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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
Commission file number 0-21289
CYBERMEDIA, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-4347239
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
3000 OCEAN PARK BLVD., SUITE 2001, SANTA MONICA, CALIFORNIA 90405
(Address of principal executive offices)
(Zip Code)
(310) 581-4700
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. (1) Yes [X] No [ ]; (2) Yes [X] No [ ]
As of July 31, 1997, 12,183,640 shares of the Registrant's Common
Stock, $0.01 par value were issued and outstanding.
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CYBERMEDIA, INC.
TABLE OF CONTENTS
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Balance Sheets At June 30, 1997 and December 31, 1996 3
Statements of Operations Three and six months ended June 30,
1997 and 1996 4
Statements of Cash Flow Six Months ended June 30, 1997 and 1996 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 7
PART II. OTHER INFORMATION 22
Item 1. Legal Proceedings 22
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 5. Other Information 22
Item 6. Exhibits and Reports on Form 8-K 22
Signature 23
Index to Exhibits 24
</TABLE>
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CYBERMEDIA, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
Unaudited Audited
------------ -----------------
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 22,646,000 $ 39,322,000
Marketable securities 6,869,000 -
Trade accounts receivable, net 23,953,000 12,318,000
Inventory 1,671,000 2,365,000
Prepaid expenses 923,000 1,270,000
Other current assets 220,000 185,000
------------ ------------
Total current assets 56,282,000 55,460,000
Goodwill, net 231,000 -
Furniture, fixtures and equipment, net 1,732,000 990,000
Total assets $ 58,245,000 $ 56,450,000
============ ============
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 8,123,000 $ 7,004,000
Accrued expenses 2,764,000 1,247,000
Unearned revenue 3,662,000 4,024,000
Grant payable 4,000 413,000
Current portion of capital lease 31,000 45,000
Contractual obligation for acquired R&D 1,589,000 -
------------ ------------
Total current liabilities 16,173,000 12,733,000
Capital lease obligation 49,000 49,000
Contractual obligation for acquired R&D 2,812,000 -
------------ ------------
Total liabilities 19,034,000 12,782,000
Stockholders' equity
Common stock 122,000 119,000
Additional paid-in capital 53,607,000 52,583,000
Accumulated deficit (14,408,000) (9,034,000)
Currency Translation (110,000)
------------ ------------
Total Stockholders' Equity 39,211,000 43,668,000
Total liabilities and stockholders' equity $ 58,245,000 $ 56,450,000
============ ============
</TABLE>
See accompanying notes to Financial Statements
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CYBERMEDIA, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended Quarter Ended Six Months Ended Six Months Ended
June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996
------------- ------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Revenue $ 20,447,000 $ 7,891,000 $ 36,980,000 $ 13,949,000
Cost of goods sold 3,875,000 2,787,000 8,088,000 4,888,000
------------ ------------ ------------ ------------
Gross profit 16,572,000 5,104,000 28,892,000 9,061,000
Expenses
Research and development 2,740,000 669,000 4,285,000 1,143,000
Sales & marketing 9,584,000 4,730,000 17,739,000 8,609,000
General & administrative 1,679,000 902,000 2,649,000 1,513,000
One-time in-process R&D and acquisition
expenses 9,091,000 - 9,091,000 -
------------ ------------ ------------ ------------
Total Operating expenses 23,094,000 6,301,000 33,764,000 11,265,000
Operating income (loss) (6,522,000) (1,197,000) (4,872,000) (2,204,000)
Other income (expense) 398,000 (15,000) 919,000 (25,000)
------------ ------------ ------------ ------------
Profit (loss) before income taxes (6,124,000) (1,212,000) (3,953,000) (2,229,000)
Provision for income taxes 582,000 - 1,421,000 -
------------ ------------ ------------ ------------
Net income (loss) $ (6,706,000) $ (1,212,000) $ (5,374,000) $ (2,229,000)
============ ============ ============ ============
Net income (loss) per share $ (0.49) $ (0.15) $ (0.45) $ (0.28)
Shares used in computing net income
(loss) per share 12,178,000 7,889,000 12,050,000 7,889,000
</TABLE>
See accompanying notes to Financial Statements
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CYBERMEDIA, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended June 30,
------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Cash flow from operating activities:
Net income (loss) $ (5,374,000) $ (2,229,000)
Adjustments to reconcile met loss to net cash used in operating
activities:
Depreciation 244,000 42,000
Royalty expense (adjustment) - 188,000
Changes in assets and liabilities:
Trade accounts receivable, net (11,635,000) (2,786,000)
Inventory 694,000 (823,000)
Prepaid expenses 347,000 (542,000)
Other current assets (35,000) 3,000
Accounts payable 1,119,000 1,327,000
Accrued expenses 1,517,000 190,000
Unearned revenues (362,000) 2,385,000
Deferred obligation for acquired R&D 4,401,000 -
------------ ------------
Net cash used in operating activities (9,084,000) (2,245,000)
------------ ------------
Cash flows used in investing activities
Purchase of furniture, fixtures and equipment (986,000) (608,000)
Purchase of Marketable Securities (6,869,000) -
------------ ------------
Net cash used by investing activities (7,855,000) (608,000)
------------ ------------
Cash flows from financing activities:
Payment of capital lease obligations (14,000) (5,000)
Payment of notes payable (50,000)
Proceeds from notes payable to bank 1,300,000
Expenses associated with initial public offering (261,000)
Proceeds from the issuance of common stock 538,000 127,000
------------ ------------
Net cash used by financing activities 263,000 1,372,000
------------ ------------
Net decrease in cash and cash equivalents (16,676,000) (1,481,000)
Cash and cash equivalents at beginning of year 39,322,000 2,050,000
------------ ------------
Cash and cash equivalents at end of period $ 22,646,000 $ 569,000
============ ============
</TABLE>
See accompanying notes to Financial Statements.
5
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CYBERMEDIA, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
(unaudited)
1. Basis of Presentation
The financial statements for the three months and six months ended
June 30, 1997 and 1996 are unaudited and reflect all adjustments,
consisting of normal recurring adjustments, which are, in the opinion
of management, necessary for a fair presentation of the financial
condition and results for the interim periods. These financial
statements should be read in conjunction with the financial statements
and notes thereto together with management's discussion and analysis
of financial condition and results of operations contained in
CyberMedia's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996. The results for the three months and six months
ended June 30, 1997 are not necessarily indicative of the results for
the entire year ending December 31, 1997.
2. Earnings Per Share
Per share data is based on the weighted average number of common
shares and dilutive common stock equivalents outstanding for the
period.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The discussion in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" contains trend analysis and other
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. Actual results could differ materially from those set forth in such
forward-looking statements as a result of the factors set forth under "Factors
Affecting Operating Results" and other risks detailed in the Company's
Registration Statement on Form S-1 (Reg. St. No. 333-11063) declared effective
by the Securities and Exchange Commission on October 22, 1996 and detailed from
time to time in the Company's reports filed with the Securities and Exchange
Commission.
The following information should be read in conjunction with the
consolidated financial statements and the notes thereto and in conjunction with
Management's Discussion and Analysis of Financial Condition and Results of
Operations in CyberMedia's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996. This analysis is provided pursuant to applicable Securities
and Exchange Commission regulations and is not intended to serve as a basis for
projections of future events.
Overview
CyberMedia is a leading provider of software products that provide automatic
service and support to PC users in the Windows environment. The Company
commenced operations in November 1991 and introduced its first automatic service
and support product, Win Win, in 1993. The Company introduced the first Windows
95 compatible version of its First Aid product line in September 1995. During
1996, and the first six months of 1997, over 90% and 60% respectively, of the
Company's net revenues were attributable to sales of its First Aid products. Any
decline in the demand for First Aid products, failure to achieve market
acceptance of upgrades to such products or failure of net revenues derived from
such products to meet the Company's expectations, whether as a result of
competition, technological change or other factors, would have a material
adverse effect on the Company's business, results of operations and financial
condition.
The Company also has a number of new product development efforts under way,
including First Aid 98, a corporate version of First Aid and Guard Dog, a
personnel security software product, scheduled for release during 1997, and a
portion of future revenues is dependent on the success of these activities. In
April, 1997 the Company acquired Microhelp Uninstaller, a product that
automatically uninstalls Windows applications. There can be no assurance that
Microhelp Uninstaller, Guard Dog, First Aid 98 or a corporate version of First
Aid will achieve significant market acceptance and failure of any of these
products to achieve such acceptance could have a material adverse effect on the
Company's future financial results.
The Company has a limited operating history upon which to base an evaluation
of its business and prospects. From inception to June 30, 1997, the Company
generated net sales of approximately $80.5 million, of which $75.4 million, or
94% of such amount, was generated in the eighteen months ended June 30, 1997.
The Company has incurred net losses in each of the last five fiscal years. At
June 30, 1997, the Company had an accumulated deficit of $14.4 million. With the
introduction of First Aid 95, the Company began focusing on building its product
line and establishing brand name awareness of its products, which has resulted
in significantly increased operating expenses. The Company anticipates that its
operating expenses will continue to increase significantly in the future as a
result of efforts to expand its sales and marketing operations, including
international sales, to fund greater levels of product development and to
increase its administrative infrastructure. The Company intends to fund
increases in operating expenses primarily from cash generated from operations
and, to the extent necessary, funds available from the Company's line of credit.
In addition, during 1996 and the first half of 1997, the
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Company's net revenues and operating expenses increased rapidly as compared to
prior periods. There can be no assurance that the Company's net revenues will
continue to remain at or increase from the levels experienced in the first six
months of 1997 or that net revenues will not decline. The Company's prospects
must be considered in light of the risks encountered by companies with limited
operating histories, particularly companies in new and rapidly evolving markets.
Future operating results will depend upon many factors, including the demand for
the Company's software products, the level of product and price competition, the
Company's success in expanding its direct and indirect distribution channels,
the Company's success in attracting and retaining motivated and qualified
personnel, the growth of activity on the Internet and the Web, the ability of
the Company to develop and market new products and to control costs and general
economic conditions. Many of these factors are beyond the Company's control.
There can be no assurance that the Company will be successful in addressing such
risks.
The Company sells its products primarily to distributors for resale to the
retail channel as well as directly to consumers through direct mail. In
addition, the Company sells its products through software catalogs throughout
the United States and Canada. Sales to the Company's top two distributors,
Navarre and Ingram Micro accounted for approximately 26% and 34%, respectively,
of the Company's net revenues in the six months ended June 30, 1997 and 25% and
25%, respectively, of net revenues in 1996. No other single customer accounted
for more than 10% of net revenues during these periods. Net revenues from direct
mail sales in 1996 and the first six months of 1997 represented approximately
30% and 7% of net revenues in each of these periods, respectively, with the
balance of net revenues attributable to sales through distributors, directly to
consumers over the internet and from OEM customers. Sales from direct mail have
historically operated at lower profitability levels than sales through
distributors. Accordingly, quarterly shifts in the mix of sales through
distributors and through direct sales could cause fluctuations in the Company's
profitability. There can be no assurance that the mix of sales or the relative
profitability by distribution channel will remain at current levels in the
future.
The Company monitors the levels of purchases and returns on a customer by
customer basis and, to date, returns have been within management's expectations.
Sales are made subject to rights of return and reserves are established at time
of shipment for future return of product based on product history, analysis of
retail sell-through and other factors. In addition, the Company may allow
certain concessions, such as price protection, to maintain its relationship with
retailers and distributors and its access to distribution channels.
Revenues are recognized upon the shipment of products to distributors,
resellers and end users. With the introduction of First Aid 95 in September
1995, CyberMedia implemented a policy of offering customers updates to its First
Aid products over the Internet at no additional cost. Given this policy and
because updates are a fundamental and integral part of its First Aid,
UnInstaller and Oil Change products, the Company defers a portion of all First
Aid, UnInstaller and Oil Change revenue ratably over estimated update periods,
generally one year from the date of sale. At June 30, 1997 the Company's balance
sheet included $3.7 million of unearned revenues to reflect future support
commitments and other unspecified enhancements to these products. To the extent
that revenues from these products continue to grow on a quarterly basis, the
total amount of deferred revenue may continue to increase and be reported on the
balance sheet as unearned revenue.
In accordance with Statement of Financial Accounting Standards No. 86, the
Company is required to capitalize eligible computer software development costs
upon the achievement of technological feasibility, subject to net realizable
value considerations. To date, the Company has charged all such costs to product
development expenses because such costs have not been material.
On April 2, 1997, the Company acquired certain assets from Luckman
Interactive which included ownership in all intellectual property rights to
Microhelp Uninstaller. This acquisition was accounted for largely as in process
research and development and was expensed during the quarter ended June 30,
1997. In addition, effective April 14, 1997, CyberMedia acquired Walk Softly,
Inc., an internet privacy software developer based in Los Altos, California in
exchange for CyberMedia Common Stock. The acquisition of
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Walk Softly was accounted for on a pooling of interests basis and the financial
statements for all periods presented herein have been restated as required by
such treatment.
Results of Operations
The following table sets forth, as a percentage of net revenues, statement
of operations data for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------- --------
1996 1997 1996 1997
----- ----- ----- -----
<S> <C> <C> <C> <C>
Net revenues.................. 100.0% 100.0% 100.0% 100.0%
Cost of revenues.............. 35.3 19.0 35.0 21.9
----- ----- ----- -----
Gross profit................ 64.7 81.0 65.0 78.1
Operating expenses:
Research and development.... 8.5 13.4 8.2 11.6
Sales and marketing......... 60.0 46.9 61.7 48.0
General and administrative.. 11.4 8.2 10.9 7.1
One-time-in-process R&D and
acquisition expenses ....... 0.0 44.4 0.0 24.6
----- ----- ----- -----
Total operating expenses. 79.9 112.9 80.8 91.3
----- ----- ----- -----
Loss from operations..... (15.2) (31.9) (15.8) (13.2)
Interest, net................. (0.2) 1.9 (0.2) 2.5
----- ----- ----- -----
Loss before income taxes. (15.4) (30.0) (16.0) (10.7)
Income tax expense............ -- 2.8 -- 3.8
-- ----- -- -----
Net loss................. (15.4)% (32.8)% (16.8)% (14.5)%
===== ===== ===== =====
</TABLE>
Net Revenues. Net revenues increased 159% to $20.4 million in the three
months ended June 30, 1997 from $7.9 million in the three months ended June 30,
1996. For the six month period ended June 30, 1997, net revenues increased 165%
to $37.0 million from $13.9 million in the same period in 1996. The Company's
net revenues consist of license fees for its software products, less provision
for returns. The Company sells its products primarily to distributors for resale
to retailers as well as directly to consumers through direct mail, the internet
and through software catalogs. The growth in net revenues during these periods
was largely attributable to the launch of Uninstaller 4.5, the expansion of the
Company's retail distribution channels and international marketing activities
and increased unit volume as a result of the market's growing awareness and
acceptance of First Aid and the introduction of Oil Change in September 1996.
The Company does not believe that the historical growth rates of its net
revenues will be sustainable or are indicative of future results.
Net revenue from international sales accounted for approximately 21% and 2%
of net revenues for the three months ended June 30, 1997 and 1996 respectively.
For the six month periods ended June 30, 1997 and 1996, the percentageof net
revenues from international sales was approximately 18% and 2%, respectively.
The increase in net revenues from international sales as a percentage of net
revenues between these periods was due to the expansion of the Company's
international operations and the introductions of localized German, Japanese,
British, French, Italian and Australian versions of First Aid during the last
twelve months. As a result of the expansion of its international operations, the
Company now denominates certain international sales in local currencies,
primarily in Europe and Japan. As a result, the Company is subject to the risks
associated with fluctuations in currency exchange rates. The Company does not
currently engage in hedging transactions and there can be no assurance that it
will not incur significant losses related to currency fluctuations. Risks
inherent in the Company's international sales generally include the impact of
fluctuating exchange rates, longer payment cycles, greater difficulty in
accounts receivable collection, unexpected changes in regulatory requirements,
seasonality due to the slowdown in European business activity during the third
quarter, and tariffs and other trade barriers. There can be no assurance that
these factors will not have a material adverse effect on the Company's future
business, financial condition and results of operations.
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Cost of Revenues. Cost of revenues were $3.9 million and $2.8 million for
the three month periods ended June 30, 1997 and 1996, respectively. For the six
months ended June 30, 1997, cost of revenues increased to $8.1 million from $
$4.9 million for the same period in 1996. Cost of revenues consists primarily of
the cost of product media, product duplication, documentation and order
fulfillment and royalties. The increases in cost of revenues were due primarily
to increased unit shipments of the Company's products.
Gross Margin. Gross margins were 81% and 65% in the three months ended June
30, 1997 and 1996, respectively. For the six month periods ended June 30, 1997
and 1996, gross margins were 78% and 65%, respectively. Gross margins in 1997
were positively affected by a decrease in the percentage of net revenues
represented by direct sales, which generated a lower gross margin than sales
through distributors during the period and a reduction in net deferrals of
revenue in 1997 versus 1996 associated with post sale obligations to customers.
Research and Development. Research and development expenses increased by
310% from $669,000 in the three months ended June 30, 1996 to $2.7 million in
the same period in 1997, representing 9%, and 13% of net revenues in these
quarters, respectively. For the six month periods ended June 30, 1997 and 1996
research and development expenses increased by 275% from $1.1 million to $4.3
million, representing 8% and 12% of revenue, respectively. Research and
development expenses consist primarily of personnel costs and, to a lesser
extent, payment to third parties for contract services, required to conduct the
Company's development efforts. The increase in research and development expenses
was primarily attributable to an increase in personnel as the Company increased
its product development efforts to support new product introductions and
upgrades. The Company believes that significant investments in product
development are required to remain competitive. As a consequence, the Company
anticipates that it will continue to devote substantial resources to research
and development.
Sales and Marketing. Sales and marketing expenses grew from $4.7 million in
the three months ended June 30, 1996 to $9.6 million in the same period of 1997,
representing 60% and 47% of net revenues in these periods, respectively. For the
six month periods ended June 30, 1997 and 1996 sales and marketing expenses
increased from $8.6 million to $17.7 million, representing 62% and 48% of net
revenues, respectively. Sales and marketing expenses consist primarily of costs
of all sales and marketing personnel, sales commissions, co-op and other
advertising costs, postage and printing costs associated with direct mail sales,
package design costs, trade show costs and costs of preparing promotional
materials. The increases in the dollar amount of sales and marketing was due
primarily to increases in co-op advertising, increases in the number of sales
and marketing personnel employed to address new sales opportunities and to
support the introduction of new products and expansion of international sales
and marketing efforts. The Company expects that sales and marketing expenditures
will increase in absolute dollars in the future as it invests in expanding its
third-party distribution channels, introduces new products and expands its
operations outside the United States.
General and Administrative. General and administrative expenses increased
from $902,000 in the three month period ended June 30, 1996 to $1.7 million in
the same period in 1997, representing 11% and 8% of net revenues in these
periods, respectively. For the six month period ended June 30, 1997 general and
administrative expenses increased from $1.5 million in 1996 to $2.6 million in
1997, representing 11% and 7% of net revenues, respectively. General and
administrative expenses consist primarily of personnel costs for finance,
administration, operations and general management, as well as legal, accounting
and facilities expenses. The increase in the dollar amount of general and
administrative expenses was due principally to growth in the infrastructure of
the Company's finance, administrative and operations groups in order to support
the Company's expanded operations. The decrease in general and administrative
expenses as a percentage of net revenues was due primarily to the growth in net
revenues. The Company expects that its general and administrative expenses will
increase in absolute dollars in the future as it expands its staffing,
information systems and infrastructure.
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Interest, Net. Interest, net was $398,000 and $(15,000) in the three month
periods ended June 30, 1997 and 1996, respectively. For the six month periods
ended June 30, 1997 and 1996, interest, net was $919,000 and $(25,000),
respectively. Interest, net consists of interest income and interest expense.
Provision for Income Taxes. The provision for income taxes includes
estimated foreign taxes attributable to activities during the quarter ended June
30, 1997. In addition, the provision for income taxes for the six month period
ended June 30, 1997 includes the provision recorded during the first quarter
which was recorded at the Company's estimated effective tax rate which, for the
three month period ended March 31, 1997 was 38%. The Company had federal and
state net operating loss carry-forwards of approximately $3.7 million at
December 31, 1996. These loss carry-forwards expire at various dates beginning
in the year 2006 and are subject to certain limitations as prescribed by Section
382 of the Internal Revenue Code of 1986, as amended.
Liquidity and Capital Resources
Since inception, the Company has financed its operations primarily through
private sales of Preferred Stock totaling $10.5 million and a grant of $318,000
administered by the ICICI. Furthermore, in October 1996, the Company completed
an initial public offering of 2,875,000 shares of Common Stock (including the
underwriters' over-allotment of 375,000) at $16.00 per share. Net proceeds to
the Company were approximately $41.5 million. In the first six months of 1996
and 1997, the Company used $2.2 million and $9.1 million of cash, respectively,
in operating activities. During these periods, the Company used net cash in
operating activities principally to support increases in accounts receivable
associated with increased net revenues.
In the first six months of 1996 and 1997, the Company's investing activities
consisted of purchases of furniture, fixtures and equipment, primarily PCs and
accessories in the amount of $608,000 and $986,000, respectively. The Company
expects that its capital expenditures will increase as the Company's employee
base continues to grow. At June 30, 1997, the Company had no material
commitments for capital expenditures.
To date, the Company has not invested in derivative securities or any other
financial instruments that involve a high level of complexity or risk.
Management expects that in the future cash in excess of current requirements
will be invested in short-term, interest-bearing, investment grade securities.
At June 30, 1997, the Company had $29.5 million in cash, cash equivalents
and marketable securities and $40.1 million in working capital. The Company also
had available a $1.0 million unsecured revolving line of credit which expires in
May 1998.
The Company believes that its current cash balances, cash available under
its line of credit and cash flows from operations, if any, will be sufficient to
meet its working capital and capital expenditure requirements for at least the
next 12 months.
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Impact of Recent Accounting Pronouncements
The Financial Accounting Standards Board (the "FASB") issued Statement of
Financial Accounting Standards No. 121 ("SFAS No. 121"), "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of," in
March 1995 which is effective for fiscal years beginning after December 15,
1995. SFAS No. 121 establishes accounting standards for the impairment of
long-lived assets, certain identifiable intangibles and goodwill related to
these assets and certain identifiable intangibles to be disposed of. Since the
Company's current accounting policy is consistent with the provisions of SFAS
No. 121, the Company's management does not anticipate that the new pronouncement
will impact its Financial Statements.
In February 1997, FASB issued Statement of Financial Accounting Standards
No. 128, Earnings Per Share ("SFAS No. 128"). SFAS No. 128 requires dual
presentation of newly defined basic and diluted earnings per share on the face
of the income statement for all entities with complex capital structures. SFAS
No. 128 is effective for financial statements issued for periods ending after
December 15, 1997, and earlier application is not permitted. The Company has not
yet determined the impact of SFAS No.128.
Factors Affecting Operating Results
Limited Operating History and History of Operating Losses. The Company has
only a limited operating history upon which to base an evaluation of its
business and prospects. The Company commenced operations in November 1991 and
introduced its first automatic service and support product, Win Win, in 1993.
The Company introduced the first Windows 95 compatible version of its First Aid
product line in September 1995. During 1996, both the Company's net revenues and
operating expenses, particularly sales and marketing expenditures, increased
rapidly compared to prior periods. From inception to June 30, 1997 the Company
generated net sales of approximately $80.5 million, of which $75.4 million, or
94% of such amount, was generated in the eighteen months ended June 30, 1997.
The Company has incurred net losses in each of the last five fiscal years,
resulting in an accumulated deficit of $14.4 million at June 30, 1997. In
addition, since 1992, the Company's operating expenses have increased
significantly as a result of efforts to expand its sales and marketing
operations, including international sales, to fund greater levels of product
development and to increase its administrative infrastructure. Management
believes that there can be no guarantee that the Company will generate future
taxable income sufficient to realize the benefits of existing deferred assets as
of December 31, 1997. There can be no assurance that the Company's net revenues
will continue to remain at or increase from the level experienced in the first
six months of 1997 or that net revenues will not decline. The Company
anticipates that in the future it will make significant investments in its
operations, particularly to support sales activities, and that as a result,
operating expenses will increase significantly. The Company intends to make such
investments on an ongoing basis, primarily from cash generated from operations
and, to the extent necessary, funds available from the Company's line of credit,
as the Company develops and introduces new products and expands into new markets
such as international, corporate and OEM markets. If net revenues do not
correspondingly increase, the Company is likely to continue to incur net losses
and its financial condition will be materially adversely affected. The Company
has not yet achieved profitability on an annual basis, and there can be no
assurance that the Company will achieve or sustain profitability on a quarterly
basis or annual basis. Furthermore, operating results for future periods are
subject to numerous uncertainties. The Company's prospects must be considered in
light of the risks encountered by companies with limited operating histories,
particularly companies in new and rapidly evolving markets. In addition, the
Company's future operating results will depend upon, among other factors, the
demand for the Company's software products, the level of product and price
competition, the Company's success in expanding its direct and indirect
distribution channels, the Company's success in attracting and retaining
motivated and qualified personnel, the ability of the Company to expand its
international sales, develop and market new products and product upgrades and
manage product transitions, the ability of the Company to control costs, the
growth of activity on the Internet and the World Wide Web (the "Web"), and
general economic conditions. Many of these factors are beyond the
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<PAGE> 13
Company's control. If the Company is not successful in addressing such risks,
the Company will be materially adversely affected. See "-- Potential
Fluctuations in Quarterly Results; Seasonality," "-- Product Concentration;
Risks Associated with First Aid Upgrades," and "-- Developing Market"
Potential Fluctuations in Quarterly Results; Seasonality. The Company's
quarterly operating results have fluctuated in the past and are expected to
fluctuate significantly in the future. These fluctuations may arise as a result
of a number of factors, including the number and timing of new product
introductions, upgrades and product enhancements by the Company or its
competitors, purchasing patterns of distributors and customers, marketing and
promotional programs, pricing and other competitive pressures, order deferrals
and product returns in anticipation of new products or upgrades to existing
products, the mix of distribution channels through which the Company's products
are sold, the Company's decisions regarding hiring and other expenses, market
acceptance of the Company's products, market acceptance of commerce over the
Internet, technological limitations of the Internet, the developing nature of
the market for the Company's products, general economic conditions and other
factors. The Company generally ships products as orders are received and,
accordingly, the Company has historically operated with relatively little
backlog. As a result, quarterly revenues will depend predominantly on the volume
and timing of orders received during a particular quarter, both of which are
difficult to forecast. With the introduction of First Aid 95, the Company
significantly increased its level of operating expenses. The Company anticipates
that its operating expenses will continue to increase substantially in the
future as a result of efforts to expand its sales and marketing operations,
including expanding its international sales, to fund greater levels of product
development, and to increase its administrative infrastructure. To the extent
that such expenses precede or are not subsequently followed by increased net
revenues, the Company's business, results of operations and financial condition
will be materially adversely affected. A relatively high percentage of the
Company's expenses is fixed in the short term and the Company is generally
unable to adjust spending in a timely manner to compensate for shortfalls in net
revenues. In addition, the consumer software industry in which the Company
operates has seasonal elements. In recent years, the consumer software industry
has experienced relatively higher demand for software products in the fourth
quarter due to year-end holiday buying and relatively lower demand in the summer
months. If net revenues fall below the Company's expectations, expenditure
levels as a percentage of total net revenues could be disproportionately high,
and operating results would be immediately and adversely affected. The Company
believes that period-to-period comparisons of its operating results are not
meaningful and should not be relied upon as any indication of future
performance. Due to the foregoing factors, among others, it is likely that the
Company's future quarterly operating results from time to time will not meet the
expectations of securities analysts or investors, which may have an adverse
effect on the price of the Company's Common Stock.
Product Concentration; Risks Associated with First Aid Upgrades. During 1996
and the first six months of 1997, over 90% and 60%, repectively, of the
Company's net revenues were attributable to sales of its First Aid products. The
Company anticipates that sales of its First Aid products will account a
substantial majority of its net revenues in 1997. There can be no assurance that
net revenues from the First Aid products will continue to grow at historical
rates or be sustainable at current levels. The Company's future financial
performance will depend in large part on the successful development,
introduction and customer acceptance of new product offerings and enhanced
versions of the First Aid products. Any decline in the demand for First Aid
products, failure to achieve market acceptance of upgrades to such products or
failure of net revenues derived from such products to meet the Company's
expectations, whether as a result of competition, technological change or other
factors, would have a material adverse effect on the Company's business, results
of operations and financial condition.
Management of Growth; Dependence on Key Personnel. The Company's business
has grown rapidly during the past year and such growth has placed and, if
sustained, will continue to place, significant demands on the Company's
management and resources. Recently, the Company has significantly increased the
scale of its operations to support increased sales volumes and to address
critical infrastructure and other requirements. This increase included
substantial investments in sales and marketing to support sales activities and
the hiring of a number of new employees, which have resulted in
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higher operating expenses. Between December 1, 1995 and June 30, 1997, the
number of Company employees increased from approximately 20 to approximately 200
and the Company currently expects to hire many additional employees during 1997.
The Company's ability to manage any future growth, should it occur, will
continue to depend upon the successful expansion of its sales, marketing,
research and development, customer support and administrative infrastructure and
the ongoing implementation and improvement of a variety of internal management
systems, procedures and controls. There can be no assurance that the Company
will be able to attract, manage and retain additional personnel to support any
future growth or will not experience significant problems with respect to any
infrastructure expansion or the attempted implementation of systems, procedures
and controls. Any failure in one or more of these areas would have a material
adverse effect on the Company's business, results of operations and financial
condition.
The Company's future success also depends on its continuing ability to
attract and retain highly qualified technical personnel. Competition for such
personnel is intense and there can be no assurance that the Company will be able
to retain its key technical employees or that it will be able to attract and
retain additional highly qualified technical personnel in the future. Any
inability to attract and retain the necessary technical personnel could have a
material adverse effect on the Company's business, results of operations and
financial condition.
The Company is dependent upon certain of its executive officers and has
entered into employment agreements with certain of its executive officers in
order to help assure their retention by the Company. However, there can be no
assurance that any such employment agreements will sufficiently incentivize such
executive officers to remain with the Company. The Company does not maintain any
key person insurance policies on the lives of any of its executive officers. The
loss of or inability to retain these key executive officers for any reason could
have a material adverse effect upon the Company's business, results of
operations and financial condition.
Competition. The PC software industry is intensely competitive and
characterized by short product life cycles and frequent new product
introductions. The Company competes with software companies of varying sizes and
resources, including SystemSoft Corporation, Quarterdeck Corporation, Symantec
Corp., McAfee Associates, Inc. and others. The Company believes that a number of
software companies will be introducing automatic service and support software
products in the near future that will compete with the Company's products. The
Company expects that potential future competitors may include other software
vendors, including Internet software vendors. Many of the Company's existing and
potential competitors have substantially greater financial, technical and
marketing resources than the Company. Moreover, there are no proprietary
barriers to entry that could keep existing and potential competitors from
developing similar products or selling competing products in the Company's
markets. To the extent that the Company's competitors bundle their software
products with leading hardware, application software or operating system
vendors, or if one or more of the operating system vendors, such as Microsoft
Corporation ("Microsoft"), developed its own technical support software and
incorporated such functionality into its products, the Company's business,
results of operation and financial condition could be materially adversely
affected. There can be no assurance that the Company will be able to compete
successfully with existing or potential competitors. Increased competition may
result in the loss of shelf space or a reduction in demand or sell-through of
the Company's products, any of which could have a material adverse effect on the
Company's business, results of operations and financial condition.
Microsoft's position as a large, well-capitalized software company with a
dominant share of the market for PC operating system software could enable it to
develop products that compete effectively with those of the Company. In
particular, Microsoft is incorporating "Plug and Play" capabilities into future
versions of its operating systems. Plug and Play capabilities are designed to
allow PC users to add on any computer peripheral (such as a modem, video or
sound card) to a Windows-based system and enable that peripheral to work
immediately, without concern for software configuration errors or driver
conflicts. In addition, to the extent that Microsoft incorporates functionality
comparable, or perceived as comparable, to that offered by the Company into its
Windows products (or separately offers comparable products), sales of the
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<PAGE> 15
Company's products could be materially adversely affected. There can be no
assurance that any such action by Microsoft or others would not render the
Company's products noncompetitive or obsolete.
The Company's products also compete indirectly against alternative sources
of technical support, such as the technical support departments of hardware and
software vendors. Additionally, the Internet provides hardware and software
vendors with a new medium to offer technical support services. The Company
expects that many vendors will provide Internet-based technical support services
to support their existing and future products. The availability of these
technical support services could materially dilute the value of the Company's
products and have a material adverse effect on the Company's market position,
business, results of operations and financial condition.
In addition, the Company may face increasing pricing pressures from current
and future competitors and, accordingly, there can be no assurance that
competitive pressures will not require the Company to reduce its prices. Any
material reduction in the price of the Company's products would negatively
affect the Company's business, results of operations and financial condition,
and would require the Company to increase unit sales in order to maintain
historic levels of net revenues. There can be no assurance that competitors will
not develop products that are superior to the Company's products or that achieve
greater market acceptance and thereby negatively affect sales of the Company's
products.
Dependence on Microsoft Windows. The Company's success is dependent on the
continued widespread use of the Windows operating systems for PCs. The Company's
First Aid products automatically detect, diagnose and resolve common software
conflicts and configuration errors arising in the Windows operating environment.
Although Windows operating systems are currently used by many PC users, other
companies, including International Business Machines Corporation and Apple
Computer, Inc., have developed or are developing other operating systems that
compete, or will compete, with Windows. In the event that any of these
alternative operating systems become widely accepted in the PC marketplace,
demand for the Company's products could be adversely affected, thereby
materially adversely affecting the Company's business, results of operations and
financial condition. In addition, Microsoft may introduce a new operating system
to replace Windows or could incorporate some or many of the key features of the
Company's First Aid products in new versions of its operating systems, thereby
eliminating the need for users to purchase the Company's products. The inability
to adapt current products or to develop new products for use with any new
operating systems on a timely basis would have a material adverse effect on the
Company's business, results of operations and financial condition.
In addition, the Company's ability to develop products based on Windows
operating systems and release these products immediately prior to, or at the
time of Microsoft's release of new and upgraded Windows products is
substantially dependent on its ability to gain pre-release access to, and to
develop expertise in, current and future versions of Windows. There can be no
assurance that the Company will be able to provide products that are compatible
with future Windows releases on a timely basis, with or without the cooperation
of Microsoft.
Developing Market. The Company's products address the new and rapidly
evolving market for automatic service and support software. The market for
automatic service and support software products has only recently begun to
develop and is characterized by an increasing number of existing and potential
market entrants who are in the process of introducing or developing automatic
service and support software. As is typical in the case of a new and rapidly
evolving market, the demand and market acceptance for recently introduced
products are subject to a high level of uncertainty and risk. It is difficult to
predict the future growth rate and size of this market. There can be no
assurance that the market for the Company's products will develop, that demand
for the Company's products or for automatic service and support software
products in general will increase or that the rate of growth of this demand will
be sustainable or will not decrease. The Company's ability to develop and
successfully market additional products depends substantially on the acceptance
of automatic service and support software by individual and corporate users as
an effective means of addressing their technical support requirements. If the
market fails to develop, develops more slowly than expected or becomes saturated
with competitors, or if the
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<PAGE> 16
Company's products do not achieve or sustain market acceptance, the Company's
business, results of operations and financial condition will be materially
adversely affected.
New Product Development and Technological Change. Substantially all of the
Company's net revenues have been derived, and substantially all of the Company's
future net revenues are expected to be derived, from the sale of its automatic
service and support software products. The market for automatic service and
support software products is characterized by rapid technological advances,
evolving industry standards in computer hardware and software technology and
frequent new product introductions and enhancements. The Company's products must
be continually updated to address the new and evolving technical support
requirements of third-party hardware and software. Failure to anticipate
technical difficulties that arise from use of these third-party products and
incorporate solutions to such difficulties into the Company's products would
have a material adverse effect on continued market acceptance of the Company's
products. The Company's ability to design, develop, test and support on a timely
basis new software products, updates and enhancements that respond to
technological developments and emerging industry standards is critical to the
Company's future success. The Company is currently upgrading its First Aid
products and expects these upgrades to be released in the fourth quarter of
1997. There can be no assurance that the Company will be successful in such
efforts or that the Company will not experience difficulties that could delay or
prevent the successful development, introduction and marketing of new products
and enhancements, or that its new products, upgrades and enhancements will
adequately meet the requirements of the marketplace and achieve market
acceptance. The introduction of new products, upgrades or enhanced versions of
existing products is subject to the risk of development delays due to resource
constraints, technological change and other reasons. If the Company is unable to
develop on a timely basis new software products, upgrades or enhancements to
existing products or if such new products, upgrades or enhancements do not
achieve market acceptance, the Company's business, results of operations and
financial condition would be materially adversely affected.
The Company currently employs software engineers in India on a work-for-hire
basis. These engineers are primarily responsible for updating the Company's
knowledge bases for current applications and upgrades. Any loss of the services
of these engineers due to political or economic instability or for any other
reason could adversely affect the Company's product development efforts and
thereby could materially adversely affect the Company's business, results of
operations and financial condition.
Dependence on Distribution Channels. The Company currently sells its
products primarily through distributors for resale to the retail channel and
through direct mail. Sales to such distributors and sales through direct mail
accounted for approximately 69% and 30%, respectively, of the Company's net
revenues in 1996. Sales from direct mail have historically operated at lower
profitability levels than sales from distributors. Accordingly, quarterly shifts
in the mix of sales through distributors and through direct mail could cause
fluctuations in the Company's profitability. There can be no assurance that the
mix or relative profitability of such sales will remain at current levels in the
future. The Company is evaluating the use of alternative distribution channels
for its products and began distributing Oil Change through the Internet in
October 1996.
Sales to a limited number of distributors have constituted and are expected
to continue to constitute a substantial portion of the Company's net revenues.
Sales to the Company's top two distributors, Navarre Corporation ("Navarre") and
Ingram Micro, Inc. ("Ingram Micro"), accounted for approximately 26% and 34%,
respectively, of the Company's net revenues in the first six months of 1997. The
loss of, or reduction in, orders from any of these distributors could have a
material adverse effect on the Company's business, results of operations and
financial condition. Historically, margins for distributors in the PC software
industry have been low, competition has been intense and distributors have
relied on timely payments from their customers. Financial difficulties of any
distributors could render the Company's associated accounts receivable
uncollectible, which could have a material adverse effect on the Company's
business, results of operations and financial condition. In addition, any
special distribution arrangements or product pricing arrangements that the
Company may implement for strategic purposes in one or more of its distribution
channels could materially adversely affect its margins.
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<PAGE> 17
The distribution channels through which consumer software products are sold
have been characterized by rapid change, including consolidations and financial
difficulties of certain distributors and retailers and the emergence of new
retailers such as general mass merchandisers. In addition, due to an increase in
the number of software applications, there are an increasing number of companies
competing for access to these channels. Retailers of the Company's products
typically have a limited amount of shelf space and promotional resources, and
there is intense competition for high quality and adequate levels of shelf space
and promotional support from the retailers. The Company believes this
competition for shelf space will increase in the near term as competitors
introduce new automatic service and support software. There can be no assurance
that retailers will continue to purchase the Company's products or provide the
Company's products with adequate levels of shelf space and promotional support,
the lack of which would have a material adverse effect on the Company's
business, results of operations and financial condition.
Risk of Product Returns. The Company's business includes a substantial risk
of product returns from distributors, retailers and end users, either through
the exercise of contractual return rights or as a result of the Company's policy
of assisting customers in balancing and updating inventories. Individual end
users may return products within 60 days of the date of purchase for a full
refund. Most retailers, distributors and end users also have the ability to
return products for a full refund. In addition, competitors' promotional or
other activities could cause returns to increase sharply at any time. Further,
the rate of product returns could increase if general mass merchandisers become
a larger percentage of the Company's business or other changes in the Company's
distribution channel occur. Large shipments in anticipation of unrealized demand
can lead to overstocking by the Company's distributors or retailers and result
in substantial product returns. Furthermore, the risk of product returns will
increase if demand for the Company's products declines.
Although the Company establishes reserves based on estimated future returns
of products, taking into account promotional activities, the timing of new
product introductions, distributor and retailer inventories of the Company's
products and other factors, there can be no assurance that actual levels of
returns will not significantly exceed amounts anticipated by the Company. In
addition, the Company provides price protection to its distributors in the event
the Company reduces its prices. While to date, the number of products returned
to the Company has been immaterial, there can be no assurance that the number of
returns will not significantly increase in the future. Any material increase in
the level of returns could materially adversely affect the Company's business,
results of operations and financial condition.
Dependence on the Internet. The commercial viability of Oil Change and the
Company's ability to execute its strategy to leverage Oil Change as an
Internet-based platform for other products and services are dependent upon the
continued development and acceptance of the Internet as a delivery medium for
third-party software programs. In addition, the Company's future success may be
dependent upon continued growth in the use of the Internet in order to support
the distribution of products and future upgrades. The use of the Internet as a
distribution channel is new and unproven and represents a significant departure
from traditional distribution methods employed by software companies. Critical
issues concerning the commercial use of the Internet (including security,
reliability, cost, ease of use and access and speed) remain unresolved and may
affect the use of the Internet as a medium to distribute software. There can be
no assurance that the use of the Internet as a distribution channel will be
effective for either current or future products. The failure of the Internet to
be an effective distribution channel could have a material adverse effect on the
Company's business and prospects. The Company's future success depends, in part,
upon the future growth of the Internet for commercial transactions. There can be
no assurance that communication or commerce over the Internet will become
widespread and it is not known whether this market will develop to the extent
necessary for demand for the Company's products to emerge and become
sustainable. The Internet may not prove to be a viable commercial marketplace
for a number of reasons, including inadequate communications bandwidth and a
lack of secure payment mechanisms. To the extent that the Internet continues to
experience significant growth in the number of users and level of use, there can
be no assurance that the Internet infrastructure will continue to be able to
support the demands placed upon it. Moreover, the Internet could lose its
viability due to delays in the
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<PAGE> 18
development or adoption of new standards and protocols required to handle
increased levels of Internet activity or due to increased governmental
regulation. Changes in or insufficient availability of telecommunications
services to support the Internet also could result in slower response times
which might adversely affect customers' ability or willingness to access the
Company's products or upgrades over the Internet. In addition, the security and
privacy concerns of existing and potential customers, as well as concerns
related to computer viruses, may inhibit the growth of the Internet marketplace
generally and the customer base for the Company's Oil Change product in
particular. The viability of Oil Change also depends upon the continuation of
the current practice of publishing new updates and patches to commonly used
software applications and device drivers on vendors' Web sites.
If use of the Internet does not continue to grow, if the Internet
infrastructure does not effectively support customer demand or if hardware and
software vendors do not continue to post updates and patches on the Internet,
the Company's business, results of operations and financial condition could be
materially adversely affected. If users fail to accept Oil Change as a technical
support solution, the Company may have to expend significant resources to
educate users and create demand for Oil Change.
Limited Protection of Proprietary Rights. The Company's success is heavily
dependent upon its proprietary software. The Company relies primarily on a
combination of copyright, trademark and trade secret laws, employee
confidentiality and nondisclosure agreements and third-party nondisclosure
agreements and other methods of protection common in the consumer software
industry to protect its proprietary rights. The Company licenses its products
primarily under "shrink wrap" license agreements that are not signed by
licensees and therefore may be unenforceable under the laws of certain
jurisdictions. In addition, the Company has two United States patent
applications pending and intends to seek international and further United States
patents on its technology. There can be no assurance that patents will issue
from the Company's pending applications or that any claims allowed from the
pending patent applications or those hereafter filed will be of sufficient scope
or strength, or be issued in all countries where the Company's products can be
sold, to provide meaningful protection or any commercial advantage to the
Company or that any patents which may be issued to the Company will not be
challenged and invalidated. In addition, existing copyright laws provide only
limited protection. Despite the Company's efforts to protect its proprietary
rights, unauthorized parties may attempt to copy or otherwise obtain and use the
Company's products or technology that the Company considers proprietary, and
third parties may develop similar technology independently. Policing
unauthorized use of the Company's products is difficult, and while the Company
is unable to determine the extent to which piracy of its software products
exists, software piracy can be expected to be a persistent problem. There can be
no assurance that the Company's means of protecting its proprietary rights will
be adequate. In addition, there can be no assurance that the Company's
competitors will not independently develop technologies and products that are
substantially equivalent or superior to those of the Company without violating
the Company's proprietary rights.
As the number of software products in the industry increases and the
functionality of these products increasingly overlaps, software developers may
become increasingly subject to infringement claims. From time to time, the
Company has received communications from third parties asserting that certain
products may infringe upon the intellectual property rights of others. To date,
no such claim has resulted in litigation or the payment of any damages. However,
there can be no assurance that existing or future infringement claims against
the Company with respect to current or future products will not result in costly
litigation or require the Company to enter into royalty bearing licenses with
third parties or to discontinue use of certain portions of the Company's
technology if licenses are not available on acceptable terms.
While to date the Company's international sales have been insignificant, the
Company intends to devote substantial resources in an effort to expand the
international distribution of its products. The laws of some foreign countries
either do not protect the Company's proprietary rights or offer only limited
protection for those rights. The Company has not registered its copyrights in
any foreign countries. While in most foreign countries registration is not
required in order to receive copyright protection, the ability to
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bring an enforcement action and obtain certain remedies depends on compliance
with that country's copyright laws. Consequently, the Company's failure to
register its copyrights abroad may make enforcement of these rights more
difficult or reduce the available remedies in any enforcement action. In
addition, the Company has not to date pursued foreign registration of its
trademarks due to the significant costs involved and, as a result, the Company
may not be able to prevent a third party from using its trademarks in many
foreign jurisdictions.
System Interruption and Security Risks. The Company's ability to provide
product functionality through the Internet is dependent on its ability to
protect its system from interruption, whether by damage from fire, earthquake,
power loss, telecommunications failure, unauthorized entry or other events
beyond the Company's control. Most of the Company's computer equipment,
including its processing equipment, is currently located at a single site. While
the Company believes that its existing and planned precautions of redundant
systems, regular data backups and other procedures are adequate to prevent any
significant system outage or data loss, there can be no assurance that
unanticipated problems will not cause such a failure or 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, employees or other Internet users. Any damage or failure that
causes interruptions in the Company's operations could have a material adverse
effect on the Company's business, results of operations and financial condition.
Computer break-ins and other disruptions could jeopardize the security of
information stored in and transmitted through the computer systems of the
individuals and businesses utilizing the Company's products, which could result
in significant liability to the Company and also may deter customers and
potential customers from using the Company's services. Persistent problems
continue to affect public and private data networks. For example, in a number of
networks, hackers have bypassed network security and misappropriated
confidential information.
Product Liability. Although the Company attempts to incorporate support for
most software conflicts and configuration errors in the Windows environment,
there can be no assurance that the Company's products will resolve any specific
problems encountered by a PC user. Furthermore, as a result of their complexity,
the Company's software products may contain undetected errors or failures, when
they are first introduced and as new versions are released. There can be no
assurance that, despite testing by the Company and testing and use by current
and potential customers, errors will not be found in new products after
commencement of commercial shipments or thereafter. The occurrence of any such
errors could result in the loss of, or a delay in, market acceptance of the
Company's products, which would have a material adverse effect on the Company's
business, results of operations and financial condition. The Company's license
agreements with its customers typically contain provisions designed to limit the
Company's exposure to potential claims for damages. It is possible, however,
that the limitation of liability provisions contained in the Company's license
agreement may not be effective under the laws of certain jurisdictions. Although
the Company has not experienced any such claims to date, the sale and support of
the Company's products may entail the risk of such claims. While the Company has
obtained insurance against product liability risks, there can be no assurance
that such insurance will provide adequate coverage. The Company does not
currently carry errors and omissions coverage which may protect against
allegations that the Company's products have failed to perform adequately. Any
such claims for damages brought against the Company could have a material
adverse effect on the Company's business, results of operations and financial
condition.
Risks Associated With Global Operations. During the first half of 1997,
approximately 18% of total revenues were from sales to customers outside of the
United States. The Company is expanding its sales operations outside of the
United States which will require significant management attention and financial
resources. The Company's ability to expand its product sales internationally is
dependent on the successful development of localized versions of the Company's
products, acceptance of such products and the acceptance of the Internet
internationally. The Company expects to commit significant resources to
customizing its products for selected international markets and to developing
international sales and support channels. The Company's First Aid products rely
on a knowledge base that contains detailed information based on specific English
language versions of third-party hardware and software
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applications. This knowledge base must be recreated for each foreign language
version that is developed to support foreign releases of such products, many of
which have been modified from their United States releases. There can be no
assurance that this task can be completed in a timely or cost-effective manner
or that enough products can be supported to ensure customer acceptance. The
Company believes that successful execution of a global strategy is critical to
maintaining its current market position and competitive advantage. Failure to
successfully expand its products to international markets could cause the
Company to lose business to global competitors or prevent the development of
strategic relationships with global hardware and software vendors.
International operations are subject to a number of risks, including costs
of customizing products for foreign countries, dependence on independent
resellers, multiple and conflicting regulations regarding communications, use of
data and control of Internet access, longer payment cycles, unexpected changes
in regulatory requirements, import and export restrictions and tariffs,
difficulties in staffing and managing foreign operations, greater difficulty or
delay in accounts receivable collection, potentially adverse tax consequences,
the burdens of complying with a variety of foreign laws, the impact of possible
recessionary environments in economies outside the United States and political
and economic instability. Furthermore, the Company's export sales are currently
denominated predominantly in United States dollars. An increase in the value of
the United States dollar relative to foreign currencies could make the Company's
products more expensive and, therefore, potentially less competitive in foreign
markets. If the Company increases its international sales, its net revenues may
also be affected to a greater extent by seasonal fluctuations resulting from
lower sales that typically occur during the summer months in Europe and other
parts of the world.
Reliance on Outside Resources. The Company relies upon independent
contractors to perform a number of tasks, including product duplication and
packaging, reproduction of manuals and brochures and order fulfillment. The
Company depends on these outside parties to perform such functions to the
Company's specifications and quality standards. The Company currently does not
have long-term agreements with any of these outside parties. The Company also
employs software engineers in India on a work-for-hire basis to assist in its
product development efforts. Although the Company believes that alternative
resources exist or can be obtained, a disruption of the Company's relationship
with any of these outside parties or the failure of these outside parties to
continue to provide quality supplies and services on a timely basis could
materially adversely affect the Company's business, results of operations and
financial condition.
Litigation. From time to time, the Company may be involved in litigation
relating to claims arising out of its products or operations in the normal
course of business. See " Part II, Item 1. Legal Proceedings."
Volatility of Stock Price. The market price of the shares of Common Stock is
likely to be highly volatile and could be subject to wide fluctuations in
response to factors such as actual or anticipated variations in the Company's
operating results, announcements of technological innovations, new products or
new contracts by the Company or its competitors, developments with respect to
patents, copyrights or proprietary rights, changes in financial estimates by
securities analysts, conditions and trends in the software and other technology
industries, adoption of new accounting standards affecting the software
industry, general market conditions and other factors. Further, the stock market
has experienced extreme price and volume fluctuations that have particularly
affected the market prices of equity securities of many high technology
companies and that often have been unrelated or disproportionate to the
operating performance of such companies. Declines in market prices generally may
adversely affect the market price of the Company's Common Stock. In the past,
following periods of volatility in the market price of a company's securities,
securities class action litigation has often been instituted against such
company. Such litigation, if instituted, could result in substantial costs and a
diversion of management attention and resources, which would have a material
adverse effect on the Company's business, results of operations and financial
condition. These market fluctuations, as well as general economic, political and
market
20
<PAGE> 21
conditions, such as recessions or international currency fluctuations, may
adversely affect the market price of the Common Stock.
21
<PAGE> 22
PART II: OTHER INFORMATION
Item 1. Legal Proceedings:
In June 1997, the Company filed a lawsuits in the U.S. District Court for
the Northern District of Georgia against MicroBasic GmbH ("MicroBasic") and
Roderick Manhattan Group, Ltd. ("RMG") demanding that they cease copying and
distributing MicroHelp UnInstaller. In addition, in June 1997, the Company filed
a lawsuit in the Birmingham Mercantile Court, Great Britan, against RMG
demanding payment for past due invoices.
Item 4. Submission of Matters to Vote of Security Holders
On June 4, 1997 the Annual Meeting of Stockholders of the Company was
held in Santa Monica, California. An election of Directors was held with a slate
of seven candidates, Unni Warrier, Paul Dali, Peter Morris, Suhas Patil, Ronald
Posner, Kanwal Rekhi and James Tolonen being elected to the Board of Directors
of the Company. Of shares represented and voting, Mr. Warrier received 6,038,152
affirmative votes and 638,353 votes against, Mr. Posner received 6,037,352
affirmative votes and 639,153 votes against and each of the other directors
received 6,038,352 affirmative votes and 638,153 votes against.
The stockholders also ratified the appointment of KPMG Peat Marwick, LLP
as independent auditors, to audit the financial statements of the Company for
the fiscal year ending December 31, 1997. There were 6,673,255 shares voted in
favor of the ratification, 1,200 shares voted against ratification and 2,050
shares abstained.
Item 5. Other Information
Paul Dali, a member of the Board of Directors of the Company, resigned
his position as a director in July 1997, for personal business reasons.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Asset Purchase Agreement between CyberMedia, inc.
and Luckman Interactive, Inc. dated April 2, 1997
11.2 Statement Regarding Computation of Net Income
Per Share
27.3 Financial Data Schedule
(b) Reports on form 8-K
No reports on Form 8-K have been filed during the period for
which the report is filed.
22
<PAGE> 23
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
CYBERMEDIA, INC.
(Registrant)
Date: August 12, 1997 By: /s/ Jeffrey W. Beaumont
-----------------------------
Chief Financial Officer
(Principal Financial and
Principal Accounting Officer)
23
<PAGE> 24
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Page
<S> <C>
10.1 Asset Purchase Agreement between CyberMedia, inc. and Luckman 25
Interactive, Inc. dated April 2, 1997
11.1 Statement Regarding Computation of Net Income Per Share 160
27.1 Financial Data Schedule 161
</TABLE>
24
<PAGE> 1
EXHIBIT 10.1
PURCHASE OF CERTAIN ASSETS OF LUCKMAN INTERACTIVE, INC.
BY CYBERMEDIA, INC.
APRIL 2, 1997
<PAGE> 2
PURCHASE OF CERTAIN ASSETS OF LUCKMAN INTERACTIVE, INC.
BY CYBERMEDIA, INC.
APRIL 2, 1997
CLOSING INDEX
<TABLE>
<CAPTION>
TAB
---
<S> <C>
Asset Purchase Agreement by and between Luckman Interactive, Inc. ("Luckman") and
CyberMedia, Inc. ("CyberMedia") dated as of April 2, 1997 ("Effective Date")............1
Registration Rights Agreement by and between CyberMedia, Inc. and Luckman
Interactive, Inc. dated as of April 2, 1997..............................................2
Warrant to Purchase ** shares of Common Stock of CyberMedia to Luckman...................3
Bill of Sale.............................................................................4
Assignment of Copyright of Intellectual Property Rights..................................5
Assignment of Trademarks.................................................................6
Assignment and Transfer of all right, title, and interest in and to the following
agreements...............................................................................7
Republishing and Distribution Agreement between Luckman Interactive, Inc. and
Marubeni Corporation dated 3/4/97
Computer Software License Agreement dated October 11, 1995 between MicroHelp,
Inc. and INSO Corporation, as amended by Amendment
Termination of the following Agreements:.................................................8
International Distribution Agreement between Power Reporting & Microhelp dated
August 15, 1995
Distribution Agreement between BFL Software & Microhelp dated September
19, 1996
Republisher Agreement between MicroHelp, Inc. and AB Pro dated 7/1/96;
Republishing Agreement between MicroHelp, Inc. and MicroBasic GmbH dated
3/1/96;
Republishing Agreement between MicroHelp, Inc. and Questar dated 3/1/96;
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C> <C>
Republishing Agreement between MicroHelp, Inc. and Roderick Manhattan Group,
Limited dated 3/15/96; and
European Distribution Agreement Convey A.S. & Microhelp dated May 20, 1996
Receipt of Warrant executed by President of Luckman......................................9
Receipt of Consideration executed by President of Luckman...............................10
Evidence of wire transfers in the following amounts:....................................11
a) ** to Merrill Lynch Business Financial Service
b) ** to Silicon Valley Bank
c) ** to Former Shareholders of MicroHelp, Inc.
d) ** to Luckman Interactive, Inc.
UCC Termination Statements filed with various jurisdictions releasing security
interests in assets.....................................................................12
a) California: Termination of File No. 9632560244
between Luckman Interactive, Inc. and Janet Van Pelt,
Mark E. Novisoff, Timothy B. O'Pry, and Thomas Lynch
b) California: Termination of File No. 9632560220,
between Luckman Interactive, Inc. and Janet Van Pelt,
Mark E. Novisoff, Timothy B. O'Pry, and Thomas Lynch
c) California: Termination of File No.: 96-36560426
between Luckman Interactive, Inc. and Silicon Valley
Bank
d) California: Termination between Luckman Interactive,
Inc. and Willie Gault
e) Delaware: Termination of File No. 96 33171 between
Luckman Interactive, Inc. and Janet Van Pelt, Mark E.
Novisoff, Timothy B. O'Pry, and Thomas Lynch
f) Delaware: Termination of File No. 96 33155, between
Luckman Interactive, Inc. and Janet Van Pelt, Mark E.
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C> <C>
Novisoff, Timothy B. O'Pry, and Thomas Lynch
g) Georgia: Termination of File No. 033199616159
between Luckman Interactive, Inc. and Janet Van Pelt,
Mark E. Novisoff, Timothy B. O'Pry, ad Thomas Lynch
h) Georgia: Termination of File No. 033199616160,
between Luckman Interactive, Inc. and Janet Van Pelt,
Mark E. Novisoff, Timothy B. O'Pry, ad Thomas Lynch
i) Georgia: Termination of File No. 033199703662
regarding Merrill Lynch Business Financial Services,
Inc. and Timothy O'Pry
j) Georgia: Termination of File No. 033199703662
regarding Merrill Lynch Business Financial Services,
Inc. and Janet Van Pelt
k) Georgia: Termination of File No. 033199703662
regarding Merrill Lynch Business Financial Services,
Inc. and Tom Lynch
l) Georgia: Termination of File No. 033199703662
regarding Merrill Lynch Business Financial Services,
Inc. and Microhelp, Inc.
m) Georgia: Termination of File No. 033199703662
regarding Merrill Lynch Business Financial Services,
Inc. and Luckman Interactive
n) Nevada: Termination of File No.: 97044637 regarding
Merrill Lynch Business Financial Services, Inc. and
Mark Novisoff
Purchase Orders for UnInstaller..........................................................13
</TABLE>
<PAGE> 5
TAB 1
ASSET PURCHASE AGREEMENT BETWEEN
CYBERMEDIA, INC. AND
LUCKMAN INTERACTIVE, INC.
DATED APRIL 2, 1997
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
<S> <C> <C> <C>
1. Sale of Assets...........................................................................1
1.1 Transfer..........................................................................1
1.2 No Assumption of Liabilities......................................................1
1.3 Contracts.........................................................................1
1.4 Sales Tax; Duties.................................................................2
2. Representations and Warranties of Luckman................................................2
2.1 Organization and Standing.........................................................2
2.2 Corporate Power; Authorization....................................................2
2.3 Undisclosed Liabilities...........................................................2
2.4 Title to Properties and Assets; Liens, Etc........................................2
2.5 Patents, Trademarks and Trade Secrets.............................................3
2.6 Rights to the Software............................................................4
2.7 Compliance with Other Instruments.................................................4
2.8 Litigation, Etc...................................................................5
2.9 Governmental Authorizations and Regulations.......................................5
2.10 Material Contracts; Commitments and Product Warranties............................5
2.11 Manufacturing and Technology Rights...............................................6
2.12 Contracts, Transactions with Directors, Officers, Etc.............................6
2.13 Brokerage.........................................................................6
2.14 Environmental and Pollution Control Regulation....................................6
2.15 Information Furnished True........................................................6
2.16 Bulk Sales Laws...................................................................6
2.17 Termination of Agreements.........................................................7
3. Representations and Warranties of CyberMedia.............................................7
3.1 Organization and Standing.........................................................7
3.2 Corporate Power; Authorization....................................................7
3.3 Other Consents and Approvals......................................................7
4. License and Transfer Option..............................................................7
4.1 License...........................................................................7
4.2 License Consideration.............................................................8
4.3 Irrevocable Transfer Option.......................................................8
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
<S> <C> <C> <C>
5. Effective Date...........................................................................8
5.1 Effective Date....................................................................8
5.2 On or before the Effective Date, Luckman shall deliver to CyberMedia:.............8
5.3 Transfer of Assets................................................................9
5.4 Acceptance........................................................................9
6. Consideration............................................................................9
6.1 Warrant...........................................................................9
6.2 Advance..........................................................................10
6.3 Royalty..........................................................................10
6.4 Adjustment; Recoupment...........................................................11
6.5 Accounting.......................................................................12
6.6 Examination......................................................................12
6.7 Right of Offset..................................................................12
6.8 No Guarantee.....................................................................12
6.9 MicroHelp Litigation.............................................................12
6.10 Failure to Pay...................................................................13
6.11 Sale of Assets...................................................................13
7. Indemnity...............................................................................13
7.1 Luckman Indemnity. .............................................................13
7.2 Assertion of Claims..............................................................13
7.3 Claims Against CyberMedia........................................................14
7.4 General Indemnity................................................................14
8. Luckman's Post-Effective Date Covenants.................................................14
8.1 Access...........................................................................14
8.2 Further Assurances...............................................................14
8.3 Use of Corporate and Trade Name..................................................14
8.4 Cooperation......................................................................14
9. Noncompetition Covenants................................................................15
10. Confidentiality.........................................................................15
10.1 Condition of Confidentiality.....................................................15
10.2 Developments Projects............................................................16
11. Miscellaneous...........................................................................16
</TABLE>
<PAGE> 8
<TABLE>
<S> <C> <C> <C>
11.1 Governing Law....................................................................16
11.2 Entire Agreement; Amendment......................................................16
11.3 Delays or Omissions..............................................................16
11.4 Notices, Etc.....................................................................16
11.5 Attorneys' Fees..................................................................17
11.6 Expenses.........................................................................17
11.7 Counterparts.....................................................................17
11.8 Severability.....................................................................17
11.9 Titles and Headings..............................................................18
11.10 Assignment.......................................................................18
11.11 Successors and Assigns...........................................................18
11.12 Survival of Representations and Warranties.......................................18
11.13 Rights of Third Parties..........................................................18
</TABLE>
Exhibits
Exhibit A Minutes of the Board of Directors of Luckman Interactive, Inc.
Exhibit B The Software
Exhibit C Assets
Exhibit D Schedule of Exceptions
Exhibit E Bill of Sale
Exhibit F Assignment of Copyright
Exhibit G Form of Warrant
Exhibit H Distribution Agreements to be Terminated
Exhibit I Former Shareholders of MicroHelp, Inc.
Exhibit J Registration Rights Agreement
<PAGE> 9
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement, dated as of April 2, 1997 (the
"Agreement"), is made by and between Luckman Interactive, Inc., a Delaware
corporation ("Luckman") and CyberMedia, Inc., a Delaware corporation
("CyberMedia") with reference to the following facts:
Luckman is engaged in the business of developing and marketing computer
software and related products including the computer programs identified in
Exhibit B hereto (the "Software"). On the terms and conditions provided herein,
CyberMedia wishes to acquire the Software and related assets of Luckman, and
Luckman desires to sell the same to CyberMedia.
The parties hereto agree as follows:
1. Sale of Assets.
1.1 Transfer. Subject to the terms and conditions contained
herein, with effect from the Effective Date (as defined in Section 5.1, below),
Luckman hereby transfers to CyberMedia all right title and interest in and to
those certain tangible, intangible and contract assets, rights and properties,
all as more particularly described in Exhibit C attached hereto (the "Assets").
1.2 No Assumption of Liabilities. This Agreement does not
transfer and CyberMedia does not assume and expressly disclaims any and all
costs, debts, claims, liabilities and obligations of or relating to the
ownership of the Assets or the operations of Luckman, whether prior to or after
the Effective Date, including, but not limited to, any obligations relating to
Luckman's employees and agreements relating to the development, distribution or
licensing of the Software or any derivatives thereof, with the sole and single
exception that CyberMedia shall assume the purchase orders issued to Warner
Media referenced in Exhibit C hereto up to the maximum amount set forth on such
Exhibit.
1.3 Contracts. Subject to Section 4 below, from and after the
Effective Date CyberMedia shall be entitled to the benefit of all of the
contracts in the Assets; provided, however, that with respect to the Software
License Agreement between MicroHelp, Inc. and Western Digital Corporation
("Western Digital") dated August 16, 1996, CyberMedia shall remit ** of its net
revenues under such agreement to Luckman so long as Western Digital sells its
Disk Drive (as defined therein) with a copy of the "Transport" function of the
Software. This obligation to remit such amounts shall terminate at such time
that (i) the agreement with Western Digital terminates, (ii) Western Digital
ceases to include a copy of "Transport" with the sales of the Disk Drive or
(iii) Western Digital upgrades and distributes the entire "UnInstaller" program
with the Disk Drive. Luckman shall give such assistance to CyberMedia as
CyberMedia shall reasonably request to enable CyberMedia to enjoy the benefit of
the foregoing. Insofar as consents to the transfer or assignment from third
parties are required, Luckman shall obtain such consents prior to the Effective
Date. From and after the Effective Date, all unfilled orders for the Software
will be filled by
<PAGE> 10
CyberMedia, and Luckman will refer any customers interested in the Software to
CyberMedia. CyberMedia will provide Luckman with a contact phone number for such
purposes.
1.4 Sales Tax; Duties. Luckman shall be responsible for any and
all sales or other transaction taxes, duties and other similar charges payable
in connection with the sale of the Assets or the transactions contemplated
hereby. As set forth in Exhibit C hereto, the parties agree that for the
purposes of this Agreement the customer list shall be valued at **.
2. Representations and Warranties of Luckman. Except as disclosed or
excepted in the Schedule attached hereto as Exhibit D (the "Schedule"), which
shall state the specific subsection of this Section 2 to which each disclosure
or exception is made, Luckman represents and warrants to CyberMedia as follows:
2.1 Organization and Standing. Luckman is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Luckman has all requisite corporate power to own and operate its
properties and assets, and to carry on its business as conducted, and possess
all licenses, franchises, rights and privileges necessary for the conduct of its
business. Luckman is qualified to do business in all other jurisdictions in
which such qualification is required. Attached hereto as Exhibit A are copies of
the minutes of the meeting of Luckman's Board of Directors expressly authorizing
the transfer of the Assets on the terms set forth herein. Said copies are true,
correct, complete and properly executed and will be true, correct and complete
on the Effective Date.
2.2 Corporate Power; Authorization. Luckman has all requisite
legal and corporate power and authority to enter into this Agreement, to
transfer the Assets, and to carry out and perform all of its obligations under
the terms of this Agreement. All corporate action on the part of Luckman and all
action on the part of its officers, directors and shareholders and other
security holders that is necessary for the authorization, execution and delivery
of this Agreement by Luckman, for the performance of Luckman's obligations
hereunder and for the sale and transfer of the Assets has been taken; and this
Agreement, when executed and delivered, shall constitute the legal and binding
obligation of Luckman, enforceable against Luckman in accordance with its terms.
2.3 Undisclosed Liabilities. Luckman is not subject to any
obligations or liabilities of any nature related to the Assets, whether
absolute, accrued, contingent or otherwise, or whether assumed or guaranteed,
directly or indirectly.
2.4 Title to Properties and Assets; Liens, Etc. Luckman has good
and marketable title to all of its properties and assets related to the Assets,
in each case subject to no mortgage, pledge, lien, lease, encumbrance or charge,
other than (a) the lien of current taxes not yet due and payable, and (b)
possible minor liens and encumbrances which do not in any case materially
detract from the value of the property subject thereto or materially impair the
Assets, and which have not arisen otherwise than in the ordinary course of
business. Luckman is not subject to or bound by any
-6-
<PAGE> 11
judgment, order, writ, injunction or decree of any court or of any governmental
body, or of any arbitrator, which could prevent the use by CyberMedia of the
Assets after the Effective Date. Luckman is not a party, bound by or a
beneficiary of any agreement which could prevent the use by CyberMedia of the
Assets, in each case in accordance with past practices, after the Effective
Date, or which, by operation of law, or pursuant to the terms of any such
agreement, would terminate upon the consummation of transactions contemplated
hereby, absent the consent of the other parties thereof. When transferred to
CyberMedia, the Assets will be free and clear subject to no mortgage, pledge,
lien, lease, license, encumbrance, charge or rights of any other party.
2.5 Patents, Trademarks and Trade Secrets.
2.5.1 There are no pending or threatened claims against Luckman
alleging that the conduct of Luckman's business in connection with the Assets
infringes or conflicts with the rights of others under patents, service marks,
trade names, trademarks, copyrights, trade secrets, know-how, data or other
proprietary or intellectual property rights (collectively, "Intellectual
Property Rights"). Luckman's business as it has been conducted and the use of
the Assets in the conduct of Luckman's business do not infringe or conflict with
the rights of others, including the Intellectual Property Rights of others. To
Luckman's knowledge after due investigation, no employee or consultant of
Luckman owns any Intellectual Property Rights directly or indirectly competitive
with those owned or to be used by Luckman in connection with the Assets or
derived from or in connection with the conduct of Luckman's business. Luckman is
not aware of any violation or infringement by a third party of any of Luckman's
Intellectual Property Rights related to the Assets.
2.5.2 Set forth in the Schedule is a true and correct list and
summary description of:
(1) all trademark or trade name registrations,
copyrights and patents, and all applications pending therefor, which are owned
by Luckman relating to the Assets; and
(2) all licenses (or similar agreements) to Intellectual
Property Rights granted by or to Luckman and relating to the Assets.
2.5.3 Except as disclosed in the Schedule, Luckman has not agreed
to indemnify any person for or against any infringement of any Intellectual
Property Right related to the Assets.
2.5.4 All rights to any tangible or intangible property, material
to the conduct of Luckman's business related to the Assets as presently
conducted or planned, of any predecessor entity to Luckman, whether or not a
limited or general partnership, corporation or other form of business entity,
have been validly transferred to Luckman free of any adverse claims by any such
predecessor entity, or any partner, limited partner, security holder or creditor
of any such
-7-
<PAGE> 12
predecessor entity, and no such property rights remain in any such entity or
person.
2.6 Rights to the Software. Without limiting the generality of Section
2.5 hereof:
2.6.1 Luckman owns or possesses all Intellectual Property Rights
in the Software. Except for any royalty that may be payable by Luckman to
Maximized Software, Inc. in connection with that certain license agreement more
fully described in Section 6.9 below, Luckman is under no obligation to pay any
other party any royalties or other fixed or contingent amounts with respect to
the Software, including, but not limited to, any royalties or other fixed or
contingent amounts based upon the sale, license, distribution or other use or
exploitation of the Software. The Software does not infringe or conflict with
the Intellectual Property Rights of others. There are no pending or threatened
claims against Luckman alleging any of the foregoing nor is Luckman aware of any
basis upon which any party might allege any of the foregoing. Luckman is not
aware of any violation or infringement by a third party of any Intellectual
Property Rights associated with the Software. Luckman has taken and will take
all reasonable security measures to protect the secrecy, confidentiality and
value of all Intellectual Property Rights transferred in accordance with this
Agreement;
2.6.2 No current or former employee or consultant of Luckman owns
any Intellectual Property Rights in the Software or any other Intellectual
Property Rights directly or indirectly competitive with those in the Software;
2.6.3 All Intellectual Property Rights in the Software of any
predecessor entity to Luckman, whether or not a limited or general partnership,
corporation or other form of business entity, have been validly transferred to
Luckman free of any adverse claims by any such predecessor entity, or any
partner, limited partner, security holder or creditor of any such predecessor
entity, and no such property rights remain in any such entity or person; and
2.6.4 With respect to the transfer of rights in the Software
under this Agreement, CyberMedia shall be subject to no limitations, obligations
or restrictions with regard to the sale, license, distribution or other transfer
or exploitation of the Software, whether in the form transferred to CyberMedia
or after modification, including, but not limited to, any of the foregoing
arising out of any distribution, license or other agreements previously entered
into by Luckman.
2.7 Compliance with Other Instruments. Luckman is not in
violation or default of any provision of its Articles of Incorporation or Bylaws
as same relate to the Assets, each as in effect as of the date hereof or of any
material provision or any instrument, mortgage, deed of trust, loan, contract,
commitment, judgment, decree, order or obligation to which it is a party or by
which it or any portion of the Assets are bound which would materially adversely
affect the condition of the Assets nor is Luckman in violation or default of any
provision of any federal, state, local or foreign law, ordinance, regulation or
order applicable to Luckman which would materially adversely affect the
condition of the Assets. The execution, delivery and performance of and
compliance with this Agreement as the sale and transfer of the Assets will not
result in any such violation, be in conflict
-8-
<PAGE> 13
with or constitute, with or without the passage of time or giving of notice, a
default under any such provision, require any consent or waiver under any such
provision (other than any consents or waivers that have been obtained), or
result in the creation of any mortgage, pledge, lien, encumbrance or charge upon
any of the Assets; and there is no such provision which materially adversely
affects or, so far as Luckman is presently aware, in the future may materially
adversely affect the condition of the Assets.
2.8 Litigation, Etc. No action, suit, proceeding or investigation
is pending or threatened against Luckman relating to the Assets, nor, to the
best knowledge of Luckman, is there any basis therefor. The foregoing includes
any action, suit, proceeding or investigation, pending or threatened, which
questions the validity of this Agreement or the right of Luckman to enter into
the Agreement and to sell and transfer the Assets; or any litigation pending or
threatened which might affect the ability of CyberMedia to use the Assets in the
ordinary course of business. There is no judgment, decree, injunction, rule or
order of any court, governmental department, commission agency, instrumentality
or arbitrator or other similar ruling outstanding against Luckman relating to
the Assets. No action, suit, proceeding or investigation is pending or
threatened by Luckman relating to the Assets.
2.9 Governmental Authorizations and Regulations. Luckman has all
currently required federal, state, local and foreign governmental licenses and
permits material to the conduct of its business relating to the Assets and the
ownership and use of the Assets, such licenses and permits are in full force and
effect, no violations are, to the best knowledge of Luckman, recorded in respect
of any such licenses or permits, and no proceeding is pending or, to the
knowledge of Luckman, threatened to revoke or limit any thereof. Luckman has
delivered to CyberMedia a true and correct list of all licenses, franchises,
permits and other governmental authorizations held by Luckman that are material
in connection with Luckman's ownership and use of the Assets. No consent,
approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state or local
governmental or regulatory authority on the part of Luckman is required in
connection with the valid execution and delivery of this Agreement or the sale
and transfer of the Assets or the use of the Assets by CyberMedia.
2.10 Material Contracts; Commitments and Product Warranties. The
Schedule contains a list of (a) all of Luckman's contracts relating to the
Assets (whether the applicable party is Luckman or MicroHelp, Inc.), including
purchase orders to Luckman, mortgages, indentures, agreements and debt
instruments, (b) all distributorship, reseller, sales representative and similar
agreements, relating to the Assets; (c) all agreements granting any rights in
and to any of the Assets (including, but not limited to, rights to distribute,
license, sublicense or copy the Software), and (d) all agreements between
Luckman and any of its shareholders, officers, directors and employees relating
to the Assets (together, the "Contracts"). Luckman has supplied CyberMedia true
and correct copies of all of the Contracts. Each of the Contracts is valid,
binding and in full force and effect in all material respects and enforceable by
Luckman, in accordance with its terms, subject to the effect of applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application relating to or affecting enforcement of creditors' rights and rules
or laws concerning
-9-
<PAGE> 14
equitable remedies. Luckman is not in default under any of the Contracts. No
major customer of Luckman has canceled or threatened cancellation of any
contractual arrangement with Luckman for the provision by Luckman of goods
and/or services. To the best knowledge of Luckman no other party to any of the
Contracts is in material default thereunder. Luckman has supplied to CyberMedia
copies of all product warranties granted with respect to its products comprising
the Assets.
2.11 Manufacturing and Technology Rights. Except as set forth in the
Schedule, Luckman has not granted rights to manufacture, produce, assemble,
license or sell its products or any of its technology related to the Assets to
any other person and is not bound by any agreement which affects Luckman's
exclusive right to manufacture, assemble or sell its products (including, but
not limited to the Software), or, where appropriate, its technology.
2.12 Contracts, Transactions with Directors, Officers, Etc.
Neither the execution nor delivery of this Agreement, nor the sale and transfer
of the Assets, will, to the best knowledge of Luckman, conflict with or result
in a breach of the terms, conditions or provisions of, or constitute a default
under, any contract, covenant or instrument under which any of the directors,
officers, employees or consultants is now obligated. Luckman's Assets do not
include any inventions of any of Luckman's directors, officers, employees or
consultants made or owned prior to their appointment by Luckman nor do the
Assets violate any limitations or restrictions to which any such director,
officer, employee or consultant is a party or may be subject. To the best of the
knowledge of Luckman, no employee of Luckman is in violation of any term of any
employment contract, proprietary information and inventions agreement, or any
other contract or agreement relating to the relationship of any such employee
with Luckman or any previous employer.
2.13 Brokerage. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of Luckman. Luckman agrees to indemnify and hold CyberMedia harmless
against any liability, settlement or expense arising out of, or in connection
with, any such claim.
2.14 Environmental and Pollution Control Regulation. Luckman has
not been and is not in violation or default of any environmental or pollution
control law or regulation or other administrative regulation and none of the
properties or assets of Luckman (including the Assets), nor the operation or
maintenance thereof, contravened or contravenes any zoning restriction,
environmental or pollution control law or regulation or other administrative
regulation (whether or not permitted because of prior nonconforming use) or
violated or violates any restrictive covenant or any provision of law in such a
way as to adversely affect the Assets.
2.15 Information Furnished True. No representation, warranty or
statement by Luckman in this Agreement or in any written statement or
certificate furnished or to be furnished to CyberMedia pursuant to this
Agreement or in connection with the transactions contemplated hereby contains or
will contain any untrue statement of a material fact or, when taken together,
omits or will omit to state a material fact necessary to make the statements
made herein or therein, in light of the
-10-
<PAGE> 15
circumstances under which they were made, not misleading.
2.16 Bulk Sales Laws. The Bulk Sales laws are not applicable to
the sale and transfer of the Assets.
2.17 Termination of Agreements. With respect to the Assets, the
agreements listed in Exhibit H attached hereto have been rightfully and lawfully
terminated, in whole or in part as the case may be, and Luckman has no further
obligations thereunder in connection therewith.
3. Representations and Warranties of CyberMedia. CyberMedia represents
and warrants to Luckman as follows:
3.1 Organization and Standing. CyberMedia is a corporation duly
organized, validly existing and in good standing under the laws of Delaware;
3.2 Corporate Power; Authorization. CyberMedia has now, or will
have at the Effective Date, all requisite legal and corporate power to enter
into this Agreement, to purchase the Assets, and to carry out and perform its
obligations under the terms of this Agreement. All corporate action on the part
of CyberMedia and its officers, directors and shareholders that is necessary for
the authorization, execution and delivery of this Agreement by it, for the
performance of its obligations hereunder, and for the purchase of the Assets,
has been taken or will be taken prior to the Effective Date; and this Agreement,
when executed and delivered, shall constitute the legal and binding obligation
of CyberMedia, enforceable against CyberMedia in accordance with its terms; and
3.3 Other Consents and Approvals. The execution, delivery and
performance of and compliance with this Agreement and the purchase of the Assets
will not result in violation or default of any provision of the charter
documents of CyberMedia, each as in effect on and as of the Effective Date, or
of any material provision of any instrument, mortgage, deed of trust, loan,
contract, commitment, judgment, decree, order or obligation to which it is a
party or by which it is bound. Other than as contemplated by this Agreement, the
execution, delivery and performance of and compliance with this Agreement will
not require any consent or waiver (other than any consents or waivers that have
been obtained).
4. License and Transfer Option.
4.1 License. Luckman hereby grants to CyberMedia for a period of
two years from the Effective Date the exclusive, worldwide, fully paid-up right
and license, with the right to sublicense, under all of Luckman's right, title
and interest in that certain Agreement between MicroHelp, Inc. and Ken Spreitzer
dba Maximized Software dated May 29, 1992, as amended (the "Maximized
Agreement"). Luckman represents and warrants that (i) the Maximized Agreement is
currently in full force and effect and (ii) that the intellectual property and
technology licensed under the Maximized Agreement does not comprise any portion
of the UnInstaller version 4.0 portion of the Software.
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<PAGE> 16
The foregoing representations shall be subject to the
indemnification obligations set forth in Section 7 below. The foregoing license
shall be irrevocable and non-terminable for any reason, including, without
limitation, any breach of this Agreement by CyberMedia or otherwise.
4.2 License Consideration. In consideration of the license
granted in Section 4.1 above, CyberMedia hereby agrees to pay, on the Effective
Date, the sum of ** to Luckman.
4.3 Irrevocable Transfer Option. Luckman hereby grants to
CyberMedia the irrevocable, exclusive right and option, at CyberMedia's sole
discretion, to receive an assignment and transfer of all of Luckman's right,
title and interest in and to all aspects of the Maximized Agreement. Such right
and option shall be exercised as follows: At any time within the period
commencing thirty (30) days from the Effective Date and ending on the date that
is two years from the Effective Date, CyberMedia shall have the irrevocable
right, but not the obligation, to pay to Luckman the sum of ** and thereby
receive an assignment of all right, title and interest under the Maximized
Agreement. Such assignment shall occur automatically upon CyberMedia's payment
of such amount and shall not require any further action on either party's part
to be fully effective. Luckman shall not hereafter contend that such assignment
was conditional, in any manner, with the sole exception of the payment of such
** amount. During the period that this option remains in effect, Luckman shall
not assign, transfer, pledge, grant a security interest in or otherwise encumber
any portion of the Maximized Agreement or the rights granted therein.
5. Effective Date.
5.1 Effective Date. The effective date of this transaction shall
be the date first set forth above (the "Effective Date").
5.2 On or before the Effective Date, Luckman shall deliver to
CyberMedia.2 On or before the Effective Date, Luckman shall deliver to
CyberMedia
5.2.1 A duly executed bill of sale of the tangible
Assets in the form attached hereto as Exhibit E;
5.2.2 A duly executed assignment or assignments of
copyrights in the Intellectual Property Rights included in the Assets in the
form attached hereto as Exhibit F;
5.2.3 A duly executed assignment or assignments of
trademarks in a form reasonably acceptable to CyberMedia;
5.2.4 Evidence of the termination of Merrill Lynch
Business Financial Services' liens on the Assets and UCC-3 termination
statements related thereto signed by an authorized representative of Merrill
Lynch Business Financial Services to be filed in all applicable jurisdictions;
5.2.5 Evidence of the termination of Silicon Valley
Bank's liens on the
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<PAGE> 17
Assets and UCC termination statements related thereto signed by an authorized
representative of Silicon Valley Bank, to be filed in all applicable
jurisdictions; and
5.2.6 Evidence of the termination of the liens of each
Mark E. Novisoff, Timothy B. O'Pry, Thomas Lynch and Janet Van Pelt on the
Assets and UCC termination statements related thereto signed by a legal
representative of each such person, to be filed in the applicable jurisdictions.
5.3 Transfer of Assets.
5.3.1 On the Effective Date, or such other date as
Luckman and CyberMedia may agree, Luckman shall transfer the Software to
CyberMedia at CyberMedia's headquarters in Santa Monica, California. All
transfers of Software hereunder shall be by electronic means.
5.3.2 On the Effective Date, or such other date as
Luckman and CyberMedia may agree, Luckman shall deliver to CyberMedia at
CyberMedia's headquarters in Santa Monica, California all of the Assets which
are in tangible form.
5.4 Acceptance. On the Effective Date, as set forth in Section
5.3.1, Luckman shall transfer the Assets, including without limitation the
Software, to CyberMedia. The sole condition on CyberMedia's payment of the
amounts due hereunder shall be CyberMedia's ability, to cause the source code
version of the Software to build the object code version thereof in a manner
consistent with customary practices in the computer software industry in the
United States. The date of completion of such "build" is herein referred to as
the "Acceptance Date." Compliance will be delivery of four CDs signed by Brad
Kingsbury as follows: "BK 3/31/97." For the purposes of this Agreement the
Acceptance Date shall mean the Effective Date. In the event that the Software is
not capable of being built in the manner or within the time described above,
then in such and only such instance, this Agreement shall be terminated, and all
rights in and to the Assets shall automatically revert to Luckman without
further action, and neither party shall have any further liability to the other
hereunder. Notwithstanding the foregoing, Luckman shall provide CyberMedia with
reasonable assistance with such build.
6. Consideration. In consideration of the transfer of the Assets and the
other covenants and indemnities of Luckman hereunder, CyberMedia shall pay
Luckman the following consideration:
6.1 Warrant. A warrant ("Warrant") to purchase up to ** shares of
the Common Stock of CyberMedia. Such Warrant shall have an exercise price equal
to the closing price of CyberMedia's Common Stock on the Effective Date. In the
event that, at any time during the period commencing on the Effective Date and
ending on the date that is six (6) months from the Effective Date, CyberMedia
receives a claim that it, in its reasonable discretion, believes to be material
to its full enjoyment of its rights under this Agreement (a "Claim"), CyberMedia
will notify Luckman
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<PAGE> 18
thereof. From and after the date of such notice, the Warrant
shall not be exercisable until such time as either such claim has been fully
withdrawn or such claim has been resolved in CyberMedia's favor. No such claim
or notice shall act to extend the term of the Warrant, which shall expire on May
1, 1999. In the event that Luckman exercises its right to purchase any of the
Shares (as defined in the Warrant) during the period commencing on the Effective
Date and ending on the date that is six (6) months from the Effective Date, then
in such event Luckman shall not sell, transfer, pledge, grant a security
interest in or otherwise encumber the Shares prior to the date that is six
months from the Effective Date. In the event that there is a Claim during such
six (6) month period, then CyberMedia will have the right, but not the
obligation, to purchase the Shares from Luckman at the exercise price set forth
in the Warrant. If CyberMedia so purchases the Shares and the Claim has been
fully withdrawn or resolved in CyberMedia's favor, then Luckman will have the
right to repurchase the Shares at such price. The Warrant shall be in the form
set forth as Exhibit G hereto. The Warrant shall be subject to the terms and
conditions of the Registration Rights Agreement attached as Exhibit J hereto.
6.2 Advance. The sum of ** shall be payable to Luckman on the
Acceptance Date (as defined in Section 5.4 above); provided, however, Luckman
hereby directs CyberMedia to pay the following: (i) an amount equal to ** to
Merrill Lynch Business Financial Services in satisfaction of that certain WCMA
Note, Loan and Security Agreement No. 701-07304 dated as of July 19, 1996 and in
satisfaction of any obligations of Luckman in connection with such agreement to
the former shareholders of MicroHelp, Inc. listed on Exhibit I hereto pursuant
to that certain letter agreement dated November 18, 1996 by and among MicroHelp,
Inc., Brent Luckman and Luckman Interactive, Inc. (ii) an amount equal to ** to
Silicon Valley Bank in satisfaction of that certain Factoring Agreement dated
November 8, 1996 and (iii) an aggregate amount equal to ** to the former
shareholders of MicroHelp, Inc. listed on Exhibit I hereto in satisfaction of
those certain Promissory Notes made by Luckman to each of such persons dated
November 18, 1996 and such amounts shall be deducted from the monies otherwise
payable to Luckman under this Section 6.2. Luckman shall cause Merrill Lynch
Business Financial Services, Silicon Valley Bank and the persons named on
Exhibit I hereto to terminate all liens on the assets and file UCC termination
statements in all applicable jurisdictions in connection therewith within
fifteen (15) days after the Effective Date. Luckman shall provide CyberMedia
with all evidence of such terminations and UCC filings. Such amount shall be an
advance against and recoupable from any amounts otherwise due to Luckman under
Section 6.3 below as set forth in Section 6.4 below.
6.3 Royalty. During the period commencing on the Effective Date
and continuing through March 30, 1999, CyberMedia shall pay to Luckman a royalty
for each copy of a product containing the Assets sold or licensed, as set forth
in this Section. Such royalty shall be equal to a percentage of CyberMedia's Net
Revenues (defined below) actually received by CyberMedia with respect to sales
or licenses of any product containing the Software or any other portion of the
Assets. For sales to related parties, such royalty shall be computed as if the
software had been sold or licensed on an arms-length basis. Such royalty shall
be paid and accounted for on a calendar quarterly basis, for sales and licenses
made during the preceding quarter. The percentage of Net Revenues shall be as
set forth below for the applicable calendar quarter.
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<PAGE> 19
<TABLE>
<CAPTION>
Calendar Quarter Ending Percentage of Net
Revenues
- -----------------------------------------------------------------------
<S> <C>
June 30, 1997 **
September 30, 1997 **
December 31, 1997 **
Thereafter through March 30, 1999 **
</TABLE>
From and after March 30, 1999, no further amounts will be due
hereunder. As used herein, the term "Net Revenues" shall mean all amounts
actually received by CyberMedia from sales or licenses of products containing
the Assets or any portion thereof, less allowances for credits, returns and
promotional discounts. In circumstances where a product of CyberMedia is
comprised of both some portion of the Assets and other products ("Combined
Products"), then CyberMedia shall make a reasonable allocation of the portion of
the amounts received with respect to such Combined Product to be allocated to
Net Revenues hereunder. Such allocation will be based, where possible, upon the
relative list prices of the products included in such Combined Product.
6.4 Adjustment; Recoupment. The royalty amounts due to Luckman
under Section 6.3 above shall be adjusted as set forth in this Section. Of the
royalty amounts payable to Luckman under Section 6.3 above, one-half of such
amounts shall be paid to Luckman and one-half shall be retained by CyberMedia as
a recoupment of the advance paid under Section 6.2 above; provided, however that
with respect to each of the eight (8) calendar quarters commencing with the
calendar quarter ending June 30, 1997, CyberMedia shall guarantee payment to
Luckman of a minimum royalty of ** per quarter, for a total of **. By way of
example and not limitation:
(i) if the amount of Net Revenues for a particular
quarter were ** and Luckman's royalty rate for such quarter were **%, then
Luckman's royalty for such quarter would be ** under Section 6.3 above. In such
event ** of such amount ** would, under the immediately preceding sentence, be
paid to Luckman and the other ** would be retained by CyberMedia in recoupment
of the advance paid under Section 6.2 above. However, under such sentence, given
the applicable minimum royalty, Luckman would be owed **. The remaining
difference ** would be retained by CyberMedia and credited against the advance
referred to in Section 6.2 above.
(ii) if the amount of Net Revenues for a particular
quarter were ** and Luckman's royalty rate for such quarter were ** then
Luckman's royalty for such quarter would be ** under Section 6.3 above. In such
event ** of such amount * would be paid to Luckman and the ** would be retained
by CyberMedia in recoupment of the advance paid under Section 6.2 above. The
minimum royalty would not be paid in that instance.
Upon recoupment by CyberMedia of all amounts paid under Section 6.2
above, Luckman
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<PAGE> 20
shall receive all applicable royalties earned through March 30, 1999. At any
such time the aggregate minimum royalty set forth in this Section 6.4 is paid in
full, then CyberMedia's obligation to pay a quarterly minimum royalty shall
terminate.
6.5 Accounting. Within 30 days following the end of each calendar
quarter during which payments are due under Section 6.3 above, CyberMedia shall
submit to Luckman a statement setting forth the royalty due under Section 6.3
above with respect to such quarter and the basis for such calculation, in
reasonable detail. Such statement shall be accompanied by payment of any amounts
due.
6.6 Examination. CyberMedia shall keep accurate books and records
relating to the calculation of amounts due under Section 6.3 above. Luckman
shall have the right, not more than once in each 12-month period, at its sole
cost and expense to engage a nationally recognized accounting firm to examine
the books and records relating to the amounts due under such Section, provided
that such accounting firm shall agree to disclose the results of such
examination both to CyberMedia and to Luckman, provided, further, that such
accounting firm shall agree to be bound by a customary nondisclosure agreement.
In the event any such examination reveals an underpayment of more than ** of
amounts payable to Luckman during the period subject to examination, CyberMedia
shall pay the cost of such examination in addition to the amounts due.
6.7 Right of Offset. In the event that CyberMedia is subject to a
claim related to the transfer of Assets hereunder, including without limitation
any claim for amounts due in connection with CyberMedia's exploitation of the
Assets, CyberMedia, after consultation with Luckman, shall have the right to
offset against amounts otherwise due under Section 6.3 above an amount equal to
the amount CyberMedia reasonably anticipates it will be required to expend in
defending or settling such claim. Upon the final adjudication or other
conclusion of such claim, CyberMedia shall immediately remit to Luckman any
amounts then due under Section 6.3.
6.8 No Guarantee. Luckman acknowledges and agrees that CyberMedia
is making no guarantees under this Agreement with respect to the sales of the
Software or the amount of any royalty that will be paid to Luckman hereunder.
6.9 MicroHelp Litigation..9 MicroHelp Litigation. Luckman has
entered into a series of Agreements dated as of November 18, 1996 under which
Luckman acquired the stock of MicroHelp, Inc., a Georgia corporation
("MicroHelp"). MicroHelp was the licensee under that certain license agreement
dated May 29, 1992 under which Maximized Software, Inc. ("Maximized"), granted
to MicroHelp certain rights in and to the Software, in return for, among other
things, a royalty. MicroHelp is currently a party to that certain litigation in
the U.S. District Court for the Northern District of Georgia in which Maximized
has contended that it is owed certain amounts under its agreement with
MicroHelp. Luckman understands and agrees that in addition to Luckman's
indemnification obligations under Section 7.4 below, that, of the royalty and
other amounts to be paid under Section 6.3 above, CyberMedia will retain and
hold an amount equal to ** of Net Revenues from the Net Revenues otherwise
payable to Luckman, until such time as it receives assurances that it will not
be required to
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<PAGE> 21
pay any amounts to Maximized. CyberMedia's receipt of a duly executed release
stating that Maximized has released MicroHelp, Luckman and CyberMedia from any
claim for future payment shall be a sufficient assurance.
6.10 Failure to Pay. In the event that CyberMedia does not make a
required quarterly payment as set forth in Section 6.3 above, Luckman shall
provide CyberMedia with written notice of such failure to pay via certified
mail. If CyberMedia does not make the required quarterly payment within thirty
(30) days of receipt of such written notice, then Luckman may, at its option,
declare any unpaid portion of the minimum royalty due under Section 6.4 due and
payable.
6.11 Sale of Assets. In the event that CyberMedia sells the
Assets to a third party, prior to March 30, 1999, then CyberMedia shall pay any
unpaid portion of the minimum royalty under Section 6.4 within thirty (30) days
of such event.
7. Indemnity.
7.1 Luckman Indemnity. Luckman agrees to indemnify CyberMedia and
hold it harmless with respect to any liabilities, losses, damages, costs or
expenses (including reasonable legal fees and expenses) incurred by CyberMedia
or by any of its subsidiaries or by any successor of any of them, directly or
indirectly, to the extent that such liabilities, losses, damages or expenses,
are occasioned by, caused by or arise out of (all such following events
collectively referred to hereinafter as "Indemnity Events"):
7.1.1 Any breach by Luckman of this Agreement;
7.1.2 Any inaccuracy in or breach of any of the
representations or warranties or failure to perform any of the covenants made by
Luckman in this Agreement, or any certificate, exhibit, instrument or other
document delivered pursuant to this Agreement;
7.1.3 Any and all actions brought by any current or
former shareholder or employee of Luckman, or MicroHelp against CyberMedia which
arise out of or relate to this Agreement or any exhibit, instrument or other
document or the transactions contemplated hereby;and
7.1.4 Any debts, claims, liabilities, or obligations of
Luckman, including but not limited to, any of the foregoing relating to the
sale, license, distribution or other transfer or the development or other
exploitation of any version of the Software or the Assets.
7.2 Assertion of Claims. If CyberMedia shall have any claim of
indemnification pursuant to Section 7.1 hereof, it shall give written notice
thereof to Luckman, including a brief description of the facts upon which such
claim is based and the amount thereof.
7.3 Claims Against CyberMedia. CyberMedia shall control the
defense, settlement or other disposition of any such claim for which
indemnification may be sought, and all
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<PAGE> 22
parties to this Agreement will cooperate with CyberMedia in any such defense,
including, without limitation, by revealing all information pertinent thereto
within their control and by testifying for and on behalf of CyberMedia.
CyberMedia shall have the right, but not the obligation, to compromise or settle
any such claim, after consultation with Luckman.
7.4 General Indemnity. Luckman agrees to indemnify CyberMedia and
hold it harmless with respect to any liabilities, losses, damages, costs or
expenses (including reasonable legal fees and expenses) incurred by CyberMedia
or by any of its subsidiaries or by any successor of any of them, directly or
indirectly, to the extent that such liabilities, losses, damages or expenses,
are occasioned by or arise out of any action, suit, proceeding or investigation
in connection with the Assets, including without limitation any claim by the
former shareholders or employees of MicroHelp, any current or former
shareholders or employees of Luckman, Maximized Software, Inc., Yorkton
Securities Inc., Merrill Lynch Business Financial Services, Kenneth J. Spreitzer
or Microtech Marketing Services, Inc.
8. Luckman's Post-Effective Date Covenants.
8.1 Access. Luckman shall afford to CyberMedia full access during
normal business hours to all of Luckman's books and records and shall furnish to
CyberMedia all information concerning Luckman's business, properties and
personnel which relates to the Assets, as CyberMedia may reasonably request.
8.2 Further Assurances. Luckman shall execute, acknowledge and
deliver any further assignments, conveyances and other assurances, documents and
instruments of transfer, consistent with the terms of this Agreement, reasonably
requested by CyberMedia or its counsel and shall take any other action,
consistent with the terms of this Agreement, that may be reasonably requested by
CyberMedia or its counsel for the purpose of assigning, transferring, granting,
conveying, and confirming to CyberMedia or reducing to possession, any or all of
the Assets.
8.3 Use of Corporate and Trade Name. Luckman agrees that from and
after the Effective Date they shall not use the names and marks "UnInstaller,"
"MicroHelp UnInstaller"or any similar name as a corporate or trade name, nor
will they use such names or similar names with respect to any product or service
sold offered by Luckman. Luckman hereby grants to CyberMedia a worldwide,
perpetual, exclusive and fully paid-up license to use the name and mark
"MicroHelp UnInstaller" in connection with the reproduction, marketing and
distribution of the Software. In the event that CyberMedia abandons use of such
name and mark, then the rights granted under the immediately preceding sentence
shall immediately terminate.
8.4 Cooperation. Luckman shall not voluntarily undertake any
course of action inconsistent with the satisfaction of its obligations or
agreements set forth in this Agreement and shall promptly do such acts and take
all such measures as may be appropriate to enable CyberMedia to perform as early
as practicable the obligations provided in this Agreement to be performed by
CyberMedia.
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<PAGE> 23
9. Noncompetition Covenants. Luckman agrees that without the written
consent of CyberMedia, it will not at any time following the Effective Date and
continuing for so long thereafter as Luckman has the right to receive payments
hereunder, directly or indirectly engage in, or have any interest in any person,
firm, corporation, or business (whether as an employee, officer, director,
agent, security holder, creditor, consultant or otherwise) that engages in any
competitive activity which is the same as, substantially similar to, or
competitive with the Assets so long as CyberMedia (or any successor to
CyberMedia), shall engage in such activity. As used herein, the term
"competitive activity" shall include any service or computer program, whether
delivered over tangible media or the Internet or other network, the principal
feature of which is to move or remove desktop applications and related files so
as to enhance the performance of a computing device. The parties intend that the
covenant contained in this Section shall be construed as a series of separate
covenants, and if, in any judicial proceeding, a court shall refuse to enforce
any of the separate covenants deemed and included in this Section, then that
unenforceable covenant shall be deemed eliminated from these provisions for the
purpose of those proceedings to the extent necessary to permit the remaining
separate covenants to be enforced. Nothing herein shall prevent Luckman from
developing, manufacturing, selling, licensing, distributing or otherwise
exploiting a computer program for managing Internet applications (as opposed to
desktop applications), incidental features of which are the clean-up of
duplicative files and browser cache clean-up.
10. Confidentiality.
10.1 Condition of Confidentiality. Each of the parties hereto and
their respective representatives will hold in confidence any data and
information obtained with respect to any other party, or the business of any
other party, from any representative, officer, director or employee of such
party, or from any books or records of such party in connection with this
Agreement or the transactions contemplated by this Agreement, and shall not use
such data and information or disclose the same to others, except if such data or
information is published or is a matter of public knowledge or is required by
any applicable law or regulation to be disclosed. Following the Effective Date,
to the maximum extent permitted by applicable law, the confidential information
relating to the Assets shall at all times be and remain the sole and exclusive
property of CyberMedia, and Luckman agrees to observe confidentiality with
regard to same and to insure that its employees and shareholders do the same. It
is understood and agreed that any party's remedies at law for a breach by
another party of its obligations under this Section will be inadequate and that
the non-breaching party shall, in the event of any such breach, be entitled to
equitable relief (including without limitation, injunctive relief and specific
performance) in addition to all other remedies provided under this Agreement or
available to the non-breaching party at law. The obligations and rights of the
parties under this Section shall survive any expiration or termination of this
Agreement for any reason whatsoever. If this Agreement is terminated for any
reason, all written data and information obtained by any of the parties hereto
from any other party in this matter shall be returned to the relevant party and
each party agrees to use all reasonable efforts to keep confidential any
information obtained by it in this matter unless and until such information is
ascertainable from public or published information or trade sources or is
otherwise a matter of public knowledge.
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<PAGE> 24
10.2 Developments Projects. Notwithstanding Section 10.1 hereof,
Luckman and the Shareholder, on the one hand, and CyberMedia, on the other hand,
acknowledge that each may now or hereafter own or develop products or technology
which may be similar to some of the confidential information of the other,
including but not limited to, technical information of the other. Each of the
parties hereto acknowledges that nothing contained in this Section 9 shall be
construed as limiting any party's current of future development projects so long
as such does not result in a breach of Sections 9 or 10.1.
11. Miscellaneous.
11.1 Governing Law. This Agreement shall be governed by and
construed in accordance with the substantive laws of the State of California
applicable to contracts between California residents entered into and to be
performed entirely within the State of California. Any action or proceeding
brought by either party against the other arising out of or related to this
Agreement shall be brought only in a state or federal court of competent
jurisdiction located in San Francisco, California, and the parties hereby
consent to the in personam jurisdiction of said courts.
11.2 Entire Agreement; Amendment. This Agreement, the Exhibits
and Schedules attached thereto and hereby incorporated herein, and the other
documents delivered pursuant hereto constitute the full and entire understanding
and agreement between the parties with regard to the subjects hereof and thereof
and supersedes and revokes all other previous discussions, understandings and
agreements, whether oral or written, between the parties with regard to the
subject matter hereto. 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), with the written
consent of Luckman and CyberMedia.
11.3 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any party upon any breach or default of any
other party under this Agreement shall impair any such right, power or remedy of
that party nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereunder occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of a party of any breach or default under this Agreement, or any waiver
on the part of any holder of any provisions or conditions of this Agreement,
must be in writing and shall be effective only to the extent specifically set
forth in such writing. All remedies, either under this Agreement or by law or
otherwise, afforded to the parties hereunder shall be cumulative and not
alternative.
11.4 Notices, Etc. All notices and other communications required
or permitted hereunder shall be in writing and shall be effective upon hand
delivery by messenger or upon receipt by facsimile with a confirming copy sent
by first-class mail, postage prepaid, or five (5) days after deposit in the U.S.
postal system by certified or registered mail, return receipt requested, postage
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prepaid:
If to CyberMedia:
CyberMedia, Inc.
3000 Ocean Park Blvd., Suite 2001
Santa Monica, California 90405
Attention: Unni Warrier
With a copy to:
Henry V. Barry
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
If to Luckman:
Luckman Interactive, Inc.
1055 West Seventh Street
Los Angeles, California 90017
Attention: Mark Green and Brent Luckman
or at such other address as the relevant party shall furnish to the other
parties in writing.
11.5 Attorneys' Fees. In any action brought to construe or
enforce this Agreement, the party who substantially prevails shall receive in
addition to any other remedy to which it may be entitled compensation for all
expenses incurred in pursuing such action, including, but not limited to,
reasonable attorneys' fees, expert witness fees and costs.
11.6 Expenses. Each party shall bear its own expenses and legal
fees incurred on its behalf with respect to this Agreement and the transactions
contemplated hereby.
11.7 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be enforceable and all of which together
shall constitute one instrument.
11.8 Severability. In case any provision of this Agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
11.9 Titles and Headings. The titles and headings contained in
this Agreement are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this
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<PAGE> 26
Agreement.
11.10 Assignment. Luckman shall not assign this Agreement without
the prior written consent of CyberMedia. Such consent may be withheld in
CyberMedia's sole discretion. The assignment of Luckman's rights under this
Agreement to Line, Inc., a Delaware corporation and wholly-owned subsidiary of
Luckman, is hereby approved. Luckman shall continue to be obligated under this
Agreement provided CyberMedia permits any assignment hereunder.
11.11 Successors and Assigns. Except as otherwise provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the affiliates, subsidiaries, successors and assigns of the parties
hereto.
11.12 Survival of Representations and Warranties. In addition to
the provisions of this Agreement, all statements contained in any certificates,
exhibits, instruments or other documents delivered by any party pursuant to the
provisions of this Agreement shall be deemed to be representations and
warranties by such party. The representations and warranties of the parties
shall survive the Effective Date.
11.13 Rights of Third Parties. Nothing contained in this
Agreement, express or implied, shall be deemed to confer any rights or remedies
upon, nor obligate any of the parties hereto, to any person or entity other than
such parties, unless so stated to the contrary.
-22-
<PAGE> 27
IN WITNESS WHEREOF, the parties below have executed this
Agreement as of the date first above written.
LUCKMAN INTERACTIVE, INC.
By: /s/ MARK GREEN
-------------------------------------------
Name: Mark Green
-----------------------------------------
Title: President
----------------------------------------
CYBERMEDIA, INC.
By: /s/ UNNI WARRIER
-------------------------------------------
Name: Unni Warrier
-----------------------------------------
Title: President and Chief Executive Officer
----------------------------------------
[Signature Page to Asset Purchase Agreement]
<PAGE> 28
EXHIBIT A
MINUTES OF THE BOARD OF DIRECTORS OF LUCKMAN INTERACTIVE, INC.
<PAGE> 29
WAIVER OF NOTICE OF SPECIAL MEETING OF
THE BOARD OF DIRECTORS OF
Luckman Interactive, Inc.
A Delaware corporation
WE, THE UNDERSIGNED, being all the members of the Board of Directors of
Luckman Interactive, Inc., a corporation under the laws of the State of
Delaware, do hereby waive notice of time, place and purpose of the special
meeting of the Board of Directors of said Corporation, and do fix the 21st day
of March 1997 at 4:30 p.m., as the time of a meeting.
We hereby waive all the requirements of the statutes of the State of
Delaware as to notice of said meeting and the publication thereof; and we
consent to transaction at said meeting of such business as may properly come
before the meeting.
Dated: March 21, 1997 /s/ BRENT LUCKMAN
--------------------------------
Brent Luckman
/s/ MARK GREEN
--------------------------------
Mark Green
/s/ JOEL STEVENS
--------------------------------
Joel Stevens
<PAGE> 30
MINUTES OF MEETING
OF THE BOARD OF DIRECTORS OF
LUCKMAN INTERACTIVE, INC.
CALL TO ORDER
A meeting of the Board of Directors of Luckman Interactive, Inc., a
Delaware corporation (the "Corporation"), was held at the offices of Luckman
Interactive, Inc., 1055 W. Seventh Street, Los Angeles, California 90017, on
the 21st day of March 1997 at 4:30 p.m.
ROLL CALL
There were present at said meeting the following directors:
Brent Luckman Mark Green
Joel Stevens
(by telephone)
Also Present:
Mary-Felicia Apanius
There being present a majority of the directors of the
Corporation, it was determined that a Quorum for the transaction of business
existed.
LICENSE OF UNINSTALLER TO CYBERMEDIA
WHEREAS, the Chairman advised the meeting that negotiations had been
conducted with Cybermedia, Inc. in furtherance of an asset sale of the Company's
Uninstaller product line to Cybermedia. Cybermedia had proposed to acquire
Uninstaller on the following terms: Aggregate payment of $8.4 million dollars
with $3.9 million due at closing and $4.5 million due in installments over the
next two years; payment of additional royalties based on a royalty payment
schedule; and a grant to Luckman of warrants to purchase 150,000 shares of
Cybermedia common stock at market price with Cybermedia's commitment to register
the warrants within a stated period after closing; Cybermedia and Luckman would
both have the rights to use of the Uninstaller customer list subject to both
parties mutual commitment to update the list for each other's benefit;
assignment of the license agreement between INSO Chicago Corporation and
Microhelp to Cybermedia and Luckman would retain the source code and the right
to develop and market Internet version of Uninstaller.
<PAGE> 31
WHEREAS, the Chairman stated that it is necessary to pass a
resolution accepting the proposal of Cybermedia, Inc. to license Uninstaller,
After discussion, upon motion duly made, seconded and
unanimously carried, it was:
RESOLVED, that it is in the best interests of the Corporation
that the Corporation enter into an agreement with Cybermedia, Inc. on the
general terms as described by the Chairman; and
FURTHER RESOLVED, that the officers of the Corporation be hereby
authorized to negotiate the specific terms of an appropriate agreement.
GRANT OF WARRANTS TO PURCHASE STOCK
WHEREAS, the Chairman advised the meeting that the Board of
Directors has determined that it is in the best interest of the Corporation to
grant warrants to purchase shares of the Corporation's common stock to Diameter
Holdings, Ltd. and Dr. Kurt Wagner. It was noted that Diameter Holdings and Dr.
Wagner rendered valuable services and support to the Corporation and assisted
the Corporation in attending the Spring Internet World trade show. The Chairman
proposed that warrants to purchase shares be granted as set forth below:
Name Warrants Exercise Price
---- -------- --------------
Diameter Holdings 10,000 $1.00
Dr. Kurt Wagner 5,000 $1.00
After discussion, upon motion duly made, seconded and
unanimously carried, it was:
RESOLVED, that warrants to purchase 10,000 shares and 5,000
shares of the Corporation's common stock at $1.00 per share are hereby granted
to Diameter Holdings, Ltd. and Dr. Kurt Wagner, respectively. Such warrants
shall be immediately vested.
The undersigned, Secretary of the Corporation, hereby certifies
that the foregoing are the resolutions adopted by the Board of Directors at a
meeting held pursuant to waiver of notice, all Directors being present, on
March 21, 1997
/s/ MARY-FELICIA APANIUS
Dated: 21 March 1997 -------------------------------
Mary-Felicia Apanius
Assistant Secretary
<PAGE> 32
EXHIBIT B
THE SOFTWARE
MICROHELP UNINSTALLER, THE SOURCE CODE AND OBJECT CODE THEREFORE AND ALL RELATED
TECHNICAL AND USER DOCUMENTATION, ALL VERSIONS THEREOF, INCLUDING WITHOUT
LIMITATION VERSIONS 3.0, 3.5 AND 4.0, AND ANY INTERMEDIATE RELEASES RELATED
THERETO AND ALL TRANSLATIONS THEREOF, INCLUDING WITHOUT LIMITATION THE JAPANESE,
GERMAN, ITALIAN, AND SPANISH TRANSLATIONS OF THE FOREGOING.
<PAGE> 33
EXHIBIT C
ASSETS
Intellectual Property. Schedule C-1 sets forth a list of all
Intellectual Property Rights of Luckman to be transferred to CyberMedia. Such
schedule shall be updated as of the Effective Date.
Property. Schedule C-2 sets forth a list of all tangible and incidental
assets of Luckman to be transferred to CyberMedia. Such schedule shall be
updated as of the Effective Date.
Other Assets. Schedule C-3 sets forth a list of all other assets of
Luckman to be transferred to CyberMedia. Such schedule shall be updated as of
the Effective Date.
<PAGE> 34
SCHEDULE C-1
INTELLECTUAL PROPERTY RIGHTS
All Intellectual Property Rights in and to the Assets, including the
Software and Documentation (as defined in Schedule C-2), including all prior,
current and future versions, all derivative works and all translations thereof.
All trademarks and trade names of Luckman used in connection with the
Software, including but not limited to "UNINSTALLER". CyberMedia may use the
name and mark "MicroHelp UnInstaller" in connection with the reproduction,
marketing and distribution of the Software as provided in Section 7.3 of the
Agreement.
Without limiting the foregoing, the following Intellectual property
Rights of Luckman are transferred to CyberMedia:
Trademarks
"UNINSTALLER" -- Assignment filed in Cobb County, Georgia by Ken
Spreitzer dba Maximized Software to MicroHelp, Inc. as of May 29, 1992;
application filed with the United States Patent and Trademark Office but refused
as of January 18, 1995.
"REMEMBER, IT'S A JUNGLE IN THERE" -- United States Patent and Trademark
Office Registration No. 1,957,984; Registered February 20, 1996.
"SMARTLINKS" -- Common law trademark claimed; no intent to use
application filed.
"HEY, EVERYONE CAN USE A LITTLE HELP" -- Common law trademark claimed;
no intent to use application filed.
Copyrights
Common law copyright claimed in all software assets.
Patents
None.
-2-
<PAGE> 35
SCHEDULE C-2
PROPERTY
Incidental Property:
1. The master copies of the Software and all versions thereof.
2. All tangible embodiments of the source code for the Software (the
"Source Code"). For the purposes of this Agreement the Source Code shall be
interpreted as commonly understood in the computer software industry. Without
limiting the generality of the foregoing, the Source Code shall include the
human readable form of the object code of the Software and the related system
documentation, including all comments and any procedural code, notes on the
software architecture, computer program listings and other computer program
documentation.
3. All documentation relating to the Software, including, but not
limited to the following (collectively, the "Documentation"): (i) user, quality
assurance, technical support, marketing and training documentation and all
camera-ready text and artwork relating to same; (ii) all materials useful for
design and understanding of the Software (such as logic manuals, flow charts,
and principals of operation); and (iii) all machine-readable text or graphic
files subject to display relating to the foregoing.
Tangible Property:
1. A copy, in machine readable form, of the customer list relating
to the Software. The parties agree that for the purposes of this Agreement the
customer list shall be valued at **. Luckman shall have the right to retain one
copy of such list, but agrees that it will not use such list in any manner that
is competitive with the business of CyberMedia relating to the Assets, including
without limitation by contacting customers from such list for the purpose of
selling such customers any product that is competitive with any portion of the
Assets.
-3-
<PAGE> 36
SCHEDULE C-3
OTHER ASSETS AND CONTRACTS
1. All of the rights, but not the liabilities, associated with the
following agreements:
(a) Subject to Section 1.3 of the Agreement, Software License Agreement
between MicroHelp, Inc. and Western Digital Corporation dated August 16, 1996.
(b) Agreement between MicroHelp, Inc. and Iomega Corporation dated
January 17, 1995, as amended by an Amendment dated December 29, 1995.
(c) Software License Agreement between MicroHelp and Powerquest Software
dated September 8, 1996, as amended by an Addendum dated September 8, 1996.
(d) Republishing and Distribution Agreement between Luckman Interactive,
Inc. and Marubeni Corporation dated March 4, 1997.
(e) Computer Software License Agreement dated October 11, 1995 between
MicroHelp, Inc. and INSO Corporation, as amended by Amendment I dated July 29,
1996.
(f) Subject to Section 4 of the Agreement, License Agreement between Ken
Spreitzer dba Maximized Software and MicroHelp, Inc. dated May 29, 1992 for
UnInstaller and Quick WIN.INI Cleaner, as amended by an Amendment dated April 1,
1993, and by two Amendments dated December 3, 1993.
(g) Computer Software License Agreement dated November 10, 1994 between
Systems Compatibility Corporation and MicroHelp, Inc., as amended by an
Amendment dated January 10, 1995 and by an Amendment dated February 9, 1995.
(h) Distributor Agreement dated December 11, 1995 between Merisel
Americas, Inc. and MicroHelp, Inc.
(i) Distribution Agreement dated April 5, 1994 between Ingram Micro,
Inc. and MicroHelp, Inc. as amended by Letter Agreement dated May 17, 1995.
(j) Software Distribution Agreement dated March 4, 1996 between Tech
Data Corporation and MicroHelp, Inc.
(k) Letter Agreement dated April 9, 1996 between GT Interactive Software
Corp. and MicroHelp, Inc.
-4-
<PAGE> 37
2. All of the rights, but not the liabilities, associated with all customer
contracts for the Software prior to the date hereof.
3. Luckman hereby assigns all rights, title and interest in and to any
causes of action that Luckman may have related to the Assets including without
limitation any claims against any former shareholders or employees of MicroHelp,
Inc.
4. Purchase orders for all inventory currently in the possession of Warner
Media fulfillment house, not to exceed a purchase order for ** units of version
3.5 of the Software at ** per unit and a purchase order for ** units of version
4.0 of the Software at ** per unit.
-5-
<PAGE> 38
EXHIBIT D
SCHEDULE OF EXCEPTIONS
Section 2.4: Liens and Encumbrances
Factoring Agreement dated November 8, 1996 between Silicon Valley Financial
Services (a division of Silicon Valley Bank) and Luckman Interactive, Inc.
WCMA Note, Loan and Security Agreement No. 701-07304 dated July 19, 1996 between
Merrill Lynch Business Financial Services, Inc. and MicroHelp, Inc.
General Security Agreement dated November 18, 1996 between Willie Gault and
Luckman Interactive, Inc.
Section 2.8: Pending or Threatened Litigation
Maximized Software, Inc. v. MicroHelp, Inc. Case No. 1 96-CV-1052-CC - United
States District Court for the Northern District of Georgia, Atlanta Divisions.
Microtech Marketing Services, Inc. v. MicroHelp, Inc., Luckman Interactive, Inc.
et al. Case No. 774940 - Orange County Superior Court.
<PAGE> 39
EXHIBIT E
BILL OF SALE
Pursuant to the Asset Purchase Agreement between Luckman Interactive,
Inc. a Delaware corporation ("Luckman") and CyberMedia, Inc., a Delaware
corporation ("CyberMedia"), dated April __, 1997 (the "Agreement"), Luckman for
good and valuable consideration, receipt of which is hereby acknowledged, does
hereby transfer, convey, sell, assign and deliver to CyberMedia and CyberMedia's
successors and assigns good, valid and marketable title to all of the Assets, as
such term is defined in Section 1.1 of the Agreement, free and clear of any and
all mortgages, pledges, leases, licenses, charges, liens and encumbrances,
unless otherwise stated on Exhibit D to the Agreement.
IN WITNESS WHEREOF, Luckman has caused this Bill of Sale to be duly
executed as of April __, 1997.
LUCKMAN INTERACTIVE, INC.
By:
-----------------------------------
Mark Green, President
<PAGE> 40
EXHIBIT F
ASSIGNMENT OF COPYRIGHT
WHEREAS, Luckman Interactive, Inc., a Delaware corporation, (hereinafter
"Assignor"), and CyberMedia, Inc., a Delaware corporation, (hereinafter
"Assignee") are parties to that certain Asset Purchase Agreement dated as of
April __, 1997 (the "Agreement") pursuant to which Assignor sold, conveyed,
transferred, assigned and delivered to Assignee all right, title and interest in
and to certain intellectual property, including all patent, copyright, trademark
and other intellectual property rights therein together with the business
associated therewith.
NOW, THEREFORE, for good and valuable consideration the receipt of which
is hereby acknowledged, Assignor hereby transfers, conveys and assigns to
Assignee all right, title and interest whatsoever, throughout the world, in and
under the copyrights on the works identified on Exhibit B to the Agreement,
including without limitation that certain computer software program known as
"MicroHelp Uninstall," to have and to hold the same, unto Assignee, its
successors and assigns, for the full duration of all such rights, and any
renewals and extensions thereof.
Assignor further transfers, conveys and assigns unto Assignee the entire
right, title and interest in and to any and all causes of action and rights of
recovery for past infringement of the copyrights herein assigned.
This Assignment is made pursuant to and is subject to all the terms of
the Agreement.
IN WITNESS WHEREOF, Luckman Interactive, Inc. and CyberMedia, Inc. have
each caused this instrument to be signed in its name by its duly authorized
officer to be effective as of the ___ day of April, 1997.
LUCKMAN INTERACTIVE, INC.
By:
--------------------------------------
Mark Green
President
CYBERMEDIA, INC.
By:
--------------------------------------
Unni Warrier
President
<PAGE> 41
EXHIBIT G
FORM OF WARRANT
<PAGE> 42
COMMON STOCK PURCHASE WARRANT
THIS WARRANT HAS BEEN, AND THE SHARES OF COMMON STOCK WHICH MAY BE PURCHASED
PURSUANT TO THE EXERCISE OF THIS WARRANT (THE "SHARES") WILL BE, ACQUIRED SOLELY
FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF. NEITHER THIS WARRANT NOR THE SHARES (TOGETHER, THE
"SECURITIES") HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR
AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH
DISPOSITION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS
OF THE ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS.
VOID AFTER MAY 1, 1999
CYBERMEDIA, INC.
WARRANT TO PURCHASE ** SHARES OF COMMON STOCK
_________________
THIS CERTIFIES THAT, for value received, Luckman Interactive, Inc. (the
"HOLDER") is entitled to subscribe for and purchase from CyberMedia, Inc., a
Delaware corporation (the "COMPANY"), ** shares (as adjusted pursuant to Section
3 hereof) of the fully paid and nonassessable Common Stock, $0.01 par value (the
"SHARES"), of the Company at the price of ** per share (the "EXERCISE PRICE")
(as adjusted pursuant to Section 3 hereof), subject to the provisions and upon
the terms and conditions hereinafter set forth.
This Warrant is subject to the following terms and conditions:
1. Method of Exercise; Payment.
(a) Exercise. Subject to subsection (c) below, the purchase
rights represented by this Warrant may be exercised by the Holder, in whole or
in part, from time to time by the surrender of this Warrant (with the notice of
exercise form (the "NOTICE OF EXERCISE") attached hereto as
-3-
<PAGE> 43
Exhibit A duly executed) at the principal office of the Company, and by the
payment to the Company of an amount equal to the Exercise Price multiplied by
the number of the Shares being purchased, which amount may be paid, at the
election of the Holder, by wire transfer or certified check payable to the order
of the Company. The person or persons in whose name(s) any certificate(s)
representing Shares shall be issuable upon exercise of this Warrant shall be
deemed to have become the holder(s) of record of, and shall be treated for all
purposes as the record holder(s) of, the Shares represented thereby (and such
Shares shall be deemed to have been issued) immediately prior to the close of
business on the date or dates upon which this Warrant is exercised.
(b) Stock Certificates. In the event of any exercise of the
rights represented by this Warrant, certificates for the shares of Common Stock
so purchased shall be delivered to the Holder within a reasonable time and,
unless this Warrant has been fully exercised or has expired, a new Warrant
representing the shares with respect to which this Warrant shall not have been
exercised shall also be issued to the Holder within such time.
(c) Vesting. Notwithstanding anything to the contrary set
forth herein, this Warrant may be exercised only as set forth in this subsection
(c). In the event that, at any time during the period commencing on the date
hereof and ending on the date that is six (6) months from the date hereof, the
Company receives a claim that it, in its reasonable discretion, believes to be
material to its full enjoyment of its rights under that certain Asset Purchase
Agreement related to the purchase of certain assets of Holder between the
parties dated of even date herewith (a "Claim"), the Company will notify Holder
thereof. From and after the date of such notice, this Warrant shall not be
exercisable until such time as either such claim has been fully withdrawn or
such claim has been resolved in the Company's favor. No such claim or notice
shall act to extend the term of this Warrant, which shall expire on May 1, 1999.
In the event that Holder exercises its right to purchase any of the Shares
during the period commencing on the date hereof and ending on the date that is
six (6) months from the date hereof, then in such event Holder shall not sell,
transfer, pledge, grant a security interest in or otherwise encumber the Shares
prior to the date that is six months from the date hereof. In the event that
there is a Claim during such six (6) month period, then the Company will have
the right, but not the obligation, to purchase the Shares from Holder at the
exercise price set forth in this Warrant. If the Company so purchases the Shares
and the Claim has been fully withdrawn or resolved in the Company's favor, then
Holder will have the right to repurchase the Shares at such price.
2. Stock Fully Paid; Reservation of Shares. All of the Shares
issuable upon the exercise of the rights represented by this Warrant will, upon
issuance and receipt of the Exercise Price therefor, be fully paid and
nonassessable, and free from all preemptive rights, rights of first refusal or
first offer, taxes, liens and charges with respect to the issuance thereof.
During the period within which the rights represented by this Warrant may be
exercised, the Company shall at all times have authorized and reserved for
issuance sufficient shares of its Common Stock to provide for the
-4-
<PAGE> 44
exercise of the rights represented by this Warrant.
3. Adjustment of Exercise Price and Number of Shares. Subject to
the provisions of Section 12 hereof, the number and kind of Shares purchasable
upon the exercise of this Warrant and the Exercise Price therefor shall be
subject to adjustment from time to time upon the occurrence of certain events,
as follows:
(a) Reclassification, Consolidation or Merger. In case of
any reclassification of the Common Stock (other than a change in par value, or
as a result of a subdivision or combination), or in case of any consolidation or
merger of the Company with or into another corporation (other than a
consolidation or merger with another corporation in which the Company is a
continuing corporation and in which the Company's stockholders immediately
preceding such consolidation or merger own at least 50% of the voting securities
of the Company following such consolidation or merger and which does not result
in any reclassification of the Shares issuable upon exercise of this Warrant),
or in case of any sale of all or substantially all of the assets of the Company,
the Company, or such successor or purchasing corporation as the case may be,
shall execute a new Warrant, providing that the holder of this Warrant shall
have the right to exercise such new Warrant, and procure upon such exercise and
payment of the same aggregate Exercise Price, in lieu of the Shares of Common
Stock theretofore issuable upon exercise of this Warrant, the kind and amount of
shares of stock, other securities, money and property receivable upon such
reclassification, change, consolidation, sale of all or substantially all of the
Company's assets or merger by a holder of an equivalent number of shares of
Common Stock. Such new Warrant shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Section 3. The provisions of this subsection (a), subject to Section 12 hereof,
shall similarly apply to successive reclassifications, consolidations, mergers,
and the sale of all or substantially all of the Company's assets.
(b) Stock Splits, Dividends and Combinations. In the event
that the Company shall at any time subdivide the outstanding shares of Common
Stock, or shall issue a stock dividend on its outstanding shares of Common
Stock, the number of Shares issuable upon exercise of this Warrant immediately
prior to such subdivision or to the issuance of such stock dividend shall be
proportionately increased, and the Exercise Price shall be proportionately
decreased, and in the event that the Company shall at any time combine the
outstanding shares of Common Stock, the number of Shares issuable upon exercise
of this Warrant immediately prior to such combination shall be proportionately
decreased, and the Exercise Price shall be proportionately increased, effective
at the close of business on the date of such subdivision, stock dividend or
combination, as the case may be.
4. Notices.
-5-
<PAGE> 45
(a) Upon any adjustment of the Exercise Price and any
increase or decrease in the number of Shares purchasable upon the exercise of
this Warrant in accordance with Section 3 hereof, then, and in each such case,
the Company, within thirty (30) days thereafter, shall give written notice
thereof to the Holder at the address of such Holder as shown on the books of the
Company which notice shall state the Exercise Price as adjusted and, if
applicable, the increased or decreased number of Shares purchasable upon the
exercise of this Warrant, setting forth in reasonable detail the method of
calculation of each.
(b) Any written notice by the Company required or permitted
hereunder shall be given by hand delivery or first class mail, postage prepaid,
addressed to the Holder at the address shown on the books of the Company for the
Holder.
5. Transfer of Warrant. Except in accordance with the conditions
contained in Section 6 hereof, this Warrant and all rights hereunder are not
transferable. In order to effect any transfer of all or a portion of this
Warrant or the Shares, the transferor shall deliver a completed and duly
executed Notice of Transfer (attached hereto as Exhibit B).
6. Condition of Exercise or Transfer of Warrant.
(a) Unless exercised pursuant to an effective registration
statement under the Act which includes the Shares so exercised, it shall be a
condition to any exercise or transfer of this Warrant that the Company shall
have received, at the time of such exercise or transfer, a representation in
writing from the recipient or transferee in the form attached hereto as Exhibit
A-1 or Exhibit B-1, respectively, that the Shares being issued upon exercise, or
this Warrant (or portion hereof) transferred, as the case may be, are being
acquired for investment and not with a view to any sale or distribution thereof.
(b) It shall be a further condition to any transfer of this
Warrant, or of any or all of the Shares issued upon exercise of this Warrant,
other than a transfer registered under the Act, that the Holder shall have given
written notice to the Company which shall describe the manner and circumstances
of the proposed transfer and be accompanied by a written opinion of Holder's
legal counsel or a "no-action" letter reasonably satisfactory to the Company
stating that such transfer is exempt from the registration and delivery
requirements of the Act and applicable state securities laws.
(c) Each certificate evidencing the Shares issued upon
exercise of this Warrant, or transfer of such shares (other than a transfer
registered under the Act or any subsequent transfer of shares so registered)
shall be stamped or imprinted with a legend substantially in the following form:
-6-
<PAGE> 46
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT") OR ANY STATE SECURITIES LAWS. SUCH
SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE ACT.
Subject to this Section 6, the Company may instruct its transfer agent
not to register the transfer of all or a part of this Warrant, or any of the
Shares, unless one of the conditions specified in the above legend is satisfied.
7. Removal of Legend. Upon request of a holder of a certificate
with the legend referred to in Section 6 hereof, the Company shall issue to such
holder a new certificate therefor free of any transfer legend, if, with such
request, the Company shall have received either an opinion of counsel or a
"no-action" letter referred to in Section 6(b) of this agreement to the effect
that any transfer by such holder of the shares evidenced by such certificate
will not violate the Act and applicable state securities laws; provided,
however, that the Company shall not be obligated to remove any such legends
prior to the closing date of the Public Offering.
8. Fractional Shares. No fractional shares of Common Stock will be
issued in connection with any exercise hereunder, but in lieu of such fractional
shares the Company shall make a cash payment therefor upon the basis of the
Exercise Price then in effect.
9. Representations and Warranties of the Company. The Company
represents and warrants to the Holder as follows:
(a) This Warrant has been duly authorized and executed by
the Company and is a valid and binding obligation of the Company enforceable in
accordance with its terms;
(b) The Shares have been duly authorized and reserved for
issuance by the Company and, when issued in accordance with the terms hereof,
will be validly issued, fully paid and nonassessable;
(c) The rights, preferences, privileges and restrictions
granted to or imposed upon the Shares and the holders thereof are as set forth
in the Company's Certificate of Incorporation, a true and complete copy of which
has been delivered to the original Holder of this Warrant; and
-7-
<PAGE> 47
(d) The execution and delivery of this Warrant are not, and
the issuance of the Shares upon exercise of this Warrant in accordance with the
terms hereof will not be, inconsistent with the Company's Certificate of
Incorporation or Bylaws, as amended.
10. Representations and Warranties by the Holder. The Holder
represents and warrants to the Company as follows:
(a) This Warrant is being acquired for its own account, for
investment and not with a view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the Act. Upon
exercise of this Warrant, the Holder shall, if so requested by the Company,
confirm in writing, in a form reasonably satisfactory to the Company, that the
Shares issuable upon exercise of this Warrant are being acquired for investment
and not with a view toward distribution or resale.
(b) The Holder understands that the Warrant and the Shares
have not been registered under the Act by reason of their issuance in a
transaction exempt from the registration and prospectus delivery requirements of
the Act pursuant to Section 4(2) thereof, and that they must be held by the
Holder indefinitely, and that the Holder must therefore bear the economic risk
of such investment indefinitely, unless a subsequent disposition thereof is
registered under the Act or is exempted from such registration. The Holder
further understands that the Shares have not been qualified under the California
Securities Law of 1968 (the "CALIFORNIA LAW") by reason of their issuance in a
transaction exempt from the qualification requirements of the California Law
pursuant to Section 25102(f) thereof, which exemption depends upon, among other
things, the bona fide nature of the Holder's investment intent expressed above.
(c) The Holder has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of the purchase of this Warrant and the Shares purchasable pursuant to the
terms of this Warrant and of protecting its interests in connection therewith.
(d) The Holder is able to bear the economic risk of the
purchase of the Shares pursuant to the terms of this Warrant.
11. Rights of Stockholders. No holder of this Warrant shall be
entitled, as a Warrant holder, to vote or receive dividends or be deemed the
holder of Common Stock or any other securities of the Company which may at any
time be issuable on the exercise hereof for any purpose, nor shall anything
contained herein be construed to confer upon the holder of this Warrant, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action (whether
upon any recapitalization, issuance of stock,
-8-
<PAGE> 48
reclassification of stock, change of par value, consolidation, merger,
conveyance, or otherwise) or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise until the Warrant shall have been
exercised and the Shares purchasable upon the exercise hereof shall have become
deliverable, as provided herein.
12. Expiration of Warrant. This Warrant shall expire and shall no
longer be exercisable as of 5:00 p.m., California local time, on May 1, 1999.
13. Miscellaneous.
(a) This Warrant is being delivered in the State of
California and shall be construed and enforced in accordance with and governed
by the laws of such State. The parties expressly stipulate that any litigation
under this Warrant shall be brought in the State courts of the Counties of Santa
Clara or San Francisco, California and in the United States District Court for
the Northern District of California. The parties agree to submit to the
jurisdiction and venue of those courts.
(b) The headings in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect any of the terms hereof.
(c) The terms of this Warrant shall be binding upon and
shall inure to the benefit of any successors or assigns of the Company and of
the holder or holders hereof and of the Shares issued or issuable upon the
exercise hereof.
(d) This Warrant and the other documents delivered pursuant
hereto constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof.
(e) The Company shall not, by amendment of its Certificate
of Incorporation, or through any other means, directly or indirectly, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant
and shall at all times in good faith assist in the carrying out of all such
terms and in the taking of all such action as may be necessary or appropriate in
order to protect the rights of the holder of this Warrant against impairment.
(f) Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in
the case of any such loss, theft or destruction, upon delivery of an indemnity
agreement reasonably satisfactory in form and amount to the Company or, in the
case of any such mutilation, upon surrender and cancellation of such Warrant,
the Company at its expense will execute and deliver to the holder of record, in
lieu thereof, a new Warrant of like date and tenor.
-9-
<PAGE> 49
(g) This Warrant and any provision hereof may be amended,
waived or terminated only by an instrument in writing signed by the Company and
the Holder.
(h) Receipt of this Warrant by the holder hereof shall
constitute acceptance of and agreement to the foregoing terms and conditions.
-10-
<PAGE> 50
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
Issued this 2nd day of April, 1997.
CYBERMEDIA, INC.
By: ___________________________
Name: Unni Warrier
Title: President and Chief Executive Officer
Acknowledged and Accepted:
- ---------------------------------
Luckman Interactive, Inc.
By:______________________
Authorized signatory
[Signature Page to Warrant]
<PAGE> 51
EXHIBIT A
NOTICE OF EXERCISE
TO: CyberMedia, Inc.
3000 Ocean Park Blvd., Suite 2001
Santa Monica, CA 90405
Attention: President
1. The undersigned hereby elects to purchase shares of Common Stock
of CyberMedia, Inc. pursuant to the terms of this Warrant, and tenders herewith
payment of the purchase price of such shares in full.
2. Please issue a certificate or certificates representing said
shares of Common Stock in the name of the undersigned or in such other name as
is specified below:
---------------------------------
(Name)
---------------------------------
---------------------------------
(Address)
3. The undersigned hereby represents and warrants that the
aforesaid shares of Common Stock are being acquired for the account of the
undersigned for investment and not with a view to, or for resale, in connection
with the distribution thereof, and that the undersigned has no present intention
of distributing or reselling such shares and all representations and warranties
of the undersigned set forth in Section 10 of the attached Warrant are true and
correct as of the date hereof. In support thereof, the undersigned agrees to
execute an Investment Representation Statement in a form substantially similar
to the form attached to the Warrant as Exhibit A-1.
--------------------------------
(Signature and Date)
Title: _________________________
<PAGE> 52
EXHIBIT A-1
INVESTMENT REPRESENTATION STATEMENT
PURCHASER : Luckman Interactive, Inc.
SELLER : CyberMedia, Inc.
COMPANY : CyberMedia, Inc.
SECURITY : COMMON STOCK ISSUED UPON EXERCISE OF THE COMMON STOCK PURCHASE
WARRANT ISSUED ON APRIL 2, 1997
AMOUNT : __________ SHARES
DATE : ____________, 19__
In connection with the purchase of the above-listed Securities, I, the
Purchaser, represent to the Seller and to the Company the following:
(a) I am aware of the Company's business affairs and financial
condition, and have acquired sufficient information about the Company to reach
an informed and knowledgeable decision to acquire the Securities. I am
purchasing these Securities for my own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof for purposes of the Securities Act of 1933, as amended (the "Securities
Act").
(b) I understand that the Securities have not been registered under
the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of my
investment intent as expressed herein. In this connection, I understand that, in
the view of the Securities and Exchange Commission (the "SEC"), the statutory
basis for such exemption may be unavailable if my representation was predicated
solely upon a present intention to hold these Securities for the minimum capital
gains period specified under tax statutes, for a deferred sale, for or until an
increase or decrease in the market price of the Securities, or for a period of
one year or any other fixed period in the future.
(c) I further understand that the Securities must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from registration is otherwise available. Moreover, I understand
that the Company is under no obligation to register the Securities. In addition,
I understand that the certificate evidencing the Securities will be imprinted
with a legend
<PAGE> 53
which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of counsel for
the Company.
(d) I am familiar with the provisions of Rule 144, promulgated under
the Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof, in a non-public offering subject to the satisfaction of certain
conditions.
The Securities may be resold in certain limited circumstances subject to
the provisions of Rule 144, which requires among other things: (1) the
availability of certain public information about the Company, (2) the resale
occurring not less than two years after the party has purchased, and made full
payment for, within the meaning of Rule 144, the securities to be sold; and, in
the case of an affiliate, or of a non-affiliate who has held the securities less
than three years, (3) the sale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934) and the amount of
securities being sold during any three month period not exceeding the specified
limitations stated therein, if applicable.
(e) I agree, in connection with any of the Company's underwritten
public offerings of the Company's securities, (1) not to sell, make short sale
of, loan, grant any options for the purchase of, or otherwise dispose of any
shares of Common Stock of the Company held by me (other than those shares
included in the registration) without the prior written consent of the Company
or the underwriters managing such initial underwritten public offering of the
Company's securities for one hundred eighty (180) days from the effective date
of such registration, and (2) I further agree to execute any agreement
reflecting (1) above as may be requested by the underwriters at the time of the
public offering; provided however that the officers and directors of the Company
who own the stock of the Company also agree to such restrictions.
(f) I further understand that in the event all of the applicable
requirements of Rule 144 are not satisfied, registration under the Securities
Act, compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not exclusive, the
Staff of the SEC has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.
-------------------------------
(Signature)
-2-
<PAGE> 54
By:____________________________
Title:_________________________
Date:________________, 19__
-3-
<PAGE> 55
EXHIBIT B
NOTICE OF TRANSFER
(To be signed only upon transfer of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _______________________________________________ the right represented by
the attached Warrant to purchase ** shares of Common Stock of CyberMedia, Inc.,
to which the attached Warrant relates, and appoints ______________ Attorney to
transfer such right on the books of CyberMedia, Inc., with full power of
substitution in the premises.
Dated: ____________________
--------------------------------
(Signature must conform in all
respects to name of Holder as
specified on the face of the
Warrant)
--------------------------------
(Address)
Signed in the presence of:
- ----------------------------
<PAGE> 56
EXHIBIT B-1
INVESTMENT REPRESENTATION STATEMENT
OF TRANSFEREE
PURCHASER :
TRANSFEROR :
COMPANY : CyberMedia, Inc.
SECURITY : COMMON STOCK PURCHASE WARRANT ORIGINALLY ISSUED ON APRIL 2, 1997
AMOUNT : __________ SHARES
DATE : ____________, 19__
In connection with the purchase of the above-listed Securities, I, the
Purchaser, represent to the Seller and to the Company the following:
(a) I am aware of the Company's business affairs and financial
condition, and have acquired sufficient information about the Company to reach
an informed and knowledgeable decision to acquire the Securities. I am
purchasing these Securities for my own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof for purposes of the Securities Act of 1933, as amended (the "Securities
Act").
(b) I understand that the Securities have not been registered under
the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of my
investment intent as expressed herein. In this connection, I understand that, in
the view of the Securities and Exchange Commission (the "SEC"), the statutory
basis for such exemption may be unavailable if my representation was predicated
solely upon a present intention to hold these Securities for the minimum capital
gains period specified under tax statutes, for a deferred sale, for or until an
increase or decrease in the market price of the Securities, or for a period of
one year or any other fixed period in the future.
<PAGE> 57
(c) I further understand that the Securities must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from registration is otherwise available. Moreover, I understand
that the Company is under no obligation to register the Securities. In addition,
I understand that the certificate evidencing the Securities will be imprinted
with a legend which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of counsel for
the Company.
(d) I am familiar with the provisions of Rule 144, promulgated under
the Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof, in a non-public offering subject to the satisfaction of certain
conditions.
The Securities may be resold in certain limited circumstances subject to
the provisions of Rule 144, which requires among other things: (1) the
availability of certain public information about the Company, (2) the resale
occurring not less than two years after the party has purchased, and made full
payment for, within the meaning of Rule 144, the securities to be sold; and, in
the case of an affiliate, or of a non-affiliate who has held the securities less
than three years, (3) the sale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934) and the amount of
securities being sold during any three month period not exceeding the specified
limitations stated therein, if applicable.
(e) I agree, in connection with any of the Company's underwritten
public offerings of the Company's securities, (1) not to sell, make short sale
of, loan, grant any options for the purchase of, or otherwise dispose of any
shares of Common Stock of the Company held by me (other than those shares
included in the registration) without the prior written consent of the Company
or the underwriters managing such initial underwritten public offering of the
Company's securities for one hundred eighty (180) days from the effective date
of such registration, and (2) I further agree to execute any agreement
reflecting (1) above as may be requested by the underwriters at the time of the
public offering; provided however that the officers and directors of the Company
who own the stock of the Company also agree to such restrictions.
(f) I further understand that in the event all of the applicable
requirements of Rule 144 is not satisfied, registration under the Securities
Act, compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not exclusive, the
Staff of the SEC has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.
<PAGE> 58
-------------------------------
(Signature)
By:____________________________
Title:_________________________
Date:________________, 19__
<PAGE> 59
EXHIBIT H
DISTRIBUTION AGREEMENTS TO BE TERMINATED
1) Republisher Agreement between MicroHelp, Inc. and AB Pro dated as of
July 1, 1996.
2) Republishing Agreement between MicroHelp, Inc. and Questar dated as of
March 1, 1996.
3) Republishing Agreement between MicroHelp, Inc. and MicroBasic GmbH dated
as of March 1, 1996
4) Republishing Agreement between MicroHelp, Inc. and Roderick Manhattan
Group, Limited dated as of March 15, 1996.
5) International Distribution Agreement between MicroHelp, Inc. and Power
Reporting dated as of August 15, 1995.
6) Distribution Agreement between MicroHelp, Inc. and BFL Software dated as
of September 19, 1996.
7) European Distribution Agreement between MicroHelp, Inc. and Convey A.S.
dated as of May 20, 1996.
8) Any other distribution agreements between Luckman and other third
parties to the extent they relate to the Assets.
<PAGE> 60
EXHIBIT I
FORMER SHAREHOLDERS OF MICROHELP, INC.
Mark E. Novisoff
Timothy B. O'Pry
Thomas Lynch
Janet Van Pelt
<PAGE> 61
EXHIBIT J
REGISTRATION RIGHTS AGREEMENT
<PAGE> 62
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made as of April 2, 1997 by and
between CyberMedia Inc., a Delaware corporation (the "Company") and Luckman
Interactive, Inc. ("Holder").
RECITALS
WHEREAS, the Company and Holder are parties to that certain Asset
Purchase Agreement (the "Purchase Agreement") dated as of April 2, 1997; and
WHEREAS, in connection with the Purchase Agreement, the Company is
issuing to Holder a Warrant to purchase ** shares of the Company's Common Stock
(the "Warrant").
WHEREAS, the Company has agreed to grant to Holder certain registration
rights with respect to the Registrable Securities, as defined below.
NOW THEREFORE, in consideration of the foregoing, the parties agree as
follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following
terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission of
the United States or any other U.S. federal agency at the time administering the
Securities Act.
"Common Stock" shall mean shares of the Company's Common Stock.
"Holder" shall mean Luckman Interactive, Inc.
"Other Holders" shall mean holders of Company securities having
received registration rights pursuant prior to the date hereof.
"Registrable Securities" means (i) the Company's Common Stock,
(ii) the Common Stock issuable upon exercise of the Warrant (if such warrant is
exercisable under Section 1(c) thereof) and (iii) any shares of Common Stock
issued or issuable in respect of such Common Stock upon any stock split, stock
dividend, recapitalization, or similar event. Shares of Common Stock shall only
be treated as Registrable Securities if they have not been (A) sold to or
through a broker or dealer or underwriter in a public distribution or a public
securities transaction or (B) sold or, in the opinion of counsel to the Company,
are available for sale in a single transaction exempt from the registration and
prospectus delivery requirements of the Securities Act so that all transfer
restrictions and restrictive legends with respect thereto are removed upon the
consummation of such sale.
-2-
<PAGE> 63
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses, except as
otherwise stated below, incurred by the Company in complying with Section 2
hereof, including, without limitation, all registration, qualification and
filing fees, printing expenses, escrow fees, fees and disbursements of counsel
for the Company (but not fees and disbursements of special counsel for Holder,
if any, that is not also counsel for the Company), Blue Sky fees and expenses
and the expense of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees of the Company
which shall be paid in any event by the Company).
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder, or any
similar United States federal statute.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
Holder.
2. REGISTRATION ON FORM S-3.
(a) Request for Registration. If Holder requests that the
Company file a registration statement on Form S-3 (or any successor form to Form
S-3) for a public offering of all Holder's Registrable Securities within three
months from the time Company is entitled to use Form S-3 to register the
Registrable Securities for such an offering (the date on which such three month
period ends, the "Registration Deadline"), the Company shall cause all of such
Registrable Securities to be registered for the offering by the Registration
Deadline on such form and to cause such Registrable Securities to be qualified
in such jurisdictions as the Holder or Holders may reasonably request. Nothing
contained herein shall limit Company's ability to include any Registrable
Securities of any Other Holder in any registration on Form S-3.
(b) Limitations. Notwithstanding the foregoing, the Company
shall not be obligated to take any action pursuant to this Section 2: (i) in any
particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such registration,
qualification or compliance unless the Company is already subject to service in
such jurisdiction and except as may be required by the Securities Act; (ii) if
the Company shall furnish to Holder a certificate signed by the President of the
Company stating that in the good faith judgment of the Board of Directors it
would be seriously detrimental to the Company or its shareholders for
registration statements to be filed in the near future, then the Company's
obligation to use its best efforts to file a registration statement shall be
deferred for a period not to exceed sixty (60) days from the Registration
Deadline.
-3-
<PAGE> 64
3. EXPENSES OF REGISTRATION.
(a) Registration Expenses. The Company shall bear all
Registration Expenses incurred in connection with all registrations pursuant to
Section 2.
(b) Selling Expenses. Unless otherwise stated, all Selling
Expenses relating to securities registered on behalf of the Holders and Other
Holders shall be borne by the Holders and Other Holders pro rata on the basis of
the number of shares so registered.
4. REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Agreement,
the Company will:
(a) keep Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof;
(b) prepare and file with the Commission a registration
statement and any amendments thereto with respect to such securities and use its
best efforts to cause such registration statement to become and remain effective
for at least one hundred twenty (120) days or until the distribution described
in the Registration Statement has been completed; and
(c) furnish to the Holder and to the underwriters of the
securities being registered such reasonable number of copies of the registration
statement, preliminary prospectus, final prospectus and such other documents as
such Holder and the underwriters may reasonably request in order to facilitate
the public offering of such securities.
5. INDEMNIFICATION.
(a) By Company. The Company will indemnify Holder with
respec t to which egistration, qualification or compliance has been effected
pursuant to this Agreement, and each underwriter, if any, and each person who
controls any underwriter within the meaning of Section 15 of the Securities Act,
against all expenses, claims, losses, damages or liabilities (or actions in
respect thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, or any violation or alleged violation by the Company of the
Securities Act, or the Securities Exchange Act of 1934, as amended (the "1934
Act"), or any rule or regulation promulgated under the Securities Act or the
1934 Act applicable to the Company in connection with any such registration,
qualification or compliance, and the Company will reimburse Holder, each such
underwriter and each person who controls any such underwriter, for any legal and
any other
-4-
<PAGE> 65
expenses reasonably incurred in connection with investigating, preparing or
defending any such claim, loss, damage, liability or action, provided that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any untrue
statement or omission or alleged untrue statement or omission, made in reliance
upon and in conformity with written information furnished to the Company by an
instrument duly executed by Holder, controlling person or underwriter and stated
to be specifically for use therein. If the Holder is represented by counsel
other than counsel for the Company, the Company will not be obligated under this
Section 5(a) to reimburse legal fees and expenses of more than one separate
counsel for Holder.
(b) By Holder. Holder will, if Registrable Securities held
by Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each Other Holder, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company and such Other Holders for any legal
or any other expenses reasonably incurred by them in connection with
investigating or defending any such claim, loss, damage, liability or action, in
each case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by Holder and stated to be specifically
for use therein. Notwithstanding the foregoing, the liability of Holder under
this subsection (b) shall be limited in an amount equal to the public offering
price of the shares sold by Holder, unless such registration liability arises
out of or is based on willful conduct by Holder.
(c) Procedures. Each party entitled to indemnification under
this Section 5 (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement unless the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action and provided further that the Indemnifying Party shall not
assume the defense for matters as to which there is a conflict of interest or
separate and different defenses. No Indemnifying Party, in the defense of any
such claim or litigation, shall,
-5-
<PAGE> 66
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation.
6. INFORMATION BY HOLDER. Holder shall furnish to the Company such
information regarding Holder as shall be necessary to enable the Company to
comply with the provisions hereof in connection with any registration,
qualification or compliance referred to in this Agreement.
7. RESTRICTIVE LEGEND. Each certificate representing Registrable
Securities shall be stamped or otherwise imprinted with a legend substantially
in the following form, in addition to any legend that may now or hereafter be
required by the California Department of Corporations or any other state
securities law or regulation:
"THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO CERTAIN
RESTRICTIONS ON SALE, TRANSFER, AND HYPOTHECATION AS SET FORTH
IN A REGISTRATION RIGHTS AGREEMENT BETWEEN THE ISSUER
CORPORATION AND THE REGISTERED HOLDER, OR SUCH HOLDER'S
PREDECESSOR IN INTEREST. COPIES OF SUCH AGREEMENT ARE ON FILE AT
THE PRINCIPAL OFFICE OF THE ISSUER CORPORATION AND WILL BE
FURNISHED UPON REQUEST TO SUCH REGISTERED HOLDER."
8. MISCELLANEOUS.
(a) Governing Law. This Agreement will be governed by and
construed under the laws of California as applied to agreements among California
residents entered into and to be performed entirely within California.
(b) 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 Holder. Any
amendment or waiver effected in accordance with this paragraph will be binding
upon each holder of any securities purchased under this Agreement at the time
outstanding (including securities into which such securities are convertible),
each future holder of all such securities and the Company.
(c) Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegally invalid, unenforceable or void, this Agreement shall continue in full
force and effect without said provision. In such event, the parties shall
negotiate, in good faith, a legal, valid and binding substitute provision which
most nearly effects the intent of the parties in entering into this Agreement.
-6-
<PAGE> 67
(d) Notices. All notices to Holder will be mailed by
registered or certified mail to the addresses maintained in the Company's
records for such Holders. Notices will be effective three (3) days after deposit
in the U.S. Mail.
(e) Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together will constitute one and the same instrument.
(f) Titles, Subtitles and Table of Contents. The titles,
subtitles and table of contents used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.
-7-
<PAGE> 68
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first above written.
COMPANY
CYBERMEDIA, INC.
By:
Name:
Title:
HOLDER
LUCKMAN INTERACTIVE, INC.
By:______________________________________
Name:
Title:
[Signature page to Registration Rights Agreement]
-8-
<PAGE> 69
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made as of April 2, 1997 by and
between CyberMedia Inc., a Delaware corporation (the "Company") and Luckman
Interactive, Inc. ("Holder").
RECITALS
WHEREAS, the Company and Holder are parties to that certain Asset
Purchase Agreement (the "Purchase Agreement") dated as of April 2, 1997; and
WHEREAS, in connection with the Purchase Agreement, the Company is
issuing to Holder a Warrant to purchase ** shares of the Company's Common Stock
(the "Warrant").
WHEREAS, the Company has agreed to grant to Holder certain registration
rights with respect to the Registrable Securities, as defined below.
NOW THEREFORE, in consideration of the foregoing, the parties agree as
follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following
terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission of
the United States or any other U.S. federal agency at the time administering the
Securities Act.
"Common Stock" shall mean shares of the Company's Common Stock.
"Holder" shall mean Luckman Interactive, Inc.
"Other Holders" shall mean holders of Company securities having
received registration rights pursuant prior to the date hereof.
"Registrable Securities" means (i) the Company's Common Stock,
(ii) the Common Stock issuable upon exercise of the Warrant (if such warrant is
exercisable under Section 1(c) thereof) and (iii) any shares of Common Stock
issued or issuable in respect of such Common Stock upon any stock split, stock
dividend, recapitalization, or similar event. Shares of Common Stock shall only
be treated as Registrable Securities if they have not been (A) sold to or
through a broker or dealer or underwriter in a public distribution or a public
securities transaction or (B) sold or, in the opinion of counsel to the Company,
are available for sale in a single transaction exempt from the registration and
prospectus delivery requirements of the Securities Act so that all transfer
restrictions and restrictive legends with respect thereto are removed upon the
consummation of such sale.
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<PAGE> 70
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses, except as
otherwise stated below, incurred by the Company in complying with Section 2
hereof, including, without limitation, all registration, qualification and
filing fees, printing expenses, escrow fees, fees and disbursements of counsel
for the Company (but not fees and disbursements of special counsel for Holder,
if any, that is not also counsel for the Company), Blue Sky fees and expenses
and the expense of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees of the Company
which shall be paid in any event by the Company).
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder, or any
similar United States federal statute.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
Holder.
2. REGISTRATION ON FORM S-3.
(a) Request for Registration. If Holder requests that the
Company file a registration statement on Form S-3 (or any successor form to Form
S-3) for a public offering of all Holder's Registrable Securities within three
months from the time Company is entitled to use Form S-3 to register the
Registrable Securities for such an offering (the date on which such three month
period ends, the "Registration Deadline"), the Company shall cause all of such
Registrable Securities to be registered for the offering by the Registration
Deadline on such form and to cause such Registrable Securities to be qualified
in such jurisdictions as the Holder or Holders may reasonably request. Nothing
contained herein shall limit Company's ability to include any Registrable
Securities of any Other Holder in any registration on Form S-3.
(b) Limitations. Notwithstanding the foregoing, the Company
shall not be obligated to take any action pursuant to this Section 2: (i) in any
particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such registration,
qualification or compliance unless the Company is already subject to service in
such jurisdiction and except as may be required by the Securities Act; (ii) if
the Company shall furnish to Holder a certificate signed by the President of the
Company stating that in the good faith judgment of the Board of Directors it
would be seriously detrimental to the Company or its shareholders for
registration statements to be filed in the near future, then the Company's
obligation to use its best efforts to file a registration statement shall be
deferred for a period not to exceed sixty (60) days from the Registration
Deadline.
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3. EXPENSES OF REGISTRATION.
(a) Registration Expenses. The Company shall bear all
Registration Expenses incurred in connection with all registrations pursuant to
Section 2.
(b) Selling Expenses. Unless otherwise stated, all Selling
Expenses relating to securities registered on behalf of the Holders and Other
Holders shall be borne by the Holders and Other Holders pro rata on the basis of
the number of shares so registered.
4. REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Agreement,
the Company will:
(a) keep Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof;
(b) prepare and file with the Commission a registration
statement and any amendments thereto with respect to such securities and use its
best efforts to cause such registration statement to become and remain effective
for at least one hundred twenty (120) days or until the distribution described
in the Registration Statement has been completed; and
(c) furnish to the Holder and to the underwriters of the
securities being registered such reasonable number of copies of the registration
statement, preliminary prospectus, final prospectus and such other documents as
such Holder and the underwriters may reasonably request in order to facilitate
the public offering of such securities.
5. INDEMNIFICATION.
(a) By Company. The Company will indemnify Holder with
respect to which registration, qualification or compliance has been effected
pursuant to this Agreement, and each underwriter, if any, and each person who
controls any underwriter within the meaning of Section 15 of the Securities Act,
against all expenses, claims, losses, damages or liabilities (or actions in
respect thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, or any violation or alleged violation by the Company of the
Securities Act, or the Securities Exchange Act of 1934, as amended (the "1934
Act"), or any rule or regulation promulgated under the Securities Act or the
1934 Act applicable to the Company in connection with any such registration,
qualification or compliance, and the Company will reimburse Holder, each such
underwriter and each person who controls any such underwriter, for any legal and
any other
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<PAGE> 72
expenses reasonably incurred in connection with investigating, preparing or
defending any such claim, loss, damage, liability or action, provided that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any untrue
statement or omission or alleged untrue statement or omission, made in reliance
upon and in conformity with written information furnished to the Company by an
instrument duly executed by Holder, controlling person or underwriter and stated
to be specifically for use therein. If the Holder is represented by counsel
other than counsel for the Company, the Company will not be obligated under this
Section 5(a) to reimburse legal fees and expenses of more than one separate
counsel for Holder.
(b) By Holder. Holder will, if Registrable Securities held
by Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each Other Holder, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company and such Other Holders for any legal
or any other expenses reasonably incurred by them in connection with
investigating or defending any such claim, loss, damage, liability or action, in
each case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by Holder and stated to be specifically
for use therein. Notwithstanding the foregoing, the liability of Holder under
this subsection (b) shall be limited in an amount equal to the public offering
price of the shares sold by Holder, unless such registration liability arises
out of or is based on willful conduct by Holder.
(c) Procedures. Each party entitled to indemnification under
this Section 5 (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement unless the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action and provided further that the Indemnifying Party shall not
assume the defense for matters as to which there is a conflict of interest or
separate and different defenses. No Indemnifying Party, in the defense of any
such claim or litigation, shall,
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<PAGE> 73
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation.
6. INFORMATION BY HOLDER Holder shall furnish to the Company such
information regarding Holder as shall be necessary to enable the Company to
comply with the provisions hereof in connection with any registration,
qualification or compliance referred to in this Agreement.
7. RESTRICTIVE LEGEND. Each certificate representing Registrable
Securities shall be stamped or otherwise imprinted with a legend substantially
in the following form, in addition to any legend that may now or hereafter be
required by the California Department of Corporations or any other state
securities law or regulation:
"THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO CERTAIN
RESTRICTIONS ON SALE, TRANSFER, AND HYPOTHECATION AS SET FORTH
IN A REGISTRATION RIGHTS AGREEMENT BETWEEN THE ISSUER
CORPORATION AND THE REGISTERED HOLDER, OR SUCH HOLDER'S
PREDECESSOR IN INTEREST. COPIES OF SUCH AGREEMENT ARE ON FILE AT
THE PRINCIPAL OFFICE OF THE ISSUER CORPORATION AND WILL BE
FURNISHED UPON REQUEST TO SUCH REGISTERED HOLDER."
8. MISCELLANEOUS.
(a) Governing Law. This Agreement will be governed by and
construed under the laws of California as applied to agreements among California
residents entered into and to be performed entirely within California.
(b) 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 Holder. Any
amendment or waiver effected in accordance with this paragraph will be binding
upon each holder of any securities purchased under this Agreement at the time
outstanding (including securities into which such securities are convertible),
each future holder of all such securities and the Company.
(c) Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegally invalid, unenforceable or void, this Agreement shall continue in full
force and effect without said provision. In such event, the parties shall
negotiate, in good faith, a legal, valid and binding substitute provision which
most nearly effects the intent of the parties in entering into this Agreement.
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<PAGE> 74
(d) Notices. All notices to Holder will be mailed by
registered or certified mail to the addresses maintained in the Company's
records for such Holders. Notices will be effective three (3) days after deposit
in the U.S. Mail.
(e) Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together will constitute one and the same instrument.
(f) Titles, Subtitles and Table of Contents. The titles,
subtitles and table of contents used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.
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<PAGE> 75
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first above written.
COMPANY
CYBERMEDIA, INC.
By: /s/ UNNI WARRIER
Name: Unni Warrier
Title: President and
Chief Executive Officer
HOLDER
LUCKMAN INTERACTIVE, INC.
By: /s/ MARK GREEN
--------------------------------------
Name: Mark Green
Title: President
[Signature page to Registration Rights Agreement]
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TAB 3
COMMON STOCK PURCHASE WARRANT
THIS WARRANT HAS BEEN, AND THE SHARES OF COMMON STOCK WHICH MAY BE PURCHASED
PURSUANT TO THE EXERCISE OF THIS WARRANT (THE "SHARES") WILL BE, ACQUIRED SOLELY
FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF. NEITHER THIS WARRANT NOR THE SHARES (TOGETHER, THE
"SECURITIES") HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR
AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH
DISPOSITION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS
OF THE ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS.
VOID AFTER MAY 1, 1999
CYBERMEDIA, INC.
WARRANT TO PURCHASE ** SHARES OF COMMON STOCK
THIS CERTIFIES THAT, for value received, Luckman Interactive, Inc. (the
"HOLDER") is entitled to subscribe for and purchase from CyberMedia, Inc., a
Delaware corporation (the "COMPANY"), ** shares (as adjusted pursuant to Section
3 hereof) of the fully paid and nonassessable Common Stock, $0.01 par value (the
"SHARES"), of the Company at the price of ** per share (the "EXERCISE PRICE")
(as adjusted pursuant to Section 3 hereof), subject to the provisions and upon
the terms and conditions hereinafter set forth.
This Warrant is subject to the following terms and conditions:
1. Method of Exercise; Payment.
(a) Exercise. Subject to subsection (c) below, the purchase
rights represented by this Warrant may be exercised by the Holder, in whole or
in part, from time to time by the surrender of this Warrant (with the notice of
exercise form (the "NOTICE OF EXERCISE") attached hereto as Exhibit A duly
executed) at the principal office of the Company, and by the payment to the
Company of an amount equal to the Exercise Price multiplied by the number of the
Shares being
<PAGE> 77
purchased, which amount may be paid, at the election of the Holder, by wire
transfer or certified check payable to the order of the Company. The person or
persons in whose name(s) any certificate(s) representing Shares shall be
issuable upon exercise of this Warrant shall be deemed to have become the
holder(s) of record of, and shall be treated for all purposes as the record
holder(s) of, the Shares represented thereby (and such Shares shall be deemed to
have been issued) immediately prior to the close of business on the date or
dates upon which this Warrant is exercised.
(b) Stock Certificates. In the event of any exercise of the
rights represented by this Warrant, certificates for the shares of Common Stock
so purchased shall be delivered to the Holder within a reasonable time and,
unless this Warrant has been fully exercised or has expired, a new Warrant
representing the shares with respect to which this Warrant shall not have been
exercised shall also be issued to the Holder within such time.
(c) Vesting. Notwithstanding anything to the contrary set
forth herein, this Warrant may be exercised only as set forth in this subsection
(c). In the event that, at any time during the period commencing on the date
hereof and ending on the date that is six (6) months from the date hereof, the
Company receives a claim that it, in its reasonable discretion, believes to be
material to its full enjoyment of its rights under that certain Asset Purchase
Agreement related to the purchase of certain assets of Holder between the
parties dated of even date herewith (a "Claim"), the Company will notify Holder
thereof. From and after the date of such notice, this Warrant shall not be
exercisable until such time as either such claim has been fully withdrawn or
such claim has been resolved in the Company's favor. No such claim or notice
shall act to extend the term of this Warrant, which shall expire on May 1, 1999.
In the event that Holder exercises its right to purchase any of the Shares
during the period commencing on the date hereof and ending on the date that is
six (6) months from the date hereof, then in such event Holder shall not sell,
transfer, pledge, grant a security interest in or otherwise encumber the Shares
prior to the date that is six months from the date hereof. In the event that
there is a Claim during such six (6) month period, then the Company will have
the right, but not the obligation, to purchase the Shares from Holder at the
exercise price set forth in this Warrant. If the Company so purchases the Shares
and the Claim has been fully withdrawn or resolved in the Company's favor, then
Holder will have the right to repurchase the Shares at such price.
2. Stock Fully Paid; Reservation of Shares. All of the Shares
issuable upon the exercise of the rights represented by this Warrant will, upon
issuance and receipt of the Exercise Price therefor, be fully paid and
nonassessable, and free from all preemptive rights, rights of first refusal or
first offer, taxes, liens and charges with respect to the issuance thereof.
During the period within which the rights represented by this Warrant may be
exercised, the Company shall at all times have authorized and reserved for
issuance sufficient shares of its Common Stock to provide for the exercise of
the rights represented by this Warrant.
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<PAGE> 78
3. Adjustment of Exercise Price and Number of Shares. Subject to
the provisions of Section 12 hereof, the number and kind of Shares purchasable
upon the exercise of this Warrant and the Exercise Price therefor shall be
subject to adjustment from time to time upon the occurrence of certain events,
as follows:
(a) Reclassification, Consolidation or Merger. In case of
any reclassification of the Common Stock (other than a change in par value, or
as a result of a subdivision or combination), or in case of any consolidation or
merger of the Company with or into another corporation (other than a
consolidation or merger with another corporation in which the Company is a
continuing corporation and in which the Company's stockholders immediately
preceding such consolidation or merger own at least 50% of the voting securities
of the Company following such consolidation or merger and which does not result
in any reclassification of the Shares issuable upon exercise of this Warrant),
or in case of any sale of all or substantially all of the assets of the Company,
the Company, or such successor or purchasing corporation as the case may be,
shall execute a new Warrant, providing that the holder of this Warrant shall
have the right to exercise such new Warrant, and procure upon such exercise and
payment of the same aggregate Exercise Price, in lieu of the Shares of Common
Stock theretofore issuable upon exercise of this Warrant, the kind and amount of
shares of stock, other securities, money and property receivable upon such
reclassification, change, consolidation, sale of all or substantially all of the
Company's assets or merger by a holder of an equivalent number of shares of
Common Stock. Such new Warrant shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Section 3. The provisions of this subsection (a), subject to Section 12 hereof,
shall similarly apply to successive reclassifications, consolidations, mergers,
and the sale of all or substantially all of the Company's assets.
(b) Stock Splits, Dividends and Combinations. In the event
that the Company shall at any time subdivide the outstanding shares of Common
Stock, or shall issue a stock dividend on its outstanding shares of Common
Stock, the number of Shares issuable upon exercise of this Warrant immediately
prior to such subdivision or to the issuance of such stock dividend shall be
proportionately increased, and the Exercise Price shall be proportionately
decreased, and in the event that the Company shall at any time combine the
outstanding shares of Common Stock, the number of Shares issuable upon exercise
of this Warrant immediately prior to such combination shall be proportionately
decreased, and the Exercise Price shall be proportionately increased, effective
at the close of business on the date of such subdivision, stock dividend or
combination, as the case may be.
4. Notices.
(a) Upon any adjustment of the Exercise Price and any
increase or decrease in the number of Shares purchasable upon the exercise of
this Warrant in accordance with Section 3
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hereof, then, and in each such case, the Company, within thirty (30) days
thereafter, shall give written notice thereof to the Holder at the address of
such Holder as shown on the books of the Company which notice shall state the
Exercise Price as adjusted and, if applicable, the increased or decreased number
of Shares purchasable upon the exercise of this Warrant, setting forth in
reasonable detail the method of calculation of each.
(b) Any written notice by the Company required or permitted
hereunder shall be given by hand delivery or first class mail, postage prepaid,
addressed to the Holder at the address shown on the books of the Company for the
Holder.
5. Transfer of Warrant. Except in accordance with the conditions
contained in Section 6 hereof, this Warrant and all rights hereunder are not
transferable. In order to effect any transfer of all or a portion of this
Warrant or the Shares, the transferor shall deliver a completed and duly
executed Notice of Transfer (attached hereto as Exhibit B).
6. Condition of Exercise or Transfer of Warrant.
(a) Unless exercised pursuant to an effective registration
statement under the Act which includes the Shares so exercised, it shall be a
condition to any exercise or transfer of this Warrant that the Company shall
have received, at the time of such exercise or transfer, a representation in
writing from the recipient or transferee in the form attached hereto as Exhibit
A-1 or Exhibit B-1, respectively, that the Shares being issued upon exercise, or
this Warrant (or portion hereof) transferred, as the case may be, are being
acquired for investment and not with a view to any sale or distribution thereof.
(b) It shall be a further condition to any transfer of this
Warrant, or of any or all of the Shares issued upon exercise of this Warrant,
other than a transfer registered under the Act, that the Holder shall have given
written notice to the Company which shall describe the manner and circumstances
of the proposed transfer and be accompanied by a written opinion of Holder's
legal counsel or a "no-action" letter reasonably satisfactory to the Company
stating that such transfer is exempt from the registration and delivery
requirements of the Act and applicable state securities laws.
(c) Each certificate evidencing the Shares issued upon
exercise of this Warrant, or transfer of such shares (other than a transfer
registered under the Act or any subsequent transfer of shares so registered)
shall be stamped or imprinted with a legend substantially in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR FOR RESALE IN
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<PAGE> 80
CONNECTION WITH, ANY DISTRIBUTION THEREOF, AND HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR ANY STATE
SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE ACT.
Subject to this Section 6, the Company may instruct its transfer agent
not to register the transfer of all or a part of this Warrant, or any of the
Shares, unless one of the conditions specified in the above legend is satisfied.
7. Removal of Legend. Upon request of a holder of a certificate
with the legend referred to in Section 6 hereof, the Company shall issue to such
holder a new certificate therefor free of any transfer legend, if, with such
request, the Company shall have received either an opinion of counsel or a
"no-action" letter referred to in Section 6(b) of this agreement to the effect
that any transfer by such holder of the shares evidenced by such certificate
will not violate the Act and applicable state securities laws; provided,
however, that the Company shall not be obligated to remove any such legends
prior to the closing date of the Public Offering.
8. Fractional Shares. No fractional shares of Common Stock will be
issued in connection with any exercise hereunder, but in lieu of such fractional
shares the Company shall make a cash payment therefor upon the basis of the
Exercise Price then in effect.
9. Representations and Warranties of the Company. The Company
represents and warrants to the Holder as follows:
(a) This Warrant has been duly authorized and executed by
the Company and is a valid and binding obligation of the Company enforceable in
accordance with its terms;
(b) The Shares have been duly authorized and reserved for
issuance by the Company and, when issued in accordance with the terms hereof,
will be validly issued, fully paid and nonassessable;
(c) The rights, preferences, privileges and restrictions
granted to or imposed upon the Shares and the holders thereof are as set forth
in the Company's Certificate of Incorporation, a true and complete copy of which
has been delivered to the original Holder of this Warrant; and
(d) The execution and delivery of this Warrant are not, and
the issuance of the
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<PAGE> 81
Shares upon exercise of this Warrant in accordance with the terms hereof will
not be, inconsistent with the Company's Certificate of Incorporation or Bylaws,
as amended.
10. Representations and Warranties by the Holder. The Holder
represents and warrants to the Company as follows:
(a) This Warrant is being acquired for its own account, for
investment and not with a view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the Act. Upon
exercise of this Warrant, the Holder shall, if so requested by the Company,
confirm in writing, in a form reasonably satisfactory to the Company, that the
Shares issuable upon exercise of this Warrant are being acquired for investment
and not with a view toward distribution or resale.
(b) The Holder understands that the Warrant and the Shares
have not been registered under the Act by reason of their issuance in a
transaction exempt from the registration and prospectus delivery requirements of
the Act pursuant to Section 4(2) thereof, and that they must be held by the
Holder indefinitely, and that the Holder must therefore bear the economic risk
of such investment indefinitely, unless a subsequent disposition thereof is
registered under the Act or is exempted from such registration. The Holder
further understands that the Shares have not been qualified under the California
Securities Law of 1968 (the "CALIFORNIA LAW") by reason of their issuance in a
transaction exempt from the qualification requirements of the California Law
pursuant to Section 25102(f) thereof, which exemption depends upon, among other
things, the bona fide nature of the Holder's investment intent expressed above.
(c) The Holder has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of the purchase of this Warrant and the Shares purchasable pursuant to the
terms of this Warrant and of protecting its interests in connection therewith.
(d) The Holder is able to bear the economic risk of the
purchase of the Shares pursuant to the terms of this Warrant.
11. Rights of Stockholders. No holder of this Warrant shall be
entitled, as a Warrant holder, to vote or receive dividends or be deemed the
holder of Common Stock or any other securities of the Company which may at any
time be issuable on the exercise hereof for any purpose, nor shall anything
contained herein be construed to confer upon the holder of this Warrant, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action (whether
upon any recapitalization, issuance of stock, reclassification of stock, change
of par value, consolidation, merger, conveyance, or otherwise) or to receive
notice of meetings, or to receive dividends or subscription rights or otherwise
until the
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<PAGE> 82
Warrant shall have been exercised and the Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein.
12. Expiration of Warrant. This Warrant shall expire and shall no
longer be exercisable as of 5:00 p.m., California local time, on May 1, 1999.
13. Miscellaneous.
(a) This Warrant is being delivered in the State of
California and shall be construed and enforced in accordance with and governed
by the laws of such State. The parties expressly stipulate that any litigation
under this Warrant shall be brought in the State courts of the Counties of Santa
Clara or San Francisco, California and in the United States District Court for
the Northern District of California. The parties agree to submit to the
jurisdiction and venue of those courts.
(b) The headings in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect any of the terms hereof.
(c) The terms of this Warrant shall be binding upon and
shall inure to the benefit of any successors or assigns of the Company and of
the holder or holders hereof and of the Shares issued or issuable upon the
exercise hereof.
(d) This Warrant and the other documents delivered pursuant
hereto constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof.
(e) The Company shall not, by amendment of its Certificate
of Incorporation, or through any other means, directly or indirectly, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant
and shall at all times in good faith assist in the carrying out of all such
terms and in the taking of all such action as may be necessary or appropriate in
order to protect the rights of the holder of this Warrant against impairment.
(f) Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in
the case of any such loss, theft or destruction, upon delivery of an indemnity
agreement reasonably satisfactory in form and amount to the Company or, in the
case of any such mutilation, upon surrender and cancellation of such Warrant,
the Company at its expense will execute and deliver to the holder of record, in
lieu thereof, a new Warrant of like date and tenor.
(g) This Warrant and any provision hereof may be amended,
waived or
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<PAGE> 83
terminated only by an instrument in writing signed by the Company and the
Holder.
(h) Receipt of this Warrant by the holder hereof shall
constitute acceptance of and agreement to the foregoing terms and conditions.
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<PAGE> 84
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
Issued this 2nd day of April, 1997.
CYBERMEDIA, INC.
By: /s/ UNNI WARRIER
----------------------------
Name: Unni Warrier
Title: President and Chief Executive Officer
Acknowledged and Accepted:
- ---------------------------------
Luckman Interactive, Inc.
By: /s/ MARK GREEN
---------------------------
Authorized signatory
[Signature Page to Warrant]
<PAGE> 85
EXHIBIT A
NOTICE OF EXERCISE
TO: CyberMedia, Inc.
3000 Ocean Park Blvd., Suite 2001
Santa Monica, CA 90405
Attention: President
1. The undersigned hereby elects to purchase ______________ shares
of Common Stock of CyberMedia, Inc. pursuant to the terms of this Warrant, and
tenders herewith payment of the purchase price of such shares in full.
2. Please issue a certificate or certificates representing said
shares of Common Stock in the name of the undersigned or in such other name as
is specified below:
---------------------------------
(Name)
---------------------------------
---------------------------------
(Address)
3. The undersigned hereby represents and warrants that the
aforesaid shares of Common Stock are being acquired for the account of the
undersigned for investment and not with a view to, or for resale, in connection
with the distribution thereof, and that the undersigned has no present intention
of distributing or reselling such shares and all representations and warranties
of the undersigned set forth in Section 10 of the attached Warrant are true and
correct as of the date hereof. In support thereof, the undersigned agrees to
execute an Investment Representation Statement in a form substantially similar
to the form attached to the Warrant as Exhibit A-1.
--------------------------------
(Signature and Date)
Title: _________________________
<PAGE> 86
EXHIBIT A-1
INVESTMENT REPRESENTATION STATEMENT
PURCHASER : Luckman Interactive, Inc.
SELLER : CyberMedia, Inc.
COMPANY : CyberMedia, Inc.
SECURITY : COMMON STOCK ISSUED UPON EXERCISE OF THE COMMON STOCK PURCHASE
WARRANT ISSUED ON APRIL 2, 1997
AMOUNT : __________ SHARES
DATE : ____________, 19__
In connection with the purchase of the above-listed Securities, I, the
Purchaser, represent to the Seller and to the Company the following:
(a) I am aware of the Company's business affairs and financial
condition, and have acquired sufficient information about the Company to reach
an informed and knowledgeable decision to acquire the Securities. I am
purchasing these Securities for my own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof for purposes of the Securities Act of 1933, as amended (the "Securities
Act").
(b) I understand that the Securities have not been registered under
the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of my
investment intent as expressed herein. In this connection, I understand that, in
the view of the Securities and Exchange Commission (the "SEC"), the statutory
basis for such exemption may be unavailable if my representation was predicated
solely upon a present intention to hold these Securities for the minimum capital
gains period specified under tax statutes, for a deferred sale, for or until an
increase or decrease in the market price of the Securities, or for a period of
one year or any other fixed period in the future.
(c) I further understand that the Securities must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from registration is otherwise available. Moreover, I understand
that the Company is under no obligation to register the Securities. In addition,
I understand that the certificate evidencing the Securities will be imprinted
with a legend
<PAGE> 87
which prohibits the transfer of the Securities unless they are registered or
such registration is not required in the opinion of counsel for the Company.
(d) I am familiar with the provisions of Rule 144, promulgated under
the Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof, in a non-public offering subject to the satisfaction of certain
conditions.
The Securities may be resold in certain limited circumstances subject to
the provisions of Rule 144, which requires among other things: (1) the
availability of certain public information about the Company, (2) the resale
occurring not less than two years after the party has purchased, and made full
payment for, within the meaning of Rule 144, the securities to be sold; and, in
the case of an affiliate, or of a non-affiliate who has held the securities less
than three years, (3) the sale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934) and the amount of
securities being sold during any three month period not exceeding the specified
limitations stated therein, if applicable.
(e) I agree, in connection with any of the Company's underwritten
public offerings of the Company's securities, (1) not to sell, make short sale
of, loan, grant any options for the purchase of, or otherwise dispose of any
shares of Common Stock of the Company held by me (other than those shares
included in the registration) without the prior written consent of the Company
or the underwriters managing such initial underwritten public offering of the
Company's securities for one hundred eighty (180) days from the effective date
of such registration, and (2) I further agree to execute any agreement
reflecting (1) above as may be requested by the underwriters at the time of the
public offering; provided however that the officers and directors of the Company
who own the stock of the Company also agree to such restrictions.
(f) I further understand that in the event all of the applicable
requirements of Rule 144 are not satisfied, registration under the Securities
Act, compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not exclusive, the
Staff of the SEC has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.
-------------------------------
(Signature)
-2-
<PAGE> 88
By:____________________________
Title:_________________________
Date:________________, 19__
-3-
<PAGE> 89
EXHIBIT B
NOTICE OF TRANSFER
(To be signed only upon transfer of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _______________________________________________ the right represented by
the attached Warrant to purchase ** shares of Common Stock of CyberMedia, Inc.,
to which the attached Warrant relates, and appoints ______________ Attorney to
transfer such right on the books of CyberMedia, Inc., with full power of
substitution in the premises.
Dated: ____________________
--------------------------------
(Signature must conform in all
respects to name of Holder as
specified on the face of the
Warrant)
--------------------------------
(Address)
Signed in the presence of:
- ----------------------------
<PAGE> 90
EXHIBIT B-1
INVESTMENT REPRESENTATION STATEMENT
OF TRANSFEREE
PURCHASER :
TRANSFEROR :
COMPANY : CyberMedia, Inc.
SECURITY : COMMON STOCK PURCHASE WARRANT ORIGINALLY ISSUED ON APRIL 2, 1997
AMOUNT : __________ SHARES
DATE : ____________, 19__
In connection with the purchase of the above-listed Securities, I, the
Purchaser, represent to the Seller and to the Company the following:
(a) I am aware of the Company's business affairs and financial
condition, and have acquired sufficient information about the Company to reach
an informed and knowledgeable decision to acquire the Securities. I am
purchasing these Securities for my own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof for purposes of the Securities Act of 1933, as amended (the "Securities
Act").
(b) I understand that the Securities have not been registered under
the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of my
investment intent as expressed herein. In this connection, I understand that, in
the view of the Securities and Exchange Commission (the "SEC"), the statutory
basis for such exemption may be unavailable if my representation was predicated
solely upon a present intention to hold these Securities for the minimum capital
gains period specified under tax statutes, for a deferred sale, for or until an
increase or decrease in the market price of the Securities, or for a period of
one year or any other fixed period in the future.
(c) I further understand that the Securities must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from registration is otherwise available. Moreover, I understand
that the Company is under no obligation to register the Securities. In
<PAGE> 91
addition, I understand that the certificate evidencing the Securities will be
imprinted with a legend which prohibits the transfer of the Securities unless
they are registered or such registration is not required in the opinion of
counsel for the Company.
(d) I am familiar with the provisions of Rule 144, promulgated under
the Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof, in a non-public offering subject to the satisfaction of certain
conditions.
The Securities may be resold in certain limited circumstances subject to
the provisions of Rule 144, which requires among other things: (1) the
availability of certain public information about the Company, (2) the resale
occurring not less than two years after the party has purchased, and made full
payment for, within the meaning of Rule 144, the securities to be sold; and, in
the case of an affiliate, or of a non-affiliate who has held the securities less
than three years, (3) the sale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934) and the amount of
securities being sold during any three month period not exceeding the specified
limitations stated therein, if applicable.
(e) I agree, in connection with any of the Company's underwritten
public offerings of the Company's securities, (1) not to sell, make short sale
of, loan, grant any options for the purchase of, or otherwise dispose of any
shares of Common Stock of the Company held by me (other than those shares
included in the registration) without the prior written consent of the Company
or the underwriters managing such initial underwritten public offering of the
Company's securities for one hundred eighty (180) days from the effective date
of such registration, and (2) I further agree to execute any agreement
reflecting (1) above as may be requested by the underwriters at the time of the
public offering; provided however that the officers and directors of the Company
who own the stock of the Company also agree to such restrictions.
(f) I further understand that in the event all of the applicable
requirements of Rule 144 is not satisfied, registration under the Securities
Act, compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not exclusive, the
Staff of the SEC has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.
-------------------------------
(Signature)
-2-
<PAGE> 92
By:____________________________
Title:_________________________
Date:________________, 19__
-3-
<PAGE> 93
TAB 4
BILL OF SALE
Pursuant to the Asset Purchase Agreement between Luckman Interactive,
Inc. a Delaware corporation ("Luckman"), and CyberMedia, Inc., a Delaware
corporation ("CyberMedia"), dated April 2, 1997 (the "Agreement"), Luckman for
good and valuable consideration, receipt of which is hereby acknowledged, does
hereby transfer, convey, sell, assign and deliver to CyberMedia and CyberMedia's
successors and assigns good, valid and marketable title to all of the Assets, as
such term is defined in Section 1.1 of the Agreement, free and clear of any and
all mortgages, pledges, leases, licenses, charges, liens and encumbrances,
unless otherwise stated on Exhibit D to the Agreement.
IN WITNESS WHEREOF, Luckman has caused this Bill of Sale to be duly
executed as of April 2, 1997.
LUCKMAN INTERACTIVE, INC.
By: /s/ MARK GREEN
----------------------------------
Mark Green, President
<PAGE> 94
TAB 5
ASSIGNMENT OF COPYRIGHT
WHEREAS, Luckman Interactive, Inc., a Delaware corporation, (hereinafter
"Assignor"), and CyberMedia, Inc., a Delaware corporation, (hereinafter
"Assignee") are parties to that certain Asset Purchase Agreement dated as of
April 2, 1997 (the "Agreement") pursuant to which Assignor sold, conveyed,
transferred, assigned and delivered to Assignee all right, title and interest in
and to certain intellectual property, including all patent, copyright, trademark
and other intellectual property rights therein together with the business
associated therewith.
NOW, THEREFORE, for good and valuable consideration the receipt of which
is hereby acknowledged, Assignor hereby transfers, conveys and assigns to
Assignee all right, title and interest whatsoever, throughout the world, in and
under the copyrights on the works identified on Exhibit B to the Agreement,
including without limitation that certain computer software program known as
"MicroHelp Uninstall," to have and to hold the same, unto Assignee, its
successors and assigns, for the full duration of all such rights, and any
renewals and extensions thereof.
Assignor further transfers, conveys and assigns unto Assignee the entire
right, title and interest in and to any and all causes of action and rights of
recovery for past infringement of the copyrights herein assigned.
This Assignment is made pursuant to and is subject to all the terms of
the Agreement.
IN WITNESS WHEREOF, Luckman Interactive, Inc. and CyberMedia, Inc. have
each caused this instrument to be signed in its name by its duly authorized
officer to be effective as of the 2nd day of April, 1997.
LUCKMAN INTERACTIVE, INC.
By: /s/ MARK GREEN
------------------------------------
Mark Green
President
CYBERMEDIA, INC.
By: /s/ UNNI WARRIER
------------------------------------
Unni Warrier
President
<PAGE> 95
TAB 6
ASSIGNMENT OF TRADEMARKS
WHEREAS, LUCKMAN INTERACTIVE, INC., a Delaware corporation, having an
address at 1055 West 7th Street, Suite 2580, Los Angeles, California 90017 has
adopted, used, is using or intends to use and is the owner of the following
trademarks:
TRADEMARKS
UNINSTALLER
SMARTLINKS
HEY, EVERYONE CAN USE A LITTLE HELP
WHEREAS, LUCKMAN INTERACTIVE, INC. has adopted, used, is using or
intends to use and is the owner of the following trademark with registration
before the United States Patent and Trademark Office:
<TABLE>
<CAPTION>
TRADEMARK REG. NO. DATE OF REGISTRATION
--------- -------- --------------------
<S> <C> <C>
REMEMBER, IT'S A JUNGLE IN THERE 1,957,984 February 20, 1996
</TABLE>
WHEREAS, CYBERMEDIA, INC., a Delaware corporation, having its principal
office at 3000 Ocean Park Blvd., Suite 2001, Santa Monica, California 90405 is
desirous of acquiring the trademark and the registration.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, LUCKMAN INTERACTIVE, INC., assigns to CYBERMEDIA,
INC., all right, title and interest in the United States in and to the
trademarks and the registration together with the goodwill of the business
symbolized by the trademarks and the registration thereof.
Dated: April 2, 1997
LUCKMAN INTERACTIVE, INC.
By: /s/ MARK GREEN
------------------------------------
Mark Green
President
<PAGE> 96
TAB 7
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT was made and entered into this day of 2 April, 1997 by
and among LUCKMAN INTERACTIVE, INC., a corporation duly organized and existing
under the laws of the State of California, with its principal office at 1055
West 7th Street Suite 2580, Los Angeles, California, 90017 U.S.A. (hereinafter
called the "ASSIGNOR"), CYBERMEDIA, INC., a corporation duly organized and
existing under the laws of the State of California, with 3000 Ocean Park Blvd.,
Suite 2001, Santa Monica, California 90405 U.S.A. (hereinafter called
"ASSIGNEE") and MARUBENI CORPORATION, a corporation duly organized and existing
under the laws of Japan, with its principal office at 4-2 Ohtemachi, 1-chome
Chiyoda-ku, Tokyo, 100-88 Japan (hereinafter called "MC"), and MARUBENI
INTERNATIONAL ELECTRONICS CORPORATION, a corporation duly organized and
existing under the laws of the State of California, U.S.A., with its principal
office at 3285 Scott Blvd., Santa Clara, California 95054 U.S.A. (hereinafter
called "MIE").
WITNESSETH:
WHEREAS, the ASSIGNOR, MC, and MIE entered into a REPUBLISHING AND DISTRIBUTION
AGREEMENT on March 4, 1997 (hereinafter called the "AGREEMENT") for PRODUCTS
described in the AGREEMENT;
WHEREAS, the ASSIGNOR wishes to assign all its rights and obligations under the
AGREEMENT to the ASSIGNEE, and the ASSIGNEE wishes to accept such assignment
and assume all the ASSIGNOR's rights and obligations thereunder; and
WHEREAS, MC and MIE are willing to consent to such assignment, subject to the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants hereinafter set forth, the parties hereto hereby agree as follows:
2
<PAGE> 97
Article 1. Assignment
1.1 The ASSIGNOR hereby assigns all its rights and obligations under the
AGREEMENT, whether heretofore accrued or hereafter to accrue, to the
ASSIGNEE as of the date hereof.
Article 2. Acceptance of Assignment
2.1 The ASSIGNEE hereby accepts the assignment as per the foregoing Article
1. and unconditionally and irrevocably undertakes to assume and perform
all the obligations originally assumed by the ASSIGNOR under the
AGREEMENT, whether heretofore accrued or hereafter to accrue, as of the
date hereof strictly in accordance with the terms and conditions of the
AGREEMENT as if the ASSIGNEE had originally been a party to the
AGREEMENT.
Article 3. Consent to Assignment
3.1 MC and MIE hereby consent to the assignment by the ASSIGNOR of its
rights and obligations under the AGREEMENT as aforesaid.
Article 4. Release and Information
4.1 As of the date hereof, the ASSIGNOR shall be released from all
obligations, whether heretofore accrued or hereafter to accrue,
originally assumed by it under the AGREEMENT, and the ASSIGNEE shall
indemnify and hold the ASSIGNOR harmless from and against any loss,
damage, expense, cost, claim, or liability which may be incurred by, or
asserted against the ASSIGNOR as a result of any failure by the ASSIGNEE
to perform any obligation under the AGREEMENT assumed by it hereunder.
ARTICLE 5. INDEMNIFICATION
5.1
Notwithstanding the assignment by the ASSIGNOR of its rights and obligations
under the AGREEMENT as aforesaid, the ASSIGNOR undertakes that the ASSIGNEE
shall duly perform all of its obligations under the AGREEMENT following
assignment. Further, the ASSIGNOR undertakes to indemnify and hold MC and MIE
harmless from and against any loss, damage, expense, cost, claim or liability
which MC and MIE may incur as a result of any failure by the ASSIGNEE to perform
any of the obligations under the AGREEMENT assumed by it hereunder.
3
<PAGE> 98
Article 5. Expenses and Taxes
5.1 The ASSIGNEE shall pay, or reimburse the ASSIGNOR upon request, all
expenses, taxes, fees, stamp duties and other costs or charges (including
reasonable legal expenses to ensure the validity of this assignment as against
any third party under the laws of the state of California) which may be incurred
by the ASSIGNOR in connection with the preparation, execution and delivery of
this ASSIGNMENT AGREEMENT and any other document or instrument contemplated
hereby.
Article 6. Governing Law
6.1 This ASSIGNMENT AGREEMENT shall be governed by and construed in
accordance with the laws of the State of California.
4
<PAGE> 99
IN WITNESS WHEREOF, the parties hereto have caused this ASSIGNMENT AGREEMENT to
be executed by their respective, duly authorized representatives in the day and
year first above written.
LUCKMAN INTERACTIVE, INC.
/s/ MARK GREEN
- ----------------------------------
Mark Green
President
CYBERMEDIA, INC.
- -----------------------------------
Name:
Title:
MARUBENI CORPORATION
- -----------------------------------
Tetsuo Umezaki
General Manager,
Electronics Dept. (B260)
MARUBENI INTERNATIONAL ELECTRONICS CORPORATION
- -----------------------------------
Hideaki Takagi
President & CEO
5
<PAGE> 100
IN WITNESS WHEREOF, the parties hereto have caused this ASSIGNMENT AGREEMENT to
be executed by their respective, duly authorized representatives in the day and
year first above written.
LUCKMAN INTERACTIVE, INC.
/s/ MARK GREEN
- ----------------------------------
Mark Green
President
CYBERMEDIA, INC.
/s/ UNNI WARRIER
- -----------------------------------
Name: Unni Warrier
Title: CEO
MARUBENI CORPORATION
- -----------------------------------
Tetsuo Umezaki
General Manager,
Electronics Dept. (B260)
MARUBENI INTERNATIONAL ELECTRONICS CORPORATION
/s/ HIDEAKI TAKAGI
- -----------------------------------
Hideaki Takagi
President & CEO
5
<PAGE> 101
ASSIGNMENT AGREEMENT
The undersigned, INSO Chicago Corporation, d/b/a INSO Corporation ("INSO") and
Cybermedia, Inc. hereby agree as follows:
1. INSO hereby consents to the assignment of the agreement (the
"Agreement") dated the 11th day of October 1995 and any amendments thereto,
made with MicroHelp, Inc., by Luckman Interactive, Inc. (the successor to
MicroHelp by virtue of merger as of November 18, 1996) ("Luckman") to
Cybermedia, Inc.;
2. INSO hereby acknowledges that Cybermedia, Inc. shall have the
benefits and rights of, and be bound by the obligations contained in, the
Agreement as if it were an original signatory thereto; and
3. Cybermedia, Inc. hereby agrees to accept such assignment and to
perform and discharge each of the obligations of Luckman under the Agreement in
accordance with the terms thereof.
INSO Chicago Corporation d/b/a INSO Corporation
By: /s/ BRUCE G. HILL
---------------------------------
Title: Secretary and General Counsel
Date: 4/3/97
Cybermedia, Inc.
By: /s/ UNNI WARRIER
---------------------------------
Title: CEO
Date: 4/3/97
<PAGE> 102
TAB 8
[LUCKMAN INTERACTIVE, INC. LETTERHEAD]
1 April 1997
Mr. Steven Duchen
Power Reporting
3rd Floor, NCN House
75 Church Street
Cape Town 8000, South Africa
Re: International Distribution Agreement/Power Reporting & Microhelp
----------------------------------------------------------------
Dear Mr. Duchen:
This letter shall serve as notice that Power Reporting is in breach of
the International Distribution Agreement entered into 15 August 1995, with
Microhelp, Inc. (the "Agreement") as follows:
- Failure to provide a business plan no later than 1 April as required
by section 4.4(b); and
- Failure to comply with the Microhelp Documentation and Information
Procedures.
Pursuant to section 4.1(c), Power Reporting has thirty days from the
date hereof to cure such breach or the Agreement shall terminate effective 1 May
1997. In addition, if such breach is cured or if any court of competent
jurisdiction determines that this notice of termination is ineffective, Power
Reporting is hereby notified that pursuant to section 4.1(b) of the Agreement,
this letter shall be deemed notice of termination effective one-hundred and
eighty (180) days from the date of this letter.
Very truly yours,
/s/ MARY APANIUS
----------------------
Mary-Felicia Apanius
Corporate Counsel
<PAGE> 103
[LUCKMAN INTERACTIVE, INC. LETTERHEAD]
1 April 1997
BFL Software Limited
Gopalakrishna Complex, 45/3, Residency Road
Bangalore, 560 025 India
Attn: K. Mallikarjun
Re: Distribution Agreement/BFL Software & Microhelp
-----------------------------------------------
Dear Mr. Mallikarjun:
This letter shall serve as notice that BFL Software is in breach of
the Distribution Agreement entered into 19 September 1996, with Microhelp,
Inc. (the "Agreement") as follows:
- Failure to provide a business plan no later than 1 April as required
by section 3.6(b); and
- Failure to comply with the Microhelp Documentation and Information
Procedures.
Pursuant to section 4.1(c), BFL Software has thirty days from the date
hereof to cure such breach or the Agreement shall terminate effective 1 May
1997. In addition, if such breach is cured or if any court of competent
jurisdiction determines that this notice of termination is ineffective, BFL
Software is hereby notified that pursuant to section 4.1(b) of the Agreement,
this letter shall be deemed notice of termination effective one-hundred and
eighty (180) days from the date of this letter.
Very truly yours,
/s/ MARY APANIUS
----------------------
Mary-Felicia Apanius
Corporate Counsel
<PAGE> 104
[LUCKMAN INTERACTIVE, INC. LETERHEAD]
1 April 1997
Mr. Bertrand Michels
AB Pro
Parc Burospace 15
91572 Bievres Cedex
France
Re: Republishing Agreement/AB Pro & Microhelp
-----------------------------------------
Dear Mr. Michels:
This letter shall serve as notice that AB Pro is in breach of the
Republishing Agreement entered into 1 July 1996 with Microhelp, Inc. (the
"Agreement") as follows:
- Failure to provide annual exclusive criteria and guidelines ninety
days prior to the end of the term of the Agreement pursuant to
section 4.6(d);
- Failure to provide a business plan no later than 1 April as
required by section 4.4(b); and
- Failure to meet the minimum sales quotas set forth in Exhibit B as
required pursuant to section 4.6(a).
Pursuant to section 5.1(c), AB Pro has thirty days from the date
hereof to cure such breach or the Agreement shall terminate effective 1 May
1997. In addition, if such breach is cured or if any court of competent
jurisdiction determines that this notice of termination is ineffective, AB Pro
is hereby notified that pursuant to section 5.1(b) of the Agreement, this
letter shall be deemed notice of termination effective one-hundred and eighty
(180) days from the date of this letter.
Very truly yours,
/s/ MARY APANIUS
----------------------
Mary-Felicia Apanius
Corporate Counsel
<PAGE> 105
[LUCKMAN INTERACTIVE, INC.(TM) LETTERHEAD]
31 March 1997
Mr. Gunter Eibl
MicroBasic GmbH
Am Sommerfeld 11
D-85622 WeiBenfeld, Germany
Re: Republishing Agreement
----------------------
Dear Gunter:
As we have notified you previously, MicroBasic is in breach of the
Republishing Agreement for failure to pay royalties as agreed. We advised you
that it was Luckman's intent to terminate the Agreement effective 26 March 1997
if payment in full was not made by that date and the breach cured. As we have
not received payment as requested, Microbasic is hereby notified that the
Agreement is terminated. Microbasic must immediately cease and desist from
selling any Luckman/Microhelp products. All gold masters and translation
materials must be returned to us together with the full payment of all amounts
due. All finished product you have in inventory must be either returned or
destroyed and a certificate of destruction provided to us.
We will be announcing the appointment of our new distributor with
notice to all dealers effective 1 April 1997.
Very truly yours,
/s/ MARY-FELICIA APANIUS
-----------------------------------
Mary-Felicia Apanius
Corporate Counsel
cc: Ms. Annete Gold
<PAGE> 106
[LUCKMAN INTERACTIVE, INC.(TM) LETTERHEAD]
31 March 1997
Mr. Gunter Eibl
MicroBasic GmbH
Am Sommerfeld 11
D-85622 WeiBenfeld, Germany
Re: Republishing Agreement
----------------------
Dear Gunter:
Further to my letter of 27 March 1997, please be advised that if any
court of competent jurisdiction determines that the termination of the
Republishing Agreement made as of that date is ineffective, MicroBasic GmbH is
herewith notified that pursuant to section 5.1(b) of the Republishing Agreement,
this letter shall be deemed the notice of termination effective one-hundred and
eighty (180) days from the date of this letter.
Very truly yours,
/s/ MARY-FELICIA APANIUS
-----------------------------------
Mary-Felicia Apanius
Corporate Counsel
<PAGE> 107
[LUCKMAN INTERACTIVE, INC.(TM) LETTERHEAD]
31 March 1997
Mr. David Orban
Questar
Via Ghislandi, 61/B
24125 Bergamo, Italy
Re: Republishing Agreement
----------------------
Dear David:
Further to my letter of 27 March 1997, please be advised that if any
court of competent jurisdiction determines that the termination of the
Republishing Agreement made as of that date is ineffective, Questar is herewith
notified that pursuant to section 5.1(b) of the Republishing Agreement, this
letter shall be deemed the notice of termination effective one-hundred and
eighty (180) days from the date of this letter.
Very truly yours,
/s/ MARY-FELICIA APANIUS
-----------------------------------
Mary-Felicia Apanius
Corporate Counsel
<PAGE> 108
[LUCKMAN INTERACTIVE, INC.(TM) LETTERHEAD]
27 March 1997
Mr. David Orban
Questar
Via Ghislandi, 61/B
24125 Bergamo, Italy
Re: Republishing Agreement
----------------------
Dear David:
Thank you for your wire transfer. However, as we have notified you
previously, Questar is in breach of the Republishing Agreement for failure to
pay royalties in full as agreed. We advised you that it was Luckman's intent to
terminate the Agreement effective 26 March 1997 if payment in full was not made
by that date and the breach cured. As we have not received payment as
requested, Questar is hereby notified that the Agreement is terminated. Questar
must immediately cease and desist from selling any Luckman/Microhelp products.
All gold masters and translation materials must be returned to us together with
the full payment of all amounts due. All finished product in inventory must be
either returned or destroyed and a certificate of destruction provided to us.
We will be announcing the appointment of our new distributor with notice to all
dealers effective 1 April 1997.
Thank you for your anticipated cooperation.
Very truly yours,
/s/ MARY-FELICIA APANIUS
-----------------------------------
Mary-Felicia Apanius
Corporate Counsel
<PAGE> 109
[LUCKMAN INTERACTIVE, INC.(TM) LETTERHEAD]
31 March 1997
Mr. Roger Barratt
Roderick Manhattan Group
123 Disraeli Road
London SW15 2DZ
U.K.
Re: Republishing Agreement
----------------------
Dear Roger:
Further to my letter of 27 March 1997, please be advised that if any
court of competent jurisdiction determines that the termination of the
Republishing Agreement made as of that date is ineffective, The Roderick
Manhattan Group is herewith notified that pursuant to section 5.1(b) of the
Republishing Agreement, this letter shall be deemed the notice of termination
effective one-hundred and eighty (180) days from the date of this letter.
Very truly yours,
/s/ MARY-FELICIA APANIUS
-----------------------------------
Mary-Felicia Apanius
Corporate Counsel
<PAGE> 110
[LUCKMAN INTERACTIVE, INC.(TM) LETTERHEAD]
27 March 1997
Mr. Roger Barratt
Roderick Manhattan Group
123 Disraeli Road
London SW15 2DZ
U.K.
Re: Republishing Agreement
----------------------
Dear Roger:
Thank you for the royalty reports although I do not understand why you
were trying to fax them to Microhelp when we have repeatedly advised you that
they are to be sent to the attention of Fred Rigaud and myself at Luckman. The
Microhelp facility has been closed and Microhelp personnel are no longer
associated with the Company. As requested, invoices will be sent to the
attention of Justine Lockett.
As we have notified you previously, the Roderick Manhattan Group is in
breach of the Republishing Agreement for failure to pay royalties as agreed.
The Agreement was terminated effective 11 March 1997 for this reason and you
must cease and desist from selling any Luckman/Microhelp products. All gold
masters must be returned to us immediately together with full payment of all
amounts due without offsets for any returned product. You are correct the
Global Internet inventory is separate from the Microhelp payment issue; as we
previously notified you, we will arrange to have the inventory picked up from
your facility.
We will be announcing the appointment of our new distributor with
notice to all dealers effective 1 April 1997.
Very truly yours,
/s/ MARY-FELICIA APANIUS
-----------------------------------
Mary-Felicia Apanius
Corporate Counsel
<PAGE> 111
[LUCKMAN INTERACTIVE, INC. LOGO]
1 April 1997
Mr. Jan Yttereng
Convey A.S.
Kaptein Mitids vie 22
N-7002 Trondheim
Norway
Re: European Distribution Agreement/Convey A.S. & Microhelp
-------------------------------------------------------
Dear Mr. Yttereng:
This letter shall serve as notice that Convey A.S. is in breach of the
European Distribution Agreement entered into 20 May 1996, with Microhelp, Inc.
(the "Agreement") as follows:
- Failure to provide a business plan no later than 1 April as required
by section 3.6(b); and
- Failure to comply with the Microhelp Documentation and Information
Procedures.
Pursuant to section 4.1(c), Convey A.S. has thirty days from the date
hereof to cure such breach or the Agreement shall terminate effective 1 May
1997. In addition, if such breach is cured or if any court of competent
jurisdiction determines that this notice of termination is ineffective, Convey
A.S. is hereby notified that pursuant to section 4.1(b) of the Agreement, this
letter shall be deemed notice of termination effective one-hundred and eighty
(180) days from the date of this letter.
Very truly yours,
/s/ MARY-FELICIA APANIUS
------------------------------------
Mary-Felicia Apanius
Corporate Counsel
<PAGE> 112
TAB 9
RECEIPT
The undersigned hereby acknowledges receipt of a warrant to purchase
** shares of Common Stock of Cybermedia at ** per share as described in
the Asset Purchase Agreement by and between Luckman Interactive, Inc., a
Delaware corporation and Cybermedia, Inc., a Delaware corporation, dated April
2, 1997.
Date: April 2, 1997
LUCKMAN INTERACTIVE, INC.
By: /s/ MARK GREEN
----------------------------
Mark Green
President
Please return to:
Don Wade, Esq.
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
<PAGE> 113
TAB 10
LUCKMAN INTERACTIVE, INC.
RECEIPT
In connection with the Asset Purchase Agreement dated April 2, 1997 by
and between Luckman Interactive (the "Company") and Cybermedia, Inc., the
Company hereby acknowledges receipt on the date set forth below at a wire
transfer to the account of the Company in the aggregate amount of
**.
Dated: April 2, 1997
LUCKMAN INTERACTIVE, INC.
By: /s/ MARK GREEN
-----------------------------------
Mark Green, President
<PAGE> 114
TAB 11
1 of 1 BANKS REPORTED; 4 OF 5 ACCOUNTS REPORTED
BANK: 97 APR 3 03:38 PM PST
USER: 97 APR 3 03:38 PM PST
BANK OF AMERICA
WILSON SONSINI GOODRICH ROSATI
CURRENT DAY REPORTING
BAMTRAC DETAIL REPORT
AS OF APR 3
***************BANK OF AMERICA NT&SA NORTH -- SAN FRANCISCO, CA****************
*** U.S. DOLLAR *** TRUST TRUST
1484300544 LATEST UPDATE: APR 3 14:34 PST
+++++++++++++++++++++++++++++++++++ CREDITS +++++++++++++++++++++++++++++++++++
++++++++++++++++++++++++++++++++++++ DEBITS +++++++++++++++++++++++++++++++++++
* WIRES OUT--DOMESTIC (WOD) *
** REF # 970403MT590589GM VALUE: APR 3
WIRE RECEIPT TIME= 14:23
CREDIT= BANK OF MONTREAL
PAYMENT METHOD= CUSTOMER TRANSFER
DETAILS OF PAYMENT:
BNF= LUCKMAN INTERACTIVE
ORG=WILSON, SONSINI, GOODRICH AND ROSATI ORG
REF=NOREF OBI=SUSAN KOWALSKYJ 416 867 7867
BNF=/AC-4637697
MTA #= 09329655
** FED REF # 9646 VALUE: APR 3
WIRE RECEIPT TIME= 14:23
CREDIT= COMERICA BANK CALIFORNIA
PAYMENT METHOD= FEDWIRE
DETAILS OF PAYMENT:
BNF= LUCKMAN INTERACTIVE
ORG=WILSON SONSINI GOODRICH ROSATI ORG
REF=NOREF OBI=CONNIE MCCOY 818 587 5203 WILSON SONSINI
<PAGE> 115
BNF=/AC-8941006473
MTA #= 09329646
** FED REF # 9647 VALUE: APR 3
WIRE RECEIPT TIME= 14:23
CREDIT= SILICON VALLEY BANK
PAYMENT METHOD= FEDWIRE
DETAILS OF PAYMENT:
BNF= LUCKMAN INTERACTIVE
ORG=WILSON SONSINI GOODRICH ROSATI ORG
REF=NOREF OBI=WILSON SONSINI BNF=/AC-01032585 70
MTA #= 09329647
** FED REF # 9649 VALUE: APR 3
WIRE RECEIPT TIME= 14:23
CREDIT= MELLON BANK NA AA171
PAYMENT METHOD= FEDWIRE
DETAILS OF PAYMENT:
BNF= MERRILL LYNCH
ORG=WILSON SONSINI GOODRICH ROSATI ORG
REF=NOREF OBI=FFC TO MICROHELP INC ACCT NO 701 07 304
WILSON SONSINI BNF=/AC-1011730
MTA #= 09329649
** FED REF # 9650 VALUE: APR 3
WIRE RECEIPT TIME= 14:32
CREDIT= FIRST UNION NATIONAL BANK
PAYMENT METHOD= FEDWIRE
DETAILS OF PAYMENT:
BNF= TIMOTHY B O PRY
ORG=WILSON SONSINI GOODRICH ROSATI ORG
REF=NOREF OBI=MARY LARKE O STEEN 404 865 3025 WILSON
SONSINI BNF=AC-1020001497293
MTA #= 09329650
<PAGE> 116
TAB 12
April 02, 1997
RE: WARNER MEDIA UNINSTALLER 4.0 INVENTORY COUNT
There is currently approx. ** units of UnInstaller and Best of the
Web/Luckman's Official World Wide Web Yellow Pages Bundle available.
There is currently approx. ** units of UnInstaller 4.0 single units
available plus any overs that are uncompleted at this time.
(There is an expected return of UnInstaller 4.0 units from Distribution because
of the expected bundle release. Therefore there will be available additional
finished single units.)
There is approx. ** units of UnInstaller 3.0/3.5 available (approx. **
units on route of return) plus an additional ** units expected to be
returned in the near future. Total of UnInstaller 3.0/3.5 available -- approx.
** units.
Invoice for PO 10081 for the build of UnInstaller 4.0 is ** to Warner
Media.
<PAGE> 117
[V Tech Data LETTERHEAD] Show this Purchase Order on all correspondence,
invoices, shipping papers and packages
WAREHOUSE # A1
PURCHASE ORDER 769276
P.O. DATE 03/11/97 PAGE 1 OF 1
PAYMENT TERMS 2% 15, NET 45 REFERENCE # 0
VENDOR NUMBER 55655 PRD. MGR. 755 T. AYER X75590
======================================= ======================================
[ILLEGIBLE] SHIP TO
======================================= ======================================
LUCKMAN INTERACTIVE TECH DATA CORP.
- --------------------------------------- --------------------------------------
1055 WEST 7TH STREET 8501 NW 17TH STREET
- --------------------------------------- --------------------------------------
SUITE 2580
- ---------------------------------------- --------------------------------------
- --------------------------------------- -------------------------------------
LOS ANGELES, CA 90017 MIAMI, FL 33126
- --------------------------------------- -------------------------------------
SHIP TERMS OPEN ACCOUNT SHIP VIA AS PER ROUTING GUIDE
FOB POINT
======================================= ======================================
[NOT LEGIBLE] [ILLEGIBLE]
======================================= ======================================
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
===============================================================================
[ILLEGIBLE]
===============================================================================
437684 UB-WN-10-FD 03/21/97 ** ** **
- -------------------------------------------------------------------------------
UNINSTALLER 4.0 3.5 MOST [ILLEGIBLE]
- -------------------------------------------------------------------------------
BEST OF THE WEB BUNDLE EA 1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
437685 UNI4.0 03/21/97 ** ** **
- -------------------------------------------------------------------------------
UNINSTALLER 4.0 3.5 W95 [ILLEGIBLE]
- -------------------------------------------------------------------------------
OFFICE DEPOT ONLY!!!! EA 1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE] **
TERMS: The terms and conditions on this form are an -----------------------
integral part of this purchase agreement and are the
final and complete agreement between the buyer and [ILLEGIBLE]
the seller. No variation from these terms and
conditions as stated on this order, or from the -----------------------
provisions of the Uniform Commercial Code, will Authorized Signature
be acceptable without the prior written approval
of the purchaser.
<PAGE> 118
[V Tech Data LETTERHEAD] Show this Purchase Order on all correspondence,
invoices, shipping papers and packages
WAREHOUSE # A2
PURCHASE ORDER 769277
P.O. DATE 03/11/97 PAGE 1 OF 1
PAYMENT TERMS 2% 15, NET 45 REFERENCE # 0
VENDOR NUMBER 55655 PRD. MGR. 755 T. AYER X75590
======================================= ======================================
[ILLEGIBLE] SHIP TO
======================================= ======================================
LUCKMAN INTERACTIVE TECH DATA CORP.
- --------------------------------------- --------------------------------------
1055 WEST 7TH STREET 1275 OAKBROOK DRIVE
- --------------------------------------- --------------------------------------
SUITE 2580 SUITE D
- ---------------------------------------- --------------------------------------
- --------------------------------------- -------------------------------------
LOS ANGELES, CA 90017 NORCROSS, GA 30093
- --------------------------------------- -------------------------------------
SHIP TERMS OPEN ACCOUNT SHIP VIA AS PER ROUTING GUIDE
FOB POINT
======================================= ======================================
[NOT LEGIBLE] [ILLEGIBLE]
======================================= ======================================
- --------------------------------------- -------------------------------------
RESENT CHECK FOR DUPLICAT
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
===============================================================================
[ILLEGIBLE]
===============================================================================
437684 UB-WN-10-FD 03/21/97 ** ** **
- -------------------------------------------------------------------------------
UNINSTALLER 4.0 3.5 MOST [ILLEGIBLE]
- -------------------------------------------------------------------------------
BEST OF THE WEB BUNDLE EA 1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
437685 UNI4.0 03/21/97 ** ** **
- -------------------------------------------------------------------------------
UNINSTALLER 4.0 3.5 W95 [ILLEGIBLE]
- -------------------------------------------------------------------------------
OFFICE DEPOT ONLY!!!! EA 1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE] **
TERMS: The terms and conditions on this form are an -----------------------
integral part of this purchase agreement and are the
final and complete agreement between the buyer and [ILLEGIBLE]
the seller. No variation from these terms and
conditions as stated on this order, or from the -----------------------
provisions of the Uniform Commercial Code, will Authorized Signature
be acceptable without the prior written approval
of the purchaser.
<PAGE> 119
[V Tech Data LETTERHEAD] Show this Purchase Order on all correspondence,
invoices, shipping papers and packages
WAREHOUSE # A2
PURCHASE ORDER 769277
P.O. DATE 03/11/97 PAGE 1 OF 1
PAYMENT TERMS 2% 15, NET 45 REFERENCE # 0
VENDOR NUMBER 55655 PRD. MGR. 755 T. AYER X75590
======================================= ======================================
[ILLEGIBLE] SHIP TO
======================================= ======================================
LUCKMAN INTERACTIVE TECH DATA CORP.
- --------------------------------------- --------------------------------------
1055 WEST 7TH STREET 1275 OAKBROOK DRIVE
- --------------------------------------- --------------------------------------
SUITE 2580 SUITE D
- ---------------------------------------- --------------------------------------
- --------------------------------------- -------------------------------------
LOS ANGELES, CA 90017 NORCROSS, GA 30093
- --------------------------------------- -------------------------------------
SHIP TERMS OPEN ACCOUNT SHIP VIA AS PER ROUTING GUIDE
FOB POINT
======================================= ======================================
[NOT LEGIBLE] [ILLEGIBLE]
======================================= ======================================
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
===============================================================================
[ILLEGIBLE]
===============================================================================
437684 UB-WN-10-FD 03/21/97 ** ** **
- -------------------------------------------------------------------------------
UNINSTALLER 4.0 3.5 MOST [ILLEGIBLE]
- -------------------------------------------------------------------------------
BEST OF THE WEB BUNDLE EA 1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
437685 UNI4.0 03/21/97 ** ** **
- -------------------------------------------------------------------------------
UNINSTALLER 4.0 3.5 W95 [ILLEGIBLE]
- -------------------------------------------------------------------------------
OFFICE DEPOT ONLY!!!! EA 1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE] **
TERMS: The terms and conditions on this form are an -----------------------
integral part of this purchase agreement and are the
final and complete agreement between the buyer and [ILLEGIBLE]
the seller. No variation from these terms and
conditions as stated on this order, or from the -----------------------
provisions of the Uniform Commercial Code, will Authorized Signature
be acceptable without the prior written approval
of the purchaser.
<PAGE> 120
[V Tech Data LETTERHEAD] Show this Purchase Order on all correspondence,
invoices, shipping papers and packages
WAREHOUSE # A3
PURCHASE ORDER 769278
P.O. DATE 03/11/97 PAGE 1 OF 1
PAYMENT TERMS 2% 15, NET 45 REFERENCE # 0
VENDOR NUMBER 55655 PRD. MGR. 755 T. AYER X75590
======================================= ======================================
[ILLEGIBLE] SHIP TO
======================================= ======================================
LUCKMAN INTERACTIVE TECH DATA CORP.
- --------------------------------------- --------------------------------------
1055 WEST 7TH STREET 1228 FOREST PARKWAY
- --------------------------------------- --------------------------------------
SUITE 2580 SUITE 200
- ---------------------------------------- --------------------------------------
- --------------------------------------- -------------------------------------
LOS ANGELES, CA 90017 PAULSBORO, NJ 08066
- --------------------------------------- -------------------------------------
SHIP TERMS OPEN ACCOUNT SHIP VIA AS PER ROUTING GUIDE
FOB POINT
======================================= ======================================
[NOT LEGIBLE] [ILLEGIBLE]
======================================= ======================================
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
===============================================================================
[ILLEGIBLE]
===============================================================================
437684 UB-WN-10-FD 03/21/97 ** ** **
- -------------------------------------------------------------------------------
UNINSTALLER 4.0 3.5 MOST [ILLEGIBLE]
- -------------------------------------------------------------------------------
BEST OF THE WEB BUNDLE EA 1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
437685 UNI4.0 03/21/97 ** ** **
- -------------------------------------------------------------------------------
UNINSTALLER 4.0 3.5 W95 [ILLEGIBLE]
- -------------------------------------------------------------------------------
OFFICE DEPOT ONLY!!!! EA 1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE] **
TERMS: The terms and conditions on this form are an -----------------------
integral part of this purchase agreement and are the
final and complete agreement between the buyer and [ILLEGIBLE]
the seller. No variation from these terms and
conditions as stated on this order, or from the -----------------------
provisions of the Uniform Commercial Code, will Authorized Signature
be acceptable without the prior written approval
of the purchaser.
<PAGE> 121
[V Tech Data LETTERHEAD] Show this Purchase Order on all correspondence,
invoices, shipping papers and packages
WAREHOUSE # A4
PURCHASE ORDER 769279
P.O. DATE 03/11/97 PAGE 1 OF 1
PAYMENT TERMS 2% 15, NET 45 REFERENCE # 0
VENDOR NUMBER 55655 PRD. MGR. 755 T. AYER X75590
======================================= ======================================
[ILLEGIBLE] SHIP TO
======================================= ======================================
LUCKMAN INTERACTIVE TECH DATA CORP.
- --------------------------------------- --------------------------------------
1055 WEST 7TH STREET 3899 WM RICHARDSON CT
- --------------------------------------- --------------------------------------
SUITE 2580
- ---------------------------------------- --------------------------------------
- --------------------------------------- -------------------------------------
LOS ANGELES, CA 90017 SOUTH BEND, IN 46628
- --------------------------------------- -------------------------------------
SHIP TERMS OPEN ACCOUNT SHIP VIA AS PER ROUTING GUIDE
FOB POINT
======================================= ======================================
[NOT LEGIBLE] [ILLEGIBLE]
======================================= ======================================
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
===============================================================================
[ILLEGIBLE]
===============================================================================
437684 UB-WN-10-FD 03/21/97 ** ** **
- -------------------------------------------------------------------------------
UNINSTALLER 4.0 3.5 MOST [ILLEGIBLE]
- -------------------------------------------------------------------------------
BEST OF THE WEB BUNDLE EA 1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
437685 UNI4.0 03/21/97 ** ** **
- -------------------------------------------------------------------------------
UNINSTALLER 4.0 3.5 W95 [ILLEGIBLE]
- -------------------------------------------------------------------------------
OFFICE DEPOT ONLY!!!! EA 1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE] **
TERMS: The terms and conditions on this form are an -----------------------
integral part of this purchase agreement and are the
final and complete agreement between the buyer and [ILLEGIBLE]
the seller. No variation from these terms and
conditions as stated on this order, or from the -----------------------
provisions of the Uniform Commercial Code, will Authorized Signature
be acceptable without the prior written approval
of the purchaser.
<PAGE> 122
[V Tech Data LETTERHEAD] Show this Purchase Order on all correspondence,
invoices, shipping papers and packages
WAREHOUSE # A5
PURCHASE ORDER 769280
P.O. DATE 03/11/97 PAGE 1 OF 1
PAYMENT TERMS 2% 15, NET 45 REFERENCE # 0
VENDOR NUMBER 55655 PRD. MGR. 755 T. AYER X75590
======================================= ======================================
[ILLEGIBLE] SHIP TO
======================================= ======================================
LUCKMAN INTERACTIVE TECH DATA CORP.
- --------------------------------------- --------------------------------------
1055 WEST 7TH STREET 5100 LIBERTY WAY
- --------------------------------------- --------------------------------------
SUITE 2580
- ---------------------------------------- --------------------------------------
- --------------------------------------- -------------------------------------
LOS ANGELES, CA 90017 FORT WORTH, TX 76178
- --------------------------------------- -------------------------------------
SHIP TERMS OPEN ACCOUNT SHIP VIA AS PER ROUTING GUIDE
FOB POINT
======================================= ======================================
[NOT LEGIBLE] [ILLEGIBLE]
======================================= ======================================
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
===============================================================================
[ILLEGIBLE]
===============================================================================
437684 UB-WN-10-FD 03/21/97 ** ** **
- -------------------------------------------------------------------------------
UNINSTALLER 4.0 3.5 MOST [ILLEGIBLE]
- -------------------------------------------------------------------------------
BEST OF THE WEB BUNDLE EA 1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
437685 UNI4.0 03/21/97 ** ** **
- -------------------------------------------------------------------------------
UNINSTALLER 4.0 3.5 W95 [ILLEGIBLE]
- -------------------------------------------------------------------------------
OFFICE DEPOT ONLY!!!! EA 1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE] **
TERMS: The terms and conditions on this form are an -----------------------
integral part of this purchase agreement and are the
final and complete agreement between the buyer and [ILLEGIBLE]
the seller. No variation from these terms and
conditions as stated on this order, or from the -----------------------
provisions of the Uniform Commercial Code, will Authorized Signature
be acceptable without the prior written approval
of the purchaser.
<PAGE> 123
[V Tech Data LETTERHEAD] Show this Purchase Order on all correspondence,
invoices, shipping papers and packages
WAREHOUSE # A6
PURCHASE ORDER 769281
P.O. DATE 03/11/97 PAGE 1 OF 1
PAYMENT TERMS 2% 15, NET 45 REFERENCE # 0
VENDOR NUMBER 55655 PRD. MGR. 755 T. AYER X75590
======================================= ======================================
[ILLEGIBLE] SHIP TO
======================================= ======================================
LUCKMAN INTERACTIVE TECH DATA CORP.
- --------------------------------------- --------------------------------------
1055 WEST 7TH STREET 4621 GUASTI ROAD
- --------------------------------------- --------------------------------------
SUITE 2580 UNIT 1
- ---------------------------------------- --------------------------------------
- --------------------------------------- -------------------------------------
LOS ANGELES, CA 90017 ONTARIO, CA 91764
- --------------------------------------- -------------------------------------
SHIP TERMS OPEN ACCOUNT SHIP VIA AS PER ROUTING GUIDE
FOB POINT
======================================= ======================================
[NOT LEGIBLE] [ILLEGIBLE]
======================================= ======================================
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
===============================================================================
[ILLEGIBLE]
===============================================================================
437684 UB-WN-10-FD 03/21/97 ** ** **
- -------------------------------------------------------------------------------
UNINSTALLER 4.0 3.5 MOST [ILLEGIBLE]
- -------------------------------------------------------------------------------
BEST OF THE WEB BUNDLE EA 1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
437685 UNI4.0 03/21/97 ** ** **
- -------------------------------------------------------------------------------
UNINSTALLER 4.0 3.5 W95 [ILLEGIBLE]
- -------------------------------------------------------------------------------
OFFICE DEPOT ONLY!!!! EA 1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE] **
TERMS: The terms and conditions on this form are an -----------------------
integral part of this purchase agreement and are the
final and complete agreement between the buyer and [ILLEGIBLE]
the seller. No variation from these terms and
conditions as stated on this order, or from the -----------------------
provisions of the Uniform Commercial Code, will Authorized Signature
be acceptable without the prior written approval
of the purchaser.
<PAGE> 124
[V Tech Data LETTERHEAD] Show this Purchase Order on all correspondence,
invoices, shipping papers and packages
WAREHOUSE # A7
PURCHASE ORDER 769282
P.O. DATE 03/11/97 PAGE 1 OF 1
PAYMENT TERMS 2% 15, NET 45 REFERENCE # 0
VENDOR NUMBER 55655 PRD. MGR. 755 T. AYER X75590
======================================= ======================================
[ILLEGIBLE] SHIP TO
======================================= ======================================
LUCKMAN INTERACTIVE TECH DATA CORP.
- --------------------------------------- --------------------------------------
1055 WEST 7TH STREET 1624 PACIFIC ST.
- --------------------------------------- --------------------------------------
SUITE 2580
- ---------------------------------------- --------------------------------------
- --------------------------------------- -------------------------------------
LOS ANGELES, CA 90017 UNION CITY, CA 94587
- --------------------------------------- -------------------------------------
SHIP TERMS OPEN ACCOUNT SHIP VIA AS PER ROUTING GUIDE
FOB POINT
======================================= ======================================
[NOT LEGIBLE] [ILLEGIBLE]
======================================= ======================================
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
===============================================================================
[ILLEGIBLE]
===============================================================================
437684 UB-WN-10-FD 03/21/97 ** ** **
- -------------------------------------------------------------------------------
UNINSTALLER 4.0 3.5 MOST [ILLEGIBLE]
- -------------------------------------------------------------------------------
BEST OF THE WEB BUNDLE EA 1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
437685 UNI4.0 03/21/97 ** ** **
- -------------------------------------------------------------------------------
UNINSTALLER 4.0 3.5 W95 [ILLEGIBLE]
- -------------------------------------------------------------------------------
OFFICE DEPOT ONLY!!!! EA 1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[ILLEGIBLE] **
TERMS: The terms and conditions on this form are an -----------------------
integral part of this purchase agreement and are the
final and complete agreement between the buyer and [ILLEGIBLE]
the seller. No variation from these terms and
conditions as stated on this order, or from the -----------------------
provisions of the Uniform Commercial Code, will Authorized Signature
be acceptable without the prior written approval
of the purchaser.
<PAGE> 125
-------------------------------
PURCHASE ORDER
MERISEL
-------------------------------
PURCHASE ORDER NUMBER: 24-04337
BILL TO:
MERISEL AMERICAS, INC. PHONE 310-615-1080
200 CONTINENTAL BLVD.
EL SEGUNDO, CA 90245-0984
DATE
ATTENTION: ACCOUNTS PAYABLE FEB 24,97 15531 PAGE 1
TO: SHIP TO:
LUCKMAN INTERACTIVE, INC. MERISEL AMERICAS, INC.
4359 SHALLOWFORD INDUSTRIAL PKWY 3050 N.E. INDEPENDENCE AVE
MARIETTA, GA 30066 LEE'S SUMMIT, NO 64064
TERMS RUN FEB 24,97 10:07
VIA UPS GRND DATE TO BE DELIVERED FOB SHIP POINT
INSTRUCTIONS: ALL DELIVERIES MUST BE ACCOMPANIED BY A COMPLETE AND ACCURATE
PACKING SLIP. CALL MERISEL TRAFFIC AT 310 615-3080 FOR ROUTING
ON ALL SHIPMENTS OVER 200 LBS. TERMS AND CONDITIONS ON ATTACHED
SHEET APPLY TO THIS PURCHASE ORDER. CONFIRMING - DO NOT
DUPLICATE.
******************************
******************************
<TABLE>
<CAPTION>
PROM OPEN UNIT EXTENDED
ITEM DESCRIPTION MACHINE MEDIA DATE QTY PRICE PRICE
<S> <C> <C> <C> <C> <C>
UNINSTALLER 4.0 & BEST
OF THE 86840 UB-WN-10-FD IBM PC CDRO 03/17/97 ** ** **
BUYER: G1 JACKIE GOMEZ TOTAL ** **
</TABLE>
<PAGE> 126
-------------------------------
PURCHASE ORDER
MERISEL
-------------------------------
PURCHASE ORDER NUMBER: 31-81679
BILL TO:
MERISEL AMERICAS, INC. PHONE 310-615-3080
200 CONTINENTAL BLVD.
EL SEGUNDO, CA 90245-3080
DATE
ATTENTION: ACCOUNTS PAYABLE FEB 24,97 15931 PAGE 1
TO: SHIP TO:
LUCKMAN INTERACTIVE, INC. MERISEL AMERICAS, INC.
4359 SHALLOWFORD INDUSTRIAL PKWY 1269 WOOD DALE RD.
MARIETTA, GA 30066 WOOD DALE IL 60191
TERMS RUN FEB 25,97 16:37
SHIP VIA UPS GRND DATE TO BE DELIVERED FOB SHIP POINT
INSTRUCTIONS: ALL DELIVERIES MUST BE ACCOMPANIED BY A COMPLETE AND ACCURATE
PACKING SLIP. CALL MERISEL TRAFFIC AT 310 615-3080 FOR ROUTING
ON ALL SHIPMENTS OVER 200 LBS. TERMS AND CONDITIONS ON ATTACHED
SHEET APPLY TO THIS PURCHASE ORDER. CONFIRMING - DO NOT
DUPLICATE.
******************************
******************************
<TABLE>
<CAPTION>
PROM OPEN UNIT EXTENDED
LNE ITEM DESCRIPTION MACHINE MEDIA DATE QTY PRICE PRICE
<S> <C> <C> <C> <C> <C> <C>
001 UNINSTALLER 4.0 & BEST
OF THE 86840 UB-WN-10-FD IBM PC CDRO 03/17/97 ** ** **
BUYER: G1 JACKIE GOMEZ TOTAL ** **
</TABLE>
<PAGE> 127
-------------------------------
PURCHASE ORDER
MERISEL
-------------------------------
PURCHASE ORDER NUMBER: 22-78258
BILL TO:
MERISEL AMERICAS, INC. PHONE 310-615-3080
200 CONTINENTAL BLVD.
EL SEGUNDO, CA 90245-3080
DATE
ATTENTION: ACCOUNTS PAYABLE FEB 24,97 15931 PAGE 1
TO: SHIP TO:
LUCKMAN INTERACTIVE, INC. MERISEL AMERICAS, INC.
4359 SHALLOWFORD INDUSTRIAL PKWY 5700 EASTPORT
MARIETTA, GA 30066 RICHMOND, VA 23231
TERMS RUN FEB 24,97 10:07
VIA UPS GRND DATE TO BE DELIVERED FOB SHIP POINT
INSTRUCTIONS: ALL DELIVERIES MUST BE ACCOMPANIED BY A COMPLETE AND ACCURATE
PACKING SLIP. CALL MERISEL TRAFFIC AT 310 615-3080 FOR ROUTING
ON ALL SHIPMENTS OVER 200 LBS. TERMS AND CONDITIONS ON ATTACHED
SHEET APPLY TO THIS PURCHASE ORDER. CONFIRMING - DO NOT
DUPLICATE.
******************************
******************************
<TABLE>
<CAPTION>
PROM OPEN UNIT EXTENDED
ITEM DESCRIPTION MACHINE MEDIA DATE QTY PRICE PRICE
<S> <C> <C> <C> <C> <C> <C>
UNINSTALLER 4.0 & BEST
OF THE 86840 UB-WN-10-FD IBM PC CDRO 03/17/97 ** ** **
BUYER: G1 JACKIE GOMEZ TOTAL ** **
</TABLE>
<PAGE> 128
-------------------------------
PURCHASE ORDER
MERISEL
-------------------------------
PURCHASE ORDER NUMBER: 11-70613
BILL TO:
MERISEL AMERICAS, INC. PHONE 310-615-3080
200 CONTINENTAL BLVD.
EL SEGUNDO, CA 90245-0984
DATE
ATTENTION: ACCOUNTS PAYABLE FEB 24,97 15931 PAGE 1
TO: SHIP TO:
LUCKMAN INTERACTIVE, INC. MERISEL, INC. BRANCH 11
4359 SHALLOWFORD INDUSTRIAL PKWY 30750 SAN CLEMENTE
MARIETTA, GA 30066 HAYWARD, CA 94544
TERMS RUN FEB 24,97 10:07
VIA UPS GRND DATE TO BE DELIVERED FOB SHIP POINT
INSTRUCTIONS: ALL DELIVERIES MUST BE ACCOMPANIED BY A COMPLETE AND ACCURATE
PACKING SLIP. CALL MERISEL TRAFFIC AT 310 615-3080 FOR ROUTING
ON ALL SHIPMENTS OVER 200 LBS. TERMS AND CONDITIONS ON ATTACHED
SHEET APPLY TO THIS PURCHASE ORDER. CONFIRMING - DO NOT
DUPLICATE.
******************************
******************************
<TABLE>
<CAPTION>
PROM OPEN UNIT EXTENDED
ITEM DESCRIPTION MACHINE MEDIA DATE QTY PRICE PRICE
<S> <C> <C> <C> <C> <C> <C>
UNINSTALLER 4.0 & BEST
OF THE 86840 UB-WN-10-FD IBM PC CDRO 03/10/97 ** ** **
BUYER: G1 JACKIE GOMEZ TOTAL ** **
</TABLE>
<PAGE> 129
********************************
PURCHASE ORDER
MERISEL
********************************
PURCHASE ORDER NUMBER: 22-90343
BILL TO:
MERISEL AMERICAS, INC. PHONE 310-615-3080
200 CONTINENTAL BLVD.
EL SEGUNDO, CA 90243-3050
DATE
ATTENTION: ACCOUNTS PAYABLE MAR 27,97 15931 PAGE 1
TO: SHIP TO:
LUCKMAN INTERACTIVE, INC. MERISEL AMERICAS, INC.
4339 SHALLOWFORD INDUSTRIAL PKWY 5700 EASTPORT
MARIETTA, GA 30066 RICHMOND, VA 23231
TERMS RUN MAR 27,97 134637
SHIP VIA UPS GRND DATE TO BE DELIVERED FOB SHIP POINT
INSTRUCTIONS: ALL DELIVERIES MUST BE ACCOMPANIED BY A COMPLETE AND ACCURATE
PACKING LIST
CALL MERISEL TRAFFIC AT 310 615-3080 FOR ROUTING ON ALL SHIPMENTS
OVER 200 POUNDS
TERMS AND CONDITIONS ON ATTACHED SHEET APPLY TO THIS P.O.
CONFIRMING - DO NOT DUPLICATE.
********************************
********************************
<TABLE>
<S> <C> <C> <C> <C> <C>
PROM OPEN UNIT EXTENDED
LNE ITEM DESCRIPTION MACHINE MEDIA DATE QTY PRICE PRICE
001 UNINSTALLER 4.0 & BEST OF THE IBM PC CDRO 04/14/97 ** ** **
56940 UB-WN-10-FD
BUYER: G1 JACKIE GOMEZ TOTAL ** **
</TABLE>
<PAGE> 130
********************************
PURCHASE ORDER
MERISEL
********************************
PURCHASE ORDER NUMBER: 24-04501
BILL TO:
MERISEL AMERICAS, INC. PHONE 310-615-3080
200 CONTINENTAL BLVD.
EL SEGUNDO, CA 90243-0994
DATE
ATTENTION: ACCOUNTS PAYABLE MAR 27,97 13931 PAGE 1
TO: SHIP TO:
LUCKMAN INTERACTIVE, INC. MERISEL AMERICAS, INC.
4339 SHALLOWFORD INDUSTRIAL PKWY 3050 N.E. INDEPENDENCE AVE
MARIETTA, GA 30066 LEE'S SUMMIT, MO 64064
TERMS RUN MAR 27,97 134641
SHIP VIA UPS GRND DATE TO BE DELIVERED FOB SHIP POINT
INSTRUCTIONS: ALL DELIVERIES MUST BE ACCOMPANIED BY A COMPLETE AND ACCURATE
PACKING LIST
CALL MERISEL TRAFFIC AT 310 615-3080 FOR ROUTING ON ALL SHIPMENTS
OVER 200 POUNDS
TERMS AND CONDITIONS ON ATTACHED SHEET APPLY TO THIS P.O.
CONFIRMING - DO NOT DUPLICATE.
********************************
********************************
<TABLE>
<S> <C> <C> <C> <C> <C>
PROM OPEN UNIT EXTENDED
LNE ITEM DESCRIPTION MACHINE MEDIA DATE QTY PRICE PRICE
001 UNINSTALLER 4.0 & BEST OF THE IBM PC CDRO 04/14/97 ** ** **
56940 UB-WN-10-FD
BUYER: G1 JACKIE GOMEZ TOTAL ** **
</TABLE>
<PAGE> 131
MERISEL
200 North Continental Boulevard
El Segundo, California 92045
(310) 615 3080
Friday, March 26, 1997
PURCHASE ORDER FAX
COVER SHEET
TO
LUCKMAN INTERACTIVE, INC
12136141929
FROM
JACKIE GOMEZ
Phone: (310) 535-8079
Fax: (310) 535-8195
3 Pages (incl. cover)
<PAGE> 132
<TABLE>
<CAPTION>
<S> <C> <C> <C>
[INGRAM PO# 10-56861 PURCHASE ORDER
MICRO
LOGO] PAGE 1 PLEASE ACKNOWLEDGE THIS ORDER
PROMPTLY AND ADVISE SHIPPING DATE. BILL
VENDOR # VENDOR OF LADING MUST ACCOMPANY INVOICE.
9013 1 S
LUCKMAN INTERACTIVE, INC. H IMPORTANT
2801 WEST COAST HIGHWAY #290 I INGRAM MICRO THE PURCHASE ORDER NUMBER MUST
NEWPORT BEACH, CA 92663 P 1050 SOUTH STATE COLLEGE APPEAR ON ALL INVOICES, SHIPPING
FULLERTON, CA 92631 PAPERS AND PACKAGES. PACKAGING SLIP
MUST ACCOMPANY SHIPMENT. INVOICE
T EACH PURCHASE ORDER SEPARATELY.
O
- ----------------------------------------------------------------------------------------------------------------------------------
NUMBER VENDOR # VEND. TELEPHONE NO. P.O. DATE DELIVERY DATE PAYMENT TERMS
56861-5 9013 714-548-7200 02/25/97 NET 45 U.S. DOLLARS
- ----------------------------------------------------------------------------------------------------------------------------------
ID NO. CANCEL DATE ???? ???? SHIP TO NO. SHIPPING INSTRUCTIONS SHIP VIA FREIGHT TERMS B#
- ----------------------------------------------------------------------------------------------------------------------------------
[ILLEGIBLE] [ILLEGIBLE] [ILLEGIBLE] [ILLEGIBLE] [ILLEGIBLE] [ILLEGIBLE]
- ----------------------------------------------------------------------------------------------------------------------------------
AUTO FAX PO
** EA 901323 WIN-32 UNINSTALLER V4.0 & BEST OF THE DSK3 ** **
UB-HM-10-FD NET BUNDLE SINGLE 1-DOC
** EA 901304 MAC NET COMMANDER INTERNET SUITE CROM ** **
NC-MC-10-FD V1.0 FOR MAC
VENDORS PLEASE NOTE ANY CHANGES IN PRICE OR TERMS NEED APPROVAL BEFORE SHIPMENT
- ----------------------------------------------------------------------------------------------------------------------------------
** MERCHANDISE SHIPPED ON THIS PURCHASE ORDER NOT IN
AGREEMENT WITH THE SPECIFICS AS OUTLINED ABOVE WILL BE
RETURNED UNLESS PRIOR APPROVAL HAS BEEN OBTAINED **
SIGNATURE________________________________________________________
</TABLE>
<PAGE> 133
<TABLE>
<CAPTION>
<S> <C> <C> <C>
[INGRAM PO# 10-56861 PURCHASE ORDER
MICRO
LOGO] PAGE 1 PLEASE ACKNOWLEDGE THIS ORDER
PROMPTLY AND ADVISE SHIPPING DATE. BILL
VENDOR # VENDOR OF LADING MUST ACCOMPANY INVOICE.
9013 1 S
LUCKMAN INTERACTIVE, INC. H IMPORTANT
2801 WEST COAST HIGHWAY #290 I INGRAM MICRO (FREMONT) THE PURCHASE ORDER NUMBER MUST
NEWPORT BEACH, CA 92663 P 41490 BOYCE RD. BLDG. D APPEAR ON ALL INVOICES, SHIPPING
FREMONT, CA 94538-3113 PAPERS AND PACKAGES. PACKAGING SLIP
MUST ACCOMPANY SHIPMENT. INVOICE
T EACH PURCHASE ORDER SEPARATELY.
O
- ----------------------------------------------------------------------------------------------------------------------------------
NUMBER VENDOR # VEND. TELEPHONE NO. P.O. DATE DELIVERY DATE PAYMENT TERMS
56861-5 9013 714-548-7200 02/25/97 NET 45 U.S. DOLLARS
- ----------------------------------------------------------------------------------------------------------------------------------
ID NO. CANCEL DATE ???? ???? SHIP TO NO. SHIPPING INSTRUCTIONS SHIP VIA FREIGHT TERMS B#
- ----------------------------------------------------------------------------------------------------------------------------------
[ILLEGIBLE] [ILLEGIBLE] [ILLEGIBLE] [ILLEGIBLE] [ILLEGIBLE] [ILLEGIBLE]
- ----------------------------------------------------------------------------------------------------------------------------------
AUTO FAX PO
** EA 901323 WIN-32 UNINSTALLER V4.0 & BEST OF THE DSK3 ** **
UB-HM-10-FD NET BUNDLE SINGLE 1-DOC
** EA 901304 MAC NET COMMANDER INTERNET SUITE CROM ** **
NC-MC-10-FD V1.0 FOR MAC
VENDORS PLEASE NOTE ANY CHANGES IN PRICE OR TERMS NEED APPROVAL BEFORE SHIPMENT
- ----------------------------------------------------------------------------------------------------------------------------------
** MERCHANDISE SHIPPED ON THIS PURCHASE ORDER NOT IN
AGREEMENT WITH THE SPECIFICS AS OUTLINED ABOVE WILL BE
RETURNED UNLESS PRIOR APPROVAL HAS BEEN OBTAINED **
SIGNATURE________________________________________________________
</TABLE>
<PAGE> 134
<TABLE>
<CAPTION>
<S> <C> <C> <C>
[INGRAM PO# 10-56861 PURCHASE ORDER
MICRO
LOGO] PAGE 1 PLEASE ACKNOWLEDGE THIS ORDER
PROMPTLY AND ADVISE SHIPPING DATE. BILL
VENDOR # VENDOR OF LADING MUST ACCOMPANY INVOICE.
9013 1 S
LUCKMAN INTERACTIVE, INC. H IMPORTANT
2801 WEST COAST HIGHWAY #290 I INGRAM MICRO THE PURCHASE ORDER NUMBER MUST
NEWPORT BEACH, CA 92663 P CONSOLIDATION CENTER APPEAR ON ALL INVOICES, SHIPPING
48949 WARM SPRINGS BLVD. PAPERS AND PACKAGES. PACKAGING SLIP
FREMONT CA 94539 MUST ACCOMPANY SHIPMENT. INVOICE
T EACH PURCHASE ORDER SEPARATELY.
O
- ----------------------------------------------------------------------------------------------------------------------------------
NUMBER VENDOR # VEND. TELEPHONE NO. P.O. DATE DELIVERY DATE PAYMENT TERMS
56862-6 9013 714-548-7200 02/25/97 NET 45 U.S. DOLLARS
- ----------------------------------------------------------------------------------------------------------------------------------
ID NO. CANCEL DATE ???? ???? SHIP TO NO. SHIPPING INSTRUCTIONS SHIP VIA FREIGHT TERMS B#
- ----------------------------------------------------------------------------------------------------------------------------------
[ILLEGIBLE] [ILLEGIBLE] [ILLEGIBLE] [ILLEGIBLE] [ILLEGIBLE] [ILLEGIBLE]
- ----------------------------------------------------------------------------------------------------------------------------------
AUTO FAX PO
** EA 901323 WIN-32 UNINSTALLER V4.0 & BEST OF THE DSK3 ** **
UB-NM-10-FD WEB BUNDLE SINGLE 1-DOC
** EA 901304 MAC NET COMMANDER INTERNET SUITE CROM ** **
NC-MC-10-FD V1.0 FOR MAC
VENDORS PLEASE NOTE ANY CHANGES IN PRICE OR TERMS NEED APPROVAL BEFORE SHIPMENT
- ----------------------------------------------------------------------------------------------------------------------------------
** MERCHANDISE SHIPPED ON THIS PURCHASE ORDER NOT IN
AGREEMENT WITH THE SPECIFICS AS OUTLINED ABOVE WILL BE
RETURNED UNLESS PRIOR APPROVAL HAS BEEN OBTAINED **
SIGNATURE________________________________________________________
KEITH FITZGERALD
</TABLE>
<PAGE> 135
GT INTERACTIVE SOFTWARE - PURCHASE REQUISITION WORKSHEET PAGE 1
!!! PACKING LIST MUST ACCOMPANY SHIPMENT OR SHIPMENT WILL BE REFUSED!!!
PRW #: 4832 Requisition #: 04029803 PO #: 04044576 Date: 2/24/97
<TABLE>
<S> <C> <C> <C>
Vendor #: 0506
Vendor Name: Luckman Interactive Payment Terms: 30 Days after receipt of goods
Address: 1055 West 7th Street FOB: ORIGIN
Los Angeles, California 91107 Return: Possible exchange
Contact Name: Kim Weidmark Royalty: Paid 45 days after/60 days of sale
Phone: 213-614-0966 x 122 Requested Ship Date: Immediate
FAX: 213-614-1929
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
GTIS Control Vendor Vendor Software Product Cost Units Extended
Selection # LOC # UPC # Part # Class Title Per Unit Ordered Cost Royalty
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
04-31724 000000 78461942012 3 Not Available 30 Uninstaller 4.0 ** ** **
- --------------------------------------------------------------------------------------------------------------------------------
END OF ORDER END OF ORDER END OF ORDER END OF ORDER END OF ORDER Total: ** **
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Approval: Approval: [INITIALS] Approval: [INITIALS]
-------------- ------------ ------------
Administration ???????? Finance
Shipping Method: Contact Traffic Dept at 212-726-6519/6960 to make shipping
arrangements, give carton/pallet amounts total weights.
Please FAX copies of Packing Lists to Traffic Department at
212-726-4250 BEFORE SHIPPING.
Delivery Carrier/Contact Receiving Dept. @ 908 248-5445 to
make delivery appointment.
Ship to: GT Interactive Software
1 Nixon Lane
Edison, New Jersey 08817
Tel: 988-248-5445/Rick Pater
<PAGE> 136
GT INTERACTIVE SOFTWARE - PURCHASE REQUISITION WORKSHEET PAGE 1
!!! PACKING LIST MUST ACCOMPANY SHIPMENT OR SHIPMENT WILL BE REFUSED!!!
PRW #: 4801 Requisition #: 04029745 PO #: 04044459 Date: 2/14/97
<TABLE>
<S> <C> <C> <C>
Vendor #: 0506
Vendor Name: Luckman Interactive Payment Terms: 30 Days after receipt of goods
Address: 1055 West 7th Street FOB: ORIGIN
Los Angeles, California 91107 Return: Possible exchange
Contact Name: Kim Weidmark Royalty: Paid 45 days after/60 days of sale
Phone: 213-614-0966 x 122 Requested Ship Date: Immediate
FAX: 213-614-1929
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
GTIS Control Vendor Vendor Software Product Cost Units Extended
Selection # LOC # UPC # Part # Class Title Per Unit Ordered Cost Royalty
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
04-31724 000000 78461942012 3 Not Available 30 Uninstaller 4.0 ** ** **
- --------------------------------------------------------------------------------------------------------------------------------
END OF ORDER END OF ORDER END OF ORDER END OF ORDER END OF ORDER Total: ** **
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Approval: Approval: [INITIALS] Approval: [INITIALS]
-------------- ------------ ------------
Administration ???????? Finance
Shipping Method: Contact Traffic Dept at 212-726-6519/6960 to make shipping
arrangements, give carton/pallet amounts total weights.
Please FAX copies of Packing Lists to Traffic Department at
212-726-4250 BEFORE SHIPPING.
Delivery Carrier/Contact Receiving Dept. @ 908 248-5445 to
make delivery appointment.
Ship to: GT Interactive Software
1 Nixon Lane
Edison, New Jersey 08817
Tel: 988-248-5445/Rick Pater
<PAGE> 137
GT INTERACTIVE SOFTWARE - PURCHASE REQUISITION WORKSHEET PAGE 1
!!! PACKING LIST MUST ACCOMPANY SHIPMENT OR SHIPMENT WILL BE REFUSED!!!
PRW #: 4749 Requisition #: 04029665 PO #: 04044402 Date: 2/6/97
<TABLE>
<S> <C> <C> <C>
Vendor #: 0506
Vendor Name: Luckman Interactive Payment Terms: 30 Days after receipt of goods
Address: 1055 West 7th Street FOB: ORIGIN
Los Angeles, California 91107 Return: Possible exchange
Contact Name: Kim Weidmark Royalty: Paid 45 days after/60 days of sale
Phone: 213-614-0966 x 122 Requested Ship Date: Immediate
FAX: 213-614-1929
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
GTIS Control Vendor Vendor Software Product Cost Units Extended
Selection # LOC # UPC # Part # Class Title Per Unit Ordered Cost Royalty
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
04-31724 000000 78461942012 0 Not Available 30 Uninstaller 4.0 ** ** **
- --------------------------------------------------------------------------------------------------------------------------------
END OF ORDER END OF ORDER END OF ORDER END OF ORDER END OF ORDER Total: ** **
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Approval: Approval: [INITIALS] Approval: [INITIALS]
-------------- ------------ ------------
Administration ???????? Finance
Shipping Method: Contact Traffic Dept at 212-726-6519/6960 to make shipping
arrangements, give carton/pallet amounts total weights.
Please FAX copies of Packing Lists to Traffic Department at
212-726-4250 BEFORE SHIPPING.
Delivery Carrier/Contact Receiving Dept. @ 908 248-5445 to
make delivery appointment.
Ship to: GT Interactive Software
1 Nixon Lane
Edison, New Jersey 08817
Tel: 988-248-5445/Rick Pater
<PAGE> 138
GT INTERACTIVE SOFTWARE - PURCHASE REQUISITION WORKSHEET PAGE 1
!!! PACKING LIST MUST ACCOMPANY SHIPMENT OR SHIPMENT WILL BE REFUSED!!!
PRW #: 4864 Requisition #: 04029851 PO #: 04044611 Date: 2/26/97
<TABLE>
<S> <C> <C> <C>
Vendor #: 0506
Vendor Name: Luckman Interactive Payment Terms: 30 Days after receipt of goods
Address: 1055 West 7th Street FOB: ORIGIN
Los Angeles, California 91107 Return: Possible exchange
Contact Name: Kim Weidmark Royalty: Paid 45 days after/60 days of sale
Phone: 213-614-0966 x 122 Requested Ship Date: Immediate
FAX: 213-614-1929
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
GTIS Control Vendor Vendor Software Product Cost Units Extended
Selection # LOC # UPC # Part # Class Title Per Unit Ordered Cost Royalty
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
04-31724 000000 78461942012 0 Not Available 30 Uninstaller 4.0 ** ** **
- --------------------------------------------------------------------------------------------------------------------------------
END OF ORDER END OF ORDER END OF ORDER END OF ORDER END OF ORDER Total: ** **
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Approval: Approval: [INITIALS] Approval: [INITIALS]
-------------- ------------ ------------
Administration ???????? Finance
Shipping Method: Contact Traffic Dept at 212-726-6519/6960 to make shipping
arrangements, give carton/pallet amounts total weights.
Please FAX copies of Packing Lists to Traffic Department at
212-726-4250 BEFORE SHIPPING.
Delivery Carrier/Contact Receiving Dept. @ 908 248-5445 to
make delivery appointment.
Ship to: GT Interactive Software
1 Nixon Lane
Edison, New Jersey 08817
Tel: 988-248-5445/Rick Pater
<PAGE> 1
Exhibit 11.1 Statement Regarding Computation of Net Income Per Share
Computation of Per Share Income (Loss)
<TABLE>
<CAPTION>
For the three months ended For the six months ended
June 30, June 30,
------------------------------ ------------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Earnings per Common and
Common Equivalent Share:
Average Market Price/ Initial
Public Offering Price $ 14.85 $ 16.00 $ 14.81 $ 16.00
Weighted Average Common
Shares Outstanding During Period: 12,178,000 1,223,000 12,050,000 1,223,000
Shares of Common stock issued
within the last twelve months
preceding the initial filing date - 1,272,000 - 1,272,000
------------ ------------ ------------ ------------
12,178,000 2,495,000 12,050,000 2,495,000
Common Stock Equivalents:
Common Stock options and warrants
granted within the last twelve months
preceding the initial filing date - 1,375,000 - 1,375,000
Preferred Stock convertible into Common
Stock and sold within the last twelve months
preceding the initial filing date - 4,019,000 - 4,019,000
Incremental number of Shares arising
from outstanding Common Stock
options and warrants - - - -
------------ ------------ ------------ ------------
- 5,394,000 - 5,394,000
Weighted average Common and Common
Equivalent Shares 12,178,000 7,889,000 12,050,000 7,889,000
Net income (loss) for period $ (6,706,000) $ (1,212,000) $ (5,374,000) $ (2,229,000)
Income (loss) per Share $ (0.55) $ (0.15) $ (0.45) $ (0.28)
</TABLE>
25
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1997 AND THE RELATED CONSOLIDATED
STATEMENTS OF OPERATIONS FOR THE SIX MONTHS IN THE PERIOD ENDED JUNE 30, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 22,646
<SECURITIES> 6,869
<RECEIVABLES> 27,351
<ALLOWANCES> 3,398
<INVENTORY> 1,671
<CURRENT-ASSETS> 56,282
<PP&E> 2,252
<DEPRECIATION> 520
<TOTAL-ASSETS> 58,245
<CURRENT-LIABILITIES> 16,173
<BONDS> 0
0
0
<COMMON> 53,729
<OTHER-SE> (14,518)
<TOTAL-LIABILITY-AND-EQUITY> 58,245
<SALES> 36,980
<TOTAL-REVENUES> 36,980
<CGS> 8,088
<TOTAL-COSTS> 8,088
<OTHER-EXPENSES> 33,764
<LOSS-PROVISION> 320
<INTEREST-EXPENSE> (919)
<INCOME-PRETAX> (3,953)
<INCOME-TAX> 1,421
<INCOME-CONTINUING> (5,374)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,374)
<EPS-PRIMARY> (.45)
<EPS-DILUTED> (.45)
</TABLE>
