereof. The Company may require the Holders to furnish
to the Company such information regarding themselves and the distribution of
Registrable Securities as the Company may from time to time reasonably request
in order to comply with the Securities Act. The Holders agree to notify the
Company as promptly as practicable of any inaccuracy or change in information
they have previously furnished to the Company.
4.6 Registration Procedures. If and whenever the Company is required
by the provisions of Section 4.3 or 4.4 to effect a registration under the
Securities Act, the Company shall, at its expense, as expeditiously as
practicable:
(a) In accordance with the Securities Act and the rules and
regulations of the SEC, prepare and file with the SEC as expeditiously
as possible (but in no event later than 30 days after the date of this
Warrant, in the case of registration under Section 4.3 or after request
from Holder(s) pursuant to the terms of Section 4.4) a Registration
Statement in the form of an appropriate registration statement with
respect to the Registrable Securities and use its best efforts to cause
such Registration Statement to become and remain continuously effective
until the all of the Registrable Securities covered by such Registration
Statement have been sold in accordance with the intended methods of
disposition of the seller or sellers set forth in such Registration
Statement. The Company shall prepare and file with the SEC such
amendments to such Registration Statement and supplements to the
Prospectus contained therein as may be necessary to keep such
Registration Statement effective and such Registration Statement and
Prospectus accurate and complete during such period;
(b) Furnish to the Holders participating in such registration
such reasonable number of copies of the Registration Statement and
Prospectus and such other documents as such Holders may reasonably
request in order to facilitate the public offering of the Registrable
Securities;
(c) Use its reasonable efforts to register or qualify the
Registrable Securities covered by such Registration Statement under such
state securities or blue sky laws of such jurisdictions as such Holders
may reasonably request, provided that the Company shall not be obligated
to file any general consent to service of process or to qualify as a
foreign corporation in any jurisdiction in which it is not so qualified
or to subject itself to taxation in connection with any such
registration or qualification of such Registrable Securities;
(d) Notify the Holders participating in such registration,
promptly after it receives notice thereof, of the date and time when
such Registration Statement and each post-effective amendment thereto
has become effective or a supplement to any Prospectus forming a part of
such Registration Statement has been filed;
<PAGE> 11
(e) Notify the Holders participating in such registration
promptly of any request by the SEC for the amending or supplementing of
such Registration Statement or Prospectus or for additional information;
(f) Prepare and promptly file with the SEC and promptly notify
the Holders participating in such registration of the filing of such
amendments or supplements to such Registration Statement or Prospectus
as may be necessary to correct any statements or omissions if, at the
time when a Prospectus relating to such Securities is required to be
delivered under the Securities Act, any event has occurred as the result
of which any such Prospectus or any other Prospectus then in effect may
include an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading;
(g) Advise the Holders participating in such registration,
promptly after it receives notice or obtain knowledge thereof, of the
issuance of any stop order by the SEC suspending the effectiveness of
such Registration Statement or the initiation or threatening of any
proceeding for that purpose and promptly use its best efforts to prevent
the issuance of any stop order or to obtain its withdrawal if such stop
order should be issued; and
(h) Otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make generally
available to the Company's security holders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act, no
later than 45 days after the end of any 12-month period (or 90 days, if
such a period is a fiscal year) beginning with the first month of the
Company's first fiscal quarter commencing after the effective date of
the applicable Registration Statement.
4.7 Expenses of Registration. All expenses of the Company incident to
the Company's performance of or compliance with the provisions of this Article
IV ("Registration Expenses") shall be borne by the Company including without
limitation:
(a) All registration and filing fees;
(b) Fees and expenses of compliance with all securities or
blue sky laws (including the reasonable fees and disbursements of
counsel for the Company in connection with blue sky qualifications of
the Registrable Securities; provided, however, that the Company shall
not be required to consent to general service of process in any such
state);
(c) Printing, messenger, telephone and delivery expenses; and
(d) Fees and disbursements of counsel for the Company and its
independent auditors.
Nothing in this Section 4.7 shall be deemed to require the Company to
pay any underwriting discounts, selling commissions or similar fees applicable
to Registrable Securities
<PAGE> 12
if the applicable registration results in an underwritten public offering of
all or any portion of the Registrable Securities.
In addition, the Company shall pay the reasonable fees and disbursements
of one counsel selected by the Holders registering Registrable Securities in
any such Registration Statement incurred in connection with the offering
contemplated by such Registration Statement.
4.8 Indemnification and Contribution.
(a) Indemnification by the Company. Whenever, pursuant to
Section 4.3 or 4.4, a Registration Statement relating to the Registrable
Securities is filed under the Securities Act, the Company shall (except
as to matters covered by Section 4.8(b) hereof) indemnify and hold
harmless each Holder participating in the registration, each of their
officers, directors and employees, and each person, if any, who controls
any such Person (collectively, the "Holder Indemnitees" and,
individually, a "Holder Indemnitee"), against any losses, claims,
damages or liabilities, joint or several, to which such Holder
Indemnitees may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in such
Registration Statement, or Prospectus contained therein, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and shall reimburse each Holder Indemnitee for all legal or
other expenses reasonably incurred by it in connection with
investigating or defending against such loss, claim, damage, liability
or action.
(b) Indemnification by Holders. Each Holder participating in
such registration shall indemnify and hold harmless the Company, each of
its directors, each of its officers and each other person, if any, who
controls the Company, within the meaning of the Securities Act
(collectively, the "Company Indemnitees" and, individually, a "Company
Indemnitee") and each other Holder Indemnitee against all losses,
claims, damages or liabilities, joint or several, to which any of the
Company Indemnitees or the other Holder Indemnitees may become subject
under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any
material fact contained in such Registration Statement, or Prospectus
contained therein, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, but only if, and to the extent that,
such statement or omission was in reliance upon and in conformity with
information furnished to the Company by such Holder for use in the
preparation thereof.
(c) Indemnification Procedures. Promptly after receipt by a
Holder Indemnitee or a Company Indemnitee (collectively, "Indemnitees"
and, individually, an "Indemnitee") under Section 4.8(a) or 4.8(b) of
notice of the commencement of any action, such Indemnitee shall, if a
claim in respect thereof is to be made against the
<PAGE> 13
indemnifying party under such clause, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve the indemnifying party from any
liability which it may have to any Indemnitee otherwise than under such
clauses except to the extent that the indemnifying party has been
prejudiced by the failure to receive such notice. In case any such
action shall be brought against any Indemnitee, and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in, and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
Indemnitee, and after written notice from the indemnifying party to such
Indemnitee of its election to assume the defense thereof, the
indemnifying party shall not be liable to such Indemnitee under such
clause for any legal or other expenses subsequently incurred by such
Indemnitee in connection with the defense thereof other than reasonable
costs of investigation; provided, however, that the Indemnitee shall
have the right to employ one counsel to represent such Indemnitee if, in
the reasonable judgment of such Indemnitee (based on the written opinion
of counsel), it is advisable for such party to be represented by
separate counsel because a conflict of interest exists between such
indemnified and indemnifying party in respect of such claim, and in that
event the reasonable fees and expenses of such separate counsel shall be
paid by the indemnifying party. Notwithstanding the foregoing, if the
Company is an Indemnitee, the Company shall designate the one counsel,
and in all other circumstances, the one counsel shall be designated by a
majority in interest based upon the Registrable Securities of the
Indemnities. For purposes of this Section 4.8 the terms "control," and
"controlling person" have the meanings which they have under the
Securities Act.
(d) Contribution. If for any reason the foregoing indemnity is
unavailable, or is insufficient to hold harmless an Indemnitee, then the
indemnifying party shall contribute to the amount paid or payable by the
Indemnitee as a result of such losses, claims, damages, liabilities or
expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party on the one hand and
the Indemnitee on the other from the registration or (ii) if the
allocation provided by clause (i) above is not permitted by applicable
law, or provides a lesser sum to the Indemnitee than the amount
hereinafter calculated, in such proportion as is appropriate to reflect
not only the relative benefits received by the indemnifying party on the
one hand and the Indemnitee on the other but also the relative fault of
the indemnifying party and the Indemnitee as well as any other relevant
equitable considerations. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
4.9 Transfer of Registration Rights. The rights under this Article
IV may be assigned by a Holder to a transferee or assignee of any of such
Holder's Restricted Securities.
4.10 Rule 144 Reporting. With a view to making available to the
Holders the benefits of certain rules and regulations of the SEC which may
permit the sale of the Restricted Securities to the public without
registration, the Company agrees to use its best efforts to:
<PAGE> 14
(a) Make and keep public information available, as these terms
are understood and defined in Rule 144 under the Securities Act at all
times after the Closing;
(b) File with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the
Exchange Act; and
(c) Furnish to Buyer forthwith upon Buyer's request (i) a
written statement by the Company as to its compliance with the public
information requirements of Rule 144 under the Act (ii) a copy of the
most recent annual or quarterly report of the Company, and (iii) such
other reports and documents as may be reasonably requested in availing
Buyer of any rule or regulation of the SEC permitting the sale of any
such securities without registration.
ARTICLE V
TERMS DEFINED
As used in this Warrant, unless the context otherwise requires, the
following terms have the respective meanings set forth below or in the Section
indicated:
Average Market Value -- The average of the Closing Price for the
security in question for the 20 trading days immediately preceding the date of
determination.
Board of Directors -- the Board of Directors of the Company.
Business Day -- any day that NASDAQ is open for trading.
Closing Price --
(a) If the primary market for the security in question is a
national securities exchange registered under the Exchange Act, the
National Association of Securities Dealers Automated Quotation System --
National Market System, or other market or quotation system in which
last sale transactions are reported on a contemporaneous basis, the last
reported sales price, regular way, of such security for such day, or, if
there has not been a sale on such trading day, the highest closing or
last bid quotation therefor on such trading day (excluding, in any case,
any price that is not the result of bona fide arm's length trading); or
(b) If the primary market for such security is not an exchange
or quotation system in which last sale transactions are
contemporaneously reported, the highest closing or last bona fide bid or
asked quotation by disinterested Persons in the over-the-counter market
on such trading day as reported by the National Association of
Securities Dealers through its Automated Quotation System or its
successor or such other generally accepted source of publicly reported
bid quotations as the holders of the Warrant or Warrant Shares
designate.
<PAGE> 15
Common Stock -- shall mean and include the Company's Common Stock, par
value $.001 per share, authorized on the date of the original issue of this
Warrant and shall also include (i) in case of any reorganization,
reclassification, consolidation, merger, share exchange or sale, transfer or
other disposition of assets of the character referred to in Section 3.1(a)(iii)
hereof, the stock, securities or assets provided for in such Section
3.1(a)(iii), and (ii) any other shares of common stock of the Company into
which such shares of Common Stock may be converted.
Common Stock Equivalent -- any option, warrant, right, or similar
security exercisable into, exchangeable for, or convertible to Common Stock.
Exchange Act -- the Securities Exchange Act of 1934 and the rules and
regulations thereunder, all as the same shall be in effect at the time.
Fair Market Value -- (a) as to securities regularly traded in the
organized securities markets, the Average Market Value; and (b) as to all
securities not regularly traded in the securities markets and other property,
the fair market value of such securities or property as determined in good
faith by the Board of Directors of the Company at the time it authorizes the
transaction (a "Valuation Event") requiring a determination of Fair Market
Value under this Agreement.
Maturity -- 5:00 p.m., Dallas, Texas time, on June 30, 2004.
NASDAQ -- National Association of Securities Dealers Automated
Quotations System.
Other Securities -- any stock, other securities, property, or other
property or rights (other than Common Stock) that the holders become entitled
to receive upon exercise of the Warrants.
Outstanding -- when used with reference to Common Stock at any date,
all issued shares of Common Stock (including, without duplication, shares
deemed issued pursuant to Article III) at such date, except shares then held in
the treasury of the Company.
Person -- any individual, corporation, partnership, trust, limited
liability company, organization, association or other entity or individual.
Securities Act -- the Securities Act of 1933 and the rules and
regulations thereunder, all as the same shall be in effect at the time.
Warrant -- this Warrant and any successor or replacement Warrant
delivered in accordance with Section 2.4 or 6.8.
Warrant Office -- as defined in Section 2.1.
<PAGE> 16
Warrant Shares -- shall mean the shares of Common Stock or Other
Securities purchased or purchasable by the registered holder of this Warrant or
the permitted assignees of such holder upon exercise thereof pursuant to
Article I hereof.
ARTICLE VI
MISCELLANEOUS
6.1 Entire Agreement. This Warrant contains the entire agreement
between the holder hereof and the Company with respect to the shares
purchasable upon exercise hereof and the related transactions, and supersedes
all prior arrangements or understanding with respect thereto.
6.2 Governing Law. This Warrant shall be governed by and construed
in accordance with the laws of the State of Delaware.
6.3 Waiver and Amendment. Any term or provision of this Warrant may
be waived at any time by the party which is entitled to the benefits thereof
and any term or provision of this Warrant may be amended or supplemented at any
time by agreement of the holder hereof and the Company, except that any waiver
of any term or condition, or any amendment or supplementation, of this Warrant
must be in writing. A waiver of any breach or failure to enforce any of the
terms or conditions of this Warrant shall not in any way effect, limit or waive
a party's rights hereunder at any time to enforce strict compliance thereafter
with every term or condition of this Warrant.
6.4 Illegality. In the event that any one or more of the provisions
contained in this Warrant shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in any other respect and the remaining
provisions of this Warrant shall not, at the election of the party for whom the
benefit of the provision exists, be in any way impaired.
6.5 Copy of Warrant. A copy of this Warrant shall be filed among the
records of the Company.
6.6 Notice. Any notice or other document required or permitted to be
given or delivered to the holder hereof shall be delivered at, or sent by
certified or registered mail to such holder at, the last address shown on the
books of the Company maintained at the Warrant Office for the registration of
this Warrant or at any more recent address of which the holder hereof shall
have notified the Company in writing. Any notice or other document required or
permitted to be given or delivered to the Company, other than such notice or
documents required to be delivered to the Warrant Office, shall be delivered
at, or sent by certified or registered mail to, the office of the Company at
2425 Crownpoint Executive Drive, Charlotte, North Carolina 28227, or such other
address within the continental United States of America as shall have been
furnished by the Company to the holder of this Warrant.
6.7 Limitation of Liability; Not Shareholders. No provision of this
Warrant shall be construed as conferring upon the holder hereof the right to
vote, consent, receive dividends or
<PAGE> 17
receive notices other than as herein expressly provided in respect of meetings
of shareholders for the election of directors of the Company or any other
matter whatsoever as a shareholder of the Company. No provision hereof, in the
absence of affirmative action by the holder hereof to purchase shares of Common
Stock, and no mere enumeration herein of the rights or privileges of the holder
hereof, shall give rise to any liability of such holder for the purchase price
of any shares of Common Stock or as a shareholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company.
6.8 Exchange, Loss, Destruction, etc. of Warrant. Upon receipt of
evidence satisfactory to the Company of the loss, theft, mutilation or
destruction of this Warrant, and in the case of any such loss, theft or
destruction upon delivery of a bond of indemnity in such form and amount as
shall be reasonably satisfactory to the Company, or in the event of such
mutilation upon surrender and cancellation of this Warrant, the Company shall
make and deliver a new Warrant of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Warrant. Any Warrant issued under the provisions of
this Section 6.8 in lieu of any Warrant alleged to be lost, destroyed or
stolen, or in lieu of any mutilated Warrant, shall constitute an original
contractual obligation on the part of the Company. This Warrant shall be
promptly canceled by the Company upon the surrender hereof in connection with
any exchange or replacement. The holder of this Warrant shall pay all taxes
and all other expenses and charges payable in connection with the preparation,
execution and delivery of Warrants pursuant to this Section 6.8.
6.9 Headings. The Article and Section and other headings herein are
for convenience only and are not a part of this Warrant and shall not affect
the interpretation thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 18
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name.
Dated: July 24, 1997.
COMPUTER INTEGRATION CORP.
By: /s/ Samuel C. McElhaney
--------------------------
Its: Chief Executive Officer
-------------------------
<PAGE> 19
EXHIBIT A
SUBSCRIPTION NOTICE
The undersigned, the holder of the foregoing Warrant, hereby elects to
exercise purchase rights represented by said Warrant for, and to purchase
thereunder _________________ shares of the Common Stock covered by said Warrant
and herewith makes payment in full therefor pursuant to Section 1.1 of such
Warrant as follows: ___________________________, and requests (a) that
certificates for such shares (and any securities or other property issuable
upon such exercise) be issued in the name of, and delivered to,
____________________________________________________ and (b) if such shares
shall not include all of the shares issuable as provided in said Warrant, that
a new Warrant of like tenor and date for the balance of the shares issuable
thereunder be delivered to the undersigned.
-----------------------------
Dated:______________
<PAGE> 20
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES ACT OF ANY STATE (COLLECTIVELY, THE "ACTS").
NEITHER THIS WARRANT NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT WITH RESPECT HERETO UNDER ALL OF THE APPLICABLE ACTS, OR
AN OPINION OF COUNSEL SATISFACTORY TO COMPUTER INTEGRATION CORP. TO THE EFFECT
THAT SUCH REGISTRATIONS ARE NOT REQUIRED.
COMPUTER INTEGRATION CORP.
COMMON STOCK PURCHASE WARRANT
THIS IS TO CERTIFY THAT, COMPUTER INTEGRATION CORP., a Delaware
corporation (the "Company"), hereby grants to Darryl Pounds a Warrant to
purchase 100,000 shares of the duly authorized, validly issued, fully paid and
nonassessable shares of Common Stock, $.001 par value, of the Company (the
"Common Stock"), at a purchase price per share of $1.13 (the "Exercise Price"),
and to exercise the other appurtenant rights, powers and privileges hereinafter
set forth. The number of shares of the Common Stock purchasable hereunder and
the Exercise Price are subject to adjustment in accordance with Article III
hereof. This Warrant shall expire at 5:00 p.m., Dallas, Texas time, on June
30, 2004 (the "Maturity").
Certain capitalized terms used in this Warrant are defined in Article V
hereof.
ARTICLE I
EXERCISE OF WARRANT
1.1 Method of Exercise. This Warrant may be exercised in whole or in
part at any time or from time to time on or after the date hereof and prior to
Maturity on any date that is a Business Day; provided, however, that the
minimum number of shares of Common Stock for which this Warrant may be
exercised in part is 3,000 shares, which number is subject to adjustment in
accordance with Article III hereof. To exercise this Warrant, in whole or
part, the holder hereof shall deliver to the Company, at the Warrant Office
designated in Section 2.1, (a) a written notice in the form of the Subscription
Notice attached as Exhibit A hereto, stating therein the election of such
holder to exercise this Warrant in the manner provided in the Subscription
Notice, (b) payment in full of the Exercise Price (in the manner described
below) for all Warrant Shares purchased hereunder, and (c) this Warrant. This
Warrant shall be deemed to be exercised on the date of receipt by the Company
of the Subscription Notice, accompanied by payment for the Warrant Shares and
surrender of this Warrant, as aforesaid, and such date is referred to herein
<PAGE> 21
as the "Exercise Date". Upon such exercise, the Company shall within three
Business Days issue and deliver to such holder a certificate for the full
number of the Warrant Shares or Other Securities purchased by such holder
hereunder, against the receipt by the Company of the total Exercise Price
payable for all the Warrant Shares so purchased. Payment of the Exercise Price
shall be made by either (i) certified or official bank check, (ii) cancellation
of any debt owed by the Company to the holder hereof, or (iii) surrendering of
Warrant Shares or other shares of Common Stock valued at the current Fair
Market Value. If the holder surrenders a combination of cash, cancellation of
any debt, or Warrant Shares or other shares of Common Stock, the holder shall
specify the respective number of Warrant Shares to be purchased with each form
of consideration, and the foregoing provisions shall be applied to each form of
consideration with the same effect as if this Warrant were being separately
exercised with respect to each form of consideration. The Person in whose name
the certificate(s) for Common Stock is to be issued shall be deemed to have
become a holder of record of such Common Stock on the Exercise Date. If this
Warrant has been exercised in part, the Company shall deliver to the holder a
new Warrant evidencing the rights of such holder to purchase a number of
Warrant Shares with respect to which this Warrant has not been exercised, which
new Warrant shall, in all other respects, be identical with this Warrant, or,
at the option of the Company, appropriate notation may be made on this Warrant
and this Warrant returned to such holder. The issuance of any Common Stock or
Other Securities upon the exercise of the Warrant shall be made without charge
to any holder for any tax, other than income taxes assessed on such holder, in
respect of such issuance.
1.2 Fractional Shares. In lieu of any fractional shares of Common
Stock which would otherwise be issuable upon exercise of this Warrant, the
Company shall issue a certificate for the next higher number of whole shares of
Common Stock for any fraction of a share which is one-half or greater. No
shares shall be issued for less than one-half of a share of Common Stock.
ARTICLE II
WARRANT OFFICE; TRANSFER
2.1 Warrant Office. The Company shall maintain an office for certain
purposes specified herein (the "Warrant Office"), which office shall initially
be the Company's office at 2425 Crownpoint Executive Drive, Charlotte, North
Carolina 28227, and may subsequently be such other office of the Company or of
any transfer agent of the Common Stock in the continental United States as to
which written notice has previously been given to the holder of this Warrant.
The Company shall maintain, at the Warrant Office, a register for the Warrant,
in which the Company shall record the name and address of the person in whose
name this Warrant has been issued, as well as the name and address of each
permitted assignee of the rights of the registered owner hereof.
2.2 Ownership of Warrant. The Company may deem and treat the person
in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any
notice to the contrary, until presentation of this Warrant for registration of
transfer as provided in this Article II.
<PAGE> 22
2.3 Transfer and Exchange. The Warrant and all options and rights
under the Warrant are transferable, as to all or any part of the number of
issuable Warrant Shares purchasable upon its exercise, by the holders of the
Warrants, in person or by duly authorized attorney, on the books of the Company
upon surrender of the Warrant at the principal offices of the Company, together
with the form of transfer authorization attached to the Warrant duly executed.
Absent any such transfer, the Company may deem and treat the registered holders
of the Warrant at any time as the absolute owners of the Warrants for all
purposes and shall not be affected by any notice to the contrary. If any
Warrant is transferred in part, the Company shall, at the time of surrender of
such Warrant, issue to the transferee a Warrant covering the number of issuable
Warrant Shares transferred and to the transferor a Warrant covering the number
of issuable Warrant Shares not transferred.
2.4 Restrictions on Exercise and Transfer of Warrants. The Company
agrees to maintain at the Warrant Office books for the registration and
transfer of this Warrant. The Company, from time to time, shall register the
transfer of this Warrant in such books upon surrender of this Warrant at the
Warrant Office properly endorsed or accompanied by appropriate instruments of
transfer and written instructions for transfer satisfactory to the Company.
2.5 Expenses of Delivery of Warrants. The Company shall pay all
expenses, taxes and other charges payable in connection with the preparation,
issuance and delivery of Warrants and related Warrant Shares hereunder.
2.6 Compliance with Securities Laws. The holder hereof understands
and agrees that the following restrictions and limitations shall be applicable
to all Warrant Shares and resales or other transfers of such Warrant Shares
pursuant to the Securities Act:
(a) The holder hereof agrees that the Warrant Shares shall not
be sold or otherwise transferred unless the Warrant Shares are
registered under the Securities Act and state securities laws or are
exempt therefrom.
(b) Unless then covered by an effective registration statement
registering the resale of such Warrant Shares, upon issuance, a legend
in substantially the following form has been or shall be placed on the
certificate(s) evidencing the Warrant Shares:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or any state securities
act. The shares have been acquired for investment and may not be sold,
transferred, pledged or hypothecated unless (i) they shall have been
registered under the Securities Act of 1933, as amended, and any
applicable state securities act, or (ii) Computer Integration Corp.
shall have been furnished with an opinion of counsel, satisfactory to
counsel for Computer Integration Corp., that registration is not
required under any of such acts."
<PAGE> 23
ARTICLE III
ANTI-DILUTION PROVISIONS
3.1 Adjustments to Number of Shares Purchasable.
(a) The Warrants shall be exercisable for the number of shares
of Common Stock in such manner that, following the complete and full
exercise of the Warrant of each holder, the amount of Common Stock
issued to all holders shall equal 100,000 shares of Common Stock, as
adjusted, to the extent necessary, to give effect to the following
events:
(i) In case at any time or from time to time, the
holders of any class of Common Stock or Common Stock Equivalent
have received, or (on or after the record date fixed for the
determination of shareholders eligible to receive) have become
entitled to receive, without payment therefor:
(A) consideration (other than cash) by way of
dividend or distribution; or
(B) consideration (including cash) by way of
spin-off, split-up, reclassification (including any
reclassification in connection with a consolidation or
merger in which the Company is the surviving corporation),
recapitalization, combination of shares into a smaller
number of shares, or similar corporate restructuring;
other than additional shares of Common Stock issued as a
stock dividend or in a stock-split (adjustments in respect of
which are provided for in Sections 3.1(a)(ii) and (iii)), then,
and in each such case, the holders, on the exercise of the
Warrants, shall be entitled to receive for each share of Common
Stock issuable under the Warrants as of the record date fixed for
such distribution, the greatest per share amount of consideration
received by any holder of any class of Common Stock or Common
Stock Equivalent or to which such holder is entitled. All such
consideration receivable upon exercise of the Warrant with
respect to such a distribution shall be deemed to be outstanding
and owned by such holder for purposes of determining the amount
of consideration to which such holder is entitled upon exercise
of the Warrant with respect to any subsequent distribution.
(ii) If at any time there occurs any stock split, stock
dividend, reverse stock split, or other subdivision of the Common
Stock, then the number of shares of Common Stock to be received
by the holder of the Warrant and the Exercise Price, subject to
the limitations set forth in this Agreement, shall be
proportionately adjusted.
<PAGE> 24
(iii) In case of any reclassification or change of
outstanding shares of any class of Common Stock or Common Stock
Equivalent (other than a change in par value, or from par value
to no par value, or from no par value to par value), or in the
case of any consolidation of the Company with, or merger or share
exchange of the Company with or into, another Person, or in case
of any sale of all or a majority of the property, assets,
business, income or revenue generating capacity, or goodwill of
the Company, the Company, or such successor or other Person, as
the case may be, shall provide that the Holder of the Warrant
shall thereafter be entitled to receive the highest per share
kind and amount of consideration received or receivable
(including cash) upon such reclassification, change,
consolidation, merger, share exchange, or sale by any holder of
any class of Common Stock or Common Stock Equivalent that the
Warrant entitles the holder to receive immediately prior to such
reclassification, change, consolidation, merger, share exchange,
or sale (as adjusted pursuant to Section 3.1(a)(i) and otherwise
in this Agreement). Any such successor Person, which thereafter
shall be deemed to be the Company for purposes of the Warrants,
shall provide for adjustments that are as nearly equivalent as
may be possible to the adjustments provided for by this Section
3.1.
(iv) If at any time the Company issues or sells any
shares of any Common Stock or any Common Stock Equivalent at a
per unit or share consideration (which consideration shall
include the price paid upon issuance plus the minimum amount of
any exercise, conversion, or similar payment made upon exercise
or conversion of any Common Stock Equivalent) less than the
Exercise Price or the then current Fair Market Value per share of
Common Stock immediately prior to the time such Common Stock or
Common Stock Equivalent is issued or sold, excluding (x) up to
1,800,000 shares of Common Stock issuable to employees performing
services for the Company pursuant to stock option, stock grant or
similar stock incentive plans or arrangements approved by the
Board of Directors, and (y) up to 1,261,434 shares of Common
Stock issuable upon conversion of 19,035.85 shares of Series D
Preferred Stock and 125 shares of Series E Preferred Stock issued
and outstanding on the date hereof (the "Additional Securities"),
then:
(A) the Exercise Price shall be reduced to the
lower of the prices calculated by:
(I) dividing (x) an amount equal to the
sum of (1) the number of shares of Common Stock
outstanding on a fully diluted basis immediately
prior to such issuance or sale multiplied by the
then existing Exercise Price plus (2) the aggregate
consideration, if any, received by the Company upon
such issuance or sale, by (y) the total number of
shares of Common Stock outstanding immediately
after such issuance or sale on a fully diluted
basis; and
<PAGE> 25
(II) multiplying the then existing
Exercise Price by a fraction, the numerator of
which is (x) the sum of (1) the number of shares of
Common Stock outstanding on a fully diluted basis
immediately prior to such issuance or sale,
multiplied by the Fair Market Value per share of
Common Stock immediately prior to such issuance or
sale, plus (2) the aggregate consideration received
by the Company upon such issuance or sale, (y)
divided by the total number of shares of Common
Stock outstanding on a fully diluted basis
immediately after such issuance or sale, and the
denominator of which is the Fair Market Value per
share of Common Stock immediately prior to such
issuance or sale (for purposes of this subsection
(II), the date as of which the Fair Market Value
per share of Common Stock shall be computed shall
be the earlier of the date upon which the Company
(aa) enters into a firm contract for the issuance
of such shares, or (bb) issues such shares); and
(B) the number of shares of Common Stock for
which any of the Warrants may be exercised at the Exercise
Price resulting from the adjustment described in
subsection (A) above shall be equal to the product of the
number of shares of Common Stock purchasable under such
Warrants immediately prior to such adjustment, multiplied
by a fraction, the numerator of which is the Exercise
Price in effect immediately prior to such adjustment and
the denominator of which is the Exercise Price resulting
from such adjustment.
(v) In case any event occurs as to which the preceding
Sections 3.1(a)(i) through (iv) are not strictly applicable, but
as to which the failure to make any adjustment would not fairly
protect the purchase rights represented by the Warrants in
accordance with the essential intent and principles of this
Agreement, then, in each such case, the holder may appoint an
independent investment bank or firm of independent public
accountants, which shall give its opinion as to the adjustment,
if any, on a basis consistent with the essential intent and
principles established in this Agreement, necessary to preserve
the purchase rights represented by the Warrants. Upon receipt of
such opinion, the Company shall promptly deliver a copy of such
opinion to the holder and shall make the adjustments described in
such opinion. The fees and expenses of such investment bank or
independent public accountants shall be borne by the Company.
(b) The Company shall not by any action including, without
limitation, amending, or permitting the amendment of, the charter
documents, bylaws, or similar instruments of the Company or through any
reorganization, reclassification, transfer of assets, consolidation,
merger, share exchange, dissolution, issue or sale of securities, or any
other similar voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Agreement or the Warrants, but
shall at all times in good faith assist in the carrying out of all such
terms and in the taking of all such actions as may be
<PAGE> 26
necessary or appropriate to protect the rights of the holders against
impairment or dilution. Without limiting the generality of the
foregoing, the Company shall (i) take all such action as may be
necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of Common Stock and
Other Securities, free and clear of all liens, encumbrances, equities,
and claims and (ii) use its best efforts to obtain all such
authorizations, exemptions, or consents from any public regulatory body
having jurisdiction as may be necessary to enable the Company to perform
its obligations under the Warrants. Without limiting the generality of
the foregoing, the Company represents and warrants that the board of
directors of the Company has determined the Exercise Price to be
adequate and the issuance of the Warrants to be in the best interests of
the Company.
(c) Any calculation under this Section 3.1 shall be made to
the nearest one ten-thousandth of a share and the number of issuable
Warrant Shares resulting from such calculation shall be rounded up to
the next whole share of Common Stock or Other Securities comprising
issuable Warrant Shares.
(d) The Company shall not, and shall not permit any Subsidiary
to, issue any Capital Stock other than, Common Stock and Common Stock
Equivalents.
3.2 Costs. The Company shall pay all documentary, stamp, transfer or
other transactional taxes attributable to the issuance or delivery of Warrant
Shares upon exercise of this Warrant.
3.3 Reservations of Shares. The Company shall reserve at all times
so long as this Warrant remains outstanding, free from preemptive rights, out
of its treasury Common Stock or its authorized but unissued shares of Common
Stock, or both, solely for the purposes of effecting the exercise of this
Warrant, sufficient shares of Common Stock to provide for the exercise hereof.
3.4 Valid Issuance. All shares of Common Stock which may be issued
upon exercise of this Warrant shall upon issuance by the Company be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issuance thereof attributable to any act or
omission by the Company, and the Company shall take no action which shall cause
a contrary result (including without limitation, any action which would cause
the Exercise Price to be less than the par value, if any, of the Common Stock).
ARTICLE IV
REGISTRATION RIGHTS
4.1 Definitions.
As used in this Article IV, the following capitalized terms shall have
the following meanings:
<PAGE> 27
"Holder" shall mean Buyer and any of its permitted transferees who own
Registrable Securities.
"Prospectus" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments to the
Registration Statement of which such Prospectus is a part, and all material
incorporated by reference in such Prospectus.
"Registrable Securities" shall mean all Warrant Shares, but only so long
as they remain Restricted Securities.
"Registration Expenses" shall have the meaning assigned to such term in
Section 4.7.
"Registration Statement" means any registration statement of the Company
which covers any of the Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits, and
all material incorporated by reference in such Registration Statement.
"Restricted Securities" means the Registrable Securities, other than
those Registrable Securities (i) that have been effectively registered under
the Securities Act and disposed of in accordance with the Registration
Statement covering them or (ii) that are eligible in total for resale under
Rule 144 of the Securities Act (or any successor rule or regulation).
4.2 Securities Subject to Article IV. The securities entitled to the
benefits of this Article IV are the Registrable Securities.
4.3 Registration. Promptly following the Closing, the Company shall
(i) prepare and file a Registration Statement on the appropriate form then
available to the Company, and use its best efforts to effect the registration
for resale by the Holders thereof of all the Registrable Securities, and (ii)
prepare and file with the Nasdaq Stock Market an notification form for the
listing of additional securities for the purpose of listing the Shares on the
Nasdaq Stock Market. The Company shall use its best efforts to keep such
Registration Statement effective under Rule 415 under the Securities Act until
no Holders hold Registrable Securities. Each Holder agrees that if the Company
determines that there are material developments that require the filing of a
post-effective amendment to the Registration Statement, then each Holder
registering Registrable Securities thereunder agrees to refrain from selling
any Registrable Securities until the post-effective amendment is declared
effective. The Company agrees to file and attempt to have declared effective
such post-effective amendment as soon as possible.
<PAGE> 28
4.4 Piggyback Registration Rights.
(a) If the Company at any time or from time to time subsequent
to the date of this Agreement proposes to register any securities under
the Securities Act either for its own account or the account of any
selling stockholders (other than pursuant to Section 4.3 and other than
pursuant to a registration statement on Forms S-4 or S-8 or any
successor or similar forms), it shall give written notice to each of the
Holders of Registrable Securities of its intention at least 20 days in
advance of the filing of any registration statement with respect
thereto. Upon the written request of any of the Holders of Registrable
Securities given within 15 days after receipt of such notice, the
Company, subject to Section 4.4(b), shall cause the Registrable
Securities requested by the Holders to be registered, to be so
registered.
(b) Underwritten Offerings.
(i) In the case of an underwritten offering by the
Company of securities, the Company shall, with respect to
Registrable Securities that a Holder of Registrable Securities
then desires to sell, enter into an underwriting agreement with
the same underwriters engaged by the Company with respect to
securities being offered by the Company and cause such
underwriters to include in any such underwriting all of the
Securities that a Holder of Registrable Securities then desires
to sell; provided, however, that such underwriting agreement is
in substantially the same form as the underwriting agreement that
the Company enters into in connection with the primary offering
it is making.
(ii) If the managing underwriter with respect to an
offering pursuant to this Section 4.4 requests that the number of
shares of Registrable Securities of the Holder that are entitled
to be registered pursuant to this Section 4.4 be reduced because
of marketing factors, then the shares of Registrable Securities
of the Holders that they wish to register pursuant to this
Section 4.4 shall be reduced by such amount as the managing
underwriter may determine, which reduced number of shares of
Registrable Securities shall be included on a pro rata basis
among the Holders of Registrable Securities who are participating
in such offering.
(iii) Selection of Underwriters and Counsel. If any
registration hereunder is to be an underwritten offering with
respect to any issue of Registrable Securities, the Company shall
have the right to select the investment banker or bankers and
manager or managers to administer the related offering; provided
that, such investment banker(s) or manager(s) shall each be
either (i) nationally recognized investment banking firms, (ii)
regional investment banking firms nationally recognized for their
expertise and experience in financings of companies in the
computer distribution business or (iii) an investment banking
firm approved by a majority in interest of the Holders.
<PAGE> 29
4.5 Information. Upon making a request pursuant to Section 4.3 or
4.4, the Holder(s) of Registrable Securities shall specify the number of shares
of Registrable Securities to be registered and shall also specify the intended
method of disposition thereof. The Company may require the Holders to furnish
to the Company such information regarding themselves and the distribution of
Registrable Securities as the Company may from time to time reasonably request
in order to comply with the Securities Act. The Holders agree to notify the
Company as promptly as practicable of any inaccuracy or change in information
they have previously furnished to the Company.
4.6 Registration Procedures. If and whenever the Company is required
by the provisions of Section 4.3 or 4.4 to effect a registration under the
Securities Act, the Company shall, at its expense, as expeditiously as
practicable:
(a) In accordance with the Securities Act and the rules and
regulations of the SEC, prepare and file with the SEC as expeditiously
as possible (but in no event later than 30 days after the date of this
Warrant, in the case of registration under Section 4.3 or after request
from Holder(s) pursuant to the terms of Section 4.4) a Registration
Statement in the form of an appropriate registration statement with
respect to the Registrable Securities and use its best efforts to cause
such Registration Statement to become and remain continuously effective
until the all of the Registrable Securities covered by such Registration
Statement have been sold in accordance with the intended methods of
disposition of the seller or sellers set forth in such Registration
Statement. The Company shall prepare and file with the SEC such
amendments to such Registration Statement and supplements to the
Prospectus contained therein as may be necessary to keep such
Registration Statement effective and such Registration Statement and
Prospectus accurate and complete during such period;
(b) Furnish to the Holders participating in such registration
such reasonable number of copies of the Registration Statement and
Prospectus and such other documents as such Holders may reasonably
request in order to facilitate the public offering of the Registrable
Securities;
(c) Use its reasonable efforts to register or qualify the
Registrable Securities covered by such Registration Statement under such
state securities or blue sky laws of such jurisdictions as such Holders
may reasonably request, provided that the Company shall not be obligated
to file any general consent to service of process or to qualify as a
foreign corporation in any jurisdiction in which it is not so qualified
or to subject itself to taxation in connection with any such
registration or qualification of such Registrable Securities;
(d) Notify the Holders participating in such registration,
promptly after it receives notice thereof, of the date and time when
such Registration Statement and each post-effective amendment thereto
has become effective or a supplement to any Prospectus forming a part of
such Registration Statement has been filed;
<PAGE> 30
(e) Notify the Holders participating in such registration
promptly of any request by the SEC for the amending or supplementing of
such Registration Statement or Prospectus or for additional information;
(f) Prepare and promptly file with the SEC and promptly notify
the Holders participating in such registration of the filing of such
amendments or supplements to such Registration Statement or Prospectus
as may be necessary to correct any statements or omissions if, at the
time when a Prospectus relating to such Securities is required to be
delivered under the Securities Act, any event has occurred as the result
of which any such Prospectus or any other Prospectus then in effect may
include an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading;
(g) Advise the Holders participating in such registration,
promptly after it receives notice or obtain knowledge thereof, of the
issuance of any stop order by the SEC suspending the effectiveness of
such Registration Statement or the initiation or threatening of any
proceeding for that purpose and promptly use its best efforts to prevent
the issuance of any stop order or to obtain its withdrawal if such stop
order should be issued; and
(h) Otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make generally
available to the Company's security holders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act, no
later than 45 days after the end of any 12-month period (or 90 days, if
such a period is a fiscal year) beginning with the first month of the
Company's first fiscal quarter commencing after the effective date of
the applicable Registration Statement.
4.7 Expenses of Registration. All expenses of the Company incident to
the Company's performance of or compliance with the provisions of this Article
IV ("Registration Expenses") shall be borne by the Company including without
limitation:
(a) All registration and filing fees;
(b) Fees and expenses of compliance with all securities or
blue sky laws (including the reasonable fees and disbursements of
counsel for the Company in connection with blue sky qualifications of
the Registrable Securities; provided, however, that the Company shall
not be required to consent to general service of process in any such
state);
(c) Printing, messenger, telephone and delivery expenses; and
(d) Fees and disbursements of counsel for the Company and its
independent auditors.
Nothing in this Section 4.7 shall be deemed to require the Company to
pay any underwriting discounts, selling commissions or similar fees applicable
to Registrable Securities
<PAGE> 31
if the applicable registration results in an underwritten public offering of
all or any portion of the Registrable Securities.
In addition, the Company shall pay the reasonable fees and disbursements
of one counsel selected by the Holders registering Registrable Securities in
any such Registration Statement incurred in connection with the offering
contemplated by such Registration Statement.
4.8 Indemnification and Contribution.
(a) Indemnification by the Company. Whenever, pursuant to
Section 4.3 or 4.4, a Registration Statement relating to the Registrable
Securities is filed under the Securities Act, the Company shall (except
as to matters covered by Section 4.8(b) hereof) indemnify and hold
harmless each Holder participating in the registration, each of their
officers, directors and employees, and each person, if any, who controls
any such Person (collectively, the "Holder Indemnitees" and,
individually, a "Holder Indemnitee"), against any losses, claims,
damages or liabilities, joint or several, to which such Holder
Indemnitees may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in such
Registration Statement, or Prospectus contained therein, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and shall reimburse each Holder Indemnitee for all legal or
other expenses reasonably incurred by it in connection with
investigating or defending against such loss, claim, damage, liability
or action.
(b) Indemnification by Holders. Each Holder participating in
such registration shall indemnify and hold harmless the Company, each of
its directors, each of its officers and each other person, if any, who
controls the Company, within the meaning of the Securities Act
(collectively, the "Company Indemnitees" and, individually, a "Company
Indemnitee") and each other Holder Indemnitee against all losses,
claims, damages or liabilities, joint or several, to which any of the
Company Indemnitees or the other Holder Indemnitees may become subject
under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any
material fact contained in such Registration Statement, or Prospectus
contained therein, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, but only if, and to the extent that,
such statement or omission was in reliance upon and in conformity with
information furnished to the Company by such Holder for use in the
preparation thereof.
(c) Indemnification Procedures. Promptly after receipt by a
Holder Indemnitee or a Company Indemnitee (collectively, "Indemnitees"
and, individually, an "Indemnitee") under Section 4.8(a) or 4.8(b) of
notice of the commencement of any action, such Indemnitee shall, if a
claim in respect thereof is to be made against the
<PAGE> 32
indemnifying party under such clause, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve the indemnifying party from any
liability which it may have to any Indemnitee otherwise than under such
clauses except to the extent that the indemnifying party has been
prejudiced by the failure to receive such notice. In case any such
action shall be brought against any Indemnitee, and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in, and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
Indemnitee, and after written notice from the indemnifying party to such
Indemnitee of its election to assume the defense thereof, the
indemnifying party shall not be liable to such Indemnitee under such
clause for any legal or other expenses subsequently incurred by such
Indemnitee in connection with the defense thereof other than reasonable
costs of investigation; provided, however, that the Indemnitee shall
have the right to employ one counsel to represent such Indemnitee if, in
the reasonable judgment of such Indemnitee (based on the written opinion
of counsel), it is advisable for such party to be represented by
separate counsel because a conflict of interest exists between such
indemnified and indemnifying party in respect of such claim, and in that
event the reasonable fees and expenses of such separate counsel shall be
paid by the indemnifying party. Notwithstanding the foregoing, if the
Company is an Indemnitee, the Company shall designate the one counsel,
and in all other circumstances, the one counsel shall be designated by a
majority in interest based upon the Registrable Securities of the
Indemnities. For purposes of this Section 4.8 the terms "control," and
"controlling person" have the meanings which they have under the
Securities Act.
(d) Contribution. If for any reason the foregoing indemnity is
unavailable, or is insufficient to hold harmless an Indemnitee, then the
indemnifying party shall contribute to the amount paid or payable by the
Indemnitee as a result of such losses, claims, damages, liabilities or
expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party on the one hand and
the Indemnitee on the other from the registration or (ii) if the
allocation provided by clause (i) above is not permitted by applicable
law, or provides a lesser sum to the Indemnitee than the amount
hereinafter calculated, in such proportion as is appropriate to reflect
not only the relative benefits received by the indemnifying party on the
one hand and the Indemnitee on the other but also the relative fault of
the indemnifying party and the Indemnitee as well as any other relevant
equitable considerations. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
4.9 Transfer of Registration Rights. The rights under this Article
IV may be assigned by a Holder to a transferee or assignee of any of such
Holder's Restricted Securities.
4.10 Rule 144 Reporting. With a view to making available to the
Holders the benefits of certain rules and regulations of the SEC which may
permit the sale of the Restricted Securities to the public without
registration, the Company agrees to use its best efforts to:
<PAGE> 33
(a) Make and keep public information available, as these terms
are understood and defined in Rule 144 under the Securities Act at all
times after the Closing;
(b) File with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the
Exchange Act; and
(c) Furnish to Buyer forthwith upon Buyer's request (i) a
written statement by the Company as to its compliance with the public
information requirements of Rule 144 under the Act (ii) a copy of the
most recent annual or quarterly report of the Company, and (iii) such
other reports and documents as may be reasonably requested in availing
Buyer of any rule or regulation of the SEC permitting the sale of any
such securities without registration.
ARTICLE V
TERMS DEFINED
As used in this Warrant, unless the context otherwise requires, the
following terms have the respective meanings set forth below or in the Section
indicated:
Average Market Value -- The average of the Closing Price for the
security in question for the 20 trading days immediately preceding the date of
determination.
Board of Directors -- the Board of Directors of the Company.
Business Day -- any day that NASDAQ is open for trading.
Closing Price --
(a) If the primary market for the security in question is a
national securities exchange registered under the Exchange Act, the
National Association of Securities Dealers Automated Quotation System --
National Market System, or other market or quotation system in which
last sale transactions are reported on a contemporaneous basis, the last
reported sales price, regular way, of such security for such day, or, if
there has not been a sale on such trading day, the highest closing or
last bid quotation therefor on such trading day (excluding, in any case,
any price that is not the result of bona fide arm's length trading); or
(b) If the primary market for such security is not an exchange
or quotation system in which last sale transactions are
contemporaneously reported, the highest closing or last bona fide bid or
asked quotation by disinterested Persons in the over-the-counter market
on such trading day as reported by the National Association of
Securities Dealers through its Automated Quotation System or its
successor or such other generally accepted source of publicly reported
bid quotations as the holders of the Warrant or Warrant Shares
designate.
<PAGE> 34
Common Stock -- shall mean and include the Company's Common Stock, par
value $.001 per share, authorized on the date of the original issue of this
Warrant and shall also include (i) in case of any reorganization,
reclassification, consolidation, merger, share exchange or sale, transfer or
other disposition of assets of the character referred to in Section 3.1(a)(iii)
hereof, the stock, securities or assets provided for in such Section
3.1(a)(iii), and (ii) any other shares of common stock of the Company into
which such shares of Common Stock may be converted.
Common Stock Equivalent -- any option, warrant, right, or similar
security exercisable into, exchangeable for, or convertible to Common Stock.
Exchange Act -- the Securities Exchange Act of 1934 and the rules and
regulations thereunder, all as the same shall be in effect at the time.
Fair Market Value -- (a) as to securities regularly traded in the
organized securities markets, the Average Market Value; and (b) as to all
securities not regularly traded in the securities markets and other property,
the fair market value of such securities or property as determined in good
faith by the Board of Directors of the Company at the time it authorizes the
transaction (a "Valuation Event") requiring a determination of Fair Market
Value under this Agreement.
Maturity -- 5:00 p.m., Dallas, Texas time, on June 30, 2004.
NASDAQ -- National Association of Securities Dealers Automated
Quotations System.
Other Securities -- any stock, other securities, property, or other
property or rights (other than Common Stock) that the holders become entitled
to receive upon exercise of the Warrants.
Outstanding -- when used with reference to Common Stock at any date,
all issued shares of Common Stock (including, without duplication, shares
deemed issued pursuant to Article III) at such date, except shares then held in
the treasury of the Company.
Person -- any individual, corporation, partnership, trust, limited
liability company, organization, association or other entity or individual.
Securities Act -- the Securities Act of 1933 and the rules and
regulations thereunder, all as the same shall be in effect at the time.
Warrant -- this Warrant and any successor or replacement Warrant
delivered in accordance with Section 2.4 or 6.8.
Warrant Office -- as defined in Section 2.1.
<PAGE> 35
Warrant Shares -- shall mean the shares of Common Stock or Other
Securities purchased or purchasable by the registered holder of this Warrant or
the permitted assignees of such holder upon exercise thereof pursuant to
Article I hereof.
ARTICLE VI
MISCELLANEOUS
6.1 Entire Agreement. This Warrant contains the entire agreement
between the holder hereof and the Company with respect to the shares
purchasable upon exercise hereof and the related transactions, and supersedes
all prior arrangements or understanding with respect thereto.
6.2 Governing Law. This Warrant shall be governed by and construed
in accordance with the laws of the State of Delaware.
6.3 Waiver and Amendment. Any term or provision of this Warrant may
be waived at any time by the party which is entitled to the benefits thereof
and any term or provision of this Warrant may be amended or supplemented at any
time by agreement of the holder hereof and the Company, except that any waiver
of any term or condition, or any amendment or supplementation, of this Warrant
must be in writing. A waiver of any breach or failure to enforce any of the
terms or conditions of this Warrant shall not in any way effect, limit or waive
a party's rights hereunder at any time to enforce strict compliance thereafter
with every term or condition of this Warrant.
6.4 Illegality. In the event that any one or more of the provisions
contained in this Warrant shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in any other respect and the remaining
provisions of this Warrant shall not, at the election of the party for whom the
benefit of the provision exists, be in any way impaired.
6.5 Copy of Warrant. A copy of this Warrant shall be filed among the
records of the Company.
6.6 Notice. Any notice or other document required or permitted to be
given or delivered to the holder hereof shall be delivered at, or sent by
certified or registered mail to such holder at, the last address shown on the
books of the Company maintained at the Warrant Office for the registration of
this Warrant or at any more recent address of which the holder hereof shall
have notified the Company in writing. Any notice or other document required or
permitted to be given or delivered to the Company, other than such notice or
documents required to be delivered to the Warrant Office, shall be delivered
at, or sent by certified or registered mail to, the office of the Company at
2425 Crownpoint Executive Drive, Charlotte, North Carolina 28227, or such other
address within the continental United States of America as shall have been
furnished by the Company to the holder of this Warrant.
6.7 Limitation of Liability; Not Shareholders. No provision of this
Warrant shall be construed as conferring upon the holder hereof the right to
vote, consent, receive dividends or
<PAGE> 36
receive notices other than as herein expressly provided in respect of meetings
of shareholders for the election of directors of the Company or any other
matter whatsoever as a shareholder of the Company. No provision hereof, in the
absence of affirmative action by the holder hereof to purchase shares of Common
Stock, and no mere enumeration herein of the rights or privileges of the holder
hereof, shall give rise to any liability of such holder for the purchase price
of any shares of Common Stock or as a shareholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company.
6.8 Exchange, Loss, Destruction, etc. of Warrant. Upon receipt of
evidence satisfactory to the Company of the loss, theft, mutilation or
destruction of this Warrant, and in the case of any such loss, theft or
destruction upon delivery of a bond of indemnity in such form and amount as
shall be reasonably satisfactory to the Company, or in the event of such
mutilation upon surrender and cancellation of this Warrant, the Company shall
make and deliver a new Warrant of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Warrant. Any Warrant issued under the provisions of
this Section 6.8 in lieu of any Warrant alleged to be lost, destroyed or
stolen, or in lieu of any mutilated Warrant, shall constitute an original
contractual obligation on the part of the Company. This Warrant shall be
promptly canceled by the Company upon the surrender hereof in connection with
any exchange or replacement. The holder of this Warrant shall pay all taxes
and all other expenses and charges payable in connection with the preparation,
execution and delivery of Warrants pursuant to this Section 6.8.
6.9 Headings. The Article and Section and other headings herein are
for convenience only and are not a part of this Warrant and shall not affect
the interpretation thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 37
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name.
Dated: July 24, 1997.
COMPUTER INTEGRATION CORP.
By: /s/ Samuel C. McElhaney
-------------------------
Its: Chief Executive Officer
-------------------------
<PAGE> 38
EXHIBIT A
SUBSCRIPTION NOTICE
The undersigned, the holder of the foregoing Warrant, hereby elects to
exercise purchase rights represented by said Warrant for, and to purchase
thereunder _________________ shares of the Common Stock covered by said Warrant
and herewith makes payment in full therefor pursuant to Section 1.1 of such
Warrant as follows: ___________________________, and requests (a) that
certificates for such shares (and any securities or other property issuable
upon such exercise) be issued in the name of, and delivered to,
____________________________________________________ and (b) if such shares
shall not include all of the shares issuable as provided in said Warrant, that
a new Warrant of like tenor and date for the balance of the shares issuable
thereunder be delivered to the undersigned.
---------------------------
Dated:______________
<PAGE> 1
EXHIBIT 3
July 24, 1997
Mr. Donald Russell Robert W. Johnson IV
Chairman, CEA Management Corp. The Johnson Company, Inc.
Communications Equity Associates 630 Fifth Avenue, Suite 1510
101 East Kennedy Blvd., Suite 3300 New York, New York 10111
Tampa, Florida 33602
Neil J. Burmeister
Mr. Donald Searles P.O. Box 5415
CRT Trust Advisors Inc. New York, New York 10185-0044
400 Embassy Row, Suite 500
Atlanta, Georgia 30328 Arthur DelVesco
12 South Wynstone Drive
Mr. John Perry, III North Barrington, Illinois
60010
564 Toro Canyon Road
Santa Barbara, California 93108
Mr. Thomas D. McCloskey, Jr.
President
McCloskey Enterprises, Inc.
730 E. Durant, Suite 202
Aspen, Colorado 81611
Gentlemen:
Chartwell Group, Inc. ("Chartwell") and Computer Integration Corp.
("CIC") are parties to a Stock Purchase Agreement dated as of May 15, 1997 (the
"Agreement"). Under the Agreement, Chartwell has the right to assign any or
all of its rights under the Agreement, including its rights to purchase CIC
common stock, to one or more assignees. Collectively, the addressees of this
letter ("Assignees") have agreed to purchase 2,277,103 shares of CIC common
stock for the aggregate purchase price of $2,436,500, and Chartwell has
assigned its rights to buy these shares to Assignees as permitted by the
Agreement. Assignees have wire transferred funds into CIC's attorney's trust
account to accomplish this closing.
This letter will constitute Chartwell's agreement that, for one year
after the Closing (the same time period set forth in Section 4.2 of the
Agreement), it will use its best efforts to cause and maintain the election to
the Board of Directors of one nominee of Assignees' group (as
<PAGE> 2
designated by Neil J. Burmeister or a replacement representative appointed by a
majority-in-interest of Assignees). If necessary to create a vacancy for the
election of such nominee, Chartwell will cause one of the other directors it is
entitled under the Agreement to elect to resign from the Board.
Very truly yours,
CHARTWELL GROUP, INC.
/s/ Michael G. Santry
---------------------------
By: Michael G. Santry
Its: Chairman of the Board
<PAGE> 1
EXHIBIT 4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That the undersigned has made,
constituted and appointed, and by these presents does make, constitute and
appoint Michael G. Santry, its true and lawful attorney-in-fact, for it and in
its name, place and stead to sign its name in its capacity to any and all
Schedule 13Ds and any and all amendments thereto that it is required to file
and to file such instruments with the Securities and Exchange Commission and
any other appropriate regulatory agency and to deliver such instruments to
Computer Integration Corp. and to the National Association of Securities
Dealers, Inc. and any other appropriate regulatory agency.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal,
this 4th day of August, 1997.
CODINVEST LIMITED
By: /s/ Luc Argand
--------------------------------
Its: Director
-------------------------------
