United States
Securities and Exchange Commission
Washington, D.C. 20549
____________________
FORM 8-K
____________________
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
December 31, 1997 1-13591
Date of Report Commission File Number
(Date of earliest event reported)
Computron Software, Inc.
(Exact name of registrant as specified in its charter)
Delaware 13-2966911
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification Number
301 Route 17 North
Rutherford, New Jersey 07070
(Address of Principal Executive Offices) (Zip Code)
(201) 935-3400
(Registrant's telephone number, including area code)
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(a) not applicable
(b) not applicable
(c) Exhibits
4.1 Form of Warrant, included as an exhibit to Exhibit 10.1
hereto.
10.1 Securities Purchase Agreement, dated as of December
31, 1997, among the Company and the investors
listed therein.
Item 9. Sales of Equity Securities Pursuant to Regulation S.
On December 31, 1997, in reliance on the exemption from
the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to Regulation S
thereunder, Computron Software, Inc. (the "Company") completed
the offer and sale of 1,535,140 shares of common stock of the
Company, par value $.01 per share (the "Common Stock"), and
383,785 warrants, each warrant exercisable for one share of
Common Stock for $3.00, subject to adjustment, during the 5 years
ending December 31, 2002 (the "Warrants"), for an aggregate
consideration of $3,070,280. On December 31, 1997, the Company
also completed the offer and sale of 1,402,360 shares of Common
Stock and 350,590 Warrants in reliance on the exemption from the
registration requirements of the Securities Act, pursuant to
Section 4(2) of the Securities Act and Regulation D thereunder,
for an aggregate consideration of $2,804,720. Pursuant to the
terms of the Securities Purchase Agreement, dated as of December
31, 1997 (the "Securities Purchase Agreement"), entered into
among the Company and the investors listed below, the Company
will use reasonable best efforts to file a registration statement
with the SEC covering the Common Stock issued, the Common Stock
issuable upon exercise of the Warrants and certain additional
Common Stock issuable under certain conditions pursuant to the
terms of the Securities Purchase Agreement and to cause such
registration statement to become effective no later than June 15,
1998.
The Common Stock and Warrants issued in reliance on
Regulation S under the Securities Act and under Section 4(2)
under the Securities Act and Regulation D thereunder were sold to
the following:
Pursuant to Regulation S:
1. Lion Investments Limited
2. Westpool Investment Trust plc
3. CA Capital Management Ltd.
Pursuant to Section 4(2) and Regulation D thereunder:
1. The Weber Family Trust dated 1/6/89
2. RH Capital Associates Number One, L.P.
3. Robert Horwitz
4. Paul Savidis
5. WPG Software Fund, L.P.
6. WPG Institutional Software Fund, L.P.
7. Sippl Macdonald Ventures II, L.P.
Neither the Common Stock nor the Warrants issued by the
Company nor the Common Stock issuable upon exercise of the
Warrants has been registered under the Securities Act or any
state securities laws. Accordingly, these securities may not be
offered or sold absent registration or an exemption from the
registration requirements of the Securities Act, and applicable
state securities laws.
The Securities Purchase Agreement and a form of the Warrant
are filed as exhibits hereto and are hereby incorporated by
reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
Date: January 8, 1998 COMPUTRON SOFTWARE, INC.
By: /s/Michael R. Jorgensen
Name: Michael R. Jorgensen
Title: Executive Vice
President and
Chief Financial
Officer
EXHIBIT INDEX
Exhibit Description Page
- ------- ---------------------------- ------------
4.1 Form of Warrant, included as an
exhibit to Exhibit 10.1 hereto.
10.1 Securities Purchase Agreement, dated
as of December 31, 1997, among the
Company and the investors listed
therein.
COMPUTRON SOFTWARE, INC.
SECURITIES PURCHASE AGREEMENT
dated as of
December 30, 1997<PAGE>
TABLE OF CONTENTS
Page
SECTION 1 Authorization and Sale of Securities . . . . . . . . .1
1.1 Authorization. . . . . . . . . . . . . . . . . . . . .1
1.2 Sale of Securities . . . . . . . . . . . . . . . . . .1
SECTION 2 Closing Date; Delivery . . . . . . . . . . . . . . . .1
2.1 Closing Date . . . . . . . . . . . . . . . . . . . . .1
2.2 Delivery . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 3 Representations and Warranties of the Company. . . . .2
3.1 Organization and Standing; Certificate and Bylaws. . .2
3.2 Corporate Power. . . . . . . . . . . . . . . . . . . .2
3.3 Capitalization . . . . . . . . . . . . . . . . . . . .3
3.4 Authorization. . . . . . . . . . . . . . . . . . . . .3
3.5 SEC Filings; Financial Statements. . . . . . . . . . .3
3.6 Absence of Certain Changes or Events . . . . . . . . .4
3.7 Taxes. . . . . . . . . . . . . . . . . . . . . . . . .4
3.8 Title to Properties and Assets; Liens, etc.. . . . . .4
3.9 Intellectual Property. . . . . . . . . . . . . . . . .5
3.10 Compliance with Other Instruments, None Burdensome,
etc.5
3.11 Litigation, etc. . . . . . . . . . . . . . . . . . . .5
3.12 Governmental Consents, etc.. . . . . . . . . . . . . .6
3.13 Brokers or Finders . . . . . . . . . . . . . . . . . .6
3.14 Exempt Offering. . . . . . . . . . . . . . . . . . . .6
SECTION 4 Representations and Warranties of the Investors. . . .6
4.1 Authorization. . . . . . . . . . . . . . . . . . . . .6
4.2 Purchase Entirely for Own Account. . . . . . . . . . .7
4.3 Investment Experience. . . . . . . . . . . . . . . . .7
4.4 Federal Securities Law Exemption . . . . . . . . . . .7
4.5 Accredited Investor. . . . . . . . . . . . . . . . . .9
4.6 Informed Investment Decision . . . . . . . . . . . . 10
4.7 Restricted Securities. . . . . . . . . . . . . . . . 11
4.8 Representations to the Investors . . . . . . . . . . 11
4.9 No Solicitation. . . . . . . . . . . . . . . . . . . 11
4.10 Fiduciary Representations. . . . . . . . . . . . . . 11
4.11 Representations True and Complete. . . . . . . . . . 12
4.12 Compliance with Laws . . . . . . . . . . . . . . . . 12
4.13 Legends. . . . . . . . . . . . . . . . . . . . . . . 12
4.14 Governmental Consents. . . . . . . . . . . . . . . . 13
SECTION 5 Covenants and Agreements . . . . . . . . . . . . . . 14
5.1 Access to Properties and Records . . . . . . . . . . 14
5.2 Exchange Listing . . . . . . . . . . . . . . . . . . 14
5.3 Board Members. . . . . . . . . . . . . . . . . . . . 14
5.4 Registration Rights. . . . . . . . . . . . . . . . . 15
5.5 Spinoffs or Other Distribution of Securities . . . . 16
5.6 Issuance of Certain Shares and Warrants. . . . . . . 17
SECTION 6 Conditions to Closing of Investors . . . . . . . . . 17
6.1 Representations and Warranties Correct . . . . . . . 17
6.2 Covenants. . . . . . . . . . . . . . . . . . . . . . 17
6.3 Blue Sky . . . . . . . . . . . . . . . . . . . . . . 18
6.4 No Illegality. . . . . . . . . . . . . . . . . . . . 18
6.5 Stock Price. . . . . . . . . . . . . . . . . . . . . 18
6.6 Exchange Listing . . . . . . . . . . . . . . . . . . 18
6.7 Legal Opinion. . . . . . . . . . . . . . . . . . . . 18
6.8 Stockholder Litigation Settlement. . . . . . . . . . 18
6.9 Closing Deadline . . . . . . . . . . . . . . . . . . 18
SECTION 7 Conditions to Closing of Company . . . . . . . . . . 18
7.1 Representations and Warranties . . . . . . . . . . . 19
7.2 Blue Sky . . . . . . . . . . . . . . . . . . . . . . 19
7.3 No Illegality. . . . . . . . . . . . . . . . . . . . 19
7.4 Closing Deadline . . . . . . . . . . . . . . . . . . 19
SECTION 8 Miscellaneous. . . . . . . . . . . . . . . . . . . . 19
8.1 Termination. . . . . . . . . . . . . . . . . . . . . 19
8.2 Survival; Indemnification. . . . . . . . . . . . . . 19
8.3 Governing Law; Knowledge . . . . . . . . . . . . . . 20
8.4 Successors and Assigns . . . . . . . . . . . . . . . 20
8.5 Entire Agreement; Amendment. . . . . . . . . . . . . 20
8.6 Notices, etc.. . . . . . . . . . . . . . . . . . . . 20
8.7 Delays or Omissions. . . . . . . . . . . . . . . . . 20
8.8 Expenses . . . . . . . . . . . . . . . . . . . . . . 21
8.9 Counterparts . . . . . . . . . . . . . . . . . . . . 21
8.10 Severability . . . . . . . . . . . . . . . . . . . . 21
8.11 Gender . . . . . . . . . . . . . . . . . . . . . . . 21
EXHIBITS
A. Schedule of Investors
B. Form of Warrants
C. Piggyback Registration Rights
D. Form of Legal Opinion <PAGE>
COMPUTRON SOFTWARE, INC.
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (the "Agreement") is made
as of December 30, 1997, by and among Computron Software, Inc., a
Delaware corporation (the "Company"), with its principal
executive offices at 301 Route 17 North, Rutherford, New Jersey
07070, and the investors listed on the Schedule of Investors
attached as Exhibit A hereto (the "Investors").
SECTION 1
Authorization and Sale of Securities
1.1 Authorization. The Company has authorized the sale and
issuance of 2,937,500 shares (the "Shares") of its common stock,
$0.01 par value per share (the "Common Stock"), and Warrants to
purchase 734,375 shares of the Company's Common Stock, in the
form attached to this Agreement as Exhibit B (the "Warrants").
1.2 Sale of Securities. Subject to the terms and
conditions hereof, at the Closing the Company will issue and sell
to the Investors, and the Investors will buy from the Company,
the number of shares of the Company's Common Stock and Warrants
to purchase the number of shares of Common Stock specified
opposite each Investor's name on the Schedule of Investors. Each
share of Common Stock shall be sold together with a Warrant to
purchase 0.25 share of Common Stock at an aggregate cash purchase
price of $2.00. The shares of Common Stock issuable upon
conversion of the Warrants shall be referred to as "Warrant
Shares." The Warrants, the Shares and the Warrant Shares
actually issued at the Closing, and additional Warrants, shares
of Common Stock and Warrant shares issuable hereunder in an
aggregate amount equal to 10% of each of the foregoing, shall be
referred to as the "Securities." The Company's agreements with
each of the Investors are separate agreements, and the sales of
the Securities to each of the Investors are separate sales.
SECTION 2
Closing Date; Delivery
2.1 Closing Date. The closing of the purchase and sale of
2,937,500 shares of the Company's Common Stock and Warrants to
purchase 734,375 shares of the Company's Common Stock hereunder
(the "Closing") shall be held on December 31, 1997 or on such
later date or dates as the Company and the Investors may agree to
(the date for such Closing being referred to as the "Closing
Date"). The place of the Closing (including the place of
delivery to the Investors by the Company of the certificates
evidencing all shares of Common Stock and the Warrants being
purchased and the place of payment to the Company by the
Investors of the purchase price therefor) shall be at the offices
of Proskauer Rose LLP, 1585 Broadway, New York, New York 10036,
or such other place as the Investors and the Company may mutually
agree.
2.2 Delivery. At the Closing, the Company will deliver to
each Investor a certificate or certificates representing the
number of Shares of Common Stock and Warrants to purchase Common
Stock as designated on the Schedule of Investors to be purchased
by each Investor, against payment of the purchase price therefor,
by wire transfer payable to the Company, in the amounts specified
on the Schedule of Investors.
SECTION 3
Representations and Warranties of the Company
The Company hereby represents and warrants to the Investors,
subject to the exceptions disclosed in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996
(the "1996 10-K"), the Company's Quarterly Reports on Form 10-Q
for the quarters ended March 31, 1997, June 30, 1997 and
September 30, 1997 and the Company's Proxy Statement dated June
6, 1997 related to the Company's 1997 Annual Meeting of
Shareholders (collectively, the "Disclosure Documents"), as
follows:
3.1 Organization and Standing; Certificate and Bylaws. The
Company is a corporation duly organized, validly existing and in
good standing under, and by virtue of, the laws of the
jurisdiction of its incorporation. The Company has requisite
corporate power to own, lease and operate its properties and
assets, and to carry on its business as presently conducted, and
is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction in which the failure to be
so qualified would have a Material Adverse Effect (as defined
below) on the Company. The Company has delivered or made
available a true and correct copy of the Certificate of
Incorporation and Bylaws or other charter documents of the
Company, each as amended to date, to counsel for the Investors.
When used in connection with the Company, the term "Material
Adverse Effect" means, for the purposes of this Agreement, any
event or effect that is materially adverse to the business,
assets, financial condition, or results of operations of the
Company and its subsidiaries taken as a whole.
3.2 Corporate Power. The Company will have at the Closing
Date all requisite corporate power and authority to execute and
deliver this Agreement and the Warrants, to sell and issue the
Common Stock and the Warrants and to issue the underlying Warrant
Shares and any additional Securities issuable hereunder, and to
carry out and perform its obligations under the terms of this
Agreement and the Warrants.
3.3 Capitalization. The authorized capital stock of the
Company consists of 50,000,000 shares of Common Stock and
5,000,000 shares of Preferred Stock. As of December 23, 1997,
20,839,780 shares of Common Stock had been issued and were
outstanding and no shares of Preferred Stock had been issued and
were outstanding. As of December 23, 1997, there were no
outstanding rights, options, warrants, conversion rights or
agreements for the purchase or acquisition from the Company of
any shares of its capital stock, other than options to purchase
3,821,152 shares of the Company's Common Stock that have been
issued to directors, employees and consultants of the Company
under the Company's Amended and Restated 1995 Stock Option Plan.
Assuming the accuracy of each Investor's representations in
Section 4 below, upon issuance, the Securities will be issued in
compliance with all federal and state securities laws.
3.4 Authorization. All corporate action on the part of the
Company, its directors and stockholders necessary for the
authorization, execution, delivery and performance of this
Agreement by the Company, the authorization, sale, issuance and
delivery of the Common Stock and the Warrants and the performance
of the Company's obligations hereunder has been taken or will be
taken prior to the Closing. This Agreement and the Warrants,
when executed and delivered by the Company, shall constitute the
valid and binding obligations of the Company enforceable in
accordance with their respective terms except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium,
and other laws of general application affecting enforcement of
creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief, and
other equitable remedies, and (iii) to the extent the
indemnification provisions contained in the registration rights
set forth on set forth on Exhibit C hereto (the "Registration
Rights") may be limited by applicable federal and state
securities laws. The Securities issuable hereunder, when issued
and paid for in compliance with the provisions of this Agreement,
will be validly issued and will be fully paid and nonassessable,
and free of any liens or encumbrances (assuming the Investors
take the Securities with no notice thereof and obtain control of
the Securities) other than any liens or encumbrances created by
or imposed upon the holders; provided, however, that the
Securities may be subject to restrictions on transfer under state
or federal securities laws.
3.5 SEC Filings; Financial Statements.
(a) The Company and each of its subsidiaries has filed
all forms, reports and documents required to be filed with the
Securities and Exchange Commission (the "SEC") since January 1,
1995. All such required forms, reports and documents are
referred to herein as the "SEC Reports." As of their respective
dates, the SEC Reports (i) were prepared in accordance with the
requirements of the Securities Act or the Exchange Act, as the
case may be, and the rules and regulations of the SEC thereunder
applicable to such SEC Reports and (ii) did not at the time they
were filed (or if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing) contain
any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(b) Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in
the 1996 10-K and in each SEC Report filed subsequent to the date
thereof (the "Financials") (x) complies as to form in all
material respects with the published rules and regulations of the
SEC with respect thereto, (y) was prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved (except as may
be indicated in the notes thereto or, in the case of unaudited
interim financial statements, as may be permitted by the SEC on
Form 10-Q under the Exchange Act) and (z) fairly presented in all
material respects the consolidated financial position of the
Company and its subsidiaries as at the respective dates thereof
and the consolidated results of its operations and cash flows for
the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring
year-end adjustments. The balance sheet of the Company contained
in the Company's Quarterly Report on Form 10-Q for the period
ended September 30, 1997 is hereinafter referred to as the
"Balance Sheet." Neither the Company nor any of its subsidiaries
has any liabilities (absolute, accrued, contingent or otherwise)
of a nature required to be disclosed on a balance sheet or in the
related notes to the consolidated financial statements prepared
in accordance with GAAP which have, individually or in the
aggregate, a Material Adverse Effect on the Company and its
subsidiaries taken as a whole, except liabilities (i) provided
for in the Balance Sheet, or (ii) incurred since the date of the
Balance Sheet in the ordinary course of business.
3.6 Absence of Certain Changes or Events. Since September
30, 1997, and prior to the date of this Agreement, there has not
been: (i) any Material Adverse Effect on the Company or (ii) any
material change by the Company in its accounting methods,
principles or practices, except as required by concurrent changes
in GAAP.
3.7 Taxes. The Company and each of its subsidiaries has
filed all material tax returns required to be filed by any of
them and has paid (or the Company has paid on its behalf), or has
set up an adequate reserve for the payment of, all material taxes
required to be paid as shown on such returns or estimated to be
paid if returns have not been filed and the most recent financial
statements contained in the SEC Reports reflect an adequate
reserve for all material taxes payable by the Company and its
subsidiaries accrued through the date of such financial
statements. Except as reasonably would not be expected to have a
Material Adverse Effect on the Company, no material deficiencies
for any taxes have been proposed, asserted or assessed against
the Company or any of its subsidiaries.
3.8 Title to Properties and Assets; Liens, etc. The
Company has good and valid title to its material properties and
assets, and has good title to all its material leasehold
interests, in each case subject to no mortgage, pledge, lien,
lease, encumbrance or charge, other than (i) the lien of current
taxes not yet due and payable, (ii) possible minor liens and
encumbrances which do not in any case materially detract from the
value of the property subject thereto or materially impair the
operations of the Company, and (iii) such other liens as would
not have a Material Adverse Effect on the Company.
3.9 Intellectual Property.
(a) The Company and its subsidiaries own, or have the
right to use, sell or license all intellectual property necessary
or required for the conduct of their respective businesses as
presently conducted (such intellectual property and the rights
thereto are collectively referred to as the "Company IP Rights")
except for any failure to own or have the right to use, sell or
license that would not have a Material Adverse Effect on the
Company.
(b) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated
hereby will not constitute a breach of any instrument or
agreement governing any Company IP Right, will not cause the
forfeiture or termination or give rise to a right of forfeiture
or termination of any Company IP Right or impair the right of
Company and its subsidiaries to use, sell or license any Company
IP Right or portion thereof, except for the occurrence of any
such breach, forfeiture, termination or impairment that would
not, individually or in the aggregate, result in a Material
Adverse Effect on the Company.
(c) (i) Neither the manufacture, marketing, license,
sale or use of any product currently licensed or sold by the
Company or any of its subsidiaries violates any license or
agreement between the Company or any of its subsidiaries and any
third party or, to the knowledge of the Company, infringes any
intellectual property right of any other party; and (ii) there is
no pending or, to the knowledge of the Company, threatened claim
or litigation contesting the validity, ownership or right to use,
sell, license or dispose of any Company IP Right, except, with
respect to clauses (i) and (ii), for any violations,
infringements, claims or litigation that would not have a
Material Adverse Effect on the Company.
3.10 Compliance with Other Instruments, None Burdensome,
etc. The Company is not in violation of any term of the
Certificate of Incorporation or Bylaws, or to its knowledge, any
order, statute, rule or regulation applicable to the Company,
which violation reasonably would be expected to have a Material
Adverse Effect on the Company. The execution, delivery and
performance of and compliance with this Agreement, and the
issuance of the Securities, have not resulted and will not result
in any violation of, or conflict with, or constitute a default
under, or result in the creation of, any material mortgage,
pledge, lien, encumbrance or charge upon any of the properties or
assets of the Company.
3.11 Litigation, etc. Except for the Class Action (as
defined in Section 6.8 hereof), there are no actions, suits,
proceedings or investigations pending against the Company or its
properties before any court or governmental agency (nor, to the
Company's knowledge, is there any written threat thereof), which,
either in any case or in the aggregate, reasonably would be
expected to have a Material Adverse Effect on the Company, and
none which questions the validity of this Agreement or the
Warrants or any action taken or to be taken in connection
herewith.
3.12 Governmental Consents, etc. No consent, approval or
authorization of, or designation, declaration or filing with, any
federal, state or local governmental authority on the part of the
Company is required in connection with the valid execution and
delivery of this Agreement or the offer, sale or issuance of the
Securities, except (i) filings with the SEC and (ii)
qualification (or taking such action as may be necessary to
secure an exemption from qualification, if available) of the
offer and sale of the Securities under applicable state
securities or "blue sky" laws.
3.13 Brokers or Finders. The Company has not incurred, and
will not incur, directly or indirectly, any liability for
brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement or any transaction
contemplated hereby.
3.14 Exempt Offering. Subject to the accuracy of each
Investor's representations and warranties set forth in Section 4
hereof, the offer, sale and issuance of the Shares and Warrants
to the Investors on the Closing Date in conformity with the terms
of this Agreement, constitute transactions exempt from the
registration requirements of Section 5 of the Securities Act of
1933, as amended (the "Act") and applicable state securities
laws.
SECTION 4
Representations and Warranties of the Investors
Each Investor hereby represents and warrants to the Company
with respect to its purchase of the Common Stock and the Warrants
as set forth herein. The representations, covenants and
agreements contained herein are made separately by each Investor
and no Investor shall be responsible, or have any liability, for
breaches or failures to act or comply with the provisions
contained in this Section 4 by any other Investor.
4.1 Authorization. This Agreement, when executed and
delivered by the Investor, will constitute the Investor's valid
and legally binding obligation, enforceable in accordance with
its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally,
(ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies, and
(iii) to the extent the indemnification provisions contained in
the Registration Rights may be limited by applicable federal or
state securities laws.
4.2 Purchase Entirely for Own Account. This Agreement is
made with the Investor in reliance upon the Investor's
representation to the Company, which by the Investor's execution
of this Agreement the Investor hereby confirms, that the
Securities to be received by the Investor will be acquired for
investment for the Investor's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any
part thereof, and that the Investor has no present intention of
selling, granting any participation in, or otherwise distributing
the same. By executing this Agreement, the Investor further
represents that the Investor does not have any contract,
undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third
person, with respect to any of the Securities. The Investor
represents that it has the full power and authority to enter into
this Agreement.
4.3 Investment Experience. The Investor is an investor in
securities of comparable companies and acknowledges that it is
able to fend for itself, can bear the economic risk of its
investment, and has such knowledge and experience in financial or
business matters that it is capable of evaluating the merits and
risks of the investment in the Securities. If other than an
individual, the Investor also represents it has not been
organized solely for the purpose of acquiring the Securities, of
if the Investor has been organized solely for the purpose of
acquiring the Securities, that all of the equity owners of the
Investor are "accredited investors" as defined below.
4.4 Federal Securities Law Exemption.
(a) Each of the U.S. Investors (as such Investor is
designated in the Schedule of Investors attached hereto as
Exhibit A) understands that the sale of the Securities to such
U.S. Investor is intended to be exempt from registration under
the Act, by virtue of Section 4(2) of the Act and applicable
state securities laws. None of the U.S. Investors will sell,
hypothecate or otherwise transfer any or all of the Securities
unless:
(i) There is then in effect a registration
statement under the Act covering such proposed disposition and
such disposition is made in accordance with such registration
statement;
(ii) The applicable U.S. Investor shall have
notified the Company of the proposed disposition and shall have
furnished the Company with a statement of the circumstances
surrounding the proposed disposition, and if requested by the
Company, the Investor shall have furnished the Company with
either (A) an unqualified written opinion of counsel who shall be
reasonably satisfactory to the Company addressed to the Company
and reasonably satisfactory in form and substance to the
Company's counsel to the effect that the proposed transfer may be
effected without registration under the Act or (B) a "No Action"
letter from the SEC to the effect that the transfer of such
securities without registration will not result in a
recommendation by the staff of the SEC that action be taken with
respect thereto, whereupon the holder of such Securities shall be
entitled to transfer such Securities in accordance with the terms
of the notice delivered by the holder to the Company; or
(iii) The applicable U.S. Investor shall have
assigned, transferred, pledged or otherwise disposed of the
Securities in a transaction involving the distribution without
consideration of the Securities by such U.S. Investor to any of
its partners or retired partners, or to the estate of any of its
partners or retired partners, or in a transaction involving the
transfer or distribution of the Securities by a corporation to
any subsidiary, parent or affiliated corporation of such
corporation, and such transaction shall not be in violation of
applicable federal or state securities laws; provided in each
case that such U.S. Investor shall give written notice to the
Company of such Investor's intention to effect such transfer,
assignment, pledge or other disposition. Such U.S. Investor will
cause any such proposed purchaser, assignee, transferee or
pledgee of any Securities held by such U.S. Investor to agree to
take and hold such Securities subject to the provisions and upon
the conditions specified in this Agreement.
(b) Each of the Non-U.S. Investors (as such Investor
is designated in the Schedule of Investors attached hereto as
Exhibit A) understands that the sale of the Securities to such
Non-U.S. Investor is intended to be exempt from registration
under the Act by virtue of Regulation S of the Act and applicable
state securities laws. None of the Non-U.S. Investors will sell,
hypothecate or otherwise transfer any or all of the Securities
unless:
(i) There is then in effect a registration
statement under the Act covering such proposed disposition and
such disposition is made in accordance with such registration
statement;
(ii) Such Non-U.S. Investor shall have notified
the Company of the proposed disposition and shall have furnished
the Company with a statement of the circumstances surrounding the
proposed disposition, and if requested by the Company, shall have
furnished the Company with either (A) an unqualified written
opinion of counsel who shall be reasonably satisfactory to the
Company addressed to the Company and reasonably satisfactory in
form and substance to the Company's counsel to the effect that
the proposed transfer may be effected without registration under
the Act or (B) a "No Action" letter from the SEC to the effect
that the transfer of such securities without registration will
not result in a recommendation by the staff of the SEC that
action be taken with respect thereto, whereupon the holder of
such Securities shall be entitled to transfer such Securities in
accordance with the terms of the notice delivered by the holder
to the Company;
(iii) Such Non-U.S. Investor shall have
assigned, transferred, pledged or otherwise disposed of the
Securities in a transaction involving the distribution without
consideration of the Securities by such Non-U.S. Investor to any
of its partners or retired partners, or to the estate of any of
its partners or retired partners, or in a transaction involving
the transfer or distribution of the Securities by a corporation
to any subsidiary, parent or affiliated corporation of such
corporation, and such transaction shall not be in violation of
applicable federal or state securities laws; provided in each
case that such Non-U.S. Investor shall give written notice to the
Company of such Non-U.S. Investor's intention to effect such
transfer, assignment, pledge or other disposition. Such Non-U.S.
Investor will cause any such proposed purchaser, assignee,
transferee or pledgee of any Securities held by such Non-U.S.
Investor to agree to take and hold such Securities subject to the
provisions and upon the conditions specified in this Agreement;
(iv) At the time the buy order for the Securities
was originated, the purchasing entity shall have been outside the
United States and shall not have been a "U.S. Person," as such
term is defined in Rule 902(o) under the Act, and shall not have
been purchasing for the account or benefit of a U.S. Person; or
(v) Such Non-U.S. Investor shall have sold,
assigned, transferred, pledged or otherwise disposed of the
Securities in a transaction involving an offer and sale that
shall occur outside the United States within the meaning of
Regulation S under the Act, in a transaction meeting the
requirements of Rule 904 under the Act, and subject to the
Company's right prior to any such offer, sale or transfer to
require the delivery of an unqualified written opinion of counsel
who shall be reasonably satisfactory to the Company addressed to
the Company and reasonably satisfactory in form and substance to
the Company's counsel to the effect that the proposed transfer
may be effected in reliance on Regulation S under the Act.
4.5 Accredited Investor. Each of the Investors represents
and warrants that such Investor is an "accredited investor" as
that term is defined in Rule 501 promulgated under the Act by
virtue of one or more of the following:
(a) Such Investor is either: a bank as defined in
Section 3(a)(2) of the Act, or a savings and loan association or
other institution as defined in Section 3(a)(5)(A) of the Act,
whether acting in its individual or fiduciary capacity; a broker
or dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934, as amended; an insurance company as defined
in Section 2(13) of the Act; an Investment Company registered
under the Investment Company Act of 1940 or a Business
Development Company as defined in Section 2(a)(48) of the
Investment Company Act; a Small Business Investment Company
licensed by the U.S. Small Business Administration under Section
301(c) or (d) of the Small Business Investment Act of 1958; a
plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees if such
plan has total assets in excess of $5,000,000; or an employee
benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974, if the investment decision is made by a
plan fiduciary, as defined in Section 3(21) of such Act, which is
either a bank, savings and loan association, insurance company,
or registered investment adviser, or if the employee benefit plan
has total assets in excess of $5,000,000 or, if a self-directed
plan, with investment decisions made solely by persons that are
accredited investors; or
(b) Such Investor is a private business development
company as defined in Section 202(a)(22) of the Investment
Advisers Act of 1940; or
(c) Such Investor is an organization described in
Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended (the "Code"), or a corporation, Massachusetts or similar
business trust, partnership or limited liability company, not
formed for the specific purpose of acquiring the securities
offered hereby, with total assets in excess of $5,000,000; or
(d) Such Investor is a natural person whose individual
net worth, or joint net worth with that person's spouse, at the
time of the purchase, exceeds $1,000,000; or
(e) Such Investor is a natural person who had
individual income in excess of $200,000 in each of the two most
recent years or joint income with that person's spouse in excess
of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current
year; or
(f) Such Investor is a trust, with total assets in
excess of $5,000,000, not formed for the specific purpose of
acquiring the securities offered hereby, whose purchase is
directed by a sophisticated person as described in Rule
506(b)(2)(ii) of Regulation D promulgated under the Act; or
(g) Such Investor is a corporation or other entity all
of whose shareholders or other equity owners are themselves
accredited investors by virtue of this subparagraph or by
subparagraphs (a) through (f) above.
For purposes hereof, "individual income" means adjusted
gross income as reported for federal income tax purposes, less
any income attributable to a spouse or to property owned by a
spouse, increased by the following amounts (but not including any
amounts attributable to a spouse or to property owned by a
spouse): (i) the amount of any interest income received which is
tax-exempt under Section 103 of the Code, (ii) the amount of
losses claimed as a limited partner in a limited partnership (as
reported on Schedule E of Form 1040), (iii) any deduction claimed
for depletion under Section 611 et seq. of the Code, and (iv) any
amount by which income from long-term capital gains has been
reduced in arriving at adjusted gross income pursuant to the
provisions of Section 1202 of the Code. For purposes hereof,
"net worth" means the excess of total assets at fair market
value, including home and personal property, over total
liabilities, including mortgage.
4.6 Informed Investment Decision. Each of the Investors
further represents and warrants that in order to make an informed
decision in connection with the purchase of the Securities:
(a) Such Investor recognizes that an investment in the
Securities involves a number of significant risks, including,
without limitation, those set forth in the Disclosure Documents;
such Investor, or such Investor's agent or attorney, has such
knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of an investment in
the Securities; such Investor acknowledges that the Disclosure
Documents may contain forward-looking statements within the
meaning of Section 27A of the Act and Section 21E of the Exchange
Act and that actual results in the future could differ materially
from those described in any forward-looking statements; and
(b) Such Investor, or such Investor's agent or
attorney, (i) has been provided with sufficient information with
respect to the business of the Company and has carefully reviewed
the Disclosure Documents, (ii) has been provided with such
additional information with respect to the Company as such
Investor or such Investor's agent or attorney has requested, and
(iii) has had the opportunity to discuss such information with
members of the management of the Company and any questions that
such Investor had with respect thereto have been answered to its
full satisfaction.
4.7 Restricted Securities. Each of the Investors
understands that the Securities are not registered under the Act
or applicable state securities laws and such securities must be
held indefinitely, unless the subsequent disposition thereof is
registered under the Act and applicable state securities laws or
an exemption from such registration is available. The Company
has not undertaken to register the Securities pursuant to the Act
and, except as provided in the registration rights granted
hereunder, will have no obligation to effect on behalf of any
Investor any registration under the Act or to assist any Investor
in complying with any exemption from registration under the Act
or any state securities laws. Each of the Investors understands
that the exemption from registration afforded by certain rules
and regulations under the Act depends upon the satisfaction of
various conditions and that, if applicable, such rules and
regulations may afford the basis for sales of the Securities only
in limited amounts.
4.8 Representations to the Investors. The Investors
acknowledge that the Disclosure Documents replace and supersede
any and all information delivered prior to delivery of the
Disclosure Documents.
4.9 No Solicitation. None of the Investors are subscribing
to purchase the Securities as a result of or subsequent to any
advertisement, article, notice or other communication published
in any newspaper, magazine or similar media or broadcast over
television or radio, or presented at any seminar or meeting, or
any solicitation of a subscription by a person not previously
known to such Investor in connection with investments in
securities generally.
4.10 Fiduciary Representations. If any Investor is acting in
a fiduciary capacity in purchasing the Securities, the fiduciary
represents and warrants that he or she has authority to execute
this Agreement on behalf of the person or persons for whom the
Securities are being purchased, that such persons have been given
the Disclosure Documents and this Agreement and have confirmed to
the fiduciary that they have reviewed the same, and that the
representations and warranties contained in this Agreement (and
in any other written statement or document delivered to the
Company) shall be deemed to have been made on behalf of such
person or persons.
4.11 Representations True and Complete. All information
which each of the Investors has furnished and is furnishing to
the Company, including, without limitation, the representation as
to each Investor's status as an "Accredited Investor" within the
meaning of Rule 501 promulgated under the Act and all other
representations contained in this Agreement, are correct and
complete as of the date of this Agreement, and if there should be
any material change in such information prior to such Investor's
receipt of the Securities, each of the Investors will immediately
furnish such revised or corrected information to the Company.
Each of the Investors is executing and delivering this Agreement
with full awareness of its implications and in recognition of the
fact that the Company is relying on such Investor's
representations and warranties in selling the Securities to such
Investor, and that the Company and other investors may be damaged
if such representations or warranties are incorrect.
4.12 Compliance with Laws. Each of the Investors agrees,
within five (5) days after receipt of a request from the Company,
to provide such information and to execute and deliver such
documents as may reasonably be necessary to comply with any and
all laws and ordinances to which the Company is subject.
4.13 Legends.
(a) It is understood that the certificates evidencing
the Securities issued to each U.S. Investor may bear one or all
of the following legends:
(i) "THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE
SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS
SOLD PURSUANT TO RULE 144 OF SUCH ACT."
(ii) Any legend required by the laws of the States
of New Jersey, New York or any other applicable state securities
laws.
(b) It is understood that the certificates evidencing
the Securities issued to any Non-U.S. Investor may bear one or
all of the following legends:
(i) "THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND ARE BEING
OFFERED AND SOLD ONLY PURSUANT TO OFFERS AND SALES THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S
UNDER THE SECURITIES ACT. THESE SECURITIES MAY NOT BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION."
(ii) "THE HOLDER OF THIS SECURITY BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER
THIS SECURITY PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE
LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON
WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER
OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY), ONLY (A)
TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C)
PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S
UNDER THE SECURITIES ACT IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, OR (D)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S
RIGHT PRIOR TO ANY OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (C)
OR (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATES AND/OR OTHER INFORMATION REASONABLY SATISFACTORY TO
THE COMPANY."
(iii) Any legend required by the laws of the
States of New Jersey, New York or any other applicable state
securities laws.
4.14 Governmental Consents. Other than securities law
filings required to be made by the Company, no consent, approval
or authorization of or designation, declaration or filing with
any state, federal or foreign governmental authority on the part
of the Investor is required in connection with the valid
execution and delivery of this Agreement by each of the Investors
and the consummation by the Investors of the transactions
contemplated hereby and thereby.
SECTION 5
Covenants and Agreements
5.1 Access to Properties and Records. The Company shall
afford to the Investors and their respective accountants, counsel
and representatives, reasonable access during normal business
hours throughout the period prior to the Closing to all of their
properties, books, contracts, commitments and written records
(including, but not limited to, tax returns for the preceding six
years), and shall make reasonably available their officers and
employees to answer fully and promptly questions put to them
thereby; provided that no investigation pursuant to this Section
5.1 shall alter any representation or warranty of any party
hereto or conditions to the obligation of the parties hereto;
provided, further, that such access shall not unreasonably
interfere with the normal business operations of any of the
parties hereto. Subject to applicable law and to legal process,
each Investor will hold, and will cause each of their affiliates,
employees, officers, directors and other representatives to hold,
in confidence, any information or data concerning the Company
identified to such Investor as "confidential" furnished to them
in connection with the transactions contemplated by this
Agreement.
5.2 Exchange Listing. The Company shall maintain in good
standing the listing of its Common Stock on the American Stock
Exchange, or shall cause, and cause to be continued, the listing
thereof on the New York Stock Exchange or inclusion thereof in
the Nasdaq National Market system, for at least one year
following the Closing Date. If the Company fails to so maintain
such listing or inclusion for such period, then the Company shall
issue, at no additional cost, to each of the Investors additional
shares of Common Stock and Warrants to purchase Common Stock
equal to ten percent (10%) of the respective amounts of such
securities listed on the Schedule of Investors actually issued at
the Closing. Such additional shares and Warrant Shares shall at
the time of issuance be covered by the Registration Rights
hereunder.
5.3 Board Members. At the request of Investors holding a
majority of Shares not resold to the public, the Company shall
promptly take all action necessary to appoint to the Board of
Directors of the Company a candidate proposed by such majority
who is acceptable to the Board of Directors in its reasonable
discretion. The Company shall use its reasonable best efforts to
cause such candidate to be included in the slate of nominees
proposed by the Company's Board of Directors for election by the
Company's stockholders at each subsequent meeting called to elect
directors and to recommend such candidate for election to the
Board of Directors. Such Investors shall use their reasonable
best efforts to select a candidate who intends to serve on the
Board of Directors for an indefinite period of time. In the
event such candidate is removed, resigns, does not stand for
re-election or otherwise is no longer a member of the Board of
Directors, then such Investors shall again have the right to
select such a candidate. The Company's obligations under this
Section shall terminate upon such time as the Investors who are
original parties to this Agreement (the "Original Investors") no
longer hold at least 50% of the aggregate Shares issued and sold
pursuant to this Agreement.
5.4 Registration Rights.
(a) The Company shall use its reasonable best efforts
to file with the SEC a registration statement on any available
form (the "Registration Statement") relating to the registration
under the Act for an offering on a continuous basis under Rule
415 of the Act of the Shares, the Warrant Shares and any other
shares of Common Stock issuable hereunder, and file with state
securities administrators such registration statements or other
documents as may be required under applicable state securities
laws to qualify or register such shares. The Company shall use
its reasonable best efforts to cause the Registration Statement
to become effective no later than June 15, 1998 and subsequently
to keep the same effective as provided herein. In the event the
Registration Statement is not declared effective by June 15,
1998, the Company shall issue, at no additional cost, to each of
the Investors additional shares of Common Stock and Warrants to
purchase Common Stock equal to ten percent (10%) of the amounts
listed on the Schedule of Investors actually issued at the
Closing. In addition, in the event the Registration Statement is
not declared effective by September 15, 1998, the Company shall
either (at the Company's election) (i) issue, at no additional
cost, to each of the Original Investors additional shares of
Common Stock and Warrants to purchase Common Stock equal to ten
percent (10%) of the amounts listed on the Schedule of Investors
actually issued at the Closing and held by such Original Investor
as of September 15, 1998 or (ii) pay to each Original Investor an
amount in cash equal to $818,000 multiplied by the fraction
obtained by dividing (A) the number of Shares held by such
Original Investor as of the date of the Company's obligation
under this provision by (B) the total number of Shares originally
issued hereunder (the "Pro Rata Share"). Further, in the event
that sales under the Registration Statement are unavailable to
the Investors for any period in excess of 75 consecutive days or
100 total days, during the period from the date of effectiveness
until December 31, 1999, for each 30 days or portion thereof in
excess of either of such amounts, whichever is greater, the
Company shall either (at the Company's election) (i) issue, at no
additional cost, to each of the Original Investors additional
shares of Common Stock and Warrants to purchase Common Stock
equal to one percent (1%) of the amounts listed on the Schedule
of Investors actually issued at the Closing and held by such
Original Investor as of the date of the Company's obligations
under this provision or (ii) pay to each Original Investor an
amount in cash equal to $81,800 multiplied by such Original
Investor's Pro Rata Share. To the extent an Original Investor no
longer holds Shares originally issued hereunder, the number of
additional shares of Common Stock or Warrants to be issued, or
the amount of any cash to be paid, by the Company under either of
the prior two sentences shall be proportionately reduced. All
additional shares issuable pursuant to this Section 5.4 shall at
the time of issuance be covered by the Registration Rights
granted hereunder and shall at the time of issuance be authorized
for listing by the Company on the American Stock Exchange or any
other exchange or market on which the Company's Common Stock
trades. In addition to "shelf" registration rights, the
Investors shall be entitled to "piggyback" registration rights,
all as set forth on Exhibit Chereto.
(b) The Company shall use its reasonable best efforts
to keep the Registration Statement continuously effective until
the first date on which (i) all of the securities registered
thereunder have been sold pursuant thereto or (ii) each Investor
can sell freely all of such securities under Rule 144(k)
promulgated under the Act (or similar provision) without volume
limitation. The Company shall promptly file and use its
reasonable best efforts to have declared effective any
post-effective amendments or supplements as may be necessary to
make the Registration Statement and any prospectus thereunder not
misleading or inaccurate in any material respect. The Company
shall promptly notify each Investor if at any time any
circumstance has arisen that renders the Registration Statement
or any prospectus thereunder unavailable for sales of the
securities covered thereby and thereafter when sales can
recommence in reliance thereon. The Company will provide each
Investor at no charge with sufficient copies of such prospectus
as such Investor may reasonably request.
(c) The Company will pay all expenses relating to the
preparation of SEC, blue sky and other filings and initial and
continuing effectiveness of the Registration Statement (or any
piggyback registration) including all filing fees, accounting
costs, legal fees (including the reasonable fees of up to $10,000
for one counsel for the Investors) and otherwise (other than
commissions or compensation payable to underwriters). The
Company will indemnify each Investor with respect to liabilities
arising under the Act as provided in Exhibit C.
(d) In the event of a breach by the Company of any of
its obligations under this Section, each Investor will be
entitled to specific performance of its rights. The Company
agrees that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by it of any of the
provisions of this Section and hereby further agrees that, in the
event of any action for specific performance in respect of such
breach, it shall waive the defense that a remedy at law would be
adequate.
(e) The Company has not entered, as of the date
hereof, and will not enter, into any agreement with respect to
any of its securities that is inconsistent with the rights
granted to the Investors hereunder or otherwise conflicts with
the provisions hereof.
(f) Except with respect to Shares sold under Rule 144
of the Act or under an effective registration statement, the
registration and other rights provided hereunder shall be
assignable by each Investor to any party that purchases Shares or
Warrants from such Investor in accordance with the terms of this
Agreement, subject to agreement by such assignee to be bound by
the terms of this Agreement.
5.5 Spinoffs or Other Distribution of Securities. In the
event that the Company consummates a spinoff of any of its
subsidiaries (or any portion of the shares thereof) in which it
distributes to its stockholders securities of such entity, the
Company shall notify the holders of any outstanding Warrants
thereof and shall, at the request of any such holder, (i)
exchange such holder's outstanding Warrants for new Warrants
covering the same number of Warrant Shares at an Exercise Price
reduced in respect of such distribution as described below and
(ii) issue such holder a warrant or warrants to purchase any
securities issued in respect of such distribution in an amount
equal to such holder's fully diluted share of the outstanding
Common Stock of the Company at the time of such distribution.
The Exercise Price of the outstanding warrants issued hereunder
shall be adjusted in proportion to the relative fair market
values of (i) the Company after such distribution and (ii) the
securities distributed, such that the aggregate exercise price
under all such warrants shall remain unchanged. Such fair market
values shall be deemed to be the respective average of the
closing prices of the securities of each entity so represented on
the principal exchange or market on which it is traded for the
five trading days following the effective date of the
distribution or, if such securities are not traded on a
securities exchange or market, such fair market values shall be
determined by the Company's Board of Directors on the basis of
its diligent good faith judgment. The Company shall extend the
registration rights granted under this Agreement to any
securities covered by any additional warrants issued under this
Section; provided, that with respect to "shelf" registration
rights, such registration rights shall only be required at such
time as Form S-3 (or any successor form thereto) is available for
the registration of securities of such subsidiary.
5.6 Issuance of Certain Shares and Warrants. To the
extent that the Company is required hereunder to issue additional
shares of Common Stock or Warrants hereunder, at such time as
such shares and Warrants are to be issued the Company shall take
all necessary action to duly authorize and issue in compliance
with all applicable laws the applicable number of additional
shares and Warrants, and shall have approved for listing on the
principal market or exchange on which the Company's Common Stock
trades the applicable number of additional shares, including in
each case shares issuable upon exercise of such Warrants.
SECTION 6
Conditions to Closing of Investors
The Investors' obligations to purchase the Common Stock and
the Warrants at the Closing are, at the option of each Investor,
subject to the fulfillment on or prior to the Closing Date of the
following conditions:
6.1 Representations and Warranties Correct. The
representations and warranties made by the Company in Section 3
hereof shall be true and correct in all material respects when
made, and shall be true and correct in all material respects on
the Closing Date with the same force and effect as if they had
been made on and as of said date.
6.2 Covenants. All covenants and agreements contained in
this Agreement to be performed by the Company on or prior to the
Closing Date shall have been performed or complied with in all
material respects.
6.3 Blue Sky. The Company shall have obtained all
necessary "blue sky" law permits and qualifications or secured an
exemption therefrom, required by any state for the offer and sale
of the Securities.
6.4 No Illegality. No temporary restraining order,
preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other legal or regulatory
restraint or prohibition preventing the consummation of the
transactions contemplated hereby shall be in effect.
6.5 Stock Price. The average closing price for the
Company's Common Stock on the American Stock Exchange for the
five business days prior to the Closing Date shall be at least
$2.25 per share.
6.6 Exchange Listing. The Shares and the Warrant Shares,
plus shares of Common Stock in an amount equal to 10% of the
aggregate thereof, shall have been authorized for listing on the
American Stock Exchange, subject only to official notification at
issuance.
6.7 Legal Opinion. The Investors shall have received from
Proskauer Rose LLP, special counsel to the Company, and Paul
Abel, Esq., corporate counsel to the Company, legal opinions
substantially containing in the aggregate the items set forth in
Exhibit D attached hereto.
6.8 Stockholder Litigation Settlement. The settlement and
potential exposure thereunder with respect to that certain
litigation styled In Re Computron Securities Class Action
Litigation (U.S. District Court, District of New Jersey Civil
Action No. 96-CV-1911 AJL) (the "Class Action") shall be
satisfactory to the Investors in their reasonable sole
discretion.
6.9 Closing Deadline. The Company shall have tendered to
the Investors an aggregate of at least 2,500,000 Shares and
625,000 Warrants by 11:59 p.m. Eastern Time on December 31, 1997.
SECTION 7
Conditions to Closing of Company
The Company's obligation to sell and issue the Company's
Stock and the Warrants at the Closing is, at the option of the
Company, subject to the fulfillment of the following conditions:
7.1 Representations and Warranties. The representations
made by the Investors in Section 4 hereof shall be true and
correct when made, and shall be true and correct on the Closing
Date and all covenants and agreements of the Investors to be
performed on or prior to the Closing Date shall have been
performed or complied with in all material respects.
7.2 Blue Sky. The Company shall have obtained all
necessary "blue sky" law permits and qualifications, or secured
an exemption therefrom, required by any state for the offer and
sale of the Securities.
7.3 No Illegality. No temporary restraining order,
preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other legal or regulatory
restraint or prohibition preventing the consummation of the
transactions contemplated hereby shall be in effect.
7.4 Closing Deadline. The full purchase price for at least
2,500,000 Shares and 625,000 Warrants shall have been tendered
for payment hereunder by 11:59 p.m. Eastern Time on December 31,
1997.
SECTION 8
Miscellaneous
8.1 Termination. In the event any of the closing
conditions set forth in Section 6 is not met by 11:59 p.m. on
December 31, 1997, the Investors may terminate this Agreement.
In the event any of the closing conditions set forth in Section 7
is not met by 11:59 p.m. on December 31, 1997, the Company may
terminate this Agreement. In the event of such termination, no
party hereto (or any of its directors or officers) shall have any
liability or further obligation to any other party hereto, except
that nothing shall relieve any party from liability for any
willful breach of this Agreement prior to such termination.
8.2 Survival; Indemnification. All representations,
warranties, covenants and agreements contained in this Agreement
or in any instrument delivered pursuant to this Agreement shall
survive the Closing Date for a period of two years, except that
the covenants and agreements set forth in Sections 5.2 through
5.6 shall survive the Closing Date indefinitely (or such other
period as specified), in each case unless this Agreement is
terminated pursuant to Section 8.1. The Company shall indemnify
the Investors against all claims, obligations, costs and expenses
(including without limitation attorneys' fees) (collectively,
"Losses") arising in connection with the breach of any
representation, warranty, covenant or agreement of the Company
contained herein. Each Investor shall indemnify the Company
against all Losses arising in connection with the breach of any
representation, warranty, covenant or agreement of such Investor
contained herein. Notwithstanding the foregoing, neither party
shall have any liability under this Section 8.2 unless Losses to
the indemnified parties exceed in the aggregate $50,000, in which
case the indemnifying party shall be liable for the amount of
such excess.
8.3 Governing Law; Knowledge. This Agreement shall be
governed in all respects, by the laws of the State of New York,
without giving effect to the conflicts of laws principles
thereof. For purposes of this Agreement, "knowledge" of any
party shall mean the knowledge of the executive officers or
partners of that party after such executive officers or partners
have made all reasonable inquiries.
8.4 Successors and Assigns. Except as otherwise provided
herein, the provisions hereof shall inure to the benefit of, and
be binding upon the successors, assigns, heirs, executors, and
administrators of the parties hereto, provided, however, that the
rights of an Investor to purchase Shares shall not be assignable
without the written consent of the Company.
8.5 Entire Agreement; Amendment. This Agreement and the
other documents delivered pursuant hereto constitute the full and
entire understanding and agreement between the parties with
regard to the subjects hereof and thereof. Neither this
Agreement nor any term hereof may be amended, waived, discharged,
or terminated other than by a written instrument signed by the
party against whom enforcement of any such amendment, waiver,
discharge, or termination is sought; provided, however, that
holders of a majority of the Shares not resold to the public may
waive or amend, on behalf of all Investors, any provisions hereof
benefitting Investors.
8.6 Notices, etc. All notices and other communications
required or permitted hereunder shall be in writing and shall be
deemed effectively given upon delivery to the party to be
notified in person or by courier service addressed (a) if to an
Investor, at such Investor's address set forth in Exhibit A, or
at such other address as such Investor shall have furnished to
the Company in writing, or (b) if to any other holder of any
Securities, at such address as such holder shall have furnished
the Company in writing, or, until any such holder so furnishes an
address to the Company, then to and at the address of the last
holder of such Securities who has so furnished an address to the
Company, or (c) if to the Company, one copy should be sent to its
address set forth on the signature page of this Agreement and
addressed to the attention of the Corporate Secretary, or at such
other address as the Company shall have furnished to the
Investors.
8.7 Delays or Omissions. No delay or omission to exercise
any right, power or remedy accruing to any holder of any
Securities or to the Company, upon any breach or default of the
other party under this Agreement, shall impair any such right,
power or remedy of such holder or the Company nor shall it be
construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach
or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent
or approval of any kind or character on the part of any holder or
the Company of any breach or default under this Agreement, or any
waiver on the part of any holder or the Company of any provisions
or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement or by law or
otherwise afforded to any holder or the Company, shall be
cumulative and not alternative.
8.8 Expenses. The Company shall pay at Closing or promptly
thereafter the Investors' reasonable legal fees and expenses of
one counsel with respect to this Agreement and the transactions
contemplated hereby.
8.9 Counterparts. This Agreement may be executed in any
number of counterparts, each of which may be executed by less
than all of the Investors each of which shall be enforceable
against the parties actually executing such counterparts, and all
of which together shall constitute one and the same instrument.
8.10 Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or void, this Agreement
shall continue in full force and effect without said provision;
provided that no such severability shall be effective if it
materially changes the economic benefit of this Agreement to any
party.
8.11 Gender. The use of the neuter gender herein shall be
deemed to include the masculine and the feminine gender, if the
context so requires.
[This space intentionally left blank]<PAGE>
The foregoing Securities Purchase Agreement is hereby
executed as of the date first above written.
"COMPANY"
COMPUTRON SOFTWARE, INC.
a Delaware corporation
By:
Michael R. Jorgensen
Executive Vice President and
Chief Financial Officer
Address: 301 Route 17 North
Rutherford, NJ 07070
Facsimile: (201) 939-6955
"INVESTORS"
LION INVESTMENTS LIMITED
By:
Name:
Title:
Address: c/o London Merchant
Securities
33 Robert Adam Street
London WIM 5AH England
Facsimile: 011-44-171-935-3737
WESTPOOL INVESTMENT TRUST plc
By:
Name:
Title:
Address: c/o London Merchant
Securities
33 Robert Adam Street
London WIM 5AH England
Facsimile: 011-44-171-935-3737
**SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT** <PAGE>
THE WEBER FAMILY TRUST
DATED 1/6/89
By:
Name: Eugene M. Weber
Title: Trustee
Address: c/o Bluewater Capital
Management, Inc.
50 California Street,
Suite 3200
San Francisco, CA 94111
Facsimile: (415) 788-6763
RH CAPITAL ASSOCIATES NUMBER
ONE, L.P.
By: RH Capital Associates
Its: General Partner
By:
Name: Robert Horwitz
Title: Sole Proprietor
Address: c/o RH Capital
55 Harristown Road
Glen Rock, NJ 07452
Facsimile: (201) 444-1469
ROBERT HORWITZ
Address: c/o RH Capital
55 Harristown Road
Glen Rock, NJ 07452
Facsimile: (201) 444-1469
**SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT** <PAGE>
PAUL SAVIDIS
Address: c/o RH Capital
55 Harristown Road
Glen Rock, NJ 07452
Facsimile: (201) 444-1469
WPG SOFTWARE FUND, L.P.
By: Weiss, Peck & Greer, L.L.C.
Its: General Partner
By:
Name:
Title:
Address: c/o Weiss, Peck &
Greer, L.L.C.
One New York Plaza
New York, NY 10004
Facsimile: (212) 908-9652
WPG INSTITUTIONAL SOFTWARE FUND,
L.P.
By: Weiss, Peck & Greer, L.L.C.
Its: General Partner
By:
Name:
Title:
Address: c/o Weiss, Peck &
Greer, L.L.C.
One New York Plaza
New York, NY 10004
Facsimile: (212) 908-9652
** SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT** <PAGE>
CA CAPITAL MANAGEMENT LTD.
By: Weiss, Peck & Greer, L.L.C.
Its: Attorney-in Fact
By:
Name:
Title:
Address: c/o Weiss, Peck &
Greer, L.L.C.
One New York Plaza
New York, NY 10004
Facsimile: (212) 908-9652
SIPPL MACDONALD VENTURES II, L.P.
By: Sippl Macdonald Management,
LLC
Its: General Partner
By:
Name: Jackie Macdonald
Title: Manager
Address: 5 Elder Court
Menlo Park, CA 94025
Facsimile: (650) 326-4404
** SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT** <PAGE>
EXHIBIT A
SCHEDULE OF INVESTORS
<TABLE>
<HEAD>
<S> <C> <C> <C>
Number of
Number of Warrants
Share of to Purchase Aggregate
Common Common Purchase
Name and Address of Investor Stock Stock Price
- ---------------------------- ---------- ----------- ---------
</HEAD>
U.S. Investors:
The Weber Family Trust dated 1/6/89 7,500 1,875 $ 15,000
c/o Bluewater Capital Management, Inc.
50 California Street, Suite 3200
San Francisco, CA 94111
Attn: Mr. Eugene M. Weber
RH Capital Associates Number One, L.P. 700,000 175,000 $1,400,000
Robert Horwitz 200,000 50,000 $ 400,000
Paul Savidis 30,000 7,500 $ 60,000
c/o RH Capital
55 Harristown Road
Glen Rock, NJ 07452
Attn: Mr. Robert Horwitz
WPG Software Fund, L.P. 185,745 46,436 $ 371,490
WPG Institutional Software Fund, L.P. 129,115 32,279 $ 258,230
c/o Weiss, Peck & Greer, L.L.C.
One New York Plaza
New York, NY 10004
Attn: Mr. Ben Taylor
Sippl Macdonald Ventures II, L.P. 150,000 37,500 $ 300,000
5 Elder Court
Menlo Park, CA 94025
Attn: Ms. Jackie Macdonald
Non-U.S. Investors:
Lion Investments Limited 500,000 125,000 $1,000,000
Westpool Investment Trust plc 1,000,000 250,000 $2,000,000
c/o London Merchant Securities
33 Robert Adam Street
London W1M 5AH England
Attn: Mr. Michael Waldron
CA Capital Management Ltd. 35,140 8,785 $ 70,280
c/o Weiss, Peck & Greer, L.L.C.
One New York Plaza
New York, NY 10004
Attn: Mr. Ben Taylor
--------- ------- ----------
2,937,500 734,375 $5,875,000
========= ======= ==========
</TABLE>
<PAGE>
EXHIBIT B
FORM OF WARRANT
For U.S. Persons:
THIS WARRANT AND THE COMMON STOCK TO BE ISSUED UPON EXERCISE OF
THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
EXERCISED, SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED BY OR
ON BEHALF OF ANY "U.S. PERSON," AS SUCH TERM IS DEFINED IN RULE
902(o) OF THE SECURITIES ACT, IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL,
REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS
NOT REQUIRED UNDER THE SECURITIES ACT.
For Non-U.S. Persons who have acquired
these securities pursuant to Regulation S:
THIS WARRANT AND THE COMMON STOCK TO BE ISSUED UPON EXERCISE OF
THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS AND ARE BEING OFFERED AND SOLD ONLY PURSUANT TO
OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT. THIS WARRANT
AND THE COMMON STOCK TO BE ISSUED UPON EXERCISE OF THIS WARRANT
MAY NOT BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY, PRIOR TO THE
DATE WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE
DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF THIS SECURITY), ONLY (A) TO THE COMPANY, (B)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) PURSUANT TO OFFERS AND
SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT
TO THE COMPANY'S RIGHT PRIOR TO ANY OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSE (C) OR (D) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATES AND/OR OTHER INFORMATION
REASONABLY SATISFACTORY TO THE COMPANY.
WARRANT
To Purchase Shares of Common Stock of
Computron Software, Inc.
THIS HEREBY CERTIFIES that, for value received, ____________
(the "Holder") is entitled, upon the terms and subject to the
conditions hereinafter set forth, to purchase from Computron
Software, Inc., a Delaware corporation (the "Company"), that
number of fully paid and nonassessable shares of the Company's
common stock, par value $0.01 per share ("Common Stock"), at the
purchase price per Share as set forth in Section 1(a) below
("Exercise Price"). The number of Shares and Exercise Price are
subject to adjustment as provided in Section 10 hereof. This
Warrant is one of a series of Warrants (the "Warrants") issued to
certain investors pursuant to that certain Securities Purchase
Agreement, dated as of December 30, 1997 (the "Securities
Purchase Agreement"), by and between the Company and such certain
investors.
1. Number of Shares; Exercise Price; Term.
(a) Subject to adjustments as provided herein, this Warrant
is exercisable for ______ shares (the "Shares") of the Company's
Common Stock at a purchase price of $3.00 per Share.
(b) Subject to the terms and conditions set forth herein,
this Warrant shall be exercisable during a term commencing on the
date hereof and ending 5:00 p.m. Eastern Standard Time on
December 31, 2002.
2. Title to Warrant. This Warrant and all rights hereunder are
transferable, in whole or in part, but only with the prior
written consent of the Company, which consent shall not be
unreasonably withheld; provided, however, that no consent shall
be required for any assignment, transfer, pledge or other
disposition of this Warrant in a transaction involving the
distribution without consideration of this Warrant by the Holder
to any of its partners or retired partners, or to the estate of
any of its partners or retired partners, or in a transaction
involving the transfer or distribution of this Warrant by a
corporation to any subsidiary, parent or affiliated corporation
of such corporation, and which transaction is not in violation of
applicable federal and state securities laws; provided in each
case that the Holder shall give written notice to the Company of
its intention to effect such transfer, sale, assignment, pledge
or other disposition. Transfers shall occur at the office or
agency of the Company by the holder hereof in person or by duly
authorized attorney, upon surrender of this Warrant together with
the Assignment Form annexed hereto properly endorsed. The
Investor will cause any such proposed purchaser, assignee,
transferee or pledgee of this Warrant to agree to take and hold
such Warrant subject to the provisions and upon the conditions
specified in this Warrant and the Securities Purchase Agreement.
3. Exercise of Warrant. The purchase rights represented by
this Warrant are exercisable by the registered holder hereof, in
whole or in part, at any time, or from time to time, during the
term hereof as described in Section 1 above, by the surrender of
this Warrant and the Notice of Exercise annexed hereto duly
completed and executed on behalf of the holder hereof, at the
principal executive offices of the Company (or such other office
or agency of the Company as it may designate by notice in writing
to the registered holder hereof at the address of such holder
appearing on the books of the Company), and subject to Section 4
hereof, upon payment of the purchase price of the Shares thereby
purchased (i) in cash or check acceptable to the Company or (ii)
solely with respect to Investors who are original parties to the
Securities Purchase Agreement, by "cashless" or "net issue"
exercise by specifying the number of Shares to be delivered to
the Holder and the number of Shares deemed to be surrendered in
payment of the Exercise Price, the holder of this Warrant shall
be entitled to receive a certificate for the number of Shares so
purchased and, if this Warrant is exercised in part, a new
Warrant for the unexercised portions of this Warrant. For
purposes of a "cashless" or "net issue" exercise, all Shares
deemed to be surrendered will be attributed a value equal to (x)
the average closing price per share on the American Stock
Exchange or other securities exchange or market for the five (5)
trading days prior to exercise minus (y) the Exercise Price. In
the event shares of the Company's Common Stock are not traded on
a securities exchange or market, the Board of Directors of the
Company shall determine the current market price of the Shares
surrendered on the basis of its diligent, good faith judgment.
The Company agrees that, upon exercise of this Warrant in
accordance with the terms hereof, the Shares so purchased shall
be deemed to be issued to such holder as the record owner of such
Shares as of the close of business on the date on which this
Warrant shall have been exercised.
Certificates for Shares purchased hereunder and, on partial
exercise of this Warrant, a new Warrant for the unexercised
portion of this Warrant shall be delivered to the holder hereof
as promptly as practicable after the date on which this Warrant
shall have been exercised.
4. No Fractional Shares or Scrip. No fractional Shares or
scrip representing fractional Shares shall be issued upon the
exercise of this Warrant. In lieu of any fractional Share to
which such holder would otherwise be entitled, such holder shall
be entitled, at its option, to receive either (i) a cash payment
equal to the excess of fair market value for such fractional
Share above the Exercise Price for such fractional Share (as
mutually determined by the Company and the holder) or (ii) a
whole Share if the holder tenders the Exercise Price for one
whole Share.
5. Charges, Taxes and Expenses. Issuance of certificates for
Shares upon the exercise of this Warrant shall be made without
charge to the holder hereof for any issue or transfer tax or
other incidental expense in respect of the issuance of such
certificates, all of which taxes and expenses shall be paid by
the Company, and such certificates shall be issued in the name of
the holder of this Warrant or in such name or names as may be
directed by the holder of this Warrant (with the prior written
consent of the Company); provided, however, that in the event
certificates for Shares are to be issued in a name other than the
name of the holder of this Warrant, this Warrant when surrendered
for exercise shall be accompanied by the Assignment Form attached
hereto duly executed by the holder hereof and the Notice of
Exercise duly completed and executed and stating in whose name
and certificates are to be issued; and provided further, that
such assignment shall be subject to applicable laws and
regulations. Upon any transfer involved in the issuance or
delivery of any certificates for Shares of the Company's
securities, the Company may require, as a condition thereto, the
payment of a sum sufficient to reimburse it for any transfer tax
incidental thereto.
6. No Rights as Stockholder. This Warrant does not entitle the
holder hereof to any voting rights, dividend rights or other
rights as a stockholder of the Company prior to the exercise
hereof.
7. Exchange and Registry of Warrant. The Company shall
maintain a registry showing the name and address of the
registered holder of this Warrant. This Warrant may be
surrendered for exchange, transfer or exercise, in accordance
with its terms, at the principal offices of the Company, and the
Company shall be entitled to rely in all respects, prior to
written notice to the contrary, upon such registry.
8. Loss, Theft, Destruction or Mutilation of Warrant. Upon
receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of this Warrant,
and in case of loss, theft or destruction of indemnity or
security reasonably satisfactory to it, and upon reimbursement to
the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of this Warrant, if mutilated,
the Company will make and deliver a new Warrant of like tenor and
dated as of such cancellation, in lieu of this Warrant.
9. Saturdays, Sundays, Holidays. etc. If the last or appointed
day for the taking of any action or the expiration of any right
required or granted herein shall be a Saturday or a Sunday or
shall be a legal holiday, then such action may be taken or such
right may be exercised on the next succeeding day not a Saturday
or a Sunday or a legal holiday.
10. Adjustments of Rights. The Exercise Price and the number
and type of shares purchasable hereunder are subject to
adjustment from time to time as follows:
(a) Merger. If at any time there shall be a reorganization
or recapitalization, a merger or consolidation of the Company
with or into another entity or a merger or consolidation of
another entity with or into the Company, then, as a part of any
such merger or consolidation, lawful provision shall be made so
that the holder of this Warrant shall thereafter be entitled to
receive upon exercise of this Warrant, during the period
specified herein and upon payment of the aggregate Exercise Price
then in effect, the number of shares of stock or other
securities, or property (including without limitation cash), as
the case may be, to which a holder of the stock deliverable upon
exercise of this Warrant would have been entitled in such merger
or consolidation if this Warrant had been exercised immediately
before such merger or consolidation. In any such case,
appropriate adjustment shall be made in the application of the
provisions of this Warrant with respect to the rights and
interests of the holder after the reorganization,
recapitalization, merger or consolidation.
(b) Reclassification, etc. If the Company at any time
shall, by subdivision, combination or reclassification of
securities or otherwise, change any of the securities as to which
purchase rights under this Warrant exist into the same or a
different number of securities of any other (or the same) class
or classes, this Warrant shall thereafter represent the right to
acquire such number and kind of securities as would have been
issuable as the result of such change with respect to the
securities which were subject to the purchase rights under this
Warrant immediately prior to such subdivision, combination,
reclassification or other change.
(c) Split, Subdivision or Combination of Shares. If the
Company at any time while this Warrant remains outstanding and
unexpired shall pay a stock dividend, split, subdivide or combine
the securities as to which purchase rights under this Warrant
exist, the Exercise Price shall be proportionately decreased in
the case of a split or subdivision or proportionately increased
in the case of a combination.
(d) Spinoffs or Other Distributions of Securities. In the
event that the Company consummates a spinoff of any of its
subsidiaries, assets or operations or otherwise makes a
distribution to its stockholders of any property or securities
other than Common Stock of the Company, the holder of this
Warrant may, but shall not be obligated to, exchange this Warrant
for the warrants specified in Section 5.5 of the Securities
Purchase Agreement.
11. Notice of Record Dates; etc.
(a) If the Company shall fix a record date of the holders
of Common Stock (or other stock or securities at the time
deliverable on exercise of this Warrant) for the purpose of
entitling or enabling them to receive any dividend (other than a
stock dividend) or other distribution, or to receive any right to
subscribe for or purchase any shares of any class of any other
securities, or to receive any other right, or
(b) in the event of any event referred to in Section 10,
any commencement of any tender offer to purchase a majority of
the Common Stock of the Company, or the consummation of any
transfer of all or substantially all of the assets of the Company
to another entity, or
(c) in the event of the voluntary or involuntary
dissolution, liquidation or winding up of the Company, then, in
any such event, the Company will mail or cause to be mailed to
the Holder a notice specifying, as the case may be, (i) the date
on which a record is to be taken for the purpose of such
dividend, distribution or right and stating the amount and
character of such dividend, distribution or right, (ii) the date
on which a record is to be taken for the purpose of voting on or
approving such events referred to in clauses (b) and (c) above,
if applicable, and (iii) the approximate date on which any such
event is then expected to take place and the time, if any is to
be fixed, as of which the holders of record of Common Stock (or
such other stock or securities at the time deliverable upon
exercise of this Warrant) shall be entitled to exchange their
Shares (or such other stock or securities) for securities, cash
or other property payable or deliverable upon such event. The
Company shall use its reasonable efforts to mail such notice at
least twenty-one (21) days prior to the date therein specified,
if practicable.
12. Notice of Adjustments. Whenever the Exercise Price or
number or type of shares purchasable hereunder shall be adjusted
pursuant to Section 10 hereof, the Company shall issue a
certificate setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated and the Exercise
Price and number and type of shares purchasable hereunder after
giving effect to such adjustment, and shall cause a copy of such
certificate to be mailed (by first class mail), postage prepaid)
to the holder of this Warrant.
13. Covenant to Reserve Common Stock. The Company shall at all
times reserve and keep available out of its authorized but
unissued Common Stock the full number of Shares, if any,
deliverable upon exercise of this Warrant and shall, at its own
expense, take all such actions and attain all such permits and
orders as may be necessary to enable the Company lawfully to
issue such Common Stock upon exercise of this Warrant.
14. Miscellaneous.
(a) Governing Law. This Warrant shall be binding upon any
successors or assigns of the Company. This Warrant shall
constitute a contract under the laws of New York and for all
purposes shall be construed in accordance with and governed by
the laws of said state, without giving effect to the conflict of
laws principles.
(b) Restrictions. (i) For U.S. Persons: THIS WARRANT AND
THE COMMON STOCK TO BE ISSUED UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE EXERCISED, SOLD,
OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED BY OR ON BEHALF OF ANY
"U.S. PERSON," AS SUCH TERM IS DEFINED IN RULE 902(o) OF THE
SECURITIES ACT, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT.
<PAGE>
(ii) For Non-U.S. Persons who have acquired these
securities pursuant to Regulation S: THIS WARRANT AND THE COMMON
STOCK TO BE ISSUED UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND ARE BEING
OFFERED AND SOLD ONLY PURSUANT TO OFFERS AND SALES THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S
UNDER THE SECURITIES ACT. THIS WARRANT AND THE COMMON STOCK TO
BE ISSUED UPON EXERCISE OF THIS WARRANT MAY NOT BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES
TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY, PRIOR TO THE
DATE WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE
DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF THIS SECURITY), ONLY (A) TO THE COMPANY, (B)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) PURSUANT TO OFFERS AND
SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT
TO THE COMPANY'S RIGHT PRIOR TO ANY OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSE (C) OR (D) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATES AND/OR OTHER INFORMATION
REASONABLY SATISFACTORY TO THE COMPANY.
(c) Amendments. This Warrant may be amended and the
observance of any term of this Warrant may be waived only with
the written consent of the Company and the then holders of the
Warrants exercisable for a majority of the Shares (or other
securities or property, as the case may be) then issuable upon
exercise of the then outstanding Warrants.
(d) Assignment. This Warrant shall be binding upon the
successors and assigns of the Company.
(e) Notice. Any notice required or permitted hereunder
shall be deemed effectively given upon delivery to the address of
the party to be notified by overnight courier at the address
indicated below for such party, or at such other address as such
other party may designate by ten-day advance written notice.
IN WITNESS WHEREOF, Computron Software, Inc. has caused this
Warrant to be executed by its officer thereunto duly authorized.
Dated: December 31, 1997
Computron Software, Inc.,
a Delaware corporation
By:_______________________________
Michael R. Jorgensen
Executive Vice President and
Chief Financial Officer
HOLDER
By:_______________________________________________
Name of Holder: _______________________________
Name of Signatory:_____________________________
Title of Signatory:____________________________
Signature: ____________________
Address: ____________________
____________________
____________________
<PAGE>
NOTICE OF EXERCISE FOR U.S. PERSONS
To: Computron Software, Inc.
1. The undersigned hereby elects to purchase ______ shares
of Common Stock ("Stock") of Computron Software, Inc. (the
"Company") pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price and any transfer
taxes payable pursuant to the terms of the Warrant, together with
an Investment Representation Statement in form and substance
satisfactory to legal counsel to the Company.
2. The shares of Stock to be received by the undersigned
upon exercise of the Warrant are being acquired for its own
account, not as a nominee or agent, and not with a view to resale
or distribution of any part thereof, and the undersigned has no
present intention of selling, granting any participation in, or
otherwise distributing the same. The undersigned further
represents that it does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or
grant participation to such person or to any third person, with
respect to the Stock. The undersigned believes it has received
all the information it considers necessary or appropriate for
deciding whether to purchase the Stock.
3. The undersigned understands that the shares of Stock
are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the
Company in transactions not involving a public offering and that
under such laws and applicable regulations such securities may be
resold without registration under the Securities Act of 1933, as
amended (the "Act"), only in certain limited circumstances. In
this connection, the undersigned represents that it is familiar
with SEC Rule 144, as presently in effect, and understands the
resale limitations imposed thereby and by the Act.
4. The undersigned understands the instruments evidencing
the Stock may bear one or all of the following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED BY OR ON BEHALF OF ANY "U.S. PERSON," AS SUCH
TERM IS DEFINED IN RULE 902(o) OF THE SECURITIES ACT, IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO
THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE SECURITIES ACT."
(b) Any legend required by applicable state law.
5. Please issue a certificate or certificates representing
said shares of Stock in the name of the undersigned:
____________________________________________________
[Name]
6. Please issue a new Warrant for the unexercised portion
of the attached Warrant in the name of the undersigned:
___________________________________________________
[Name]
[Tax Identification No.]
___________________________________________________
[Date] [Signature]
<PAGE>
NOTICE OF EXERCISE FOR NON-U.S. PERSONS
To: Computron Software, Inc.
1. The undersigned hereby elects to purchase ______ shares
of Common Stock ("Stock") of Computron Software, Inc. (the
"Company") pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price and any transfer
taxes payable pursuant to the terms of the Warrant, together with
an Investment Representation Statement in form and substance
satisfactory to legal counsel to the Company.
2. The undersigned hereby represents and warrants to the
Company that (i) it is not a "U.S. Person," as such term is
defined in Rule 902(o) of the U.S. Securities Act of 1933, as
amended (the "Act"); (ii) the Warrant is not being exercised on
behalf of any U.S. Person; (iii) the Warrant is not being
exercised within the United States; and (iv) the shares of Stock
to be delivered upon exercise of the Warrant will not be
delivered within the United States.
3. The shares of Stock to be received by the undersigned
upon exercise of the Warrant are being acquired for its own
account, not as a nominee or agent, and not with a view to resale
or distribution of any part thereof, and the undersigned has no
present intention of selling, granting any participation in, or
otherwise distributing the same. The undersigned further
represents that it does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or
grant participation to such person or to any third person, with
respect to the Stock. The undersigned believes it has received
all the information it considers necessary or appropriate for
deciding whether to purchase the Stock.
4. The undersigned understands that the shares of Stock
are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the
Company in transactions not involving a public offering and that
under such laws and applicable regulations such securities may be
resold without registration under the Act, only in certain
limited circumstances. In this connection, the undersigned
represents that it is familiar with SEC Rule 144, as presently in
effect, and understands the resale limitations imposed thereby
and by the Act.
5. The undersigned understands the instruments evidencing
the Stock may bear one or all of the following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND ARE
BEING OFFERED AND SOLD ONLY PURSUANT TO OFFERS AND
SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT.
THESE SECURITIES MAY NOT BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION."
(b) "THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS
SECURITY, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE
LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE
COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF THIS SECURITY), ONLY (A) TO THE COMPANY,
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C)
PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT
OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT PRIOR TO
ANY OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (C) OR
(D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATES AND/OR OTHER INFORMATION REASONABLY
SATISFACTORY TO THE COMPANY."
(c) Any legend required by applicable state law.
6. Please issue a certificate or certificates representing
said shares of Stock in the name of the undersigned:
___________________________________________________
[Name]
7. Please issue a new Warrant for the unexercised portion
of the attached Warrant in
the name of the undersigned:
___________________________________________________
[Name]
[Tax Identification No.]
___________________________________________________
[Date] [Signature]
______________________________________________________________
[Date] [Signature]
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply
required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights
evidenced thereby are hereby assigned to
(Please Print)
whose address is ___________________________________________
(Please Print)
Dated: ______________________
Holder's Signature: ___________________________________
Holder's Address: ___________________________________
Signature Guaranteed: ____________________________
NOTE: The signature to this Assignment Form must correspond with
the name as it appears on the face of the Warrant, without
alteration or enlargement or any change whatever, and must be
guaranteed by a bank or trust company. Officers of corporations
and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing
Warrant.<PAGE>
EXHIBIT C
PIGGYBACK REGISTRATION RIGHTS
1. Certain Definitions. Capitalized terms not otherwise
defined herein shall have the same meaning given to them in the
Agreement to which this Exhibit C is attached. As used in this
Exhibit C, the following terms shall have the following
respective meanings:
(a) The term "beneficially owned" shall refer to the
meaning of such term as provided in Rule 13d-3 promulgated under
the Exchange Act.
(b) The term "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended, or any successor federal
statute and the rules and regulations of the SEC thereunder, all
as the same shall be in effect from time to time.
(c) The term "Holder" shall mean the Investors and any
permitted transferee of Registrable Securities, provided that any
such person shall cease to be a Holder at such time as the
registration rights to which such person is entitled hereunder
terminate pursuant to Section 8 of this Exhibit C.
(d) The term "person" shall mean any person,
individual, corporation, partnership, trust or other
nongovernmental entity or any governmental agency, court,
authority or other body (whether foreign, federal, state, local
or otherwise).
(e) The terms "register," "registered" and
"registration" shall refer to a registration effected by
preparing and filing a registration statement in compliance with
the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
(f) The term "Registrable Securities" shall mean (i)
the shares of the Company's Common Stock (the "Shares") purchased
pursuant to the Agreement by the U.S. Investors, (ii) any shares
of the Company's Common Stock issued upon exercise of the
Warrants purchased pursuant to the Agreement, except that they
shall not include shares of Common Stock that are issued upon
exercise of the Warrants to Holders who are not the U.S.
Investors (the "Warrant Shares"), (iii) any shares of the
Company's Common Stock (or Common Stock issued by the Company
upon the exercise, conversion or exchange of any other
securities) issued by the Company in respect of the Shares or the
Warrant Shares upon any stock split, stock dividend,
recapitalization, or similar event and (iv) any shares of the
Company's Common Stock issued by the Company in respect of the
additional shares of Common Stock and Warrants issuable by the
Company under Sections 5.2 and 5.4 of the Agreement.
(g) The term "Securities Act" shall mean the U.S.
Securities Act of 1933, as amended, or any similar federal
statute and the rules and regulations of the SEC thereunder, all
as the same shall be in effect at the time.
(h) The term "SEC" shall mean the United States
Securities and Exchange Commission or any other federal agency at
the time administering the Securities Act.
2. Company Registration.
(a) If the Company proposes to register any of its
Common Stock under the Securities Act in connection with an
underwritten public offering of such Common Stock solely for cash
(including a registration effected by the Company for
stockholders other than the Holders, but not including (i) a
registration relating solely to employee benefit plans, (ii) a
registration relating solely to a Rule 145 transaction, (iii) a
registration in which the only Common Stock being registered is
Common Stock issuable upon conversion of convertible debt
securities that are also being registered, and (iv) a
registration on any form that does not include substantially the
same information as would be required to be included in a
registration statement covering the sale of the Registrable
Securities), the Company shall, at such time, promptly give each
Holder written notice of such proposed registration. Upon the
written request of each Holder delivered to the Secretary of the
Company within fifteen (15) days after the date of such notice
by the Company, the Company will, subject to the provisions
hereof, include in such registration, to the extent it takes
place, the resale of such number of Registrable Securities that
each such Holder has requested to be registered; provided, that
the minimum number of Registrable Securities that each requesting
Holder may request to be included shall be 50,000 shares.
(b) Notwithstanding any other provision of this
Exhibit C, if the managing underwriter of the public offering
referred to in Section 2(a) advises the Company and/or the
Holders in writing in its good faith judgment that marketing
factors require a limitation of the number of securities to be
underwritten in a registration pursuant to Section 2(a), then the
underwriter shall first include in such registration the
securities to be registered by the Company and securities to be
registered by any other persons having rights as of the date
hereof to include securities in such registration ("Pre-Existing
Registrable Securities"), and thereafter may exclude some or all
Registrable Securities from such registration pro rata with all
other securities (other than Pre-Existing Registrable Securities)
having rights to be included in such registration ("Other
Registrable Securities") based on the total number of Registrable
Securities and Other Registrable Securities requested; provided,
however, that if any Registrable Securities or Other Registrable
Securities shall be included in the registration and
underwriting, then such shares of Registrable Securities shall be
included in the registration and underwriting and allocated among
all Holders thereof and all holders of Other Registrable
Securities in proportion, as nearly as practicable, of the
respective amounts of Registrable Securities and Other
Registrable Securities requested to be registered in such
registration by such Holders at the time of filing the
registration statement to the total number of Registrable
Securities and Other Registrable Securities so requested, or in
such other manner as shall be agreed to by the Company, holders
of Other Registrable Securities and Holders of a majority of the
Registrable Securities proposed to be included in such
registration. No Registrable Securities excluded from the
underwriting by reason of the underwriter's marketing limitation
shall be included in such registration. To facilitate the
allocation of shares in accordance with the above provisions, the
Company or the underwriters may round the number of shares
allocated to any Holder to the nearest 100 shares. In the event
that as a result of the proration provisions of this Section any
requesting Holder shall not be entitled to include in a
registration at least 50% of the Registrable Securities requested
by such Holder, such Holder may elect to withdraw such Holder's
request to include Registrable Securities in such registration (a
"Withdrawal Election"); provided, however, that a Withdrawal
Election shall be irrevocable and, after making a Withdrawal
Election, such Holder shall no longer have any right to include
Registrable Securities in the registration as to which such
Withdrawal Election was made.
(c) The Company shall have the right to terminate or
withdraw any registration under this Section 2 prior to the
effectiveness of such registration whether or not any Holder has
elected to include securities in such registration. The
Registration Expenses of such withdrawn registration shall be
borne by the Company in accordance with Section 5 hereof.
3. Obligations of the Company. Whenever required pursuant
to this Exhibit C to effect the registration of any Registrable
Securities, the parties agree as follows:
(a) The Company shall furnish to the Holders such
numbers of copies of the prospectus, including a prospectus
subject to completion, in conformity with the requirements of
the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities
owned by them.
(b) The Company shall use its reasonable efforts to
register and qualify the securities covered by such registration
statement, if any, under such other securities or "blue sky" laws
of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in
any such states or jurisdictions.
(c) In the event of any underwritten public offering,
the Company shall enter into and perform its obligations under an
underwriting agreement, in usual and customary form, with the
managing underwriter of such offering.
(d) The Company shall notify each Holder of
Registrable Securities covered by such registration statement,
(A) when a prospectus or any prospectus supplement or post-
effective amendment has been filed, and, with respect to the
registration statement or any post- effective amendment, when the
same has become effective; (B) of any request by the SEC or any
other federal or state governmental authority during the period
of effectiveness of the registration statement for amendments or
supplements to the registration statement or related prospectus
or for additional information relating to the registration
statement, (C) of the issuance by the SEC or any other federal or
state governmental authority of any stop order suspending the
effectiveness of the registration statement or the initiation of
any proceedings for that purpose, (D) of the receipt by the
Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose; or
(E) of the happening of any event which makes any statement made
in the registration statement or related prospectus or any
document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or which requires the
making of any changes in the registration statement or prospectus
so that, in the case of the registration statement, it will not
contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to
make the statements therein not misleading, and that in the case
of the prospectus, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading. The Company shall use its reasonable best efforts to
ensure that the use of the prospectus may be resumed as soon as
practicable. The Company shall use every reasonable effort to
obtain the withdrawal of any order suspending the effectiveness
of the registration statement, or the lifting of any suspension
of the qualification (or exemption from qualification) of any of
the securities for sale in any jurisdiction, at the earliest
practicable moment. The Company shall, upon the occurrence of
any event contemplated by clause E above, prepare a supplement or
post-effective amendment to the registration statement or a
supplement to the related prospectus or any document incorporated
therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable
Securities being sold thereunder, such prospectus will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading.
(e) At the time of any registration of Registrable
Securities pursuant hereto, the Company and the Holders on behalf
of whom shares may be registered shall negotiate in good faith
the terms of indemnity (including indemnification of
underwriters) and other customary agreements relating to any such
registration.
4. Obligations of the Holders.
(a) It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this
Exhibit C with respect to the Registrable Securities of any
selling Holder that such Holder shall furnish to the Company such
information regarding itself, the Registrable Securities held by
it, and the intended method of disposition of such securities as
shall be required to effect the registration of such Holder's
Registrable Securities.
(b) In the event of any underwritten public offering,
each Holder seeking to have Registrable Securities included in a
registration statement shall participate in such underwriting on
the same terms as the Company and shall enter into and perform
its obligations under an underwriting agreement in customary form
with the managing underwriter of such offering. Each Holder
participating in such underwriting who has not made a Withdrawal
Election pursuant to Section 2(b) shall enter into and perform
its obligations under a "market stand-off" agreement in customary
form with the managing underwriter of such offering providing
that such Holder shall not sell or otherwise transfer or dispose
of any Registrable Securities during the 120-day period following
the effective date of such offering (or such shorter period as
may be determined by such Holder and the managing underwriter).
Although Holders not participating in such underwriting are not
obligated to enter into a "market stand-off" agreement, such
non-participating Holders agree to consider prior to making any
sale of Registrable Securities during the underwriting period and
for a reasonable period thereafter the effect of such sale on the
market for the Company's Common Stock, but such non-participating
Holder shall be free to make decisions with respect to the sale,
transfer or other disposition of such Holder's Registrable
Securities and shall in no way have any liability for such
decisions under this Section.
(c) In the event that the Holders shall be provided
with notice of suspension from the Company as provided in Section
3(d), each Holder shall discontinue disposition of Registrable
Securities covered by the registration statement or prospectus
until copies of a supplemented or amended prospectus are
distributed to the Holders or until the Holders are advised in
writing by the Company that the use of the applicable prospectus
may be resumed.
(d) Each Holder shall comply with Regulation M under
the Exchange Act.
5. Expenses.
(a) All Registration Expenses (as defined below),
incurred in connection with any registration pursuant to Section
2 shall be borne by the Company. "Registration Expenses" shall
mean the costs and expenses of the Company relating to any
registration pursuant to Section 2 including, without limitation,
the fees and expenses of the Company's counsel and its
accountants, all reasonable costs and expenses of one counsel for
the participating Holders not to exceed $10,000 and all other
costs and expenses of the Company incident to the preparation,
printing and filing under the Securities Act of any registration
statement and all amendments and supplements thereto and the cost
of furnishing copies of each preliminary prospectus, each final
prospectus and each amendment or supplement thereto to
underwriters (if any), dealers and other purchasers of the
securities so registered, the costs and expenses incurred in
connection with the qualification of such securities so
registered under the "blue sky" laws of various jurisdictions,
the fees and expenses of the Company's transfer agent and all
other out-of-pocket costs and expenses of complying with the
provisions of this Exhibit C with respect to such registration.
(b) The participating Holders (and other holders
including any securities in such registration) shall pay all
underwriting discounts and selling commissions with respect to
the Registrable Securities sold by them pursuant to any such
registration.
6. Indemnification.
(a) In the case of any offering registered pursuant to
this Exhibit C, the Company hereby agrees to indemnify and hold
harmless each participating Holder, the officers and directors of
each Holder, and each person, if any, who controls such Holder
within the meaning of the Securities Act or the Exchange Act,
against any losses, claims, damages or liabilities (joint or
several) to which any such person may be subject, under the
Securities Act or otherwise, and to reimburse any such person for
any legal or other expenses reasonably incurred, as they are
incurred, by them in connection with investigating any claims or
defending against any actions, insofar as such losses, claims,
damages or liabilities arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact
contained in the registration statement under which such shares
of Registrable Securities were registered under the Securities
Act pursuant to this Exhibit C, any prospectus contained therein,
if used during the period appropriate for such prospectus, or any
amendment or supplement thereto (if so used), or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages or
liabilities arise out of or are (i) based upon any such untrue
statement or omission or alleged untrue statement or omission
made in reliance upon information furnished to the Company by or
on behalf of such Holder specifically for use therein, or (ii)
made in any preliminary prospectus, and the prospectus contained
in the registration statement as declared effective or in the
form filed by the Company with the SEC pursuant to Rule 424 (or
other similar rule) under the Securities Act shall have corrected
such statement or omission and a copy of such prospectus shall
not have been sent or otherwise delivered to such person at or
prior to the confirmation of such sale to such person.
(b) By requesting registration under this Exhibit C,
each participating Holder agrees, if Registrable Securities held
by such Holder are included in the securities as to which such
registration is being effected, in the same manner and to the
same extent as set forth in the preceding paragraph, to indemnify
and to hold harmless the Company and its directors and officers
and each person, if any, who controls the Company within the
meaning of the Securities Act or the Exchange Act against any
losses, claims, damages or liabilities, joint or several, to
which any of such persons may be subject under the Securities Act
or otherwise, and to reimburse any of such persons for any legal
or other expenses incurred, as they are incurred, by them in
connection with investigating or defending against any such
losses, claims, damages or liabilities, but only to the extent it
arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission to state therein
a material fact required to be stated therein or necessary to
make the statements therein not misleading in any registration
statement under which the shares of Registrable Securities were
registered under the Securities Act pursuant to this Exhibit C,
any prospectus contained therein or any amendment or supplement
thereto, which was based upon and made in conformity with
information furnished to the Company in writing by or on behalf
of such Holder expressly for use therein.
(c) Each party entitled to Indemnification under this
Section (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party")
promptly after such Indemnified Party has knowledge of any claim
as to which indemnity may be sought, and shall permit the
Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, and the Indemnified Party may
participate in such defense at its own expense; provided,
however, that the Indemnified Parties shall have the right to
retain one counsel of their own, with the reasonable fees and
expenses to be paid by the Indemnifying Party, if representation
of such Indemnified Parties by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or
potential materially divergent interests between such
Indemnifying Party and any other party represented by such
counsel in such proceeding; and provided further that the failure
of any Indemnified Party to give notice as provided herein shall
not relieve the Indemnifying Party of its obligations under this
Section unless such failure resulted in a detriment to the
Indemnifying Party. No Indemnifying Party, (i) in the defense of
any such claim or litigation, shall, except with the consent of
each Indemnified Party, which consent shall not be unreasonably
withheld, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to
such claim or litigation, or (ii) shall be liable for amounts
paid in any settlement if such settlement is effected without the
consent of the Indemnifying Party, which consent shall not be
unreasonably withheld.
(d) If the indemnification provided for in this
Section is held by a court of competent jurisdiction to be
unavailable to an Indemnified Party with respect to any loss,
liability, claim, damage, or expense referred to therein, then
the Indemnifying party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable
by such Indemnified Party as a result of such loss, liability,
claim, damage, or expense in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party on the one
hand and of the Indemnified Party on the other in connection with
the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other
relevant equitable considerations. The relative fault of the
Indemnifying Party and of the Indemnified Party shall be
determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission to state any material fact relates to information
supplied by the Indemnifying Party or by the Indemnified Party
and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement
or omission.
7. Transfer of Registration Rights. Holders may assign
any or all of their registration rights under this Exhibit C to a
transferee of Registrable Securities, provided that the Company
shall be entitled to written notice of any such transfer no later
than ten (10) days after such transfer. No transferee, assignee
or other person purporting to exercise rights under this Exhibit
C who is not a signatory to the Agreement shall be entitled to do
so unless and until such person agrees in a writing delivered to
the Company to be bound by the terms of the Agreement.
8. Termination of Registration Rights. The registration
rights granted pursuant to this Exhibit C shall terminate as to
any Registrable Securities (i) held by any Holder at such time as
such Registrable Securities owned by such Holder can be sold
within a given three (3) month period without compliance with the
registration requirements of the Securities Act pursuant to Rule
144 or (ii) that have been sold pursuant to Rule 144 or an
effective registration statement under the Securities Act.
9. Reports Under the Exchange Act. With a view to making
available to the Holders the benefits of Rule 144 promulgated
under the Securities Act and any other rule or regulation of the
SEC that may at any time permit a Holder to sell securities of
the Company to the public without registration or pursuant to a
registration solely for the resale of securities pursuant to a
registration statement on Form S-3, the Company agrees to use its
reasonable best efforts to:
(a) make and keep public information available, as
those terms are understood and defined in Rule 144 under the
Securities Act, at all times;
(b) file with the SEC in a timely manner all reports
and other documents required of the Company under the Securities
Act and the Exchange Act; and
(c) furnish to any Holder, so long as the Holder owns
any Registrable Securities, forthwith upon request (i) a written
statement by the Company that it has complied with the reporting
requirements of Rule 144 under the Securities Act, the Securities
Act and the Exchange Act, (ii) a copy of the most recent annual
or quarterly report of the Company and such other reports and
documents so filed by the Company and (iii) such other
information as may be reasonably requested in availing any Holder
of any rule or regulation of the SEC which permits the selling of
any such securities without registration or pursuant to such
form.
10. No Inconsistent Rights. The Company will not enter
into any agreement with respect to any of its securities that is
inconsistent with the rights granted to the Holders under this
Exhibit C or otherwise conflicts with the provisions hereof.
<PAGE>
EXHIBIT D
FORM OF LEGAL OPINION
1. The Company is a corporation duly incorporated, validly
existing and in good standing under, and by virtue of, the laws
of the jurisdiction of its incorporation. The Company has
requisite corporate power to own, lease and operate its
properties and assets, and to carry on its business as described
in the 1996 10-K, and is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction
in which the failure to be so qualified would have a Material
Adverse Effect (as defined below) on the Company. When used in
connection with the Company, the term "Material Adverse Effect"
means, for the purposes of this opinion, any event or effect that
is materially adverse to the business, assets, financial
condition, or results of operations of the Company and its
subsidiaries taken as a whole.
2. The Company has all requisite corporate power and
authority to execute and deliver the Agreement and the Warrants,
to sell and issue the Common Stock and the Warrants and to issue
the underlying Warrant Shares and any additional Securities
issuable under the Agreement, and to carry out and perform its
obligations under the terms of the Agreement and the Warrants.
3. The authorized capital stock of the Company consists of
50,000,000 shares of Common Stock and 5,000,000 shares of
Preferred Stock. All of the outstanding shares of Common Stock
are duly authorized and are validly issued, fully paid and
nonassessable. Assuming the accuracy of each Investor's
representations in Section 4 of the Agreement, upon issuance, the
Securities will be issued in compliance with all federal and
state securities laws.
4. All corporate action on the part of the Company, its
directors and stockholders necessary for the authorization,
execution, delivery and performance of the Agreement by the
Company, the authorization, sale, issuance and delivery of the
Common Stock and the Warrants and the performance of the
Company's obligations under the Agreement has been taken. The
Agreement and the Warrants constitute the valid and binding
obligations of the Company enforceable in accordance with their
respective terms except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally,
(ii) as limited by laws relating to the availability of specific
performance, injunctive relief, and other equitable remedies, and
(iii) to the extent the indemnification provisions contained in
the registration rights set forth on set forth on Exhibit C to
the Agreement (the "Registration Rights") may be limited by
applicable federal and state securities laws. The Shares are,
and the Warrant Shares and any additional shares of Common Stock
issuable under the Agreement when issued in compliance with the
provisions of the Agreement and the Warrants will be, validly
issued, fully paid and nonassessable, approved for listing on the
American Stock Exchange and free of any liens or encumbrances
(assuming the Investors take the Securities with no notice
thereof) other than any liens or encumbrances created by or
imposed upon the holders; provided, however, that the Securities
may be subject to restrictions on transfer under state or federal
securities laws.
5. The Company is not in violation of any term of the
Certificate of Incorporation or Bylaws, which violation
reasonably would be expected to have a Material Adverse Effect on
the Company. The execution, delivery and performance of and
compliance with the Agreement, and the issuance of the
Securities, have not resulted and will not result in any
violation of, or conflict with, or constitute a default under, or
result in the creation of, any material mortgage, pledge, lien,
encumbrance or charge upon any of the properties or assets of the
Company or any preemptive or contractual rights to acquire any
securities of the Company under any material contract of the
Company identified in an officer's certificate attached hereto.
6. Except for the Class Action, there are no actions,
suits, proceedings or investigations pending against the Company
or its properties before any court or governmental agency (nor,
to our knowledge, is there any written threat thereof), which,
either in any case or in the aggregate, reasonably would be
expected to have a Material Adverse Effect on the Company, and
none which questions the validity of the Agreement or the
Warrants or any action taken or to be taken in connection
therewith.
7. No consent, approval or authorization of, or
designation, declaration or filing with, any federal, state or
local governmental authority on the part of the Company is
required in connection with the valid execution and delivery of
the Agreement or the offer, sale or issuance of the Securities,
except (i) filings with the SEC and (ii) qualification (or taking
such action as may be necessary to secure an exemption from
qualification, if available) of the offer and sale of the
Securities under applicable state securities or "blue sky" laws.
8. Subject to the accuracy of each Investor's
representations and warranties set forth in Section 4 of the
Agreement, the offer, sale and issuance of the Securities in
conformity with the terms of the Agreement, constitute
transactions exempt from the registration requirements of Section
5 of the Securities Act of 1933, as amended and applicable state
securities laws.
