UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
MENTORTECH INC.
---------------
(Name of Issuer)
Common Stock, par value $.01 per share
--------------------------------------
(Title of Class of Securities)
587266107
---------
(CUSIP Number)
Steven J. Glusband, Esq.
Carter, Ledyard & Milburn
2 Wall Street, New York, New York 10005
(212) 732-3200
--------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
January 27, 1999
----------------
(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 that is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box [ ].
*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 purpose of Section 18 of the Securities Exchange Act of
1934 (the "Act") or otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act.
<PAGE>
CUSIP No. 587266107
1 NAME OF REPORTING PERSON: MASHOV COMPUTERS LTD.
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY):
None
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [x]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS: WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e): [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION: Israel
NUMBER OF 7 SOLE VOTING POWER: 0
SHARES
BENEFICIALLY 8 SHARED VOTING POWER: 2,227,897 shares*
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER: 0
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE POWER: 2,227,897 shares*
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON: 2,227,897 shares*
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 62.3%
14 TYPE OF REPORTING PERSON: CO
_________________
* Includes 56,818 shares issuable upon exercise of currently exercisable
warrants.
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<PAGE>
CUSIP No. 587266107
1 NAME OF REPORTING PERSON: FORMULA SYSTEMS (1985) LTD.
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY):
None
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [x]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS: N/A
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e): [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION: Israel
NUMBER OF 7 SOLE VOTING POWER: 0
SHARES
BENEFICIALLY 8 SHARED VOTING POWER: 2,227,897 shares
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER: 0
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE POWER: 2,227,897 shares
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON: 2,227,897 shares
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 62.3%
14 TYPE OF REPORTING PERSON: CO
- 3 -
<PAGE>
Item 2. Identity and Background.
Item 2 of this Statement is hereby amended and restated in its entirety to
read as follows:
This Amendment No. 1 of this Statement ("Amendment No. 1") is filed on
behalf of Mashov Computers Ltd. ("Mashov Computers") and Formula Systems (1985)
Ltd. ("Formula Systems"), both of which are corporations formed under the laws
of the State of Israel. The principal business address and principal office of
Mashov Computers is 5 HaPlada Street, Or-Yehuda, Israel 60218. The principal
business address and principal office of Formula Systems is 39 Hagalim
Boulevard, Herzeliya, Israel 46766.
Mashov Computers is a software and information technology services company
holding interests in Mentortech and other Israeli technology corporations. The
common shares of Mashov Computers are publicly traded on the Tel-Aviv Stock
Exchange. Formula Systems is a software and information technology services
company whose ADRs are publicly traded in the United States, and is the owner of
approximately 45% of the outstanding voting securities of Mashov Computers.
The following is information concerning each executive officer or director
of Mashov Computers:
1. Name: Roy Machnes
Position with Mashov Computers: Director
Present Principal Occupation:
Chief Executive Officer and Director, Mentortech
Chairman and Director, Mashov Computers Marketing Ltd. ("Mashov
Marketing"), 5 HaPlada Street, Or-Yehuda, Israel 60218
- 4 -
<PAGE>
Address: Mentortech Inc.
462 Seventh Avenue
New York, New York 10018
Citizenship: Israeli
2. Name: Dan Goldstein
Position with Mashov Computers: Director
Present Principal Occupation:
Chairman, CEO and Director, Formula Systems
Director, Mashov Marketing
Director, Magic Software Enterprises Ltd. ("Magic Software"),
5 HaPlada Street, Or-Yehuda, Israel 60218
Address: 5 HaPlada Street
Or-Yehuda, Israel 60218
Citizenship: Israeli
3. Name: David Assia
Position with Mashov Computers: Chairman and Director
Present Principal Occupation:
Executive Chairman, Magic Software
Director, Mashov Marketing
Director, Mentortech
Address: 5 HaPlada Street
Or-Yehuda, Israel 60218
Citizenship: Israeli
4. Name: Jack Dunietz
Position with Mashov Computers: Chief Executive Officer and Director
Present Principal Occupation:
- 5 -
<PAGE>
Director, Mashov Marketing
Chief Executive Officer and Director, Magic Software
Director, Mentortech
Address: 5 HaPlada Street
Or-Yehuda, Israel 60218
Citizenship: Israeli
5. Name: Yoram Alster
Position with Mashov Computers: Director
Present Principal Occupation: Consultant
Address: 5 HaPlada Street
Or-Yehuda, Israel 60218
Citizenship: Israeli
6. Name: Amir Geva
Position with Mashov Computers: Director
Present Principal Occupation: Consultant
Address: 5 HaPlada Street
Or-Yehuda, Israel 60218
Citizenship: Israeli
7. Name: Elan Penn
Position with Mashov Computers: Vice President of Finance
Present Principal Occupation:
Chief Executive Officer, Sivan Computers Training Center(1994)Ltd.
Chief Executive Officer and Director, Mashov Marketing
Director, Mentortech
- 6 -
<PAGE>
Address: 5 HaPlada Street
Or-Yehuda, Israel 60218
Citizenship: Israeli
During the past five years, neither Mashov Computers nor (to the best
knowledge of Mashov Computers) any of its executive officers or directors listed
above has been (i) convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors), or (ii) a party to a civil proceeding of
judicial or administrative body of competent jurisdiction, as a result of which
proceeding it or he was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, United States federal or State, or Israeli, securities laws, or finding of
any violation with respect to such laws.
The following is information concerning each executive officer or director
of Formula Systems:
1. Name: Dan Goldstein
Position with Formula Systems: Chairman, CEO and Director
Present Principal Occupation:
Chairman, CEO and Director, Formula Systems
Director, Mashov Computers
Director, Mashov Marketing
Director, Magic Software
Address: 39 Hagalim Boulevard
Herzeliya, Israel 46766
Citizenship: Israeli
2. Name: Gad Goldstein
Position with Formula Systems: President and Director
Present Principal Occupation: President, Formula Systems
- 7 -
<PAGE>
Address: 39 Hagalim Boulevard
Herzeliya, Israel 46766
Citizenship: Israeli
3. Name: Shai Beilis
Position with Formula Systems:
Director and Director of Business Development
Present Principal Occupation:
Director of Business Development, Formula Systems
Address: 39 Hagalim Boulevard
Herzeliya, Israel 46766
Citizenship: Israeli
4. Name: Yoav Shaham
Position with Formula Systems:
Director and Vice President of Marketing
Present Principal Occupation:
Vice President of Marketing, Formula Systems
Address: 39 Hagalim Boulevard
Herzeliya, Israel 46766
Citizenship: Israeli
5. Name: Jacob Tenenboem
Position with Formula Systems: Director
Present Principal Occupation:
Vice Chairman of the Board of Directors
Sintech Advanced Technologies Ltd.
8 Maskit Street, Herzeliya, Israel
Address: 39 Hagalim Boulevard
Herzeliya, Israel 46766
Citizenship: Israeli
- 8 -
<PAGE>
6. Name: Yisrael Spiegler
Position with Formula Systems: Director
Present Principal Occupation:
Professor, Tel Aviv University, Graduate School of Management
Address: 39 Hagalim Boulevard
Herzeliya, Israel 46766
Citizenship: Israeli
7. Name: Benyamin Maidan
Position with Formula Systems: Director
Present Principal Occupation:
Senior Vice President
Tadiran Electronics Systems Ltd.
4 Derech Ha-horesh, Yahud, Israel
Address: 39 Hagalim Boulevard
Herzeliya, Israel 46766
Citizenship: Israeli
8. Name: Bruria Gross Prushansky
Position with Formula Systems:
Director, Secretary and General Counsel
Present Principal Occupation:
Director, Secretary and General Counsel, Formula Systems
Address: 39 Hagalim Boulevard
Herzeliya, Israel 46766
Citizenship: Israeli
- 9 -
<PAGE>
During the past five years, neither Formula Systems nor (to the best
knowledge of Formula Systems) any of its executive officers or directors listed
above has been (i) convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors), or (ii) a party to a civil proceeding of
judicial or administrative body of competent jurisdiction, as a result of which
proceeding it or he was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, United States federal or State, or Israeli, securities laws, or finding of
any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Item 3 of this Statement is hereby amended and restated in its entirety to
read as follows:
The shares of Common Stock and warrants to purchase Common Stock which are
the subject of this Amendment No. 1 (see Item 4 below) were acquired with the
working capital of Mashov Computers.
Item 4. Purpose of Transaction.
Item 4 of this Statement is hereby amended and restated in its entirety to
read as follows:
Pursuant to a Securities Purchase Agreement dated January 27, 1999 by and
among Special Situations Fund III, L.P., Special Situations Cayman Fund, L.P.,
Special Situations Private Equity Fund, L.P. and Mashov Computers Ltd., on
February 3, 1999, Mashov Computers purchased in private transactions the
following securities of the Issuer: 56,899 shares of Common
- 10 -
<PAGE>
Stock from Special Situations Fund III, L.P. at an aggregate purchase price of
$184,921.75; 18,966 shares of Common Stock from Special Situations Cayman Fund,
L.P. at an aggregate purchase price of $61,639.50; and 113,636 shares of Common
Stock at an aggregate purchase price of $369,317.00, and 56,818 warrants each to
purchase a share of Common Stock at an aggregate purchase price of $130,681.40,
from Special Situations Private Equity Fund, L.P.
Mashov Computers and/or Formula Systems may, in the future, purchase
additional shares of Common Stock and/or warrants to purchase Common Stock in
private transactions or purchase additional shares of Common Stock in the public
market. Such purchases of securities will be made for investment purposes.
The Issuer is currently assessing its various activities in order to
achieve profitable operations. To this end, the Issuer may engage in a
recapitalization or seek to dispose by sale, transfer or merger certain of its
or its subsidiaries' operations. The boards of directors of the Issuer, Mashov
Computers and Formula Systems may consider such extraordinary corporate
transactions as a merger, reorganization or liquidation of the Issuer or one or
more of its subsidiaries in the future. At present, the Common Stock is not
listed on a national securities exchange and has been eligible for termination
of registration pursuant to Section 12(g)(4) of the Act since prior to the
purchases described above in this Item 4.
Apart from and subject to the foregoing, none of Mashov Computers, Formula
Systems or, to their knowledge, any other person named in Item 2 of this
Amendment No. 1 (in his capacity as a shareholder of the Issuer) has any plan or
proposal which relates to or would result in: (a) the disposition of securities
of the Issuer; (b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its subsidiaries;
(c)
- 11 -
<PAGE>
a sale or transfer of a material amount of assets of the Issuer or any of its
subsidiaries; (d) any change in the board of directors or management of the
Issuer, including any plan or proposal to change the number or term of directors
or to fill any existing vacancies on the board; (e) any material change in the
capitalization or dividend policy of the Issuer; (f) any other material change
in the Issuer's business or corporate structure; (g) any change in the Issuer's
certificate of incorporation or bylaws or other actions which may impede the
acquisition of control of the Issuer by any person; (h) causing a class of
securities of the Issuer to be delisted from a national securities exchange; (i)
a class of equity securities of the Issuer becoming eligible for termination of
registration pursuant to Section 12(g)(4) of the Act; or (j) any action similar
to any of the foregoing. However, such plans or proposals may from time to time
hereafter be considered by such persons in their capacities as directors or
officers of the Issuer.
Item 5. Interest in Securities of the Issuer.
Item 5 of this Statement is hereby amended and restated in its entirety to
read as follows:
(a) and (b) Following the acquisition of Common Stock and warrants to
purchase Common Stock referenced in Item 4 of this Amendment No. 1, Mashov
Computers is the beneficial owner of 2,227,897 shares of Common Stock, including
56,818 shares issuable upon the exercise of warrants. These 2,227,897 shares
represent approximately 62.3% of the shares of Common Stock currently
outstanding plus those issuable upon exercise of such warrants. By virtue of its
control of the voting securities of Mashov Computers, Formula Systems may be
- 12 -
<PAGE>
considered to share with Mashov Computers the power to vote or dispose of any
the interests that Mashov Computers holds in the Issuer.
To the best knowledge of Formula Systems, none of its directors and
officers are beneficial owners of shares of Common Stock. To the best knowledge
of Mashov Computers, its directors and officers are beneficial owners (each with
sole voting and dispositive power) of the shares of Common Stock set forth
below:
Number of Shares of
Director/Officer: Common Stock:
- ----------------- -------------
Roy Machnes 26,201
Jack Dunietz 73,258
David Assia 14,785
In addition, Roy Machnes and Elan Penn are the holders of incentive stock
options (the "Stock Options") granted in connection with their employment as
Chief Executive Officer and (formerly) Chief Financial Officer, respectively.
Such Stock Options vest according to the following schedules: Roy Machnes:
Vesting Date of Number of Options
Options Vesting on Such Date Exercise Price
- ------- -------------------- --------------
August 1, 1997: 13,541 $4.67
August 1, 1998: 13,541 $4.67
November 12, 1998 15,000 $5.25
August 1, 1999: 13,541 $4.67
May 12, 1999 15,000 $5.25
May 12, 2000 15,000 $5.25
- 13 -
<PAGE>
Elan Penn:
Vesting Date of Number of Options
Options Vesting on Such Date Exercise Price
- ------- -------------------- --------------
August 1, 1997: 8,333 $4.67
August 1, 1998: 8,333 $4.67
November 12, 1998 7,500 $5.25
August 1, 1999: 8,333 $4.67
May 12, 1999 7,500 $5.25
May 12, 2000 7,500 $5.25
The exercise prices of the Stock Options were determined on the date of
grant based on the fair market value of the Common Stock. The Stock Options are
exercisable for a period of five years from the date on which such options vest,
or until 3 months after the date of any termination of employment, whichever is
earlier.
(c) On December 14, 1998, Mashov Computers, Roy Machnes, Jack Dunietz and
David Assia acquired the number of shares of Common Stock set forth below in
connection with a distribution of Common Stock by way of a dividend by Mashov
Computers Marketing Ltd., a majority-owned subsidiary of Mashov Computers, of
all of the Common Stock owned by Mashov Computers Marketing Ltd. to its public
shareholders.
Number of Shares of
Common Stock
Shareholder of Issuer Acquired in Distribution
- --------------------- ------------------------
Mashov Computers 1,937,237
Roy Machnes 26,201
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<PAGE>
Number of Shares of
Common Stock
Shareholder of Issuer Acquired in Distribution
- --------------------- ------------------------
Jack Dunietz 73,258
David Assia 14,785
In addition, on December 22, 1998, Mashov Computers purchased 11,075 shares
of Common Stock for $4.00 per share from Atmor, an unaffiliated Israeli
corporation.
(d) Reference is made to Items 5 (a), (b) and (c) of this Amendment No. 1.
(e) Not applicable.
Item 7. Material to be Filed as Exhibits.
Item 7 of this Amendment No. 1 is hereby amended and restated in its
entirety to read as follows:
1 - Securities Purchase Agreement dated January 27, 1999 by
and among Special Situations Fund III, L.P., Special
Situations Cayman Fund, L.P., Special Situations Private
Equity Fund, L.P. and Mashov Computers Ltd.
2 - Agreement between Mashov Computers and Formula Systems
dated February 4, 1999, Consenting to Joint Filing of
Schedule 13D
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<PAGE>
SIGNATURE
After reasonable inquiry and to the best of their knowledge and belief,
each of the undersigned certifies that the information set forth in this
Statement is true, complete and correct.
Date: February 4, 1999
MASHOV COMPUTERS LTD.
By: /s/Jack Dunietz
-------------------
Chief Executive Officer
FORMULA SYSTEMS (1985) LTD.
By: /s/Dan Goldstein
--------------------
Chief Executive Officer
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<PAGE>
EXHIBIT 1
---------
SPECIAL SITUATIONS FUND III, L.P.
SPECIAL SITUATIONS CAYMAN FUND, L.P.
SPECIAL SITUATIONS PRIVATE EQUITY FUND, L.P.
---------------------
MASHOV COMPUTERS LTD.
---------------------
SECURITIES PURCHASE AGREEMENT
---------------------
This Securities Purchase Agreement (this "Agreement") is made as of January
27, 1999 by and among Special Situations Fund III, L.P., Special Situations
Cayman Fund, L.P. and Special Situations Private Equity Fund, L.P. (each, a
"Seller") and Mashov Computers Ltd. ("Purchaser").
WHEREAS, Purchaser wishes to purchase and each Seller wishes to sell
certain securities of Mentortech, Inc. ("Mentortech") as set forth in this
Agreement.
NOW, THEREFORE, to effect such purchase and sale and in consideration of
the mutual representations, warranties and agreements hereinafter set forth and
intending to be legally bound by this Agreement, Purchaser and each Seller agree
as follows:
1. Sale and Purchase. Each Seller agrees to sell to Purchaser and Purchaser
agrees to purchase from each Seller the number of shares of the common stock of
Mentortech (the "Common Stock") and, if applicable, warrants to purchase shares
of common stock of Mentortech (the "Warrants", and together with the Common
Stock and any shares of common stock of Mentortech underlying the Warrants, the
"Securities") set forth beside the name of each Seller on Schedule A attached
hereto ("Schedule A"), for the aggregate purchase price (the "Purchase Price")
set forth beside the name of each Seller on Schedule A, on the terms and
conditions set forth in this Agreement. The Warrants shall be subject to the
terms of the Warrant Agreement by and between Mentortech and Special Situations
Private Equity Fund, L.P. dated December 10, 1997, a copy of which is attached
hereto as Exhibit A.
2. Payment of Purchase Price; Transfer of Securities. On a mutually agreed
upon date (the "Closing Date"), Purchaser shall pay to each Seller the Purchase
Price in immediately available or next day funds, as the parties hereto shall
agree, to such account as each Seller shall designate, against delivery in
escrow by each Seller to a law firm mutually agreeable to the parties hereto of
a certificate for the Common Stock and, if applicable, a certificate for the
Warrants, with such stock powers and assignment forms necessary to transfer to
Purchaser good and marketable title to the Securities.
<PAGE>
3. Representations and Warranties of Seller. Each Seller represents and
warrants to Purchaser as follows:
(a) Each Seller has full power and authority to execute, deliver and
perform under this Agreement and any documents necessary to transfer to
Purchaser good and marketable title to the Securities (collectively, the
"Transaction Documents") and to consummate the transactions contemplated
thereby and to perform its obligations thereunder.
(b) The execution, delivery and performance of the Transaction
Documents by each Seller and the consummation by each Seller of the
transactions contemplated therein have been duly authorized by all
necessary action on the part of each Seller. As of the Closing Date, the
Transaction Documents will be duly executed and delivered by each Seller.
Upon due execution, the Transaction Documents will constitute the valid and
binding obligations of each Seller enforceable against each Seller in
accordance with their terms, except insofar as enforcement may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium and other
laws affecting the rights of creditors generally and by the discretion of
courts in granting equitable remedies.
4. Representations and Warranties of Purchaser. Purchaser represents and
warrants to each Seller as follows:
(a) Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Israel with full power and
authority, corporate and other, to execute, deliver and perform under this
Agreement and to consummate the transactions contemplated hereby and to
perform its obligations hereunder.
(b) The execution, delivery and performance of this Agreement by
Purchaser and the consummation by Purchaser of the transactions
contemplated herein have been duly authorized by all necessary corporate
action on the part of Purchaser. Upon due execution, this Agreement will
constitute the valid and binding obligations of Purchaser enforceable
against Purchaser in accordance with its terms, except insofar as
enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the rights of creditors
generally and by the discretion of courts in granting equitable remedies.
(c) Purchaser will not sell or otherwise transfer the Securities
without registration under the Securities Act of 1933, as amended (the
"Securities Act") and any applicable state securities laws or an exemption
therefrom. Purchaser represents that Purchaser is purchasing the Securities
for Purchaser's own account, for investment and not with a view to resale
or distribution except in compliance with the Securities Act and such "blue
sky" laws as may be applicable. Purchaser has not offered or sold any
portion
<PAGE>
of the Securities being acquired nor does Purchaser have any present
intention of dividing such securities with others or of selling,
distributing or otherwise disposing of any portion of such securities
either currently or after the passage of a fixed or determinable period of
time or upon the occurrence or non-occurrence of any predetermined event or
circumstance in violation of the Securities Act.
This Agreement may be signed in counterparts.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
SPECIAL SITUATIONS FUND III, L.P.
By: /s/Austin Marxe
-------------------
General Partner
SPECIAL SITUATIONS CAYMAN FUND, L.P.
By: /s/Austin Marxe
-------------------
General Partner
SPECIAL SITUATIONS PRIVATE EQUITY
FUND, L.P.
By: /s/Austin Marxe
-------------------
General Partner
MASHOV COMPUTERS LTD.
By: /s/Elan Penn
----------------
Chief Financial Officer
By: /s/Jack Dunietz
-------------------
Chief Executive Officer
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Shares of Number of
Seller: Common Stock: Warrants: Purchase Price:
- ------ ------------ -------- --------------
<S> <C> <C> <C>
Special Situations Fund III, L.P. 56,899 None $184,921.75
Special Situations Cayman Fund, L.P. 18,966 None $ 61,639.50
Special Situations Private Equity
Fund, L.P. 113,636 56,818 $499,998.40
</TABLE>
<PAGE>
EXHIBIT A
<PAGE>
WARRANT AGREEMENT
-------------------------------------------
MENTORTECH INC.
-------------------------------------------
THIS WARRANT AGREEMENT (this "Agreement") dated as of December 10, 1997 is
made by and between Mentortech Inc., a corporation organized under the laws of
the State of Delaware (the "Company"), and Special Situations Private Equity
Fund, L.P. (the "Warrantholder").
Subject to the terms and conditions hereof, the Company agrees to issue to
the Warrantholder, pursuant to a subscription agreement by and between the
Company and the Warrantholder dated as of December 10, 1997 (the "Subscription
Agreement"), warrants as hereinafter described (the "Warrants") to purchase up
to an aggregate of 454,545 shares of the common stock of the Company, par value
$.01 per share (the "Common Stock"), at a Warrant Price of U.S. $0.55 per share
of Common Stock, subject to adjustment pursuant to Section 8 hereof. The
Warrants shall be subject to call by the Company as provided in Section 7
hereof. As used herein (i) the terms "Share" or "Shares" shall mean collectively
the Common Stock issuable upon exercise of the Warrants together with any other
securities issuable upon such exercise as provided in Section 8 of this
Agreement; (ii) the term "Warrants" shall include any and all warrants
outstanding pursuant to this Agreement, including those evidenced by a
certificate or certificates issued upon division, exchange or substitution
pursuant to this Agreement; and (iii) the term "Warrant Price" shall mean the
price per share of Common Stock at which the Common Stock shall at any time be
purchasable upon exercise of the Warrants. In addition to the adjustments
provided in Section 8 hereof, any fixed dollar per share amounts referenced in
this Agreement shall be appropriately adjusted for any stock splits,
subdivisions, stock dividends or stock distributions, combinations,
reclassifications or consolidations or other changes to the Company's capital
structure. Terms which are capitalized but not defined herein shall have the
same meanings as in the Subscription Agreement. The issuance of the Warrants
shall occur on each Closing Date, as provided in the Subscription Agreement upon
receipt of payment therefor. Except where otherwise specified, the terms of this
Agreement shall apply to all registered holders of Warrants.
For the purpose of defining the terms and provisions of the Warrants and
the respective rights and obligations thereunder, the Company and the
Warrantholder, for value received, hereby agree as follows:
<PAGE>
Section 1. Transferability and Form of Warrants.
1.1. Registration. The Warrants shall be numbered and shall be registered
on the books of the Company when issued, in accordance with Delaware corporate
practice.
1.2. Transfer. The Warrants shall be transferable only on the books of the
Company maintained at its principal office in New York, New York or wherever its
principal office may then be located, upon delivery thereof duly endorsed by the
Warrantholder seeking such transfer or by its duly authorized attorney or
representative, accompanied by proper evidence of succession, assignment or
authority to transfer. Upon any registration of transfer, the Company shall
execute and deliver new Warrants to the person entitled thereto.
1.3. Form of Warrants. The form of certificate evidencing the Warrants
shall be substantially as set forth in Exhibit 1 attached hereto. Certificates
evidencing the Warrants shall be executed on behalf of the Company by its
Chairman, President or by any Vice President, shall be attested to by its
Secretary or any Assistant Secretary, and shall be dated as of the date of
execution thereof.
1.4. Legend on Warrants and Shares. The Warrants, and the Shares issuable
upon the exercise thereof, have not been registered under the Securities Act of
1933, as amended (the "Securities Act"). Each certificate for the Warrants shall
bear the following legend:
"THE WARRANTS REPRESENTED BY THIS CERTIFICATE, AND THE
COMMON STOCK ISSUABLE UPON EXERCISE OF SUCH WARRANTS, HAVE
NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933 OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES. SUCH WARRANTS MAY NOT BE SOLD, AS SIGNED, EXCHANGED
OR OTHERWISE TRANSFERRED IN ANY MANNER AND SUCH COMMON STOCK
MAY NOT BE OFFERED FOR SALE, SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE."
And each certificate for the Shares shall bear the following legend:
"THE COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAS NOT
BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933 OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED
<PAGE>
STATES AND MAY NOT BE OFFERED FOR SALE, SOLD OR TRANSFERRED
IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution pursuant to a registration statement under the
Securities Act of the securities represented thereby) shall also bear a like
legend unless, in the opinion of the Company's counsel, the securities
represented thereby need no longer be subject to such restrictions.
Section 2. Exchange of Warrant Certificate. Any Warrant certificate may be
exchanged for another certificate or certificates entitling a Warrantholder to
purchase a like aggregate number of Shares as the certificate or certificates
surrendered then entitles such Warrantholder to purchase. Any Warrantholder
desiring to exchange a Warrant certificate shall make such request in writing
delivered to the Company, and shall surrender, properly endorsed, the
certificate evidencing the Warrant to be so exchanged. Thereupon, the Company
shall execute and deliver to the person entitled thereto a new Warrant
certificate as so requested.
Section 3. Term of Warrants; Exercise of Warrants; Market Price
(a) Subject to the terms of this Agreement, each Warrantholder shall have
the right, at any time during the period commencing at 9:00 a.m., Eastern Time,
on December 10, 1997 (the "Commencement Date") and ending at 5:00 p.m., Eastern
Time, on December 9, 1999 (the "Termination Date"), to purchase from the Company
up to the number of fully paid and nonassessable Shares which such Warrantholder
may at the time be entitled to purchase pursuant to this Agreement, upon
surrender to the Company at its principal office of the certificates evidencing
the Warrants to be exercised, with the purchase form duly completed and signed,
and upon payment to the Company of the Warrant Price (as determined in
accordance with the provisions of Section 8 hereof) for the number of Shares in
respect of which such Warrants are then exercised, but in no event for fewer
than 100 Shares (unless fewer than an aggregate of 100 Shares are then
purchasable under all outstanding Warrants held of record by a Warrantholder).
The Termination Date shall be extended for such number of days as (i) the Shares
are not covered by and may not be sold pursuant to an effective registration
statement under the Securities Act for any reason whatsoever (including, without
limitation, any stop order or suspension), (ii) the Common Stock is not listed
and trading on any national exchange or on the Nasdaq Stock Market, or is not
traded on the Nasdaq OTC Bulletin Board, or (iii) the Shares are not listed on
the principal exchange on which the Common Stock is listed or the Nasdaq Stock
Market, if the Common Stock is listed thereon, or are not eligible for trading
on the Nasdaq OTC
<PAGE>
Bulletin Board, and for a period of 30 days thereafter. Payment of the aggregate
Warrant Price shall be made in cash or by certified or cashier's check or any
combination thereof.
(b) Upon surrender of Warrant certificates and payment of the Warrant
Price, the Company shall issue and cause to be delivered with all reasonable
dispatch to or upon the written order of a Warrantholder, and (subject to
Section 11 hereof) in such name or names as such Warrantholder may designate, a
certificate or certificates for the number of full Shares so acquired upon the
exercise of the Warrant, together with cash, as provided in Section 9 hereof, in
respect of any fractional Shares otherwise issuable upon such surrender. Such
certificate or certificates shall be deemed to have been issued and any person
so designated to be named therein shall be deemed to have become a holder of
record of such Shares as of the date of surrender of the Warrants being
exercised and payment of the Warrant Price notwithstanding that the certificate
or certificates representing such securities shall not actually have been
delivered or that the stock transfer books of the Company shall then be closed.
The Warrants shall be exercisable at the election of a Warrantholder either in
full or from time to time in part and, in the event that a certificate
evidencing Warrants is exercised in respect of fewer than all of the Shares
specified therein at any time prior to the Termination Date, a new certificate
evidencing the remaining portion of the Warrants shall be issued by the Company.
(c) For all purposes of this Agreement, the term "Market Price" as of any
specified date shall mean: (i) if the Common Stock is listed or admitted for
trading on one or more United States national securities exchanges, the daily
closing price for the Common Stock on that of such exchanges as may be
designated by the Board of Directors of the Company (the "Board") as the
principal exchange in the United States on which the Common Stock is listed;
(ii) if the Common Stock is not listed or admitted for trading on any United
States national securities exchange, the daily closing bid price for the Common
Stock on the Nasdaq National or SmallCap Market ("Nasdaq"); or (iii) if the
Common Stock is not listed or admitted for trading on a United States national
securities exchange or on Nasdaq, the closing bid price of the Common Stock on
the Nasdaq OTC Bulletin Board as reported by the National Quotation Bureau Inc.
In the event that it is impracticable for the Board to establish the Market
Price of the Common Stock pursuant to this Section 3 on any specified date, the
"Market Price" shall be determined in good faith by the Board, such
determination to be conclusive.
Section 4. Payment of Taxes. The Company will pay all taxes and fees, if
any, attributable to the initial issuance of the Warrants or the issuance of the
Shares upon exercise of the Warrants, except that the Company shall not be
required to pay any tax or fee which may be payable in respect of any secondary
transfer of the Warrants or such Shares.
Section 5. Mutilated or Missing Warrants. In case the certificate or
certificates evidencing any Warrants shall be mutilated, lost, stolen or
destroyed, the Company shall, at the request of the affected Warrantholder,
issue and deliver in exchange and substitution for and upon
<PAGE>
cancellation of the mutilated certificate or certificates, or in lieu of and
substitution for the certificate or certificates lost, stolen or destroyed, a
new Warrant certificate or certificates of like tenor and representing an
equivalent right or interest, but only upon receipt of evidence satisfactory to
the Company of the loss, theft or destruction of such Warrant and, if requested,
at the cost and expense of the Warrantholder, a bond of indemnity in form and
amount satisfactory to the Company. Applicants for such substitute Warrant
certificates shall also comply with such other reasonable regulations as the
Company may prescribe.
Section 6. Reservation of Shares. There has been reserved, and the Company
shall at all times keep reserved so long as any Warrants remain outstanding, out
of its authorized share capital, such number of shares of Common Stock as shall
be subject to purchase under all outstanding Warrants. Every transfer agent for
the Common Stock and other securities of the Company issuable upon the exercise
of Warrants will be irrevocably authorized and directed at all times to reserve
such number of authorized shares of Common Stock and other securities as shall
be requisite for such purpose. The Company will supply every such transfer agent
with duly executed stock and other certificates, as appropriate, for such
purpose and will provide or otherwise make available any cash which may be
payable as provided in Section 9 hereof.
Section 7. Callability of Warrants.
(a) The Warrants shall, at the option of the Company, be subject to
call, at a price of U.S. $.01 per Warrant outstanding (the "Call Price"),
any time that the Market Price (as such term is defined in Section 3(c)
hereof) of the Common Stock has closed at or above U.S. $1.00 for any 20
consecutive trading day period. Such call may only be made by the Company
within 15 business days after the Common Stock has closed at or above U.S.
$1.00 for any such 20 consecutive trading day period.
(b) In the event that the Company shall exercise its right to call the
Warrants pursuant to this Section 7, the Company shall cause written notice
of such intention to call the Warrants to be delivered to the Warrantholder
by first-class mail at the last address of the Warrantholder as then
registered on the books of the Company not less than 30 days prior to the
date on which the Warrants shall be called for redemption (the "Call Date")
and the Call Price shall be paid to the Warrantholder by cash or check for
the number of Warrants then held by the Warrantholder.
(c) Upon due receipt of the notice referred to in Section 7(b), the
Warrantholder shall have the right to exercise the Warrants in accordance
with Section 3(a) hereof, provided that the Warrantholder shall exercise
such right prior to the Call Date. In the event that the Warrantholder
fails to exercise its right to exercise the Warrants in accordance with
Section 3(a) prior to the Call Date, upon due payment of the Call Price,
<PAGE>
the Company and the Warrantholder shall have no further obligations under
this Agreement.
(d) Notwithstanding the foregoing, no day may be taken into account
either (i) as a date on which the Market Price of the Common Stock closed
at or above U.S. $1.00 for purposes of Section 7(a), or (ii) as part of the
30-day period, set forth in Section 7(b), between the date the Company
notifies the Warrantholder of its intention to call the Warrants and the
Call Date (i.e., such 30-day period shall be suspended on each day during
such period) if (i) all Shares are not covered by and may not be sold
pursuant to an effective registration statement under the Securities Act
for any reason whatsoever, (ii) the Common Stock is not listed and trading
on any national exchange or on the Nasdaq Stock Market, or is not traded on
the Nasdaq OTC Bulletin Board, or (iii) the Shares are not listed on the
principal exchange on which the Common Stock is listed or the Nasdaq Stock
Market, if the Common Stock is listed thereon, or are not eligible for
trading on the Nasdaq OTC Bulletin Board.
Section 8. Adjustment of Number and Kind of Securities. The Warrant Price
and the number and kind of securities purchasable upon the exercise of the
Warrants shall be subject to adjustment from time to time upon the happening of
certain events, as follows:
8.1. Adjustments.
(a) In case the Company shall (i) pay a dividend in Common Stock or
make a distribution in Common Stock, (ii) subdivide its outstanding Common
Stock, (iii) combine its outstanding Common Stock into a smaller number of
shares of Common Stock, or (iv) issue, by reclassification of its Common
Stock, other securities of the Company, the number of shares of Common
Stock or other securities purchasable upon exercise of the Warrants
immediately prior thereto shall be adjusted so that each Warrantholder
shall be entitled to receive the kind and number of shares of Common Stock
or other securities of the Company which it would have owned or would have
been entitled to receive immediately after the happening of any of the
events described above, had the Warrants been exercised immediately prior
to the happening of such event or any Record Date (as defined below) with
respect thereto. For purposes hereof, "Record Date" shall mean the date of
closing the transfer books of the Company for the determination of the
shareholders entitled to any relevant dividend, distribution, subscription
rights or other rights or for the determination of shareholders entitled to
vote on any proposed merger, dissolution, liquidation or winding up of the
Company. Any adjustment made pursuant to this subsection 8.1(a) shall
become effective immediately on the effective date of such event
retroactive to the Record Date, if any, for such event.
<PAGE>
(b) In the event the Company shall issue or sell any shares of Common
Stock for a consideration per share less than the Warrant Price in effect
immediately prior to such issue or sale, then the Warrant Price in effect
immediately prior to such issue or sale, shall be reduced to such lesser
price calculated to the nearest cent) as shall be determined prior thereto
by a fraction, the numerator of which shall be the sum of (i) the number of
shares of Common Stock outstanding immediately prior to the issuance or
sale of such additional shares and (ii) the number of shares of Common
Stock which the aggregate consideration received for the issuance or sale
of such additional shares would purchase at the Warrant Price then in
effect, and the denominator of which shall be the number of shares of
Common Stock outstanding immediately after the issuance or sale of such
additional shares.
(c) For the purpose of subsection 8.1(b), the following subparagraphs
(i) to (iii), inclusive, shall be applicable:
(i) If at any time the Company shall issue or sell any rights to
subscribe for, or any rights or options to purchase, Common Stock or
any stock or other securities convertible into or exchangeable for
Common Stock (such convertible or exchangeable stock or securities
being hereinafter called "Convertible Securities"), whether or not
such rights or options or the right to convert or exchange any such
Convertible Securities shall be immediately exercisable, and the price
per share for which Common Stock shall be issuable upon the exercise
of such rights or options or upon conversion or exchange of such
Convertible Securities (determined by dividing (1) the total amount,
if any, received or receivable by the Company as consideration for the
granting of such rights or options, plus the minimum aggregate amount
of additional consideration payable to the Company upon the exercise
of such rights or options, plus, in the case of any such rights or
options which shall relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable upon the
issue or sale of such Convertible Securities and upon the conversion
or exchange thereof, by (2) the total number of shares of Common Stock
issuable upon the exercise of such rights or options or upon the
conversion or exchange of all such Convertible Securities issuable
upon the exercise of such rights or options) shall be less than the
Warrant Price in effect immediately prior to the time of the issue or
sale of such rights or options, then the total number of shares of
Common Stock issuable upon the exercise of such rights or options or
upon conversion or exchange of the total amount of such Convertible
Securities issuable upon the exercise of such rights or options shall
(as of the date of granting of such rights or options) be deemed to be
outstanding and to have been issued for such price per share, and
except as provided in Section 8.1(i) below, no further adjustments of
the Warrant Price shall be made upon the actual issue of such Common
Stock
<PAGE>
or of such Convertible Securities, upon the exercise of such rights or
options or upon the actual issue of such Common Stock upon conversion
or exchange of such Convertible Securities.
(ii) If at any time the Company shall issue or sell any
Convertible Securities, whether or not the rights to exchange or
convert thereunder shall be immediately exercisable, and the price per
share for which Common Stock shall be issuable upon such conversion or
exchange (determined by dividing (1) the total amount received or
receivable by the Company as consideration for the issue or sale of
such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (2) the total number of shares of
Common Stock issuable upon the conversion or exchange of all such
Convertible Securities) shall be less than the Warrant Price in effect
immediately prior to the time of such issue or sale, then the total
number of shares of Common Stock issuable upon conversion or exchange
of all such Convertible Securities shall (as of the date of the issue
or sale of such Convertible Securities) be deemed to be outstanding
and to have been issued for such price per share, and, except as
provided in Section 8.1(i) below, no further adjustments of the
Warrant Price shall be made upon the actual issue of such Common Stock
upon conversion or exchange of such Convertible Securities. In
addition, if any issue or sale of such Convertible Securities shall be
made upon exercise of any rights to subscribe for or to purchase or
any option to purchase any such Convertible Securities for which
adjustments of the Warrant Price shall have been or shall be made
pursuant to other provisions of this subsection 8.1(c), no further
adjustment of the Warrant Price shall be made by reason of such issue
or sale.
(iii) If at any time the Company shall set a Record Date for the
purpose of entitling holders of Common Stock (1) to receive a dividend
or other distribution payable in Common Stock or in Convertible
Securities, or (2) to subscribe for or purchase Common Stock or
Convertible Securities, then such Record Date shall be deemed to be
the date of the issue or sale of the shares of Common Stock deemed to
have been issued or sold upon the declaration of such dividend or the
making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.
(d) In case the Company shall distribute to all or substantially all
holders of its Common Stock evidences of its indebtedness or assets
(excluding cash dividends or distributions out of earnings) or rights,
options, warrants or convertible securities containing the right to
subscribe for or purchase shares of Common Stock (excluding those referred
to in subsection 8.1(b) above and rights in connection with a shareholder
<PAGE>
rights plan), then in each case the number of Shares thereafter purchasable
upon the exercise of the Warrants shall be determined by multiplying the
number of Shares theretofore purchasable upon exercise of the Warrants by a
fraction, of which the numerator shall be the then effective Warrant Price
as of the date of such distribution calculated pursuant to this Section 8,
and of which the denominator shall be such then effective Warrant Price on
such date minus the then Fair Value (determined as provided below) of the
portion of the assets or evidences of indebtedness so distributed or of
such subscription rights, options, warrants or convertible securities
applicable to one share. Such adjustment shall be made whenever any such
distribution is made and shall become effective on the date of distribution
retroactive to the Record Date for the determination of shareholders
entitled to receive such distribution.
For all purposes of this Agreement, "Fair Value" shall be determined
in good faith by the Board, such determination to be conclusive.
(e) No adjustment in the number of Shares purchasable pursuant to the
Warrants shall be required unless such adjustment would require an increase
or decrease of at least one percent in the number of Shares then
purchasable upon the exercise of the Warrants; provided that any
adjustments which by reason of this subsection 8.1(e) are not required to
be made immediately shall be carried forward and taken into account in any
subsequent adjustment.
(f) Whenever the number of Shares purchasable upon the exercise of a
Warrant is adjusted, as herein provided, the Warrant Price payable upon
exercise of such Warrant shall be adjusted by multiplying such Warrant
Price immediately prior to such adjustment by a fraction, of which the
numerator shall be the number of Shares purchasable upon the exercise of
the Warrant immediately prior to such adjustment, and of which the
denominator shall be the number of Shares so purchasable upon the exercise
of the Warrant immediately thereafter. In addition, whenever the Warrant
Price shall be adjusted, the number of Shares purchasable upon exercise
hereof simultaneously shall be adjusted by multiplying the number of Shares
issuable immediately prior to such adjustment by the Warrant Price in
effect immediately prior to such adjustment and dividing the product so
obtained by the Warrant Price, as adjusted.
(g) Whenever the number of Shares purchasable upon the exercise of
Warrants, and/or the Warrant Price, are adjusted as herein provided, the
Company shall cause to be promptly mailed to the Warrantholders by first
class mail, postage prepaid, notice of such adjustment and a statement of
the chief accounting officer of the Company setting forth the number of
Shares purchasable upon the exercise of the Warrants and the Warrant Price
after such adjustment, a brief statement of the facts requiring such
adjustment, and the computation by which such adjustment was made.
<PAGE>
(h) For the purpose of this subsection 8.1, the term Common Stock
shall mean (i) the class of Common Stock designated as the Common Stock of
the Company at the date of this Agreement, or (ii) any other class of
shares resulting from successive changes or reclassification of the Common
Stock consisting solely of changes in par value, or from par value to no
par value, or from no par value to par value. In the event that at any
time, as a result of an adjustment made pursuant to this Section 8, a
Warrantholder shall become entitled to purchase any securities of the
Company other than Common Stock, (i) if the Warrantholders' right to
purchase is on any other basis than that available to all holders of the
Common Stock, the Board shall determine the Fair Value of such other
securities and (ii) thereafter the number of such other securities so
purchasable upon exercise of the Warrants shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock contained in
this Section 8.
(i) Upon the expiration of any rights, options, warrants or conversion
privileges, if such shall not have been exercised, the number of Shares
purchasable upon exercise of the Warrants, to the extent the Warrants have
not then been exercised, shall, upon such expiration, be readjusted and
shall thereafter be such as they would have been had they been originally
adjusted (or had the original adjustment not been required, as the case may
be) on the basis of (A) the fact that the only shares of Common Stock so
issued were the shares of Common Stock, if any, actually issued or sold
upon the exercise of such rights, options, warrants or conversion
privileges, and (B) the fact that such shares of Common Stock, if any, were
issued or sold for the consideration actually received by the Company upon
such exercise plus the consideration, if any, actually received by the
Company for the issuance, sale or grant of all such rights, options,
warrants or conversion privileges whether or not exercised; provided,
however, that no such readjustment shall have the effect of decreasing the
number of Shares purchasable upon exercise of the Warrants by an amount in
excess of the amount of the adjustment initially made in respect of the
issuance, sale or grant of such rights, options, warrants or conversion
privileges.
8.2. No Adjustment for Dividends. Except as provided in subsection 8.1, no
adjustment to the Warrants or any provision or condition thereof in respect of
any dividends or distributions out of earnings of the Company shall be made
during the term of the Warrants or upon the exercise of Warrants.
8.3 No Adjustment in Certain Cases. No adjustment shall be made pursuant to
Section 8 hereof in connection with the grant or exercise of options to purchase
Common Stock under any of the Company's employee benefit plans existing as of
the date hereof.
8.4. Preservation of Purchase Rights upon Reclassification, Consolidation,
etc. In case of any consolidation of the Company with or merger of the Company
into another entity or in
<PAGE>
case of any sale or conveyance to another entity of the property, assets or
business of the Company as an entirety or substantially as an entirety, the
Company or such successor or purchasing entity, as the case may be, shall
execute with the Warrantholders an agreement that the Warrantholders shall have
the right thereafter, upon exercise of the Warrants and payment of the Warrant
Price in effect immediately prior to such consolidation, merger or sale, to
purchase the kind and amount of shares and other securities and property which
it would have been entitled to receive after the happening of such
consolidation, merger, sale or conveyance had the Warrants been exercised
immediately prior thereto. In the event of a merger described in Section
368(a)(2)(E) of the Internal Revenue Code of 1986 (or any successor provision),
in which the Company is the surviving corporation, the right to purchase Shares
under the Warrants shall terminate on the date of such merger and thereupon the
Warrants shall become null and void, but only if the controlling corporation
(after such event) shall agree to substitute for the Warrants its warrants
entitling the holder thereof to purchase the kind and amount of shares and other
securities and property which it would have been entitled to receive had the
Warrants been exercised immediately prior to such merger. Any such agreements
referred to in this subsection 8.4 shall provide for adjustments, which shall be
as nearly equivalent as may be practicable to the adjustments provided for in
Section 8 hereof, and shall contain substantially the same terms, conditions and
provisions as are contained herein immediately prior to such event. The
provisions of this subsection 8.4 shall similarly apply to successive
consolidations, mergers, sales or conveyances.
8.5. Nominal Value of Common Stock. Before taking any action which would
cause an adjustment effectively reducing the portion of the Warrant Price
allocable to each share of Common Stock below the then nominal value per share
of Common Stock issuable upon exercise of the Warrants, the Company will take
any corporate action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully-paid and
nonassessable Shares upon exercise of the Warrants.
8.6. Independent Public Accountants. The Company may retain a firm of
independent public accountants of recognized national standing in the United
States (which may be any such firm regularly employed by the Company) to make
any computation required under this Section 8, and a certificate signed by such
firm shall be evidence of the correctness of any computation made under this
Section 8.
8.7. Statement on Warrant Certificates. Irrespective of any adjustments in
the number of securities issuable upon exercise of the Warrants, Warrant
certificates theretofore or thereafter issued may continue to express the same
number of securities as are stated in the similar Warrant certificates initially
issuable pursuant to this Agreement. However, the Company may, at any time in
its reasonable discretion, make any change in the form of the Warrant
certificate that it may deem appropriate and that does not affect the substance
thereof; and any Warrant certificate
<PAGE>
hereafter issued, whether upon registration of transfer of, or in exchange or
substitution for, an outstanding Warrant certificate, may be in the form so
changed.
Section 9. Fractional Interests. The Company shall not be required to issue
fractional Shares upon the exercise of any Warrant. If any fraction of a Share
would, except for the provisions of this Section 9, be issuable on the exercise
of any Warrant (or specified portion thereof), the Company shall pay an amount
in cash equal to the Market Price (of the Common Stock for the 20 consecutive
trading days immediately preceding the date the certificates evidencing the
Warrants to be exercised are received by the Company at its principal office)
multiplied by such fraction.
Section 10. No Rights as Shareholder; Notices to Warrantholders. Nothing
contained in this Agreement or in the Warrants shall be construed as conferring
upon the Warrantholder or any transferee of any rights as a shareholder of the
Company, including (without limitation) the right to vote, receive dividends,
consent or receive notices as a shareholder in respect of any meeting of
shareholders for the election of directors of the Company or any other matter.
If, however, at any time prior to the expiration of the Warrants and prior to
their exercise in full, any one or more of the following events shall occur:
(a) any action which would require an adjustment pursuant to
Section 8.1 or 8.4; or
(b) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation, merger or sale of its
property, assets and business as an entirety or substantially as an
entirety) shall be proposed;
then the Company shall give notice in writing of such event to each of the
Warrantholders, as provided in Section 13 hereof, at least 20 days prior to the
date fixed as the Record Date. Such notice shall specify such Record Date.
Failure to mail or receive such notice or any defect therein shall not affect
the validity of any action taken with respect thereto.
Section 11. Restrictions on Transfer. The Warrantholder agrees and
undertakes that if the Warrantholder proposes to sell or otherwise transfer any
Warrants or Shares issuable upon exercise thereof, and if such Shares are not
then registered for resale pursuant to an effective registration statement under
the Securities Act, the Warrantholder proposing to make such transfer shall give
written notice to the Company describing briefly the manner in which any such
proposed transfer is to be made and no such transfer shall be made unless the
Company shall have received an opinion of counsel for the Warrantholder
reasonably acceptable to the Company, that registration under the Securities Act
is not required with respect to such transfer.
Section 12. Registration Rights.
<PAGE>
12.1 Registration Statement. The Company shall:
(a) no later than 45 calendar days following the Final Closing,
prepare and file with the Securities and Exchange Commission (the
"Commission") a registration statement (the "Registration Statement")
covering the resale of the Shares issuable upon exercise of the Warrants by
the Warrantholder from time to time on the Nasdaq OTC Bulletin Board, or on
such securities market or system on which the Common Stock shall then be
publicly traded, or in privately negotiated transactions;
(b) use its best efforts, subject to receipt of necessary information
from the Warrantholder, to cause the Registration Statement to become
effective as soon as possible thereafter;
(c) prepare and file with the Commission such supplements and
amendments to the Registration Statement and the prospectus used in
connection therewith as may be necessary to comply with the provisions of
the Securities Act until the later of such time as all of the Shares have
been sold pursuant thereto or, by reason of Rule 144(k) under the
Securities Act or any other rule of similar effect, such Shares are no
longer required to be registered for the unrestricted sale thereof by the
Warrantholder;
(d) furnish to the Warrantholder such number of copies of prospectuses
and preliminary prospectuses in conformity with the requirements of the
Securities Act and such other documents as the Warrantholder may reasonably
request, in order to facilitate the public sale or other disposition of all
or any of the Shares held by the Warrantholder, provided, however, that the
obligation of the Company to deliver copies of prospectuses or preliminary
prospectuses to the Warrantholder shall be subject to the receipt by the
Company of reasonable assurances from the Warrantholder that the
Warrantholder will comply with the applicable provisions of the Securities
Act and of such other securities or blue sky laws as may be applicable in
connection with any use of such prospectuses or preliminary prospectuses;
(e) file documents required of the Company for normal blue sky
clearance in all states, provided, however, that the Company shall not be
required to qualify to do business or consent to service of process in any
jurisdiction in which it is not now so qualified or has not so consented;
(f) bear all expenses in connection with the procedures in paragraphs
(a) through (e) of this Section 12.1, other than brokerage commissions or
placement agent fees and fees and expenses, if any, of counsel or other
advisers to the Warrantholder with respect to the registration and resale
of the Shares; and
<PAGE>
(g) prepare and file additional listing applications for the Shares on
the Nasdaq National or SmallCap Market or other exchange if the Shares are
admitted for trading on such exchange.
(h) use its best efforts to have the Registration Statement (or any
supplement or amendment to the Registration Statement, if applicable)
declared effective by the Commission as soon as practicable after the
filing thereof, but in no event later than 120 calendar days following the
Final Closing (the "First Target Effective Date"). If the Registration
Statement (or any supplement or amendment to the Registration Statement, if
applicable) is not declared effective by the First Target Effective Date,
the Company shall use its best efforts to have the Registration Statement
(or any supplement or amendment to the Registration Statement, if
applicable) declared effective by the Commission as soon as practicable
after the First Target Effective Date, but in no event later than 180
calendar days following the Final Closing (the "Second Target Effective
Date"). If the Registration Statement (or any supplement or amendment to
the Registration Statement, if applicable) is not declared effective by the
Second Target Effective Date, the Company shall use its best efforts to
have the Registration Statement (or any supplement or amendment to the
Registration Statement, if applicable) declared effective by the Commission
as soon as practicable after the Second Target Effective Date, but in no
event later than 270 calendar days following the Final Closing (the "Final
Target Effective Date"). If the Registration Statement (or any supplement
or amendment to the Registration Statement, if applicable) has not become
effective by the First Target Effective Date, then the Warrantholder shall
be entitled to receive, in addition to any other remedies available at law
or in equity, such number of Warrants equal to 10% of the Warrants then
held by the Warrantholder. If the Registration Statement (or any supplement
or amendment to the Registration Statement, if applicable) has not become
effective by the Second Target Effective Date, then the Warrantholder shall
be entitled to receive, in addition to any other remedies available at law
or in equity, such number of Warrants equal to 10% of the Warrants then
held by the Warrantholder (including any Warrants issued upon the penalty
for missing the First Target Effective Date, if any). If the Registration
Statement (or any supplement or amendment to the Registration Statement, if
applicable) has not become effective by the Final Target Effective Date,
then Warrantholder shall be entitled to receive, in addition to any other
remedies available at law or in equity, such number of Warrants equal to
10% of the Warrants then held by the Warrantholder (including any Warrants
issued upon the penalty for missing the First Target Effective Date and the
Second Target Effective Date, if any). The number of Warrants that shall be
used to calculate any payment under this Section 12.1(h) shall be
appropriately adjusted for any stock splits, subdivisions, stock dividends
or stock distributions, combinations, reclassifications or consolidations
or other changes to the Company's capital structure. The Company shall
issue and deliver the Warrants required to be delivered by the Company
hereunder to the Warrantholder within 20 days following
<PAGE>
the First Target Effective Date, the Second Target Effective Date and the
Final Target Effective Date, as the case may be.
The Company understands that the Warrantholder disclaims being an
underwriter, but the Warrantholder being deemed an underwriter shall not relieve
the Company of any of its obligations hereunder.
12.2 Limitations on Transfer. The Warrantholder agrees that it will not
effect any disposition of the Shares that would constitute a sale within the
meaning of the Securities Act except as contemplated in the Registration
Statements referred to in Section 12.1 or pursuant to an available exemption
from registration under the Securities Act and applicable state securities laws,
and further that as a condition to inclusion of the Shares in the Registration
Statement the Warrantholder agrees to provide to the Company such information as
it may reasonably request in order to include such Shares in such Registration
Statement.
12.3 Prospectus Delivery Requirements. The Warrantholder agrees not to make
any sale of the Shares, pursuant to the Registration Statement referred to in
Section 12.1 without effectively causing the prospectus delivery requirements
under the Securities Act to be satisfied. The Warrantholder acknowledges that
there may occasionally be times when the Company must suspend the use of the
prospectus forming a part of the Registration Statement until such time as an
amendment to such Registration Statement has been filed by the Company and
declared effective by the Commission or until the Company has amended or
supplemented such prospectus. In the event that the Registration Statement has
been suspended, the Company shall provide written notice of such suspension to
the selling shareholders listed in the Registration Statement. In the event that
such Registration Statement is no longer subject to such suspension, the Company
shall provide written notice to such selling Shareholders that such Selling
Shareholder may thereafter effect sales pursuant to said Registration Statement.
12.4 Indemnification and Contribution.
(a) For the purpose of this Section 12.4:
(i) the term "Selling Shareholder" shall mean any person or entity
selling Common Stock pursuant to the Registration Statement, and any
affiliate thereof;
(ii) the term "Registration Statement" shall include any preliminary
prospectus, final prospectus, exhibit, supplement or amendment
included in or relating to the Registration Statement; and
<PAGE>
(iii) the term "untrue statement" shall mean any untrue statement or
alleged untrue statement of a material fact in the Registration
Statement, or any omission or alleged omission to state in the
Registration Statement a material fact required to be stated therein
or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) The Company agrees to indemnify and hold harmless each Selling
Shareholder from and against any losses, claims, damages or liabilities to
which such Selling Shareholder may become subject (under the Securities Act
or otherwise) insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) arise out of, or are based upon,
any untrue statement, or arise out of any failure by the Company to fulfill
any undertaking included herein or in the Registration Statement, and the
Company promptly will reimburse such Selling Shareholder for any legal or
other expenses reasonably incurred in investigating, defending or preparing
to defend any such action, proceeding or claim; provided, however, that the
Company shall not be liable in any such case to the extent that such loss,
claim, damage or liability arises out of, or is based upon, an untrue
statement made in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such Selling Shareholder
specifically for use in preparation of the Registration Statement, or the
failure of such Selling Shareholder to comply with the covenants and
agreements contained herein; provided further, that the indemnification
contained in this Section 12.4 with respect to any prospectus after it has
been amended or supplemented, shall not inure to the benefit of any Selling
Shareholder (or any person controlling such Selling Shareholder) from whom
the person asserting such loss, claim, damage, or liability shall have
purchased Common Stock, that are the subject thereof if, after copies
thereof have been delivered by the Company to such Selling Shareholder,
such Selling Shareholder shall have failed to send or give a copy of the
prospectus as then amended or supplemented, as the case may be, to such
person at or prior to the confirmation of such sale of such Common Stock,
to such person, and, if such loss, claim, damage or liability would not
have arisen but for the failure of such Selling Shareholder to deliver the
same.
(c) The Warrantholder agrees to indemnify and hold harmless the
Company (and each other person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act, each officer of the Company
who signs the Registration Statement and each director of the Company) from
and against any losses, claims, damages or liabilities to which the Company
(or any such officer, director or controlling person) may become subject
(under the Securities Act or otherwise), insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise
out of, or are based upon, any failure of the Warrantholder to comply with
its covenants and agreements contained herein, or any untrue statement if
such untrue statement was made in reliance upon and in conformity with
written information furnished by or on behalf of the
<PAGE>
Warrantholder specifically for use in preparation of the Registration
Statement, and the Warrantholder promptly will reimburse the Company (or
such officer, director or controlling person), as the case may be, for any
legal or other expenses reasonably incurred in investigating, defending or
preparing to defend any such action, proceeding or claim.
(d) Promptly after receipt by any indemnified person of a notice of a
claim or the beginning of any action in respect of which indemnity is to be
sought against an indemnifying person pursuant to this Section 12.4, such
indemnified person shall notify the indemnifying person in writing of such
claim or of the commencement of such action, and, subject to the provisions
hereinafter stated, in case any such action shall be brought against an
indemnified person and such indemnifying person shall have been notified
thereof, such indemnifying person shall be entitled to participate therein,
and, to the extent it shall wish, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified person. After notice
from the indemnifying person to such indemnified person of its election to
assume the defense thereof, such indemnifying person shall not be liable to
such indemnified person for any legal expenses subsequently incurred by
such indemnified person in connection with the defense thereof. In the
event that the indemnifying party shall have assume the defense of such
action, such indemnifying party shall not enter into any compromise or
settlement without the indemnified party's prior written consent, which
consent shall not be unreasonably withheld, delayed or denied.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Section
12.4 is due in accordance with its terms but for any reason is held to be
unavailable or insufficient to hold harmless an indemnified party, the
Company on the one hand and the Warrantholder on the other hand shall, in
lieu of indemnifying such indemnified party, contribute to the aggregate
losses, claims, damages or liabilities referred to in this Section 12.4
(including costs of any investigation and legal and other expenses
reasonably incurred in connection therewith, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted), in
such proportions as is appropriate to reflect the relative benefits
received by the Company and the Warrantholder from any offering of Common
Stock and the relative fault of the Company and the Warrantholder in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of the Company and the
Warrantholder shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or
omission related to information supplied by the Company (including for this
purpose information supplied by any officer, director, employee or agent of
the Company) or to written information furnished to the Company by or on
behalf of the Warrantholder specifically for use in the preparation of the
Registration Statement or any amendment thereof or supplement thereto, and
the
<PAGE>
parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. Notwithstanding the
provisions of this Section 12.4 in no case shall the Warrantholder be
liable or responsible for any amount in excess of the proceeds received by
the Warrantholder from the sale of the Registerable Shares included in the
Registration Statement, provided, however, that 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. For purposes of this
Section 12.4, each person, if any, who controls the Warrantholder within
the meaning of Section 15 of the Securities Act or Section 20(a) of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act") shall
have the same rights to contribution as the Warrantholder, and each person,
if any, who controls the Company within the meaning of the Section 15 of
the Securities Act or Section 20(a) of the Exchange Act, each director of
the Company and each officer of the Company who shall have signed the
Registration Statement shall have the same rights to contribution as the
Company, subject to the immediately preceding sentence of this Section
12.4. Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party
in respect of which a claim for contribution may be made against another
party or parties under this Section 12.4, notify such party or parties from
whom contribution may be sought, and the omission so to notify such party
or parties from whom contribution may be sought shall relieve the party or
parties from whom contribution may be sought (if such party was unaware of
such action, suit, or proceeding and was materially prejudiced by such
omission) from any liability under this Section 12.4, but not from any
other obligation it or they may have hereunder or other than under this
Section 12.4. No party shall be liable for contribution with respect to the
settlement of any action, suit, proceeding or claim effected without its
written consent. The obligations of the Warrantholder to contribute
pursuant to this Section 12.4 are several in proportion to its respective
number of Registerable Shares included in the Registration Statement and
not joint.
12.5 Elimination of Transfer Restrictions. The limitations imposed by
Section 12.2 upon the transferability of the Shares shall cease and terminate as
to any particular Shares when such Shares shall have been effectively registered
under the Securities Act and sold or otherwise disposed of in accordance with
the intended method of disposition set forth in the Registration Statement or at
such time as an opinion of counsel of the Warrantholder satisfactory to the
Company shall have been rendered to the effect that such restrictions are not
necessary in order to comply with the Securities Act.
12.6 Furnishing of Information. The Company shall:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 promulgated under the Securities Act
("Rule 144");
<PAGE>
(b) file with the Commission 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 the Warrantholder, promptly upon request, (i) a written
statement by the Company that it has complied with the reporting
requirements of the Securities Act and the Exchange Act, (ii) a copy of the
most recent annual or periodic report of the Company and such other reports
and documents so filed by the Company and (iii) such other information as
may be reasonably requested to permit the Warrantholder to sell such
securities pursuant to Rule 144 without registration.
Section 13. Notices. Any notice pursuant to this Agreement shall be in
writing and shall be deemed to have been duly given (i) if given by facsimile
transmission on the business day on which such transmission is sent and
confirmed, (ii) if given by air courier, two business days following the date it
was sent or (iii) if mailed by certified mail, return receipt requested, ten
business days following the date it was mailed, to the following addresses
(unless another address is herein specified):
If to the Warrantholder:
To the address of the Warrantholder as shown on the books of the Company.
With a copy to:
Brean Murray & Co., Inc.
570 Lexington Avenue, 11th Floor
New York, New York 10022
Attention: Ms. Joan Finsilver, Re: Mentortech Inc.
Facsimile#: (212) 702-6548
If to the Company, addressed to:
Mentortech Inc.
462 Seventh Avenue
New York, New York 10018
Attention: President
Facsimile#: (212) 736-9046
Each party may from time to time change the address or fax number to which
notices to it are to be delivered or mailed hereunder by notice in accordance
herewith to the other party.
Section 14. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company and the Warrantholder shall bind and inure
to the benefit of their respective successors and assigns.
<PAGE>
Section 15. Applicable Law. This Agreement shall be deemed to be a contract
made under the laws of the state of New York and for all purposes shall be
construed in accordance with the internal laws of said sate (without reference
to its rules as to conflicts of laws).
Section 16. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Warrantholder any legal or equitable right, remedy or claim under this
Agreement. This Agreement shall be for the sole and exclusive benefit of the
Company and the Warrantholder.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, all as of the date and year first above written.
MENTORTECH INC.
By: /s/Terry Steinberg
----------------------
Terry Steinberg
Vice President
SPECIAL SITUATIONS PRIVATE EQUITY FUND L.P.
By: MG Advisors, L.L.C.
General Partner
By: /s/David M. Greenhouse
--------------------------
David M. Greenhouse
Member
<PAGE>
[FORM OF WARRANT CERTIFICATE]
EXHIBIT 1
"THE WARRANTS REPRESENTED BY THIS CERTIFICATE, AND THE COMMON
STOCK ISSUABLE UPON EXERCISE OF SUCH WARRANTS, HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 OR
THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. SUCH
WARRANTS MAY NOT BE SOLD, ASSIGNED, EXCHANGED OR OTHERWISE
TRANSFERRED IN ANY MANNER AND SUCH COMMON STOCK MAY NOT BE
OFFERED FOR SALE, SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE."
Warrant Certificate No. _____
MENTORTECH INC.
(ORGANIZED UNDER THE LAWS
OF THE STATE OF DELAWARE)
WARRANTS TO PURCHASE COMMON STOCK
This certifies that, for value received, _____________________ (the
"Warrantholder") is the registered owner of ___ warrants (the "Warrants") to
purchase from Mentortech Inc. (the "Company"), at any time prior to 5:00 p.m.,
Eastern Time, on December 9, 1999 (the "Termination Date"), one share of common
stock of the Company, par value $0.01 per share (the "Common Stock") at an
initial purchase price of U.S. $0.55 per share of Common Stock (the "Warrant
Price"). The Warrants are subject to, and each Warrantholder, by acceptance of
this certificate, consents to, all the terms and provisions of, the Warrant
Agreement dated as of December 10, 1997, by and between the Company and the
Warrantholder, pursuant to which the Warrants were issued (the "Warrant
Agreement"). Any capitalized terms used herein and not defined herein shall have
the
<PAGE>
meanings assigned to such terms in the Warrant Agreement. The Termination Date
may be extended for a further period as provided in Section 3 of the Warrant
Agreement.
The Warrants evidenced hereby may be exercised in whole or in part by
presentation of this Warrant Certificate with the Purchase Form herein duly
executed, and simultaneous payment of the Warrant Price for each Warrant
exercised, at the principal office of the Company. Payment of such price shall
be made at the option of each Warrantholder in cash or by certified or cashier's
check.
Upon any partial exercise of the Warrants evidenced hereby, there shall be
signed and issued to the Warrantholder effecting such partial exercise a new
Warrant Certificate in respect of the Common Stock as to which the Warrants
evidenced hereby shall not have been exercised. These Warrants may be exchanged
at the office of the Company by surrender of this Warrant Certificate properly
endorsed for one or more new Warrants of the same aggregate number of shares of
Common Stock as here evidenced by the Warrant or Warrants exchanged. No
fractional shares of Common Stock will be issued upon the exercise of rights to
purchase hereunder, but the Company shall pay the cash value of any fraction
upon the exercise of one or more Warrants. These Warrants are transferable at
the office of the Company in the manner and subject to the limitations set forth
in the Warrant Agreement.
This Warrant Certificate does not entitle any Warrantholder to any of the
rights of a shareholder of the Company.
[This space intentionally left blank.]
<PAGE>
MENTORTECH INC.
By: /s/Terry I. Steinberg
-------------------------
Vice President
ATTEST:
By: /s/ Adrienne Haber
- ----------------------
Assistant Secretary
Dated: December 10, 1997
<PAGE>
PURCHASE FORM
Mentortech Inc.
462 Seventh Avenue
New York, New York 10018
Pursuant to Section 3 of the Warrant Agreement, the undersigned hereby
irrevocably elects to exercise the right of purchase represented by this Warrant
Certificate for, and to purchase thereunder, __________ shares of Common Stock
provided for therein, and requests that certificates for such Common Stock be
issued in the name of:
-----------------------------------
(Please Print or Type Name(s), Address and Taxpayer Identification Number(s))
-----------------------------------
-----------------------------------
-----------------------------------
If this Warrant Certificate is hereby being exercised with respect to fewer than
all the shares of Common Stock specified herein, please issue a new Warrant
Certificate for the unexercised balance of the Warrants, registered in the name
of the undersigned Warrantholder or his assignee as below indicated and
delivered to the address stated below.
Dated: _______________________
Name of Warrantholder(s)
or Assignee(s) (Please Print): _____________________________
-----------------------------
Address (Please Print): ______________________________________
----------------------------------------------
Signature(s): ______________________________________________
----------------------------------------------
Note: The above signature(s) must correspond exactly with the
name(s) as written upon the face of this Warrant Certificate, without
alteration or enlargement or any change whatever, unless these Warrants
have been assigned.
<PAGE>
ASSIGNMENT
(To be signed only upon assignment of Warrants)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
-----------------------------------
-----------------------------------
-----------------------------------
(Name(s) and Address(es) of Assignee(s) Must be Printed or Typewritten)
the within Warrants, hereby irrevocably constituting and appointing
________________________ the undersigned's attorney-in-fact to transfer said
Warrants on the books of the Company, with full power of substitution.
Dated: __________ ___________________________________
-----------------------------------
Signature(s) of Registered Holder(s)
Note: The above signature(s) must correspond exactly with the
name(s) as written upon the face of this Warrant Certificate, without
alteration or enlargement or any change whatever.
<PAGE>
EXHIBIT 2
---------
AGREEMENT CONSENTING TO JOINT FILING OF SCHEDULE 13D
THIS AGREEMENT is made on February 4, 1999 between Mashov Computers Ltd.
("Mashov Computers") and Formula Systems (1985) Ltd. ("Formula Systems", and
collectively, the "Parties").
WHEREAS, Mashov Computers is the beneficial owner of greater than 5% of the
Common Stock of Mentortech Inc. (the "Issuer");
WHEREAS, under the Securities Exchange Act of 1934, as amended (the "Act"),
and the Rules and Regulations promulgated thereunder, Mashov Computers is
required to file a Schedule 13D with the Securities and Exchange Commission (the
"Commission") and the Issuer; and
WHEREAS, Formula Systems is the beneficial owner of approximately 45% of
the voting securities of Mashov Computers, and by virtue of such voting control
is required by the Rules promulgated under the Act to file a Schedule 13D with
the Commission in respect of the securities of the Issuer beneficially owned by
Mashov Computers; and
WHEREAS, the Parties desire that a joint statement on Schedule 13D be filed
on their behalf.
NOW THEREFORE, for good and valuable consideration, the sufficiency of
which is hereby acknowledged, the Parties hereby agree as follows:
1. Each of Mashov Computers and Formula Systems consent to the filing of
a joint statement on Schedule 13D on behalf of each of them.
2. The Parties agree that this Agreement may be executed in counterparts.
IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement
as of the date first above written.
MASHOV COMPUTERS LTD.
By: /s/Jack Dunietz
-------------------
Chief Executive Officer
FORMULA SYSTEMS (1985) LTD.
By: /s/Dan Goldstein
--------------------
Chief Executive Officer
