Exhibit 10(iii)
THIS WARRANT MAY NOT BE TRANSFERRED EXCEPT IN THE LIMITED CIRCUMSTANCES SET
FORTH HEREIN OR WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY
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FORM OF
COMMON STOCK PURCHASE WARRANT
for the purchase of
COMMON STOCK
of
SOFTECH, INC.
(a Massachusetts corporation)
Original Issue Date: July 1, 1998
SOFTECH, Inc., a Massachusetts corporation (the "Company"), for good and
valuable consideration received, hereby certifies that IMPERIAL BANK, a
California banking corporation, or registered assigns permitted hereunder (the
"Holder"), is entitled to purchase from the Company, at any time or from time to
time during the Warrant Exercise Period (as hereinafter defined), that number of
shares of the Company's Common Stock, $.10 par value per share ("Common Stock"),
as shall be equal to the Warrant Number (as hereinafter defined), at that price
per share of Common Stock as shall be equal to the Purchase Price (as
hereinafter defined).
1. Definitions.
For the purposes of this Warrant:
"Credit Agreement" means the Credit Agreement, dated as of July 1, 1998,
among the Company, Information Decisions, Inc., as a Guarantor, the financial
institutions that are now, or hereafter become, parties thereto as Banks, and
Imperial Bank, as Agent for the Banks and as Issuer with respect to Letters of
Credit.
"Fair Market Value" means the average of the closing sale prices (if listed
on a stock exchange or quoted on the Nasdaq National Market System or any
successor thereto), or the average of the mean between the closing bid and asked
prices (if quoted on NASDAQ or otherwise publicly traded), of the Common Stock
on each of the five (5) trading days prior to the date of exercise.
"Original Issuance Date" means July 1, 1998.
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"Purchase Price" means the average of (i) the average closing share price
for the Common Stock on NASDAQ for the sixty (60) trading days prior to the
Original Issue Date, and (ii) the average closing share price for the Common
Stock on NASDAQ for the sixty (60) trading days after the Original Issuance Date
(or such number of trading days less than sixty if the Holder exercises the
Warrant prior to sixty tradings after the Original Issuance Date). The Purchase
Price is subject to automatic adjustment from time to time in accordance with
Section 3.
"Termination Date" is defined in Section 7.
"Warrant Exercise Period" means the period commencing with the Original
Issuance Date of this Warrant and ending on the Termination Date.
"Warrant Number" means, initially, 205,705 shares of Common Stock, subject
to automatic adjustment from time to time in accordance with Section 3.
Unless otherwise defined herein or the context otherwise requires, terms used in
this Agreement, including the introductory paragraph hereto, have the meanings
given to such terms in the Credit Agreement.
2. Exercise.
(a) This Warrant may be exercised by the Holder, in whole or in part, by
surrendering this Warrant, with the purchase form appended hereto as Exhibit A,
duly executed by such Holder, at the principal office of the Company, or at such
other office or agency as the Company may designate, accompanied by payment in
full by bank or certified check in lawful money of the United States, of the
aggregate Purchase Price payable in respect of the total number of shares of
Common Stock purchased upon such exercise.
(b) Each exercise of this Warrant shall be deemed to have been effected
immediately prior to the close of business on the day on which this Warrant
shall have been surrendered to the Company as provided in Subsection 2(a) above.
At such time, the person or persons in whose name or names any certificates for
or other instruments evidencing shares of Common Stock shall be issuable upon
such exercise as provided in Subsection 2(d) below shall be deemed to have
become the holder or holders of record of the Common Stock represented by such
certificates or other instruments.
(c) (i) The Holder may at its sole option, and in lieu of paying the
Purchase Price pursuant to Subsection 2(a) hereof, exchange this Warrant in
whole or in part for a number of shares of Common Stock as determined below.
Such shares of Common Stock shall be issued by the Company to the Holder without
payment by the Holder of any other exercise price or any cash or other
consideration except as set forth herein as of the date hereof. The number of
shares of Common Stock to be so issued to the Holder shall be equal to the
quotient obtained by dividing (A) the Surrendered Value (as defined below) on
the date of surrender of this Warrant pursuant to Subsection 2(a), by
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(B) the Fair Market Value on the exchange date of one share of Common
Stock.
(ii) For the purposes of this Subsection 2(c), the "Surrendered Value"
of a portion of this Warrant on a given date shall be deemed to be any
excess of (A) the aggregate Fair Market Value on such date of the total
number of shares of Common Stock otherwise issuable upon exercise of such
portion of the Warrant, over (B) the aggregate Purchase Price of such total
number of shares of Common Stock.
(d) As soon as practicable after the exercise of this Warrant in full or in
part, and in any event within three (3) business days thereafter, the Company,
at its expense, will cause to be issued in the name of, and delivered to, the
Holder, or, subject to the terms and conditions hereof, as such Holder (upon
payment by such Holder of any applicable transfer taxes) may direct:
(i) a certificate or certificates for the number of full shares of
Common Stock to which such Holder shall be entitled upon such exercise,
plus, in lieu of any fractional share to which such Holder would otherwise
be entitled, cash in an amount determined pursuant to Section 3 hereof, and
(ii) in case such exercise is in part only, a new warrant or warrants
(dated the date hereof) of like tenor, calling in the aggregate on the face
or faces thereof for the number of shares of Common Stock equal (without
giving effect to any adjustment therein) to the Warrant Number minus the
number of such shares of Common Stock purchased by the Holder upon such
exercise.
3. Adjustments; Fractional Securities.
(a) If, at any time after the original issue date of this Warrant, the
outstanding Common Stock shall be subdivided into a greater number of shares or
a dividend in Common Stock shall be paid in respect of Common Stock, the
Purchase Price in effect immediately prior to such subdivision or at the record
date of such dividend shall simultaneously with the effectiveness of such
subdivision or immediately after the record date of such dividend be immediately
and automatically proportionately and equitably reduced. If, at any time after
the original issue date of this Warrant, the outstanding Common Stock shall be
combined into a smaller number of shares, the Purchase Price in effect
immediately prior to such combination shall, simultaneously with the
effectiveness of such combination, be immediately and automatically
proportionately and equitably increased. When any adjustment is required to be
made in the Purchase Price, the number of shares of Common Stock purchasable
upon the exercise of this Warrant shall be changed to the number determined by
dividing (i) an amount equal to the maximum number of shares of Common Stock
issuable upon the exercise of this Warrant immediately prior to such adjustment,
multiplied by the
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Purchase Price in effect immediately prior to such adjustment, by (ii) the
Purchase Price in effect immediately after such adjustment.
(b) If, at any time after the original issue date of this Warrant, there
shall occur any capital reorganization or reclassification of the Common Stock
(other than a change in par value or a subdivision or combination as provided
for in Subsection 3(a) above), or any consolidation or merger of the Company
with or into another corporation, or a transfer of all or substantially all of
the assets of the Company, or the payment of a liquidating distribution, then,
upon consummation of such reorganization, reclassification, consolidation,
merger, sale, automatic conversion or liquidating distribution, lawful provision
shall be made so that the Holder of this Warrant shall have the right thereafter
to receive upon the exercise hereof (to the extent, if any, still exercisable)
the kind and amount of shares of stock or other securities or property which
such Holder would have been entitled to receive if, immediately prior to any
such reorganization, reclassification, consolidation, merger, sale, automatic
conversion or liquidating distribution, as the case may be, such Holder had held
the number of shares of Common Stock which were then purchasable upon the
exercise of this Warrant. In any such case, appropriate adjustment (as
reasonably determined by the Board of Directors of the Company) shall be made in
the application of the provisions set forth herein with respect to the rights
and interests thereafter of the Holder of this Warrant such that the provisions
set forth in this Section 3 (including provisions with respect to adjustment of
the Purchase Price) shall thereafter be applicable, as nearly as is reasonably
practicable, in relation to any shares of stock or other securities or property
thereafter deliverable upon the exercise of this Warrant.
(c) When any adjustment is required to be made in the Purchase Price or the
Warrant Number, the Company shall promptly mail to the Holder a certificate
setting forth the Purchase Price and the Warrant Number after such adjustment,
and setting forth a brief statement of the facts requiring such adjustment. Such
certificate shall also set forth the kind and amount of stock or other
securities or property into which this Warrant shall be exercisable following
the occurrence of any of the events specified in Subsection 3(a) or (b) above.
(d) The Company shall not be required, upon the exercise of this Warrant,
to issue any fractional shares, but shall make an adjustment therefore in cash
on the basis of the Fair Market Value of the Common Stock at the time of
exercise.
4. Limitation on Sales, etc.
The Holder, and each subsequent holder of this Warrant, if any,
acknowledges that this Warrant and the underlying shares of Common Stock have
not been registered under the Securities Act of 1933, as now in force or
hereafter amended, or any successor legislation (the "Act"), and agrees not to
sell, pledge, distribute, offer for sale, transfer or otherwise dispose of this
Warrant or any Common Stock issued upon its exercise in the absence of (a) an
effective registration statement under the Act as to this Warrant or such
underlying shares of Common Stock and registration or qualification of this
Warrant or such underlying shares of Common Stock under any applicable Blue Sky
or state
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securities laws then in effect, or (b) an opinion of counsel, satisfactory to
the Company, that such registration and qualification are not required.
Without limiting the generality of the foregoing, unless the offering and
sale of the Common Stock to be issued upon the particular exercise of the
Warrant shall have been effectively registered under the Act, the Company shall
be under no obligation to issue the shares covered by such exercise unless and
until the registered Holder shall have executed an investment letter in form and
substance reasonably satisfactory to the Company, including a warranty at the
time of such exercise that it is acquiring such shares for its own account, for
investment, and not with a view to, or for sale in connection with, the
distribution of any such shares, in which event the registered Holder shall be
bound by the provisions of a legend to such effect on the certificate(s)
representing the Common Stock.
In addition, without limiting the generality of the foregoing, the Company
may delay issuance of the Common Stock hereunder until completion of any action
or obtaining of any consent which the Company deems necessary under any
applicable law (including without limitation state securities or "blue sky"
laws), provided that the Company shall use all reasonable efforts in good faith
to diligently pursue completion of such action or the receipt of such consent.
5. Notices of Record Date, etc.
In case:
(a) the Company shall take a record of the holders of Common Stock for the
purpose of entitling or enabling them to receive any dividend or other
distribution, or to receive any right to subscribe for or purchase any shares of
stock of any class or any other securities, or to receive any other right, or
(b) of any capital reorganization of the Company, any reclassification of
the capital stock of the Company, any consolidation or merger of the Company
with or into another corporation, or any transfer of all or substantially all of
the assets of the Company, or
(c) of the voluntary or involuntary dissolution, liquidation or winding-up
of the Company,
then, and in each such case, the Company will mail or cause to be mailed to the
Holder of this Warrant 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, or (ii) the effective date on which such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock shall be entitled to exchange their Common
Stock for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation or
winding-up. Such notice shall be mailed at least twenty (20) days prior to the
record date or effective
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date for the event specified in such notice, provided that the failure to so
mail such notice shall not affect the legality or validity of any such action.
6. Reservation of Stock, etc.
(a) The Company will at all times reserve and keep available, solely for
issuance and delivery upon the exercise of this Warrant, such stock and other
property as from time to time shall be issuable upon the exercise of this
Warrant.
(b) The Company will not, by amendment of its Articles of Organization or
through reorganization, consolidation, merger, dissolution, issuance of capital
stock or sale of treasury stock (otherwise than upon exercise of this Warrant)
or sale of assets, or by any other act or deed, avoid or seek to avoid the
material performance or observance of any of the covenants, stipulations or
conditions in this Warrant to be observed or performed by the Company. The
Company will at all times in good faith assist, insofar as it is able, in the
carrying out of all of the provisions of this Warrant in a reasonable manner and
in the taking of all other action which may be necessary in order to protect the
rights hereunder of the Holder of this Warrant.
(c) The Company will maintain an office where presentations and demands to
or upon the Company in respect of this Warrant may be made. The Company will
give notice in writing to the Holder, at the address of the Holder appearing on
the books of the Company, of each change in the location of such office.
7. Termination.
This Warrant shall terminate and no longer be exercisable from and after
5:00 p.m., Boston time, on July 1, 2005 (the "Termination Date").
8. Transfers, etc.
(a) The Company will maintain a register containing the names and addresses
of the Holders of this Warrant. The Holder may change its, his or her address as
shown on the warrant register by written notice to the Company requesting such
change.
(b) Until any transfer of this Warrant is made in the warrant register, the
Company may treat the Holder of this Warrant as the absolute owner hereof for
all purposes.
9. Replacement of Warrants.
Upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant, and (in the case of
loss, theft or destruction) upon delivery of an indemnity agreement (with surety
if reasonably required) in an amount reasonably satisfactory to the Company, or
(in the case of mutilation) upon surrender and cancellation of this Warrant, the
Company will issue, in lieu thereof, a new Warrant of like tenor.
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10. Mailing of Notices, etc.
All notices and other communications from the Company to the Holder of this
Warrant shall be mailed by first-class certified or registered mail, postage
prepaid, to the address furnished to the Company in writing by the last Holder
of this Warrant who shall have furnished an address to the Company in writing.
All notices and other communications from the Holder of this Warrant or in
connection herewith to the Company shall be mailed by first-class certified or
registered mail, postage prepaid, to the Company at its principal executive
offices or at such other address as the Company shall so notify the Holder.
11. No Rights as Stockholder.
Until the exercise of this Warrant, the Holder shall not have or exercise
any rights by virtue hereof as a stockholder of the Company.
12. Change or Waiver.
Any term of this Warrant may be changed or waived only by an instrument in
writing signed by the party against which enforcement of the change or waiver is
sought.
13. Headings.
The headings in this Warrant are for purposes of reference only and shall
not limit or otherwise affect the meaning of any provision of this Warrant.
14. Governing Law.
The validity, construction and performance of this Warrant shall be
governed by and construed in accordance with the laws of The Commonwealth of
Massachusetts applicable to contracts executed in and performed entirely within
such Commonwealth, without reference to any choice of law principles of such
Commonwealth. With respect to any suit, action or other proceeding arising out
of this Warrant, or any other transaction contemplated thereby, the parties
hereto expressly waive any right they may have to a jury trial and agree that
any proceeding hereunder shall be tried by a judge without a jury.
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IN WITNESS WHEREOF, SOFTECH, INC. has caused this COMMON STOCK PURCHASE
WARRANT to be signed in its corporate name and its corporate seal to be
impressed hereon by its duly authorized officers on and as of July 1, 1998.
The Company:
Corporate Seal SOFTECH, INC.
By:______________________________
Title:
Attest:_________________________
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EXHIBIT A
PURCHASE FORM
To:
The undersigned, pursuant to the provisions set forth in the attached
COMMON STOCK PURCHASE WARRANT, hereby irrevocably elects either (a) to purchase
_____________ shares of Common Stock covered by such Warrant and herewith makes
payment of $______________, representing the full purchase price for such shares
at the Purchase Price per share provided for in such Warrant, or (b) to
surrender _________________ number of shares of such Warrant in exchange for the
number of shares of Common Stock determined pursuant to Section 2(c) thereof.
Dated: By:__________________________________
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EXHIBIT B
ASSIGNMENT FORM
For Value Received, the undersigned hereby sells, assigns and transfers
unto:__________________ the right to purchase Common Stock represented by this
Warrant to the extent of ________________ shares, and does hereby irrevocably
constitute and appoint ________________, attorney-in-fact to transfer the same
on the books of the Company with power of substitution in the premises.
Dated: By:__________________________________