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As filed with the Securities and Exchange Commission on November 6, 1997
Registration No. 333-_________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ACCENT SOFTWARE INTERNATIONAL LTD.
(Exact name of Registrant as specified in its charter)
<TABLE>
Israel 7372 N.A.
<S> <C> <C>
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Numbers) Identification No.)
</TABLE>
28 Pierre Koenig Street
Jerusalem 91530, Israel
Telephone: 972-2-679-3723
(Address and telephone number of Registrant's principal executive offices)
Todd A. Oseth
Accent Worldwide, Inc.
Suite 340
2864 South Circle Drive
Colorado Springs, CO 80906
(719) 576-2610
(Name, address and telephone number of agent for service of process)
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Copies to:
Herbert H. Davis III, Esq. Barry P. Levenfeld, Esq.
Rothgerber, Appel, Powers & Johnson LLP Yigal Arnon & Co.
1200 Seventeenth Street, Suite 3000 3 Daniel Frisch Street
Denver, CO 80202-5839 Tel Aviv 64731, Israel
Telephone: (303) 623-9000 Telephone: 972-3-692-6868
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Approximate date of commencement of proposed sale to the public:
From time to time after this Registration Statement becomes effective.
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If the only securities being registered on this Form are to be offered pursuant
to dividend or interest reinvestment plans, please check the following box. / /
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please 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. / /
<PAGE>
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
<TABLE>
TITLE OF EACH CLASS AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER ORDINARY SHARE(1) OFFERING PRICE(1) FEE
<S> <C> <C> <C> <C>
Ordinary Shares,
NIS .01 nominal
value per share 11,990,000(2) $2.50 $29,975,000 $9,083
</TABLE>
(1) Based upon the average of the high and low sales prices of the Company's
Ordinary Shares on the Nasdaq Small Cap Market on November 4, 1997,
estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457 of the Securities Act of 1933, as
amended.
(2) Includes 10,052,500 Ordinary Shares, which are issuable upon the conversion
of debentures issued to CC Investments, LDC, Nelson Partners, Olympus
Securities, Ltd., Marshall Companies, FTS Worldwide Inc., Beauchamp Finance
Limited and Eurofactors International (the "Investors"); 1,150,000 Ordinary
Shares, which are issuable upon the exercise of warrants issued to the
Investors (the "Investor Warrants"); and 787,500 Ordinary Shares, which are
issuable upon the exercise of warrants (the "Placement Warrants") issued to
The Shemano Group as placement agent for this transaction.
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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
<PAGE>
SUBJECT TO COMPLETION - DATED NOVEMBER 6, 1997
PROSPECTUS
ACCENT SOFTWARE INTERNATIONAL LTD.
11,990,000 ORDINARY SHARES(1)
-----------
THIS PROSPECTUS RELATES TO THE PUBLIC OFFERING, WHICH IS NOT BEING
UNDERWRITTEN, OF UP TO 11,990,000 ORDINARY SHARES, NOMINAL VALUE NIS 0.01 PER
SHARE (THE "SHARES"), OF ACCENT SOFTWARE INTERNATIONAL LTD. ("ACCENT" OR THE
"COMPANY"), WHICH MAY BE OFFERED FROM TIME TO TIME BY CERTAIN SHAREHOLDERS OF
THE COMPANY OR BY AUTHORIZED TRANSFEREES (THE "SELLING SHAREHOLDERS").
THE SHARES ARE ISSUABLE TO THE SELLING SHAREHOLDERS (i) UPON CONVERSION OF
6% DEBENTURES OF THE COMPANY ("DEBENTURES") OR SHARES OF PREFERRED STOCK
ISSUABLE IN EXCHANGE FOR THE DEBENTURES ("PREFERRED SHARES"); (ii) AS PAYMENT OF
INTEREST DUE ON THE DEBENTURES; (iii) UPON EXERCISE OF WARRANTS TO PURCHASE AN
AGGREGATE OF 1,150,000 ORDINARY SHARES ISSUED IN CONNECTION WITH THE SALE OF THE
DEBENTURES; AND (iv) UPON EXERCISE OF WARRANTS TO PURCHASE AN AGGREGATE OF
787,500 ORDINARY SHARES ISSUED TO THE SHEMANO GROUP AS THE PLACEMENT AGENT. THE
COMPANY WILL RECEIVE NO PART OF THE PROCEEDS OF SALES OF THE SHARES. HOWEVER,
THE COMPANY WILL RECEIVE PROCEEDS FROM THE EXERCISE OF THE WARRANTS, IF THE
WARRANTS ARE EXERCISED. THE EXERCISE PRICE OF THE INVESTOR AND PLACEMENT
WARRANTS IS $4,746,875 IN THE AGGREGATE. THE SHARES HAVE BEEN RESERVED BY THE
COMPANY FOR ISSUANCE AND THE EXERCISE OF THE WARRANTS. THE SHARES ARE BEING
REGISTERED BY THE COMPANY PURSUANT TO AGREEMENTS BETWEEN IT AND THE SELLING
SHAREHOLDERS.
ONCE ISSUED, THE SHARES MAY BE OFFERED BY THE SELLING SHAREHOLDERS FROM
TIME TO TIME IN ONE OR MORE TRANSACTIONS IN THE OPEN MARKET AT PRICES PREVAILING
THEREIN, IN NEGOTIATED TRANSACTIONS AT SUCH PRICES AS MY BE AGREED UPON, OR IN A
COMBINATION OF SUCH METHODS OF SALE. SEE "PLAN OF DISTRIBUTION." THE PRICE AT
WHICH ANY OF THE SHARES MAY BE SOLD, AND THE COMMISSIONS, IF ANY, PAID IN
CONNECTION WITH ANY SUCH SALE, ARE UNKNOWN AND MAY VARY FROM TRANSACTION TO
TRANSACTION. THE COMPANY WILL PAY ALL EXPENSES INCIDENT TO THE REGISTRATION OF
THE SHARES. SEE "SELLING SHAREHOLDERS" AND "PLAN OF DISTRIBUTION."
ON NOVEMBER 4, 1997, THE LAST REPORTED SALE OF THE ORDINARY SHARES ON THE
NASDAQ SMALL CAP MARKET WAS $2.50. ORDINARY SHARES ARE TRADED UNDER THE NASDAQ
SYMBOL ACNFC.
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THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. PROSPECTIVE PURCHASERS OF THE
SECURITIES OFFERED HEREBY SHOULD CAREFULLY CONSIDER THE MATTERS SET FORTH UNDER
THE CAPTION "RISK FACTORS" BEGINNING ON PAGE 9.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
- --------------------
(1) To the extent allowable under the Act, including Rule 416 thereto, this
Prospectus shall be deemed to cover an indeterminate number of additional
Ordinary Shares of the Company as may become issuable upon conversion of the
debentures and/or Convertible Preferred Shares of the Company issuable in
exchange for the debentures and the exercise of the warrants (i) to prevent
dilution resulting from stock splits, stock dividends or similar
transactions, or (ii) by reason of changes in the conversion price of the
debentures and/or the Preferred Shares or the exercise price of the warrants
in accordance with the terms thereof.
1
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EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE COMPANY HAS RECEIVED FROM THE SECURITIES AUTHORITY OF THE STATE OF ISRAEL AN
EXEMPTION FROM THE OBLIGATION TO PUBLISH THIS PROSPECTUS IN THE MANNER REQUIRED
PURSUANT TO THE PREVAILING LAWS OF THE STATE OF ISRAEL. NOTHING IN SUCH
EXEMPTION SHALL BE CONSTRUED AS AUTHENTICATING THE MATTERS CONTAINED IN THIS
PROSPECTUS OR AS AN APPROVAL OF THEIR RELIABILITY OR ADEQUACY OR AS AN
EXPRESSION OF OPINION AS TO THE QUALITY OF THE SECURITIES HEREBY OFFERED.
The date of this Prospectus ______________, 1997
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy and information statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy and information statements and other information can be inspected and
copied at the Public Reference Section of the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and the following regional
offices: Northeast Regional Office, Suite 1300, Seven World Trade Center, 13th
Floor, New York, New York 10048, and Midwest Regional Office, Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511, and copies of such material may also be obtained from the Public
Reference Section of the Commission at prescribed rates. The Commission
maintains a Web site at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. The reports, proxy, information
statements and other information filed by the Company with the Commission are
also filed with The Nasdaq Small Cap Market and can be inspected at its
facility at 1735 K Street, N.W., Washington, D.C. 20006. The Company intends
to furnish its shareholders with annual reports containing audited financial
statements and such other periodic reports as the Company deems appropriate
or as may be required by law.
The Company has filed with the Commission a registration statement on
Form S-3 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the securities offered by this
Prospectus. This Prospectus, which constitutes a part of such Registration
Statement, does not contain all of the information set forth in, or annexed as
exhibits to, the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulation of the Commission. For further
information with respect to the Company and this offering, reference is made to
the Registration Statement, including the exhibits filed therewith, which may be
inspected without charge at the offices of the Commission at the addresses set
forth above. Copies of the Registration Statement may be obtained from the
Commission at its principal office upon payment of prescribed fees. Statements
contained in this Prospectus as to the contents of any contract or other
documents are not necessarily complete and, where the contract or other document
has been filed as an exhibit to the Registration Statement, each statement is
qualified in all respects by reference to the applicable document filed with the
Commission.
The Company has received from the Securities Authority of the State of
Israel (the "Israel Securities Authority") an exemption from the reporting
obligations as specified in Chapter Six of the Israel Securities Law 5728-1968,
which include the obligation to submit periodic and immediate reports to the
Israel Securities Authority, provided that a copy of each report submitted in
accordance with applicable United States law shall be available for
2
<PAGE>
public review at the Company's principal offices in Israel.
FORWARD LOOKING STATEMENTS
Certain non-historical statements contained in this Prospectus are
forward-looking statements, which involve known and unknown risks and
uncertainties. The Company is including this statement for the express
purpose of availing itself of the protections of the safe harbor provided by
the Private Securities Litigation Reform Act of 1995 with respect to all such
forward looking statements. Examples of forward looking statements include,
but are not limited to: (i) projections of capital expenditures, revenues,
growth, prospects, capital structure and other financial matters; (ii)
statements of plans or objectives of the Company; and (iii) statements using
the words "anticipate," "expect," "may," "project," "intend" or similar
expressions.
The Company's ability to predict projected results or the effects of
certain events on the Company's operating results is inherently uncertain.
Therefore, the Company wishes to caution readers of this Prospectus to carefully
consider the matters set forth under the caption "Risk Factors" and certain
other matters discussed herein and in other publicly available information.
Such factors and many other factors beyond the control of the Company's
management could cause the actual results, performance or achievements of the
Company to be materially different from any future results, performance or
achievements that may be expressed or implied by such forward-looking
statements. See "Risk Factors."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company (File No.
0-26394) Pursuant to the Exchange Act are hereby incorporated by reference in
this Prospectus:
(1) The Company's Annual Report on Form 10-K for the year ended December 31,
1996;
(2) The Company's Current Report on Form 8-K dated February 5, 1997;
(3) The Company's Quarterly Report on Form 10-Q for the quarter ending
March 31, 1997;
(4) The Company's Proxy Statement for its Annual Meeting of Shareholders held
on May 28, 1997;
(5) The Company's Quarterly Report on Form 10-Q for the quarter ending
June 30, 1997
(6) The Company's Current Report on Form 8-K dated August 20, 1997;
(7) The Company's Registration Statement on Form S-3 dated August 27, 1997;
(8) The Company's Amended Registration Statement on Form S-3 dated
September 29, 1997;
(9) The Company's Proxy Statement for its Extraordinary Meeting of Shareholders
to be held on October 6, 1997;
(10) The Company's Registration Statement on Form S-3 dated October 16, 1997;
(11) The Company's Amended Registration Statement on Form S-3 dated October 23,
1997;
(12) The description of the Company's Ordinary Shares contained in its
Registration Statement on Form 8-A, filed with the Commission on July 11,
1995, as amended by the Company's Registration Statement filed on
Form 8-A/A filed on July 14, 1995; and
(13) The Company's Current Report on Form 8-K dated November 6, 1997.
All reports and other documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of this offering shall be deemed to be
incorporated by reference into this Prospectus, to the extent required, and to
be a part of this Prospectus from the date of filing of such reports and
documents.
Any statement contained in a document incorporated by reference into this
Prospectus shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference herein modifies or
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<PAGE>
supersedes such statement. Any statement so modified or superseded shall not,
except as so modified or superseded, be deemed to constitute a part of this
Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus has been
delivered, upon written or oral request of such person, a copy of any or all of
the foregoing documents incorporated by reference into this Prospectus (other
than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such documents). Requests for such documents
should be submitted in writing to Corporate Secretary, Accent Software
International Ltd., POB 53063, 28 Pierre Koenig Street, Jerusalem 91530 Israel,
or by e-mail: [email protected].
Unless the context otherwise requires, all references to Accent or the
Company include its wholly owned United States subsidiary, Accent Worldwide,
Inc. ("Accent Worldwide"), its wholly owned United Kingdom subsidiary, Accent
Software International (Europe) Ltd. ("Accent Europe"), and its majority-owned
subsidiary, AgentSoft Ltd. ("AgentSoft"). ACCENT is a registered trademark of
the Company in the United States, the United Kingdom, Germany and the Benelux.
The Company has applied to register AGENTSOFT, GLOBAL DEVELOPMENT KIT and
WEBTAMER as trademarks in the United States and in certain other countries.
Windows is a registered trademark and Windows NT and Windows 95 are
trademarks of Microsoft Corporation ("Microsoft"). All other trademarks
appearing in this Prospectus are the property of their respective holders.
Unless otherwise indicated, all references to Microsoft Windows are to the 3.xx
versions of Windows or Windows 95 and references to Netscape Navigator are to
2.0 and subsequent versions.
4
<PAGE>
THE COMPANY
Accent is a language solutions company which designs, develops, markets and
supports multilingual software development tools as well as multilingual
Internet and text processing software products. Accent's products address the
growing need for organizations and individuals to view, create, edit and
exchange information in languages other than English and in multiple languages.
In addition, through the Company's majority-owned subsidiary AgentSoft , it also
develops and markets intelligent agent based software tools and products for
process automation over the Internet. Through 1996 and prior, Accent's products
were marketed in more than 30 countries, primarily through retail and OEM
distribution channels. Beginning in 1997, Accent's market focus has shifted to
one of providing its technology and experience in developing language solutions
and intelligent agent software primarily to OEM and corporate customers.
Accent has used its multilingual software globalization technology as a
platform to launch several multilingual Internet products addressing the needs
of its target users. In December 1995, Accent introduced INTERNET WITH AN
ACCENT, which enables users to browse the Web in a wide variety of languages and
alphabets independent of the local language version of the Windows operating
system and which contains Web authoring tools and e-mail with broad multilingual
capabilities. Accent broadened its Internet product line through the release in
June 1996 of NAVIGATE WITH AN ACCENT, a multilingual browser plug-in for
Netscape Navigator. In the first half of 1997, Accent released the first
versions of WEBTAMER, an integrated group of utilities for the World Wide Web,
which includes AgentSoft's advanced LIVE AGENT intelligent agent technology, and
the ACCENT GLOBAL DEVELOPMENT KIT, a set of standards and tools that enables the
globalization of any Windows software application.
As the Internet continues to grow in terms of the number of users,
geographic diversity and breadth of information, Accent management believes that
demand for software applications in the areas of information access and
management, electronic commerce and workflow management and systems and network
management will increase significantly. Accent management believes that many of
these software applications will be based on intelligent agent technology.
Intelligent agents are electronic assistants that will help automate the
Internet by performing complex, repetitive or time-consuming operations. Accent
established AgentSoft in February 1996 in order to capitalize on the expected
growth of this market and to broaden its Internet product line beyond
multilingual-based software. AgentSoft is dedicated to the development of
intelligent agent-based technology and applications for the Internet and
enterprise Intranet. Through the introduction of WEBTAMER and other innovative
applications of intelligent agent technology, the Company is seeking to
establish itself as a leading participant in the emerging market for Internet
software based on intelligent agent technology.
Accent is seeking to strengthen its position as a leading provider of
multilingual Internet and word processing applications and development tools. To
achieve these objectives, Accent's business strategy is to (i) emphasize
software globalization and intelligent agent technologies; (ii) leverage its
experience in multilingual software development; (iii) add new technologies,
including intelligent agents, to its core technology platforms; and (iv) develop
strategic relationships with leading industry participants.
Accent was organized in 1988 under the laws of the State of Israel. The
Company's principal executive offices are located at 28 Pierre Koenig Street,
Jerusalem 91530, Israel, and its telephone number is 972-2-679-3723.
RECENT DEVELOPMENTS
In response to the Company's recent operating results, the Company
implemented a revised business plan designed to decrease operating expenses and
to improve its operating and financial performance while maintaining product
development activities. Specifically, the Company effected a 30% reduction in
the number of its employees. In addition, the Company reduced (i) its
expenditures on marketing and advertising by approximately 50% and (ii) its
other operating expenses by approximately 50% in all areas exclusive of research
and development, which
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expenses have remained relatively level through the date of this Prospectus.
The Company believes that these reductions and the maintenance of the
research and development expenditures will help enable the Company to achieve
its strategic product development objectives. Roger R. Cloutier II, who is
currently a vice president of Jacobs Investors, Inc. and a general partner of
IMR (a significant shareholder of the Company), was appointed Co-Chairman of
the Board on October 23, 1996. Mr. Cloutier, along with Robert Rosenschein,
Elliott Broidy and Mark Tebbe, constitute the Executive Committee of the
Board of Directors responsible for monitoring the implementation of the
Company's revised business plan. Furthermore, the Company, in the first
quarter of 1997, successfully recruited a new President/Chief Executive
Officer and a Chief Financial Officer, both of whom have extensive industry
experience. Based in Accent's new Colorado Springs office, the new management
team has begun to shift certain sales and management functions to the United
States to enable such personnel to be more effective in targeting customers
and end-users of the Company's products.
On August 5, 1997, the Company completed a financing arrangement with CC
Investments LDC (the "August Investor"), pursuant to Regulation D of the
Securities Act of 1933. The Company received $2,000,000 in cash before expenses
(approximately $1,850,000 net of expenses) and, in return, issued the August
Investor a debenture carrying six percent (6%) annual interest (payable in cash
or Ordinary Shares, at the Company's option) and convertible into the Company's
Ordinary Shares at a conversion rate equal to the lesser of (i) $2.09; or (ii)
75% of the average bid price of the Ordinary Shares for the five trading day
period preceding the date of conversion (the "August Debenture"). The August
Debenture automatically converts into Ordinary Shares on August 5, 1999, two
years after the date of the closing, and may be converted at the August
Investor's option anytime after the earlier of November 2, 1997, or that date on
which the resale of the Ordinary Shares issuable upon conversion of the August
Debenture is registered with the SEC. Such registration occurred on September
29, 1997. At any time prior to November 5, 1997, the Company may convert the
August Debenture into 2000 newly authorized Preferred Shares designated Class A
for purposes of such conversion. The Class A Preferred Shares will have a
liquidation preference of $1,000 per share plus a premium of 6% per annum. The
Class A Preferred Shares will not be entitled to any dividends nor will it have
any voting rights except as provided by Israeli law with respect to
extraordinary corporate transactions. The Class A Preferred Shares will be
convertible into Ordinary Shares on the same terms as the August Debenture as
described above. The terms of the Class A Preferred Shares will also prohibit
the issuance of Preferred Shares with terms superior or equal to the terms of
the Class A Preferred Shares for some period of time, without the August
Investor's consent. In addition, the Company has the right to redeem the August
Debenture on or after July 31, 1998, as long as no event of default has occurred
thereunder, at a redemption price of not less than 125% of the principal amount
thereof and any accrued and unpaid interest or other payments thereon.
On October 16, 1997, the August Investor converted $1,000,000 of the August
Debenture, together with accrued interest. Based upon a conversion price of
approximately $1.88 per share, the Company issued 538,300 Ordinary Shares to the
August Investor on October 21, 1997.
On October 17, 1997, the Company notified the August Investor that it was
exercising its right to exchange the debenture for Preferred Shares, effective
31 October 1997. Because the August Investor had converted $1,000,000 of the
August Debenture into Ordinary Shares as set forth in the previous paragraph,
the Company issued 1,000 Preferred Shares to the August Investor on 31 October
1997 in exchange for the remainder of the August Debenture.
On October 31, 1997, the August Investor converted 500 of its Series A
Preferred Shares, together with accrued interest. Based upon a conversion price
of approximately $1.64 per share, the Company issued 308,240 Ordinary Shares
to the August Investor on November 3, 1997.
Assuming that the Company's share price remains at its November 4, 1997
level of $2.50 per share, the remaining 500 Series A
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Preferred Shares will be convertible into approximately 265,957 Ordinary
Shares. If the share price decreases below $2.09, the conversion price may
decrease and there will be a corresponding increase in the number of shares
into which the Preferred Shares will be converted.
The August Investor was also granted warrants to purchase 250,000 Ordinary
Shares of the Company at an exercise price of $2.80 per share and additional
warrants to purchase 50,000 Ordinary Shares at an exercise price of $3.20 per
share. For facilitating the completion of this investment, The Shemano Group,
Inc., San Francisco, California, and Equity Management Partners, Atlanta,
Georgia, (the "August Placement Agents") were granted warrants to purchase a
total of 300,000 Ordinary Shares at an exercise price of $1.725 (equal to 115%
of the closing bid price on the day of closing). The warrants expire on August
5, 2002, if not exercised earlier.
The Company has entered into an agreement with Investor Resource Services,
Inc. ("IRSI") by which IRSI will provide financial advisory, strategic business
planning, and investor and public relations services designed to make the
investing public knowledgeable about the benefits of stock ownership in the
Company. Pursuant to this Agreement, the Company agreed to issue 612,000
Ordinary Shares to IRSI as compensation for the services to be provided ("IRSI
Shares"). Of these IRSI Shares, 312,000 shares were included in a Registration
Statement filed on October 16, 1997, and amended on October 23, 1997, and
300,000 shares are to be registered within twelve months of their delivery to
IRSI.
The Company has also engaged Mr. Brad Gillingham as a consultant in the
areas of strategic sales and marketing. Mr. Gillingham received warrants to
purchase 100,000 Ordinary Shares at $2.00 per share. The warrants expire on
August 1, 1999, if not exercised earlier. The agreement with Mr. Gillingham also
provides for the grant of additional warrants to purchase 100,000 Ordinary
Shares at an exercise price of $4.00 per share provided that the Company
receives $1,000,000 of revenue attributable to his efforts within 12 months of
the execution of the agreement.
Pursuant to the terms of the agreements between the Company and the August
Placement Agents, IRSI and Gillingham, the Company filed a registration
statement on Form S-3 on October 16, 1997, for the Ordinary Shares to be issued
to IRSI and reserved for issuance upon exercise of the warrants granted to the
August Placement Agents and Gillingham. This Registration Statement was declared
effective on October 24, 1997, after the filing of an amended Regisration
Statement the prior day.
On December 9, 1996, the Company issued warrants to purchase a total of
200,000 Ordinary Shares as compensation for consultant services by Robert J.
Laikin, Michael Mosher and the Manufacturers Indemnity and Insurance Company of
America ("MIICA") (the "Laikin Consultants"). Half of these warrants (100,000)
vested immediately and the remainder vested one year later provided that each of
the Laikin Consultants were still providing consulting services to the Company
on September 30, 1997. On August 18, 1997, the Company terminated the consultant
agreements with the Laikin Consultants. Thus, the condition precedent to the
vesting of the second 100,000 warrants do not exist. The exercise price of the
warrants to purchase 100,000 Ordinary Shares is $7.00 per share and the warrants
expire on December 9, 2003, if not exercised earlier.
The warrants issued to the Laikin Consultants provide the warrant holders
with the right to "piggyback" on certain registration statements filed by the
Company. All three of the Laikin Consultants chose to exercise such right.
Accordingly, the shares to be issued to the Laikin Consultants upon the exercise
of their warrants were included in the Registration Statement filed on October
16, 1997, and amended on October 23, 1997.
On November 6, 1997, the Company completed a financing arrangement with the
Investors, pursuant to Regulation D of the Securities Act of 1933. The Company
received $4,000,000 in cash before expenses, and a commitment that upon the
occurrence of certain conditions, including the effectiveness of this
Registration
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Statement, the Company would receive an additional $1,750,00 in cash before
expenses. In return for the aggregate purchase price of $4,000,000, the
Company issued the Investors debentures in the amount of $4,000,000, carrying
six percent (6%) annual interest (payable in cash or Ordinary Shares, at the
Company's option) and convertible into the Company's Ordinary Shares at a
conversion rate equal to the lesser of (i) $2.45; or (ii) 80% of the average
bid price of the Ordinary Shares for the five trading day period preceding
the date of conversion (the "First Closing Debentures") and warrants to
purchase a total of 800,000 Ordinary Shares of the Company at an exercise
price of $2.45.
Upon the closing of the additional $1,750,000 investment, the Company
shall issue the Investors 1,750 Series B Preferred Shares which will be
convertible into Ordinary Shares upon the same terms and conditions as obtain
in the First Closing Debentures (the "Second Closing Preferred Shares"). (The
First Closing Debentures and Second Closing Preferred Shares are collectively
referred to as the "November Convertible Securities.") As part of the
$1,750,000 aggregate purchase price, the Investors will receive additional
warrants to purchase a total of 350,000 Ordinary Shares of the Company with
an exercise price of $2.45. The November Convertible Securities automatically
convert into Ordinary Shares on November 6, 1999, two years after the date of
the closing, and may be converted at the Investors' option anytime after the
earlier of November 11, 1997, or that date on which the resale of the
Ordinary Shares issuable upon conversion of the November Convertible
Securities is registered with the SEC, provided that no more than 50% of the
principal amount of such securities may be converted prior to December 15,
1997. At any time prior to November 11, 1997, the Company may convert all or
part of the First Closing Debentures into up to 4,000 newly authorized
Preferred Shares designated Series B for purposes of such conversion. The
Series B Preferred Shares will have a liquidation preference of $1,000 per
share plus a premium of 6% per annum. The Series B Preferred Shares will not
be entitled to any dividends nor will it have any voting rights except as
provided by Israeli law with respect to extraordinary corporate transactions.
The Series B Preferred Shares will be convertible into Ordinary Shares on
the same terms as the November Convertible Securities as described above.
The terms of the Series B Preferred Shares will also prohibit the issuance of
Preferred Shares with terms superior or equal to the terms of the Series B
Preferred Shares for some period of time, without the Investors' consent. In
addition, the Company has the right to redeem the November Convertible
Securities on or after November 6, 1998, as long as no event of default has
occurred thereunder, at a redemption price of not less than 125% of the
principal amount thereof and any accrued and unpaid interest or other
payments thereon.
The November Convertible Securities will be convertible into
approximately 2,346,938 Ordinary Shares. If the share price decreases below
$2.45, the conversion price may decrease and there will be a corresponding
increase in the number of shares into which the November Convertible
Securities will be converted.
For facilitating the completion of this investment, The Shemano Group,
Inc., San Francisco, California, (the "November Placement Agent") was granted
warrants to purchase a total of 787,500 Ordinary Shares at an exercise price
of $2.45. The warrants expire on November 6, 2002, if not exercised earlier.
The 11,990,000 Ordinary Shares being registered pursuant to this
Registration Statement are the shares issuable to the Selling Shareholders (i)
upon conversion of the November Convertible Securities; (ii) as payment of
interest due on the First Closing Debentures; (iii) upon exercise of warrants to
purchase an aggregate of 1,150,000 Ordinary Shares issued in connection with the
sale of the November Convertible Securities; and (iv) upon exercise of warrants
to purchase an aggregate of 787,500 Ordinary Shares issued to the November
Placement Agent.
LITIGATION AND OTHER CLAIMS
On September 9, 1997, the AgentSoft was served with a complaint filed by
its former president and vice president. The complaint named as defendants
AgentSoft, Accent, Todd Oseth, as Chief Executive Officer of
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AgentSoft and Jeffrey Rosenschein as Chairman of the Board of Directors of
AgentSoft, as defendants in Israeli Labor Court. The complaint alleges
wrongful termination of the plaintiffs' employment agreements in May 1997,
failure to pay the contractually required severance, and failure to pay, in a
complete and timely manner, the statutory severance payments required by
Israeli law upon the termination of an employee. Plaintiffs seek compensation
in excess of NIS 650,000 (or approximately $186,000). The Company believes
that the termination of their employment was done properly and lawfully and
that, therefore, any claim by these former employees in connection with such
termination is without grounds. Accordingly, the Company estimates that the
chances of an outcome favorable to the Company and the other defendants is
high.
In the course of its business, the Company is the subject of claims, some
or which may mature into litigation. Although the Company is aware of claims
asserted against it, the Company is not aware, except as discussed in the
preceding paragraph, of any claims which have a reasonable possibility of
adverse outcome in a material amount. However, unforeseen circumstances may
cause such claims, or other, currently unknown claims, to result in adverse
outcomes in material amounts.
RISK FACTORS
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS,
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, PRIOR TO MAKING AN
INVESTMENT DECISION. CERTAIN STATEMENTS IN THIS PROSPECTUS THAT ARE NOT
HISTORICAL ARE FORWARD-LOOKING, INVOLVING KNOWN AND UNKNOWN RISKS AND
UNCERTAINTIES. MANY FACTORS, INCLUDING THE RISK FACTORS IDENTIFIED BELOW, COULD
CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE
MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS THAT
MAY BE EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS.
HISTORY OF OPERATING LOSSES AND ACCUMULATED DEFICIT; ANTICIPATED FUTURE LOSSES;
LIMITED OPERATING HISTORY
The Company has incurred net losses since 1992 of approximately $0.7
million, $3.1 million, $7.8 million and $21 million for the years ended
December 31, 1993, 1994, 1995 and 1996, respectively, and a net loss of
approximately $4.8 million for the six months ended June 30, 1997. As of June
30, 1997, the Company had an accumulated deficit of $38 million and a total
shareholders' deficit of $1.7 million. Pursuant to its revised business plan,
the Company intends to continue to make expenditures on new product
introductions, marketing, research and development, customer support and
administrative infrastructure over the near term. As a result, the Company
expects to incur net losses through the end of 1997, and possibly beyond.
The Company commenced operations in 1988 and shipped its first multilingual
word processing product in Israel in 1992, and internationally in 1994.The
Company shifted the focus of its operations in 1997 to the development and
distribution of multilingual software development tools for the non-retail
markets, and its first such products were released in the second quarter of
1997.The Company, therefore, has a limited operating history upon which to base
an evaluation of its current principal business and prospects. Operating results
for future periods are subject to numerous uncertainties, and there can be no
assurance that the Company will achieve or sustain profitability on an annual or
quarterly basis. The Company's prospects must be considered in light of the
risks encountered by companies in the early stage of development, particularly
companies in new and rapidly evolving markets. Future operating results will
depend upon many factors, including the demand for the Company's Internet
products, the level of product and price competition, the ability of the Company
to develop and market new products and product enhancements, the success of the
Company in attracting and retaining motivated and qualified personnel, the
ability of the Company to control its costs and general economic conditions.
There can be no assurance that the Company will be successful in addressing such
risks.
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INDEPENDENT PUBLIC ACCOUNTANT'S DOUBT AS TO COMPANY'S ABILITY TO CONTINUE AS A
GOING CONCERN
The report of the Company's independent public accountants attached as part
of the Company's 1996 Annual Report on Form 10K contains an explanatory
paragraph as to the Company's ability to continue as a going concern. Among the
factors cited by the accountants as raising substantial doubt as to the
Company's ability to continue as a going concern is that the Company has
incurred losses from operations of approximately $21 million during the year
ended December 31, 1996, and had an accumulated deficit of approximately $33
million as of December 31, 1996.
SIGNIFICANT CAPITAL REQUIREMENTS; NEED FOR ADDITIONAL FINANCING
The Company's capital requirements in connection with its development and
marketing activities have been and will continue to be significant. The Company
has been dependent upon the proceeds of sales of its securities, as well as
various government guaranteed and private loans, to fund its development and
marketing activities. The Company is not generating sufficient revenues from its
operations to fund its activities and is, therefore, dependent on the proceeds
of the sale of equity and other financing devices to continue the development of
its technology and the marketing of its products. The Company anticipates, based
on its currently proposed assumptions relating to its operations and financing
plans, that it will have sufficient cash to satisfy its contemplated needs
through the end of 1997. In the event that financings and cash flow prove to be
insufficient to fund operations (due to a change in the Company's plans or a
change, or an inaccuracy, in its assumptions or as a result of unanticipated
expenses, technical difficulties, problems or otherwise), the Company would be
required to seek additional financing sooner than currently anticipated. There
can be no assurance that additional financing will be available to the Company
on commercially reasonable terms, or at all. The Company has no current
arrangement with respect to, or sources of, additional financing. The inability
to obtain additional financing, when needed, would have a material adverse
effect on the Company, including possibly requiring the Company to curtail or
cease its operations.
SUBSTANTIAL INDEBTEDNESS AND ENCUMBRANCES OF ASSETS
The Company's operations have been and continue to be financed in part from
short-term and long-term indebtedness provided by various financial
institutions. As of June 30, 1997, the outstanding balances of the Company's
short-term and long-term indebtedness were approximately $1.6 million and $1.9
million, respectively. All of the Company's assets are pledged as collateral to
secure the Company's indebtedness. If the Company is unable to generate
sufficient cash flow from operations to meet scheduled debt payments or
otherwise to comply with the terms of such indebtedness, it may be required to
refinance all or a portion of its existing debt or to obtain additional
financing. There can be no assurance that the Company will be able to obtain
such refinancing or additional financing. If no such refinancing or additional
financing is available when needed, the Company may be forced to default on its
debt obligations which would have a material adverse effect on the Company,
including the possibility of receivership or liquidation of the Company. In such
an event, the Company's secured creditors could elect to foreclose on the
Company's assets and it is likely that the debenture, the warrants and the
Shares would be worthless. In addition, the agreements relating to the Company's
bank indebtedness provide for an event of default (and the ability to accelerate
and demand repayment of outstanding loans) if there is a material adverse change
in the Company's financial condition. There can be no assurance that a
deterioration of the Company's results of operations or financial condition will
not result in an event of default under the Company's bank indebtedness.
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UNPROVEN ACCEPTANCE OF THE COMPANY'S PRODUCTS
The Company's future operating results will depend primarily upon its
ability to gain market acceptance of its multilingual software development tools
and its Internet productivity tools, such as WEBTAMER. Because the market for
the Company's Internet-related products is new and evolving, it is difficult to
assess or predict with any assurance the growth rate, if any, or the size of the
market for such products. There can be no assurance that the market for the
Company's products and services will develop, or that the Company's products and
services will achieve market acceptance. If the market fails to develop,
develops more slowly than expected or becomes saturated with competitors, or if
the Company's products do not achieve significant market acceptance, the
Company's business, operating results or financial condition will be materially
adversely affected.
UNCERTAINTY OF PRODUCT AND TECHNOLOGY DEVELOPMENT
The Company has not completed development and testing of a number of its
proposed products, some of which are still in the planning stage or in
relatively early stages of development. The Company's success will depend in
part upon the ability of its proposed products to meet targeted performance and
cost objectives, and will also depend upon the timely introduction of its
products into the marketplace and the acceptance of its products by end-users.
The Company will be required to commit considerable time, effort and resources
to finalize development of its proposed products and product enhancements.
Product development efforts may be subject to unanticipated delays, expenses,
difficulties, and the possible insufficiency of funding to complete development
and other risks inherent in the development of new products and technologies.
There can be no assurance as to when, or whether, such product development
efforts will be successfully completed.
DEPENDENCE ON COMPATIBLE THIRD-PARTY SOFTWARE MANUFACTURERS' PRODUCTS AND DESIGN
The Company's products are currently designed, and its proposed products
are being designed, to be utilized with the Windows operating system and with
the products and standards established by certain other software manufacturers.
Accordingly, the performance of certain of the Company's existing products
depends on the actions of other manufacturers, in particular Microsoft. Such
manufacturers may change their products or take actions that could make it more
difficult for the Company to develop its products or that could significantly
impair the performance of the Company's products. For example, if Microsoft were
to modify future versions of Windows in ways that required the redesign of the
Company's Windows-based products, such modification could be detrimental to the
Company. Although the Company anticipates that it will be able to adapt its
products if necessary, there can be no assurance that changes in existing
products or the introduction of new products by third parties will not have a
material adverse effect on the performance of the Company's products and
technology and on the Company's financial performance. In addition, the
Company's products may need to be adapted in the future in order to be
compatible with other or new operating systems so that the Company may maintain
and expand its product offerings. There can be no assurance that the Company
will be able to make any necessary adaptations on a timely basis.
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PRODUCT CONCENTRATION
Until the beginning of 1996, substantially all of the Company's revenues
were attributable to the sale of its multilingual word processing products.
Beginning in the first quarter of 1996, a substantial portion of the Company's
revenues has been derived from the sale of the Company's Internet-related
products. During the first quarter of 1997, the Company began to de-emphasize
the retail sale of its products and increased its focus on the development and
sale of software tools and products to be sold to other software developers,
corporations and original equipment manufacturers ("OEM"). The Company
currently expects that sales of these products will account for a substantial
portion of its revenues for the foreseeable future. As a result, factors
adversely affecting the pricing of or demand for such products and services,
such as competition or technological change, could have a material adverse
effect on the Company's business, operating results or financial condition.
COMPETITION; TECHNOLOGICAL OBSOLESCENCE
The market for general and Internet-based software and services is new,
intensely competitive, rapidly evolving and subject to rapid technological
change. In addition, there are relatively few barriers to entry into the
software business in general, including into those areas in which the Company
offers and intends to offer products. The Company expects competition in the
market for multilingual software tools for the globalization of software
products and for Internet-based products to increase substantially in the
future. To the extent that the Company's multilingual Internet products are
substitutes for single or dual language products, the Company's products
presently compete with those of numerous well-established companies, including
Microsoft, Netscape Communications Corporation ("Netscape"), CompuServe, Inc.
("CompuServe") and Quarterdeck Office Systems, Inc. ("Quarterdeck"). The Company
expects that AgentSoft will continue to develop intelligent agent technology
that the Company will use in its Internet productivity products and that the
Company will apply artificial intelligence concepts to document processing and
other applications. To the extent that the Company and AgentSoft are successful
in developing such technologies, the Company will compete with some of the same
well-established companies listed above as well as with companies to which
Accent or AgentSoft will license such technology. These companies have
substantially greater financial, technical, personnel and other resources than
the Company and have established reputations for success in the development,
licensing and sale of their products and technology. In addition, certain
companies have developed, or may be expected to develop, technologies or
products that may be functionally similar to some or all of those being
developed by the Company. The markets for the technology and products being
developed by the Company are characterized by rapid changes and evolving
industry standards, often resulting in product obsolescence or short product
life cycles. Accordingly, the ability of the Company to compete will depend
upon, among other factors, its ability to develop and introduce to the
marketplace in a timely manner new products and product enhancements. There can
be no assurance that the Company will be able to compete successfully, that its
present or future competitors will not develop technologies or products that
render the Company's products and technology obsolete or less marketable or that
the Company will be able to introduce new products and product enhancements that
are competitive with other products marketed by industry participants.
DEPENDENCE ON THE INTERNET
Sales of AgentSoft's products and the products of Accent which incorporate
AgentSoft technology will depend in large part upon the development and
maintenance of a robust industry and infrastructure for providing Internet
access and carrying Internet traffic. Because global commerce and online
exchange of information on the Internet and other similar open wide area
networks are new and evolving, there can be no assurance that the Internet will
prove to be a viable commercial marketplace or a viable medium for the
publication and distribution of information. Further, there can be no assurance
that the necessary infrastructure, such as a reliable network backbone or timely
development of complementary products, such as high speed modems, necessary to
make the Internet a viable commercial marketplace or a viable medium for the
publication and distribution of information will be developed, or, if developed,
that the Internet will become a viable commercial marketplace or a viable medium
for the publication and distribution of information. If the necessary
infrastructure or complementary products are
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not developed, or if the Internet does not become a viable commercial
marketplace or a viable medium for the publication and distribution of
information, the Company's business, operating results or financial condition
will be materially adversely affected.
PRODUCT RETURNS; COLLECTION OF ACCOUNTS RECEIVABLE; CONSIGNMENT ARRANGEMENTS
Consistent with industry practices, the Company may accept product returns
or provide other credits in the event that a distributor or a retailer holds
excess inventory of the Company's products. Although the Company is moving away
from the retail market toward the OEM and business-to-business market where
product returns are less likely, the risk of product returns and customer
defaults from prior period activities could have an adverse impact on the
Company's future operating results. In addition, the Company's sales are
normally made on credit terms and it does not hold collateral to secure payment.
Therefore, default in payment by one or more of the Company's customers could
adversely affect the Company's business, operating results or financial
condition. There can be no assurance that actual returns and uncollectible
receivables will not exceed the Company's reserves for such items and any
significant increase in product returns or uncollected accounts receivable
beyond reserves could have a material adverse effect on the Company's business,
operating results or financial condition. Consistent with industry practice, the
Company also, on occasion, transfers products through the distribution channel
on a consignment basis. There can be no assurance that such consignment
arrangements will result in additional sales for the Company or that they will
not result in excess inventory or increased working capital requirements for the
Company.
MANAGEMENT OF A RAPIDLY CHANGING BUSINESS
The Company's business is currently undergoing major change as its new
management shifts its focus from the retail market to the developer, corporate
and OEM markets. This shift in the Company's focus has placed, and is expected
to continue to place, a significant strain on the Company's management and
operations, including its sales, customer support, research and development,
finance and administrative operations. The Company has recently been able to
recruit a chief executive officer and chief financial officer who have
experience in managing large or rapidly growing business organizations. However,
the Company anticipates that continued growth, if any, may require it to recruit
and hire additional new development, managerial, finance, sales and marketing
and support personnel. There can be no assurance that the Company will be
successful at hiring or retaining such personnel. The Company's ability to
compete effectively and its future growth, if any, will require the Company to
continually improve its financial and management controls, reporting systems and
procedures on a timely basis, implement new systems as necessary and expand,
train and manage its employee workforce. There can be no assurance that the
Company's controls, systems or procedures will be adequate to support the
Company's operations. The failure of the Company's management to respond
effectively to changing business conditions could have a material adverse effect
on the Company's business, operating results or financial condition.
PRODUCT DEFECTS AND PRODUCT LIABILITY
The Company's software products are highly complex and sophisticated and
could from time to time contain design defects or software errors that could be
difficult to detect and correct. Errors, bugs or viruses may result in the loss
of or the delay in market acceptance or the loss of customer data. Although the
Company has not experienced any material adverse effect resulting from any
software defects or errors, there can be no assurance that, despite testing by
the Company and its customers, errors will not be found in new products, which
could result in a delay in or inability to achieve market acceptance and thus
could have a material adverse impact upon the Company's business, operating
results or financial condition.
DEPENDENCE ON KEY PERSONNEL
The success of the Company is substantially dependent on the performance of
its executive officers and key
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employees. Five members of senior management are parties to employment
agreements with the Company, three of which expire in July 1998, and one of
which expires in February 2000. The Company believes that the loss of the
services of one or more of such key personnel could have a material effect on
its ability to develop new products and product enhancements. In addition,
Dr. Jeffrey Rosenschein, Chief Technology Officer-Agents, and one of the five
senior managers with an employment agreement, has an academic affiliation
with Hebrew University in Jerusalem. Dr. Rosenschein was granted a leave of
absence from Hebrew University for the two-year period which expires in
October 1997, at which time Dr. Rosenschein plans to return to his full-time
position at the University. Dr. Rosenschein plans to continue as a director
of the Company and as a paid consultant to the Company, and his termination
as a full-time Company employee is not expected to have a material adverse
affect on the Company. The success of the Company also is dependent upon its
ability to hire and retain additional qualified executive, scientific and
marketing personnel. There can be no assurance that the Company will be able
to hire or retain such necessary personnel. Moreover, there can be no
assurance that the loss of the services of any of its executive officers or
other key employees would not have a material adverse effect on the Company's
business, operating results or financial condition.
PROTECTION OF PROPRIETARY INFORMATION
The Company's success and ability to compete is dependent in part upon its
proprietary software technology. While the Company relies on a combination of
trade secret and copyright law, nondisclosure agreements and technical measures
to establish and protect its proprietary rights and has also filed patent
applications for certain aspects of its technology, there can be no assurance
that the steps taken by the Company to protect its proprietary rights will be
adequate to prevent misappropriation of the technology or independent
development by others of software products with features based upon, or
otherwise similar to, those of the Company's products. To license its retail
products, the Company primarily relies on "shrink wrap" licenses that are not
signed by the end-user and, therefore, may be unenforceable under the laws of
certain jurisdictions. In addition, effective copyright and trade secret
protection may be unavailable or limited in certain foreign countries, and the
global nature of the Internet makes it virtually impossible to control the
ultimate destination of the Company's products. Despite the Company's efforts to
protect its proprietary rights, unauthorized parties may attempt to copy aspects
of the Company's products or to obtain and use information that the Company
regards as proprietary. Litigation may be necessary in the future to enforce the
Company's intellectual property rights, to determine the validity and scope of
the proprietary rights of others, or to defend against claims of infringement or
invalidity. Such litigation could result in substantial costs and diversion of
resources and could have a material adverse effect on the Company's business,
operating results or financial condition.
IMPACT OF INFLATION AND CURRENCY FLUCTUATION
The vast majority of the Company's sales are made in dollars and most of
the Company's expenses are in dollars and New Israeli Shekels ("NIS"). The cost
of the Company's operations in Israel, as expressed in dollars, is influenced by
the extent to which any increase in the rate of inflation in Israel over the
rate of inflation in the U.S. is not offset by the devaluation of the NIS in
relation to the dollar. The change in the cost of the Company's operations in
Israel, as expressed in dollars, relates primarily to the cost of salaries in
Israel, a substantial portion of which are paid in NIS linked to the Consumer
Price Index in Israel (the "Israeli CPI"). While the Company may in the future,
to the extent it deems advisable, purchase currency options or other hedging
instruments to decrease the risk of the NIS devaluation against the dollar being
less than the rate of inflation in Israel, no assurance can be given that any
such financial strategy will be successful in limiting the Company's risk.
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CONCENTRATION OF OWNERSHIP; POTENTIAL CONFLICTS OF INTEREST
As of the date of this Prospectus, IMR and its affiliates, together with
the Company's officers and directors, will beneficially own an aggregate of
approximately 33.3% of the issued and outstanding Ordinary Shares. Such
ownership will allow such persons to have significant influence over the outcome
of any matters that require shareholder approval, including the election of all
of the Company's directors (subject, in certain instances, to the requirement of
the affirmative vote of a specified percentage of disinterested shareholders),
and thereby to potentially control the affairs of the Company. In addition,
pursuant to the Stock Purchase Agreement, dated as of May 11, 1994, by and among
the Company, IMR Investments, Accent Software Partnership, Pal-Ron Marketing,
Ltd., KZ Overseas Holding Corp., Robert Rosenschein and Jeffrey Rosenschein, the
Company agreed that IMR Investments will be entitled to designate one person to
serve on the Board of Directors of the Company. The current designee of IMR
Investments is Roger Cloutier. Although the director designated by IMR
Investments is required under Israeli law to vote in a manner consistent with
his fiduciary duty to the Company, there can be no assurance that conflicts of
interest will not arise with respect to the foregoing or that such conflicts
will be resolved in a manner favorable to the Company.
NO DIVIDENDS
The Company has never paid cash dividends on its Ordinary Shares. Payment
of dividends on the Ordinary Shares is within the discretion of the Board of
Directors of the Company and will depend upon the Company's earnings, its
capital requirements and financial condition and other relevant factors. It is
the Company's intention to retain earnings, if any, to finance the operation and
expansion of its business and, therefore, it does not expect to pay any cash
dividends on its Ordinary Shares in the foreseeable future.
SIGNIFICANT OUTSTANDING TRADE PAYABLES
At June 30, 1997, the Company owed approximately $3.3 million to various
trade and other creditors of which approximately 50% was more than 60 days past
due. The inability to obtain credit on commercially reasonable terms, or at all,
resulting in an interruption of supplies or services, would have a material
adverse effect on the Company's operations.
MARKET PRICE VOLATILITY
The market price of the Company's Ordinary Shares has been highly volatile
and in the past 52 weeks the daily closing price has ranged from $15.38 to
$1.47. Factors such as the Company's financial results, introduction of new
products by the Company or its competitors, factors affecting the software
industry generally and factors relating to conditions in the State of Israel may
have a significant impact on the market price of the Company's Ordinary Shares.
Additionally, in recent years, the United States stock markets have experienced
a high level of price and volume volatility and market prices for the stock of
many companies (particularly of small and emerging growth companies, the common
stock of which trades in the over-the-counter-market) have experienced wide
price fluctuations that have not necessarily been related to the operating
performance of such companies.
SUBSTANTIAL DILUTION
The book value of the Company's Ordinary Shares was approximately $(0.15)
per share at June 30, 1997. Therefore, purchasers of Shares in this Offering
will experience immediate and substantial dilution.
POSSIBLE DELISTING OF SHARES FROM THE NASDAQ SMALL CAP MARKET;
RISKS RELATING TO PENNY STOCKS
The Ordinary Shares are quoted on the Nasdaq Small Cap Market. In order to
maintain its listing on the Nasdaq Small Cap Market, the Company must meet
certain requirements. As of June 30, 1997, the Company was in
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compliance with all of the Nasdaq listing requirements except that the
Company's total capital and surplus was less than the required level.
Specifically, on June 30, 1997, the Company's total capital and surplus of
$(1,716,000) was below the minimum Nasdaq requirement of $1,000,000. On
August 15, 1997, the Company was notified by The Nasdaq Stock Market, Inc.
that it was no longer in compliance with all of the Nasdaq Small Cap Market
listing requirements. The Company has responded to Nasdaq with a plan for
restoring its capital and surplus to the required level. On September 15,
1997, the Company received a letter from Nasdaq stating that the Company's
plan to restore its capital surplus to the required level was not acceptable
and that the Company's Ordinary Shares would be delisted. However, the
delisting action was stayed when the Company requested and was granted a
hearing regarding Nasdaq's decision to delist the Company's Ordinary Shares.
The hearing was held on October 9, 1997. On October 21, 1997, the Company
received the decision of the hearing panel to grant it a temporary exception
from Nasdaq listing requirements. The hearing panel ruled that the Company
had until November 10, 1997 to file with Nasdaq and the Securities and
Exchange Commission the Company's quarterly report on Form 10-Q and a report
on Form 8-K showing that it had at least $2,650,000 in capital and surplus.
Pending such filing and a further review by Nasdaq, the Company's stock
symbols would be changed to ACNFC and ACUFC for the Ordinary Shares and the
Units, respectively. The Company believes that after the completion of the
financing discussed in this Registration Statement and the subsequent
conversion of the November Debentures into Ordinary or Preferred Shares, it
will be in compliance with the relevant Nasdaq listing requirements. However,
there can be no assurance that the Company will be able to meet the
requirements of Nasdaq in the time required or at all. Therefore, the
Company's shares may be delisted from the Nasdaq Small Cap Market.
In addition, the Nasdaq Stock Market adopted increases in the
quantitative standards for maintenance of listings on the Nasdaq Small Cap
Market. The new standards for continued listing on the Nasdaq Small Cap Market,
which the Company anticipates will be implemented in February 1998, include
maintenance of any of (a) $2,000,000 of net tangible assets, (b) $35,000,000 of
market capitalization or (c) $500,000 of net income for two of the last three
years and the elimination of the requirements to maintain minimum total assets
and a minimum capital and surplus. There can be no assurance that the Company
will be able to meet the new standards for maintaining its listing on the Nasdaq
Small Cap Market and, if it fails to meet such standards, that it will not be
delisted.
If the Company's securities were to become delisted from trading on The
Nasdaq Small Cap Market and the trading price of such securities were to remain
below $5.00 per share or per unit, trading in such securities would also be
subject to the requirements of certain rules promulgated under the Exchange Act,
which require additional disclosure by broker-dealers in connection with any
trades involving a stock defined as a penny stock (generally, any non-Nasdaq
equity security that has a market price of less than $5.00 per share, subject to
certain exceptions). Such rules require the delivery, prior to any penny stock
transaction, of a disclosure schedule explaining the penny stock market and the
risks associated therewith, and impose various sales practice requirements on
broker-dealers who sell penny stock to persons other than established customers
and accredited investors (generally institutions). For these types of
transactions, the broker-dealer must make a special suitability determination
for the purchase and have received the purchaser's written consent to the
transaction prior to sale. The additional burdens imposed upon broker-dealers
by such requirements may discourage broker-dealers from effecting transactions
in the Ordinary Shares which could severely limit the market liquidity of the
Ordinary Shares and the ability of Selling Shareholders to sell their Shares in
the secondary market.
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS
As of the date of this Prospectus, 13,154,982 Ordinary Shares are issued
and outstanding, or are to be issued under a binding agreement, of which
8,674,835 are freely tradable. There are 3,871,907 Ordinary Shares eligible
for sale, without registration, under Rule 144 subject to certain volume
limitations and other conditions prescribed by such rule and to the contractual
restrictions described below. There are 300,000 additional IRSI Shares that are
to be registered within twelve months of their issuance, and will be freely
tradable upon an effective Registration Statement. There are warrants
outstanding for the purchase of 3,947,413 Ordinary Shares. Most of the shares
underlying these warrants have been or are being registered and will be freely
tradable. In addition, there are
16
<PAGE>
options outstanding for 1,518,583 shares, of which 1,168,583 will be freely
tradable upon exercise. In addition, the shares into which any remaining
balance of the August Debenture may be converted have been registered and
will be freely tradeable at such time as that debenture is converted.
Finally, when this Registration Statement is declared effective by the
Commission, the shares into which the November Debenture may be converted
will be freely tradeable.
In addition, the Company has granted to certain of its security holders,
including certain of its executive officers, directors and IMR Investments,
certain registration rights. No prediction can be made as to the effect, if any,
that sales of such securities or the availability of such securities for sale
will have on the market prices prevailing from time to time.
LOCATION IN ISRAEL
The Company is incorporated under the laws of, and has its offices and a
significant portion of its operations (including all of its product development
activities) in, the State of Israel. Although most of the Company's sales are
currently made to customers outside Israel, the Company is, nonetheless,
directly influenced by the political, economic and security conditions affecting
Israel. Any major hostilities involving Israel, the interruption or curtailment
of trade between Israel and its trading partners or a significant downturn in
the economic or financial condition of Israel could have a material adverse
effect on the Company's business, financial condition or results of operations.
There can be no assurance that ongoing or revived hostilities or other factors
related to the political or economic status of Israel will not have an adverse
impact on the Company's business, operating results or financial condition.
SERVICE OF PROCESS AND ENFORCEMENT OF JUDGMENTS
Service of process upon directors and officers of the Company and the
Israeli experts named herein, many of whom reside outside the United States, may
be difficult to effect within the United States. Furthermore, since the majority
of the Company's assets are located outside the United States, any judgment
obtained in the United States against the Company may not be enforceable within
the United States. The Company has been informed by its legal counsel in Israel,
Yigal Arnon & Co., that in such counsel's opinion there is doubt as to the
enforceability of civil liabilities under the Securities Act and the Exchange
Act, in original actions instituted in Israel. However, subject to certain time
limitations, Israeli courts are empowered to enforce foreign (including United
States) final executory judgments for liquidated amounts in civil matters
obtained after due trial before a court of competent jurisdiction (according to
the rules of private international law currently prevailing in Israel) which
enforces similar Israeli judgments. The enforcement of such judgments is
conditioned upon: (i) adequate service of process having been effected and the
defendant having had a reasonable opportunity to be heard; (ii) such judgments
or the enforcement thereof not being contrary to the law, public policy,
security or sovereignty of the State of Israel; (iii) such judgments not being
obtained by fraud and not conflicting with any other valid judgment in the same
matter between the same parties; and (iv) an action between the same parties in
the same matter not pending in any Israeli court at the time the lawsuit is
instituted in the foreign court. The Company has irrevocably appointed Accent
Worldwide as the Company's agent to receive service of process in any action
against the Company in any federal or state court sitting in New York County,
State of New York arising out of the Offering or any purchase or sale of
securities in connection therewith.
Foreign judgments enforced by Israeli courts generally will be payable in
Israeli currency, and a special permit of the Israeli Controller of Foreign
Currency will be required to convert the Israeli currency into dollars and to
transfer such dollars out of Israel. The usual practice in an action to recover
an amount in a non-Israeli currency is for the Israeli court to render judgment
for the equivalent in Israeli currency at the rate of exchange in force on the
date thereof. Under existing law, a foreign judgment payable in foreign currency
may be paid in Israeli currency at the rate of exchange on the date of payment,
but the judgment debtor may also make payment in foreign currency if the Israeli
exchange control regulations then in effect permit such foreign currency
payment. Pending collection, the amount of the judgment of an Israeli court
stated in Israeli currency will ordinarily be linked to the Israeli CPI plus
interest at the annual rate (set by Israeli regulations) prevailing at such
time. Judgment creditors must bear the risk that they will be
17
<PAGE>
unable to convert their award into foreign currency that can be transferred
out of Israel. All judgment creditors must bear the risk of unfavorable
exchange rates.
USE OF PROCEEDS
The Company 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, as described below. The Company will use the proceeds of
any warrant exercise for general corporate purposes and working capital. See
"Selling Shareholders" and "Plan of Distribution" described below.
SELLING SHAREHOLDERS
The following table sets forth the names of the Selling Shareholders and
the number of Ordinary Shares beneficially owned by such Selling Shareholders as
of November 6, 1997 (assuming the November Debenture is convertible on such
date, and assuming that all warrants described in this Prospectus are exercised)
and offered hereby. None of the Selling Shareholders has held any position,
office or other material relationship with the Company or any of its affiliates
within the past three years, other than as a result of its ownership of the
debenture or warrants. The Shares may be offered from time to time by the
Selling Shareholders named below. However, the Selling Shareholders are under no
obligation to sell all or any portion of the Shares under this Prospectus or
otherwise. Because the Selling Shareholders may sell all or part of their
Shares, no estimate can be given as the number of Shares that will be held by
any Selling Shareholder upon termination of any offering made hereby.
Pursuant to Rule 416 of the Securities Act, the Selling Shareholders may
also offer and sell Shares issued with respect to the debenture, the Preferred
Shares and warrants as a result of anti-dilution provision, including by reason
of changes in the conversion price of the debenture and Preferred Shares, and
stock splits, dividends and similar events.
<TABLE>
Shares Beneficially Owned
Number of Shares After Offering
Beneficially Owned -------------------------
Prior to the Offering Percent
Name of Selling Shareholder and Offered Hereby Number Outstanding
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CC Investments LDC
c/o Citco Fund Services (Cayman Islands) Ltd.
Corporate Center
West Bay Road
PO Box 31106 SMB
Grand Cayman, Cayman Islands (# of OS upon conversion & 450,000
from warrants) 0 0%
Nelson Partners
c/o Leeds Management Services, Ltd.
129 Front Street
Hamilton HM12
Cayman Islands (# of OS upon conversion & 180,000
from warrants) 0 0%
18
<PAGE>
<S> <C> <C> <C>
Olympus Securities, Ltd.
c/o Leeds Management Services, Ltd.
129 Front Street
Hamilton HM12
Cayman Islands (# of OS upon conversion & 220,000
from warrants) 0 0%
Profinsa Investments Inc.
c/o Krieger & Praeger, Esq.
319 Fifth Avenue
New York, NY 10016 (# of OS upon convesion & 200,000
From warrants) 0 0%
Marshall Companies
901 North Third Street
Minneapolis, MN 55401 (# of OS upon conversion & 100,000
from warrants) 0 0%
The Shemano Group
601 California Street, Suite 850
San Francisco, CA 94108 1,057,500 0 0%
</TABLE>
19
<PAGE>
PLAN OF DISTRIBUTION
The Shares covered by this Prospectus may be offered and sold from time
to time by the Selling Shareholders. The Selling Shareholders will act
independently of the Company in making decisions with respect to the timing,
manner and size of each sale. The Selling Shareholders may sell the Shares
being offered hereby on the Nasdaq Small Cap Market, or otherwise, at prices
and under terms then prevailing or at prices related to the then current
market price or at negotiated prices. The Shares may be sold by on or more of
the following means of distribution: (a) a block or cross trade in which the
broker, dealer or agent so engaged will attempt to sell Shares as agent, but
may position and resell a portion of the block as principal to facilitate the
transaction; (b) purchases by a broker, dealer or agent as principal and
resale by such broker, dealer or agent for its own account pursuant to this
Prospectus; (c) an over-the-counter distribution in accordance with the rules
of the Nasdaq Small Cap Market; (d) ordinary brokerage transactions (which
may include long and short sales) and transactions in which the broker
solicits purchasers; (e) in privately negotiated transactions; (f) "at the
market" to or through market makers or into an existing market for the
Ordinary Shares; (g) in other ways not involving market makers or into an
existing market for the Ordinary Shares; (h) through transactions in options,
swaps or other derivatives (whether listed or not); or (i) any combination of
the foregoing or other legally available means. 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 distributions of the
Shares or otherwise, the Selling Shareholders may enter into hedging
transactions with broker-dealers or other financial institutions. In
connection with such transactions, broker-dealers or other financial
institutions may engage in short sales of the Company's Ordinary Shares in
the course of hedging the positions they assume with Selling Stockholders.
The Selling Stockholders may also sell the Company's Ordinary Shares short
and redeliver the shares to close out such short positions. The Selling
Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions which require the delivery to
such broker-dealer or other financial institution of Shares offered hereby,
which Shares such broker-dealer or other financial institution may resell
pursuant to this Prospectus (as supplemented or amended to reflect such
transaction). The Selling Stockholders may also pledge Shares to a
broker-dealer or other financial institution, and, upon a default, such
broker-dealer or other financial institution may effect sales of the pledged
Shares pursuant to this Prospectus (as supplemented or amended to reflect
such transaction). In addition, any Shares that qualify for sale pursuant to
Rule 144 may be sold under Rule 144 rather than pursuant to this Prospectus.
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. Such brokers
or dealers and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Act in connection with such sales, and
any such commissions, discounts or concessions may be deemed to be underwriting
discounts or commissions under the Act. The Company will pay all expenses
incident to the registration of the Shares with the SEC.
In order to comply with the securities laws of certain states, if
applicable, the Shares must be sold in such 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 Company has agreed to use its
best efforts to register and qualify the Shares under such other securities or
"blue sky" laws of such jurisdictions in the Unites States as each Selling
Shareholder reasonably requests.
There can be no assurance that the Selling Shareholders will sell all or
any of the Shares.
The Company has agreed to indemnify the October Investors and any person
controlling an October Investor for any claims arising out of or are based upon
(i) any untrue statement or alleged untrue statement of a material fact in a
Registration Statement or the omission or alleged omission to state therein a
material fact required
20
<PAGE>
to be stated or necessary to make the statements therein not misleading; (ii)
any untrue statement or alleged untrue statement of a material fact contained
in any preliminary prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as amended or
supplemented, if the Company files any amendment or supplement thereto with
the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading;
or (iii) any violation or alleged violation by the Company of the Securities
Act, the Exchange Act, any other law, including, without limitation, any
state securities law, or any rule or regulation thereunder relating to the
offer or sale of the Shares. The October Investors have agreed to indemnify
the Company and certain related persons for claims arising from the matters
set forth above provided that the violation upon which the claim is based
occurred in reliance upon and in conformity with written information
furnished to the Company by an October Investor expressly for use in
connection with such Registration Statement.
The Company has agreed to indemnify the Selling Shareholders and any person
controlling a Selling Shareholder for any claims arising out of or are based
upon (i) any untrue statement or alleged untrue statement of a material fact in
a Registration Statement or the omission or alleged omission to state therein a
material fact required to be stated or necessary to make the statements therein
not misleading; (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the final
prospectus (as amended or supplemented, if the Company files any amendment or
supplement thereto with the SEC) or the omission or alleged omission to state
therein any material fact necessary to make the statements made therein, in
light of the circumstances under which the statements therein were made, not
misleading; or (iii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any other law, including, without limitation,
any state securities law, or any rule or regulation thereunder relating to the
offer or sale of the Shares. The Selling Shareholders have agreed to indemnify
the Company and certain related persons for claims arising from the matters set
forth above provided that the violation upon which the claim is based occurred
in reliance upon and in conformity with written information furnished to the
Company by a Shareholder expressly for use in connection with such Registration
Statement.
The Company has agreed with the Selling Shareholders to keep the
Registration Statement of which this Prospectus constitutes a part effective
until the earlier of the date on which all of the Shares have been sold and the
date on which all of the Shares may immediately be sold to the public without
registration pursuant to Rule 144(k) under the Act.
21
<PAGE>
LEGAL MATTERS
The validity of the securities offered hereby and certain legal matters in
connection with the Offering with respect to Israeli law will be passed upon for
the Company by Yigal Arnon & Co., Tel Aviv, Israel. Certain legal matters in
connection with the Offering with respect to United States law will be passed
upon for the Company by Rothgerber, Appel, Powers & Johnson LLP, Denver,
Colorado.
EXPERTS
The audited consolidated financial statements referred to in this
Prospectus and/or included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996, have been audited by Luboshitz, Kasierer & Co., a
Member Firm of Andersen Worldwide, SC, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
Reference is made to said reports, which include an explanatory fourth paragraph
with respect to the Company's ability to continue as a going concern.
Statements concerning Israeli law included in this Prospectus or in any
document incorporated by reference herein have been examined by Yigal Arnon &
Co., and have been included upon the authority of such counsel as an expert in
the laws of the State of Israel.
22
<PAGE>
No dealer, salesperson or any other individual has been authorized to give
any information or make any representations not contained in this Prospectus in
connection with the Offering covered by this Prospectus. If given or made, such
information or representations must not be relied upon as having been authorized
by the Company, any Selling Shareholder or any other person. This Prospectus
does not constitute an offer to sell, or a solicitation of an offer to buy, the
Shares in any jurisdiction where, or to any person to whom, it is unlawful to
make such offer or solicitation. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, create any implication that
there has not been any change in the facts set forth in this Prospectus or in
the affairs of the Company since the date hereof or that the information
contained herein is correct as of any time subsequent to the date hereof.
-----------------
TABLE OF CONTENTS
Page
----
AVAILABLE INFORMATION 2
FORWARD LOOKING STATEMENTS 3
INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE 3
THE COMPANY 4
RECENT DEVELOPMENTS 5
RISK FACTORS 9
USE OF PROCEEDS 17
SELLING SHAREHOLDERS 17
PLAN OF DISTRIBUTION 18
LEGAL MATTERS 20
EXPERTS 20
23
<PAGE>
11,990,000 ORDINARY SHARES
Accent Software
International Ltd.
--------
PROSPECTUS
--------
NOVEMBER ____, 1997
<PAGE>
2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses in connection with the issuance and distribution of the
securities registered under this Registration Statement are estimated to be as
follows:
Securities and Exchange Commission Registration Fee. . . . $ 8,974
The Nasdaq Stock Market Filing Fee . . . . . . . . . . . . 7,500
Israeli Taxes. . . . . . . . . . . . . . . . . . . . . . . 300
Printing and Engraving Expenses. . . . . . . . . . . . . . 500
Legal Fees and Expenses. . . . . . . . . . . . . . . . . . 20,000
Accounting Fees and Expenses . . . . . . . . . . . . . . . 10,000
Transfer Agent Fees. . . . . . . . . . . . . . . . . . . . 1,000
-------
Total. . . . . . . . . . . . . . . . . . . . . . . . . $48,274
------
------
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Articles of Association of the Company provide that, to the fullest
extent permitted by the Israeli Companies' Ordinance (New Version), 1983, as
amended (the "Companies Ordinance"), the Company may indemnify its directors
and officers for (i) any financial liability imposed upon them for the
benefit of a third party by a judgment, including a settlement or arbitration
decision certified by a court, as a result of an act or omission of such
person in his capacity as a director or officer of the Company; and (ii)
reasonable litigation expenses, including legal fees, incurred by such
director or officer or which he is obligated to pay by a court order, in a
proceeding brought against him by or on behalf of the Company or by others,
or in connection with a criminal proceeding in which he was acquitted, in
each case relating to acts or omissions of such person in his capacity as a
director or officer of the Company ("Indemnifiable Event").
The Company's Articles of Association provide that, to the fullest extent
permitted by the Companies Ordinance, the Company may procure directors' and
officers' liability insurance for (i) breach of the duty of care by any
director or officer owed to the Company or to any other person; (ii) breach
of fiduciary duty by any officer or director owed to the Company, provided
such person acted in good faith and had reasonable cause to assume that the
action would not prejudice the interests of the Company; and (iii) any
financial liability imposed upon any director or officer for the benefit of a
third party by reason of an act or omission of such person in his capacity as
a director or officer of the Company. The Company has a directors' and
officers' liability insurance policy that insures the Company's officers and
directors against certain liabilities.
Under the Companies Ordinance, the Company may not indemnify or procure
insurance coverage for the liability of its Office Holders (as defined in the
Companies Ordinance) in respect of any monetary obligation imposed by reason
of (i) an act or omission which constitutes a breach of fiduciary duty,
except to the extent described above; (ii) a willful breach of the duty of
care or reckless disregard of the circumstances or consequences of such
breach; (iii) an act or omission done with the intent to unlawfully realize
personal gain; or (iv) a fine or penalty imposed for a criminal offense.
II-2
<PAGE>
The Companies Ordinance defines an "Office Holder" to include a director,
general manager, chief executive officer, executive vice president, vice
president, other managers directly subordinate to the general manager, and
any person assuming the responsibilities of the foregoing positions without
regard to such person's title.
In addition, pursuant to the Companies Ordinance, indemnification of, and
procurement of insurance coverage for, an Office Holder of the Company is
permitted if it is approved by the Company's Audit Committee and Board of
Directors. In certain circumstances, the Companies Ordinance also requires
approval of such indemnification and insurance by the Company's shareholders.
ITEM 16. EXHIBITS
*4.1 -- Form of Securities Purchase Agreement dated November 6, 1997,
between Accent Software International Ltd., and CC Investments LDC,
Nelson Partners, Olympus Securities, Ltd., Marshall Companies, and
Profinsa Investments, which includes the Convertible Debenture, the
Warrant Agreement and Registration Rights Agreement as exhibits
thereto.
*4.2 -- Warrant Agreement with The Shemano Group, Inc.
*5.1 -- Opinion of Yigal Arnon & Co.
23.1 -- Consent of Luboshitz, Kasierer & Co., a Member Firm of Andersen
Worldwide, SC.
*23.2 -- Consent of Yigal Arnon & Co., contained in their opinion filed as
Exhibit 5.1.
23.3 -- Consent of Rothgerber, Appel, Powers & Johnson LLP.
24.1 -- Power of Attorney (included on page II-4 to II-5).
- -----------
* To be filed by amendment prior to the effectiveness of this Registration
Statement.
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;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Securities and Exchange Commission pursuant to Rule 424(b) if,
in the aggregate, with changes in volume and price represent no more
than a 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement; and (iii)To include any material information
with respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such information
in the registration statement.
II-3
<PAGE>
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
BONA FIDE offering thereof;
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering; and
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial BONA FIDE offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 14 above, 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 Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
II-4
<PAGE>
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 Colorado Springs, State of
Colorado, on this 6th day of November 1997.
ACCENT SOFTWARE INTERNATIONAL LTD.
By: /s/ Robert J. Behr
---------------------
Name: Robert J. Behr
Title: Chief Financial Officer
(Principal Financial and Accounting Officer)
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Todd
A. Oseth, Robert J. Behr and Robert Trachtenberg and each of them, as
attorneys-in-fact, each with the power of substitution, for him in any and
all capacities, to sign any amendment 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 cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated:
<TABLE>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ Todd A. Oseth President, Chief Executive Officer and Director November 6, 1997
- ----------------------- (principal executive officer)
Todd A. Oseth
/s/ Robert J. Behr Chief Financial Officer (principal financial November 6, 1997
- ----------------------- and accounting officer)
Robert J. Behr
/s/ Robert Rosenschein Chief Technology Officer, Languages, and November 6, 1997
- ----------------------- Co-Chairman of the Board of Directors
Robert Rosenschein
/s/ Roger Cloutier Co-Chairman of the Board of Directors November 6, 1997
- -----------------------
Roger Cloutier
/s/ Elliott B. Broidy Director November 6, 1997
- -----------------------
Elliott B. Broidy
/s/ Jeffrey Rosenschein Chief Technology Officer, Intelligent November 6, 1997
- ----------------------- Agents, and Director
Jeffrey Rosenschein
/s/ Meldon E. Levine Director November 6, 1997
- -----------------------
Meldon E. Levine
/s/ Mark A. Tebbe Director November 6, 1997
- -----------------------
Mark A. Tebbe
/s/ Esther Dyson Director November 6, 1997
- -----------------------
Esther Dyson
Authorized Representative in the United States:
ACCENT WORLDWIDE, INC.
/s/ Todd A. Oseth November 6, 1997
- -----------------------
Todd A. Oseth
By: /s/ Robert J. Behr November 6, 1997
-------------------
Robert J. Behr
Attorney-in-fact
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
*4.1 -- Form of Securities Purchase Agreement dated November 6, 1997,
between Accent Software International Ltd., and CC Investments LDC,
Nelson Partners, Olympus Securities, Ltd., Marshall Companies and
Profinsa Investments, which includes the Convertible Debenture, the
Warrant Agreement and Registration Rights Agreement as exhibits
thereto.
*4.2 -- Warrant Agreement with The Shemano Group, Inc.
*5.1 -- Opinion of Yigal Arnon & Co.
23.1 -- Consent of Luboshitz, Kasierer & Co., a Member Firm of Andersen
Worldwide, SC.
*23.2 -- Consent of Yigal Arnon & Co., contained in their opinion filed as
Exhibit 5.1.
23.3 -- Consent of Rothgerber, Appel, Powers & Johnson LLP.
24.1 -- Power of Attorney (included on page II-4 to II-5).
- -----------
* To be filed by amendment prior to the effectiveness of this Registration
Statement.
II-6
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this form S-3 of our report dated March 20, 1997 included in
Accent Software International Ltd. Form 10-K for the year ended December 31,
1996. It should be noted that we have not audited any financial statements of
the company, subsequent to December 31, 1996 or performed any audit
procedures subsequent to the date of our report.
/s/ LUBOSHITZ, KASIERER & CO.
LUBOSHITZ, KASIERER & CO.
Member Firm of Andersen Worldwide SC
Tel aviv, Israel
November 3, 1997
<PAGE>
Exhibit 23.3
November 6, 1997
Accent Software International Ltd.
28 Pierre Koenig Street
Jerusalem 91530, Israel
Ladies and Gentlemen:
We consent to the use by Accent Software International Ltd. (the
"Company") in the Company's Form S-3 Registration Statement to be filed on or
about November 6, 1997, of our name and the statement with respect to our
firm under the heading of "Legal Matters" in the Registration Statement.
Sincerely yours,
ROTHGERBER, APPEL, POWERS & JOHNSON LLP
/s/ ROTHGERBER, APPEL, POWERS & JOHNSON LLP
