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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. _________)*
Landmark Systems Corporation
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock
- --------------------------------------------------------------------------------
(Title of Class of Securities)
51506S - 10 - 0
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(CUSIP Number)
Kim D. Cooke, Esq. Managing Director
Blue Water Capital, L.L.C., Managing Member
Blue Water Strategic Fund I, L.L.C.
8300 Greensboro Drive
Suite 1020
McLean, VA 22102
( 703) 790-8821
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(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
November 21, 1997
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
CUSIP No. 51506S-10-0 Page 2 of 8 Pages
----------- -------- ---------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Blue Water Strategic Fund I, L.L.C.
8300 Greensboro Drive
Suite 1020
McLean, VA 22102
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
NUMBER OF 592,793
------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0
------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 592,793
------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
592,793
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.4%
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14 TYPE OF REPORTING PERSON*
00
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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SCHEDULE 13D
CUSIP No. 51506S-10-0 Page 3 of 8 Pages
----------- -------- ---------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Blue Water Capital, L.L.C.
8300 Greensboro Drive
Suite 1020
McLean, VA 22102
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
NUMBER OF 592,793
-------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0
-------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 592,793
-------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
592,793
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.4%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
00
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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ITEM 1. SECURITY AND ISSUER
This statement relates to Common Stock, par value $.01 per share
("Common Stock"), of Landmark Systems Corporation (the "Issuer"). The principal
executive offices of the Issuer are located at 800 Towers Crescent Drive,
Vienna, Virginia 22182.
ITEM 2. IDENTITY AND BACKGROUND
This statement is being filed by Blue Water Strategic Fund I, L.L.C.
("Blue Water Strategic Fund"), a limited liability company organized under the
laws of the State of Delaware engaged in investments in private companies, and
Blue Water Capital, L.L.C. ("Blue Water Capital"), a limited liability company
organized under the laws of the State of Delaware which is the Managing Member
of Blue Water Strategic Fund. (Blue Water Strategic Fund and Blue Water Capital
are collectively referred to as the "Reporting Persons"). Michael H. Acheson,
Henry D. Barratt, Jr., Kim D. Cooke, and Reid R. Miles are each Managing
Directors of Blue Water Capital (collectively Messrs. Acheson, Barratt, Cooke
and Miles are the "Managing Directors"). The principal business address and the
principal office address of each of the Reporting Persons and Messrs. Barratt,
Cooke and Miles is 8300 Greensboro Drive, Suite 1020, McLean, Virginia 22102.
The principal business address and the principal office address of Mr. Acheson
is 31600 Telegraph Road, Suite 260, Birmingham, Michigan 48025. The Reporting
Persons and Managing Directors have not been (i) convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) during the
last five years, or (ii) a party, during the last five years, to a civil
proceeding of a judicial or administrative body of competent jurisdiction which
resulted in either of them being subject to a judgment, decree or final order
enjoining
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future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Strategic Partners Fund acquired directly from the Issuer, on March
10, 1997, 316,156 shares of the Series B Preferred Stock, par value $0.01 per
share, of the Issuer (the "Series B Preferred") and on April 1, 1997, 79,039
shares of Series B Preferred Stock. Pursuant to the terms of the Series B
Preferred Stock, such shares were converted into an aggregate of 592,793 shares
of Common Stock on November 21, 1997 at the closing of the Issuer's initial
public offering (the "IPO"). The funds used to acquire the Series B Preferred,
in the aggregate amount of $2,500,000, were provided by monies invested in
Blue Water Strategic Fund by its members.
ITEM 4. PURPOSE OF TRANSACTION.
Blue Water Strategic Fund purchased the Series B Preferred Stock for
investment purposes. The Reporting Persons currently intend to hold the Common
Stock for investment, but may, at some future time depending on market
conditions and other factors, acquire additional shares of Common Stock (through
one or more market purchases or purchases in private transactions) or dispose of
all or a portion of the securities which they now own or hereafter may acquire.
Blue Water Strategic Fund has agreed pursuant to a lock-up agreement that they
will not offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, or otherwise dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible or exercisable or
exchangeable for Common Stock , or enter into any swap or similar agreement
that transfers, in whole or in part, the economic risk of ownership of the
Common Stock during a period of 180 days from the November 21, 1997 without
the prior written consent of Unterberg
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Harris, the lead underwriters the IPO. Unterberg Harris may, however, it its
sole discretion and at any time without notice, release all or a portion of the
securities subject to such lock-up agreement. Pursuant to a Registration Rights
Agreement entered into in connection with the acquisition of the securities,
Blue Water Strategic Fund has been granted certain rights by the Issuer to have
the Common Stock registered for sale under the Securities Act of 1933, as
amended (the "Registration Rights Agreement").
Except as set forth above, the Reporting Persons and the Managing
Directors have no present plans or proposals which relate to or would result in
any of the actions described in subparagraphs (a) through (j) of Item 4 of
Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF ISSUER.
The Series B Preferred Stock owned by the Reporting Persons
converted on the November 21, 1997 into 592,793 shares of Common Stock, which
represents approximately 5.4% of the outstanding Common Stock of the Issuer as
of November 21, 1997 (based on representations of the Issuer in its definitive
prospectus dated November 17, 1997). Blue Water Strategic Fund has the sole
power to vote or direct the vote, and sole power to dispose or to direct the
disposition, of all such securities. Such power is exercised through its
Managing Member, Blue Water Capital. The Reporting Persons and the Managing
Directors have not effected any other transactions in Common Stock during the
past sixty days.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
In connection with the sale and purchase of the Series B Preferred
Stock, Blue Water Strategic Fund entered into the Registration Rights
Agreement. Blue Water Strategic
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Fund has the right to demand registration of the shares of Common
Stock, subject to certain conditions and limitations. In addition, Blue Water
Strategic Fund has piggyback registration rights in connection with
certain proposed offerings to be registered by the Issuer. The registration
rights are generally transferable in connection with any private sale of
registerable shares, including to any member of Blue Water Strategic Fund. The
Issuer will bear all expenses incident to its registration obligations upon
exercise of these demand and piggyback registration rights, except that it will
not bear any underwriting discounts or commissions, federal or state securities
registration fees or transfer taxes relating to the exercise of those rights.
The foregoing descriptions of the Registration Rights Agreement does not
purport to be complete and is qualified in its entirety by the terms of the
Agreement which is filed as an exhibit to the statement and is incorporated by
reference herein.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit A Registration Rights Agreement
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After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
BLUE WATER STRATEGIC FUND I, L.L.C.
By: Blue Water Capital, LLC, its Managing
Member
By: /s/ Kim D. Cooke
---------------------------
Kim D. Cooke
Managing Director
BLUE WATER CAPITAL, L.L.C.
By: /s/ Kim D. Cooke
---------------------------
Kim D. Cooke
Managing Director
Dated: December 3, 1997
-- Pages 8 of 8 Pages --
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EXHIBIT A
LANDMARK SYSTEMS CORPORATION
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement") is made as of the
seventh day of March, 1997, among Landmark Systems Corporation, a Virginia
corporation (the "Company"), the persons and entities listed on the "Schedule
of Purchasers" attached hereto as Attachment A (the "Purchasers"), and Patrick
H. McGettigan, Katherine K. Clark and Jeffrey H. Bergman (collectively, the
"Founders" and singly "McGettigan", "Clark" and "Bergman" respectively).
In consideration of the mutual promises, covenants and conditions
hereinafter set forth, the parties hereto mutually agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall
have the following meanings:
(a) "Commission" means the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
(b) "Common Stock" means the authorized common stock, one cent
($0.01) par value per share, of the Company.
(c) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated
thereunder, all as the same shall be in effect from time to time.
(d) "Other Shares" means at any time those shares of Common Stock
which do not constitute Primary Shares or Registrable Shares.
(e) "Preferred Stock" means the authorized preferred stock, one
cent ($0.01) par value per share, of the Company.
(f) "Primary Shares" means at any time the authorized but unissued
shares of Common Stock.
(g) "Registrable Purchaser Shares" means at any time, with respect
to any Purchaser, the shares of Common Stock held (or to be held upon
conversion of any Restricted Purchaser Shares) by such Purchaser that
constitute Restricted Purchaser Shares.
(h) "Registrable Founder Shares" means at any time, with respect
to any Founder, the shares of Common Stock held by such Founder that constitute
Restricted Founder Shares.
(i) "Registrable Bergman Shares" means at any time, the shares of
Common Stock held (or to be held upon conversion of any Restricted Bergman
Shares) by Bergman that constitute Restricted Bergman Shares.
(j) "Registrable Shares" means Registrable Bergman Shares,
Registrable Founder Shares and Registrable Purchaser Shares collectively.
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(k) "Restricted Bergman Shares" means at any time, the shares of
Series A Preferred Stock held by Bergman on the date hereof, any shares of
Common Stock issued or issuable upon conversion thereof, and any shares or
other securities received in respect thereof, which are held by Bergman and
which have not previously been sold to the public pursuant to a registration
statement under the Securities Act or pursuant to Rule 144.
(l) "Restricted Founder Shares" means at any time, with respect to
any Founder, the shares of Common Stock held by him or her on the date hereof,
and any shares or other securities received in respect thereof, which are held
by such Founder and which have not previously been sold to the public pursuant
to a registration statement under the Securities Act or pursuant to Rule 144.
(m) "Restricted Purchaser Shares" means at any time, with respect
to any Purchaser, the shares of Series B Preferred Stock held by it on the date
hereof, any shares of Common Stock issued or issuable upon conversion thereof,
and any shares or other securities received in respect thereof, which are held
by such Purchaser and which have not previously been sold to the public
pursuant to a registration statement under the Securities Act or pursuant to
Rule 144.
(n) "Restricted Shares" means Restricted Bergman Shares,
Restricted Founder Shares and Restricted Purchaser Shares collectively.
(o) "Rule 144" means Rule 144 promulgated under the Securities Act
or any successor rule thereto or any complementary rule thereto.
(p) "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder, all as the same
shall be in effect from time to time.
(q) "Series A Preferred Stock" means the authorized shares of
Preferred Stock which are designated as "Series A Preferred Stock."
(r) "Series B Preferred Stock" means the authorized shares of
Preferred Stock which are designated as "Series B Preferred Stock."
(s) "Stock" means Common Stock, Preferred Stock or any other class
of authorized stock of the Company.
(t) "Stockholder" means any Purchaser or Founder, Bergman and any
person or entity that has acquired or acquires Restricted Purchaser Shares from
a Purchaser, Restricted Founder Shares from a Founder or Restricted Bergman
Shares from Bergman in accordance with Section 14.
(u) "Transfer" means any disposition of any Restricted Shares or
of any interest therein which constitutes a sale within the meaning of the
Securities Act, other than any disposition pursuant to an effective
registration statement under the Securities Act and complying with all
applicable state securities and "blue sky" laws.
2. REQUESTED REGISTRATION. If the Company shall be requested by
Purchasers, who or which hold Restricted Purchaser Shares constituting more
than fifty percent (50%) of the then-outstanding Restricted Purchaser Shares
held by all Purchasers, to effect the registration under the Securities Act of
Registrable Purchaser Shares in accordance with this Section 2, then the
Company shall promptly give written notice of such proposed registration to all
holders of
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Restricted Purchaser Shares and shall offer to include in such proposed
registration any Registrable Purchaser Shares requested to be included in such
proposed registration by such holders who respond in writing to the Company's
notice within thirty (30) days after delivery of such notice (which response
shall specify the number of Registrable Purchaser Shares proposed to be
included in such registration). The Company shall promptly use its best
efforts to effect such registration under the Securities Act of the Registrable
Purchaser Shares which the Company has been so requested to register; provided,
however, that the Company shall not be obligated to effect any registration
under the Securities Act except in accordance with the following provisions:
(a) the Company shall not be obligated to file (i) more than one
registration statement initiated pursuant to this Section 2 which becomes
effective, or (ii) any registration statement during any period in which any
other registration statement pursuant to which Primary Shares are to be or were
sold has been filed and not withdrawn or has been declared effective within the
prior one hundred eighty (180) days;
(b) the Company shall not be obligated to effect any registration
unless the anticipated aggregate offering proceeds, net of underwriting
discounts and commissions, are expected to exceed $5,000,000;
(c) the Company shall not be obligated to effect any registration
prior to the earlier of (i) December 31, 2000 and (ii) one hundred eighty (180)
days after the time the Company makes an initial offering of Common Stock to
the public pursuant to an effective registration statement under the Securities
Act;
(d) the Company may delay the filing or effectiveness of any
registration statement for a period not to exceed one hundred fifty (150) days
after the date of a request for registration pursuant to this Section 2 if (i)
at the time of such request the Company is engaged, or has fixed plans to
engage within sixty (60) days of the time of such request, in a firm commitment
underwritten public offering of Primary Shares in which the holders of
Restricted Purchaser Shares may include Registrable Purchaser Shares pursuant
to Section 3 below or (ii) the Corporation shall furnish to the Purchasers
requesting such registration a certificate signed by the President of the
Company stating that, in the good faith judgment of the Board of Directors of
the Company, and with the concurrence of the investment banker, if any, that is
currently being retained by the Company, it would be seriously detrimental to
the Company and its shareholders for such registration statement to be filed
and it is therefore essential to defer the filing of such registration
statement (provided that the Company may not utilize the right set forth in
this Section 2(d) more than once in any twelve (12) month period and in the
event the Company does utilize such right, the holders of Restricted Purchaser
Shares requesting such registration will be entitled to withdraw such request
and, if such request is withdrawn, such registration will not count as a
registration pursuant to this Section 2, and the holders of Restricted
Purchaser Shares requesting such registration shall have no obligation to
reimburse the Company for the Company's expenses in connection with such
rescinded registration); and
(e) with respect to any registration pursuant to this Section 2,
the Company or the Founders may include in such registration any Primary
Shares, Registrable Founder Shares, Registrable Bergman Shares or Other Shares;
provided, however, that in the event the registration is for a registered
public offering involving an underwriting, if the underwriter (or
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the managing underwriter on behalf of the underwriters) advises the Company
that the inclusion of all Registrable Shares, Primary Shares and Other Shares
proposed to be included in such registration would interfere with the
successful marketing (including pricing) of all such securities, then the
number of Registrable Shares, Primary Shares and Other Shares proposed to be
included in such registration shall be included in the following order:
(i) first, the Registrable Purchaser Shares, pro
rata based upon the number of Registrable Purchaser Shares (based upon Common
Stock equivalents) proposed to be included by each Purchaser;
(ii) second, the Primary Shares;
(iii) third, the Registrable Founder Shares and
Registrable Bergman Shares, pro rata based upon the number of Registrable
Founder Shares and Registrable Bergman Shares (based on Common Stock
equivalents) proposed to be included by each Founder; and
(iv) fourth, the Other Shares.
A requested registration under this Section may be rescinded by
written notice to the Company by the Purchasers initiating such request;
provided, however, that such rescinded registration shall not count as a
registration statement initiated pursuant to this Section 2 for purposes of
Section 2(a) above if, notwithstanding Section 7 below, the Purchasers
initiating such request shall have reimbursed the Company for all out-of-pocket
expenses incurred by the Company in connection with such rescinded
registration.
A registration pursuant to this Section 2 shall not be deemed to have
been effected (i) unless a registration statement with respect thereto has
become effective, (ii) if after it has become effective, such registration is
interfered with by any stop order, injunction or other order or requirement of
the Commission or other governmental agency or court for any reason, or (iii)
if the conditions to closing specified in the purchase agreement or
underwriting agreement entered into in connection with such registration are
not satisfied, other than by reason of some act or omission by the holders of
Restricted Purchaser Shares requesting such registration.
3. PIGGYBACK REGISTRATION.
(a) If the Company at any time proposes for any reason to register
Primary Shares under the Securities Act, other than a registration relating
solely to employee benefit plans or a Commission Rule 145 (or any rule adopted
by the Commission in substitution thereof or in Amendment thereto) transaction,
it shall promptly give written notice to each Stockholder of its intention so
to register the Primary Shares and, upon the written request, given within
thirty (30) days after delivery of any such notice by the Company, of any
Stockholder to include in such registration Registrable Shares (which request
shall specify the number of Registrable Shares proposed to be included in such
registration), the Company shall use its best efforts to cause all such
Registrable Shares to be included in such registration on the same terms and
conditions as the securities otherwise being sold in such registration;
provided, however, that in the event the
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registration is for a registered public offering involving an underwriting, if
the underwriter (or the managing underwriter on behalf of the underwriters)
advises the Company that the inclusion of all Registrable Shares proposed to be
included in such registration would interfere with the successful marketing
(including pricing) of the Primary Shares proposed to be registered by the
Company, then the number of Primary Shares and Registrable Shares proposed to
be included in such registration shall be included in the following order:
(i) first, the Primary Shares;
(ii) second, the Registrable Purchaser Shares, pro
rata based upon the number of Registrable Purchaser Shares (based upon Common
Stock equivalents) proposed to be included by each Purchaser; and
(iii) third, the Registrable Founder Shares and
Registrable Bergman Shares, pro rata based upon the number of Registrable
Founder Shares and Registrable Bergman Shares (based upon Common Stock
equivalents) proposed to be included by each Founder.
(b) Each Stockholder who has requested that Registrable Shares be
included in a registration pursuant to Section 3(a) above, shall be bound by
the Company's choice of managing underwriter stated in the Company's notice and
to execute an underwriting agreement with such underwriter that is (i)
reasonably satisfactory to such Stockholder and (ii) in customary form. No
registration effected under this Section 3 shall relieve the Company of its
obligation to effect any registration upon request under Section 2 above.
4. REGISTRATIONS ON FORM S-3.
(a) Subject to Sections 4(b) and 4(c) below, at such time as the
Company shall have qualified for the use of Form S-3 promulgated under the
Securities Act or any successor form thereto, the Purchasers shall have the
right to request up to three (3) or, if the Company has not effected any
registration pursuant to Section 2 above that was declared or ordered
effective, four (4) registrations on such Form S-3 under this Section 4. Such
requests shall (i) specify the number of Registrable Purchaser Shares intended
to be sold or disposed of, (ii) state the intended method of disposition of
such Registrable Purchaser Shares, and (iii) relate to at least ten percent
(10%) of all the Registrable Purchaser Shares then outstanding.
(b) If the Company furnishes to the Purchasers a certificate
signed by the President of the Company stating that in the good faith judgment
of the Board of Directors of the Company, and with the concurrence of the
investment banker, if any, that is currently being retained by the Company, it
would be seriously detrimental to the Company or its shareholders for any
registration statements to be filed in the near future, then the Company's
obligation to take any action pursuant to this Section 4 shall be deferred for
a period not to exceed one hundred and fifty (150) days from the receipt of the
request to file such registration by the Purchasers; provided, however, that
the Company may not make such certification more than once in any twelve (12)
month period.
(c) A requested registration on Form S-3 or any successor form in
compliance with this Section 4 shall not count as a registration statement
demanded pursuant to Section 2, but
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shall otherwise be treated as a registration initiated pursuant to and shall,
except as otherwise expressly provided in this Section 4, be subject to Section
2..
5. "MARKET STAND-OFF" AGREEMENT. If in connection with the initial
public offering of shares of Common Stock of the Company registered pursuant to
the Securities Act, the managing underwriter for such registration shall so
request, the Stockholders shall not sell, make any short sale of, grant any
option for the purchase of, or otherwise dispose of any Restricted Shares
(other than those shares of Common Stock included in such registration) without
the prior written consent of the Company for a period designated by the Company
in writing to the Stockholders, which period shall not begin more than ten (10)
days prior to the effectiveness of the registration statement pursuant to which
such public offering shall be made and shall not last more than one hundred
eighty (180) days (or such other period as the officers and directors of the
Company and holders of greater than one percent (1%) of all Registrable Shares
mutually agree) after the effective date of such registration statement.
6. PREPARATION AND FILING. If and whenever the Company is under an
obligation pursuant to the provisions of this Agreement to effect the
registration of any Registrable Shares, the Company shall, as expeditiously as
practicable:
(a) use its best efforts to cause a registration statement that
registers such Registrable Shares to become and remain effective for a period
of one hundred eighty (180) days or until all of such Registrable Shares have
been disposed of (if earlier);
(b) furnish, at least five (5) business days before filing a
registration statement that registers such Registrable Shares, a prospectus
relating thereto or any amendments or supplements relating to such a
registration statement or prospectus, to one counsel selected by the holders of
a majority of such Registrable Shares (the "Selling Stockholders' Counsel"),
copies of all such documents proposed to be filed (it being understood that
such five (5) business day period need not apply to successive drafts of the
same document proposed to be filed so long as such successive drafts are
supplied to such counsel in advance of the proposed filing by a period of time
that is customary and reasonable under the circumstances);
(c) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective for at least a period of one hundred eighty (180) days or until all
of such Registrable Shares have been disposed of (if earlier) and to comply
with the provisions of the Securities Act with respect to the sale or other
disposition of such Registrable Shares;
(d) notify in writing the Selling Stockholders' Counsel promptly
(i) of the receipt by the Company of any notification with respect to any
comments by the Commission with respect to such registration statement or
prospectus or any amendment or supplement thereto or any request by the
Commission for the amending or supplementing thereof or for additional
information with respect thereto, (ii) of the receipt by the Company of any
notification with respect to the issuance by the Commission of any stop order
suspending the effectiveness of such registration statement or prospectus or
any amendment or supplement thereto or the initiation or threatening of any
proceeding for that purpose and (iii) of the receipt by the Company of any
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notification with respect to the suspension of the qualification of such
Registrable Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purposes;
(e) use its best efforts to register or qualify such Registrable
Shares under such other securities or blue sky laws of such jurisdictions as
any seller of Registrable Shares reasonably requests and do any and all other
acts and things which may be reasonably necessary or advisable to enable such
seller of Registrable Shares to consummate the disposition in such
jurisdictions of the Registrable Shares owned by such seller; provided,
however, that the Company will not be required to qualify generally to do
business, subject itself to general taxation or consent to general service of
process in any Jurisdiction where it would not otherwise be required so to do
but for this Section 6(e);
(f) furnish to each seller of such Registrable Shares such number
of copies of a summary prospectus or other prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as such seller of Registrable Shares may reasonably request in
order to facilitate the public sale or other disposition of such Registrable
Shares;
(g) use its best efforts to cause such Registrable Shares to be
registered with or approved by such other governmental agencies or authorities
as may be necessary by virtue of the business and operations of the Company to
enable the seller or sellers thereof to consummate the disposition of such
Registrable Shares;
(h) notify on a timely basis each seller of such Registrable
Shares at any time when a prospectus relating to such Registrable Shares is
required to be delivered under the Securities Act within the appropriate period
mentioned in Section 6(a) above, of the happening of any event as a result of
which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing and, at the
request of such seller, prepare and furnish to such seller a reasonable number
of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the offerees of such shares, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing;
(i) make available for inspection by any seller of such
Registrable Shares, any underwriter participating in any disposition pursuant
to such registration statement and any attorney, accountant or other agent
retained by any such seller or underwriter (collectively, the "Inspectors"),
all pertinent financial and other records, pertinent corporate documents and
properties of the Company (collectively, the "Records"), as shall be reasonably
necessary to enable them to exercise their due diligence responsibility, and
cause the Company's officers, directors and employees to supply all information
(together with the Records, the "Information") reasonably requested by any such
Inspector in connection with such registration statement. Any of the
Information which the Company determines in good faith to be confidential, and
of which determination the Inspectors are so notified, shall not be disclosed
by the Inspectors unless (i) the disclosure of such Information is necessary to
avoid or correct a misstatement or omission in the
7
<PAGE> 16
registration statement, (ii) the release of such Information is ordered
pursuant to a subpoena or other order from a court of competent jurisdiction or
(iii) such Information has been made generally available to the public. The
seller of Registrable Shares agrees that he, she or it will, upon learning that
disclosure of such Information is sought in a court of competent jurisdiction,
give notice to the Company and allow the Company, at the Company's expense, to
undertake appropriate action to prevent disclosure of the Information deemed
confidential;
(j) use its best efforts to obtain from its independent certified
public accountants "comfort" letters in customary form and at customary times
and covering matters of the type customarily covered by comfort letters;
(k) use its best efforts to obtain from its counsel an opinion or
opinions in customary form;
(l) provide a transfer agent and registrar (which may be the same
entity and which may be the Company) for such Registrable Shares;
(m) issue to any underwriter to which any seller of Registrable
Shares may sell shares in such offering certificates evidencing such
Registrable Shares;
(n) list such Registrable Shares on any national securities
exchange on which any shares of the Common Stock are listed or, if the Common
Stock is not listed on a national securities exchange, use its best efforts to
qualify such Registrable Shares for inclusion on the automated quotation system
of the National Association of Securities Dealers, Inc. (the "NASD") or such
national securities exchange as the holders of a majority of such Registrable
Shares shall request;
(o) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission and make available to its security
holders, as soon as reasonably practicable, earnings statements (which need not
be audited) covering a period of twelve (12) months beginning within three (3)
months after the effective date of the registration statement, which earnings
statements shall satisfy the provisions of Section 11(a) of the Securities Act;
and
(p) use its best efforts to take all other steps necessary to
effect the registration of such Registrable Shares contemplated hereby.
In connection with the preparation and filing of each registration
statement under the Securities Act pursuant to this Agreement, the Company will
give the holder of Registrable Shares registered under such registration
statement a reasonable opportunity to review and comment upon such registration
statement, each prospectus included therein or filed with the Commission, and
each amendment thereof or supplement thereto, all prior to finalization.
7. EXPENSES. All expenses incurred by the Company in complying with
Section 6 above, including, without limitation, all registration and filing
fees (including all expenses incident to filing with the NASD), fees and
expenses of complying with securities and blue sky laws, printing expenses, and
fees and expenses of the Company's counsel and accountants, and the fees and
expenses of the Selling Stockholders' Counsel shall be paid by the Company;
provided, however, that all underwriting discounts and selling commissions
applicable to the Registrable
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<PAGE> 17
Shares, and all fees and expenses of any special or interim audit for any
registration initiated by Stockholders pursuant to Section 2 above that is not
otherwise required under the Securities Act or by the managing underwriter, if
any, in connection with such registration shall be borne by the seller or
sellers thereof, in proportion to the number of Registrable Shares sold by such
seller or sellers.
8. INDEMNIFICATION.
(a) In connection with any registration of any Registrable Shares
under the Securities Act pursuant to this Agreement, the Company shall
indemnify and hold harmless each Stockholder selling such Registrable Shares,
its officers and directors, each underwriter, broker or any other person acting
on behalf of such selling Stockholder and each other person, if any, who
controls any of the foregoing persons within the meaning of the Securities Act
against any losses, claims, damages or liabilities, joint or several, (or
actions in respect thereof) to which any of the foregoing persons may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material fact
contained in the registration statement under which such Registrable Shares
were registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein or otherwise filed with the Commission, any
amendment or supplement thereto or any document incident to registration or
qualification of any Registrable Shares, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading or,
with respect to any prospectus, necessary to make the statements therein in
light of the circumstances under which they were made not misleading, or any
violation by the Company of the Securities Act or state securities or blue sky
laws applicable to the Company and relating to action or inaction required of
the Company in connection with such registration or qualification under such
state securities or blue sky laws; and shall reimburse such selling
Stockholder, such officer or director, such underwriter, such broker or such
other person acting on behalf of such selling Stockholder and each such
controlling person for any legal or other expenses reasonably incurred by any
of them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in said
registration statement, preliminary prospectus, final prospectus, amendment,
supplement or document incident to registration or qualification of any
Registrable Shares in reliance upon and in conformity with written information
furnished to the Company through an instrument duly executed by such selling
Stockholder or underwriter that states that it is specifically for use in the
preparation thereof.
(b) In connection with any registration of Registrable Shares
under the Securities Act pursuant to this Agreement, each Stockholder selling
Registrable Shares shall indemnify and hold harmless (in the same manner and to
the same extent as set forth in the preceding paragraph of this Section) the
Company, each director of the Company, each officer of the Company who shall
sign such registration statement, each underwriter, broker or other person
acting on behalf of such selling Stockholder, each person who controls any of
the foregoing persons within the
9
<PAGE> 18
meaning of the Securities Act and each other Stockholder selling Registrable
Shares under such registration statement with respect to any statement or
omission from such registration statement, any preliminary prospectus or final
prospectus contained therein or otherwise filed with the Commission, any
amendment or supplement thereto or any document incident to registration or
qualification of any Registrable Shares, if such statement or omission was made
in reliance upon and in conformity with written information furnished to the
Company or such underwriter through an instrument duly executed by such selling
Stockholder or underwriter that states that it is specifically for use in
connection with the preparation of such registration statement, preliminary
prospectus, final prospectus, amendment, supplement or document; provided,
however, that the obligation to indemnify will be several, not joint and
several, among the Stockholders selling Registrable Shares, and the maximum
amount of liability in respect of such indemnification shall be in proportion
to and limited to, in the case of each Stockholder selling Registrable Shares,
an amount equal to the net proceeds actually received by such selling
Stockholder from the sale of Registrable Shares effected pursuant to such
registration.
(c) The indemnification required by this Section 8 will be made by
periodic payments during the course of the investigation or defense, as and
when bills are received or expenses incurred, subject to prompt refund in the
event any such payments are determined not to have been due and owing
hereunder.
(d) Promptly after receipt by an indemnified party of notice of
the commencement of any action involving a claim referred to in this Section 8,
such indemnified party will, if a claim in respect thereof is made against an
indemnifying party, give written notice to the latter of the commencement of
such action. In case any such action is brought against an indemnified party,
the indemnifying party will be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly notified
to the extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be responsible for any legal or other expenses
subsequently incurred by the latter in connection with the defense thereof;
provided, however, that if any indemnified party shall have reasonably
concluded that there may be one or more legal or equitable defenses available
to such indemnified party which are additional to or conflict with those
available to the indemnifying party, or that such claim or litigation involves
or could have an effect upon matters beyond the scope of the indemnity
agreement provided in this Section 8, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party
and such indemnifying party shall reimburse such indemnified party and any
person controlling such indemnified party for that portion of the fees and
expenses of any counsel retained by the indemnified party which is reasonably
related to the matters covered by the indemnity agreement provided in this
Section 8.
(e) The indemnification provided for under this Agreement will
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling person
of such indemnified party and will survive the transfer of securities.
(f) If the indemnification provided for in this Section 8 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any loss, claim,
10
<PAGE> 19
damage, liability or action referred to herein, then the indemnifying party, in
lieu of indemnifying such indemnified party hereunder, shall contribute to the
amounts paid or payable by such indemnified party as a result of such loss,
claim, damage, liability or action in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or omissions
which resulted in such loss, claim, damage or liability as well as any other
relevant equitable considerations. The relative fault of the indemnifying
party and of the indemnified party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company and the
Stockholders selling Registrable Shares agree that it would not be just and
equitable if contributions pursuant to this paragraph were determined by pro
rata allocation or by any other method of allocation which did not take into
account the equitable considerations referred to herein. The amount paid or
payable to an indemnified party as a result of the losses, claims, damages,
liabilities or expenses referred to above shall be deemed to include, subject
to the limitation set forth in Section 8(d) above, any legal or other expenses
reasonably incurred in connection with investigating or defending the same.
Notwithstanding the foregoing, in no event shall the amount contributed by a
Stockholder selling Registrable Shares exceed the aggregate net offering
proceeds received by such selling Stockholder from the sale of such selling
Stockholder's Registrable Shares.
9. UNDERWRITING AGREEMENT. Notwithstanding the provisions of Sections 5,
6, 7 and 8 above, to the extent that the Company and the Stockholders selling
Registrable Shares in a proposed registration shall enter into an underwriting
or similar agreement, which agreement contains provisions covering one or more
issues addressed in such Sections, the provisions contained in such Sections
addressing such issue or issues shall be superseded with respect to such
registration by such other agreement.
10. INFORMATION BY HOLDER. Each Stockholder selling Registrable Shares in
a proposed registration shall furnish to the Company such written information
regarding such holder and the distribution proposed by such Stockholder as the
Company may reasonably request in writing and as shall be reasonably required
in connection with any registration, qualification or compliance referred to in
this Agreement.
11. EXCHANGE ACT COMPLIANCE. From and after the date upon which the
registration statement pursuant to which the Company shall have initially
registered shares of Common Stock under the Securities Act for sale to the
public shall have been declared effective or such earlier date as a
registration statement filed by the Company pursuant to the Exchange Act
relating to any class of the Company's securities shall have become effective,
the Company shall comply with all of the reporting requirements of the Exchange
Act and with all other public information reporting requirements of the
Commission which are conditions to the availability of Rule 144 for the sale of
the Common Stock. Upon the request of any Stockholder, the Company will
deliver to such Stockholder a written statement as to whether it has complied
with such requirements. The Company shall cooperate with each Stockholder in
supplying such
11
<PAGE> 20
information as may be necessary for such Stockholder to complete and file any
information reporting forms presently or hereafter required by the Commission
as a condition to the availability of Rule 144.
12. TERMINATION. This Agreement shall terminate and be of no further
force or effect when there shall not be any Restricted Shares, provided that
the rights of the Stockholders and obligations of the Corporation under
Sections 2, 3 and 4 hereof shall earlier terminate and be of no further force
or effect at such earlier time as to any Stockholder as the provisions of Rule
144(k) are applicable to the Restricted Shares then held by such Stockholder.
13. SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to the
benefit of the Company and the Stockholders and, subject to Section 14, their
respective successors, permitted assigns, heirs and legal representatives (as
the case may be).
14. ASSIGNMENT. This Agreement and the rights and obligations of the
parties hereunder shall not be assignable, except that a Stockholder may assign
its rights hereunder (a) if such Stockholder is a partnership or a limited
liability company, to any partner or member thereof (in the case of a pro rata
distribution by a Stockholder that is a partnership or a limited liability
company to its partners or members), (b) if such Stockholder is a corporation,
to any majority-owned subsidiary of such Stockholder (provided that such rights
may be exercised by such subsidiary only for so long as such subsidiary
continues to be majority-owned by such Stockholder), (c) if such Stockholder is
a natural person, to the spouse or descendants of such person or any trust for
the benefit of any thereof or (d) otherwise to any other person or entity to
whom at least 50,000 Restricted Shares, as constituted on the date hereof, or
lesser number of such shares if representing all of the shares then held by
such Stockholder, have been properly sold or otherwise transferred in
accordance with the terms of the applicable agreement(s) governing such
transactions;; provided, however, that the Company is given written notice at
the time of such assignment stating the name and address of the assignee and
identifying the securities with respect to which the rights and benefits
hereunder are being assigned and such assignee expressly agrees in writing with
the Company and the other Stockholders to be bound by and to comply with all
applicable provisions of this Agreement, whereupon such person or entity shall
have the benefits of, and shall be subject to the restrictions contained in,
this Agreement with respect to such securities. Any assignment pursuant to
this Section 14 shall not relieve, release or otherwise discharge the
Stockholder effecting such assignment from its obligations under this
Agreement. This Agreement shall bind and inure to the benefit of the Company,
each Stockholder, and its or his respective successors, permitted assigns,
heirs and legal representatives.
15. ENTIRE AGREEMENT. This Agreement contains the entire agreement among
the parties with respect to the subject matter hereof and supersedes all prior
arrangements or understandings with respect hereto.
16. NOTICES. All notices, requests, consents and other communications
hereunder to any party shall be deemed to be sufficient if contained in a
written instrument and shall be deemed to have been duly given when delivered
in person, by telecopy, by nationally-recognized overnight
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<PAGE> 21
courier, or by first class registered or certified mail, postage prepaid,
addressed to such party at the address set forth below or such other address as
may hereafter be designated in writing by the addressee to the addressor:
If to Bergman: Mr. Jeffrey H. Bergman
9521 Woodington Drive
Potomac, Maryland 20854
If to McGettigan : Mr. Patrick H. McGettigan
Landmark Systems Corporation
8000 Towers Crescent Drive
Suite 1600
Vienna, Virginia 22182
If to Clark: Ms. Katherine K. Clark
Landmark Systems Corporation
8000 Towers Crescent Drive
Suite 1600
Vienna, Virginia 22182
If to the Purchasers: Blue Water Strategic Fund I, LLC
8300 Greensboro Drive, Suite 1020
McLean, Virginia 22012
If to the Company: Landmark Systems Corporation
8000 Towers Crescent Drive
Suite 1600
Vienna, Virginia 22182
Attn: Ms. Katherine K. Clark,
President
All such notices, requests, consents and other communications shall be deemed
to have been delivered (a) in the case of personal delivery or delivery by
telecopy, on the date of such delivery, (b) in the case of
nationally-recognized overnight courier, on the next business day and (c) in
the case of mailing, on the third business day following such mailing if sent
by certified mail, return receipt requested.
17. MODIFICATIONS; AMENDMENTS; WAIVERS. The terms and provisions of this
Agreement may not be modified or amended, except pursuant to a writing signed
by the parties.
18. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute but
one agreement.
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<PAGE> 22
19. HEADINGS. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be a
part of this Agreement.
20. SEVERABILITY. It is the desire and intent of the parties that the
provisions of this Agreement be enforced to the fullest extent permissible
under the law and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, if any provision of this Agreement would
be held in any jurisdiction to be invalid, prohibited or unenforceable for any
reason, such provision, as to such jurisdiction, shall be ineffective, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
Notwithstanding the foregoing, if such provision could be more narrowly drawn
so as not to be invalid, prohibited or unenforceable in such jurisdiction, it
shall, as to such jurisdiction, be so narrowly drawn, without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
21. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the Commonwealth of Virginia, without
giving effect to any law or rule that would cause the laws of any jurisdiction
other than the Commonwealth of Virginia to be applied.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
LANDMARK SYSTEMS CORPORATION
By:
--------------------------------------
Title:
-----------------------------------
BLUE WATER STRATEGIC FUND I, LLC
By: Blue Water Capital, LLC, Managing Member
By:
--------------------------------------
KIM D. COOKE,
MANAGING DIRECTOR
-----------------------------------------
JEFFREY H. BERGMAN
-----------------------------------------
PATRICK H. MCGETTIGAN
14
<PAGE> 23
-----------------------------------------
KATHERINE K. CLARK
15
<PAGE> 24
ATTACHMENT A
Schedule of Purchasers
<TABLE>
<CAPTION>
Name and Address Number of Series B
of Purchaser Preferred Shares
----------------------- ----------------
<S> <C>
Blue Water Strategic Fund I, LLC,
8300 Greensboro Drive, Suite 1020 316,156
McLean, VA 22012
TOTAL 316,156
</TABLE>
A-1
