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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 29, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------
FAXSAV INCORPORATED
(Exact name of Registrant as specified in its Charter)
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DELAWARE 11-3025769
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
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399 THORNALL STREET, EDISON, NEW JERSEY 08837
(732) 906-2000
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
------------------------------
THOMAS F. MURAWSKI
PRESIDENT AND CHIEF EXECUTIVE OFFICER
FAXSAV INCORPORATED
399 THORNALL STREET
EDISON, NEW JERSEY 08837
(732) 906-2000
(Name, address, including zip code, and telephone number,
including area code, of agent for service of process)
------------------------------
COPIES TO:
RICHARD R. PLUMRIDGE, ESQ.
BRIAN B. MARGOLIS, ESQ.
BROBECK, PHLEGER & HARRISON LLP
1633 BROADWAY, 47TH FLOOR
NEW YORK, NEW YORK 10019
(212) 581-1600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable on or after this Registration Statement is declared 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 the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SHARES TO BE AMOUNT TO BE AGGREGATE AGGREGATE AMOUNT OF
REGISTERED REGISTERED PRICE PER UNIT(1) OFFERING PRICE(2) REGISTRATION FEE
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Common Stock, $.01 par value............... 2,000,000 Shares $3.65 $7,300,000 $2,153.50
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(1) Based on the average high and low trading prices of the Common Stock, as
reported on the Nasdaq National Market, on September 23, 1998.
(2) Estimated pursuant to Rule 457(c) solely for the purpose of computing the
registration fee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH 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 THEREAFTER 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 SECTION 8(A), MAY
DETERMINE.
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<PAGE>
PROSPECTUS
2,000,000 SHARES
FAXSAV INCORPORATED
COMMON STOCK
--------------------------
This Prospectus relates to the public offering, which is not being
underwritten, of up to 2,000,000 shares (the "Shares") of Common Stock, par
value $.01 per share, of FaxSav Incorporated ("FaxSav" or the "Company"). All of
these shares have been issued to certain Selling Stockholders (the "Selling
Stockholders") under an exemption from registration under the Securities Act of
1933, as amended (the "Securities Act").
The Shares may be offered by the Selling Stockholders from time to time in
transactions on the Nasdaq National Market, in negotiated transactions, or a
combination of such methods of sale, at fixed prices which may be changed, at
market prices prevailing at the time of sale, at prices related to prevailing
market prices or at negotiated prices. The Selling Stockholders may effect such
transactions by selling the Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholders and/or the purchasers of the Shares
for whom such broker-dealers may act as agents or to whom they sell as
principals, or both (which compensation as to a particular broker-dealer might
be in excess of customary commissions). In order to comply with the securities
laws of certain states, if applicable, the Shares will be sold in such
jurisdictions only through registered or licensed brokers or dealers. The
Selling Stockholders may transfer their Shares under certain circumstances to
other persons who may, in turn, resell Shares in the manner described above. In
addition, the Selling Stockholders may pledge or make gifts of their Shares and
such Shares may also be sold by the pledgees or transferees. To the extent
required, the specific Shares to be sold, the names of the Selling Stockholders,
the public offering price, the names of any such agent, dealer or underwriter,
and any applicable commission or discount with respect to any particular offer
will be set forth in an accompanying Prospectus Supplement. See "Selling
Stockholders" and "Plan of Distribution."
None of the proceeds from the sale of the Shares by the Selling Stockholders
will be received by the Company. The Company has agreed to bear certain expenses
(other than underwriting discounts and selling commissions and fees and
disbursements of counsel and other advisors to the Selling Stockholders) in
connection with the registration of the Shares. The Company has agreed to
indemnify the Selling Stockholders and their affiliates against certain
liabilities, including liabilities under the Securities Act. The Selling
Stockholders have agreed to indemnify the Company and its affiliates against
certain liabilities, including liabilities under the Securities Act, under
certain circumstances.
The Selling Stockholders and any broker-dealers, agents or underwriters that
participate with the Selling Stockholders in the distribution of the Shares may
be deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act, and any commissions received by them and any profit on the
resale of the Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. See "Plan of Distribution"
herein for a description of indemnification arrangements.
The Common Stock of the Company is traded on the Nasdaq National Market
under the symbol "FAXX." On September 28, 1998, the last reported sales price of
the Company's Common Stock on the Nasdaq National Market was $4.38 per share.
--------------------------
AN INVESTMENT IN THE SHARES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING ON PAGE 5.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFERING MADE HEREBY, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, ANY SELLING STOCKHOLDER OR BY ANY OTHER PERSON. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SHARES
TO ANY PERSON OR BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION MAY NOT LAWFULLY BE MADE. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF.
THE DATE OF THIS PROSPECTUS IS SEPTEMBER 29, 1998
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TABLE OF CONTENTS
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PAGE
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Available Information...................................................................................... 2
Incorporation Of Certain Information By Reference.......................................................... 2
The Company................................................................................................ 4
Risk Factors............................................................................................... 5
Use Of Proceeds............................................................................................ 13
Selling Stockholders....................................................................................... 14
Plan Of Distribution....................................................................................... 14
Legal Matters.............................................................................................. 15
Experts.................................................................................................... 15
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AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 under the Securities Act with
respect to the Common Stock offered hereby. This Prospectus does not contain all
of the information set forth in the Registration Statement and the exhibits and
the schedules thereto. For further information with respect to the Company and
such Common Stock, reference is made to the Registration Statement and exhibits
and schedules thereto. Statements contained in this Prospectus as to the
contents of any contract or other document referred to are not necessarily
complete, and, with respect to any contract or other document filed as an
exhibit to the Registration Statement, each such statement is qualified in all
respects by reference to such exhibit. Copies of the Registration Statement and
the exhibits thereto are on file at the offices of the Commission and may be
obtained upon payment of the prescribed fee or may be examined without charge at
the public reference facilities of the Commission described below.
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files annual and quarterly reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information may be inspected, and copies of such material may be obtained upon
payment of the prescribed fees, at the Commission's Public Reference Section,
Room 1024, 450 Fifth Street, N.W., Washington D.C. 20549, as well as at the
Commission's Regional Offices at Seven World Trade Center, New York, New York
10048, and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511, or may be obtained from the Commission's Internet site on
the world wide web at http://www.sec.gov. Copies of such material can be
obtained in person from the Public Reference Section of the Commission at its
principal office located at 450 Fifth Street, N.W., Washington, D.C. 20549, upon
payment of the prescribed fees.
The Common Stock of the Company is traded on the Nasdaq National Market, and
in accordance therewith, annual and quarterly reports, proxy statements and
other information concerning the Company may be inspected at the Nasdaq National
Market's offices located in Washington, D.C.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed with the Commission are hereby incorporated by
reference in this Prospectus: (1) the Annual Report of the Company on Form 10-K
for the fiscal year ended December 31, 1997 (the "1997 Form 10-K"); (2) the
Quarterly Reports of the Company on Form 10-Q for the quarters ended March 31,
1998 and June 30, 1998; (3) the Proxy Statement of the Company in connection
with the Annual Meeting of the Stockholders held on May 28, 1998; and (4) the
Company's Current Report on Form 8-K filed on September 23, 1998.
All reports and other documents subsequently filed by the Company pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of this
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Offering shall be deemed to be incorporated by reference herein and to be a part
hereof from the date of filing of such reports and documents. Any statement
incorporated herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any or all of the foregoing documents incorporated herein by reference (other
than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such document). Requests for such documents
should be submitted in writing to Mr. Peter S. Macaluso, Vice President and
Chief Financial Officer, FaxSav Incorporated, 399 Thornall Street, Edison, New
Jersey 08837.
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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
THIS PROSPECTUS INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE EXCHANGE ACT. ALL
STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACTS INCLUDED IN THIS PROSPECTUS
OR INCORPORATED HEREIN BY REFERENCE REGARDING THE COMPANY'S FINANCIAL POSITION
AND BUSINESS STRATEGY MAY CONSTITUTE FORWARD-LOOKING STATEMENTS. ALTHOUGH THE
COMPANY BELIEVES THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING
STATEMENTS ARE REASONABLE, IT CAN GIVE NO ASSURANCE THAT SUCH EXPECTATIONS WILL
PROVE TO HAVE BEEN CORRECT. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THE COMPANY'S EXPECTATIONS ("CAUTIONARY STATEMENTS") ARE
DISCLOSED IN THIS PROSPECTUS, INCLUDING WITHOUT LIMITATION, IN CONJUNCTION WITH
THE FORWARD-LOOKING STATEMENTS UNDER "RISK FACTORS." ALL SUBSEQUENT WRITTEN AND
ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE COMPANY OR PERSONS ACTING ON
ITS BEHALF ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY
STATEMENTS.
THE COMPANY
The Company was incorporated in Delaware in November 1989 under the name
Digitran Corporation and changed its name to FaxSav Incorporated in February
1996. The Company's executive offices are located at 399 Thornall Street,
Edison, New Jersey 08837, and its telephone number is (732) 906-2000.
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RISK FACTORS
AN INVESTMENT IN THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVES A HIGH
DEGREE OF RISK AND SHOULD NOT BE MADE BY ANY INVESTOR WHO CANNOT AFFORD THE LOSS
OF HIS ENTIRE INVESTMENT. ACCORDINGLY, PROSPECTIVE INVESTORS SHOULD CAREFULLY
CONSIDER THE FOLLOWING FACTORS, IN ADDITION TO ALL OF THE OTHER INFORMATION
PRESENTED IN THIS PROSPECTUS, BEFORE PURCHASING ANY OF THE SHARES OF COMMON
STOCK OFFERED HEREBY.
HISTORY OF OPERATING LOSSES; ACCUMULATED DEFICIT
From its inception in 1989 through the six month period ended June 30, 1998,
the Company has experienced significant operating losses. The Company incurred
operating losses of $4.1 million, $7.5 million and $7.1 million during the years
ended December 31, 1995, 1996 and 1997, respectively and $3.1 million during the
six months ended June 30, 1998. The Company currently anticipates incurring
further operating losses as it attempts to expand its business and there can be
no assurance that its future operations will generate positive operating income.
As of June 30, 1998, the Company had an accumulated deficit of $35.3 million.
The Company has generated net operating loss ("NOL") carryforwards for
income tax purposes of approximately $30.0 million through December 31, 1997.
These NOL carryforwards have been recorded as a deferred tax asset of
approximately $9.5 million. Based upon the Company's history of operating losses
and presently known factors, management has determined that it is more likely
than not that the Company will be unable to generate sufficient taxable income
prior to the expiration of these NOL carryforwards and has accordingly reduced
its deferred tax assets to zero with a full valuation allowance.
INTENSE COMPETITION
The market for facsimile transmission services is intensely competitive and
there are limited barriers to entry. The Company expects that competition will
intensify in the future. The Company believes that its ability to compete
successfully will depend upon a number of factors, including market presence;
the capacity, reliability and security of its network infrastructure; the
pricing policies of its competitors and suppliers; the timing of introductions
of new services and service enhancements by the Company and its competitors; and
industry and general economic trends.
The Company's current and prospective competitors generally fall into the
following groups: (i) telecommunication companies, such as AT&T, MCI WorldCom,
Sprint and the regional Bell operating companies, and telecommunications
resellers; (ii) Internet service providers, such as Uunet Technologies, Inc., a
subsidiary of MCI WorldCom, Inc., and NETCOM On-Line Communications Services,
Inc., (iii) on-line services providers, such as Microsoft Corporation and
America Online, Inc. and (iv) direct fax delivery competitors, including Xpedite
Systems, Inc. and UNIFI Communications, Inc. Many of these competitors have
greater market presence, engineering and marketing capabilities, and financial,
technological and personnel resources than those available to the Company. As a
result, they may be able to develop and expand their communications and network
infrastructures more quickly, adapt more swiftly to new or emerging technologies
and changes in customer requirements, take advantage of acquisition and other
opportunities more readily, and devote greater resources to the marketing and
sale of their products and services than can the Company. Further, the
foundation of the Company's telephony network infrastructure consists of the
right to use the telecommunications lines of several of the above-mentioned long
distance carriers, including MCI WorldCom. There can be no assurance that these
companies will not discontinue or otherwise alter their relationships with the
Company in a manner that would have a material adverse effect upon the Company's
business, financial condition and results of operations. In addition, current
and potential competitors have established or may establish cooperative
relationships among themselves or with third parties to increase the ability of
their services to address the needs of the Company's current and prospective
customers. Accordingly, it is possible that new competitors or alliances among
competitors may emerge and rapidly acquire significant market share. In addition
to direct
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competitors, many of the Company's larger potential customers may seek to
internally fulfill their fax communication needs through the deployment of their
own computerized fax communications systems or network infrastructures for
intra-company faxing. Increased competition is likely to result in price
reductions and could result in reduced gross margins and erosion of the
Company's market share, any of which would have a material adverse effect on the
Company's business, financial condition and results of operations. There can be
no assurance that the Company will be able to compete successfully against
current or future competitors or that competitive pressures will not have a
material adverse effect on the Company's business, financial condition and
results of operations.
On August 7, 1997, the Federal Communications Commission (the "FCC") issued
new rules which may significantly reduce the cost of international calls
originating in the United States. The five-year phase-in period commenced on
January 1, 1998. To the extent that these new regulations are implemented and
result in reductions in the cost of international calls originating in the
United States, the Company will face increased competition for its international
fax services which may have a material adverse effect on the Company's business,
financial condition or results of operations.
POSSIBLE DELISTING FROM NASDAQ
The Common Stock of the Company is listed on the Nasdaq National Market
("Nasdaq") and continued inclusion of such securities on Nasdaq requires, among
other criteria, that the Company maintain at least $4.0 million in net tangible
assets. As of June 30, 1998, the Company had net tangible assets of
approximately $1.6 million and was not in compliance with the net tangible
assets maintenance requirement. On July 24, 1998, the Company completed a
private placement of the 2,000,000 shares of its Common Stock being registered
hereunder to a group of investors for an aggregate purchase price of $7.0
million. As a result, the Company's net tangible assets as of June 30, 1998 on a
pro forma basis, reflecting the proceeds from the private placement, amounted to
$8.5 million. Consequently, the Company is currently in compliance with the
Nasdaq maintenance requirements and expects to be so notified in the near future
by Nasdaq, thereby reducing the risk that the Company's shares would be
delisted. However, if Nasdaq determines that the Company is not currently in
compliance with its maintenance requirements or if, in the future, the Company
is unable to satisfy such maintenance requirements, the Company's securities may
be delisted from Nasdaq. There can be no assurance that the Common stock will
not be delisted, which would materially impair the liquidity of such securities.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FINANCING; DILUTION
The Company currently believes that its current cash and cash equivalents
will be sufficient to meet its presently anticipated cash needs for working
capital and capital expenditure requirements through August 31, 1999. However,
the Company's cash requirements may vary materially from those now planned as a
result of unforeseen changes that could consume a significant portion of the
available resources before such time. To the extent that funds expected to be
generated from the Company's operations are insufficient to meet current or
planned operating requirements or to maintain a Nasdaq listing, the Company will
seek to obtain additional funds through bank facilities, equity or debt
financing, collaborative or other arrangements with corporate partners and
others and from other sources. See "--Possible Delisting from Nasdaq."
Additional funding may not be available when needed or on terms acceptable to
the Company, which could have a material adverse effect on the Company's
business, financial condition and results of operations. If adequate funds are
not available, the Company may be required to delay or to eliminate certain
expenditures or to license to third parties the rights to commercialize
technologies that the Company would otherwise seek to develop itself. In
addition, in the event that the Company obtains any additional funding, such
financings may have a dilutive effect on the holders of the Company's
securities.
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LIMITED PROTECTION OF INTELLECTUAL PROPERTY RIGHTS; RISK OF THIRD PARTY CLAIMS
OF INFRINGEMENT.
The Company's success is dependent upon its proprietary technology. The
Company relies primarily on a combination of contract, copyright and trademark
law, trade secrets, confidentiality agreements and contractual provisions to
protect its proprietary rights. The Company has been granted a patent related to
its faxSAV Connector and has a patent application pending for its "e-mail
Stamps" security technology incorporated into its faxMailer service. There can
be no assurance that a patent will issue from such application or that present
or future patents will provide sufficient protection to the Company's present or
future technologies, services and processes. In addition, there can be no
assurance that others will not independently develop substantially equivalent
proprietary information or obtain access to the Company's know-how. Despite the
Company's efforts to protect its proprietary rights, unauthorized parties may
attempt to copy aspects of the Company's services or to obtain and use
information that the Company regards as proprietary. In addition, the laws of
some foreign countries do not protect the Company's proprietary rights to the
same extent as do the laws of the United States. There can be no assurance that
the steps taken by the Company to protect its proprietary rights will be
adequate or that the Company's competitors will not independently develop
technologies that are substantially equivalent or superior to the Company's
technologies.
There can be no assurance that other third parties will not assert
infringement claims against the Company in the future. Patents have been granted
recently on fundamental technologies in the communications and desktop software
areas, and patents may issue which relate to fundamental technologies
incorporated in the Company's services. As patent applications in the United
States are not publicly disclosed until the patent issues, applications may have
been filed which, if issued as patents, could relate to the Company's services.
The Company could incur substantial costs and diversion of management resources
with respect to the defense of any claims that the Company has infringed upon
the proprietary right of others, which costs and diversion could have a material
adverse effect on the Company's business, financial condition and results of
operations. Furthermore, parties making such claims could secure a judgment
awarding substantial damages, as well as injunctive or other equitable relief
which could effectively block the Company's ability to license and sell its
services in the United States or abroad. Any such judgment could have a material
adverse effect on the Company's business, financial condition and results of
operations. In the event a claim relating to proprietary technology or
information is asserted against the Company, the Company may seek licenses to
such intellectual property. There can be no assurance, however, that licenses
could be obtained on terms acceptable to the Company, or at all. The failure to
obtain any necessary licenses or other rights could have a material adverse
effect on the Company's business, financial condition and results of operations.
QUARTERLY FLUCTUATIONS; POSSIBLE VOLATILITY OF STOCK PRICE
The Company may in the future experience significant quarter to quarter
fluctuations in its results of operations, which may result in volatility in the
price of the Company's Common Stock. Quarterly results of operations may
fluctuate as a result of a variety of factors, including demand for the
Company's services, the introduction of new services and service enhancements by
the Company or its competitors, market acceptance of new services, the mix of
revenues between Internet-based versus telephony-based deliveries, the timing of
significant marketing programs, the number and timing of the hiring of
additional personnel, competitive conditions in the industry and general
economic conditions. The Company's revenues are difficult to forecast.
Shortfalls in revenues may adversely and disproportionately affect the Company's
results of operations because a high percentage of the Company's operating
expenses are relatively fixed, and planned expenditures, such as the anticipated
expansion of the Company's Internet infrastructure, are based primarily on sales
forecasts. In addition, the stock market in general has experienced extreme
price and volume fluctuations, which have affected the market price of
securities of many companies in the telecommunications and technology industries
and which may have been unrelated to the operating
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performance of such companies. These market fluctuations may adversely affect
the market price of the Company's Common Stock. Accordingly, the Company
believes that period to period comparisons of results of operations are not
necessarily meaningful and should not be relied upon as an indication of future
results of operations. There can be no assurance that the Company will be
profitable in any future quarter. Due to the foregoing factors, it is likely
that in one or more future quarters the Company's operating results will be
below the expectations of public market analysts and investors. Such an event
would have a material adverse effect on the price of the Company's Common Stock.
DEPENDENCE ON NETWORK INFRASTRUCTURE; NO ASSURANCE OF ADDITIONAL
INTERNET-CAPABLE NODE DEPLOYMENT
The Company's future success will depend in part upon the capacity,
reliability and security of its network infrastructure and in part upon its
ability to expand the deployment of an international network of Internet-capable
facsimile nodes. The Company must continue to expand and adapt its network
infrastructure as the number of customers and the volume of traffic they wish to
transmit increases. The expansion and adaptation of the Company's network
infrastructure will require substantial financial, operational and management
resources. There can be no assurance that the Company will be able to expand or
adapt its network infrastructure to meet any additional demand on a timely
basis, at a commercially reasonable cost, or at all. In addition, there can be
no assurance that the Company will be able to deploy additional contemplated
Internet-capable facsimile nodes on a timely basis, at a commercially reasonable
cost, or at all. Any failure of the Company to expand its network infrastructure
on a timely basis, to adapt it to changing customer requirements or evolving
industry standards or to complete the development of the contemplated
Internet-capable facsimile node infrastructure on a timely basis would have a
material adverse effect on the Company's business, financial condition and
results of operations. Further, there can be no assurance that the Company will
be able to satisfy the regulatory requirements in each of the countries
currently targeted for node deployment, which may prevent the Company from
installing Internet-capable facsimile nodes in such countries and may have a
material adverse effect on the Company's business, operating results and
financial condition.
DEPENDENCE ON THE INTERNET AS A LOW-COST FACSIMILE TRANSMISSION MEDIUM; NO
ASSURANCE OF INCREASED MARKET ACCEPTANCE
The Company believes that its future success will depend in part upon its
ability to significantly expand its base of Internet-capable nodes and route
more of its customers' traffic through the Internet. The Company's success is
therefore largely dependent upon the viability of the Internet as a medium for
the transmission of documents. There can be no assurance that document
transmission over the Internet will continue to be reliable or that Internet
capacity constraints will not develop which inhibit efficient document
transmission. The Company accesses the Internet from its Internet-capable nodes
by dedicated connection to third party internet service providers. The Company
pays fixed monthly fees for such Internet access, regardless of the Company's
usage or the volume of its customers' traffic. There can be no assurance that
the current pricing structure for access to and use of the Internet will not
change unfavorably. If material capacity constraints develop on the Internet or
the current Internet pricing structure changes unfavorably, the Company's
business, financial condition and results of operations would be materially and
adversely affected. In addition, the Company's future success is dependent upon
the increased acceptance by potential customers of the Internet as the preferred
medium for transmission of documents. There can be no assurance that such market
acceptance shall continue to increase. Lack of increased market acceptance would
materially and adversely affect the Company's business, financial condition and
results of operations.
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NO ASSURANCE OF SUCCESSFUL MANAGEMENT OF GROWTH
The Company has rapidly and significantly expanded its operations and
anticipates that significant expansion will continue to be required in order to
address potential market opportunities. There can be no assurance that such
expansion will be successfully completed or that it will generate sufficient
revenues to cover the Company's expenses. The inability of the Company to
promptly address and respond to these circumstances could have a material
adverse effect on the Company's business, financial condition and results of
operations.
RAPID INDUSTRY CHANGE
The telecommunications industry in general, and the facsimile transmission
business in particular, are characterized by rapid and continuous technological
change. Future technological advances in the telecommunications industry may
result in the availability of new services or products that could compete with
the facsimile transmission services provided by the Company or reduce the cost
of existing products or services, any of which could enable the Company's
existing or potential customers to fulfill their fax communications needs more
cost efficiently. There can be no assurance that the Company will be successful
in developing and introducing new services that meet changing customer needs and
respond to technological changes or evolving industry standards in a timely
manner, if at all, or that services or technologies developed by others will not
render the Company's services noncompetitive. The inability of the Company to
respond to changing market conditions, technological developments, evolving
industry standards or changing customer requirements, or the development of
competing technology or products that render the Company's services
noncompetitive would have a material adverse effect on the Company's business,
financial condition and results of operations.
RISK OF SYSTEM FAILURE; SECURITY RISKS
The Company's operations are dependent on its ability to protect its network
from interruption by damage from fire, earthquake, power loss,
telecommunications failure, unauthorized entry, computer viruses or other events
beyond the Company's control. Most of the Company's current computer hardware
and switching equipment, including its processing equipment, is currently
located at three sites. There can be no assurance that the Company's existing
and planned precautions of backup systems, regular data backups and other
procedures will be adequate to prevent significant damage, system failure or
data loss. Despite the implementation of security measures, the Company's
infrastructure may also be vulnerable to computer viruses, hackers or similar
disruptive problems caused by its customers or other Internet users. Persistent
problems continue to affect public and private data networks, including computer
break-ins and the misappropriation of confidential information. Such computer
break-ins and other disruptions may jeopardize the security of information
stored in and transmitted through the computer systems of the individuals,
businesses and financial institutions utilizing the Company's services, which
may result in significant liability to the Company and also may deter potential
customers from using the Company's services. Any damage, failure or security
breach that causes interruptions or data loss in the Company's operations or in
the computer systems of its customers could have a material adverse effect on
the Company's business, financial condition and results of operations.
DEPENDENCE UPON SUPPLIERS; SOLE AND LIMITED SOURCES OF SUPPLY
The Company relies on third parties to supply key components of its network
infrastructure, including long distance telecommunications services and
telecommunications node equipment, many of which are available only from sole or
limited sources. MCI WorldCom is the primary provider of long distance
telecommunications services to the Company. The Company has from time-to-time
experienced partial interruptions of service from its telecommunications
carriers which have temporarily prevented customers in limited geographical
areas from reaching the FaxSav network. There can be no assurance that the
Company will not experience partial or complete service interruptions in the
future. The fixed term of one
9
<PAGE>
of the Company's contracts with MCI WorldCom expired on November 30, 1997, after
which the contract has continued and will continue on a month-to-month basis
until renegotiated by the parties or terminated by either party. There can be no
assurance that MCI WorldCom and the Company's other telecommunications providers
will continue to provide long distance services to the Company at attractive
rates, or at all, or that the Company will be able to obtain such services in
the future from these or other long distance providers on the scale and within
the time frames required by the Company. Any failure to obtain such services on
a timely basis at an affordable cost, or any significant delays or interruptions
of service from such carriers, would have a material adverse effect on the
Company's business, financial condition and results of operations.
All of the faxboards used in the Company's telecommunications nodes are
supplied by Brooktrout Technology, Inc. ("Brooktrout"). The Company purchases
Brooktrout faxboards on a non-exclusive basis pursuant to purchase orders placed
from time-to-time, carries a limited inventory of faxboards and has no
guaranteed supply arrangement with Brooktrout. In addition to faxboards, many of
the routers, switches and other hardware components used in the Company's
network infrastructure are supplied by sole or limited sources on a
non-exclusive, purchase order basis. There can be no assurance that Brooktrout
or the Company's other suppliers will not enter into exclusive arrangements with
the Company's competitors, or cease selling these components to the Company at
commercially reasonable prices, or at all. The anticipated expansion of the
Company's network infrastructure is expected to place a significant demand on
the Company's suppliers, some of which have limited resources and production
capacity. In addition, certain of the Company's suppliers, in turn, rely on sole
or limited sources of supply for components included in their products. Failure
of the Company's suppliers to adjust to meet such increasing demand may prevent
them from continuing to supply components and products in the quantities and
quality and at the times required by the Company, or at all. The Company's
inability to obtain sufficient quantities of sole or limited source components
or to develop alternative sources if required could result in delays and
increased costs in the expansion of the Company's network infrastructure or in
the inability of the Company to properly maintain the existing network
infrastructure, which would have a material adverse effect on the Company's
business, financial condition and results of operations.
RISK OF SOFTWARE DEFECTS OR DEVELOPMENT DELAYS
Software-based services and equipment, such as the Company's faxSAV for
Internet suite of services and the faxSAV Connector, may contain undetected
errors or failures when introduced or when new versions are released. There can
be no assurance that, despite testing by the Company and by current and
potential customers, errors will not be found in such software or other releases
after commencement of commercial shipments, or that the Company will not
experience development delays, resulting in delays in the shipment of software
and a loss of or delay in market acceptance, any of which could have a material
adverse effect on the Company's business, financial condition and results of
operations.
DEPENDENCE ON KEY PERSONNEL
The Company's future performance depends in significant part upon the
continued service of its key technical, sales and senior management personnel,
none of whom is bound by an employment agreement. Competition for such personnel
is intense, and there can be no assurance that the Company can retain its key
technical, sales and managerial employees or that it can attract, assimilate or
retain other highly qualified technical, sales and managerial personnel in the
future.
RELIANCE ON INTERNATIONAL STRATEGIC ALLIANCES; RISKS ASSOCIATED WITH
INTERNATIONAL OPERATIONS
The Company has established and intends to expand an international customer
base by forming strategic sales and marketing alliances with foreign Internet
service providers, telecommunications companies and resellers. There can be no
assurance that the Company will be able to establish additional
10
<PAGE>
strategic alliances or to maintain such strategic alliances. The Company's
success in expanding its international customer base depends not only on the
formation of additional strategic alliances but also on the success of these
partners and their ability to market the Company's services. The failure to
maintain such strategic alliances or the failure of these partners to
successfully develop and sustain a market for the Company's service will have a
material adverse effect on the Company's ability to expand its international
customer base, which could have a material adverse effect on the Company's
business, financial condition and results of operations.
In 1997, the Company derived approximately $2.3 million, or 13.2% of its
total revenues, from customers outside of the United States. The Company expects
that such revenues will represent an increasing percentage of its total revenues
in the future. Risks inherent in the Company's international business activities
generally include foreign currency exchange risk, unexpected changes in
regulatory requirements, tariffs and other trade barriers, costs of localizing
products for foreign countries, lack of acceptance of localized products in
foreign markets, longer accounts receivable payment cycles, difficulties in
managing international operations, potentially adverse tax consequences, and the
burdens of complying with a wide variety of foreign laws. There can be no
assurance that such factors will not have a material adverse effect on the
Company's future international revenues and, consequently, on the Company's
business, financial condition and results of operations.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are coded to
accept only two digit entries in the date code field. These date code fields
will need to accept four digit entries to distinguish 21st century dates from
20th century dates. As a result, in less than two years, computer systems and/or
software used by many companies may need to be upgraded to comply with such
"Year 2000" requirements. Significant uncertainty exists in the software
industry concerning the potential effects associated with such compliance.
The Company has completed a study of its computing and networking systems
for the purpose of identifying all date representations and possible Year 2000
impact. The computing systems that provide application layer services (i.e.,
FaxSav customer services) within the FaxSav network are based upon some variant
of the Unix operating system, which adequately represents dates beyond the year
2000. Many of the computing systems that support the internal operations of the
Company's business have the similar capacity to represent dates beyond the Year
2000. In addition, for all its internal accounting applications, the Company has
purchased new accounting system software that the manufacturer specifies as Year
2000 compliant. The Company's expected total cost to implement the new software
is approximately $0.2 million. Finally, the Company intends to conduct a test of
its computing systems to verify the results of its study prior to the Year 2000.
There can be no assurance that the Company's software contains all necessary
date code changes or that all problems can be identified by the Company's study
and subsequent testing. Accordingly, the Company and its customers may be
affected by Year 2000 issues. Compliance with Year 2000 requirements may disrupt
the Company's ability to continue developing and marketing its facsimile
transmission products and services. The Company may also incur certain
unexpected expenditures in connection with Year 2000 compliance. Any of the
foregoing could result in a material adverse effect on the Company's business,
financial condition and results of operations.
GOVERNMENT REGULATION
The Company is subject to regulation by various state public service and
public utility commissions and by various international regulatory authorities.
FaxSav is licensed by the FCC as an authorized telecommunications company and is
classified as a "non-dominant interexchange carrier." Generally, the FCC has
chosen not to exercise its statutory power to closely regulate the charges or
practices of non-
11
<PAGE>
dominant carriers. Nevertheless, the FCC acts upon complaints against such
carriers for failure to comply with statutory obligations or with the FCC's
rules, regulations and policies. The FCC also has the power to impose more
stringent regulatory requirements on the Company and to change its regulatory
classification. There can be no assurance that the FCC will not change the
Company's regulatory classification or otherwise subject the Company to more
burdensome regulatory requirements.
In connection with the deployment of Internet-capable nodes in countries
throughout the world, the Company is required to satisfy a variety of foreign
regulatory requirements. The Company intends to explore and seek to comply with
these requirements on a country-by-country basis as the deployment of
Internet-capable facsimile nodes continues. There can be no assurance that the
Company will be able to satisfy the regulatory requirements in each of the
countries currently targeted for node deployment, and the failure to satisfy
such requirements may prevent the Company from installing Internet-capable
facsimile nodes in such countries. The failure to deploy a number of such nodes
could have a material adverse effect on the Company's business, operating
results and financial condition.
The Company's nodes and its FAXLAUNCHER service utilize encryption
technology in connection with the routing of customer documents through the
Internet. The export of such encryption technology is regulated by the United
States government. The Company has authority for the export of such encryption
technology other than to Cuba, Iran, Iraq, Libya, North Korea and Rwanda.
Nevertheless, there can be no assurance that such authority will not be revoked
or modified at any time for any particular jurisdiction or in general. In
addition, there can be no assurance that such export controls, either in their
current form or as may be subsequently enacted, will not limit the Company's
ability to distribute its services outside of the United States or
electronically. While the Company takes precautions against unlawful exportation
of its software, the global nature of the Internet makes it virtually impossible
to effectively control the distribution of its services. Moreover, future
Federal or state legislation or regulation may further limit levels of
encryption or authentication technology. Any such export restrictions, the
unlawful exportation of the Company's services, or new legislation or regulation
could have a material adverse effect on the Company's business, financial
condition and results of operations.
SHARES ELIGIBLE FOR FUTURE SALE; EFFECT ON ABILITY TO RAISE CAPITAL
Sales of substantial amounts of Common Stock in the public market following
this Offering, or the perception that such sales could occur, could adversely
affect the prevailing market price of the Company's Common Stock and may have a
material and adverse effect on the Company's ability to raise the capital
necessary to fund its future operations. As of August 5, 1998, without taking
into account shares of Common Stock issued upon exercise of stock options,
warrants or other rights to acquire Common Stock after such date, the Company
had outstanding 12,834,482 shares of Common Stock. The Shares and substantially
all of the shares of Common Stock already outstanding will be freely tradeable
in the public market without restriction under the Securities Act, except that
any shares held by "affiliates" of the Company, as such term is defined in Rule
144(a) under the Securities Act ("Affiliates"), may generally only be sold in
compliance with the applicable provisions of Rule 144 of the Securities Act. In
general, under Rule 144 an Affiliate is entitled to sell within any three-month
period a number of shares that does not exceed the greater of 1% of the then
outstanding shares of the Company's Common Stock (approximately 128,345 shares)
or the average weekly trading volume in the Company's Common Stock on the Nasdaq
National Market during the four calendar weeks preceding the date on which
notice of such sale was filed under Rule 144. Sales under Rule 144 are also
subject to certain provisions relating to the manner and notice of sale and the
availability of current public information about the Company. Additional shares
of Common Stock, including shares issuable upon exercise of options, warrants
and other rights to acquire Common Stock, will also become eligible for sale in
the public market from time to time in the future. Furthermore, certain holders
of Common Stock have the right to cause the Company to register their shares
under the Securities Act in the future. The Company is required to bear the
expenses of all such
12
<PAGE>
required registrations (except underwriting discounts and commissions). The
Company is required to use its best efforts to effect such registrations,
subject to certain conditions and limitations.
ANTITAKEOVER CONSIDERATIONS
The Company's Sixth Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation") authorizes the Board of Directors to issue,
without stockholder approval, up to 1,000,000 shares of Preferred Stock with
voting, conversion and other rights and preferences that could adversely affect
the voting power or other rights of the holders of Common Stock. The Certificate
of Incorporation also provides for staggered terms for the members of the Board
of Directors. In addition, the Company will be subject to the provisions of
Section 203 of the Delaware General Corporation Law, which will generally
prohibit the Company from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. The foregoing and other
provisions of the Certificate of Incorporation and the Company's By-laws, as
amended (the "By-laws") and the application of Section 203 of the Delaware
General Corporation Law could have the effect of deterring certain takeovers or
delaying or preventing certain changes in control or management of the Company,
including transactions in which stockholders might otherwise receive a premium
for their shares over then current market prices.
NO DIVIDENDS
The Company has never paid any cash dividends on its Common Stock and does
not anticipate paying any cash dividends in the foreseeable future.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares. All
proceeds will be received by the Selling Stockholders. See "Selling
Stockholders."
13
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth the number of shares of Common Stock
beneficially owned by each of the Selling Stockholders as of September 14, 1998.
None of the Selling Stockholders has had a material relationship with the
Company within the past three years other than as a result of the ownership of
the Shares or other securities of the Company. The Shares offered by this
Prospectus may be offered from time to time by the Selling Stockholders. See
"Plan of Distribution."
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
NUMBER OF SHARES AFTER OFFERING
BENEFICIALLY NUMBER OF SHARES ------------------------
OWNED REGISTERED NUMBER
NAME OF SELLING STOCKHOLDER PRIOR TO OFFERING FOR SALE HEREBY OF SHARES PERCENT
- ------------------------------------------------------- ----------------- ----------------- ----------- -----------
<S> <C> <C> <C> <C>
CMS Concentrated Equity Fund, L.P...................... 150,000 150,000 0 0.0%
Deem Trust............................................. 10,000 10,000 0 0.0%
East River Ventures, L.P............................... 285,714 285,714 0 0.0%
Equities Holdings LLC.................................. 71,429 71,429 0 0.0%
Herbert Friedman....................................... 2,143 2,143 0 0.0%
Montague Hackett....................................... 4,286 4,286 0 0.0%
Haussman Holdings, Ltd................................. 250,000 250,000 0 0.0%
Alicia Lindgren........................................ 2,142 2,142 0 0.0%
M3 Partners LLC........................................ 8,572 8,572 0 0.0%
Harold Newman.......................................... 40,000 40,000 0 0.0%
Piton Partners......................................... 150,000 150,000 0 0.0%
Stanley Rawn........................................... 4,286 4,286 0 0.0%
Stanford B School Trust................................ 150,000 150,000 0 0.0%
Victory Ventures, LLC.................................. 171,428 171,428 0 0.0%
Watershed Cayman, Ltd.................................. 650,000 550,000 100,000 *
Whittier Ventures LLC.................................. 150,000 150,000 0 0.0%
--
----------------- ----------------- -----------
TOTAL............................................ 2,100,000 2,000,000 100,000 *
--
--
----------------- ----------------- -----------
----------------- ----------------- -----------
</TABLE>
- ------------------------
* Less than 1%.
The Shares are being registered as a result of a contractual arrangement
with the Selling Stockholders. The Company has agreed to bear certain expenses
(other than underwriting discounts and selling commissions and fees and
disbursements of counsel and other advisors to the Selling Stockholders) in
connection with the registration of the Shares.
The Company has agreed to prepare and file such amendments and supplements
to the Registration Statement as may be necessary to keep this Registration
Statement effective until the earlier of: (a) July 22, 2000; or (b) the date on
which all of the Shares have been sold pursuant to the terms hereof.
PLAN OF DISTRIBUTION
The Shares offered hereby may be offered by the Selling Stockholders from
time to time in transactions on the Nasdaq National Market, in negotiated
transactions, or a combination of such methods of sale, at fixed prices which
may be changed, at market prices prevailing at the time of sale, at prices
related to prevailing market prices or at negotiated prices. The Selling
Stockholders may effect such transactions by selling the Shares to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Stockholders and/or the
purchasers of the Shares for whom such broker-dealers may act as agents or to
whom they sell as principals, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions). In order to comply
with the securities laws of certain states, if applicable, the Shares will be
14
<PAGE>
sold in such jurisdictions only through registered or licensed brokers or
dealers. The Selling Stockholders may transfer their Shares under certain
circumstances to other persons who may, in turn, resell Shares in the manner
described above. In addition, the Selling Stockholders may pledge or make gifts
of their Shares and such Shares may also be sold by the pledgees or transferees.
At the time a particular offer of Shares is made, to the extent required, a
Prospectus Supplement will be distributed which will set forth the number of
Shares being offered and the terms of the offering including the name or names
of any underwriters, dealers or agents, the purchase price paid by any
underwriter for the Shares purchased from Selling Stockholders, any discounts,
commissions and other items constituting compensation from the Selling
Stockholders and any discounts, commissions or concessions allowed or reallowed
or paid to dealers.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with by the Company and the Selling
Stockholders.
The Selling Stockholders may also transfer their Shares pursuant to Rule
144, whether or not the Registration Statement, of which this Prospectus forms a
part, is effective at the time of any such transfer.
The Selling Stockholders and any broker-dealers, agents or underwriters that
participate with the Selling Stockholders in the distribution of the Shares may
be deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act, and any commissions received by them and any profit on the
resale of the Selling Stockholder Shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act. The Company has
agreed to indemnify the Selling Stockholders and their affiliates against
certain liabilities, including liabilities under the Securities Act. The Selling
Stockholders have agreed to indemnify the Company and its affiliates against
certain liabilities, including liabilities under the Securities Act.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Shares may not simultaneously engage in
market making activities with respect to the Common Stock of the Company for a
period of two business days prior to the commencement of such distribution. In
addition and without limiting the foregoing, each Selling Stockholder will be
subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including, without limitation, Regulation M, which
provisions may limit the timing of purchases and sales of shares of the
Company's Common Stock by the Selling Stockholders.
The Company has agreed to bear certain expenses (other than underwriting
discounts and selling commissions and fees and disbursements of counsel and
other advisors to the Selling Stockholders) in connection with the registration
of the Shares.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon for the
Company by Brobeck, Phleger & Harrison LLP, New York, New York.
EXPERTS
The balance sheets as of December 31, 1997 and 1996 and the statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1997, incorporated by reference in this
prospectus, have been incorporated herein, in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in accounting and auditing.
15
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2,000,000 SHARES
FAXSAV INCORPORATED
COMMON STOCK
---------------------
PROSPECTUS
---------------------
SEPTEMBER 29, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth an estimate of the expenses to be incurred by
the Company in connection with the issuance and distribution of the securities
being registered hereby. All such expenses will be borne by the Company:
<TABLE>
<CAPTION>
AMOUNT TO
BE PAID
-----------
<S> <C>
SEC Registration Fee.......................................... $ 2,153
Nasdaq Listing Fee............................................ 17,500
Legal Fees and Expenses....................................... 20,000
Accounting Fees and Expenses.................................. 10,000
Miscellaneous................................................. 347
-----------
Total................................................... $ 50,000
-----------
-----------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law authorizes a court to
award or a corporation's Board of Directors to grant indemnification to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended (the "Act"). Article IX of the Registrant's Sixth Amended and
Restated Certificate of Incorporation provides for indemnification of its
directors and officers and permissible indemnification of employees and other
agents to the maximum extent permitted by the Delaware General Corporation Law.
The Company has purchased liability insurance on behalf of its directors and
officers for liabilities arising out of their capacities as such.
ITEM 16. EXHIBITS
The following is a list of Exhibits filed as part of the Registration
Statement:
<TABLE>
<C> <S>
3.1 Registrant's Sixth Amended and Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3.3 to the Registrant's Registration Statement on Form S-1,
Registration No. 333-09613 ("Registrant's Registration Statement")).
3.2 By-laws of the Registrant (incorporated by reference to Exhibits 3.4 and 3.5 to the
Registrant's Registration Statement).
4.1 Specimen certificate for shares of the Registrant's Common Stock (incorporated herein
by reference to Exhibit 4.1 to the Registrant's Registration Statement).
4.2 Provisions of the Articles of Incorporation and By-laws of the Registrant defining
rights of holders of Common Stock of the Registrant (incorporated herein by reference
to Exhibits 3.1, 3.2, 3.3, 3.4 and 3.5 to the Registrant's Registration Statement).
5.1 Opinion of Brobeck, Phleger & Harrison LLP.*
10.1 Form of Common Stock Purchase Agreement, Dated July 22, 1998.*
23.1 Consent of Brobeck, Phleger & Harrison LLP (included in the opinion filed as Exhibit
5.1).
23.2 Consent of PricewaterhouseCoopers LLP, independent accountants.*
24.1 Power of Attorney (included with signature page).
</TABLE>
- ------------------------
* Filed herewith.
II-1
<PAGE>
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 14 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 Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than 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 Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made
of the securities offered hereby, 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. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective 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 the undertakings set forth in paragraphs (i) and (ii)
above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in this
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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 bona fide 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.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 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.
II-2
<PAGE>
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus 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.
II-3
<PAGE>
SIGNATURES
KNOW ALL MEN BY THESE PRESENTS, that each person or entity whose signature
appears below constitutes and appoints Thomas F. Murawski and Peter S. Macaluso,
and each of them, its true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for it and in its name, place and
stead, in any and all capacities, to sign any and all amendments, including any
post-effective amendments, to this Registration Statement on Form S-3, or any
registration statement relating to the offering to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as it might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds 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 the City of Edison, State of New Jersey, on September 29, 1998.
<TABLE>
<S> <C> <C>
FAXSAV INCORPORATED
By: /s/ THOMAS F. MURAWSKI
---------------------------------------------
Thomas F. Murawski
CHAIRMAN OF THE BOARD OF DIRECTORS,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities indicated on September 29, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------------------ ---------------------------------------------------------
<C> <S>
/s/ THOMAS F. MURAWSKI
------------------------------------------- Chairman of the Board of Directors, President and Chief
Thomas F. Murawski Executive Officer (principal executive officer)
/s/ PETER S. MACALUSO
------------------------------------------- Vice President and Chief Financial Officer (principal
Peter S. Macaluso financial and accounting officer)
/s/ JEFFREY M. DRAZAN
-------------------------------------------
Jeffrey M. Drazan Director
/s/ PETER A. HOWLEY
-------------------------------------------
Peter A. Howley Director
/s/ ROBERT LABANT
-------------------------------------------
Robert Labant Director
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
- ----------- -------------------------------------------------------------------------------------------------- -----------
<C> <S> <C>
3.1 Registrant's Sixth Amended and Restated Certificate of Incorporation (incorporated by reference to
Exhibit 3.3 to the Registrant's Registration Statement on Form S-1, Registration No. 333-09613
("Registrant's Registration Statement")...........................................................
3.2 By-Laws of the Registrant (incorporated by reference to Exhibit 3.4 and 3.5 to the Registrant's
Registration Statement)...........................................................................
4.1 Specimen certificate for shares of the Registrant's Common Stock (incorporated herein by reference
to Exhibit 4.1 to the Registrant's Registration Statement)........................................
4.2 Provisions of the Articles of Incorporation and By-laws of the Registrant defining rights of
holders of Common Stock of the Registrant (incorporated herein by reference to Exhibits 3.1., 3.2,
3.3, 3.4 and 3.5 to the Registrant's Registration Statement)......................................
5.1 Opinion of Brobeck, Phleger & Harrison LLP*.......................................................
10.1 Form of Common Stock Purchase Agreement, Dated July 22, 1998*.....................................
23.1 Consent of Brobeck, Phleger & Harrison LLP (included in the opinion filed as Exhibit 5.1).........
23.2 Consent of PricewaterhouseCoopers LLP, independent accountants*...................................
24.1 Power of Attorney (included with signature page)..................................................
</TABLE>
- ------------------------
* Filed herewith.
<PAGE>
EXHIBIT 5.1
September 29, 1998
FaxSav Incorporated
399 Thornall Street
Edison, New Jersey 08837
Ladies and Gentlemen:
We have assisted in the preparation and filing by FaxSav Incorporated (the
"Company") of a Registration Statement on Form S-3 (the "Registration
Statement"), with the Securities and Exchange Commission, relating to the sale
of up to 2,000,000 shares (the "Shares") of Common Stock, $0.01 par value (the
"Common Stock"), of the Company. A form of common stock purchase agreement (the
"Common Stock Purchase Agreement") is filed as an exhibit to the Registration
Statement. The Registration Statement relates to 2,000,000 Shares to be sold by
certain stockholders of the Company (the "Shares").
We have examined such records and documents and have made such examination
of laws as we considered necessary to form a basis for the opinion set forth
herein. In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, and the
conformity with the originals of all documents submitted to us as copies
thereof.
Based upon and subject to the foregoing, we are of the opinion that (i) the
Shares have been duly authorized and (ii) the Shares have been validly issued
and are fully paid and nonassessable.
We hereby consent to the use of our name in the Registration Statement under
the caption "Legal Matters" in the related Prospectus and consent to the filing
of this opinion as an exhibit thereto.
<TABLE>
<S> <C> <C>
Very truly yours,
/s/ BROBECK, PHLEGER & HARRISON LLP
-----------------------------------------
BROBECK, PHLEGER & HARRISON LLP
</TABLE>
<PAGE>
EXHIBIT 10.1
FAXSAV INCORPORATED
COMMON STOCK PURCHASE AGREEMENT
----------------
July 22, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. Purchase and Sale of Stock.................................................................... 1
1.1 Sale and Issuance of Common Stock.................................................... 1
1.2 Closing.............................................................................. 1
2. Representations and Warranties of the Company................................................. 1
2.1 Organization, Good Standing and Qualification........................................ 1
2.2 Authorization........................................................................ 2
2.3 Valid Issuance of Common Stock....................................................... 2
2.4 Governmental Consents................................................................ 2
2.5 Litigation........................................................................... 2
2.6 Compliance with Other Instruments.................................................... 2
2.7 Financial Statements................................................................. 3
2.8 SEC Filings.......................................................................... 3
2.9 Other Information.................................................................... 3
3. Representations and Warranties of the Investor................................................ 3
3.1 Authorization........................................................................ 4
3.2 Purchase Entirely for Own Account.................................................... 4
3.3 Disclosure of Information............................................................ 4
3.4 Investment Experience................................................................ 4
3.5 Accredited Investor.................................................................. 4
3.6 Restricted Securities................................................................ 5
4. Conditions of the Investors' Obligations at Closing........................................... 5
4.1 Closing.............................................................................. 5
4.2 Representations and Warranties....................................................... 5
4.3 Performance.......................................................................... 5
4.4 Qualifications....................................................................... 5
5. Conditions of the Company's Obligations at Closing............................................ 5
5.1 Closing.............................................................................. 5
5.2 Representations and Warranties....................................................... 5
5.3 Payment of Purchase Price............................................................ 5
5.4 Qualifications....................................................................... 6
6. Registration of Common Stock.................................................................. 6
6.1 Definitions.......................................................................... 6
6.2 Required Registration................................................................ 6
6.3 Obligations of the Company........................................................... 7
6.4 Furnish Information.................................................................. 8
</TABLE>
i
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<TABLE>
<CAPTION>
Page
<S> <C>
6.5 Expenses of Registration............................................................. 9
6.6 Delay of Registration................................................................ 9
6.7 Indemnification...................................................................... 9
6.8 Assignment of Registration Rights.................................................... 11
6.9 "Lock-Up" Agreement.................................................................. 11
6.10 "Market Stand-Off" Agreement......................................................... 12
7. Miscellaneous................................................................................. 12
7.1 Survival of Warranties............................................................... 12
7.2 Successors and Assigns............................................................... 13
7.3 Governing Law........................................................................ 13
7.4 Counterparts......................................................................... 13
7.5 Titles and Subtitles................................................................. 13
7.6 Notices.............................................................................. 13
7.7 Finder's Fee......................................................................... 13
7.8 Expenses............................................................................. 13
7.9 Attorney's Fees...................................................................... 14
7.10 Amendments and Waivers............................................................... 14
7.11 Severability......................................................................... 14
7.12 Entire Agreement..................................................................... 14
</TABLE>
SCHEDULE 1 - List of Investors, addresses, number of shares of Common Stock
being purchased and purchase price due from each Investor
ii
<PAGE>
COMMON STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of the 22nd day of July, 1998,
by and between FaxSav Incorporated, a Delaware corporation (the "Company"), and
the investors listed on Schedule 1 attached hereto, each of which is herein
referred to as an "Investor".
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
1.1 Sale and Issuance of Common Stock. Subject to the terms and
conditions of this Agreement, each Investor agrees to purchase at the Closing
and the Company agrees to sell and issue to the Investor at the Closing, that
number of shares of the Company's common stock, $.01 par value per share
("Common Stock") as is set forth opposite each Investor's named on Schedule 1
attached hereto, at a purchase price of Three Dollars and Fifty Cents ($3.50)
per share. The maximum aggregate number of shares of Common Stock sold pursuant
to this Agreement shall be Two Million (2,000,000) shares.
1.2 Closing. The purchase and sale of the Common Stock shall take place
at the offices of Brobeck, Phleger & Harrison, LLP, 1633 Broadway, New York, at
such time and place as the Company and Investors acquiring in the aggregate a
minimum of One Million Five Hundred Thousand (1,500,000) shares of Common Stock
sold pursuant hereto mutually agree upon orally or in writing (which time and
place are designated as the "Initial Closing"), but any event no later than July
24, 1998. The Company may sell up to the balance of the authorized number of
shares of Common Stock not sold at the Initial Closing to such Investors (who
need not have purchased shares in the Initial Closing) as it shall select at a
purchase price not less than $3.50 per share, at such other time and place as
the Company and such Investors shall mutually agree upon orally or in writing
(an "Additional Closing", and together with the Initial Closing the "Closing"),
provided each Additional Closing shall take place not later than August 3, 1998.
At each Closing, the Company shall deliver to each Investor a certificate
representing the Common Stock which such Investor is purchasing against either
(i) delivery to the Company by such Investor of a check or (ii) a completed wire
transfer, in the amount of the purchase price payable by such Investor, in favor
of the Company.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investor that:
2.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware.
<PAGE>
2.2 Authorization. All corporate action on the part of the Company, its
officers, directors and shareholders necessary for the authorization, execution
and delivery of this Agreement and the performance of all obligations of the
Company hereunder and the authorization, issuance and delivery of the Common
Stock being sold hereunder has been taken or will be taken prior to the Closing,
and this Agreement constitutes a valid and legally binding obligation of the
Company, enforceable in accordance with its terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights generally, (ii)
as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies, and (iii) to the extent the
indemnification provisions contained herein may be limited by applicable federal
or state securities laws.
2.3 Valid Issuance of Common Stock. The Common Stock which is being
purchased by each Investor hereunder, when issued, sold and delivered in
accordance with the terms hereof for the consideration expressed herein, will be
duly and validly issued, fully paid and nonassessable, and, based in part upon
the representations of the Investors in this Agreement, will be issued in
compliance with all applicable federal and state securities laws.
2.4 Governmental Consents. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of the Company is
required in connection with the consummation of the transactions contemplated by
this Agreement, except for post-Closing filings as may be required under
applicable state securities laws.
2.5 Litigation. Except as previously disclosed by the Company in its
periodic reports filed with the U.S. Securities and Exchange Commission (the
"SEC") pursuant to the requirements of the Securities Exchange Act of 1934 (the
"1934 Act"), as amended, and listed in Section 2.8 hereof, there is no action,
suit, proceeding or investigation pending or currently threatened against the
Company. The Company is not a party or subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality. Except as previously disclosed by the Company in its periodic
reports filed with the SEC pursuant to the requirements of the 1934 Act, there
is no action, suit, proceeding or investigation by the Company currently pending
or which the Company intends to initiate.
2.6 Compliance with Other Instruments. The Company is not in violation
or default of any provisions of its Sixth Amended and Restated Certificate of
Incorporation or Bylaws, true and correct and complete copies of which have been
furnished to each Investor, or of any instrument, judgment, order, writ, decree
or contract to which it is a party or by which it is bound or, to its knowledge,
of any provision of federal or state statute, rule or regulation applicable to
the Company. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not result in any such
violation or be in conflict with or constitute, with or without the passage of
time and giving of notice, either a default under any such provision,
2
<PAGE>
instrument, judgment, order, writ, decree or contract or an event which results
in the creation of any lien, charge or encumbrance upon any assets of the
Company or the suspension, revocation, impairment, forfeiture, or nonrenewal of
any material permit, license, authorization, or approval applicable to the
Company, its business or operations or any of its assets or properties.
2.7 Financial Statements. The Company has delivered to each Investor
its audited financial statements (balance sheet and statement of operations,
statement of stockholders' equity and statement of cash flows) at December 31,
1997 and for the fiscal year then ended and similar unaudited financial
statements at March 31, 1998 and for the three-month period then ended (the
"Financial Statements"). The Financial Statements are complete and correct in
all material respects and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated and with each other. The Financial Statements accurately set
out and describe the financial condition and operating results of the Company as
of the dates, and for the periods, indicated therein, subject to normal year-end
audit adjustments. Since March 31, 1998, there has occurred no event materially
adverse to the Company, its business or prospects.
2.8 SEC Filings. The Company has delivered to the Investor:
(a) its Prospectus, dated October 11, 1996;
(b) its annual report on Form 10-K for the fiscal year ended
December 31, 1997;
(c) its quarterly report on Form 10-Q for the fiscal quarter ended
March 31, 1998; and
(d) its proxy statement to stockholders as filed with the SEC on
April 30, 1998.
As of its filing date, no such report or statement filed by the Company
with the SEC contained any untrue statement of a material fact or omitted to
state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
2.9 Other Information. The Company has delivered to the Investor copies
of all press releases, reports to stockholders and other documents released to
the public since January 1, 1998.
3. Representations and Warranties of the Investor. Each Investor,
severally and not jointly, hereby represents and warrants that:
3
<PAGE>
3.1 Authorization. This Agreement constitutes its valid and legally
binding obligation, enforceable in accordance with its terms, except; (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.
3.2 Purchase Entirely for Own Account. This Agreement is made with each
Investor in reliance upon each Investor's representation to the Company, which
by such Investor's execution of this Agreement such Investor hereby confirms,
that the Common Stock to be received by such Investor will be acquired for
investment for such Investor's own account, not as a nominee or agent, and not
with a view to the resale or distribution of any part thereof, and that such
Investor has no present intention of selling, granting any participation in, or
otherwise distributing the same. By executing this Agreement, each Investor
further represents that it does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participations to such
person or to any third person, with respect to the Common Stock. Each Investor
represents that it has full power and authority to enter into this Agreement.
Notwithstanding the foregoing, Investors may effect: (i) resales or
distributions of up to twenty percent (20%) of the Common Stock received by each
Investor to accredited investors within the meaning of SEC Rule 501 of
Regulation D or (ii) distributions in kind to any beneficial owners of such
Investor provided, that all such permitted transfers shall be (x) subject to the
restrictions of applicable federal or state securities laws and (y) such
transferee or assignee agrees in writing to be bound by and subject to the terms
and conditions of this Agreement.
3.3 Disclosure of Information. Each Investor believes it has received
all the information it considers necessary or appropriate for deciding whether
to purchase the Common Stock. Each Investor further represents that it has had
an opportunity to ask questions and receive answers from the Company regarding
the terms and conditions of the offering of the Common Stock. The foregoing,
however, does not limit or modify the representations and warranties of the
Company in Section 2 of this Agreement or the right of each Investor to rely
thereon.
3.4 Investment Experience. Each Investor is an investor in securities
of companies at an early stage and acknowledges that it is able to fend for
itself, can bear the economic risk of its investment and has such knowledge and
experience in financial or business matters such that it is capable of
evaluating the merits and risks of its investment in the Common Stock. In
connection therewith, each Investor understands that the purchase of the shares
offered hereby is highly speculative and involves a significant degree of risk,
as more fully described in the "Risk Factors" sections included in the Company's
periodic reports filed with the SEC pursuant to the requirements of the 1934
Act.
3.5 Accredited Investor. Each Investor is an "accredited investor"
within the meaning of SEC Rule 501 of Regulation D, as presently in effect.
4
<PAGE>
3.6 Restricted Securities. Each Investor understands that the shares of
Common Stock it is purchasing are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the Company
in a transaction not involving a public offering and that under such laws and
applicable regulations such securities may not be resold without registration
under the Securities Act of 1933, as amended (the "Act"), except in certain
limited circumstances. In this connection, each Investor represents that it is
familiar with Rule 144 under the Act ("Rule 144"), as presently in effect, and
understands the resale limitations imposed thereby and by the Act.
4. Conditions of the Investors' Obligations at Closing. The obligations
of each Investor under subsection 1.1 of this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions, the
waiver of which shall not be effective against any Investor who does not consent
in writing thereto:
4.1 Closing. The Closing shall have occurred on or before July 24,
1998.
4.2 Representations and Warranties. The representations and warranties
of the Company contained in Section 2 shall be true on and as of the Closing
with the same effect as though such representations and warranties had been made
on and as of the date of such Closing.
4.3 Performance. The Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
4.4 Qualifications. All authorizations, approvals or permits, if any,
of any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Common Stock pursuant to this Agreement shall be duly obtained and effective as
of the Closing.
5. Conditions of the Company's Obligations at Closing. The obligations
of the Company to each Investor under this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions by that
Investor:
5.1 Closing. The Closing shall have occurred on or before July 24,
1998.
5.2 Representations and Warranties. The representations and warranties
of the Investor contained in Section 3 shall be true on and as of the Closing
with the same effect as though such representations and warranties had been made
on and as of the Closing.
5.3 Payment of Purchase Price. The Investor shall have delivered the
purchase price specified in Section 1.
5
<PAGE>
5.4 Qualifications. All authorizations, approvals or permits, if any,
of any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Common Stock pursuant to this Agreement shall be duly obtained and effective as
of the Closing.
6. Registration of Common Stock. The Company covenants and agrees as
follows:
6.1 Definitions. For purposes of this Section 6:
(a) The term "register", "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document;
(b) The term "Registrable Securities" means (i) the Common Stock
issued pursuant to this Agreement; or (ii) any Common Stock of the Company
issued as (or issuable upon the conversion or exercise of any warrant, right or
other security which is issued as) a dividend or other distribution with respect
to, or in exchange for or in replacement of, such Common Stock, excluding in all
cases, however, any Registrable Securities which are sold, assigned, pledged,
hypothecated or otherwise disposed of by an Investor in a transaction in which
such Investor's rights under this Agreement are not assigned or assignable;
(c) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities; and
(d) The term "Holder" means one of the Investors.
6.2 Required Registration.
(a) The Company shall, subject to the limitations specified in this
Agreement, use its best efforts to file a registration statement on Form S-3
within sixty (60) days from the date hereof covering the registration under the
Act of all Registrable Securities then outstanding.
(b) Notwithstanding the foregoing, if the Company shall furnish to
the Holders a certificate signed by the Chief Executive Officer and President of
the Company stating that, in the good faith judgment of the Board of Directors
of the Company, it would be seriously detrimental to the Company and its
stockholders for a registration statement to be filed and it is therefore
essential to defer the filing of such registration statement, the Company shall
have the right to defer taking action with respect to such filing for a period
of
6
<PAGE>
not more than thirty (30) days from the delivery of such certificate to the
Holders. The following events or circumstances may result in the filing of a
registration statement being detrimental to the Company and its shareholders: a
pending material acquisition, merger or sale or purchase of assets, pending or
threatened material litigation, pending or threatened material regulatory or
governmental action, pending material change in the business, prospects,
condition (financial or other) or properties of the Company. The foregoing list
is for illustrative purposes only and is not meant to be exclusive.
(c) The registration statement filed pursuant to this Section 6.2
may include other securities of the Company (i) which are held by persons who,
by virtue of agreements with the Company, are entitled to include their
securities in any such registration, (ii) which are held by officers and
directors of the Company, or (iii) which are being offered for the account of
the Company provided, however that the number of shares of the Holders'
Registrable Securities to be included in such registration statement which is
firmly underwritten shall not be reduced unless all other securities are first
entirely excluded from the registration statement.
6.3 Obligations of the Company. When required under this Section 6 to
effect the registration of the Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to the Registrable Securities and use its best efforts to cause such
registration statement to become effective, and keep such registration statement
effective until the earlier of (i) the second anniversary of the date hereof or
(ii) until all such Registrable Securities have been sold are eligible to be
sold pursuant to Rule 144; provided that if, during the period the registration
statement is required to be kept effective, the Company delivers a certificate,
as per Section 6.2(b), stating that, in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the Company and
its shareholders for such registration statement to be kept effective during a
specified period of time (the "Blackout Period"), then the Company shall not be
obligated to keep such registration statement effective for a period of not more
than thirty (30) days, and the Holders of the Registrable Securities covered by
the Registration Statement shall not sell any of their Registrable Securities
covered by the Registration Statement, during such Blackout Period. The Company
shall not utilize this right more than once in any twelve (12) month period.
After the termination of such Blackout Period, the Company shall file an
amendment to such registration statement or a new registration statement with
respect to the unsold portion of the Registrable Securities included in the
original registration statement and shall keep such amendment or new
registration statement effective until the earlier of; (i) the second
anniversary of the date hereof, or (ii) until all such Registrable Securities
have been sold or are eligible to be sold pursuant to Rule 144.
7
<PAGE>
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders whose Registrable Securities are covered
by the Registration Statement such numbers of copies of a prospectus, including
a preliminary prospectus, in conformity with the requirements of the Act, and
such other documents as they may reasonably request in order to facilitate the
disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders whose
Registrable Securities are covered by the Registration Statement; provided that
the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions.
(e) Notify the Holders whose Registrable Securities are covered by
the Registration Statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
(f) Use its best efforts to furnish, at the request of the Holders
whose Registrable Securities are covered by the Registration Statement, on the
date that such Registrable Securities are delivered to the underwriters for sale
in connection with a registration pursuant to this Section 6, if such securities
are being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective, (i) an opinion, dated such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders whose
Registrable Securities are covered by the Registration Statement and (ii) a
letter dated such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to the Holders whose Registrable Securities are
covered by the Registration Statement.
6.4 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 6 with
respect to the Registrable Securities of the Holders whose Registrable
Securities are covered by the Registration Statement that each of such Holders
shall furnish to the Company such
8
<PAGE>
information regarding itself, the Registrable Securities held by it, and the
intended method of disposition of such securities as shall be reasonably
required to effect the registration of such Holder's Registrable Securities.
6.5 Expenses of Registration. All expenses incurred in connection with
registrations, filings or qualifications pursuant to Section 6.2, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company, and the
reasonable fees and disbursements of one counsel for the Holders whose
Registrable Securities are covered by the Registration Statement shall be borne
by the Company.
6.6 Delay of Registration. The Holders shall not have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 6.
6.7 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 6:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless the Holder whose Registrable Securities are covered by the
Registration Statement, any underwriter (as defined in the Act) for such Holders
and each person, if any, who controls such Holders or underwriter within the
meaning of the Act or the 1934 Act, against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the Act or
the 1934 Act, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by the Company of the Act, the 1934 Act, or any
rule or regulation promulgated under the Act or the 1934 Act; and the Company
will pay to such Holders, and each such underwriter or controlling person any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this Section 6.7
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld or delayed), nor shall
the Company be liable in any such case for any such loss, claim, damage,
liability, or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
such Holders, or any such underwriter or controlling person.
9
<PAGE>
(b) To the extent permitted by law, each Holder whose Registrable
Securities are covered by the Registration Statement will indemnify and hold
harmless the Company, each of its directors, each of its officers who has signed
the registration statement, each person, if any, who controls the Company within
the meaning of the Act, any underwriter, and any controlling person of any such
underwriter, against any losses, claims, damages, or liabilities (joint or
several) to which any of the foregoing persons may become subject, under the
Act, or the 1934 Act, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration; and such Holder
will pay any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this Section 6.7, in connection with investigating
or defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this Section 6.7 shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of such Holder,
which consent shall not be unreasonably withheld; provided that, in no event
shall any indemnity under this Section 6.7 exceed the gross proceeds from the
offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 6.7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 6.7, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
6.7, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 6.7.
(d) If the indemnification provided for in this Section 6.7 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim,
10
<PAGE>
damage, or expense in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and of the indemnified party on
the other in connection with the statements or omissions that resulted in such
loss, liability, claim, damage, or expense as well as any other relevant
equitable considerations. The relative fault of the indemnifying party and of
the indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) The obligations of the Company and Holders under this Section
6.7 shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 6, and otherwise.
6.8 Assignment of Registration Rights. The right to have the Company
register Registrable Securities pursuant to this Section 6 may not be assigned;
provided, however, that (i) any heir or the estate of an Investor which acquires
the Registrable Securities from such Investor by will or intestate succession
shall be entitled to have the Company register the Registrable Securities
pursuant to this Section 6 (provided that such heirs or such estate shall have a
single attorney in fact for the purpose of exercising any rights, receiving any
notices or taking any action under this Section 6); (ii) any individual Investor
may sell, assign or transfer Registrable Securities to his or her spouse or
children or to a trust established for the benefit of his or her spouse,
children or himself or herself, and such transferee shall be entitled to have
the Company register the Registrable Securities pursuant to this Section 6; and
(iii) such right may be assigned by a Holder to a permitted transferee or
assignee of such securities who, after such assignment or transfer, holds at
least 20,000 shares of Registrable Securities (subject to appropriate adjustment
for stock splits, stock dividends, combinations and other recapitalizations)
provided, (A) the Company is, within a reasonable time after such transfer,
furnished with written notice of the name and address of such transferee or
assignee and the securities with respect to which such registration rights are
being assigned; (B) such transferee or assignee agrees in writing to be bound by
and subject to the terms and conditions of this Agreement, including without
limitation the provision of Sections 6.9 and 6.10 hereof; and (C) such
assignment shall be effective only if immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Act.
6.9 "Lock-Up" Agreement. Each Investor hereby agrees that, for a period
of sixty (60) days from the Initial Closing, it shall not, unless expressly
agreed to in writing by the Company, directly or indirectly, sell, offer to
sell, contract to sell (including, without limitation, any short sale), grant
any option to purchase or otherwise transfer or dispose of (other than to donees
who agree to be similarly bound) the Registrable Securities included in such
registration. Notwithstanding the foregoing, Investors may engage in private
resales of the registrable securities pursuant to Section 4(2) of the Act and
Regulation D promulgated thereunder. The "Lock-Up" Agreement contained in this
Section 6.9 shall automatically
11
<PAGE>
terminate upon the public announcement of any of the following: (i) the
acquisition of the Company by another entity by means of any transaction or
series of related transactions (including, without limitation, any
reorganization, merger or consolidation but, excluding any merger effected
exclusively for the purpose of changing the domicile of the Company); or (ii) a
sale of all or substantially all of the assets of the Company; unless the
shareholders of record as constituted immediately prior to such acquisition or
sale will, immediately after such acquisition or sale (by virtue of securities
issued as consideration for the Company's acquisition or sale or otherwise) hold
at least 51% of the voting power of the surviving or acquiring entity.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of the
Investors (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
6.10 "Market Stand-Off" Agreement. Each Holder hereby agrees that,
during a reasonable period of duration specified by the Company and an
underwriter of common stock or other securities of the Company, following the
effective date of a registration statement of the Company filed under the Act,
it shall not, to the extent reasonably requested by the Company and such
underwriter, directly or indirectly sell, offer to sell, contract to sell
(including, without limitation, any short sale), grant any option to purchase or
otherwise transfer or dispose of (other than to donees who agree to be similarly
bound) any securities of the Company held by it at any time during such period
except common stock included in such registration. The Company shall, at the
time of such offering promptly give each Holder written notice of such
registration and upon the written request of each Holder, the Company shall
cause to be registered under the Act all of the Registrable Securities that each
such Holder has requested to be registered provided, however, that if the total
amount of securities, including Registrable Securities, requested by Holders to
be included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the Holders according to the total
amount of securities entitled to be included therein owned by each Holder or in
such other proportions as shall mutually be agreed to by such selling Holders).
7. Miscellaneous.
7.1 Survival of Warranties. The warranties, representations and
covenants of the Company and each Investor contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Investors or the Company.
12
<PAGE>
7.2 Successors and Assigns. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any shares of Common Stock sold hereunder). Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
7.3 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of New York without regard to the principles of
conflicts or choice of law.
7.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.5 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7.6 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof in the case of the Company
and on Schedule 1 in the case of each Investor, or at such other address as such
party may designate by ten (10) days' advance written notice to the other
parties.
7.7 Finder's Fee. Each party represents that it neither is nor will be
obligated for any finders' fee or commission in connection with this
transaction. Each Investor agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which such Investor or any of its officers, partners,
employees, or representatives is responsible.
The Company agrees to indemnify and hold harmless the Investors from
any liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
7.8 Expenses. The Company agrees to reimburse the Investors for their
reasonable out-of-pocket legal fees and expenses, in an amount not to exceed
$15,000 in the aggregate.
13
<PAGE>
7.9 Attorney's Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled. The Company
shall pay all attorney's fees, costs and necessary disbursements incurred by the
Investors, commencing the date hereof, in connection with the consummation of
the transactions as contemplated by Section 1 hereof.
7.10 Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and the holders of a majority of the
Common Stock sold hereunder. Any amendment or waiver effected in accordance with
this paragraph shall be binding upon each holder of any securities purchased
under this Agreement at the time outstanding, each future holder of all such
securities, and the Company.
7.11 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
7.12 Entire Agreement. This Agreement and the documents referred to
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations, or covenants except as specifically set forth herein or
therein.
[Remainder of this page intentionally left blank]
14
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Common Stock
Purchase Agreement as of the date first above written.
FAXSAV INCORPORATED
By: /s/ Peter S. Macaluso
--------------------------------------
Name: Peter S. Macaluso
--------------------------------------
(please print)
Title: Vice President and CFO
-------------------------------------
Address: 399 Thornhall Street
Edison, NJ 08837
INVESTORS:
East River Ventures, L.P.
By: /s/ Walter A. Carozza
--------------------------------------
Name: Walter Carozza
--------------------------------------
(please print)
Title: General Partner
--------------------------------------
Haussmann Holdings, N.V.
By: /s/ Neil Glass
--------------------------------------
Name: Neil Glass
--------------------------------------
(please print)
Title: Controller
--------------------------------------
[SIGNATURE PAGE TO COMMON STOCK PURCHASE AGREEMENT]
<PAGE>
Watershed Cayman, Ltd.
By: /s/ Vincent Carrino
--------------------------------------
Name: Vincent Carrino
--------------------------------------
(please print)
Title: President, Brookhaven Capital
Management LLC, Investment Advisor
to Watershed (Cayman) Ltd.
--------------------------------------
Stanford B. School Trust
By: /s/ Harry A. Turner
--------------------------------------
Name: Harry A. Turner
--------------------------------------
(please print)
Title: Managing Director, Stanford
Management Company
--------------------------------------
CMS Concentrated Equity Fund, L.P.
By MSPS Feeders, Inc., General Partner
By: /s/ Marian Cohen
--------------------------------------
Name: Marian Cohen
--------------------------------------
(please print)
Title: Vice President
--------------------------------------
Piton Partners LP
By: /s/ Vincent Carrino
--------------------------------------
Name: Vincent Carrino
--------------------------------------
(please print)
Title: General Partner
--------------------------------------
[SIGNATURE PAGE TO COMMON STOCK PURCHASE AGREEMENT]
<PAGE>
Whittier Ventures LLC
By: /s/ David A. Dahl
--------------------------------------
Name: David A. Dahl
--------------------------------------
(please print)
Title: President
--------------------------------------
Deem Trust
By: /s/ Robert H. Dahl
--------------------------------------
Name: Robert H. Dahl
--------------------------------------
(please print)
Title: Trustee
--------------------------------------
Harold Newman
By: /s/ Harold J. Newman
--------------------------------------
Name: Harold J. Newman
--------------------------------------
(please print)
Title:
--------------------------------------
Equities Holdings LLC
By: /s/ Montague H. Hackett, Jr.
--------------------------------------
Name: Montague H. Hackett, Jr.
--------------------------------------
(please print)
Title:
--------------------------------------
[SIGNATURE PAGE TO COMMON STOCK PURCHASE AGREEMENT]
<PAGE>
Victory Ventures LLC
By: /s/ Walter A. Carozza
--------------------------------------
Name: Walter A. Carozza
--------------------------------------
(please print)
Title: Co-President
--------------------------------------
M3 Partners LLC
By: /s/ Walter A. Carozza
--------------------------------------
Name: Walter A. Carozza
--------------------------------------
(please print)
Title: Manager/Member
--------------------------------------
Stanley Rawn
By: /s/ Stanley R. Rawn, Jr.
--------------------------------------
Name: Stanley R. Rawn, Jr.
--------------------------------------
(please print)
Title:
--------------------------------------
Montague Hackett
By: /s/ Montague H. Hackett, Jr.
--------------------------------------
Name: Montague H. Hackett, Jr.
--------------------------------------
(please print)
Title: Co-Chairman, Victory Ventures LLC
--------------------------------------
[SIGNATURE PAGE TO COMMON STOCK PURCHASE AGREEMENT]
<PAGE>
Herbert Friedman
By: /s/ Herbert M. Friedman
--------------------------------------
Name: Herbert M. Friedman
--------------------------------------
(please print)
Title:
--------------------------------------
Alicia Lindgren
By: /s/ Alicia B. Lindgren
--------------------------------------
Name: Alicia B. Lindgren
--------------------------------------
(please print)
Title:
--------------------------------------
[SIGNATURE PAGE TO COMMON STOCK PURCHASE AGREEMENT]
<PAGE>
Schedule 1
----------
List of Investors, addresses, number of shares being purchased and
purchase price due from each Investor.
<TABLE>
<CAPTION>
Number of
Investor Shares Purchase Price
- -------- ------ --------------
<S> <C> <C>
First Closing:
Haussmann Holdings, N.V. 107,142 $374,997
3000 Sand Hill Road, Building 3
Suite 105
Menlo Park, CA 94025
Watershed Cayman, Ltd. 350,000 $1,225,000
3000 Sand Hill Road, Building 3
Suite 105
Menlo Park, CA 94025
Stanford B School Trust 150,000 $525,000
3000 Sand Hill Road, Building 3
Suite 105
Menlo Park, CA 94025
CMS Concentrated Equity Fund, L.P. 150,000 $525,000
3000 Sand Hill Road, Building 3
Suite 105
Menlo Park, CA 94025
Piton Partners LP 100,000 $350,000
3000 Sand Hill Road, Building 3
Suite 105
Menlo Park, CA 94025
Whittier Ventures LLC 150,000 $525,000
1600 Huntington Drive
South Pasadena, CA 91030
--------- ----------
Subtotal 1,007,142 $3,524,997
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Second Closing:
Deem Trust 10,000 $35,000
3580 Wilshire Blvd.
Suite 1620
Los Angeles, CA 90010
Harold Newman 40,000 $140,000
Newberger and Berman
605 Third Ave., 38th Floor
New York, NY 10158
Piton Partners LP 50,000 $175,000
3000 Sand Hill Road, Building 3
Suite 105
Menlo Park, CA 94025
Watershed Cayman, Ltd. 200,000 $700,000
3000 Sand Hill Road, Building 3
Suite 105
Menlo Park, CA 94025
East River Ventures, L.P. 285,714 $999,999
645 Madison Avenue, 22nd Floor
New York, NY 10022
Haussmann Holdings, Ltd. 142,858 $500,003
3000 Sand Hill Road, Building 3
Suite 105
Menlo Park, CA 94025
--------- ----------
Subtotal 728,572 $2,550,002
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Third Closing:
Victory Ventures LLC 171,428 $599,998
645 Madison Ave.
New York, NY 10022
Equities Holdings LLC 21,429 $75,001.50
645 Madison Ave.
New York, NY 10022
M3 Partners LLC 8,572 $30,002
645 Madison Ave.
New York, NY 10022
Stanley Rawn 4,286 $15,001
645 Madison Ave.
New York, NY 10022
Montague Hackett 4,286 $15,001
645 Madison Ave.
New York, NY 10022
Herbert Friedman 2,143 $7,500.50
645 Madison Ave.
New York, NY 10022
Alicia Lindgren 2,142 $7,497
645 Madison Ave.
New York, NY 10022
--------- ----------
Subtotal 214,286 $750,001
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Fourth Closing:
Equities Holdings LLC 50,000 $175,000
645 Madison Ave.
New York, NY 10022
--------- ----------
Subtotal 50,000 $175,000
Total 2,000,000 $7,000,000
</TABLE>
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement
of FaxSav Incorporated (formerly Digitran Corporation, the "Company") on Form
S-3 of our report dated February 4, 1998, on our audits of the financial
statements and financial statement schedule of FaxSav Incorporated as of
December 31, 1997 and 1996 and for the years ended December 31, 1997, 1996 and
1995, which report is included in the Company's Annual Report on Form 10-K. We
also consent to the reference to out firm under the caption "Experts".
<TABLE>
<S> <C>
/s/ PRICEWATERHOUSECOOPERS, LLP
-------------------------------------------
PricewaterhouseCoopers, LLP
</TABLE>
September 29, 1998
Parsippany, New Jersey
