<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 17, 2000
REGISTRATION NO. 333-__________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
T-NETIX, INC.
(Exact Name of Registrant as Specified in its Charter)
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COLORADO 67 INVERNESS WAY, SUITE 100 84-1037352
(State or Other Jurisdiction of ENGLEWOOD, CO 80112 (I.R.S. Employer
Incorporation or Organization) (303) 790-9111 Identification Number)
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)
ALVYN A. SCHOPP
67 INVERNESS WAY, SUITE 100
ENGLEWOOD, CO 80112
(303) 790-9111
(Name, address, including zip code, and telephone number, including area code, of agent for service)
COPIES TO:
Herbert H. Davis III, Esq.
Rothgerber Johnson & Lyons LLP
1200 Seventeenth Street, Suite 3000
Denver, CO 80202
(303) 623-9000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: from time
to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 of the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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Proposed
Amount Maximum Proposed Maximum
Title of Shares to be Offering Price Aggregate Amount of
to be Registered Registered Per Share Offering Price Registration Fee
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Common Stock ........................ 2,575,000 Shares(2) $5.625 (1) $14,484,375 $3,823.88 (1)
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(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) on the basis of the average of the high and low
prices of the Common Stock as quoted on the Nasdaq National Market on
May 15, 2000.
(2) Shares of Common Stock which may be offered pursuant to this Registration
Statement, which shares are issuable upon conversion of 3,750 shares of Series A
Convertible Preferred Stock upon exercise of certain warrants. For purposes of
estimating the number of shares of Common Stock to be included in this
Registration Statement, T-NETIX calculated 260% of the number of shares of
Common Stock issuable in connection with the conversion of T-NETIX's Series A
Convertible Preferred Stock and the exercise of the warrants issued to RGC
International Investors, L.L.C., and 100% of the number of shares of Common
Stock issuable in connection with the exercise of the other warrants described
herein. In addition to the shares set forth in the table, the amount to be
registered includes an indeterminate number of shares issuable upon conversion
of or in respect of the Series A Convertible Preferred Stock and the warrants,
as such number may be adjusted as a result of stock splits, stock dividends and
similar transactions in accordance with Rule 416.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
PROSPECTUS
2,575,000 Shares
T-NETIX, INC.
COMMON STOCK
Certain of our shareholders have advised us that they intend to sell
from time to time up to 2,575,000 shares of our common stock, $0.01 par value
per share. No underwriter is underwriting this offering. The selling
shareholders, or their respective pledgees, donees, transferees or other
successors in interest, may offer the shares from time to time in one or more
transactions on the Nasdaq National Market at prevailing market prices, or in
negotiated transactions at agreed upon prices, or in a combination of such
methods of sale. We will receive no part of the proceeds of such sales. We have
not issued any of the shares offered by this document, but we will issue those
shares from time to time upon conversion any outstanding shares of our Series A
Convertible Preferred Stock and exercise of certain stock purchase warrants.
Our common stock is traded on the Nasdaq National Market under the
symbol "TNTX." We do not know the prices at which the selling shareholders will
sell any of the shares, or the commissions the selling shareholders will pay, if
any, in connection with any such sale. These prices and commissions may vary
from transaction to transaction.
In this document, we will sometimes refer to T-NETIX, Inc. as simply
"T-NETIX." We will also sometimes refer to the shares being offered by this
Prospectus as the "shares," to our common stock as the "common stock," and to
our Series A Convertible Preferred Stock as the "preferred stock."
Our principal executive offices are located at 67 Inverness Way East,
Suite 100, Englewood, Colorado 80112; our telephone number is (303) 790-9111.
-------------------
SEE "RISK FACTORS" ON PAGES 2 TO 5 FOR A DISCUSSION OF CERTAIN FACTORS THAT YOU
SHOULD CONSIDER IN CONNECTION WITH AN INVESTMENT IN THE SHARES.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus is dated May ___, 2000
<PAGE> 3
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WE HAVE NOT AUTHORIZED ANYONE TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ABOUT THE COMPANY THAT IS DIFFERENT FROM, OR IN ADDITION TO, THAT
CONTAINED IN THIS PROSPECTUS. THEREFORE, IF ANYONE DOES GIVE YOU INFORMATION OF
THIS SORT, YOU SHOULD NOT RELY ON IT. IF YOU ARE IN A JURISDICTION WHERE AN
OFFER TO SELL, OR THE SOLICITATION OF AN OFFER TO BUY, ANY OF THE SECURITIES
OFFERED BY THIS PROSPECTUS IS UNLAWFUL, OR IF YOU ARE A PERSON TO WHOM IT IS
UNLAWFUL TO DIRECT THESE KINDS OF ACTIVITIES, THE OFFER PRESENTED IN THIS
PROSPECTUS DOES NOT EXTEND TO YOU. THIS PROSPECTUS SPEAKS ONLY AS OF THE DATE OF
THIS PROSPECTUS UNLESS THE INFORMATION SPECIFICALLY INDICATES THAT ANOTHER DATE
APPLIES.
----------------
TABLE OF CONTENTS
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Page
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Summary Information........................................................ 1
Risk Factors............................................................... 2
Use of Proceeds............................................................ 6
Selling Shareholders....................................................... 6
Information about RGC International Investors, L.L.C....................... 7
Plan of Distribution....................................................... 7
Legal Matters.............................................................. 9
Experts................................................................... 10
Where You Can Find More Information....................................... 10
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T-NETIX, INC.
2,575,000 SHARES
COMMON STOCK
-------------------
P R O S P E C T U S
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May ___, 2000
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<PAGE> 4
SUMMARY INFORMATION
We provide specialized call processing and other services to the
corrections industry, directly or through our telecommunications service
provider customers. We derive our revenue from three main sources:
telecommunications services, direct call provisioning and equipment sales. Our
primary customers for telecommunications services include AT&T, Bell Atlantic,
US WEST, SBC Communications, Inc., BellSouth, MCI WorldCom and GTE. As a direct
inmate call provider, we buy "wholesale" call services and resell them as
collect calls. Equipment sales are generally made to our telecommunications
services customers. We provide our services in over 1,100 correctional
facilities. Our products and services include comprehensive call processing
systems, recording systems, commissary management systems and prison information
systems for the corrections industry and special-purpose speech processing
software and systems. Our current products are based on proprietary software and
a combination of proprietary and "off-the-shelf" electronic hardware. These
systems are designed to be flexible delivery platforms which are easily
integrated with our customer's networks and information systems. Our revenue
stream is mostly recurring, as a result of T-NETIX's generally charging for its
services on a fee per transaction processed basis over long-term contracts.
At March 31, 2000, our assets were $70,477,000, total shareholders'
equity was $21,089,000 and our net loss for the three-month period ended March
31, 2000 was $1,079,000.
We issued 3,750 shares of our Series A Convertible Preferred Stock and
a stock purchase warrant exercisable for 340,909 shares our common stock to RGC
International Investors, L.L.C., a fund managed by Rose Glen Capital Management,
L.P., in an issuance that was exempt from the registration requirements of the
Securities Act of 1933, as amended, under Section 4(2) of the Securities Act and
Regulation D. The exercise price of the stock purchase warrant is $6.60 per
share. The preferred stock has a yield of 8% per annum payable on liquidation,
and is convertible into our common stock at a "variable" conversion price based
on the market price of the common stock during a pricing period of any five
consecutive trading days during the 22 consecutive trading days preceding
conversion, up to a "fixed" conversion price of $6.05. The fixed conversion
price is subject to adjustment if, during the 10 consecutive trading days ending
on August 17, 2000, 110% of the average closing bid price of our common stock is
below $6.05. The preferred stock matures on April 17, 2003.
With limited exceptions relating to a change of control of T-NETIX,
during the six month period after we issued the preferred stock, the preferred
stock is not convertible into our common stock unless the market price of our
common stock equals or exceeds the fixed conversion price or 115% of the
variable conversion price. After that, we have the right to issue cash instead
of common stock upon conversion of the preferred stock if the market price of
the common stock is less than the fixed conversion price.
If any of the following occurs, the holder of the preferred stock can
require that we redeem the preferred stock at a premium equal to the greater of
20% over the stated value of the preferred stock (plus the 8% yield), and the
product of the highest number of shares then issuable on conversion of the
preferred stock times the highest closing price for the common stock during the
period between the occurrence of any of the following and one day prior to the
date the redemption occurs;
o We breach certain covenants relating to the issuance or transfer of common
stock issuable on conversion of the preferred stock, or relating to the
registration of that common stock;
o We commit certain acts of insolvency or bankruptcy;
o We fail to maintain the listing of our common stock on Nasdaq, the New York
Stock Exchange ("NYSE") or the American Stock Exchange ("AMEX"); or
o The amount of common stock issuable on conversion of the preferred stock
would represent more than 20% of the total outstanding common stock.
If all of the following are true, we have the right to redeem the
preferred stock at a premium equal to the greater of 20% over the stated value
of the preferred stock (plus the 8% yield), and the product of the highest
number of shares then issuable on conversion of the preferred stock times the
highest closing price for the common stock during the period between the date
we send notice of intent to redeem and one day prior to the date the redemption
occurs:
o The common stock issuable on conversion of the preferred stock is authorized
and reserved for issuance, registered under the Securities Act and eligible
to be traded on Nasdaq, the NYSE or the AMEX;
o The holder of the preferred stock cannot then require us to redeem the
preferred stock; and
o The trading price of our common stock is $4.00 or less (subject to
adjustments) for a period of 10 consecutive trading days.
Also, if the first two bullet points immediately above are true, we
have the right to redeem the preferred stock if we publicly announce a major
transaction, such as a merger of T-NETIX or a sale of all or substantially all
of our assets, at a different redemption price than the redemption price
described above. The different redemption price is the greater of the product of
the highest number of shares then issuable on conversion of the preferred stock
times the price per share being offered in the major transaction, and the
product of the stated amount (plus the 8% yield) times either 165% if the major
transaction occurs within one year of issuance of the preferred stock or 200% if
the major transaction occurs more than one year after issuance of the preferred
stock.
We also issued a stock purchase warrant exercisable for 25,000 shares
our common stock to Daniel M. Carney, our Chairman of the Board, in an issuance
that was exempt from the registration requirements of the Securities Act under
Section 4(2) and Regulation D. The exercise price of Mr. Carney's stock purchase
warrant is $6.05 per share. The warrant matures on April 14, 2005.
We also issued a stock purchase warrant exercisable for 50,000 shares
our common stock to Zanett Securities Corp., which brokered our arrangement with
Rose Glen Capital Management L.P., in an issuance that was exempt from the
registration requirements of the Securities Act under Section 4(2) and
Regulation D. The exercise price of Zanett Securities Corp.'s stock purchase
warrant is $6.60 per share. The warrant matures on April 17, 2005.
<PAGE> 5
We are registering the shares of common stock underlying the Series A
Convertible Preferred Stock and the above-noted stock purchase warrants as
required by a Registration Rights Agreement dated April 17, 2000, into which we
entered with RGC International Investors, L.L.C.
RISK FACTORS
An investment in the securities offered by this Prospectus involves a
high degree of risk. You should consider carefully the following factors, in
addition to other information contained in this Prospectus and any Prospectus
Supplement, in connection with an investment in the securities offered in this
offering.
This Prospectus contains statements which constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act"), and Section 21E of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). The words "anticipate," "expect,"
"believe," "goal," "plan," "intend," "estimate" and similar expressions and
variations thereof used in this Prospectus are intended to specifically identify
forward-looking statements. Prospective investors are cautioned that any such
forward-looking statements are not guarantees of future performance and involve
risks and uncertainties, and that actual results may differ materially from
those projected in the forward-looking statements as a result of various
factors, including the risk factors described below. We undertake no obligation
to publicly update or revise forward-looking statements made in this Prospectus
to reflect events or circumstances after the date of this Prospectus or to
reflect the occurrence of unanticipated events.
A SMALL NUMBER OF CUSTOMERS ACCOUNTED FOR A HIGH PERCENTAGE OF OUR REVENUE,
THEREFORE, THE LOSS OF A MAJOR CUSTOMER COULD HARM OUR BUSINESS.
In the Corrections Division, a small number of customers account for a
significant portion of our revenue. If we lose existing customers and do not
replace them with new customers, our revenue will decrease and may not be
sufficient to cover our costs. For the year ended December 31, 1999, AT&T, Bell
Atlantic and SBC Communications, Inc. accounted for approximately 13%, 10% and
10%, respectively of our total revenue. In the Internet Services Division, a
single customer, US WEST !NTERPRISE America, Inc., accounts for all of our
Internet Services revenue. If we lose this customer and do not replace it with
new customers, our revenue will decrease, we will be unable to continue this
line of business and this could harm our business.
CHANGES IN GOVERNMENT TELECOMMUNICATIONS REGULATIONS COULD CAUSE REDUCED DEMANDS
FOR OUR PRODUCTS AND SERVICES.
In our Corrections Division, our telecommunications service provider
customers and we are subject to varying degrees of federal, state, and local
regulation. Regulatory actions have impacted, and are likely to continue to
impact, both our customers and us. Regulatory actions may cause changes in the
manner in which our customers or we conduct business. The products that we
develop must comply with standards established by the Federal Communications
Commission. A change in these standards may have a material adverse affect on
our business, operating results, and financial condition. In the Internet
Services Division, if state regulatory authorities grant our existing Internet
service customer the ability to carry inter-LATA Internet services, the need for
our Internet services could be extinguished and our existing contract would
terminate.
2
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WE OPERATE IN HIGHLY COMPETITIVE MARKETS AND MAY NOT BE ABLE TO COMPETE
EFFECTIVELY.
The telecommunications industry, including the inmate calling market,
is and can be expected to remain highly competitive. In our Corrections Division
we compete directly against other suppliers of inmate call processing systems,
such as private pay phone operators and manufacturers of call processing
equipment. In addition, our customers and we jointly compete against other call
providers to obtain contracts for inmate calling services. Finally, we may also
compete against our customers who choose to use another call provider on a
particular bid. Changes in regulations have affected the competitive dynamics
within our industry. Increased competition may reduce the fees we charge, reduce
margins and cause a loss of market share. As a result of these and other
factors, we may not be able to compete effectively with our current or future
competitors, which would have a material adverse affect on our business,
operating results, and financial condition.
CHANGES IN TECHNOLOGY AND OUR ABILITY TO ENHANCE OUR EXISTING PRODUCTS MAY
ADVERSELY AFFECT OUR FINANCIAL RESULTS
The markets for our products, especially the telecommunications
industry, change rapidly because of technological innovation, changes in
customer requirements, declining prices, and evolving industry standards, among
other factors. To be competitive, we must develop and introduce product
enhancements and new products, which increase our customers' and our ability to
increase market share in the corrections industry. New products and new
technology often render existing information services or technology
infrastructure obsolete, excessively costly, or otherwise unmarketable. As a
result, our success depends on our ability to timely innovate and integrate new
technologies into our current products and services and to develop new products.
In addition, as the telecommunications networks are modernized and evolve from
analog-based to digital-based systems, certain features offered by us may
diminish in value. Moreover, regulatory actions affecting the telecommunications
industry may require significant upgrades to our current technology or may
render our service offerings obsolete or commercially unattractive. We cannot
guarantee that we will have sufficient technical, managerial or financial
resources to develop or acquire new technology or to introduce new services or
products that would meet our customers needs in a timely manner.
OUR SUCCESS DEPENDS ON OUR ABILITY TO PROTECT OUR PROPRIETARY TECHNOLOGY AND
ENSURE THAT OUR SYSTEMS ARE NOT INFRINGING ON OTHER COMPANIES
Our success depends to a significant degree on our protection of our
proprietary technology, particularly in the area of three-way call prevention.
The unauthorized reproduction or other misappropriation or our proprietary
technology could enable third parties to benefit from our technology without
paying us for it. Although we have taken steps to protect our proprietary
technology, they may be inadequate. We rely on a combination of patent and
copyright law and non-disclosure agreements to establish and protect our
proprietary rights in our systems. However, existing trade secret, copyright and
trademark laws offer only limited protection. Despite our efforts to protect our
proprietary rights, unauthorized parties may attempt to copy aspects of our
products or obtain and use trade secrets or other information we regard as
proprietary. If we resort to legal proceedings to enforce our intellectual
property rights, the proceedings would be burdensome and expensive and could
involve a high degree of risk.
In addition, with respect to our intellectual property rights, we
cannot be sure that a third party will not accuse us of infringement. Any claim
of infringement could cause us to incur substantial costs
3
<PAGE> 7
defending against that claim, even if the claim is not valid, and could distract
our management from our business. A party making a claim also could secure
judgment that requires us to pay substantial damages. A judgment could also
include an injunction or other court order that could prevent us from selling
our products. Any of these events could have a material adverse effect on our
business, operating results and financial condition.
OUR BUSINESS COULD BE ADVERSELY AFFECTED IF OUR PRODUCTS AND SERVICES FAIL TO
PERFORM OR BE PERFORMED PROPERLY
Products as complex as ours may contain undetected errors or "bugs",
which result in product failures or security breaches or otherwise fail to
perform in accordance with customer expectations. Any failure of our systems
could result in a claim for substantial damages against us, regardless of our
responsibility for the failure. Although we maintain general liability
insurance, including coverage for errors and omissions, there can be no
assurance that our existing coverage will continue to be available on reasonable
terms or will be available in amounts sufficient to cover one or more large
claims, or that the insurer will not disclaim coverage as to any future claim.
The occurrence of errors could result in loss of data to us or our customers
which could cause a loss of revenue, failure to achieve acceptance, diversion of
development resources, injury to our reputation, or damages to our efforts to
build brand awareness, any of which could have a material adverse affect on our
market share and, in turn, our operating results and financial condition.
OUR FAILURE TO EFFECTIVELY INTEGRATE THE BUSINESSES WE HAVE ACQUIRED MAY
ADVERSELY AFFECT OUR BUSINESS
On June 14, 1999 we merged with Gateway Technologies, Inc. A failure to
effectively integrate this business could have a material adverse effect on our
business, operating results and financial condition. There can be no assurance
that we will be able to consolidate the operations of Gateway with our
operations in a manner that will achieve efficient operating results. In
addition, there can be no assurance that we will be able to retain the personnel
of Gateway.
WE MAY NOT BE ABLE TO OBTAIN ADDITIONAL CAPITAL TO FUND OUR OPERATIONS
We are taking steps to increase cash flow from operations and obtain
additional financing to ensure that we are able to carry out our fiscal 2000
business plan. There can be no assurance that we will be successful in
increasing our cash flow from operations or that additional financing will be
available, or if available, will be obtained on acceptable terms. The financing
may also dilute existing stockholders.
If we cannot obtain adequate funds on acceptable terms, we may be
unable to:
o fund our working capital requirements;
o fund anticipated new installations of inmate call processing systems
and upgrades of existing systems;
o take advantage of strategic opportunities;
o respond to competitive pressures; and
o develop or enhance our services.
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Any of these failures could adversely affect our profitability. If we
do not achieve or sustain profitability in the future, we may be unable to
continue our operations.
OUR PREFERRED STOCK IS CONVERTIBLE INTO SHARES OF OUR COMMON STOCK AT A RATE
THAT ADJUSTS BASED ON THE TRADING PRICE OF OUR COMMON STOCK, THEREFORE
CONVERSION OF THE PREFERRED STOCK MAY RESULT IN SUBSTANTIALLY GREATER DILUTION
OF OUR EXISTING SHAREHOLDERS IF OUR STOCK PRICE DECREASES
As of May 10, 2000, 3,750 shares of our preferred stock were issued and
outstanding. Each share of our preferred stock is convertible into that number
of shares of our common stock as is determined by dividing the stated value
($1,000) of the share of preferred stock by the then current conversion price.
The conversion price is based on the market price of the common stock. If
converted on May 10, 2000, 100% of the Series A Preferred Stock would have been
convertible into approximately 744,417 shares of common stock, however, this
number of shares could be significantly greater if the market price of the
common stock decreases. Purchasers of common stock could therefore experience
substantial dilution of their investment upon conversion of the preferred stock.
The shares of preferred stock are not registered and may be sold only if
registered under the Securities Act or sold in accordance with an applicable
exemption from registration, such as Rule 144. The shares of common stock into
which the preferred stock may be converted are being registered pursuant to this
registration statement.
As of May 10, 2000, a warrant to purchase 340,909 shares of common
stock issued to the purchaser of the preferred stock was outstanding. This
warrant is exercisable in whole or in part over the next five years at a price
of $6.60 per share of common stock. That price may be adjusted from time to time
under antidilution provisions stated in the warrant. The shares of common stock
issuable upon exercise of this warrant are being registered pursuant to this
registration statement.
As of May 10, 2000, a warrant to purchase 25,000 shares of common stock
issued to Daniel M. Carney was outstanding. This warrant is exercisable in whole
or in part over the next five years at a price of $6.05 per share of common
stock. That price may be adjusted from time to time under antidilution
provisions stated in the warrant. The shares of common stock issuable upon
exercise of this warrant are being registered pursuant to this registration
statement.
As of May 10, 2000, a warrant to purchase 50,000 shares of common stock
issued to Zanett Securities Corp. was outstanding. This warrant is exercisable
in whole or in part over the next five years at a price of $6.60 per share of
common stock. That price may be adjusted from time to time under antidilution
provisions stated in the warrant. The shares of common stock issuable upon
exercise of this warrant are being registered pursuant to this registration
statement.
As of May 10, 2000, 2,069,546 shares of common stock were reserved for
issuance upon exercise of our outstanding options, and an additional 2,575,000
shares of common stock were reserved for issuance upon conversion of the
preferred stock and exercise of the warrants described in this prospectus. At
May 10, 2000, there were 12,733,084 shares of common stock outstanding. All of
these outstanding shares were freely tradeable without restriction under the
Securities Act unless held by affiliates.
5
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USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares.
All proceeds from the sale of the shares will be for the account of the selling
shareholders listed below (collectively, the "selling shareholders"), as
described below. See "Selling Shareholders" and "Plan of Distribution."
SELLING SHAREHOLDERS
The following table lists the selling shareholders for whose account
the shares are being offered, the number of shares (and percentage if greater
than one percent) of common stock held by each selling shareholder prior to the
offering, the number of shares being offered for the selling shareholders'
accounts, and (if greater than one percent) the percentage of the outstanding
common stock to be owned by each selling shareholder after completion of the
offering (see footnote 1 below):
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<CAPTION>
SHARES BENEFICIALLY
OWNED PRIOR SHARES POSITION WITH
NAME TO THE OFFERING OFFERED(1) T-NETIX
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<S> <C> <C> <C>
RGC International Investors, L.L.C. 2,500,000(2) 2,500,000 None
Zanett Securities Corp. 50,000(3) 50,000 None
Daniel M. Carney 1,950,140(4) 25,000 Director
</TABLE>
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(1) Assuming all of the shares are sold pursuant to this Prospectus--see "Plan
of Distribution." Under these circumstances, the only selling shareholder
that will own common stock after the shares are sold is Daniel M. Carney,
who will own 1,925,140 shares or 12.6% assuming he sells none of his other
shares. The actual number of shares of common stock offered in this
prospectus, and included in the registration statement of which this
prospectus is a part, includes the additional number of shares of common
stock that may be issued or issuable upon conversion of the preferred stock
and exercise of the stock purchase warrants by reason of any stock split,
stock dividend or similar transaction involving the common stock, in
accordance with Rule 416 under the Securities Act.
(2) See "Information About RGC International Investors, L.L.C." below.
(3) Includes 50,000 shares issuable upon exercise of a stock purchase warrant
within 60 days of May 10, 2000.
(4) Includes (i) 115,000 shares owned by Communications Vending Corporation of
Arizona, of which Mr. Carney has a 30% beneficial interest; (ii) 20,000
shares issuable pursuant to options exercisable within 60 days of May 10,
2000; and (iii) 25,000 shares issuable upon exercise of a stock purchase
warrant within 60 days of May 10, 2000.
The information in this table with respect to the percentage of
outstanding common stock is based on the assumption that the number of
outstanding shares of common stock does not increase or decrease from 15,308,084
shares (the actual number of outstanding shares (12,733,084) plus the 2,575,000
shares offered by this Prospectus), the number of shares of common stock used to
prepare this table as of May 10, 2000, and does not include outstanding stock
options. We may amend or supplement this Prospectus to update the disclosure set
forth herein.
6
<PAGE> 10
INFORMATION ABOUT RGC INTERNATIONAL INVESTORS, L.L.C.
The number of shares set forth in the table for RGC International
Investors, L.L.C. represents an estimate of the number of shares of common stock
to be offered by RGC International Investors, L.L.C. The actual number of shares
of common stock issuable upon conversion of the preferred stock and exercise of
the related warrants is indeterminate, is subject to adjustment and could be
materially greater or less than the estimated number. Whether that actual number
of shares increases or decreases depends on factors that cannot be predicted by
us at this time, including, among other factors, the future market price of the
common stock. Under the terms of the preferred stock, if the preferred stock had
been actually converted on May 10, 2000, the conversion price would have been
$5.0375. The warrants issued in connection with the Series A Preferred Stock are
exercisable into 340,909 shares of common stock at an exercise price of $6.60.
Under the terms of the preferred stock and the related warrants, the
shares of preferred stock are convertible and the warrants are exercisable by
any holder only to the extent that the number of shares of common stock issuable
pursuant to the preferred stock and warrants, together with the number of shares
of common stock owned by the holder and its affiliates (but not including shares
of common stock underlying unconverted shares of preferred stock or unexercised
portions of the warrants) would not exceed 4.9% of the then outstanding common
stock, as determined in accordance with Section 13(d) of the Exchange Act.
Accordingly, the number of shares of common stock set forth in the table for RGC
International Investors, L.L.C. exceeds the number of shares of common stock
that RGC International Investors, L.L.C. could own beneficially at any given
time through its ownership of the preferred stock and the warrants. In that
regard, the beneficial ownership of the common stock by RGC International
Investors, L.L.C. set forth in the table is not determined in accordance with
Rule 13d-3 under the Exchange Act.
PLAN OF DISTRIBUTION
The shares covered by this Prospectus may be offered and sold from time
to time by the selling shareholders or their respective pledgees, donees,
transferees or other successors in interest. Each selling shareholder will act
independently of T-NETIX in making decisions with respect to the timing,
manner and size of each sale. The selling shareholders may sell the shares being
offered in one or more transactions, which may involve block transactions:
o on the Nasdaq National Market or on any other market on which
the common stock may from time to time be trading;
o in an over-the-counter distribution in accordance with the
rules of the Nasdaq National Market;
o in ordinary brokerage transactions and transactions in which
the brokers solicit purchasers;
o in privately-negotiated transactions;
o through the writing of options on the shares;
o in short sales; or
o in any combination thereof.
7
<PAGE> 11
The sale price to the public may be:
o the market price prevailing at the time of sale;
o a price related to the prevailing market price;
o a negotiated price; or
o other prices that the selling shareholders may determine from
time to time.
The shares may also be sold pursuant to Rule 144.
The selling shareholders shall have the sole and absolute discretion
not to accept any purchase offer or make any sale of shares if they deem the
purchase price to be unsatisfactory at any particular time.
The selling shareholders or their respective pledgees, donees,
transferees or other successors in interest, may also sell the shares directly
to market makers acting as principals and/or broker-dealers acting as agents for
themselves or their customers. The broker-dealers may receive compensation in
the form of discounts, concessions or commissions from the selling shareholders
and/or the purchasers of shares for whom the broker-dealers may act as agents or
to whom they may sell as principals or both, and the compensation as to a
particular broker-dealer might be in excess of customary commissions. Market
makers and block purchasers purchasing the shares will do so for their own
account and at their own risk. It is possible that a selling shareholder will
attempt to sell shares of common stock in block transactions to market makers or
other purchasers at a price per share that may be below the then market price.
The selling shareholders, alternatively, may sell all or any part of
the shares offered under this prospectus through an underwriter. No selling
shareholder has entered into any agreement with a prospective underwriter and
there is no assurance that any underwriting agreement will be entered into. If a
selling shareholder enters into an underwriting agreement or agreements, the
relevant details will be set forth in a supplement or revisions to this
prospectus.
The selling shareholders cannot assure that all or any of the shares
offered in this prospectus will be issued to, or sold by, the selling
shareholders.
To the extent required, this prospectus may be amended and supplemented
from time to time to describe a specific plan of distribution. In connection
with distribution of the shares or otherwise, the selling shareholders may enter
into hedging transactions with broker-dealers or other financial institutions.
In connection with those transactions, broker-dealers or other financial
institutions may engage in short sales of our common stock in the course of
hedging the positions they assume with the selling shareholders. The selling
shareholders may also sell our common stock short and redeliver the shares to
close out their short positions. The selling shareholders may also enter into
options or other transactions with broker-dealers or other financial
institutions which require the delivery to a broker-dealer or other financial
institution of the shares offered, which shares the broker-dealer or
8
<PAGE> 12
other financial institution may resell pursuant to this prospectus (as
supplemented or amended to reflect the transaction). The selling shareholders
may also pledge shares to a broker-dealer or other financial institution, and,
upon a default, the broker-dealer or other financial institution may effect
sales of the pledged shares pursuant to this prospectus (as supplemented or
amended to reflect the transaction).
In effecting sales, brokers, dealers or agents engaged by the selling
shareholders may arrange for other brokers or dealers to participate. Brokers,
dealers or agents may receive commissions, discounts or concessions from the
selling shareholders in amounts to be negotiated prior to the sale. The brokers
or dealers and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Act and the Securities Exchange Act of
1934, as amended, or the rules and regulations under those acts, in connection
with these sales, and any commissions, discounts or concessions may be deemed to
be underwriting discounts or commissions under the Act and the Exchange Act, or
the rules and regulations under those acts. We will not pay any commissions and
discounts of underwriters, dealers or agents or any transfer taxes.
In order to comply with the securities laws of certain states, if
applicable, the shares must be sold in those jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
The selling shareholders and any other persons participating in the
sale or distribution of the shares will be subject to applicable provisions of
the Exchange Act and the rules and regulations under that act, including,
without limitation, Regulation M. These provisions may restrict certain
activities of, and limit the timing of purchases and sales of any of the shares
by, the selling shareholders or any other person participating in the sale or
distribution. Furthermore, under Regulation M, persons engaged in a distribution
of securities are prohibited form simultaneously engaging in market making and
certain other activities with respect to those securities for a specified period
of time prior to the commencement of the distributions, subject to specified
exceptions or exemptions. All of these limitations may affect the marketability
of the shares.
We have agreed to indemnify RGC International Investors, L.L.C., or its
transferees or assignees, against certain liabilities, including liabilities
under the Securities Act, or to contribute to payments that RGC International
Investors, L.L.C. or its pledgees, donees, transferees or other successors in
interest, may be required to make in respect of those liabilities.
LEGAL MATTERS
The validity of the issuance of the shares of common stock offered
hereby has been passed upon for us by Rothgerber Johnson & Lyons LLP, Denver,
Colorado.
9
<PAGE> 13
EXPERTS
The financial statements of T-NETIX, Inc. as of December 31, 1999 and
1998, and for each of the years in the three-year period ended December 31,
1999, and the related financial statement schedule, have been incorporated by
reference herein and in the registration statement in reliance upon the reports
of KPMG LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a
Registration Statement under the Securities Act, which registers the common
stock being offered by this Prospectus. The Registration Statement, including
its attached exhibits and schedules, contains additional relevant information
about us and our common stock. The rules and regulations of the Commission allow
us to omit certain information included in the Registration Statement from this
Prospectus. Such additional information is available for inspection and copying
at the offices of the Commission.
We file annual, quarterly and current reports, proxy statements and
other information with the Commission. You may read and copy any reports,
statements or other information that we file at the following locations of the
Commission:
Public Reference Room New York Regional Office Chicago Regional Office
Room 1024 13th Floor Citicorp Center
450 Fifth Street, N.W. 7 World Trade Center Suite 1400
Washington, D.C. 20549 New York, NY 10048 500 West Madison Street
Chicago, IL 60661
Please call the Commission at 1-800-SEC-0330 for further information.
Our public filings are also available from commercial document retrieval
services and at the Internet web site maintained by the Commission at
http://www.sec.gov.
The Commission allows us to "incorporate by reference" information into
this Prospectus, which means that we can disclose important information to
investors by referring them to another document filed separately with the
Commission. The information incorporated by reference is deemed to be part of
this Prospectus, except for any information superseded by information contained
directly in this document. This Prospectus incorporates by reference the
documents set forth below that we have previously filed with the Commission.
These documents contain important information about us and our financial
condition.
T-NETIX Commission Filings (File No. 0-25016):
Annual Report on Form 10-K for the year ended December 31, 1999.
Quarterly Report on Form 10-Q for the quarter ended March 31, 2000.
Current Report on Form 8-K dated April 19, 2000.
10
<PAGE> 14
Definitive Proxy Statement, Schedule 14A filed with the Commission on
April 17, 2000.
Description of the common stock contained in T-NETIX's Registration
Statement on Form 8-A, Registration No. 0-25016, filed by T-NETIX under
Section 12 of the Exchange Act.
Additional documents that we may file with the Commission between the
date of this Prospectus and the date this offering is terminated are also
incorporated by reference. These include any periodic reports, such as Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form
8-K, as well as any proxy statements.
You can obtain any of the documents incorporated by reference in, but
not included with, this Prospectus from us without charge, excluding all
exhibits unless we have specifically incorporated by reference an exhibit in
this Prospectus, by requesting them in writing or by telephone from the
following address:
T-NETIX, Inc.
Attn: John Giannaula, Corporate Secretary
67 Inverness Way East, Suite 100
Englewood, Colorado 80112
Telephone: (303) 790-9111
11
<PAGE> 15
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses of the offering (except for Commission filing
fees), all of which are to be borne by us, are as follows:
<TABLE>
<S> <C>
Printing Expenses............................... $ 2,500
Accounting Fees and Expenses.................... 3,000
Legal Fees and Expense.......................... 2,300
Commission Filing Fee........................... 3,824
TOTAL........................................... $11,624
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 7-109-101 et seq. of the Colorado Business Corporation Act
empowers a Colorado corporation to indemnify its directors, officers, employees
and agents under certain circumstance, as well as providing for the elimination
of personal liability of directors and officers of a Colorado corporation for
monetary damages.
Article IX(A) of the Articles of Incorporation of the Registrant reads
as follows:
"To the fullest extent permitted by the laws of the State of Colorado,
as the same now exists or may hereafter be amended, the Corporation shall
indemnify its directors and officers. Other employees, trustees and agents of
the Corporation may be indemnified by the Corporation upon such terms and
conditions consistent with applicable law, as the board of directors deems
appropriate."
Article IX(G) of the Articles of Incorporation of the Registrant reads
as follows:
"To the fullest extent permitted by the laws of the State of Colorado,
as the same now exists or may hereafter be amended, no director of the
Corporation shall be personally liable to the Corporation or to its shareholders
for monetary damages for breach of fiduciary duty as a director."
ITEM 16. EXHIBITS.
The following Exhibits are filed as a part of this Registration
Statement pursuant to Item 601 of Regulation S-K:
Exhibit Number
4.1 Form of Certificate representing the common stock, par value
$0.01 per share, of the Company--incorporated by reference
from Form 10-K for the year ended July 31, 1995.
4.2 The Company's Amended and Restated Articles of Incorporation
-- incorporated by reference from Exhibit 3.2 of the Company's
Form 10-K for the year ended July 31, 1998.
II-1
<PAGE> 16
4.3 Amendment to the Articles of Incorporation of T-NETIX, Inc.,
defining the rights, preferences and limitations of the Series
A Convertible Preferred Stock -- incorporated by reference
from Exhibit 4.1 of T-NETIX's Current Report on Form 8-K filed
on April 19, 2000.
4.4 Stock Purchase Warrant for the purchase of 340,909 shares of
T-NETIX, Inc. common stock -- incorporated by reference from
Exhibit 4.2 of T-NETIX's Current Report on Form 8-K filed on
April 19, 2000.
4.5 Stock Purchase Warrant for the purchase of 25,000 shares of
T-NETIX, Inc. common stock -- incorporated by reference from
Exhibit 4.3 of T-NETIX's Current Report on Form 8-K filed on
April 19, 2000.
4.6 Securities Purchase Agreement dated April 17, 2000, between
T-NETIX, Inc. and RGC International Investors, LDC --
incorporated by reference from Exhibit 99.2 of T-NETIX's
Current Report on Form 8-K filed on April 19, 2000.
4.7 Registration Rights Agreement dated April 17, 2000, between
T-NETIX, Inc. and RGC International Investors, LDC --
incorporated by reference from Exhibit 99.3 of T-NETIX's
Current Report on Form 8-K filed on April 19, 2000.
4.8* Stock Purchase Warrant for the purchase of 50,000 shares of
T-NETIX, Inc. common stock.
5.1* Legal Opinion of Rothgerber Johnson & Lyons LLP
23.1* Consent of Rothgerber Johnson & Lyons LLP (included in Exhibit
5.1 hereto)
23.2* Consent of independent accountants
24.1* Power of Attorney (included on signature page attached hereto)
- -----------------
*Filed herewith
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement to include
any material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement;
(2) That, for the purposes of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable.
II-2
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Englewood, State of Colorado, on May 15, 2000.
T-NETIX, INC.
By: /s/ Alvyn A. Schopp
----------------------------------------
Alvyn A. Schopp, Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
Alvyn A. Schopp and John Giannaula and each of them, as attorneys-in-fact, each
with the power of substitution, for him in any and all capacities, to sign any
amendments to this Registration Statement and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting to said attorney-in-fact, and each of them, full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact, or any one of them, or their or his substitute or
substitutes, may lawfully do or causes to be done by virtue hereof.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Alvyn A. Schopp Chief Executive Officer and May 15, 2000
- -------------------------- Director (also Principal
Alvyn A. Schopp Accounting and Financial Officer)
/s/ Thomas E. Larkin President May 15, 2000
- --------------------------
Thomas E. Larkin
/s/ W. P. Buckthal Director May 15, 2000
- --------------------------
W. P. Buckthal
</TABLE>
II-3
<PAGE> 18
<TABLE>
<S> <C> <C>
/s/ John H. Burbank III Director May 15, 2000
- --------------------------
John H. Burbank III
/s/ Daniel M. Carney Chairman of the Board May 15, 2000
- --------------------------
Daniel M. Carney
/s/ Richard E. Cree Director May 15, 2000
- --------------------------
Richard E. Cree
Director May __, 2000
- --------------------------
Robert A. Geist
/s/ Martin T. Hart Director May 15, 2000
- --------------------------
Martin T. Hart
Director May __, 2000
- --------------------------
James L. Mann
Director May __, 2000
- --------------------------
Daniel J. Taylor
/s/ B. Holt Thrasher Director May 15, 2000
- --------------------------
B. Holt Thrasher
</TABLE>
II-4
<PAGE> 19
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBITS
- ----------- --------
<S> <C>
4.1 Form of Certificate representing the common stock, par value $0.01
per share, of the Company -- incorporated by reference from Form
10-K for the year ended July 31, 1995.
4.2 The Company's Amended and Restated Articles of Incorporation --
incorporated by reference from Exhibit 3.2 of the Company's Form
10-K for the year ended July 31, 1998.
4.3 Amendment to the Articles of Incorporation of T-NETIX, Inc.,
defining the rights, preferences and limitations of the Series A
Convertible Preferred Stock -- incorporated by reference from
Exhibit 4.1 of T-NETIX's Current Report on Form 8-K filed on
April 19, 2000.
4.4 Stock Purchase Warrant for the purchase of 340,909 shares of
T-NETIX, Inc. common stock -- incorporated by reference from
Exhibit 4.2 of T-NETIX's Current Report on Form 8-K filed on
April 19, 2000.
4.5 Stock Purchase Warrant for the purchase of 25,000 shares of
T-NETIX, Inc. common stock -- incorporated by reference from
Exhibit 4.3 of T-NETIX's Current Report on Form 8-K filed on
April 19, 2000.
4.6 Securities Purchase Agreement dated April 17, 2000, between
T-NETIX, Inc. and RGC International Investors, LDC --
incorporated by reference from Exhibit 99.2 of T-NETIX's
Current Report on Form 8-K filed on April 19, 2000.
4.7 Registration Rights Agreement dated April 17, 2000, between
T-NETIX, Inc. and RGC International Investors, LDC --
incorporated by reference from Exhibit 99.3 of T-NETIX's
Current Report on Form 8-K filed on April 19, 2000.
4.8* Stock Purchase Warrant for the purchase of 50,000 shares of
T-NETIX, Inc. common stock.
5.1* Legal Opinion of Rothgerber Johnson & Lyons LLP
23.1* Consent of Rothgerber Johnson & Lyons LLP (included in Exhibit
5.1 hereto)
23.2* Consent of independent accountants
24.1* Power of Attorney (included on signature page attached hereto)
</TABLE>
- -------------------
*Filed herewith
<PAGE> 1
EXHIBIT 4.8
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
EXCEPT AS OTHERWISE SET FORTH HEREIN, NEITHER THIS WARRANT NOR ANY OF
SUCH SHARES MAY BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER SAID ACT OR,
AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE CUSTOMARY FOR
OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT REGISTRATION IS
NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER
SUCH ACT.
Right to
Purchase
50,000 Shares
of Common
Stock, par
value $0.01
per share
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, Zanett Securities
Corp., or its registered assigns, is entitled to purchase from T-NETIX, Inc., a
Colorado corporation (the "Company"), at any time or from time to time during
the period specified in Paragraph 2 hereof, fifty thousand (50,000) fully paid
and nonassessable shares of the Company's common stock, par value $0.01 per
share (the "Common Stock"), at an exercise price of $6.60 per share (the
"Exercise Price"). The term "Warrant Shares," as used herein, refers to the
shares of Common Stock purchasable hereunder. The Warrant Shares and the
Exercise Price are subject to adjustment as provided in Paragraph 4 hereof.
This Warrant is subject to the following terms, provisions,
and conditions:
1. MANNER OF EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR
SHARES. Subject to the provisions hereof, this Warrant may be exercised by the
holder hereof, in whole or in part, by the surrender of this Warrant, together
with a completed exercise agreement in the form attached hereto (the "Exercise
Agreement"), to the Company during normal business hours on any trading day at
the Company's principal executive offices (or such other office or agency of the
Company as it may designate by notice to the holder hereof), and upon (i)
payment to the Company in cash, by certified or official bank check or by wire
transfer for the account of the Company of the Exercise Price for the Warrant
Shares specified in the Exercise Agreement or (ii) if the resale of the Warrant
Shares by the holder is not then registered pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), delivery to the Company of a written notice of an election to
effect a "Cashless Exercise" (as
<PAGE> 2
defined in Section 11(c) below) for the Warrant Shares specified in the Exercise
Agreement. The Warrant Shares so purchased shall be deemed to be issued to the
holder hereof or such holder's designee, as the record owner of such shares, as
of the close of business on the date on which this Warrant shall have been
surrendered, the completed Exercise Agreement shall have been delivered, and
payment shall have been made for such shares (or an election to effect a
Cashless Exercise has been made) as set forth above. Certificates for the
Warrant Shares so purchased, representing the aggregate number of shares
specified in the Exercise Agreement, shall be delivered to the holder hereof
within a reasonable time, not exceeding two (2) trading days, after this Warrant
shall have been so exercised. The certificates so delivered shall be in such
denominations as may be requested by the holder hereof and shall be registered
in the name of such holder or such other name as shall be designated by such
holder. If this Warrant shall have been exercised only in part, then, unless
this Warrant has expired, the Company shall, at its expense, at the time of
delivery of such certificates, deliver to the holder a new Warrant representing
the number of shares with respect to which this Warrant shall not then have been
exercised.
2. PERIOD OF EXERCISE. This Warrant is exercisable at any time
or from time to time on or after the date on which this Warrant is issued and
delivered pursuant to the terms of the Securities Purchase Agreement (the "Issue
Date") and before 5:00 p.m., New York City time, on the fifth (5th) anniversary
of the Issue Date (the "Exercise Period").
3. CERTAIN AGREEMENTS OF THE COMPANY. The Company hereby
covenants and agrees as follows:
(a) SHARES TO BE FULLY PAID. All Warrant Shares will,
upon issuance in accordance with the terms of this Warrant, be validly issued,
fully paid, and nonassessable and free from all taxes, liens, and charges with
respect to the issue thereof.
(b) RESERVATION OF SHARES. During the Exercise
Period, the Company shall at all times have authorized, and reserved for the
purpose of issuance upon exercise of this Warrant, a sufficient number of shares
of Common Stock to provide for the exercise of this Warrant.
(c) LISTING. The Company shall promptly secure the
listing of the shares of Common Stock issuable upon exercise of the Warrant upon
each national securities exchange or automated quotation system, if any, upon
which shares of Common Stock are then listed (subject to official notice of
issuance upon exercise of this Warrant) and shall maintain, so long as any other
shares of Common Stock shall be so listed, such listing of all shares of Common
Stock from time to time issuable upon the exercise of this Warrant; and the
Company shall so list on each national securities exchange or automated
quotation system, as the case may be, and shall maintain such listing of, any
other shares of capital stock of the Company issuable upon the exercise of this
Warrant if and so long as any shares of the same class shall be listed on such
national securities exchange or automated quotation system.
-2-
<PAGE> 3
(d) CERTAIN ACTIONS PROHIBITED. The Company will not,
by amendment of its charter or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities, or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed by it hereunder, but will at all times in
good faith assist in the carrying out of all the provisions of this Warrant and
in the taking of all such action as may reasonably be requested by the holder of
this Warrant in order to protect the exercise privilege of the holder of this
Warrant against dilution or other impairment, consistent with the tenor and
purpose of this Warrant. Without limiting the generality of the foregoing, the
Company (i) will not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the Exercise Price then in
effect, and (ii) will take all such actions as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of this Warrant.
(e) SUCCESSORS AND ASSIGNS. This Warrant will be
binding upon any entity succeeding to the Company by merger, consolidation, or
acquisition of all or substantially all the Company's assets.
4. ANTIDILUTION PROVISIONS. During the Exercise Period, the
Exercise Price and the number of Warrant Shares shall be subject to adjustment
from time to time as provided in this Paragraph 4.
In the event that any adjustment of the Exercise Price as
required herein results in a fraction of a cent, such Exercise Price shall be
rounded up to the nearest cent.
(a) ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES
UPON ISSUANCE OF COMMON STOCK. Except as otherwise provided in Paragraphs 4(c)
and 4(e) hereof, if and whenever on or after the Issue Date of this Warrant, the
Company issues or sells, or in accordance with Paragraph 4(b) hereof is deemed
to have issued or sold, any shares of Common Stock for no consideration or for a
consideration per share (before deduction of reasonable expenses or commissions
or underwriting discounts or allowances in connection therewith) less than the
Market Price (as hereinafter defined) on the date of issuance (or deemed
issuance) of such Common Stock (a "Dilutive Issuance"), then immediately upon
the Dilutive Issuance, the Exercise Price will be reduced to a price determined
by multiplying the Exercise Price in effect immediately prior to the Dilutive
Issuance by a fraction, (i) the numerator of which is an amount equal to the sum
of (x) the number of shares of Common Stock actually outstanding immediately
prior to the Dilutive Issuance, plus (y) the quotient of the aggregate
consideration, calculated as set forth in Paragraph 4(b) hereof, received by the
Company upon such Dilutive Issuance divided by the Market Price in effect
immediately prior to the Dilutive Issuance, and (ii) the denominator of which is
the total number of shares of Common Stock Deemed Outstanding (as defined below)
immediately after the Dilutive Issuance.
-3-
<PAGE> 4
(b) EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS. For
purposes of determining the adjusted Exercise Price under Paragraph 4(a) hereof,
the following will be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. If the
Company in any manner (except in replacement of or exchange for warrants, rights
or options of a target company in a merger or acquisition) issues or grants any
warrants, rights or options, whether or not immediately exercisable, to
subscribe for or to purchase Common Stock or other securities convertible into
or exchangeable for Common Stock ("Convertible Securities") (such warrants,
rights and options to purchase Common Stock or Convertible Securities are
hereinafter referred to as "Options") and the price per share for which Common
Stock is issuable upon the exercise of such Options is less than the Market
Price on the date of issuance or grant of such Options, then the maximum total
number of shares of Common Stock issuable upon the exercise of all such Options
will, as of the date of the issuance or grant of such Options, be deemed to be
outstanding and to have been issued and sold by the Company for such price per
share. For purposes of the preceding sentence, the "price per share for which
Common Stock is issuable upon the exercise of such Options" is determined by
dividing (i) the total amount, if any, received or receivable by the Company as
consideration for the issuance or granting of all such Options, plus the minimum
aggregate amount of additional consideration, if any, payable to the Company
upon the exercise of all such Options, plus, in the case of Convertible
Securities issuable upon the exercise of such Options, the minimum aggregate
amount of additional consideration payable upon the conversion or exchange
thereof at the time such Convertible Securities first become convertible or
exchangeable, by (ii) the maximum total number of shares of Common Stock
issuable upon the exercise of all such Options (assuming full conversion of
Convertible Securities, if applicable). No further adjustment to the Exercise
Price will be made upon the actual issuance of such Common Stock upon the
exercise of such Options or upon the conversion or exchange of Convertible
Securities issuable upon exercise of such Options.
(II) ISSUANCE OF CONVERTIBLE SECURITIES. If
the Company in any manner issues or sells any Convertible Securities, whether or
not immediately convertible (other than where the same are issuable upon the
exercise of Options) and the price per share for which Common Stock is issuable
upon such conversion or exchange is less than the Market Price on the date of
issuance of such Convertible Securities, then the maximum total number of shares
of Common Stock issuable upon the conversion or exchange of all such Convertible
Securities will, as of the date of the issuance of such Convertible Securities,
be deemed to be outstanding and to have been issued and sold by the Company for
such price per share. For the purposes of the preceding sentence, the "price per
share for which Common Stock is issuable upon such conversion or exchange" is
determined by dividing (i) the total amount, if any, received or receivable by
the Company as consideration for the issuance or sale of all such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the conversion or exchange thereof at the time
such Convertible Securities first become convertible or exchangeable, by (ii)
the maximum total number of shares of Common Stock issuable upon the conversion
or exchange of all such Convertible Securities. No further
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<PAGE> 5
adjustment to the Exercise Price will be made upon the actual issuance of such
Common Stock upon conversion or exchange of such Convertible Securities.
(III) CHANGE IN OPTION PRICE OR CONVERSION
RATE. If there is a change at any time in (i) the amount of additional
consideration payable to the Company upon the exercise of any Options; (ii) the
amount of additional consideration, if any, payable to the Company upon the
conversion or exchange of any Convertible Securities; or (iii) the rate at which
any Convertible Securities are convertible into or exchangeable for Common Stock
(other than under or by reason of provisions designed to protect against
dilution), the Exercise Price in effect at the time of such change will be
readjusted to the Exercise Price which would have been in effect at such time
had such Options or Convertible Securities still outstanding provided for such
changed additional consideration or changed conversion rate, as the case may be,
at the time initially granted, issued or sold.
(IV) TREATMENT OF EXPIRED OPTIONS AND
UNEXERCISED CONVERTIBLE SECURITIES. If, in any case, the total number of shares
of Common Stock issuable upon exercise of any Option or upon conversion or
exchange of any Convertible Securities is not, in fact, issued and the rights to
exercise such Option or to convert or exchange such Convertible Securities shall
have expired or terminated, the Exercise Price then in effect will be readjusted
to the Exercise Price which would have been in effect at the time of such
expiration or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination (other
than in respect of the actual number of shares of Common Stock issued upon
exercise or conversion thereof), never been issued.
(v) CALCULATION OF CONSIDERATION RECEIVED.
If any Common Stock, Options or Convertible Securities are issued, granted or
sold for cash, the consideration received therefor for purposes of this Warrant
will be the amount received by the Company therefor, before deduction of
reasonable commissions, underwriting discounts or allowances or other reasonable
expenses paid or incurred by the Company in connection with such issuance, grant
or sale. In case any Common Stock, Options or Convertible Securities are issued
or sold for a consideration part or all of which shall be other than cash, the
amount of the consideration other than cash received by the Company will be the
fair value of such consideration, except where such consideration consists of
securities, in which case the amount of consideration received by the Company
will be the Market Price thereof as of the date of receipt. The fair value of
any consideration other than cash or securities will be determined in good faith
by the Board of Directors of the Company.
(VI) EXCEPTIONS TO ADJUSTMENT OF EXERCISE
PRICE. No adjustment to the Exercise Price will be made (i) upon the exercise of
any warrants, options or convertible securities granted, issued and outstanding
on the date of issuance of this Warrant; (ii) upon the grant or exercise of any
stock or options which may hereafter be granted or exercised under any employee
benefit plan of the Company now existing or to be implemented in the future, so
long as the issuance of such stock or options is approved by a majority of the
independent
-5-
<PAGE> 6
members of the Board of Directors of the Company or a majority of the members of
a committee of independent directors established for such purpose; or (iii) upon
the exercise of the Warrants.
(c) SUBDIVISION OR COMBINATION OF COMMON STOCK. If
the Company at any time subdivides (by any stock split, stock dividend,
recapitalization, reorganization, reclassification or otherwise) the shares of
Common Stock acquirable hereunder into a greater number of shares, then, after
the date of record for effecting such subdivision, the Exercise Price in effect
immediately prior to such subdivision will be proportionately reduced. If the
Company at any time combines (by reverse stock split, recapitalization,
reorganization, reclassification or otherwise) the shares of Common Stock
acquirable hereunder into a smaller number of shares, then, after the date of
record for effecting such combination, the Exercise Price in effect immediately
prior to such combination will be proportionately increased.
(d) ADJUSTMENT IN NUMBER OF SHARES. Upon each
adjustment of the Exercise Price pursuant to the provisions of this Paragraph 4,
the number of shares of Common Stock issuable upon exercise of this Warrant
shall be adjusted by multiplying a number equal to the Exercise Price in effect
immediately prior to such adjustment by the number of shares of Common Stock
issuable upon exercise of this Warrant immediately prior to such adjustment and
dividing the product so obtained by the adjusted Exercise Price.
(e) CONSOLIDATION, MERGER OR SALE. In case of any
consolidation of the Company with, or merger of the Company into any other
corporation, or in case of any sale or conveyance of all or substantially all of
the assets of the Company other than in connection with a plan of complete
liquidation of the Company, then:
(1) If the fair value per share of Common
Stock of the shares of stock, securities or assets that are to be issued or paid
to the Company or its common shareholders in such consolidation, merger, sale or
conveyance, is greater than the then applicable Exercise Price, the Company
shall have the right to declare this Warrant to be exercised in full (using the
Cashless Exercise described herein), effective as of a date immediately prior to
the closing of such consolidation, merger, sale or conveyance. The Company shall
provide notice of its intent to make such a declaration (which intent may be
subject to fluctuations in the fair value of the consideration to be received in
such consolidation, merger, sale or conveyance) a reasonable time prior to the
anticipated closing of the consolidation, merger, sale or conveyance, and in no
case less than 10 business days prior to such closing. The declaration shall be
made in writing and provided to the holder of this Warrant on or as soon as
reasonably practicable after the effective date of such declaration. Upon such
declaration this Warrant shall be deemed to represent only the right to receive
such shares of stock, securities or assets as may be issued or paid with respect
to or in exchange for the number of shares of Common Stock acquirable and
receivable upon the Cashless Exercise of this Warrant on the effective date of
such declaration. The exercise of this Warrant pursuant to the Company's
declaration as just described shall be void and of no effect if the
consolidation, merger, sale or conveyance giving rise to the declaration does
not close within 10 business days after the effective date of such declaration.
-6-
<PAGE> 7
Or, if the Company does not or cannot declare this Warrant to be exercised in
full,
(2) As a condition of such consolidation,
merger or sale or conveyance, adequate provision will be made whereby the holder
of this Warrant will have the right to acquire and receive upon exercise of this
Warrant in lieu of the shares of Common Stock immediately theretofore acquirable
upon the exercise of this Warrant, such shares of stock, securities or assets as
may be issued or payable with respect to or in exchange for the number of shares
of Common Stock immediately theretofore acquirable and receivable upon exercise
of this Warrant had such consolidation, merger or sale or conveyance not taken
place. In any such case, the Company will make appropriate provision to insure
that the provisions of this Paragraph 4 hereof will thereafter be applicable as
nearly as may be in relation to any shares of stock or securities thereafter
deliverable upon the exercise of this Warrant.
The Company will not effect any consolidation, merger or sale
or conveyance unless the Company declares the exercise in full of this Warrant
or, prior to the consummation of such consolidation, merger, sale or conveyance,
the successor or acquiring entity (if other than the Company) and, if an entity
different from the successor or acquiring entity, the entity whose capital stock
or assets the holders of the Common Stock of the Company are entitled to receive
as a result of such consolidation, merger or sale or conveyance assumes by
written instrument the obligations under this Warrant (including under this
Paragraph 4) and the obligations to deliver to the holder of this Warrant such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, the holder may be entitled to acquire.
(f) DISTRIBUTION OF ASSETS. In case the Company shall
declare or make any distribution of its assets (including cash) to holders of
Common Stock as a partial liquidating dividend, by way of return of capital or
otherwise, then, after the date of record for determining stockholders entitled
to such distribution, but prior to the date of distribution, the holder of this
Warrant shall be entitled upon exercise of this Warrant for the purchase of any
or all of the shares of Common Stock subject hereto, to receive the amount of
such assets which would have been payable to the holder had such holder been the
holder of such shares of Common Stock on the record date for the determination
of stockholders entitled to such distribution.
(g) NOTICE OF ADJUSTMENT. Upon the occurrence of any
event which requires any adjustment of the Exercise Price, then, and in each
such case, the Company shall give notice thereof to the holder of this Warrant,
which notice shall state the Exercise Price resulting from such adjustment and
the increase or decrease in the number of Warrant Shares purchasable at such
price upon exercise, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based. Such calculation
shall be certified by the chief financial officer of the Company.
(h) MINIMUM ADJUSTMENT OF EXERCISE PRICE. No
adjustment of the Exercise Price shall be made in an amount of less than 1% of
the Exercise Price in effect at the time such adjustment is otherwise required
to be made, but any such lesser adjustment shall be carried forward and shall be
made at the time and together with the next subsequent adjustment
-7-
<PAGE> 8
which, together with any adjustments so carried forward, shall amount to not
less than 1% of such Exercise Price.
(i) NO FRACTIONAL SHARES. No fractional shares of
Common Stock are to be issued upon the exercise of this Warrant, but the Company
shall pay a cash adjustment in respect of any fractional share which would
otherwise be issuable in an amount equal to the same fraction of the Market
Price of a share of Common Stock on the date of such exercise.
(j) OTHER NOTICES. In case at any time:
(i) the Company shall declare any dividend
upon the Common Stock payable in shares of stock of any class or make any other
distribution (including dividends or distributions payable in cash out of
retained earnings) to the holders of the Common Stock;
(II) the Company shall offer for
subscription pro rata to the holders of the Common Stock any additional shares
of stock of any class or other rights;
(III) there shall be any capital
reorganization of the Company, or reclassification of the Common Stock, or
consolidation or merger of the Company with or into, or sale of all or
substantially all its assets to, another corporation or entity; or
(IV) there shall be a voluntary or
involuntary dissolution, liquidation or winding-up of the Company;
then, in each such case, the Company shall give to the holder of this Warrant
(a) notice of the date on which the books of the Company shall close or a record
shall be taken for determining the holders of Common Stock entitled to receive
any such dividend, distribution, or subscription rights or for determining the
holders of Common Stock entitled to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, notice of
the date (or, if not then known, a reasonable approximation thereof by the
Company) when the same shall take place. Such notice shall also specify the date
on which the holders of Common Stock shall be entitled to receive such dividend,
distribution, or subscription rights or to exchange their Common Stock for stock
or other securities or property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or
winding-up, as the case may be. Such notice shall be given at least 30 days
prior to the record date or the date on which the Company's books are closed in
respect thereto. Failure to give any such notice or any defect therein shall not
affect the validity of the proceedings referred to in clauses (i), (ii), (iii)
and (iv) above.
(k) CERTAIN EVENTS. If any event occurs of the type
contemplated by the adjustment provisions of this Paragraph 4 but not expressly
provided for by such provisions, the Company will give notice of such event as
provided in Paragraph 4(g) hereof, and the Company's Board of Directors will
make an appropriate adjustment in the Exercise Price and the
-8-
<PAGE> 9
number of shares of Common Stock acquirable upon exercise of this Warrant so
that the rights of the Holder shall be neither enhanced nor diminished by such
event.
(l) CERTAIN DEFINITIONS.
(i) "COMMON STOCK DEEMED OUTSTANDING" shall
mean the number of shares of Common Stock actually outstanding (not including
shares of Common Stock held in the treasury of the Company), plus (x) pursuant
to Paragraph 4(b)(i) hereof, the maximum total number of shares of Common Stock
issuable upon the exercise of Options, as of the date of such issuance or grant
of such Options, if any, and (y) pursuant to Paragraph 4(b)(ii) hereof, the
maximum total number of shares of Common Stock issuable upon conversion or
exchange of Convertible Securities, as of the date of issuance of such
Convertible Securities, if any.
(II) "MARKET PRICE," as of any date, (i)
means the average of the last reported sale prices for the shares of Common
Stock on the Nasdaq National Market (the "NNM") for the five (5) trading days
immediately preceding such date as reported by Bloomberg Financial Markets or an
equivalent reliable reporting service mutually acceptable to and hereafter
designated by the holder of this Warrant and the Company ("Bloomberg"), or (ii)
if the NNM is not the principal trading market for the shares of Common Stock,
the average of the last reported sale prices on the principal trading market for
the Common Stock during the same period as reported by Bloomberg, or (iii) if
market value cannot be calculated as of such date on any of the foregoing bases,
the Market Price shall be the fair market value as reasonably determined in good
faith by (a) the Board of Directors of the Corporation or (b) at the option of a
majority-in-interest of the holders of the outstanding Warrants, by an
independent investment bank of nationally recognized standing in the valuation
of businesses similar to the business of the corporation. The manner of
determining the Market Price of the Common Stock set forth in the foregoing
definition shall apply with respect to any other security in respect of which a
determination as to market value must be made hereunder.
(III) "COMMON STOCK," for purposes of this
Paragraph 4, includes the Common Stock, par value $0.01 per share, and any
additional class of stock of the Company having no preference as to dividends or
distributions on liquidation, provided that the shares purchasable pursuant to
this Warrant shall include only shares of Common Stock, par value $0.01 per
share, in respect of which this Warrant is exercisable, or shares resulting from
any subdivision or combination of such Common Stock, or in the case of any
reorganization, reclassification, consolidation, merger, or sale of the
character referred to in Paragraph 4(e) hereof, the stock or other securities or
property provided for in such Paragraph.
5. ISSUE TAX. The issuance of certificates for Warrant Shares
upon the exercise of this Warrant shall be made without charge to the holder of
this Warrant or such shares for any issuance tax or other costs in respect
thereof, provided that the Company shall not be required to pay any tax which
may be payable in respect of any transfer involved in the issuance and delivery
of any certificate in a name other than the holder of this Warrant.
-9-
<PAGE> 10
6. NO RIGHTS OR LIABILITIES AS A SHAREHOLDER. This Warrant
shall not entitle the holder hereof to any voting rights or other rights as a
shareholder of the Company. No provision of this Warrant, in the absence of
affirmative action by the holder hereof to purchase Warrant Shares, and no mere
enumeration herein of the rights or privileges of the holder hereof, shall give
rise to any liability of such holder for the Exercise Price or as a shareholder
of the Company, whether such liability is asserted by the Company or by
creditors of the Company.
7. TRANSFER, EXCHANGE, AND REPLACEMENT OF WARRANT.
(a) RESTRICTION ON TRANSFER. This Warrant and the
rights granted to the holder hereof are transferable, in whole or in part, upon
surrender of this Warrant, together with a properly executed assignment in the
form attached hereto, at the office or agency of the Company referred to in
Paragraph 7(e) below, provided, however, that any transfer or assignment shall
be subject to the conditions set forth in Paragraph 7(f) hereof and to all
applicable securities laws. Until due presentment for registration of transfer
on the books of the Company, the Company may treat the registered holder hereof
as the owner and holder hereof for all purposes, and the Company shall not be
affected by any notice to the contrary.
(b) WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS.
This Warrant is exchangeable, upon the surrender hereof by the holder hereof at
the office or agency of the Company referred to in Paragraph 7(e) below, for new
Warrants of like tenor representing in the aggregate the right to purchase the
number of shares of Common Stock which may be purchased hereunder, each of such
new Warrants to represent the right to purchase such number of shares as shall
be designated by the holder hereof at the time of such surrender.
(c) REPLACEMENT OF WARRANT. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction, or
mutilation of this Warrant and, in the case of any such loss, theft, or
destruction, upon delivery of an indemnity agreement reasonably satisfactory in
form and amount to the Company, or, in the case of any such mutilation, upon
surrender and cancellation of this Warrant, the Company, at its expense, will
execute and deliver, in lieu thereof, a new Warrant of like tenor.
(d) CANCELLATION; PAYMENT OF EXPENSES. Upon the
surrender of this Warrant in connection with any transfer, exchange, or
replacement as provided in this Paragraph 7, this Warrant shall be promptly
canceled by the Company. The Company shall pay all taxes (other than securities
transfer taxes) and all other expenses (other than legal expenses, if any,
incurred by the Holder or transferees) and charges payable in connection with
the preparation, execution, and delivery of Warrants pursuant to this Paragraph
7.
(e) REGISTER. The Company shall maintain, at its
principal executive offices (or such other office or agency of the Company as it
may designate by notice to the holder hereof), a register for this Warrant, in
which the Company shall record the name and address of the person in whose name
this Warrant has been issued, as well as the name and address of each transferee
and each prior owner of this Warrant.
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<PAGE> 11
(f) EXERCISE OR TRANSFER WITHOUT REGISTRATION. If, at
the time of the surrender of this Warrant in connection with any exercise,
transfer, or exchange of this Warrant, this Warrant (or, in the case of any
exercise, the Warrant Shares issuable hereunder), shall not be registered under
the Securities Act and under applicable state securities or blue sky laws, the
Company may require, as a condition of allowing such exercise, transfer, or
exchange, (i) that the holder or transferee of this Warrant, as the case may be,
furnish to the Company a written opinion of counsel, which opinion and counsel
are acceptable to the Company, to the effect that such exercise, transfer, or
exchange may be made without registration under said Act and under applicable
state securities or blue sky laws, (ii) that the holder or transferee execute
and deliver to the Company an investment letter in form and substance acceptable
to the Company and (iii) that the transferee be an "accredited investor" as
defined in Rule 501(a) promulgated under the Securities Act; provided that no
such opinion, letter or status as an "accredited investor" shall be required in
connection with a transfer pursuant to Rule 144 under the Securities Act. The
first holder of this Warrant, by taking and holding the same, represents to the
Company that such holder is an "accredited investor," and is acquiring this
Warrant for investment only and not with a view to the distribution thereof.
8. REGISTRATION RIGHTS. The initial holder of this Warrant is
entitled to the benefit of such registration rights in respect of the Warrant
Shares as are set forth in Section 2 of that certain Registration Rights
Agreement by and between the Company and RGC International Investors, LDC, dated
of even date herewith.
9. NOTICES. All notices, requests, and other communications
required or permitted to be given or delivered hereunder to the holder of this
Warrant shall be in writing, and shall be personally delivered, or shall be sent
by certified or registered mail or by recognized overnight mail courier, postage
prepaid and addressed, to such holder at the address shown for such holder on
the books of the Company, or at such other address as shall have been furnished
to the Company by notice from such holder. All notices, requests, and other
communications required or permitted to be given or delivered hereunder to the
Company shall be in writing, and shall be personally delivered, or shall be sent
by certified or registered mail or by recognized overnight mail courier, postage
prepaid and addressed, to the office of the Company at 67 Inverness Drive East,
Suite 100, Englewood, Colorado 80112, Attention: Chief Executive Officer, or at
such other address as shall have been furnished to the holder of this Warrant by
notice from the Company. Any such notice, request, or other communication may be
sent by facsimile, but shall in such case be subsequently confirmed by a writing
personally delivered or sent by certified or registered mail or by recognized
overnight mail courier as provided above. All notices, requests, and other
communications shall be deemed to have been given either at the time of the
receipt thereof by the person entitled to receive such notice at the address of
such person for purposes of this Paragraph 9, or, if mailed by registered or
certified mail or with a recognized overnight mail courier upon deposit with the
United States Post Office or such overnight mail courier, if postage is prepaid
and the mailing is properly addressed, as the case may be.
10. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO
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<PAGE> 12
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN THE STATE OF COLORADO
(WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS). BOTH PARTIES IRREVOCABLY
CONSENT TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS AND
THE STATE COURTS LOCATED IN COLORADO WITH RESPECT TO ANY SUIT OR PROCEEDING
BASED ON OR ARISING UNDER THIS AGREEMENT, THE AGREEMENTS ENTERED INTO IN
CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY AND
IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH SUIT OR PROCEEDING MAY BE
DETERMINED IN SUCH COURTS. BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING. BOTH PARTIES
FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL
SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN
ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER PARTY'S RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. BOTH PARTIES AGREE THAT A
FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE
AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY
OTHER LAWFUL MANNER.
11. MISCELLANEOUS.
(a) AMENDMENTS. This Warrant and any provision hereof
may only be amended by an instrument in writing signed by the Company and the
holder hereof.
(b) DESCRIPTIVE HEADINGS. The descriptive headings of
the several paragraphs of this Warrant are inserted for purposes of reference
only, and shall not affect the meaning or construction of any of the provisions
hereof.
(c) CASHLESS EXERCISE. Notwithstanding anything to
the contrary contained in this Warrant, if the resale of the Warrant Shares by
the holder is not then registered pursuant to an effective registration
statement under the Securities Act, this Warrant may be exercised by
presentation and surrender of this Warrant to the Company at its principal
executive offices with a written notice of the holder's intention to effect a
cashless exercise, including a calculation of the number of shares of Common
Stock to be issued upon such exercise in accordance with the terms hereof (a
"Cashless Exercise"). In the event of a Cashless Exercise, in lieu of paying the
Exercise Price in cash, the holder shall surrender this Warrant for that number
of shares of Common Stock determined by multiplying the number of Warrant Shares
to which it would otherwise be entitled by a fraction, the numerator of which
shall be the difference between the then current Market Price per share of the
Common Stock and the Exercise Price, and the denominator of which shall be the
then current Market Price per share of Common Stock.
(d) REMEDIES. The Company acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to the holder, by
vitiating the intent and purpose
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<PAGE> 13
of the transaction contemplated hereby. Accordingly, the Company acknowledges
that the remedy at law for a breach of its obligations under this Warrant will
be inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Warrant, that the holder shall be entitled, in
addition to all other available remedies at law or in equity, to an injunction
or injunctions restraining, preventing or curing any breach of this Warrant and
to enforce specifically the terms and provisions thereof, without the necessity
of showing economic loss and without any bond or other security being required.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed by its duly authorized officer.
T-NETIX, INC.
By:
-----------------------------------
Alvyn A. Schopp
Chief Executive Officer
Dated as of April 17, 2000
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<PAGE> 14
FORM OF EXERCISE AGREEMENT
Dated: ________ __, 200_
To: T-NETIX, Inc.
The undersigned, pursuant to the provisions set forth in the
within Warrant, hereby agrees to purchase ________ shares of Common Stock
covered by such Warrant, and makes payment herewith in full therefor at the
price per share provided by such Warrant in cash or by certified or official
bank check in the amount of, or, if the resale of such Common Stock by the
undersigned is not currently registered pursuant to an effective registration
statement under the Securities Act of 1933, as amended, by surrender of
securities issued by the Company (including a portion of the Warrant) having a
market value (in the case of a portion of this Warrant, determined in accordance
with Section 11(c) of the Warrant) equal to $_________. Please issue a
certificate or certificates for such shares of Common Stock in the name of and
pay any cash for any fractional share to:
Name:
----------------------------------------
Signature:
----------------------------------------
Address:
----------------------------------------
----------------------------------------
Note: The above signature should correspond
exactly with the name on the face of the within
Warrant.
and, if said number of shares of Common Stock shall not be all the shares
purchasable under the within Warrant, a new Warrant is to be issued in the name
of said undersigned covering the balance of the shares purchasable thereunder
less any fraction of a share paid in cash.
<PAGE> 15
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers all the rights of the undersigned under the within Warrant, with
respect to the number of shares of Common Stock covered thereby set forth
hereinbelow, to:
<TABLE>
<CAPTION>
Name of Assignee Address No of Shares
- ---------------- ------- ------------
<S> <C> <C>
</TABLE>
, and hereby irrevocably constitutes and appoints ______________ _______________
_________ as agent and attorney-in-fact to transfer said Warrant on the books of
the within-named corporation, with full power of substitution in the premises.
Dated: , 200
--------------- --
In the presence of:
- ------------------------------------------
Name:
-------------------------------------
Signature:
--------------------------------
Title of Signing Officer or Agent (if any):
- ------------------------------------------
Address:
----------------------------------
- ------------------------------------------
Note: The above signature should correspond
exactly with the name on the face of the within
Warrant.
<PAGE> 1
Exhibit 5.1
May 15, 2000
T-NETIX, Inc.
67 Inverness Way, Suite 100
Englewood, Colorado 80112
Ladies and Gentlemen:
You have requested our opinion in connection with the Registration
Statement on Form S-3 (the "Registration Statement") which is expected to be
filed by T-NETIX, Inc. (the "Company") on or about May 17, 2000, with respect to
the offer and sale of 2,575,000 shares of common stock, $0.01 par value, by
certain selling shareholders named in the Registration Statement.
We have reviewed such corporate documents and have made such
investigation of Colorado law as we have deemed necessary under the
circumstances. Based on that review and investigation, it is our opinion that
when the shares referred to above have been duly authorized and issued, and are
fully paid and nonassessable.
We consent to the use by the Company, in the Registration Statement, of
our name and the statement with respect to our firm under the heading of "Legal
Matters" in the Registration Statement.
Sincerely yours,
ROTHGERBER JOHNSON & LYONS LLP
/s/ Rothgerber Johnson & Lyons LLP
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement on
Form S-3 of T-NETIX, Inc., relating to the registration of 2,575,000 shares, of
our report dated March 21, 2000, on the consolidated balance sheets of T-NETIX,
Inc. and subsidiaries as of December 31, 1999 and 1998, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the years in the three-year period ending December 31, 1999, which
report appears in the December 31, 1999, Annual Report on Form 10-K of T-NETIX,
Inc. and to the reference to our firm under the heading "Experts" in the
Prospectus.
/s/ KPMG LLP
Denver, Colorado
May 17, 2000
