UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 4)(1)
-------------------------------
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC.
(Name of Issuer)
Common Stock, $.01 par value
(Title of Class of Securities)
285825 10 5
(CUSIP Number)
--------------------------------
Howard Kailes, Esq.
Krugman, Chapnick & Grimshaw
Park 80 West - Plaza Two
Saddle Brook, New Jersey 07663
(201) 845-3434
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
-------------------------------
July 11, 1996
(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.
------
Check the following box if a fee is being paid with the statement.
------
(A fee is not required only if the reporting person: (a) has a
previous statement on file reporting beneficial ownership of more
than five percent of the class of securities described in Item 1;
and (2) has filed no amendment subsequent thereto reporting
beneficial ownership of five percent or less of such class.) (See
Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should
be filed with the Commission. See Rule 13d-1(a) for other parties
to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the
subject class of securities, and for any subsequent amendment
containing information which would alter disclosures provided in a
prior cover page.
<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).
______
(1) Constitutes Amendment No. 5 to Schedule 13G dated February 11,
1994 filed by Bruce F. Failing, Jr., Leigh Q. Failing,
individually and as trustee of The Failing Trust, and
Elizabeth F. Failing, as trustee of The Failing Trust.<PAGE>
<PAGE>
CUSIP NO. 285825 10 5
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Bruce F. Failing, Jr.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)
-----
(b) X
-----
3 SEC USE ONLY
4 SOURCE OF FUNDS*
PF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
-----
6 CITIZENSHIP OR PLACE OR ORGANIZATION
United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7 SOLE VOTING POWER
1,638,830
8 SHARED VOTING POWER
1,506,807 (see footnote 1)
9 SOLE DISPOSITIVE POWER
1,638,830
10 SHARED DISPOSITIVE POWER
1,506,807 (see footnote 1)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,145,637
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
see footnote 2
<PAGE>
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.0%
14 TYPE OF REPORTING PERSON*
IN
- -----------------
(1) Represents 1,318,489 shares held by The Failing Trust, 168,318
shares held be Elizabeth Z. Failing and 20,000 shares jointly
owned with Leigh Q. Failing.
(2) Excludes an aggregate of 7,890,758 shares (the "Garfinkle
Shares") beneficially owned by Norton Garfinkle, Garfinkle
Limited Partnership I and Garfinkle Limited Partnership II,
subject to the provisions of a stockholders agreement dated
March 12, 1993 (the "Stockholders Agreement").
<PAGE>
<PAGE>
CUSIP NO. 285825 10 5
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Leigh Q. Failing (individually and as trustee of The Failing
Trust)
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)
-----
(b) X
-----
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
-----
6 CITIZENSHIP OR PLACE OR ORGANIZATION
United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7 SOLE VOTING POWER
-0-
8 SHARED VOTING POWER
1,338,489 (see footnote 1)
9 SOLE DISPOSITIVE POWER
-0-
10 SHARED DISPOSITIVE POWER
1,338,489 (see footnote 1)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,338,489 (see footnote 1)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
see footnote 2
<PAGE>
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.4% (see footnote 2)
14 TYPE OF REPORTING PERSON*
IN
- ---------------
(1) Represents 1,318,489 shares held by The Failing Trust and
20,000 shares jointly owned with Bruce F. Failing, Jr.
(2) Excludes the Garfinkle Shares and 1,807,148 shares
beneficially owned by Bruce F. Failing, Jr., which are subject
to the Stockholders Agreement.<PAGE>
<PAGE>
CUSIP NO. 285825 10 5
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Elizabeth F. Failing (as trustee of The Failing Trust)
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)
-----
(b) X
-----
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
-----
6 CITIZENSHIP OR PLACE OR ORGANIZATION
United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7 SOLE VOTING POWER
-0-
8 SHARED VOTING POWER
1,318,489 (see footnote 1)
9 SOLE DISPOSITIVE POWER
-0-
10 SHARED DISPOSITIVE POWER
1,318,489 (see footnote 1)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,318,489 (see footnote 1)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
see footnote 2
<PAGE>
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.3%
14 TYPE OF REPORTING PERSON*
IN
- ---------------
(1) Represents shares held by The Failing Trust.
(2) Excludes The Garfinkle Shares and 1,827,148 shares held by
Bruce F. Failing, Jr., which are subject to the Stockholders
Agreement.
<PAGE>
<PAGE>
INTRODUCTORY STATEMENT
Pursuant to Reg. Section 240.13d-2, this Amendment No. 4 to
Schedule 13D discloses changes in the Statement on Schedule 13D
dated July 24, 1995, as amended by Amendment No. 1 thereto dated
July 24, 1995, Amendment No. 2 thereto dated September 30, 1995 and
Amendment No. 3 thereto dated December 27, 1995 (together, the
"Amended Statement on Schedule 13D"), filed jointly by Bruce F.
Failing, Jr. ("BFF"), Leigh Q. Failing ("LQF"), individually and as
trustee of The Failing Trust, and Elizabeth F. Failing ("EFF"), as
trustee of The Failing Trust; and pursuant to Reg. Section
232.101(a)(2)(ii), this Amendment No. 4 restates in its entirety
the text of the Amended Statement on Schedule 13D previously filed
in paper format. No person or entity responding hereunder shall be
responsible for the completeness or accuracy of any information
contained herein with respect to any other person or entity.
Item 1. Security and Issuer
-------------------
The securities to which this statement relates are shares of
the common stock, $.01 par value, of Electronic Retailing Systems
International, Inc., a Delaware corporation (the "Corporation").
The principal executive offices of the Corporation are located at
372 Danbury Road, Wilton, Connecticut 06897.
Item 2. Identity and Background
-----------------------
This statement is filed jointly, pursuant to Rule 13d-1(f)(1)
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), by BFF, LQF, individually and as trustee of The
Failing Trust, and EFF, as trustee of The Failing Trust.
BFF's principal occupation is as President of the Corporation,
which develops and supplies electronic shelf labeling systems.
BFF's residence address is 237 Round Hill Road, Greenwich,
Connecticut 06897. BFF is a citizen of the United States of
America.
LQF is not employed and is engaged in community service for
various organizations. LQF's residence address is 237 Round Hill
Road, Greenwich, Connecticut 06897. LQF is a citizen of the United
States of America.
EFF is not employed and is engaged in community service for
various organizations. EFF's residence address is 65 South Road,
Westhampton Beach, New York 11978. EFF is a citizen of the United
States of America.
During the last five years, none of BFF, LQF nor EFF has been
convicted in a criminal proceeding (excluding traffic violations
and similar misdemeanors), or was a party to a civil proceeding of
a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree
or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
<PAGE>
Item 3. Source and Amount of Funds
or Other Consideration
--------------------------
As more fully described under Items 4, 5(c) and 6 herein, on
July 11, 1996: (i) all of the 11,576 shares (the "Preferred
Shares") of Series A Cumulative, Convertible Preferred Stock, $1.00
par value (the "Preferred Stock"), of the Corporation held by BFF
were converted into an aggregate of 289,400 shares (the "Conversion
Shares") of Common Stock, and (ii) BFF acquired an additional
31,870 shares (the "Private Placement Shares") of Common Stock for
a purchase price of $71,707.50 obtained from personal funds
($21,705.75 of which represented payments under the conversion
agreement [the "Conversion Agreement"] hereinafter described).
Item 4. Purpose of Transaction
----------------------
In connection with completion by the Corporation of (i) the
offshore public offering (the "Regulation S Offering"), in
accordance with Regulation S under the Securities Act of 1933, as
amended, of shares of Common Stock, as a result of which the
Corporation received gross proceeds of approximately $11.2 million,
and (ii) the contemporaneous private placement (the "Private
Placement") of shares of Common Stock to subscribers, including
certain members of the Corporation's Board of Directors and their
affiliates, as a result of which the Corporation received gross
proceeds of approximately $2.1 million, holders of all outstanding
shares of Preferred Stock converted their shares into the number of
shares of Common Stock into which such shares of Preferred Stock
were convertible in accordance with their terms. Accordingly, on
July 11, 1996 the Preferred Shares, each valued at $100, were
converted into the Conversion Shares at the conversion price of
$4.00 per share pursuant to the Conversion Agreement. In addition,
on such date BFF acquired the Private Placement Shares in the
Private Placement pursuant to subscription agreements (the
"Subscription Agreements") accepted by the Corporation on July 5,
1996 and subject to closing of the Regulation S Offering.
At July 30, 1996, Norton Garfinkle, Chairman of the Board and
a director of the Corporation, and BFF beneficially owned, together
with members of their respective families (including related
parties), approximately 52.5% of the outstanding Common Stock. As
more fully described under Item 6 herein, Messrs. Garfinkle and BFF
and their respective families are subject to an agreement relating
to the voting and disposition of such shares. Accordingly, Mr.
Garfinkle and BFF, acting together, will be in a position to elect
all of the Corporation's directors and to take action requiring
stockholder approval.
Each of the undersigned will review various factors, such as
the Corporation's business and prospects, general economic
conditions and money and stock market conditions, and may consider
the acquisition of additional securities of the Corporation, or the
disposition thereof, whether in open market brokerage transactions
in the over-the-counter market, or otherwise.
<PAGE>
Except as aforesaid, none of the undersigned has any plans or
proposals which relate to or would result in any other action
specified in clauses (a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer
------------------------------------
(a) As of July 30, 1996, BFF beneficially owned, for purposes
of Rule 13d-3 under the Exchange Act, 3,145,637 shares of Common
Stock, constituting, to the best of the knowledge of BFF, 15.0% of
the issued and outstanding shares of Common Stock. Such shares
include: (i) 1,318,489 shares (the "Trust Shares") held by The
Failing Trust, as to which LQF (BFF's wife) and EFF (BFF's mother)
act as co-trustees, (ii) 168,318 shares (the "EZF Shares"), held by
EZF, BFF's sister, and (iii) 20,000 shares (the "Joint Shares")
held jointly with LQF. Such shares exclude an aggregate of
7,890,758 shares (the "Garfinkle Shares") beneficially owned by
Norton Garfinkle, Garfinkle Limited Partnership I and Garfinkle
Limited Partnership II which are subject to the provisions of a
stockholders agreement dated March 12, 1993 (the "Stockholders
Agreement") among such parties and BFF, The Failing Trust and EZF.
As of July 30, 1996, LQF beneficially owned, for purposes of
Rule 13d-3 under the Exchange Act, 1,338,489 shares of Common
Stock, constituting, to the best of the knowledge of LQF, 6.4% of
the issued and outstanding shares of Common Stock. Such shares
represent the Trust Shares and the Joint Shares and exclude the
Garfinkle Shares and 1,807,148 shares beneficially owned by BFF
(including the EZF Shares), which are subject to the Stockholders
Agreement.
As of July 30, 1996, EFF beneficially owned, for purposes of
Rule 13d-3 under the Exchange Act, 1,318,489 shares of Common
Stock, constituting, to the best of the knowledge of EFF, 6.3% of
the issued and outstanding shares of Common Stock. Such shares
represent the Trust Shares and exclude the Garfinkle Shares and
1,827,148 shares beneficially owned by BFF (including the EZF
Shares and the Joint Shares), which are subject to the Stockholders
Agreement.
(b) Exclusive of any effect of the relationships set forth
under the Stockholders Agreement, BFF had sole power to vote or to
direct the vote, and sole power to dispose or to direct the
disposition, of 1,638,830 shares of Common Stock, and shared power
to vote or to direct the vote, and shared power to dispose or to
direct the disposition of, 1,506,807 shares of Common Stock,
consisting of the Trust Shares (with respect to which such shared
power was held with LQF and EFF), the EZF Shares (with respect to
which such shared power was held with EZF) and the Joint Shares
(with respect to which such shared power was held with LQF).
During the last five years, EZF, a citizen of the United
States of America whose residence address is 301 East 87th Street,
New York, New York 10128 and whose principal occupation is as
president of B. Field, Inc., an apparel manufacturer, has not been
convicted in a criminal proceeding (excluding traffic violations
<PAGE>
and similar misdemeanors) nor was a party to a civil proceeding of
a judicial or administrative body of competent jurisdiction, and as
a result of such proceeding was or is subject to a judgment, decree
or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
Exclusive of any effect of the relationships set forth under
the Stockholders Agreement, LQF had shared power to vote or to
direct the vote of, and shared power to dispose or to direct the
disposition of, 1,318,489 shares of Common Stock, consisting of the
Trust Shares (with respect to which such shared power was held with
BFF and EFF), and also of 20,000 shares of Common Stock, consisting
of the Joint Shares (with respect to which such shared power was
held with BFF).
Exclusive of any effect of the relationships set forth under
the Stockholder Agreement, EFF had shared power to vote or to
direct the vote of, and shared power to dispose or to direct the
disposition of, 1,318,489 shares of Common Stock, consisting of the
Trust Shares (with respect to which such shared power was held with
BFF and LQF).
(c) On July 11, 1996, the Preferred Shares were converted
into the Conversion Shares pursuant to the Conversion Agreement.
On July 11, 1996, BFF acquired the Private Placement Shares
pursuant to the Subscription Agreements, for a per share price of
$2.25.
(d) LQF and EFF, as co-trustees of the Failing Trust, may pay
or apply dividends or proceeds from the sale of the Trust Shares to
the beneficiaries thereof, namely Lindsey Failing and Bruce Failing
III, the children of BFF and LQF.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to Securities of the Issuer
------------------------------------------------------
Under the Stockholders Agreement, members of the Failing
family (including related parties) and of the Garfinkle family
(including related parties), have agreed that: (i) through the year
2003, they will use their best efforts to provide that the Board of
Directors of the Corporation will consist of not more than seven
directors, six of whom will be designated by Mr. Garfinkle and BFF
in proportion to the respective beneficial holdings of shares of
Common Stock of the Garfinkle family and the Failing family, (ii)
except for sales effected pursuant to Rule 144 and transfers to
affiliates, family members or related trusts, neither family may
transfer any shares of Common Stock to any third party without
first offering such shares to the other family at the same price as
offered by such third party, (iii) through the year 2003, in the
event either family proposes to transfer shares of Common Stock to
a third party in a transaction pursuant to which control of the
<PAGE>
Corporation would change, the other family will have the right, on
the same terms, to participate in such transaction, and (iv)
through the year 2003, Mr. Garfinkle has the option to acquire at
fair market value all shares held by the Failing family upon the
death or incapacity of BFF, which option may be assigned to the
Corporation, subject to the Corporation's acceptance of such
option. Such arrangements terminate in the event either family owns
less than ten percent of the outstanding Common Stock, or if Mr.
Garfinkle and BFF are unable to elect at least a majority of the
Board of Directors of the Corporation.
On July 11, 1996, upon completion of the Regulation S Offering
and the Private Placement, the Preferred Shares were converted into
the Conversion Shares pursuant to a conversion agreement dated July
2, 1996 entered into between the Corporation and BFF. Pursuant to
the Conversion Agreement BFF was entitled to the amount of $21,705
from the Corporation in connection with such conversion, which was
applied to the acquisition of Private Placement Shares.
BFF is entitled to certain demand and incidental registration
rights covering the Conversion Shares pursuant to a Registration
Rights Agreement dated July 24, 1995 extended by the Corporation.
Such demand registration rights obligate the Corporation to
register such shares, on two occasions, provided that the holders
of at least 500,000 shares notify the Corporation that they intend
to offer for sale in the aggregate at least 100,000 shares of
Common Stock. Under a Registration Right Agreement dated July 11,
1996 extended by the Corporation, BFF is entitled to incidental
registration rights covering the Private Placement Shares.
The undersigned are also entitled to certain demand and
incidental registration rights, covering an aggregate of 2,804,367
shares of Common Stock issued to them in connection with the
Corporation's reorganization prior to its initial public offering
of Common Stock, pursuant to a Registration Rights Agreement dated
March 12, 1993 extended by the Corporation. Such demand
registration rights obligate the Corporation to register such
shares, on two occasions, provided that the holders of at least
500,000 shares notify the Corporation that they intend to offer for
sale in the aggregate at least 100,000 shares of Common Stock.
Except as stated in response to this Item 6, none of the
undersigned is a party to any contract, arrangement, understanding
or relationship (legal or otherwise) with any person with respect
to any securities of the Corporation, including but not limited to,
any transfer or voting of any such securities, finder's fees, joint
ventures, loans or option arrangements, parts or calls, guarantees
or profits, divisions of profit or loss, or the giving or
withholding of proxies.
<PAGE>
Item 7. Materials to be Filed as Exhibits
---------------------------------
Exhibit A - Agreement pursuant to Rule 13d-1(f)(1)(iii)
Exhibit B - Stockholders Agreement dated March 12, 1993*
Exhibit C - Registration Rights Agreement dated March 12, 1993*
Exhibit D - Subscription Agreement dated July 24, 1995*
Exhibit E - Registration Rights Agreement dated July 24, 1995*
Exhibit F - Conversion Agreement dated July 2, 1996
Exhibit G - Subscription Agreements accepted July 5, 1996
Exhibit H - Registration Rights Agreement dated July 11, 1996
__________________
* Previously filed in paper format.
<PAGE>
<PAGE>
SIGNATURE
---------
After reasonable inquiry and to the best of our respective
knowledge and belief, we certify that the information set forth in
this statement is true, complete and correct.
Dated: July 30, 1996
s/Bruce F. Failing, Jr.
------------------------------
Bruce F. Failing, Jr.
Dated: July 30, 1996
s/Leigh Q. Failing
-----------------------------
Leigh Q. Failing, individually
and as Trustee of The Failing
Trust
Dated: July 30, 1996
s/Elizabeth F. Failing
-----------------------------
Elizabeth F. Failing, as Trustee
of The Failing Trust
<PAGE>
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit A - Agreement pursuant to Rule 13d-1(f)(1)(iii)
Exhibit B - Stockholders Agreement dated March 12, 1993*
Exhibit C - Registration Rights Agreement dated March 12, 1993*
Exhibit D - Subscription Agreement dated July 24, 1995*
Exhibit E - Registration Rights Agreement dated July 24, 1995*
Exhibit F - Conversion Agreement dated July 2, 1996
Exhibit G - Subscription Agreements accepted July 5, 1996
Exhibit H - Registration Rights Agreement dated July 11, 1996
__________________
* Previously filed in paper format.
EXHIBIT A
Pursuant to Rule 13d-l(f)(l)(iii) promulgated by the
Securities and Exchange Commission, the undersigned agree that the
statement to which this Exhibit is attached is filed on their
behalf and in the capacities set out hereinbelow.
Dated: July 30, 1996
s/Bruce F. Failing, Jr.
------------------------------
Bruce F. Failing, Jr.
Dated: July 30, 1996
s/Leigh Q. Failing
-----------------------------
Leigh Q. Failing, individually
and as Trustee of The Failing
Trust
Dated: July 30, 1996
s/Elizabeth F. Failing
-----------------------------
Elizabeth F. Failing, as Trustee
of The Failing Trust
EXHIBIT F
CONVERSION AGREEMENT
July 2, 1996
Electronic Retailing Systems
International, Inc.
362 Danbury Road
Wilton, Connecticut 06897
Dear Sirs:
You have described to the undersigned the proposals by
Electronic Retailing Systems International, Inc., a Delaware
corporation (the "Company"): (i) to place shares of its common
stock, $.01 par value (the "Common Stock"), through Henderson
Crosthwaite Institutional Brokers Limited, in an offshore
transaction (the "Regulation S Offering") exempt from the
registration requirements of the Securities Act of 1933, and (ii)
contemporaneously with the consummation of the Regulation S
Offering, to sell, in a private transaction (the "Private
Placement") to subscribers including certain directors of the
Company or their affiliates, additional shares of Common Stock. The
undersigned is advised that, at a meeting thereof duly held on June
13, 1996, the Board of Directors of the Company authorized an
aggregate of up to 8,500,000 shares of Common Stock for issuance in
the Regulation S Offering and the Private Placement.
This letter shall evidence the agreement of the undersigned,
as the holder of the number of shares of the Company's Series A
Cumulative Convertible Preferred Stock, $1.00 par value (the
"Preferred Stock"), set forth below under the name of the
undersigned, to convert all shares of Preferred Stock in accordance
with their terms, to shares of Common Stock, in consideration of a
payment to the undersigned of the amount set forth below under its
name. Such conversion and such payment shall be effective
contemporaneously with the consummation of the Regulation S
Offering and the Private Placement (including the issuance of the
shares of Common Stock in such transactions and the delivery of
payment therefor to the Company).
In furtherance thereof, the undersigned shall surrender all
shares of Preferred Stock held by it to the Company, at its address
set forth above, no later than the close of business on July 8,
1996. This letter shall constitute the notice of conversion
(subject to the conditions set forth herein) contemplated by
Paragraph (J)(ii) of the certificate of designation establishing
the Preferred Stock, whereby the undersigned instructs the Company
to issue all shares of Common Stock issuable upon conversion of the
undersigned's Preferred Stock in the name of the undersigned, at
the address of the undersigned set forth in the records of the
Company.
<PAGE>
The agreements set forth herein shall operate through July 31,
1996, at which time, in the event the Regulation S Offering and the
Private Placement shall not theretofore have occurred, it shall
have no further effect, and all share certificates delivered by the
undersigned to the Company shall forthwith be returned to the
undersigned.
Your execution of the enclosed counterpart of this letter in
the space below provided shall evidence your receipt and acceptance
hereof and agreement to be bound hereby.
Very truly yours,
s/Bruce F. Failing Jr.
--------------------------------
Bruce F. Failing, Jr.
No. Shares Preferred Stock: 11,576
------
Payment: $21,705
-------
ACCEPTED AND AGREED:
ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC.
By: s/Bruce F. Failing, Jr.
---------------------------
EXHIBIT G
SUBSCRIPTION AGREEMENT
Electronic Retailing Systems International, Inc.
372 Danbury Road
Wilton, Connecticut 06897-2523
Gentlemen:
1. The undersigned hereby subscribes for 22,223 shares
(the "Shares") of the common stock, $.01 par value ("Common
Stock"), of Electronic Retailing Systems International, Inc., a
Delaware corporation (the "Corporation"). The undersigned shall, on
or prior to July 8, 1996, tender payment in full for the foregoing
Shares, in the amount of $2.25 per share of Common Stock, or an
aggregate of $50,001.75 (the "Purchase Price"), in the manner set
forth in Paragraph 8 hereof. The Corporation, in its sole
discretion, may elect to cancel the offering of Common Stock at any
time prior to acceptance of this subscription, and in such event
neither party hereto shall have any further obligation hereunder
and all funds delivered as aforesaid shall be returned to the
undersigned, together with interest thereon, if any, under the
escrow arrangements hereinafter described. In the event the
Corporation shall not have accepted this subscription on or prior
to July 31, 1996 (or the shares of Common Stock subject hereto
shall not have been issued prior to such date), neither party shall
have any further obligation hereunder and all funds delivered as
aforesaid shall be returned to the undersigned, together with
interest thereon, if any, under the escrow arrangements hereinafter
described.
2. To induce the acceptance of this subscription by the
Corporation, the undersigned hereby represents, warrants, agrees
and confirms to the Corporation that:
(a) Simultaneously with the acceptance of this
subscription by the Corporation, and by completing, executing and
delivering the Subscriber Signature Page and Power of Attorney
accompanying this Subscription Agreement, the undersigned will be
bound by all of the terms and conditions hereof and be a party to
the Registration Rights Agreement (as hereinafter defined), and
will appoint the Corporation as attorney-in-fact of the undersigned
to, among other things, execute the Registration Rights Agreement
on behalf of the undersigned.
(b) The information which the undersigned has provided
to the Corporation is true and correct in all respects as of the
date hereof (or, if there have been any changes in such information
since the date such information was furnished, the undersigned has
advised the Corporation in writing of such changes).
(c) The address set forth below is the true and correct
residence of the undersigned, the undersigned has reached the age
of majority in such state or jurisdiction, and the undersigned has
<PAGE>
no present intention of becoming a resident of any other state,
country or jurisdiction. (If a corporation, trust or partnership,
the undersigned has its principal place of business at the address
set forth below, and was not organized for the specific purpose of
acquiring the Common Stock subscribed for herein).
(d) The undersigned is a sophisticated investor familiar
with the types of risks inherent in the purchase of the Common
Stock, and has such business or financial experience that the
undersigned is capable of protecting his own interests in
connection with an investment in the Corporation.
(e) The undersigned has examined, or has had an
opportunity to examine, and make copies of, before the date hereof,
all information concerning the Corporation and the offering of the
Common Stock requested by the undersigned, and all material
documents relating to this offering, and on the basis of such
examination is thoroughly familiar with the business and affairs of
the Corporation. Without limiting the generality of the foregoing,
the undersigned has received a copy of the Corporation's Annual
Report on Form 10-K for the year ended December 31, 1995, as
amended by Amendment No. 1 thereto on Form 10-K/A, the
Corporation's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995 and the Corporation's Current Report on Form 8-K
dated June 30, 1996. The undersigned has had an opportunity to ask
questions of and receive answers from the Corporation, or a person
or persons acting on its behalf, concerning the terms and
conditions of this investment, and to obtain any additional
information necessary to verify the accuracy of the information
furnished, and all such questions have been answered to the full
satisfaction of the undersigned.
(f) No representations or warranties have been made to
the undersigned by or on behalf of the Corporation, or any of its
agents, employees or affiliates, and in entering into this
transaction the undersigned is relying only on the results of his
own independent investigation, including the information furnished
by the Corporation.
(g) The undersigned does not intend or anticipate that
this investment be a source of income, the undersigned is able to
bear the substantial economic risks of the investment in the Common
Stock being made by him, and at the present time the undersigned
could afford a complete loss of such investment.
(h) The undersigned is acquiring the Shares for his own
account, for investment purposes only, and not with a view to the
sale or other distribution thereof, in whole or in part. In order
to induce the Corporation to issue and sell the Shares subscribed
for herein to the undersigned, it is agreed that the Corporation
will have no obligation to recognize the ownership, beneficial or
otherwise, of the Shares by anyone other than the undersigned.
<PAGE>
(i) The undersigned understands that:
(i) The Shares are a speculative investment and may
involve a high degree of risk.
(ii) There are substantial restrictions on the
transferability of the Shares; the undersigned will not
initially be able to avail himself of the provisions of Rule
144 adopted by the Securities and Exchange Commission under
the Securities Act of 1933 (the "Securities Act") with respect
to the resale of Shares; and, accordingly, it may not be
possible for the undersigned to liquidate his investment in
the Corporation.
(j) The undersigned understands that the Common Stock
sold hereunder has not been registered under the Securities Act in
reliance on an exemption thereunder for transactions not involving
any public offering and that the Common Stock sold hereunder has
not been approved or disapproved by the Securities and Exchange
Commission or by any other federal or state agency.
(k) The undersigned will not sell, transfer, pledge or
otherwise dispose of any Shares or any interest therein, until
either of the following events has occurred: (i) he has received an
opinion in form and substance reasonably acceptable to the
Corporation of counsel reasonably acceptable to the Corporation
that registration thereof under the Securities Act is not required;
or (ii) a registration statement under the Securities Act covering
such securities, or interest therein and the disposition thereof
has become effective under the Securities Act. Stock certificates
evidencing the Shares shall be endorsed with a legend to the
foregoing effect, and stop transfer instructions shall be issued
with respect to the Shares, so long as the Shares are subject to
such restrictions on disposition.
(l) The undersigned is an "accredited investor" as
defined under Regulation D promulgated pursuant to the Securities
Act.
(m) If the undersigned is a corporation or trust, the
officer or trustee executing this Subscription Agreement represents
and warrants that he is authorized to so sign; that the corporation
or trust is authorized by the articles (or certificate) of
incorporation and by-laws of the corporation or by the trust
agreement, as the case may be, to make this investment and to enter
into this Subscription Agreement and, in the case of a corporation,
the undersigned will, upon request of the Corporation, furnish to
the Corporation a true and correct copy of the provisions of the
articles (or certificate) of incorporation or by-laws, or both,
authorizing the undersigned to make such investment, as well as a
copy (certified by the secretary or other authorized officer) of
appropriate corporate resolutions authorizing this specific
investment, and in the case of a trust, the undersigned will, upon
<PAGE>
request of the Corporation, furnish to the Corporation a true and
correct copy of the provisions of the trust agreement authorizing
the trustee to make such investment.
(n) If the undersigned is a partnership, by signing
below, the partner executing this Subscription Agreement represents
and warrants that each one of the foregoing representations or
agreements or understandings set forth herein applies to each
partner; that he is authorized to so sign; upon request of the
Corporation, the undersigned will furnish to the Corporation a true
and correct copy of the provisions of the undersigned's partnership
agreement authorizing the executing partner to make such
investments; in the case of any partner that is a trust, a trustee
(or co-trustee) of the trust is authorized by the trust agreement
to make this investment and to enter into this Subscription
Agreement; and in the case of any partner that is a corporation,
such corporation, will upon request of the Corporation, furnish to
the Corporation a true and correct copy of the provisions of the
articles (or certificate) of incorporation or by-laws, or both,
authorizing such corporation to make such investment, and a copy
(certified by the secretary or other authorized officer) of
appropriate corporate resolutions authorizing this specific
investment; and in the case of a partner that is a trust, the
undersigned will, upon request of the Corporation, furnish to the
Corporation a true and correct copy of the provisions of the trust
agreement authorizing the trustee to make such investment.
3. The undersigned understands the meaning and legal
consequences of the representations and warranties contained in
paragraph 2 hereof, and the undersigned hereby agrees to indemnify
and hold harmless the Corporation and each officer and director
thereof from and against any and all loss, damage or liability due
to or arising out of a breach of any representation or warranty of
the undersigned.
4. The undersigned understands that this subscription
is not binding on the Corporation until the Corporation accepts it,
which acceptance is at the sole discretion of the Corporation, by
executing this Subscription Agreement where indicated. Subject to
such acceptance, all shares subscribed hereunder shall be issuable
upon satisfaction of the conditions described under Paragraph 8.
5. By its acceptance of this subscription, the
Corporation hereby represents, warrants, agrees and confirms to the
undersigned that:
(a) The officer executing this Subscription Agreement is
authorized to so sign; the Corporation is authorized by its
certificate of incorporation and by-laws to accept this
Subscription Agreement; and the execution and delivery hereof by
the Corporation and the consummation by the Corporation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action.
<PAGE>
(b) The Corporation is duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation, and has all requisite corporate power and authority
to own and operate its properties and to carry on its business as
now conducted and proposed to be conducted.
(c) The authorized capital stock of the Corporation
consists of 25,000,000 shares of Common Stock, of which 11,800,048
shares are issued and outstanding, and 2,000,000 shares of
preferred stock, $1.00 par value, of which 140,000 shares are
designated as Series A Cumulative, Convertible Preferred Stock
("Series A Preferred Stock"), 125,556 shares of which are issued
and outstanding. There are no subscriptions, warrants, options,
calls, commitments by or agreements to which the Corporation is
bound relating to the issuance or purchase of any shares of Common
Stock, except for: (i) warrants (the "CDA Warrants"), exercisable
with respect to an aggregate of 699,724 shares of Common Stock, and
a 7.4% Convertible Note (the "CDA Note") in the original principal
amount of up to $5,000,000, convertible with respect to shares of
Common Stock as set forth therein, held by the Connecticut
Development Authority (the "CDA"); (ii) options, exercisable with
respect to an aggregate of 614,619 shares of Common Stock issuable
pursuant to the Corporation's 1993 Employee Stock Option Plan;
(iii) options, exercisable with respect to an aggregate of 85,000
shares of Common Stock issuable pursuant to the Corporation's 1993
Director Stock Option Plan; (iv) warrants issuable to Advest, Inc.,
exercisable with respect to 50,000 shares of Common Stock; (v) an
aggregate of 3,138,900 shares of Common Stock issuable upon
conversion of the outstanding Series A Preferred Stock; and (vi) an
aggregate of up to 8,500,000 shares of Common Stock issuable
pursuant to certain placing arrangements between the Corporation
and Henderson Crosthwaite Institutional Brokers Limited ("HCIBL"),
to be evidenced by a placing agreement (the "Placing Agreement")
between the Corporation and HCIBL, and the fee and related
compensation arrangements in connection therewith, and a
contemporaneous private placement (the "Private Placement") of
Common Stock to subscribers including certain directors of the
Corporation or their affiliates. In furtherance of the transactions
described under clause (vi) immediately preceding, and if the
authorized capitalization of the Corporation is insufficient for
the Corporation's outstanding Common Stock and shares reserved for
issuance, the CDA has agreed to a moratorium on conversion of the
CDA Warrants and the CDA Note pending approval of an increase in
the authorized capitalization of the Corporation at its next annual
meeting of stockholders. The Shares shall be duly authorized,
validly issued and fully paid and non-assessable shares of Common
Stock.
6. (a) This subscription is not transferable or
assignable by the undersigned.
<PAGE>
(b) All notices or other communications to be given
or made hereunder shall be in writing and shall be delivered
personally or mailed, by registered or certified mail, return
receipt requested, postage prepaid, to the undersigned or to the
Corporation, as the case may be, at the respective addresses set
forth herein.
(c) Notwithstanding the place where this
Subscription Agreement may be executed by any of the parties
hereto, the parties expressly agree that all the terms and pro-
visions hereof shall be construed in accordance with and governed
by the laws of the State of Connecticut, USA.
(d) This Subscription Agreement, and the agreements
referred to herein, constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and may be
amended only by a writing executed by the parties.
(e) The Corporation shall pay all of its expenses
in connection with this Agreement and the transactions contemplated
hereby.
7. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION
OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.
8. On or prior to July 8, 1996, the undersigned shall
deliver, by certified check made payable to Krugman, Chapnick &
Grimshaw, as escrow agent, or wire transfer to the account
hereinafter designated, an amount equal to the Purchase Price. Any
such check should be delivered to such escrow agent, Attention:
Howard Kailes, at Park 80 West - Plaza Two, Saddle Brook, New
Jersey 07663. Any such wire transfer shall be to the account of
such escrow agent, in accordance with the following instructions:
Name of Bank Interchange State Bank
Address of Bank Park 80 West - Plaza Two
Saddle Brook, New Jersey 07663
ABA # of Bank 021205871
Account Name Krugman, Chapnick & Grimshaw
Attorney Trust Account
Account No. 11 30323
The Purchase Price shall be held by said escrow agent,
pursuant to the terms of an escrow agreement, as amended,
substantially in the form heretofore delivered to the undersigned,
until: (i) acceptance of this subscription and (ii) the
contemporaneous occurrence of closing under the Placing Agreement
<PAGE>
and admission of the Common Stock for trading on the Alternative
Investment Market of the London Stock Exchange, whereupon such
funds, together with interest thereon, if any, under such escrow
arrangements, shall be delivered to the Corporation. This
Subscription Agreement, and related documentation, should be
delivered to the Corporation at 372 Danbury Road, Wilton,
Connecticut 06897, Attention: President, and shall be held thereby
pending release of funds in the manner hereinabove set forth.
9. The undersigned herewith authorizes the execution
and delivery of the Registration Rights Agreement (the
"Registration Rights Agreement") among the Corporation and the
subscribers parties thereto, in the form heretofore submitted to
the undersigned, in the name and on behalf of the undersigned (it
being acknowledged and agreed that all subscribers to the Private
Placement shall be identified on Schedule 1 thereto and become
signatories thereof, the date thereof shall be the date of closing
under this Subscription Agreement, and a reference to "up to
2,000,000 shares" shall be inserted in the first recital thereof),
which shall be held in the same manner as the Subscription
Agreement.
IN WITNESS WHEREOF, the undersigned executes and agrees
to be bound by this Subscription Agreement by executing the
Subscriber Signature Page and Power of Attorney attached hereto
this 3rd day of July, 1996.
<PAGE>
<PAGE>
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC.
SUBSCRIBER SIGNATURE PAGE AND POWER OF ATTORNEY
The undersigned, desiring to subscribe to shares of the common
stock, $.01 par value, of Electronic Retailing Systems
International, Inc., a Delaware corporation (the "Corporation"),
hereby adopts and agrees to be bound by all of the terms and
provisions of (i) the foregoing Subscription Agreement (the
"Subscription Agreement") and (ii) the Registration Rights
Agreement (the "Registration Rights Agreement") among the
Corporation and the subscribers parties thereto. The undersigned,
by his execution hereof, hereby makes, constitutes and appoints the
Corporation as his true and lawful agent and attorney-in-fact, with
full power of substitution and full power and authority in his
name, place and stead to make, execute, sign, acknowledge, swear
to, record and file the Subscription Agreement and the Registration
Rights Agreement. The power of attorney hereby granted shall be
deemed to be coupled with an interest and shall be irrevocable and
survive death, incapacity, insolvency, dissolution or termination
of the undersigned or any delivery by the undersigned of an
assignment of the whole or any portion of the interest of the
undersigned. The undersigned hereby confirms all of the terms and
representations made by the undersigned in the Subscription
Agreement hereby executed and delivered by the undersigned to the
Corporation.
PLEASE PROVIDE ALL INFORMATION REQUESTED BELOW
(Type or print clearly using black ink)
X s/Bruce F. Failing X
------------------------------- ---------------------------
Signature of Subscriber Signature of Joint Subscriber
(if any)
<PAGE>
<PAGE>
A. Check if individual If Fiduciary, Corporation or
ownership. Partnership, check if one and
indicate capacity of signature
under signature line:
If Joint Ownership, Check one:
B. Joint Tenants with F. Trust - attach a copy
Rights of Survivorship of trust agreement
C. Tenants in Common G. Power of Attorney - attach
original
D. Community Property H. Custodian under Uniform
Gifts to Minors Act
E. Tenants by Entirety I. Partnership-attach a copy
of partnership agreement
J. Corporation-attach a copy
of corporate resolution
authorizing signature
and purchase
K. Other-Please specify be
low and supply evidence
of authority to sign and
purchase:
------------------------------
###-##-####
- -------------------------- or ------------------------------
Social Security Number Identification Number of
of Individual Subscriber Corporate Subscriber
------------------------
Social Security Number
of Individual Joint Subscriber (if any)
<PAGE>
<PAGE>
Subscriber Name
Bruce F. Failing, Jr.
- ---------------------------------------------------------------
First Name - Initial Not Acceptable M.I. Last Name
Joint Subscriber Name (if any)
- ---------------------------------------------------------------
First Name - Initial Not Acceptable M.I. Last Name
Partnership or Corporate Subscriber Name
- ---------------------------------------------------------------
- ---------------------------------------------------------------
Jurisdiction of Incorporation of Corporate Subscriber
Residence Address, or Principal Place of Business if Corporate
Subscriber (Important: P.O. Box Numbers not acceptable for
Residence Address)
237 Round Hill Road
- ---------------------------------------------------------------
Street Number Street Name Apt. No.
Greenwich, Connecticut 06831
- ---------------------------------------------------------------
Bldg. No. City State Zip Code
Mailing Address (if other than address above)
- ---------------------------------------------------------------
Street Number Street Name Apt. No.
- ---------------------------------------------------------------
Bldg. No. City State Zip Code
Home Telephone Office Telephone
---------------- ---------------
Area Code Number Area Code Number
<PAGE>
<PAGE>
The foregoing subscription is hereby accepted by the
Corporation this 5th day of July, 1996.
ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC., a
Delaware corporation
By s/William B. Fischer
-------------------------------
<PAGE>
<PAGE>
SUBSCRIPTION AGREEMENT
(Delayed Funding)
Electronic Retailing Systems International, Inc.
372 Danbury Road
Wilton, Connecticut 06897-2523
Gentlemen:
1. The undersigned hereby subscribes for 9,647 shares
(the "Shares") of the common stock, $.01 par value ("Common
Stock"), of Electronic Retailing Systems International, Inc., a
Delaware corporation (the "Corporation"). The undersigned shall,
contemporaneously with closing under the Placing Agreement (as
hereinafter defined) and admission of the Common Stock for trading
on the Alternative Investment Market of the London Stock Exchange,
tender payment in full for the foregoing Shares, in the amount of
$2.25 per share of Common Stock, or an aggregate of $21,705.75 (the
"Purchase Price"), in the manner set forth in Paragraph 8 hereof,
subject to prior acceptance hereof by the Corporation. The
Corporation, in its sole discretion, may elect to cancel the
offering of Common Stock at any time prior to acceptance of this
subscription, and in such event neither party hereto shall have any
further obligation hereunder. In the event the Corporation shall
not have accepted this subscription on or prior to July 31, 1996
(or the shares of Common Stock subject hereto shall not have been
issued prior to such date), neither party shall have any further
obligation hereunder.
2. To induce the acceptance of this subscription by the
Corporation, the undersigned hereby represents, warrants, agrees
and confirms to the Corporation that:
(a) Simultaneously with the acceptance of this
subscription by the Corporation, and by completing, executing and
delivering the Subscriber Signature Page and Power of Attorney
accompanying this Subscription Agreement, the undersigned will be
bound by all of the terms and conditions hereof and be a party to
the Registration Rights Agreement (as hereinafter defined), and
will appoint the Corporation as attorney-in-fact of the undersigned
to, among other things, execute the Registration Rights Agreement
on behalf of the undersigned.
(b) The information which the undersigned has provided
to the Corporation is true and correct in all respects as of the
date hereof (or, if there have been any changes in such information
since the date such information was furnished, the undersigned has
advised the Corporation in writing of such changes).
(c) The address set forth below is the true and correct
residence of the undersigned, the undersigned has reached the age
of majority in such state or jurisdiction, and the undersigned has
<PAGE>
no present intention of becoming a resident of any other state,
country or jurisdiction. (If a corporation, trust or partnership,
the undersigned has its principal place of business at the address
set forth below, and was not organized for the specific purpose of
acquiring the Common Stock subscribed for herein).
(d) The undersigned is a sophisticated investor familiar
with the types of risks inherent in the purchase of the Common
Stock, and has such business or financial experience that the
undersigned is capable of protecting his own interests in
connection with an investment in the Corporation.
(e) The undersigned has examined, or has had an
opportunity to examine, and make copies of, before the date hereof,
all information concerning the Corporation and the offering of the
Common Stock requested by the undersigned, and all material
documents relating to this offering, and on the basis of such
examination is thoroughly familiar with the business and affairs of
the Corporation. Without limiting the generality of the foregoing,
the undersigned has received a copy of the Corporation's Annual
Report on Form 10-K for the year ended December 31, 1995, as
amended by Amendment No. 1 thereto on Form 10-K/A, the
Corporation's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995 and the Corporation's Current Report on Form 8-K
dated June 30, 1996. The undersigned has had an opportunity to ask
questions of and receive answers from the Corporation, or a person
or persons acting on its behalf, concerning the terms and
conditions of this investment, and to obtain any additional
information necessary to verify the accuracy of the information
furnished, and all such questions have been answered to the full
satisfaction of the undersigned.
(f) No representations or warranties have been made to
the undersigned by or on behalf of the Corporation, or any of its
agents, employees or affiliates, and in entering into this
transaction the undersigned is relying only on the results of his
own independent investigation, including the information furnished
by the Corporation.
(g) The undersigned does not intend or anticipate that
this investment be a source of income, the undersigned is able to
bear the substantial economic risks of the investment in the Common
Stock being made by him, and at the present time the undersigned
could afford a complete loss of such investment.
(h) The undersigned is acquiring the Shares for his own
account, for investment purposes only, and not with a view to the
sale or other distribution thereof, in whole or in part. In order
to induce the Corporation to issue and sell the Shares subscribed
for herein to the undersigned, it is agreed that the Corporation
will have no obligation to recognize the ownership, beneficial or
otherwise, of the Shares by anyone other than the undersigned.
<PAGE>
(i) The undersigned understands that:
(i) The Shares are a speculative investment and may
involve a high degree of risk.
(ii) There are substantial restrictions on the
transferability of the Shares; the undersigned will not
initially be able to avail himself of the provisions of Rule
144 adopted by the Securities and Exchange Commission under
the Securities Act of 1933 (the "Securities Act") with respect
to the resale of Shares; and, accordingly, it may not be
possible for the undersigned to liquidate his investment in
the Corporation.
(j) The undersigned understands that the Common Stock
sold hereunder has not been registered under the Securities Act in
reliance on an exemption thereunder for transactions not involving
any public offering and that the Common Stock sold hereunder has
not been approved or disapproved by the Securities and Exchange
Commission or by any other federal or state agency.
(k) The undersigned will not sell, transfer, pledge or
otherwise dispose of any Shares or any interest therein, until
either of the following events has occurred: (i) he has received an
opinion in form and substance reasonably acceptable to the
Corporation of counsel reasonably acceptable to the Corporation
that registration thereof under the Securities Act is not required;
or (ii) a registration statement under the Securities Act covering
such securities, or interest therein and the disposition thereof
has become effective under the Securities Act. Stock certificates
evidencing the Shares shall be endorsed with a legend to the
foregoing effect, and stop transfer instructions shall be issued
with respect to the Shares, so long as the Shares are subject to
such restrictions on disposition.
(l) The undersigned is an "accredited investor" as
defined under Regulation D promulgated pursuant to the Securities
Act.
(m) If the undersigned is a corporation or trust, the
officer or trustee executing this Subscription Agreement represents
and warrants that he is authorized to so sign; that the corporation
or trust is authorized by the articles (or certificate) of
incorporation and by-laws of the corporation or by the trust
agreement, as the case may be, to make this investment and to enter
into this Subscription Agreement and, in the case of a corporation,
the undersigned will, upon request of the Corporation, furnish to
the Corporation a true and correct copy of the provisions of the
articles (or certificate) of incorporation or by-laws, or both,
authorizing the undersigned to make such investment, as well as a
copy (certified by the secretary or other authorized officer) of
appropriate corporate resolutions authorizing this specific
investment, and in the case of a trust, the undersigned will, upon
request of the Corporation, furnish to the Corporation a true and
correct copy of the provisions of the trust agreement authorizing
the trustee to make such investment.
<PAGE>
(n) If the undersigned is a partnership, by signing
below, the partner executing this Subscription Agreement represents
and warrants that each one of the foregoing representations or
agreements or understandings set forth herein applies to each
partner; that he is authorized to so sign; upon request of the
Corporation, the undersigned will furnish to the Corporation a true
and correct copy of the provisions of the undersigned's partnership
agreement authorizing the executing partner to make such
investments; in the case of any partner that is a trust, a trustee
(or co-trustee) of the trust is authorized by the trust agreement
to make this investment and to enter into this Subscription
Agreement; and in the case of any partner that is a corporation,
such corporation, will upon request of the Corporation, furnish to
the Corporation a true and correct copy of the provisions of the
articles (or certificate) of incorporation or by-laws, or both,
authorizing such corporation to make such investment, and a copy
(certified by the secretary or other authorized officer) of
appropriate corporate resolutions authorizing this specific
investment; and in the case of a partner that is a trust, the
undersigned will, upon request of the Corporation, furnish to the
Corporation a true and correct copy of the provisions of the trust
agreement authorizing the trustee to make such investment.
3. The undersigned understands the meaning and legal
consequences of the representations and warranties contained in
paragraph 2 hereof, and the undersigned hereby agrees to indemnify
and hold harmless the Corporation and each officer and director
thereof from and against any and all loss, damage or liability due
to or arising out of a breach of any representation or warranty of
the undersigned.
4. The undersigned understands that this subscription
is not binding on the Corporation until the Corporation accepts it,
which acceptance is at the sole discretion of the Corporation, by
executing this Subscription Agreement where indicated. Subject to
such acceptance, all shares subscribed hereunder shall be issuable
upon satisfaction of the conditions described under Paragraph 8.
5. By its acceptance of this subscription, the
Corporation hereby represents, warrants, agrees and confirms to the
undersigned that:
(a) The officer executing this Subscription Agreement is
authorized to so sign; the Corporation is authorized by its
certificate of incorporation and by-laws to accept this
Subscription Agreement; and the execution and delivery hereof by
the Corporation and the consummation by the Corporation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action.
(b) The Corporation is duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation, and has all requisite corporate power and authority
to own and operate its properties and to carry on its business as
now conducted and proposed to be conducted.
<PAGE>
(c) The authorized capital stock of the Corporation
consists of 25,000,000 shares of Common Stock, of which 11,800,048
shares are issued and outstanding, and 2,000,000 shares of
preferred stock, $1.00 par value, of which 140,000 shares are
designated as Series A Cumulative, Convertible Preferred Stock
("Series A Preferred Stock"), 125,556 shares of which are issued
and outstanding. There are no subscriptions, warrants, options,
calls, commitments by or agreements to which the Corporation is
bound relating to the issuance or purchase of any shares of Common
Stock, except for: (i) warrants (the "CDA Warrants"), exercisable
with respect to an aggregate of 699,724 shares of Common Stock, and
a 7.4% Convertible Note (the "CDA Note") in the original principal
amount of up to $5,000,000, convertible with respect to shares of
Common Stock as set forth therein, held by the Connecticut
Development Authority (the "CDA"); (ii) options, exercisable with
respect to an aggregate of 614,619 shares of Common Stock issuable
pursuant to the Corporation's 1993 Employee Stock Option Plan;
(iii) options, exercisable with respect to an aggregate of 85,000
shares of Common Stock issuable pursuant to the Corporation's 1993
Director Stock Option Plan; (iv) warrants issuable to Advest, Inc.,
exercisable with respect to 50,000 shares of Common Stock; (v) an
aggregate of 3,138,900 shares of Common Stock issuable upon
conversion of the outstanding Series A Preferred Stock; and (vi) an
aggregate of up to 8,500,000 shares of Common Stock issuable
pursuant to certain placing arrangements between the Corporation
and Henderson Crosthwaite Institutional Brokers Limited ("HCIBL"),
to be evidenced by a placing agreement (the "Placing Agreement")
between the Corporation and HCIBL, and the fee and related
compensation arrangements in connection therewith, and a
contemporaneous private placement (the "Private Placement") of
Common Stock to subscribers including certain directors of the
Corporation or their affiliates. In furtherance of the transactions
described under clause (vi) immediately preceding, and if the
authorized capitalization of the Corporation is insufficient for
the Corporation's outstanding Common Stock and shares reserved for
issuance, the CDA has agreed to a moratorium on conversion of the
CDA Warrants and the CDA Note pending approval of an increase in
the authorized capitalization of the Corporation at its next annual
meeting of stockholders. The Shares shall be duly authorized,
validly issued and fully paid and non-assessable shares of Common
Stock.
6. (a) This subscription is not transferable or
assignable by the undersigned.
(b) All notices or other communications to be given
or made hereunder shall be in writing and shall be delivered
personally or mailed, by registered or certified mail, return
receipt requested, postage prepaid, to the undersigned or to the
Corporation, as the case may be, at the respective addresses set
forth herein.
<PAGE>
(c) Notwithstanding the place where this
Subscription Agreement may be executed by any of the parties
hereto, the parties expressly agree that all the terms and pro-
visions hereof shall be construed in accordance with and governed
by the laws of the State of Connecticut, USA.
(d) This Subscription Agreement, and the agreements
referred to herein, constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and may be
amended only by a writing executed by the parties.
(e) The Corporation shall pay all of its expenses
in connection with this Agreement and the transactions contemplated
hereby.
7. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION
OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.
8. Contemporaneously with closing under the Placing
Agreement, and admission of the Common Stock for trading on the
Alternative Investment Market of the London Stock Exchange, the
undersigned shall deliver to the Corporation an amount equal to
the Purchase Price, by certified check, wire transfer, or offset
against amounts payable to the undersigned under a certain
Conversion Agreement entered into by the Corporation and the
undersigned. This Subscription Agreement, and related
documentation, should be delivered to the Corporation at 372
Danbury Road, Wilton, Connecticut 06897, Attention: President, and
shall be held thereby pending delivery of funds in the manner
hereinabove set forth.
9. The undersigned herewith authorizes the execution
and delivery of the Registration Rights Agreement (the
"Registration Rights Agreement") among the Corporation and the
subscribers parties thereto, in the form heretofore submitted to
the undersigned, in the name and on behalf of the undersigned (it
being acknowledged and agreed that all subscribers to the Private
Placement shall be identified on Schedule 1 thereto and become
signatories thereof, the date thereof shall be the date of closing
under this Subscription Agreement, and a reference to "up to
2,000,000 shares" shall be inserted in the first recital thereof),
which shall be held in the same manner as the Subscription
Agreement.
IN WITNESS WHEREOF, the undersigned executes and agrees
to be bound by this Subscription Agreement by executing the
Subscriber Signature Page and Power of Attorney attached hereto
this 3rd day of July, 1996.
<PAGE>
<PAGE>
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC.
SUBSCRIBER SIGNATURE PAGE AND POWER OF ATTORNEY
The undersigned, desiring to subscribe to shares of the common
stock, $.01 par value, of Electronic Retailing Systems
International, Inc., a Delaware corporation (the "Corporation"),
hereby adopts and agrees to be bound by all of the terms and
provisions of (i) the foregoing Subscription Agreement (the
"Subscription Agreement") and (ii) the Registration Rights
Agreement (the "Registration Rights Agreement") among the
Corporation and the subscribers parties thereto. The undersigned,
by his execution hereof, hereby makes, constitutes and appoints the
Corporation as his true and lawful agent and attorney-in-fact, with
full power of substitution and full power and authority in his
name, place and stead to make, execute, sign, acknowledge, swear
to, record and file the Subscription Agreement and the Registration
Rights Agreement. The power of attorney hereby granted shall be
deemed to be coupled with an interest and shall be irrevocable and
survive death, incapacity, insolvency, dissolution or termination
of the undersigned or any delivery by the undersigned of an
assignment of the whole or any portion of the interest of the
undersigned. The undersigned hereby confirms all of the terms and
representations made by the undersigned in the Subscription
Agreement hereby executed and delivered by the undersigned to the
Corporation.
PLEASE PROVIDE ALL INFORMATION REQUESTED BELOW
(Type or print clearly using black ink)
X s/Bruce F. Failing X
------------------------- ---------------------------
Signature of Subscriber Signature of Joint Subscriber
(if any)
<PAGE>
<PAGE>
A. Check if individual If Fiduciary, Corporation or
ownership. Partnership, check if one and
indicate capacity of signature
under signature line:
If Joint Ownership, Check one:
B. Joint Tenants with F. Trust - attach a copy
Rights of Survivorship of trust agreement
C. Tenants in Common G. Power of Attorney - attach
original
D. Community Property H. Custodian under Uniform
Gifts to Minors Act
E. Tenants by Entirety I. Partnership-attach a copy
of partnership agreement
J. Corporation-attach a copy
of corporate resolution
authorizing signature and
purchase
K. Other-Please specify be
low and supply evidence of
authority to sign and pur-
chase:
---------------------------
###-##-####
- ------------------------- or ---------------------------
Social Security Number of Identification Number of
Individual Subscriber Corporate Subscriber
------------------------
Social Security Number
of Individual Joint Subscriber (if any)
<PAGE>
<PAGE>
Subscriber Name
Bruce F. Failing, Jr.
- ----------------------------------------------------------------
First Name - Initial Not Acceptable M.I. Last Name
Joint Subscriber Name (if any)
- ----------------------------------------------------------------
First Name - Initial Not Acceptable M.I. Last Name
Partnership or Corporate Subscriber Name
- ----------------------------------------------------------------
- ----------------------------------------------------------------
Jurisdiction of Incorporation of Corporate Subscriber
Residence Address, or Principal Place of Business if Corporate
Subscriber (Important: P.O. Box Numbers not acceptable for
Residence Address)
237 Round Hill Road
- ----------------------------------------------------------------
Street Number Street Name Apt. No.
Greenwich, Connecticut 06831
- ----------------------------------------------------------------
Bldg. No. City State Zip Code
Mailing Address (if other than address above)
- ----------------------------------------------------------------
Street Number Street Name Apt. No.
- ----------------------------------------------------------------
Bldg. No. City State Zip Code
Home Telephone Office Telephone
----------------- ----------------
Area Code Number Area Code Number
<PAGE>
<PAGE>
The foregoing subscription is hereby accepted by the
Corporation this 5th day of July, 1996.
ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC., a
Delaware corporation
By s/William B. Fischer
--------------------------------
EXHIBIT H
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement dated as of July 11, 1996, among
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC., a corporation
duly organized and validly existing under the laws of the State of
Delaware (hereinafter referred to as the "Corporation"), and each
of the parties (hereinafter referred to, collectively, as the
"Stockholders" and, individually, as a "Stockholder") identified on
Schedule 1 attached hereto who are signatories hereto.
W I T N E S S E T H :
WHEREAS, each of the Stockholders is party to a Subscription
Agreement with the Corporation (hereinafter referred to,
collectively, as the "Subscription Agreements"), pursuant to which
the Corporation shall issue to the Stockholders an aggregate of up
to 2,000,000 shares (hereinafter referred to, collectively, as the
"Shares") of its common stock, $.01 par value (as the same may be
constituted from time to time hereinafter referred to as the
"Common Stock");
WHEREAS, in connection with effectuating the transactions
contemplated by the provisions of the Subscription Agreements the
Corporation and the Stockholders are entering into this Agreement;
NOW, THEREFORE, in consideration of the premises and the
covenants and agreements herein contained the parties hereto hereby
agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following additional terms
shall have the following respective meanings:
The term "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended from time to time.
The term "Incidental Registration" shall have the meaning set
forth in Paragraph B of Article III.
The term "Person" shall mean an individual, partnership,
corporation, trust or unincorporated organization, or a government
or agency or political subdivision thereof.
The term "Prior Registration Rights Agreement" shall mean the
Registration Rights Agreement dated March 12, 1993 among the
Corporation and the limited partners of ERS Associates Limited
Partnership, a Connecticut limited partnership.
The term "Prospectus" shall mean the prospectus included in
any Registration Statement, as amended or supplemented by any
prospectus supplement with respect to the terms of the offering of
any portion of the Registrable Securities covered by the
<PAGE>
Registration Statement and all other amendments and supplements to
the Prospectus, including post-effective amendments and all
material incorporated by reference in such Prospectus.
The term "Registration Expenses" shall have the meaning set
forth in Article VI.
The term "Registrable Securities" shall mean (i) the Shares,
and (ii) any securities issued or issuable with respect to the
Shares referred to in clause (i) immediately preceding by way of a
stock dividend or stock split or in connection with a combination
of shares, recapitalization, merger, consolidation or other
reorganization; provided, however, that a security ceases to be a
Registrable Security when it is no longer a Restricted Security.
The term "Registration Statement" shall mean any registration
statement of the Corporation which covers Registrable Securities
pursuant to the provisions of this Agreement, including the
Prospectus, amendments (including post-effective amendments) and
supplements to such Registration Statement, all exhibits and all
material incorporated by reference in such Registration Statement.
The term "Restricted Securities" shall mean any security
unless or until: (i) it has been effectively registered under the
Securities Act and disposed of in accordance with the Registration
Statement covering it; (ii) it is distributed to the public
pursuant to Rule 144 (or any similar provisions then in force)
under the Securities Act; (iii) it is eligible for sale pursuant to
rule 144(k) (or any similar provisions then in force) under the
Securities Act, or (iv) it has otherwise been transferred and a new
certificate or other evidence of ownership for it not bearing a
restrictive legend pursuant to the Securities Act and not subject
to any stop transfer order has been delivered by or on behalf of
the Corporation and no other restriction on transfer exists.
The term "Securities Act" shall mean the Securities Act of
1933, as amended from time to time.
The term "Selling Expenses" shall have the meaning set forth
in Article VI.
The term "SEC" shall mean the Securities and Exchange
Commission.
The term "underwritten registration" or "underwritten
offering" shall mean a registration in which securities of the
Corporation are sold pursuant to a firm commitment underwriting to
an underwriter at a fixed price for reoffering or pursuant to
agency or best efforts arrangements with an underwriter.
<PAGE>
<PAGE>
ARTICLE II
SECURITIES SUBJECT TO THIS AGREEMENT
A. Registrable Securities. The securities entitled to the
benefits of this Agreement are the Registrable Securities.
B. Holders of Registrable Securities. A Person is deemed to
be a holder of Registrable Securities whenever such Person owns
Registrable Securities or has the right to acquire such Registrable
Securities, whether or not such acquisition has actually been
effected, and disregarding any legal restrictions upon the exercise
of such right. Without limiting the generality of the foregoing,
each holder of Shares shall be deemed a holder of Registrable
Securities.
ARTICLE III
INCIDENTAL REGISTRATIONS
A. Notice and Request for Incidental Registration. Whenever
the Corporation proposes to register any of its securities under
the Securities Act, other than pursuant to a registration on Forms
S-4 or S-8 or comparable forms (hereinafter referred to as an
"Incidental Registration"), the Corporation shall give written
notice to all holders of Registrable Securities of its intention to
effect such a registration not later than the earlier of (i) the
tenth day following receipt by the Corporation of notice of any
demand registration rights or (ii) 30 days prior to the anticipated
effectiveness of such registration. Subject to the provisions of
Paragraphs C and D of this Article III, the Corporation shall
include in such Incidental Registration all Registrable Securities
with respect to which the Corporation has received written requests
for inclusion therein within 15 days after the mailing or delivery.
If an Incidental Registration is an underwritten offering effected:
(i) under Paragraph C of this Article III, all Persons
whose securities are included in the Incidental Registration
shall be obligated to sell their securities on the same terms
and conditions as apply to the securities being issued and
sold by the Corporation; or
(ii) under Paragraph D of this Article III, all Persons
whose securities are included in the Incidental Registration
shall be obligated to sell their securities on the same terms
and conditions as apply to the securities being sold by the
Person or Persons who initiated the Incidental Registration
under said paragraph.
B. Incidental Registration Expenses. The Corporation shall
pay all Registration Expenses related to such registration, or
incurred as a result of the participation in an Incidental
Registration of the holders of Registrable Securities, whether or
not the Registration Statement with respect to such registration
has become effective, and all other expenses incurred by the
Corporation in complying with this Article III. All Selling
<PAGE>
Expenses related to such registration shall be borne by the
participating sellers (including the Corporation, if a seller), in
proportion to the number of shares sold by each, or by such sellers
as they may agree.
C. Priority on Underwritten Primary Registration. If an
Incidental Registration is an underwritten primary registration on
behalf of the Corporation, and the managing underwriters advise the
Corporation in writing that in their opinion the total number or
dollar amount of securities requested to be included in such
registration exceeds the number or dollar amount of securities
which can be sold in such offering without materially adverse
effect on the proposed sale by the Corporation, the Corporation
shall include in such registration:
(i) first, all securities the Corporation proposes to
sell; and
(ii) second, the Registrable Securities and such other
securities (provided such securities are of the same class as
the securities being sold by the Corporation) requested to be
included in such registration in excess of the number of
securities the Corporation proposes to sell which, in the
opinion of such underwriters, can be sold without materially
adverse effect on the proposed sale by the Corporation
(allocated pro rata among the holders of such Registrable
Securities and other securities on the basis of the number of
securities requested to be included therein by each such
holder);
except, in the event any party to the Prior Registration Agreement
exercises any rights thereunder with respect to such Incidental
Registration, the provisions of Article IV, Section F of the Prior
Registration Agreement with respect to such allocation to such
party shall supersede the provisions of clause (ii) immediately
preceding insofar as relating to the ERS Group (as defined in the
Prior Registration Agreement).
D. Priority on Underwritten Secondary Registration. If an
Incidental Registration is an underwritten secondary registration
on behalf of holders of the Corporation's securities, and the
managing underwriters advise the Corporation in writing that in
their opinion the number of securities requested to be included in
such registration exceeds the number of securities which can be
sold in such offering without materially adverse effect on the
proposed sale by such holders, the Corporation shall include in
such registration:
(i) first, all securities requested to be included in
such registration by the securityholders initiating such
registration; and
(ii) second, up to the full number of Registrable
Securities and such other securities (provided such securities
are of the same class as the securities being sold by the
Corporation) requested to be included in such registration in
<PAGE>
excess of the number of securities the securityholders
initiating such registration propose to sell which, in the
opinion of such underwriters, can be sold without materially
adverse effect on the proposed sale by such holders (allocated
pro rata among the holders of such Registrable Securities and
other securities on the basis of the number of securities
requested to be included therein by each such holder);
except, in the event any party to the Prior Registration Agreement
exercises any rights thereunder with respect to such Incidental
Registration, the provisions of Article IV, Section F of the Prior
Registration Agreement with respect to such allocation to such
party shall supersede the provisions of clause (ii) immediately
preceding insofar as relating to the ERS Group (as defined in the
Prior Registration Agreement).
E. Selection of Underwriters. If any Incidental Registration
is an underwritten offering, the Corporation shall have the right
to select the investment banker or investment bankers and manager
or managers to administer the offering.
ARTICLE IV
HOLDBACK AGREEMENTS
Each holder of Registrable Securities whose Registrable
Securities are covered by a Registration Statement filed pursuant
to Article III hereof agrees, if requested by the managing
underwriters, not to effect any public sale or distribution of
securities of the Corporation of the same class as the securities
included in such Registration Statement, including a sale pursuant
to Rule 144 under the Securities Act (except as part of such
underwritten registration) during the ten-day period prior to, and
during the 180-day period beginning on, the closing date of each
underwritten offering of Registrable Securities made pursuant to
such Registration Statement, to the extent timely notified in
writing by the Corporation or the managing underwriters. The
foregoing provisions shall not apply to any holder of Registrable
Securities if such holder is prevented by applicable statute or
regulation from entering into any such agreement; provided,
however, that any such holder shall undertake, in its request to
participate in any such underwritten offering, not to effect any
public sale or distribution of the applicable class of Registrable
Securities commencing on the date of sale of such applicable class
of Registrable Securities unless it has provided 45 days' prior
written notice of such sale or distribution to the underwriter or
underwriters.
ARTICLE V
REGISTRATION PROCEDURES
Whenever the holders of Registrable Securities have requested
that any Registrable Securities be registered pursuant to this
Agreement, the Corporation shall use its best efforts to effect
such registration to permit the sale of such Registrable Securities
<PAGE>
in accordance with the intended method or methods of disposition
thereof, and pursuant thereto the Corporation shall as
expeditiously as possible:
A. prepare and file with the SEC a Registration Statement on
a form for which the Corporation then qualifies which is
satisfactory to the Corporation and the holders of a majority of
the Registrable Securities being registered (unless the offering is
made on an underwritten basis, including on a best efforts
underwriting basis, in which event the managing underwriter or
underwriters shall determine the form to be used) and which form
shall be available for the sale of the Registrable Securities in
accordance with the intended method or methods of distribution
thereof, and use its best efforts to cause such Registration
Statement to be come effective;
B. prepare and file with the SEC such amendments and post-
effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement effective for a period
of not less than six months, or such shorter period which will
terminate when all Registrable Securities covered by such
Registration Statement have been sold or withdrawn; cause the
Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424
under the Securities Act; and comply with the provisions of the
Securities Act with respect to the disposition of all securities
covered by such Registration Statement during the applicable period
in accordance with the intended methods of disposition by the
sellers thereof set forth in such Registration Statement or
supplement to the Prospectus;
C. notify the selling holders of Registrable Securities and
the managing underwriters, if any, promptly, and (if requested by
any such Person) confirm such advice in writing,
(i) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to
the Registration Statement or any post-effective amendment,
when the same has become effective;
(ii) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose; and
(iii) of the receipt by the Corporation of any
notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any
proceeding for such purpose.
D. make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of the Registration
Statement at the earliest possible moment;
E. if requested by the managing underwriters or a holder of
Registrable Securities being sold, incorporate in a Prospectus
<PAGE>
supplement or post-effective amendment such information as the
managing underwriters and the holders of a majority of the
Registrable Securities being sold and their respective counsel
reasonably conclude should be included in the Registration
Statement, so that such Registration Statement conforms in both
form and substance to the requirements of the Securities Act,
including without limitation with respect to the number of
Registrable Securities being sold to such underwriters, the
purchase price being paid therefor by such underwriters and with
respect to any other terms of the underwritten offering of the
Registrable Securities to be sold in such offering; and make all
required filings of such Prospectus supplement or post-effective
amendment as soon as notified of the matters to be incorporated in
such Prospectus supplement or post-effective amendment;
F. promptly prior to the filing of any document which is to
be incorporated by reference into the Registration Statement or the
Prospectus (after initial filing of the Registration Statement)
provide copies of such document to counsel to the selling holders
of Registrable Securities and to the managing underwriters, if any,
and make the Corporation's representatives available for discussion
of such document;
G. prior to any public offering of Registrable Securities,
register or qualify or cooperate with the selling holders of
Registrable Securities, the underwriters, if any, and their
respective counsel in connection with the registration or
qualification of such Registrable Securities for offer and sale
under the securities or blue sky laws of such jurisdictions as any
seller or underwriter reasonably requests in writing and do any and
all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities
covered by the Registration Statement; provided, however, that the
Corporation shall not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or
to take any action which would subject it to general service of
process in any such jurisdiction where it is not then so subject;
H. cooperate with the selling holders of Registrable
Securities and the managing underwriters, if any, to facilitate the
timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive
legends; and enable such Registrable Securities to be in such
denominations and registered in such names as the managing
underwriters may request at least two business days prior to any
sale of Registrable Securities to the underwriters;
I. upon the happening of any event which makes any statement
made in the Registration Statement, the Prospectus or any document
incorporated therein by reference untrue or which requires the
making of any changes in the Registration Statement, the Prospectus
or any document incorporated therein by reference in order to make
the statements therein not misleading, prepare a supplement or
post-effective amendment to the Registration Statement or the
Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered
<PAGE>
to the purchasers of the Registrable Securities, the Prospectus
shall not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein
not misleading;
J. cause all Registrable Securities covered by the
Registration Statement to be listed on each securities exchange on
which similar securities issued by the Corporation are then listed
if requested by the holders of a majority of such Registrable
Securities or the managing underwriters, if any;
K. provide a transfer agent and registrar for all
Registrable Securities and a CUSIP number for all Registrable
Securities, in each case not later than the effective date of such
registration statement;
L. enter into such agreements (including an underwriting
agreement satisfactory to the Corporation, containing customary
representations, warranties and agreements) and take all such other
actions in connection therewith in order reasonably to expedite or
facilitate the disposition of such Registrable Securities and in
such connection, whether or not an underwriting agreement is
entered into and whether or not the registration is an underwritten
registration:
(i) make such representations and warranties to the
holders of such Registrable Securities and the underwriters,
if any, in such form, substance and scope as are customarily
made by issuers to underwriters in primary underwritten
offerings;
(ii) obtain opinions of counsel to the Corporation and
updates thereof (which counsel and opinions, in form, scope
and substance, shall be reasonably satisfactory to the
managing underwriters, if any, and the holders of a majority
of the Registrable Securities being sold) addressed to the
underwriters, if any;
(iii) obtain "cold comfort" letters and updates thereof
from the Corporation's independent certified public
accountants addressed to the underwriters, if any, such
letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters to
underwriters in connection with primary underwritten
offerings; and
(iv) deliver such documents and certificates as may be
requested by the holders of a majority of the Registrable
Securities being sold and the managing underwriters, if any,
to evidence compliance with clause (i) of this Paragraph K and
with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Corporation.
The obligations under this Paragraph L above shall be performed at
each closing under such underwriting or similar agreement or as and
to the extent required thereunder.
<PAGE>
M. make available for inspection by a representative of the
sellers of Registrable Securities, any underwriter participating in
any disposition pursuant to such registration statement, and any
attorney, accountant or other agent retained by the sellers or
underwriters, all financial and other records, pertinent corporate
documents of the Corporation, and cause the Corporation's officers,
directors and employees to supply all information reasonably
requested by any such representative, underwriter, attorney,
accountant or agent solely for use in connection with such
registration statement; provided, however, that any records,
information or documents that are designated by the Corporation in
writing as confidential shall be kept confidential by such Persons
pursuant to such reasonable confidentiality agreements as the
Corporation may request;
N. otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make generally
available to its security holders, earnings statements satisfying
the provisions of Section 11(a) of the Securities Act, no later
than 45 days after the end of any twelve-month period (or 90 days,
if such period is a fiscal year): (i) commencing at the end of any
fiscal quarter in which Registrable Securities are sold to
underwriters in an underwritten offering, or, if not sold to
underwriters in such an offering; and (ii) beginning with the first
month of the Corporation's first fiscal quarter commencing after
the effective date of the Registration Statement, which statements
shall cover said twelve-month periods.
ARTICLE VI
REGISTRATION AND SELLING EXPENSES
For purposes of this Agreement, all underwriting discounts and
selling commissions applicable to the sale of Registrable
Securities (all such expenses being herein referred to as "Selling
Expenses"), and all expenses incident to the Corporation's
performance of or compliance with this Agreement, including without
limitation:
A. all registration and filing fees (including with respect
to filings required to be made with the National Association of
Securities Dealers, Inc.);
B. fees and expenses of compliance with securities or blue
sky laws (including fees and disbursements of counsel for the
underwriters in connection with domestic blue sky qualifications of
the Registrable Securities and determination of their eligibility
for investment under the laws of such jurisdictions as the managing
underwriters or holders of a majority of the Registrable Securities
being sold may designate);
C. printing, messenger, telephone and delivery expenses;
D. fees and disbursements of counsel for the Corporation;
<PAGE>
<PAGE>
E. fees and disbursements of all independent certified
public accountants of the Corporation (including the expenses of
any "cold comfort" letters required by or incident to such
performance);
F. fees and expenses of other Persons retained by the
Corporation;
(all such expenses being herein called "Registration Expenses")
shall be borne as provided in this Agreement; it being understood
and agreed that the Corporation shall, in any event, pay its
internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit conducted at
the end of the Corporation's fiscal year in the ordinary course of
business, and the fees and expenses incurred in connection with the
listing of the securities to be registered on each securities
exchange and securities association.
ARTICLE VII
INDEMNIFICATION
A. Indemnification by Corporation. The Corporation agrees to
indemnify, to the full extent permitted by law, each holder of
Registrable Securities, its officers, directors, employees and
agents and each Person who controls such holder (within the meaning
of the Securities Act) against all losses, claims, damages,
liabilities and expenses caused by any untrue or alleged untrue
statement of a material fact contained in any Registration
Statement, Prospectus or preliminary prospectus or any omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, except insofar as the same are caused by or contained
in any information furnished in writing to the Corporation by such
holder expressly for use therein or by such holder's failure to
deliver a copy of the Registration Statement or Prospectus after
the Corporation has furnished such holder with a sufficient number
of copies of the same. The Corporation shall also indemnify
underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the
distribution, their officers and directors and each Person who
controls such Persons (within the meaning of the Securities Act) to
the same extent as hereinabove provided with respect to the
indemnification of the holders of Registrable Securities.
B. Indemnification by Holder of Registrable Securities. In
connection with any Registration Statement in which a holder of
Registrable Securities is participating, each such holder will
furnish to the Corporation in writing such information and
affidavits as the Corporation reasonably requests for use in
connection with any Registration Statement or Prospectus and agrees
to indemnify, to the full extent permitted by law, the Corporation,
its directors and officers and each Person who controls the
Corporation (within the meaning of the Securities Act) against any
losses, claims, damages, liabilities and expenses resulting from
<PAGE>
any untrue or alleged untrue statement of a material fact or any
omission or alleged omission of a material fact required to be
stated in the Registration Statement or Prospectus or preliminary
Prospectus or necessary to make the statements therein not
misleading, to the extent, but only to the extent, that such untrue
statement or omission is contained in any information or affidavit
so furnished in writing by such holder to the Corporation
specifically for inclusion in such Registration Statement or
Prospectus. In no event shall the liability of any selling holder
of Registrable Securities hereunder be greater in amount than the
dollar amount of the proceeds received by such holder upon the sale
of the Registrable Securities giving rise to such indemnification
obligation. The Corporation shall be entitled to receive
indemnities from underwriters, selling brokers, dealer managers and
similar securities industry professionals participating in the
distribution, to the same extent as provided above with respect to
information so furnished in writing by such Persons specifically
for inclusion in any Prospectus or Registration Statement.
C. Conduct of Indemnification Proceedings. Any Person
entitled to indemnification hereunder shall (i) give prompt notice
to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) permit such indemnifying party to
assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided, however, that any
Person entitled to indemnification hereunder shall have the right
to employ separate counsel and to participate in the defense of
such claim, but the fees and expenses of such counsel shall be at
the expense of such Person unless (a) the indemnifying party has
agreed to pay such fees or expenses, or (b) the indemnifying party
shall have failed to assume the defense of such claim and employ
counsel reasonably satisfactory to such Person, or (c) in the
reasonable judgment of any such Person and the indemnifying party,
based upon advice of their respective counsel, a conflict of
interest may exist between such Person and the indemnifying party
with respect to such claims (in which case, if the Person notifies
the indemnifying party in writing that such Person elects to employ
separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense
of such claim on behalf of such Person). If such defense is not
assumed by the indemnifying party, the indemnifying party shall not
be subject to any liability for any settlement made without its
consent (but such consent will not be unreasonably withheld). No
indemnifying party shall be required to consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in
respect to such claim or litigation. An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim
will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with
respect to such claim.
<PAGE>
ARTICLE VIII
RULE 144
The Corporation covenants that it shall file the reports
required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the SEC
thereunder, and it shall take such further action as any holder of
Registrable Securities may reasonably request, all to the extent
required from time to time to enable such holder to sell
Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (i) Rule
144 under the Securities Act, as such rule may be amended from time
to time, or (ii) any similar rule or regulation hereafter adopted
by the SEC. Upon the request of any holder of Registrable Secu-
rities, the Corporation shall deliver to such holder a written
statement as to whether it has complied with such information and
requirements.
ARTICLE IX
PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Person may participate in any underwritten registration
hereunder unless such Person (i) agrees to sell such Person's
securities on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, representations and warranties,
underwriting agreements and other certificates and documents, and
provides such opinions of counsel, required under the terms of such
underwriting arrangements or otherwise deemed necessary or
appropriate by the Corporation or counsel to the Corporation.
ARTICLE X
MISCELLANEOUS
A. Remedies. Each holder of Registrable Securities, in
addition to being entitled to exercise all rights provided herein
or granted by law, including recovery of damages, shall be entitled
to specific performance of its rights under this Agreement. The
Corporation agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of
the provisions of this Agreement and hereby agrees to waive the
defense in any action for specific performance that a remedy at law
would be adequate.
B. Notices. All notices, requests or instructions hereunder
shall be in writing and delivered personally or sent by registered
or certified mail, postage prepaid, as follows:
<PAGE>
(1) if to the Corporation:
372 Danbury Road
Wilton, Connecticut 06897
with a copy to:
Howard Kailes, Esq.
Krugman, Chapnick & Grimshaw
Park 80 West - Plaza Two
Saddle Brook, New Jersey 07662
(2) if to any Stockholders, at its address set forth on
Schedule 1.
Any of the above addresses may be changed at any time by notice
given as provided above; provided, however, that any such notice of
change of address shall be effective only upon receipt.
C. Entire Agreement. This Agreement and the documents
referred to herein contain the entire agreement of the parties
hereto with respect to the transactions contemplated hereby, and
supersede all prior understandings, arrangements, and agreements
with respect to the subject matter hereof. No modification hereof
shall be effective unless in writing and signed by the party
against which it is sought to be enforced.
D. Further Action. Each of the parties hereto shall use such
party's best efforts to take such actions as may be necessary or
reasonably requested by the other party hereto to carry out and
consummate the transactions contemplated by this Agreement.
E. Successors and Assigns. The registration rights granted
to the Stockholders under Article III may be transferred to a
transferee who acquires any Shares, which transfer shall be
effective when the Corporation is given written notice by the
transferor at the time of such transfer stating the name and
address of the transferee and identifying the securities with
respect to which the rights under Article III are being assigned.
F. Notice of Shares. All references herein to numbers of
shares of Registrable Securities shall be subject to appropriate
adjustment for stock splits, stock dividends and recapitalizations
of the Corporation.
G. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware
applicable in the case of agreements made and to be performed
entirely within such State.
H. Captions. The captions appearing herein are for the
convenience of the parties only and shall not be construed to
affect the meaning of the provisions of this Agreement.
I. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but
<PAGE>
all of which taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC.
By s/William B. Fischer
---------------------------------
STOCKHOLDERS:
By: ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC., a Delaware
corporation, as Attorney-in-Fact for
the Stockholders named in Schedule 1
annexed hereto
By s/William B. Fischer
----------------------------------
<PAGE>
<PAGE>
SCHEDULE 1
Names and Address
- -----------------
Garfinkle Limited Partnership II
133 East 62nd Street
New York, NY 10021
Bruce F. Failing, Jr.
237 Round Hill Road
Greenwich, CT 06831
Donald E. Zilkha
993 Fifth Avenue
Apartment 8
New York, NY 10028
Selim K. Zilkha Trust
750 Lausanne Road
Los Angeles, CA 90077
Joseph M. Schell
3983 Happy Valley Road
Lafayette, CA 94549
