Exhibit 4.2
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). THIS SUBSCRIPTION AGREEMENT SHALL NOT
CONSTI-TUTE AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE
SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL. THE SECURITIES ARE "RESTRICTED" AND MAY NOT BE RESOLD OR TRANSFERRED
EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM.
8% CONVERTIBLE PREFERRED STOCK
SUBSCRIPTION AGREEMENT
CONSILIUM, INC.
THIS AGREEMENT is executed in reliance upon the transaction exemption
afforded by Regulation D as promulgated by the Securities and Exchange
Commission ("SEC"), under the Securities Act of 1933, as amended (the "Act").
This Agreement has been executed by the undersigned in connection with
the private placement of the Convertible Preferred Stock Series A (hereinafter
referred to as the "Preferred Stock") of CONSILIUM, INC. (NASDAQ National Market
System symbol "CSIM"), located at 000 Xxxxx Xxxxxx, Xxxxxxxx Xxxx, XX 00000, a
corporation organized under the laws of Delaware, USA (hereinafter referred to
as the "Company"). The terms on which the Preferred Stock may be converted into
Common Stock and the other terms of the Preferred Stock are set forth in the
Certificate of Designation of the Convertible Preferred Stock Series A (Exhibit
A annexed hereto). This Subscription and, if accepted by the Company, the offer
and sale of the Preferred Stock and the underlying Common Stock (collectively
the "Securities"), are being made in reliance upon the provisions of Regulation
D under the Act.
The undersigned, ______________________________, located at
____________ __________________________, a corporation (limited liability
company) organized under the laws of _______ (hereinafter referred to as
"Subscriber"), hereby represents and warrants to, and agrees with the Company as
follows:
1. Agreement to Subscribe; Purchase Price.
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(a) The Company will sell and the Subscriber will buy ___________
(___) shares of Preferred Stock for an aggregate purchase price of
____________________ ($_______) (U.S.) Dollars based on U.S.$1,000 per share.
The shares shall pay an eight (8%) percent cumulative dividend, payable in cash
or Common Stock (based on the average closing bid price for the five (5) trading
days prior to the record date) at the discretion of the Company at the time of
each conversion.
(b) Form of Payment. Subscriber shall pay the Purchase Price by
---------------
delivering good funds in United States Dollars by wire transfer to Xxxxxxx X.
Xxxxxxxxx, P.C., Escrow Agent, in accordance with a separate Escrow Agreement
(Attachment I), against delivery of the original Preferred Stock.
(c) Wire Instructions. Wire instructions for Xxxxxxx X. Xxxxxxxxx,
-----------------
P.C. are as follows:
Chase Manhattan Bank, N.A.
ABA No. 000000000
For the Account of:
United States Trust Company of New York
Account No. 000-0-000000
In favor of:
Xxxxxxx X. Xxxxxxxxx, P.C. Attorney Trust Account
Account No. 59-02347
2. Representation and Warranties of the Subscriber. Subscriber
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acknowledges, represents, warrants and agrees as follows:
(a) Organization and Authorization. Subscriber is duly incorporated
------------------------------
or organized and validly existing in the country of its incorporation or
organization and has all requisite power and authority to purchase and hold the
Securities. The decision to invest and the execution and delivery of this
Agreement by the Subscriber, the performance by the Subscriber of its
obligations hereunder and the consummation by the Subscriber of the transactions
contemplated hereby have been duly authorized and requires no other proceedings
on the part of the Subscriber. The Undersigned's signatory has all right, power
and authority to execute and deliver this Agreement on behalf of the Subscriber.
This Agreement has been duly executed and delivered by the Subscriber and,
assuming the execution and delivery hereof and acceptance thereof by the
Company, will constitute the legal, valid and binding obligations of the
Subscriber, enforceable against the Subscriber in accordance with its terms and
the Subscriber can afford the complete loss of Subscriber's investment.
(b) Evaluation of Risks. Subscriber has such knowledge and experience
-------------------
in financial and business matters as to be capable of evaluating the merits and
risks of, and bearing the economic risks entailed by, an investment in the
Company and of protecting its interests in connection with this transaction. It
recognizes that its investment in the Company involves a high degree of risk and
the Subscriber can afford the complete loss of Subscriber's investment.
(c) Independent Counsel. Subscriber acknowledges that it has been
-------------------
advised to consult with its own attorney regarding legal matters concerning the
Company and to consult with its tax advisor regarding the tax consequences of
acquiring the Securities.
2
(d) Disclosure Documentation. Subscriber has received and reviewed
------------------------
copies of the Company's reports filed under the Securities Exchange Act of 1934,
as amended (the "1934 Act"), including its December 31, 1996 Form 10-K and its
January 31, 1997 and April 30, 1997 Form 10-Q's (collectively, the "SEC
Filings"). Subscriber acknowledges that the Company has offered to make
available any additional public information that the Subscriber may reasonably
request, including technical information, and other material information about
the Company and Subscriber has been offered Company's full and unconditional
cooperation in making such information available to Subscriber and acknowledges
that the Company has recommended that the Subscriber request and review such
information prior to making an investment decision. No oral or written
representations have been made, or oral or written information furnished to the
undersigned or its advisors, if any, in connection with the offering of the
Securities which were or are in any way inconsistent with the SEC Filings.
(e) Opportunity to Ask Questions. Subscriber has had a reasonable
----------------------------
opportunity to ask questions of and receive answers from the Company concerning
the Company and the offering, and all such questions, if any, have been answered
to the full satisfaction of Subscriber.
(f) SEC Filings Constitute Sole Representations. Except as set forth
-------------------------------------------
in the SEC Filings, no representations or warranties have been made to
Subscriber by (a) the Company or any agent, employee or affiliate of the Company
or (b) any other person, and in entering into this transaction Subscriber is not
relying upon any information, other than that contained in the SEC Filings and
the results of independent investigation by Subscriber.
(g) Subscriber is Accredited Investor. The undersigned is an
---------------------------------
"Accredited Investor" as defined below who represents and warrants it is
included within one or more of the following categories of "Accredited
Investors."
(i) Any bank as defined in Section 3(a)(2) of the Act, or any
savings and loan associated or other institution as defined in Section
3(a)(5)A of the Act whether acting in it individual or fiduciary capacity;
any broker or dealer registered pursuant to Section 15 of the 1934 Act; any
insurance company as defined in Section 2(13) of the Act; any investment
company registered under the Investment Company Act of 1940 or a business
development company as defined in Section 2(a)(48) of that Act; any Small
Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Act of
1958; any plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its political
subdivision, for the benefits of its employees if such plan has total
assets in excess of $5,000,000; and employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act of 1974
if the investment decision is made by a plan fiduciary, as defined in
Section 3(21) of such Act, which is either a bank, savings and loan
association, insurance company, or registered investment advisor, or if the
employee benefit plan has total assets in excess of $5,000,000 or, if a
self-directed plan, with investment decisions made solely by persons that
are accredited investors;
3
(ii) Any private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940;
(iii) Any organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of acquiring the
securities offered, with total assets in excess of $5,000,000;
(iv) Any director, executive officer, or general partner of
the issuer of the securities being offered or sold, or any director,
executive officer, or general partner of a general partner of that issuer;
(v) Any natural person whose individual net worth, or joint
net worth with that person's spouse, at the time of his purchase exceeds
$1,000,000;
(vi) Any natural person who had an individual income in excess
of $200,000 in each of the two (2) most recent years or joint income with
that person's spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching that same income level in the current
year;
(vii) Any trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the securities offered, whose
purchase is directed by a sophisticated person as described in Section
230.506(b)(2)(ii);
(viii) Any entity in which all of the equity owners are
accredited investors; and
(ix) Any self-directed employee benefit plan with investment
decisions made solely by persons that are accredited investors within the
meaning of Rule 501 of Regulation D promulgated under the Act.
(h) No Registration, Review or Approval. Subscriber acknowledges and
-----------------------------------
understands that the limited private offering and sale of Securities pursuant to
this Agreement has not been reviewed or approved by the SEC or by any state
securities commission, authority or agency, and is not registered under the Act
or under the securities or "blue sky" laws, rules or regulations of any state.
Subscriber acknowledges, understands and agrees that the Securities are being
offered and sold hereunder pursuant to (i) a private placement exemption to the
registration provisions of the Act pursuant to Section 3(b) or Section 4(2) of
such Act and Regulation D promulgated under such Act, and (ii) a similar
exemption to the registration provisions of applicable state securities laws.
Subscriber understands that the Company is relying upon the truth and accuracy
of the representations, warranties, agreements, acknowledgments and
understandings of Subscriber set forth herein in order to determine the
applicability of such exemptions and the suitability of Subscriber to acquire
the Securities.
4
(i) Investment Intent. Without limiting its ability to resell the
-----------------
Securities pursuant to an effective registration statement, Subscriber is
acquiring the Securities solely for its own account and not with a view to the
distribution, assignment or resale to others. Subscriber understands and agrees
that it may bear the economic risk of its investment in the Securities for an
indefinite period of time.
(j) Transfer Restrictions/Conversion Holding Period/Conversion Price.
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Refer to Certificate of Designation (Exhibit A).
(k) Registration Rights. The parties have entered into a Registration
-------------------
Rights Agreement (Attachment II).
(l) No Advertisements. The Subscriber is not subscribing for
-----------------
Securities as a result of or subsequent to any advertisement, article, notice or
other communication published in any newspaper, magazine, or similar media or
broadcast over television or radio, or presented at any seminar or meeting.
(m) Capitalization. The authorized capital stock of the Company
--------------
consists of 25,000,000 Shares of Common Stock, $.01 par value, of which
8,018,291 shares of Common Stock have been issued as of April 30, 1997, and
4,000,000 Shares of Preferred Stock, $.01 par value, of which 3,000 Shares have
been designated Series A Non-Voting Convertible Preferred Stock, $.01 par value.
All issued and outstanding shares of Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable. The Company has reserved
from its authorized but unissued shares of Common Stock a sufficient number of
shares of Common Stock to permit the conversion in full of the outstanding
Shares. As of the Closing Date, the Company has reserved sufficient shares of
Common Stock for issuance upon exercise of the Shares which are convertible, at
Purchaser's option, at the Conversion Price, as per the Certificate of
Designation.
3. Representations and Warranties of the Company. For so long as any
---------------------------------------------
Securities held by Subscriber remains outstanding, the Company acknowledges,
represents, warrants and agrees as follows:
(a) Organization and Authorization. The Company is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own and operate
its properties and assets and to carry on its business as currently conducted.
The Company is not in default or violation of any material term or provision of
its Certificate of Incorporation, as amended, or By-laws nor will the
consummation of the transactions contemplated by this Agreement cause any such
default or violation. The Company has all requisite corporate power and
authority to enter into this Agreement, to sell the Securities hereunder and to
carry out and perform its obligations under the terms of this Agreement. This
Agreement is a valid and binding obligation of the Company, enforceable in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
effecting the rights of creditors generally and available equitable remedies.
5
(b) Reporting Issuer Company Status. The Company is in full
-------------------------------
compliance, to the extent applicable, with all reporting obligations under
either Section 12(b), 12(g) or 15(d) of the 1934, and shall use its best efforts
to maintain such status on a timely basis. The Company has registered its
Common Stock pursuant to Section 12 of the 1934 Act and the Common Stock trades
on the NASDAQ National Market System.
The Company has filed all material required to be filed pursuant to
all reporting obligations, under either Section 13(a) or 15(d) of the Exchange
Act for a period of at least twelve (12) months immediately preceding the offer
to sell the Shares (or for such shorter period that the Company has been
required to file such material).
(c) Further Representations and Warranties of the Company. For so
-----------------------------------------------------
long as any Securities held by the Subscriber remain outstanding, the Company
acknowledges, represents, warrants and agrees as follows:
(i) It will reserve from its authorized but unissued shares of
Common Stock a sufficient number of shares of Common Stock to permit the
conversion in full of the outstanding Securities.
(ii) It will use its best efforts to maintain the listing of its
Common Stock on the NASDAQ National Market System.
(iii) It will permit the Subscriber to exercise its right to
convert the Preferred Stock by telecopying an executed and completed Notice
of Conversion (Exhibit B annexed hereto) to the Company and delivering the
original Notice of Conversion and the certificate representing the
Preferred Stock to the Company by express courier. Each business date on
which a Notice of Conversion is telecopied to and received by the Company
in accordance with the provisions hereof shall be deemed a conversion date.
The Company will use its best efforts to transmit the certificates
representing shares of Common Stock issuable upon conversion of any
Preferred Stock (together with the certificates representing the Preferred
Stock not so converted) to the Subscriber via express courier, by
electronic transfer or otherwise within three business days after the
conversion date if the Company has received the original Notice of
Conversion and Preferred Stock certificate being so converted by such date.
In addition to any other remedies which may be available to the Subscriber,
in the event that the Company fails to use its best efforts to effect
delivery of such shares of Common Stock within such three business day
period, the Subscriber will be entitled to revoke the relevant Notice of
Conversion by delivering a notice to such effect to the Company whereupon
the Company and the Subscriber shall each be restored to their respective
positions immediately prior to delivery of such Notice of Conversion. The
Notice of Conversion and Preferred Stock representing the portion of the
Shares converted shall be delivered as follows:
6
To the Company:
Consilium, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxx, Esq.
Fax: (000) 000-0000
In the event that the Common Stock issuable upon conversion of the
Preferred Stock is not delivered, as a direct result of the negligence or action
or inaction of the Company only, within ten (10) business days of receipt by the
Company of a valid Conversion Notice and the Preferred Stock to be converted
(such date of receipt referred to as the "Conversion Date"), and (i) the closing
price of the Common Stock of the Company on the NASDAQ National Market on the
date the Common Stock issuable upon conversion of the Preferred Stock is
delivered to the Purchaser (the "Delivery Date") is lower than the Conversion
Price, or (ii) the Delivery Date is not within fifteen (15) business days of the
Conversion Date, the Company shall pay to the Purchaser, in immediately
available funds, upon demand, as liquidated damages for such failure and not as
a penalty, for each $100,000 of Preferred Stock sought to be converted, $500 for
each of the first ten (10) days and $1,000 per day thereafter that the
Conversion Shares are not delivered, which liquidated damages shall run from the
tenth of fifteenth business day after the Conversion Date. Any and all payments
required pursuant to this paragraph shall be payable only in shares of Common
Stock based on the average closing bid price for the five (5) trading days prior
to the Conversion Date and not in cash. The number of such shares shall be
determined by dividing the total sum payable by the Conversion Price.
(d) SEC Filings. None of the Company's filings with the Securities
-----------
and Exchange Commission since December 31, 1996 contains any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statement therein in light of the circumstances under
which they were made, not misleading. To the best of its knowledge, the Company
has since December 31, 1996 timely filed all requisite forms, reports and
exhibits thereto with the Securities and Exchange Commission, except for the
timely filing of Forms 3, 4 and 5 under Section 16 of the Securities and
Exchange Act.
(e) Full Disclosure. There is no fact known to the Company (other
---------------
than general economic conditions known to the public generally) that has not
been disclosed in writing to the Subscriber that (i) could reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise) or in the earnings, business affairs, business prospects, properties
or assets of the Company, or (ii) could reasonably be expected to materially and
adversely affect the ability of the Company to perform its obligations pursuant
to this Agreement.
(f) Opinion of Counsel. The Company shall have their counsel, or the
------------------
Company's general counsel, as applicable, provide, at the Company's expense, an
opinion of counsel acceptable to the transfer agent (if required) upon
conversion of the Convertible Preferred Stock, upon receipt of Notice of
Conversion from each Subscriber.
7
Subscriber shall, upon the Closing, receive an opinion letter from
counsel to the Company to the effect that:
(i) The Company is duly incorporated and validly existing and
in good standing under the laws and jurisdiction of its incorporation.
(ii) Except as set forth in the SEC Filings, to Counsels'
knowledge during the time he has served as counsel to the Company, without
an independent investigation, there is no litigation filed against the
Company currently pending.
(iii) Except as set forth in the SEC Filings and Annual Report,
to Counsels' knowledge, without an independent investigation, the Company
is not a party to or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality.
(iv) To Counsels' knowledge, without an independent
investigation, there is no litigation filed by the Company currently
pending.
(v) The Subscription Agreement, the issuance of the Preferred
Stock and the issuance of Common Stock, upon conversion of the Preferred
Stock, have been duly approved by all required corporate action and that
all such securities, upon delivery, in accordance with the terms of this
Agreement shall be validly issued and outstanding, fully paid and
nonassessable.
(vi) To Counsel's knowledge, without an independent
investigation, the execution and delivery of the Subscription Agreement,
the issuance of the Preferred Stock and the issuance of Common Stock upon
conversion of the Preferred Stock, do not and will not conflict with or
result in a material breach by the Company of any of the terms or
provisions of, or constitute a material default under the articles of
incorporation or by-laws of the Company, or any of the contracts filed as
Exhibits 10.1 through 10.22 to the Company's most recently filed Report on
Form 10-Q.
(g) That it will obtain for the Subscriber, at the Company's expense,
any and all opinions of counsel which may be reasonably required in order to
convert the Preferred Stock.
(h) Outstanding Debt or Equity Securities. Except as described in
-------------------------------------
the Company's SEC Filings for the 1991-1996 fiscal years, and in press releases
issued and Form 8-Ks filed by the Company since the end of the 1996 fiscal year,
and options and warrants to purchase Common Stock of the Company, there are no
other material outstanding debt or equity securities presently convertible into
shares of Common Stock. Except as described in the Company's SEC Filings, the
Company has no outstanding restricted shares of Common Stock, or
8
shares of Common Stock sold under Regulation S or Regulation D under
the Act or outstanding under any other exemption from registration, which are
available for sale as unrestricted free trading stock.
(i) Rule 144 Reporting. With a view to making available the benefits
------------------
of certain rules and regulations of the SEC which may at any time permit the
sale of the Securities to the public without registration, the Company agrees to
use its best efforts to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Act, at all times after the
effective date on which the Company becomes subject to the reporting
requirements of the Act or the Exchange Act;
(b) use its best efforts to file with the SEC in a timely manner
all reports and other documents required of the Company under the Act and the
1934 Act;
(c) to furnish to Purchaser forthwith upon request a written
statement by the Company as to its compliance with the reporting requirements of
said Rule 144, and of the Act and the 1934 Act, a copy of the most recent annual
or quarterly report of the Company, and such other reports and documents of the
Company and other information in the possession of or reasonably obtainable by
the Company as Purchaser may reasonably request in availing itself of any rule
or regulation of the SEC allowing Purchaser to sell any such Securities without
registration.
(j) No Conflict. The execution and delivery of this Agreement do not,
-----------
and the consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or default (with or without notice or lapse
of time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or to a loss of a material benefit, under, any
provision of the Articles of Incorporation, and any amendments thereto, Bylaws,
Stockholders Agreements and any amendments thereto of the Company or any
material mortgage, indenture, lease or other agreement or instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company, its properties or
assets.
(k) Use of Proceeds. The Company represents that the net proceeds
---------------
from this offer will be used for working capital.
(l) Dilution. The Company is aware and acknowledges that conversion
--------
of the Preferred Stock could cause dilution to existing shareholders and could
significantly increase the outstanding number of shares of Common Stock, up to a
maximum of 1,595,639 shares.
(m) Stock Issuance. The Preferred Stock which shall be issued at the
--------------
closing is properly issued under the Company's state of incorporation and all
issued and outstanding shares of Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable.
9
4. Representations and Warranties of the Company and Subscriber.
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Each of Subscriber and the Company represent to the other the following with
respect to itself:
(a) Subscription Agreement. The Subscription Agreement has been duly
----------------------
authorized, validly executed and delivered on behalf of the Company and
Subscriber and is a valid and binding agreement in accordance with its terms,
subject to general principles of equity and to bankruptcy or other laws
affecting the enforcement of creditors' rights generally.
(b) Approvals. Neither the Company nor Subscriber is aware of any
---------
authorization, approval or consent of any governmental body which is legally
required for the issuance and sale of the Securities.
(c) Indemnification. Each of the Company and the Subscriber agrees to
---------------
indemnify the other and to hold the other harmless from and against any and all
losses, damages, liabilities, costs and expenses (including reasonable
attorneys' fees) which the other may sustain or incur in connection with the
breach by the indemnifying party of any representation, warranty or covenant
made by it in this Agreement.
5. Restrictions on Conversion of Preferred Stock. The Subscriber or
---------------------------------------------
any subsequent holder of the Preferred Stock (the "Holder") shall be prohibited
from converting any portion of the Preferred Stock which would result in the
Subscriber or the Holder being deemed the beneficial owner, in accordance with
the provisions of Rule 13d-3 of the 1934 Act, as amended, of 4.99% or more of
the then issued and outstanding Common Stock of the Company, and notwithstanding
any other provisions in this Agreement, the Holder's Securities, when aggregated
with all securities issued and sold by the Company in connection herewith shall
in no event be convertible into more than 1,595,639 shares of Common Stock.
6. Registration or Exemption Requirements. Subscriber acknowledges
--------------------------------------
and understands that the Securities may not be resold or otherwise transferred
except in a transaction registered under the Act and any applicable state
securities laws or unless an exemption from such registration is available.
Subscriber understands that the Securities will be imprinted with a legend that
prohibits the transfer of the Securities unless (i) they are registered or such
registration is not required, and (ii) if the transfer is pursuant to an
exemption from registration other than Rule 144 under the Act and, if the
Company shall so request in writing, an opinion of counsel reasonably
satisfactory to the Company is obtained to the effect that the transaction is so
exempt.
7. Legend. The certificates representing the Securities shall be
------
subject to a legend restricting transfer under the Act, such legend to be
substantially as follows:
"THESE SECURITIES HAS BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). SUCH
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT WHICH, EXCEPT IN THE
CASE
10
OF AN EXEMPTION PURSUANT TO RULE 144 UNDER SAID ACT, IS CONFIRMED IN A
LEGAL OPINION SATISFACTORY TO THE COMPANY."
The Securities shall also include any legends required by any applicable state
securities laws.
The legend(s) shall be removed and the Company shall issue replacement
certificates without such legend to the holder of such certificates if such
holder provides to the Company an opinion of counsel reasonably acceptable to
the Company, to the effect that a public sale, transfer or assignment of such
Securities may be made without registration.
8. Stock Delivery Instructions. The Preferred Stock Certificate
---------------------------
shall be delivered to Subscriber on a delivery versus payment basis as set forth
in the Escrow Agreement.
9. Closing Date. The date of the issuance of the Preferred Stock
------------
(the "Closing Date") shall be mutually agreed upon as to time and place.
10. Conditions to the Company's Obligation to Sell. Subscriber
----------------------------------------------
understands that the Company's obligation to sell the Convertible Preferred
Stock are conditioned upon:
(a) The receipt and acceptance by the Company of this Subscription
Agreement for all of the Convertible Preferred Stock as evidenced by execution
of this Subscription Agreement by the President or any Vice President of the
Company; and
(b) Delivery into escrow by Subscriber of good cleared funds as
payment in full for the purchase of the Preferred Stock, and written
notification to the Company by the Escrow Agent of receipt of payment in full
for the Convertible Preferred Stock;
(c) All representations and warranties of the Subscriber shall remain
true and correct as of the Closing Date; and
(d) The Company receives a minimum investment of $2 million on the
sale of Preferred Stock.
11. Conditions to Subscriber's Obligation to Purchase. The Company
-------------------------------------------------
understands that Subscriber's obligation to purchase the Convertible Preferred
Stock is conditioned upon:
(a) Acceptance by Subscriber of a satisfactory Subscription
Agreement, including Exhibits and Attachments, for the sale of the Convertible
Preferred Stock;
(b) Delivery of the Convertible Preferred Stock;
(c) All representations and warranties of the Company shall remain
true and correct as of the Closing Date;
11
(d) Receipt of opinion of counsel and filed Certificate of
Designation.
12. Miscellaneous.
-------------
(a) Governing Law/Jurisdiction. This Agreement will be construed and
--------------------------
enforced in accordance with and governed by the laws of the State of New York,
except for matters arising under the Act, without reference to principles of
conflicts of law. Each of the parties consents to the jurisdiction of the
federal courts whose districts encompass any part of the State of New York or
the state courts of the State of New York in connection with any dispute arising
under this Agreement and hereby waives, to the maximum extent permitted by law,
any objection, including any objection based on forum non conveniens, to the
----- --- ----------
bringing of any such proceeding in such jurisdictions. Each party hereby agrees
that if another party to this Agreement obtains a judgment against it in such a
proceeding, the party which obtained such judgment may enforce same by summary
judgment in the courts of any country having jurisdiction over the party against
whom such judgment was obtained, and each party hereby waives any defenses
available to it under local law and agrees to the enforcement of such a
judgment. Each party to this Agreement irrevocably consents to the service of
process in any such proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to such party at its address set forth herein.
Nothing herein shall affect the right of any party to serve process in any other
manner permitted by law.
(b) Confidentiality. If for any reason the transactions contemplated
---------------
by this Agreement are not consummated, each of the parties hereto shall keep
confidential any information obtained from any other party (except information
publicly available or in such party's domain prior to the date hereof, and
except as required by court order) and shall promptly return to the other
parties all schedules, documents, instruments, work papers or other written
information, without retaining copies thereof, previously furnished by it as a
result of this Agreement or in connection herewith.
(c) Facsimile/Counterparts/Entire Agreement. In lieu of the original,
---------------------------------------
a facsimile transmission or copy of the original shall be as effective and
enforceable as the original. This Agreement may be executed in counterparts
which shall be considered an original document and which together shall be
considered a complete document. This Agreement and Exhibits hereto constitute
the entire agreement between the Subscriber and the Company with respect to the
subject matter hereof. This Agreement may be amended only by a writing executed
by both of them.
(d) Severability. In the event that any provision of this Agreement
------------
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
(e) Fees. The Company acknowledges that the Purchasers shall have no
----
responsibility for the payment of any of the Company's fees in connection with
this offering.
12
IN WITNESS WHEREOF, this Subscription Agreement was duly executed on
the date first written below.
PURCHASER:
--------------------------------------
By
------------------------------------
Officer:
Title:
Executed this ____ day of August, 1997
Agreed to and Accepted on
this ____ day of August 1997
CONSILIUM, INC.
By
--------------------------------
Title:
13
FULL NAME AND ADDRESS OF SUBSCRIBER FOR REGISTRATION PURPOSES:
NAME:
ADDRESS:
TEL NO:
FAX NO:
CONTACT
NAME:
DELIVERY INSTRUCTIONS (IF DIFFERENT FROM REGISTRATION NAME):
NAME:
ADDRESS:
TEL NO:
FAX NO:
CONTACT
NAME:
SPECIAL
INSTRUCTIONS:
-----------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
14
EXHIBIT A
CERTIFICATE OF DESIGNATION
of
SERIES A CONVERTIBLE PREFERRED STOCK
of
CONSILIUM, INC.
(Pursuant to Section 151 of the Delaware General Corporation Law)
CONSILIUM, INC., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), hereby
certifies that the following resolutions were adopted by the Board of Directors
of the Corporation as required by Section 151 of the General Corporation Law by
unanimous written consent of the Board of Directors dated August 15, 1997:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (the "Board") in accordance with the
provisions of the Certificate of Incorporation, the Board hereby creates a
series of preferred stock of the Corporation, par value $.01 per share (the
"Preferred Stock"), and hereby states the designation and number of shares, and
fixes the relative rights, preferences, and limitations thereof as follows:
Section 1. Designation and Amount. The shares of such series shall
----------------------
be designated as "Series A Convertible Preferred Stock" (the "Series A Preferred
Stock") and the number of shares constituting the Series A Preferred Stock shall
be three thousand (3,000). Such number of shares may be increased or decreased
by resolution of the Board; provided, however, no decrease shall reduce the
number of shares of Series A Preferred Stock to a number less than the number of
shares then outstanding plus the number of shares reserved for issuance upon the
exercise of outstanding options, rights, or warrants for, or upon the conversion
of any outstanding securities issued by the Corporation convertible into Series
A Preferred Stock.
Section 2. Dividends.
---------
a. Subject to the limitations set forth below, the holders of the
Series A Preferred Stock shall be entitled to receive, from funds of the
Corporation legally available therefor pursuant to the General Corporation Law
of the State of Delaware (the "Legally Available Funds"), a cumulative dividend
of $80 per annum on each share of Series A Preferred Stock ratably for the
period that such share of the Series A Preferred Stock is outstanding (the
"Period").
b. Subject to the limitations set forth herein and by applicable
state law, dividends on each share of Series A Preferred Stock shall be due and
payable on or before the fifth business day following the Conversion Date (as
defined below) with respect to such share or the Anniversary Date (as defined
below), whichever is applicable, and shall paid to the holder of record of such
share as such holder appears on the stock register of the Corporation on the
Conversion Date or the Anniversary Date, whichever is applicable.
c. Dividends on shares of Series A Preferred Stock shall be fully
cumulative and shall accrue without regard to whether or not such dividends have
been declared and whether or not there are any Legally Available Funds available
for the payment of dividends.
d. Dividends on the shares of Series A Preferred Stock shall be
payable in cash, common stock of the Corporation, $0.01 par value per share (the
"Common Stock"), or any combination thereof, as determined by the Board. Any
Common Stock so issued as a dividend shall be deemed to have a value equal to
the average of the closing bid prices of the Common Stock as reported on the
National Association of Securities Dealers Automated Quotation System ("NASDAQ")
(or on the principal national securities exchange on which the Common Stock is
admitted to trading or listed or, if not listed or admitted to trading on NASDAQ
or a national securities exchange, as reported by the National Quotation Bureau,
Inc. or other similar organization ("Other Exchanges") ) for the five (5)
trading days immediately prior to the date such dividend is payable.
e. No share of Series A Preferred Stock shall be entitled to
participate with respect to any dividend (in any form) declared, accrued, or
paid on any other class, or series thereof, of the capital stock of the
Corporation.
Section 3. Conversion.
----------
a. The holder of any share or shares of Series A Preferred Stock
shall have the right, without the payment of any additional consideration, to
convert any share of Series A Preferred Stock held by such holder into that
number of fully paid and non-assessable shares of Common Stock as is determined
by dividing $1,000 by the Conversion Price using the following Conversion
Schedule:
Six (6) months from the Closing Date holders shall have the right to
convert twenty five (25%) percent of their total outstanding position, only if
the Closing Price reported on NASDAQ or Other Exchanges is five ($5.00) dollars
or above, at a fifteen (15%) percent discount from the Average Bid Price of the
five (5) trading days prior to the Conversion Date; provided, however, the
Company shall not be obligated to convert an aggregate number of Shares of
Series A Preferred Stock greater than twenty-five (25%) percent of the number of
designated shares of Series A Preferred Stock.
Nine (9) months from the Closing Date holders shall have the right to
convert an additional twenty-five (25%) percent of its total outstanding
position, only if the Closing Price reported on NASDAQ or Other Exchange is five
($5.00) dollars or above, at a seventeen (17%)
2
percent discount from the Average Bid Price of the five (5) trading days prior
to the Conversion Date; provided, however, the Company shall not be obligated to
convert an aggregate number of Shares of Series A Preferred Stock greater than
fifty (50%) percent of the number of designated shares of Series A Preferred
Stock.
One (1) year from the Closing Date the holder shall have right to
convert any unconverted Preferred Stock at an eighteen (18%) percent discount
from the five (5) day Average Bid Price prior to the Conversion Date.
As used herein, the Conversion Price shall mean a price equal to the
above discount from the Average Bid Price (as hereinafter defined), provided,
however, in no event shall the Conversion Price be less than $1.95 (the "Floor
Price") or more than the difference between the Closing Bid Price and the Floor
Price added to the Closing Bid Price (the "Ceiling Price"). The formula for
such calculation shall be stated as follows:
Ceiling Price = Closing Bid Price - $1.95 + Closing Bid Price
The holder shall exercise its right to convert the Preferred Stock by
telecopying an executed and completed Notice of Conversion (Exhibit A annexed
hereto) to the Company and delivering the original Notice of Conversion and the
certificate representing the Preferred Stock to the Company by express courier.
Each business date on which a Notice of Conversion is telecopied to and received
by the Company in accordance with the provisions hereof shall be deemed a
conversion date. The Company will use its best efforts to transmit the
certificates representing shares of Common Stock issuable upon conversion of any
Preferred Stock (together with the certificates representing the Preferred Stock
not so converted) to the holder via express courier, by electronic transfer or
otherwise within three business days after the conversion date if the Company
has received the original Notice of Conversion and Preferred Stock certificate
being so converted by such date. In addition to any other remedies which may be
available to the holder, in the event that the Company fails to use its best
efforts to effect delivery of such shares of Common Stock within such three
business day period, the holder will be entitled to revoke the relevant Notice
of Conversion by delivering a notice to such effect to the Company whereupon the
Company and the holder shall each be restored to their respective positions
immediately prior to delivery of such Notice of Conversion.
In the event that the Common Stock issuable upon conversion of the
Preferred Stock is not delivered, as a direct result of the negligence or action
or inaction of the Company only, within ten (10) business days of receipt by the
Company of a valid Conversion Notice and the Preferred Stock to be converted
(such date of receipt referred to as the "Conversion Date"), and (i) the closing
price of the Common Stock of the Company on the Nasdaq National Market on the
date the Common Stock issuable upon conversion of the Preferred Stock is
delivered to the Purchaser (the "Delivery Date") is lower than the Conversion
Price, or (ii) the Delivery Date is not within fifteen (15) business days of the
Conversion Date, the Company shall pay to the Purchaser, in immediately
available funds, upon demand, as liquidated damages for such failure and not as
a penalty, for each $100,000 of Preferred Stock sought to be converted, $500 for
each of the first ten (10) days and $1,000 per day thereafter that the
Conversion Shares are not
3
delivered, which liquidated damages shall run from the tenth or fifteenth
business day after the Conversion Date. Any and all payments required pursuant
to this paragraph shall be payable only in shares of Common Stock and not in
cash. The number of such shares shall be determined by dividing the total sum
payable by the Conversion Price.
b. Any shares of Series A Preferred Stock outstanding on the second
anniversary of the date on which the Series A Preferred Stock was first issued
by the Corporation (the "Anniversary Date") automatically shall be converted
into Common Stock on the same basis as the holder of such shares of Series A
Preferred Stock may convert such shares pursuant to Section 3a above. The
Corporation shall not be obligated to deliver the certificate(s) evidencing such
shares of Common Stock unless the certificate(s) evidencing the Series A
Preferred Stock so converted are delivered to the Corporation.
c. (1) If the Corporation shall, at any time or from time to time,
declare and pay to the holders of Common Stock a dividend in shares of Common
Stock, or the Corporation shall subdivide the outstanding shares of Common Stock
into a greater number of shares of Common Stock, or combine the outstanding
shares of Common Stock into a smaller number of shares of Common Stock then the
Floor Price, each shall be adjusted so that the same shall equal the price
determined by multiplying the Floor Price by a fraction, the numerator of which
shall be the number of shares of Common Stock issued and outstanding immediately
prior to the happening of such even and the denominator of which shall be the
number of shares of Common Stock issued and outstanding immediately after the
happening of such event. Such adjustment shall become effective immediately
after the opening of business of the day following the record date, in the event
of a stock dividend or the day upon which the subdivision or combination becomes
effective, as the case may be.
(2) If the Corporation shall, at any time or from time to time
after the date on which the Series A Preferred Stock was first issued by the
Corporation, make or issue, or fix a record date for the determination of
holders of shares of Common Stock entitled to receive a dividend or other
distribution payable in securities of the Corporation, including a distribution
of evidence of indebtedness of the Corporation, other than shares of Common
Stock, then, and in each such event, provision shall be made by the Corporation
so that the holders of shares of Series A Preferred Stock shall receive upon
conversion thereof, in a addition to the number of shares of Common Stock
receivable thereupon, the amount of those securities of the Corporation that
such holders would have received had their shares of Series A Preferred Stock
been converted on the date of such even and had they thereafter, during the
period from the date of such event to and including the date of conversion,
retained such securities receivable by them as aforesaid during such period.
(3) If the shares of Common Stock issuable upon the conversion of
shares of Series A Preferred Stock shall be changed into the same or any
different number of shares of any class or any series of any class of capital
stock, whether by capital reorganization, reclassification or otherwise (other
than a subdivision or combination of shares or a stock dividend provided for
above, or a reorganization, merger, consolidation or sale of assets provided for
in Section 7 hereof), then, and in each such event, the holder of shares of
Series A Preferred
4
Stock shall have the right thereafter to convert such shares of Series A
Preferred Stock into the kind and amount of shares of stock and other securities
and property receivable upon such reorganization, reclassification or other
change by holders of the number of shares of Common Stock into which such shares
of Series A Preferred Stock might have been converted immediately prior to such
reorganization, reclassification or change.
e. At all times, the Corporation shall reserve and keep available
out of its authorized but unissued Common Stock solely for issuance upon the
conversion of shares of the Series A Preferred Stock as herein provided, such
number of shares of Common Stock as, from time to time, shall be issuable upon
the conversion of all the shares of the Series A Preferred Stock at the time
outstanding.
f. No fractional shares of Common Stock shall be issued. In lieu of
the issuance of any fractional share of Common Stock that would, but for the
foregoing, be issued to a holder of Series A Preferred Stock on the conversion
thereof, the Corporation shall pay to such holder, in cash, the value of such
fractional share which value shall be based upon the closing sale price of the
Common Stock as reported on NASDAQ (or on the principal national securities
exchange on which the Common Stock is admitted to trading or listed or, if not
listed or admitted to trading on NASDAQ or a national securities exchange, as
reported by the National Quotation Bureau, Inc. or other similar organization)
for the trading day immediately preceding the effective date of such conversion.
Section 4. Voting Rights. Except as required by applicable law, the
-------------
holders of shares of Series A Preferred Stock shall not have the right or power
to vote on any question or in any proceeding or to be represented at, or to
receive notice of, any meeting of the Corporation's stockholders.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
-----------------
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized by unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of Designation
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
Section 6. Liquidation, Dissolution or Winding Up. In the event of
--------------------------------------
any liquidation, dissolution, or winding up of the Corporation, the holders of
shares of the Series A Preferred Stock are entitled to receive out of assets of
the Corporation available for distribution to stockholders, after satisfaction
of indebtedness, but before any distribution of assets is made to holders of
Common Stock or to holders of any other class of stock of the Corporation
ranking junior to the Series A Preferred Stock upon liquidation, liquidating
distributions on each share of Series A Preferred Stock held by such holder in
the per share amount of $1,000 plus all dividends accrued and unpaid, if any, on
each such share pursuant to Section 2 hereof (the "Liquidation Preference").
If, upon any liquidation, dissolution or winding up of the Corporation, the
amounts payable with respect too the Series A Preferred Stock or any other
shares of stock of the
5
Corporation ranking as to any such distribution on a parity with the Series A
Preferred Stock are not paid in full, the holders of the Series A Preferred and
of such other shares will share ratably in any such distribution of assets of
the Corporation in proportion to the full distributable amounts to which they
are entitled. After payment of the full amount of the liquidating distribution
to which they are entitled, the holders of shares of the Series A Preferred
Stock will not be entitled to any further participation in any distribution of
assets by the Corporation.
Section 7. Consolidation, Merger, etc. If the Corporation shall
--------------------------
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then, in any such case, the
Corporation, as a condition precedent to such transaction, shall cause effective
provisions to be made so that each holder of Series A Preferred Stock then
outstanding shall have the right, by converting such share(s) of Series A
Preferred Stock to acquire the kind and amount of shares of stock, securities,
cash and/or other property receivable upon such consolidation, merger,
combination or other transaction by a holder of the number of shares of Common
stock which might have been acquired upon conversion of such Series A Preferred
Stock immediately prior to such consolidation, merger, combination, or other
transaction.
Section 8. No Redemption. The shares of Series A Preferred Stock
-------------
shall not be redeemable.
Section 9. Amendment. This Certificate of Designation shall not be
---------
amended in any manner which should materially alter or change the powers,
preferences, or special rights of the Series A Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of at least two-
thirds of the outstanding shares of Series A Preferred Stock, voting together as
a single class.
RESOLVED, FURTHER, that the appropriate officers of the Corporation
hereby are authorized to execute and acknowledge a certificate setting forth
these resolution and to cause such certificate to be filed and recorded, all in
accordance with the requirements of Section 151 of the General Corporation Law
of the State of Delaware.
IN WITNESS WHEREOF, this Certificate of Designation is executed on
behalf of the Corporation by its President and Chief Executive Officer this ___
day of August, 1997.
-------------------------------------
Xxxxxxxx X. Xxxxxxxx
President and Chief Executive Officer
6
EXHIBIT B
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the
8% Convertible Preferred Stock)
The undersigned hereby irrevocably elects to convert the Preferred Stock
Certificate No. _________ into Shares of Common Stock of CONSILIUM, INC. (the
"Company") according to the conditions hereof, as of the date written below.
The undersigned represents and warrants that:
(i) that all offers and sales by the undersigned of the shares of Common
Stock issuable to the undersigned upon conversion of the Preferred
Stock shall be made pursuant to an exemption from registration under
the Act, or pursuant to registration of the Common Stock under the
Securities Act of 1933, as amended (the "Act"), subject to any
restrictions on sale or transfer set forth in the Subscription
Agreement between the Company and the original holder of the
Preferred Stock submitted herewith for conversion;
(ii) the undersigned has not engaged in any transaction or series of
transaction that is a part of or a plan or scheme to evade the
registration requirements of the Act; and
(iii) upon conversion pursuant to this Notice of Conversion, the
undersigned will not own or deemed to beneficially own (within the
meaning of the 0000 Xxx) 4.9% or more of the then issued and
outstanding shares of the Company.
---------------------------- ----------------------------------
Date of Conversion Applicable Conversion Price
---------------------------- ----------------------------------
Number of Common Shares upon $ Amount of Conversion
Conversion
---------------------------- ----------------------------------
Signature Name
Address: Delivery of Shares to:
* This original Preferred Stock and Notice of Conversion must be received by the
Company by the third business day following the Date of Conversion
ATTACHMENT I
ESCROW AGREEMENT
THIS AGREEMENT is made as of the ____ day of August, 1997 by and
between CONSILIUM, INC., with its principal office at 000 Xxxxx Xxxxxx, Xxxxxxxx
Xxxx, XX 00000 (hereinafter the "Company"), ___________________________,
________________________ _________ (hereinafter "Purchaser") and XXXXXXX X.
XXXXXXXXX, P.C., 00 Xxxxxxxx, 00xx Xx., Xxx Xxxx, XX 00000 (hereinafter the
"Escrow Agent").
W I T N E S S E T H:
WHEREAS, pursuant to the Securities Purchase Agreement dated August
__, 1997 (the "Agreement"), Purchaser will be purchasing shares of the Company
(the "Securities") at a purchase price as set forth in the Securities
Subscription Agreement, signed by the Company and Purchaser; and
WHEREAS, the Company has requested that the Escrow Agent hold the
funds of Purchaser in escrow until the Escrow Agent has received the Securities
and had the opportunity to speak with the Company to confirm their issuance.
The Escrow Agent will then immediately wire transfer or otherwise deliver at the
Company's direction immediately available funds to the Company or the Company's
account and arrange for delivery of the Securities to Purchaser per the
Purchaser's written instructions.
NOW, THEREFORE, in consideration of the covenants and mutual promises
contained herein and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged and intending to be legally
bound hereby, the parties agree as follows:
ARTICLE 1
---------
TERMS OF THE ESCROW
-------------------
1.1 The parties hereby agree to establish an escrow account with the
Escrow Agent whereby the Escrow Agent shall hold the funds for the purchase of
the Securities.
1.2 Upon Escrow Agent's receipt of cleared funds into his attorney
trustee account, he shall notify in writing the Company, or the Company's
designated attorney or agent, of the amount of funds he has received into his
account.
1.3 The Company, upon receipt of said notice and acceptance of
Purchaser's Subscription Agreement, as evidenced by the Company's execution
thereof, shall deliver to
Escrow Agent the Securities being purchased. Escrow Agent shall then communicate
with the Company to confirm the validity of its issuance.
1.4 Once Escrow Agent reasonably confirms the validity of the
issuance of the Securities, he shall immediately wire that amount of funds
necessary to purchase the Securities, per the written instructions of the
Company. The Company will furnish Escrow Agent with a "Net Letter" directing
payment of legal fees incurred by the Purchasers to Xxxxxxx X. Xxxxxxxxx, P.C.
not to exceed twenty thousand ($20,000) dollars and placement agent fees as
directed by the Company accordingly with the net balance payable to the Company.
Once the funds have been received per the Company's instructions, the Escrow
Agent shall then arrange to have the Securities delivered as per instructions
from the Purchaser.
1.5 This Agreement may be altered or amended only with the consent of
all of the parties hereto. Should the Company attempt to change this Agreement
in a manner which, in the Escrow Agent's discretion, shall be undesirable, the
Escrow Agent may resign as Escrow Agent by notifying the Company and the
Purchaser in writing. In the case of the Escrow Agent's resignation or removal
pursuant to the foregoing, his only duty, until receipt of notice from the
Company and the Purchaser or its agent that a successor escrow agent shall have
been appointed, shall be to hold and preserve the Securities and/or funds. Upon
receipt by the Escrow Agent of said notice from the Company and the Purchaser of
the appointment of a successor escrow agent, the name of a successor escrow
account and a direction to transfer the Securities and/or funds, the Escrow
Agent shall promptly thereafter transfer all of the Securities and/or funds held
in escrow to said successor escrow agent. Immediately after said transfer of
Securities, the Escrow Agent shall furnish the Company and the Purchaser with
proof of such transfer. The Escrow Agent is authorized to disregard any
notices, requests, instructions or demands received by it from the Company or
the Purchaser after notice of resignation or removal shall have been given,
unless the same shall be the aforementioned notice from the Company and the
Purchaser to transfer the Securities and funds to a successor escrow agent or to
return same to the respective parties.
1.6 The Escrow Agent shall be reimbursed by the Company and the
Purchaser for any reasonable expenses incurred in the event there is a conflict
between the parties and the Escrow Agent shall deem it necessary to retain
counsel.
1.7 The Escrow Agent shall not be liable for any action taken or
omitted by him in good faith in accordance with the advice of the Escrow Agent's
counsel; and in no event shall the Escrow Agent be liable or responsible except
for the Escrow Agent's own gross negligence or willful misconduct.
1.8 The Company and the Purchaser warrant to and agree with the
Escrow Agent that, unless otherwise expressly set forth in this Agreement:
(i) there is no security interest in the Securities or any part
thereof;
2
(ii) no financing statement under the Uniform Commercial Code is on
file in any jurisdiction claiming a security interest or in
describing (whether specifically or generally) the Securities or
any part thereof; and
(iii) the Escrow Agent shall have no responsibility at any time to
ascertain whether or not any security interest exists in the
Securities or any part thereof or to file any financing
statement under the Uniform Commercial Code with respect to the
Securities or any part thereof.
1.9 The Escrow Agent has no liability hereunder to either party
other than to hold the Securities and funds and to deliver them under the terms
hereof. Each party hereto agrees to indemnify and hold harmless the Escrow
Agent from and with respect to any suits, claims, actions or liabilities arising
in any way out of this transaction including the obligation to defend any legal
action brought which in any way arises out of or is related to this Escrow.
ARTICLE 2
---------
MISCELLANEOUS
-------------
2.1 No waiver or any breach of any covenant or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision herein contained. No extension
of time for performance of any obligation or act shall be deemed any extension
of the time for performance of any other obligation or act.
2.2 All notices or other communications required or permitted
hereunder shall be in writing, and shall be sent by fax, overnight courier,
registered or certified mail, postage prepaid, return receipt requested, and
shall be deemed received upon receipt thereof, as follows:
(i) Consilium, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Attn: Xxxxxxx X. Field, Esq.
Tele: (000) 000-0000
Fax: (000) 000-0000
(ii) Xxxx, Xxxx, Xxxx & Freidenrich
000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxx Xxxx Xxxxxxx
Tele: (000) 000-0000
Fax: (000) 000-0000
3
(iii) Xxxxxxx X. Xxxxxxxxx, P.C.
00 Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxx, Esq.
Tele: (000) 000-0000
Fax: (000) 000-0000 (fax)
(iv)
Attn:
Tele:
Fax:
2.3 This Agreement shall be binding upon and shall inure to the
benefit of the permitted successors and assigns of the parties hereto.
2.4 This Agreement is the final expression of, and contains the
entire Agreement between, the parties with respect to the subject matter hereof
and supersedes all prior understandings with respect thereto. This Agreement
may not be modified, changed, supplemented or terminated, nor may any
obligations hereunder be waived, except by written instrument signed by the
parties to be charged or by its agent duly authorized in writing or as otherwise
expressly permitted herein.
2.5 Whenever required by the context of this Agreement, the singular
shall include the plural and masculine shall include the feminine. This
Agreement shall not be construed as if it had been prepared by one of the
parties, but rather as if both parties had prepared the same. Unless otherwise
indicated, all references to Articles are to this Agreement.
2.6 The Company acknowledges and confirms that it is not being
represented in a legal capacity by Xxxxxxx X. Xxxxxxxxx, P.C. and it has had the
opportunity to consult with its own legal advisors prior to the signing of this
Agreement.
2.7 The parties hereto expressly agree that this Agreement shall be
governed by, interpreted under and construed and enforced in accordance with the
laws of the State of New York. Any action to enforce, existing out of, or
relating in any way to, any provisions of this Agreement shall be brought
through the American Arbitration Association at the designated locale of New
York, New York.
4
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the ____ day of August 1997.
CONSILIUM, INC.
By
----------------------------
Officer
,
----------------------
Purchaser
By
------------------------------
Officer
XXXXXXX X. XXXXXXXXX, P.C.,
Escrow Agent
By
------------------------------
Xxxxxxx X. Xxxxxxxxx
5
ATTACHMENT II
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated the ____ day of August,
1997, between _______________________ (the "Holder" or "Holders") issued
pursuant to a Convertible Preferred Stock Subscription Agreement of even date
herewith, and CONSILIUM, INC., a Delaware corporation, having its principal
place of business at 000 Xxxxx Xxxxxx, Xxxxxxxx Xxxx, XX 00000 (the "Company").
WHEREAS, simultaneously with the execution and delivery of this
Agreement, the Holders are purchasing from the Company, pursuant to a
Convertible Preferred Stock Subscription Agreement dated the date hereof (the
"Agreement"), an aggregate of up to Three Million ($3,000,000) Dollars of non-
voting Convertible Preferred Stock convertible into Common Stock in accordance
with the terms of a Certificate of Designation filed by the Company in
connection with such sales (hereinafter collectively referred to as the "Stock"
or "Securities" of Consilium, Inc.); and
WHEREAS, the Company desires to grant to the Holders the registration
rights set forth herein with respect to the Securities.
NOW, THEREFORE, the parties hereto mutually agree as follows:
Section 1. Registrable Securities. As used herein the term
----------------------
"Registrable Security" means the Common Stock issuable upon conversion of the
non-voting Convertible Preferred Stock; provided, however, that with respect to
any particular Registrable Security, such security shall cease to be a
Registrable Security when, as of the date of determination, (i) it has been
effectively registered under the Securities Act of 1933, as amended (the "Act")
and disposed of pursuant thereto, (ii) registration under the Act is no longer
required for the immediate public distribution of such security as a result of
the provisions of Rule 144 or Reg S, or (iii) it has ceased to be outstanding.
The term "Registrable Securities" means any and/or all of the securities falling
within the foregoing definition of a "Registrable Security." In the event of any
merger, reorganization, consolidation, recapitalization or other change in
corporate structure affecting the Common Stock, such adjustment shall be made in
the definition of "Registrable Security" as is appropriate in order to prevent
any dilution or enlargement of the rights granted pursuant to this Section 1.
Section 2. Restrictions on Transfer. The Holder acknowledges and
------------------------
understands that prior to the registration of the Securities as provided herein,
the Securities are "restricted securities" as defined in Rule 144 promulgated
under the Act. The Holder understands that no disposition or transfer of the
Securities may be made by Holder in the absence of (i) an opinion of counsel
reasonably satisfactory to the Company that such transfer may be made or (ii) a
registration statement under the Act is then in effect with respect thereto.
Section 3. Registration Rights.
-------------------
(a) The Company shall prepare and file a Registration Statement with
the Securities and Exchange Commission ("SEC"), on one occasion, at the sole
expense of the Company (except as provided in Section 3(c) hereof), in respect
of all holders of Registrable Securities, so as to permit a non-underwritten
public offering and sale of the Registrable Securities under the Act. The
number of shares to be issued on conversion of the non-voting Convertible
Preferred Stock (the "Conversion Shares") to be registered shall be two hundred
(200%) percent of the number of such shares that would be required, if all of
the Securities were converted on the filing date of the Registration Statement.
(b) The Company will maintain any Registration Statement or post-
effective amendment filed under this Section 3 hereof current under the Act
until the earlier of (i) the date that all of the Registrable Securities have
been sold pursuant to the Registration Statement, (ii) the date the holders
thereof receive an opinion of counsel that the Registrable Securities may be
sold under the provisions of Rule 144, or (iii) the second anniversary of the
effective date of the Registration Statement.
(c) All fees, disbursements and out-of-pocket expenses and costs
incurred by the Company in connection with the preparation and filing of any
Registration Statement under subparagraph 3(a) and in complying with applicable
securities and Blue Sky laws (including, without limitation, all attorneys'
fees) shall be borne by the Company. The Holder shall bear the cost of
underwriting discounts and commissions, if any, applicable to the Registrable
Securities being registered and the fees and expenses of its counsel. The
Company shall use its best efforts to qualify any of the securities for sale in
such states as such Holder reasonably designates and shall furnish
indemnification in the manner provided in Section 9 hereof. However, the
Company shall not be required to qualify in any state which will require an
escrow or other restriction relating to the Company and/or the sellers. The
Company at its expense will supply the Holder with copies of such Registration
Statement and the prospectus or offering circular included therein and other
related documents in such quantities as may be reasonably requested by the
Holder.
(d) The Company shall not be required by this Section 3 to include a
Holder's Registrable Securities in any Registration Statement which is to be
filed if, in the opinion of counsel for both the Holder and the Company (or,
should they not agree, in the opinion of another counsel experienced in
securities law matters acceptable to counsel for the Holder and the Company) the
proposed offering or other transfer as to which such registration is requested
is exempt from applicable federal and state securities laws and would result in
all purchasers or transferees obtaining securities which are not "restricted
securities", as defined in Rule 144 under the Act.
(e) In the event the Registration Statement to be filed by the Company
pursuant to Section 3(a) above is not declared effective by the SEC within one
hundred eighty (180) days from the Closing Date, then the Company will pay
Holder by wire transfer, as liquidated damages for such failure and not as a
penalty, two (2%) percent of the principal
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amount of the Securities per month thereafter in cash or stock at the Company's
option (the first month shall be pro rated on a weekly basis) until the Company
procures registration of the Stock. If the Company does not remit the damages to
the Purchaser as set forth above, the Company will pay the Purchaser reasonable
costs of collection, including attorneys fees, in addition to the liquidated
damages. Such payment shall be made to the Purchaser immediately if the
registration of the Securities are not effected; provided, however, that the
payment of such liquidated damages shall not relieve the Company from its
obligations to register the Securities pursuant to this Section.
(f) No provision contained herein shall preclude the Company from
selling securities pursuant to any Registration Statement in which it is
required to include Registrable Securities pursuant to this Section 3.
Section 4. Cooperation with Company. Holders will cooperate with the
------------------------
Company in all respects in connection with this Agreement, including, timely
supplying all information reasonably requested by the Company and executing and
returning all documents reasonably requested in connection with the registration
and sale of the Registrable Securities.
Section 5. Registration Procedures. If and whenever the Company is
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required by any of the provisions of this Agreement to effect the registration
of any of the Registrable Securities under the Act, the Company shall (except as
otherwise provided in this Agreement), as expeditiously as possible:
(a) prepare and file with the Commission such amendments and
supplements to such registration statement and the Prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Act with respect to the sale or other
disposition of all securities covered by such registration statement when the
Holder or Holders of such securities shall desire to sell or otherwise dispose
of the same (including prospectus supplements with respect to the sales of
securities from time to time in connection with a registration statement
pursuant to Rule 415 of the Commission);
(b) furnish to each Holder such numbers of copies of a summary
prospectus or other prospectus, including a preliminary prospectus or any
amendment or supplement to any prospectus, in conformity with the requirements
of the Act, and such other documents, as such Holder may reasonably request in
order to facilitate the public sale or other disposition of the securities owned
by such Holder;
(c) use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as the Holder, shall reasonably request, and do any
and all other acts and things which may be necessary or advisable to enable each
Holder to consummate the public sale or other disposition in such jurisdiction
of the securities owned by such Holder, except that the Company shall not for
any such purpose be required to qualify to do business as a foreign corporation
in any jurisdiction wherein it is not so qualified or to file therein any
general consent to service of process;
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(d) use its best efforts to list such securities on the NASDAQ
National Market System or any securities exchange on which any securities of the
Company is then listed, if the listing of such securities is then permitted
under the rules of such exchange or NASDAQ National Market System;
(e) enter into and perform its obligations under an underwriting
agreement, if the offering is an underwritten offering, in usual and customary
form, with the managing underwriter or underwriters of such underwritten
offering;
(f) notify each Holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto covered
by such registration statement is required to be delivered under the Act, of the
happening of any event of which it has knowledge as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.
Section 6. Information by Holder. Each Holder of Registrable
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Securities included in any registration shall furnish to the Company such
information regarding such Holder and the distribution proposed by such Holder
as the Company may request in writing and as shall be required in connection
with any registration, qualification or compliance referred to in this Section
6.
Section 7. Assignment. The rights granted the Holders under this
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Agreement shall not be assigned without the written consent of the Company,
which consent shall not be unreasonably withheld. In no event shall the rights
granted under this Agreement be transferred to a transferee, other than
affiliated companies of the Holder, of Registrable Securities having a value
less than $250,000. In the event of a transfer of the rights granted under this
Agreement, the Holders agree that the Company may require that the transferee
comply with reasonable conditions as determined in the discretion of the
Company. This Agreement is binding upon and inures to the benefit of the
parties hereto and their respective heirs, successors and permitted assigns.
Section 8. Termination of Registration Rights. The rights granted
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pursuant to this Agreement shall terminate as to each Investor (and permitted
transferee under Section 7 above) upon the occurrence of any of the following:
(a) all such Holder's securities subject to this Agreement have been
registered;
(b) such Holder's securities subject to this Agreement may be sold
without such registration pursuant to Rule 144 or Reg S promulgated by the SEC
pursuant to the Act;
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(c) such Holder's securities subject to this Agreement can be sold
pursuant to Rule 144(k); or
(d) three years after the Company's next registered offering to the
public.
Section 9. Indemnification.
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(a) In the event of the filing of any Registration Statement with
respect to Registrable Securities pursuant to Section 3 hereof, the Company
agrees to indemnify and hold harmless the Holder and each person, if any, who
controls the Holder within the meaning of the Act ("Distributing Holders")
against any losses, claims, damages or liabilities, joint or several (which
shall, for all purposes of this Agreement, include, but not be limited to, all
costs of defense and investigation and all attorneys' fees), to which the
Distributing Holders may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any such Registration Statement, or any
related preliminary prospectus, final prospectus, offering circular,
notification or amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such Registration Statement, preliminary prospectus, final
prospectus, offering circular, notification or amendment or supplement thereto
in reliance upon, and in conformity with, written information furnished to the
Company by the Distributing Holders, specifically for use in the preparation
thereof. This indemnity agreement will be in addition to any liability which
the Company may otherwise have.
(b) Each Distributing Holder agrees that it will indemnify and hold
harmless the Company, and each officer, director of the Company or person, if
any, who controls the Company within the meaning of the Act, against any losses,
claims, damages or liabilities (which shall, for all purposes of this Agreement,
include, but not be limited to, all costs of defense and investigation and all
attorneys' fees) to which the Company or any such officer, director or
controlling person may become subject under the Act or otherwise, insofar as
such losses claims, damages or liabilities (or actions in respect thereof);
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in a Registration Statement requested by such
Distributing Holder, or any related preliminary prospectus, final prospectus,
offering circular, notification or amendment or supplement thereto, or arise out
of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in such Registration Statement, preliminary prospectus, final prospectus,
offering circular, notification or amendment or supplement thereto in reliance
upon, and in conformity with, written information furnished to the Company by
such Distributing Holder, specifically for use in the preparation thereof and,
provided further, that the indemnity agreement contained in this Section 9(b)
shall not inure to the benefit of the Company with respect to any person
5
asserting such loss, claim, damage or liability who purchased the Registrable
Securities which are the subject thereof if the Company failed to send or give
(in violation of the Act or the rules and regulations promulgated thereunder) a
copy of the prospectus contained in such Registration Statement to such person
at or prior to the written confirmation to such person of the sale of such
Registrable Securities, where the Company was obligated to do so under the Act
or the rules and regulations promulgated thereunder. This indemnity agreement
will be in addition to any liability which the Distributing Holders may
otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve the indemnifying
party from any liability which it may have to any indemnified party otherwise
than as to the particular item as to which indemnification is then being sought
solely pursuant to this Section. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, assume the defense thereof. Subject to the provisions herein stated
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation, unless the
indemnifying party shall not pursue the action to its final conclusion. The
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel reasonably
satisfactory to the indemnified party; provided that if the indemnified party is
the Distributing Holder, the fees and expenses of such counsel shall be at the
expense of the indemnifying party if (i) the employment of such counsel has been
specifically authorized in writing by the indemnifying party, or (ii) the named
parties to any such action (including any impleaded parties) include both the
Distributing Holder and the indemnifying party and the Distributing Holder shall
have been advised by such counsel that there may be one or more legal defenses
available to the indemnifying party different from or in conflict with any legal
defenses which may be available to the Distributing Holder (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the Distributing Holder, it being understood, however, that the
indemnifying party shall, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable only for the reasonable
fees and expenses of one separate firm of attorneys for the Distributing Holder,
which firm shall be designated in writing by the Distributing Holder). No
settlement of any action against an indemnified party shall be made without the
prior written consent of the indemnified party, which consent shall not be
unreasonably withheld.
Section 10. Contribution. In order to provide for just and equitable
------------
contribution under the Act in any case in which (i) the Distributing Holder
makes a claim for indemnification
6
pursuant to Section 9 hereof but is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
the express provisions of Section 9 hereof provide for indemnification in such
case, or (ii) contribution under the Act may be required on the part of any
Distributing Holder, then the Company and the applicable Distributing Holder
shall contribute to the aggregate losses, claims, damages or liabilities to
which they may be subject (which shall, for all purposes of this Agreement,
include, but not be limited to, all costs of defense and investigation and all
attorneys' fees), in either such case (after contribution from others) on the
basis of relative fault as well as any other relevant equitable considerations.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or the applicable Distributing Holder,
on the other hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Distributing Holder agree that it would not be just and
equitable if contribution pursuant to this Section were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in this Section. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this Section
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
Section 11. Notices. Any notice pursuant to this Agreement by the
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Company or by the Holder shall be in writing and shall be deemed to have been
duly given if delivered by (i) hand, (ii) by facsimile and followed by mail
delivery or (iii) if mailed by certified mail, return receipt requested, postage
prepaid, addressed as follows:
(a) If to the Holder, to its, his or her address set forth on the
signature page of this Agreement, with a copy to the person designated in the
Agreement.
(b) If to the Company, at the address set forth herein, or to such
other address as any such party may designate by notice to the other party.
Notices shall be deemed given at the time they are delivered personally or five
(5) days after they are mailed in the manner set forth above. If notice is
delivered by facsimile to the Company and followed by mail, delivery shall be
deemed given two (2) days after such facsimile is sent.
Section 12. Counterparts. This Agreement may be executed in
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 13. Headings. The headings in this Agreement are for
--------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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Section 14. Governing Law, Venue. This Agreement will be construed
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and enforced in accordance with and governed by the laws of the State of New
York, except for matters arising under the Act, without reference to principles
of conflicts of law. Each of the parties consents to the jurisdiction of the
federal courts whose districts encompass any part of the State of New York or
the state courts of the State of New York in connection with any dispute arising
under this Agreement and hereby waives, to the maximum extent permitted by law,
any objection, including any objection based on forum non conveniens, to the
----- --- ----------
bringing of any such proceeding in such jurisdictions. Each party hereby agrees
that if another party to this Agreement obtains a judgment against it in such a
proceeding, the party which obtained such judgment may enforce same by summary
judgment in the courts of any country having jurisdiction over the party against
whom such judgment was obtained, and each party hereby waives any defenses
available to it under local law and agrees to the enforcement of such a
judgment. Each party to this Agreement irrevocably consents to the service of
process in any such proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to such party at its address set forth herein.
Nothing herein shall affect the right of any party to serve process in any other
manner permitted by law.
Section 15. Severability/Defined Terms. If any provision of this
--------------------------
Agreement shall for any reason be held invalid or unenforceable, such invalidity
or unenforceablity shall not affect any other provision hereof and this
Agreement shall be construed as if such invalid or unenforceable provision had
never been contained herein. Terms not otherwise defined herein shall be
defined in accordance with the Convertible Preferred Stock Subscription
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, on the day and year first above written.
Attest: CONSILIUM, INC.
By: By:
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Name: Name:
Title: Title:
-------------------- ----------------------
PURCHASER:
----------------------------
By:
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Officer
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