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SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No.1)*
MIDISOFT CORPORATION
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(Name of Issuer)
Common Stock, no par value
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(Title of Class of Securities)
597 413 10 3
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(CUSIP Number)
Shaul C. Baruch
BP Software, Ltd.
15851 Dallas Parkway, Suite 1120
Addison, Texas 75001
Telephone: (972 ) 233-9003
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Name, Address and Telephone Number of Persons
Authorized to Receive Notices and Communications)
June 15, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information that would alter disclosures
provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 11 Pages
<PAGE>
SCHEDULE 13D
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CUSIP No. 597 413 10 3 Page 2 of 11 Pages
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1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
BP Software Ltd.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)(a) |_|
(b) |X|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
WC -- See Item 3
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Texas
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7 SOLE VOTING POWER
0 Shares
NUMBER OF ----------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 5,884,615 Shares
EACH ----------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 0 Shares
----------------------------------------------------
10 SHARED DISPOSITIVE POWER
5,884,615 Shares
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,884,615 Shares
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS)
N/A
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
48%
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14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
PN
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<PAGE>
SCHEDULE 13D
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CUSIP No. 597 413 10 3 Page 3 of 11 Pages
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1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
BP Software, GP, L.L.C.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)(a) |_|
(b) |X|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
Not Applicable
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Texas
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7 SOLE VOTING POWER
0 Shares
NUMBER OF ----------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 5,884,615 Shares
EACH ----------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 0 Shares
----------------------------------------------------
10 SHARED DISPOSITIVE POWER
5,884,615 Shares
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,884,615 Shares
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS)
N/A
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
48%
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14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
PN
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<PAGE>
SCHEDULE 13D
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CUSIP No. 597 413 10 3 Page 4 of 11 Pages
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1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
Shaul C. Baruch
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) |_|
(b) |X|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
PF -- See Item 3
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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7 SOLE VOTING POWER
250,000 Shares
NUMBER OF
SHARES --------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 5,884,615 Shares
REPORTING --------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH
250,000 Shares
--------------------------------------------------
10 SHARED DISPOSITIVE POWER
5,884,615 Shares
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,134,615 Shares
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS)
N/A
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
50%
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14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
IN
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<PAGE>
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CUSIP No. 597 413 10 3 Page 5 of 11 Pages
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Item 1. Security and Issuer
The class of equity securities to which this statement relates
is the common stock, no par value, ("Common Stock") of Midisoft Corporation
("Issuer"), a Washington corporation, whose principal executive offices are
located at 1605 NW Sammamish Road, Issaquah, Washington 98027. The percentage of
beneficial ownership in this statement is based upon 6,387,954 shares of Common
Stock outstanding as of August 31, 1998, as disclosed in the Issuer's Proxy
Statement for the Annual Meeting of Shareholders to be held on October 30, 1998
filed with the Securities and Exchange Commission.
Item 2. Identity and Background
This statement is filed on behalf of BP Software, Ltd., a
limited partnership organized and existing under the laws of the State of Texas
("Record Holder") whose business is to acquire, hold and sell securities of the
Issuer, and the two other persons described below having an interest in the
Record Holder.
The general partner of the Record Holder is BP Software, GP,
L.L.C., a Texas limited liability company ("General Partner"). The General
Partner's business is to manage the assets of the Record Holder.
The General Partner is controlled by Shaul C. Baruch, who is
the Manager of the General Partner, holding a 75% equity interest therein. Mr.
Baruch's principal occupation is managing his investments. Mr. Baruch is a
citizen of the United States.
The business address of each Reporting Person is 15851 Dallas
Parkway, Suite 1120, Addison, Texas 75001.
During the last five years, none of the Reporting Persons has
been convicted in any criminal proceeding (excluding traffic violations or
similar misdemeanors).
During the last five years, none of the Reporting Persons has
been a party to any civil proceeding of a judicial or administrative body of
competent jurisdiction resulting in any judgment, decree or final order against
it or him enjoining it or him from engaging in future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
The Record Holder acquired the securities of the Issuer for
aggregate consideration of $2.5 million (described in Item 5 below) using the
capital contributions made by its partners. Mr. Baruch acquired the securities
<PAGE>
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CUSIP No. 597 413 10 3 Page 6 of 11 Pages
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of the Issuer owned directly by him(described in Item 5 below) in October 1997,
for aggregate consideration of approximately $311,240.00 using personal funds.
Item 4. Purpose of Transactions
The securities specified in Item 5(c) were acquired to obtain
an equity position in the Issuer for investment purposes. Each Reporting Person
may acquire or dispose of additional shares of the Issuer, but do not presently
intend to do so, although this intention may change depending upon market
conditions. Except as described in Item 6 below, none of the Reporting Persons
has any present plans that relate to or would result in: an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Issuer or any of its subsidiaries; a sale or transfer of a
material amount of assets of the Issuer or any of its subsidiaries; any change
in the present board of directors or management of the Issuer, including any
plans or proposals to change the number or term of directors or to fill any
existing vacancies on the board; any material change in the present
capitalization or dividend policy of the Issuer; any other material change in
the Issuer's business or corporate structure; changes in the Issuer's charter,
bylaws or instruments corresponding thereto or other actions that may impede the
acquisition of control of the Issuer by any person; causing a class of
securities of the Issuer to be delisted from a national securities exchange or
to cease to be authorized to be quoted in an inter-dealer quotation system of a
registered national securities association; causing a class of equity securities
of the Issuer to become eligible for termination of registration pursuant to
Section 12(g)(4) of the Securities Exchange Act of 1934; or any action similar
to the above.
Item 5. Interest in Securities of the Issuer
The Record Holder and the Issuer entered into a Securities
Purchase Agreement ("Purchase Agreement") dated as of October 28, 1997 pursuant
to which the Record Holder purchased 1% Convertible Debentures of the Issuer
("Debentures") and warrants of the Issuer ("Warrants," together with the
Debentures, the "Securities") which are convertible into and exercisable for
shares of Common Stock of the Issuer, respectively. The parties entered into an
amendment to the Purchase Agreement dated as of June 15, 1998, pursuant to which
the Record Holder agreed to purchase $500,000 aggregate Debentures ("June
Debentures") with the option to purchase an additional $500,000 prior to
December 31, 1998. The June Debentures are convertible upon 90 days written
notice into 2,500,000 shares of Common Stock. Pursuant to the terms of the
Purchase Agreement, the Record Holder purchased the following Securities with
the following exercise/conversion terms:
<PAGE>
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CUSIP No. 597 413 10 3 Page 7 of 11 Pages
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<TABLE>
<CAPTION>
EXERCISE/ NUMBER OF MATURITY/
DATE CONVERSION SHARES EXPIRATION
SECURITY* ISSUED AMOUNT RATE ISSUABLE DATE
--------- ------ ------ --------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
1. D 10/28/97 $500,000 $.60 833,333 10/28/2000
W 10/28/97 1.50 416,666 10/28/2002
2. D 11/28/97 $500,000 .60 833,334 11/28/2000
W 11/28/97 1.50 416,667 11/28/2002
3. D 01/09/98 $500,000 .52 961,538 1/9/2001
W 01/09/98 1.25 480,769 1/9/2003
4. D 01/28/98 $500,000 .52 961,539 1/28/2001
W 01/28/98 1.25 480,769 1/28/2003
5. W 06/15/98 .75 500,000 6/15/2003
-------
SUBTOTAL 5,884,615
---------
D 06/15/98 $500,000 .20 2,500,000** 6/15/2003
---------
TOTAL 8,884,615
=========
</TABLE>
* D = Convertible Debenture
W = Warrant
** Not currently convertible
The Record Holder, as the holder of record, nominally holds
voting and dispositive power with respect to the 5,884,615 shares of Common
Stock, issuable upon conversion of the Debentures and upon exercise of the
Warrants which power is shared with the General Partner, which controls the
Record Holder, and ultimately with Shaul Baruch, who controls the General
Partner. Accordingly, the Record Holder and the General Partner beneficially own
approximately 48% of the shares of Common Stock of the Issuer. Mr. Baruch has
sole voting and dispositive power with respect to 250,000 additional shares
owned directly by him. Accordingly, Mr. Baruch beneficially owns 6,134,615
shares of Common Stock or approximately 50% of the outstanding shares.
<PAGE>
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CUSIP No. 597 413 10 3 Page 8 of 11 Pages
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Item 6. Contracts, Arrangements, Understandings or Relationships
with Respect to the Securities of the Issuer
The Debentures accrue interest at the rate of 1% per annum
payable in cash or, at the Company's option, in shares of Common Stock. The
Issuer may redeem the Debentures at any time prior to conversion for an amount
equal to the outstanding principal amount plus accrued interest and a redemption
premium. For as long as the Debentures are outstanding or the record owner owns
at least 25% of the Issuer's Common Stock, the Record Holder has the right to
appoint three of the Issuer's five directors, subject to the approval of the
Board of Directors and all mergers and acquisitions shall require the unanimous
approval of the Board of Directors. The Record Holder has to date appointed the
following three directors: Larry Smart, David Weimert and Robert Orbach.
Additionally, so long as the Record Holder holds or has a right to hold any
debentures, the Record Holder has a right of first refusal on all equity
securities sold by the Issuer.
The Record Holder has the right to purchase an additional
$500,000 of convertible debentures prior to December 31, 1998 and an additional
$1 million of convertible debentures in June 1999. If the Record Holder
exercised all of its warrants and converted all of its debt, a change of control
of the Company could result.
The Record Holder and the Issuer also entered into a
Registration Rights Agreement pursuant to which the Issuer has agreed to use its
reasonable best efforts to register the shares of Common Stock issuable upon
exercise of the Warrants and conversion of the Debentures within 30 days of the
initial closing of the purchase of the Debentures.
Item 7. Material to be Filed as Exhibits
(a) Form of Securities Purchase Agreement, dated as of October 28,
1997, incorporated by reference to Exhibit 4.5(h) to the
Annual Report on Form 10- KSB40 for the year ended December
31, 1997, of the Issuer ("Annual Report").
(b) Form of Registration Rights Agreement, dated as of October 28,
1997, incorporated by reference to Exhibit 4.6(h) to the
Annual Report.
(c) Form of Debenture, dated October 28, 1997, incorporated by
reference to Exhibit 4.7 to the Annual Report.
(d) Form of Warrant, dated October 28, 1997, incorporated by
reference to Exhibit 4.7 to the Annual Report.
(e) Joint Filing Agreement.
(f) Second Amendment to Securities Purchase Agreement dated as of
June 15, 1998,incorporated by reference to Exhibit 4.8 to the
Quarterly Report on Form 10-QSB for the six months ended June
30, 1998, of the Issuer.
<PAGE>
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CUSIP No. 597 413 10 3 Page 9 of 11 Pages
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(g) Form of Debenture dated June 15, 1998.
(h) Form of Warrant dated June 15, 1998.
<PAGE>
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CUSIP No. 597 413 10 3 Page 10 of 11 Pages
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: October 22, 1998
BP SOFTWARE, LTD.
By: BP Software, GP, L.L.C.
By: /s/ Shaul C. Baruch, Manager
-----------------------------
Shaul C. Baruch, Manager
BP SOFTWARE, GP, L.L.C.
By: /s/ Shaul C. Baruch, Manager
-------------------------------
Shaul C. Baruch, Manager
/s/ Shaul C. Baruch
------------------------------
Shaul C. Baruch, Individually
<PAGE>
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CUSIP No. 597 413 10 3 Page 11 of 11 Pages
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AGREEMENT
This will confirm the agreement by and among the undersigned
that the Schedule 13D dated October 22, 1998, with respect to the ownership of
Common Stock of Midisoft Corporation by the undersigned, is filed on behalf of
each of the undersigned.
Dated: October 22, 1998
BP SOFTWARE, LTD.
By: BP Software, GP, L.L.C.
By: /s/ Shaul C. Baruch, Manager
-----------------------------
Shaul C. Baruch, Manager
BP SOFTWARE, GP, L.L.C.
By: /s/ Shaul C. Baruch, Manager
-------------------------------
Shaul C. Baruch, Manager
/s/ Shaul C. Baruch
------------------------------
Shaul C. Baruch, Individually
<PAGE>
DEBENTURE
THESE SECURITIES (THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR
OTHER EVIDENCE ACCEPTABLE TO THE CORPORATION THAT SUCH REGISTRATION IS
NOT REQUIRED.
No. 105 U.S. $500,000
MIDISOFT CORPORATION
1 % CONVERTIBLE DEBENTURE DUE JUNE 15, 2003
FOR VALUE RECEIVED, the Midisoft corporation (the "Company") promises
to pay to BP Software, Ltd. (the registered holder hereof (the "Holder"), the
principal sum of FIVE HUNDRED THOUSAND Dollars (US $500,000) on June 15, 2003
(the "Maturity Date") and to pay interest on the principal sum outstanding from
time to time, in annual installments, in arrears on the anniversary date hereof
and upon conversion as provided herein on June 15, 2003 at the rate of 1 % per
annum accruing from the date of initial issuance. Accrual of interest shall
commence on the first such business day to occur after the date hereof (the
"Issuance Dates) until payment in full of the principal sum has been made or
duly provided for. Subject to the provision of Section 4 below, the principal
of, and interest on this Debenture are payable at the option of the Company, in
shares of Common Stock, no par value per share, of the Company ("Common Stock")~
or in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts, at the address
of the Holder as designated in writing by the Holder from time to time. To the
extent paid in shares of Common Stock, interest on this Debenture shall be paid
at the "Market Price" of the Common Stock. The Market Price shall be the average
closing bid price of the Common Stock on the five (5) trading days immediately
preceding the Issuance Date, as reported by the National Association of
Securities Dealers, or the closing bid price on the over the counter market over
the five (5) trading days immediately preceding the Issuance Date, or, in the
event the Common Stock is listed on a stock exchange, the Market Price shall be
the closing price on the exchange for the five (5) trading days immediately
preceding the Issuance Date, as reported in the Wall Street Journal. The Company
will pay the principal of and interest upon this Debenture on the Maturity Date,
less any amounts required by law to be deducted, to the registered holder of
this Debenture as of the tenth day prior to the Maturity Date and addressed to
such holder at the last address designated by the Holder in writing. The
forwarding of such check shall constitute a payment of principal and interest
hereunder and shall satisfy and discharge the liability for principal and
interest on this Debenture to the extent of the sum represented by such check.
This Debenture is being issued pursuant to that certain Securities
Purchase Agreement dated October 28, 1997 between the Company and Holder (the
"Purchase Agreement"). This Debenture is subject to the following additional
provisions:
<PAGE>
1. The Debentures are exchangeable for an equal aggregate principal
amount of Debentures of different authorized denominations, as requested by the
Holders surrendering the same. No service charge will be made for such
registration or transfer or exchange.
2. The Company shall be entitled to withhold from all payments of
principal of and interest on this Debenture any amounts required to be withheld
under the applicable provisions of the United States income tax laws or other
applicable laws at the time of such payments and Holder shall execute and
deliver all required documentation in connection therewith.
3. This Debenture has been issued subject to investment representations
of the original purchaser hereof and may be transferred or exchanged only in
compliance with the Securities Act of 1933, as amended (the "Act"),and other
applicable state and foreign securities laws. In the event of any proposed
transfer of this Debenture the Company may require, prior to issuance of a new
Debenture in the name of such other person that it receive reasonable transfer
documentation including opinions that the issuance of the Debenture in such
other name does not and will not cause a violation of the Act or any applicable
state or foreign securities laws. Prior to due presentment for transfer of this
Debenture, the Company and any agent of the Company may treat the person in
whose name this Debenture is duly registered on the Company's Debenture Register
as the owner hereof for the purpose of receiving payment as herein provided and
for all other purposes whether or not this Debenture be overdue, and neither the
Company nor any such agent shall be affected by notice to the contrary.
4. A. Subject to Section 4B and 4C hereof, the Holder of this Debenture
is entitled, at its option to convert at any time, and from time to time, in
whole or in part, the principal amount of this Debenture, provided that the
principal amount is at least US 10,000 (unless if at the time of such election
to convert the aggregate principal amount of all Debentures registered to the
Holder is less than Ten Thousand Dollars (US $10,000), then the whole amount
thereof) into Two Million Five Hundred Thousand (2,500,000) shares of Common
Stock of the Company at a conversion price for each share of Common Stock equal
to the price of twenty cents ($0.20) per share. Conversion shall be effectuated
by surrendering this Debenture to be converted to the Company with the form of
conversion notice attached hereto as Exhibit A, executed by the Holder of the
Debenture evidencing such Holder's intention to convert this Debenture or a
specified portion (as above provided) hereof, and accompanied, if required by
the Company, by proper assignment hereof in blank. Interest accrued or accruing
from the date of issuance to the date of conversion shall at the option of the
Company be paid in cash or Common Stock upon conversion at the Market Price. No
fraction of Shares or scrip representing fractions of shares will be issued on
conversion, but the number of shares issuable shall be rounded to the nearest
whole share. The date on which notice of conversion is given (the "Conversion
Date") shall be deemed to be the date on which the Holder has delivered this
Debenture, with the conversion notice duly executed, to the Company or, the date
set forth in such facsimile delivery of the notice of conversion if the
Debenture is received by the Company within three (3) business days therefrom.
Facsimile delivery of the conversion notice shall be accepted by the Company at
telephone number (425-391-3610); ATTN:
<PAGE>
President or Secretary. Certificates representing Common Stock upon conversion
will be delivered within ninety (90) days from the date the notice of conversion
with the original Debenture is delivered to the Company.
B. (i) Notwithstanding any other provision hereof to the contrary, at
any time prior to the Conversion Date, the Company shall have the right to
redeem all but not less than all of the outstanding principal amount of the
Debentures then held by the Holder for an amount (the "Redemption Amount") equal
to the sum of (i) such outstanding principal of the Debentures plus all accrued
but unpaid interest thereof through the date the Redemption Price is paid to the
Holder (the "Redemption Payment Date"), plus (ii) the Redemption Premium (as
defined below).
(ii) The "Redemption Premium" shall be:
a. if the Redemption Payment Date is not more than 45 days from
the Issuance Date, [7%] of the outstanding principal of the
Debentures;
b. if the Redemption Payment Date is more than 45 days but not
more than 90 days from the Issuance Date, [14%] of the
outstanding principal of the Debentures; and
c. if the Redemption Payment Date is more than 90 days from the
Issuance Date, [25%] of the outstanding principal of the
Debentures.
iii. The Redemption Payment shall be paid to the Holder within ten
(10) days from the date of the Notice of Redemption. Furthermore,
in the event such payment is not timely made,,any rights of the
Company to redeem the Debenture shall terminate, and the Notice
of Redemption shall be null and void.
C. The Company shall have the right to require, by written notice to
the Holder of this Debenture at least ten (10) days prior to the Maturity Date,
that the Holder of this Debenture exercise its right of conversion with respect
to all or that portion of the principal amount and interest outstanding on the
Maturity Date.
5. No provision of this Debenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal of, and
interest on, this Debenture at the time, place, and rate, and in the coin or
currency, herein prescribed. This Debenture and all other Debentures now or
hereafter issued of similar terms are direct obligations of the Company.
6. No recourse shall be had for the payment of the principal of, or the
interest on, this Debenture, or for any claim based hereon, or otherwise in
respect hereof, against any incorporate, shareholder, officer or director, as
such past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue
<PAGE>
hereof, expressly waived and released.
7. If the Company mergers or consolidates with another corporation or sells
or transfers all or substantially all of its assets to another person and the
holders of the Common Stock are entitled to receive stock, securities or
property in respect of or in exchange for Common Stock, then as a condition of
such merger, consolidated, sale or transfer, the Company and any such successor,
purchaser or transferee agree that the Debenture may thereafter be converted on
the terms and subject to the conditions set forth above into the kind and amount
of stock, securities or property receivable upon such merger, consolidation,
sale or transfer by a holder of the number of shares of Common Stock into which
this Debenture might have been converted immediately before such merger,
consolidation, sale or transfer, subject to adjustments which shall be as nearly
equivalent as may be practicable. In the event of any proposed merger,
consolidation or sale or transfer of all or substantially all of the assets of
the Company (a "Sale"), the Holder hereof shall have the right to convert by
delivering a Notice of Conversion to the Company within fifteen (15) days of
receipt of notice of such Sale from the Company. In the event the Holder hereof
shall elect not to convert, and without regard to Section 4(b) above, the
Company may prepay all outstanding principal and accrued interest on this
Debenture, less all amounts required by law to be deducted, upon which tender of
payment following such notice, the right of conversion shall terminate.
8. The Holder of the Debenture, by acceptance hereof, agrees that this
Debenture is being acquired for investment and that such Holder will not offer,
sell or otherwise dispose of this Debenture or the Shares of Common Stock
issuable upon conversion thereof except under circumstances which will not
result in a violation of the Act or any applicable state Blue Sky or foreign
laws or similar laws relating to the sale of securities.
9. The indebtedness evidenced by this Debenture shall be senior and prior
in right of payment of the Company's Indebtedness. "Indebtedness" shall mean the
principal, unpaid interest and any other amounts due and owing on (i)
indebtedness of the Company, or indebtedness on which the Company is a
guarantor, whether outstanding on the date hereof or hereafter created, to banks
for money borrowed by the Company or a subsidiary of the Company, whether or not
secured, and (ii) any and all deferrals, renewals, refunds or extensions of such
indebtedness or any debentures, notes or other evidence of indebtedness issued
in exchange for such indebtedness, This Debenture is secured by first, prior and
perfected interests in the Company's intellectual property rights, fixed assets
and contracts for product delivery.
10. This Debenture shall be governed by and construed in accordance with
the laws of the State of Washington for contracts to be wholly performed in such
state and without regard to the principles thereof regarding the conflict of
laws. Each of the parties consents to jurisdiction in King County, Washington in
connection with any dispute arising under this Agreement and hereby waives, to
the maximum extent permitted by law, any objection, including any objection
based on forum non conveniens, to the bringing of any such proceeding in such
jurisdictions.
<PAGE>
11. The following shall constitute an "Event of Default":
a. The Company shall default in the payment of principal or interest
on this Debenture and such default shall remain unremedied for
five (5) business days after the Company has been notified of the
default in writing by a Holder; or
b. Any of the representations or warranties made by the Company
herein, in the Purchase Agreement, or in any certificate or
financial or other written statements furnished by the Company in
connection with the execution and delivery of this Debenture or
the Purchase Agreement shall be false or misleading in any
material respect at the time made; or
c. The Company fails to issue shares of Common Stock to the Holder
or to cause its Transfer Agent to issue shares of Common Stock
upon exercise by the Holder of the conversion rights of the
Holder in accordance with the terms of this Debenture, fails to
transfer or to cause its transfer Agent to transfer any
certificate for shares of Common Stock issued to the Holder upon
conversion of this Debenture and when required by the Debenture
or the Purchase Agreement, or fails to remove any restrictive
legend or to cause its Transfer Agent to transfer on any
certificate or any shares of Common Stock issued to the Holder
upon conversion of this Debenture as and when required by this
Debenture or the Securities Purchase Agreement and any such
failure shall continue uncured for five (5) business days after
the Company has been notified of such failure in writing by
Holder; or
d. The Company shall fail to perform or observe, in any material
respect, any other covenant, term, provision, condition,
agreement or obligation of the Company under this Debenture and
such failure shall continue uncured for a period of thirty (30)
days after written notice from the Holder of such failure; or
e. The Company shall (1) after the date hereof, make an assignment
for the benefit of creditors or commence proceedings for its
dissolution; or (2) apply for or consent to the appointment of a
trustee, liquidation or receiver for all or a substantial part of
its property or business; or
f. A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or business
without its consent and shall not be discharged within sixty (60)
days after such appointment; or
g. Any governmental agency or any court of competent jurisdiction at
the instance of any governmental agency shall assume custody or
control of the whole or any substantial portion of the properties
or assets of the Company and shall not be dismissed within sixty
(60) days thereafter; or
<PAGE>
h. Bankruptcy, reorganization, insolvency or liquidation proceedings
or other proceedings for relief under any bankruptcy law or any
law for the relief of debtors shall be instituted by or against
the Company and, if instituted against the Company, shall not be
dismissed within sixty (60) days after such institution or the
Company shall by any action or answer approve of, consent to, or
acquiesce in any such proceedings or admit the material
allegations of, or default in answering a petition filed in any
such proceeding.
Then, or at any time thereafter, and in each and every such case, unless such
Event of Default shall have been waived in writing by the Holder (which waiver
shall not be deemed to be a waiver of any subsequent default), at the option of
the Holder and in the Holder's sole discretion, the Holder may consider this
Debenture immediately due and payable, without presentment, demand, protest or
notice of any kinds, all of which are hereby expressly waived, anything herein
or in any note or other instruments contained to the contrary notwithstanding,
and the Holder may immediately enforce any and all of the Holder's rights and
remedies provided herein or any other rights or remedies afforded by law.
12. Nothing contained in this Debenture shall be construed as conferring
upon the Holder the right to vote or to receive dividends or to consent or
receive notice as a shareholder in respect of any meeting of shareholders or any
rights whatsoever as a shareholder of the Company, unless and to the extent
converted in accordance with the terms hereof.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
Dated: __________, 199_ MIDISOFT CORPORATION
By:_______________________________
__________________________________
(Print Name)
__________________________________
(Title)
<PAGE>
EXHIBIT A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $_____ of the
principal amount of the above Debenture No. ____ into shares of Common Stock of
MIDISOFT CORPORATION (the "Company") according to the conditions hereof, as of
the date written below. In converting the Debenture No. _____, the undersigned
hereby confirms and acknowledges that the shares of Common Stock are being
acquired solely for the account of the undersigned and not a nominee for any
other party, and that the undersigned will not offer, sell or otherwise dispose
of any such shares of Common Stock, except under circumstances that will not
result in a violation of the Securities Act of 1933, as amended.
Date of Conversion: -----------------------------------------------------------
Applicable Conversion Price: --------------------------------------------------
Signature: -------------------------------------------------------------------
(Name)
Address: --------------------------------------------------------------------
- -------------------------------------------------------------------------------
*This original Debenture and Notice of Conversion must be received by the
Company by the third business date following the Date of Conversion.
<PAGE>
WARRANT
THE REGISTERED OWNER OF THIS WARRANT, BY HIS ACCEPTANCE HEREOF, AGREES THAT HE
WILL NOT SELL, TRANSFER OR ASSIGN THIS WARRANT. TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS SET FORTH IN
ANNEX I TO WARRANT, STATEMENT OF RIGHTS; OF WARRANTHOLDER. NO TRANSFER OF THESE
SECURITIES OR OF THIS CERTIFICATE, OR OF ANY SECURITIES OR CERTIFICATES ISSUED
IN EXCHANGE THEREFOR, SHALL BE EFFECTIVE UNLESS THERE IS COMPLIANCE WITH THE
TERMS AND CONDITIONS OF SUCH RESTRICTIONS.
--------------------------------------------------------------------
WARRANT
For the Purchase of 500,000 Shares of Common Stock of
MIDISOFT CORPORATION
(A Washington Corporation)
THIS CERTIFIES THAT, for value received, BP Software, Ltd., as registered owner
(the "Owner') of this Warrant, is entitled, subject to Annex I hereto at any
time or from time to time on after June 15, 1998 and at or before 5:00 p.m.,
Pacific Time, June 15, 2003, subject to earlier expiration pursuant to Section 2
of Annex I attached hereto (the "Expiration Date"), but not thereafter, to
subscribe for, purchase and receive fully paid and non-assessable shares of
common stock (the "Shares") of Midisoft Corporation, a Washington corporation
(the "Corporation"), at the price of seventy-five cents ($0.75) per Share (the
"Exercise Price"), upon presentation and surrender of this Warrant and upon
payment of the Exercise Price for the Shares to be purchased to the Corporation
at the principal office of the Corporation as more fully described in the
Statement of Rights of Warrantholder, a copy of which is attached as Annex I
hereto and by this reference made a part hereof; provided, however, upon the
occurrence of the events specified in Annex I, the rights granted by this
Warrant shall be terminated or adjusted as specified in Annex I. Upon exercise
of this Warrant, the form of election hereinafter provided must be duly executed
and the instructions for registration of the Shares acquired by such exercise
must be completed. If the subscription rights represented hereby shall not be
exercised at or before the Expiration Date, or such earlier date as may be
applicable pursuant to Section 2 of Annex I, this Warrant shall become and be
void without further force or effect, and all rights represented hereby shall
cease and expire.
Subject to the terms contained herein, this Warrant may be exercised in whole or
in part by execution by the Owner of the form of exercise attached hereto. In
the event of the exercise hereof in part only, the Corporation shall cause to be
delivered to the Owner a new Warrant of like tenor to this Warrant in the name
of the Owner evidencing the right of the Owner to purchase the number of Shares
purchasable hereunder as to which this Warrant has not been exercised.
<PAGE>
In no event shall this Warrant (or the Shares issuable upon full or partial
exercise hereof) be offered or sold except in conformity with the Securities Act
of 1933, as amended.
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be signed by its
duly authorized officers.
MIDISOFT CORPORATION
By: --------------------------
President
By:---------------------------
Secretary
<PAGE>
Form to be used to exercise Warrant:
EXERCISE FORM
The undersigned hereby elects irrevocably to exercise this within Warrant and to
purchase shares of Common Stock of Midisoft Corporation, called for hereby, and
hereby makes payment of $______________ (at the rate of $0.75 per share) in
payment of the Exercise Price pursuant hereto. Please issue the shares as to
which this Warrant is exercised in accordance with the instructions given below.
Dated:______________________, 19__
Signature: ---------------------------------
Signature Guaranteed: ----------------------
INSTRUCTIONS FOR REGISTRATION OF SHARES
Name ------------------------------------------
(Print in Block Letters)
Address ----------------------------------------
<PAGE>
MIDISOFT CORPORATION
ANNEX I TO WARRANT
STATEMENT OF RIGHTS OF WARRANTHOLDER
1. Exchange of Warrant. This Warrant, at any time prior to the exercise
hereof, upon presentation and surrender to the Corporation, may be exchanged,
alone or with other Warrants of like tenor registered in the name of the same
Owner, for another Warrant or other Warrants of like tenor in the name of such
Owner, exercisable for the same aggregate number of Shares as the Warrant or
Warrants surrendered.
2. Purchase and Exercise of Warrant.
a. THIS WARRANT MAY NOT BE SOLD, ASSIGNED, HYPOTHECATED,
TRANSFERRED, OTHER THAN BY WILL OR PURSUANT TO THE LAWS OF DESCENT AND
DISTRIBUTION. Each certificate for Warrants issued hereunder shall bear a legend
reading substantially as follows:
"TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFI CATE IS SUBJECT
TO CERTAIN RESTRICTIONS SET FORTH IN ANNEX I TO WARRANT, STATEMENT OF
RIGHTS OF WARRANTHOLDER. NO TRANSFER OF THESE SECURITIES OR OF THIS
CERTIFICATE, OR OF ANY SECURITIES OR CERTIFICATES ISSUED IN EXCHANGE
THEREFOR, SHALL BE EFFECTIVE UNLESS THERE IS COMPLIANCE WITH THE TERMS
AND CONDITIONS OF SUCH RESTRICTIONS."
In case the Owner shall desire to exercise the purchase right evidenced by this
Warrant, the Owner shall surrender this Warrant with the form of exercise
attached hereto duly executed by the Owner, to the Corporation at the principal
office of the Corporation at 1605 NW Sammamish Road, Suite 205, Issaquah,
Washington 98027, attention of the President accompanied by payment by certified
funds, cashier's check or other form of payment acceptable to the Corporation of
the total Exercise Price (hereinafter defined) for the Shares to be purchased.
This Warrant may be exercised in whole or in part. In case of the exercise
hereof in part only the Corporation will deliver to the Owner a new Warrant of
like tenor in the name of the Owner evidencing the right to purchase the number
of Shares as to which this Warrant has not been exercised. Unless the
Corporation receives an opinion from counsel satisfactory to it that such a
legend is not required in order to assure compliance with the Securities Act of
1933, as amended (the "1933 Act"), or any applicable state securities laws, each
certificate for Shares issued hereunder shall bear a legend reading
substantially as follows:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, NOR HAVE THEY BEEN REGISTERED UNDER THE SECURITIES ("BLUE SKY")
LAWS OF ANY STATE. THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED,
PLEDGED, OR HYPOTHECATED UNLESS THEY HAVE FIRST BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AND UNDER THE APPLICABLE STATE SECURITIES
<PAGE>
("BLUE SKY") LAWS OR UNLESS THE AVAILABILITY OF AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT AND LAWS IS ESTABLISHED TO THE
SATISFACTION OF THE COMPANY, WHICH MAY NECESSITATE A WRITTEN OPINION
OF SELLER'S COUNSEL SATISFACTORY TO COMPANY COUNSEL.
b. The exercise price (the "Exercise Price") per Share
issuable upon the exercise of this Warrant shall be seventy-five cents ($0.75).
c. The term of this Warrant (the "Warrant Period") is a five
year period commencing on June 15, 1998 and ending on June 15, 2003.
3. Disposition of Securities
a. The registered owner of this Warrant, by acceptance hereof,
agrees that, before any (disposition is made of any Warrant or underlying Share,
the Owner shall give written notice to the Corporation describing briefly the
manner of any such proposed disposition. No such disposition shall be made
unless and until:
b. The Corporation has received an opinion from counsel for
the Owner of said securities stating that no registration under the 1933 Act or
any state securities law is required with respect to such disposition; or
c. A registration statement or post-effective amendment to a
registration statement under the 1933 Act has been filed by the Corporation and
made effective by the Securities and Exchange Commission covering such proposed
disposition and the securities have been registered under the appropriate state
securities laws or an exemption from registration is available.
4. Share Dividends Reclassification: Reorganization Provisions.
a. If, prior to the expiration of this Warrant by exercise or
by its terms, the Corporation shall issue shares of Common Stock as a share
dividend or subdivide the number of outstanding shares of Common Stock into a
greater number of shares, then, in either of such cases, the Exercise Price per
Share purchasable pursuant to this Warrant in effect at the time of such action
shall be proportionately increased; and conversely, if the Corporation shall
contract the number of outstanding shares of Common Stock by combining such
shares into a smaller number of shares, then, in such case, the Exercise Price
per Share purchasable pursuant to this Warrant in effect at the time of such
action shall be proportionately increased and the number of Shares at that time
purchasable pursuant to this Warrant shall be proportionately decreased. If the
Corporation shall, at any time during the life of this Warrant declare a
dividend payable in cash on its shares of Common Stock and shall at
substantially the same time offer to its shareholders a right to purchase new
shares of Common Stock form the proceeds of such dividend or for an amount
substantially equal to the dividend, all shares of Common Stock so issued shall,
for the purpose of this Warrant, be deemed to have been issued as a share
<PAGE>
dividend. Any dividend paid or distributed upon the Common Stock in shares of
any other class of securities convertible into Common Stock shall be treated as
a dividend paid in Common Stock to the extent that shares of Common Stock are
issuable upon the conversion thereof.
b. If, prior to the expiration of this Warrant by exercise or
by its terms, the Corporation shall be re-capitalized by reclassifying its
outstanding shares of Common Stock into shares with a different par value, or
the Corporation or a successor corporation shall consolidate or merge with or
convey all or substantially all of its or of any successor corporation's
property and assets to any other corporation or corporations (any such
corporation being included within the meaning of the term "successor
corporation" used above in the event of any consolidation or merger of any such
corporation with, or the sale of all or substantially all of the property of any
such corporation to another corporation or corporations), the Owner of this
Warrant shall thereafter have the right to purchase, upon the basis and on the
terms and conditions and during the time specified in this Warrant, in lieu of
the Shares theretofore purchasable upon the exercise of this Warrant, such
shares, securities, or assets as may be issued or payable with respect to, or in
exchange for, the number of Shares theretofore purchasable upon the exercise of
this Warrant had such recapitalization, consolidation, merger or conveyance not
taken place, and, in any such event, the rights of the Owner of this Warrant to
an adjustment in the number of Shares purchasable upon the exercise of this
Warrant as herein provided shall continue and be preserved in respect of any
shares, securities, or assets which the Owner of this Warrant becomes entitled
to purchase.
c. If: (i) the Corporation shall take a record of the holders
of its Common Stock for the purpose of entitling them to receive a dividend
payable otherwise than in cash, or any other distribution in respect of the
Common Stock (including cash), pursuant to, without limitation, any spin-off,
split-off, or distribution of the Corporation's assets; or (ii) the Corporation
shall take a record of the holders of its Common Stock for the purpose of
entitling them to subscribe for or purchase any shares of any class or to
receive any other rights; or (iii) in the event of any classification,
reclassification, or other reorganization of the shares which the Corporation is
authorized to issue, consolidation or merger of the Corporation with or into
another corporation, or conveyance of all or substantially all of the assets of
the Corporation, or (iv) in the event of the voluntary or involuntary
dissolution, liquidation or winding up of the Corporation; then, and in any such
case, the Corporation shall mail to the Owner of this Warrant, at least thirty
(30) days prior thereto, a notice stating the date or expected date on which a
record is to be taken for the purpose of such dividend, distribution or rights,
or the date on which such classification, reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation, or winding up as
the case may be, will be effected. Such notice shall also specify the date or
expected date, if any is to be fixed, as of which holders of record shall be
entitled to participate in such dividend, distribution, or rights, or shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such classification, Reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding up, as
the case may be.
<PAGE>
d. If the Corporation, at any time while this Warrant shall
remain unexpired and unexercised, shall sell all or substantially all of its
property, dissolve, liquidate, or wind up its affairs, the Owner of this Warrant
may thereafter receive upon exercise hereof, in lieu of each Share which it
would have been entitled to receive, the same kind and amount of any securities
or assets as may be issuable, distributable, or payable upon any such sale,
dissolution, liquidation, or winding up with respect to each Common Share of the
Corporation.
5. Reservation of Shares Issuable on Exercise of Warrants. The
Corporation will, at all times, reserve and keep available out of its authorized
shares, solely for issuance upon the exercise of this Warrant such number of
shares of Common Stock and other shares as from time to time shall be issuable
upon the exercise of this Warrant.
6. Loss. Theft. Destruction or Mutilation. Upon receipt by the
Corporation of evidence satisfactory to it (in the exercise of its reasonable
discretion) of the ownership of and the loss, theft, destruction, or mutilation
of this Warrant, the Corporation will execute and deliver, in lieu thereof, a
new Warrant of like tenor.
7. Warrantholder Not a Shareholder. The Owner of this Warrant, as such,
shall not be entitled by reason of this Warrant to any rights whatsoever of a
shareholder of the Corporation.
DATED this __ day of ___________, 199_
MIDISOFT CORPORATION
By: ----------------------------
President
