As filed with the Securities and Exchange Commission on December 14, 1999
Registration No. 333-86741
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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The Publishing Company of North America, Inc.
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(Exact name of registrant as specified in its charter)
Florida 59-3203301
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
186 P.C.N.A. Parkway, Lake Helen, Florida 32744
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(Address of Principal Executive Offices)
Peter S. Balise, President
The Publishing Company of North America, Inc.
186 P.C.N.A. Parkway
Lake Helen, FL 32744
(904) 228-1000
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(Name, address, and telephone number of agent of service)
Please send a copy of all communication also to:
Michael D. Harris, Esq.
Michael Harris, P.A.
1645 Palm Beach Lakes Boulevard, Suite 550
West Palm Beach, Florida 33401
(561) 478-7077
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALES TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_] _________________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [_] _________________
If delivery of this prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]
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The registrant hereby amends this registration statement pursuant to Rule 429 on
the date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that this
registration statement shall become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECUTITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED ______________ __, 1999
PROSPECTUS
225,000 SHARES OF COMMON STOCK
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
INVESTING IN THE COMMON STOCK INVOLVES SUBSTANTIAL RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 3.
This prospectus relates to the public offering of up to 225,000 shares of our
common stock. We are not selling any of these shares and will not receive any of
the proceeds from the sale of the shares. The prices at which the selling
stockholder may sell the shares will be determined by the prevailing market
price for the shares or in negotiated transactions.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is _________________
The Publishing Company of North America, Inc.
186 P.C.N.A. Parkway
Lake Helen, FL 32744
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YOU SHOULD ONLY RELY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS.
WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM
THAT CONTAINED IN THIS PROSPECTUS. WE ARE OFFERING TO SELL, AND SEEKING OFFERS
TO BUY, SHARES OF COMMON STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE
PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS THE
DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS PROSPECTUS
OR OF ANY SALE OF COMMON STOCK.
TABLE OF CONTENTS
Risk Factors ..................................................... 3
Forward-Looking Statements ....................................... 8
Summary of Our Business .......................................... 8
Where You Can Find More Information .............................. 11
Selling Stockholder .............................................. 12
Plan of Distribution ............................................. 12
Legal Matters .................................................... 13
Experts .......................................................... 13
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RISK FACTORS
Investing in our common stock involves a high degree of risk. You
should not purchase our common stock unless you can afford a complete loss of
your investment. You should consider the following risks as well as the
information contained in the reports and proxy statement that are incorporated
in this prospectus.
RISKS RELATING TO OUR BUSINESS
IF WE CANNOT EFFECTIVELY MANAGE OUR GROWTH, WE MAY INCUR OPERATING LOSSES
We recently launched our new Internet business. If our Internet
business grows, this growth may place a further strain on our administrative,
operational and financial resources and we may again lose money. We have limited
management depth, and if we grow substantially in the future, we may not be able
to hire the necessary senior and middle management personnel necessary to
implement our programs. Following the closing of our initial public offering in
the Spring of 1996, our print business grew. However, we encountered operational
difficulties and sustained operating losses for a long period of time.
IF WE SUFFER MATERIAL LOSSES IN THE FUTURE OUR STOCK MAY BE DELISTED FROM NASDAQ
Our stock currently meets Nasdaq listing requirements. If we sustain
material losses in the future, there can be no assurance that our stock will
meet the criteria for continued listing. If we are unable to satisfy Nasdaq's
listing requirements, our stock may be delisted from Nasdaq, reducing our
liquidity and our stock price.
BECAUSE WE DEPEND UPON THIRD PARTIES IN BOTH OUR PRINT AND INTERNET BUSINESSES,
THEIR FAILURE TO TIMELY AND RELIABLY PROVIDE SERVICES TO US MAY RESULT IN THE
LOSS OF REVENUES
In our print directory business, we subcontract all of the printing of
our bar and medical association directories to independent printing companies.
If printers delay the delivery of directories, this could have the consequence
of causing bar and medical associations, for which we are late in delivering
directories, to terminate their agreements with us or of causing advertisers to
cancel their media agreements with us and request refunds of prepaid fees.
Advertisers who are affected by delays in the delivery of directories, may also
decline future print and Internet advertising opportunities with us.
Our Internet business is similarly dependent upon third parties to
provide all of the content and host and maintain our websites. To the extent
that any or all of these third parties fail to meet their obligations to us,
existing and prospective advertisers may lose confidence in our ability to
attract and maintain a consistent Internet presence. Also, users of our websites
would likely not visit our websites. This in turn will reduce our future online
revenues.
WE WILL FACE INTENSE COMPETITION IN ALL ASPECTS OF OUR BUSINESS WHICH MAY RESULT
IN FUTURE OPERATING LOSSES
WE FACE COMPETITION FOR CONTRACTS FOR PRINT DIRECTORIES
In competing for print directory contracts, we compete with a number of
other publishers of bar membership directories, including Legal Directories
Publishing Company, a publisher of state bar directories, and Martindale Hubbell
which publishes what is considered to be the premier legal directory.
Martindale-Hubbell is a well recognized name to lawyers which gives it an
important competitive
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advantage. If we cannot compete effectively, we may suffer a significant decline
in our print directory business in the future.
OUR NEW ONLINE BUSINESS FACES INTENSE COMPETITION
In our new online business, we face enormous competition from Internet
companies, a few of which are oriented towards the legal market. These
competitors are spending substantial sums advertising their websites and
developing a brand-name recognition. These companies also have significant other
competitive advantages including management depth. Because of our lack of
significant assets, we may not be able to compete effectively in our online
business. There are low barriers to entry, and competitors can launch new
websites at a relatively low cost. We believe that our ability to compete online
will be affected, among other factors, by our ability to:
o develop and maintain a sufficiently large base of legal
professionals and others who regularly visit our websites;
o develop regular visitors to our websites based upon the features
we offer, including attractive e-commerce products and services;
and
o provide visitors to America's Legal Superstore with incentives to
order goods and services online and participate in e-commerce
transactions.
Please see the risk factors beginning at the bottom of page 4 which describe the
hurdles our Internet business faces.
IF OUR CHIEF EXECUTIVE OFFICER IS NOT AVAILABLE, WE MAY LOSE PRINT DIRECTORY
BUSINESS AND BE UNABLE TO ATTRACT FUTURE BUSINESS
We rely heavily upon Mr. Peter S. Balise, our chief executive officer,
in attracting and maintaining print directory agreements with bar and medical
associations. If Mr. Balise resigns or is otherwise unavailable, we may be
unable to renew existing directory agreements and attract new agreements with
bar and medical associations. We believe Mr. Balise's relationships with bar
association professionals are an important advantage and that it would be
difficult and expensive to replace him.
IF WE, OR OUR VENDORS, ARE NOT YEAR 2000 COMPLIANT, OUR BUSINESS MAY BE
DISRUPTED RESULTING IN A LOSS OF REVENUES AND OUR INCURRING SIGNIFICANT LOSSES
We are dependent, to a substantial degree, upon the proper functioning
of our computer hardware, software and other information technology systems, and
on the proper functioning of the systems of our suppliers and service providers.
A failure of these systems to correctly recognize dates beyond December 31,
1999, could materially disrupt our operations, delay the delivery of directories
and prevent persons from using our websites. Disruptions or, in the worst case
scenario, a complete failure of all of our services, also may arise as a result
of us or third parties not being Year 2000 compliant. Any malfunction in our
information technology systems, or those of our suppliers or third parties,
could result in a loss of revenues and our incurring significant losses.
RISKS RELATED TO THE INTERNET
OUR LIMITED FINANCIAL RESOURCES MAY PREVENT US FROM ATTRACTING ENOUGH USERS OF
OUR WEBSITES RESULTING IN LIMITED REVENUES FROM THE INTERNET
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We are currently witnessing a period in which well capitalized business
are spending enormous sums advertising their websites. We have limited resources
and cannot incur any significant expenses in advertising our websites. For this
reason, we may not be successful in generating substantial revenues from our
websites.
BECAUSE WE HAVE LIMITED INTERNET EXPERIENCE AND OUR INTERNET MODEL IS UNPROVEN,
OUR INTERNET BUSINESS MAY NOT BE SUCCESSFUL
We recently launched our Internet business. To date, we have generated
limited revenues. Our current Internet business model, which is based on bar
associations encouraging members to use our websites, is unproven. Because of
our lack of experience and financial strength, we may not attract enough legal
professionals and others to our websites to make them attractive to advertisers
and product vendors. Accordingly, our Internet business may not be successful.
IF WE ARE NOT SUCCESSFUL IN INCREASING BRAND AWARENESS AMONG MEMBERS OF THE
LEGAL COMMUNITY AND INCREASING VISITS TO OUR WEBSITES, OUR INTERNET BUSINESS
WILL NOT BE SUCCESSFUL
The future success of our Internet business will depend, in part, upon
our ability to increase our brand awareness. In order to build brand awareness
and increase usage of our websites, we must succeed in our marketing efforts and
provide high-quality services and continue to add content, products and services
that satisfy the needs of the legal community and others. Our ability to
increase advertising and produce revenues from our websites will depend in part
on the success of this marketing campaign. If our marketing efforts are
unsuccessful and we cannot increase our brand awareness, our Internet business
will not be successful.
IF THE INTERNET BECOMES AN UNRELIABLE MEANS FOR PROVIDING PRODUCTS AND SERVICES,
OUR ONLINE REVENUES WILL BE REDUCED
Because of Internet growth, the Internet infrastructure may not be able
to meet the demands placed upon it and reliability may decline. In addition, our
present and any future websites may experience interruptions in service as a
result of outages or other delays. Any of these factors could reduce the use of
our websites significantly, which would reduce our future online revenues.
IF ADVERTISERS WHICH ADVERTISE IN OUR PRINT DIRECTORIES DO NOT ACCEPT THE
INTERNET AS AN ADVERTISING MEDIUM, OUR ABILITY TO GENERATE REVENUES FROM THE
INTERNET MAY BE LIMITED
The success of our websites partly depends upon the willingness of
advertisers in our print directories to advertise online. Many of these
advertisers have little or no experience using the Internet for advertising
purposes. These businesses may find advertising on the Internet to be less
effective for promoting their products and services relative to traditional
advertising media. As a result, our future Internet revenues may be limited.
IF WE ARE NOT SUCCESSFUL IN COMPETING FOR INTERNET ADVERTISERS, OUR INTERNET
BUSINESS WILL NOT BE SUCCESSFUL
All of our Internet revenues have come from the sale of advertising. We
compete for a share of the advertising budget of those advertisers seeking to
reach the legal community, including websites operated by direct and indirect
competitors, traditional print media, and radio and television stations. If we
cannot assure advertisers that their advertising results in meaningful business
to them, we will not be successful in this aspect of our business.
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IF THE THIRD PARTIES WE RELY UPON FOR E-COMMERCE TRANSACTIONS ARE UNABLE TO
GENERATE SIGNIFICANT SALES FROM E-COMMERCE TRANSACTIONS, THE ROYALTIES PAID TO
US WILL BE LIMITED
Because the goods and services we are offering and intend to offer
through others on the Internet are available elsewhere, both on the Internet and
through conventional retail outlets, we may not be successful in the e-commerce
market. Because we receive limited royalties or commissions from our e-commerce
programs, the third parties must achieve very high sales for us to recognize
meaningful revenues.
WE MAY BECOME SUBJECT TO BURDENSOME GOVERNMENT REGULATION AND LEGAL
UNCERTAINTIES
There are an increasing number of laws and regulations pertaining to
the Internet, and additional laws and regulations may be enacted in the future.
These laws and regulations may relate to liability for information retrieved
from or transmitted over the Internet, online content, user privacy, taxation
and the quality of products and services. Moreover, the applicability to the
Internet of existing laws governing intellectual property ownership, copyright,
trademark, trade secret, obscenity, libel, gambling, employment, privacy and
other issues is uncertain and developing. Any new law or regulation relating to
the Internet or the application or interpretation of existing laws, could
decrease the demand for the Internet as a vehicle for information and commerce
and could increase the cost of our conducting business and otherwise impair our
ability to generate revenues or derive profits from the Internet.
WE DEPEND ON THE CONTINUED GROWTH IN USE AND EFFICIENT OPERATION OF THE INTERNET
The Internet-based information market is new and rapidly evolving. Our
ability to implement our Internet strategy would be materially adversely
affected if Internet usage does not continue to grow or grows more slowly than
anticipated. Internet usage may be inhibited for a number of reasons, including:
o inadequate network infrastructure;
o security concerns;
o inconsistent quality of service, and
o unavailability of cost-effective, high-speed access to
the Internet.
OUR WEBSITES ARE VULNERABLE TO SECURITY BREACHES AND SIMILAR THREATS WHICH COULD
RESULT IN OUR LIABILITY FOR DAMAGES AND HARM TO OUR REPUTATION
Despite the implementation of network security measures by third
parties operating our websites, our websites are vulnerable to computer viruses,
break-ins and similar disruptive problems caused by Internet users. These
occurrences could result in our liability for damages, and our reputation could
suffer. The circumvention of our security measures may result in the
misappropriation of such proprietary information as credit card and social
security numbers. Any such security breach could lead to interruptions and
delays and the cessation of service to our customers and could result in a
decline in revenues.
RISK RELATING TO OUR COMMON STOCK
WE ARE CONTROLLED BY OUR CHIEF EXECUTIVE OFFICER, WHICH MEANS HE MAY STOP A
THIRD PARTY FROM ACQUIRING US EVEN IF IT IS IN THE BEST INTERESTS OF OUR
STOCKHOLDERS AND AS A RESULT HIS CONTROL MAY REDUCE THE PRICE OF OUR COMMON
STOCK
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Mr. Peter S. Balise, president and chairman of our board of directors,
owns approximately 42% of our outstanding common stock. As a practical matter,
he will have sufficient voting power to control the outcome of matters submitted
to our stockholders for approval, including the election of directors and any
merger, consolidation or sale of substantially all of our assets. The
concentration of ownership of our common stock could delay or prevent a proxy
contest, merger, tender offer or purchases of our common stock that could give
our stockholders the opportunity to realize a premium over the then-prevailing
market price for our common stock. This may have the effect of decreasing the
market price of our common stock.
OUR COMMON STOCK PRICE MAY BE HIGHLY VOLATILE AND INVESTORS MAY NOT BE ABLE TO
SELL THEIR STOCK AT OR ABOVE CURRENT MARKET PRICES
At times this year, the market price of our common stock has been
highly volatile. At the same time, the stock market in general, and the market
for Internet-related technology companies in particular, has been highly
volatile. If, as a result of our new Internet business, we are perceived as an
Internet company, our common stock price may become more volatile in the future.
Investors may not be able to resell their shares of our common stock following
periods of volatility because of the market's adverse reaction to such
volatility. We cannot assure you that our common stock will trade at the same
levels as other Internet stocks, or that Internet stocks in general, will
sustain their current market prices.
Factors that could cause our common stock price to be volatile may
include:
o actual or anticipated variations in quarterly operating results,
o announcements of results concerning our new Internet business,
o new products or services,
o changes in financial estimates by securities analysts,
o changes in conditions or trends on the Internet industry,
o changes in the market valuations of Internet companies,
o changes in how the market perceives us and how it perceives the
nature of our business,
o announcements by us or competitors of significant acquisitions,
o strategic partnerships or joint ventures,
o additions or departures of key personnel, and
o sales of common stock.
Many of these factors are beyond our control. These factors may reduce
the market price of our common stock, regardless of our operating performance.
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FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that address
matters that include our expectations with regard to our print directory
business, our Internet business and our compliance with the Year 2000. In
addition to these statements, trend analysis and other information including
words such as "seek", "anticipate", "believe", "plan", "estimate", "expect",
"intend" and other similar expressions are forward-looking statements. These
statements may be found in the section of this prospectus entitled "Risk
Factors". We anticipate that some or all of the results will not occur because
of various factors including, but not limited to all of the risks discussed in
"Risk Factors."
SUMMARY OF OUR BUSINESS
We are a leading publisher of official bar association membership
directories. We also publish membership directories for medical associations.
Over approximately the last year, we have intentionally reduced the number of
directories we publish in order to achieve profitability from our traditional
publishing business. We believe that the publications of bar association
membership directories has limited growth opportunities.
At the same time, the Internet has opened a new opportunity for us to
provide information, sell advertising and offer goods and services to the legal
community and others.
In 1999, we launched our Internet strategy featuring three websites
consisting of a legal portal, an online directory of experts and vendors selling
products and services to the legal community and an e-commerce store. We believe
the growing acceptance of the Internet creates a potential business opportunity;
we also believe we can leverage upon our relationships with bar associations,
our print directory clients and others to promote our online websites.
We have been publishing official bar association membership directories
since 1994. We publish these directories for state bar associations, city bar
associations and county bar associations. Since 1995 we have also been the
official publisher of the National Association of Bar Executives membership
directory. The National Association is the official trade association for
executives of bar associations. Among the bar associations for which we publish
membership directories:
o Foundation of the State Bar of o Maricopa County Bar Association
California (Phoenix, Arizona)
o Ohio State Bar Association o Atlanta Bar Association
o Rhode Island Bar Association o Orange County Bar Association (CA)
o North Carolina Bar Association o King County Bar Association
(Seattle, WA)
o New Hampshire Bar Association o Hennepin County Bar Association
(Minneapolis, MN)
We generate revenues primarily from the sale of advertising in
membership directories. Our traditional model for print directories was to
distribute them free to all members of bar or medical associations. Under our
free program, we are required to print directories for each association member;
this maximizes printing expenses. In the Spring of 1998, we implemented a new
method of distributing our membership directories to bar associations which we
call our directory participation program. Under
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our directory participation program, we offer participating bar associations the
opportunity to share revenue with us from the sale of directories to members.
This program results in reducing circulation because not all members purchase
the membership directories while at the same time reducing printing costs.
Ultimately, we anticipate advertising revenues may be less under this program.
However, due to a variety of factors affecting future advertising sales, it will
not be practicable to quantify the impact this program will have on future
advertising revenues. Presently, approximately half of the membership
directories we publish are for associations which have elected the directory
participation program.
At the beginning of 1999, all of our print directory operations began
to be conducted through our wholly-owned subsidiary, PCNA Communications
Corporation, which we organized in the fourth quarter of 1998. PCNA
Communications also has been conducting operations of America's Legal
Superstore, our online e-commerce business which we launched on August 3, 1999
and our online vendor directory business which we launched on September 9, 1999.
We intend to transfer all of the online assets to Attorneys.com, Inc., another
wholly-owned subsidiary which we organized in the first quarter of 1999.
Our president and chief executive officer is concentrating the great
majority of his time on expanding our new Internet business. He recently
spearheaded the negotiations through which Attorneys.com, Inc., which was
previously known as Attorneys Online, Inc., purchased the rights to the Internet
address, Attorneys.com. With this new name, we plan to begin to evaluate
different marketing strategies for Internet operations. To date, we have spent
only a limited amount of money in marketing and advertising our new websites.
Our primary marketing to date has consisted of seeking to work with bar
associations in order to encourage their members to visit our websites. This
program, which we call our association alliance program, involves our sharing a
portion of the revenues we will generate from e-commerce as a result of
purchases by a participating association's members. To date bar associations
that have joined our association alliance program include the state bars of
Massachusetts, Connecticut, Delaware, Virginia and Montana.
However, we recognize that significant sums of money are currently
being spent by well-capitalized public and privately-held companies marketing
their websites. We do not have significant capital for marketing and advertising
our websites. Our association alliance program may not be successful in
competing with the better funded companies marketing their e-commerce websites.
We are engaged in discussions with investment bankers relating to providing
financing to permit Attorneys.com to advertise and market its websites in order
to gain market share. We do not know if these negotiations will be fruitful and
if we will ultimately have sufficient capital for these purposes.
In connection with our acquisition of the Internet address
Attorneys.com, we issued the sellers four-year non-interest bearing promissory
notes in the total amount of $100,000. We also issued to the sellers warrants to
purchase 100,000 shares of Attorneys.com common stock exercisable for four years
at $2.25 per share. In the event that at the time of an initial public offering
of Attorneys.com, it has more than 15,000,000 shares of common stock
outstanding, the warrants will be adjusted to permit the holders to purchase
more shares. If we are able to effect an initial public offering for
Attorneys.com, the sellers have the option to either exercise the warrants or
have the notes paid. If the notes are pre-paid, the amount of the note payments
will range from $25,000 if paid prior to October 28, 2,000 or $100,000 if paid
after October 28, 2002. If on the due date of the notes of October 28, 2003, the
notes have not been paid, we may extend the due date for an additional nine
years in which case the notes increase to $500,000, payable $50,000 per year.
During 1999, we have created three new websites designed to serve
members of the legal community and others seeking legal information. We
introduced the first website, www.lawlinks.com, at the American Bar Association
annual convention on August 3, 1999. This website is designed to be a
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portal or an entrance into the Internet. This website consists primarily of a
variety of legal information useful to lawyers as well as members of the general
public. Photobooks, Inc.compiles the information on this website from
information contained elsewhere on the Internet. This information may be viewed
on lawlinks.com or through links to the other websites. There are also direct
links to our other two websites as well as to the Martindale-Hubbell Lawyer
Locator and FindLaw, a leading Internet legal research service. There is also a
link to Emplawyernet.com, on online legal search firm containing listings of
available law jobs. In November 1999, we added a travel agency feature to
lawlinks.com. This feature is operated by Travelocity, a leading Internet
provider of travel services. For all airline tickets, cruises, hotels, rental
cars and other travel services purchased, we will receive a small royalty from
Travelocity. Additionally, lawlinks.com has a link to amazon.com, a leading
online seller of books and other merchandise. Commencing in 2000, we intend to
add to lawlinks.com two new features. The first feature consists of a link to an
attorney referral service in order to enable persons seeking an attorney to
locate one. Additionally, we intend to launch a free legal advice section of
this website providing information for the public in easy-to-understand language
concerning a wide variety of legal subjects including personal injury law,
criminal law, family law, employment law, real estate law and litigation issues.
We launched our second website located at www.lawmiles.com also on
August 3, 1999. This website features our online shopping mall which we call
America's Legal Superstore. This website is actually operated by Value America,
Inc. Except for identifying our brandname and the links to our other websites,
this website is identical to Value America's website. Persons purchasing
merchandise from lawmiles.com also receive law miles which are redeemable for
frequent flyer miles on major airlines, discounts on hotels or car rentals, or
an up to 2% cash refund. As an affiliate program, we receive a commission from
Value America based upon Value America's sales through our website. To date, we
have generated only nominal revenues.
Our third website is www.thelegalsource.com, which is our online vendor
directory. We launched this website on September 9, 1999. This website is a
comprehensive online directory which features experts and product and service
providers to the legal community. It is searchable on either a statewide or
local area basis and by category. This website features pull-down menus which
permit the user to easily locate the type of expert, product or service desired.
We generate revenues on this website from the sale of listings to
advertisers. We began selling online listings in May 1999 and recognized
$280,000 of revenues in the third-quarter. Primarily because of the shorter time
available for selling online advertising, we estimate that Internet revenues
from the sale of listings will be less than one-half of the third-quarter's
Internet revenues. Also, we have been selling Internet listings for the
www.legalsource.com as part of a package consisting of advertising for our print
membership directories and online Internet listings; however, during the
third-quarter, we also had sales staff dedicated to selling Internet listings
only.
In 2000, we intend to begin selling banner advertising for our websites
in order to generate additional revenues. However, as a practical matter, until
we can demonstrate that there is a substantial number of visitors to our
websites, we will not be successful in achieving significant revenues from
banner advertisements.
Furthermore, in 2000, we may expand the business of Attorneys.com
beyond the Internet by setting up a telephone-based attorney referral service.
We believe there are a great number of attorneys in various locations throughout
the United States who are either currently publicly advertising their services
or considering doing so who might be willing to pool their resources and share
costs with other attorneys located in their community who have similar
specialties. This kind of referral service
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essentially operates on a rotating basis in which each participant shares in
referrals equally and each participant shares in the cost of advertising. It
would generate revenues from the sale of listings to these attorneys, and we
would be required to pay for the local advertising and the cost of operating the
referral service, including telecommunications costs and administrative costs.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any document we file at the SEC's public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information on the public conference rooms. Our SEC
filings are also available on the SEC's Internet site at www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus. Later information we file with the SEC
will update and modify this information. We are incorporating by reference the
documents listed below and any future filings made with the SEC under the
Securities Exchange Act of 1934 until the warrant holder completes its offering
of 225,000 shares of common stock.
o Our annual report on Form 10-KSB for the year ended December 31, 1998.
o Our quarterly reports on Form 10-QSB for the quarters ended March 31,
June 30 and September 30, 1999.
o Our Proxy Statement for our annual meeting of stockholders held on May
24, 1999.
o The description of our common stock contained in our registration
statement on Form 8-A, filed in 1996.
o All other reports filed under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
James M. Koller, CFO
The Publishing Company of North America, Inc.
186 PCNA Parkway
Lake Helen, FL 32744
(904) 228-1000
11
<PAGE>
SELLING STOCKHOLDER
The 225,000 shares of common stock are being offered for sale by
InterWest Associates. Ajay Anand, a partner of InterWest, is a beneficial owner
and has the power to sell the shares. InterWest Associates is currently
providing financial public relations services for us under an agreement entered
into on July 8, 1999. We are paying InterWest Associates a fee over the 12 month
period of the agreement at a rate of $6,000 for the first month, $5,000 for each
of the next two months and $3,000 per month for the remaining nine months. We
have had no other relationship with InterWest Associates in the past. InterWest
Associates has advised us that it does not own any of our securities except for
warrants we issued to it permitting it to purchase from us 225,000 shares of our
common stock. It intends to offer for sale all 225,000 shares of common stock.
The 225,000 shares of common stock may be purchased from us on the
terms and subject to the conditions contained in the table below:
No. of Exercise Lock-up on
Warrants Price Sales Until Expiration Date
--------------------------------------------------------------------------
25,000 $1.6875 N/A January 7, 2001
25,000 $2.50 N/A February 7, 2001
25,000 $3.00 N/A March 7, 2001
16,667 $3.50 N/A April 7, 2001
16,667 $4.00 N/A May 7, 2001
16,667 $4.50 N/A June 7, 2001
16,667 $5.00 January 8, 2000 July 7, 2001
16,667 $5.50 February 8, 2000 August 7, 2001
16,667 $6.00 March 8, 2000 September 7, 2001
16,667 $6.50 April 8, 2000 October 7, 2001
16,667 $7.00 May 8, 2000 November 7, 2001
16,664 $7.50 June 8, 2000 December 7, 2001
The lock-up on sales means that even if the warrants are exercised, the shares
of common stock may not be sold until the applicable dates.
PLAN OF DISTRIBUTION
The shares covered by this prospectus may be offered and sold at any
time by the selling stockholder subject to the lock-ups described above. The
selling stockholder will act independently in making decisions with respect to
the timing, manner and size of each sale. The selling stockholder may sell the
shares being offered on the Nasdaq SmallCap Market, or otherwise, at prices and
under terms then prevailing or at prices related to the then current market
price, at varying prices or at negotiated prices.
Broker-dealers may receive compensation in the form of commissions,
discounts or concessions from the selling stockholders in amounts to be
negotiated in connection with sales. These brokers or dealers may be deemed to
be "underwriters" within the meaning of the Securities Act of 1933. In this
case, any commissions, discounts or concessions received by broker-dealers and
any profit on the resale
12
<PAGE>
of the shares sold by them may be deemed to be underwriting compensation under
the Securities Act. Compensation to be received by any broker-dealers and
retained by the selling stockholders in excess of usual and customary
commissions will, to the extent required, be set forth in a supplement to this
prospectus.
We have advised the selling stockholder that the anti-manipulation
rules of Regulation M under the Securities Exchange Act of 1934 may apply to
sales of the shares of common stock offered in the market and to the activities
of the selling stockholder and its affiliates. In addition, we will make copies
of this prospectus available to the selling stockholder and have informed it of
the need for delivery of copies of this prospectus to purchasers at or prior to
the time of any sale of the shares of common stock. The selling stockholder may
indemnify any broker-dealer that participates in transactions involving the sale
of the shares against certain liabilities, including liabilities arising under
the Securities Act.
LEGAL MATTERS
Michael Harris, P.A., West Palm Beach, Florida, will pass upon the
validity of the shares of common stock being offered with this prospectus.
EXPERTS
The consolidated financial statements of The Publishing Company of
North America, Inc. and subsidiaries appearing in The Publishing Company of
North America, Inc. and subsidiaries' Annual Report (Form 10-KSB) for the year
ended December 31, 1998, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such consolidated financial statements are incorporated
herein by reference in reliance upon such report given on the authority of the
firm as experts in accounting and auditing.
13
<PAGE>
================================================================================
225,000 SHARES
THE PUBLISHING COMPANY OF
NORTH AMERICA, INC.
COMMON STOCK
---------------
PROSPECTUS
---------------
-----------------, ------
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14 OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
- ------- -------------------------------------------
We will pay all expenses incident to the offering and sale to the
public of the shares being registered other than any commission and discounts of
underwriters, dealers or agents and any transfer taxes. Such expenses are set
forth in the following table. All of the amounts shown are estimates except for
the Securities and Exchange Commission registration fee.
SEC Registration Fee $ 675.39
Accounting Fees and expenses $ 8,000.00
Legal Fees and expenses $15,000.00
Miscellaneous $ 500.00
----------
TOTAL: $24,175.39
ITEM 15 INDEMNIFICATION OF DIRECTORS AND OFFICERS
- ------- -----------------------------------------
Under Florida law, our directors are protected against personal
liability for monetary damages from breaches of their duty of care. As a result
our directors will not be liable in an action by us or a stockholder for
monetary damages alleging negligence or gross negligence in the performance of
their duties. However, our directors and executive officers remain liable for
monetary damages for willful misconduct, conscious disregard of the best
interest of The Publishing Company of North America, Inc. and for transactions
from which a director or officer derives an improper personal benefit. Directors
also remain liable under another provision of the Florida laws which makes
directors personally liable for unlawful distributions and expressly contains a
negligence standard with respect to this liability. The liability of our
directors and officers under federal or state securities laws is not affected by
these provisions of Florida law. We also maintain a liability insurance policy
to protect our directors and officers. While our directors have protection from
awards of monetary damages from breaches of fiduciary duty, that does not
eliminate the fiduciary duty equitable remedies including an injunction or
recession based upon a breach of fiduciary duty are still available.
Insofar as indemnification for liabilities arising out of the
Securities Act may be permitted to directors, officers, or persons controlling
us under the above provisions, we have been informed that in the opinion of the
Securities and Exchange Commission, this indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
II-1
<PAGE>
ITEM 16 EXHIBITS
- ------- --------
Exhibit No. Exhibits
- ----------- --------
4 Financial Public Relations Service Agreement
4.1 Agreement to Purchase Attorneys.com
4.2 Form of Warrants (Attorneys.com Purchase)
4.3 Form of Note (Attorneys.com Purchase)
5 Opinion of Michael Harris, P.A.
23 Consent of Ernst & Young LLP
23.1 Consent of Michael Harris, P.A.(1)
(1) Contained in Opinion of Michael Harris, P.A.
ITEM 17 UNDERTAKINGS
- ------- ------------
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply
if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports
filed with or furnished to the Commission by the registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the registration
statement.
II-2
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bonafide2 offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered, which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the registrant's annual report
pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions (see Item 15 above), or otherwise, the registrant has
been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of
the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act
and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of the Securities
Act of 1933 the registrant certifies that it has reasonable cause to believe
that it meets all of the requirements for filing on Form S-3 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Lake Helen, Florida, on December 10, 1999.
THE PUBLISHING COMPANY OF
NORTH AMERICA, INC.
By: /s/ Peter S. Balise
-------------------------------------
Peter S. Balise
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE><CAPTION>
Name Title Date
- ---- ----- ----
<S> <C> <C>
/s/ Peter S. Balise Chairman of the Board of Directors December 10, 1999
- ----------------------
Peter S. Balise
/s/ James M. Koller Chief Financial Officer December 10, 1999
- ---------------------- (Principal Financial and Accounting Officer)
James M. Koller
/s/ Andrew J. Cahill Director December 10, 1999
- ----------------------
Andrew J. Cahill
Director
- ----------------------
Russell A. Perkins
Director
- ----------------------
Richard C. Silver
/s/ J. William Wrigley Director December 10, 1999
- ----------------------
J. William Wrigley
</TABLE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
The Publishing Company of North America, Inc.
---------------------------------------------
(Exact name of registrant as specified in its charter)
EXHIBIT INDEX
Exhibit No. Exhibits
- ----------- --------
4 Financial Public Relations Service Agreement
4.1 Agreement to Purchase Attorneys.com
4.2 Form of Warrants (Attorneys.com Purchase)
4.3 Form of Note (Attorneys.com Purchase)
5 Opinion of Michael Harris, P.A.
23 Consent of Ernst & Young LLP
23.1 Consent of Michael Harris, P.A. (1)
(1) Contained in Opinion of Michael Harris, P.A.
EXHIBIT 4
---------
FINANCIAL PUBLIC RELATIONS SERVICES AGREEMENT
This Financial Public Relations Services Agreement ("Agreement") is
made as of the 8th day of July, 1999, by and between THE PUBLISHING COMPANY OF
NORTH AMERICA, INC. 186 PCNA PARKWAY, LAKE HELEN, FL 32744, a Florida
corporation hereinafter referred to as "PCNA" or "Client," and INTERWEST
ASSOCIATES, 10 IMA LOA COURT, SUITE 1000, NEWPORT BEACH, CA 92663 hereinafter
referred to as "ITWA".
HEREAFTER, the Client and ITWA are referred to collectively as "Parties" and
singularly as "Party".
R E C I T A L S
- - - - - - - -
A. The Client is a leader in the publishing of city, county and state
bar association print directories throughout the United States and
selling advertising in those directories. The Client is embarking
upon a new Internet business direction featuring a legal portal, a
legal superstore, and an online vendor directory.
B. The Client seeks assistance in communicating with the
broker-dealer and investment community, and desires to increase
the awareness of its common stock prospects among high producing
retail stockbrokers, market makers, small/micro-cap fund managers
and securities analysts.
C. ITWA specializes in providing public and investor relations
services to assist companies in establishing and maintaining good
relationships with brokerage firms, and in communicating
effectively with investors, shareholders, market makers,
securities analysts and others in the investment community.
D. The Client desires to engage ITWA to provide services in
connection with the financial public relations needs of PCNA.
THEREFORE, the Client hereby engages the services of ITWA and in
consideration of the mutual pledge herein contained, the parties hereby agree as
follows:
1. TERM. This Agreement shall commence on the date first above written and
shall continue until a date twelve (12) months after the date of this
Agreement unless extended by mutual written agreement of the parties to
this Agreement. ITWA has the right to terminate this Agreement in its sole
discretion if Client violates or proposes to violate any applicable federal
or state law, rule or regulation. PCNA may also terminate this Agreement in
its sole discretion. ITWA may terminate this Agreement with prior 30-day
notice in the event that the client should fail to compensate ITWA any or
part of the compensation set forth in Section 5 of this Agreement. ITWA may
terminate Agreement if the payment has not been received by the Client, as
specified under Section 5 of this Agreement, within fifteen (15) days from
the date the payment is due.
Page 1
<PAGE>
2. SERVICES. ITWA shall provide consulting services to PCNA in connection with
the establishment of good relations by PCNA with the investment community,
which include the following services:
(a) Develop, implement and maintain an ongoing stock market support system
with the general objective of expanding stockbroker awareness of PCNA
activities, and hence to generate interest in PCNA's stock.
(b) Develop, implement and maintain a system to keep existing stockholders
informed with regards to PCNA's activities and potential, build a
national network of stockbrokers who are informed about and interested
in PCNA, and develop leads for select brokers to assist them in their
marketing of PCNA's stock.
(c) Seek to obtain market makers for PCNA's stock.
(d) Seek to obtain analyst coverage and reports with respect to PCNA and
its business, including follow-up coverage when applicable.
Services provided by ITWA are hereby acknowledged by the parties to
this Agreement to be limited to those specified herein and are not intended to
include any securities brokerage services.
3. USE OF AGENTS OR ASSISTANTS. To the extent reasonably necessary to enable
ITWA to perform its duties as set forth in Section 2 hereunder, ITWA shall
be authorized to engage the services of any agent which it deems proper,
and it may further employ, engage, or retain the services of such other
persons or corporations ("Agents") to aid or assist it in the proper
performance of its duties. Any Agents engaged by ITWA shall be subject to
all of the restrictions imposed upon ITWA by this Agreement, and ITWA shall
use its best efforts to ensure that any Agents are bound by the
restrictions.
4. NO GUARANTEE. Nothing in this Agreement or in the ITWA statements to PCNA
will be construed as a guarantee regarding the outcome of PCNA's future
common stock price. ITWA makes no such promises or guarantees. ITWA's
comments regarding the business and future prospects of PCNA, if any, are
expressions of opinion only and are not intended for sale or solicitation
of securities. All opinions and estimates included within any ITWA
literature are for information purposes only and are not intended as an
offer or solicitation with respect to the purchase or sale of any security.
ITWA must comply with SEC guidelines with respect to being compensated for
any financial marketing of PCNA's stock including Section 17(b) of the
Securities Act of 1933.
5. COMPENSATION AND EXPENSE REIMBURSEMENTS. In consideration for its services
pursuant to this Agreement, ITWA shall receive the following compensation
and expense reimbursements:
Page 2
<PAGE>
(a) CASH
The Client will pay to ITWA a fee equal to $6,000 upon the execution
of this Agreement by both parties hereto, $5,000 on the 8th day of
each month for the following two (2) months thereafter, and $3,000 for
the next nine (9) months, for a total of twelve (12) months.
(b) WARRANTS
As additional compensation, PCNA irrevocably grants to ITWA warrants
to purchase 225,000 shares of its common stock (the "Warrants"), fully
vested and immediately exercisable at the prices listed below and
until the expiration dates listed below. The shares underlying the
Warrants shall be subject to restriction from sale, pledge, or
hypothecation for periods of time described below (a "Lock-up"), after
which the shares underlying the Warrants shall be freely salable or
otherwise tradable.
No. of Exercise Lock-up on Warrants
Warrants Price sales until expire after
----------------------------------------------------------------------
25,000 $1.6875 N/A Jan. 7, 2001
25,000 $2.5000 Aug. 8, 1999 Feb. 7, 2001
25,000 $3.0000 Sept. 8, 1999 Mar. 7, 2001
16,667 $3.5000 Oct. 8, 1999 Apr. 7, 2001
16,667 $4.0000 Nov. 8, 1999 May 7, 2001
16,667 $4.5000 Dec. 8, 1999 June 7, 2001
16,667 $5.0000 Jan. 8, 2000 July 7, 2001
16,667 $5.5000 Feb. 8, 2000 Aug. 7, 2001
16,667 $6.0000 Mar. 8, 2000 Sep. 7, 2001
16,667 $6.5000 Apr. 8, 2000 Oct. 7, 2001
16,667 $7.0000 May. 8, 2000 Nov. 7, 2001
16,664 $7.5000 June 8, 2000 Dec. 7, 2001
(i) Protection Against Dilution. If all or any portion of the Warrants
are exercised subsequent to the occurrence of any stock dividend,
stock split, combination or exchange of shares, reclassification
or recapitalization of the Company's common stock, reorganization
of the Company, consolidation with or merger into or sale or
conveyance of all or substantially all of the Company's assets to
another corporation or any other similar event, the holder of the
Warrants exercising any shall receive, upon exercise of such
Warrant at the exercise price, the aggregate number and class of
shares which such holder would have received if the Warrant had
been exercised immediately prior to such or exchange of shares,
reorganization, consolidation, merger or sale or in the event of a
stock dividend, stock split combination or recapitalization, the
exercise price and the number of shares issuable upon exercise
shall be proportionately adjusted.
(ii) As soon as practicable, PCNA shall at its sole cost, except any
counsel fees of ITWA, file a registration statement on Form S-3,
or other available form, covering the public sale of the shares of
common stock issuable upon exercise of the Warrants (the
"Registerable Securities") and use its best efforts to have it
declared effective with the Securities and Exchange Commission.
Page 3
<PAGE>
(iii)PCNA shall also:
(A) Supply to ITWA two (2) executed copies of each
registration statement and a reasonable number of
copies of the final prospectus in conformity with
requirements of the Securities Act of 1933 (the
"Act") and the Rules and Regulations promulgated
thereunder and such other documents as ITWA shall
reasonably request.
(B) Use its best efforts to cause the Registerable
Securities to be available to be sold in the State of
New York and registered or qualified under such other
securities acts or blue sky laws of such
jurisdictions as ITWA shall reasonably request as
long as such jurisdictions do not exercise a "merit
review" of the offering and do any and all other acts
and things which may be necessary or advisable to
enable ITWA to consummate such proposed sale or other
disposition of the Registerable Securities in any
such jurisdiction; provided, however, that in no
event shall PCNA be obligated, in connection
therewith, to qualify to do business or to file a
general consent to service of process in any
jurisdiction where it shall not then be qualified.
(C) Keep the registration statement effective until the
expiration date of the Warrants and cooperate in
taking such action necessary to permit the public
sale or other disposition of such Registerable
Securities by ITWA.
(D) Indemnify and hold harmless ITWA and each
underwriter, within the meaning of the Act, who may
purchase from or sell for ITWA, any Registerable
Securities, from and against any and all losses,
claims, damages, and liabilities (including, but not
limited to, any and all expenses whatsoever
reasonably incurred in investigation, preparing,
defending or settling any claim) arising from (1) any
untrue or alleged untrue statement of material fact
contained in any such registration statement or any
prospectus contained therein or delivered thereunder,
or from (2) any omission to state therein a material
fact required to be stated therein or necessary to
make the statements therein not misleading, unless
each untrue statement or omission or such alleged
untrue statement or omission was based upon
information furnished or required to be furnished in
writing to PCNA by ITWA or underwriter expressly for
use therein, which indemnification shall include each
person, if any, who controls ITWA or underwriter
within the meaning of the Act. Provided, however,
that PCNA shall not be so obligated to indemnify ITWA
or underwriter or controlling person unless ITWA and
underwriter shall at the same time indemnify the
Company, its directors, each officer signing any
registration statement or any amendment to any
registration statement and each person, if any, who
controls PCNA within
Page 4
<PAGE>
the meaning of the Act, from and against any and all
losses, claims, damages and liabilities (including,
but not limited to, any and all expenses whatsoever
reasonably incurred in investigation, preparing,
defending or settling any claim) arising from (3) any
untrue or alleged untrue statement of a material fact
contained in the registration statement or any
amendment thereto, or prospectus contained therein or
(4) any omission or alleged omission to state therein
a material fact required to be stated therein or
necessary to make the statements therein not
misleading, but the indemnity of ITWA, underwriter or
controlling person shall be limited to liability
based upon information furnished in writing to PCNA
by ITWA or underwriter or controlling person
expressly for use therein. The indemnity agreement of
PCNA herein shall not inure to the benefit of ITWA or
any such underwriter (or to the benefit of any person
who controls ITWA or such underwriter) on account of
any losses, claims, damages, liabilities (or actions
or proceedings in respect thereof) arising from the
sale of any such Registerable Securities by ITWA or
such underwriter to any person if such underwriter
failed to send or give a copy of the prospectus as
the same may then be supplemented or amended (if such
supplement or amendment shall have been furnished to
ITWA or the underwriter) to such person with or prior
to written confirmation of the sale involved. By its
signature, ITWA agrees to the indemnification
provided above.
(iv) PCNA shall comply with the requirements of Section 5(b)(vi) and
(vii) at its own expense, including legal, accounting, filing,
state qualifications, and printing fees and costs, but excluding
counsel fees for the selling stockholders.
(v) PCNA's obligation under Section 5(b)(vi) and (vii) shall be
conditioned, as to each such public offering, upon a timely
receipt by PCNA in writing of:
(A) Information as to the terms of such public offering
furnished by or on behalf of ITWA or underwriter
intending to make a public distribution of its
Registerable Securities; and
(B) Such other information as PCNA may reasonably require
from ITWA and any underwriter for inclusion in such
registration statement.
6. MISCELLANEOUS EXPENSES. The Client will bear all of the costs relating to
the preparation and presentation of materials to its stockholders and the
investment community, which are not specified under Section 2 of this
Agreement. Client agrees to reimburse ITWA on a monthly basis for all of
the expenses incurred by ITWA that fall outside the scope of services as
identified under Section 2, including but not limited to travel, lodging,
lead generation, advertising, design and print costs, and related expenses.
Provided, however, PCNA's liability for any individual costs shall not
exceed $100 without the express written consent of PCNA's President.
Page 5
<PAGE>
7. DEVOTION OF TIME. ITWA shall devote a substantial amount of its time to the
performance of its duties under this Agreement which is necessary for a
satisfactory performance. Should the Client require additional services not
included in the Agreement, ITWA shall make a reasonable effort to fit such
additional services into its time schedule without decreasing the
effectiveness of its performance or its duties hereunder.
8. ENTIRE AGREEMENT. This Agreement supersedes any and all other agreements,
either oral or in writing, between the parties hereto with respect to the
subject matter hereof, and no other agreement, statement, or promise
relating to the subject matter of this Agreement which is not contained
herein shall be valid or binding.
9. ASSIGNMENT. Neither this Agreement nor any duties shall be assignable by
ITWA without the prior written consent of the Client, although ITWA may
delegate duties as contemplated in Section 3 herein. In the event of an
assignment by ITWA to which the Client has consented, the assignee or his
legal representative shall agree in writing with the Client to personally
assume, perform, and be bound by the covenants, and agreements contained
herein.
10. SUCCESSORS AND ASSIGNMENT. Subject to the provision regarding assignment,
this Agreement shall be binding on the heirs, executors, administrators,
successors, and assigns of the respective parties.
11. ATTORNEY'S FEES. If any action at law or in equity is brought to enforce or
interpret the provisions of this Agreement, or to collect any amounts
payable pursuant to this Agreement, the prevailing party shall be entitled
to full reimbursement of reasonable attorney's fees and costs in addition
to any other relief to which it may be entitled.
12. GOVERNING LAW. The validity of this Agreement and of any of its terms or
provisions, as well as the rights and duties of the parties hereunder shall
be governed by the law of the State of California.
13. SEVERABILITY. In the event any provision of this Agreement is deemed
unenforceable or ineffective, it shall not affect the enforceability or
effectiveness of any other provision of this Agreement, and all other
provisions of this Agreement shall remain in full force and effect.
14. INDEMNIFICATION. The Client agrees to indemnify and hold ITWA and its
partners, officers, directors, employees, agents and affiliates harmless
from and against any and all loss, claim, damage, liability and expense
(including, without limitation, costs of investigation, legal and other
fees and expenses incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim asserted), to
which ITWA may become subject under the United States or foreign securities
laws or any applicable statute or regulation of jurisdiction, or at common
law (whether tort, contract or any other basis), or otherwise, insofar as
such loss, claim, damage, liability expense arises from, or is based upon,
in whole or in part: (i) a material breach of this Agreement by the Client,
or (ii) an untrue statement of a material fact or omission to state a
material fact, or allegation of an untrue statement of a material fact or
omission to state a material fact, by the Client in any documents or
information provided to the investment
Page 6
<PAGE>
community or to individual investors, which was necessary in order to make
the statements made, in light of the circumstances under which they were
made, not misleading, to the extent such breach, untrue statement or
omission is the cause of the loss, claim, damage, liability or expense.
15. NON-CIRCUMVENTION. ITWA will from time to time introduce potential funding
sources and/or sales agents (collectively, the "Contact" or "Source") to
the Client for the purpose of fulfilling obligation to the Client. The
Client covenants not to circumvent ITWA, either directly or indirectly,
with respect to any Contact/Source introduced to the Client by the ITWA.
16. CONFIDENTIALITY. The parties agree to maintain as confidential, and not to
disclose to any third party without the prior consent of the other party,
any information of a proprietary nature which one party learns from the
other party as part of the necessary process of performing their services
and obligations under this Agreement, other than information (a) which was
already public knowledge at the time it was learned by the party, or which
subsequently came into the public domain through no fault of the receiving
parties; (b) which is necessary or appropriate to disclose in order to
comply with applicable laws, rules and regulations or enable a party to
comply with this Agreement; (c) which was lawfully received by the
receiving party from a third party free of an obligation of confidence to
such third party; (d) which was already in the possession of the receiving
party prior to the receipt thereof, directly or indirectly, from the
disclosing party; (e) which is required to be disclosed in a judicial or
administrative proceeding after all reasonable legal remedies for
maintaining such information in confidence have been exhausted including,
but not limited to, giving the disclosing party as much advance notice of
the possibility of such disclosure as practical so the disclosing party may
attempt to obtain a protective order concerning such disclosure; or (f)
which is subsequently and independently developed by employees,
consultants, or agents of the receiving party without reference to the
confidential information disclosed under this Agreement.
17. EQUITABLE RELIEF. The parties agree that money damages would not be a
sufficient remedy for breach of the Non-Circumvention, confidentiality and
other obligations of this Agreement. Accordingly, in addition to all other
remedies that either party may have, each party shall be entitled to
specific performance and injunctive or other equitable relief as a remedy
for any breach of the non-circumvention, confidentiality and other
obligations of the other party under this Agreement. The defaulting party
agrees to waive any requirement for a bond in connection with any such
injunctive or other equitable relief.
18. NOTICES. Any notices given pursuant to this Agreement shall be in writing
and shall be deemed received by the party to be notified upon personal
delivery, facsimile, air courier, registered mail, return-receipt
requested, or 72 hours after mailing by the notifying party by first class
mail to the address set forth below the party's signature in this
Agreement, or to such other different address as the party shall notify the
other party in writing in accordance with the terms of this Agreement. It
is also set forth in this Agreement that facsimile signatures are
acceptable and bind the Parties to the terms of this Agreement.
Page 7
<PAGE>
19. INDEPENDENT CONTRACTORS. ITWA is an independent contractor with respect to
the Client under this Agreement. No partnership, joint venture, employment
or fiduciary relationship is intended between the parties to this
Agreement. ITWA shall have sole discretion in determining the methods and
means of performing its services under this Agreement, and in supplying the
tools and instruments used by it pursuant to this Agreement.
20. ARBITRATION. ANY CONTROVERSY OR CLAIM OF ANY KIND OR NATURE WITH REGARD TO
THIS AGREEMENT WHETHER CONTRACT, TORT, OR OTHERWISE, SHALL BE SETTLED BY
BINDING ARBITRATION IN ACCORDANCE WITH THE COMMERCIAL ARBITRATION RULES OF
THE AMERICAN ARBITRATION ASSOCIATION, AND JUDGMENT ON THE AWARD RENDERED BY
THE ARBITRATORS MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. THE
PARTIES HERETO ACKNOWLEDGE THAT THIS PROVISION AFFECTS THEIR LEGAL RIGHTS
AND AGREE TO BE BOUND UNDER ANY AND ALL CIRCUMSTANCES TO THE DETERMINATION
OF SUCH BINDING ARBITRATION. THE PREVAILING PARTY IN ANY ARBITRATION
INSTITUTED UNDER THIS AGREEMENT SHALL, IN ADDITION TO OTHER REMEDIES, BE
ENTITLED TO BE REIMBURSED BY THE OTHER PARTY FOR ALL EXPENSES OF SUCH
ARBITRATION, INCLUDING REASONABLE ARBITRATOR'S AND ATTORNEYS' FEES.
Executed as of the day and year first above written.
ITWA: INTERWEST ASSOCIATES CLIENT: THE PUBLISHING CO. OF
NORTH AMERICA, INC.
By: /s/ Ajay Anand By: /s/ Peter S. Balise
---------------------------- -----------------------------------
Ajay Anand, Partner Peter S. Balise, President
10 Ima Loa Court, Suite 1000 186 P.C.N.A. Parkway
Newport Beach, CA 92660 Lake Helen, FL 32744
Telephone: (949) 645-8325 Telephone: (904) 228-1000, Ext. 305
Facsimile: (949) 645-8559 Facsimile: (904) 228-0271
Page 8
EXHIBIT 4.1
-----------
ATTORNEYS ONLINE, INC.
186 P.C.N.A. PARKWAY
LAKE HELEN, FL 32744-0280
October 28, 1999
VIA FACSIMILE 916-652-9433
VFR, Inc.
Attention: Frank Rowley, President
Dear Mr. Rowley:
This letter (the "Agreement") contains the agreement of Attorneys
Online, Inc. ("AOL") to purchase all right, title and interest in and to the URL
or domain name known as "attorneys.com" in exchange for the consideration
contained below and subject to the terms and conditions contained below:
1. VFR, Inc. ("VFR") sells and conveys to AOL the URL or domain name
known as "attorneys.com" (the "Name") and represents and warrants that it has
full ownership right in and to the Name, has the power to sell the Name to AOL
and all corporate authorization to carry out this agreement. By their signature
below, the four individuals ratify and confirm this ownership, power and
authority, subject to the rights of the Partnership and its partners. Each of
the signatories to this Agreement is referred to as a "Party."
2. As full and fair consideration for the acquisition of attorneys.com,
AOL is issuing to VFR its promissory note (the "Note"), the form of which is
annexed as Exhibit A, and warrants to purchase 100,000 shares of AOL's common
stock (the "Warrants") exercisable for four years at $2.25 per share. The form
of Warrants is annexed as Exhibit B. The Warrants shall contain customary
anti-dilution and cashless exercise provisions. The exercise price has been
selected using the current market price of AOL's parent, The Publishing Company
of North America, Inc., and gives effect to the current condition of AOL's
business.
3. The face value of the Note shall be $100,000, which shall not bear
interest.
a. Subject to a possible extension as provided below, the Note
shall be due and payable on October 28, 2003;
b. The Note shall be secured by a security agreement in the form
annexed as Exhibit C and a UCC-1 Financing Statement covering the URL known as
attorneys.com;
c. In the event of an initial public offering by AOL of its
securities ("IPO"), and assuming AOL gives written notice of the filing of a
registration statement with the Securities
Page 1
<PAGE>
and Exchange Commission to VFR or its assigns at least 30 days prior to the
closing of an IPO, VFR or its assigns must give to AOL, at least 10 days prior
to the closing of the IPO, written notice of VFR's or its assigns' election to
(i) have the Note pre-paid in full at the applicable sum specified below or (ii)
exercise the Warrants within the four year term. If AOL fails to give notice
within the time specified above, VFR or its assigns shall have 20 days from the
day AOL gives such written notice to notify AOL of its election referred to in
the preceding sentence. If VFR elects to receive payment of the Note prior to
its due date, it shall receive the following amount:
==============================================================
DATE AMOUNT
------------------------------------ -------------------------
Prior to October 28, 2000 $ 25,000
------------------------------------ -------------------------
Prior to October 28, 2001 $ 50,000
------------------------------------ -------------------------
Prior to October 28, 2002 $ 75,000
------------------------------------ -------------------------
Prior to October 28, 2003 $100,000
==============================================================
d. In the event that prior to conversion of the Note, AOL files a
voluntary petition under the United States bankruptcy laws or the insolvency
laws of any state, or a creditor of AOL files a petition under the United States
bankruptcy laws or the insolvency laws of any state, the Note shall become in
default as of one minute prior to the filing of such petition or other pleading
and VFR, or its assigns, shall be entitled to all of the rights of a secured
creditor, including, but not limited to reacquiring attorneys.com in lieu of
receiving payment for the Note; and
e. If as of the due date of October 28, 2003, the Note has not
been paid as provided in this letter agreement, AOL may extend the due date of
the Note for an additional period of 9 years and increase the face value of this
Note to $500,000 by paying the sum of $50,000 to VFR or its assigns on October
28, of each year commencing 2003 through 2112.
4. The Warrants expire upon the closing of an IPO if VFR or its assigns
elect to have the Note paid. In no event shall VFR or its assigns be entitled to
receive payment of the Note and exercise the Warrants. In the event that at the
time of the effective date of the IPO, there are more than 15,000,000 shares of
common stock of AOL outstanding, the number of Warrants shall be increased by
the following formula:
(i) The product of 100,000 times the actual number of shares of
common stock of AOL outstanding shall be divided by
(ii) 15,000,000 and the resulting sum shall be the number of
Warrants 5. Upon delivery of the Note, Security Agreement, UCC-1 and Warrants,
and execution of this Agreement, VFR shall take all necessary steps to promptly
transfer
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<PAGE>
attorneys.com to AOL.
6. AOL represents and warrants that it has obtained all necessary
authorization for it to execute and deliver this Agreement and carry out its
terms.
7. Enforcement of Agreement. In the event of a dispute arising under
this Agreement, the Note or the Warrants, the dispute shall be settled by
binding arbitration as provided below:
a. The arbitration shall be conducted by a single, neutral
arbitrator, hereinafter referred to as the "Arbitrator" in accordance with the
provisions of California Code of Civil Procedure Section 1280, et seq.
b. Upon the written request for arbitration by any Party, the
Parties shall within ten days select an Arbitrator from the judicial arbitrators
list of Placer County, California. The Party, or representative of, the Party
requesting arbitration shall contact the Arbitrator and retain his services,
said Party, subject to paragraph 7(d)(6) shall be responsible for all fees.
c. The Arbitrator shall commence hearings within sixty (60) days
of being retained, hearings shall not be recessed for longer than ten days. The
Arbitrator shall render a decision within thirty (30) days of the conclusion of
hearings.
d. The Arbitrator shall exercise the powers conferred by law and
by this Agreement in accordance with the provisions of California Code of Civil
Procedure Section 1280, et seq., except:
(1) In addition to making a written award, the Arbitrator shall set
forth a written "Arbitration Award and Statement of Decision" containing those
elements described in California Code of Civil Procedure Sections 632 and
1283.4, including issues submitted for decision by the Parties pursuant to
Section 632.
(2) The Arbitration Award and Statement of Decision shall be
detailed and shall address all issues controverted or contested by the Parties,
explaining the factual and legal basis for the decision and citing legal
authority therefor.
(3) Except as provided herein, the decision of the Arbitrator shall
be based on the then existing statutes and case law of the State of California
as such statutes are required to be applied in a trial before an elected judge.
The Arbitrator shall receive, exclude, and consider evidence solely as provided
by the California Evidence Code and relevant case law. The remedies and relief
which the Arbitrator may fashion shall be strictly limited to those expressly
provided by law or this Agreement.
(4) This Agreement shall be interpreted so as to limit rather than
to expand the powers of the Arbitrator. The Arbitrator shall not have the broad
scope of authority set forth by the majority in Advanced Micro Devices, Inc. v.
Intel Corporation (1994) 9 Cal.4th 362
Page 3
<PAGE>
[36Cal.Rptr.2d 582; 885 P.2d 994]. The Parties hereby expressly limit the scope
of authority of the Arbitrator to that set forth by the dissent in Advanced
Micro Devices, Inc. v. Intel Corporation.
(5) In the event that the Arbitration Award and Statement of
Decision is, upon its face, contrary to California law and/or this Agreement, it
shall be of no force or effect and the Parties shall be free to seek appropriate
relief in a court of law. Pursuant to this Agreement, such relief may include,
in the discretion of the court: (i) correction of the Arbitration Award and
Statement of Decision in the manner of California Code of Civil Procedure
Section 1286.2; (ii) vacation of the Arbitration Award and Statement of Decision
with remand for further hearing before the same or a new arbitrator.
(6) The Arbitrator may award attorneys' fees and costs as he shall
deem just and proper, or at his election defer to a determination by the Court
after entry of judgment.
8. All notices, offers, acceptance and any other acts under this
Agreement (except payment) shall be in writing, and shall be sufficiently given
if delivered to the addressees in person, by Federal Express or similar
receipted delivery, by facsimile delivery or, if mailed, postage prepaid, by
certified mail, return receipt requested, as follows:
The Company: Attorneys Online, Inc.
186 P.C.N.A. Parkway
Lake Helen, FL 32744-0280
or to such other address as either of them, by notice to the other may designate
from time to time. The transmission confirmation receipt from the sender's
facsimile machine shall be conclusive evidence of successful facsimile delivery.
Time shall be counted to, or from, as the case may be, the delivery in person or
by mailing.
If the foregoing is acceptable to you, please execute a copy of this
letter agreement in the place provided and return it to us by facsimile.
Sincerely yours,
/s/ Peter S. Balise
--------------------------
Peter S. Balise, President
PSB:as
Page 4
<PAGE>
We hereby agree to the terms of the foregoing letter agreement and the
undersigned do hereby agree that the Internet domain name "attorneys.com" is and
at all times has been the property of an equal Partnership among Frank L.
Rowley, James J. Grace, Jerome D. Artz, and Gerald J. Brentnall, Jr. The
undersigned further agree that "attorneys.com" was and is held in the name or
names of VFR, Inc. and/or Gerald Brentnall, Jr. solely as a convenience for the
undersigned. VFR, Inc. and/or Gerald J. Brentnall, Jr. are authorized to execute
any and all documents and to take any and all actions necessary to protect the
interests of said Partnership and shall be held harmless for all such actions
taken in good faith.
/s/ Frank L. Rowley October 28, 1999
- ----------------------------- ----------------
FRANK L. ROWLEY, PERSONALLY & DATE
AS PRESIDENT OF VFR, INC.
/s/ James J. Grace October 28, 1999
- ----------------------------- ----------------
JAMES J. GRACE DATE
/s/ Jerome D. Artz October 28, 1999
- ----------------------------- ----------------
JEROME D. ARTZ DATE
- ----------------------------- ----------------
GERALD J. BRENTNALL, JR. DATE
Page 5
<PAGE>
October 28, 1999
To: PCNA, Inc.
From: attorneys.com
Any and all communications or notices, and any distributions, arising from the
sale of attorneys.com shall be made to the following persons and addresses. All
distributions shall be in equal shares.
FRANK L. ROWLEY
P.O. Box 7
Loomis, CA 95650
----------------------------
JAMES J. GRACE
P.O. Box 7
Loomis, CA 95650
----------------------------
JEROME D. ARTZ
P.O. Box 7
Loomis, CA 95650
----------------------------
GERALD J. BRENTNALL, JR.
P.O. Box 351
Loomis, CA 95650 /s/ Gerald J. Brentnall, Jr.
----------------------------
Page 6
EXHIBIT 4.2
-----------
THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND ISSUABLE
UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
UNDER THE PROVISIONS OF ANY APPLICABLE STATE SECURITIES LAWS,
BUT HAVE BEEN ACQUIRED BY THE REGISTERED HOLDER HEREOF FOR
PURPOSES OF INVESTMENT AND IN RELIANCE ON STATUTORY EXEMPTIONS
UNDER THE SECURITIES ACT, AND UNDER ANY APPLICABLE STATE
SECURITIES LAW. THESE SECURITIES AND THE SECURITIES ISSUED UPON
EXERCISE HEREOF MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR
ASSIGNED, NOR MAY THESE WARRANTS BE EXERCISED, EXCEPT IN
ACCORDANCE WITH TERMS SET FORTH IN THIS CERTIFICATE OR IN A
TRANSACTION WHICH IS EXEMPT UNDER PROVISIONS OF THE SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT; AND IN THE CASE OF AN
EXEMPTION, ONLY IF THE COMPANY HAS RECEIVED AN OPINION OF
COUNSEL TO THE COMPANY THAT SUCH TRANSACTION DOES NOT REQUIRE
REGISTRATION OF ANY SUCH SECURITIES
No. __
Attorneys Online, Inc.
Common Stock Purchase Warrant
To Purchase 100,000 Shares of Common Stock
Attorneys Online, Inc., a Florida corporation (the "Company"), hereby
certifies that, for value received, ______________________________ or assigns
(the "Holder") is entitled, subject to the terms set forth below, to purchase
from the Company at any time on or from time to time (as long as the Company has
completed an initial public offering of its securities ("IPO")) for a period of
four years commencing October 28, 1999 and expiring at 5:00 p.m. New York time
on October 28, 2003, unless earlier terminated as provided in Section 1.3,
100,000 fully paid and non-assessable shares of common stock (the "Common
Stock") of the Company at the price of $2.25 per share (the "Purchase Price").
The number and character of such shares of Common Stock and the Purchase Price
are subject to adjustment as provided herein.
As used herein the following capitalized terms, unless the context
otherwise requires, have the following respective meanings:
(a) The term "Company" includes any corporation which shall
succeed to or assume the obligations of the Company hereunder.
Page 1
<PAGE>
(b) The term "Common Stock" means the common stock, par value
$0.001 per share, of the Company, together with all stock of any class
or classes (however designated) of the Company, the holders of which
shall have the right, without limitation as to amount, either to all or
to a share of the balance of current dividends and liquidating
dividends after the payment of dividends and distributions on any
shares entitled to preference, and the holders of which shall
ordinarily, in the absence of contingencies, be entitled to vote for
the election of a majority of directors of the Company (even though the
right so to vote has been suspended by the happening of such a
contingency).
(c) The term "Fair Market Value" shall be determined as of
the close of the last trading day and shall mean:
(1) the closing price of the Company's Common Stock
appearing on a national securities exchange if the principal
market for the Common Stock is such an exchange, or, if not
listed or not the principal market, the closing price on The
Nasdaq Stock Market ("Nasdaq").
(2) if the Company's shares are not listed on Nasdaq,
then the closing price for its Common Stock as listed on the
National Association of Securities Dealers, Inc.'s
Over-the-Counter Bulletin Board (the "Bulletin Board"); or
(3) if the Company's Common Stock is not listed on the
Bulletin Board, then the average bid and asked price for the
Company's Common Stock as listed in the National Quotation
Bureau's "pink sheets"; or
(4) if there are no listed bid and asked prices published
in the pink sheets, then the fair market value shall be based
upon the average closing bid and asked price as determined
following a polling of all dealers making a market in the
Company's Common Stock.
(d) The term "Purchase Price per share" shall be the then
applicable purchase price for one share of Common Stock as adjusted
pursuant to Sections 5 and 6 hereof.
(e) The phrase "Trading Days" refers to days in which The
Nasdaq Stock Market is open for business.
(f) The term "Warrants" refers to these Warrants.
1 Exercise of Warrants; Partial Exercise.
1.1 Exercise in Full or in Part. These Warrants may be
exercised in full or in part by the Holder hereof by surrender of these
Warrants, with the form of subscription attached hereto duly executed by such
Holder, to the Company at its principal office, as provided in Section
Page 2
<PAGE>
17 hereof, accompanied by payment by certified or official bank check payable to
the order of the Company, in the amount obtained by multiplying the number of
shares of Common Stock called for on the face of these Warrants (without giving
effect to any adjustment therein) by the Purchase Price. In lieu of paying the
Purchase Price, as specified above, the Holder may surrender for cancellation
Warrants in an amount equal to the Fair Market Value of the Company's Common
Stock times the number of Warrants so as to equal the required aggregate
Purchase Price. By way of example, if the Holder elects to exercise 10,000
Warrants and the Fair Market Value of the Common Stock is $10.00, the Holder
must surrender 2,500 Warrants in order to pay $25,000. Thus, the total number of
Warrants remaining is 87,500 and the Holder owns 10,000 shares of Common Stock.
1.2 Company to Reaffirm Obligations. The Company will, at the
time of any exercise of these Warrants, upon the request of the Holder hereof,
acknowledge in writing its continuing obligation to afford to such Holder any
rights to which such Holder shall continue to be entitled after such exercise in
accordance with the provisions of these Warrants, provided that if the Holder of
these Warrants shall fail to make any such request, such failure shall not
affect the continuing obligation of the Company to afford such Holder any such
rights.
1.3 Termination of the Warrants. In the event that the Company
completes an IPO, the Warrants shall expire if the Holder gives notice to
receive payment of a note as provided on Exhibit A.
2. Delivery of Stock Certificates, etc., on Exercise. As soon as
practicable after the exercise of these Warrants in full or in part, and in any
event within two to three Trading Days thereafter, the Company at its expense
(including the payment by it of any applicable issue or transfer taxes) will
cause to be issued in the name of and delivered to the Holder hereof a
certificate or certificates for the number of fully paid and non-assessable
Common Stock to which such Holder shall be entitled upon such exercise, plus, in
lieu of any fractional share to which such holder would otherwise be entitled,
cash equal to such fraction multiplied by the then current fair market value of
one full share (determined by the closing price on the principal market as of
the date of receipt of the Warrants with executed subscription), together with
any other stock or other securities and property (including cash, where
applicable) to which such Holder is entitled upon such exercise pursuant to
Section 3 hereof or otherwise.
3. Anti-Dilution Provisions. If and to the extent that the number of
issued shares of Common Stock of the Company shall (i) be increased, reduced or
changed by change in par value, split up, reclassification, or distribution of a
dividend payable in Common Stock, the number of shares subject to the Warrants
and the exercise price per share shall be proportionately adjusted; or (ii) in
the event that at the time of the effective date of the IPO there are more than
15,000,000 shares of Common Stock of AOL outstanding, the number of Warrants
shall be increased by the following formula:
(i) The product of 100,000 times the actual number of shares of
Common Stock of AOL outstanding shall be divided by.
Page 3
<PAGE>
(ii) 15,000,000 and the resulting sum shall be the number of
Warrants.
4. Reorganization, Consolidation, Merger, etc. In case the Company
shall (a) effect a reorganization, (b) consolidate with or merge into any other
entity, or (c) transfer all or substantially all of its properties or assets to
any other entity under any plan or arrangement contemplating the dissolution of
the Company, then, in each such case, the holder of these Warrants, upon the
exercise thereof as provided in Section 1 hereof at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall be entitled to receive (and
the Company shall be entitled to deliver), in lieu of the Common Stock issuable
upon such exercise prior to such consummation or such effective date, the stock
and other securities and property (including cash) to which such Holder would
have been entitled upon such consummation or in connection with such
dissolution, as the case may be, if such Holder had so exercised these Warrants
immediately prior thereto, all subject to further adjustment thereafter as
provided in Section 3 hereof.
5. Sale or Exercise Without Registration. If, at the time of any
exercise, the shares of Common Stock shall not be registered under the
Securities Act, the Company may require, as a condition of allowing such
exercise, that the Holder or transferee of such Common Stock, as the case may
be, furnish to the Company an opinion of counsel to the Company (for which the
Company shall pay the fees and expenses) to the effect that such exercise,
transfer or exchange may be made without registration under the Securities Act,
provided that the disposition thereof shall at all times be within the control
of such Holder or transferee, as the case may be. The Holder of the Warrants
represents to the Company that it is acquiring the Warrants for investment and
not with a view to the distribution thereof.
6. Further Assurances. The Company will take all such action as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and non-assessable Common Stock upon the exercise of all Warrants
from time to time outstanding.
7. Officer's Certificate as to Adjustments. In each case of any
adjustment or readjustment in the Common Stock issuable upon the exercise of the
Warrants, the Company at its expense will promptly compute such adjustment or
readjustment in accordance with the terms of the Warrants and prepare a
certificate, executed by its chief financial or accounting officer, setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based, and the number of Common Stock
outstanding or deemed to be outstanding. The Company will forthwith mail a copy
of each such certificate to each Holder of Warrants.
8. Notices of Record Date, etc. In the event of
(a) any capital reorganization of the Company, any reclassification
or recapitalization of the capital stock of the Company or any transfer
of all or substantially all the assets of the Company to or
consolidation or merger of the Company with or into any other person;
or
Page 4
<PAGE>
(b) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
and to which Section 4 hereof is applicable, then and in each such
event the Company will mail or cause to be mailed to each holder of
Warrants a notice specifying (i) the date on which any such record is
to be taken for the purpose of such dividend, distribution or right,
and stating the amount and character of such dividend, distribution or
right; and (ii) the date on which any such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up is to take place, and the time,
if any, as of which the holders of record of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or
other property deliverable upon such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution,
liquidation or winding-up. Such notice shall be mailed at least 15 days
prior to the date therein specified.
9. Reservation of Common Stock, etc., Issuable on Exercise of Warrants.
The Company will at all times reserve and keep available, solely for issuance
and delivery upon the exercise of the Warrants, all Common Stock from time to
time issuable upon the exercise of the Warrants.
10. Listing on Securities Exchanges; Registration. If the Company at
any time shall list any Common Stock on any national securities exchange, the
Company will, at its expense, simultaneously list on such exchange, upon
official notice of issuance upon exercise of the Warrants, and maintain such
listing of, all Common Stock from time to time issuable upon the exercise of the
Warrants.
11. Exchange of Warrants. Subject to the provisions of Section 5
hereof, upon surrender for exchange of any Warrants, properly endorsed to the
Company, the Company at its own expense will issue and deliver to the holder
thereof new Warrants of like tenor, in the name of such holder calling in the
aggregate on the face or faces thereof for the number of shares of Common Stock
called for on the face of the Warrants so surrendered.
12. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrants and, in the case of any such loss, theft or destruction, upon delivery
of an indemnity agreement reasonably satisfactory in form and amount to the
Company or, in the case of any such mutilation, upon surrender and cancellation
of such Warrants, the Company at its expense will execute and deliver, in lieu
thereof, new Warrants of like tenor.
13. Legend. Upon exercise of any of the Warrants and the issuance of
any of the Common Stock, pursuant thereto all certificates representing Common
Stock shall bear on the face thereof substantially the following legend:
The securities represented by this certificate have not been
registered
Page 5
<PAGE>
under the Securities Act of 1933, as amended, and may not be sold,
offered for sale, assigned, transferred or otherwise disposed of,
unless registered pursuant to the provisions of that Act or unless
a written opinion of counsel to the Company concludes that such
disposition is in compliance with an available exemption from such
registration.
14. Remedies. The Company stipulates that the remedies at law of the
Holder of these Warrants in the event of any default or threatened default by
the Company in the performance of or compliance with any of the terms of these
Warrants are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
15. Severability. In the event any parts of these Warrants are found to
be void, the remaining provisions of these Warrants shall nevertheless be
binding with the same effect as though the void parts were deleted.
16. Benefit. These Warrants shall be binding upon and inure to the
benefit of the parties hereto and their legal representatives, successors and
assigns.
17. Notices and Addresses. All notices, offers, acceptance and any
other acts under these Warrants (except delivery of these Warrants and payment
of the Purchase Price) shall be in writing, and shall be sufficiently given if
delivered to the addressees in person, by Federal Express or similar receipted
delivery, by facsimile delivery or, if mailed, postage prepaid, by certified
mail, return receipt requested, as follows:
The Company: Mr. Peter S. Balise President
186 P.C.N.A. Parkway
Lake Helen, FL 32744-0280
Facsimile: (904) 228-0271
The Holder: VFR, Inc.
Facsimile: (916) 652-9433
or to such other address as any of them, by notice to the others may designate
from time to time. The transmission confirmation receipt from the sender's
facsimile machine shall be conclusive evidence of successful facsimile delivery.
Time shall be counted to, or from, as the case may be, the delivery in person or
by mailing.
18. Attorney's Fees. In the event that there is any controversy or
claim arising out of or relating to these Warrants, or to the interpretation,
breach or enforcement thereof, and any action or proceeding including an
arbitration proceeding is commenced to enforce the provisions of these
Page 6
<PAGE>
Warrants, the prevailing party shall be entitled to an award by the court of
reasonable attorney's fees, costs and expenses.
19. Governing Law. These Warrants and any dispute, disagreement, or
issue of construction or interpretation arising hereunder whether relating to
its execution, its validity, the obligations provided herein or performance
shall be governed or interpreted according to the internal laws of the State of
California without regard to choice of law considerations.
20. Section or Paragraph Headings. Section headings herein have been
inserted for reference only and shall not be deemed to limit or otherwise
affect, in any matter, or be deemed to interpret in whole or in part any of the
terms or provisions of these Warrants.
21. Enforcement of Agreement. These Warrants are subject to the
arbitration provisions on Exhibit A.
Dated: November 3, 1999 Attorneys Online, Inc.
By:
--------------------------
Peter S. Balise, President
Page 7
<PAGE>
ASSIGNMENT FORM
(To be executed only upon the assignment of Warrants)
FOR VALUE RECEIVED the undersigned registered holder of the within
Warrants hereby sells, assigns and transfers unto ______________, whose address
is ____________________________ all of the rights of the undersigned under the
within Warrants, with respect to ______________ Common Stock of Attorneys
Online, Inc. and, if such Common Stock do not include all the Common Stock
issuable as provided in the Warrants, that new Warrants of like tenor for the
number of Common Stock not being transferred hereunder be issued in the name of
and delivered to the undersigned, and does hereby irrevocably constitute and
appoint ______________ Attorney to register such transfer on the books of
______________ maintained for the purpose, with full power of substitution in
the premises.
Dated: ______________, ______. __________________________
(Signature must conform in
all respects to name of
holder as specified on the
face of the Warrants)
Signature Guaranteed __________________________
Address:
Page 8
<PAGE>
FORM OF SUBSCRIPTION
(To be signed only upon exercise of Warrants)
To:___________________________
The undersigned, the holder of the within Warrants, hereby irrevocably
elects to exercise the purchase right represented by such Warrants for, and to
purchase thereunder, ______________ Common Stock of Attorneys Online, Inc., and
herewith makes payment of $______________ therefor, and requests that the
certificates for such shares be issued in the name of, and delivered
to,_________________, whose address is___________________________________. If
the Common Stock being purchased hereby do not include all the Common Stock
issuable as provided in the Warrants, that new Warrants for the number of Common
Stock not being purchased hereunder be issued in the name of and delivered to
the undersigned.
Dated: ______________, ______. __________________________
(Signature must conform in
all respects to name of
holder as specified on the
face of the Warrants)
Signature Guaranteed __________________________
Address:
Page 9
EXHIBIT 4.3
-----------
No. __
ATTORNEY'S ONLINE, INC.
SECURED
PROMISSORY NOTE
$_____________ ________ ____, 1999
For Value Received, the undersigned, Attorney's Online, Inc. ("Maker"),
promises to pay to the order of ________________ (the "Holder"), or his assigns,
the sum of _____________ ($__________). This Note shall bear no interest. Said
principal is due and payable on November 3, 2003 unless the principal and due
date are increased and extended as described in Section 3(e) of that certain
letter agreement dated October 28, 1999 (the "Agreement") by and between the
Maker and the Holder, which Agreement is annexed as Exhibit A and incorporated
by reference hereto. This Note shall be considered in default when payment
required to be made hereunder shall not have been made by 5:00 p.m. California
time on its due date.
If the Holder or his assigns elect to exercise the Warrants as referred
to in the Agreement, this Note shall be null and void.
This Note is secured by that certain Security Agreement of even-date
herewith by and between the parties hereto and a UCC-1 Financing Statement
covering the URL (domain name) known as "attorneys.com".
While in default this Note shall bear interest at the rate of ten
percent (10%) per annum.
Page 1
<PAGE>
Payments shall be made of lawful money of the United States at Loomis,
California, or at such other place as may be designated in writing by the
Holder.
This Note may be prepaid in whole or in part, at any time without
penalty as described in the Agreement.
All makers and endorsers now or hereafter becoming parties hereto
jointly and severally waive demand, presentment, notice of non-payment in
protest and, if this Note becomes in default and is placed into the hands of an
attorney for collection, to pay attorney's fees and all other costs for making
such collection, provided the Holder is the prevailing party.
This Note may not be changed or terminated orally, but only with an
agreement in writing, signed by the parties against whom enforcement of any
waiver, change, modification or discharge is sought, with such agreement being
effective and binding only upon the parties thereto.
This Note and the rights and obligations of the Holder and of the
undersigned shall be governed by and construed and enforced in accordance with
the laws of the State of California.
Attorney's Online, Inc.
By:
----------------------------------------
James M. Koller, Chief Financial Officer
Page 2
EXHIBIT 5
---------
December 10, 1999
The Publishing Company of North America, Inc.
186 PCNA Parkway
Lake Helen, FL 32744
Attention: Mr. Peter S. Balise, President
RE: THE PUBLISHING COMPANY OF NORTH AMERICA, INC./
FORM S-3 CORRESPONDENCE
Dear Mr. Balise:
You have advised us that The Publishing Company of North America, Inc.
(the "Company") is filing with the United States Securities and Exchange
Commission an amendment of its Registration Statement on Form S-3 with respect
to 225,000 shares of Common Stock, no par value, issuable upon the exercise of
warrants issued to InterWest Associates.
In connection with the filing of this Registration Statement amendment,
you have requested us to furnish you with our opinion as to the legality of (i)
such of the Company's shares of Common Stock as are presently outstanding; and
(ii) such securities as shall be offered by the Company itself pursuant to the
Prospectus which is part of the Registration Statement.
You have advised us that as of December 10,1999, the Company's
authorized capital consists of 15,000,000 shares of Common Stock, no par value
per share, of which 3,290,720 shares of Common Stock are issued and outstanding.
You have further advised us that the Company has received valid consideration
for the issuance of these shares.
After having examined the Company's amended and restated articles of
incorporation, bylaws, minutes, the agreement with InterWest Associates and the
documents incorporated by reference in the Prospectus, we are of the opinion
that (i) the 3,290,720 shares of Common Stock are, and (ii) the 225,000 shares
of Common Stock offered by InterWest Associates will be, when the warrants are
exercised according to their terms and valid consideration received, fully paid
and nonassessable, duly authorized and validly issued.
We consent to the use of our name in the Prospectus under the caption
"Legal Matters".
Very truly yours,
/s/ Michael Harris, P.A.
------------------------
MICHAEL HARRIS, P.A.
EXHIBIT 23
----------
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3 No. 333-86741) and related prospectus of
The Publishing Company of North America, Inc. for the registration of 225,000
shares of its common stock and to the incorporation by reference therein of our
report dated March 3, 1999, with respect to the consolidated financial
statements of The Publishing Company of North America, Inc. included in its
Annual Report (Form 10-KSB/A) for the year ended December 31, 1998, filed with
the Securities and Exchange Commission.
/s/ Ernst & Young LLP
---------------------
Ernst & Young LLP
Orlando, FL
December 10, 1999
