UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/X/ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended September 30, 1995 or
/ /
Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from to
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Commission file number: 0-14025
SOFTWARE PUBLISHING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-2707010
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3165 Kifer Road, Santa Clara, California 95051
(Address of principal executive offices)
Registrant's telephone number, including area code:
(408) 986-8000
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange
on which registered
None None
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001 per share
Preferred Share Purchase Rights
(Title of Class)
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. Yes X No
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Indicate by check mark if disclosure of delinquent filers to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of the registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of this 10-K or any amendment to this Form
10-K.
The aggregate market value of the voting stock held by non-affiliates of
the registrant, based upon the closing sale price of the Common Stock on
December 1, 1995 as reported on the Nasdaq National Market, was approximately
$39,578,386. Shares of
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Common Stock held by each officer and director and by each person who owns 5% or
more of the outstanding Common Stock have been excluded in that such persons may
be deemed to be affiliates. This determination of affiliate status is not
necessarily a conclusive determination for other purposes.
As of December 1, 1995, the registrant had outstanding 12,528,490 shares of
Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Parts of the following documents are incorporated by reference to Parts II,
III and IV of this Form 10-K Report: (1) Proxy Statement for registrant's Annual
Meeting of Stockholders to be held January 23, 1996 (Part III), and (2)
registrant's Annual Report to Stockholders for the fiscal year ended September
30, 1995 (Parts II and IV).
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PART I
ITEM 1. BUSINESS.
General
Software Publishing Corporation ("Software Publishing" or the "Company"),
which was incorporated in California in 1980 and reincorporated in Delaware in
1991, is an international supplier of business productivity software, dedicated
to delivering personal computing software with high functionality and ease of
use. The Company develops and markets software solutions that enable business
professionals to access, understand and communicate information visually. The
Company currently offers products which operate on the DOS, Windows and Windows
95 operating systems for IBM personal computers and compatibles.
The Company's principal product family is the Harvard(1) line of
graphical information presentation products and ASAP. ASAP, the first product
based upon the technology acquired as a result of the purchase of Digital Paper,
Inc. in March 1995, was introduced late in the fourth quarter of fiscal 1995. In
fiscal 1995, the Company introduced six new or enhanced products including ASAP.
Products enhanced in fiscal 1995 as Windows 95 application products included
Harvard Graphics version 4.0, Harvard ChartXL version 2.0 and Harvard Spotlight
version 2.0. Other new products introduced in fiscal 1995 include Harvard
Montage and OnFile. The Company also offers word processing and other business
productivity software products.
The majority of the Company's products are sold through corporate and
reseller channels. The corporate sales group works closely with corporate and
government customers as well as information center managers, while the reseller
sales group is responsible for all sales to distributors, resellers and original
equipment manufacturers ("OEMs"). Sales to corporate accounts are made
principally through the reseller channel.
Reseller computer stores include major national dealers such as Egghead
Discount Software, Stream International, Inc., Softmart Inc. and Software
Spectrum, Inc. The Company's major distributors include Ingram Micro Inc.,
Merisel Computer Products, Inc. and the
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(1) Harvard, Harvard Graphics and the Software Publishing Corporation logo are
registered trademarks and Harvard ChartXL, Harvard Montage, Harvard
Spotlight, Intelligent Formatting, and ASAP are trademarks of Software
Publishing. The Harvard product line is a group of products from Software
Publishing Corporation and has no connection with Harvard University. All
trademarks referenced herein are the property of the respective owners.
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Computer 2000 group of companies. Sales to resellers and distributors comprised
approximately 84%, 80% and 92% of net revenues in fiscal 1995, 1994 and 1993,
respectively. Upgrades to the Company's products are sold through resellers and
distributors, as well as directly by the Company to end users.
In June 1994, the Company completed the sale of its Superbase product
line to Computer Concepts Corporation ("CCC"), in exchange for 2,031,175 shares
of the purchaser's restricted common stock, which has increased to 2,297,842
shares as of September 1995 due to penalties for late registration. On September
29, 1995, CCC filed a Form S-1 registration statement under the Securities Act
of 1933, registering the 2,297,842 shares of Common Stock of CCC held by the
Company. Because of uncertainties regarding the ultimate realization of a
portion or all of the value of these shares, the Company has not recognized a
gain on this transaction in its financial statements at this time. As of
September 30, 1995, shares of Computer Concept Corporation were trading on the
Nasdaq National Market at $2.00 per share. Net revenues from the sale of
Superbase products represented 0%, 3% and 8% of the Company's total net revenues
for fiscal 1995, 1994 and 1993, respectively.
Recent Developments
Acquisition
The Company acquired Digital Paper, Inc., a developer of visual
communications software technology, during the second quarter of fiscal 1995 for
approximately $5.0 million in cash and stock in installment payments and up to
an additional $1.5 million in cash upon the achievement of certain contingent
unit, revenue and technical milestones over the next three years. As a result of
this acquisition, the Company recorded a one time charge of $4.8 million in the
second quarter of fiscal 1995 for the portion of the transaction related to
in-process research and development. The Company will expense the milestone
payments at the time of payment. In the third quarter of fiscal 1995, the
Company paid the first $2.0 million installment payment and in the fourth
quarter of fiscal 1995 the Company paid the first milestone payment of $250,000.
Restructuring
In fiscal years 1995, 1994, and 1993, the Company implemented
reorganizations and reduced its worldwide workforce to address the changing
market dynamics of the application software industry. As a result of these
reorganizations, the Company has centralized its research and development,
finance and manufacturing activities, consolidated its sales and marketing
functions and outsourced to
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third parties its telesales, support and customer service activities.
In the third quarter of fiscal 1995, the Company reversed $6.0 million
in prior period restructuring charges upon the negotiated termination of the
lease on its headquarters facility in Santa Clara, California. In the fourth
quarter of fiscal 1995, the Company incurred a restructuring charge of $5.9
million, which included $1.4 million for the reduction in worldwide work force
and severance and $4.5 million for excess facilities, equipment and product
abandonment, and other expenses. As a result of the restructuring in fiscal 1995
the Company has provided for the planned reduction of its work force by
approximately 45% to 110 employees during the first quarter of fiscal 1996.
Changes in Executive Officers
During fiscal 1995 there were several changes in Executive Officers:
Daniel Fraisl was elected Vice President of Research and Development in
September 1995, replacing Eagle Berns who left the Company and in July 1995
Bradford D. Peppard joined the Company as Vice President of North American
Marketing, replacing Chris Randles who left the Company.
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Product Information
The Company's Harvard line of graphics and presentation products are
designed to provide business professionals with a variety of easy to use
products for analyzing and presenting information. These users require desktop
software solutions to manage and present information visually. In fiscal 1995,
1994 and 1993 sales of presentation related products accounted for 89%, 87% and
83% of total net revenues, respectively. These products include Harvard Graphics
for Windows 95, Windows and DOS, Harvard ChartXL, and Harvard Spotlight.
In fiscal 1995, the Company introduced six new products. ASAP was
introduced in September of 1995. The implementation of this new technology is a
continuation and extension of the Company's presentation centric product line.
Sales of ASAP accounted for approximately 7.0% of total net revenues in fiscal
1995.
The Company's primary products are discussed below.
ASAP 1.0: A presentation application that supports even inexperienced users
in the creation of a presentation in a few minutes. Built on technology called
Intelligent Formatting, ASAP allows the user to convert text created in ASAP's
outliner or in the user's word processing program into a professional,
well-designed presentation. The user is able to click on the Preview Tab and
select from 22 pre-designed Intelligent Layouts, 13 Intelligent Designs, and 17
Intelligent Color Schemes.
Harvard Graphics 4.0 for Windows 95: An easy-to-use Windows presentation
graphics package offering the Advisor System that includes an interactive Design
Checker, Quick Presentations, Design Tips, and Quick Tips that help users create
more effective presentations. This product also includes Harvard Montage Lite, a
powerful image browser. Being Windows 95 compliant and having a similar look and
feel to Microsoft Office 95, Harvard Graphics 4.0 enables users to benefit from
a common user interface among all compliant applications. Harvard Graphics 4.0
also exceeds the Windows 95 requirements for OLE 2.0 technology.
Harvard Graphics 3.0 for Windows: This product offers a range of new
capabilities that focus on helping users create and deliver more effective
presentations. For example, Version 3.0 expands on the Harvard Graphics Advisor
feature introduced in the previous version, and now offers a complete Advisor
System. The Advisor System is comprised of pre-designed Quick Presentations, or
sample presentations with common business themes that users can customize; Quick
Advice, provides users with "how to" advice on the selection and effective use
of presentation styles, output devices and chart types; and an interactive
Design Checker checks a user's
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presentation against a set of design rules, and offers specific design
suggestions to improve a slide's appearance. In addition, Version 3.0 provides
Quick Tips and Design Tips in all views and expands the use of Quick Looks
throughout the product. Other enhancements to Harvard Graphics 3.0 include an
Animation Player with 15 ready-made clips.
Harvard Graphics version 3.0 also allows users to launch applications
directly from the customizable icon bar, giving them quick and easy access to
applications on their desktop. Users can now add most DOS or Windows application
program icon to any of the customizable icon bars. For example, a user can add
an icon for a spreadsheet application that in turn can automatically load a
specific file. This version is also e-mail enabled, allowing users to quickly
e-mail a presentation without exiting Harvard Graphics. The product supports
both VIM and MAPI protocols.
Harvard ChartXL 2.0 for Windows 95: A charting application that gives users
of spreadsheet software and other major Windows based applications a solution
for analyzing, viewing and presenting their data more effectively. The new
version offers more than 300 unique two- and three-dimensional business,
statistical, and technical chart types, coupled with powerful spreadsheet
capabilities and "what if" analysis tools.
Harvard Spotlight 2.0 for Windows 95: A product designed to help presenters
control the flow and delivery of their electronic presentations. Using Harvard
Spotlight, presenters can easily set up different views, including current
audience slide, presentation notes, the next slide preview, a navigation bar,
and a presentation status panel. During an electronic presentation, the user has
access to all this information, while the audience sees only the current slide.
Harvard Spotlight 2.0 now offers a dual-display VGA PCMCIA card solution for
notebook computer users. The new PCMCIA card eliminates the need for two
machines using a cable set-up.
Harvard Montage for Windows: A product that provides users of Harvard
Graphics, PowerPoint and Freelance Graphics with a first-time solution for
cataloging and viewing presentations and slides. Harvard Montage also helps
users quickly organize and find clip art, photos, images, sound, animation and
video clips for use in any Windows application. Harvard Montage ships with a
CD-ROM that includes more than 2,000 clip art images, a variety of photographic
and textured backgrounds, and presentation templates in Harvard Graphics,
Freelance Graphics and PowerPoint formats.
Superbase Desktop and Other Database Product: This category included
Superbase, Superbase SQL Library and InfoAlliance. The Company completed the
sale of its Superbase product line to Computer Concepts Corporation in June
1994, as a part of the Company's restructuring efforts. The Superbase relational
database
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products, which included Superbase 2.0 for Windows and Superbase SQL Library
1.1, were designed for corporate management information systems organizations
and other business users, as well as the independent or corporate applications
developer. In fiscal 1995 sales of these products were negligible. In fiscal
1994 and 1993, sales of these products accounted for 4% and 8% of total net
revenues, respectively.
Word Processing and Other: The Company's word processing and other products
are designed for business professionals who use PCs and want to enhance the
efficiency of their work. These products provide users with functionality and
fast results for a minimal investment of learning time. The business
professional may be part of a work group where other standard software and
hardware products are used. These Software Publishing products provide
streamlined data interchange capabilities to facilitate such configurations. Net
revenues from the sales of word processing and other products were 3%, 7% and 7%
in fiscal 1995, 1994 and 1993 respectively. This category includes Professional
Write, Professional Write PLUS, OfficeWriter, and Professional File.
Marketing
Software Publishing Corporation is an international supplier of business
productivity software for personal computers. The Company currently develops and
markets software solutions that enrich the user's ability to access, understand
and communicate information to make more effective decisions, including the
industry leading Harvard Graphics product line.
The Company's Harvard Graphics, Harvard ChartXL, Harvard Spotlight and
other products are directed toward the business professional who uses
application software to increase his or her productivity, yet requires that the
program demand a minimum amount of training time. The customer may also be an
experienced computer user who requires software with a high degree of
sophistication and functionality. These product lines are also targeted at the
corporate management information systems organization manager who services the
needs for accessing, manipulating, updating and presenting data from multiple
sources. The Company's new product, ASAP, is built around a technology called
Intelligent Formatting, and allows users to instantly convert text into a
professional, well-designed presentation.
The Company's advertising programs for its product lines are designed to
increase corporate and product brand awareness. The Company's advertising
targets new customers, its installed customer base, and with competitive upgrade
promotions, its competitors' customers. The Company advertises primarily through
business trade periodicals, direct mailing and participation in trade shows. The
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Company also promotes its products to corporate customers with in-house training
and direct mail as well as offering volume purchase discounts and site licenses.
The Company implements promotions to support distributors' and resellers' sales
efforts including advertising, rebates, training and price promotions; and it
engages in joint promotional activities with personal computer, peripheral and
other manufacturers.
The Company translates many of its products, including the documentation,
software and promotional materials, for international markets. Advertising and
promotional programs are customized for local markets where necessary.
Sales and Distribution
The Company's primary channel of worldwide distribution is through software
distributors and resellers. The Company's North American sales organization is
organized into three groups: the channel group, the original equipment
manufacturers and the corporate sales group. The channel group assists
distributors and resellers in selling, promoting and merchandising the Company's
products. This group is responsible for sales to distributors and resellers, and
also provides training to the resellers. The original equipment manufacturer
sales group is responsible for sales to hardware and software original equipment
manufacturers. The corporate sales group works closely with corporate and
government evaluators of software and information center managers to meet the
software demands of their personal computer users. Programs include in-house
corporate training seminars, assistance with system implementation, product
updates and the integration of the Company's products with existing customer
systems. Corporate and government sales are fulfilled principally through
resellers and distributors. The Company also offers site licenses and volume
purchase discounts to its corporate customers.
Sales to resellers are made directly by the Company, as well as by
distributors, who purchase directly from the Company at volume discounts. In
fiscal 1995, the Company's principal distributor worldwide was Ingram Micro
Inc., which accounted for approximately 31% of total net revenues. Principal
distributors for fiscal years 1994 and 1993 were Ingram Micro, Inc. and Merisel
Computer Products, Inc., which accounted for approximately 22% and 21%, and 8%
and 16% of total net revenues, respectively. The Company's principal reseller
was Egghead Discount Software, Inc., which accounted for less than 10% of net
revenues in fiscal years 1995, 1994, and 1993.
International sales (sales outside of North America) are made primarily
through the Company's foreign sales subsidiaries to distributors and resellers.
In fiscal 1995, 1994 and 1993,
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international sales accounted for approximately 36%, 33% and 34%, respectively,
of the Company's total net revenues. The Company maintains sales offices in the
United Kingdom and Germany. As part of the restructuring in fiscal 1995, the
Company will close its sales office in Singapore. Fiscal 1995 international net
revenues decreased approximately 45% compared to fiscal 1994 international net
revenues. Refer to Note 10 of Notes to Consolidated Financial Statements.
International sales include localized versions of selected products, as
well as the English language versions of the Company's products throughout
Europe, Latin America and the Asia/Pacific region. Localized versions include
German, French, Spanish and Italian. The Company invoiced approximately 27% of
its worldwide sales in fiscal 1995 in foreign currencies, and expects this
practice to continue. Accordingly, the Company is subject to exchange rate
fluctuations. During fiscal 1995, the Company hedged certain contractual
obligations denominated in foreign currency. Refer to Note 2 of Notes to
Consolidated Financial Statements. The Company's exposure for foreign currency
exchange gains and losses is partially mitigated as the Company incurs operating
expenses in most of the currencies in which it invoices customers.
The Company has a general return policy for its North American resellers
and distributors whereby they may return any products previously purchased from
the Company, provided that the aggregate purchase price for such returned
products does not exceed ten percent of the reseller's or distributor's net
purchases for the prior quarter. In addition to this return allowance, North
American distributors and resellers may generally exchange any discontinued
products within 90 days of notification of discontinuation for products of equal
or greater value. For international distributors and resellers, the general
return policy is the same as the general return policy for North American
resellers and distributors except that returns must be completed within the
first month of the same quarter in which the sale occurred. For international
distributors and resellers, the policy for the exchange of obsolete products
generally allows returns within 30 days after the announcement of a product's
obsolescence, provided that the product was shipped within 30 days of the
announcement. The Company's accrual for an estimate of these returns and
exchanges is included in the line item entitled "Accounts receivable, net of
allowance for doubtful accounts and returns and exchanges" on the Company's
balance sheet.
The Company typically ships products within several days after receipt of
orders, which is customary in the personal computer applications software
business. Accordingly, the Company does not believe that backlog is a meaningful
indicator of future business.
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Customer Support
Software Publishing Corporation provides free technical support for a
period of 30 days from the first call to technical support from customers. The
Company reserves for the cost of this support at the time of sale. After this
initial period, technical support is available for purchase under a variety of
value-added support programs.
Competition
The market for standard personal computer applications software is highly
competitive and has been subject to rapid development and change. The Company
has experienced a shift in its users from DOS to the Windows platform and
expects increased competition. Some of the Company's competitors have introduced
suites of products which include products that directly compete with the
Company's products and which are bundled with other office software programs by
the same or multiple competitors. These suite products are sold at an
all-inclusive price. These factors, combined with reduction in prices of
computer hardware, the decline in economic conditions and market uncertainties
have resulted in significant downward pressures on average selling prices for
the Company's products.
The Company's primary competitor is the independent software supplier
Microsoft Corporation. In addition, the Company could face additional
competition from independent software companies not currently in the personal
computer applications software market, but which may decide to enter this market
in the future.
The Company believes that the principal competitive factors in its market
include pricing (which includes individual product pricing, standard and
competitive upgrade pricing, licensing and volume discounting), product
functionality and ease of use, inclusion in suites of office products, brand
name recognition, availability and quality of training and support, quality of
documentation, operating platform availability and integration. While the
Company believes that its products compete favorably in most of these
categories, the Company does not at this time offer a suite of products, nor are
its products sold as part of a suite. The Company's ability to compete depends
on its ability to enhance its existing products, to select new markets to enter
and to develop new products that adapt to change in computer hardware and
operating systems. The Company believes that competition will continue to
intensify in the future and that new product introductions, further price
reductions, strategic alliances and other actions by competitors could
materially and adversely affect the Company's competitive position.
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Product Development
The personal computer software industry is characterized by rapid
technological change which requires a continuing high level of expenditures for
the enhancement of existing products and the development of new software
products. The Company's current product development activities include enhancing
and updating its present software packages and designing new products.
Accordingly, the Company is committed to both the development of new products
and the enhancement of existing products.
During fiscal 1995 the Company introduced six new products of which three
were Windows 95 based applications products that were released in the fourth
quarter of fiscal 1995. Also in the fourth quarter of fiscal 1995, the Company
released the first product based on the Intelligent Formatting technology
acquired as a result of the purchase of Digital Paper, Inc. Intelligent
Formatting technology is expected to provide the base for a range of products
focussing on word processing, spreadsheets, electronic mail, conferencing,
internet, scheduling and calendaring. Intelligent Formatting products automate
the layout and design of printed and electronic documents, providing significant
power and ease of use in a broad range of business and consumer applications.
The Company intends to acquire technology through license, purchase and
strategic partnerships. There can be no assurance that the Company's product
development efforts or product introductions will result in commercially
successful products.
The Company's revenues are based on a combination of products developed
internally, acquired products and products based on licensed technology. The
Company intends to continue a flexible approach to the development, acquisition
and release of new products and technologies, recognizing that the rapid changes
in the software industry require ever shorter development cycles and ever higher
levels of product quality and functionality. The Company plans to continue to
develop and acquire software technology and products to enhance and expand its
product offerings.
The Company spent approximately $11.9 million, $17.3 million and $30.0
million during fiscal 1995, 1994 and 1993, respectively, for product development
and enhancement activities. These expenditures represented approximately 38%,
28% and 29% of total net revenues in fiscal 1995, 1994 and 1993, respectively.
This percentage increase was primarily because the level of expense was absorbed
by lower than expected revenue levels. All product development costs were
expensed as incurred.
Production
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The Company's product development staff establishes the final product
testing criteria and produces the master diskettes and user manual for its
proprietary software, as part of its product development activities. Duplication
of the master diskettes and user manual, production of the packaging material
and assembly of the disk and manual into the final package are performed by
third parties to the Company's specifications. After packaging, the products are
shipped by third parties.
To date, the Company has not experienced any material difficulties or
delays in production of its software products and related documentation. Media
for the Company's software, primarily 3-1/2 inch micro-diskettes and 5-1/4 inch
floppy disks are purchased by subcontractors of the Company and are available
from multiple sources of supply.
Product Protection and Licensing
The Company regards its software as proprietary and utilizes a combination
of patents, copyrights, trademarks and trade secret laws to establish and
protect its proprietary interest and maintain the confidentiality of its
software products. The Company owns and has applied for registration of various
trademarks and copyrights.
The Company copyrights its software and related user documentation, but the
copyright laws afford only limited practical protection against duplication of
the media embodying the programs and the related user manuals. Monitoring and
identifying unauthorized use of such broadly disseminated products as personal
computer software is difficult. The Company expects software piracy to be a
problem for the packaged software industry. The Company relies principally upon
software engineering and marketing skills to protect its market position, rather
than on copyright or trade secret protection.
The Company retains exclusive ownership rights to all software both
developed and commercially distributed by the Company except for those
components of the software that the Company licenses from third parties. All
such software offered by the Company is licensed and provided in object code
pursuant to either shrink-wrap license agreements or executed license agreements
which contain restrictions on disclosure and transferability.
In addition, the Company has from time to time licensed third parties to
use, modify, reproduce, sublicense, distribute and market certain of the
Company's software products or portions of its software products. Such licensed
software is provided in object code and, in certain limited circumstances,
source code, pursuant to agreements which contain restrictions on disclosure and
transferability.
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Employees
As of September 30, 1995, the Company had 210 full-time regular and
non-regular employees, of whom 62 were in product enhancement and development,
70 were in marketing, sales and customer support, 14 were in production and 64
were in general and administrative functions. Of the total, 157 employees were
located in North America and 53 internationally. In September 1995 the Company
announced a reduction in work force which will result in approximately a 45%
reduction in work force to approximately 110 employees during the first quarter
of fiscal 1996. Refer to Note 7 of the Notes to Consolidated Financial
Statements.
None of the Company's employees are subject to a collective bargaining
agreement, and the Company has never experienced a work stoppage. Software
Publishing believes that its employee relations are good. The Company believes
that its future success will depend, in part, on its ability to continue to
attract and retain highly skilled technical, sales, marketing and management
personnel.
Executive Officers of the Registrant
The executive officers of the Company, who are elected by and serve at the
discretion of the Board of Directors, and their ages as of November 30, 1995,
are as follows:
Officer
Name Age Position Since
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Fred M. Gibbons ..... 46 Chairman of the Board 1980
Irfan Salim .......... 43 President and Chief Executive Officer 1989
Miriam K. Frazer ..... 39 Vice President, Finance 1993
and Chief Financial Officer
Daniel Fraisl ........ 34 Vice President, Research & 1995
Development
Robert T. Iguchi ..... 44 Vice President, North 1994
American Sales & Service
Bradford Peppard ..... 40 Vice President, North American Marketing 1995
David MacDonald ...... 37 Vice President, International 1992
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There are no family relationships among directors or executive officers of
the Company.
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Mr. Gibbons has served as Chairman of the Board of Directors of the Company
since October 1992. He also served as Chairman of the Board of Directors from
August 1987 to December 1987. He served as Chief Executive Officer of the
Company from December 1987 to April 1994, as President from December 1987 to
October 1992 and as President and Chief Executive Officer of the Company from
May 1980 to August 1987. In addition, Mr. Gibbons served as acting Chief
Financial Officer of the Company from March 1987 through October 1987 and from
November 1989 through March 1990.
Mr. Salim has served as President and Chief Executive Officer of the
Company since April 1994. He served as President and Chief Operating Officer
from October 1992 to April 1994, and as Vice President and General Manager of
the International Division from April 1989 to October 1992. From October 1988 to
March 1989, Mr. Salim was a consultant with Beyond, Inc., an international
marketing software consulting firm, which he co-founded. Prior to that, Mr.
Salim was employed by Lotus Development Company, a computer software
manufacturer, as Vice President and General Manager PC Spreadsheet Division from
October 1987 to October 1988, and as Vice President and General Manager,
International Division from March 1984 to September 1987.
Ms. Frazer joined the Company as Vice President, Finance and Chief
Financial Officer in August 1993. Prior to that, Ms. Frazer was employed by
Telematics International, Inc., a networking and communications hardware and
software design and manufacturing company, as Chief Financial Officer from April
1990 and Corporate Secretary from May 1990 to July 1993, and as Vice President
Corporate Communications and Treasurer from June 1989 until March 1990. Prior to
her positions at Telematics, Ms. Frazer served as Director of Corporate
Communications at AT&T Paradyne, a worldwide data communications equipment
manufacturer, from June 1987 to May 1989.
Mr. Fraisl has served as Vice President, Research and Development since
September 1995, and Director of Research and Development since April 1995. Prior
to joining the Company, Mr. Fraisl was founder and President of Digital Paper
Inc., a mobile computing software company, from 1993 to 1995. From 1988 to 1933,
Mr Fraisl served as Manager and System architect for GO Corporation, a PDA
start-up.
Mr. Iguchi has served as Vice President, North American Sales and Service
since April 1994. He joined the Company in January 1991 as the Director of
Customer Service and Technical Support. From 1985 to 1990, Mr. Iguchi served as
Director of Customer Support Organization-Headquarters Operations for
Ungermann-Bass, a local area network company.
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Mr. Peppard has served as Vice President of North American Marketing since
July 1995. From June 1990 to July 1995 he was employed by Quarterdeck Office
Systems, a PC utility, internet and x-windows software company as Director of
Marketing. From 1987 to 1990, he served as Founder and president of Softmail
Corporation, a high-tech direct marketing agency.
Mr. MacDonald has served as Vice President, International since October
1992. He served as Director of European Business Development from May 1989 to
September 1992. Prior to joining the Company, Mr. MacDonald was employed by
Beyond, Inc., an international marketing software consulting firm, as Vice
President, European Operations from July 1988 to April 1989. Prior to that, Mr.
MacDonald was employed by Lotus Development Company as Director, International
Business Development from March 1988 to August 1988, and as General Manager,
International Business Development Group from March 1986 to March 1988.
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ITEM 2. PROPERTIES.
During fiscal 1995 the Company entered into a new lease agreement for
approximately 36,000 square feet of office space in downtown San Jose,
California, for an annual rent of approximately $525,000, effective January 1996
for its headquarters location, under a lease expiring in December 2000. This
lease includes two options to extend the lease, each for an additional two-year
term and an option to terminate a portion or the entire lease any time after
December 1998. In the third quarter of fiscal 1995, the Company terminated the
lease of office space in several buildings in Santa Clara, California facilities
except for approximately 95,000 square feet of office space. Of the 95,000
square feet of office space in the Santa Clara facility, the Company currently
occupies approximately half for which the lease will expire on December 31, 1995
and the Company has subleased the other half of the space for which the lease
expires on or before August 1996. The Company's North American corporate
executive, administrative, sales, marketing, and product development and support
activities are located at these facilities.
The Company leases space in the United Kingdom for its International
Division headquarters. The International Division's marketing and customer
support activities are located at facilities in Bracknell, United Kingdom. The
Company also leases space in Germany for its foreign sales offices. As part of
the restructuring in September 1995, the Company terminated its Singapore office
lease and has also closed all its sales offices in North America and Canada.
In the third quarter of fiscal 1995, the Company reversed $6.0 million in
prior period restructuring charges upon the negotiated termination of the lease
on its headquarters facility in Santa Clara, California. In the fourth quarter
of fiscal 1995, the Company incurred a restructuring charge of $1.5 million
representing obligations for excess facilities and equipment related costs at
the Company's headquarters facility in California, international offices in the
United Kingdom and certain other sales office locations in the United States.
The Company also recorded charges of $3.4 million and $15.4 million in fiscal
years 1994 and 1993, respectively for excess leased facilities. The increase in
excess lease space during fiscal years 1995, 1994 and 1993 resulted from
reductions in the Company's work force during each year. The Company moved to
its Santa Clara facilities in July 1991, vacating its prior headquarters in
Mountain View, California. Approximately 43,200 square feet of the Mountain View
facilities are still leased to the Company under leases expiring at various
dates through December 1995. Refer to Notes 7 and 11 of the Notes to
Consolidated Financial Statements.
16
<PAGE>
ITEM 3. LEGAL PROCEEDINGS.
The Company, Fred Gibbons and Irfan Salim were named as defendants in two
class action lawsuits initially filed in the United States District Court for
the Northern District of California in April and May 1993, which alleged
securities law violations in connection with disclosures by the Company. In
December 1994, the court approved the parties' settlement of the case and issued
an order of dismissal of the case. A settlement fund of $1.5 million was
established in accordance with the terms of settlement prior to July 15, 1994.
The Company's insurance carrier contributed approximately 70% of the settlement
fund
The Company is a defendant in certain other litigation. Management is of
the opinion that the ultimate outcome of this litigation will not have a
material effect on the future operations or financial condition of the Company.
In 1991 the Company received certain restricted stock upon the sale of a
product line. Subsequent to the sale, the Company and the buyer of the product
line entered into litigation. In fiscal 1994 the litigation was resolved and the
Company received an arbitration award of $2.6 million and the restricted stock
was sold resulting in income of $3.4 million.
17
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
18
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The information required by this Item is incorporated by reference to the
section entitled "Market Price of Common Stock" on page 24 of the Company's 1995
Annual Report to Stockholders.
ITEM 6. SELECTED FINANCIAL DATA.
The information required by this Item is incorporated by reference to the
section entitled "Selected Financial Data" on page 23 of the Company's 1995
Annual Report to Stockholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT
OF OPERATIONS.
The information required by this Item is incorporated by reference to the
section entitled "Management's Discussion and Analysis of Financial Condition
and Results of Operations" on pages 2 through 6 of the Company's 1995 Annual
Report to Stockholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by this Item is incorporated by reference to the
consolidated financial statements and notes thereto on pages 7 through 21 and to
the section entitled "Selected Quarterly Data (Unaudited)" on page 24 of the
Company's 1995 Annual Report to Stockholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
As of December 10, 1994, the Company appointed KPMG Peat Marwick LLP to
replace Price Waterhouse LLP as its independent accountants. Price Waterhouse
LLP has served as the Company's independent accountants for the fiscal years
1991 through 1994. The reports of Price Waterhouse LLP on the financial
statements for the fiscal years ended September 30, 1994 and 1993 contained no
adverse opinion or disclaimer of opinion and were not qualified or modified as
to uncertainty, audit scope or accounting principles. During the two most recent
fiscal years and during the subsequent interim period through December 9, 1994,
there were no disagreements with
19
<PAGE>
Price Waterhouse LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedures, nor did Price
Waterhouse LLP advise the Company of any concern or circumstances relating to
any such matter. In addition, the Company has not had any dispute with Price
Waterhouse LLP relating to its fees for services. The change in accountants was
approved by the Audit Committee of the Board of Directors and by the Board of
Directors.
The Company engaged KPMG Peat Marwick LLP as its new independent
accountants as of December 10, 1994. During the two most recent fiscal years and
through December 9, 1994, the Company has not consulted with KPMG Peat Marwick
LLP on any accounting or financial reporting matters.
-------------------------------
With the exception of the information incorporated by reference from the
1995 Annual Report to Stockholders in Parts II and IV of this Form 10-K, the
Company's 1995 Annual Report to Stockholders is not to be deemed filed as part
of this Report.
20
<PAGE>
PART III
Certain information required by Part III is omitted from this Report in
that the registrant has filed its definitive proxy statement pursuant to
Regulation 14A (the "Proxy Statement") not later than 120 days after the end of
the fiscal year covered by this Report, and certain information included therein
is incorporated herein by reference.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required by this Item is incorporated by reference to the
sections of the Company's Proxy Statement for the January 1996 Annual Meeting of
Stockholders entitled "Proposal One: Election of Directors," and "Other
Information Compliance with Section 16(a) of the Exchange Act."
The information concerning executive officers required by this Item is
incorporated by reference to the section in Part I hereof entitled "Executive
Officers of the Registrant."
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this Item is incorporated by reference to the
sections of the Company's Proxy Statement for the January 1996 Annual Meeting of
Stockholders entitled "Proposal One: Election of Directors - Compensation of
Directors," and "Other Information - Compensation of Executive Officers."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this Item is incorporated by reference to the
sections of the Company's Proxy Statement for the January 1996 Annual Meeting of
Stockholders entitled "Record Date and Principal Stockholders," and "Other
Information Share Ownership by Principal Stockholders and Management."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required by this item is incorporated by reference to page 11
of the Proxy Statement under heading "Certain Transactions".
21
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as a part of this Report:
1. Financial Statements. The following Consolidated Financial
Statements and Notes thereto of Software Publishing Corporation and Report of
Independent Auditors are incorporated by reference to pages 7 through 22 of the
Registrant's 1995 Annual Report to Stockholders:
Consolidated balance sheets - September 30, 1995
and 1994
Consolidated statements of operations - Years ended
September 30, 1995, 1994 and 1993
Consolidated statements of cash flows - Years ended September 30,
1995, 1994 and 1993
Consolidated statements of stockholders' equity - Years ended
September 30, 1995, 1994 and 1993
Notes to consolidated financial statements
Report of independent auditors
2. Financial Statement Schedule. The following financial statement
schedule of Software Publishing Corporation and Reports of Independent Auditors
on Financial Statement schedule for the years ended September 30, 1995, 1994 and
1993 are filed as part of this Report and should be read in conjunction with the
Consolidated financial statements and notes thereto of Software Publishing
Corporation.
Page
----
Consent of Independent Auditors S-1
Report on Financial Statement Schedule S-2
Report on Financial Statement Schedule and
Consent of Independent Auditors S-3
Schedule
22
<PAGE>
II Valuation and Qualifying Accounts and Reserves S-4
Schedules not listed above have been omitted because they are not
applicable, not required or the information required to be set forth therein is
included in the consolidated financial statements or notes thereto.
3. Exhibits. The following Exhibits are filed as part of, or
incorporated by reference into, this report:
3.1(F) Certificate of Incorporation, as amended.
3.2(J) Bylaws of Registrant, as amended.
4.1(F) Fourth Article of the Certificate of Incorporation
of Registrant (see Exhibit 3.1).
4.2(G) Preferred Shares Rights Agreement dated as of May
8, 1991 between the Registrant and The Bank of
America National Trust and Savings Association, as
Rights Agent.
4.3(H) Certificate of Designation of Preferences and
Rights of Series B Convertible Preferred Stock
filed July 19, 1991.
*10.1(A) Description of Registrant's Profit Sharing Plan.
*10.2(O) Description of Registrant's Executive Bonus Plan
for fiscal 1995.
10.3(K) Form of Registrant's Indemnity Agreement with
Officers and Directors.
*10.4(L) Employee Stock Purchase Plan, as amended.
*10.5(C) 1985 Incentive Stock Option Plan, as amended, and
forms of Incentive Stock Option Agreement and
Nonstatutory Stock Option Agreement.
23
<PAGE>
10.6(B) Landmark Office Lease dated May 20, 1986 between
Registrant and Landmark Investments, Limited.
*10.7(B) 1986 Employee Stock Bonus Plan.
*10.8(L) 1987 Incentive Stock Option Plan and forms of
Incentive Stock Option Agreements and Nonstatutory
Stock Option Agreements, as amended.
10.9(D) Landmark Building Lease dated March 15, 1988
between Registrant and Landmark Investments,
Limited and First Amendment thereto dated August
10, 1988.
*10.10(L) 1989 Stock Plan and forms of Incentive Stock
Option Agreement and Nonstatutory Stock Option
Agreement, as amended.
+10.11(E) Lease dated November 27, 1990 between Registrant
and Metropolitan Life Insurance Company for
facilities located at 3165 Kiter Road, Santa
Clara, California.
10.12(M) Deed of variation (first amendment) of the lease
between Registrant and Allied Dunbar Assurance plc
for facilities located at the Pyramid House,
Easthampstead Road, Bracknell, Berkshire, United
Kingdom.
*10.13(L) 1991 Stock Option Plan and forms of agreements
thereunder, as amended.
10.14(I) Asset Purchase Agreement dated as of January 16,
1991 by and between Registrant and Spinnaker
Software Corporation.
10.15(H) Agreement dated as of July 19, 1991 by and between
the Registrant and the stockholders of Precision
Software Limited ("PSL") for the sale and purchase
of all of the issued shares in PSL.
24
<PAGE>
10.16(K) Leases dated March 1, 1993 between Registrant and
Lansdown Estates Group Limited for facilities
located at Business Development Centre units 69
and 70, Milton Park, Abingdon, Oxfordshire, United
Kingdom.
10.17(N) Asset Acquisition Agreement dated June 14, 1994
between Software Publishing Corporation and
Computer Concepts Corporation for the sale of the
Superbase assets.
10.18(O) Asset Purchase Agreement dated April 29, 1994
between Software Publishing Corporation and
Softmart, Incorporated.
10.19(P) Stock Purchase agreement among Software Publishing
Corporation, Digital Paper,Inc., Daniel J. Fraisl,
Carl Meyer and Anthony N. Hoeber dated March 31,
1995.
10.20(Q) Termination of Lease Agreement between
Metropolitian Life Insurance Company and
Registrant for facilities located at 3165 Kiter
Road, Santa Clara, California.
10.21(Q) Localization and Distribution Agreement for
Harvard Graphics Windows products, between Choten,
Inc., a Minnesota corporation and Registrant dated
February 16, 1995.
10.22(Q) Lease Agreement between Community Towers LLC, and
the Registrant, dated September 7, 1995 for
facilities located at 111 North Market Street, San
Jose, California.
10.23(Q) Assignment Agreement between the Registrant,
Choten, Inc., a Minnesota corporation and Kubota
Corporation, a Japanese corporation, wherein
Choten assigns its performance under the
Localization Agreement to Kubota, effective
February 21, 1995.
11.1(Q) Computation of net income (loss) per common share
and common equivalent share.
13.1(Q) Annual Report to Stockholders for the year ended
September 30, 1995 (to be deemed filed only to the
extent required by the
25
<PAGE>
instructions to exhibits for Reports on Form
10-K).
21.1(Q) List of Subsidiaries.
23.1(Q) Consent of Independent Auditors (see pages S-1 and
S-3).
24.1(Q) Power of Attorney (included on page 28).
27.0(Q) Financial Data Schedule
- - -------------------
(A) Incorporated by reference to exhibit filed with the Registrant's
Registration Statement on Form S-1 (No. 2-93836) filed October 18, 1984,
and Amendment No. 1 thereto filed November 15, 1984, which Registration
Statement became effective November 15, 1984.
(B) Incorporated by reference to the exhibit filed with the Registrant's Annual
Report on Form 10-K (No. 0-14025), for the fiscal year ended September 30,
1986.
(C) Incorporated by reference to the exhibit filed with the Registrant's Annual
Report on Form 10-K (No. 0-14025), for the fiscal year ended September 30,
1987.
(D) Incorporated by reference to the exhibit filed with the Registrant's Annual
Report on Form 10-K (No. 0-14025), for the fiscal year ended September 30,
1988.
(E) Incorporated by reference to the exhibit filed with the Registrant's Annual
Report on Form 10-K (No.0-14025), for the fiscal year ended September 30,
1990.
(F) Incorporated by reference to the exhibit filed with the Registrant's
Current Report on Form 8-K dated April 1, 1991.
(G) Incorporated by reference to the exhibit filed with the Registrant's
Registration Statement on Form 8-A filed May 10, 1991, and Amendment No. 1
thereto filed May 20, 1991, which Registration Statement became effective
on or about May 31, 1991.
(H) Incorporated by reference to the exhibit filed with the Registrant's
Current Report on Form 8-K dated July 19, 1991, as amended on October 1,
1991.
(I) Incorporated by reference to the exhibit filed with the Registrant's Annual
Report on Form 10-K (No. 0-14025), for the fiscal year ended September 30,
1991.
(J) Incorporated by reference to the exhibit filed with the Registrant's Annual
Report on Form 10-K (No. 0-14025), for the fiscal year ended September 30,
1992.
26
<PAGE>
(K) Incorporated by reference to the exhibit filed with the Registrant's Annual
Report on Form 10-K (No. 0-14025), for the fiscal year ended September 30,
1993.
(L) Incorporated by reference to the exhibit filed with the Registrant's
Quarterly Report on Form 10-Q for the quarter ended December 31, 1994.
(M) Incorporated by reference to the exhibit filed with the Registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1994.
(N) Incorporated by reference to the exhibit filed with the Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1994.
(O) Incorporated by reference to the exhibit filed with the Registrants's
Annual Report on Form 10-K (No. 0-14025), for the fiscal year ended
September 30,1994.
(P) Incorporated by reference to the exhibit filed with the Registrant's
Quarterly Report on Form 10-Q for the quarter ended March 30, 1995.
(Q) Filed with this document.
+ Pursuant to Rule 24b-2 under the Securities Exchange Act, confidential
treatment has been granted to portions of this exhibit, which portions have
been deleted and filed separately with the Securities and Exchange
Commission.
* Management contract or compensatory plan or arrangement required to be
filed as an exhibit to this Form 10-K, pursuant to item 14(c) of Form 10-K.
- - ------------------
(b) Reports on Form 8-K. A report on Form 8-K was filed on December 9,
1994 regarding a change in the Company's independent accountants. No
other reports on Form 8-K were filed during the fiscal quarter ended
September 30, 1995.
(c) Exhibits. See Item 14(a)3 above.
(d) Financial Statement Schedule. See Item 14(a)2 above.
27
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SOFTWARE PUBLISHING CORPORATION
By: /s/ IRFAN SALIM
-----------------------------
Irfan Salim,
President and
Chief Executive Officer
Dated: December 21, 1995
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Irfan Salim his or her attorney-in-fact,
each with the power of substitution, for him or her in any and all capacities,
to sign any amendments to this Annual Report on Form 10-K, and to file the same,
with exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorney-in-fact, or his or her substitute or substitutes, may do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
- - --------------------- -------------------------- -----------------
/s/FRED M. GIBBONS Chairman of the Board December 21, 1995
- - ---------------------
(Fred M. Gibbons)
/s/IRFAN SALIM President, Chief December 21, 1995
- - --------------------- Executive Officer and
(Irfan Salim) Director
/s/MIRIAM K. FRAZER Vice President, Finance December 21, 1995
- - --------------------- and Chief Financial
(Miriam K. Frazer) Officer
/s/MARK A. BERTELSEN Director December 21, 1995
- - ---------------------
(Mark A. Bertelsen)
/s/MICHAEL M. GILBERT Director December 21, 1995
- - ---------------------
(Michael M. Gilbert)
/s/DEBORAH A. COLEMAN Director December 21, 1995
- - ---------------------
(Deborah A. Coleman)
/s/BERNEE D. L. STROM Director December 21, 1995
- - ---------------------
(Bernee D. L. Strom)
28
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Software Publishing Corporation:
We consent to incorporation by reference in the registration statements (Nos.
33-4138, 33-19905, 33-34380 and 33-45252) on Form S-3 of Software Publishing
Corporation of our report dated October 25, 1994, relating to the consolidated
balance sheet of Software Publishing Corporation and subsidiaries as of
September 30, 1994, and the related consolidated statements of operations,
stockholders' equity, and cash flow for each of the two years in the period
ended September 30, 1994, and the related schedule, which report is incorporated
by reference in the 1995 Annual Report on Form 10-K of Software Publishing
Corporation.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
San Jose, California
December 18, 1995
S-1
<PAGE>
REPORT ON FINANCIAL STATEMENT SCHEDULE
The Board of Directors
Software Publishing Corporation:
The audit referred to in our report dated October 25, 1994 included the
related financial statement schedule as of September 30, 1994 and 1993, and for
each of the two years in the period ended September 30, 1994, included in the
1995 Annual Report on Form 10-K of Software Publishing Corporation. This
financial statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion on this financial statement schedule
based on our audit. In our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
San Jose, California
October 25, 1994
S-2
<PAGE>
REPORT ON FINANCIAL STATEMENT SCHEDULE AND
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Software Publishing Corporation:
The audit referred to in our report dated October 24, 1995, included
the related financial statement schedule as of September 30, 1995, and for the
year ended September 30, 1995, included in the 1995 annual report on Form 10-K
of Software Publishing Corporation. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement schedule based on our audit. In our opinion,
such financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
We consent to incorporation by reference in the registration statements
(Nos. 33-4138, 33-19905, 33-34380 and 33-45252) on Form S-3 of Software
Publishing Corporation of our report dated October 24, 1995, relating to the
consolidated balance sheet of Software Publishing Corporation and subsidiaries
as of September 30, 1995, and the related consolidated statements of operations,
stockholders' equity, and cash flow for the year ended September 30, 1995, and
the related schedule, which reports appear or are incorporated by reference in
the September 30, 1995, annual report on Form 10-K of Software Publishing
Corporation.
/s/ KPMG PEAT MARWICK
KPMG PEAT MARWICK
San Jose, California
December 20, 1995
S-3
<PAGE>
Schedule II
SOFTWARE PUBLISHING CORPORATION
----------
<TABLE>
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<CAPTION>
(In thousands)
Col. A Col. B Col. C Col. D Col. F
- - ------ ------ ------ ------ ------
Additions
---------
Balance at Charged Reserves of Balance at
Beginning Against Acquired End of
of Period Income Company Deductions Period
---------- ------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Year ended September 30, 1993:
Allowance for doubtful
accounts .................. $ 704 $ 532 $ -- $ 297(A) $ 939
------- ------- ----- ------- -------
Reserve for returns &
exchanges ............... $ 3,763 $20,255 $10,454 $13,564
------- ------- ------- -------
Inventory valuation .......... $ 1,613 $ 980 $ -- $ 1,188(B) $ 1,405
------- ------- ----- ------- -------
Year ended September 30, 1994:
Allowance for doubtful
accounts .................. $ 939 $ 219 $ -- $ 149(A) $ 1,009
------- ------- ----- ------- -------
Reserve for returns &
exchanges ............... $13,564 $ 2,385 $11,386 $ 4,563
------- ------- ------- -------
Inventory valuation ........ $ 1,405 $ 1,029 $ -- $ 1,499(B) $ 935
------- ------- ----- ------- -------
Year ended September 30, 1995:
Allowance for doubtful
accounts .................. $ 1,009 $ 211 $ -- $ 678(A) $ 542
------- ------- ----- ------- -------
</TABLE>
S-4
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Reserve for returns &
exchanges .............. $ 4,563 $ 8,180 $ 9,356 $ 3,387
------- ------- ------- -------
Inventory valuation ........ $ 935 $ 642 $ -- $ 588(B) $ 989
------- ------- ----- ------- -------
<FN>
- - ---------------------
(A) Actual write-offs of uncollectible accounts receivable, net of recoveries of
amounts previously written off.
(B) Actual write-offs of obsolete inventory and scrap.
</FN>
</TABLE>
S-5
<PAGE>
SOFTWARE PUBLISHING CORPORATION
ANNUAL REPORT ON FORM 10-K
INDEX TO EXHIBITS
-----------------
Exhibit Sequentially
No. Description Numbered Page
- - ------- ----------- -------------
3.1(F) Certificate of Incorporation, as amended ............. --
3.2(J) Bylaws of Registrant, as amended ..................... --
4.1(F) Fourth Article of the Certificate of
Incorporation of Registrant (see Exhibit 3.1) ........ --
4.2(G) Preferred Shares Rights Agreement dated as
of May 8, 1991 between the Registrant and
The Bank of America National Trust and
Savings Association, as Rights Agent ................ --
4.3(H) Certificate of Designation of Preferences
and Rights of Series B Convertible Preferred
Stock filed July 19, 1991 ........................... --
10.1(A) Description of Registrant's Profit Sharing
Plan ................................................. --
10.2(O) Description of Registrant's Executive Bonus
Plan for fiscal 1995 ................................ --
10.3(K) Form of Registrant's Indemnity Agreement
with Officers and Directors........................... --
10.4(L) Employee Stock Purchase Plan, as amended ............. --
10.5(C) 1985 Incentive Stock Option Plan, as amended,
and forms of Incentive Stock Option Agreement
and Nonstatutory Stock Option Agreement............... --
10.6(B) Landmark Office Lease dated May 20, 1986
between Registrant and Landmark Investments,
Limited ............................................. --
10.7(B) 1986 Employee Stock Bonus Plan ....................... --
E-1
<PAGE>
10.8(L) 1987 Incentive Stock Option Plan and forms
of Incentive Stock Option Agreements and
Nonstatutory Stock Option Agreements, as
amended ................................................... --
10.9(D) Landmark Building Lease dated March 15, 1988
between Registrant and Landmark Investments,
Limited and First Amendment thereto dated
August 10, 1988 ........................................... --
E-2
<PAGE>
10.10(L) 1989 Stock Plan and forms of Incentive Stock
Option Agreement and Nonstatutory Stock Option
Agreement, as amended...................................... --
10.11(E) Lease dated November 27, 1990 between Registrant
and Metropolitan Life Insurance Company for
facilities located at 3165 Kiter Road, Santa
Clara, California ......................................... --
10.12(M) Deed of valuation (first amendment) of the lease
between Registrant and Allied Dunbar Assurance plc
for facilities located at the Pyramid House,
Easthampstead Road, Bracknell, Berkshire, United Kingdom .. --
10.13(L) 1991 Stock Option Plan and forms of agreements
thereunder as amended. .................................... --
10.14(I) Asset Purchase Agreement dated as of
January 16, 1991 by and between Registrant
and Spinnaker Software Corporation ........................ --
10.15(H) Agreement dated as of July 19, 1991 by and
between the Registrant and the stockholders
of Precision Software Limited ("PSL") for the
sale and purchase of all of the issued shares
in PSL ................................................... --
10.16(K) Leases dated March 1, 1993 between Registrant
and Landsdown Estates Group Limited for
facilities located at Business Development
Centre units 69 and 70, Milton Park, Abingdon,
Oxfordshire, United Kingdom ............................... --
10.17(N) Asset Acquisition Agreement dated June 14, 1994 between
Software Publishing Corporation and Computer Concepts
Corporation for the sale of the Superbase
assets. .................................................. --
10.18(O) Asset Purchase Agreement dated as of April 29,
1994 between Software Publishing Corporation
and Softmart Incorporated ................................. --
10.19(P) Stock Purchase Agreement among Software Publishing
Corporation, Digital Paper, Inc., Daniel J. Fraisl,
Carl Meyer and Anthony N. Hoeber dated March 31, 1995...... --
10.20(Q) Termination of Lease Agreement between Metropolitian Life
E-3
<PAGE>
and Insurance Company and the Registrant for facilities
located at 3165 Kiter Road, Santa Clara, California........ --
10.21(Q) Localization and Distribution Agreement for Harvard Graphics
Windows products, between Choten, Inc., a Minnesota
corporation and Registrant dated February 16, 1995......... --
10.22(Q) Lease Agreement between Community Towers LLC, and the
Registrant, dated September 7, 1995 for facilities located
at 111 North Market Street, San Jose, California........... --
10.23(Q) Assignment Agreement between the Registrant, Choten, Inc.,
a Minnesota corporation and Kubota Corporation, a Japanese
corporation, wherein Choten assigns its performance under
the Localization Agreement to Kubota, effective February 21,
1995....................................................... --
11.1(Q) Computation of net income (loss) per common
share and common equivalent share.......................... --
13.1(Q) Annual Report to Stockholders for the year
ended September 30, 1995 (to be deemed filed
only to the extent required by the instructions
to exhibits for Reports on Form 10-K)...................... --
21.1(Q) List of Subsidiaries....................................... --
23.1(Q) Consent of Independent Auditors (see
pages S-1 and S-3)......................................... --
24.1(Q) Power of Attorney (included on page 28).................... --
27.0(Q) Financial Data Schedule.................................... --
- - ---------------------------
(A) Incorporated by reference to exhibit filed with the Registrant's
Registration Statement on Form S-1 (No. 2-93836) filed October 18, 1984,
and Amendment No. 1 thereto filed November 15, 1984, which Registration
Statement became effective November 15, 1984.
(B) Incorporated by reference to the exhibit filed with the Registrant's Annual
Report on Form 10-K (No. 0-14025), for the fiscal year ended September 30,
1986.
(C) Incorporated by reference to the exhibit filed with the Registrant's Annual
Report on Form 10-K (No. 0-14025), for the fiscal year ended September 30,
1987.
(D) Incorporated by reference to the exhibit filed with the Registrant's Annual
Report on Form 10-K (No. 0-14025), for the fiscal year ended September 30,
1988.
(E) Incorporated by reference to the exhibit filed with the Registrant's Annual
Report on Form 10-K (No.0-14025), for the fiscal year ended September 30,
1990.
(F) Incorporated by reference to the exhibit filed with the Registrant's
Current Report on Form 8-K dated April 1, 1991.
E-4
<PAGE>
(G) Incorporated by reference to the exhibit filed with the Registrant's
Registration Statement on Form 8-A filed May 10, 1991, and Amendment No. 1
thereto filed May 20, 1991, which Registration Statement became effective
on or about May 31, 1991.
(H) Incorporated by reference to the exhibit filed with the Registrant's
Current Report on Form 8-K dated July 19, 1991, as amended on October 1,
1991.
(I) Incorporated by reference to the exhibit filed with the Registrant's Annual
Report on Form 10-K (No. 0-14025), for the fiscal year ended September 30,
1991.
(J) Incorporated by reference to the exhibit filed with the Registrant's Annual
Report on Form 10-K (No. 0-14025), for the fiscal year ended September 30,
1992.
(K) Incorporated by reference to the exhibit filed with the Registrant's Annual
Report on Form 10-K (No. 0-14025), for the fiscal year ended September 30,
1993.
(L) Incorporated by reference to the exhibit filed with the Registrant's
Quarterly Report on Form 10-Q for the quarter ended December 31, 1993.
(M) Incorporated by reference to the exhibit filed with the Registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1994.
(N) Incorporated by reference to the exhibit filed with the Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1994.
(O) Incorporated by reference to the exhibit filed with the Registrant's Annual
Report on Form 10-K (No. 0-14025), for the fiscal year ended September 30,
1994
(P) Incorporated by reference to the exhibit filed with the Registrant's
Quarterly Report on Form 10-Q for the quarter ended March 30, 1995.
(Q) Filed with this document.
E-5
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE (the "First Amendment") is dated
as of July 31, 1995 by and between METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation ("Landlord"), and SOFTWARE PUBLISHING CORPORATION, a Delaware
corporation ("Tenant"), with reference to the following facts:
A. Landlord and Tenant entered into that certain Lease dated
on or about November 27, 1990 (the "Original Lease") with respect to certain
premises (the "Entire Premises") more particularly described in the Original
Lease and consisting of Buildings 1, 2, 3 and 4 of the Project, as defined in
the Original Lease. The Entire Premises includes certain premises consisting of
approximately 4,000 square feet described on Exhibit A attached hereto and made
a part hereof (the "Former Scopus Premises").
B. Tenant and Applied Materials, Inc., a Delaware corporation
("Applied"), entered into a sublease of a portion of the Entire Premises
pursuant to a sublease agreement dated February 2, 1994, as amended by Amendment
One to Sublease Agreement dated February 15, 1994, First Amendment to Sublease
Agreement dated June 1, 1994 and Second Amendment to Sublease Agreement dated on
or about August 30, 1994, all of which are hereinafter collectively referred to
as the "Applied Sublease." The premises covered by the Applied Sublease (the
"Applied Premises") is more particularly described on Exhibit B attached hereto
and made a part hereof. Substantially simultaneously with the execution hereof,
Landlord and Applied intend to execute a lease (the "Applied Lease") covering
the Applied Premises and the Former Scopus Premises; the date on which the
Applied Lease is executed by both Landlord and Applied is hereinafter referred
to as the "Applied Lease Execution Date."
C. Tenant and VLSI Libraries, a California corporation,
entered into a sublease of a portion of the Entire Premises pursuant to a
sublease agreement dated as of July 20, 1993, as amended by a First Amendment to
Office Sublease (the "VLSI Amendment") dated as of January 6, 1994
(collectively, the "VLSI Sublease"). The premises covered by the VLSI Sublease
(the "VLSI Premises") is more particularly described on Exhibit C attached
hereto and made a part hereof. Tenant and Strategic Mapping, Inc., a California
corporation, entered into a sublease (the "Strategic Sublease") dated as of on
or about August 1 (or 7), 1992 with respect to certain premises described
therein (the "Strategic Premises"). A description of the Strategic Premises is
attached hereto as Exhibit D and made a part hereof. The VLSI Sublease and the
Strategic Sublease are hereinafter referred to collectively from time to time as
the "Other Subleases" and individually as an "Other Sublease," and VLSI
Libraries ("VLSI") and Strategic Mapping, Inc. (Strategic"), are hereinafter
collectively referred to from time to time as the "Other Subtenants." The
Strategic Premises and the VLSI Premises are collectively referred to from time
to time herein as the "Other Sublease Premises."
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<PAGE>
D. Tenant currently occupies directly (and not through the
occupancy of any subtenant) all of the Entire Premises other than the Applied
Premises and the Other Sublease Premises (the "Existing SPC Premises"). The
Existing SPC Premises includes, in addition to the Former Scopus Premises and
other space, (i) certain space consisting of approximately 6,500 square feet and
used primarily as a cafeteria (the "Cafeteria Premises"), which is described
more particularly on Exhibit E attached hereto and made a part hereof, and (ii)
certain space consisting of approximately 165 square feet and used primarily as
a security office (the "Security Office"), which is described more particularly
on Exhibit F attached hereto and made a part hereof.
E. Landlord and Tenant now desire to modify and amend the
Original Lease to reflect, among other provisions, a change in the term
of the Original Lease.
NOW, THEREFORE, in consideration of the mutual covenants set
forth herein and other good and valuable consideration, the receipt whereof and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Scope of First Amendment. Except as expressly modified by
this First Amendment, the Original Lease shall remain in full force and effect.
Except as expressly provided in this First Amendment, the term "Lease" as used
in the Original Lease shall refer to the Original Lease as modified by this
First Amendment. Capitalized terms used in this First Amendment and not
otherwise defined herein shall have the respective meanings set forth in the
Original Lease. As between Landlord and Tenant, to the extent the letter dated
October 3, 1994 executed by Landlord, Tenant and Applied is inconsistent with
the terms of this First Amendment, the October 3, 1994 letter shall be of no
further force or effect.
2. Premises.
(a) Tenant has informed Landlord that the VLSI Sublease
terminates on December 31, 1995 and that the Strategic Sublease terminates on
August 31, 1996. For purposes of this First Amendment, the term "VLSI Sublease
Termination Date" shall refer to December 31, 1995 and the term "Strategic
Sublease Termination Date" shall refer to August 31, 1996. The term "Termination
Date" shall refer to the VLSI Sublease Termination Date, the Strategic Sublease
Termination Date, the termination date of the term of the Original Lease as to
the Applied Premises, the termination date of the Original Lease as to the
Existing SPC Premises, the termination date of the Original Lease as to the
Cafeteria Premises, and/or the termination date of the Original Lease as to the
Security Office, as the case may be.
(b) The Termination Date of the Lease as to the Applied
Premises and the Former Scopus Premises shall be the date hereof, and from the
date hereof to and including September 30, 1995 the Premises
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shall include and be limited to the Existing SPC Premises (less the Former
Scopus Premises) and the Other Sublease Premises. The Termination Date of the
Lease as to the Security Office and the Cafeteria Premises shall be September
30, 1995, and from October 1, 1995 to and including December 31, 1995 the
Premises shall include and be limited to the Existing SPC Premises (less the
Former Scopus Premises, the Cafeteria Premises, and the Security Office) and the
Other Sublease Premises. The Termination Date of the Lease as to the Existing
SPC Premises (less the Former Scopus Premises, the Cafeteria Premises, and the
Security Office) and the VLSI Premises shall be December 31, 1995, and from
January 1, 1996 to and including the Strategic Sublease Termination Date, the
Premises shall include and be limited to the Strategic Premises. The Termination
Date of the Lease as to the balance of the Premises shall be the Strategic
Sublease Termination Date. Notwithstanding anything in this Section 2(b) to the
contrary, in the event of the early termination of either of the Other Subleases
prior to its stated termination date, the applicable Other Sublease Premises
shall no longer be included within the Premises as of the date of such early
termination. The term "Premises" or "Demised Premises" as used in the Original
Lease shall refer only to the Premises as defined in this Section 2, and Base
Annual Rent and Tenant's Share of Taxes and Operating Costs shall be equitably
adjusted.
3. Effectiveness. Within two (2) days after the Applied Lease
Execution Date, Tenant shall pay Landlord as additional rent by wire transfer of
funds (i) a one-time payment in the amount of Two Million Three Hundred Ninety
Thousand Dollars ($2,390,000), and (ii) a one time payment in the amount of Two
Hundred Fourteen Thousand Eight Hundred Seventy-Two Dollars ($214,872). The
effectiveness of this First Amendment is conditioned upon and subject to
Tenant's timely payment to Landlord of the foregoing amounts.
4. Additional Modifications to Original Lease. Effective as
of the date hereof, the Original Lease is hereby further modified as hereinafter
set forth:
(a) From the date hereof to and including September
30, 1995, the Base Annual Rent payable by Tenant to Landlord for the Premises
shall be $2,026,356 and the Monthly Installment shall be $168,863. From October
1, 1995 to and including December 31, 1995, the Base Annual Rent payable by
Tenant to Landlord for the Premises shall be $1,931,880 and the Monthly
Installment shall be $160,990. From January 1, 1996 to and including the
Strategic Sublease Termination Date, the Base Annual Rent payable by Tenant to
Landlord for the Premises shall be $485,784 and the Monthly Installment shall be
$40,482.
(b) With respect to Taxes and Operating Costs,
notwithstanding Section 3.4 of the Original Lease to the contrary, (i) from the
date hereof to and including September 30, 1995 Tenant shall pay the amount of
44.67% of all Taxes and Operating Costs, (iii) from October 1, 1995 to and
including December 31, 1995, Tenant shall pay the amount of 42.58% of all Taxes
and Operating Costs, and (iv) from January 1, 1996
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<PAGE>
to and including the Strategic Sublease Termination Date, Tenant shall pay the
amount of 10.71% of all Taxes and Operating Costs.
(c) Tenant acknowledges that upon the date hereof,
the Premises have been delivered and that Tenant has no further rights under
Section 2.2 of the Original Lease.
(d) Notwithstanding anything in the Original Lease to
the contrary, Tenant shall have no right to record a memorandum of this Lease.
(e) Notwithstanding anything in the Original Lease to
the contrary:
(i) From the date hereof to and including
September 30, 1995 Tenant and Tenant's agents, employees, contractors and
invitees shall have the nonexclusive right in common with Landlord and any other
occupant of the Project, and their respective agents, employees, contractors and
invitees, to use 44.67% of the total parking spaces within the Project.
(ii) From October 1, 1995 to and including
December 31, 1995, Tenant and Tenant's agents, employees, contractors and
invitees shall have the nonexclusive right in common with Landlord and any other
occupant of the Project, and their respective agents, employees, contractors and
invitees, to use 42.58% of the total parking spaces within the Project.
(iv)From January 1, 1996 to and including
the Strategic Sublease Termination Date Tenant and Tenant's agents, employees,
contractors and invitees shall have the nonexclusive right in common with
Landlord and any other occupant of the Project, and their respective agents,
employees, contractors and invitees, to use 135 parking spaces within the
Project.
(f) Article XXVII, Article XXVIII and Article XXIX of
the Original Lease are each hereby deleted in their entirety.
(g) Notwithstanding anything in the Original Lease to
the contrary, as of the date hereof Tenant shall no longer have any further
right to assign or sublet all or any portion of the Premises.
(h) Notwithstanding anything in Article XXIV of the
Original Lease to the contrary, within five (5) days following the Applied Lease
Execution Date Tenant shall substitute the Letter(s) of Credit held by Landlord
as the Security Deposit for cash in the amount of a reduced Security Deposit in
the amount of $150,091. Provided that no event of default by Tenant has occurred
under the Original Lease, as amended by this First Amendment, Landlord shall
return to the person or persons entitled thereto the amount of $114,105 of the
Security Deposit within thirty (30) days following December 31, 1995, and the
balance of
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<PAGE>
the Security Deposit within thirty (30) days following the termination of the
Lease.
(i) Notwithstanding anything in this First Amendment
to the contrary, Tenant and its employees shall have the right to make
reasonable use of the Cafeteria Premises to and including the December 31, 1995,
VLSI and its employees shall have the right to make reasonable use of the
Cafeteria Premises to and including the VLSI Termination Date, and Strategic and
its employees shall have the right to make reasonable use of the Cafeteria
Premises to and including the Strategic Termination Date. The use of Tenant,
VLSI and Strategic and their respective employees of the Cafeteria Premises
shall be during the hours in which such premises are regularly open and shall
further be subject to such rules and regulations therefor as Applied may
establish.
5. Acceleration of Original Termination Date. For and in
consideration of the payment of the amounts set forth in Section 3(b) above and
the other covenants and conditions set forth herein, the termination date of the
Lease shall be as set forth in Section 2 above, and on the Termination Dates
with respect to each applicable portion of the Premises the Lease and any and
all rights and obligations thereunder shall be terminated and of no further
force and effect except as set forth herein; provided, however, that in the
event that the Applied Lease Execution Date does not occur on or before August
11, 1995, this First Amendment shall at the written election of either Landlord
or Tenant be null and void and of no force or effect.
6. No Release of Accrued Obligations. Neither this First
Amendment nor the acceptance by Landlord of all or any portion of the Premises
and the termination of the Lease as to all or any portion of the Premises shall
in any way be deemed to excuse or release Tenant from any obligation or
liability, including without limitation any obligation or liability under
provisions of the Lease to indemnify, defend and hold harmless Landlord or other
parties, or with respect to any breach or breaches of the Lease, which
obligation or liability (i) first arises prior to a Termination Date, or (ii)
arises out of or is incurred in connection with events or other matters which
took place prior to a Termination Date with respect to the applicable portion of
the Premises, or (iii) arises out of any provision under the Lease which by its
terms is intended to survive the expiration or sooner termination of the Lease.
7. Prorations and Adjustments.
(a) Prior to a Termination Date as to a portion of
the Premises, Tenant shall continue to pay all of Tenant's monetary obligations,
including without limitation Annual Base Rent, common area maintenance costs,
personal property taxes and real property taxes, insurance, utilities and other
amounts applicable to such portion of the Premises as the same become due and
payable under the Lease (collectively "Rental Obligations"). Whether or not
payment for any such monetary obligation was due or was made prior to the
termination of the Lease as
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<PAGE>
to a portion of the Premises, Tenant shall remain liable for all Rental
Obligations accruing under the Lease prior to the termination of the Lease as to
a portion of the Premises. On or prior to the termination of the Lease as to all
or any portion of the Premises, or within thirty (30) days thereafter, Landlord
shall have the right to deliver to Tenant Landlord's reasonable estimate of
Tenant's Share of Operating Costs and Taxes for the period to and including the
Early Termination Date and Tenant shall pay the same within thirty (30) days of
written demand, subject to adjustment based on Landlord's final accounting for
1995.
8. Surrender of Premises. On or before the termination of the
Lease with respect to a portion of the Premises, Tenant shall deliver the
Premises to Landlord in accordance with and in the condition required under the
Lease (provided that Tenant shall not be required to remove any Alterations that
Applied permits to remain in the Premises) and Tenant shall surrender any plans
and specifications, maintenance records, permits, and licenses pertaining to the
applicable portion of the Premises or to any improvements thereon, or to both
(but not pertaining to Tenant's business conducted therein) in the possession of
Tenant.
9. Space Tenants. Except with respect to the Other Subleases,
Tenant hereby waives and relinquishes all rights Tenant has, if any, to any
income from the Premises. Landlord shall have the right at Landlord's sole
election to enter into direct occupancy agreements with persons, firms or
entities currently occupying any portion of the Premises; provided that the
commencement of any such occupancy shall not occur until after the termination
date of the existing occupancy agreement with such persons, firms or entities.
Landlord shall have no obligation to pay any debts of Tenant including but not
limited to payroll taxes or state workers' compensation insurance.
10. Representation and Warranties. Tenant represents, warrants
and covenants as follows:
(a) That except for Applied and the Other Subtenants,
there are no subtenants, franchisees or concessionaires of Tenant in the
Premises, and that Tenant is the owner of Tenant's interest pursuant to the
Lease subject to no liens, claims or encumbrances.
(b) That Tenant will pay or make provision for the
payment of all trade accounts, wage claims, and other obligations of the
business conducted in the Premises and shall neither take any action nor fail to
take any action the result of which will be the imposition of any liens by third
parties upon the Premises or the improvements thereon or the creation of any
claims by third parties against Landlord.
(c) The VLSI Sublease termination date is December
31, 1995 and the Strategic Sublease termination date is on or before August 31,
1996.
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<PAGE>
11. Limitation of Liability. Landlord shall have no
obligation, nor incur any liability, under this First Amendment beyond
Landlord's then equity interest in the Project.
12. Bankruptcy of Tenant. In the event any covenant,
assignment, payment of money, transfer of property rights or granting of any
release or other benefit by Tenant hereunder is fraudulent, preferential or
otherwise voidable or recoverable in whole or in part for any reason whatsoever
under the Bankruptcy Code or any other federal or state law (a "Voidable
Transfer") and Landlord is required to repay or restore any such Voidable
Transfer or the amount or value thereof (or if in its discretion, upon the
advice of counsel, Landlord settles any claim that any such Voidable Transfer
has occurred hereunder, whether or not a court order is entered requiring it to
do so), then all liability of Tenant under the Lease shall automatically be
revived, reinstated and restored and shall exist such as if this First Amendment
had never been executed; provided that Tenant shall receive a credit for any
money paid Landlord hereunder that Landlord is not required to repay or restore.
13. Payment of Commission. In connection with this First
Amendment and the Applied Lease, Landlord and Tenant each represent to the other
that it has not used the services of a broker or other real estate licensee
other than Wayne Mascia Associates. In connection with this First Amendment and
the Applied Lease, (i) Tenant shall pay Wayne Mascia Associates a commission in
the aggregate amount of $475,000 within five (5) days after the Applied Lease
Execution Date, and (ii) Landlord shall pay Wayne Mascia Associates a commission
in the amount of $200,000 payable within five (5) days after the Applied Lease
Execution Date and $200,000 payable upon Applied's occupancy of the Existing SPC
Space under the Applied Lease as of January 1, 1996. In the event of a claim for
broker's fee, finder's fee, commission or other similar compensation in
connection herewith Tenant and Landlord hereby agree to protect, defend and
indemnify each other against and hold each other harmless from any and all
damages, liabilities, costs, expenses and losses (including, without limitation,
reasonable attorneys' fees and costs) which either may sustain or incur by
reason of such claim to the extent such claim is based on the conduct of the
indemnifying party. The provisions of this Paragraph 13 shall survive the
termination of this First Amendment.
14. Intentionally omitted.
15. Waiver. No failure or delay by a party to insist upon the
strict performance of any term, condition or covenant of this First Amendment,
or to exercise any right, power or remedy hereunder shall constitute a waiver of
the same or any other term of this First Amendment or preclude such party from
enforcing or exercising the same or any such other term, conditions, covenant,
right, power or remedy at any later time.
16. California Law. This First Amendment shall be construed
and governed by the laws of the State of California.
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<PAGE>
17. Authority. This First Amendment shall be binding upon and
inure to the benefit of the parties hereto, their respective heirs, legal
representatives, successors and assigns. Each party hereto and the persons
signing below warrant that the person signing below on such party's behalf is
authorized to do so and to bind such party to the terms of this First Amendment.
18. Attorneys' Fees and Costs. In the event of any action at
law or in equity between the parties hereto to enforce any of the provisions
hereof, any unsuccessful party to such litigation shall pay to the successful
party all costs and expenses, including reasonable attorneys' fees (including
costs and expenses incurred in connection with all appeals) incurred therein by
such successful party, and such costs, expenses and attorneys' fees may be
included in and as part of such judgment. A successful party shall be any party
who is entitled to recover his costs of suit, whether or not the suit proceeds
to final judgment.
19. Entire Agreement; No Amendment. The Original Lease, as
amended by this First Amendment, constitutes the entire agreement and
understanding between the parties herein named with respect to the subject
thereof and shall supersede all prior written and oral agreements concerning the
subject matter contained herein. This First Amendment may not be altered,
amended, modified or otherwise changed in any respect whatsoever except by a
writing duly executed by authorized representatives of the parties hereto. Each
party acknowledges that it has read this First amendment fully understands all
of the terms and conditions of this First Amendment and hereby executes this
First Amendment freely, voluntarily and with full knowledge of its significance
and with and upon advice of counsel.
20. Severability. If any provision of this First Amendment or
the application thereof to any person or circumstances shall be invalid or
unenforceable to any extent, the remainder of this First Amendment and the
application of such provision to other persons or circumstances, other than
those to which it is held invalid, shall not be affected thereby and shall be
enforced to the furthest extent permitted by law, provided that the invalidity
of such provision does not materially affect the benefits accruing to any party
hereto.
21. Counterparts. This First Amendment may be executed in
duplicates or counterparts, or both, and such duplicates or counterparts
together shall constitute but one original of the First Amendment. Each
duplicate and counterpart shall be equally admissible in evidence, and each
original shall fully bind each party who has executed it.
22. Tenant's Representation and Acknowledgment. Tenant hereby
acknowledges that Landlord has performed all of its obligations with respect to
the Premises. Tenant further acknowledges that as of the date hereof Landlord is
not in default under any of the terms of the Original Lease.
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<PAGE>
23. Agreement to Perform Necessary Acts. Each party agrees
that upon demand therefor, it shall promptly perform all further acts and
execute, acknowledge and deliver all further instructions, instruments and
documents which may be reasonably necessary or useful to carry out the
provisions of this First Amendment or to evidence, perfect or otherwise
effectuate the rights and remedies relating to this First Amendment.
24. Captions and Headings. The titles or headings of the
various paragraphs hereof are intended solely for convenience of reference and
are not intended and shall not be deemed to or in any way be used to modify,
explain or place any construction upon any of the provisions of this First
Amendment.
IN WITNESS WHEREOF, the undersigned have duly executed this
First Amendment as of the date first above written.
METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation
By
---------------------------------------
Its
---------------------------------------
SOFTWARE PUBLISHING CORPORATION,
a Delaware corporation
By
---------------------------------------
Its
---------------------------------------
By
---------------------------------------
Its
---------------------------------------
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EXHIBIT A
(DESCRIPTION OF FORMER SCOPUS PREMISES)
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<PAGE>
EXHIBIT B
(DESCRIPTION OF APPLIED PREMISES)
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EXHIBIT C
(DESCRIPTION OF VLSI PREMISES)
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EXHIBIT D
(DESCRIPTION OF STRATEGIC PREMISES)
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EXHIBIT E
(DESCRIPTION OF CAFETERIA PREMISES)
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EXHIBIT F
(DESCRIPTION OF SECURITY OFFICE)
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LOCALIZATION AND DISTRIBUTION AGREEMENT
BETWEEN
SOFTWARE PUBLISHING CORPORATION
AND
CHOTEN INC
This Agreement ("Agreement") is made effective as of February 16, 1995
(the "Effective Date"), by and between SOFTWARE PUBLISHING CORPORATION, a
Delaware corporation with its principal office located at 3165 Kifer Road, Santa
Clara, California 95051 ("SPC"); and CHOTEN INC., a Minnesota corporation with
its principal office located at 601 Second Avenue, Suite 3200, Minneapolis,
Minnesota 55402 ("Choten").
RECITALS
SPC and Choten desire that Choten localize SPC's proprietary software
Products known as "Harvard Graphics Windows version 3.x" and all subsequent
releases, enhancements, modifications, bug fixes and updates therefor for
distribution only in Japan, under the terms and conditions of this Agreement.
NOW, THEREFORE, for good and valuable consideration, SPC and Choten
agree as follows:
AGREEMENT
1. DEFINITIONS
In this Agreement (including the Recitals, and the Exhibits attached
hereto), unless the context otherwise requires, the following expressions will
bear the meanings shown:
1.1 END-USER LICENSE. The SPC standard license agreement in the form
set out in Exhibit A to this Agreement (or in such other form as SPC
prescribes).
1.2 PRODUCTS. Harvard Graphics Windows version 3.x (comprising the
software, End-User License, manuals and other printed materials prepared by SPC)
for the following platforms:
(a) Harvard Graphics for Windows V3.xJ, NEC 9800 series (HGW 3.xJN);
(b) Harvard Graphics for Windows V3.xJ, IBM compatible (HGW 3.xJI);
<PAGE>
(c) Harvard Graphics for Windows V3.xJ, Upgrade NEC 9800 series (HGW
3.xJNU);
(d) Harvard Graphics for Windows V3.xJ, Upgrade IBM compatible (HGW
3.xJIU),
(e) Harvard Graphics for Windows V3.xJ, OEM Products, NEC 9800 series
(HGW 3.xJNO); and
(f) Harvard Graphics for Windows V3.xJ, OEM Products, IBM compatible
(HGW 3.JIO).
Any upgrades, updates, corrections, modifications, new releases and
enhancements of the Products shall be deemed the Products and shall be covered
by is Agreement.
References to clauses, the parties, the Recitals, and the Exhibits are
respectively to the clauses of, and the parties, the Recitals, and the Exhibits
to this Agreement. Further, the headings in this Agreement are for use of
reference only and will not affect its interpretation.
2. GRANT OF LICENSE.
2.1 GRANT OF LOCALIZATION AND DISTRIBUTION LICENSE. During the term of
this Agreement SPC grants to Choten an exclusive license (a) to translate or
have translated the Products into the Japanese language and otherwise localize
or have localized the Products to account for cultural difference between the
United States and Japan, and (b) to copy and manufacture complete packages of
the translated Products, and distribute such packages of the translated Products
in Japan either directly or through subdistributors, original equipment
manufacturers, and value added resellers. In this regard, it is a material
condition to the rights granted to Choten hereunder that Choten assure that the
subdistributors, original equipment manufacturers, and value added resellers
distributes the translated Products in conformance with the conditions of this
Agreement, and as necessary to protect SPC's ownership and intellectual property
rights in the Products under applicable law.
2.2 LOCALIZATION OF PRODUCTS. Choten's translation of the Products will
include, without limitation, translation of the software, menus, manuals,
End-User License, registration cards, product packaging, disk labels, SPC
brochures, and all other packaging and promotional materials relating to the
distribution of the Products in Japan. Choten will advise SPC of all changes
necessary or advisable in order to comply with the local laws in Japan, and all
such changes must be first approved by SPC in writing before being implemented.
All translated materials must be first approved by SPC in writing before being
distributed by Choten in Japan. SPC agrees to respond to Choten's request for
approval within fifteen (15) calendar days of SPC's receipt of said request for
approval. If SPC does not respond to Choten within fifteen
2
<PAGE>
(15) calendar days, SPC's approval is assumed. Choten shall be obligated to
localize the Products unless Choten has commercially reasonable grounds not to
do so.
2.3 RECORDS. Choten will keep proper and accurate records of the
translated copies of the Products made by it and will provide SPC with a
quarterly statement (no later than the 45th day following the close of each
quarter) detailing the number of copies made and distributed by it in Japan
pursuant to this Agreement. Such statement shall be in a form specified by SPC.
2.4 AUDIT RIGHTS. SPC will have the right to enter Choten's
premises at any reasonable time:
(a) to audit the net number of translated copies of the Products
shipped by Choten. In the event of any discrepancy between the net
number of copies shipped by Choten and the statements provided to
SPC pursuant to Section 2.3 above, Choten will immediately rectify
such discrepancy to SPC's satisfaction, and pay to SPC all overdue
royalties, if any, with interest dating from the date when such
amounts were due. For this purpose, interest will be the lower of
1.5% of the overdue amount per month, or the highest amount
permissible under applicable law.
(b) to examine the quality of translated copies of the Products made
and distributed by Choten in accordance with Choten's obligations
pursuant to Section 2.5 below. In the event that, in the reasonable
opinion of SPC, Choten is not acting in accordance with its
obligations pursuant to Section 2.5 below, Choten will immediately
rectify such non-compliance. If Choten does not rectify such
discrepancy or non-compliance within 90 calendar days of the
discovery of the discrepancy or non- compliance, SPC may, at its
election, terminate this Agreement forthwith by service of written
notice of Choten.
2.5 TRANSLATION SCHEDULE AND QUALITY STANDARDS. Choten undertakes to
use its best endeavors to complete the translation of the Products within the
time frame and to the quality standards agreed as set forth on Exhibit B
attached hereto. On completion of the translation Choten will provide SPC with a
reasonable number of copies of the translated Products on each and every media
on which the Products has been translated and recorded, together with all
technical information related to the translation. It is expressly provided that
SPC's acceptance of the translation will neither relieve Choten from its
liabilities for defects in the translation nor make SPC responsible therefor.
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2.6 SPC DELIVERABLES. Promptly following execution of this Agreement
SPC will provide Choten with "double bite enabled" code for the Products and
object code which will be sufficient for Choten to complete the translation of
the Products as contemplated hereunder ("Localization Code"). SPC will also
provide Choten with copy of all manuals, registration cards and other written
materials which are to be translated by Choten and included in packages of the
Products for distribution in Japan. SPC will permit Choten's designated
engineers to access the SPC source code for the Products at SPC's facilities in
Santa Clara - subject to the terms of this Section 2.6. For this purpose, SPC
will provide Choten with a reasonable amount of support at SPC's facilities -
but Choten and SPC each will pay all of its own direct and indirect costs,
including but not limited to travel costs, relating to Choten's translation out
of SPC's facilities and/or localization facilities in Japan. No Choten
designated engineers will have access to the Localization Code until he/she
executes and delivers to SPC a SPC confidentiality agreement in the form
attached hereto as Exhibit C. Choten will notify SPC immediately should it
become aware of misuse or disclosure of the Localization Code or source code in
an manner prohibited by this Agreement, and will fully cooperate with SPC to
correct and limit SPC's damages resulting from such disclosure or misuse.
2.7 CHOTEN'S DELIVERABLES. The translated deliverables for the
translated Products to be provided by Choten to SPC will include (a) complete
machine-executable object code (and source code if it is made available by SPC
to Choten at SPC's facilities as described in Section 2.6 above), (b) complete
programmers' documentation in its best and most complete form then available as
well as other documentation and materials listed in Section 2.2 above, and (c)
all tools and compilers necessary for SPC to make a build of the Products being
delivered (if any such tools and compilers are readily available third party
products, Choten may identify such necessary compilers and tools rather than
provide them to SPC). Notwithstanding the foregoing, if the delivery of any
portion of any elements of the localized version of the Products, documents,
tools or any other items shall require the consent of any third party, such
assignment shall be subject to and effective as of the granting of such consent.
SPC shall be responsible for obtaining such third-party consents, provided that
Choten shall assist SPC as is reasonably necessary, at SPC's expense, in
obtaining such third party consents.
2.8 DELIVERY OF TRANSLATION DELIVERABLES. All deliverables, including
intermediate versions if specified on Exhibit B, will be delivered by Choten to
SPC at Choten's expense in conformance with Exhibit B (which exhibit also
specifies the specific format and SPC contact person for the delivery by Choten
of the deliverables for the Products). When and as SPC requests, Choten will
deliver to SPC, to the extent that it does not unreasonably interfere with
Choten's ability to comply with the time frame set forth on Exhibit
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B, a portion of the translated Products in its then most current form.
2.9 TRANSLATION OF UPDATES AND ENHANCEMENTS. During the term of this
Agreement, SPC will promptly provide Choten with updates and upgrades to the SPC
Products free of charge. Choten will promptly translate, at its expense, and
make part of the Products, such updates and upgrades for distribution hereunder.
All such translations will automatically be assigned to SPC as provided in
Section 3 below. Choten shall obligated to localize the Products unless Choten
has commercially reasonable grounds for not to do so.
2.10 RESTRICTIONS ON TRANSLATIONS. Choten will not be entitled to copy
or translate any materials of SPC other than the Products, the packaging or the
End-User License without SPC's prior written approval.
2.11 SUPPORT. During the terms of this Agreement, SPC shall provide the
Technical Support and the Error Fixes through appropriate communications
mechanisms (telephone, fax, or electronic mail) to Choten's designated support
contact or backup support contact if the primary designated contact is
unavailable. Choten will receive technical information on the development of
solutions, software problem analysis, and responses to technical issues as they
pertain to the operation of the Products.
2.12 TECHNICAL SUPPORT. During the term of this Agreement, SPC shall:
(i) designate an individual or individuals and fax numbers as main points of
contact at SPC for fax hotline support; and (ii) provide such fax hotline
support. SPC shall use its best efforts to respond to all fax inquiries
immediately, and, subject to its obligations with respect to Error Fixes set for
in Section 2.13 below, no later than 48 hours after the initial inquiry. The
obligations set forth in this Section shall be referred to as "Technical
Support".
2.13 ERROR FIXES. During the term of this Agreement, SPC shall provide
bug fixes, error fixes, workarounds, code corrections, and comparable solutions
to defects and malfunctions (collectively, "Error Fixes") of the Products
according to the schedule agreed by the parties.
3. TITLE TO TRANSLATED PRODUCTS AND MATERIALS.
3.1 SPC OWNERSHIP. Choten agrees that the Products (including the
source code, if made available by SPC to Choten) and all elements of the
translated version of the Products conducted by Choten hereunder are, and will
remain at all times, the property of SPC and SPC will retain all right, title
and interest thereto. Choten will have no right or license to use the Products
or the translated version of the Products except as expressly specified in this
Agreement.
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3.2 ASSIGNMENT OF TRANSLATED PRODUCTS AND MATERIALS. Choten further
hereby irrevocably assigns and transfers to SPC all right, title and interest
Choten may have or acquire in the translated Products, including the derivative
work copyright therein, and the deliverables thereto, including all related
trademarks, patents, copyrights, moral rights, and any other intellectual
property rights ("Assigning Rights"). Choten agrees that it will execute, upon
SPC's request, one or more written assignments in the form attached hereto as
Exhibit D or substantially similar thereto, and other documents as SPC may
reasonably request in order to document and/or record SPC's rights as stated
herein. Such documents may be filed or recorded with such governmental
authorities as SPC deems appropriate, including without limitation the United
States Copyright Office. Choten hereby waives and agrees never to assert any
moral rights it may have in the Products or in the translated Products, during
and after the expiration or any termination of this Agreement. Notwithstanding
the foregoing, if the assignment of any portion of any elements of the localized
version of the Products, documentation, tools or any other items shall require
the consent of any third party, such assignment shall be subject to and
effective as of the granting of such consent. SPC shall be responsible for
obtaining such third-party consents, provided that Choten shall assist SPC as is
reasonable necessary, at SPC's expense, in obtaining such third party consents.
THE ASSIGNING ASSETS ARE ASSIGNS OR TRANSFERS AS IS, WHERE IS AND CHOTEN MAKES
NO WARRANTY RELATING TO THE ASSIGNING ASSETS, EXPRESS OR IMPLIED, AND EXPRESSLY
EXCLUDED ANY WARRANTY OR MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR
NON-INFRINGEMENT.
3.3 WAIVER OF BENEFITS OF OWNERSHIP. To the extent that any rights of
Choten in and in relation to the translated version of the Products made
pursuant to this Agreement cannot be assigned to SPC under any applicable law,
then in such instance Choten hereby irrevocably waives the benefit of any such
rights in any part of the world.
4. CHOTEN'S OBLIGATIONS.
4.1 MARKETING AND DISTRIBUTION COMMITMENT. Choten will use its best
efforts to (a) vigorously promote the distribution of the Products in Japan in
accordance with SPC's terms and policies as announced from time to time; and (b)
satisfy those reasonable criteria and policies with respect to Choten's
obligations under this Agreement communicated in writing by SPC to Choten from
time to time. Specifically, Choten will use commercially reasonable efforts to,
during the term of this Agreement implement the marketing and promotion programs
and budget commitments for the distribution of the Products by Choten as set
forth on Exhibit E attached hereto. These marketing commitments may be changed
from time-to-time on the mutual agreement of the parties. Failure to meet the
marketing commitments for the Products for each of years shall not be grounds
for termination of the Agreement.
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4.2 SALES GOALS. Choten will use its best efforts to achieve the sales
goals during first year from the first customer shipment of the Products in
Japan, as described and set forth on Exhibit F attached hereto, consisting of
targeted unit sales of the Products in Japan. Following the initial period (and
within 60 days of the end of the then current year), the parties will mutually
agree on the quarterly and annual sales goals for the immediately succeeding
year - which in any event will be no less than the sales goals for the
immediately preceding year. In the event that SPC and Choten are unable to
agree, the annual sales goals for the immediately succeeding year will be the
same amount of immediately preceding year. Failure to meet the sales goals for
the Products for each of years shall not be ground for termination of this
Agreement.
4.3 SUPPORT AND RESOURCE COMMITMENTS. Choten further commits to provide
an adequate level of support, in line with software industry standards in the
Japanese market, for the Products at its own expense and in accordance with the
customer sales and support staffing levels, training and related customer
service commitment as described and set forth on Exhibit G attached hereto.
These support and resource commitments may be changed from time-to-time on the
mutual agreement of the parties. Choten's failure to meet the agreed-on
commitments will be a material breach of this Agreement.
4.4 NO COMPETITIVE PRODUCTS. Choten agrees and undertakes not to stock,
promote or distribute any product that directly competes with the Products.
4.5 PRODUCT RETURNS. Choten agrees and undertakes to be solely
responsible for all returns of the translated Products at its own expense,
provided, however, Choten shall have the right to deduct license fees payable to
SPC to account for returns received and credited in that calendar quarter.
4.6 DISTRIBUTION SUBJECT TO END-USER LICENSE. Choten agrees and
undertakes to ensure that the distribution of the Products in Japan will be
subject to the End-User License, and in particular but without limitation,
Choten will ensure that all its customers are made aware, prior to the license
to the customer being concluded, that the Products are being supplied subject to
the terms of the End-User License. For this purpose, translated copy of the
End-User License will be included in each package of the Products distributed by
Choten in Japan.
4.7 QUALITY OF TRANSLATED PRODUCT; INDEMNITY. Choten will be
responsible for the quality of the copies of the Products and the accuracy of
the translations made by it pursuant to this Agreement and agrees to indemnify
and hold SPC harmless from and against, any and all claims, costs, damages,
liabilities and expenses (including legal fees) arising out of Choten's
distribution of the Products in Japan.
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4.8 TRANSLATION EXPENSE. The translation of the Products, packaging and
End-User License will be at the entire expense of Choten.
4.9 INVENTORY. Choten will maintain at least one warehouse facility in
Japan, and will maintain an inventory of the Products and warehousing facilities
sufficient to serve adequately the needs of its customers on a timely basis. As
a minimum, such inventory will include not less than the quantity of the
Products necessary to meet Choten's reasonably anticipated demands for a 30 day
period.
4.10 CHOTEN FINANCIAL CONDITION. Choten will maintain and employ in
connection with Choten's business under this Agreement such working capital and
net worth as may be required in SPC's reasonable opinion to enable Choten to
carry out and perform all of Choten's obligations and responsibilities under
this Agreement. From time to time, on reasonable notice by SPC, Choten will
furnish such financial reports and other financial data as SPC may reasonably
request as necessary to determine Choten's financial condition.
4.11 PACKAGING. Choten will distribute the Products with all packaging,
warranties and disclaimers and license agreements intact as specified by SPC,
and will instruct its customers as to the terms of such documents applicable to
the Products.
4.12 CHOTEN COVENANTS. Choten will: (a) conduct business in a manner
that reflects favorably at all times on the Products and the good name, good
will and reputation of SPC; (b) avoid deceptive, misleading or unethical
practices that are or might be detrimental to SPC, the Products or the public;
(c) make no false or misleading representations with regard to SPC or the
Products; (d) not publish or employ, or cooperate in the publication or
employment of, any misleading or deceptive advertising material with regard to
SPC or the Products; (e) make no representations, warranties or guarantees to
customers or to the trade with respect to the specifications, features or
capabilities of the Products that are inconsistent with the literature
distributed by SPC; and (f) not enter into any contract or engage in any
practice detrimental to the interests of SPC in the Products.
4.13 COMPLIANCE WITH LAW. Choten will comply with all applicable
international, national, state, regional and local laws and regulations in
performing its duties hereunder and in any of its dealings with respect to the
Products.
4.14 JAPANESE GOVERNMENTAL APPROVAL. If any approval with respect to
this Agreement, or the notification or registration thereof, will be required at
any time during the term of this Agreement, with respect to giving legal effect
to this Agreement in Japan, Choten will immediately take whatever steps may be
necessary
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in this respect, and any charges incurred in connection therewith will be for
the account of Choten. Choten will keep SPC currently informed of its efforts in
this connection.
4.15 MARKET CONDITIONS. Choten will advise SPC promptly concerning any
market information that comes to Choten's attention respecting SPC, the
Products, SPC's market position or the continued competitiveness of the Products
in the Japanese marketplace. Choten will confer with SPC from time to time at
the request of SPC on matters relating to market conditions, sales forecasting
and product planning relating to the Products.
5. ROYALTY PAYMENTS.
5.1 ROYALTY PAYMENTS. For each copy of the Products that Choten shipped
to end users, subdistributor, OEM manufacturers, and value-added resellers,
Choten will pay to SPC the per unit royalty as set forth in Exhibit H attached
hereto. The per unit royalty is 17.5% of either (i) the recommended retail price
("RRP") of the Products in Japan if the Product is shipped stand alone; or (ii)
the product price charged by Choten's OEM manufacturer less the cost of goods if
the Products are shipped as an OEM product. For this purpose and within 60 days
of the end of the then-current year, SPC will set and notify Choten of the RRP
in effect for the immediately succeeding year. Choten will provide to SPC an
analysis of the current local market conditions in Japan ("Market Information")
and SPC will consider the Market Information provided in good faith in setting
the RRP; but in no event will the RRP for the succeeding year be more than then
RRP then in effect. If the term of this Agreement is extended beyond the initial
period, as provided in Section 6.1 below, the Agreement continues under the same
terms and conditions as the original Agreement.
5.2 MINIMUM ANNUAL ROYALTY PAYMENTS. To maintain its rights granted by
SPC under this Agreement, Choten agrees to pay to SPC the following minimum
annual royalties during each year of the term of this Agreement:
(a) For the period commencing from the Effective Date through June 30,
1996, Choten will pay to SPC a minimum annual royalty of Y97,700,000 in
two payments consisting of (i) a first payment of Y40,000,000 by no
later than September 30, 1995, and (ii) a second payment of Y57,700,000
by no later than June 30, 1996.
(b) Commencing July 1, 1996, and for each 12-month period during the
remaining term of this Agreement extending from July 1st to June 30th
each year, Choten will pay to SPC a minimum annual royalty which will
be mutually agreed to by the parties in good faith at least 60 days
prior to the commencing of the next succeeding 12-month period. In the
event that Choten and SPC cannot agree on the minimum annual royalty
for
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any 12-month period, then the minimum annual royalty for that year will
be Y97,700,000 the first installment consisting of Y40,000,000 to be
paid by December 31st of that year, and the second installment
consisting of Y57,700,000 to be paid by June 30th of that year. The
minimum annual royalty will be paid in two payments, in an amount also
to be agreed on by the parties, the first payment to be paid by
December 31st and the second payment to be paid by June 30th during
each such 12- month period.
(c) For purposes of payment of the minimum annual royalties, actual
royalties paid by Choten will be credited against and will reduce the
payment of minimum annual royalties as follows:
(i) for the period from the Effective Date until
September 30, 1995, actual royalties paid during that period will be
credited against the Y40,000,000 installment due on September 30, 1995.
The payment described above shall be credited to future royalties
between January 1, 1996 and June 30, 1996.
(ii) for the period of October 1, 1995 until June 30,
1996, actual royalties paid during that period will be credited against
the Y57,700,000 installment due on June 30, 1996;
(iii) for each successive period following June 30,
1996, from July 1st to December 1st, actual royalties paid during that
period will be credited again the installment due on December 31st; and
(iv) for each successive period following June 30,
1996, from January 1st to June 30th, actual royalties paid during the
period between January 1st and June 30th of that year will be credited
against the installment due on June 30th.
The parties agree that the remedy for the failure to pay the minimum annual
royalty payments shall be limited to the rights to terminate the agreement by
SPC in accordance with Section 6.5. [Notwithstanding the above, Choten is still
obligated to pay to SPC royalties on actual sales of the Products made by
Choten, and SPC does not waive its rights to collect such royalties.]
5.3. PAYMENT TERMS. Choten will pay the per unit royalties described in
Section 5.1 above within 60 days following the close of the end of the quarter
for which the license fees are due. This payment will be accompanied by a report
containing Choten's calculation of royalties paid, as described in Section 2.3
above.
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5.4 TAXES AND LATE PAYMENT. The royalties payable by Choten to SPC are
exclusive of any sales, use and/or all other taxes or duties, however
designated, except for (i) taxes on SPC's net income and (ii) withholding taxes
required to be paid by Choten to Japanese taxing authority, if any. Any such
taxes or duties required to be paid or collected by SPC shall be paid by Choten
to SPC, unless Choten provides to SPC and appropriate certificate of exemption
from the applicable taxing authority. In the event of any delay in making
payment of amounts payable to Choten to SPC hereunder, SPC may charge interest
at the lower of 1.5% per month from the due date until payment is received by
SPC, or the maximum amount payable under applicable law.
5.5 NO SETOFF. Choten will not setoff or offset against payment to SPC
amounts that Choten claims are due to it. Choten will bring any claims or causes
of action it may have in a separate action and waives any right it may have to
offset, setoff or withhold payment to SPC for the Products.
6. TERM AND TERMINATION
6.1 TERM. This Agreement will commence on the Effective Date and will
continue by the end of June 1999. Thereafter, unless and until terminated as
provided below, this Agreement will be renewed for additional periods of one
year each on the mutual agreement of the parties in writing.
6.2 TERMINATION WITHOUT CAUSE. At any time following the initial term
of this Agreement, either party may terminate this Agreement upon giving the
other party not less than 120 days prior written notice.
6.3 TERMINATION FOR CAUSE. If either party defaults in the performance
of any of its material obligations under this Agreement, then the non-defaulting
party may give written notice to the defaulting party that if the default is not
cured within 60 days this Agreement will be terminated. If the default is not
cured during the 60 day period then this Agreement will terminate immediately
upon the provision of written notice of termination from the non-defaulting
party.
6.4 FAILURE TO COMPLETE TRANSLATION. SPC may terminate this Agreement
in accordance with Section 6.3 above if the translation of the Products and
their related materials are not completed in accordance with Exhibit B; provided
however, Choten shall no be held responsible if SPC should fail to provide
Choten with Localization Code and support necessary to complete the localization
of the Products within reasonable time frame. Failure to provide required
Localization Code and support shall be considered a default by SPC.
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6.5 FAILURE TO MEET ANNUAL ROYALTY COMMITMENTS. Failure to meet the
Annual Royalty Commitment for the Product(s) in Exhibit H attached hereto, shall
be grounds for termination of this Agreement with respect to the Product(s). SPC
must provide written notice of termination within thirty (30) days of Choten's
failure to meet the Annual Royalty Commitment for the Product(s).
6.6 TERMINATION OF INSOLVENCY. Either party may, in its sole
discretion, terminate this Agreement forthwith without notice to the other party
(a) upon the institution by or against the other party of insolvency,
receivership or bankruptcy proceedings or any other proceedings for the
settlement of the other party's debts, (b) upon the other party making an
assignment for the benefit of creditors, or (c) upon the other party's
dissolution, or (d) the other party suffers any other action in consequence of
debt or insolvency.
7. CONSEQUENCES OF TERMINATION.
7.1 NO RIGHT TO DISTRIBUTE. On termination of this Agreement the
license granted to Choten to copy and distribute the Products will immediately
cease except such supporting software, information and data which Choten will
require to continue to support the Products beyond the date of expiration of
termination - but Choten will be entitled to sell off its existing stock of the
Products subject to Section 7.2 below.
7.2 SPC'S PURCHASE OF INVENTORY. SPC will have the option, exercisable
by notice in writing served on Choten either before or within 15 days after the
date of termination of this Agreement, to require Choten to deliver to SPC or to
its order all or part of Choten's inventory of the Products - subject to payment
by SPC of full manufacturing cost of such products. If SPC exercises this
option, Choten will not be obliged to pay the royalties for the repurchased
units of the Products under Section 5.1 above.
7.3 RETURN OF CONFIDENTIAL INFORMATION. Within 30 days after the
termination or expiration of this Agreement, Choten will prepare and return to
SPC (at SPC's expense) all SPC confidential information and other SPC materials
in Choten's possession, as SPC may direct.
8. COPYRIGHT AND CONFIDENTIALITY.
8.1 COPYRIGHT NOTICES. Copyright in the program included in the
Products is owned by SPC, and not by Choten or any of Choten's agents or
customers. Choten will not remove any legal notices or copyright marks which
appear in the Products and will ensure that any and all copies of the Products
made by Choten include such notices or marks.
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8.2 NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Each party will keep
confidential and will not disclose to any third party any trade secrets and
proprietary, technical, commercial and other information relating to the other
party without the prior written consent of the other party. In particular,
Choten will keep confidential and will not disclose to any third party nor use
(except pursuant to this Agreement) any information relating to the Products.
8.3 INFORMATION THAT IS NOT CONFIDENTIAL. For purposes of Section 8.2
above, the following information will not be deemed to be confidential:
(a) information that was in the public domain at the time at which the
recipient acquired it or came into the public domain after that
time through no fault of the recipient;
(b) information that was in the recipient's knowledge before it was
acquired; or
(c) information that was subsequently disclosed to the recipient by a
third party who has the right to make such a disclosure.
(d) information that has been independently developed by the recipient.
9. TRADEMARKS AND TRADE NAMES.
9.1 USE OF TRADEMARK. During the term of this Agreement, Choten will
have the right to indicate to the public in Japan that it is a licensee of SPC
in relation to the Products and to advertise the Products under the trademarks
and trade names that SPC may adopt from time to time (the "SPC Trademarks").
9.2 NO ALTERATION OR REMOVAL OF TRADEMARKS. Choten will not alter or
remove or obscure or translate any of the SPC Trademarks, and it will not at any
time during or after the term of this Agreement attempt to register any
trademarks or trade names similar to the SPC Trademarks.
9.3 NO USE OF OTHER TRADEMARKS. Choten will not use any trademarks
other than the SPC Trademarks in connection with the Products without the prior
written agreement of SPC; provided, however, SPC agrees that Choten may affix
its own brand name, trade symbol, logo or their marking to localized Products,
in addition to that of SPC, but in no way shall Choten alter SPC's mark.
Choten's brand name, trade symbol, logo or other markings must not be more
prominent thatn SPC's mark. Choten shall deliver SPC for its approval copies of
any advertising or promotional packaging, materials bearing the Trademarks used
by Choten with respect to the Products. SPC agrees to respond to Choten's
request for approval
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within fifteen (15) calendar days of SPC's receipt of said request for approval.
If SPC does not respond to Choten within fifteen (15) calendar days, SPC's
approval is assumed.
9.4 PRIOR SPC APPROVAL. All representations of the SPC Trademarks that
Choten intends to use will first be submitted to SPC for written approval.
9.5 NO RIGHTS IN TRADEMARKS. Choten has paid no consideration for the
use of SPC's trademarks, trade names, logos, designations or copyrights, and
nothing contained in this Agreement will give Choten any right, title or
interest in any of them. Choten acknowledges that SPC owns and retains all
trademarks, trade names, logos, designations, copyrights and other proprietary
rights in or associated with the Products, and agrees that Choten will not at
any time during or after this Agreement assert or claim any interest in or do
anything that may adversely affect the validity of any of SPC's Trademarks. In
this regard, Choten agrees to use reasonable efforts to protect SPC's
proprietary rights and to cooperate in SPC's efforts to protect its proprietary
rights.
10. INFRINGEMENT PROCEEDINGS AND INDEMNIFICATION.
10.1 SPC'S INDEMNIFICATION OF CHOTEN. If Choten learns of any possible
infringement of any U.S. and/or Japanese patent, copyright or trade mark of any
third party arising from the distribution of the Products in Japan pursuant to
this Agreement, Choten will immediately notify SPC. At the written request of
Choten, SPC will have the sole conduct of any proceedings (including the right
to settle a compromise) issued by any third party that the distribution of the
Products in Japan by Choten infringes any U.S. or Japanese intellectual property
rights of that third party. If Choten requests the conduct of any such
proceedings, such conduct will be at the cost of SPC and SPC will indemnify
Choten in resepct of any costs, damages or reasonable expenses incurred by
Choten and arising from such proceedings or incurred in the course of or in
connection with the performance of this Agreement provided that Choten
co-operates and assists SPC in conduct of such proceedings including, where
appropriate, lending its name.
10.2 NO INDEMNITY. SPC will have no liability and will not defend
Choten in respect of any proceeding arising from the supply of the Products
otherwise than in accordance with this Agreement, including without limitation,
the distribution of any Products incorrectly translated or in combination with
any other products or processes or if the Products are modified or adapted
without the prior agreement in writing of SPC or in respect of any trademark
infringement claims arising from the use by Choten of any marking or branding
not approved by SPC. In particular, SPC will have no liability and will not
defend Choten in respect of any proceeding
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where an infringement results from Choten's translation and not from the
original Products.
10.3 CHOTEN'S INDEMNITY OF SPC. Choten will indemnify SPC and its
affiliates for, and hold them harmless from, any loss, expense (including
reasonable attorney's fees), damage, or liability arising out of any claim,
demand, suit, or action alleging facts that constitute a breach of this
Agreement, including but not limited to Choten's distribution of defectively
translating Products, Choten's or Affiliate's misrepresentation of the Products
in Japan, or infringement of third party intellectual property rights (through
no fault of SPC) - provided that SPC promptly informs Choten in writing of any
such claim, demand, suit or action. SPC will not agree to the settlement of any
such claim, demand, suit or action prior to a final judgement thereon without
the consent of Choten, whose consent will not be unreasonably withheld.
10.4 ENTIRE LIABILITY; WAIVER OF REMEDIES. The provisions of this
Section 10 constitute the entire liability and obligations of SPC and the
exclusive remedy of Choten in respect of any alleged infringement of any third
party rights arising from the distribution by Choten of the Products pursuant to
this Agreement, and Choten waives any remedies it may have at common law,
statute or otherwise.
11. LIMITED WARRANTY; DISCLAIMER OF WARRANTIES.
11.1 LIMITED WARRANTY. SPC MAKES NO WARRANTIES OR REPRESENTATIONS AS TO
THE PERFORMANCE OF THE PRODUCT OR AS TO SERVICE TO CHOTEN OR TO ANY OTHER
PERSON, EXCEPT AS SET FORTH IN SPC'S LIMITED WARRANTY AS STATED IN THE END-USER
LICENSE. SPC RESERVES THE RIGHT TO CHANGE THE WARRANTY AND SERVICE POLICY SET
FORTH IN SUCH LIMITED WARRANTY, OR OTHERWISE, AT ANY TIME, WITHOUT FURTHER
NOTICE AND WITHOUT LIABILITY TO DISTRIBUTOR OR TO ANY OTHER PERSON.
11.2 DISCLAIMER OF WARRANTIES. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, ALL IMPLIED WARRANTIES, INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT, ARE
HEREBY EXCLUDED BY SPC.
11.3 CHOTEN WARRANTY. Choten will make no warranty, guarantee or
representation, whether written or oral, on SPC's behalf.
12. LIMITED LIABILITY.
12.1 NO CONSEQUENTIAL DAMAGES. REGARDLESS WHETHER ANY REMEDY SET FORTH
HEREIN OR IN SPC'S LIMITED WARRANTY AS STATED IN THE END- USER LICENSE FAILS OF
ITS ESSENTIAL PURPOSE OR OTHERWISE, NEITHER
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PARTY SHALL BE LIABLE FOR ANY LOST PROFITS OR FOR ANY DIRECT, INDIRECT,
INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR OTHER SPECIAL DAMAGES SUFFERED BY THE
OTHER PARTY, ITS CUSTOMERS OR OTHERS ARISING OUT OF OR RELATED TO THIS AGREEMENT
OR THE PRODUCTS, FOR ALL CAUSES OF ACTION OF ANY KIND (INCLUDING TORT, CONTRACT,
NEGLIGENCE, STRICT LIABILITY AND BREACH OF WARRANTY) EVEN IF ONE PARTY BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
12.2 MAXIMUM LIABILITY. EXCEPT FOR LIABILITY FOR PERSONAL INJURY OR
PROPERTY DAMAGE ARISING FROM SPC'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, IN NO
EVENT WILL SPC'S TOTAL CUMULATIVE LIABILITY IN CONNECTION WITH THIS AGREEMENT OR
THE PRODUCTS, FROM ALL CAUSES OF ACTION OF ANY KIND, INCLUDING TORT, CONTRACT,
NEGLIGENCE, STRICT LIABILITY AND BREACH OF WARRANTY, EXCEED THE TOTAL AMOUNT
PAID BY CHOTEN TO SPC HEREUNDER.
13. GENERAL PROVISIONS.
13.1 NOTICE. Any notice under this Agreement will be in writing and
will be sent by prepaid registered air mail post or by facsimile transmission
(confirmation to be posted within 3 days of the facsimile transmission)
addressed to the party at the above address or such other address as may be
notified by that party during this Agreement. A notice will be deemed received
if sent by registered air mail post on the 10th day after the date of posting
and, if sent by facsimile on the date of transmission provided that written
confirmation is posted by registered air mail post within three days of the
transmission.
13.2 FORCE MAJEURE. Non-performance of either party will be excused to
the extent that performance is rendered impossible by strike, fire, flood,
governmental acts or orders or restrictions, failure of suppliers or any other
reason where failure to perform is beyond the control and not caused by the
negligence or fault of the non-performing party.
13.3 ASSIGNMENT. Choten may not transfer, assign, charge, sub-license
or sub-contract, directly and indirectly, its obligations under this Agreement
without the prior written consent of SPC. Notwithstanding the foregoing, this
Agreement shall be automatically assigned to Kubota Corporation, a Japanese
corporation ("Kubota") upon written notice from Kubota and Choten of such
assignment together with the copy of the assignment agreement executed by Choten
and Kubota. Such assignment will provide that Kubota and Choten are jointly and
severally liable for Choten's performance as described under this agreement.
13.4 SEVERABILITY. If any provision of this Agreement is held to be
invalid by a court of competent jurisdiction, then the remaining provisions will
nevertheless remain in full force and effect.
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13.5 WAIVER. No waiver of any term or condition of this Agreement will
be valid or binding on either party unless agreed to in writing by both parties.
The failure of either party to enforce at any time any of the provisions of this
Agreement, or the failure to require at any time performance by the other party
of any of the provisions of this Agreement, will in no way be construed to be a
present or future waiver of such provision, nor in any way affect the validity
of such provision or the right of either party to enforce each and every such
provision thereafter.
13.6 ENGLISH LANGUAGE. This Agreement is in the English language only,
which language will be controlling in all respect and all versions in any other
language will be for accommodation only and will not be binding upon the
parties. All communications and notices to be made or given pursuant to this
Agreement will be in the English language.
13.7 GOVERNING LAW. This Agreement will be governed by and construed
under the laws of the State of California. The federal and state courts of Santa
Clara County, California will have exclusive jurisdiction and venue to
adjudicate any dispute arising out of this Agreement. Choten hereby expressly
consents to (a) the personal jurisdiction of the courts of California, and (b)
service of process being effected upon it by registered mail sent to the address
set forth on the cover page of this Agreement.
13.8 ARBITRATION. Any dispute between the parties arising out of this
Agreement will be settled by arbitration to be held in Santa Clara County,
California in accordance with the rules of the American Arbitration Association.
The arbitration will be conducted by a single arbitrator mutually selected by
the parties. The parties agree that the decision of the arbitrator will be final
and binding and may be enforced in any court of competent jurisdiction. The
substantially prevailing part in the arbitration of any subsequent litigation
will be entitled to recover from the other party all the costs, attorneys' fees
and other expenses incurred by such party in the arbitration or litigation. Each
party shall have a limited time of three (3) months after service of notice of
the Arbitration Demand, to conduct limited discovery as shall be determined by
the arbitrator, depending upon the complexity of the issues to be decided at the
Arbitration.
13.9 ENTIRE AGREEMENT. This Agreement, the End-User License, and all
exhibits attached hereto together constitute the entire agreement between the
parties pertaining to the subject matter hereof, and supersedes in their
entirety any and all written or oral agreements previously existing between the
parties with respect to the subject matter. Choten acknowledges that it is not
entering into this Agreement on the basis of any representations not expressly
contained herein.
13.10 EQUITABLE RELIEF. Choten acknowledges that any breach
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of its obligations under this Agreement with respect to the proprietary rights
or confidential information of SPC will cause SPC irreparable injury for which
there are inadequate remedies at law, and therefore SPC will be entitled to
equitable relief in addition to all other remedies provided by this Agreement or
available at law.
13.11 DUE EXECUTION. The party executing this Agreement represents and
warrants that he or she has been duly authorized under Choten's charter
documents and applicable law to execute this Agreement on behalf of Choten and
its affiliates.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective on the date specified below.
SOFTWARE PUBLISHING CORPORATION CHOTEN, INC.
By:_______________________ By:__________________________
Name:_____________________ Name:________________________
Title:____________________ Title:_______________________
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EXHIBIT A
SPC END USER LICENSE AGREEMENT
<PAGE>
SOFTWARE LICENSE AGREEMENT
IF AFTER READING THIS SOFTWARE LICENSE AGREEMENT YOU DO NOT ACCEPT OR AGREE TO
THESE TERMS, YOU MAY, WITHIN NINETY (90) DAYS, RETURN THIS ENTIRE PACKAGE UNUSED
AND UNOPENED TO THE PERSON FROM WHOM YOU ACQUIRED IT FOR A FULL REFUND. Software
Publishing Corporation grants you a nonexclusive, nontransferable license to use
this copy of the program and accompanying documentation according to the
following terms:
LICENSE
FOR THE SOFTWARE PROGRAM YOU MAY:
a. install the program on one computer or network server and concurrently have
a single user access the program from such network, and you may make a
second copy of the program onto either a home computer or a portable
computer provided that the program is installed on a single computer which
is used by you at least 80% of the time that the computer is in use;
b. use as a single concurrent node in a network environment;
c. make one (1) copy of the program in machine readable form solely for backup
purposes, provided that you reproduce all proprietary notices on the copy;
and
d. physically transfer the program from one computer to another, provided that
the program is installed on only one computer at a time except as provided
in subsection (a) above.
YOU MAY NOT:
a. use the program on more than one computer or server at a time;
b. modify, translate, reverse engineer, decompile, disassemble, create
derivative works based on, or copy (except for the backup copy) the program
or the accompanying documentation;
c. rent, transfer or grant any rights in the program or accompanying
documentation in any form to any person without the prior written consent
of Software Publishing Corporation; or
d. remove any proprietary notices, labels, or marks on the program and
accompanying documentation.
This license is not a sale. Title and copyrights to the program, accompanying
documentation and any copy made by you remain with Software Publishing
Corporation. Unauthorized copying of the program or the accompanying
documentation, or failure to comply with the above restrictions, will result in
automatic termination of this license and will make available to Software
Publishing Corporation other legal remedies.
UPGRADES
Your use of this upgrade is governed by the terms of this Agreement. If the
upgrade replaces a Software Publishing program, you agree to destroy prior
versions upon receipt of this upgrade.
LIMITED WARRANTY AND DISCLAIMER
Software Publishing Corporation warrants that, for a period of ninety (90) days
from the date of delivery to you as evidenced by a copy of your receipt, the
diskettes on which the program is furnished under normal use will be free from
defects in materials and workmanship and the program under normal use will
perform without significant errors that make it unusable. Software Publishing
Corporation's entire liability and your exclusive remedy under this warranty
(which is subject to your returning the program to Software Publishing
Corporation or an authorized dealer with a copy of your receipt) will be, at
Software Publishing Corporation's option, to attempt to correct or help you
around errors with efforts which Software Publishing Corporation believes
suitable to the problem, to replace the program or diskettes with functionally
equivalent software or diskettes, as applicable, or to refund the purchase price
and terminate this Agreement.
EXCEPT FOR THE ABOVE EXPRESS LIMITED WARRANTIES, SOFTWARE PUBLISHING CORPORATION
MAKES AND YOU RECEIVE NO WARRANTIES OR CONDITIONS, EXPRESS, IMPLIED, STATUTORY
OR IN ANY COMMUNICATION WITH YOU, AND SPECIFICALLY DISCLAIMS ANY IMPLIED
WARRANTY OF NONINFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE. Software Publishing Corporation does not warrant that the operation of
the program will be uninterrupted or error free.
SOME STATES DO NOT ALLOW THE EXCLUSION OF IMPLIED WARRANTIES SO THE ABOVE
EXCLUSIONS MAY NOT APPLY TO YOU. THIS WARRANTY GIVES YOU SPECIFIC LEGAL RIGHTS.
YOU MAY ALSO HAVE OTHER RIGHTS WHICH VARY FROM STATE TO STATE.
LIMITATION OF LIABILITY
IN NO EVENT WILL SOFTWARE PUBLISHING CORPORATION BE LIABLE FOR ANY DAMAGES,
INCLUDING LOSS OF DATA, LOST PROFITS, COST OF COVER OR OTHER SPECIAL,
INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES ARISING FROM THE USE OF THE
PROGRAM OR ACCOMPANYING DOCUMENTATION, HOWEVER CAUSED AND ON ANY THEORY OF
LIABILITY. THIS LIMITATION WILL APPLY EVEN IF SOFTWARE PUBLISHING CORPORATION OR
AN AUTHORIZED DEALER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. YOU
ACKNOWLEDGE THAT THE LICENSE FEE REFLECTS THIS ALLOCATION OF RISK. SOME STATES
DO NOT ALLOW THE LIMITATION OR EXCLUSION OF LIABILITY FOR INCIDENTAL OR
CONSEQUENTIAL DAMAGES, SO THE ABOVE LIMITATION MAY NOT APPLY TO YOU.
GOVERNMENT RESTRICTED RIGHTS LEGEND
Use, duplication or disclosure by the United States Government is subject to
restrictions of Restricted Rights for computer software developed at private
expense as set forth in FAR ss. 52.227-19 or DOD FAR Supplement ss.
252.227-7013(c)(1)(ii), and successors thereof, as applicable. Software
Publishing Corporation, 3165 Kifer Road, P.O. Box 54983, Santa Clara, CA
95056-0983.
GENERAL
This Agreement will be governed by the law of the State of California, without
reference to conflict of laws principles. This Agreement is the entire agreement
between us and supercedes any other communications or advertising with respect
to the program and accompanying documentation. If any provision of this
Agreement is held invalid, the remainder of this Agreement shall continue in
full force and effect. If you have any questions, please contact in
writing:Software Publishing Corporation Customer Service, P.O. Box 54983 Santa
Clara, CA 95056-0983. Return of the registration card is required for:
o notices of updates and enhancements
o eligibility for customer service and product support
<PAGE>
EXHIBIT B
TRANSLATION SCHEDULE AND QUALITY STANDARDS
TRANSLATION SCHEDULE:
Choten will complete and deliver to SPC all materials as indicated in the
Agreement and this exhibit for the full translation of each of SPC's products as
indicated below:
Completion Date Product
- - --------------- -------
7/1/95 Harvard Graphics for Windows V3.xJ, NEC 9800
series (HGW 3.xJN)
7/1/95 Harvard Graphics for Windows V3.xJ, IBM compatible (HGW
3.xJI);
TBD Harvard Graphics for Windows V3.xJ, Upgrade NEC 9800
series (HGW 3.xJNU);
TBD Harvard Graphics for Windows V3.xJ, Upgrade IBM
compatible (HGW 3.xJIU),
TBD Harvard Graphics for Windows V3.xJ, OEM Products, NEC
9800 series (HGW 3.xJNO); and
TBD Harvard Graphics for Windows V3.xJ, OEM
Products, IBM compatible (HGW 3.xJIO).
Quality Standards:
Translation of all SPC products by Choten as indicated above will include
the following (in addition to the specifications set forth in the Agreement):
1. Translation will include language enablement of the software program to
accommodate Japanese characters and fonts;
2. Translation will include the translation from English into Japanese of:
- the End-User License;
- the instruction manuals;
- the product packaging; and
- the screens, messages, menus and any other components of the
user interface of the product.
3. Clipart and other standard images may be added to show Japanese
representations.
4. Translation will include certain additional features to be mutually agreed
to by SPC and Choten that are important in the Japanese market (such as
doughnut charts, radar charts, import/export of Japanese file formats and
others).
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<PAGE>
EXHIBIT C
SPC CONFIDENTIALITY AGREEMENT
SOFTWARE PUBLISHING CORPORATION CONFIDENTIALITY AGREEMENT
This Agreement is effective as of the 1st day of January, 1995 between
Software Publishing Corporation ("SPC") and Choten Inc. ("Choten").
SPC is in the business of developing, manufacturing and marketing business
application software products, and Choten is in the business of translating and
distributing software products in Japan and in other markets. In order for
Choten to localize and distribute SPC's product in Japan (the "Business
Purpose"), as contemplated in that certain Localization and Distribution
Agreement between the parties effective on the same date herewith (the
"Localization Agreement"), Choten and SPC recognize that there is a need to
disclose to Choten certain confidential information of SPC to be used only for
the Business Purpose and to protect such confidential information from
unauthorized use and disclosure.
In consideration of the disclosure of such information by SPC, Choten
agrees as follows:
1. CONFIDENTIAL INFORMATION. This Agreement will apply to all confidential
and proprietary information disclosed by SPC to Choten, including but not
limited to trade secrets and confidential and proprietary information of SPC,
all inventions, designs, trademarks, formulas, processes, trade secrets, ideas
and copyrightable works, and other intellectual property rights, including
source code, derivative works and enhancements to any of SPC's products, and
other proprietary information and materials from SPC including knowledge about
SPC's business, products, programming techniques, experimental work, customers,
clients and suppliers (the "Confidential Information").
2. OBLIGATIONS. Choten agrees (i) to hold SPC's Confidential Information
in strict confidence, (ii) not to disclose such Confidential Information to any
third parties, and (iii) not to use any Confidential Information for any purpose
except for the Business Purpose. Choten may disclose the Confidential
Information to its responsible employees with a bona fide need to know, but only
to the extent necessary to carry out the Business Purpose. Choten agrees to
instruct all such employees not to disclose such Confidential Information to
third parties, including consultants, without the prior written permission of
SPC.
3. DEEMED NOT CONFIDENTIAL. Confidential Information will not include
information which:
(i) is now, or hereafter becomes, through no act or failure to act
on the part of Choten, generally known or available to the public;
(ii) was acquired by Choten before receiving such information from
SPC and without restriction as to use or disclosure;
(iii) is hereafter rightfully furnished to Choten by a third party
without restriction as to use or disclosure; or
(iv) is disclosed with the prior written consent of SPC.
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4. RETURN OF INFORMATION. Upon SPC's request, Choten will promptly return
to SPC all tangible items containing or consisting of SPC's Confidential
Information and all copies thereof.
5. NO GRANT OF RIGHTS. Choten recognizes and agrees that nothing contained
in this Agreement will be construed as granting any rights to Choten, by license
or otherwise, to any Confidential Information except as specified in this
Agreement.
6. OWNERSHIP. Choten acknowledges that all Confidential Information is
owned solely by SPC (or its licensors) and that the unauthorized disclosure or
use of such Confidential Information would cause irreparable harm and
significant injury, the degree of which may be difficult to ascertain.
Accordingly, Choten agrees that SPC will have the right to obtain an immediate
injunction enjoining any breach of this Agreement, as well as the right to
pursue any and all other rights and remedies available at law or in equity for
such a breach.
7. MISCELLANEOUS. This Agreement will be construed, interpreted, and
applied in accordance with the substantive laws of the State of California. This
Agreement and the Localization Agreement are the complete and exclusive
statement regarding the subject matter of this Agreement and supersede all prior
agreements, understandings and communications, oral or written, between the
parties regarding the subject matter of this Agreement.
8. TERM. This Agreement will remain in effect for seven years from the date
of the last disclosure of Confidential Information, at which time it will
terminate.
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EXHIBIT D
FORM OF ASSIGNMENT
For good and valuable consideration, the adequacy of which is hereby
acknowledged, Choten Inc. ("Choten") hereby assigns to Software Publishing
Corporation ("SPC") all right, title and interest (including without limitation
all copyrights, trade secret rights, patent rights and other proprietary rights)
in and to the Japanese language version of the following SPC products - each of
which were translated into Japanese by Choten for SPC under the terms of that
certain Localization and Distribution Agreement between the parties effective as
of January 1, 1995:
(a) Harvard Graphics for Windows V3.xJ, NEC 9800 series (HGW 3.xJN);
(b) Harvard Graphics for Windows V3.xJ, IBM compatible (HGW 3.xJI);
(c) Harvard Graphics for Windows V3.xJ, Upgrade NEC 9800 series (HGW
3.xJNU);
(d) Harvard Graphics for Windows V3.xJ, Upgrade IBM compatible (HGW
3.xJIU),
(e) Harvard Graphics for Windows V3.xJ, OEM Products, NEC 9800
series (HGW 3.xJNO); and
(f) Harvard Graphics for Windows V3.0J, OEM Products, IBM compatible
(HGW 3.xJIO).
Notwithstanding the foregoing, if the assignment of any portion of any
elements of the localized version of the Products, documentation, tools or any
other items shall require the consent of any third party, such assignment shall
be subject to and effective as of the granting of such consent. SPC shall be
responsible for obtainig such third-party consents, provided that Choten shall
assist SPC as is reasonable necessary, at SPC's expense, in obtaining such third
party consents. THE ASSIGNING ASSETS ARE ASSIGNS OR TRANSFERS AS IS, WHERE IS
AND CHOTEN MAKES NO WARRANTY RELATING TO THE ASSIGNING ASSETS, EXPRESS OR
IMPLIED, AND EXPRESSLY EXCLUDED ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE OR NON-INFRINGEMENT.
CHOTEN INC.
By:__________________________
Name:________________________
Title:_______________________
<PAGE>
EXHIBIT E
MARKETING AND DISTRIBUTION PROGRAMS
Choten Inc. will invest the following minimum amounts in marketing the product
HGW 3.0J N/I during the periods listed below:
MARKETING SPENDING UNTIL PRODUCT AVAILABILITY
1. Press conferences and seminars Tokyo and Osaka $50k
2. Collateral, catalog, etc (10,000 initial issues) $100k
3. Advertisements (4 magazines over 3 months + set up) $130k
4. Launch training logistics, material, equipment, etc. $60k
Total through product availability is $340k
MARKETING SPENDING FOR THE 12 MONTHS AFTER AVAILABILITY
1. Advertisements (4 magazines over 12 months + set up) $490k
2. Seminars (1 per month) $60k
3. Exhibitions (3 major shows) $150k
4. Direct mail campaign $50k
Total for 12 months after product availability $750k
Total spending $one million and ninety thousand dollars
<PAGE>
EXHIBIT F
SALES GOALS
PRODUCT 1995 1996 1997 1998
- - -------------------------------------------------------------------
HGW 3.xJ N/I TBD TBD TBD TBD
HGW 3.xJ N/IU TBD TBD TBD TBD
HGW 3.xJ N/I Office TBD TBD TBD TBD
Total K Units TBD TBD TBD TBD
Unit Sales Forecast for 1995 will be mutually agreed upon within 30 days of the
Effective Date.
PRODUCT Q1 Q2 Q3 Q4
HGW 3.xJ N/I TBD TBD TBD TBD
HGW 3.xJ N/IU TBD TBD TBD TBD
HGW 3.xJ N/I Office TBD TBD TBD TBD
Total K Units TBD TBD TBD TBD
<PAGE>
EXHIBIT G
SUPPORT COMMITMENTS
TECHNICAL SUPPORT
Choten Inc. will provide a dedicated end user and dealer hot line to provide
first level support to all users of Harvard Graphics in Japan. The hot line will
be open during normal working hours and will be manned by suitable qualified
staff.
SALES AND MARKETING SUPPORT
Choten Inc. will provide the following dedicated resources in addition to all
general sales and administrative functions.
JAPAN BASED
Marketing Programs Manager (1)
Pre sales support specialist (2)
<PAGE>
EXHIBIT H
Royalty Payments; Minimum Royalties
PRODUCTS ROYALTY BASE CURRENT PRICE RATE ROYALTY/UNIT
HGW 3.xJN/I Recommended Retail Price Y58,000 17.5% Y10,150
set by Choten
HGW 3.xJN/I Recommended Retail Price Y20,000 17.5% Y3,500
Major Upgrade Recommended Retail Price TBD 17.5% TBD
Minor Upgrade Free of Charge
OEM Sales amount deduct TBD 17.5% TBD
Component cost of goods
"Major Upgrades" shall mean upgrades, modifications, additions and substitutions
to the Products that result in substantial performance, structural, or
functional improvements or additions for which SPC, in its sole discretion,
imposes a separate charge on end users of the Products. These consist of version
upgrades for current users of the Product or competitive upgrades for users of a
competing products.
"Minor Upgrades" shall mean all corrections, upgrades, updates, modifications,
additions and substitutions to the Products which may from time to time be
distributed by SPC to end users of the Products without imposition of an
additional charge, but shall not include the Major Upgrades.
ADDENDUM NO. 1
This ADDENDUM NO. 1 (this "Addendum") is made in connection with and is
a part of that certain Office Lease, dated as of September 7, 1995, by and
between SOFTWARE PUBLISHING CORPORATION, as Tenant, and COMMUNITY TOWERS,
L.L.C., as Landlord (the "Lease").
1. Definitions and Conflict. All capitalized terms referred to in this
Addendum shall have the same meaning as provided in the Lease, except as
expressly provided to the contrary in this Addendum. In case of any conflict
between any term or provision of the Lease and any exhibits attached thereto and
this Addendum, this Addendum shall control.
2. Early Occupancy. If the Commencement Date occurs prior to January 1,
1996, no Rent for the period prior to January 1, 1996 shall be due from Tenant,
but all of the other terms and provisions of the Lease shall apply.
3. Early Termination. Provided Tenant is not in default (and no event
exists which with the passage of time or the giving of notice or both exists
which would constitute a default) under the Lease and this Addendum, Tenant
shall have the right during the period commencing on the third anniversary of
the Commencement Date and expiring at the expiration of the initial term of the
Lease, but not during any renewal period as hereinafter provided (a) to
terminate the Lease in its entirety, or (b) to partially terminate the Lease by
surrendering portions of the Leased Premises in increments of 5,000 square feet
of Rentable Area ("Partial Surrender"), upon not less than ninety (90) days
prior written notice to Landlord and the payment to Landlord at the time Tenant
provides such notice of an early termination fee equal to $200,000.00 times a
fraction, the numerator of which is the amount of Rentable Area terminated or
surrendered and the denominator of which is the Rentable Area of the Leased
Premises at the Commencement Date. The amount of the Rentable Area of the space
included in a Partial Surrender shall be determined by Landlord's licensed
architect using the method of determination specified in the definition of
Rentable Area in the Lease.
(a) Tenant shall specify the precise location of space covered
in any Partial Surrender, which shall be subject to approval by Landlord in its
good faith discretion. Tenant acknowledges that it shall not have the right to
include space in a Partial Surrender that would be of a configuration or
condition that is not similar to the average stand alone leaseable space in the
Building, not have the same reasonable accessibility routes that are consistent
with the average space leased or available for leasing in the Building, have
improper or undesirable window lines or exposure or otherwise be impractical or
uneconomical for Landlord to lease to another party.
(b) After Tenant provides written notice of such early
termination (in whole or in part), Tenant shall not have the right to rescind or
cancel such notice without the prior written consent of Landlord, which may be
exercised in its sole and absolute discretion.
(c) All space to be surrendered by Tenant under an early
termination as provided above, shall be surrendered by Tenant on the effective
date of such early termination in the condition required under the Lease for the
surrender of the Leased Premises upon the expiration or earlier termination of
the Lease.
(d) From and after the effective date of such early
termination, Tenant's Minimum Monthly Rent shall be reduced to reflect the
surrender of the space under a Partial Surrender. The amount of such reduction
shall equal the product of the Minimum Monthly Rent times a fraction, the
numerator of which is the amount of Rentable Space terminated or surrendered and
the denominator of which is the Rentable Area in the Leased Premises at the
Commencement Date. In addition, from and after said effective date, Tenant's
Proportionate Share shall be reduced to reflect the reduction of the size of the
Leased Premises. Tenant and Landlord shall execute a mutually acceptable
modification agreement promptly after Landlord receives notice of early
termination to document the foregoing.
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(e) Tenant's right of early termination shall not apply during
the Extension Period (hereinafter provided) or with respect to any (Expansion
Space) leased by Tenant as hereinafter provided.
4. Delay in Possession. The parties have anticipated that the Tenant
Improvements will be Substantially Completed by December 8, 1995, the Estimated
Commencement Date, which would afford Tenant sufficient time to move into the
Leased Premises on or before January 1, 1996. If the Commencement Date does not
occur by December 8, 1995, then Tenant may not be able to complete the move into
the Leased Premises by January 1, 1996 and would therefore incur the obligation
to pay higher rent at a holdover rate in its existing lease of space that Tenant
will vacate to occupy the Leased Premises (the "Existing Lease"). According, if
the Commencement Date does not occur by December 8, 1995, except as a result of
a Tenant Delay or a Force Majeure Delay (hereinafter described), then commencing
on December 9, 1994 until the Commencement Date occurs, Landlord agrees to pay
to Tenant a fee (the "Holdover Payment") to offset the additional rent Tenant
will be obligated to pay at the holdover rate under its Existing Lease. The
Holdover Payment shall equal $500.00 for the first day commencing on December 9,
1995 and increase by $100.00 a day thereafter until the daily Holdover Payment
is equal to $1,800.00, at which time there shall be no further increase in the
daily Holdover Payment. Notwithstanding the foregoing, Landlord shall not be
responsible for paying the Holdover Payment if the landlord under the Existing
Lease does not charge rent at the holdover rate under the Existing Lease. Under
no circumstances shall Landlord be responsible for making a Holdover Payment if
the delay in the Commencement Date is due to a Tenant Delay or a Force Majeure
Delay. Any Holdover Payment for a partial month shall be prorated on a daily
basis. Landlord shall pay its Holdover Payment promptly after receipt of written
evidence of payment by Tenant of its monthly holdover rent under Tenant's
Existing Lease. Notwithstanding the foregoing, in no event shall the aggregate
amount of Holdover Payments exceed the lesser of (a) $50,000.00 per month, or
(b) fifty percent (50%) of the daily holdover rent paid by Tenant to the
landlord under its Existing Lease. The term "Force Majeure Delay" shall mean any
delay, other than a Tenant Delay, by Landlord in completing the Tenant
Improvements by the Estimated Commencement Date by reason of governmental
preemption of priorities or other controls in connection with a national or
other public emergency, or fire, earthquake, or other casualty, riots or other
civil commotion, strikes, labor trouble (provided Landlord has engaged a
licensed and experienced contractor to construct the Tenant Improvements) or
shortages of material (provided Landlord has ordered the materials within the
time period a licensed and experienced contractor would have ordered the
materials to commence and Substanitally Complete construction of the Tenant
Improvements in light of the estimated schedule to commence and complete the
Tenant Improvements as provided in the Lease), or causes beyond the control of
the Landlord, but excluding any financial exigency of Landlord.
5. Form of Letter of Credit. The amount of the Security Deposit set
forth in section 1.11 of the Lease shall be in the form of an irrevocable,
unconditional, and clean letter of credit, payable at sight, in form and
substance acceptable to Landlord in its sole and absolute discretion, from
Citibank, N.A., Bank of America, N.A. or Wells Fargo Bank, N.A. or another
national bank acceptable to Landlord with offices in the San Francisco Bay Area
that will accept and pay on any draw on said letter of credit ("Letter of
Credit"). The Letter of Credit shall designate Landlord as beneficiary and shall
be transferable by beneficiary to any transferee, successor, and assign
(including any lender of Landlord) at no cost or expense to beneficiary. The
letter of credit shall be for a minimum period of one year and must be renewed
by Tenant at least thirty (30) days prior to its expiration date. Any renewal of
the Letter of Credit shall be for a period of not less than one year. If Tenant
does not deliver a renewal of the Letter of Credit at least thirty (30) days
prior to the applicable expiration date, Landlord shall have the right to draw
on the Letter of Credit. Landlord shall have the right to draw (in whole or in
part) on the Letter of Credit at any time it would otherwise have the right to
apply all or any portion of the Security Deposit under the terms of the Lease.
However, the Letter of Credit shall provide that it may be drawn by Landlord (or
its assignee) upon presentation by Landlord to the issuing bank (at its offices
in the San Francisco Bay Area) of a sight draft(s), together with a statement
from Landlord that the amount requested by Landlord is due and owing to Landlord
and shall be payable by the bank without inquiry or any other documentation or
further action required of the bank, Landlord, or Tenant. All costs and expenses
to obtain the Letter of Credit and all renewals shall be borne by Tenant.
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6. Option to Extend and Rent During the Extended Period. Provided that
Tenant (i) has not elected to terminate a portion of the Leased Premises under a
Partial Surrender as provided above, (ii) is not in default of any term or
provision of this Lease, or (iii) has not assigned the Lease or sublet any space
or agreed to do so in the future, Tenant shall have two (2) options to extend
the term of this Lease for a period of two (2) years each (the first such period
shall be referred to as the "First Extension Period" and the second such period
as the "Second Extension Period" and any such extension period may be referred
to as an "Extension Period") by giving written notice of exercise of such option
("Extension Option Notice") at least one hundred twenty (120) days, but not more
than three hundred sixty-five (365) days, prior to the expiration of the
applicable term. The First Extension Period shall commence, if at all,
immediately following the expiration of the initial term of the Lease, and the
Second Extension Period shall commence, if at all, immediately following the
expiration of the First Extension Period. If Tenant has defaulted or failed to
perform any obligation under this Lease five (5) or more times (after notice and
the expiration of the applicable cure period) during the term (including any
applicable Extension Period), or if Tenant is in default (after notice and the
expiration of the applicable cure period) under any term or provision of this
Lease on the date of giving an Extension Option Notice, or if Tenant is in
default (after notice and the expiration of the applicable cure period) under
any term or provision of this Lease on the date of the applicable Extension
Period is to commence, the extended term at the option of Landlord shall not
commence and this Lease shall expire at the end of term. Each Extension Period
shall be upon all of the terms and provisions of this Lease, except that the
minimum monthly rent during such Extension Periods shall be one hundred percent
(100%) of then Fair Market Rent.
(a) Fair Market Rent. The term "Fair Market Rent" for purposes
of determining minimum monthly rent during the applicable Extension Period shall
mean the greater of (i) the total monthly Rent payable during the last month
prior to the commencement of the applicable Extension Period with an appropriate
adjustment made for a new base year for the year in which the applicable
Extension Period will commence, or (ii) the monthly base rent generally
applicable to full service office leases of comparable size, age, quality of the
Leased Premises in the downtown San Jose, California location giving due
consideration for the quality of the Building and improvements therein
(including the quality of the then existing improvements in the Leased
Premises), the quality for credit tenants, for a term comparable to the
applicable Extension Period at the time the commencement of the applicable
Extension Period is scheduled to commence, with a new base year for the year in
which the applicable Extension Period will commence, and otherwise subject to
the terms and conditions of this Lease that will be applicable during the
applicable Extension Period ("Fair Market Rent").
(b) Procedure to Determine Effective Fair Market Rent.
Landlord shall notify Tenant in writing of Landlord's determination of the Fair
Market Rent ("Landlord's FMR") within fifteen (15) days after receipt of the
Extension Option Notice. Within thirty (30) days after receipt of such written
notice of Landlord's FMR, Tenant shall have the right either to: (i) elect to
cancel the Extension Option Notice for the applicable Extension Period, (ii)
accept Landlord's FMR, or (iii) elect to have the Fair Market Rent determined in
accordance with the appraisal procedure set forth below. The failure of Tenant
to provide written notice of its election under the preceding sentence shall be
deemed an acceptance of Landlord's FMR. The election (or deemed election) by
Tenant under this section shall be non-revocable and binding on the parties.
Therefore, if Tenant elects to cancel under clause (i) above, the right to
extend is terminated and null and void; and if Tenant elects to proceed under
clauses (ii) or (iii), then Tenant must extend this Lease at the Fair Market
Rent to be established thereby.
(c) Appraisers. If Tenant has elected to have the Fair Market
Rent determined by an appraisal, then within ten (10) days after receipt of
Tenant's written notice of such an election, each party, by giving written
notice to the other party, shall appoint an appraiser to render a written
opinion of the Fair Market Rent for the applicable Extension Period. Each
appraiser must be a member of the Appraisal Institute of America (MAI) for at
least five years and with at least five years experience in the appraisal of
rental rates of office buildings in the area in which the Building is located
and otherwise unaffiliated with either Landlord or Tenant. The two appraisers
shall render their written opinion of the Fair Market Rent for the applicable
Extension Period to Landlord and Tenant within thirty (30) days after the
appointment of the second appraiser. If the Fair Market Rent of each appraiser
is within five percent
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<PAGE>
(5%) of each other, then the average of the two appraisals of Fair Market Rent
shall be the Base Rent for the applicable Extension Period. If one party does
not appoint its appraiser as provided above, then the one appointed shall
determine the Fair Market Rent. The Fair Market Rent so determined under this
section shall be binding on Landlord and Tenant.
(d) Third Appraiser. If the Fair Market Rent determined by the
appraisers is more than five percent (5%) apart, then the two appraiser shall
pick a third appraiser within ten (10) days after the two appraisers have
rendered their opinions of Fair Market Rent as provided above. If the two
appraisers are unable to agree on the third appraiser within said ten (10) day
period, Landlord and Tenant shall mutually agree on the third appraiser within
then (10) days thereafter. The third appraiser shall be a person who has not
previously acted in any capacity for either party and must meet the
qualifications stated above.
(e) Impartial Appraisal. Within thirty (30) days after its
appointment, the third appraiser shall render its written opinion of the Fair
Market Rent for the applicable Extension Period ("Third Opinion"). The appraisal
of Fair Market Rent made by Landlord's or Tenant's appraiser that is closest to
the Fair Market Rent specified in the Third Opinion shall be the Fair Market
Rent during the applicable Extension Period. If the Fair Market Rent set forth
in the Third Opinion is equidistant from the Fair Market Rent made by Landlord's
or Tenant's appraiser, then the Fair Market Rent contained in the Third Opinion
shall be the Fair Market Rent during the applicable Extension Period. The Fair
Market Rent so determined under this section shall be binding on Landlord and
Tenant.
(f) Appraisal Costs. Each party shall bear the cost of its own
appraiser and one-half (1/2) the cost of the third appraiser.
(g) Acknowledgment of Rent. After the Fair Market Rent for the
applicable Extension Period has been established in accordance with the
foregoing procedure, Landlord and Tenant shall promptly execute an amendment to
this Lease to reflect the minimum monthly rent for the applicable Extension
Period.
7. Expansion Right of First Refusal. If Tenant (i) is not in default of
any term or provision of this Lease, (2) has not assigned this Lease or sublet
any space covered thereby or agreed to do so in the future, or (3) has not
elected to terminate a portion of the Leased Premises under a Partial Surrender
as provided above, Tenant shall have the right to expand into additional space
on the fourth (4th) and seventh (7th) floors of the Building that is contiguous
with the Leased Premises (the "Expansion Space. However, any such expansion
right is subject and subordinate to any other extension or expansion options or
rights of first refusal or first offer granted to any other existing tenants in
the Complex prior to the date of this Lease. Tenant's expansion right shall not
apply after the initial five (5) year term of the Lease.
(a) Right of First Refusal. During the term of this Lease, if
Landlord receives an offer (which shall mean a written letter of intent, term
sheet or other written proposal from any unaffiliated party) to lease any
portion of the Expansion Space on terms acceptable to Landlord in its sole and
absolute discretion, Landlord shall notify Tenant of the terms and conditions of
such offer and Tenant shall have five (5) days after receipt of the offer to
provide written notice to Landlord that Tenant accepts the terms proposed for
lease of such portion of the Expansion Space. The foregoing right of first
refusal to lease the Expansion Space shall not apply to any offer from any
tenant now or hereafter leasing space in the Expansion Space who renews or
extends its lease of space in the Expansion Space pursuant to the terms of such
tenant's lease. If Landlord does not receive such written notice within said
five (5) day period, then it shall be conclusively deemed an election by Tenant
not to lease such Expansion Space.
(b) Effect of Non-Acceptance. If Tenant does not accept the
offer to lease, Landlord shall be free to lease all or any portion of the
Expansion Space to the party (or any of its affiliates) making the offer or to
any other party on such terms proposed in the offer, or on any other terms
(subject to section 7(c) with respect to changes in the offer proposed to and
not accepted by Tenant).
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<PAGE>
(c) Changes in the Offer. If the difference in the stated
minimum monthly rent for the term contained in the offer presented to Tenant is
greater than ten percent (10%) of the stated minimum monthly rent payable over
the term in any amended offer to lease, Landlord shall be obligated to offer the
revised terms to Tenant and Tenant shall have five (5) days after receipt of
such amended offer to accept or reject the revised terms. If Tenant rejects or
does not accept the revised or new terms within the foregoing time period,
Landlord shall have the right to enter a lease for all or any portion of the
Expansion Space on the revised or new terms.
(d) Election to Expand. If Tenant exercises its expansion
right under this section, the Expansion Space affected thereby shall be included
in the Lease, except that the rental payments and all other terms (excluding
this Lease term and tenant improvements and allowance provided by Landlord, if
any) shall be modified as to the such Expansion Space to reflect the terms
agreed to in the offer. The parties immediately shall execute an amendment to
this Lease to include the addition of such portion of the Expansion Space to the
Leased Premises and such other modifications to the terms and conditions of this
Lease as are necessary or appropriate to incorporate the terms and conditions of
this Lease of such Expansion Space.
5
<PAGE>
COMMUNITY TOWERS OFFICE LEASE
-----------------------------
EXHIBIT A
---------
LEGAL DESCRIPTION OF THE COMPLEX
THE LEGAL PROPERTY REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA,
COUNTY OF SANTA CLARA, CITY OF SAN JOSE, AND IS MORE PARTICULARLY DESCRIBED AS
FOLLOWS:
PARCEL ONE:
- - ----------
All that real property situate in the City of San Jose, County of Santa Clara,
State of California, described as follows:
Beginning at a brass pin monument, which replaced the original granite monument
which marks the point of intersection of the centerline of San Augustina Street
with the Westerly line of Market Street, as said streets are shown on a Record
of Survey filed for record in Book 147 of Maps, page 47, Santa Clara County
Records; thence from said point of beginning along the Westerly line of Market
Street, N. 30 deg. 42' 23" W. 135.59 feet to the true point of beginning of the
property to be described; thence from said true point of beginning along the
Westerly line of Market Street, N. 30 deg. 42' 23" W. 198.44 feet to a point on
the Westerly line of Market Street distant thereon S. 30 deg. 42' 23" E. 68.26
feet from the intersection of said line of Market Street with the Southerly line
of St. James, and said point of beginning being the most Easterly corner of the
parcel of land conveyed by Pierce Pellier to Cesar Piatti, et al, by deed dated
August 20, 1887 and recorded August 25, 1887 in Book 92 of Deeds, page 152 in
the office of the County Recorder of the County of Santa Clara, State of
California; thence S. 59 deg. 16' 52" W. along the Southeasterly line of said
Piatti parcel and along the Southeasterly line of the land described in the deed
from Ralph Lowe to Ugolina Costa, by deed recorded November 9, 1903 in Book 271
of Deeds, page 572, Records of Santa Clara County, a distance of 192.77 feet to
the Southwesterly corner of said Costa parcel, being a point on the Easterly
line of San Pedro Street; thence along said Easterly line, S. 30 deg. 39' E.
198.47 feet to a point which bears S. 59 deg. 16' 22" W. and parallel with the
Northerly line of San Augustine Street from the true point of beginning; thence
N. 59 deg. 16' 22" E. and parallel with said Northerly line 192.97 feet to the
true point of beginning.
PARCEL TWO:
- - ----------
All that real property situate in the City of San Jose, County of Santa Clara,
State of California, described as follows:
Beginning at a brass pin monument, which replaced the original granite monument
which marks the point of intersection of the center line of San Augustine Street
with the Westerly line of Market Street, as said streets are shown on a Record
of Survey filed for record in Book 147 of Maps, page 47 Santa Clara County
Records; thence from said point of beginning along the Westerly line of Market
Street, N. 30 deg. 42' 23" W. 30 feet to the intersection of the Northerly line
of San Augustine Street (now known as St. John Street) with the Westerly line of
Market Street and the true point of beginning of the property to be described;
thence from said true point of beginning along the Westerly line of Market
Street, N. 30 deg. 42'23" W. 105.59 feet to a point which bears S. 30 deg. 42'
23" E. 31.91 feet from the Southeast corner of Lot No. 1 of the Pellier Survey,
which survey is recorded in Book "E" of Miscellaneous Records, page 465, Santa
Clara County Records, and said Southeast corner is witnessed by a 1/2" bolt set
flush in the sidewalk of Market Street and bears N. 59 deg. 17'37" E. 2.00 feet;
thence parallel to the Northerly line of San Augustine Street S. 59 deg. 16' 22"
W. 192.97 feet to the Easterly line of San Pedro Street, as said street is shown
on the above mentioned Record of Survey; thence along the Easterly line of San
Pedro Street, S. 30 deg. 39' E.105.59 feet to the intersection of the Northerly
line of said St. Augustine Street (now known as St. John Street) with the
Easterly line of said San Pedro Street; thence N. 59 deg. 16' 22" E. along the
Northerly line of said St. John Street, 193.07 feet to the true point of
beginning.
ARB No. 259-34-53
<PAGE>
COMMUNITY TOWERS OFFICE LEASE
-----------------------------
EXHIBIT B
---------
PLAN OF THE COMPLEX
<PAGE>
COMMUNITY TOWERS OFFICE LEASE
-----------------------------
EXHIBIT C
---------
FLOOR PLAN OF THE LEASED PREMISES
<PAGE>
PARAGON POINT OFFICE LEASE
--------------------------
EXHIBIT E
---------
CONFIRMATION OF LEASE TERM
THIS MEMORANDUM is made on , 19 , between COMMUNITY
TOWERS L.L.C. ("Landlord"), and SPC SOFTWARE PUBLISHING CORPORATION ("Tenant"),
who entered into a lease dated for reference purposes as of September ,
19 covering certain premises located at Community Towers, San Jose,
California, which premises are commonly known as 111 North Market Street, Suite
500, San Jose, California. All capitalized terms, if not defined herein, shall
be defined as they are defined in the Lease.
1. The parties to this Memorandum hereby agree that the date of ,
19 is the "Commencement Date" of the Term.
2. Tenant hereby confirms the following:
(a) That it has accepted possession of the Premises pursuant to the terms
of the Lease;
(b) That the improvements required to be furnished according to the Lease
by Landlord have been Substantially Completed;
(c) That Landlord has fulfilled all of its duties of an inducement nature;
(d) That the Lease has not been modified, altered or amended, except as
follows:
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
(e) That there are no offsets or credits against rentals, nor has any
security deposit been paid except as provided by the Lease Terms;
(f) That the Lease is in full force and effect.
3. This Memorandum, each and all of the provisions hereof, shall inure to the
benefit, or bind, as the case may require, the parties hereto, and their
respective heirs, successors, and assigns subject to the restrictions upon
assignment and subletting contained in the Lease.
LANDLORD: TENANT:
- - --------- -------
COMMUNITY TOWERS L.L.C. SPC SOFTWARE PUBLISHING CORPORATION
By: Divco Community Investors, L.L.C.
Its: Manager
By ___________________________________ By ________________________________
<PAGE>
Its __________________________________ Its _______________________________
Date: ________________________________ Date: _____________________________
COMMUNITY TOWERS OFFICE LEASE
EXHIBIT F
---------
RULES AND REGULATIONS
1. No sidewalks, entrance, passages, courts, elevators, vestibules, stairways,
corridors or halls shall be obstructed or encumbered by Tenant or used for any
purpose other than ingress and egress to and from the Premises and if the
Premises are situated on the ground floor of the Project, Tenant shall further,
at Tenant's own expense, keep the sidewalks and curb directly in front of the
Premises clean and free from rubbish.
2. No awning or other projection shall be attached to the outside walls or
windows of the Project without the prior written consent of Landlord. No
curtains, blinds, shades, drapes or screens shall be attached to or hung in, or
used in connection with any window or door of the Premises, without the prior
written consent of Landlord. Such awnings, projections, curtains, blinds,
shades, drapes, screens and other fixtures must be of a quality, type, design,
color, material and general appearance approved by Landlord, and shall be
attached in the manner approved by Landlord. All lighting fixtures hung in
offices or spaces along the perimeter of the Premises must be of a quality,
type, design, bulb color, size and general appearance approved by Landlord.
3. No sign, advertisement, notice, lettering, decoration or other thing shall be
exhibited, inscribed, painted or affixed by Tenant on any part of the outside or
inside of the Premises or of the Project, without the prior written consent of
Landlord. In the event of the violation of the foregoing by Tenant, Landlord may
remove same without any liability, and may charge the expense incurred by such
removal to Tenant.
4. The sashes, sash doors, skylights, windows and doors that reflect or admit
light or air into the halls, passageways or other public places in the Project
shall not be covered or obstructed by Tenant, nor shall any bottles, parcels or
other articles be placed on the window sills or in the public portions of the
Project.
5. No show cases or other articles shall be put in front of or affixed to any
part of the exterior of the Project, nor placed in public portions thereof
without the prior written consent of Landlord.
6. The water and wash closets and other plumbing fixtures shall not be used for
any purposes other than those for which they were constructed, and no sweepings,
rubbish, rags or other substances shall be thrown therein. All damages resulting
from any misuse of the fixtures shall be borne by Tenant to the extent that
Tenant or Tenant's agents, servants, employees, contractors, visitors or
licensees shall have caused the same.
<PAGE>
7. Tenant shall not mark, paint, drill into or in any way deface any part of the
Premises or the Project. No boring, cutting or stringing of wires shall be
permitted, except with the prior written consent of Landlord, and as Landlord
may direct.
8. No animal or bird of any kind shall be brought into or kept in or about the
Premises or the Project, except seeing-eye dogs or other seeing-eye animals.
9. Prior to leaving the Premises for the day, Tenant shall draw or lower window
coverings and extinguish all lights.
10. Tenant shall not make, or permit to be made, any unseemly or disturbing
noises or disturb or interfere with occupants of the Project, or neighboring
buildings or premises, or those having business with them. Tenant shall not
throw anything out of the doors, windows or skylights or down the passageways.
11. Neither Tenant nor any of Tenant's agents, servants, employees, contractors,
visitors or licensees shall at any time bring or keep upon the Premises any
flammable, combustible or explosive fluid, chemical or substance.
12. No additional locks, bolts or mail slots of any kind shall be placed upon
any of the doors or windows by Tenant, nor shall any change be made in existing
locks or the mechanism thereof. Tenant must, upon the termination of the
tenancy, restore to Landlord all keys of stores, offices and toilet rooms,
either furnished to, or otherwise procured by Tenant, and in the event of the
loss of any keys so furnished, Tenant shall pay to Landlord the cost thereof.
13. All removals, or the carrying in or out of any safes, freight, furniture,
construction material, bulky matter or heavy equipment of any description must
take place during the hours which Landlord or its agent may determine from time
to time. Landlord reserves the right to prescribe the weight and position of all
safes, which must be placed upon two-inch thick plank strips to distribute the
weight. The moving of safes, freight, furniture, fixtures, bulky matter or heavy
equipment of any kind must be made upon previous notice to the Building Manager
and in a manner and at times prescribed by him, and the persons employed by
Tenant for such work are subject to Landlord's prior approval. Landlord reserves
the right to inspect all safes, freight or other bulky articles to be brought
into the Project and to exclude from the Project all safes, freight or other
bulky articles which violate any of these Rules and Regulations or the Lease of
which these Rules and Regulations are a part.
14. Tenant shall not purchase spring water, towels, janitorial or maintenance or
other like service from any company or persons not approved by Landlord.
Landlord shall approve a sufficient number of sources of such services to
provide Tenant with a reasonable selection, but only in such instances and to
such extent as Landlord in its judgment shall consider consistent with security
and proper operation of the Project.
15. Landlord shall have the right to prohibit any advertising or business
conducted by Tenant referring to the Project which, in Landlord's opinion, tends
to impair the reputation of the Project or its desirability as a first class
building for offices and/or commercial services and upon notice from Landlord,
Tenant shall refrain from or discontinue such advertising.
16. Landlord reserves the right to exclude from the Project between the hours of
6:00 p.m. and 8:00 a.m. Monday through Friday, after 1:00 p.m. on Saturdays and
at all hours Sundays and legal holidays, all persons who do not present a pass
to the Project issued by Landlord. Landlord may furnish passes to Tenant so that
Tenant may validate and issue same. Tenant shall safeguard said passes and shall
be responsible for all acts of persons in or about the Project who possess a
pass issued to Tenant.
17. Tenant's contractors shall, while in the Premises or elsewhere in the
Project, be subject to and under the control and direction of the Building
Manager (but not as agent or servant of said Building Manager or of Landlord).
EXHIBIT F - Page 1 of 2
<PAGE>
18. If the Premises is or becomes infested with vermin as a result of the use or
any misuse or neglect of the Premises by Tenant, its agents, servants,
employees, contractors, visitors or licensees, Tenant shall forthwith at
Tenant's expense cause the same to be exterminated from time to time to the
satisfaction of Landlord and shall employ such licensed exterminators as shall
be approved in writing in advance by Landlord.
19. The requirements of Tenant will be attended to only upon application at the
office of the Project. Project personnel shall not perform any work or do
anything outside of their regular duties unless under special instructions from
the office of the Landlord.
20. Canvassing, soliciting and peddling in the Project are prohibited and Tenant
shall cooperate to prevent the same.
21. No water cooler, air conditioning unit or system or other apparatus shall be
installed or used by Tenant without the written consent of Landlord.
22. There shall not be used in any premises, or in the public halls, plaza
areas, lobbies, or elsewhere in the Project, either by Tenant or by jobbers or
others, in the delivery or receipt of merchandise, any hand trucks or dollies,
except those equipped with rubber tires and sideguards.
23. Tenant, Tenant's agents, servants, employees, contractors, licensees, or
visitors shall not park any vehicles in any driveways, service entrances, or
areas posted "No Parking" and shall comply with any other parking restrictions
imposed by Landlord from time to time.
24. Tenant shall install and maintain, at Tenant's sole cost and expense, an
adequate visibly marked (at all times properly operational) fire extinguisher
next to any duplicating or photocopying machine or similar heat producing
equipment, which may or may not contain combustible material, in the Premises.
25. Tenant shall keep its window coverings closed during any period of the day
when the sun is shining directly on the windows of the Premises.
26. Tenant shall not use the name of the Project for any purpose other than as
the address of the business to be conducted by Tenant in the Premises, nor shall
Tenant use any picture of the Project in its advertising, stationery or in any
other manner without the prior written permission of Landlord. Landlord
expressly reserves the right at any time to change said name without in any
manner being liable to Tenant therefor.
27. Tenant shall not prepare any food nor do any cooking, operate or conduct any
restaurant, luncheonette or cafeteria for the sale or service of food or
beverages to its employees or to others, except that food and beverage
preparation by Tenant's employees using microwave ovens or coffee makers shall
be permitted provided no odors of cooking or other processes emanate from the
Premises. Tenant shall not install or permit the installation or use of any
vending machine or permit the delivery of any food or beverage to the Premises
except by such persons and in such manner as are approved in advance in writing
by Landlord.
28. The Premises shall not be used as an employment agency, a public
stenographer or typist, a labor union office, a physician's or dentist's office,
a dance or music studio, a school, a beauty salon, or barber shop, the business
of photographic, multilith or multigraph reproductions or offset printing (not
precluding using any part of the Premises for photographic, multilith or
multigraph reproductions solely in connection with Tenant's own business and/or
activities), a restaurant or bar, an establishment for the sale of
confectionery, soda, beverages, sandwiches, ice cream or baked goods, an
establishment for preparing, dispensing or consumption of food or beverages of
any kind in any manner whatsoever, or news or cigar stand, or a radio,
television or recording studio, theatre or exhibition-hall, or manufacturing, or
the storage or sale of merchandise, goods, services or property of any kind at
wholesale, retail or auction, or for lodging, sleeping or for any immoral
purposes.
29. Business machines and mechanical equipment shall be placed and maintained by
Tenant at Tenant's expense in settings sufficient in Landlord's judgment to
absorb and prevent vibration, noise and annoyance. Tenant shall not install any
machine or equipment which causes noise, heat, cold or vibration to be
transmitted to the structure of the building in which the Premises are located
without Landlord's prior written consent, which consent may be conditioned on
such terms as Landlord may require. Tenant shall not place a load upon any floor
of the Premises exceeding the floor load per square foot which such floor was
designed to carry and which is allowed by law.
30. Tenant shall not bring any Hazardous Materials onto the Premises except for
those which are in general commercial use and are incidental to Tenant's
business office operations and only in quantities suitable for immediate use.
31. Smoking is prohibited in all enclosed Common Areas of the Project,
including, without limitation, the main lobby, all hallways, all elevators, all
elevator lobbies and all restrooms. The foregoing sentence shall not be deemed
to prohibit smoking within the Premises.
<PAGE>
EXHIBIT F - Page 2 of 2
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT is effective as of February 21, 1995 by and
between Choten, Inc., a Minnesota corporation having its principal place of
business at 601 Second Avenue, Suite 3200, Minneapolis, Minnesota ("Choten"),
Kubota Corporation, a Japanese corporation having its principal place of
business at 2-47, Shikitsuhigashi 1-chome, Naniwa-ku, Osaka, Japan 568-91
("Kubota") and Software Publishing Corporation, a Delaware corporation having
its principle place of business at 3165 Kifer Road, Santa Clara, California
95051 ("SPC").
RECITALS
A. Choten and SPC executed and delivered that certain Localization and
Distribution Agreement effective as of February 16, 1995 (the "Localization
Agreement") under which SPC granted a license to Choten, and Choten committed to
localize, manufacture, distribute and support certain of SPC's Windows
compatible software products in Japan.
B. The parties now wish for Choten to assign its performance
under the Localization Agreement to Kubota under the terms of this
Assignment Agreement.
C. Following the assignment to Kubota, the parties wish that
Choten and Kubota will remain jointly and severally liable for
Choten's performance under the Localization Agreement.
NOW, THEREFORE, in consideration of the foregoing, and of the
covenants, conditions and provisions hereinafter set forth, the parties hereto
agree as follows:
1. ASSIGNMENT; JOINT AND SEVERAL RESPONSIBILITY. Choten hereby assigns
and delegates to Kubota all of Choten's rights and performance obligations under
the Localization Agreement. As a material condition to SPC's agreement to this
assignment to Kubota, Choten and Kubota understand and agree that
notwithstanding this assignment, Choten and Kubota will both be jointly and
severally liable for Choten's performance under the Localization Agreement.
2. ARBITRATION. Any dispute between the parties arising out of this
Assignment Agreement or the Localization Agreement will be settled by
arbitration to be held in Santa Clara County, California in accordance with the
rules of the American Arbitration Association. The arbitration will be conducted
by a single arbitrator mutually selected by the parties. The parties agree that
the decision of the arbitrator will be final and binding and may be enforced in
any court of competent jurisdiction. The substantially prevailing party in the
arbitration or any subsequent litigation will be entitled to recover from the
other party all the costs, attorneys' fees and other expenses incurred by such
party in the arbitration or litigation. Each party may conduct discovery in
1
<PAGE>
accordance with Section 2016 et seq. of the California Code of Civil Procedure.
3. GOVERNING LAW. This Assignment Agreement and the Localization
Agreement will be governed by and construed under the laws of the State of
California. The federal and state courts of Santa Clara County, California will
have exclusive jurisdiction and venue to adjudicate the enforcement of any
arbitration award or other any dispute arising out of this Assignment Agreement
or the Localization Agreement. Choten and Kubota each hereby expressly consent
to (a) the personal jurisdiction of the courts of California, and (b) service of
process being effected upon it by registered mail sent to the address set forth
above.
4. NO EFFECT ON TERMS OF LOCALIZATION AGREEMENT. The terms
of this Assignment Agreement will not change, diminish or effect
the validity or effectiveness of the Localization Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective on the date first set forth above.
SOFTWARE PUBLISHING CORPORATION CHOTEN, INC.
By:_____________________ By:_____________________
Name:___________________ Name:___________________
Title:__________________ Title:__________________
KUBOTA CORPORATION
By:_____________________
Name:___________________
Title:__________________
2
Exhibit 11.1
SOFTWARE PUBLISHING CORPORATION
--------------------
COMPUTATION OF NET LOSS PER COMMON
AND COMMON EQUIVALENT SHARE
(In thousands, except per share data)
Year Ended September 30,
-----------------------------------
1995 1994 1993
-------- -------- --------
Net loss available to
common shareholders .................... $(16,537) $ (4,896) $(34,348)
======== ======== ========
Weighted average common
shares outstanding ..................... 12,494 12,391 12,212
Common equivalent shares:
Incremental shares calculated
by the treasury stock method
applies to options issued
using average fair value .............. -- -- --
-------- -------- --------
Common and common equivalents
shares outstanding for
purpose of calculating
primary net income per share .......... 12,494 12,391 12,212
Incremental shares to reflect
full dilution ......................... -- -- --
-------- -------- --------
Total shares used to reflect
full dilution ......................... 12,494 12,391 12,212
======== ======== ========
Primary net loss
per common share ...................... $ (1.32) $ (.40) $ (2.81)
======== ======== ========
Fully diluted net loss
per common share ...................... $ (1.32) $ (.40) $ (2.81)
======== ======== ========
E-6
Exhibit 21.1
Subsidiaries of Software Publishing Corporation
-----------------------------------------------
Name and Address Jurisdiction of Incorporation
- - --------------------------------------------------------------------------------
o Software Publishing Corporation Europe California
Pyramid House
Easthampstead Road
Bracknell, Berkshire RG12 1YW
United Kingdom
o Software Publishing International Corporation Barbados
Allyne house - White Park Road
P.O. Box 806E
Bridgetown, Barbados
o Software Publishing Asia/Pacific California
Level 7,15 Orion Road
Lane Cove, NSW 2066
Australia
o Software Publishing Corporation Canada Canada
1595 Sixteenth Avenue, Suite 303
Richmond Hill, Ontario
Canada L4B 3N9
o Software Publishing Corporation Netherlands California
Ir D S Tuijnmanweg 2F
4131 PN Vianen
Netherlands
o Software Publishing Deutschland Gmbh Germany
Oskar Messter Strasse 24
W 8045 Ismaning
Germany
o Software Publishing France, SARL France
306 Bureaux de la Colline
Bat A,92213 Saint Cloud Cedex
France
o Software Publishing Corporation Italy
SPC (Italia) s.r.l.
Via Melzi D'Eril 29
20154 Milano, Italy
o Precision Software Limited United Kingdom
Pyramid House
Easthampstead road
Bracknell, Berkshire RG12 1YW
United Kingdom
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
IN THOUSANDS (EXCEPT EPS)
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> SEP-30-1995
<CASH> 15,496
<SECURITIES> 12,935
<RECEIVABLES> 9,816
<ALLOWANCES> 3,929
<INVENTORY> 1,174
<CURRENT-ASSETS> 1,172
<PP&E> 1,879
<DEPRECIATION> 0
<TOTAL-ASSETS> 39,892
<CURRENT-LIABILITIES> 24,740
<BONDS> 0
<COMMON> 13
0
0
<OTHER-SE> 13,690
<TOTAL-LIABILITY-AND-EQUITY> 39,892
<SALES> 31,377
<TOTAL-REVENUES> 31,377
<CGS> 7,313
<TOTAL-COSTS> 7,313
<OTHER-EXPENSES> 11,948
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (18,209)
<INCOME-TAX> 1,672
<INCOME-CONTINUING> (16,537)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (16,537)
<EPS-PRIMARY> (1.32)
<EPS-DILUTED> 0
</TABLE>
