As filed with the Securities and Exchange Commission on April 11, 2000
Registration No.333-__________
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM S-3
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
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MAGNITUDE INFORMATION SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 75-2228828
(State of Incorporation) (I.R.S. EmployeeIdentification No.)
50 Tannery Road, Suite 8, Branchburg, New Jersey 08876,
(908)534-6400
-----------
(Address, including zip code, and telephone number,
including area code, of Rregistrant's
principal executive offices)
STEVEN D. RUDNIK
PRESIDENT AND CHIEF EXECUTIVE OFFICER
MAGNITUDE INFORMATION SYSTEMS, INC.
50 TANNERY ROAD, SUITE 8
BRANCHBURG, NEW JERSEY 08876
(908) 534-6400
-----------
(Address, including zip code, and telephone number,
including area code, or agent for service)
----------------
COPIES TO:
JOSEPH J. TOMASEK, ESQ.
75-77 NORTH BRIDGE
SOMERVILLE, NEW JERSEY 08876
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time
to time after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans,check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the Securities Act of 1933 registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, check the following box and list the
Securities Act of 1933 registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
<PAGE>
CALCULATION OF REGISTRATION FEE
================================================================================
PROPOSED PROPOSED
TITLE OF MAXIMUM MAXIMUM MAXIMUM AMOUNT
SECURITIES AMOUNT OFFERING AGGREGATE OF
TO BE TO BE PRICE PER OFFERING REGISTRATION
REGISTERED(1) REGISTERED SHARE(1) PRICE(1) FEE(1)
- ---------------------------------------- ---------------------------------------
Common Stock 19,482,086 shares $ 1.91 $ 37,210,784 $11,276
$.0001 par value
per share
- --------------------------------------------------------------------------------
(1) Estimated solely for the purpose of computing the registration fee
required by Section 6(b) of the Securities Act and computed pursuant to
Rule 457(c) under the Securities Act based upon the average of the high
and low prices of the Common Stock on April 5, 2000 as reported on the
Electronic Bulletin Board over-the-counter market maintained by the
National Association of Securities Dealers, Inc. (the ANASD@).
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to such Section 8(a), may determine.
2
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<PAGE>
PRELIMINARY PROSPECTUS: SUBJECT TO COMPLETION April __, 2000
MAGNITUDE INFORMATION SYSTEMS, INC.
19,482,086 SHARES
COMMON STOCK
---------------
This is an offering of 19,482,086 shares of common stock of Magnitude
Information Systems, Inc. (the "Company"or"Magnitude") issued or issuable under
currently exercisable warrants, convertible preferred stock, convertible
preferred stock , convertible notes and stock options. The warrants, convertible
notes and stock options were issued by Magnitude to certain securityholders of
Magnitude in private transactions during the past two years. The shares of
common stock, either already issued or issuable upon the exercise of the
warrants and stock options or upon the conversion of the convertible notes, may
be sold from time to time by or on behalf of certain securityholders of
Magnitude. See "Selling Securityholders". Only the selling securityholders
identified in this prospectus are offering shares to be sold in the offering.
Magnitude is not selling any shares in the offering. Magnitude's common stock is
quoted on the Electronic Bulletin Board, over-the-counter market under the
symbol "MAGY". On April 5, 2000, the average of the high and low prices reported
of the common stock on the Electronic Bulletin Board was $1.91.
Magnitude will not receive any of the proceeds from the sale of the
common stock by the selling securityholders. Magnitude will receive the proceeds
from the cash exercise of any of the warrants and stock options. See "Use of
Proceeds". The selling stockholders may sell their shares from time to time
throughout the offering through any legally available means, including brokers
in public sales at market prices, directly or through agents in private sales at
negotiated prices. They may also sell shares in open market transactions in
reliance upon Rule 144 under the Securities Act, provided they comply with the
requirements of Rule 144.
You may contact Magnitude at Magnitude's principal executive offices
located at 50 Tannery Road, Suite 8, Branchburg, New Jersey 08876 or by phone at
(908)534-6400. Neither the Securities and Exchange Commission nor any other
regulatory body has approved or disapproved of these securities or passed upon
the accuracy or adequacy of this prospectus. Any representation to the contrary
is a criminal offense.
---------------
THIS INVESTMENT INVOLVES CERTAIN HIGH RISKS. SEE "RISK
FACTORS" BEGINNING ON PAGE 8.
---------------
The date of this prospectus is April __, 2000
The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not seeking an offer to buy these securities in
any state where the offer or sale is not permitted.
3
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports and other information with
the Securities and Exchange Commission. Our Securities and Exchange Commission
filings are available to the public over the Internet at the Securities and
Exchange Commission's web site at http://www.sec.gov. You may also read and copy
any document we file at the Securities and Exchange Commission's public
reference rooms located at 450 Fifth Street, N.W., Washington, DC 20549, and its
public reference facilities in New York, New York and Chicago, Illinois. Please
call the Securities and Exchange Commission at 1-800-SEC-0330 for further
information on the public reference rooms and their copy charges.
This prospectus is part of a Form S-3 registration statement that we
filed with the SEC. This prospectus provides you with a general description of
the securities that may be offered for sale, but does not contain all of the
information that is in the registration statement. To see more detail, you
should read the entire registration statement and the exhibits filed with the
registration statement. Copies of the registration statement and the exhibits
are on file at the offices of the Commission and may be obtained upon payment of
the fees prescribed by the Commission, or examined without charge at the public
reference facilities of the Commission described above.
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone to provide you with different information.
Neither Magnitude nor any selling securityholder is making an offer of
the securities covered by this prospectus in any state where the offer is not
permitted. You should not assume that the information in this prospectus or any
prospectus supplement or in any other document incorporated by reference in this
prospectus is accurate as of any date other than the date on the front of those
documents.
The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with them, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is an important part of this prospectus,
and information that we file later with the Securities and Exchange Commission
will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings made with the
Securities and Exchange Commission under Sections 13(a), 13(c), 14 and 15(d) of
the Securities Exchange Act of 1934 until the selling securityholders sell all
of the securities:
(a)(1) Our Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1999.
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<PAGE>
All future reports and definitive proxy or information statements filed
under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934,
after the date of this registration statement and prior to the filing of a
post-effective amendment which indicates that all securities offered by this
prospectus have been sold or which deregisters all securities then remaining
unsold shall be deemed to be incorporated by reference into this Registration
Statement and to be a part of this registration statement from the date of
filing of such documents.
Upon request, we will provide without charge a copy of this prospectus,
and a copy of any and all of the information that has been or may be
incorporated by reference in this prospectus. Requests for such copies should be
directed to Magnitude Information Systems, Inc., 50 Tannery Road, Suite 8,
Branchburg, New Jersey 08876 (telephone: 908-534-6400).
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have authorized no
one to provide you with different information. We are not making an offer of
these securities in any state where the offer is not permitted. You should not
assume that the information in this prospectus or any prospectus supplement is
accurate as of any date other than the date on the front of this document.
---------------
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<PAGE>
INFORMATION ABOUT MAGNITUDE
THE COMPANY
Magnitude Information Systems, Inc. (the "Company" or "Magnitude") was
incorporated as a Delaware corporation on April 19, 1988 under the name
Fortunistics Inc. On March 4, 1993, the Company changed its name to Whitestone
Industries, Inc.On July 14, 1997, the Company changed its name to Proformix
Systems, Inc., and on November 18, 1998, the Company changed its name to
Magnitude Information Systems, Inc. .
The Company's primary product is an integrated suite of proprietary
software modules marketed under the name "ErgoManagerTM" which are designed to
help individual computer users and businesses deal with potentially preventable
repetitive stress injury (RSI). These software modules can be applied
individually or together in a comprehensive ergonomic and early intervention
program that seeks to modify a user's behavior by monitoring computer usage
patterns over time and warning the user when to break a dangerous trend in
repetitive usage of an input device, such as a keyboard or mouse. The product
was developed to train people working on computers, monitor computer-use related
activities and evaluate a user's risk exposure and propensity towards injury or
loss of effectiveness in connection with his/her day-to-day work. Moreover, the
software enables a company to not only address the issue of health risks
involving employees and to minimize resulting potential liabilities, but
delivers a powerful tool to increase overall productivity.
BACKGROUND
On June 24, 1997, the Company entered into an acquisition agreement
whereby it acquired substantially all of the outstanding stock of Proformix,
Inc., a Delaware corporation and manufacturer of ergonomic keyboarding
systems.Proformix, Inc. in November 1998 changed its name to Magnitude, Inc. and
is hereafter referred to as Magnitude, Inc. The business combination took the
form of a reverse acquisition. The Company and Magnitude, Inc. remain as two
separate legal entities whereby Magnitude, Inc. operates as a subsidiary of
Magnitude Information Systems, Inc.. The operations of the newly combined entity
are currently comprised solely of the operations of Magnitude, Inc.
On February 2, 1998, the Company entered into an Agreement and Plan of
Merger with Rolina Corporation, a privately held New Jersey software development
firm, and on April 30, 1998, into an Asset Purchase Agreement with Vanity
Software Publishing Co., a Canadian developer of specialized software, whereby
the Company, in return for payments in form of cash and equity, acquired the
rights to certain software products and related assets, with such software
products subsequently forming the basis for the further development during the
year of the Company's proprietary ErgoManagerTM software product. The
ErgoManagerTM system was introduced to the market in November 1998 and has since
been expanded and enhanced through newer releases.
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<PAGE>
On November 18, 1998, the Company and its wholly owned subsidiary
Magnitude, Inc. entered into an Asset Purchase Agreement and several related
agreements with 1320236 Ontario Inc. ("OS"), a publicly traded Canadian
designer, manufacturer and distributor of office furniture pursuant to which OS
acquired Magnitude, Inc.'s hardware product line comprised of ergonomic keyboard
platform products and accessories, and all related inventory and production
tooling and warehousing assets, and all intellectual property rights including
the Proformix name, against a cash consideration and an ongoing contingent
stream of royalty payments on OS' sales of the Proformix hardware products. With
the sale of the hardware product line, the Company's business is now focused
exclusively on the further development and marketing of its new software
products. Recently proposed Federal OSHA workplace ergonomics regulations
involving mandatory compliance guidelines for industry where potentially
preventable repetitive stress injuries occur have opened a potentially very
large market for the Company's products. This development comes against the
backdrop of a Notice of Allowance by the US Patent and Trademark Office on the
Company's patent application for certain design principles underlying its
ErgoManagerTM software.
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<PAGE>
RISK FACTORS
You should carefully consider the risks described below when evaluating
your ownership of the Magnitude common stock. The risks and uncertainties
described below are not the only ones Magnitude faces. Additional risks and
uncertainties we are presently not aware of or that we currently consider
immaterial may also impair Magnitude's business operations.
If any of the following risks actually occurs, Magnitude's business,
financial condition or results of operations could be materially adversely
affected. In such case, the trading price of the Magnitude common stock could
decline significantly.
Risks Associated with Forward Looking Statements.
This prospectus contains "forward-looking statements" which can be
identified by the use of words such as "intend," "anticipate," "believe,"
"estimate," "project," or "expect" or similar statements. The statements in
"Risk Factors" are cautionary statements. They identify important factors with
respect to forward-looking statements, that could cause actual results to differ
materially from those forecasted in such statements. All forward-looking
statements in this prospectus are expressly qualified in their entirety by the
cautionary statements in this paragraph.
Substantial Losses - Lack of Profitability.
We have a history of losses and if we do not achieve profitability we
may not be able to continue our business in the future. We have incurred
substantial operating losses since our inception, which has resulted in an
accumulated deficit of approximately $11,298,013 as of December 31, 1999 of
which approximately $7 million are attributable to its discontinued hardware
product line. For the fiscal years ended December 31, 1999 and 1998, we incurred
losses of $2,391,948 and $2,530,909, respectively. We have financed our
operations primarily through the sales of equity and debt securities. Our
expense levels are high and our revenues are difficult to predict. We anticipate
incurring additional losses until we increase our client base and revenues. We
may never achieve or sustain significant revenues or profitability. If we are
unable to achieve increased revenues, we will continue to have losses and may
not be able to continue our operations.
Additional Financing Requirements.
We could be required to cut back or stop operations if we are unable to
raise or obtain needed funding. Our ability to continue operations will depend
on our positive cash flow, if any, from future operations or our ability to
raise additional funds through equity or debt financing. In February, 2000 we
received a firm commitment for private financing of $3.0 million of equity in
order to obtain the working capital necessary to continue to finance our
operations and execute our business plan. Although we anticipate that future
revenues and our current cash balance will be sufficient to fund our current
operations and capital requirements for the current fiscal year, we cannot give
you any assurance that we will not need additional funds before such time. We
have no current arrangements for additional financing and we may not be able to
obtain additional financing on commercially reasonable terms, if at all. We
could be required to cut back or stop operations if we are unable to raise or
obtain funds when needed.
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<PAGE>
Limited Operating History.
We have a limited operating history as a software product company and
have made only limited sales of our products. Our total revenues for software
sales and licenses for the years ended December 31, 1999 and 1998 were
approximately $260,703 and $72,486, respectively.
Uncertainty of Market Acceptance.
Our revenues depend on sales of our specialized software products and
we are uncertain whether there will be broad market acceptance of these
products. Our revenue growth for the foreseeable future is largely dependent
upon increased sales of our ErgoManagerTM suite of software products. Since the
introduction of our ErgoManagerTM software products in November, 1998 and
through December 31, 1999 revenue from our software products has been
approximately $270,000 (prior to this time, we had sales of approximately
$63,000 based upon a predecessor version of the ErgoManagerTM software}. Our
future financial performance will depend upon the successful introduction and
customer acceptance of our ErgoManagerTM software products as well as the
development of new and enhanced versions of this product as well as other
related software products that may be developed in the future. Revenue from
products such as ErgoManagerTM depend on a number of factors, including the
influence of market competition, technological changes in the ergonomic
workplace market, our ability to design, develop and introduce enhancements on a
timely basis and our ability to successfully establish and maintain distribution
channels. If we fail to achieve broad market acceptance of our ErgoManagerTM
products, it would have a material adverse effect on our business, operating
results and financial condition.
Lack of Distribution Network and Strategic Relationships.
Inability to enter into strategic relationships with indirect channel
partners could have a material adverse effect on us. As part of our sales and
marketing efforts, we are seeking to develop strategic relationships with
indirect channel partners, such as original equipment manufacturers and
resellers. We have limited financial, personnel and other resources to undertake
extensive marketing activities ourselves. Therefore, our software products will
depend on our ability to develop and maintain strategic marketing relationships
with indirect channel partners and their ability to market and distribute our
software products. If we are unable to enter into and maintain such arrangements
or if such arrangements do not result in the successful commercialization of our
software products, then this could have a material adverse effect on our
business, operating results and financial condition.
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Possible Loss of Entire Investment.
The common stock offered hereby is highly speculative,
involves a high degree of risk and should not be purchased by any person who
cannot afford the loss of his entire investment. A purchase of our common stock
in this offering would be unsuitable for a person who cannot afford to sustain
such a loss.
Dependence Upon Key Personnel.
We are substantially dependent upon the continued services of
Steven D. Rudnik, our President and Chief Executive Officer. The loss of the
services of Mr. Rudnik through incapacity or otherwise would have a material
adverse effect upon our business and prospects. To the extent that his services
become unavailable, we will be required to retain other qualified personnel, and
there can be no assurance that we will be able to recruit and hire qualified
persons upon acceptable terms. We do not maintain key person life and disability
insurance on the life of Mr. Rudnik.
In addition, we believes that our future prospects will depend in large
part upon our ability to attract, train and retain highly-skilled technical,
managerial, sales and marketing personnel. However, competition for personnel in
the software industry is intense, and, at times, we have had difficulty locating
candidates with appropriate qualifications within various desired geographic
locations, or with certain industry-specific expertise. If our competitors
increase their use of non-compete agreements, the pool of available technical
personnel may further narrow in certain jurisdictions, even if the non-compete
agreements are ultimately unenforceable. The failure to attract, train, retain
and manage productive sales and sales support personnel would have a material
adverse effect on our business, financial condition and results of operations.
If we lose the services of one or more of our key employees, our
business, operating results, financial condition or business prospects could be
materially adversely affected. We have several programs in place to retain key
personnel, including granting of stock options that vest annually over four or
five years. A number of key employees have vested stock options with exercise
prices lower than our current stock price. These potential gains provide these
employees the economic freedom to explore personal objectives both within and
outside of our Company, which may result in the loss of one or more key
employees during the coming years.
It is widely recognized that the software industry in which we compete
is at or beyond a condition of full employment. We may not be able to attract,
train and retain the personnel it requires to develop, market, sell and support
new or existing software or to continue to grow. Also, to penetrate successfully
key vertical markets, we must attract, train and retain personnel with
industry-specific expertise.
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<PAGE>
Penny Stock Regulations
The Securities Enforcement Penny Stock Act of 1990 requires
specific disclosure to be made available in connection with trades in the stock
of companies defined as "penny stocks". The Commission has adopted regulations
that generally define a penny stock to be any equity security that has a market
price of less than $5.00 per share, subject to certain exceptions. Such
exceptions include any equity security listed on NASDAQ and any equity security
issued by an issuer that has (I) net tangible assets of at least $2,000,000, if
such issuer has been in continuous operation for three years; (ii) net tangible
assets of at least $5,000,000, if such issuer has been in continuous operation
for less than three years; or (iii) average annual revenue of at least
$6,000,000, if such issuer has been in continuous operation for less than three
years. Unless an exception is available, the regulations require the delivery,
prior to any transaction involving a penny stock, of a disclosure schedule
explaining the penny stock market and the risk associated therewith aswell as
the written consent of the purchaser of such security prior to engaging in a
penny stock transaction. The regulations on penny stocks may limit the ability
of the purchasers of our securities to sell their securities in the secondary
marketplace. Our common stock is currently considered a penny stock.
There is Intense Competition in the Industry
The market for ergonomic application software is expected to become
intensely competitive. Although we are not aware of any ergonomic software that
competes with our ErgoManagerTM software products currently, competitors will
certainly enter this marketplace. Although we believe our success will be due in
part to our early entry into the computer workplace market, we expect other
software product manufacturers to develop and sell similar products.
Intense competition could lead to increased price competition in the
market, forcing us to reduce prices. As a result, our gross margins may decline
and we may lose our first-to-market advantage which, in turn, could have a
material adverse effect on our business, financial condition and results of
operations. In addition, we may be unable to compete successfully with any new
competitors.
Magnitude Has Limited Protection of Intellectual Property and Proprietary Rights
and May Potentially Infringe Third Party Intellectual Property Rights
We consider certain aspects of our software and documentation to be
proprietary, and rely on a combination of contract, patent, copyright, trademark
and trade secret laws and other measures to protect this information.
Outstanding applications may not result in issued patents and, even if issued,
the patents may not provide any meaningful competitive advantage. Existing
copyright laws afford only limited protection. We believe that the rapid pace of
technological change in the computer software industry has made patent, trade
secret and copyright protection less significant than factors such as:
o knowledge, ability and experience of our employees;
o frequent software product enhancements; and
o timeliness and quality of support services.
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<PAGE>
Patent, trade secret and copyright protections may be inadequate, and
our competitors may independently develop ergonomic software products that are
substantially equivalent or superior to our software products. We do not believe
that our software products, our trademarks or other proprietary rights infringe
on the property rights of any third parties. However, third parties may assert
infringement claims against us and our products. These assertions could require
us to enter into royalty arrangements or could result in costly litigation.
Magnitude May Experience Product Liability Claims
Although our license agreements contain provisions designed to limit
our exposure to potential product liability claims, these provisions could be
invalidated by unfavorable judicial decisions or by federal, state or local laws
or ordinances. Although we have not experienced any product liability claims to
date, use of our software in mission critical applications may create a risk
that a third party may pursue a claim against us. Although we carry product
liability insurance, if a product liability claim against us was successful, the
resulting damages or injunctive relief could have a material adverse affect on
our business, financial condition and results of operations.
Our Stock Price is Volatile and There is a Risk of Litigation
The trading price of our common stock has in the past and may in the
future be subject to wide fluctuations in response to factors such as the
following:
o revenue or results of operations in any quarter failing to
meet the expectations, published or otherwise, of the
investment community;
o announcements of technological innovations by us or our
competitors;
o new products or the acquisition of significant customers by
us or our competitors;
o developments with respect to patents, copyrights or other
proprietary rights by us or our competitors;
o changes in recommendations or financial estimates by
securities analysts;
o conditions and trends in the software industry generally;
o adoption of new accounting standards affecting the software
industry; and
o general market conditions and other factors.
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<PAGE>
Further, the stock market has experienced in recent months and may
continue in the future to experience extreme price and volume fluctuations that
particularly affect the market prices of equity securities of high technology
companies that often are not related to or are disproportionate to the operating
performance of such companies. These broad market fluctuations, as well as
general economic, political and market conditions have, and may continue to
have, a material adverse effect on the trading price of our common stock.
Fluctuations in the price of our common stock may expose us to the risk of
securities class action lawsuits. We cannot assure you that there will not be
lawsuits in the future or that future lawsuits will not have a material adverse
effect on our business, financial condition and results of operations.
There Could Be Adverse Effects of Potential Securities Issuances
Of the 19,482,086 common shares offered in this prospectus, 4,572,332
of these Common Shares have already been issued to the selling securityholders.
If the selling securityholders were to exercise their rights under their
warrants, convertible notes, convertible preferred stock and stock options to
purchase or convert into the remaining 14,909,754 common shares offered in this
prospectus and then sell them, the market price of our common stock could be
materially adversely affected. As of March 31, 2000, the substantial majority of
the warrants, convertible preferred stock, convertible notes and stock options
had exercise prices below the current market price of our common stock.
USE OF PROCEEDS
The selling securityholders will receive the net proceeds from the sale
of common stock. Magnitude will not receive any of the proceeds from any sale of
the shares by the selling securityholders. Magnitude will receive the proceeds
from the cash exercise of any of the warrants and stock options and intends to
use any such cash proceeds received for general corporate purposes, which may
include repaying indebtedness, making additions to its working capital, funding
future acquisitions or for further developing its products and hiring additional
personnel.
SELLING SECURITYHOLDERS
All of the common stock offered is either already issued or is issuable
under currently exercisable warrants and stock options or pursuant to
convertible notes and convertible preferred stock issued by Magnitude to the
selling securityholders in private transactions exempt from the registration
requirements of the Securities Act pursuant to the private placement exemption
of Section 4(2). Magnitude may from time to time supplement or amend this
prospectus, as required, to provide other information with respect to the
selling securityholders.
The following table sets forth certain information regarding ownership of
Magnitude's common stock by the selling securityholders as of March 31, 2000,
including their names, and the number of shares of common stock owned by them
and offered pursuant to this prospectus. The selling securityholders listed in
the table do not necessarily intend to sell any of their shares. Magnitude filed
the registration statement, which includes this prospectus due to the
registration rights granted to the selling securityholders, not because they had
expressed an intent to immediately sell their shares. Holders of approximately
7,000,000 shares of the 19,482,086 shares in this offering have agreed not to
sell such shares for a period of one year.
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<TABLE>
<CAPTION>
Name of No. of Transaction
Selling Beneficial Holdings Common Shares Summary % of Class
Securityholder Before the Offering Offered Hereby Note Exhibits after Offering
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<S> <C> <C> <C> <C> <C>
929595 Ontario Ltd. 760 380 (9) 4.23 **
Abrams, P. 11,400 5,700 (9) 4.23 **
Alexander, I. 3,376 1,688 (9) 4.23 **
Angelastri, I. 850,000 600,000 (6) 4.9;4.12 **
Angelastri, I. (see above} 250,000 (10) **
Angelastri-Keller, S. 200,000 200,000 (6) 4.9;4.12 **
Aniso Stiftung 404,664 404,664 (6) 4.9;4.12 **
Barbaro, R.D. in Trust 22,392 11,196 (9) 4.23 **
Benoliel, I. 1,646 823 (9) 4.23 **
Blue Fuel Corporation 2,306 1,153 (9) 4.23 **
Brandstatter, A. 2,306 1,153 (9) 4.23 **
Brant Investment Ltd. 53,146 26,573 (9) 4.23 **
Burri, E. 200,000 200,000 (13) 4.9;4.14 **
Carrel, R. 500,100 333,400 (13) 4.15;4.18 **
Carrel, R. (see above} 166,700 (13) 4.9 **
Carter, G. 14,819 14,819 (9) 4.23 **
Christoph, M. 100,000 100,000 (6) 4.9;4.12 **
Corbett, W.&M. 100,000 100,000 (14) 4.19 **
Cumming, F. 33,619 5,000 (10) **
Curtis, J. 2,470 1,235 (9) 4.23 **
Cynamon Holding Corp. 8,232 4,116 (9) 4.23 **
Dean, M. 100,000 100,000 (5) 4.3 **
Dellelce, P. 1,646 823 (9) 4.23 **
Duncan, J. 210,000 500,000 (10) **
ES-LEA Holdings Ltd. 15,072 7,536 (9) 4.23 **
Ferrier Lullin Bank&Trust 4,940 2,470 (9) 4.23 **
Fiala, D. 14,819 14,819 (9) 4.23 **
Fireworks Creative Inc. 658 329 (9) 4.23 **
First Marathon Sec. 9,351 3,523 (9) 4.23 **
GGD Associates 275,000 275,000 (10) **
Gray, S. 537,000 537,000 (5) 4.3 **
Groconi Holdings, Inc. 1,120 560 (9) 4.23 **
Heuberger, R. 200,000 200,000 (6) 4.9;4.12 **
Hinst, R. 100,000 100,000 (5) 4.3 **
Jackson Hewitt Invest.Svc 400,000 400,000 (8) 4.3;4.13 **
Keenan, L. 6,838 3,419 (9) 4.23 **
Kesselring, R. 555,500 555,500 (13) 4.9 **
Klaube, J. 100,100 100,000 (10) **
Kroll, S. 618,792 324,926 (3) 4.10;4.11 1.18%
Kroll, S. (see above} 119,866 (10) **
Kutkrvicius, J. 3,294 1,647 (9) 4.23 **
Lalande, A. 824 412 (9) 4.23 **
Liebel, P. 2,305 2,305 (9) 4.23 **
Cont'd
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Name of No. of Transaction
Selling Beneficial Holdings Common Shares Summary % of Class
Securityholder Before the Offering Offered Hereby Note Exhibits after Offering
- --------------------------------------------------------------------------------------------------------
.
<S> <C> <C> <C> <C> <C>
Liechtensteinische Lbank 500,000 500,000 (13) 4.9;4.14 **
Liechtensteinische Lbank (see above} 1,667,250 (13) 4.16;4.17 **
Logie, T. 1,646 823 (9) 4.23 **
Lu, L. 1,646 823 (9) 4.23 **
Luescher, D. 40,000 40,000 (6) 4.9;4.12 **
Lynch, T. 2,306 1,153 (9) 4.23 **
Manis, W. 6,586 3,293 (9) 4.23 **
Martin, M. 1,850,000 1,000,000 (7) 4.20 4.89%
Martin, M. (see above} 100,000 (10) **
Masionis, S. 4,940 2,470 (9) 4.23 **
Merhavia Construct.Ltd. 1,520 760 (9) 4.23 **
Miller, P. 300,000 300,000 (8) 4.3;4.13 **
MJE Partners 210,000 210,000 (2) 4.1;4.2;4.3;4.4 **
Murphy, J. 11,400 5,700 (9) 4.23 **
Niro, G. 1,646 823 (9) 4.23 **
Paine Webber C/F G.Shemano 420,000 420,000 (2) 4.1;4.2;4.3;4.4 **
Pisani, B.M. 592,567 420,000 (4) 4.6;4.7; 1.17%
Print-O-Plast Ltd. 2,306 1,153 (9) 4.23 **
Reiter, S. 950 950 (9) 4.23 **
Reman Partners AG 300,000 300,000 (13) 4.9;4.14 **
Rogivue, N. 375,000 250,000 (13) 4.15;4.18 **
Rogivue, N. (see above} 125,000 (13) 4.9 **
Roni Excavating Ltd. 1,520 760 (9) 4.23 **
Rudnik, S. 2,302,558 150,000 (11) **
Rudnik, S. (see above} 749,780 (12) 4.21 **
Rudnik, S. (see above} 1,325,000 (10) **
Sal Investments Inc. 11,400 5,700 (9) 4.23 **
Saperia, E. 4,446 2,223 (9) 4.23 **
Schuerch Asset MgmtGm 170,000 120,000 (6) 4.9;4.12 **
Schuerch, K. 250,000 250,000 (10) **
Schuerch, U. 1,208,500 800,000 (6) 4.9;4.12 **
Schuerch, U. (see above} 69,500 (13) 4.9 **
Schuerch, U. (see above} 139,000 (13) 4.15;4.18 **
Schuerch, U. (see above} 200,000 (10) **
Shear Holdings Ltd. 950 475 (9) 4.23 **
Shear, E. 4,116 2,058 (9) 4.23 **
Shemano, G. 100,000 100,000 (14) 4.19;4.22 **
Sheppard, T. 1,647 1,647 (9) 4.23 **
Shulenberger, C. 5,928 2,964 (9) 4.23 **
</TABLE>
15
<PAGE>
Cont'd.
<TABLE>
<CAPTION>
Name of No. of Transaction
Selling Beneficial Holdings Common Shares Summary % of Class
Securityholder Before the Offering Offered Hereby Note Exhibits after Offering
<S> <C> <C> <C> <C> <C>
Siegel, H. 931,000 831,000 (5) 4.3;4.4;4.5 **
Siegel, H. (see above} 100,000 (11) **
Sprott Securities Ltd. 29,852 14,926 (9) 4.23 **
Stangel, G. 366,500 111,000 (13) 4.15;4.18 **
Stangel, G. (see above} 200,000 (10) **
Stangel, G. (see above} 55,500 (13) 4.9 **
Stanley, T. 14,819 14,819 (9) 4.23 **
Strasler, B. 2,470 2,470 (9) 4.23 **
Tapio, R. 222,000 222,000 (5) 4.3 **
Tarek, P. 5,598 2,799 (9) 4.23 **
Thomas, D. 65,860 32,930 (9) 4.23 **
Trull, R. 210,000 210,000 (2) 4.1;4.2;4.3;4.4 **
Twomey, L. 210,000 210,000 (2) 4.1;4.2;4.3;4.4 **
Untemaehrer, S. 1,111,000 1,111,000 (13) 4.15;4.18 **
Ushter Holdings Inc. 1,300 650 (9) 4.23 **
Vanity Software PublCo. 4,508 2,254 (9) 4.23 **
Viviana Partners, L.P 1,260,000 1,260,000 (1) 4.8;4.9 **
Wagner, T. 40,000 40,000 (6) 4.9;4.12 **
Ward, D. 100,000 100,000 (5) 4.3 **
Watson, K. 7,410 3,705 (9) 4.23 **
Xonnel Holdings Ltd. 11,400 5,700 (9) 4.23 **
Ziraldo, D. 6,586 3,293 (9) 4.23 **
18,952,376 19,482,086
</TABLE>
** less than 1 percent
16
<PAGE>
Notes:
(1) Private Placement Pursuant to Section 4(2)
The Company is registering shares on behalf of an institutional investor, such
shares having been issued pursuant to his election to convert a convertible
promissory note dated April 23, 1999, into 660,000 common shares of the Company;
and 600,000 shares underlying a stock purchase warrant issued to the same
investor concurrent with the convertible note. The Company's net proceeds from
this transaction not including any proceeds that may accrue from exercise of the
warrant, totaled $300,000. The securities were issued in reliance upon
exemptions provided by Section 4(2) of the Securities Act, as a private
transaction with an accredited investor. A copy of the note and the form of the
warrant are attached hereto as Exhibits 4.8 and 4.9.
(2) Private Placement Pursuant to Section 4(2)
The Company is registering shares on behalf of four private investors, such
shares having been issued pursuant to their election to convert convertible
promissory notes issued during June 1999, into an aggregate 550,000 common
shares of the Company; and 500,000 shares underlying stock purchase warrants
issued to the same investors concurrent with the convertible notes. The
Company's net proceeds from these transactions not including any proceeds that
may accrue from exercise of the warrants, totaled $250,000. The securities were
issued pursuant to subscription agreements certifying these investors as
accredited investors, and in reliance upon exemptions provided by Section 4(2)
of the Securities Act. The form of the subscription agreements, notes and
warrants are attached hereto as Exhibits 4.1, 4.2, 4.3 and 4.4 .
(3) Private Placement Pursuant to Section 4(2)
The shares to be registered represent shares underlying the current balance of a
convertible promissory note dated April 26, 1999, issued to a private investor
who presently is a Director of the Company, pursuant to a loan agreement of the
same date as amended on May 3, 1999. The note originally amounted to $200,000.
The securities were issued in reliance upon exemptions provided by Section 4(2)
of the Securities Act, as a private transaction with an accredited investor.
Copies of the loan agreement and note are attached hereto as Exhibits 4.10 and
4.11.
(4) Private Placement Pursuant to Section 4(2)
The Company is registering shares on behalf of a private investor, such shares
having been issued pursuant to his election to convert a convertible promissory
note dated May 28, 1999, into 220,000 common shares of the Company; and 200,000
shares underlying a stock purchase warrant issued to the same investor
concurrent with the convertible note. The Company's net proceeds from this
transaction not including any proceeds that may accrue from exercise of the
warrant, totaled $100,000. The securities were issued in reliance upon
exemptions provided by Section 4(2) of the Securities Act, as a private
transaction with an accredited investor. Copies of the note and warrant are
attached hereto as Exhibits 4.6 and 4.7 .
(5) Private Placement Pursuant to Section 4(2)
The Company is registering shares on behalf of a private investor and five
transferees of the investor, such shares having been issued pursuant to his
election to convert several convertible promissory notes dating between June
1999 and November 1999 into a total of 990,000 common shares of the Company; and
900,000 shares underlying stock purchase warrants issued concurrent with the
convertible notes. The Company's net proceeds from these transactions not
including any proceeds that may accrue from exercise of the warrants, totaled
$450,000. The securities were issued in reliance upon exemptions provided by
Section 4(2) of the Securities Act, as a private transaction with an accredited
investor. The form of the subscription agreements, notes and warrants are
attached hereto as Exhibits 4.1, 4.2, 4.3, 4.4 and 4.5.
17
<PAGE>
(6) Private Placement Pursuant to Section 4(2)
The Company is registering shares on behalf of nine private foreign investors,
of which 1,252,332 shares were issued pursuant to private placement
subscriptions entered into between the Company and such investors between
October 1999 and December 1999, and 1,252,332 shares underlying stock purchase
warrants issued to the same investors concurrent with the shares. The Company's
net proceeds from these transactions not including any proceeds that may accrue
from exercise of the warrants, totaled $626,166. The securities were issued
pursuant to subscription agreements certifying these investors as accredited
investors, and in reliance upon exemptions provided by Section 4(2) of the
Securities Act. The form of the subscription agreements and warrants are
attached hereto as Exhibits 4.9 and 4.12.
(7) Resignation Agreement of Former Chairman
The shares to be registered represent shares underlying 100,000 shares of Series
C Senior Convertible Preferred Stock issued to the former chairman of the
Company pursuant to the terms of his Resignation Agreement dated January 28,
2000 (see Exhibit to Registration Statement on Form S-8 filed with the
Commission January 31, 2000). Exhibit 4.20 refers to the Certificate of
Designations for the Series C Senior Convertible Preferred Stock.
(8) Private Placement Pursuant to Section 4(2)
The Company is registering shares on behalf of two private investors, of which
400,000 shares were issued pursuant to private placement subscriptions entered
into between the Company and such investors in January and February 2000, and
300,000 shares underlying stock purchase warrants issued to the same investors
concurrent with the shares. The Company's net proceeds from these transactions
not including any proceeds that may accrue from exercise of the warrants,
totaled $200,000. The securities were issued pursuant to subscription agreements
certifying these investors as accredited investors, and in reliance upon
exemptions provided by Section 4(2) of the Securities Act. The form of the
subscription agreements and warrants are attached hereto as Exhibits 4.3 and
4.13 .
(9) Shares Underlying Warrants Issued Pursuant to Acquisition The shares to be
registered underlie warrants issued to former shareholders of Vanity Software
Publishing Corporation ("Vanity"), a Canadian software company. On April 30,
1998, the Company signed an agreement to acquire substantially all of the
assets, subject to the assumption of certain liabilities, of Vanity in exchange
for 224,000 restricted shares of the common stock of the Company and warrants to
purchase an additional 224,000 shares at a price of $5.00 per share. Such
warrants carried "piggy-back" registration rights. The major asset of Vanity was
a proprietary ergonomic software package sold under the name ErgoBreak(TM) that
the Company integrated into its own software products suite marketed under the
ErgoManager(TM) label. The issuance of the aforesaid shares and warrants was
made pursuant to exemptions provided by Section 4(2) of the Securities Act.
Vanity subsequently offered to their shareholders which numbered approximately
fifty, an exchange of their shares in Vanity into a ratably calculated number of
units comprised of one common share of the Company and a warrant for the
purchase of one common share of the Company at the price of US$5.00 each.
Substantially all Vanity shareholders elected to accept this offer following
which Vanity requested, and the Company agreed to, cancel the shares and warrant
issued to Vanity and replace them with like securities issued in the name of the
individual Vanity shareholders. The form of warrant issued to the former Vanity
shareholders is attached hereto as Exhibit 4.23.
18
<PAGE>
(10) Shares Underlying Non-Statutory Stock Options
The Company is registering an aggregate 3,324,866 shares underlying
non-statutory stock options issued to certain present and past key employees, on
behalf of such employees and their transferees, as follows:
a) Options for 1,325,000 shares, issued in 1998 to the current President
and Chief Executive Officer of the Company;
b) Options for 100,000 shares, issued in 1997 and 1998 to the current Chief
Financial Officer of the Company;
c) Options for 500,000 shares, issued in 1999 to the current Executive Vice
President of the Company;
d) Options for 1,399,866 shares that were granted to a former President and
Chief Executive Officer of the Company in 1998 and had previously been
registered on Form S-8 by a filing on June 17, 1998, on behalf of eight
individual assignees to whom such options were subsequently transferred.
(11) Shares Issued in Lieu of Cash Compensation to Officers
The current President and Chief Executive Officer of the Company had previously
agreed to accept 150,000 shares in lieu of cash remuneration during the period
May through December 1999, whereby such stock award carried "piggy-back"
registration rights. The current Vice President of Shareholder Relations had
agreed to accept a certain number of shares in lieu of cash compensation of
which 100,000 shares were to be issued on April 1, 2000, and whereby such stock
award carries "piggy-back" registration rights.
(12) Shares Underlying a Convertible Promissory Note issued to an Officer and
Director. In connection with the acquisition by the Company of Rolina
Corporation in February 1998, the Company issued certain common stock shares to
the former principal of Rolina Corporation who currently serves as the Company's
President and Chief Executive Officer, together with a put option exercisable
earliest at February 1, 2000, for 155,556 such shares. The Company and the
President and Chief Executive Officer agreed that the Company meet its
obligation arising from the put by issuing a convertible promissory note whereby
the shares underlying the conversion option are to be registered. See Exhibit
4.21 attached hereto.
(13) Private Placement Pursuant to Section 4(2)
The Company is registering a total 5,583,850 shares on behalf of eight private
foreign investors pursuant to private placement subscriptions entered into
between the Company and such investors, between January and March 2000. 500,000
of such shares have been issued outright; an aggregate 3,055,900 shares underlie
conversion privileges accruing to a total of 305,590 shares of Series B Senior
Convertible Preferred Stock issued to or subscribed for by certain of these
investors; 500,000 shares underlie stock purchase warrants for the purchase of
shares at $1.00 per share issued to certain of these investors; and 555,750
shares underlie stock purchase warrants for the purchase of shares at $0.90 per
share, subscribed to by certain of these investors. The shares to be registered
also include a total 972,200 shares underlying stock purchase warrants for the
purchase of shares at $0.90 per share, which warrants have been assigned to
certain of the investors. The Company's net proceeds from these transactions not
including any proceeds that may accrue from exercise of the warrants, will total
$2,725,000, of which $1,825,000 have been received at the time of this
submission. The securities were issued or will be issued pursuant to
subscription agreements certifying these investors as accredited investors, and
in reliance upon exemptions provided by Section 4(2) of the Securities Act. The
form of the subscription agreements are attached hereto as Exhibits 4.14, 4.15
and 4.16 , and of the warrants as Exhibits 4.9 and 4.17. Exhibit 4.18 refers to
the Certificate of Designations for the Series B Senior Convertible Preferred
Stock.
(14) Shares Underlying Warrants Issued for Services
The Company is registering an aggregate 200,000 shares underlying two stock
purchase warrants issued pursuant to a consulting agreement with an unrelated
party. A copy of the consulting agreement is attached as Exhibit 4.22.
19
<PAGE>
DESCRIPTION OF CAPITAL STOCK
Magnitude is currently authorized by its Certificate of Incorporation
to issue an aggregate 33,000,000 shares of capital stock, including 30,000,000
shares of Common Stock, $.0001 par value per share of which 14,591,980 were
issued and outstanding as of March 31, 2000 and 3,000,000 shares of Preferred
Stock, $0.01 par value per share of which: 2,500 shares have been designated as
Cumulative Preferred Stock, par value $0.0001 per share, of which 1 share was
outstanding as of March 31, 2000; 300,000 shares have been designated as Series
A Senior Convertible Preferred Stock (the "Series A Stock"), $0.001 par value
per share; 350,000 shares have been designated as Series B Senior Convertible
Preferred Stock (the "Series B Stock"), par value $0.001 per share, of which
194,440 shares were outstanding as of March 31, 2000, and; 120,000 shares have
been designated as Series C Senior Convertible Preferred Stock (the "Series C
Stock") par value $0.001 per share of which 100,000 shares were outstanding as
of March 31, 2000. Common Stock
The holders of Common Stock are entitled to one vote for each share
held of record on all matters submitted to a vote of stockholders. Subject to
the rights and preferences of the holders of any outstanding Preferred Stock,
the holders of Common Stock are entitled to receive ratably such dividends as
are declared by the Board of Directors out of funds legally available therefor.
In the event of a liquidation, dissolution or winding-up of the Company, holders
of Common Stock have the right to a ratable portion of assets remaining after
the payment of all debts and other liabilities of the Company, subject to the
liquidation preferences, if any, of the holders of any outstanding Preferred
Stock. Holders of Common Stock have neither preemptive rights nor rights to
convert their Common Stock into any other securities and are not subject to
future calls or assessments by the Company. There are no redemption or sinking
fund provisions applicable to the Common Stock. The rights, preferences and
privileges of the holders of Common Stock may be subject to, and may be
adversely affected by, the rights of the holders of shares of Preferred Stock
that the Company may designate and issue in the future.
Preferred Stock
The Board of Directors of the Company recently took action to create
and authorize the issuance of (1) up to 300,000 shares of Preferred Stock
designated as Series A Senior Convertible Preferred Stock (the "Series A
Stock"); (2) up to 350,000 shares of Preferred Stock designated as Series B
Senior Convertible Preferred Stock (the "Series B Stock') of which 194,440
shares were outstanding as of March 31, 2000, and; (3) up to 120,000 shares of
Preferred Stock designated as Series C Senior Convertible Preferred Stock (the
"Series C Stock") of which 100,000 shares were outstanding as of March 31, 2000.
20
<PAGE>
The Series A Stock
The Series A Stock has no voting rights and their holders do not have a
right to cast a vote on shareholder matters. The holders of Series A Stock are
entitled to receive semi-annual cumulative dividends before any dividends are
declared and paid upon the Common Stock, but on par with the holders of any
Series B Stock and Series C Stock, calculated against their liquidation price of
$5.00 per share at the rate of 7% annually during the first year of their
issuance, increasing thereafter in increments of 1/2 of 1% per year for the next
six years when the interest rate is fixed at 10% annually. In the event of a
liquidation, dissolution or winding up of the affairs of Magnitude and after
payment of its debts and liabilities, the holders are entitled to be paid out of
the remaining assets a liquidation price of $5.00 per share of Series A Stock,
on an equal basis with the holders of any Series B Stock and Series C Stock.
Magnitude has the right to redeem or buy back part or all of the Series A Stock
three years after their issuance by paying to the holders the liquidation price
($5.00 per share), any accumulated but unpaid dividends and a payment (a "call
premium") equal to 15% of the liquidation price. Holders of the Series A Stock
can convert their shares into Magnitude Common Stock at a conversion rate equal
to 150% of the "market price" of Magnitude's Common Stock at the time of
conversion. "Market price" is based upon the average bid and asked prices for
Magnitude's Common Stock as quoted by the then stock exchange during the 20
consecutive trading day period immediately preceding the conversion.
The Series B Stock.
The Series B Stock has no voting rights and their holders do not have a
right to cast a vote on shareholder matters. The holders of Series B Stock are
entitled to receive semi-annual cumulative dividends before any dividends are
declared and paid upon the Common Stock, but on par with the holders of any
Series A Stock and Series C Stock, calculated against their liquidation price of
$9.00 per share at the rate of 7% annually. In the event of a liquidation,
dissolution or winding up of the affairs of Magnitude and after payment of its
debts and liabilities, the holders are entitled to be paid out of the remaining
assets a liquidation price of $9.00 per share of Series B Stock, on an equal
basis with the holders of any Series A Stock and Series C Stock. Magnitude has
the right to redeem or buy back part or all of the Series B Stock three years
after their issuance by paying to the holders the liquidation price ($9.00 per
share), any accumulated but unpaid dividends and a payment (a "call premium")
equal to 10% of the liquidation price. Holders of the Series B Stock can convert
their shares into Magnitude Common Stock on the basis of 10 shares of Common
Stock for one share of Series B Stock. The Series C Stock.
The Series C Stock has no voting rights and their holders do not have a
right to cast a vote on shareholder matters. The holders of Series C Stock are
entitled to receive monthly cumulative dividends before any dividends are
declared and paid upon the Common Stock, but on par with the holders of any
Series A Stock and Series B Stock, calculated against their liquidation price of
$9.00 per share at the rate of 7% annually. In the event of a liquidation,
dissolution or winding up of the affairs of Magnitude and after payment of its
debts and liabilities, the holders are entitled to be paid out of the remaining
assets a liquidation price of $9.00 per share of Series C Stock, on an equal
basis with the holders of any Series A Stock and Series B Stock. Magnitude has
the right to redeem or buy back part or all of the Series C Stock three years
after their issuance by paying to the holders the liquidation price ($9.00 per
share), any accumulated but unpaid dividends and a payment (a "call premium")
equal to 10% of the liquidation price. Holders of the Series C Stock can convert
their shares into Magnitude Common Stock on the basis of 10 shares of Common
Stock for one share of Series C Stock.
21
<PAGE>
Cumulative Preferred Stock
The Company has designated 2,500 shares as "Cumulative Preferred
Stock", of which as of March 31, 2000, one share is issued and outstanding. The
Cumulative Preferred Stock is non-voting. Each share shall be entitled to
receive out of the surplus or net profits of the Company, cumulative dividends
thereon at the rate of $9,000 per year, payable quarterly, semi-annually, or
annually, as and when declared by the Board of Directors. The Cumulative
Preferred Stock shall, with respect to dividend rights, rights on liquidation,
winding up and dissolution and rights upon redemption, rank prior to all classes
and series of Common Stock.
22
<PAGE>
PLAN OF DISTRIBUTION
The selling securityholders may sell some or all of their shares at any
time and in any of the following ways. They may sell their shares:
o To underwriters who buy the shares for their own account and
resell them in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying
prices determined at the time of sale. Any public offering
price and any discount or concessions allowed or reallowed or
paid to dealers may be changed from time to time;
o Through brokers, acting as principal or agent, in
transactions, which may involve block transactions, on the
Electronic Bulletin Board, over-the-counter market or on other
exchanges on which the shares are then listed, in special
offerings, exchange distributions pursuant to the rules of the
applicable exchanges or in the over-the-counter market, or
otherwise, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices, at negotiated
prices or at fixed prices;
o Directly or through brokers or agents in private sales a
negotiated prices; or
o By any other legally available means.
Selling securityholders may pay part of the proceeds from the sale of
shares in commissions and other compensation to underwriters, dealers, brokers
or agents who participate in the sales. Holders of approximately 7,000,000
shares have agreed not to sell such shares for a period of one year.
Certain states may require shares to be sold only through registered or
licensed brokers or dealers. In addition, certain states may require the shares
to be registered or qualified for sale unless an exemption from registration or
qualification is available and complied with.
Magnitude has agreed to contribute to payments the selling
securityholders may be required to make under the Securities Act.
LEGAL MATTERS
The law firm of Joseph J. Tomasek, Esq., 75-77 North Bridge Street,
Somerville, New Jersey will render an opinion on the validity of the shares
offered under this prospectus.
23
<PAGE>
EXPERTS
Rosenberg Rich Baker Berman & Company, independent auditors, have
audited our consolidated financial statements included in our Annual Report on
Form 10-KSB for the year ended December 31, 1999, as set forth in their report,
which is incorporated by reference in this prospectus and elsewhere in the
registration statement. Our financial statements are incorporated by reference
in reliance on Rosenberg Rich Baker Berman & Company=s report, given on their
authority as experts in accounting and auditing.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS OR IN ANY PROSPECTUS SUPPLEMENT. IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
MAGNITUDE, ANY UNDERWRITER OR THEIR RESPECTIVE AFFILIATES. NEITHER THE DELIVERY
OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER OR
THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE FACTS SET FORTH HEREIN OR THEREIN OR IN THE AFFAIRS OF
MAGNITUDE SINCE THE DATE HEREOF. THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT
DO NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM,
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
---------------
24
<PAGE>
TABLE OF CONTENTS
Page
Where You Can Find More Information............................. 4
The Company..................................................... 6
Risk Factors.................................................... 8
Use of Proceeds.................................................. 13
Selling Securityholders......................................... 13
Description of Capital Stock..................................... 20
Plan of Distribution............................................. 23
Legal Matters.................................................... 23
Experts.......................................................... 24
19,482,086 Shares
Magnitude Information Systems, Inc.
Common Stock
--------------
PROSPECTUS
--------------
________, 2000
25
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Magnitude will pay all expenses incident to the offering and sale to
the public of the shares being registered other than any commissions and
discounts of underwriters, dealers or agents and any transfer taxes. Such
expenses are set forth in the following table. All of the amounts shown are
estimates except the Securities and Exchange Commission ("SEC") registration
fee.
SEC registration fee 11,276.00
Legal fees and expenses 10,000.00
Accounting fees and expenses 2,500.00
Miscellaneous expenses 1,000.00
Total 24,776.00
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by the Delaware General Corporation Law, Magnitude has
included in its Certificate of Incorporation a provision to eliminate the
personal liability of it's directors for monetary damages for breach or alleged
breach of their fiduciary duties as directors, subject to certain exceptions. In
addition, the Bylaws of Magnitude require the Company to (i) indemnify the
officers and directors under certain circumstances, including those
circumstances in which indemnification would otherwise be discretionary, and
(ii) advance expenses to the officers and directors as incurred in connection
with proceedings against them for which they may be indemnified. Magnitude has
entered into indemnification agreements with the officers and directors
containing provisions that are in some respects broader than the specific
indemnification provisions contained in the Delaware General Corporation Law.
The indemnification agreements may require the companies, among other things, to
indemnify such officers and directors against certain liabilities that may arise
by reason of their status or service as directors or officers (other than
liabilities arising from willful misconduct of a culpable nature), to advance
expenses incurred as a result of any proceeding against them as to which they
may be indemnified, and to obtain directors' and officers' insurance if
available on reasonable terms. Magnitude believes that these charter provisions
and indemnification agreements are necessary to attract and retain qualified
persons as directors and officers.
Magnitude understands that the staff of the Securities and Exchange
Commission is of the opinion that statutory, charter and contractual provisions
as are described above have no effect on claims arising under the federal
securities laws.
26
<PAGE>
ITEM 16. EXHIBITS
EXHIBIT INDEX
2.2 Agreement and Plan of Merger with Rolina Corporation and Steven D.
Rudnik, and Employment Agreement with Steven D. Rudnik, both of the
date February 2 , 1998, as filed as Exhibit to the Company's report on
Form 10-KSB for the year ended December 31, 1998. Incorporated herein
by reference.
3 (i) Articles of Incorporation and Amendments thereto, incorporated
herein by reference to Exhibits of previous filings with the
Commission.
3 (ii) Bylaws of the Company, incorporated herein by reference to
Exhibits of previous filings with the Commission.
4.1 Term Sheet
4.2 Form of Subscription Agreement
4.3 Form of Common Stock Purchase Warrant
4.4 Form of Convertible Promissory Note
4.5 Form of Subscription Agreement
4.6 Form of Convertible Grid Promissory Note
4.7 Form of Common Stock Purchase Warrant
4.8 Form of Convertible Promissory Note
4.9 Form of Common Stock Purchase Warrant
4.10 Loan Agreement with S.Kroll
4.11 Form of Convertible Promissory Note
4.12 Form of Subscription Agreement
4.13 Form of Subscription Agreement
4.14 Form of Subscription Agreement
4.15 Form of Subscription Agreement
4.16 Form of Subscription Agreement
4.17 Form of Common Stock Purchase Warrant
4.18* Amendment to the Company's Certificate of Incorporation as filed with
the State of Delaware on January 31, 2000, and amended on March 20,
2000, designating a new class of Series B Senior Convertible Preferred
Stock.
4.19 Form of Common Stock Purchase Warrant
4.20* Amendment to the Company's Certificate of Incorporation as filed with
the State of Delaware on January 31, 2000, and amended on March 20,
2000, designating a new class of Series C Senior Convertible Preferred
Stock
4.21 Agreement with S.Rudnik, re: convertible debt
4.22 Consulting agreement with G.Shemano
4.23 Form of Common Stock Purchase Warrant
4.24* Amendment to the Company's Certificate of Incorporation as filed with
the State of Delaware on January 31, 2000, and amended on March 20,
2000, designating a new class of Series A Senior Convertible Preferred
Stock.
5.1 Legal opinion and consent of Joseph J. Tomasek, Esq.
10.1 Resignation Agreement dated July 21, 1999, between J. Swon and B.
Deichl and the Company, incorporated herein by reference to the Exhibit
of Form S-8 filed with the Commission on August 3, 1999.
10.2 Resignation Agreement dated January 28, 2000, between M. Martin and the
Company, incorporated herein by reference to the Exhibit of Form S-8
filed with the Commission on January 31, 2000.
23.1 Independent Auditors' Consent
- -------
*Documents incorporated by reference to Magnitude's Annual Report filed on Form
10-KSB for the fiscal year ended December 31, 1999 with the Securities and
Exchange Commission on March 30, 2000.
27
<PAGE>
ITEM 17. UNDERTAKINGS
A. UNDERTAKING PURSUANT TO RULE 415
The undersigned Registrant hereby undertakes: (1) To file, during any
period in which offers or sales are being made, a post-effective amendment to
this Registration Statement: II-1 22 (i) to include any prospectus required by
Section 10(a)(3) Securities Act of 1933 (the "Securities Act"); (ii) to reflect
in the prospectus any facts or events arising after the effective date of the
Registration Statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the SEC
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
Registration Statement; (iii) to include any material information with respect
to the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement; (2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; (3) To remove from registration by means of a
post-effective amendment any of the securities being registered that remain
unsold at the termination of this offering.
B. UNDERTAKING REGARDING FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT
DOCUMENTS BY REFERENCE
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
28
<PAGE>
C. UNDERTAKING IN RESPECT OF INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
D. UNDERTAKING PURSUANT TO RULE 430A
The undersigned Registrant hereby undertakes that: (1) For purposes of
determining any liability under the Securities Act, the information omitted from
the form of the prospectus filed as part of this Registration Statement in
reliance upon Rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this Registration Statement as of the time it was
declared effective. (2) For the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
29
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, MAGNITUDE INFORMATION SYSTEMS, INC., a corporation organized and
existing under the laws of the State of Delaware, certifies that it has
reasonable grounds to believe that it meets all of the requirements for filing
on Form S-3 and has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Branchburg,
State of New Jersey, on April 7, 2000
MAGNITUDE INFORMATION SYSTEMS, INC.
By:/s/Steven D. Rudnik
Steven D. Rudnik, President
and Chief Executive Officer
By:/s/ Joerg H. Klaube
Joerg H. Klaube, Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appointsSteven D. Rudnik, his attorneys-in-fact, each with
the power of substitution, for him in any and all capacities, to sign any
amendments to this Registration Statement on Form S-3, and to file the same,
with exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof. Pursuant to the requirements of the
Securities Act of 1933, this Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Steven D. Rudnik President and April 7, 2000
Steven D. Rudnik Chief Executive Officer
(Principal Executive Officer)
/s/ Joerg H. Klaube Chief Financial Officer April 7, 2000
Joerg H. Klaube (Principal Financial Officer)
/s/ Paul Chernis Director April 7, 2000
Paul Chernis
/s/ Peter J. Buscetto Director April 7, 2000
Peter J. Buscetto
/s/ Seymour Kroll Director April 7, 2000
Seymour Kroll
/s/ John C. Duncan Executive Vice President
John C. Duncan and Director April 7, 2000
/s/ Joseph J. Tomasek Director April 7, 2000
Joseph J. Tomasek
30
<PAGE>
Exhibit 4.1
MAGNITUDE INFORMATION SYSTEMS, INC.
TERM SHEET - DATED MAY 20, 1999
PRIVATE OFFERING TO ACCREDITED INVESTORS
PURSUANT TO RULE 506
Issuer: Magnitude Information Systems, Inc.,
a Delaware
corporation (the"Company")
Placement Agent: The Company has not engaged any placement
agent in connection with this Offering.
Securities Offered: The Company is offering
units ("Units") containing (a) one
$50,000 7% convertible promissory
note due fourteen months from the
date of issuance ("Notes"); and (b)
one warrant ("Warrants") for the
purchase of 100,000 shares of the
Company's common stock ("Common
Stock") during the four year period
commencing on the date of issuance
at an exercise price of $1.00 per
share.
Description of Notes:
Interest: The Notes bear interest from the date of
issuance at 7% per annum payable at the
maturity of the Notes.
Maturity: The notes mature fourteen months from
the date of issuance. Payment of the notes
will be made against presentation of the
notes.
Conversion: The Notes are convertible into
Common Stock at any time during the
term of the Notes at the conversion
rate of $.50 of debt per share of
Common Stock.. Any such conversions
must be made in increments of no
less than $25,000 and upon at least
five days notice to the Company. The
Notes are convertible into a maximum
of 100,000 shares of Common Stock.
<PAGE>
Description of Warrants: The Warrants are exercisable during the
four year period commencing on the
date of issuance at an exercise price of
$1.00 per share. Should the closing price
of the Common Stock exceed $2.00 per share
for a period of ten consecutive trading
days at any time during the term of the
Warrants, the Company shall have the
option to require the holder, so long as
the shares are registered with the
Securities and Exchange Commission, to
either exercise the Warrants in full within
ten business days of the Company's written
notice to the holder, or upon the failure
of the holder to exercise the Warrants, the
Warrant shall automatically expire. To be
effective, the Company's written notice
must be delivered to the holder no later
than the second business day following the
tenth day of the ten consecutive trading
days on which the closing price of the
Common Stock exceeds $2.00.
Registration Rights: The Company will use its best efforts to
include the Common Stock
underlying the Notes (not to exceed 100,000
shares) and the Common Stock underlying
the Warrants in a registration statement
filed with the Securities and Exchange
Commission on or before December 31, 1999.
Should the securities not be registered by
such date, the Company will issue to each
investor an additional 10,000 shares of
Common Stock for every Unit subscribed to.
Offering: The Units will be sold on a "best
efforts" basis pursuant to Rule 506
of Regulation D, which Rule was
promulgated under the Securities Act
of 1933, as amended (the "Act") as
well as other applicable exemptions
from the registration requirements
of the Act.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY ANY FEDERAL OR STATE
SECURITIES AGENCY NOR HAS ANY AGENCY REVIEWED
OR PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS TERM SHEET. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE. ACCORDINGLY
INVESTORS MUST RELY UPON THEIR OWN
EXAMINATION OF THIS OFFERING AND THE COMPANY
IN MAKING AN INVESTMENT DECISION.
THE SECURITIES OFFERED HEREBY INVOLVE A
HIGHER DEGREE OF RISK AND SHOULD NOT BE
PURCHASED BY INVESTORS WHO CANNOT AFFORD THE
LOSS OF THEIR ENTIRE INVESTMENT.
<PAGE>
Investment
Qualifications: Each investor will represent that he is an
accredited investor within the meaning of
rule 501 of Regulation D under the Securities
Act of 1933, and will complete a confidential
investor questionnaire.
Subscription Period: The Units will be offered
during the Subscription Period,
which shall mean the period
commencing on the date of this Term
Sheet and ending on June 30, 1999.
The Subscription Period may be
extended in the sole discretion of
the Company without notice to
subscribers for an additional thirty
day period.
Payment: All checks for the purchase of the Units
shall be made payable to "Magnitude
Information Systems, Inc." The proceeds
from the sale of the Units, less legal fees
and other expenses, will be immediately
available to the Company upon clearance of
such funds and acceptance of subscriptions
by the Company. There is no minimum amount
which must be raised in order for funds to
be released to the Company. The Company
has the right in its sole discretion
to reject any subscriptions.
Use of Proceeds: The net proceeds from
the sale of the Units will be used
for working capital and other
corporate purposes, including, legal
and other fees relating to this
Offering. The Company will require
significant additional capital to
fund its operations and business
plans.
Commissions: The Company will not pay any commissions
on sales of Units made through the Company's
officers and directors. The Company
reserves the right to compensate finders who
assist in the sale of Units.
Substantial Risk: An investment in the Company is subject to
substantial risks and in extremely
speculative. An investment should only be
considered by an investor who can afford to
lose their entire investment.
<PAGE>
Risk Factors: The undersigned acknowledges that the
Company (i) has suffered substantial
losses in its prior operations, (ii)
currently has a significant working capital
deficit, and (iii) requires significant
funding in order to operate its business and
satisfy existing obligations. In addition,
the Company and its operations are subject
to a myriad of other risks which effect
undercapitalized entities. As a result of
such risks the loss of the undersigned's
entire investment is possible.
Independent Verification: Each subscriber will
be required to acknowledge that the
subscriber has conducted its own
investigation into the business of
the Company as well as the Company's
future proposed plans without the
Company furnishing to such
subscriber any prospectus, offering
memorandum or written description of
the Company, its business plans
and/or its future plans other than
this Term Sheet and the attached
Exhibits.
Additional
Information: All potential subscribers should contact
Joerg Klaube, the Company's Chief Financial
Officer, 50 Tannery Road, Branchburg, New
Jersey 08876 (908)543-6400 for further
information regarding the Company.
Exhibits: The following exhibits are included with
this Term Sheet:
Exhibit 1: Subscription Agreement and
Investor Questionnaire
<PAGE>
Jurisdictional Notices
For Residents of All States:
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATES AND ARE BEING
OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF
SAID ACT AND SUCH LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE MEMORANDUM. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
New York Residents:
THIS CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM HAS NOT BEEN FILED WITH
OR REVIEWED BY THE ATTORNEY GENERAL OF THE STATE OF NEW YORK PRIOR TO ITS
ISSUANCE AND USE. THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED
UPON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATIONS TO THE
CONTRARY ARE UNLAWFUL.
PROFORM\AGMTS\TERM SHEET RW
<PAGE>
Exhibit 4.2
ACCREDITED INVESTOR
SUBSCRIPTION AGREEMENT
Subscription Agreement and Questionnaire for the
Purchase of Units of Magnitude Information Systems, Inc.
Pursuant to the terms of the offer made by Magnitude Information
Systems, Inc. ("Company") described in the Term Sheet dated May 20, 1999 ("Term
Sheet"), the undersigned hereby subscribes for _____Units of the Company's
common stock ("Units") at a purchase price of $50,000 per Unit. The entire
purchase price is due and payable upon the execution of this Subscription
Agreement, and shall be paid by check, subject to collection, or by wire
transfer, made payable to the order of "Magnitude Information Systems, Inc." The
Company shall have the right to reject this subscription in whole or in part.
1 The undersigned, in order to induce the Company to accept this
Subscription Agreement represents, warrants and covenants to the Company as
follows:
(a) The undersigned acknowledges that (i) the Units being
purchased hereunder have not been registered under the Securities Act of 1933,as
amended ("Securities Act"), or the securities laws of any State; (ii) absent an
exemption from registration contained in those laws, the issuance and sale of
the Units would require registration; and (iii) the Company's reliance upon any
such exemption is invariably based upon the undersigned's representations,
warranties, and agreements contained in this Subscription Agreement (the
Subscription Agreement and the included Investor Questionnaire are collectively
referred to herein as the "Subscription Documents").
(b) The undersigned agrees that this Subscription Agreement is
and shall be irrevocable unless it has not been accepted by the Company.
(c) The undersigned has carefully read the Term Sheet, the
Subscription Agreement and all exhibits included with the Term Sheet
(collectively, "Disclosure Materials") all of which the undersigned acknowledges
have been delivered to the undersigned. The undersigned acknowledges that the
undersigned has been given the opportunity to ask questions of, and receive
answers from, the Company concerning the terms and conditions of this
Subscription Agreement and the Disclosure Materials and to obtain such
additional written information, to the extent the Company possesses such
information or can acquire it without unreasonable effort or expense, necessary
to verify the accuracy of same, as the Undersigned desires in order to evaluate
the investment. The undersigned further acknowledges that the undersigned has
received no representations or warranties from the Company, or their respective
employees or agents in making this investment decision other than as set forth
in the Disclosure Materials.
<PAGE>
(d) The undersigned acknowledges that the undersigned has
investigated the Company's business, financial conditions, current state of
affairs, planned business and other matters necessary in order for the
undersigned to make an informed investment decision regarding the purchase of
the Units.
(e) The undersigned acknowledges that the undersigned is
purchasing the Units without being furnished any prospectus or written
description of the Company, its business and/or its future plans, other than the
Disclosure Material, and has relied solely upon the Disclosure Material and the
undersigned's own investigation into the Company and its proposed operations.
(f) The undersigned is aware that the purchase of the Units is
a speculative investment involving a high degree of risk and that there is no
guarantee that the undersigned will realize any gain from this investment, and
that the entire investment could be lost.
(g) The undersigned understands that no federal or state
agency has made any finding or determination regarding the fairness of this
Offering, or any recommendation or endorsement of this Offering.
(h) The undersigned is purchasing the Units for the
undersigned's own account, with the intention of holding the Security with no
present intention of dividing or allowing others to participate in this
investment or of reselling or otherwise participating, directly or indirectly,
in a distribution of the Security, and shall not make any sale, transfer, or
pledge thereof without registration under the Securities Act and any applicable
securities laws of any state or unless an exemption from registration is
available under those laws.
(i) The undersigned will not sell short in any manner the
shares of Common Stock underlying the Warrants and/or Notes contained in the
Units.
(j) The undersigned is financially able to bear the economic
risk of this investment, including the ability to hold the Units indefinitely or
to afford a complete loss of the undersigned's investment in the Units.
<PAGE>
(k) The undersigned represents that the undersigned's overall
commitment to investments which are not readily marketable is not
disproportionate to its net worth, and the investment in the Units will not
cause such overall commitment to become excessive. The undersigned understands
that the statutory basis on which the Units are being sold to the undersigned to
others would not be available if the undersigned's present intention were to
hold the Units for a fixed period or until the occurrence of a certain event.
The undersigned realizes that in the view of the Securities and Exchange
Commission,a purchase now with a present intent to resell by reason of a
foreseeable specific contingency or any anticipated change in the market value,
or in the condition of the Company, or that of the industry in which the
business of the Company is engaged or in connection with a contemplated
liquidation, or settlement of any loan obtained by the undersigned for the
acquisition of the Units, and for which such Units may be pledged as security or
as donations to religious or charitable institutions for the purpose of securing
a deduction on an income tax return, would, in fact, represent a purchase with
an intent inconsistent with the undersigned's representations to the Company,
and the Securities and Exchange Commission would then regard such sale as one
for which no exemption from registration is available. The undersigned will not
pledge, transfer or assign this Subscription Agreement.
(l) The undersigned represents that the funds provided for
this investment are either separate property of the Undersigned, other property
over which the undersigned has the right of control, or are otherwise funds as
to which the undersigned has the sole right of management.
(m) The address shown under the undersigned's signature at the
end of this Subscription Agreement is the undersigned's principal business
address if a corporation or other entity.
(n) The undersigned has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Units.
(o) The undersigned acknowledges that the certificates for the
securities comprising the shares of Common Stock underlying the Warrants and the
Notes contained in the Units which the undersigned will receive will contain a
legend substantially as follows:
THE SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO
DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, TRANSFERRED, MADE SUBJECT
TO A SECURITY INTEREST, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR AN OPINION OF COUNSEL FOR THE COMPANY IS RECEIVED THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT.
(p) This Subscription Agreement and all representations,
warranties and statements made herein are true, complete and correct in all
material respects.
(q) The undersigned acknowledges that the Company, except as
set forth in the Term Sheet, is under no obligation to register the Units under
the Securities Act or any state securities laws, or to take any action to make
any exemption from any such registration provisions available.
(r) This Subscription Agreement is a legally binding
obligation of the undersigned in accordance with its
terms.
<PAGE>
(s) The undersigned is an "accredited investor," as such term
is defined in Regulation D of the Rules and Regulations promulgated under the
Act.
(t) If the undersigned is a partnership, corporation, trust or
other entity, (i) the undersigned has enclosed with this Subscription Agreement
appropriate evidence of the authority of the individual executing this
Subscription Agreement to act on its behalf (e.g., if a trust, a certified copy
of the trust agreement; if a corporation, a certified corporate resolution
authorizing the signature and a certified copy of the articles of incorporation;
or if a partnership, a certified copy of the partnership agreement), (ii) the
undersigned represents and warrants that it was not organized or reorganized for
the specific purpose of acquiring Units, and (iii) the undersigned has the full
power and authority to execute this Subscription Agreement on behalf of such
entity and to make the representations and warranties made herein on its behalf,
and (iv) this investment in the Company has been affirmatively authorized, if
required,by the governing board of such entity and is not prohibited by the
governing documents of the entity.
(u) The undersigned expressly acknowledges and agrees that the
Company is relying upon the Undersigned's representation contained in this
Subscription Agreement. The undersigned subscriber acknowledges that the
undersigned understands the meaning and legal consequences of the
representations and warranties which are contained herein and hereby agrees to
indemnify, save and hold the Company, and their respective officers, directors
and counsel harmless from and against any and all claims or actions arising out
of a breach of any representation, warranty or acknowledgment of the undersigned
contained in any Subscription Document. Such indemnification shall be deemed to
include not only the specific liabilities or obligation with respect to which
such indemnity is provided, but also all reasonable costs, expenses, counsel
fees and expenses of settlement relating thereto, whether or not any such
liability or obligation shall have been reduced to judgment.
(v) Except as otherwise specifically provided for hereunder,
no party shall be deemed to have waived any of his or her or its rights
hereunder or under any other agreement, instrument or papers signed by any of
them with respect to the subject matter hereof unless such waiver is in writing
signed by the party waiving said right. A waiver on any one occasion with
respect to the subject matter hereof shall not be construed as a bar to, or
waiver of, any right or remedy on any future occasion. All rights and remedies
with respect to the subject matter hereof, whether evidenced hereby or by any
other agreement, instrument, or paper, will be cumulative, and may be exercised
separately or concurrently.
(w) The parties have not made any representations or
warranties with respect to the subject matter hereof not set forth herein, and
this Subscription Agreement, together with any instruments executed
simultaneously herewith,constitutes the entire agreement between them with
respect to the subject matter hereof. All understandings and agreements
heretofore had between the parties with respect to the subject matter hereof are
merged in this Subscription Agreement and any such instrument, which alone fully
and completely expresses their agreement.
<PAGE>
(x) This Agreement may not be changed, modified, extended,
terminated or discharged orally, but only by an agreement in writing, which is
signed by all of the parties to this Agreement.
(y) The parties agree to execute any and all such other and
further instruments and documents, and to take any and all such further actions
reasonably required to effectuate this Subscription Agreement and the intent and
purposes hereof.
(z) This Subscription Agreement shall be governed by and
construed in accordance with the laws of the State of New York and the
undersigned hereby consents to the jurisdiction of the courts of the State of
New York and/or the United States District Court for the Southern District of
New York.
(aa) The undersigned understands that this subscription is not
binding upon the Company until the Company accepts it,which acceptance is at the
sole discretion of the Company and is to be evidenced by the Company's execution
of this Subscription Agreement where indicated. This Subscription Agreement
shall be null and void if the Company does not accept it as aforesaid.
(bb) The undersigned understands that the Company may, in its
sole discretion, reject this subscription and, in the event that the offering to
which this Subscription relates is oversubscribed, reduce this subscription in
any amount and to any extent, whether or not pro rata reductions are made of any
other investor's subscription.
cc) Neither this Subscription Agreement nor any of the rights
of the undersigned hereunder may be transferred or assigned by the undersigned.
(dd) Please check whether one or more of the following
definitions of "accredited investor," if any, applies to you. If none of the
following applies to you, please leave a blank.
<PAGE>
(i) A Bank as defined in Section 3(a)(2) of the Securities Act of 1933, as
amended ("Securities Act"), or any savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the Securities Act whether
acting in its individual or fiduciary capacity; any broker or dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); an insurance company as defined in Section 2(13) of the
Securities Act; an investment company registered under the Investment Company
Act of 1940 or a business development company as defined in Section 2(a)(48) of
that act; a Small Business Investment Company licensed by the U.S.Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act
of 1958;any plan established and maintained by a state, or its political
subdivisions,or any agency or instrumentality of a state or its political
subdivisions for the benefit of its employees, if such plan has total assets in
excess of $5,000,000; any employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974, if the investment decision is
made by a plan fiduciary, as defined in Section 3(21) of such act, which is
either a bank, savings and loan association, insurance company, or registered
investment advisor, or if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with investment decisions made solely
by persons that are Accredited Investors. -------
(ii) A Private Business Development Company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940.
(iii) An organization described in Section 501(c)(3) of the Internal
Revenue Code or corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000.
(iv) A natural person whose individual net worth, or joint net worth with
that person's spouse, at the time of purchase exceeds $1,000,000.
-------
(v) A natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with that person's spouse in
excess of $300,000 in each of those years and has a reasonable expectation of
reaching the same income level in the current year.
(vi) Any trust, with total assets in excess of $5,000,000, not formed for
the specific purpose of acquiring the Units, whose purchase is directed by a
sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D. -------
(vii) Any entity in which all of the equity owners are Accredited
Investors.
-------
<PAGE>
2. This following information is required pursuant to Article III,
Section 44 of the Rules of Fair Practice of the NASD and upon which the Company
will rely in making any statement to the NASD concerning the association or
affiliation of any officer,director or security holder of the Company with any
NASD member.
(i) State whether you or any of your Affiliates or any of your
Associates (See Definitions at the end of this
Subscription Agreement) are
(a) Member of the National Association of Securities Dealers, Inc.
("NASD");
Yes____ No____
(b) a Person Associated with a Member of the NASD; or
Yes____ No____
(c) an Affiliate of a Member of the NASD.
Yes____ No____
(ii) State whether you or any of your Affiliates or any of your Associates
own stock or other securities of any member of the NASD (other than
securities purchased on the open market).
Yes____ No____
(iii) State whether you or any of your Affiliates or any of your Associates
have made a subordinated loan to any Member of the NASD.
Yes____ No____
(iv) If you marked "Yes" to any of the questions above,please briefly
describe the facts below, giving the names of the appropriate Members
of the NASD to which your answers refer.
(v) The Undersigned has carefully reviewed the jurisdictional notices
listed below and agrees to abide by any restrictions contained therein
applicable to the undersigned.
JURISDICTIONAL NOTICES
THE SECURITIES OFFERED PURSUANT TO THE MEMORANDUM HEREBY HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 OR THE SECURITIES LAWS
OF ANY STATES OF THE UNITED STATES OR ANY OTHER JURISDICTION AND ARE BEING
OFFERED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS
OF SAID ACT AND SUCH LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE
SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE MEMORANDUM. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. IT IS THE RESPONSIBILITY
OF ANY SUBSCRIBER WISHING TO PURCHASE THE Units TO SATISFY ITSELF AS TO THE FULL
OBSERVANCE OF THE LAWS OF ANY RELEVANT TERRITORY OUTSIDE THE UNITED STATES IN
CONNECTION WITH ANY SUCH PURCHASE, INCLUDING OBTAINING ANY REQUIRED GOVERNMENTAL
OR OTHER CONSENTS OR OBSERVING ANY OTHER APPLICABLE FORMALITIES.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement
on this __ day of ___ , _______
(Total Investment) $_____________
-----------
Exact Name in Which Title is to be Held
Signature
Name (Please Print)
Title of Person Executing Agreement
Address: Number and Street
City Country Zip Code
Tax Identification Number
Jurisdiction of Incorporation
Accepted this __ day of , _______, on behalf of
------ ------------------
MAGNITUDE INFORMATION SYSTEMS, INC.
BY:
<PAGE>
DEFINITIONS
Affiliate: An Affiliate of any person (for purposes hereof a "person"
includes a partnership, corporation or other legal entity such
as a trust or estate) is a person which controls, is
controlled by or is under common control with such person. For
purposes of this definition:
(i) a person should be presumed to control a Member if the
person beneficially owns 10% or more of the outstanding voting
securities of a Member which is a corporation, or beneficially
owns a partnership interest in 10% or more of the outstanding
voting securities of a person which is a corporation, or
beneficially own a partnership interest in 10% or more of the
distributable profits or losses of a person which is a
partnership; and
(ii) a Member should be presumed to control a person if the
Member and Persons Associated with the Member beneficially own
10% or more of the outstanding voting securities of a person
which is a corporation, or beneficially own a partnership
interest in 10% or more of the distributable profits or losses
of a person which is a partnership; and
(iii) a person should be presumed to be under common control
with a Member if:
(1) the same person controls both the Member and such
person by beneficially owning 10% or more of the
outstanding voting securities of the Member and other
such person which is a corporation, or by
beneficially owning a partnership interest in 10% or
more of the distributable profits or losses of the
Member and other such person which is a partnership;
or
(2) a person having the power to direct or cause the
direction of the management or policies of the Member
also has the power to direct or cause the direction
of the management or policies of the other entity in
question.
Associate: An Associate is
(i) any corporation or organization of which you are
an officer, director or partner, or of which you are
directly or indirectly the beneficial owner of 10% or
more of any class of equity securities.
(ii) any trust or other estate in which you have a
substantial beneficial interest or as to which you
serve as trustee or in a similar fiduciary capacity;
and
<PAGE>
(iii) any relative or spouse of yours, or any relative of such spouse who
has the same home as you.
Member: A Member is any broker or dealer admitted to membership in the NASD.
Person A "Person Associated with a Member" is every sole proprietor, partner,
Associated officer, director or branch manager of any Member, or any natural
person
with a occupying a similar status or performing similar functions, or any
person
Member: engaged in the investment banking or securities business who is
directly or indirectly controlling or controlled by such Member
(for example, any employee), whether or not any such person is
registered or exempt from registration with the NASD.
<PAGE>
Exhibit 4.3
COMMON STOCK PURCHASE WARRANT
For the Purchase of __________ Shares of Common Stock
of
MAGNITUDE INFORMATION SYSTEMS, INC.
(A Delaware Corporation)
THIS CERTIFIES THAT, for value received_______________________________
__________, residing at_____________________________ (the "Holder"), as owner of
this Warrant (sometimes referred to herein as "Warrant"), is entitled to
subscribe for, purchase and receive _______ fully paid and nonassessable shares
of common stock (the "Common Stock"), of Magnitude Information Systems, Inc., a
Delaware corporation (the "Company") at the price of $1.00(U.S.) per share of
Common Stock (the "Exercise Price"), upon
payment of the Exercise Price in accordance with the provisions hereof at the
principal office of the Company. If the subscription rights represented hereby
shall not be exercised on or before the Expiration Date, this Warrant shall
become and will be void without further force of effect, and all rights
represented hereby shall cease and expire.
This Warrant may be exercised subject to the following terms and
conditions.
(i) Terms of Warrant.
Holder shall be entitled to purchase and receive _______
shares of Common Stock at the Exercise Price at any time on or before 5:00 PM on
___________ (the "Expiration Date"), by paying the Exercise Price to the
Company. Notwithstanding the foregoing, in the event the Company's shares of
common stock shall be quoted at a publicly traded price of $2.00 per share at
the close of each trading day for a period of ten (10) consecutive trading days
at any time (and from time to time to the extent said Warrant shall not be
exercised or shall not expire in accordance with its terms prior to each such
ten (10 ) day period) during the term of this Warrant, the Company shall have
the option, so long as the Underlying Shares are subject to an effective
registration statement, to provide Holder with a notice of required Warrant
exercise acceleration with any such notice to be delivered within a period of
two (2) business days after such ten (10) day period and Holder shall then have
a period of ten (10) business days after said notice (expiring at 5:00 PM on
such tenth day) within which to exercise this Warrant in full and make payment
thereon as provided herein; any failure by Holder to timely exercise as set
forth herein shall cause this Warrant and all rights evidenced hereby to
automatically expire. Any notices required hereunder shall be in writing and may
be delivered via U.S. Postal Service, personally or by any commercial delivery
or overnight service to the Holder or Company at the respective addresses set
forth herein for the same. Any attempted but undelivered notice sent via any
method and for which a proof of attempted delivery therefor is issued and left
at the appropriate address shall be deemed to be effective delivery.
(ii) Exercise of Warrant.
This Warrant may only be exercised once during the Exercise
Period by surrendering the form of subscription attached hereto duly executed by
the Holder, to the Company at its principal office at 50 Tannery Road,
Branchburg, New Jersey 08876 or at such other address as may be designated by
the Company, and by simultaneously paying the Exercise Price in cash or check to
the Company. The date of exercise shall be the date on which the completed
subscription agreement, and Exercise Price are tendered to the Company.
(iii) Restricted Nature of Underlying Stock.
Unless the Company receives an opinion from counsel
satisfactory to it that such a legend is not required, in order to assure
compliance with the Securities Act of 1933, as amended (the "1933 Act"), or any
applicable State Securities Laws, each certificate for shares of Common Stock
underlying this Warrant ("Underlying Shares") shall bear a legend reading
substantially as follows:
"The Securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended ("Act"). Such
securities have been acquired for investment and may not be publicly
offered or sold in the absence of (1) an effective registration
statement for such securities under the Act; (2) An opinion of counsel
acceptable to the Company prior to any proposed transfer to the effect
that registration is not required under the Act; or (3) a letter
presented to the Company prior to any proposed transfer, from the staff
of the Securities and Exchange Commission, to the effect that it will
not take any enforcement action if the proposed transfer is made
without registration under the Act."
(iv) Disposition of Warrant or Underlying Shares.
The Holder, by acceptance hereof, agrees for itself that this Warrant
shall not be assignable or transferable in whole or in part by Holder under any
circumstances and any such attempted assignment or transfer shall immediately
cause this Warrant to expire and be rendered null and void. In addition to the
requirements set forth above, disposition of any of the underlying Shares shall
not be made unless and until:
(a) The Company has received an opinion from counsel for the
Holder, satisfactory to the Company, stating that no registration under the 1933
Act is required with respect to such disposition; or
(b) A registration statement or post-effective amendment to a
registration statement under the 1933 Act has been filed and made effective by
the Commission covering such proposed disposition.
(v) Loss, Theft, Destruction or Mutilation. Upon receipt by the Company
of evidence satisfactory to it (in the exercise of its reasonable discretion) of
the ownership of and the loss, theft, destruction, or mutilation of this
Warrant, the Company will execute and deliver, in lieu thereof, a new Warrant of
like tenor.
(vi) Warrant Holder Not a Shareholder. Any Holder of this Warrant, as
such, shall not be entitled by reason of this Warrant to any rights whatsoever
of a shareholder of the Company.
(vii) Taxes. The Company will pay all document and stamp taxes in
respect of the issue of this Warrant or the Common Shares issuable upon exercise
thereof.
(viii) Miscellaneous. References herein describing this instrument as a
"Warrant" or "Warrants", refer solely to the rights conferred upon Holder
hereby.
(ix) Warrant Subject to Restrictions under Securities Act. No sale,
offer to sell or transfer of the Warrants represented by this certificate can or
will be made in as much as the Warrant is not assignable or transferable under
any circumstances and any attempt to assign or transfer this Warrant shall cause
the same to immediately expire and be null and void in accordance with its
terms. No sale, offer to sell or transfer of the underlying shares shall be made
unless a registration statement under the 1933 Act, with respect to such shares
is then in effect or an exemption from the registration requirements of the 1933
Act is then in fact applicable to such shares. The availability of such
exemption shall be established to the reasonable satisfaction of the Company and
its counsel.
(x) Registration of Shares. The Company hereby agrees to cause the
Underlying Shares of common stock represented hereby to be registered with the
Securities and Exchange Commission pursuant to a registration statement under
the 1933 Act by no later than _______________.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
a duly authorized officer.
_________, _______ MAGNITUDE INFORMATION SYSTEMS, INC.
By: _________________________
Form to be used to exercise Warrant:
EXERCISE FORM
Date: ________, ______
The undersigned hereby elects irrevocably to exercise the within
Warrant and to purchase ___________ shares of Common Stock of Magnitude
Information Systems, Inc. called for thereby.
Signature: ________________________
Signature Guaranteed: __________________
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name _____________________________
Address __________________________
**************
NOTICE: The signature to the form to exercise must correspond with the name as
written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
Exhibit 4.4
CONVERTIBLE PROMISSORY NOTE
$____________ Branchburg, New Jersey
-----------------, -------
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
("THE SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER ALL APPLICABLE
SECURITIES LAWS OR UNLESS EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS ARE
AVAILABLE, WHICH EXEMPTIONS SHALL BE ESTABLISHED TO THE REASONABLE SATISFACTION
OF THE COMPANY, BY OPINION OF COUNSEL OR OTHERWISE.
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
_______ ________, (herein called "Note Holder") located at
___________________________________, or such other place as may be designated in
writing by Note Holder, the principal sum of ______________________
($_____________) DOLLARS, (subject to receipt by the undersigned of said
principal sum as advanced by Note Holder), together with interest as hereinafter
provided. Subject to the conversion and/or prepayment as hereinafter contained,
the entire principal amount due hereunder along with accrued interest thereon
shall be paid to the Note Holder in one payment on the date which is Fourteen
(14) months from the date hereof.
The undersigned borrower shall pay the Note Holder interest commencing
with the date hereof, computed on the basis of a 360 day year on the unpaid
principal balance at the rate of Seven (7%) percent per annum from the date of
actual advance to the undersigned.
Note Holder is hereby granted an option to convert, in increments of no
less than $25,000.00, up to the entire principal balance due hereunder into
shares of common stock of the undersigned at a conversion price of $.50 per
share. Said option shall be exercisable by Note Holder upon at least five (5)
business days prior written notice, as hereinafter provided, to the undersigned
at any time and from time to time during the term hereof but no later than five
(5) business days prior to the aforementioned principal due date hereunder. In
the event Note Holder elects to so convert any portion of the principal
otherwise due hereunder, Note Holder shall provide the undersigned with written
notice of such conversion option exercise as aforesaid whereupon this Note and
all sums due Note Holder hereunder shall be deemed to be partially or fully
pre-paid and satisfied as the case may be dependent upon the principal sums so
converted, and the undersigned shall, as soon as may be practicable thereafter,
deliver or cause to be delivered to Note Holder all shares of common stock due
to Note Holder as aforesaid. All notices shall be in writing, sent via next day
overnight mail or delivery service with receipt therefor, and shall be deemed
given as of the date of such mailing. All shares received hereunder shall be
subject to all applicable securities laws. Notwithstanding the foregoing, the
undersigned shall, by _______________, cause an amount of the undersigned's
shares calculated at the above conversion rate to be registered upon such
Registration Statement as may be legally available so as to cause said shares
subject to the foregoing conversion option to be without the Rule 144
Restriction. Should Note Holder elect to convert as set forth above prior to the
filing of such Registration Statement, then the shares Note Holder receives upon
such conversion shall thereafter be included in the foregoing Registration
Statement. In no event shall the number of shares to be registered and issuable
hereunder as set forth above exceed _________. In the event the undersigned
shall not cause said Registration Statement to become effective within the
foregoing period, Note Holder shall be entitled to receive an additional
______________ shares of the undersigned common stock which shares shall be
subject to all applicable securities laws.
Upon the failure to pay the sums of money due under this Promissory
Note, which default shall remain uncured for a period of thirty (30) days, or
the appointment of a receiver of the property, rights, credits, assets or any
part thereof, of the undersigned, or the filing of a petition by or against the
undersigned for relief under any bankruptcy or insolvency law, or an assignment
of all the undersigned's assets for the benefit of creditors, the Note Holder
may at its option:
(1) Declare all sums owing Note Holder from the undersigned hereunder
to be forthwith due and payable.
(2) Collect interest on the principal balance owing hereon at the rate
provided herein from the date of such default, and if this Note is referred for
collection, collect all reasonable expenses incurred by Note Holder in
connection with the collection of this Note, including but not limited to
reasonable attorney's fees.
Note Holder shall not, by any act, delay, omission or otherwise be
deemed to have waived any of his rights or remedies hereunder and no waiver by
the Note Holder of his rights or remedies hereunder shall be valid against Note
Holder unless in writing, signed by Note Holder, and then only to the extent
therein set forth. The waiver by the Note Holder of any right or remedy
hereunder upon any one occasion shall not be construed as a bar to any right or
remedy which he would otherwise have had on any future occasion.
The undersigned shall have the right to make prepayments upon thirty
days' notice, in whole or in part, of this Note without premium or penalty and
from time to time. All prepayments shall be applied against the payments due in
the order of maturity.
The undersigned hereby waives presentment for payment, protest and
notice for non-payment of this Note.
This Note shall be governed by and construed in accordance with the
laws of the State of New Jersey with venue situate therein and may not be
assigned in whole or in part without the prior written consent of the
undersigned in each instance.
MAGNITUDE INFORMATION SYSTEMS, INC.
(SEAL)
BY:________________________________
ATTEST:
- ----------------------------
<PAGE>
Exhibit 4.5
SUBSCRIPTION AGREEMENT
Subscription Agreement and Questionnaire of Magnitude Information Systems,
Inc.
The undersigned hereby subscribes for _____ convertible promissory
notes, a copy of the form of which is annexed hereto as Exhibit A (the "Notes"),
and ____ common stock purchase warrants, a copy of the form of which is annexed
hereto as Exhibit B (the "Warrants"), from Magnitude Information Systems,
Inc.(the "Company") for the purchase price of $________. The Notes and Warrants,
as well as their respective underlying Company Common Stock, are sometimes
hereinafter collectively referred to as the "Security" or "Securities". The
entire purchase price is due and payable upon the execution of this Subscription
Agreement,and shall be paid by check, subject to collection, or by wire
transfer, made payable to the order of "Magnitude Information Systems, Inc." The
Company shall have the right to reject this subscription in whole or in part.
1 The undersigned, in order to induce the Company to accept this
Subscription Agreement represents, warrants and covenants to the Company as
follows:
(a) The undersigned acknowledges that (i) the Notes and
Warrants being purchased hereunder have not been registered under the Securities
Act of 1933,as amended ("Securities Act"), or the securities laws of any State;
(ii) absent an exemption from registration contained in those laws, the issuance
and sale of the Notes and Warrants would require registration; and (iii) the
Company's reliance upon any such exemption is invariably based upon the
undersigned's representations, warranties, and agreements contained in this
Subscription Agreement (the Subscription Agreement and the included Investor
Questionnaire are collectively referred to herein as the "Subscription
Documents").
(b) The undersigned agrees that this Subscription Agreement is
and shall be irrevocable unless it has not been accepted by the Company.
(c) The undersigned has carefully read the Company's Form
10-KSB for the fiscal year ended December 31, 1998 and Form 10-QSB for the
quarter ended _____________, this Subscription Agreement as well as the Note and
Warrant attached hereto as Exhibits A and B, respectively (collectively, the
"Disclosure Materials") all of which the undersigned acknowledges have been
delivered to the undersigned. The undersigned acknowledges that the undersigned
has been given the opportunity to ask questions of, and receive answers from,
the Company concerning the terms and conditions of this Subscription Agreement
and the Disclosure Materials and to obtain such additional written information,
to the extent the Company possesses such information or can acquire it without
unreasonable effort or expense, necessary to verify the accuracy of same, as the
Undersigned desires in order to evaluate the investment. The undersigned further
acknowledges that the undersigned has received no representations or warranties
from the Company, or their respective employees or agents in making this
investment decision other than as set forth in the Disclosure Materials.
<PAGE>
(d) The undersigned acknowledges that the undersigned has
investigated the Company's business, financial conditions, current state of
affairs, planned business and other matters necessary in order for the
undersigned to make an informed investment decision regarding the purchase of
the Notes and Warrants.
(e) The undersigned acknowledges that the undersigned is
purchasing the Notes and Warrants without being furnished any prospectus or
written description of the Company, its business and/or its future plans, other
than the Disclosure Material, and has relied solely upon the Disclosure Material
and the undersigned's own investigation into the Company and its proposed
operations.
(f) The undersigned is aware that the purchase of the Notes
and Warrants is a speculative investment involving a high degree of risk and
that there is no guarantee that the undersigned will realize any gain from this
investment, and that the entire investment could be lost.
(g) The undersigned understands that no federal or state
agency has made any finding or determination regarding the fairness of this
Offering, or any recommendation or endorsement of this Offering.
(h) The undersigned is purchasing the Notes and Warrants for
the undersigned's own account, with the intention of holding the Security with
no present intention of dividing or allowing others to participate in this
investment or of reselling or otherwise participating, directly or indirectly,
in a distribution of the Security, and shall not make any sale, transfer, or
pledge thereof without registration under the Securities Act and any applicable
securities laws of any state or unless an exemption from registration is
available under those laws.
(i) The undersigned will not sell short in any manner the
shares of Common Stock underlying the Notes and Warrants.
(j) The undersigned is financially able to bear the economic
risk of this investment, including the ability to hold the Notes and Warrants
indefinitely or to afford a complete loss of the undersigned's investment in the
Notes and Warrants.
<PAGE>
(k) The undersigned represents that the undersigned's overall
commitment to investments which are not readily marketable is not
disproportionate to its net worth, and the investment in the Notes and Warrants
will not cause such overall commitment to become excessive. The undersigned
understands that the statutory basis on which the Units are being sold to the
undersigned to others would not be available if the undersigned's present
intention were to hold the Notes and Warrants for a fixed period or until the
occurrence of a certain event. The undersigned realizes that in the view of the
Securities and Exchange Commission,a purchase now with a present intent to
resell by reason of a foreseeable specific contingency or any anticipated change
in the market value, or in the condition of the Company, or that of the industry
in which the business of the Company is engaged or in connection with a
contemplated liquidation, or settlement of any loan obtained by the undersigned
for the acquisition of the Notes and Warrants, and for which such Notes and
Warrants may be pledged as security or as donations to religious or charitable
institutions for the purpose of securing a deduction on an income tax return,
would, in fact, represent a purchase with an intent inconsistent with the
undersigned's representations to the Company, and the Securities and Exchange
Commission would then regard such sale as one for which no exemption from
registration is available. The undersigned will not pledge, transfer or assign
this Subscription Agreement.
(l) The undersigned represents that the funds provided for
this investment are either separate property of the Undersigned, other property
over which the undersigned has the right of control, or are otherwise funds as
to which the undersigned has the sole right of management.
(m) The address shown under the undersigned's signature at the
end of this Subscription Agreement is the undersigned's principal business
address if a corporation or other entity.
(n) The undersigned has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Notes and Warrants.
(o) The undersigned acknowledges that the certificates for the
securities comprising the shares of Common Stock underlying the Notes and
Warrants which the undersigned will receive will contain a legend substantially
as follows:
THE SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT
WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD,
TRANSFERRED, MADE SUBJECT TO A SECURITY INTEREST, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR AN OPINION OF
COUNSEL FOR THE COMPANY IS RECEIVED THAT REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT.
(p) This Subscription Agreement and all representations,
warranties and statements made herein are true, complete and correct in all
material respects.
(q) The undersigned acknowledges that the Company, except as
set forth in the Notes and Warrants, is under no obligation to register the
Notes and Warrants under the Securities Act or any state securities laws, or to
take any action to make any exemption from any such registration provisions
available.
(r) This Subscription Agreement is a legally binding
obligation of the undersigned in accordance with its terms.
<PAGE>
(s) The undersigned is an "accredited investor," as such term
is defined in Regulation D of the Rules and Regulations promulgated under the
Act.
(t) If the undersigned is a partnership, corporation, trust or
other entity, (i) the undersigned has enclosed with this Subscription Agreement
appropriate evidence of the authority of the individual executing this
Subscription Agreement to act on its behalf (e.g., if a trust, a certified copy
of the trust agreement; if a corporation, a certified corporate resolution
authorizing the signature and a certified copy of the articles of incorporation;
or if a partnership, a certified copy of the partnership agreement), (ii) the
undersigned represents and warrants that it was not organized or reorganized for
the specific purpose of acquiring the Notes and Warrants, and (iii) the
undersigned has the full power and authority to execute this Subscription
Agreement on behalf of such entity and to make the representations and
warranties made herein on its behalf, and (iv) this investment in the Company
has been affirmatively authorized, if required,by the governing board of such
entity and is not prohibited by the governing documents of the entity.
(u) The undersigned expressly acknowledges and agrees that the
Company is relying upon the Undersigned's representation contained in this
Subscription Agreement. The undersigned subscriber acknowledges that the
undersigned understands the meaning and legal consequences of the
representations and warranties which are contained herein and hereby agrees to
indemnify, save and hold the Company, and their respective officers, directors
and counsel harmless from and against any and all claims or actions arising out
of a breach of any representation, warranty or acknowledgment of the undersigned
contained in any Subscription Document. Such indemnification shall be deemed to
include not only the specific liabilities or obligation with respect to which
such indemnity is provided, but also all reasonable costs, expenses, counsel
fees and expenses of settlement relating thereto, whether or not any such
liability or obligation shall have been reduced to judgment.
(v) Except as otherwise specifically provided for hereunder,
no party shall be deemed to have waived any of his or her or its rights
hereunder or under any other agreement, instrument or papers signed by any of
them with respect to the subject matter hereof unless such waiver is in writing
signed by the party waiving said right. A waiver on any one occasion with
respect to the subject matter hereof shall not be construed as a bar to, or
waiver of, any right or remedy on any future occasion. All rights and remedies
with respect to the subject matter hereof, whether evidenced hereby or by any
other agreement, instrument, or paper, will be cumulative, and may be exercised
separately or concurrently.
(w) The parties have not made any representations or
warranties with respect to the subject matter hereof not set forth herein, and
this Subscription Agreement, together with the Notes and Warrants executed
simultaneously herewith, constitutes the entire agreement between them with
respect to the subject matter hereof. All understandings and agreements
heretofore had between the parties with respect to the subject matter hereof are
merged in this Subscription Agreement and the Notes and Warrants which alone
fully and completely expresses their agreement.
<PAGE>
(x) This Agreement may not be changed, modified, extended,
terminated or discharged orally, but only by an agreement in writing, which is
signed by all of the parties to this Agreement.
(y) The parties agree to execute any and all such other and
further instruments and documents, and to take any and all such further actions
reasonably required to effectuate this Subscription Agreement and the intent and
purposes hereof.
(z) This Subscription Agreement shall be governed by and
construed in accordance with the laws of the State of New York and the
undersigned hereby consents to the jurisdiction of the courts of the State of
New York and/or the United States District Court for the Southern District of
New York.
(aa) The undersigned understands that this subscription is not
binding upon the Company until the Company accepts it,which acceptance is at the
sole discretion of the Company and is to be evidenced by the Company's execution
of this Subscription Agreement where indicated. This Subscription Agreement
shall be null and void if the Company does not accept it as aforesaid.
(bb) Intentionally omitted.
(cc) Neither this Subscription Agreement nor any of
the rights of the undersigned hereunder may be transferred or assigned by
the undersigned.
(dd) Please check whether one or more of the following
definitions of "accredited investor," if any, applies to you. If none of the
following applies to you, please leave a blank.
<PAGE>
(i) A Bank as defined in Section 3(a)(2) of the Securities Act of 1933, as
amended ("Securities Act"), or any savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the Securities Act whether
acting in its individual or fiduciary capacity; any broker or dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); an insurance company as defined in Section 2(13) of the
Securities Act; an investment company registered under the Investment Company
Act of 1940 or a business development company as defined in Section 2(a)(48) of
that act; a Small Business Investment Company licensed by the U.S.Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act
of 1958;any plan established and maintained by a state, or its political
subdivisions,or any agency or instrumentality of a state or its political
subdivisions for the benefit of its employees, if such plan has total assets in
excess of $5,000,000; any employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974, if the investment decision is
made by a plan fiduciary, as defined in Section 3(21) of such act, which is
either a bank, savings and loan association, insurance company, or registered
investment advisor, or if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with investment decisions made solely
by persons that are Accredited Investors.
(ii) A Private Business Development Company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940.
(iii) An organization described in Section 501(c)(3) of the Internal
Revenue Code or corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000.
(iv) A natural person whose individual net worth, or joint net worth with
that person's spouse, at the time of purchase exceeds $1,000,000.
(v) A natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with that person's spouse in
excess of $300,000 in each of those years and has a reasonable expectation of
reaching the same income level in the current year.
(vi) Any trust, with total assets in excess of $5,000,000, not formed for
the specific purpose of acquiring the Units, whose purchase is directed by a
sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D.
(vii) Any entity in which all of the equity owners are Accredited
Investors.
<PAGE>
2. This following information is required pursuant to Article III,
Section 44 of the Rules of Fair Practice of the NASD and upon which the Company
will rely in making any statement to the NASD concerning the association or
affiliation of any officer,director or security holder of the Company with any
NASD member.
(i) State whether you or any of your Affiliates or any of your
Associates (See Definitions at the end of this
Subscription Agreement) are
(a) Member of the National Association of Securities Dealers,
Inc. ("NASD");
Yes____ No____
(b) a Person Associated with a Member of the NASD; or
Yes____ No____
(c) an Affiliate of a Member of the NASD.
Yes____ No____
(ii) State whether you or any of your Affiliates or any of your Associates
own stock or other securities of any member of the NASD (other than
securities purchased on the open market).
Yes____ No____
(iii) State whether you or any of your Affiliates or any of your Associates
have made a subordinated loan to any Member of the NASD.
Yes____ No____
(iv) If you marked "Yes" to any of the questions above,please briefly
describe the facts below, giving the names of the appropriate Members
of the NASD to which your answers refer.
<PAGE>
(v) The Undersigned has carefully reviewed the jurisdictional notices
listed below and agrees to abide by any restrictions contained therein
applicable to the undersigned.
JURISDICTIONAL NOTICES
THE SECURITIES OFFERED PURSUANT TO THE MEMORANDUM HEREBY HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 OR THE SECURITIES LAWS
OF ANY STATES OF THE UNITED STATES OR ANY OTHER JURISDICTION AND ARE BEING
OFFERED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS
OF SAID ACT AND SUCH LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE
SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE MEMORANDUM. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. IT IS THE RESPONSIBILITY
OF ANY SUBSCRIBER WISHING TO PURCHASE THE Units TO SATISFY ITSELF AS TO THE FULL
OBSERVANCE OF THE LAWS OF ANY RELEVANT TERRITORY OUTSIDE THE UNITED STATES IN
CONNECTION WITH ANY SUCH PURCHASE, INCLUDING OBTAINING ANY REQUIRED GOVERNMENTAL
OR OTHER CONSENTS OR OBSERVING ANY OTHER APPLICABLE FORMALITIES.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement
on this __ day of ___ , _______
(Total Investment) $_____________
-----------
Exact Name in Which Title is to be Held
Signature
Name (Please Print)
Title of Person Executing Agreement
Address: Number and Street
City Country Zip Code
Tax Identification Number
Jurisdiction of Incorporation
Accepted this __ day of , _______, on behalf of
------ ------------------
MAGNITUDE INFORMATION SYSTEMS, INC.
BY:
<PAGE>
DEFINITIONS
Affiliate: An Affiliate of any person (for purposes hereof a "person"
includes a partnership, corporation or other legal entity such
as a trust or estate) is a person which controls, is
controlled by or is under common control with such person. For
purposes of this definition:
(i) a person should be presumed to control a Member if the
person beneficially owns 10% or more of the outstanding voting
securities of a Member which is a corporation, or beneficially
owns a partnership interest in 10% or more of the outstanding
voting securities of a person which is a corporation, or
beneficially own a partnership interest in 10% or more of the
distributable profits or losses of a person which is a
partnership; and
(ii) a Member should be presumed to control a person if the
Member and Persons Associated with the Member beneficially own
10% or more of the outstanding voting securities of a person
which is a corporation, or beneficially own a partnership
interest in 10% or more of the distributable profits or losses
of a person which is a partnership; and
(iii) a person should be presumed to be under common control
with a Member if:
(1) the same person controls both the Member and such
person by beneficially owning 10% or more of the
outstanding voting securities of the Member and other
such person which is a corporation, or by
beneficially owning a partnership interest in 10% or
more of the distributable profits or losses of the
Member and other such person which is a partnership;
or
(2) a person having the power to direct or cause the
direction of the management or policies of the Member
also has the power to direct or cause the direction
of the management or policies of the other entity in
question.
Associate: An Associate is
(i) any corporation or organization of which you are
an officer, director or partner, or of which you are
directly or indirectly the beneficial owner of 10% or
more of any class of equity securities.
(ii) any trust or other estate in which you have a
substantial beneficial interest or as to which you
serve as trustee or in a similar fiduciary capacity;
and
<PAGE>
(iii) any relative or spouse of yours, or any
relative of such spouse who has the same home as you.
Member: A Member is any broker or dealer admitted to membership in the NASD.
Person A "Person Associated with a Member" is every sole proprietor,
partner,
Associated officer, director or branch manager of any Member, or any
natural person
with a occupying a similar status or performing similarfunctions,or any
person
Member: engaged in the investment banking or securities business who is
directly or indirectly controlling or controlled by such Member
(for example, any employee), whether or not any such person is
registered or exempt from registration with the NASD.
<PAGE>
Exhibit 4.6
CONVERTIBLE GRID PROMISSORY NOTE
$100,000.00 MAXIMUM Branchburg, New Jersey
May 28, 1999
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
("THE SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER ALL APPLICABLE
SECURITIES LAWS OR UNLESS EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS ARE
AVAILABLE, WHICH EXEMPTIONS SHALL BE ESTABLISHED TO THE REASONABLE SATISFACTION
OF THE COMPANY, BY OPINION OF COUNSEL OR OTHERWISE.
FOR VALUE RECEIVED, the undersigned promises to pay to the order of B.
MICHAEL PISANI, (herein called "Note Holder") located at 44 Lake Hill Road,
Short Hills, New Jersey 07078, or such other place as may be designated in
writing by Note Holder, the principal sum of ONE HUNDRED THOUSAND ($100,000.00)
DOLLARS, (subject to receipt by the undersigned of said principal sum as
advanced by Note Holder as follows: $50,000 (less $7,500 representing an amount
heretofore outstanding and due Note Holder satisfied hereby) upon the date
hereof, $25,000 within 7 days hereafter and an additional $25,000 within 7 days
thereafter), together with interest as hereinafter provided. Subject to the
conversion and/or prepayment as hereinafter contained, the entire principal
amount due hereunder along with accrued interest thereon shall be paid to the
Note Holder in one payment on the date which is Fourteen (14) months from the
date hereof.
The undersigned borrower shall pay the Note Holder interest commencing
with the date hereof, computed on the basis of a 360 day year on the unpaid
principal balance at the rate of Seven (7%) percent per annum from the date of
actual advance to the undersigned.
Note Holder is hereby granted an option to convert, in increments of no
less than $25,000.00, up to the entire principal balance due hereunder into
shares of common stock of the undersigned at a conversion price of $.50 per
share. Said option shall be exercisable by Note Holder upon at least five (5)
business days prior written notice, as hereinafter provided, to the undersigned
at any time and from time to time during the term hereof but no later than five
(5) business days prior to the aforementioned principal due date hereunder. In
the event Note Holder elects to so convert any portion of the principal
otherwise due hereunder, Note Holder shall provide the undersigned with written
notice of such conversion option exercise as aforesaid whereupon this Note and
all sums due Note Holder hereunder shall be deemed to be partially or fully
pre-paid and satisfied as the case may be dependent upon the principal sums so
converted, and the undersigned shall, as soon as may be practicable thereafter,
deliver or cause to be delivered to Note Holder all shares of common stock due
to Note Holder as aforesaid. All notices shall be in writing, sent via next day
overnight mail or delivery service with receipt therefor, and shall be deemed
given as of the date of such mailing. All shares received hereunder shall be
subject to all applicable securities laws. Notwithstanding the foregoing, the
undersigned shall, by December 31, 1999, cause an amount of the undersigned's
shares calculated at the above conversion rate to be registered upon such
Registration Statement as may be legally available so as to cause said shares
subject to the foregoing conversion option to be without the Rule 144
Restriction. Should Note Holder elect to convert as set forth above prior to the
filing of such Registration Statement, then the shares Note Holder receives upon
such conversion shall thereafter be included in the foregoing Registration
Statement. In no event shall the number of shares to be registered and issuable
hereunder as set forth above exceed 200,000. In the event the undersigned shall
not cause said Registration Statement to become effective within the foregoing
period, Note Holder shall be entitled to receive an additional twenty thousand
(20,000) shares of the undersigned common stock which shares shall be subject to
all applicable securities laws.
Upon the failure to pay the sums of money due under this Promissory
Note, which default shall remain uncured for a period of thirty (30) days, or
the appointment of a receiver of the property, rights, credits, assets or any
part thereof, of the undersigned, or the filing of a petition by or against the
undersigned for relief under any bankruptcy or insolvency law, or an assignment
of all the undersigned's assets for the benefit of creditors, the Note Holder
may at its option:
(1) Declare all sums owing Note Holder from the undersigned hereunder
to be forthwith due and payable.
(2) Collect interest on the principal balance owing hereon at the rate
provided herein from the date of such default, and if this Note is referred for
collection, collect all reasonable expenses incurred by Note Holder in
connection with the collection of this Note, including but not limited to
reasonable attorney's fees.
Note Holder shall not, by any act, delay, omission or otherwise be
deemed to have waived any of his rights or remedies hereunder and no waiver by
the Note Holder of his rights or remedies hereunder shall be valid against Note
Holder unless in writing, signed by Note Holder, and then only to the extent
therein set forth. The waiver by the Note Holder of any right or remedy
hereunder upon any one occasion shall not be construed as a bar to any right or
remedy which he would otherwise have had on any future occasion.
The undersigned shall have the right to make prepayments, in whole or
in part, of this Note without premium or penalty and from time to time. All
prepayments shall be applied against the payments due in the order of maturity.
The undersigned hereby waives presentment for payment, protest and
notice for non-payment of this Note.
This Note shall be governed by and construed in accordance with the
laws of the State of New Jersey with venue situate therein and may not be
assigned in whole or in part without the prior written consent of the
undersigned in each instance.
MAGNITUDE INFORMATION SYSTEMS, INC.
(SEAL)
BY:________________________________
STEVEN D. RUDNIK, PRESIDENT
ATTEST: 50 Tannery Road
Branchburg, NJ 08876
- ----------------------------
JOERG KLAUBE , SECRETARY
<PAGE>
Exhibit 4.7
COMMON STOCK PURCHASE WARRANT
For the Purchase of 200,000 Shares of Common Stock
of
MAGNITUDE INFORMATION SYSTEMS, INC.
(A Delaware Corporation)
THIS CERTIFIES THAT, for value received MICHAEL PISANI (the "Holder"),
as owner of this Warrant (sometimes referred to herein as "Warrant"), is
entitled to subscribe for, purchase and receive up to 200,000 fully paid and
nonassessable shares of common stock (the "Common Stock"), of Magnitude
Information Systems, Inc., a Delaware corporation (the "Company") at the price
of $1.00(U.S.) per share of Common Stock (the "Exercise Price"), upon payment of
the Exercise Price in accordance with the provisions hereof at the principal
office of the Company. If the subscription rights represented hereby shall not
be exercised on or before the Expiration Date, this Warrant shall become and
will be void without further force of effect, and all rights represented hereby
shall cease and expire.
This Warrant may be exercised subject to the following terms and
conditions.
(i) Terms of Warrant.
Holder shall be entitled to purchase and receive up to 200,000
shares of Common Stock at the Exercise Price at any time on or before 5:00 PM on
May , 2003 (the "Expiration Date"), by paying the Exercise Price to the Company.
Notwithstanding the foregoing, in the event the Company's shares of common stock
shall be quoted at a publicly traded price of $2.00 per share at the close of
each trading day for a period of ten (10) consecutive trading days at any time
(and from time to time to the extent said Warrant shall not be exercised or
shall not expire in accordance with its terms prior to each such ten (10 ) day
period) during the term of this Warrant, the Company shall have the option to
provide Holder with a notice of required Warrant exercise acceleration within a
period of two (2) days after each such ten (10) day period and Holder shall then
have a period of three (3) days after said notice (expiring at 5:00 PM on the
third day) within which to exercise this Warrant in full and make payment
thereon as provided herein; any failure by Holder to timely exercise as set
forth herein shall cause this Warrant and all rights evidenced hereby to
automatically expire.
(ii) Exercise of Warrant.
This Warrant may be exercised during the Exercise Period by
surrendering the form of subscription attached hereto duly executed by the
Holder, to the Company at its principal office at 50 Tannery Road, Branchburg,
New Jersey 08876 or at such other address as may be designated by the Company,
and by simultaneously paying the Exercise Price in cash or check to the Company.
The date of exercise shall be the date on which the completed subscription
agreement, and Exercise Price are tendered to the Company.
(iii) Restricted Nature of Underlying Stock.
Unless the Company receives an opinion from counsel
satisfactory to it that such a legend is not required, in order to assure
compliance with the Securities Act of 1933, as amended (the "1933 Act"), or any
applicable State Securities Laws, each certificate for shares of Common Stock
underlying this Warrant ("Underlying Shares") shall bear a legend reading
substantially as follows:
"The Securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended ("Act"). Such
securities have been acquired for investment and may not be publicly
offered or sold in the absence of (1) an effective registration
statement for such securities under the Act; (2) An opinion of counsel
acceptable to the Company prior to any proposed transfer to the effect
that registration is not required under the Act; or (3) a letter
presented to the Company prior to any proposed transfer, from the staff
of the Securities and Exchange Commission, to the effect that it will
not take any enforcement action if the proposed transfer is made
without registration under the Act."
(iv) Disposition of Warrant or Underlying Shares.
The Holder, by acceptance hereof, agrees for itself and any subsequent
owner(s) that, in addition to the requirements set forth above, disposition of
any Warrant or the underlying Shares shall not be made unless and until:
(a) The Company has received an opinion from counsel for the
Holder(s) of the Warrant or underlying Shares stating that no registration under
the 1933 Act is required with respect to such disposition; or
(b) A registration statement or post-effective amendment to a
registration statement under the 1933 Act has been filed and made effective by
the Commission covering such proposed disposition.
(v) Loss, Theft, Destruction or Mutilation. Upon receipt by the Company
of evidence satisfactory to it (in the exercise of its reasonable discretion) of
the ownership of and the loss, theft, destruction, or mutilation of this
Warrant, the Company will execute and deliver, in lieu thereof, a new Warrant of
like tenor.
(vi) Warrant Holder Not a Shareholder. Any Holder of this Warrant, as
such, shall not be entitled by reason of this Warrant to any rights whatsoever
of a shareholder of the Company.
(vii) Taxes. The Company will pay all document and stamp taxes in
respect of the issue of this Warrant or the Common Shares issuable upon exercise
thereof.
(viii) Miscellaneous. References herein describing this instrument as a
"Warrant" or "Warrants", refer solely to the rights conferred upon Holder
hereby.
(ix) Warrant Subject to Restrictions under Securities Act. No sale,
offer to sell or transfer of the Warrants represented by this certificate or the
underlying shares shall be made unless a registration statement under the 1933
Act, with respect to such Options or shares is then in effect or an exemption
from the registration requirements of the 1933 Act is then in fact applicable to
such shares or Common Stock Purchase Warrants. The availability of such
exemption shall be established to the reasonable satisfaction of the Company and
its counsel.
(x) Registration of Shares. The Company hereby agrees to cause the
Underlying Shares of common stock represented hereby to be registered with the
Securities and Exchange Commission pursuant to a registration statement under
the 1933 Act by no later than December 31, 1999.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
a duly authorized officer.
May ____, 1999 MAGNITUDE INFORMATION SYSTEMS, INC.
By: _________________________
Steven Rudnik, President
<PAGE>
Form to be used to exercise Warrant:
EXERCISE FORM
Date: ________, ______
The undersigned hereby elects irrevocably to exercise the within
Warrant and to purchase 200,000 shares of Common Stock of Magnitude Information
Systems, Inc. called for thereby.
Signature: ________________________
Signature Guaranteed: __________________
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name _____________________________
Address __________________________
**************
NOTICE: The signature to the form to exercise must correspond with the name as
written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
<PAGE>
Exhibit 4.8
CONVERTIBLE PROMISSORY NOTE
$300,000.00 Branchburg, New Jersey
- -----------
__ April 23, 1999
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
("THE SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER ALL APPLICABLE
SECURITIES LAWS OR UNLESS EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS ARE
AVAILABLE, WHICH EXEMPTIONS SHALL BE ESTABLISHED TO THE REASONABLE SATISFACTION
OF THE COMPANY, BY OPINION OF COUNSEL OR OTHERWISE.
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
VIVIANA PARTNERS, LP, (herein called "Note Holder") located at 1 Sansome Street,
Suiye 3900, San Francisco, CA 94104, or such other place as may be designated in
writing by Note Holder, the sum of THREE HUNDRED THOUSAND ($300,000.00) DOLLARS.
together with interest as hereinafter provided. Subject to the conversion and/or
prepayment as hereinafter contained, the entire principal amount due hereunder
shall be paid to the Note Holder in one payment on the date which is Fourteen
(14) months from the date hereof.
The undersigned borrower shall pay the Note Holder interest commencing
with the date hereof, computed on the basis of a 360 day year on the unpaid
principal balance at the rate of Seven (7%) percent per annum with interest
payments due hereunder payable semi-annually during the term hereof.
Note Holder is hereby granted an option to convert, in increments of no
less than $25,000.00, up to the entire principal balance due hereunder into
shares of common stock of the undersigned at a conversion price of $.50 per
share. Said option shall be exercisable by Note Holder upon at least five (5)
business days prior written notice, as hereinafter provided, to the undersigned
at any time and from time to time during the term hereof but no later than five
(5) business days prior to the aforementioned principal due date hereunder. In
the event Note Holder elects to so convert any portion of the principal
otherwise due hereunder, Note Holder shall provide the undersigned with written
notice of such conversion option exercise as aforesaid whereupon this Note and
all sums due Note Holder hereunder shall be deemed to be partially or fully
pre-paid and satisfied as the case may be dependent upon the principal sums so
converted, and the undersigned shall, as soon as may be practicable thereafter,
deliver or cause to be delivered to Note Holder all shares of common stock due
to Note Holder as aforesaid. All notices shall be in writing, sent via next day
overnight mail or delivery service with receipt therefor, and shall be deemed
given as of the date of such mailing. All shares received hereunder shall be
subject to all applicable securities laws. Notwithstanding the foregoing, the
undersigned shall, within six (6) months of the date hereof, cause an amount of
the undersigned's shares calculated at the above conversion rate to be
registered upon such Registration Statement as may be legally available so as to
cause said shares subject to the foregoing conversion option to be without the
Rule 144 Restriction. Should Note Holder elect to convert as set forth above
prior to the filing of such Registration Statement, then the shares Note Holder
receives upon such conversion shall thereafter be included in the foregoing
Registration Statement. In no event shall the number of shares to be registered
and issuable hereunder as set forth above exceed 600,000. In the event the
undersigned shall not cause said Registration Statement to become effective
within the foregoing six (6) months period, Note Holder shall be entitled to
receive an additional sixty thousand (60,000) shares of the undersigned common
stock which shall be included within the Registration Statement. Nothing
contained hereinabove shall relieve the undersigned of its registration
obligation as set forth above.
In the event the undersigned shall, during the fourteen (14) month term
hereof, enter into additional financing which provides for either a direct
equity investment or the conversion of debt into shares of the undersigned's
common stock at an investment or conversion rate less than $0.50 per share
("Favored Conversion Rate"), Note Holder shall then be entitled to convert the
then outstanding principal balance due hereunder at such Favored Conversion
Rate. Any such election by Note Holder to convert at the Favored Conversion Rate
as set forth above shall require Note Holder to convert into such shares of the
undersigned's common stock upon the same terns and conditions as such direct
equity investment or such additional convertible debt financing, as the case may
be. For purposes of example and not by way of limitation, a subsequent equity
investment or convertible debt financing into restricted shares would provide
Note Holder with the ability to convert at the Favored Conversion Rate into
common stock with the same restrictions.
Upon the failure to pay the sums of money due under this Promissory
Note, which default shall remain uncured for a period of thirty (30) days, or
the appointment of a receiver of the property, rights, credits, assets or any
part thereof, of the undersigned, or the filing of a petition by or against the
undersigned for relief under any bankruptcy or insolvency law, or an assignment
of all the undersigned's assets for the benefit of creditors, the Note Holder
may at its option:
(1) Declare all sums owing Note Holder from the undersigned hereunder
to be forthwith due and payable.
(2) Collect interest on the principal balance owing hereon at the rate
provided herein from the date of such default, and if this Note is referred for
collection, collect all reasonable expenses incurred by Note Holder in
connection with the collection of this Note, including but not limited to
reasonable attorney's fees.
Note Holder shall not, by any act, delay, omission or otherwise be
deemed to have waived any of his rights or remedies hereunder and no waiver by
the Note Holder of his rights or remedies hereunder shall be valid against Note
Holder unless in writing, signed by Note Holder, and then only to the extent
therein set forth. The waiver by the Note Holder of any right or remedy
hereunder upon any one occasion shall not be construed as a bar to any right or
remedy which he would otherwise have had on any future occasion.
The undersigned shall have the right to make prepayments, in whole or
in part, of this Note without premium or penalty and from time to time upon at
least thirty (30) days prior written notice to Note Holder. All prepayments
shall be applied against the payments due in the order of maturity.
The undersigned hereby waives presentment for payment, protest and
notice for non-payment of this Note.
This Note shall be governed by and construed in accordance with the
laws of the State of New Jersey with venue situate therein and may not be
assigned in whole or in part without the prior written consent of the
undersigned in each instance.
MAGNITUDE INFORMATION SYSTEMS, INC.
(SEAL)
BY:________________________________
ATTEST:
<PAGE>
Exhibit 4.9
COMMON STOCK PURCHASE WARRANT
For the Purchase of __________ Shares of Common Stock
of
MAGNITUDE INFORMATION SYSTEMS, INC.
(A Delaware Corporation)
THIS CERTIFIES THAT, for value received _________________________________
__________, residing at _____________________________ (the "Holder"), as owner
of this Warrant (sometimes referred to herein as "Warrant"), is entitled to
subscribe for, purchase and receive _______ fully paid and nonassessable shares
of common stock (the "Common Stock"), of Magnitude Information Systems, Inc., a
Delaware corporation (the "Company") at the price of $1.00(U.S.) per share of
Common Stock (the "Exercise Price"), upon payment of the Exercise Price in
accordance with the provisions hereof at the principal office of the Company. If
the subscription rights represented hereby shall not be exercised on or before
the Expiration Date, this Warrant shall become and will be void without further
force of effect, and all rights represented hereby shall cease and expire.
This Warrant may be exercised subject to the following terms and
conditions.
(i) Terms of Warrant.
Holder shall be entitled to purchase and receive _______
shares of Common Stock at the Exercise Price at any time on or before 5:00 PM on
___________ (the "Expiration Date"), by paying the Exercise Price to the
Company. Any notices required hereunder shall be in writing and may be delivered
via U.S. Postal Service, personally or by any commercial delivery or overnight
service to the Holder or Company at the respective addresses set forth herein
for the same. Any attempted but undelivered notice sent via any method and for
which a proof of attempted delivery therefor is issued and left at the
appropriate address shall be deemed to be effective delivery.
(ii) Exercise of Warrant.
This Warrant may only be exercised once during the Exercise
Period by surrendering the form of subscription attached hereto duly executed by
the Holder, to the Company at its principal office at 50 Tannery Road,
Branchburg, New Jersey 08876 or at such other address as may be designated by
the Company, and by simultaneously paying the Exercise Price in cash or check to
the Company. The date of exercise shall be the date on which the completed
subscription agreement, and Exercise Price are tendered to the Company.
(iii) Restricted Nature of Underlying Stock.
Unless the Company receives an opinion from counsel
satisfactory to it that such a legend is not required, in order to assure
compliance with the Securities Act of 1933, as amended (the "1933 Act"), or any
applicable State Securities Laws, each certificate for shares of Common Stock
underlying this Warrant ("Underlying Shares") shall bear a legend reading
substantially as follows:
"The Securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended ("Act"). Such
securities have been acquired for investment and may not be publicly
offered or sold in the absence of (1) an effective registration
statement for such securities under the Act; (2) An opinion of counsel
acceptable to the Company prior to any proposed transfer to the effect
that registration is not required under the Act; or (3) a letter
presented to the Company prior to any proposed transfer, from the staff
of the Securities and Exchange Commission, to the effect that it will
not take any enforcement action if the proposed transfer is made
without registration under the Act."
(iv) Disposition of Warrant or Underlying Shares.
The Holder, by acceptance hereof, agrees for itself that this Warrant
shall not be assignable or transferable in whole or in part by Holder under any
circumstances and any such attempted assignment or transfer shall immediately
cause this Warrant to expire and be rendered null and void. In addition to the
requirements set forth above, disposition of any of the underlying Shares shall
not be made unless and until:
(a) The Company has received an opinion from counsel for the
Holder, satisfactory to the Company, stating that no registration under the 1933
Act is required with respect to such disposition; or
(b) A registration statement or post-effective amendment to a
registration statement under the 1933 Act has been filed and made effective by
the Commission covering such proposed disposition.
(v) Loss, Theft, Destruction or Mutilation. Upon receipt by the Company
of evidence satisfactory to it (in the exercise of its reasonable discretion) of
the ownership of and the loss, theft, destruction, or mutilation of this
Warrant, the Company will execute and deliver, in lieu thereof, a new Warrant of
like tenor.
(vi) Warrant Holder Not a Shareholder. Any Holder of this Warrant, as
such, shall not be entitled by reason of this Warrant to any rights whatsoever
of a shareholder of the Company.
(vii) Taxes. The Company will pay all document and stamp taxes in
respect of the issue of this Warrant or the Common Shares issuable upon exercise
thereof.
(viii) Miscellaneous. References herein describing this instrument as a
"Warrant" or "Warrants", refer solely to the rights conferred upon Holder
hereby.
(ix) Warrant Subject to Restrictions under Securities Act. No sale,
offer to sell or transfer of the Warrants represented by this certificate can or
will be made in as much as the Warrant is not assignable or transferable under
any circumstances and any attempt to assign or transfer this Warrant shall cause
the same to immediately expire and be null and void in accordance with its
terms. No sale, offer to sell or transfer of the underlying shares shall be made
unless a registration statement under the 1933 Act, with respect to such shares
is then in effect or an exemption from the registration requirements of the 1933
Act is then in fact applicable to such shares. The availability of such
exemption shall be established to the reasonable satisfaction of the Company and
its counsel.
(x) "Piggyback Registration" of Shares. If the Company at any time
undertakes to register any of its securities under the Securities Act of 1933
(the "1933 Act") (other than in connection with a merger or pursuant to Form S-8
or other comparable form), the Company shall include the Underlying Shares of
common stock represented hereby in such registration, provided, however, that if
such registration is effected in connection with an underwritten offering and
the managing underwriter declines to include such Underlying Shares, then, the
Company shall be relieved of its obligation to register such shares with respect
to that particular offering.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
a duly authorized officer.
_________, _______ MAGNITUDE INFORMATION SYSTEMS, INC.
By: _________________________
<PAGE>
Form to be used to exercise Warrant:
EXERCISE FORM
Date: ________, ______
The undersigned hereby elects irrevocably to exercise the within
Warrant and to purchase ___________ shares of Common Stock of Magnitude
Information Systems, Inc. called for thereby.
Signature: ________________________
Signature Guaranteed: __________________
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name _____________________________
Address __________________________
**************
NOTICE: The signature to the form to exercise must correspond with the name as
written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
<PAGE>
Exhibit 4.10
AGREEMENT
Mr. Seymour Kroll
3333 West Ellsworth Road
Ann Arbor, MI 48108
Dear Seymour,
As per our recent discussions, this letter shall set forth the
understanding upon which our agreement will be based.
You agree to provide the sum of $200,000.00 to the Company within 10
days of our agreement by any combination of checks and wire transfers. The
aggregate total of $200,000.00 ("Obligation") shall bear interest at the rate of
twelve (12%) percent per annum calculated based upon the sum outstanding payable
upon maturity and said Obligation shall be a convertible obligation of the
Company which shall mature, subject to repayment as set forth below, fourteen
(14) months from the date of funding by you. Additionally, subject to the
repayment terms contained hereinafter, the amount outstanding may at any time
upon your election during said fourteen (14) month period, be convertible into
common shares of Company's stock at the conversion rate of $0.50 of debt per
share. Any such conversions must be made in increments of no less than
$50,000.00 and upon at least five (5) business days prior written notice to the
Company and any such conversions shall reduce the Obligation. All shares
received hereunder shall be subject to all applicable securities laws.
Notwithstanding the foregoing, the Company shall, within six (6) months of your
wire transfer, cause an amount of Company shares calculated at the above
conversion rate to be registered upon such Registration Statement as may be
legally available so as to cause said shares to be without the Rule 144
Restriction. Should you elect to convert as set forth above prior to the filing
of such Registration Statement, then the shares you receive upon such conversion
shall thereafter be included in the foregoing Registration Statement. In no
event shall the number of shares to be registered and issuable hereunder as set
forth above exceed 400,000 shares.
Notwithstanding anything contained hereinabove to the contrary, the
Company may elect to prepay all or part of said Obligation without penalty. As
security for said Obligation by the Company, all Office Specialty royalties
received by the Company shall be paid into a bank account that is controlled by
you and such royalties shall be applied against the reduction of the Obligation
until the obligation is paid in full or otherwise satisfied as hereinabove
provided. The Company specifically agrees that at no time shall it elect to
offset against such royalties any commissions due to Office Specialty resulting
from any of Office Specialty's commissionable sales of the Company software
products. As further security for the Obligation, the Company shall provide you
with a 50% security interest in the EMS(TM) software in which a security
interest is currently held by the undersigned in an individual capacity and for
which you will be added as an additional secured party to the extent of your
interests therein as provided herein.
Furthermore, the Company hereby represents that except for a security
interest held by Michael G. Martin, there are no other known encumbrances of
record on the Office Specialty royalties stream. Michael G. Martin has agreed
under separate cover that your security interest will take priority over his
regarding this Office Specialty royalty stream.
Furthermore as an additional consideration within this agreement and
upon execution of this agreement you will be offered a position on the Company's
Board of Directors and shall be entitled to receive the same stock options as
provided to all other Board Members.
I trust that the foregoing properly reflects our understanding and if
so, please signify the same where indicated below and return a fully executed
copy to me via fax. Please initial each of the pages near my initials to avoid
any confusion with previous draft versions.
Very truly yours,
MAGNITUDE INFORMATION SYSTEMS, INC.
By:_________________________________
Steven D. Rudnik, President & CEO
AGREED AND CONSENTED
- -------------------------
Seymour Kroll Dated: May 3, 1999
<PAGE>
Exhibit 4.11
CONVERTIBLE PROMISSORY NOTE
$200,000.00 Branchburg, New Jersey
April 26, 1999
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
("THE SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER ALL APPLICABLE
SECURITIES LAWS OR UNLESS EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS ARE
AVAILABLE, WHICH EXEMPTIONS SHALL BE ESTABLISHED TO THE REASONABLE SATISFACTION
OF THE COMPANY, BY OPINION OF COUNSEL OR OTHERWISE.
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
SEYMOUR KROLL, (herein called "Note Holder") located at 3333 West Ellsworth
Road, Ann Arbor, MI 48108, or such other place as may be designated in writing
by Note Holder, the sum of TWO HUNDRED THOUSAND ($200,000.00) DOLLARS, together
with interest as hereinafter provided. Subject to the conversion and/or
prepayment as hereinafter contained, the entire principal amount due hereunder
shall be paid to the Note Holder in one payment together with accrued interest
thereon on the date which is Fourteen (14) months from the date hereof.
The undersigned borrower shall pay the Note Holder interest commencing
with the date hereof, computed on the basis of a 360 day year on the unpaid
principal balance at the rate of Twelve (12%) percent per annum.
Note Holder is hereby granted an option to convert, in increments of no
less than $50,000.00, up to the entire principal balance due hereunder into
shares of common stock of the undersigned at a conversion price of $.50 per
share. Said option shall be exercisable by Note Holder upon at least five (5)
business days prior written notice, as hereinafter provided, to the undersigned
at any time and from time to time during the term hereof but no later than five
(5) business days prior to the aforementioned principal due date hereunder. In
the event Note Holder elects to so convert any portion of the principal
otherwise due hereunder, Note Holder shall provide the undersigned with written
notice of such conversion option exercise as aforesaid whereupon this Note and
all sums due Note Holder hereunder shall be deemed to be partially or fully
pre-paid and satisfied as the case may be dependent upon the principal sums so
converted, and the undersigned shall, as soon as may be practicable thereafter,
deliver or cause to be delivered to Note Holder all shares of common stock due
to Note Holder as aforesaid. For purposes of this paragraph only, all notices
shall be in writing, sent via next day overnight mail or delivery service with
receipt therefor, and shall be deemed given as of the date of such mailing. All
shares received hereunder shall be subject to all applicable securities laws.
Notwithstanding the foregoing, the undersigned shall, within six (6) months of
the date hereof, cause an amount of the undersigned's shares calculated at the
above conversion rate to be registered upon such Registration Statement as may
be legally available so as to cause said shares subject to the foregoing
conversion option to be without the Rule 144 Restriction. Should Note Holder
elect to convert as set forth above prior to the filing of such Registration
Statement, then the shares Note Holder receives upon such conversion shall
thereafter be included in the foregoing Registration Statement. In no event
shall the number of shares to be registered and issuable hereunder as set forth
above exceed 400,000 shares.
Upon the failure to pay the sums of money due under this Promissory
Note, which default shall remain uncured for a period of thirty (30) days, or
the appointment of a receiver of the property, rights, credits, assets or any
part thereof, of the undersigned, or the filing of a petition by or against the
undersigned for relief under any bankruptcy or insolvency law, or an assignment
of all the undersigned's assets for the benefit of creditors, the Note Holder
may at its option:
(1) Declare all sums owing Note Holder from the undersigned hereunder
to be forthwith due and payable.
(2) Collect interest on the principal balance owing hereon at the rate
provided herein from the date of such default, and if this Note is referred for
collection, collect all reasonable expenses incurred by Note Holder in
connection with the collection of this Note, including but not limited to
reasonable attorney's fees.
Note Holder shall not, by any act, delay, omission or otherwise be
deemed to have waived any of his rights or remedies hereunder and no waiver by
the Note Holder of his rights or remedies hereunder shall be valid against Note
Holder unless in writing, signed by Note Holder, and then only to the extent
therein set forth. The waiver by the Note Holder of any right or remedy
hereunder upon any one occasion shall not be construed as a bar to any right or
remedy which he would otherwise have had on any future occasion.
The undersigned shall have the right to make prepayments, in whole or
in part, of this Note without premium or penalty and from time to time and shall
cause the royalty payments to which it is otherwise entitled to receive from
1320236 Ontario Inc. arising from and subject to that certain Marketing and
Development Agreement dated November, 1998 by and between the undersigned and
said 1320236 Ontario Inc. as aforesaid to be paid to Note Holder as and for a
prepayment reduction of the sum due Note Holder hereunder. All rights of Note
Holder to such royalty payments shall cease upon the full satisfaction of the
undersigned's payment obligation hereunder to Note Holder in accordance with the
terms hereinabove contained. All prepayments shall be applied against the
payments due in the order of maturity.
The undersigned hereby waives presentment for payment, protest and
notice for non-payment of this Note.
This Note shall be governed by and construed in accordance with the
laws of the State of New Jersey with venue situate therein and may not be
assigned in whole or in part without the prior written consent of the
undersigned in each instance.
MAGNITUDE INFORMATION SYSTEMS, INC.
(SEAL)
BY:________________________________
STEVEN D. RUDNIK, PRESIDENT
ATTEST: 50 Tannery Road
Branchburg, NJ 08876
- ----------------------------
JOERG KLAUBE , SECRETARY
<PAGE>
Exhibit 4.12
SUBSCRIPTION AGREEMENT
Pursuant to Section 4 (2) of the Securities Act of 1933
Subscription Agreement and Questionnaire of Magnitude Information Systems,
Inc.
The undersigned hereby subscribes for the purchase of ___________ Units
consisting of _____________ shares (the "Shares") of the common stock of
Magnitude Information Systems, Inc. (the "Company") and a warrant for the
purchase of ___________ common shares of the Company, a copy of which is annexed
hereto as Exhibit A (the "Warrant"), for the purchase price of $______________.
The Shares and the Warrant, as well as the shares underlying the Warrant, are
sometimes hereinafter collectively referred to as the "Security" or
"Securities". The entire purchase price is due and payable upon the execution of
this Subscription Agreement, and shall be paid by check, subject to collection,
or by wire transfer, made payable to the order of "Magnitude Information
Systems, Inc." The Company shall have the right to reject this subscription in
whole or in part.
1 The undersigned, in order to induce the Company to accept this
Subscription Agreement represents, warrants and covenants to the Company as
follows:
(a) The undersigned acknowledges that (i) the Shares and
Warrant being purchased hereunder have not been registered under the Securities
Act of 1933, as amended ("Securities Act"), or the securities laws of any State;
(ii) absent an exemption from registration contained in those laws, the issuance
and sale of the Shares and Warrant would require registration; and (iii) the
Company's reliance upon any such exemption is invariably based upon the
undersigned's representations, warranties, and agreements contained in this
Subscription Agreement (the Subscription Agreement and the included Investor
Questionnaire are collectively referred to herein as the "Subscription
Documents").
(b) The undersigned agrees that this Subscription Agreement is
and shall be irrevocable unless it has not been accepted by the Company.
(c) The undersigned has carefully read the Company's Form
10-KSB for the fiscal year ended December 31, 1998 and Forms 10-QSB for the
quarters ended March 31, 1999, and June 30, 1999, this Subscription Agreement as
well as the Warrant attached hereto as Exhibit A, respectively (collectively,
the "Disclosure Materials") all of which the undersigned acknowledges have been
delivered to the undersigned. The undersigned acknowledges that the undersigned
has been given the opportunity to ask questions of, and receive answers from,
the Company concerning the terms and conditions of this Subscription Agreement
and the Disclosure Materials and to obtain such additional written information,
to the extent the Company possesses such information or can acquire it without
unreasonable effort or expense, necessary to verify the accuracy of same, as the
Undersigned desires in order to evaluate the investment. The undersigned further
acknowledges that the undersigned has received no representations or warranties
from the Company, or their respective employees or agents in making this
investment decision other than as set forth in the Disclosure Materials.
<PAGE>
(d) The undersigned acknowledges that the undersigned has
investigated the Company's business, financial conditions, current state of
affairs, planned business and other matters necessary in order for the
undersigned to make an informed investment decision regarding the purchase of
the Shares and Warrant.
(e) The undersigned acknowledges that the undersigned is
purchasing the Shares and Warrant without being furnished any prospectus or
written description of the Company, its business and/or its future plans, other
than the Disclosure Materials, and has relied solely upon the Disclosure
Materials and the undersigned's own investigation into the Company and its
proposed operations.
(f) The undersigned is aware that the purchase of the Shares
and Warrant is a speculative investment involving a high degree of risk and that
there is no guarantee that the undersigned will realize any gain from this
investment, and that the entire investment could be lost.
(g) The undersigned understands that no federal or state
agency has made any finding or determination regarding the fairness of this
private offering, or any recommendation or endorsement of this private offering.
(h) The undersigned is purchasing the Shares and Warrant for
the undersigned's own account, with the intention of holding the Security with
no present intention of dividing or allowing others to participate in this
investment or of reselling or otherwise participating, directly or indirectly,
in a distribution of the Security, and shall not make any sale, transfer, or
pledge thereof without registration under the Securities Act and any applicable
securities laws of any state or unless an exemption from registration is
available under those laws.
(i) The undersigned will not sell short in any manner the
Shares or the shares of Common Stock underlying the Warrant.
(j) The undersigned is financially able to bear the economic
risk of this investment, including the ability to hold the Shares and Warrant
indefinitely or to afford a complete loss of the undersigned's investment in the
Shares and Warrant.
<PAGE>
(k) The undersigned represents that the undersigned's overall
commitment to investments which are not readily marketable is not
disproportionate to its net worth, and the investment in the Shares and Warrant
will not cause such overall commitment to become excessive. The undersigned
understands that the statutory basis on which the Shares and Warrant are being
sold to the undersigned would not be available if the undersigned's present
intention were to hold the Shares and Warrant for a fixed period or until the
occurrence of a certain event. The undersigned realizes that in the view of the
Securities and Exchange Commission, a purchase now with a present intent to
resell by reason of a foreseeable specific contingency or any anticipated change
in the market value, or in the condition of the Company, or that of the industry
in which the business of the Company is engaged or in connection with a
contemplated liquidation, or settlement of any loan obtained by the undersigned
for the acquisition of the Shares and Warrant, and for which such Shares and
Warrant may be pledged as security or as donations to religious or charitable
institutions for the purpose of securing a deduction on an income tax return,
would, in fact, represent a purchase with an intent inconsistent with the
undersigned's representations to the Company, and the Securities and Exchange
Commission would then regard such sale as one for which no exemption from
registration is available. The undersigned will not pledge, transfer or assign
this Subscription Agreement.
(l) The undersigned represents that the funds provided for
this investment are either separate property of the Undersigned, other property
over which the undersigned has the right of control, or are otherwise funds as
to which the undersigned has the sole right of management.
(m) The address shown under the undersigned's signature at the
end of this Subscription Agreement is the undersigned's principal business
address if a corporation or other entity.
(n) The undersigned has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Shares and Warrant.
(o) The undersigned acknowledges that the certificates for the
securities comprising the Shares and the shares of Common Stock underlying the
Warrant which the undersigned will receive will contain a legend substantially
as follows:
THE SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT
WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD,
TRANSFERRED, MADE SUBJECT TO A SECURITY INTEREST, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE RECEIPT BY THE
COMPANY OF AN OPINION OF COUNSEL TO THE HOLDER HEREOF SATISFACTORY TO
THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT.
(p) This Subscription Agreement and all representations,
warranties and statements made herein are true, complete and correct in all
material respects.
(q) The undersigned acknowledges that the Company, except as
set forth in the Shares and Warrant, is under no obligation to register the
Shares and Warrant under the Securities Act or any state securities laws, or to
take any action to make any exemption from any such registration provisions
available, except that the Company is extending "Piggyback Registration" rights
with respect to the Shares, to the effect that it include the Shares in any
registration of its securities under the Securities Act of 1933 (other than in
connection with a merger or pursuant to Form S-8 or other comparable form)
except in case of an underwritten offering where the managing underwriter
declines to include such Shares. In the event that the Company failed to do so
for any reason or that no such registration giving rise to the exercise of such
"Piggyback Registration" rights takes place within a period of six (6) months
from now, the undersigned shall be entitled to receive an additional __________
shares of the Common Stock of the Company.
(r) This Subscription Agreement is a legally binding obligation of
the undersigned in accordance with its terms.
<PAGE>
(s) The undersigned is an "accredited investor," as such term
is defined in Regulation D of the Rules and Regulations promulgated under the
Act.
(t) If the undersigned is a partnership, corporation, trust or
other entity, (i) the undersigned has enclosed with this Subscription Agreement
appropriate evidence of the authority of the individual executing this
Subscription Agreement to act on its behalf (e.g., if a trust, a certified copy
of the trust agreement; if a corporation, a certified corporate resolution
authorizing the signature and a certified copy of the articles of incorporation;
or if a partnership, a certified copy of the partnership agreement), (ii) the
undersigned represents and warrants that it was not organized or reorganized for
the specific purpose of acquiring the Shares and Warrant, and (iii) the
undersigned has the full power and authority to execute this Subscription
Agreement on behalf of such entity and to make the representations and
warranties made herein on its behalf, and (iv) this investment in the Company
has been affirmatively authorized, if required, by the governing board of such
entity and is not prohibited by the governing documents of the entity.
(u) The undersigned expressly acknowledges and agrees that the
Company is relying upon the Undersigned's representation contained in this
Subscription Agreement. The undersigned subscriber acknowledges that the
undersigned understands the meaning and legal consequences of the
representations and warranties which are contained herein and hereby agrees to
indemnify, save and hold the Company, and their respective officers, directors
and counsel harmless from and against any and all claims or actions arising out
of a breach of any representation, warranty or acknowledgment of the undersigned
contained in any Subscription Document. Such indemnification shall be deemed to
include not only the specific liabilities or obligation with respect to which
such indemnity is provided, but also all reasonable costs, expenses, counsel
fees and expenses of settlement relating thereto, whether or not any such
liability or obligation shall have been reduced to judgment.
(v) Except as otherwise specifically provided for hereunder,
no party shall be deemed to have waived any of his or her or its rights
hereunder or under any other agreement, instrument or papers signed by any of
them with respect to the subject matter hereof unless such waiver is in writing
signed by the party waiving said right. A waiver on any one occasion with
respect to the subject matter hereof shall not be construed as a bar to, or
waiver of, any right or remedy on any future occasion. All rights and remedies
with respect to the subject matter hereof, whether evidenced hereby or by any
other agreement, instrument, or paper, will be cumulative, and may be exercised
separately or concurrently.
(w) The parties have not made any representations or
warranties with respect to the subject matter hereof not set forth in this
Subscription Agreement, together with the Shares and Warrant executed
simultaneously herewith, constitutes the entire agreement between them with
respect to the subject matter hereof. All understandings and agreements
heretofore had between the parties with respect to the subject matter hereof are
merged in this Subscription Agreement and the Shares and Warrant which alone
fully and completely expresses their agreement.
<PAGE>
(x) This Agreement may not be changed, modified, extended,
terminated or discharged orally, but only by an agreement in writing, which is
signed by all of the parties to this Agreement.
(y) The parties agree to execute any and all such other and
further instruments and documents, and to take any and all such further actions
reasonably required to effectuate this Subscription Agreement and the intent and
purposes hereof.
(z) This Subscription Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey and the
undersigned hereby consents to the jurisdiction of the courts of the State of
New Jersey and/or the United States District Court for the District of New
Jersey.
(aa) The undersigned understands that this subscription is not
binding upon the Company until the Company accepts it, which acceptance is at
the sole discretion of the Company and is to be evidenced by the Company's
execution of this Subscription Agreement where indicated. This Subscription
Agreement shall be null and void if the Company does not accept it as aforesaid.
(bb) Intentionally Omitted.
(cc) Neither this Subscription Agreement nor any
of the rights of the undersigned hereunder may be transferred or assigned
by the undersigned.
(dd) Please check whether one or more of the following
definitions of "accredited investor," if any, applies to you. If none
of the following applies to you, please leave a blank.
<PAGE>
(i) A Bank as defined in Section 3(a)(2) of the Securities Act of 1933, as
amended ("Securities Act"), or any savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the Securities Act whether
acting in its individual or fiduciary capacity; any broker or dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); an insurance company as defined in Section 2(13) of the
Securities Act; an investment company registered under the Investment Company
Act of 1940 or a business development company as defined in Section 2(a)(48) of
that act; a Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958; any plan established and maintained by a state, or its
political subdivisions, or any agency or instrumentality of a state or its
political subdivisions for the benefit of its employees, if such plan has total
assets in excess of $5,000,000; any employee benefit plan within the meaning of
the Employee Retirement Income Security Act of 1974, if the investment decision
is made by a plan fiduciary, as defined in Section 3(21) of such act, which is
either a bank, savings and loan association, insurance company, or registered
investment advisor, or if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with investment decisions made solely
by persons that are Accredited Investors.
(ii) A Private Business Development Company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940.
(iii) An organization described in Section 501(c)(3) of the Internal
Revenue Code or corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000.
(iv) A natural person whose individual net worth, or joint net worth with
that person's spouse, at the time of purchase exceeds $1,000,000.
(v) A natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with that person's spouse in
excess of $300,000 in each of those years and has a reasonable expectation of
reaching the same income level in the current year.
(vi) Any trust, with total assets in excess of $5,000,000, not formed for
the specific purpose of acquiring the Shares and Warrant, whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii) of
Regulation D.
(vii) Any entity in which all of the equity owners are Accredited
Investors.
2. This following information is required pursuant to Article III,
Section 44 of the Rules of Fair Practice of the NASD and upon which the Company
will rely in making any statement to the NASD concerning the association or
affiliation of any officer, director or security holder of the Company with any
NASD member.
(i) State whether you or any of your Affiliates or any of your
Associates (See Definitions at the end of this
Subscription Agreement) are
(a) Member of the National Association of Securities Dealers,
Inc. ("NASD");
Yes____ No____
(b) a Person Associated with a Member of the NASD; or
Yes____ No____
(c) an Affiliate of a Member of the NASD.
Yes____ No____
(ii) State whether you or any of your Affiliates or any of your Associates
own stock or other securities of any member of the NASD (other than
securities purchased on the open market).
Yes____ No____
(iii) State whether you or any of your Affiliates or any of your Associates
have made a subordinated loan to any Member of the NASD.
Yes____ No____
(iv) If you marked "Yes" to any of the questions above, please briefly
describe the facts below, giving the names of the appropriate Members
of the NASD to which your answers refer.
<PAGE>
(v) The Undersigned has carefully reviewed the jurisdictional notices
listed below and agrees to abide by any restrictions contained therein
applicable to the undersigned.
JURISDICTIONAL NOTICES
THE SECURITIES OFFERED PURSUANT TO THE TERMS AND PROVISIONS OF THIS
SUBSCRIPTION AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATES OF THE UNITED STATES
OR ANY OTHER JURISDICTION AND ARE BEING OFFERED AND SOLD IN RELIANCE UPON
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES
COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING
AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY
OR ADEQUACY OF THE MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
IT IS THE RESPONSIBILITY OF THE SUBSCRIBER WISHING TO PURCHASE THE SHARES AND
WARRANT TO SATISFY ITSELF AS TO THE FULL OBSERVANCE OF THE LAWS OF ANY RELEVANT
TERRITORY OUTSIDE THE UNITED STATES IN CONNECTION WITH ANY SUCH PURCHASE,
INCLUDING OBTAINING ANY REQUIRED GOVERNMENTAL OR OTHER CONSENTS OR OBSERVING ANY
OTHER APPLICABLE FORMALITIES.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement on this __ day of ________ , 1999.
Purchase Price for the Shares and Warrant: $_______________.
Exact Name in Which Title is to be Held
Signature
Name (Please Print)
Title of Person Executing Agreement
Address: Number and Street
City State Zip Code
Tax Identification Number
Jurisdiction of Incorporation
Accepted this __ day of ___ , 1999, on behalf of
------ ---------------------
MAGNITUDE INFORMATION SYSTEMS, INC.
BY:
DEFINITIONS
Affiliate: An Affiliate of any person (for purposes hereof a "person"
includes a partnership, corporation or other legal entity such
as a trust or estate) is a person which controls, is
controlled by or is under common control with such person. For
purposes of this definition:
(i) a person should be presumed to control a Member if the
person beneficially owns 10% or more of the outstanding voting
securities of a Member which is a corporation, or beneficially
owns a partnership interest in 10% or more of the outstanding
voting securities of a person which is a corporation, or
beneficially own a partnership interest in 10% or more of the
distributable profits or losses of a person which is a
partnership; and
(ii) a Member should be presumed to control a person if the
Member and Persons Associated with the Member beneficially own
10% or more of the outstanding voting securities of a person
which is a corporation, or beneficially own a partnership
interest in 10% or more of the distributable profits or losses
of a person which is a partnership; and
(iii) a person should be presumed to be under common control
with a Member if:
(1) the same person controls both the Member and such
person by beneficially owning 10% or more of the
outstanding voting securities of the Member and other
such person which is a corporation, or by
beneficially owning a partnership interest in 10% or
more of the distributable profits or losses of the
Member and other such person which is a partnership;
or
(2) a person having the power to direct or cause the
direction of the management or policies of the Member
also has the power to direct or cause the direction
of the management or policies of the other entity in
question.
Associate: An Associate is
(i) any corporation or organization of which you are
an officer, director or partner, or of which you are
directly or indirectly the beneficial owner of 10% or
more of any class of equity securities.
(ii) any trust or other estate in which you have a
substantial beneficial interest or as to which you
serve as trustee or in a similar fiduciary capacity;
and
<PAGE>
(iii) any relative or spouse of yours, or any
relative of such spouse who has the same home as you.
Member: A Member is any broker or dealer admitted to membership in
the NASD.
Person A "Person Associated with a Member" is every sole proprietor,
partner,
Associated officer, director or branch manager of any Member, or
any natural person
with a occupying a similar status or performing similar functions,
or any person
Member: engaged in the investment banking or securities business who
is directly or indirectly controlling or controlled by such
Member (for example, any employee), whether or not any such
person is registered or exempt from registration with the
NASD.
- ----------------------------
<PAGE>
Exhibit 4.13
SUBSCRIPTION AGREEMENT
Pursuant to Section 4 (2) of the Securities Act of 1933
Subscription Agreement and Questionnaire of Magnitude Information Systems, Inc.
The undersigned hereby subscribes for the purchase of ___________ Units
consisting of _____________ shares (the "Shares") of the common stock of
Magnitude Information Systems, Inc. (the "Company") and a warrant for the
purchase of ___________ common shares of the Company, a copy of which is annexed
hereto as Exhibit A (the "Warrant"), for the purchase price of $______________.
The Shares and the Warrant, as well as the shares underlying the Warrant, are
sometimes hereinafter collectively referred to as the "Security" or
"Securities". The entire purchase price is due and payable upon the execution of
this Subscription Agreement, and shall be paid by check, subject to collection,
or by wire transfer, made payable to the order of "Magnitude Information
Systems, Inc." The Company shall have the right to reject this subscription in
whole or in part.
1 The undersigned, in order to induce the Company to accept this
Subscription Agreement represents, warrants and covenants to the Company as
follows:
(a) The undersigned acknowledges that (i) the Shares and
Warrant being purchased hereunder have not been registered under the Securities
Act of 1933, as amended ("Securities Act"), or the securities laws of any State;
(ii) absent an exemption from registration contained in those laws, the issuance
and sale of the Shares and Warrant would require registration; and (iii) the
Company's reliance upon any such exemption is invariably based upon the
undersigned's representations, warranties, and agreements contained in this
Subscription Agreement (the Subscription Agreement and the included Investor
Questionnaire are collectively referred to herein as the "Subscription
Documents").
(b) The undersigned agrees that this Subscription Agreement is
and shall be irrevocable unless it has not been accepted by the Company.
(c) The undersigned has carefully read the Company's Form
10-KSB for the fiscal year ended December 31, 1998 and Forms 10-QSB for the
quarters ended March 31, 1999, June 30, 1999, and September 30, 1999, this
Subscription Agreement as well as the Warrant attached hereto as Exhibit A,
respectively (collectively, the "Disclosure Materials") all of which the
undersigned acknowledges have been delivered to the undersigned. The undersigned
acknowledges that the undersigned has been given the opportunity to ask
questions of, and receive answers from, the Company concerning the terms and
conditions of this Subscription Agreement and the Disclosure Materials and to
obtain such additional written information, to the extent the Company possesses
such information or can acquire it without unreasonable effort or expense,
necessary to verify the accuracy of same, as the Undersigned desires in order to
evaluate the investment. The undersigned further acknowledges that the
undersigned has received no representations or warranties from the Company, or
their respective employees or agents in making this investment decision other
than as set forth in the Disclosure Materials.
<PAGE>
(d) The undersigned acknowledges that the undersigned has
investigated the Company's business, financial conditions, current state of
affairs, planned business and other matters necessary in order for the
undersigned to make an informed investment decision regarding the purchase of
the Shares and Warrant.
(e) The undersigned acknowledges that the undersigned is
purchasing the Shares and Warrant without being furnished any prospectus or
written description of the Company, its business and/or its future plans, other
than the Disclosure Materials, and has relied solely upon the Disclosure
Materials and the undersigned's own investigation into the Company and its
proposed operations.
(f) The undersigned is aware that the purchase of the Shares
and Warrant is a speculative investment involving a high degree of risk and that
there is no guarantee that the undersigned will realize any gain from this
investment, and that the entire investment could be lost.
(g) The undersigned understands that no federal or state
agency has made any finding or determination regarding the fairness of this
private offering, or any recommendation or endorsement of this private offering.
(h) The undersigned is purchasing the Shares and Warrant for
the undersigned's own account, with the intention of holding the Security with
no present intention of dividing or allowing others to participate in this
investment or of reselling or otherwise participating, directly or indirectly,
in a distribution of the Security, and shall not make any sale, transfer, or
pledge thereof without registration under the Securities Act and any applicable
securities laws of any state or unless an exemption from registration is
available under those laws.
(i) The undersigned will not sell short in any manner the
Shares or the shares of Common Stock underlying the Warrant.
(j) The undersigned is financially able to bear the economic
risk of this investment, including the ability to hold the Shares and Warrant
indefinitely or to afford a complete loss of the undersigned's investment in the
Shares and Warrant.
<PAGE>
(k) The undersigned represents that the undersigned's overall
commitment to investments which are not readily marketable is not
disproportionate to its net worth, and the investment in the Shares and Warrant
will not cause such overall commitment to become excessive. The undersigned
understands that the statutory basis on which the Shares and Warrant are being
sold to the undersigned would not be available if the undersigned's present
intention were to hold the Shares and Warrant for a fixed period or until the
occurrence of a certain event. The undersigned realizes that in the view of the
Securities and Exchange Commission, a purchase now with a present intent to
resell by reason of a foreseeable specific contingency or any anticipated change
in the market value, or in the condition of the Company, or that of the industry
in which the business of the Company is engaged or in connection with a
contemplated liquidation, or settlement of any loan obtained by the undersigned
for the acquisition of the Shares and Warrant, and for which such Shares and
Warrant may be pledged as security or as donations to religious or charitable
institutions for the purpose of securing a deduction on an income tax return,
would, in fact, represent a purchase with an intent inconsistent with the
undersigned's representations to the Company, and the Securities and Exchange
Commission would then regard such sale as one for which no exemption from
registration is available. The undersigned will not pledge, transfer or assign
this Subscription Agreement.
(l) The undersigned represents that the funds provided for
this investment are either separate property of the Undersigned, other property
over which the undersigned has the right of control, or are otherwise funds as
to which the undersigned has the sole right of management.
(m) The address shown under the undersigned's signature at the
end of this Subscription Agreement is the undersigned's principal business
address if a corporation or other entity.
(n) The undersigned has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Shares and Warrant.
(o) The undersigned acknowledges that the certificates for the
securities comprising the Shares and the shares of Common Stock underlying the
Warrant which the undersigned will receive will contain a legend substantially
as follows:
THE SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
PURPOSES ONLY AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE,
AND MAY NOT BE SOLD, TRANSFERRED, MADE SUBJECT TO A SECURITY
INTEREST, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE RECEIPT BY THE COMPANY OF AN OPINION OF
COUNSEL TO THE HOLDER HEREOF SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT.
(p) This Subscription Agreement and all representations,
warranties and statements made herein are true, complete and correct in all
material respects.
(q) The undersigned acknowledges that the Company, except as
set forth in the Shares and Warrant, is under no obligation to register the
Shares and Warrant under the Securities Act or any state securities laws, or to
take any action to make any exemption from any such registration provisions
available, except that the Company is extending "Piggyback Registration" rights
with respect to the Shares, to the effect that it include the Shares in any
registration of its securities under the Securities Act of 1933 (other than in
connection with a merger or pursuant to Form S-8 or other comparable form)
except in case of an underwritten offering where the managing underwriter
declines to include such Shares. In the event that the Company failed to do so
for any reason or that no such registration giving rise to the exercise of such
"Piggyback Registration" rights takes place within a period of six (6) months
from now, the undersigned shall be entitled to receive an additional __________
shares of the Common Stock of the Company.
(r) This Subscription Agreement is a legally binding
obligation of the undersigned in accordance with its terms.
<PAGE>
(s) The undersigned is an "accredited investor," as such term
is defined in Regulation D of the Rules and Regulations promulgated under the
Act.
(t) If the undersigned is a partnership, corporation, trust or
other entity, (i) the undersigned has enclosed with this Subscription Agreement
appropriate evidence of the authority of the individual executing this
Subscription Agreement to act on its behalf (e.g., if a trust, a certified copy
of the trust agreement; if a corporation, a certified corporate resolution
authorizing the signature and a certified copy of the articles of incorporation;
or if a partnership, a certified copy of the partnership agreement), (ii) the
undersigned represents and warrants that it was not organized or reorganized for
the specific purpose of acquiring the Shares and Warrant, and (iii) the
undersigned has the full power and authority to execute this Subscription
Agreement on behalf of such entity and to make the representations and
warranties made herein on its behalf, and (iv) this investment in the Company
has been affirmatively authorized, if required, by the governing board of such
entity and is not prohibited by the governing documents of the entity.
(u) The undersigned expressly acknowledges and agrees that the
Company is relying upon the Undersigned's representation contained in this
Subscription Agreement. The undersigned subscriber acknowledges that the
undersigned understands the meaning and legal consequences of the
representations and warranties which are contained herein and hereby agrees to
indemnify, save and hold the Company, and their respective officers, directors
and counsel harmless from and against any and all claims or actions arising out
of a breach of any representation, warranty or acknowledgment of the undersigned
contained in any Subscription Document. Such indemnification shall be deemed to
include not only the specific liabilities or obligation with respect to which
such indemnity is provided, but also all reasonable costs, expenses, counsel
fees and expenses of settlement relating thereto, whether or not any such
liability or obligation shall have been reduced to judgment.
(v) Except as otherwise specifically provided for hereunder,
no party shall be deemed to have waived any of his or her or its rights
hereunder or under any other agreement, instrument or papers signed by any of
them with respect to the subject matter hereof unless such waiver is in writing
signed by the party waiving said right. A waiver on any one occasion with
respect to the subject matter hereof shall not be construed as a bar to, or
waiver of, any right or remedy on any future occasion. All rights and remedies
with respect to the subject matter hereof, whether evidenced hereby or by any
other agreement, instrument, or paper, will be cumulative, and may be exercised
separately or concurrently.
(w) The parties have not made any representations or
warranties with respect to the subject matter hereof not set forth in this
Subscription Agreement, together with the Shares and Warrant executed
simultaneously herewith, constitutes the entire agreement between them with
respect to the subject matter hereof. All understandings and agreements
heretofore had between the parties with respect to the subject matter hereof are
merged in this Subscription Agreement and the Shares and Warrant which alone
fully and completely expresses their agreement.
<PAGE>
(x) This Agreement may not be changed, modified, extended,
terminated or discharged orally, but only by an agreement in writing, which is
signed by all of the parties to this Agreement.
(y) The parties agree to execute any and all such other and
further instruments and documents, and to take any and all such further actions
reasonably required to effectuate this Subscription Agreement and the intent and
purposes hereof.
(z) This Subscription Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey and the
undersigned hereby consents to the jurisdiction of the courts of the State of
New Jersey and/or the United States District Court for the District of New
Jersey.
(aa) The undersigned understands that this subscription is not
binding upon the Company until the Company accepts it, which acceptance is at
the sole discretion of the Company and is to be evidenced by the Company's
execution of this Subscription Agreement where indicated. This Subscription
Agreement shall be null and void if the Company does not accept it as aforesaid.
(bb) Intentionally Omitted.
(cc) Neither this Subscription Agreement nor any
of the rights of the undersigned hereunder may be transferred or assigned
by the undersigned.
(dd) Please check whether one or more of the following
definitions of "accredited investor," if any, applies to you. If none
of the following applies to you, please leave a blank.
<PAGE>
(i) A Bank as defined in Section 3(a)(2) of the Securities Act of 1933, as
amended ("Securities Act"), or any savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the Securities Act whether
acting in its individual or fiduciary capacity; any broker or dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); an insurance company as defined in Section 2(13) of the
Securities Act; an investment company registered under the Investment Company
Act of 1940 or a business development company as defined in Section 2(a)(48) of
that act; a Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958; any plan established and maintained by a state, or its
political subdivisions, or any agency or instrumentality of a state or its
political subdivisions for the benefit of its employees, if such plan has total
assets in excess of $5,000,000; any employee benefit plan within the meaning of
the Employee Retirement Income Security Act of 1974, if the investment decision
is made by a plan fiduciary, as defined in Section 3(21) of such act, which is
either a bank, savings and loan association, insurance company, or registered
investment advisor, or if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with investment decisions made solely
by persons that are Accredited Investors.
(ii) A Private Business Development Company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940.
(iii) An organization described in Section 501(c)(3) of the Internal
Revenue Code or corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000.
(iv) A natural person whose individual net worth, or joint net worth with
that person's spouse, at the time of purchase exceeds $1,000,000.
(v) A natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with that person's spouse in
excess of $300,000 in each of those years and has a reasonable expectation of
reaching the same income level in the current year.
(vi) Any trust, with total assets in excess of $5,000,000, not formed for
the specific purpose of acquiring the Shares and Warrant, whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii) of
Regulation D.
(vii) Any entity in which all of the equity owners are Accredited
Investors.
2. This following information is required pursuant to Article III,
Section 44 of the Rules of Fair Practice of the NASD and upon which the Company
will rely in making any statement to the NASD concerning the association or
affiliation of any officer, director or security holder of the Company with any
NASD member.
(i) State whether you or any of your Affiliates or any of your
Associates (See Definitions at the end of this
Subscription Agreement) are
(a) Member of the National Association of Securities Dealers,
Inc. ("NASD");
Yes____ No____
(b) a Person Associated with a Member of the NASD; or
Yes____ No____
(c) an Affiliate of a Member of the NASD.
Yes____ No____
(ii) State whether you or any of your Affiliates or any of your Associates
own stock or other securities of any member of the NASD (other than
securities purchased on the open market).
Yes____ No____
(iii) State whether you or any of your Affiliates or any of your Associates
have made a subordinated loan to any Member of the NASD.
Yes____ No____
(iv) If you marked "Yes" to any of the questions above, please briefly
describe the facts below, giving the names of the appropriate Members
of the NASD to which your answers refer.
<PAGE>
(v) The Undersigned has carefully reviewed the jurisdictional notices
listed below and agrees to abide by any restrictions contained therein
applicable to the undersigned.
JURISDICTIONAL NOTICES
THE SECURITIES OFFERED PURSUANT TO THE TERMS AND PROVISIONS OF THIS
SUBSCRIPTION AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATES OF THE UNITED STATES
OR ANY OTHER JURISDICTION AND ARE BEING OFFERED AND SOLD IN RELIANCE UPON
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES
COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING
AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY
OR ADEQUACY OF THE MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
IT IS THE RESPONSIBILITY OF THE SUBSCRIBER WISHING TO PURCHASE THE SHARES AND
WARRANT TO SATISFY ITSELF AS TO THE FULL OBSERVANCE OF THE LAWS OF ANY RELEVANT
TERRITORY OUTSIDE THE UNITED STATES IN CONNECTION WITH ANY SUCH PURCHASE,
INCLUDING OBTAINING ANY REQUIRED GOVERNMENTAL OR OTHER CONSENTS OR OBSERVING ANY
OTHER APPLICABLE FORMALITIES.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement on this __ day of ________ ,1999
Purchase Price for the Shares and Warrant: $_______________.
Exact Name in Which Title is to be Held
Signature
Name (Please Print)
Title of Person Executing Agreement
Address: Number and Street
City State Zip Code
Tax Identification Number
Jurisdiction of Incorporation
Accepted this __ day of ___ , 1999, on behalf of
------ ---------------------
MAGNITUDE INFORMATION SYSTEMS, INC.
BY:
DEFINITIONS
Affiliate: An Affiliate of any person (for purposes hereof a "person"
includes a partnership, corporation or other legal entity such
as a trust or estate) is a person which controls, is
controlled by or is under common control with such person. For
purposes of this definition:
(i) a person should be presumed to control a Member if the
person beneficially owns 10% or more of the outstanding voting
securities of a Member which is a corporation, or beneficially
owns a partnership interest in 10% or more of the outstanding
voting securities of a person which is a corporation, or
beneficially own a partnership interest in 10% or more of the
distributable profits or losses of a person which is a
partnership; and
(ii) a Member should be presumed to control a person if the
Member and Persons Associated with the Member beneficially own
10% or more of the outstanding voting securities of a person
which is a corporation, or beneficially own a partnership
interest in 10% or more of the distributable profits or losses
of a person which is a partnership; and
(iii) a person should be presumed to be under common control
with a Member if:
(1) the same person controls both the Member and such
person by beneficially owning 10% or more of the
outstanding voting securities of the Member and other
such person which is a corporation, or by
beneficially owning a partnership interest in 10% or
more of the distributable profits or losses of the
Member and other such person which is a partnership;
or
(2) a person having the power to direct or cause the
direction of the management or policies of the Member
also has the power to direct or cause the direction
of the management or policies of the other entity in
question.
Associate: An Associate is
(i) any corporation or organization of which you are
an officer, director or partner, or of which you are
directly or indirectly the beneficial owner of 10% or
more of any class of equity securities.
(ii) any trust or other estate in which you have a
substantial beneficial interest or as to which you
serve as trustee or in a similar fiduciary capacity;
and
<PAGE>
(iii) any relative or spouse of yours, or any
relative of such spouse who has the same home as you.
Member: A Member is any broker or dealer admitted to membership in the NASD.
Person A "Person Associated with a Member" is every sole proprietor,
partner,
Associated officer, director or branch manager of any Member, or any natural
person
with a occupying a similar status or performing similar functions, or any
person
Member: engaged in the investment banking or securities business who is
directly or indirectly controlling or controlled by such Member
(for example, any employee), whether or not any such person is
registered or exempt from registration with the NASD.
Exhibit 4.14
Form of SUBSCRIPTION AGREEMENT under Tranche A
Pursuant to Section 4 (2) of the Securities Act of 1933
Subscription Agreement and Questionnaire of Magnitude Information Systems, Inc.
The undersigned hereby subscribes for the purchase of ___________
Units, each Unit consisting of one share (the "Shares") of the common stock of
Magnitude Information Systems, Inc. (the "Company") and a warrant for the
purchase of one common share of the Company, a copy of which is annexed hereto
as Exhibit A (the "Warrant"), for the purchase price of US$0.50 per Unit. The
Shares and the Warrant, as well as the shares underlying the Warrant, are
sometimes hereinafter collectively referred to as the "Security" or
"Securities". The entire purchase price is due and payable upon the execution of
this Subscription Agreement, and shall be paid by check, subject to collection,
or by wire transfer, made payable to the order of "Magnitude Information
Systems, Inc." The Company shall have the right to reject this subscription in
whole or in part.
1 The undersigned, in order to induce the Company to accept this
Subscription Agreement represents, warrants and covenants to the Company as
follows:
(a) The undersigned acknowledges that (i) the Shares and
Warrant being purchased hereunder have not been registered under the Securities
Act of 1933, as amended ("Securities Act"), or the securities laws of any State;
(ii) absent an exemption from registration contained in those laws, the issuance
and sale of the Shares and Warrant would require registration; and (iii) the
Company's reliance upon any such exemption is invariably based upon the
undersigned's representations, warranties, and agreements contained in this
Subscription Agreement (the Subscription Agreement and the included Investor
Questionnaire are collectively referred to herein as the "Subscription
Documents").
(b) The undersigned agrees that this Subscription Agreement is
and shall be irrevocable unless it has not been accepted by the Company.
(c) The undersigned has carefully read the Company's Form
10-KSB for the fiscal year ended December 31, 1998 and Forms 10-QSB for the
quarters ended March 31, 1999, June 30, 1999, and September 30, 1999, this
Subscription Agreement as well as the Warrant attached hereto as Exhibit A,
respectively (collectively, the "Disclosure Materials") all of which the
undersigned acknowledges have been delivered to the undersigned. The undersigned
acknowledges that the undersigned has been given the opportunity to ask
questions of, and receive answers from, the Company concerning the terms and
conditions of this Subscription Agreement and the Disclosure Materials and to
obtain such additional written information, to the extent the Company possesses
such information or can acquire it without unreasonable effort or expense,
necessary to verify the accuracy of same, as the Undersigned desires in order to
evaluate the investment. The undersigned further acknowledges that the
undersigned has received no representations or warranties from the Company, or
their respective employees or agents in making this investment decision other
than as set forth in the Disclosure Materials.
<PAGE>
(d) The undersigned acknowledges that the undersigned has
investigated the Company's business, financial conditions, current state of
affairs, planned business and other matters necessary in order for the
undersigned to make an informed investment decision regarding the purchase of
the Shares and Warrant.
(e) The undersigned acknowledges that the undersigned is
purchasing the Shares and Warrant without being furnished any prospectus or
written description of the Company, its business and/or its future plans, other
than the Disclosure Materials, and has relied solely upon the Disclosure
Materials and the undersigned's own investigation into the Company and its
proposed operations.
(f) The undersigned is aware that the purchase of the Shares
and Warrant is a speculative investment involving a high degree of risk and that
there is no guarantee that the undersigned will realize any gain from this
investment, and that the entire investment could be lost.
(g) The undersigned understands that no federal or state
agency has made any finding or determination regarding the fairness of this
private offering, or any recommendation or endorsement of this private offering.
(h) The undersigned is purchasing the Shares and Warrant for
the undersigned's own account, with the intention of holding the Security with
no present intention of dividing or allowing others to participate in this
investment or of reselling or otherwise participating, directly or indirectly,
in a distribution of the Security, and shall not make any sale, transfer, or
pledge thereof without registration under the Securities Act and any applicable
securities laws of any state or unless an exemption from registration is
available under those laws.
(i) The undersigned will not sell short in any manner the
Shares or the shares of Common Stock underlying the Warrant.
(j) The undersigned is financially able to bear the economic
risk of this investment, including the ability to hold the Shares and Warrant
indefinitely or to afford a complete loss of the undersigned's investment in the
Shares and Warrant.
<PAGE>
(k) The undersigned represents that the undersigned's overall
commitment to investments which are not readily marketable is not
disproportionate to its net worth, and the investment in the Shares and Warrant
will not cause such overall commitment to become excessive. The undersigned
understands that the statutory basis on which the Shares and Warrant are being
sold to the undersigned would not be available if the undersigned's present
intention were to hold the Shares and Warrant for a fixed period or until the
occurrence of a certain event. The undersigned realizes that in the view of the
Securities and Exchange Commission, a purchase now with a present intent to
resell by reason of a foreseeable specific contingency or any anticipated change
in the market value, or in the condition of the Company, or that of the industry
in which the business of the Company is engaged or in connection with a
contemplated liquidation, or settlement of any loan obtained by the undersigned
for the acquisition of the Shares and Warrant, and for which such Shares and
Warrant may be pledged as security or as donations to religious or charitable
institutions for the purpose of securing a deduction on an income tax return,
would, in fact, represent a purchase with an intent inconsistent with the
undersigned's representations to the Company, and the Securities and Exchange
Commission would then regard such sale as one for which no exemption from
registration is available. The undersigned will not pledge, transfer or assign
this Subscription Agreement.
(l) The undersigned represents that the funds provided for
this investment are either separate property of the Undersigned, other property
over which the undersigned has the right of control, or are otherwise funds as
to which the undersigned has the sole right of management.
(m) The address shown under the undersigned's signature at the
end of this Subscription Agreement is the undersigned's principal business
address if a corporation or other entity.
(n) The undersigned has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Shares and Warrant.
(o) The undersigned acknowledges that the certificates for the
securities comprising the Shares and the shares of Common Stock underlying the
Warrant which the undersigned will receive will contain a legend substantially
as follows:
THE SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO
DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, TRANSFERRED, MADE SUBJECT TO
A SECURITY INTEREST, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS
AND UNTIL REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL TO THE HOLDER HEREOF
SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH
ACT.
(p) This Subscription Agreement and all representations,
warranties and statements made herein are true, complete and correct in all
material respects.
(q) The undersigned acknowledges that the Company, except as
set forth in the Shares and Warrant, is under no obligation to register the
Shares and Warrant under the Securities Act or any state securities laws, or to
take any action to make any exemption from any such registration provisions
available, except that the Company is extending "Piggyback Registration" rights
with respect to the Shares, to the effect that it include the Shares in any
registration of its securities under the Securities Act of 1933 (other than in
connection with a merger or pursuant to Form S-8 or other comparable form)
except in case of an underwritten offering where the managing underwriter
declines to include such Shares.
(r) This Subscription Agreement is a legally binding
obligation of the undersigned in accordance with its terms.
<PAGE>
(s) The undersigned is an "accredited investor," as such term
is defined in Regulation D of the Rules and Regulations promulgated under the
Act.
(t) If the undersigned is a partnership, corporation, trust or
other entity, (i) the undersigned has enclosed with this Subscription Agreement
appropriate evidence of the authority of the individual executing this
Subscription Agreement to act on its behalf (e.g., if a trust, a certified copy
of the trust agreement; if a corporation, a certified corporate resolution
authorizing the signature and a certified copy of the articles of incorporation;
or if a partnership, a certified copy of the partnership agreement), (ii) the
undersigned represents and warrants that it was not organized or reorganized for
the specific purpose of acquiring the Shares and Warrant, and (iii) the
undersigned has the full power and authority to execute this Subscription
Agreement on behalf of such entity and to make the representations and
warranties made herein on its behalf, and (iv) this investment in the Company
has been affirmatively authorized, if required, by the governing board of such
entity and is not prohibited by the governing documents of the entity.
(u) The undersigned expressly acknowledges and agrees that the
Company is relying upon the Undersigned's representation contained in this
Subscription Agreement. The undersigned subscriber acknowledges that the
undersigned understands the meaning and legal consequences of the
representations and warranties which are contained herein and hereby agrees to
indemnify, save and hold the Company, and their respective officers, directors
and counsel harmless from and against any and all claims or actions arising out
of a breach of any representation, warranty or acknowledgment of the undersigned
contained in any Subscription Document. Such indemnification shall be deemed to
include not only the specific liabilities or obligation with respect to which
such indemnity is provided, but also all reasonable costs, expenses, counsel
fees and expenses of settlement relating thereto, whether or not any such
liability or obligation shall have been reduced to judgment.
(v) Except as otherwise specifically provided for hereunder,
no party shall be deemed to have waived any of his or her or its rights
hereunder or under any other agreement, instrument or papers signed by any of
them with respect to the subject matter hereof unless such waiver is in writing
signed by the party waiving said right. A waiver on any one occasion with
respect to the subject matter hereof shall not be construed as a bar to, or
waiver of, any right or remedy on any future occasion. All rights and remedies
with respect to the subject matter hereof, whether evidenced hereby or by any
other agreement, instrument, or paper, will be cumulative, and may be exercised
separately or concurrently.
(w) The parties have not made any representations or
warranties with respect to the subject matter hereof not set forth in this
Subscription Agreement, together with the Shares and Warrant executed
simultaneously herewith, constitutes the entire agreement between them with
respect to the subject matter hereof. All understandings and agreements
heretofore had between the parties with respect to the subject matter hereof are
merged in this Subscription Agreement and the Shares and Warrant which alone
fully and completely expresses their agreement.
<PAGE>
(x) This Agreement may not be changed, modified, extended,
terminated or discharged orally, but only by an agreement in writing, which is
signed by all of the parties to this Agreement.
(y) The parties agree to execute any and all such other and
further instruments and documents, and to take any and all such further actions
reasonably required to effectuate this Subscription Agreement and the intent and
purposes hereof.
(z) This Subscription Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey and the
undersigned hereby consents to the jurisdiction of the courts of the State of
New Jersey and/or the United States District Court for the District of New
Jersey.
(aa) The undersigned understands that this subscription is not
binding upon the Company until the Company accepts it, which acceptance is at
the sole discretion of the Company and is to be evidenced by the Company's
execution of this Subscription Agreement where indicated. This Subscription
Agreement shall be null and void if the Company does not accept it as aforesaid.
(bb) Intentionally Omitted.
(cc) Neither this Subscription Agreement nor any of
the rights of the undersigned hereunder may be transferred or assigned by
the undersigned.
(dd) Please check whether one or more of the following
definitions of "accredited investor," if any, applies to you. If none
of the following applies to you, please leave a blank.
<PAGE>
(i) A Bank as defined in Section 3(a)(2) of the Securities Act of 1933, as
amended ("Securities Act"), or any savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the Securities Act whether
acting in its individual or fiduciary capacity; any broker or dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); an insurance company as defined in Section 2(13) of the
Securities Act; an investment company registered under the Investment Company
Act of 1940 or a business development company as defined in Section 2(a)(48) of
that act; a Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958; any plan established and maintained by a state, or its
political subdivisions, or any agency or instrumentality of a state or its
political subdivisions for the benefit of its employees, if such plan has total
assets in excess of $5,000,000; any employee benefit plan within the meaning of
the Employee Retirement Income Security Act of 1974, if the investment decision
is made by a plan fiduciary, as defined in Section 3(21) of such act, which is
either a bank, savings and loan association, insurance company, or registered
investment advisor, or if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with investment decisions made solely
by persons that are Accredited Investors.
(ii) A Private Business Development Company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940.
(iii) An organization described in Section 501(c)(3) of the Internal
Revenue Code or corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000.
(iv) A natural person whose individual net worth, or joint net worth with
that person's spouse, at the time of purchase exceeds $1,000,000.
(v) A natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with that person's spouse in
excess of $300,000 in each of those years and has a reasonable expectation of
reaching the same income level in the current year.
(vi) Any trust, with total assets in excess of $5,000,000, not formed for
the specific purpose of acquiring the Shares and Warrant, whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii) of
Regulation D.
(vii) Any entity in which all of the equity owners are Accredited
Investors.
2. This following information is required pursuant to Article III,
Section 44 of the Rules of Fair Practice of the NASD and upon which the Company
will rely in making any statement to the NASD concerning the association or
affiliation of any officer, director or security holder of the Company with any
NASD member.
(i) State whether you or any of your Affiliates or any of your
Associates (See Definitions at the end of this
Subscription Agreement) are
(a) Member of the National Association of Securities Dealers,
Inc. ("NASD");
Yes____ No____
(b) a Person Associated with a Member of the NASD; or
Yes____ No____
(c) an Affiliate of a Member of the NASD.
Yes____ No____
(ii) State whether you or any of your Affiliates or any of your Associates
own stock or other securities of any member of the NASD (other than
securities purchased on the open market).
Yes____ No____
(iii) State whether you or any of your Affiliates or any of your Associates
have made a subordinated loan to any Member of the NASD.
Yes____ No____
(iv) If you marked "Yes" to any of the questions above, please briefly
describe the facts below, giving the names of the appropriate Members
of the NASD to which your answers refer.
<PAGE>
(v) The Undersigned has carefully reviewed the jurisdictional notices
listed below and agrees to abide by any restrictions contained therein
applicable to the undersigned.
JURISDICTIONAL NOTICES
THE SECURITIES OFFERED PURSUANT TO THE TERMS AND PROVISIONS OF THIS
SUBSCRIPTION AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATES OF THE UNITED STATES
OR ANY OTHER JURISDICTION AND ARE BEING OFFERED AND SOLD IN RELIANCE UPON
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES
COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING
AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY
OR ADEQUACY OF THE MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
IT IS THE RESPONSIBILITY OF THE SUBSCRIBER WISHING TO PURCHASE THE SHARES AND
WARRANT TO SATISFY ITSELF AS TO THE FULL OBSERVANCE OF THE LAWS OF ANY RELEVANT
TERRITORY OUTSIDE THE UNITED STATES IN CONNECTION WITH ANY SUCH PURCHASE,
INCLUDING OBTAINING ANY REQUIRED GOVERNMENTAL OR OTHER CONSENTS OR OBSERVING ANY
OTHER APPLICABLE FORMALITIES.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement on this __ day of ________ ,2000.
Purchase Price for the Units: US$_______________.
Exact Name in Which Title is to be Held
Signature
Name (Please Print)
Title of Person Executing Agreement
Address: Number and Street
City State Zip Code
Tax Identification Number
Jurisdiction of Incorporation
Accepted this __ day of ___ , 2000, on behalf of
------ ---------------------
MAGNITUDE INFORMATION SYSTEMS, INC.
BY:
Steven D. Rudnik
DEFINITIONS
Affiliate: An Affiliate of any person (for purposes hereof a "person"
includes a partnership, corporation or other legal entity such
as a trust or estate) is a person which controls, is
controlled by or is under common control with such person. For
purposes of this definition:
(i) a person should be presumed to control a Member if the
person beneficially owns 10% or more of the outstanding voting
securities of a Member which is a corporation, or beneficially
owns a partnership interest in 10% or more of the outstanding
voting securities of a person which is a corporation, or
beneficially own a partnership interest in 10% or more of the
distributable profits or losses of a person which is a
partnership; and
(ii) a Member should be presumed to control a person if the
Member and Persons Associated with the Member beneficially own
10% or more of the outstanding voting securities of a person
which is a corporation, or beneficially own a partnership
interest in 10% or more of the distributable profits or losses
of a person which is a partnership; and
(iii) a person should be presumed to be under common control
with a Member if:
(1) the same person controls both the Member and such
person by beneficially owning 10% or more of the
outstanding voting securities of the Member and other
such person which is a corporation, or by
beneficially owning a partnership interest in 10% or
more of the distributable profits or losses of the
Member and other such person which is a partnership;
or
(2) a person having the power to direct or cause the
direction of the management or policies of the Member
also has the power to direct or cause the direction
of the management or policies of the other entity in
question.
Associate: An Associate is
(i) any corporation or organization of which you are
an officer, director or partner, or of which you are
directly or indirectly the beneficial owner of 10% or
more of any class of equity securities.
(ii) any trust or other estate in which you have a
substantial beneficial interest or as to which you
serve as trustee or in a similar fiduciary capacity;
and
<PAGE>
(iii) any relative or spouse of yours, or any
relative of such spouse who has the same home as you.
Member: A Member is any broker or dealer admitted to membership in the NASD.
Person A "Person Associated with a Member" is every sole proprietor,
partner,
Associated officer, director or branch manager of any Member, or any natural
person
with a occupying a similar status or performing similar functions, or any
person
Member: engaged in the investment banking or securities business who is
directly or indirectly controlling or controlled by such Member
(for example, any employee), whether or not any such person is
registered or exempt from registration with the NASD.
Exhibit 4.15
SUBSCRIPTION AGREEMENT
Pursuant to Section 4 (2) of the Securities Act of 1933
Subscription Agreement and Questionnaire of Magnitude Information Systems, Inc.
The undersigned hereby subscribes for the purchase of ___________
shares (the "Shares") of the Series B Senior Convertible Preferred Stock of
Magnitude Information Systems, Inc. (the "Company"), the designation of which is
annexed hereto as Exhibit A, for the purchase price of US$9.00 per Share. The
Shares are sometimes hereinafter collectively referred to as the "Security" or
"Securities". The entire purchase price is due and payable upon the execution of
this Subscription Agreement, and shall be paid by check, subject to collection,
or by wire transfer, made payable to the order of "Magnitude Information
Systems, Inc." The Company shall have the right to reject this subscription in
whole or in part.
1 The undersigned, in order to induce the Company to accept this
Subscription Agreement represents, warrants and covenants to the Company as
follows:
(a) The undersigned acknowledges that (i) the Shares being
purchased hereunder have not been registered under the Securities Act of 1933,
as amended ("Securities Act"), or the securities laws of any State; (ii) absent
an exemption from registration contained in those laws, the issuance and sale of
the Shares would require registration; and (iii) the Company's reliance upon any
such exemption is invariably based upon the undersigned's representations,
warranties, and agreements contained in this Subscription Agreement (the
Subscription Agreement and the included Investor Questionnaire are collectively
referred to herein as the "Subscription Documents").
(b) The undersigned agrees that this Subscription Agreement is
and shall be irrevocable unless it has not been accepted by the Company.
(c) The undersigned has carefully read the Company's Form
10-KSB for the fiscal year ended December 31, 1998 and Forms 10-QSB for the
quarters ended March 31, 1999, June 30, 1999, and September 30, 1999, this
Subscription Agreement as well as the designation attached hereto as Exhibit A,
respectively (collectively, the "Disclosure Materials") all of which the
undersigned acknowledges have been delivered to the undersigned. The undersigned
acknowledges that the undersigned has been given the opportunity to ask
questions of, and receive answers from, the Company concerning the terms and
conditions of this Subscription Agreement and the Disclosure Materials and to
obtain such additional written information, to the extent the Company possesses
such information or can acquire it without unreasonable effort or expense,
necessary to verify the accuracy of same, as the Undersigned desires in order to
evaluate the investment. The undersigned further acknowledges that the
undersigned has received no representations or warranties from the Company, or
their respective employees or agents in making this investment decision other
than as set forth in the Disclosure Materials.
<PAGE>
(d) The undersigned acknowledges that the undersigned has
investigated the Company's business, financial conditions, current state of
affairs, planned business and other matters necessary in order for the
undersigned to make an informed investment decision regarding the purchase of
the Shares.
(e) The undersigned acknowledges that the undersigned is
purchasing the Shares without being furnished any prospectus or written
description of the Company, its business and/or its future plans, other than the
Disclosure Materials, and has relied solely upon the Disclosure Materials and
the undersigned's own investigation into the Company and its proposed
operations.
(f) The undersigned is aware that the purchase of the Shares
is a speculative investment involving a high degree of risk and that there is no
guarantee that the undersigned will realize any gain from this investment, and
that the entire investment could be lost.
(g) The undersigned understands that no federal or state
agency has made any finding or determination regarding the fairness of this
private offering, or any recommendation or endorsement of this private offering.
(h) The undersigned is purchasing the Shares for the
undersigned's own account, with the intention of holding the Security with no
present intention of dividing or allowing others to participate in this
investment or of reselling or otherwise participating, directly or indirectly,
in a distribution of the Security, and shall not make any sale, transfer, or
pledge thereof without registration under the Securities Act and any applicable
securities laws of any state or unless an exemption from registration is
available under those laws.
(i) The undersigned will not sell short in any manner the
Shares.
(j) The undersigned is financially able to bear the economic
risk of this investment, including the ability to hold the Shares indefinitely
or to afford a complete loss of the undersigned's investment in the Shares.
<PAGE>
(k) The undersigned represents that the undersigned's overall
commitment to investments which are not readily marketable is not
disproportionate to its net worth, and the investment in the Shares will not
cause such overall commitment to become excessive. The undersigned understands
that the statutory basis on which the Shares are being sold to the undersigned
would not be available if the undersigned's present intention were to hold the
Shares for a fixed period or until the occurrence of a certain event. The
undersigned realizes that in the view of the Securities and Exchange Commission,
a purchase now with a present intent to resell by reason of a foreseeable
specific contingency or any anticipated change in the market value, or in the
condition of the Company, or that of the industry in which the business of the
Company is engaged or in connection with a contemplated liquidation, or
settlement of any loan obtained by the undersigned for the acquisition of the
Shares, and for which such Shares may be pledged as security or as donations to
religious or charitable institutions for the purpose of securing a deduction on
an income tax return, would, in fact, represent a purchase with an intent
inconsistent with the undersigned's representations to the Company, and the
Securities and Exchange Commission would then regard such sale as one for which
no exemption from registration is available. The undersigned will not pledge,
transfer or assign this Subscription Agreement.
(l) The undersigned represents that the funds provided for
this investment are either separate property of the Undersigned, other property
over which the undersigned has the right of control, or are otherwise funds as
to which the undersigned has the sole right of management.
(m) The address shown under the undersigned's signature at the
end of this Subscription Agreement is the undersigned's principal business
address if a corporation or other entity.
(n) The undersigned has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Shares.
(o) The undersigned acknowledges that the certificates for the
securities comprising the Shares which the undersigned will receive will contain
a legend substantially as follows:
THE SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO
DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, TRANSFERRED, MADE SUBJECT
TO A SECURITY INTEREST, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL TO THE
HOLDER HEREOF SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT.
(p) This Subscription Agreement and all representations,
warranties and statements made herein are true, complete and correct in all
material respects.
(q) The undersigned acknowledges that the Company, except as
set forth in the Shares, is under no obligation to register the Shares under the
Securities Act or any state securities laws, or to take any action to make any
exemption from any such registration provisions available, except that the
Company agrees to undertake to file a registration statement under the
Securities Act of 1933 for the common shares underlying the conversion option of
the Shares, no later than 120 days after the date of issuance of the Shares.
(r) This Subscription Agreement is a legally binding
obligation of the undersigned in accordance with its terms.
<PAGE>
(s) The undersigned is an "accredited investor," as such term
is defined in Regulation D of the Rules and Regulations promulgated under the
Act.
(t) If the undersigned is a partnership, corporation, trust or
other entity, (i) the undersigned has enclosed with this Subscription Agreement
appropriate evidence of the authority of the individual executing this
Subscription Agreement to act on its behalf (e.g., if a trust, a certified copy
of the trust agreement; if a corporation, a certified corporate resolution
authorizing the signature and a certified copy of the articles of incorporation;
or if a partnership, a certified copy of the partnership agreement), (ii) the
undersigned represents and warrants that it was not organized or reorganized for
the specific purpose of acquiring the Shares, and (iii) the undersigned has the
full power and authority to execute this Subscription Agreement on behalf of
such entity and to make the representations and warranties made herein on its
behalf, and (iv) this investment in the Company has been affirmatively
authorized, if required, by the governing board of such entity and is not
prohibited by the governing documents of the entity.
(u) The undersigned expressly acknowledges and agrees that the
Company is relying upon the Undersigned's representation contained in this
Subscription Agreement. The undersigned subscriber acknowledges that the
undersigned understands the meaning and legal consequences of the
representations and warranties which are contained herein and hereby agrees to
indemnify, save and hold the Company, and their respective officers, directors
and counsel harmless from and against any and all claims or actions arising out
of a breach of any representation, warranty or acknowledgment of the undersigned
contained in any Subscription Document. Such indemnification shall be deemed to
include not only the specific liabilities or obligation with respect to which
such indemnity is provided, but also all reasonable costs, expenses, counsel
fees and expenses of settlement relating thereto, whether or not any such
liability or obligation shall have been reduced to judgment.
(v) Except as otherwise specifically provided for hereunder,
no party shall be deemed to have waived any of his or her or its rights
hereunder or under any other agreement, instrument or papers signed by any of
them with respect to the subject matter hereof unless such waiver is in writing
signed by the party waiving said right. A waiver on any one occasion with
respect to the subject matter hereof shall not be construed as a bar to, or
waiver of, any right or remedy on any future occasion. All rights and remedies
with respect to the subject matter hereof, whether evidenced hereby or by any
other agreement, instrument, or paper, will be cumulative, and may be exercised
separately or concurrently.
(w) The parties have not made any representations or
warranties with respect to the subject matter hereof not set forth in this
Subscription Agreement, together with the Shares executed simultaneously
herewith, constitutes the entire agreement between them with respect to the
subject matter hereof. All understandings and agreements heretofore had between
the parties with respect to the subject matter hereof are merged in this
Subscription Agreement and the Shares which alone fully and completely expresses
their agreement.
<PAGE>
(x) This Agreement may not be changed, modified, extended,
terminated or discharged orally, but only by an agreement in writing, which is
signed by all of the parties to this Agreement.
(y) The parties agree to execute any and all such other and
further instruments and documents, and to take any and all such further actions
reasonably required to effectuate this Subscription Agreement and the intent and
purposes hereof.
(z) This Subscription Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey and the
undersigned hereby consents to the jurisdiction of the courts of the State of
New Jersey and/or the United States District Court for the District of New
Jersey.
(aa) The undersigned understands that this subscription is not
binding upon the Company until the Company accepts it, which acceptance is at
the sole discretion of the Company and is to be evidenced by the Company's
execution of this Subscription Agreement where indicated. This Subscription
Agreement shall be null and void if the Company does not accept it as aforesaid.
(bb) Intentionally Omitted.
(cc) Neither this Subscription Agreement nor
any of the rights of the undersigned hereunder may be
transferred or assigned by the undersigned.
(dd) Please check whether one or more of the following
definitions of "accredited investor," if any, applies to you. If none
of the following applies to you, please leave a blank.
<PAGE>
(i) A Bank as defined in Section 3(a)(2) of the Securities Act of 1933, as
amended ("Securities Act"), or any savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the Securities Act whether
acting in its individual or fiduciary capacity; any broker or dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); an insurance company as defined in Section 2(13) of the
Securities Act; an investment company registered under the Investment Company
Act of 1940 or a business development company as defined in Section 2(a)(48) of
that act; a Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958; any plan established and maintained by a state, or its
political subdivisions, or any agency or instrumentality of a state or its
political subdivisions for the benefit of its employees, if such plan has total
assets in excess of $5,000,000; any employee benefit plan within the meaning of
the Employee Retirement Income Security Act of 1974, if the investment decision
is made by a plan fiduciary, as defined in Section 3(21) of such act, which is
either a bank, savings and loan association, insurance company, or registered
investment advisor, or if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with investment decisions made solely
by persons that are Accredited Investors.
(ii) A Private Business Development Company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940.
(iii) An organization described in Section 501(c)(3) of the Internal
Revenue Code or corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000.
(iv) A natural person whose individual net worth, or joint net worth with
that person's spouse, at the time of purchase exceeds $1,000,000.
(v) A natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with that person's spouse in
excess of $300,000 in each of those years and has a reasonable expectation of
reaching the same income level in the current year.
(vi) Any trust, with total assets in excess of $5,000,000, not formed for
the specific purpose of acquiring the Shares and Warrant, whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii) of
Regulation D.
(vii) Any entity in which all of the equity owners are Accredited
Investors.
2. This following information is required pursuant to Article III,
Section 44 of the Rules of Fair Practice of the NASD and upon which the Company
will rely in making any statement to the NASD concerning the association or
affiliation of any officer, director or security holder of the Company with any
NASD member.
(i) State whether you or any of your Affiliates or any of your
Associates (See Definitions at the end of this
Subscription Agreement) are
(a) Member of the National Association of Securities Dealers,
Inc. ("NASD");
Yes____ No____
(b) a Person Associated with a Member of the NASD; or
Yes____ No____
(c) an Affiliate of a Member of the NASD.
Yes____ No____
(ii) State whether you or any of your Affiliates or any of your Associates
own stock or other securities of any member of the NASD (other than
securities purchased on the open market).
Yes____ No____
(iii) State whether you or any of your Affiliates or any of your Associates
have made a subordinated loan to any Member of the NASD.
Yes____ No____
(iv) If you marked "Yes" to any of the questions above, please briefly
describe the facts below, giving the names of the appropriate Members
of the NASD to which your answers refer.
<PAGE>
(v) The Undersigned has carefully reviewed the jurisdictional notices
listed below and agrees to abide by any restrictions contained therein
applicable to the undersigned.
JURISDICTIONAL NOTICES
THE SECURITIES OFFERED PURSUANT TO THE TERMS AND PROVISIONS OF THIS
SUBSCRIPTION AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATES OF THE UNITED STATES
OR ANY OTHER JURISDICTION AND ARE BEING OFFERED AND SOLD IN RELIANCE UPON
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES
COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING
AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY
OR ADEQUACY OF THE MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
IT IS THE RESPONSIBILITY OF THE SUBSCRIBER WISHING TO PURCHASE THE SHARES AND
WARRANT TO SATISFY ITSELF AS TO THE FULL OBSERVANCE OF THE LAWS OF ANY RELEVANT
TERRITORY OUTSIDE THE UNITED STATES IN CONNECTION WITH ANY SUCH PURCHASE,
INCLUDING OBTAINING ANY REQUIRED GOVERNMENTAL OR OTHER CONSENTS OR OBSERVING ANY
OTHER APPLICABLE FORMALITIES.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement on this __ day of ________ ,2000.
Purchase Price for the Shares: US$_______________.
Exact Name in Which Title is to be Held
Signature
Name (Please Print)
Title of Person Executing Agreement
Address: Number and Street
City State Zip Code
Tax Identification Number
Jurisdiction of Incorporation
Accepted this __ day of ___ , 2000, on behalf of
------ ---------------------
MAGNITUDE INFORMATION SYSTEMS, INC.
BY:
Steven D. Rudnik
DEFINITIONS
Affiliate: An Affiliate of any person (for purposes hereof a "person"
includes a partnership, corporation or other legal entity such
as a trust or estate) is a person which controls, is
controlled by or is under common control with such person. For
purposes of this definition:
(i) a person should be presumed to control a Member if the
person beneficially owns 10% or more of the outstanding voting
securities of a Member which is a corporation, or beneficially
owns a partnership interest in 10% or more of the outstanding
voting securities of a person which is a corporation, or
beneficially own a partnership interest in 10% or more of the
distributable profits or losses of a person which is a
partnership; and
(ii) a Member should be presumed to control a person if the
Member and Persons Associated with the Member beneficially own
10% or more of the outstanding voting securities of a person
which is a corporation, or beneficially own a partnership
interest in 10% or more of the distributable profits or losses
of a person which is a partnership; and
(iii) a person should be presumed to be under common control
with a Member if:
(1) the same person controls both the Member and such
person by beneficially owning 10% or more of the
outstanding voting securities of the Member and other
such person which is a corporation, or by
beneficially owning a partnership interest in 10% or
more of the distributable profits or losses of the
Member and other such person which is a partnership;
or
(2) a person having the power to direct or cause the
direction of the management or policies of the Member
also has the power to direct or cause the direction
of the management or policies of the other entity in
question.
Associate: An Associate is
(i) any corporation or organization of which you are
an officer, director or partner, or of which you are
directly or indirectly the beneficial owner of 10% or
more of any class of equity securities.
(ii) any trust or other estate in which you have a
substantial beneficial interest or as to which you
serve as trustee or in a similar fiduciary capacity;
and
<PAGE>
(iii) any relative or spouse of yours, or any
relative of such spouse who has the same home as you.
Member: A Member is any broker or dealer admitted to membership in
the NASD.
Person A "Person Associated with a Member" is every sole proprietor,
partner,
Associated officer, director or branch manager of any Member, or any
natural perso
with a occupying a similar status or performing similar functions,
or any person
Member: engaged in the investment banking or securities business who
is directly or indirectly controlling or controlled by such
Member (for example, any employee), whether or not any such
person is registered or exempt from registration with the
NASD.
Exhibit 4.16
SUBSCRIPTION AGREEMENT
Pursuant to Section 4 (2) of the Securities Act of 1933
Subscription Agreement and Questionnaire of Magnitude Information Systems,
Inc.
The undersigned hereby subscribes for the purchase of ___________
Units, each Unit consisting of one share (the "Shares") of the Series B Senior
Convertible Preferred Stock of Magnitude Information Systems, Inc. (the
"Company"), the designation of which is annexed hereto as Exhibit B, and a
warrant for the purchase of five (5) common shares of the Company, a copy of
which is annexed hereto as Exhibit A (the "Warrant"), for the purchase price of
US$9.00 per Unit. The Shares and the Warrant, as well as the shares underlying
the Warrant, are sometimes hereinafter collectively referred to as the
"Security" or "Securities". The entire purchase price is due and payable upon
the execution of this Subscription Agreement, and shall be paid by check,
subject to collection, or by wire transfer, made payable to the order of
"Magnitude Information Systems, Inc." The Company shall have the right to reject
this subscription in whole or in part.
1 The undersigned, in order to induce the Company to accept this
Subscription Agreement represents, warrants and covenants to the Company as
follows:
(a) The undersigned acknowledges that (i) the Shares and
Warrant being purchased hereunder have not been registered under the Securities
Act of 1933, as amended ("Securities Act"), or the securities laws of any State;
(ii) absent an exemption from registration contained in those laws, the issuance
and sale of the Shares and Warrant would require registration; and (iii) the
Company's reliance upon any such exemption is invariably based upon the
undersigned's representations, warranties, and agreements contained in this
Subscription Agreement (the Subscription Agreement and the included Investor
Questionnaire are collectively referred to herein as the "Subscription
Documents").
(b) The undersigned agrees that this Subscription Agreement is
and shall be irrevocable unless it has not been accepted by the Company.
(c) The undersigned has carefully read the Company's Form
10-KSB for the fiscal year ended December 31, 1998 and Forms 10-QSB for the
quarters ended March 31, 1999, June 30, 1999, and September 30, 1999, this
Subscription Agreement as well as the Warrant attached hereto as Exhibit A,
respectively (collectively, the "Disclosure Materials") all of which the
undersigned acknowledges have been delivered to the undersigned. The undersigned
acknowledges that the undersigned has been given the opportunity to ask
questions of, and receive answers from, the Company concerning the terms and
conditions of this Subscription Agreement and the Disclosure Materials and to
obtain such additional written information, to the extent the Company possesses
such information or can acquire it without unreasonable effort or expense,
necessary to verify the accuracy of same, as the Undersigned desires in order to
evaluate the investment. The undersigned further acknowledges that the
undersigned has received no representations or warranties from the Company, or
their respective employees or agents in making this investment decision other
than as set forth in the Disclosure Materials.
<PAGE>
181
(d) The undersigned acknowledges that the undersigned has
investigated the Company's business, financial conditions, current state of
affairs, planned business and other matters necessary in order for the
undersigned to make an informed investment decision regarding the purchase of
the Shares and Warrant.
(e) The undersigned acknowledges that the undersigned is
purchasing the Shares and Warrant without being furnished any prospectus or
written description of the Company, its business and/or its future plans, other
than the Disclosure Materials, and has relied solely upon the Disclosure
Materials and the undersigned's own investigation into the Company and its
proposed operations.
(f) The undersigned is aware that the purchase of the Shares
and Warrant is a speculative investment involving a high degree of risk and that
there is no guarantee that the undersigned will realize any gain from this
investment, and that the entire investment could be lost.
(g) The undersigned understands that no federal or state
agency has made any finding or determination regarding the fairness of this
private offering, or any recommendation or endorsement of this private offering.
(h) The undersigned is purchasing the Shares and Warrant for
the undersigned's own account, with the intention of holding the Security with
no present intention of dividing or allowing others to participate in this
investment or of reselling or otherwise participating, directly or indirectly,
in a distribution of the Security, and shall not make any sale, transfer, or
pledge thereof without registration under the Securities Act and any applicable
securities laws of any state or unless an exemption from registration is
available under those laws.
(i) The undersigned will not sell short in any manner the
Shares or the shares of Common Stock underlying the Warrant.
(j) The undersigned is financially able to bear the economic
risk of this investment, including the ability to hold the Shares and Warrant
indefinitely or to afford a complete loss of the undersigned's investment in the
Shares and Warrant.
<PAGE>
(k) The undersigned represents that the undersigned's overall
commitment to investments which are not readily marketable is not
disproportionate to its net worth, and the investment in the Shares and Warrant
will not cause such overall commitment to become excessive. The undersigned
understands that the statutory basis on which the Shares and Warrant are being
sold to the undersigned would not be available if the undersigned's present
intention were to hold the Shares and Warrant for a fixed period or until the
occurrence of a certain event. The undersigned realizes that in the view of the
Securities and Exchange Commission, a purchase now with a present intent to
resell by reason of a foreseeable specific contingency or any anticipated change
in the market value, or in the condition of the Company, or that of the industry
in which the business of the Company is engaged or in connection with a
contemplated liquidation, or settlement of any loan obtained by the undersigned
for the acquisition of the Shares and Warrant, and for which such Shares and
Warrant may be pledged as security or as donations to religious or charitable
institutions for the purpose of securing a deduction on an income tax return,
would, in fact, represent a purchase with an intent inconsistent with the
undersigned's representations to the Company, and the Securities and Exchange
Commission would then regard such sale as one for which no exemption from
registration is available. The undersigned will not pledge, transfer or assign
this Subscription Agreement.
(l) The undersigned represents that the funds provided for
this investment are either separate property of the Undersigned, other property
over which the undersigned has the right of control, or are otherwise funds as
to which the undersigned has the sole right of management.
(m) The address shown under the undersigned's signature at the
end of this Subscription Agreement is the undersigned's principal business
address if a corporation or other entity.
(n) The undersigned has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Shares and Warrant.
(o) The undersigned acknowledges that the certificates for the
securities comprising the Shares and the shares of Common Stock underlying the
Warrant which the undersigned will receive will contain a legend substantially
as follows:
THE SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO
DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, TRANSFERRED, MADE SUBJECT
TO A SECURITY INTEREST, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL TO THE
HOLDER HEREOF SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT.
(p) This Subscription Agreement and all representations,
warranties and statements made herein are true, complete and correct in all
material respects.
(q) The undersigned acknowledges that the Company, except as
set forth in the Shares and Warrant, is under no obligation to register the
Shares and Warrant under the Securities Act or any state securities laws, or to
take any action to make any exemption from any such registration provisions
available, except that the Company agrees to undertake to file a registration
statement under the Securities Act of 1933 for the common shares underlying the
conversion option of the Shares and the Warrant, no later than 30 days after the
date of issuance of the Shares and Warrant.
(r)This Subscription Agreement is a legally binding obligation
of the undersigned in accordance with its terms.
<PAGE>
(s) The undersigned is an "accredited investor," as such term
is defined in Regulation D of the Rules and Regulations promulgated under the
Act.
(t) If the undersigned is a partnership, corporation, trust or
other entity, (i) the undersigned has enclosed with this Subscription Agreement
appropriate evidence of the authority of the individual executing this
Subscription Agreement to act on its behalf (e.g., if a trust, a certified copy
of the trust agreement; if a corporation, a certified corporate resolution
authorizing the signature and a certified copy of the articles of incorporation;
or if a partnership, a certified copy of the partnership agreement), (ii) the
undersigned represents and warrants that it was not organized or reorganized for
the specific purpose of acquiring the Shares and Warrant, and (iii) the
undersigned has the full power and authority to execute this Subscription
Agreement on behalf of such entity and to make the representations and
warranties made herein on its behalf, and (iv) this investment in the Company
has been affirmatively authorized, if required, by the governing board of such
entity and is not prohibited by the governing documents of the entity.
(u) The undersigned expressly acknowledges and agrees that the
Company is relying upon the Undersigned's representation contained in this
Subscription Agreement. The undersigned subscriber acknowledges that the
undersigned understands the meaning and legal consequences of the
representations and warranties which are contained herein and hereby agrees to
indemnify, save and hold the Company, and their respective officers, directors
and counsel harmless from and against any and all claims or actions arising out
of a breach of any representation, warranty or acknowledgment of the undersigned
contained in any Subscription Document. Such indemnification shall be deemed to
include not only the specific liabilities or obligation with respect to which
such indemnity is provided, but also all reasonable costs, expenses, counsel
fees and expenses of settlement relating thereto, whether or not any such
liability or obligation shall have been reduced to judgment.
(v) Except as otherwise specifically provided for hereunder,
no party shall be deemed to have waived any of his or her or its rights
hereunder or under any other agreement, instrument or papers signed by any of
them with respect to the subject matter hereof unless such waiver is in writing
signed by the party waiving said right. A waiver on any one occasion with
respect to the subject matter hereof shall not be construed as a bar to, or
waiver of, any right or remedy on any future occasion. All rights and remedies
with respect to the subject matter hereof, whether evidenced hereby or by any
other agreement, instrument, or paper, will be cumulative, and may be exercised
separately or concurrently.
(w) The parties have not made any representations or
warranties with respect to the subject matter hereof not set forth in this
Subscription Agreement, together with the Shares and Warrant executed
simultaneously herewith, constitutes the entire agreement between them with
respect to the subject matter hereof. All understandings and agreements
heretofore had between the parties with respect to the subject matter hereof are
merged in this Subscription Agreement and the Shares and Warrant which alone
fully and completely expresses their agreement.
<PAGE>
(x) This Agreement may not be changed, modified, extended,
terminated or discharged orally, but only by an agreement in writing, which is
signed by all of the parties to this Agreement.
(y) The parties agree to execute any and all such other and
further instruments and documents, and to take any and all such further actions
reasonably required to effectuate this Subscription Agreement and the intent and
purposes hereof.
(z) This Subscription Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey and the
undersigned hereby consents to the jurisdiction of the courts of the State of
New Jersey and/or the United States District Court for the District of New
Jersey.
(aa) The undersigned understands that this subscription is not
binding upon the Company until the Company accepts it, which acceptance is at
the sole discretion of the Company and is to be evidenced by the Company's
execution of this Subscription Agreement where indicated. This Subscription
Agreement shall be null and void if the Company does not accept it as aforesaid.
(bb) Intentionally Omitted.
(cc) Neither this Subscription Agreement nor any of
the rights of the undersigned hereunder may be transferred or assigned by
the undersigned.
(dd) Please check whether one or more of the following
definitions of "accredited investor," if any, applies to you. If none
of the following applies to you, please leave a blank.
<PAGE>
(i) A Bank as defined in Section 3(a)(2) of the Securities Act of 1933, as
amended ("Securities Act"), or any savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the Securities Act whether
acting in its individual or fiduciary capacity; any broker or dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); an insurance company as defined in Section 2(13) of the
Securities Act; an investment company registered under the Investment Company
Act of 1940 or a business development company as defined in Section 2(a)(48) of
that act; a Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958; any plan established and maintained by a state, or its
political subdivisions, or any agency or instrumentality of a state or its
political subdivisions for the benefit of its employees, if such plan has total
assets in excess of $5,000,000; any employee benefit plan within the meaning of
the Employee Retirement Income Security Act of 1974, if the investment decision
is made by a plan fiduciary, as defined in Section 3(21) of such act, which is
either a bank, savings and loan association, insurance company, or registered
investment advisor, or if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with investment decisions made solely
by persons that are Accredited Investors.
(ii) A Private Business Development Company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940.
(iii) An organization described in Section 501(c)(3) of the Internal
Revenue Code or corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000.
(iv) A natural person whose individual net worth, or joint net worth with
that person's spouse, at the time of purchase exceeds $1,000,000.
(v) A natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with that person's spouse in
excess of $300,000 in each of those years and has a reasonable expectation of
reaching the same income level in the current year.
(vi) Any trust, with total assets in excess of $5,000,000, not formed for
the specific purpose of acquiring the Shares and Warrant, whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii) of
Regulation D.
(vii) Any entity in which all of the equity owners are Accredited
Investors.
2. This following information is required pursuant to Article III,
Section 44 of the Rules of Fair Practice of the NASD and upon which the Company
will rely in making any statement to the NASD concerning the association or
affiliation of any officer, director or security holder of the Company with any
NASD member.
(i) State whether you or any of your Affiliates or any of your
Associates (See Definitions at the end of this
Subscription Agreement) are
(a) Member of the National Association of Securities Dealers,
Inc. ("NASD");
Yes____ No____
(b) a Person Associated with a Member of the NASD; or
Yes____ No____
(c) an Affiliate of a Member of the NASD.
Yes____ No____
(ii) State whether you or any of your Affiliates or any of your Associates
own stock or other securities of any member of the NASD (other than
securities purchased on the open market).
Yes____ No____
(iii) State whether you or any of your Affiliates or any of your Associates
have made a subordinated loan to any Member of the NASD.
Yes____ No____
(iv) If you marked "Yes" to any of the questions above, please briefly
describe the facts below, giving the names of the appropriate Members
of the NASD to which your answers refer.
<PAGE>
(v) The Undersigned has carefully reviewed the jurisdictional notices
listed below and agrees to abide by any restrictions contained therein
applicable to the undersigned.
JURISDICTIONAL NOTICES
THE SECURITIES OFFERED PURSUANT TO THE TERMS AND PROVISIONS OF THIS
SUBSCRIPTION AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATES OF THE UNITED STATES
OR ANY OTHER JURISDICTION AND ARE BEING OFFERED AND SOLD IN RELIANCE UPON
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES
COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING
AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY
OR ADEQUACY OF THE MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
IT IS THE RESPONSIBILITY OF THE SUBSCRIBER WISHING TO PURCHASE THE SHARES AND
WARRANT TO SATISFY ITSELF AS TO THE FULL OBSERVANCE OF THE LAWS OF ANY RELEVANT
TERRITORY OUTSIDE THE UNITED STATES IN CONNECTION WITH ANY SUCH PURCHASE,
INCLUDING OBTAINING ANY REQUIRED GOVERNMENTAL OR OTHER CONSENTS OR OBSERVING ANY
OTHER APPLICABLE FORMALITIES.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement on this __ day of ________ , ---- ---------- 2000
Purchase Price for the Units: US$_______________.
Exact Name in Which Title is to be Held
Signature
Name (Please Print)
Title of Person Executing Agreement
Address: Number and Street
City State Zip Code
Tax Identification Number
Jurisdiction of Incorporation
Accepted this __ day of ___ , 2000, on behalf of
------ ---------------------
MAGNITUDE INFORMATION SYSTEMS, INC.
BY:
Steven D. Rudnik
DEFINITIONS
Affiliate: An Affiliate of any person (for purposes hereof a "person"
includes a partnership, corporation or other legal entity such
as a trust or estate) is a person which controls, is
controlled by or is under common control with such person. For
purposes of this definition:
(i) a person should be presumed to control a Member if the
person beneficially owns 10% or more of the outstanding voting
securities of a Member which is a corporation, or beneficially
owns a partnership interest in 10% or more of the outstanding
voting securities of a person which is a corporation, or
beneficially own a partnership interest in 10% or more of the
distributable profits or losses of a person which is a
partnership; and
(ii) a Member should be presumed to control a person if the
Member and Persons Associated with the Member beneficially own
10% or more of the outstanding voting securities of a person
which is a corporation, or beneficially own a partnership
interest in 10% or more of the distributable profits or losses
of a person which is a partnership; and
(iii) a person should be presumed to be under common control
with a Member if:
(1) the same person controls both the Member and such
person by beneficially owning 10% or more of the
outstanding voting securities of the Member and other
such person which is a corporation, or by
beneficially owning a partnership interest in 10% or
more of the distributable profits or losses of the
Member and other such person which is a partnership;
or
(2) a person having the power to direct or cause the
direction of the management or policies of the Member
also has the power to direct or cause the direction
of the management or policies of the other entity in
question.
Associate: An Associate is
(i) any corporation or organization of which you are
an officer, director or partner, or of which you are
directly or indirectly the beneficial owner of 10% or
more of any class of equity securities.
(ii) any trust or other estate in which you have a
substantial beneficial interest or as to which you
serve as trustee or in a similar fiduciary capacity;
and
<PAGE>
(iii) any relative or spouse of yours, or any
relative of such spouse who has the same home as you.
Member: A Member is any broker or dealer admitted to membership in
the NASD.
Person A "Person Associated with a Member" is every sole proprietor,
partner,
Associated officer, director or branch manager of any Member, or any
natural person
with a occupying a similar status or performing similar functions, or
any person
Member: engaged in the investment banking or securities business who
is directly or indirectly controlling or controlled by such
Member (for example, any employee), whether or not any such
person is registered or exempt from registration with the NASD.
Exhibit 4.17
FORM OF COMMON STOCK PURCHASE WARRANT
For the Purchase of XXX.XXX Shares of Common Stock
of
MAGNITUDE INFORMATION SYSTEMS, INC.
(A Delaware Corporation)
THIS CERTIFIES THAT, for value received __________________, residing at
_________ ________________________________ (the "Holder"), as owner of this
Warrant (sometimes referred to herein as "Warrant"), is entitled to subscribe
for, purchase and receive XXX.XXX fully paid and nonassessable shares of common
stock (the "Common Stock"), of Magnitude Information Systems, Inc., a Delaware
corporation (the "Company") at the price of $0.90(U.S.) per share of Common
Stock (the "Exercise Price"), upon payment of the Exercise Price in accordance
with the provisions hereof at the principal office of the Company. If the
subscription rights represented hereby shall not be exercised on or before the
Expiration Date, this Warrant shall become and will be void without further
force or effect, and all rights represented hereby shall cease and expire.
This Warrant may be exercised subject to the following terms and
conditions.
(i) Terms of Warrant.
Holder shall be entitled to purchase and receive XXX.XXX
shares of Common Stock at the Exercise Price at any time on or before 5:00 PM on
[the third anniversary date hereof] (the "Expiration Date"), by paying the
Exercise Price to the Company. Any notices required hereunder shall be in
writing and may be delivered via U.S. Postal Service, personally or by any
commercial delivery or overnight service to the Holder or Company at the
respective addresses set forth herein for the same. Any attempted but
undelivered notice sent via any method and for which a proof of attempted
delivery therefor is issued and left at the appropriate address shall be deemed
to be effective delivery.
<PAGE>
(ii) Exercise of Warrant.
This Warrant may only be exercised once during the Exercise
Period by surrendering the form of subscription attached hereto duly executed by
the Holder, to the Company at its principal office at 50 Tannery Road,
Branchburg, New Jersey 08876 or at such other address as may be designated by
the Company, and by simultaneously paying the Exercise Price in cash or check to
the Company. The date of exercise shall be the date on which the completed
subscription agreement, and Exercise Price are tendered to the Company.
(iii) Restricted Nature of Underlying Stock.
Unless the Company receives an opinion from counsel
satisfactory to it that such a legend is not required, in order to assure
compliance with the Securities Act of 1933, as amended (the "1933 Act"), or any
applicable State Securities Laws, each certificate for shares of Common Stock
underlying this Warrant ("Underlying Shares") shall bear a legend reading
substantially as follows:
"The Securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended ("Act"). Such
securities have been acquired for investment and may not be publicly
offered or sold in the absence of (1) an effective registration
statement for such securities under the Act; (2) An opinion of counsel
acceptable to the Company prior to any proposed transfer to the effect
that registration is not required under the Act; or (3) a letter
presented to the Company prior to any proposed transfer, from the staff
of the Securities and Exchange Commission, to the effect that it will
not take any enforcement action if the proposed transfer is made
without registration under the Act."
(iv) Disposition of Warrant or Underlying Shares.
The Holder, by acceptance hereof, agrees for itself that this Warrant
shall not be assignable or transferable in whole or in part by Holder under any
circumstances and any such attempted assignment or transfer shall immediately
cause this Warrant to expire and be rendered null and void. In addition to the
requirements set forth above, disposition of any of the underlying Shares shall
not be made unless and until:
(a) The Company has received an opinion from counsel for the
Holder, satisfactory to the Company, stating that no registration under the 1933
Act is required with respect to such disposition; or
(b) A registration statement or post-effective amendment to a
registration statement under the 1933 Act has been filed and made effective by
the Commission covering such proposed disposition.
(v) Loss, Theft, Destruction or Mutilation. Upon receipt by the Company
of evidence satisfactory to it (in the exercise of its reasonable discretion) of
the ownership of and the loss, theft, destruction, or mutilation of this
Warrant, the Company will execute and deliver, in lieu thereof, a new Warrant of
like tenor.
<PAGE>
(vi) Warrant Holder Not a Shareholder. Any Holder of this Warrant, as
such, shall not be entitled by reason of this Warrant to any rights whatsoever
of a shareholder of the Company.
(vii) Taxes. The Company will pay all document and stamp taxes in
respect of the issue of this Warrant or the Common Shares issuable upon exercise
thereof.
(viii) Miscellaneous. References herein describing this instrument as a
"Warrant" or "Warrants", refer solely to the rights conferred upon Holder
hereby.
(ix) Warrant Subject to Restrictions under Securities Act. No sale,
offer to sell or transfer of the Warrants represented by this certificate can or
will be made in as much as the Warrant is not assignable or transferable under
any circumstances and any attempt to assign or transfer this Warrant shall cause
the same to immediately expire and be null and void in accordance with its
terms. No sale, offer to sell or transfer of the underlying shares shall be made
unless a registration statement under the 1933 Act, with respect to such shares
is then in effect or an exemption from the registration requirements of the 1933
Act is then in fact applicable to such shares. The availability of such
exemption shall be established to the reasonable satisfaction of the Company and
its counsel.
(x) Registration of Underlying Shares. The Company agrees to undertake
to file a registration statement under the Securities Act of 1933 (the "1933
Act") which includes the Underlying Shares of common stock represented hereby,
within 30 days from the date hereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
a duly authorized officer.
_______________, 2000 MAGNITUDE INFORMATION SYSTEMS, INC.
By: _________________________
<PAGE>
Form to be used to exercise Warrant:
EXERCISE FORM
Date: ________, ______
The undersigned hereby elects irrevocably to exercise the within
Warrant and to purchase XXX.XXX shares of Common Stock of Magnitude Information
Systems, Inc. called for thereby.
Signature: ________________________
Signature Guaranteed: __________________
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name _____________________________
Address __________________________
**************
NOTICE: The signature to the form to exercise must correspond with the name as
written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
<PAGE>
Exhibit 4.18
Amendment to the Company's Certificate of Incorporation
Re: Designation of a new class of Series B Senior Convertible Preferred Stock
Is incorporated herein by reference to Exhibit (4.2) to report on Form 10-KSB as
filed with the Commission on March 30, 2000 .
<PAGE>
Exhibit 4.19
COMMON STOCK PURCHASE WARRANT
For the Purchase of __________ Shares of Common Stock
of
MAGNITUDE INFORMATION SYSTEMS, INC.
(A Delaware Corporation)
THIS CERTIFIES THAT, for value received ____________, with an address
at _______ __________________________________ (the "Holder"), as owner of this
Warrant (sometimes referred to herein as "Warrant"), is entitled to subscribe
for, purchase and receive _______ fully paid and nonassessable shares of common
stock (the "Common Stock"), of Magnitude Information Systems, Inc., a Delaware
corporation (the "Company") at the price of $2.00(U.S.) per share of Common
Stock (the "Exercise Price"), upon payment of the Exercise Price in accordance
with the provisions hereof at the principal office of the Company. If the
subscription rights represented hereby shall not be exercised on or before the
Expiration Date, this Warrant shall become and will be void without further
force or effect, and all rights represented hereby shall cease and expire.
This Warrant may be exercised subject to the following terms and
conditions.
(i) Terms of Warrant.
Holder shall be entitled to purchase and receive ________
shares of Common Stock at the Exercise Price at any time on or before 5:00 PM
Eastern Standard Time on ___________ (the "Expiration Date"), by paying the
Exercise Price to the Company. Any notices required hereunder shall be in
writing and may be delivered via U.S. Postal Service, personally or by any
commercial delivery or overnight service to the Holder or Company at the
respective addresses set forth herein for the same. Any attempted but
undelivered notice sent via any method and for which a proof of attempted
delivery therefor is issued and left at the appropriate address shall be deemed
to be effective delivery.
(ii) Exercise of Warrant.
This Warrant may be exercised in whole or in part, in
increments to purchase no less than 50,000 shares of Common Stock during the
Exercise Period by surrendering the exercise form attached hereto (the "Exercise
Form") duly executed by the Holder, to the Company at its principal office at 50
Tannery Road, Suite 8, Branchburg, New Jersey 08876 or at such other address as
may be designated by the Company, and by simultaneously paying the Exercise
Price in cash or check to the Company. The date of exercise shall be the date on
which the completed Exercise Form and Exercise Price are tendered to the
Company.
(iii) Restricted Nature of Warrant and Underlying Stock.
This Warrant and the shares of Common Stock that underlie this Warrant
are deemed "restricted securities" as that term is defined in Rule 144
promulgated under the Securities Act of 1933, as amended (the 1933 Act"). This
Warrant and each certificate representing any of the Underlying Shares shall
bear a legend in a form reading substantially as follows:
"The Securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended ("Act"). Such
securities have been acquired for investment and may not be publicly
offered or sold in the absence of (1) an effective registration
statement for such securities under the Act; (2) An opinion of counsel
acceptable to the Company prior to any proposed transfer to the effect
that registration is not required under the Act; or (3) a letter
presented to the Company prior to any proposed transfer, from the staff
of the Securities and Exchange Commission, to the effect that it will
not take any enforcement action if the proposed transfer is made
without registration under the Act."
(iv) Disposition of Warrant or Underlying Shares.
The Holder, by acceptance hereof, agrees that this Warrant shall not be
assignable or transferable in whole or in part by Holder under any circumstances
and any such attempted assignment or transfer shall immediately cause this
Warrant to expire and be rendered null and void. In the event of the death of
the Holder, all of the rights and obligations set forth in this Warrant shall
automatically, by operation of law, be transferred to the Holder's estate or
personal representative, as the case may be. This Warrant shall not be called or
redeemed by the Company at any time.
<PAGE>
(v) Loss, Theft, Destruction or Mutilation.
Upon receipt by the Company of evidence satisfactory to it (in the
exercise of its reasonable discretion) of the ownership of and the loss, theft,
destruction, or mutilation of this Warrant, the Company will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
(vi) Warrant Holder Not a Shareholder.
The Holder of this Warrant, as such, shall not be entitled by reason of
this Warrant to any rights whatsoever as a shareholder of the Company.
(vii) Taxes. The Company will pay all document and stamp taxes in
respect of the issue of this Warrant or the Common Shares issuable upon exercise
thereof.
(viii) Miscellaneous. References herein describing this instrument as a
"Warrant" or "Warrants", refer solely to the rights conferred upon Holder
hereby.
(ix) Warrant Subject to Restrictions under Securities Act. No sale,
offer to sell or transfer of the Warrants represented by this certificate can or
will be made in as much as the Warrant is not assignable or transferable under
any circumstances and any attempt to assign or transfer this Warrant shall cause
the same to immediately expire and be null and void in accordance with its
terms. No sale, offer to sell or transfer of the underlying shares shall be made
unless a registration statement under the 1933 Act, with respect to such shares
is then in effect or an exemption from the registration requirements of the 1933
Act is then in fact applicable to such shares. The availability of such
exemption shall be established to the reasonable satisfaction of the Company and
its counsel.
(x) "Piggyback Registration" of Shares. If the Company at any time
undertakes to register any of its securities under the Securities Act of 1933
(the "1933 Act") (other than in connection with a merger or pursuant to Form S-8
or other comparable form),
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
a duly authorized officer.
___________, 2000 MAGNITUDE INFORMATION SYSTEMS, INC.
By: _________________________
<PAGE>
Form to be used to exercise Warrant:
EXERCISE FORM
Date: ________, ______
The undersigned hereby elects irrevocably to exercise the within
Warrant and to purchase __________ shares of Common Stock of Magnitude
Information Systems, Inc. called for thereby.
Signature: ________________________
Signature Guaranteed: __________________
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name _____________________________
Address __________________________
**************
NOTICE: The signature to the form to exercise must correspond with the name as
written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
<PAGE>
Exhibit 4.20
Amendment to the Company's Certificate of Incorporation
Re: Designation of a new class of Series C Senior Convertible Preferred Stock
Is incorporated herein by reference to Exhibit (4.3) to report on Form 10-KSB as
filed with the Commission on March 30, 2000 .
<PAGE>
Exhibit 4.21
THIRD AMENDMENT TO AGREEMENT
AND PLAN OF MERGER AND FIRST AMENDMENT TO PUT OPTION
THIS AGREEMENT made this day of April, 2000, by and among MAGNITUDE
SOFTWARE, INC., formerly PROFORMIX SOFTWARE, INC., a Delaware corporation
authorized to do business in the State of New Jersey, with offices located at 50
Tannery Road, Branchburg, New Jersey 08876 (hereinafter referred to as
ASOFTWARE@), MAGNITUDE INFORMATION SYSTEMS, INC., formerly PROFORMIX SYSTEMS,
INC., a Delaware corporation authorized to do business in the State of New
Jersey, with offices located at 50 Tannery Road, Branchburg, New Jersey 08876
(hereinafter referred to as AMAGNITUDE@), and STEVEN D. RUDNIK, residing at 8
Knollwood Terrace, Chester, New Jersey 07930 (hereinafter referred to as
ASHAREHOLDER@).
WITNESSETH:
WHEREAS, SOFTWARE is a wholly owned subsidiary of MAGNITUDE; and
WHEREAS, SOFTWARE, MAGNITUDE, SHAREHOLDER and Rolina Corporation, a New
Jersey corporation, entered into an Agreement and Plan of Merger dated February
2, 1998 (hereinafter referred to as the AMerger Agreement@) whereunder the said
Rolina Corporation was merged with and into SOFTWARE; and
WHEREAS, SOFTWARE, MAGNITUDE and SHAREHOLDER entered into a written
Agreement dated October 30, 1998 amending the Merger Agreement and a written
Agreement dated June 18, 1999 further amending the Merger Agreement (the Merger
Agreement and these agreements being hereinafter referred to as the AAmended
Merger Agreement@); and
WHEREAS, under Section 1.2(c)(ii) of the Amended Merger Agreement,
SHAREHOLDER was given a right to Aput@ 155,556 shares of the common stock of
MAGNITUDE to MAGNITUDE at the predetermined price of $2.41 per share, said Aput@
to be exercisable between February 2, 2000 and May 1, 2000; and
WHEREAS, the said Aput@ was further memorialized in a written Common
Stock Put Option dated February 2, 1998 (hereinafter referred to as the APut
Option@); and
WHEREAS, under Section (ii) of the Put Option, MAGNITUDE is required to
pay to SHAREHOLDER the stipulated amount no more than sixty (60) days after the
tender of the Put Option exercise form; and
WHEREAS, by a written Security Agreement dated February 2, 1998 and
related Financing Statements duly filed and recorded, SHAREHOLDER received a
perfected security interest in certain assets (hereinafter referred to as the
ACollateral@) as set forth in the said Security Agreement and Financing
Statements to secure the above obligation of MAGNITUDE to pay the Aput@
obligation; and
<PAGE>
WHEREAS, SHAREHOLDER exercised the Aput@ on March 25, 2000 as to all of
the said 155,556 shares of MAGNITUDE common stock, resulting in an obligation
due from MAGNITUDE to SHAREHOLDER of $374,889.96; and
WHEREAS, MAGNITUDE has informed SHAREHOLDER that it would be of
assistance to MAGNITUDE if it could modify the timing of the payment of the said
$374,889.96 (hereinafter referred to as the AObligation@); and
WHEREAS, at the request of MAGNITUDE, SHAREHOLDER has agreed to modify
the timing of the payment of the Obligation under the Amended Merger Agreement
and the Put Option on the terms more specifically set forth herein; and
WHEREAS, the parties have agreed to modify the Amended Merger Agreement
and the Put Option as more specifically set forth herein.
NOW, THEREFORE, in consideration of the foregoing, and the mutual
promises and covenants contained herein and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties agree as
follows:
1. MAGNITUDE shall pay interest on the unpaid principal balance of the
Obligation at the rate of seven percent (7%) per annum, commencing February 1,
2000. MAGNITUDE has paid to SHAREHOLDER the accrued interest on March 1, 2000
and April 1, 2000, and shall continue to pay to SHAREHOLDER such interest on the
first day of May, 2000 and the first day of each succeeding month thereafter
until the Obligation has been fully paid and satisfied.
2. All remaining unpaid amounts due from MAGNITUDE to SHAREHOLDER
respecting the Obligation shall be paid two (2) years after the date hereof.
3. SHAREHOLDER shall have the right to convert part or all of the
Obligation and any unpaid accrued interest thereon to shares of MAGNITUDE common
stock (hereinafter referred to as ACommon Shares@) at the conversion rate of
$.50 per Common Share at any time prior to the complete satisfaction of the
Obligation. To exercise his said conversion right, SHAREHOLDER shall deliver to
MAGNITUDE a written notice thereof signed by SHAREHOLDER.
4. MAGNITUDE shall have the right to prepay the Obligation and any
accrued interest thereon subject to the following conditions:
(a) MAGNITUDE shall only be permitted to exercise its
prepayment right by paying the entire principal outstanding balance of and
accrued interest on the Obligation;
<PAGE>
(b) MAGNITUDE shall exercise its right to prepay the
Obligation and any accrued interest thereon only upon thirty (30) days' prior
written notice to SHAREHOLDER, provided, however, it has completed the
registration of the Common Shares of MAGNITUDE as required pursuant to
subparagraph (c) below and further provided that MAGNITUDE has not received from
SHAREHOLDER his written notice of election to convert as provided in Paragraph 3
above either prior to MAGNITUDE'S sending of its written notice to prepay or
MAGNITUDE's actual delivery of the prepayment to SHAREHOLDER; and
(c) MAGNITUDE shall register a sufficient number of its Common
Shares to accommodate any future exercise of the conversion right identified in
Paragraph 3 above by SHAREHOLDER of the entire Obligation under the Securities
Act of 1933, as amended (the "1933 Act") at the time it files any appropriate
registration statement under the 1933 Act, i.e., Form S-3, Form SB-1, Form SB-2
or their respective successor registration forms, following the date hereof.
5. If MAGNITUDE at any time undertakes to register any of its
securities under the Act (other than in connection with a merger or pursuant to
Form S-8 or other comparable form), MAGNITUDE shall include in such registration
the shares of common stock allocated for the possible conversion set forth in
Paragraph 4 above, provided, however, that if such registration is effected in
connection with an underwritten offering and the managing underwriter declines
to include such shares, then, MAGNITUDE shall be relieved of its obligation to
register such shares with respect to that particular offering.
6. The Amended Merger Agreement and all other documents executed under
or in relation to the Amended Merger Agreement are not in any way affected by
this Third Amendment, except as specifically set forth herein. The parties
hereby ratify and reconfirm the enforceability and legal effect of all of the
terms and provisions set forth in the Amended Merger Agreement, the Put Option,
and the Security Agreement and Financing Statements thereunder not expressly
modified by this Third Amendment.
7. MAGNITUDE shall promptly reimburse SHAREHOLDER for the amount of all
attorneys= fees and disbursements incurred by SHAREHOLDER relating to or arising
out of the negotiation and preparation of this Third Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment
to be signed on the date and year first above written.
MAGNITUDE SOFTWARE, INC. formerly
Attest: PROFORMIX SOFTWARE, INC.
Joerg Klaube
By:
Steven D. Rudnik, President and
Chief xecutive Officer
<PAGE>
MAGNITUDE INFORMATION SYSTEMS, INC.,
formerly known as PROFORMIX
Attest: SYSTEMS, INC.
By:
By: Steven D. Rudnik, President
Joerg Klaube, Secretary and Chief Executive Officer
Witness: Steven D. Rudnik
<PAGE>
Exhibit 4.22
MAGNITUDE INFORMATION SYSTEMS, INC.
50 Tannery Road, Suite 8
Branchburg, New Jersey 08876
March 13, 2000
VIA TELECOPY AND FIRST CLASS MAIL
PERSONAL AND CONFIDENTIAL
Mr. Gary J. Shemano
The Shemano Group
601 California Street
Suite 1850
San Francisco, California 94108
Dear Mr. Shemano:
This will serve as the agreement between The Shemano Group ("you") and
Magnitude Information Systems, Inc. ("MIS") pursuant to which MIS shall retain
you to provide financial advisory services to MIS in return for agreed-upon
compensation, more particularly described below (the "Agreement").
Our Agreement is intended to supersede any and all prior agreements,
contracts and understandings, written or oral, between you and MIS. We agree on
the following terms:
1. Scope of Financial Advisory Services. We agree that you shall advise
and consult with MIS, its officers, directors and consultants/advisors, on a
non-exclusive basis, to provide MIS and its shareholders with certain financial
advisory services in an effort to increase MIS' shareholder value. These
financial advisory services shall include the following:
A. Identify and introduce to MIS potential strategic
business partners and alliances as well as to
potential merger or acquisition candidates.
B. Organize and assist MIS in presentations to the
investment banking community, fund/money managers and
to the broker-dealer community ("road shows").
C. Identify and introduce potential institutional and
accredited investors to MIS.
The foregoing described services are sometimes collectively hereinafter
referred to as the "Financial Advisory Services".
2. Compensation. In payment for your agreement to perform and render to
MIS the Financial Advisory Services during the term hereof, MIS agrees to
compensate you by issuing to you a nontransferable warrant to purchase 200,000
shares of MIS Common Stock at the exercise price of $2.00 per share (the
"Warrant"), exercisable at any time, in whole or in part, during the three year
period commencing as of the date of this Agreement. A copy of the Warrant is
attached hereto as Exhibit A.
3. Compliance with Disclosure Laws. You agree to utilize your best
efforts to fully comply with all federal and state securities disclosure laws
with respect to all activities you undertake pursuant to the terms of this
Agreement, including but not limited to disclosing when required to any third
parties the nature of your relationship with MIS and the amount of any
compensation earned or to be earned under this Agreement. You agree to indemnify
MIS, its officers, directors, employees, consultants and advisors from and
against any liability of any nature whatsoever that may arise out of any breach
of your promises made herein. Conjunctively, MIS represents to you that its
Form10-KSB for the fiscal year ended December 31, 1998, its Forms 10-QSB for the
periods ended March 31, 1999, June 30, 1999 and September 30, 1999 MIS as well
as all other MIS issued public information through the date hereof, discloses
all material information concerning MIS and its financial condition as of the
applicable dates and does not omit any material facts, the absence of which
would render such documents misleading and agrees to indemnify you from and
against any liability of any nature whatsoever that may arise out of MIS' breach
of its representations made herein.
4. Restricted Nature of Warrant and Underlying Stock. A. You
acknowledge that the Warrant to be issued to you as compensation, as well as the
shares of Common Stock that underlie the Warrant, are deemed "restricted
securities" as that term is defined in Rule 144 promulgated under the Securities
Act of 1933, as amended (the "1933 Act"). You agree, therefore that you will not
sell, offer to sell or transfer the Warrant or any of the shares of Common Stock
underlying the Warrant (the "Underlying Shares") except pursuant to a
registration statement filed pursuant to the 1933 Act and applicable state
securities laws or pursuant to exemptions therefrom, proved in such latter case
to the reasonable satisfaction of MIS and its counsel. The Warrant and each
certificate representing any of the Underlying Shares shall bear a legend in
substantial form to the following:
"The Securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended ("Act"). Such
securities have been acquired for investment and may not be publicly
offered or sold in the absence of (1) an effective registration
statement for such securities under the Act; (2) An opinion of counsel
acceptable to the Company prior to any proposed transfer to the effect
that registration is not required under the Act; or (3) a letter
presented to the Company prior to any proposed transfer, from the staff
of the Securities and Exchange Commission, to the effect that it will
not recommend any enforcement action in the event of the described,
proposed transfer without registration under the Act."
B. Registration Rights. Upon MIS' determination, exercised in good
faith, that you have rendered the Financial Advisory Services under this
Agreement through the applicable date and, based upon such performance through
the applicable date, MIS has a reasonable expectation that you will continue to
perform such Financial Advisory Services throughout the term of this Agreement,
MIS shall include the Underlying Shares in any registration statement it intends
to file under the 1933 Act after July 1, 2000, pursuant to which MIS seeks to
register common shares either on its behalf or on behalf of other selling
shareholders, at its sole cost and expense, subject, if applicable, to the
consent of any lead underwriter.
5. Representations as to Investment Intent. You represent to MIS that
you are an accredited investor as that term is defined in Regulation D
promulgated under the 1933 Act and that you are accepting the compensation
represented by the Warrant and the Underlying Shares for your own account with
no present intention to sell, distribute or otherwise transfer such securities.
You acknowledge that you have negotiated in good faith with MIS for this
compensation and further acknowledge that MIS has made no representations to you
concerning the value or worth of the Warrant and the Underlying Shares.
6. Term of Agreement. Except as may be expressly set forth herein to
the contrary, the term of this Agreement shall be for a period of one (1) year
subject, however, to earlier termination by MIS on 30 days written notice to
you.
7. Confidentiality. You agree , if you have not already
done so, to execute and deliver MIS' Confidentiality Agreement and to
annex it as Exhibit B hereto.
8. Governing Law. We agree that this Agreement shall be
governed by and construed in accordance with the laws of the State of
New Jersey.
9. Assignment/Miscellaneous. Neither you nor MIS may assign any
obligation, duty or right under this Agreement without the express written
consent of the other party. This Agreement is for the benefit of you and MIS and
our respective successors alone. Neither you nor MIS can modify or amend this
Agreement except pursuant to a written instrument signed by both parties.
Please indicate your acknowledgment of and agreement to the foregoing
by signing your name where indicated below. We look forward to working with you
and further developing a prosperous and mutually rewarding relationship.
Very Truly yours,
Magnitude Information Systems, Inc.
By:
Steven D. Rudnik
President
Agreed to and accepted by:
Gary J. Shemano, Individually,
and on behalf of The Shemano Group
<PAGE>
Exhibit 4.23
---------
Warrant to Purchase
_______ Shares of Common Stock
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND NEITHER
THIS WARRANT NOR SUCH SHARES MAY BE SOLD, ENCUMBERED OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR AN
EXEMPTION FROM SUCH REGISTRATION REQUIREMENT, AND, IF AN EXEMPTION SHALL BE
APPLICABLE, THE HOLDER SHALL HAVE DELIVERED AN OPINION OF COUNSEL ACCEPTABLE TO
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
Void after 5: 00 P.M. New York City time April 30, 2003
COMMON STOCK PURCHASE WARRANT
OF
MAGNITUDE INFORMATION SYSTEMS, INC.
f/k/a PROFORMIX SYSTEMS, INC.
This is to certify that, FOR VALUE RECEIVED, __________________., or registered
assigns ("Holder"), is entitled to purchase, subject to the provisions of this
Warrant, from Magnitude Information Systems, Inc., a Delaware corporation
("Company"), ______ shares of the Company's common stock, par value $.0001 per
share ("Common Stock"), at an exercise price per share of $5.00 U.S., subject to
adjustment as provided in this Warrant, at any time during the period commencing
on April 30, 1999 ("Commencement Date") and ending on April 30, 2003, ("Exercise
Period"). In the event that the last day of the Exercise Period shall be a day
on which banking institutions in the State of New York are authorized by law to
close for all or part of the day, then the Exercise Period shall expire on the
next succeeding day which shall not be such a day. The number of shares of
Common Stock to be received upon the exercise of this Warrant and the price to
be paid for a share of Common Stock may also be adjusted from time to time as
hereinafter set forth. The exercise price for the purchase of a share of Common
Stock pursuant to this Warrant in effect at any time and as adjusted from time
to time is hereinafter sometimes referred to as the "Exercise Price".
(a) Exercise of Warrant. This Warrant may be exercised in whole at any
time or in part from time to time during the Exercise Period by presentation and
surrender of this Warrant to the Company at its principal office, or at the
office of its stock transfer agent, if any, with the Purchase Form annexed to
this Warrant duly executed and accompanied by payment of the Exercise Price for
the number of shares of Common Stock specified in such form. If this Warrant
should be exercised in part only, the Company shall upon surrender of this
Warrant for cancellation, execute and deliver a new Warrant evidencing the
rights of the Holder hereof to purchase the balance of the shares of Common
Stock purchasable hereunder. Upon receipt by the Company of this Warrant at its
office, or by the stock transfer agent of the Company at its office, in proper
form for exercise, accompanied by payment of the Exercise Price of the Warrant
Shares with respect to which the Warrant is being exercised, the Holder shall be
deemed to be the holder of record of the shares of Common Stock issuable upon
such exercise, notwithstanding that the stock transfer books of the Company
shall then be closed or that certificates representing such shares of Common
Stock shall not then be actually delivered to the Holder. In the event that
payment of the Exercise Price is made other than by wire transfer of funds or by
a certified or official bank check acceptable to the Company, the Holder shall
not be deemed to be the holder of the Warrant Shares until the proceeds of the
payment shall be collected by the Company.
(b) Reservation of Shares. The Company hereby agrees that at all times
there shall be reserved for issuance and/or delivery upon exercise of this
Warrant such number of shares of Common Stock as shall be required for
issuance and delivery upon exercise of this Warrant.
(c) Fractional Shares. No fractional shares or script representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise of this
Warrant, the Company shall pay to the Holder an amount in cash equal to such
fraction multiplied by the current value of such fractional share, determined
as follows:
(1) If the Common Stock is listed on a national securities
exchange or admitted to unlisted trading privileges on such exchange or listed
for trading on The NASDAQ Stock Market or other automated quotation system
which provides information as to the last sale price, the current value shall
be the reported last sale price of one share of Common Stock on such exchange
or market on the last business day prior to the date of exercise of this
Warrant, or if no such sale is made on such day, the current value shall be
the average of the closing bid and asked prices for such day on such exchange
or system; or
(2) If the Common Stock is not so listed or admitted to
unlisted trading privileges, the current value shall be the mean of the
reported last bid and asked prices of one share of Common Stock as reported by
NASDAQ or the National Quotation Bureau, Inc. or other similar reporting
service selected by the Company's board of directors, on the last business day
prior to the date of the exercise of this Warrant, or
(3) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices are not so reported, the
current value of one share of Common Stock shall be an amount, not less than
book value, determined in such reasonable manner as may be prescribed by the
Board of Directors of the Company.
(d) Exchange, Transfer, Assignment or Loss of Warrant. This
Warrant is exchangeable, without expense, at the option of the Holder, upon
presentation and surrender hereof to the Company or at the office of its stock
transfer agent, if any, for other Warrants of different denominations
entitling the holder thereof to purchase in the aggregate the same number of
shares of Common Stock purchasable hereunder. Subject to the provisions of
Paragraph (j) of this Warrant, upon surrender of this Warrant to the Company
or at the office of its stock transfer agent, if any, with the Assignment Form
annexed hereto duly executed and funds sufficient to pay any transfer tax the
Company shall, without charge, execute and deliver a new Warrant in the name
of the assignee named in such instrument of assignment and this Warrant shall
promptly be canceled. This Warrant may be divided or combined with other
Warrants which carry the same rights upon presentation hereof at the office of
the Company or at the office of its stock transfer agent, if any, together
with a written notice specifying the names and denominations in which new
Warrants are to be issued and signed by the Holder hereof. The term "Warrant"
as used herein includes any Warrants into which this Warrant may be divided or
exchanged. Upon receipt by the Company of evidence satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant and (in the case of
loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Warrant, if mutilated, the Company
will execute and deliver a new Warrant of like tenor. Any such new Warrant
executed and delivered shall constitute an additional contractual obligation
on the part of the Company, whether or not this Warrant so lost, stolen,
destroyed, or mutilated shall be at any time enforceable by anyone.
(e) Rights of the Holder. The Holder shall not, by virtue of this
Warrant, be entitled to any rights of a stockholder in the Company, either at
law or equity, and the rights of the Holder are limited to those expressed in
the Warrant and are not enforceable against the Company except to the extent
set forth in this Warrant.
(f) Anti-Dilution Provisions.
(1) The Exercise Price in effect at any time and the number
and kind of securities purchasable upon exercise of each Warrant shall be
subject to adjustment in case the Company shall, subsequent to the date hereof
(A) pay a dividend or make a distribution on its shares of Common Stock in
shares of Common Stock, (B) subdivide or reclassify its outstanding Common
Stock into a greater number of shares, or (C) combine or reclassify its
outstanding Common Stock into a smaller number of shares or otherwise effect a
reverse split or (D) effect a recapitalization whereby the holders of the
Common Stock receive in respect of or in exchange for such shares Holder
securities of the Company, the Exercise Price in effect at the time of the
record date for such dividend or distribution or of the effective date of such
subdivision, combination, reclassification or recapitalization shall be
proportionately adjusted so that the Holder of this Warrant exercised after
such date shall be entitled to receive the aggregate number and kind of shares
and/or other securities which, if this Warrant had been exercised immediately
prior to such time, he would have owned upon such exercise and been entitled
to receive upon such dividend, subdivision, combination or reclassification.
Such adjustment shall be made successively whenever any event listed in this
Paragraph (f)(1) shall occur, provided, however, that with respect to a
recapitalization referred to in clause (D) of this Paragraph (f)(1), the
Exercise Price shall not be adjusted, and the Holder shall be entitled to
receive, upon payment of the Exercise Price per share, such securities as
would have been represented by one share of Common Stock had the Warrant been
exercised immediately prior to the record date relating to such transaction.
(2) Whenever the Exercise Price payable upon exercise of each
Warrant is adjusted pursuant to Paragraph (f)(1) of this Warrant, the number of
shares of Common Stock purchasable upon exercise of each Warrant shall
simultaneously be adjusted by multiplying the number of shares of Common Stock
issuable upon exercise of each Warrant in effect on the date thereof by the
Exercise Price in effect on the date thereof and dividing the product so
obtained by the Exercise Price, as adjusted. In no event shall the Exercise
Price per share be less than the par value per share, and if any adjustment made
pursuant to said Paragraph (f)(1) would result in an exercise price of less than
the par value per share then, in such event, the Exercise Price per share shall
be the par value per share.
(3) No adjustment in the Exercise Price shall be required unless
such adjustment would require an increase or decrease of at least five cents
($0.05) in such price provided, however, that any adjustments which by reason of
this Paragraph (f)(3) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Paragraph (f) shall be made to the nearest cent or to the nearest one-hundredth
of a share, as the case may be. Anything in this Paragraph (f) to the contrary
notwithstanding, the Company shall be entitled, but shall not be required, to
make such changes in the Exercise Price, in addition to those required by this
Paragraph (f) as it in its discretion shall determine to be advisable in order
than any dividend or distribution payable or distributed to the holders of its
Common Stock shall not result in any tax to the holders of its Common Stock or
securities convertible into Common Stock.
(4) The Company may retain a firm of independent public
accountants of recognized standing selected by the Board of Directors (who may
be the regular accountants employed by the Company) to make any computation
required by this Paragraph (f), and a certificate signed by such firm shall be
conclusive evidence of the correctness of such adjustment.
(5) In the event that at any time, as a result of an adjustment
made pursuant to Paragraph (f)(1) of this Warrant, the Holder of any Warrant
thereafter shall become entitled to receive any shares of the Company, other
than Common Stock, thereafter the number of such other shares so receivable upon
exercise of any Warrant shall be subject to adjustment from time to time in a
manner and on terms as nearlv equivalent as practicable to the provisions with
respect to the Common Stock contained in Paragraph (f)(1) of this Warrant.
(6) Irrespective of any adjustments in the Exercise Price or the
number or kind of shares purchasable upon exercise of Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in this and similar Warrants initially
issued by the Company.
(g) Officer's Certificate. Whenever the Exercise Price shall be adjusted
as required by the provisions of Paragraph (f) of this Warrant, the Company
shall forthwith file in the custody of its Secretary or an Assistant Secretary
at its principal office and with its stock transfer agent, if any, an officer's
certificate showing the adjusted Exercise Price and the adjusted number of
shares of Common Stock issuable upon exercise of each Warrant, determined as
herein provided, setting forth in reasonable detail the facts requiring such
adjustment, including a statement of the number of additional shares of Common
Stock, if any, and such other facts as shall be necessary to show the reason for
and the manner of computing such adjustment. Each such officer's certificate
shall be made available at all reasonable times for inspection by the Holder,
and the Company shall, forthwith after each such adjustment, mail, by first
class mail, a copy of such certificate to the Holder or any such holder at such
holder's address set forth in the Company's Warrant Register.
(h) Notices to Warrant Holders. So long as this Warrant shall be
outstanding (1) if the Company shall pay any dividend or make any distribution
upon Common Stock (other than a regular cash dividend payable out of retained
earnings) or (2) if the Company shall offer to all holders of Common Stock for
subscription or purchase by them any share of any class or any other rights or
(3) if any capital reorganization of the Company, reclassification of the
capital stock of the Company, consolidation or merger of the Company with or
into another corporation, sale, lease or transfer of all or substantially all
of the property and assets of the Company to another corporation, or voluntary
or involuntary dissolution, liquidation or winding up of the Company shall be
effected, then in any such case, the Company shall cause to be mailed by
certified mail to the Holder, at least fifteen days prior to the date
specified in clauses (i) and (ii), as the case may be, of this Paragraph (h) a
notice containing a brief description of the proposed action and stating the
date on which (i) a record is to be taken for the purpose of such dividend,
distribution or rights, or (ii) such reclassification, reorganization,
consolidation, merger, conveyance, lease, dissolution, liquidation or winding
up is to take place and the date, if any is to be fixed, as of which the
holders of Common Stock or other securities shall receive cash or other
property deliverable upon such reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding up.
(i) Reclassification, Reorganization or Merger.
(1) Subject to the provisions of paragraph (1), in case of any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the Company, or in case of any consolidation or merger of the
Company with or into another corporation (other than a merger with a subsidiary
in which merger the Company is the continuing corporation and which does not
result in any reclassification, capital reorganization or other change of
outstanding shares of Common Stock of the class issuable upon exercise of this
Warrant) or in case of any sale, lease or conveyance to another corporation of
the property of the Company as an entirety, the Company shall, as a condition
precedent to such transaction, cause effective provisions to be made so that the
Holder shall have the right thereafter by exercising this Warrant, to purchase
the kind and amount of shares of stock and other securities and property
receivable upon such reclassification, capital reorganization and other change,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock which might have been purchased upon exercise of this Warrant
immediately prior to such reclassification, change, consolidation, merger, sale
or conveyance. Any such provision shall include provision for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Warrant. The foregoing provisions of this Paragraph (i) shall
similarly apply to successive reclassification, capital reorganizations and
changes of shares of Common Stock and to successive consolidations, mergers,
sales or conveyances. In the event that in connection with any such capital
reorganization or reclassification, consolidation, merger, sale or conveyance,
additional shares
<PAGE>
of Common Stock shall be issued in exchange, conversion, substitution
or payment, in whole or in part, for a security of the Company other than Common
Stock, any such issue shall be created as an issue of Common Stock covered by
the provisions of Paragraph (f)of this Warrant.
(2) Notwithstanding the provisions of Paragraph (i)(1) of this
Warrant, in the event that, as a result of any merger, consolidation or similar
transaction, all of the holders of Common Stock receive and are entitled to
receive no consideration other than cash in respect of their shares of Common
Stock, then, at the effective time of the transaction, the rights to purchase
Common Stock pursuant to the Warrants shall terminate, and the holders of the
Warrants shall, notwithstanding any other provisions of this Warrant, receive in
respect of each Warrant to purchase one (1) share of Common Stock, upon
presentation of the Warrant the amount, if any, by which the consideration per
share of Common Stock payable to the holders of Common Stock at such effective
time exceeds the Exercise Price in effect on such effective date, without giving
effect to the transaction, in the event that, subsequent to the effective time,
additional cash or other consideration is payable to the holders of Common Stock
of record as of the effective time, the same consideration shall be payable to
the holders of the Warrants to the extent that the total cash then received by
the holders of Common Stock exceeds the Exercise Price in effect at such
effective date, without giving effect to the transaction, with the same effect
as if the Warrants had been exercised on and as of such effective time. If the
Exercise Price per share shall exceed the total consideration payable with
respect to one (1) share of Common Stock, then this Warrant shall terminate and
cease to be exercisable. In the event of any merger, consolidation, sale or
lease of substantially all of the Company's assets or reorganization whereby the
Company is not the surviving corporation in lieu of the provisions of Paragraph
(i)(1) of this Warrant, the Company may provide in the agreement relating to the
transaction that each Warrant shall become, be converted into or be exchanged
for, such securities of the surviving or acquiring corporation or other entity
as has a value equal to the value of the Warrants, securities being issued in
exchange therefor, to be determined by the Company's Board of Directors, such
determination to be final, binding and conclusive on the Company and the holders
of the Warrants
(j) Transfer to Comply with the Securities Act of 1933. This Warrant or
the Warrant Shares or any other security issued or issuable upon exercise of
this Warrant may not be sold or otherwise disposed of except as follows:
(1) To a person who, in the opinion of counsel for the Company,
is a person to whom this Warrant or Warrant Shares may legally be transferred
without registration and without the delivery of a current prospectus under the
Securities Act of 1933, as amended (the "Securities Act"), with respect thereto
and then only against receipt of an agreement of such person to comply with the
provisions of this Paragraph (j) with respect to any resale or other disposition
of such securities, which agreement shall be satisfactory in form and substance
to the Company and its counsel and an opinion of counsel for the transferor as
to the availability of an exemption from the registration requirements of the
Securities Act, such counsel and opinion to be acceptable in form and substance
to the Company and its counsel or
<PAGE>
(2) to any person upon delivery of a prospectus then meeting
the requirements of the Securities Act relating to such securities and the
offering thereof for such sale or disposition.
(k) Registration Rights
(1) Piggyback Registration. During the five year period
commencing on the Date of Closing pursuant to the Asset Purchase Agreement
between Vanity Software Publishing Corporation and the Company of May 1, 1998
("Agreement"), the Company shall include the shares of Common Stock underlying
the Warrants (collectively, the "Shares" or "Registrable Securities"), in any
registration statement that the Company files with the Securities and Exchange
Commission, other than in connection with a merger or pursuant to Form S-4 or
Form S-8 or other comparable forms relating to equity securities to be issued
solely in connection with an acquisition of any entity or business, or equity
securities issuable in connection with stock option or other employee benefit
plans.
(2) Cooperation with the Company. The Holders will cooperate
with the Company in all respects in connection with this Agreement, including,
timely supplying all information reasonably requested by the Company and
executing and returning all documents reasonably requested in connection with
the registration and sale of the Shares.
(1) Governing Law
The Warrant Agreement shall be construed in accordance with and governed
by the internal laws of the State of New York, without giving option to
conflicts of law principles.
Dated as of ________________
MAGNITUDE INFORMATION SYSTEMS, INC.
f/k/a PROFORMIX SYSTEMS, INC.
By: ______________________________________
<PAGE>
PURCHASE FORM
Dated: ______________, _____
The undersigned hereby irrevocably elects to exercise the within
Warrant to the extent of purchasing ______ shares of Common Stock and hereby
makes payment of $_______________ in payment of the actual exercise price
thereof
INSTRUCTIONS FOR REGISTRATION OF STOCK
Narne______________________________________________________
(Please typewrite or print in block letters)
Signature___________________________________________________
Social Security or Employer Identification No. ________________________________
ASSIGNMENT FORM
FOR VALUE RECEIVED,
- ------------------------------------------------------
hereby sells, assigns and transfer unto
Name ________________________________________________
(Please typewrite or print in block letters)
Address ______________________________________________
Social Security or Employer Identification No. ________________________________
the right to purchase Common Stock represented by this Warrant to the extent of
________________ shares as to which such right is exercisable and does hereby
irrevocably constitute and appoint __________________________ attorney to
transfer the same on the books of the Company with full power of substitution.
Dated: ____________, _____
Signature ____________________________
Signature Medallion Guaranteed:
- --------------------------
<PAGE>
EXHIBIT A
COMMON STOCK PURCHASE WARRANT
For the Purchase of 200,000 Shares of Common Stock
of
MAGNITUDE INFORMATION SYSTEMS, INC.
(A Delaware Corporation)
THIS CERTIFIES THAT, for value received Gary J. Shemano, having an address
c/o The Shemano Group, 601 California Street. Suite 1850, San Francisco,
California 94108 (the "Holder"), as owner of this Warrant (sometimes referred to
herein as "Warrant"), is entitled to subscribe for, purchase and receive 200,000
fully paid and nonassessable shares of common stock (the "Common Stock"), of
Magnitude Information Systems, Inc., a Delaware corporation (the "Company") at
the price of $2.00 (U.S.) per share of Common Stock (the "Exercise Price"), upon
payment of the Exercise Price in accordance with the provisions hereof at the
principal office of the Company. If the subscription rights represented hereby
shall not be exercised on or before the Expiration Date, this Warrant shall
become and will be void without further force or effect, and all rights
represented hereby shall cease and expire.
This Warrant may be exercised subject to the following terms and
conditions.
(i) Terms of Warrant.
Holder shall be entitled to purchase and receive 200,000
shares of Common Stock at the Exercise Price at any time on or before 5:00 p.m.
Eastern Standard Time on March 15, 2003 (the "Expiration Date"), by paying the
Exercise Price to the Company. Any notices required hereunder shall be in
writing and may be delivered via U.S. Postal Service, personally or by any
commercial delivery or overnight service to the Holder or Company at the
respective addresses set forth herein for the same. Any attempted but
undelivered notice sent via any method and for which a proof of attempted
delivery therefor is issued and left at the appropriate address shall be deemed
to be effective delivery.
(ii) Exercise of Warrant.
This Warrant may be exercised in whole or in part, in
increments to purchase no less than 50,000 shares of Common Stock during the
Exercise Period by surrendering the exercise form attached hereto (the "Exercise
Form") duly executed by the Holder, to the Company at its principal office at 50
Tannery Road, Suite 8, Branchburg, New Jersey 08876 or at such other address as
may be designated by the Company, and by simultaneously paying the Exercise
Price in cash or check to the Company. The date of exercise shall be the date on
which the completed Exercise Form and Exercise Price are tendered to the
Company.
(iii) Restricted Nature of Warrant and Underlying Stock.
This Warrant and the shares of Common Stock that underlie this Warrant
are deemed "restricted securities" as that term is defined in Rule 144
promulgated under the Securities Act of 1933, as amended (the "1933 Act"). No
sale, offer to sell or transfer of this Warrant or any of the shares of Common
Stock underlying this Warrant (the "Underlying Shares") may be made except
pursuant to a registration statement filed pursuant to the 1933 Act and
applicable State Securities Laws or pursuant to exemptions therefrom proved in
such latter case to the reasonable satisfaction of the Company and its counsel.
This Warrant and each certificate representing any of the Underlying Shares
shall bear a legend in substantial form to the following:
"The Securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended ("Act"). Such
securities have been acquired for investment and may not be publicly
offered or sold in the absence of (1) an effective registration
statement for such securities under the Act; (2) An opinion of counsel
acceptable to the Company prior to any proposed transfer to the effect
that registration is not required under the Act; or (3) a letter
presented to the Company prior to any proposed transfer, from the staff
of the Securities and Exchange Commission, to the effect that it will
not recommend any enforcement action in the event of the described,
proposed transfer without registration under the Act."
(iv) Disposition of Warrant or Underlying Shares.
The Holder, by acceptance hereof, agrees that this Warrant shall not be
assignable or transferable in whole or in part by Holder under any circumstances
and that any attempted assignment or transfer shall immediately cause this
Warrant to expire and be rendered null and void. In the event of the death of
the Holder, all of the rights and obligations set forth in this Warrant shall
automatically, by operation of law, be transferred to the Holder's estate or
personal representative, as the case may be.
(v) Registration Rights. The Company hereby agrees to include the
Underlying Shares in any registration statement it may file under the 1933 Act
at any time following the date hereof , at its sole cost and expense, seeking to
register common shares on its behalf or on behalf of selling shareholders,
subject, if applicable, to the consent of the lead underwriter.
(vi) No Redemption. This Warrant shall not be called or redeemed
by the Company at any time.
(vii) Loss, Theft, Destruction or Mutilation. Upon receipt by the
Company of evidence satisfactory to it (in the exercise of its reasonable
discretion) of the ownership of and the loss, theft, destruction, or mutilation
of this Warrant, the Company will execute and deliver, in lieu thereof, a new
Warrant of like tenor.
(viii) Warrant Holder Not a Shareholder. The Holder of this Warrant, as
such, shall not be entitled by reason of any term or provision set forth in this
Warrant to any rights whatsoever as a shareholder of the Company.
(ix) Taxes. The Company will pay all document and stamp taxes in
connection with the issuance of this Warrant or the Common Shares that may be
issued upon exercise hereof.
(x) Miscellaneous. References herein describing this instrument as a
"Warrant" or "Warrants", refer solely to the rights conferred upon the Holder.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
a duly authorized officer as of the date set forth below
Dated: _________________ MAGNITUDE INFORMATION SYSTEMS, INC.
By: _______________________
Steven D. Rudnik, President
<PAGE>
Form to be used to exercise Warrant:
EXERCISE FORM
Date: ______________
The undersigned hereby elects irrevocably to exercise the within
Warrant and to purchase 200,000 shares of Common Stock of Magnitude Information
Systems, Inc. called for thereby.
Signature: ________________________
Signature Guaranteed: __________________
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name _____________________________
Address ___________________________
**************
NOTICE: The signature to the form to exercise must correspond with the name as
written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
<PAGE>
Exhibit 5.1
April 7, 2000
Joseph J. Tomasek
Attorney At Law
75-77 North Bridge Street
Somerville, New Jersey 08876
Magnitude Information Systems, Inc.
50 Tannery Road, Unit 8
Branchburg, New Jersey 08876
Ladies and Gentlemen::
I have acted as counsel for Magnitude Information Systems, Inc., a
Delaware corporation ("Magnitude"), in connection with the preparation of a
Registration Statement on Form S-3 (the "Registration Statement") to be filed by
Magnitude with the Securities and Exchange Commission (the "Commission')
pursuant to the Securities Act of 1933 (the "Act"). The Registration Statement
relates to up to 19,482,086 shares (the "Shares") of common stock, par value
$.0001 per share (the "Common Stock").
I have examined such corporate records, certificates and other
documents as I have considered necessary or appropriate for the purposes of this
opinion. In such examination, I have assumed the genuineness of all signatures
and the authenticity of all documents submitted to me as copies. In examining
agreements executed by parties other than Magnitude, I have assumed that such
parties had the power, corporate or other, to enter into and perform all
obligations thereunder and also have assumed the due authorization by all
requisite action, corporate or other, and execution and delivery by such parties
of such documents, and the validity and binding effect thereof. As to any facts
material to the opinion expressed herein which I have not independently verified
or established, I have relied upon statements and representations of officers
and representatives of Magnitude and others.
Based on such examination, I am of the opinion that the Shares have
been duly authorized for issuance and are validly issued, fully paid and
non-assessable.
I hereby consent to the inclusion of this opinion as an exhibit to the
Registration Statement and to the reference to me and this opinion in the
prospectus that forms a part of the Registration Statement.
Very truly yours,
/s/ Joseph J. Tomasek
Joseph J. Tomasek, Esq.
<PAGE>
Exhibit 23.1
ROSENBERG RICH
BAKER BERMAN
& COMPANY
380 Foothill Road
P.O. Box 6483
Bridgewater, New Jersey 08807
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Magnitude Information Systems, Inc. and Subsidiaries
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-3 Registration Statement of Magnitude Information
Systems, Inc. and Subsidiaries of our report dated March 24, 2000 on the
consolidated financial statements of Magnitude Information Systems, Inc. and
Subsidiaries appearing as Exhibit A in the annual report on Form 10-KSB for the
fiscal year ended December 31, 1999, and to all references to our Firm included
in this Form S-3 Registration Statement.
/s/ Rosenberg Rich Baker Berman & Company
Rosenberg Rich Baker Berman & Company
Bridgewater, New Jersey
April 7, 2000
<PAGE>
