EXHIBIT 10(f)
STOCK AND WARRANT PURCHASE AGREEMENT
between
BT HOLDINGS (NEW YORK), INC.
and
C.I.S. TECHNOLOGIES, INC.
Dated as of November 21, 1994
STOCK AND WARRANT PURCHASE AGREEMENT, dated as of November 21, 1994,
between BT Holdings (New York), Inc. a New York corporation (the "Purchaser"),
and C.I.S. Technologies, Inc., a Delaware corporation (the "Company").
WITNESSETH;
WHEREAS, the Purchaser wishes to purchase from the Company, and the Company
wishes to issue and sell to the Purchaser, (i) 1,615,818 shares of the Company's
Common Stock, $.01 par value per share (the "Common Stock"), (ii) 2,384,182
shares of the Company's Series A Preferred Stock, $.01 par value per share (the
"Series A Preferred Stock" and, together with the Common Stock, the "Stock"),
and (ii) warrants to purchase an additional 500,000 shares of Series A Preferred
Stock (the "Warrants") (unless otherwise defined, all capitalized terms used
herein shall have the respective meanings ascribed to them in Section 6); and
WHEREAS, the Purchaser and the Company are entering into this Agreement to
provide for such purchase and sale and to establish various rights and
obligations in connection therewith.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein set forth, and such other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto intending
to be legally bound, agree as follows:
1. Purchase and Sale of Shares.
---------------------------
1.1. Issuance and Sale. Upon the terms set forth herein and provided
-----------------
the conditions in Section 1.3 have been fulfilled, at the Closing referred
to in Section 1.2, the Company will issue and sell to the Purchaser, and
the Purchaser will purchase from the Company, (i) 1,615,818 shares of
Common Stock (the "Common Shares"), (ii) 2,384,182 shares of Series A
Preferred Stock (the "Series A Preferred Shares" and, together with the
Common Shares, the "Shares"), and (iii) the Warrants to purchase an
additional 500,000 shares of Series A Preferred Stock (the "Underlying
Series A Preferred Shares"), for an aggregate purchase price of $10,000,000
(the "Purchase Price").
1.2 Closing. The closing (the "Closing") of the issuance, sale and
-------
purchase of the Shares and the Warrants shall take place, subject to prior
satisfaction of the conditions in Section 1.3, on such date on or before
December 31, 1994 as the parties may agree (the date on which the closing
occurs being the "Closing Date"). At the Closing:
(i) the Company will deliver to the Purchaser or its nominee
stock certificates in definitive form and a warrant certificate in the
form of Exhibit A hereto, both registered in the name of the Purchaser
or its nominee,
2
representing the Shares and the Warrants, respectively, being
purchased by the Purchaser pursuant hereto, and
(ii) the Purchaser shall pay to the Company Ten Million
($10,000,000) U.S. Dollars by wire transfer of immediately available
funds to an account previously identified by the Company.
1.3 Conditions to Closing. The obligation of the Purchaser to
---------------------
purchase the Shares and the Warrants is subject to the fulfillment of each
of the following conditions precedent:
(i) the Purchaser shall have received from Pray, Walker,
Jackman, Williamson & Marlar, counsel to the Company, a written
opinion dated the Closing Date substantially in the form attached as
Exhibit B hereto;
(ii) the Company shall have executed and delivered to the
Purchaser for counter-signature by the Purchaser a registration rights
agreement in the form of Exhibit C hereto (the "Registration Rights
Agreement");
(iii) the representations and warranties of the Company
contained in this Agreement shall be true and correct on and as of the
Closing Date with the same effect as though made on and as of such
date, the Company shall have performed in all material respects all of
its obligations and agreements hereunder theretofore to be performed
by it, and the Purchaser shall have received on the Closing Date a
certificate to that effect dated the Closing Date and executed on
behalf of the Company by its Chief Executive Officer or President;
(iv) the Company shall have amended its certificate of
incorporation by filing with the Secretary of State of the State of
Delaware the Certificate of Designation establishing the terms of the
Series A Preferred Stock in the form of Exhibit D hereto (the
"Certificate of Designation");
(v) no action or proceeding shall have been instituted, or shall
be deemed by the Purchaser likely to be instituted, before any court
or governmental agency or body to restrain or prohibit consummation of
the transactions contemplated hereby;
(vi) no material adverse change shall have occurred in the
business, conditions, operations (financial or otherwise) or prospects
of the Company and its Subsidiaries taken as a whole from that set
forth in the consolidated balance sheet of the Company as of December
31, 1993 included in the SEC Reports, other than changes disclosed or
referred to in the SEC Reports or in the Disclosure Letter;
3
(vii) as of the Closing Date, Philip D. Kurtz shall be the
Chief Executive Officer and James L. Hersma shall be the President and
Chief Operating Officer of the Company and no steps shall have been
taken by the Company or other such individuals to remove such
individuals (whether by termination of employment, reorganization or
otherwise) from such positions;
(viii) The Purchaser shall have received from Coopers & Lybrand
a procedures letter reasonably satisfactory in form and substance to
the Purchaser;
(ix) an individual identified by the Purchaser to the Company in
writing as the Purchaser's "nominee for director" shall have been
elected a director of the Company.
2. Representations and Warranties of the Company. The Company represents
---------------------------------------------
and warrants as of the date hereof as follows:
2.1. Organization and Qualification. The Company and each of its
------------------------------
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated and
has the power and authority to own its respective property and to carry on
its respective business as now being conducted. The Company and each of
its Subsidiaries is duly qualified as a foreign corporation to do business
and is in good standing in every jurisdiction in which the nature of its
respective business conducted or property owned by it makes such
qualification necessary and where the failure so to qualify would have a
material adverse effect on the business or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole. Paragraph
2.1 of the Disclosure Letter lists all of the Company's Subsidiaries as of
the date of this Agreement and the amount and percent of its stock
ownership thereof.
2.2. Due Authorization. The Company has all right, power and
-----------------
authority to enter into and perform this Agreement, the Warrants and the
Registration Rights Agreement and to issue and sell the Shares, the
Warrants and the Underlying Series A Preferred Shares. The execution and
delivery of this Agreement and the Registration Rights Agreement, the
issuance and sale of the Shares, the Warrants, and, upon exercise of the
Warrants, the Underlying Series A Preferred shares by the Company and the
compliance by the Company with all the provisions of this Agreement, the
Warrants and the Registration Rights Agreement (i) are within the power and
authority of the Company, (ii) do not require the approval or consent of
any stockholders of the Company, any governmental authority or any third
party, and (iii) have been authorized by all requisite action on the part
of the Company. This Agreement and the Registration Rights Agreement have
been duly executed and delivered by the Company and constitute valid and
binding obligations of the Company enforceable against the Company in
4
accordance with their respective terms, except that (i) such enforcement
may be subject to bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors rights
and (ii) the remedy of specific performance and injunctive and other forms
of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought. The Company has furnished to the Purchaser true and correct
copies of the Company's Certificate of Incorporation and By-laws as in
effect on the date of this Agreement.
2.3. Status of Shares. Upon issuance of the Shares and the Warrants
----------------
at the Closing, and, upon issuance of the Underlying Series A Preferred
Shares upon exercise of the Warrants, the Shares and the Underlying Series
A Preferred Shares will be validly issued, fully paid and nonassessable and
the issuance of the Shares and the Underlying Series A Preferred Shares is
not and will not be subject to preemptive rights of any other stockholder
of the Company.
2.4. SEC Reports. The Stock is registered under Section 12(g) of the
-----------
Exchange Act, and the Company has filed all proxy statements, reports and
other documents required to be filed by it under the Exchange Act. The
Company has furnished the Purchaser true and correct copies of its Annual
report on Form 10-K for the fiscal year ended December 31, 1993, and all
proxy statements and reports under the Exchange Act filed by the Company
after such date, each as filed with the Commission (collectively, the "SEC
Reports"). Each SEC report, at the time it was filed with or delivered to
the Commission, was in substantial compliance with the requirements of its
respective report form.
2.5. Consents. The Company is not required to obtain any consent,
--------
approval or authorization of, or to make any declaration or filing with,
any governmental authority as a condition to or in connection with the
valid execution, delivery and performance of this Agreement, the Warrants
or the Registration Rights Agreement and the valid offer, issue, sale or
delivery of the Shares, the Warrants or, upon exercise of the Warrants, the
Underlying Series A Preferred Shares, or the performance by the Company of
its obligations in respect thereof, except for any filings required to
effect any registration pursuant to and as contemplated specifically by the
Registration Rights Agreement and any filings required pursuant to federal
securities laws which will be timely made after the Closing hereunder.
2.6. No Conflict. None of the execution and delivery of this
-----------
Agreement or the Registration Rights Agreement, the issuance of the Shares,
the Warrants, or, upon exercise of the Warrants, the Underlying Series A
Preferred Shares, or the fulfillment of, or compliance with, the terms and
provisions hereof or thereof will conflict with or result in a breach of
5
the terms, conditions or provisions of, give rise to a right of termination
under, constitute a default under or result in any violation of (i) the
Certificate of Incorporation or By-laws of the Company, (ii) any indenture,
loan agreement, lease, mortgage or other agreement binding on the Company
or any Subsidiary, (iii) any judgment or decree of a court or
administrative agency binding on the Company or any Subsidiary or (iv) any
applicable statute, law, rule or regulation to which the Company or any
Subsidiary or any of their property is subject. Performance by the Company
of its obligations under this Agreement and the Registration Rights
Agreement will not result in the imposition or creation of any lien or
charge against any assets of the Company. Neither the Company nor any
subsidiary is a party to any contract or agreement or subject to any
charter or other corporate restriction which materially and adversely
affects its business, property, assets, financial condition or prospects.
Neither the Company nor any Subsidiary is in default under any outstanding
indenture or other debt instrument or with respect to the payment of the
principal of or interest on any outstanding obligations for borrowed money
nor is it in default under any of their respective contracts or agreements
or under any instrument by which the Company or any Subsidiary is bound, in
each case which default materially and adversely affects the business,
operations, assets, financial condition or prospects of the Company and its
subsidiaries taken as a whole.
2.7. Capitalization. The authorized capital stock of the Company
--------------
consists of (i) 50,000,000 shares of Common Stock, of which, as of the date
hereof, 28,477,888 shares are outstanding and 1,517,745 shares are held in
treasury and (ii) 20,000,000 shares of preferred stock, $.01 par value, no
shares of which are issued and outstanding. All of such outstanding shares
have been validly issued and are fully paid and nonassessable. No class of
capital stock of the Company is entitled to preemptive rights. Except for
the options and warrants listed in paragraph 2.7 of the Disclosure Letter
or disclosed in the SEC Reports, there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into,
shares of any capital stock of the Company or contracts, commitments,
understandings or arrangements by which the Company is or may become bound
to issue additional shares of its capital stock or options, warrants, or
rights to purchase or acquire any shares of its capital stock. Since
December 31, 1993, the Company has not changed the amount of its authorized
capital stock or subdivided or otherwise changed any shares of any class of
its capital stock, whether by way or reclassification, recapitalization,
stock split or otherwise or issued or reissued, or agreed to issue,
reissue, redeem or repurchase, any of its capital stock, except as
disclosed in paragraph 2.7 of the Disclosure Letter and has not since such
date declared or paid any dividend in cash or stock or made any other
distribution of assets to its stockholders.
6
2.8 Taxes.
-----
(i) The term "Tax" includes any material tax or similar
governmental charge, impost or levy (including, without limitation,
income taxes, franchise taxes, transfer taxes or fees, stamp taxes,
sales taxes, use taxes, excise taxes, ad valorem taxes, withholding
taxes, employee withholding taxes, worker's compensation, payroll
taxes, unemployment insurance, social security, minimum taxes or
windfall profits taxes), together with any related liabilities,
penalties, fines, additions to tax or interest, imposed by the United
States or any state, county, provincial, local or foreign government
or subdivision or agency thereof, except that, for purposes of
------ ----
paragraph (ii) of this Section 2.8, the term "Tax" does not include
taxes, penalties and interest referred to in paragraph 2.8 of the
Disclosure Letter.
(ii) All federal, state and local Tax returns, including all
information returns, required to be filed by or on behalf of the
Company or any of its Subsidiaries have been timely filed or requests
for extensions have been timely filed and any such extension has been
granted and has not expired, and all such filed returns are complete
and accurate in all material respects. Except as disclosed in the
Company's SEC Reports, all taxes attributable to it or any of its
Subsidiaries that are or were due or payable (without regard to
whether such Taxes have been assessed) have been paid in full or have
been adequately provided for on its consolidated balance sheet and
consolidated statement of earnings or income (in accordance with
generally accepted accounting principles). Adequate provision in
accordance with generally accepted accounting principles appropriately
and consistently applied has been made in the Company's financial
statements included in the SEC Reports relating to all Taxes for the
periods covered thereby that were not yet due and payable as of the
dates thereof, regardless of whether the liability for such Taxes is
disputed. Except as disclosed in its SEC Reports, there is no
outstanding audit examination, deficiency, refund litigation or
outstanding waivers or agreements extending the applicable statute of
limitations for the assessment or collection of any Taxes for any
period with respect to any Taxes of the Company or its Subsidiaries.
All Taxes, interest, additions and penalties due with respect to
completed and settled examinations or concluded litigation relating to
the Company or any of its Subsidiaries have been paid in full or have
been recorded on its or such Subsidiary's balance sheet and
consolidated statement of earnings or income (in accordance with
generally accepted accounting principles). Neither the Company nor
any of its Subsidiaries is a party to a tax sharing or similar
agreement or any agreement pursuant to which it or any of its
Subsidiaries has indemnified any party
7
(other than it or one of its subsidiaries) with respect to Taxes. The
proper and accurate amounts have been withheld from all employees (and
timely paid to the appropriate Governmental Entity or set aside in an
account for such purposes) for all periods through the Closing Date in
compliance with all Tax withholding provisions of applicable, federal,
state, local and foreign laws (including, without limitation, income,
social security and employment tax withholding for all types of
compensation).
2.9 Labor Matters. Neither the Company nor any of its Subsidiaries
-------------
is a party to, or is bound by, any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization, nor is the Company or any of its Subsidiaries the subject of
any material proceeding asserting that it or any such Subsidiary has
committed an unfair labor practice or seeking to compel it or such
Subsidiary to bargain with any labor organization as to wages or conditions
of employment, nor is there any strike involving the Company or any of its
Subsidiaries pending or, to the knowledge of its executive officers,
threatened, nor are its executive officers aware of any activity involving
its or any of its subsidiaries' employees seeking to certify a collective
bargaining unit or engaging in any other organization activity.
2.10 Compliance with ERISA. Each member of the ERISA Group has
---------------------
fulfilled its obligations under the minimum funding standards of ERISA and
the Code with respect to each Plan and is in compliance in all material
respects with the presently applicable provisions of ERISA and the Code
with respect to each Plan. No member of the ERISA Group has (i) sought a
waiver of the minimum funding standard under Section 412 of the Code in
respect of any Plan, (ii) failed to make any contribution or payment to any
Plan, or made any amendment to any Plan, which has resulted or could result
in the imposition of a lien or the posting of a bond or other security
under ERISA or the Code, (iii) incurred any liability under Title IV of
ERISA other than a liability to the PBGC for premiums under Section 4007 of
ERISA or (iv) engaged in a transaction with respect to a Plan, which has
resulted or could result in such member being subject to a tax or penalty
imposed by either Section 4975 of the Code or Section 502 of ERISA. The
Company has not received any notification that any Multiemployer Plan is in
reorganization or has been terminated within the meaning of Title IV of
ERISA, and has no Multiemployer Plan that is reasonably expected to be in
reorganization or to be terminated where such reorganization or termination
has had or could reasonably be expected to have, through increases in the
contributions required to be made or otherwise, a material adverse effect
on the business, condition, operations (financial or otherwise) or
prospects of the Company and its Subsidiaries taken as a whole.
8
2.11 Litigation. There are no proceedings or investigations pending
----------
or threatened before any court or arbitrator or before or by any
Governmental Entity which, in any one case or in the aggregate could
reasonably be expected to have a material adverse effect on the business,
conditions, operations (financial or otherwise) or prospects of the Company
and its Subsidiaries taken as a whole or call into question the validity or
enforceability of this Agreement, the Warrants, the Registration Rights
Agreement or the transactions contemplated hereby or thereby.
2.12 Credit Agreement Representations and Warranties. The Company's
-----------------------------------------------
representations and warranties in the following sections of the Credit
Agreement, dated as of October 15, 1994, among the Company, certain of its
affiliates, and General Electric Capital Corporation are hereby
incorporated into and made a part of this Agreement for the benefit of the
Purchaser, mutatis mutandis, as if set forth in full herein, and are true
------- --------
and correct as of the date hereof: Section 3.5, Section 3.6, Section 3.7,
Section 3.8, Section 3.9, Section 3.10, Section 3.11, Section 3.12, Section
3.13, Section 3.14, Section 3.18 and Section 3.19.
2.13. Other Matters. The Company is not now and will not be, after
-------------
giving effect to the receipt of the proceeds from the sale of the Shares,
the Warrants or the Underlying Series A Preferred Shares, an "investment
company" within the meaning of the Investment Company Act of 1940, nor will
it be controlled by or acting on behalf of any person which is such an
investment company. The Company does not own any "margin stock" within the
meaning of Regulation G of the Board of Governors of the Federal Reserve
System and is not selling the Shares, the Warrants or the Underlying Shares
"for the purpose of purchasing or carrying any margin stock" within the
meaning of the said Regulation G.
2.14. Disclosure. None of this Agreement, any SEC Report, or any
----------
certificate or written disclosure furnished to the Purchaser by or on
behalf of the Company in connection with the transactions contemplated
hereby contains any untrue statements of a material fact or omits to state
a material fact necessary in order to make the statements contained herein
and therein not misleading. There is no fact peculiar to the Company or
any of its Subsidiaries which the Company has not disclosed to the
Purchaser in writing which materially affects adversely or, so far as the
Company can now reasonably foresee, could materially affect adversely the
properties, business, condition (financial or otherwise) or prospects of
the Company and its Subsidiaries taken as a whole or the ability of the
Company to perform this Agreement, the Warrants, the Registration Rights
Agreement or its obligations in respect of the Shares.
2.15. Brokers or Finders. No agent, broker, investment banker or
------------------
other firm or Person is or will be entitled to any
9
broker's fee or any other commission or similar fee for which the Purchaser
will be liable.
3. Representations and Warranties of the Purchaser. The Purchaser
-----------------------------------------------
represents and warrants as of the date hereof as follows:
3.1. Due Authorization. The Purchaser has all corporate power and
-----------------
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the
Purchaser and the consummation by the Purchaser of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on behalf of the Purchaser. This Agreement has been duly executed
and delivered by the Purchaser and constitutes a valid and binding
agreement of the Purchaser enforceable against the Purchaser in accordance
with its terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors rights and (ii) the remedy
of specific performance and injunctive and other forms of equitable relief
may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
3.2. Acquisition for Investment. The Purchaser is acquiring the
--------------------------
Shares and the Warrants and, upon exercise of the Warrants, will be
acquiring the Underlying Series A Preferred Shares for its own account for
the purpose of investment and not with a view to or for sale in connection
with any "distribution" (within the meaning of the Securities Act) thereof,
and the Purchaser has no present intention or plan to effect any
distribution of the Shares, the Warrants or the Underlying Series A
Preferred Shares. The Purchaser understands that each certificate
representing the Shares, the Warrants and the Underlying Shares will
contain the restrictive legend set forth in Section 7.12
3.3. Brokers or Finders. No agent, broker, investment banker or
------------------
other firm or Person who is not an affiliate of the Purchaser is or will be
entitled to any broker's fee or any other commission or similar fee from
the Purchaser.
3.4. Accredited Investor. The Purchaser is an "accredited investor"
-------------------
within the meaning of Rule 501 promulgated under the Securities Act.
4. Covenants of the Company. The Company hereby covenants that, (i) at
------------------------
all times prior to the earlier of the Closing Date and December 31, 1994, and
(ii) thereafter during such time as the Purchaser (or one of its Affiliates)
owns a minimum of 500,000 Shares of Common Stock (including, for these purposes,
shares of Common Stock purchased upon conversion of the Series A Preferred
Stock):
10
4.1. Reports and Financial Statements.
--------------------------------
(a) The Company will cause its Common Stock to continue to be
registered under Sections 12(g) of the Exchange Act, will comply with
its reporting and filing obligations under the Exchange Act and will
not take any action or file any document (whether or not permitted by
the Exchange Act or the rules thereunder) to terminate or suspend such
registration or to terminate or suspend its reporting and filing
obligations under the Exchange Act. The Company will take all action
necessary to continue the listing or trading of its Common Stock on
any national securities exchange or the Automated Quotation System of
the National Association of Securities Dealers on which such Common
Stock is listed or traded and will comply with its reporting, filing
and other obligations under the Exchange Act, the Securities Act and
the bylaws or rules of said exchange or Association.
(b) The Company will furnish to the Purchaser, concurrently with
the distribution or filing thereof, each annual and quarterly report
to its shareholders, its reports on Form 10-K and 10-Q and each other
report, registration statement, definitive proxy statement or other
document filed with the Commission and any reports, listing
applications or other documents filed with any national securities
exchange or the National Association of Securities Dealers, and each
press release or other public announcement issued by the Company.
4.2. Rights of Inspection. The Company and each of its Subsidiaries
--------------------
will permit representatives of the Purchaser to visit and inspect any of
the properties of the Company and its Subsidiaries, including each of their
books of account, and to discuss the Company's and its Subsidiaries'
affairs, finances and accounts with the Company's and any Subsidiary's
officers and its independent public accountants, all at such reasonable
times and as often as the Purchaser may reasonably request.
4.3. Maintenance and Compliance. The Company and each of its
--------------------------
Subsidiaries will (i) maintain its corporate existence, rights, powers and
privileges in good standing, (ii) pay promptly when due all taxes,
assessments and governmental charges properly imposed on it, (iii) maintain
its properties in workable condition and repair, (iv) comply in all
material respects with all laws and governmental regulations and
restrictions applicable to its business or properties, (v) maintain with
financially sound insurers such insurance coverage against liability, fire
and other risks as is reasonably prudent and customary for companies
similarly situated, (vi) keep records and books of account and maintain a
system of internal accounting controls in accordance with generally
accepted accounting principles and in compliance with Section 13(b)(2) of
the Exchange Act, (vii) retain independent public accountants of recognized
national standing
11
as auditors of the Company's annual financial statements, (viii) comply in
all material respects with ERISA and (ix) comply in all material respects
with all applicable Environmental Regulations.
4.4 Press Release; Public Offering Materials. The Company will not
----------------------------------------
and will not permit any of its Subsidiaries to disclose the name of the
Purchaser in any press release or in any prospectus, proxy statement or
other materials filed with any Governmental Entity relating to a public
offering of the capital stock of the Company without the Purchaser's prior
written consent which consent shall not be unreasonably withheld.
4.5. Purchaser Representation on Company Board. The Company will
-----------------------------------------
take all permissible and appropriate action to ensure that one person
selected by Purchaser is nominated and elected to serve on the Company's
board of directors (it being understood that, notwithstanding the
introduction to Section 4, the Company's obligations under this Section 4.4
commence on the Closing Date).
4.6 Share Repurchases. (a) The Company will not repurchase or
-----------------
redeem any shares of any Common Stock or its other equity securities if,
after giving effect to such repurchase or redemption, either (i) the Shares
of Common Stock owned by the Purchaser and its Affiliates would equal or
exceed 5.0% of the Company's Outstanding Common Stock or (ii) the Purchaser
Shares (as defined in Section 7.12) owned by the Purchaser and its
Affiliates would equal or exceed 15% of the Company's Outstanding Common
Stock (the circumstances described in clause (i) and (ii) above each a
"Threshold") without first complying with the other provisions of this
Section 4.6. For purposes of the foregoing, the term "Outstanding" means
shares issued and outstanding, includes shares of Common Stock which the
Purchaser may acquire directly or indirectly upon exercise of the Warrant
or conversion of shares of Series A Preferred Stock, but does not include
shares issuable upon exercise or conversion of options, warrants,
convertible securities or other similar instruments owned by any Person
other than the Company or an affiliate of the Company.
(b) In the event a proposed repurchase or redemption would cause the
Company to cross a Threshold, at least 30 days before such repurchase or
redemption the Company shall (i) notify the Purchaser of such proposed
repurchase or redemption and (ii) offer to repurchase or redeem such number
of Purchaser Shares owned by the Purchaser or its Affiliates as necessary
to prevent the proposed purchase or redemption from causing the Company to
cross a Threshold on substantially the same terms (as to both consideration
and timing) as are applicable to the proposed repurchase or redemption of
such other shares.
12
4.7 Additional Ventures. Subject to the last two sentences of this
-------------------
Section 4.7, in the event the Company proposes to join with any third-party
who is not an Affiliate (an "unaffiliated Third-Party"), whether through a
joint venture, partnership, co-ownership of another entity or otherwise
(each a "Venture"), to provide cash management or data processing services
or related technology and related services to customers or potential
customers, the Company agrees that it will first explore in good faith with
the Purchaser whether the Purchaser or one of its Affiliates desires to
join with the Company in developing the Venture. If the Purchaser or one
of its Affiliates does wish to join with the Company in developing such
Venture, the Company and the Purchaser or such Affiliate of the Purchaser
will negotiate in good faith for a reasonable period of time to establish
mutually acceptable terms and conditions upon which the Company and the
Purchaser or its Affiliates may establish such Venture. This Section 4.7
will not apply if an unaffiliated Third Party proposes to contribute as an
integral part of the Venture products or services (other than healthcare
decision support information products or services) or good will which is
not reasonably believed by the Company to be available from Purchaser or
its Affiliates. For purposes hereof, "healthcare decision support
information products or services" means products or services which
facilitate the accumulation, manipulation and repackaging of healthcare
data for marketing to the healthcare industry.
4.8 Conduct of Business. Prior to the earlier of (i) the Closing
-------------------
Date and (ii) December 31, 1994, the Company and its Subsidiaries will
conduct their businesses only in the ordinary and usual course of such
businesses and will not issue any additional equity securities except
pursuant to a Plan.
5. Additional Shares.
-----------------
In the event that, during any calendar quarter (treating the period
from the date of this Agreement through December 31, 1994 as a calendar
quarter for purposes of this Section 5) on the first day of which the
Purchaser (together with its Affiliates) owns a minimum of 500,000
Purchaser Shares (as defined in Section 7.12), the Company shall issue
additional shares of Common Stock ("Additional Third-Party Shares")
otherwise than (i) to employees of the Company or its Subsidiaries, other
than pursuant to options, warrants or other rights to acquire such shares
granted to such employees, in an aggregate amount of not more than 100,000
shares per calendar year, (ii) pursuant to options, warrants or other
rights granted to employees of the Company or a Subsidiary (and not
transferable to any Person who is not an employee of the Company or a
Subsidiary) to acquire such shares at prices not less than the market price
thereof (as defined in Section 6(h) of the Certificate of Designation) on
the date of the grant of each such option, warrant or other right, or (iii)
pursuant to
13
a Plan, on or before the fifth day after the end of such calendar quarter
the Company shall offer to issue to the Purchaser additional shares of
Common Stock ("Additional Common Shares") or additional shares of Series A
Preferred Stock ("Additional Series A Preferred Shares") in accordance with
this Section 5.1. In each such case:
(i) the number of Additional Shares so offered shall equal 17.6%
of the number of Additional Third-Party Shares issued during such
calendar quarter (rounded to the nearest whole share), and 33-1/3% of
the Additional Shares so offered to the Purchaser shall be Additional
Common Shares and 66-2/3% of the Additional Shares so offered shall be
Additional Series A Preferred Shares;
(ii) except as otherwise provided in clause (iii), below, the
offer price of each Additional Share so offered shall be determined by
dividing the aggregate of the consideration received by the Company
with respect to the Additional Third-Party Shares issued during such
calendar quarter by the total number of such Additional Third-Party
Shares so issued (provided, however, that if any of the events
-------- -------
described in Section 6 of the Certificate of Designation giving rise
to an adjustment in the Conversion Rate (as defined therein) shall
theretofore have occurred, for purposes of this Section 5 an
Additional Series A Preferred Share shall be deemed to be such
fraction or multiple of a Series A Preferred Share which would, after
giving effect to such event, produce a Conversion Rate of 1.00), and
(iii) if the Additional Third-Party Shares were issued pursuant
to options, warrants or other similar rights to acquire such shares
and such options, warrants or other similar rights were themselves
issued in a Permitted Transaction, the offer price of each Additional
Share so offered shall be the market price thereof (as defined in
Section 6(h) of the Certificate of Designation) determined as of the
last business day of the applicable calendar quarter. ("Permitted
Transaction", as used in this clause (iii), means a transaction in
which the Company acquires assets or a business operation from a
Person or Persons who are not affiliates of the Company and, in
connection with such acquisition, issues to such Person or Persons or
their employees options, warrants or other similar rights to acquire a
number of shares of the Company's Common Stock up to (but not
exceeding 500,000.
The Company's offer to the Purchase shall be in writing and shall set forth
a calculation of the applicable offer price. The Purchaser may accept such
offer on or before the 15th day after such offer is received by it by
paying to the Company, at its office set forth in Section 7.5 (and in
immediately available funds), an amount determined as described above, and
14
the Company shall thereupon issue the appropriate number of Additional
Common Shares and Additional Series A Preferred Shares to the Purchaser.
The Company shall not at any time issue additional shares of Common Stock
(otherwise than pursuant to a Plan) unless at the same time it takes all
corporate action necessary and reserves for issuance a sufficient number of
shares of Common Stock and Series A Preferred Stock to carry out its
obligations under this Section 5.1.
6. Definitions. For purposes of this Agreement, the following terms shall
-----------
have the following meanings:
"Affiliate" has the meaning set forth in Rule 12b-2 under the Exchange
Act (as in effect on the date of this Agreement), it being understood that
any limited partner of a partnership shall not be an Affiliate of such
partnership solely by virtue of its status as such a limited partner.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission.
"Disclosure Letter" means the letter from the Company to the Purchaser
of even date with this Agreement setting forth certain exceptions and
qualifications to the Company's representations and warranties herein.
"Environmental Regulations" means all federal, state, local and
foreign environmental laws, statutes, rules, regulations, order and
ordinances, as amended.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Group" means the Company and all members of a controlled group
of corporations and all trades or businesses (whether or not incorporated)
under common control with the Company which are treated as a single
employer under Section 414 of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any similar Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Exchange Act shall include
reference to the comparable section, if any, of any such similar Federal
statute.
"Governmental Entity" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
15
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA to which any member of the ERISA Group is then making
or accruing an obligation to make contributions or has within the preceding
five-plan years made contribution.
"PBGC" means the Pension Benefit Guarantee Corporation or any
successor thereto.
"Person" means any individual, partnership, joint venture,
corporation, trust, unincorporated organization, government or department
or agency of a government.
"Plan" means an employee pension benefit plan as defined in Section
3(3) of ERISA (other than a Multiemployer Plan) which is covered by Title
IV of ERISA or is subject to the minimum funding standards of Section 412
of the Code and which is maintained or contributed to by the Company or any
member of the ERISA Group.
"SEC Reports" has the meaning provided in Section 2.4 hereof.
"Subsidiary" means, with respect to any Person, any corporation the
majority of the voting shares of which at the time are owned directly or
indirectly by such Person and/or by one or more Subsidiaries of such
Person.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
7. Miscellaneous.
-------------
7.1. Severability. If any term, provision, covenant or restriction
------------
of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants, and restrictions of this Agreement shall remain in full force
and effect and shall in no way be affected, impaired or invalidated. It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and
restrictions without limitation any of such which may be hereafter declared
invalid, void or unenforceable.
7.2. Specific Enforcement. The Purchaser, on the one hand, and the
--------------------
Company, on the other, acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to
an injunction to prevent breaches of the provisions of this Agreement and
to enforce specifically the terms
16
and provisions hereof in any court of the United States or any state
thereof having jurisdiction, this being in addition to any other remedy to
which they may be entitled at law or equity.
7.3. Entire Agreement. This Agreement (including the exhibits
----------------
hereto) contains the entire understanding of the parties with respect to
the transactions contemplated hereby.
7.4. Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more of the counterparts have been
signed by each party and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
7.5. Notices. All notices, consents, requests, instructions,
-------
approvals and other communications provided for herein shall be validly
given, if in writing and delivered personally, by confirmed telecopy or by
registered mail or nationally recognized air courier, postage prepaid to:
the Company:
C.I.S. Technologies, Inc.
One Warren Place
6100 South Yale, Suite 1900
Tulsa, Oklahoma 74136-1930
Attention: Philip D. Kurtz
Chairman and Chief Executive Officer
Telecopy: 918/481-4205
with a copy to:
Pray, Walker, Jackman, Williamson & Marlar
900 Oneok Plaza
100 West 5th Street
Tulsa, Oklahoma 74103-4218
Attn: Thomas G. Noulles, Esq.
Telecopy: 918/581-5599
the Purchaser:
BT Holdings (New York), Inc.
130 Liberty Street
New York, New York 10006
Attention: Nathan H. Peck, Jr.
Telecopy: 212/250-1835
17
with a copy to:
Richard A. Coll, Esq.
BT Holdings (New York), Inc.
130 Liberty Street
New York, New York 10006
Telecopy: 212/250-5063
or to such other address as any party may, from time to time, designate in a
written notice given in a like manner.
7.6. Amendments. Neither this Agreement nor any terms hereof may be
----------
changed, waived, amended or modified unless such change, waiver, amendment
or modification is in writing and signed by the Company and the Purchaser
or its successors and assigns. This Agreement may not be waived, changed,
modified or discharged orally, but only by an agreement in writing signed
by the party or parties against whom enforcement of any waiver, change,
modification or discharge is sought or by parties with the right to consent
to such waiver, change, modification or discharge on behalf of such party.
7.7. Delays or Omissions. No delay or omission to exercise any
-------------------
right, power or remedy accruing to either party to this Agreement
(including any holder of Shares), upon any breach or default of another
party under this Agreement, shall impair any such right, power or remedy of
such party 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 a
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. All remedies, either under this Agreement or by law
or otherwise afforded to any party, shall be cumulative and not
alternative.
7.8. Cooperation. The Purchaser and the Company agree to take, or
-----------
cause to be taken, all such further or other actions as shall reasonably be
necessary to make effective and consummate the transactions contemplated by
this Agreement.
7.9. Successors and Assigns. This Agreement may not be assigned by
----------------------
the Company and may only be assigned by the Purchaser to one or more
Affiliates of Purchaser. This Agreement and all covenants and agreements
contained herein shall bind and inure to the benefit of the parties hereto
and their respective successors and permitted assigns. The rights of the
Purchaser hereunder may not be assigned by the Purchaser in connection with
the transfer or assignment of any Shares or Additional Shares or of the
Warrants.
7.10. Expenses. The Company shall pay all stamp and other taxes
--------
payable with respect to the issuance of the Shares, Additional Shares and
the Underlying Series A Preferred Shares.
18
7.11. Survival of Representations and Warranties. All representations and
------------------------------------------
warranties contained herein or made in writing by any party in connection
herewith shall survive the execution and delivery of this Agreement and the
issuance and delivery of the Shares, for a period of three years from the
latest date set forth under the signatures hereto, regardless of any
investigation made by or on behalf of any party.
7.12. Transfer of Shares.
------------------
(a) The term "Purchaser Shares", as used in this Section 7.12,
means at any point in time (x) the Common Shares then owned by the
Purchaser or its Affiliates, (y) the shares of Common Stock issuable
upon conversion of the Series A Preferred Shares then owned by the
Purchaser or its Affiliates, and (z) the Warrants and Series A
Preferred Shares then owned by the Purchaser or its Affiliates or
issuable upon exercise of the Warrants (excluding, however, any shares
of Common Stock acquired by the Purchaser or its Affiliates from
Persons other than the Company). The term "Free Purchaser Shares"
means (i) from the Closing Date through the date nine months
thereafter, 0% of the Purchaser Shares, (ii) thereafter through the
date two years after the Closing Date, 66-2/3% of the Purchaser Shares
as they exist as of the first day of such period, and (iii) thereafter
100% of the Purchaser Shares (with such percentages calculated based
upon the sum of the number of shares of Common Stock (x) owned by the
Purchaser and its Affiliates, (y) with respect to Series A Preferred
Shares, issuable upon exercise of Series A Preferred Shares owned by
the Purchaser or its Affiliates, and (z) with respect to the Warrants,
issuable upon conversion of underlying Series A Preferred Shares
issuable upon exercise of the Warrants).
(b) the Purchaser understands and agrees that the Shares and the
Warrants have not been, and the Underlying Series A Preferred Shares
at the time of their delivery upon exercise of the Warrants and any
Additional Shares upon their issuance and delivery will not have been,
registered under the Securities Act or the securities laws of any
state and that they may be sold or otherwise disposed of only in one
or more transactions registered under the Securities Act and, where
applicable, such laws, or as to which an exemption from the
registration requirements of the Securities Act and, where applicable,
such laws are available. The Purchaser understands and agrees that
each certificate representing the Shares, Warrants, Underlying Series
A Preferred Shares and Additional Shares shall bear, until so
registered or until a holder of such Shares causes to be delivered to
the Company an opinion of counsel reasonably acceptable to the Company
to the affect that such legend is not
19
necessary in order to assure compliance with the Securities Act's
registration provisions, the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS.
THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR
TRANSFERRED FOR VALUE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION OF THEM
UNDER THE SECURITIES ACT OF 1933 AND/OR APPLICABLE STATE SECURITIES LAWS,
OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH
REGISTRATION(S) IS (ARE) NOT REQUIRED THEREUNDER.
(c) The Purchaser may, at any time and from time to time, sell
or otherwise transfer (x) any Purchaser Shares to any Affiliate of the
Purchaser which agrees to be bound by the terms of this Agreement
without any further limitation whatsoever and (y), subject to Section
7.12(b), any Free Purchaser Shares to any Person; except that
notwithstanding the foregoing, the Purchaser may only sell or
otherwise transfer pursuant to clause (y) above Free Purchaser Shares
(A) in a widely dispersed public distribution, (B) in a private
placement in which no one party acquires the right to purchase in
excess of 2% of the voting shares of the Company, (C) in an assignment
to a single party (e.g. a broker or investment banker) for the purpose
- -
of conducting a widely dispersed public distribution on the
transferor's behalf or (D) in any other manner permitted by the
Federal Reserve Board. For purposes of this paragraph (c),
percentages of the Company's outstanding voting securities shall
include shares issuable upon exercise or conversion of Series A
Preferred stock, the Warrants or other similar securities owned by the
Purchaser or its Affiliates but shall not include shares issuable upon
exercise or conversion of convertible securities, options, warrants or
other similar instruments owned by Persons who are not Affiliates of
the Purchaser.
7.13. Governing Law; Jurisdiction. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK. THE COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL
COURTS LOCATED IN NEW YORK, NEW YORK, SHALL HAVE EXCLUSIVE JURISDICTION TO
HEAR AND DETERMINE ANY CLAIMS OR DISPUTES PERTAINING TO THIS AGREEMENT OR
THE REGISTRATION RIGHTS AGREEMENT; PROVIDED, THAT THE COMPANY AND THE
PURCHASER ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK, NEW YORK; AND FURTHER
PROVIDED, THAT NOTHING IN THIS AGREEMENT OR THE REGISTRATION RIGHTS
AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE PURCHASER FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE PURCHASER. THE
COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN
ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT AND THE COMPANY HEREBY
WAIVES
20
ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING
OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.
THE COMPANY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND
OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF
SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL ADDRESSED TO THE COMPANY AT THE ADDRESS SET FORTH IN SECTION
6.5 OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED
UPON THE EARLIER OF THE COMPANY'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS
AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
IN WITNESS WHEREOF, the Purchaser and the Company have caused this
Agreement to be duly executed, all as of the day and year first above written.
BT HOLDINGS (NEW YORK), INC.
By: ___________________________________
Name:______________________________
Title:_____________________________
C.I.S. TECHNOLOGIES, INC.
By: ___________________________________
Name:______________________________
Title:_____________________________
21
THIS WARRANT AND THE SHARES OF SERIES A PARTICIPATING
CONVERTIBLE PREFERRED STOCK ISSUABLE UPON THE EXERCISE
HEREOF HAVE NOT BEEN REGISTERED UNDER EITHER THE
SECURITIES ACT OF 1933 (THE "ACT") OR APPLICABLE STATE
SECURITIES LAWS (THE "STATE ACTS") AND SHALL NOT BE
SOLD, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE
TRANSFERRED (WHETHER OR NOT FOR CONSIDERATION) BY THE
HOLDER EXCEPT UPON THE ISSUANCE TO THE COMPANY OF A
FAVORABLE OPINION OF COUNSEL AND/OR SUBMISSION TO THE
COMPANY OF SUCH EVIDENCE AS MAY BE SATISFACTORY TO
COUNSEL TO THE COMPANY, IN EACH SUCH CASE, TO THE
EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN
VIOLATION OF THE ACT AND THE STATE ACTS.
WARRANT TO PURCHASE
SHARES OF SERIES A PARTICIPATING
CONVERTIBLE PREFERRED STOCK
C.I.S. TECHNOLOGIES,INC.
(a Delaware Corporation)
C.I.S. TECHNOLOGIES,INC., a Delaware corporation (the "Company"), hereby
certifies that BT Holdings (New York), Inc., a New York Corporation, its
successors and assigns, registered on the books of the Company maintained for
such purposes as the registered holder hereof (the "Holder"), for value
received, is entitled to purchase from the Company Five Hundred Thousand
(500,000) fully paid and non-assessable shares of Series A Participating
Convertible Preferred Stock of the Company, $0.01 par value ("Preferred
Shares"), at the purchase price of Three and 25/100 dollars ($3.25) per
Preferred Share (the "Exercise Price") (the number of Preferred Shares and
Exercise Price being subject to adjustment as hereinafter provided) upon the
terms and conditions herein provided. Certain capitalized terms used herein
which are otherwise not defined are defined in the Stock and Warrant Purchase
Agreement of even date herewith (the "Agreement") to which Holder and the
Company are parties.
1. Exercise of Warrants.
(a) Subject to subsection (b) of this Section 1, upon presentation and
surrender of this Warrant Certificate, with the attached Purchase Form duly
executed, at the principal office of the Company at Tulsa, Oklahoma, or at
such other place as the Company may designate by notice to the Holder
hereof, together with a certified or bank cashier's check payable to the
order of the Company in the amount of the Exercise Price times the number
of Preferred Shares being purchased, the Company shall deliver to the
Holder hereof, as promptly as practicable, certificates representing the
Preferred Shares being purchased. This Warrant may be exercised in whole
or in part; and, in case of exercise hereof in part only, the Company, upon
surrender hereof, will deliver to the Holder a new Warrant Certificate or
Warrant Certificates of like tenor entitling the Holder to purchase the
number of Preferred Shares as to which this Warrant has not been exercised.
(b) This Warrant must be exercised on or prior to November 23, 1997
after which time it will be void and of no further force or effect.
2. Rights and Obligations of Warrant Holder.
(a) The Holder of this Warrant Certificate shall not, by virtue
hereof, be entitled to any rights of a shareholder in the Company, either
at law or in equity; provided if any certificate representing the Preferred
Shares is issued to the Holder hereof upon exercise of this Warrant, such
Holder shall, for all purposes, be deemed to have become the holder of
record of such Preferred Shares on the date on which this Warrant
Certificate, together with a duly executed Purchase Form, was surrendered
and payment of the Exercise Price was made, irrespective of the date of
delivery of such Preferred Share certificate. The rights of the Holder of
this Warrant are limited to those expressed herein and the Holder of this
Warrant, by its acceptance hereof, consents to and agrees to be bound by
and to comply with all the provisions of this Warrant Certificate. In
addition, the Holder of this Warrant Certificate, by accepting the same,
agrees that the Company may deem and treat the person in whose name this
Warrant Certificate is registered on the books of the Company maintained
for such purpose as the absolute, true and lawful owner for all purposes
whatsoever, notwithstanding any notation of ownership or other writing
thereon, and the Company shall not be affected by any notice to the
contrary.
(b) No Holder of this Warrant Certificate, as such, shall be entitled
to vote or receive dividends or to be deemed the holder of Preferred Shares
for any purpose, nor shall anything contained in this Warrant Certificate
be construed to confer upon any Holder of this Warrant Certificate, as
such, any of the rights of a shareholder of the Company or any right to
vote, give or withhold consent to any action by the Company, whether upon
any recapitalization, issue of stock, reclassification of stock,
consolidation, merger, conveyance or otherwise, receive notice of meetings
or other action affecting shareholders (except for notices provided for
herein), receive dividends, subscription rights or otherwise, until this
Warrant shall have become exercisable and been exercised and the Preferred
Shares purchasable upon the exercise thereof shall have become deliverable
as provided herein; provided that any such exercise on any date when the
stock transfer books
of the Company shall be closed shall constitute the person or persons in
whose name or names the certificate or certificates for those Preferred
Shares are to be issued as the record holder or holders thereof for all
purposes at the opening of business on the next succeeding day on which
such stock transfer books are open, and the Warrant surrendered shall not
be deemed to have been exercised, in whole or in part as the case may be,
until the next succeeding day on which the stock transfer books are open
for the purpose of determining entitlement to dividends on the Company's
Participating Convertible Series A Preferred stock.
3. Shares Underlying Warrants. The Company covenants and agrees that all
Preferred Shares delivered upon exercise of this Warrant shall, upon delivery
and payment therefor, be duly and validly authorized and issued, fully-paid and
non-assessable, and free from all stamp-taxes, liens, and charges with respect
to the purchase thereof. In addition, the Company agrees at all times to
reserve and keep available an authorized number of Preferred Shares sufficient
to permit the exercise in full of this Warrant.
4. Disposition of Warrants or Preferred Shares. The Holder of this
Warrant Certificate and any transferee hereof or of the Preferred Shares
issuable upon the exercise of this Warrant Certificate, by their acceptance
hereof, hereby understand and agree that the Warrant, and the Preferred Shares
issuable upon the exercise hereof, have not been registered under either the
Securities Act of 1933 (the "Act") or applicable state securities laws (the
"State Acts") and shall not be sold, pledged, hypothecated, donated or otherwise
transferred (whether or not for consideration) except upon the issuance to the
Company of a favorable opinion of counsel and/or submission to the Company of
such evidence as may be satisfactory to counsel for the Company, in each such
case, to the effect that any such transfer shall not be in violation of the Act
and the State Acts. It shall be a condition to the transfer of this Warrant
that any transferee thereof deliver to the Company its written agreement to
accept and be bound by all of the terms and conditions of this Warrant
Certificate.
5. Adjustments.
(a) Stock Dividends. If after the date hereof, the number of
---------------
outstanding shares of the Company's common stock, $.01 par value ("Common
Shares"), is increased by a stock dividend payable in Common Shares or
Preferred Shares or by a split-up of Common Shares, then, on the day
following the date fixed for the determination of holders of Common Shares
entitled to receive such stock dividend or split-up, the number of
Preferred Shares issuable on exercise of the Warrants shall be increased in
proportion to such increase in outstanding Common Shares or Preferred
Shares and the then applicable Exercise Price shall be correspondingly
decreased.
(b) Aggregation of Shares. If after the date hereof, the number of
---------------------
outstanding Common Shares is decreased by a combination or reclassification
of Common Shares, then, after the effective date of such combination or
reclassification, the number of Preferred Shares issuable on exercise of
the Warrants shall be decreased in proportion to such decrease in
outstanding Common Shares and the then applicable Exercise Price shall be
correspondingly increased.
(c) Special Stock Dividend. If after the date hereof, shares of any
----------------------
class of the Company (other than Common Shares) are issued by way of a
stock dividend on outstanding Common Shares then, commencing with the day
following the date fixed for the determination of holders of Common Shares
entitled to receive such stock dividend, in addition to any Preferred
Shares receivable upon exercise of the Warrants, the Holder shall, upon
such exercise of the Warrants, be entitled to receive, as nearly as
practicable, the same number of shares of dividend stock, plus any shares
issued upon any subsequent change, replacement, subdivision or combination
thereof to which the holders would have been entitled had their Warrants
been exercised immediately prior to such stock dividend.
(d) Issuance of Shares Below Market. If on a date after the date
-------------------------------
hereof ("New Issue") the Company issues and sells Common Shares, Preferred
Shares, or a combination thereof at a price per share less than the market
price per Common Share (determined as provided in the following paragraph)
on the New Issue Date, the Exercise Price in effect at the opening of
business on the day following such issuance and sale shall be adjusted by
multiplying such Exercise Price by a fraction of which (i) the numerator
shall be the aggregate number of Common Shares and Preferred Shares
outstanding at the close of business on the New Issue Date plus the number
of Common Shares which the aggregate of the offering price of the total
number of Common Shares, Preferred Shares, or combination thereof so issued
and sold would purchase at such current market price, and (ii) the
denominator shall be the aggregate number of Common Shares and Preferred
Shares outstanding at the close of business on the New Issue Date plus the
number of Common Shares, Preferred Shares, or combination thereof so
offered and sold, such adjustment to become effective immediately after the
opening of business on the day following the date, and contingent upon the
actual occurrence, of such issuance and sale.
For purposes of the preceding paragraph, the "market price per Common
Share" shall be the average of the daily closing prices for any period of
five to ten consecutive business days selected by the Company commencing
not more than 20 business days before the day in question. "Business day"
means any Monday, Tuesday, Wednesday, Thursday and Friday other than any
day on which securities are not traded on the principal exchange or
principal market through which Common Shares are traded. The closing price
for each such day shall be the last reported sales price, regular way, or,
in
2
case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices, regular way, in either case on the
New York Stock Exchange, Inc. or, if the Common Shares are not listed or
admitted to trading on such Exchange, on the principal national securities
exchange on which the Common Shares are listed or admitted to trading or,
if not listed or admitted to trading on any national securities exchange,
on the NASDAQ Stock Market, Inc. National Market or, if the Common Shares
are not listed or admitted to trading on any national securities exchange
or quoted on such National Market, the fair market value as determined in
good faith by the board of directors of the Company, whose determination
shall, absent demonstrable error, be conclusive.
(e) Reorganization. If after the date hereof any capital
--------------
reorganization or reclassification of the Common Shares, or consolidation
or merger of the Company with another Corporation, or the sale of all or
substantially all of its assets to another corporation shall be effected,
then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, lawful and fair provisions shall be made
whereby the Holders shall thereafter have the right to purchase and receive
in lieu of the Preferred Shares immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby, such shares
of stock, securities or assets as may be issued or payable with respect to
or in exchange for a number of outstanding Common Shares equal to the
number of Preferred Shares immediately theretofore purchasable and
receivable upon the exercise of the rights represented by the Warrants had
such reorganization, reclassification, consolidation, merger or sale not
taken place and in any such case appropriate provisions shall be made with
respect to the rights and interests of the Holders to the end that the
provisions hereof (including, without limitation, provisions for
adjustments of the Exercise Price and the number of Preferred Shares
purchasable upon the exercise of the Warrants) shall thereafter be
applicable as nearly as may be in relation to any share of stock,
securities, or assets thereafter deliverable upon the exercise hereof. The
Company shall not effect any such consolidation, merger or sale unless
prior to the consummation thereof the successor corporation (if other than
the Company) resulting from such consolidation or merger, or the
corporation purchasing such assets, shall assume by written instrument
executed and delivered to the Holders the obligation to deliver to the
Holders such shares of stock, securities or assets as, in accordance with
the foregoing provisions, such holders may be entitled to purchase.
(f) Notice to Warrant Holders of Adjustment. Whenever the number of
---------------------------------------
Preferred Shares purchasable or the Exercise Price hereunder is adjusted as
herein provided, the Company shall cause to be mailed to the Holder in
accordance with the provisions of this Section a notice (i) stating that
the number of Preferred Shares purchasable upon exercise or the Exercise
Price of this Warrant has been adjusted, (ii) setting forth the adjusted
number of Preferred Shares purchasable upon the exercise of this Warrant or
the adjusted Exercise Price, and (iii) showing in reasonable detail the
computations and the facts, including the amount of consideration received
or deemed to have been received by the Company, upon which such adjustments
are based.
6. Loss or Destruction. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant
Certificate and, in the case of any such loss, theft or destruction, upon
delivery of an indemnity agreement or bond satisfactory in form, substance and
amount to the Company or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant Certificate, the Company at its expense will
execute and deliver, in lieu thereof, a new Warrant Certificate of like tenor.
7. Survival. The various rights and obligations of the Holder hereof as
set forth herein shall survive the exercise of the Warrants represented hereby
and the surrender of this Warrant Certificate.
8. Notices. Whenever any notice, payment of any purchase price, or other
communication is required to be given or delivered under the terms of this
Warrant, it shall be in writing and delivered by hand delivery or United States
registered or certified mail, return receipt requested, postage prepaid, and
will be deemed to have been given or delivered on the date such notice, purchase
price or other communication is so delivered or posted, as the case may be; and,
if to the Company, it will be addressed as follows:
C.I.S. Technologies, Inc.
6100 South Yale, Suite 1900
Tulsa, Oklahoma 74136
and if to the Holder, it will be addressed to the registered Holder at his
address as it appears on the books of the Company.
9. GOVERNING LAW; JURISDICTION. THIS WARRANT CERTIFICATE SHALL BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK. THE COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL
COURTS LOCATED IN NEW YORK, NEW YORK, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR
AND DETERMINE ANY CLAIMS OR DISPUTES PERTAINING TO THIS WARRANT CERTIFICATE;
PROVIDED, THAT THE COMPANY AND THE PURCHASER ACKNOWLEDGE THAT ANY APPEALS FROM
THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK, NEW
YORK; AND FURTHER PROVIDED, THAT NOTHING IN THIS WARRANT CERTIFICATE SHALL BE
DEEMED OR OPERATE TO PRECLUDE THE HOLDER FROM BRINGING SUIT OR
3
TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION OR TO ENFORCE A JUDGMENT OR
OTHER COURT ORDER IN FAVOR OF THE HOLDER. THE COMPANY EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY
SUCH COURT AND THE COMPANY HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED
UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND
HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. THE COMPANY HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE COMPANY AT THE ADDRESS SET FORTH
IN SECTION 8 OF THIS WARRANT CERTIFICATE AND THAT SERVICE SO MADE SHALL BE
DEEMED COMPLETED UPON THE EARLIER OF THE COMPANY'S ACTUAL RECEIPT THEREOF OR
THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
DATED: November 23, 1994
C.I.S. TECHNOLOGIES, INC.
ATTEST:
By _____________________________
____________________________ Title:__________________________
___________ Secretary
4
PURCHASE FORM
__________________________
Date
TO: C.I.S. TECHNOLOGIES, INC.
The undersigned hereby irrevocably elects to exercise the attached Warrant
Certificate to the extent of ___________ shares of the Series A Participating
Convertible Preferred Stock, $0.01 par value, of C.I.S. Technologies, Inc. and
hereby makes payment of $____________ in accordance with the provisions of
Section 1 of the Warrant Certificate in payment of the purchase price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name:_____________________________________________________________
(Please typewrite or print in block letters)
Address:__________________________________________________________
__________________________________________________________
Soc. Sec. or Employer I.D. No. ___________________________________
_______________________________
By:____________________________
tgn\agms\war-fin.bt