SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 13(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 19, 1997
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-14076 22-3270045
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
3 Oak Road, Fairfield, New Jersey 07004
(Address of principal executive offices) (Zip Code)
(973) 808-1992
(Registrant's telephone number, including area code)
111 North Market Street, San Jose, California 95113
(Former name or former address, if changed since last report)
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Item 5. Other Events.
Software Publishing Corporation Holdings, Inc. (the "Company") has approved
a plan to restructure its operations and management team. The Board of Directors
of the Company has decided to move the Company's principal executive offices to
Fairfield, New Jersey and to close the Company's San Jose, California office in
an effort to significantly reduce the Company's expenses. Additional revenue
enhancement, cost-cutting and productivity improvement measures have also been
adopted. Barry A. Cinnamon, the Company's former Chairman of the Board,
President and Chief Executive Officer has resigned these positions and as a
director of the Company. Lori Kramer Cinnamon has also resigned as a director
and officer of the Company. Mark E. Leininger, the Company's Chief Operating
Officer, will assume Mr. Cinnamon's responsibilities and will be responsible for
the Company's operations, including the implementation of the restructuring. The
Company also announced the appointment of a new Chief Financial Officer, Kevin
D. Sullivan, CPA. Mr. Sullivan has previously held two positions as Chief
Financial Officer and formerly was the Treasurer of Prime Hospitality Corp., a
New York Stock Exchange company, when it was known as Prime Motor Inns.
The Company has taken these actions pursuant to a plan which is intended to
result in the Company operating successfully. The Company believes that, by
continuing to develop and enhance its successful direct mail and telemarketing
operations, eliminating the overhead associated with operations in the high-cost
northern California environment and by improving its operations at the Company's
Nashua, New Hampshire telemarketing and warehouse facilities, the Company can
establish a positive cash flow; however, no assurance can be given in this
regard. The Company expects to continue to market and sell its existing
products, including Serif PagePlus , Serif DrawPlus , Serif MailPlus and
Software Publishing Corporation's Harvard Graphics , ActiveMail and other
products. With the benefit of the Company's profitable direct mail and
telemarketing operations in the United Kingdom and with the anticipated
increased efficiencies in the Company's United States direct mail and
telemarketing facilities and operations, the Company anticipates that it can
continue to increase its sales of these products, as well as any other product
which the Company may develop, acquire or license.
In connection with these actions, the Company expects to classify its
Intelligent Formatting technology as a discontinued operation, and anticipates
that implementing the restructuring plan will result in non-recurring charges of
approximately $4,000,000 in the fourth quarter of fiscal 1997, including
expenses of approximately $500,000 anticipated to be incurred in connection with
closing the San Jose office.
In connection with the resignation of Mr. Cinnamon, the Company has agreed
to license a portion of its Intelligent Formatting technology to him for use in
connection with a proposed Internet database product that the Company has no
current plans to develop. The Company will be entitled to receive royalties and
commissions in connection with the license granted to Mr. Cinnamon. In addition,
Mr. Cinnamon agreed to surrender his 60,520 shares of the Company's Class B
Voting Preferred Stock, Series A for cancellation and granted to the Company a
ten year right to vote any of the 842,542 shares of the Company's Common Stock
owned by Mr. Cinnamon.
In addition, Eng Chye Low has resigned as a director of the Company for
medical reasons.
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Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits.
Listed below are all exhibits to this Current Report on Form 8-K.
Exhibit
Number Description
10.54 Settlement and Release Agreement, dated December 19, 1997, among
the Registrant, Barry A. Cinnamon and Lori Kramer Cinnamon.
10.55 License Agreement, dated December 19, 1997, between Software
Publishing Corporation and Barry A. Cinnamon.
99.1 Press Release of the Registrant, dated December 22, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SOFTWARE PUBLISHING
CORPORATION HOLDINGS, INC.
Dated: December 30, 1997 By: /s/ Mark E. Leininger
Mark E. Leininger
Vice President and Chief Operating Officer
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EXHIBIT INDEX
Exhibit
Number Description
10.54 Settlement and Release Agreement, dated December 19, 1997, among
the Registrant, Barry A. Cinnamon and Lori Kramer Cinnamon.
10.55 License Agreement, dated December 19, 1997, between Software
Publishing Corporation and Barry A. Cinnamon.
99.1 Press Release of the Registrant, dated December 22, 1997.
SETTLEMENT AND GENERAL RELEASE AGREEMENT
THIS SETTLEMENT AND GENERAL RELEASE AGREEMENT (the "Agreement") is made and
entered into as of the 19th day of December, 1997 by and between Barry A.
Cinnamon ("BAC" or the "Employee"), Lori Kramer Cinnamon, each an individual
residing at 25 Oldchester Road, Essex Fells, New Jersey 07021 ("LKC"; and
together with BAC, hereinafter sometimes referred to as the "Cinnamons"), and
Software Publishing Corporation Holdings, Inc. (formerly known as Allegro New
Media, Inc.), a Delaware corporation (the "Company") (collectively, the
"Parties"). The Parties acknowledge that the terms and conditions of this
Agreement have been voluntarily agreed to and that such terms are final and
binding.
WHEREAS, BAC has been a director of the Company and has been employed by
the Company as Chairman of the Board, Chief Executive Officer and President; and
WHEREAS, LKC has been Assistant Vice President and Vice President of
Marketing and as a director of the Company and has been employed by the Company
in various capacities; and
WHEREAS, the Company desires to accept BAC's and LKC's resignation as
employees, officers and directors; and
WHEREAS, the Parties now desire to settle fully and finally claims BAC
and/or LKC may have against the Company and that the Company may have against
BAC and/or LKC and others released herein, including, but not limited to, any
matters arising out of their respective employment with the Company and their
separation therefrom.
NOW, THEREFORE, in consideration of the premises and mutual promises herein
contained, it is agreed as follows:
1. Non-Admission of Liability or Wrongdoing.
This Agreement shall not be construed in any way as an admission by the
Parties that any of them have acted wrongfully with respect to each other or any
other person or that any one of them has any rights whatsoever against the
others.
2. Resignation.
BAC hereby resigns as an officer (Chairman of the Board, President and
Chief Executive Officer), employee and director of the Company. LKC hereby
resigns as a director and as an officer and employee of the Company. The
Cinnamons agree to return to the Company all assets, equipment or other items
which are owned by the Company not later than one (1) month after the date of
this Agreement, except that BAC may retain his desk and chairs from his
Fairfield, New Jersey office and his laptop computer, fax machine and printer
from his San Jose, California office. If reasonably acceptable to the Chief
Operating Officer of the Company, BAC shall be permitted to
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remove these items from the Company's premises after normal business hours
provided he is escorted by an authorized representative of the Company.
Otherwise, the Company shall deliver to BAC these items and his personal
belongings located on the Company's premises within one (1) month after the date
hereof. From and after the date hereof, BAC shall make himself available to the
Company at reasonable times and upon reasonable notice to assist and consult
with the Company with respect to marketing, sales, product development and other
activities of the Company which BAC was involved in during his employment by the
Company. Until January 31, 1998, BAC shall not be required to devote more than
five (5) hours per week in this regard, and thereafter through June 30, 1998
shall not be required to devote more than one (1) hour per week in this regard,
and from and after July 1, 1998 BAC shall have no further obligation in this
regard.
3. Consideration to Cinnamon.
(a) On the eighth day after the execution and delivery of this Agreement:
(i) the Company shall pay to BAC an amount equal to $6,000 in respect of
accrued vacation;
(ii) the Company shall pay to BAC his unpaid reasonable expenses incurred
in the normal course of the fulfillment of his duties as an officer
and director of the Company, including but not limited to reasonable
travel and business expenses incurred through the date of this agree-
ment, upon submission of customary documentation relating thereto. It
is expressly acknowledged that BAC will continue to make his best
efforts to minimize these expenses;
(iii)the Company shall pay to BAC an amount equal to $50,000 in a cashiers
or certified check;
(iv) in the event that the Company has not actually paid BAC's reasonable
credit card bill of approximately $13,000, as previously purported to
have been wire transferred by the Company pursuant to BAC's instruc-
tions and acknowledged by BAC's credit card issuer, the Company shall
do so within fifteen (15) days after BAC requests such payment;
(b) the Company shall pay to BAC the sum of $10,000 on the 15th day of each
month for twenty (20) months after the date hereof pursuant to the Company's
normal payroll practices;
(c) the Company shall continue to make all payments with respect to health
insurance for Cinnamons' benefit comparable to that coverage made available to
the Company's executive officers through the earlier of (1) December 31, 1999 or
(2) such time as BAC is employed or retained on a substantially full-time basis;
(d) the Company shall reimburse BAC for his moving expenses, up to a
maximum of $15,000 upon submission of customary documentation relating thereto;
(e) the Company shall register for resale by BAC 865,000 shares of common
stock, par value $.001 per share (the "Common Stock"), of the Company in the
Registration Statement on Form S-3 currently proposed to be filed by the
Company. The Cinnamons agree that they will sell their shares of Common Stock of
the Company only in the following manner: (a) in accordance with all applicable
federal and state securities laws; (b) the Cinnamons will not sell any shares of
Common Stock until the earlier of (i) six (6) months after the date of this
Agreement or (ii) upon the
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closing price per share of Common Stock on Nasdaq being less than $.60 on
any trading day; (c) the Cinnamons shall not sell during any one week an amount
in excess of an aggregate of more than 30% of the average daily sales volume of
the Common Stock on Nasdaq over the preceding two weeks, without the consent of
a market maker in the Company's Common Stock to be named by the Company which
will purchase or effectuate any such purchase, in the event such a consent is
hereunder required; and (d) prior to selling any shares of Common Stock, the
Cinnamons agree to first contact the Company's President or Chief Operating
Officer, and to comply with the Company's Insider Trading Policy so long as they
are subject thereto;
(f) the Company enter into a license agreement with BAC in the form
attached hereto as Exhibit A (the "License Agreement"); and
(g) all consideration set forth in this Section 2 shall be paid to the
Cinnamons' or their heirs, regardless of their ability to provide services in
any given period, and regardless of the Cinnamons' health, death or disability
status.
(h) subject to the terms of the Company's Long-Term Incentive Plan, all
incentive stock options granted to the Cinnamons by the Company shall be exer-
cisable for a period of 12 months from and after the date hereof to the extent
otherwise exercisable, and thereafter shall terminate.
4. Surrender of Series B Voting Preferred Stock and the Proxy with Respect
to Shares of Common Stock.
Upon the execution and delivery of this Agreement:
(a) BAC hereby surrenders to the Company for cancellation stock certificate
no. B 1 representing 60,520 shares of Class B Voting Preferred Stock Series A of
the Company, and all right, title and interest with respect to any such shares
of Class B Voting Preferred Stock, Series A; and
(b) BAC and LKC hereby appoint the President of the Company as attorney and
proxy, with full power of substitution, in the name and place of BAC, to vote as
proxy all of the shares of Common Stock of the Company owned beneficially or of
record by either of them, in any capacity, now or at any time hereafter, in such
manner as may be determined by the President of the Company in his sole
discretion. The Cinnamons hereby acknowledge that the Company would not agree to
this Agreement in the absence of this proxy, that this proxy is a requirement
for the Company to enter into this Agreement and that this proxy is and shall at
all times be irrevocable and coupled with an interest. The Cinnamons further
acknowledge that this proxy shall remain in effect for ten (10) years, except to
the extent that the shares of Common Stock subject to this proxy are no longer
owned beneficially or of record by either of them or any member of their family
or any affiliate thereof.
5. Complete Release.
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(a) As a material inducement to the Company to enter into this Agreement,
the Cinnamons hereby waive, release and discharge the Company, its subsidiaries
and their respective officers, directors, stockholders, employees, agents,
attorneys, subsidiaries, servants, successors, insurers, affiliates and their
successors and assigns, from any and all manner of action, claims, liens,
demands, liabilities, causes of action, charges, complaints, suits (judicial,
administrative or otherwise), damages, debts, demands, obligations of any other
nature, past or present, known or unknown, whether in law or in equity, whether
founded upon contract (expressed or implied), tort (including, but not limited
to, defamation), statute or regulation (State, Federal or local), common law
and/or any other theory or basis, from the beginning of the world to the date
hereof, including, but not limited to, any claim that either Cinnamon has
asserted, now asserts or could have asserted, but not including any claim for
the enforcement of this Agreement. This includes, but is not limited to, claims
arising under Federal, State or local laws prohibiting employment or other
discrimination or claims growing out of any legal restrictions on the Company's
rights to terminate its employees, including without limitation any claim
arising under Title VII of the United States Code or under any age or gender
discrimination law. Notwithstanding anything else contained in this Agreement,
this Agreement is not intended to release any rights either Cinnamon has with
respect to participation in company sponsored stock option plans, or any rights
either Cinnamon has to seek and obtain indemnification and/or defense from the
Company in the event that any claim is asserted against either Cinnamon by a
third party.
(b) As a material inducement to the Cinnamons to enter into this Agreement,
the Company and its subsidiaries hereby irrevocably and unconditionally waives,
releases and discharges each Cinnamon, their agents and attorneys, successors
and assigns, from any and all manner of action, claims, liens, demands,
liabilities, causes of action, charges, complaints, suits (judicial,
administrative or otherwise), damages, debts, demands, obligations of any other
nature, past or present, known or unknown to the Company, whether in law or in
equity, whether founded upon contract (expressed or implied), tort (including,
but not limited to, defamation), statute or regulation (State, Federal or
local), common law and/or any other theory or basis, from the beginning of the
world to the date hereof, arising out of their employment and positions as
officers and/or directors, and the resignation therefrom or the termination
thereof, including, but not limited to, any claim that the Company has asserted,
now asserts or could have asserted, but not including any (i) claims for the
enforcement of this Agreement or the License Agreement and (ii) action, claims,
liens, demands, liabilities, causes of action, charges, complaints, suits
(judicial, administrative or otherwise), damages, debts, demands or obligations
of any other nature which directly arise out of or directly relate to any
willful misconduct, gross negligence or fraud committed by either of the
Cinnamons, or any violation by either of the Cinnamons of Section 13(d) or 16 of
the Securities Exchange Act of 1934, as amended, unless such actions were taken
in good faith with a reasonable belief that such actions were in the best
interests of the Company.
(c) It is understood and agreed by the Parties that the facts and
respective assumptions of law in contemplation of which this Agreement is made
may hereafter prove to be other than or different from those facts and
assumptions now known, made or believed by them to be true. The Parties
expressly accept and assume the risk of the facts and assumptions to be so
different, and agree that
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all terms of this agreement shall be in all respects effective and not
subject to termination or reclusion by any such difference in facts or
assumptions of law.
6. Acknowledgments.
Each Cinnamon acknowledges that:
(a) He or she has had a full twenty-one (21) days within which to consider
this Agreement before executing it;
(b) He or she has carefully read and fully understands all of the
provisions of this Agreement;
(c) He or she is, through this Agreement, releasing the Company and its
affiliates from any and all claims he or she may have against any of them and
being released from certain potential liabilities by the Company;
(d) He or she knowingly and voluntarily agrees to all of the terms set
forth in this Agreement;
(e) He or she knowingly and voluntarily intends to be legally bound by the
same;
(f) He or she was advised and hereby is advised in writing to consider the
terms of this Agreement and consult with an attorney of his or her choice prior
to executing this Agreement;
(g) He or she has a full seven (7) days following the execution of this
Agreement to revoke this Agreement and has been and hereby is advised in writing
that this Agreement shall not become effective or enforceable until the
revocation period has expired; and
(h) He or she understands that rights or claims under the Age
Discrimination in Employment Act of 1967 (29 U.S.C. 621 et seq.) that may arise
after the date of this Agreement is executed are not waived.
7. Non-Disclosure.
Neither Cinnamon shall disclose or deliver to any other party any trade
secrets or confidential or proprietary information gained through employment
with the Company. This includes, but is not limited to, proprietary
technologies, patents, patent applications, software programs and tools,
financial information, business plans, systems, files, algorithms, file
structures, customer lists, supplier lists, internal program structures,
options, documentation and data developed by the Company or any subsidiary or
division thereof. Each Cinnamon agrees that any breach of this Section 7 may
cause the Company substantial and irreparable damages that would not be
quantifiable and therefore, in the event of any such breach, in addition to
other remedies that may be available, the Company shall have the right to seek
specific performance and other injunctive and equitable relief.
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8. Non-Disparagement.
The Parties mutually agree not to publish, communicate or disseminate any
negative information or any information regarding this Agreement to the public,
the media, suppliers, vendors and other industry participants, except that they
may disclose its contents to their respective financial advisors, accountants
and attorneys and as required by law.
9. No Representations.
The Parties represent that in signing this Agreement, they do not rely on
nor have they relied on any representation or statement not specifically set
forth in this Agreement by any of the releasees or by any of the releasees'
agents, representatives or attorneys with regard to the subject matter, basis or
effect of this Agreement or otherwise.
10. Successors.
This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective administrators, representatives, executors,
successors and assigns, by reason of merger, consolidation, and/or purchase or
acquisition of substantially all of the Company's assets or otherwise.
11. Governing Law.
This agreement is made and entered into in this State of New York, and
shall in all respects be interpreted, enforced and governed under the laws of
the State of New York.
12. Arbitration.
(a) Any dispute arising between the Parties, including but not limited to
those pertaining to the formation, validity, interpretation, effect or alleged
breach of this Agreement ("Arbitrable Dispute") will be submitted to arbitration
in New York, New York, before an experienced employment arbitrator and selected
in accordance with the rules of the American Arbitration Association labor
tribunal. Each party shall pay the fees of their respective attorneys, the
expenses of their witnesses and any other expenses connected with presenting
their claim. Other costs of the arbitration, including the fees of the
arbitrator, cost of any record or transcript of the arbitration, administrative
fees, and other fees and costs shall be borne equally by the Parties.
(b) Should any party to this Agreement hereafter institute any legal action
or administrative proceedings against another party with respect to any claim
waived by this Agreement or pursue any other Arbitrable Dispute by any method
other than said arbitration, the responding party shall be entitled to recover
from the initiating party all damages, costs, expenses and attorneys' fees
incurred as a result of such action.
13. Proper Construction.
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(a) The language of all parts of this Agreement shall in all cases be
construed as a whole according to its fair meaning, and not strictly for or
against any of the parties;
(b) As used in this Agreement, the term "or" shall be deemed to include the
term "and/or" and the singular or plural number shall be deemed to include the
other whenever the context so indicates or requires;
(c) The paragraph headings used in this Agreement are intended solely for
convenience of reference and shall not in any manner amplify, limit, modify or
otherwise be used in the interpretation of any of the provisions hereof.
14. Severability.
Should any of the provisions of this Agreement be declared or be determined
to be illegal or invalid, the validity of the remaining parts, terms or
provisions shall not be affected thereby and said illegal or invalid part, term
or provision shall be deemed not to be a part of this Agreement.
15. Entire Agreement.
This Agreement sets forth the entire agreement between the Parties, and
fully supersedes any and all prior agreements or understandings between the
Parties pertaining to the subject matter hereof. All other contracts, agreements
or understandings between the Parties, other than the License Agreement, are
null and void. Without limiting the foregoing, any and all employment
agreements, including all amendment and/or addendums thereto, shall be
terminated and of no further force or effect, whether or not such agreements
state that the same, or portions thereof, are to survive termination.
16. Third Party Beneficiaries.
Software Publishing Corporation, Serif, Inc. and Serif (Europe) Limited
shall be third party beneficiaries of this Agreement.
17. Non-Solicitation and Non-Interference.
For a period of twelve (12) months after the date of this Agreement,
neither BAC nor LKC shall:
(a) for either of the Cinnamons' own account or for the account of any
other person or entity, directly or indirectly interfere with the Company's or
any of its affiliates' or subsidiaries' relationship with any of its suppliers,
customers, accounts, brokers, representatives or agents; or
(b) employ or otherwise engage, or solicit, entice or induce on behalf of
either of the Cinnamons' or any other person or entity, directly or indirectly,
the services, retention or
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employment of any of Jacques Boutin, Darrin Darvil or Gary Mull or any
person or entity which employs, retains or otherwise in any way utilizes the
services of any such person.
18. Counterparts.
This Agreement may be executed in counterparts. Each counterpart shall be
deemed an original, and when taken together with the other signed counterpart,
shall constitute one fully executed Agreement.
19. Further Assurances.
From and after the date hereof, the parties hereto shall take all actions,
including the execution and delivery of all documents, necessary to effectuate
the terms hereof.
20. Survival.
All obligations of the Parties as set forth herein shall survive the
execution and delivery hereof.
21. Indemnification.
The Cinnamons will be indemnified as provided in the Company's by-laws in
effect on December 15, 1997, from and after the date of this Agreement.
PLEASE READ CAREFULLY. THIS SETTLEMENT AND GENERAL RELEASE AGREEMENT
INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
Dated: New York, New York Dated: New York, New York
December 19, 1997 December 19, 1997
SOFTWARE PUBLISHING CORPORATION
HOLDINGS, INC.
By: /s/Mark E. Leininger /s/ Barry A. Cinnamon
Name: Mark E. Leininger Barry Cinnamon
Title: Vice President and Chief Operating
Officer
/s/ Lori K. Cinnamon
Lori Kramer Cinnamon
SOFTWARE LICENSE AGREEMENT
This Agreement is entered into on December 19, 1997, by and between Barry
A. Cinnamon, a individual residing at 25 Oldchester Road, Essex Fells, New
Jersey 07021 ("Publisher"), and Software Publishing Corporation, a Delaware
corporation with offices at 3 Oak Road, Fairfield, New Jersey 07004
("Developer").
BACKGROUND
WHEREAS, Developer has investigated and has commenced certain development
activities with respect thereto of an Internet database reporting software
product tentatively entitled "Metareport" (the "Software"), and Publisher
desires to develop, market, publish and distribute copies of the Software on an
exclusive basis, under a name to be selected by Publisher.
NOW THEREFORE, the parties hereby agree as follows:
1. DEFINITIONS
(a) Software means the Software, including any and all associated patents
to the extent that the same are utilized by the Software
(b) Software Package means a package intended for marketing and including a
copy of the Software (in executable object code form only) a license agreement,
and other supplementary materials, as determined in the sole discretion of
Publisher.
(c) End User means a person or entity that acquires a Software for use
rather than resale or distribution.
(d) OEM means a person or entity that acquires an interest in the Software
for incorporation as a component of its product or products or as a separate
product.
2. GRANT OF LICENSE
Developer hereby grants to Publisher the exclusive perpetual world-wide
right to use, copy, modify, enhance, prepare derivative works based upon,
manufacture, package, market, distribute, display, sell, lease and otherwise
transfer copies of the Software under any name selected by Publisher, and not
any other aspect of the Developer's Intelligent Formatting technology. Publisher
may also sublicense the foregoing rights; provided, that the royalties set forth
in Section 7 hereof shall apply to any such sublicense. Notwithstanding anything
to the contrary set forth herein, (a) the Developer and any and all subsidiaries
and affiliates of the Developer shall at all times have the right to use the
Software and the Software Package internally, for its and their own accounts and
benefits and (b) the Developer shall own all Software derivative works licensed
to Publisher pursuant hereto. The Company will not market or sell any product
which is competitive with the
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Software for two (2) years after the date hereof and the Company shall not
at any time use any Software derivative works developed by Publisher in
connection with products which are competitive with the Software.
3. DELIVERY
Within 90 days of the date hereof, Developer shall deliver to Publisher one
copy of the Software (in both source and executable object code form, to the
extent available) in the Software's current form and all related documentation,
plans, pre-cursor software (to the extent available), tools and modules.
4 PRODUCT NAME
Publisher may, in its sole discretion, select the name(s) under which the
Software will be marketed (the "Product Name"). Publisher shall own all right,
title and interest in and to such Product Name, and all use thereof shall inure
to the benefit of Publisher. Developer shall have the right to refer to such
Product Name for promotional purposes.
5. MARKETING
(a) Marketing Efforts. Publisher shall determine, in Publisher's reasonable
discretion, the manner and method of marketing and distribution of the Software,
including, but not limited to, marketing expenditures, advertising and
promotion, packaging, channels of distribution and any suggested retail or other
price of the Software. Publisher makes no guarantee of success regarding
Publisher's efforts under this Agreement and makes no commitment whatever with
respect to revenue to be achieved or Royalties to be earned from the Software.
(b) Marketing Costs. Except as expressly set forth herein, Publisher will
bear all costs of manufacturing, marketing and distributing the Software.
(c) Right to Discontinue Marketing. Developer acknowledges that there is no
assurance that the Software will be successfully introduced in the marketplace
or that the Software will generate any specified amount of Royalties payable to
Developer. Developer further agrees that Publisher shall have the right, in
Publisher's sole discretion, to discontinue marketing and/or exploitation of any
or all of the Software at any time, in which event the license granted by this
Agreement shall become non-exclusive
(d) Right to Develop and Market Similar Software. Nothing contained in this
Agreement shall be construed as prohibiting Publisher from developing and
marketing software which is similar in function to the Software, provided that
such software is developed without infringement of Developer's trade secret and
other proprietary rights.
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6. SUPPORT FOR END USERS OR OTHERS
Developer shall have no obligation to provide technical support to any End
Users or users of the Software.
7. ROYALTIES
(a) Royalties. Publisher shall pay Royalties to Developer equal to:
(1) two (2%) percent of Publisher's Net Receipts with respect to sales
to End-Users; and
(2) Fifteen (15%) of any and all consideration received by Publisher
in connection with the sale, assignment, license to OEMs (i.e.
other than End-Users) of this Agreement, the license granted under
this Agreement or the Software in any manner, directly or
indirectly, including the incremental value of any employment,
consulting or non-competition agreement entered into by Publisher
or any affiliate thereof with any such transferee, assignee or
licensee or any affiliate thereof to the extent exceeding $250,000
per year.
(b) Net Receipts. For purposes of this Agreement, "Net Receipts" shall mean
cash or cash equivalents received by Publisher in connection with the licensing,
sale or other commercial exploitation of the Software, less (i) returns and
customary credits and refunds consistent with normal business practices and (ii)
any federal, state or foreign sales, excise or other taxes or tariffs imposed on
the Software (not including any tax based on Publisher's net income).
(c) Payment. Within 45 days after the end of each calendar quarter,
Publisher shall remit to Developer the Royalties due on Net Receipts received by
Publisher during the immediately preceding calendar quarter and provide
Publisher with a written report specifying the Software shipped, sold or
licensed during such quarter, the Net Receipts received by Publisher during such
quarter and the calculation of the Royalties due to Developer in connection
therewith.
(d) Books and Records. Publisher agrees to maintain adequate books and
records relating to the production and distribution of the Software, and the
receipt of payment with respect thereto. Such books and records shall be
available at their place of keeping for inspection by an independent certified
public accountant chosen and paid by Developer to audit and analyze appropriate
and relevant accounting records of Publisher at Publisher's premises to verity
accurate and full accounting for and payment of all moneys due Developer
hereunder. Any such audit shall be permitted during business hours upon three or
more days' advanced written request. Developer may conduct such audit once per
year in a manner so as not to unreasonably interfere with Publisher's normal
business.
(e) Demo Disks. Publisher may, in its sole discretion, prepare, manufacture
and distribute a limited version of the Software for the purpose of
demonstrating the Software (the
<PAGE>
"Demo Disk"). No Royalties will be due to Developer with respect to any use
or distribution of Demo Disks.
(f) Evaluation Copies. Publisher may, in its sole discretion, distribute
copies of the Software at no charge for the purpose of demonstrating the
Software or for other promotional purposes (the "Evaluation Copies"). No
Royalties will be due to Developer with respect to any use or distribution of
Evaluation Copies.
8. WARRANTY BY DEVELOPER
(a) Authority. Developer represents and warrants to Publisher that
Developer has the full right, power and authority to enter into and perform this
Agreement.
9. LIMITATION OF LIABILITY
THE LIABILITY OF EITHER PARTY TO THE OTHER SHALL BE LIMITED TO DIRECT
DAMAGES AND SHALL NOT EXCEED THE AMOUNT OF THE ROYALTIES PAID BY PUBLISHER TO
DEVELOPER HEREUNDER. IN NO EVENT WILL EITHER PARTY BE LIABLE FOR INCIDENTAL,
SPECIAL, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS) SUFFERED BY THE
OTHER, EVEN IF IT HAS PREVIOUSLY BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.
10. TERM AND TERMINATION
(a) Term. This Agreement shall become effective on the date set forth above
and shall continue until terminated by either party as set forth in this
Section.
(b) Software Not Accepted. Developer may terminate this Agreement if
Publisher has not accepted the Software by March 15, 1998.
(c) Material Breach. Either party may terminate this Agreement for any
material breach of this Agreement by the other party that is not cured within 30
days of written notice.
(d) Events on Termination. Notwithstanding termination or expiration of
this Agreement for any reason whatsoever, Publisher shall have the continuing
right to market and distribute the Software manufactured prior to the effective
date of termination or expiration. Termination of this Agreement shall not
release Publisher from its obligation to pay Developer any Royalties which
accrued prior to such termination or which shall accrue to Developer after the
effective date of such termination.
(e) Right to Retain Use. No termination of this Agreement for any reason
whatsoever shall limit in any way Publisher's right to use the Software for its
own purposes and for the purpose of providing technical support to End Users of
the Software, but Publisher may not manufacture or distribute copies of the
Software except as expressly provided herein.
<PAGE>
(f) Sublicenses Upon Termination. Any sublicenses granted by Publisher
prior to the termination of this Agreement shall survive such termination
provided that continuing royalty obligations are complied with and such
sublicense has been granted in accordance with this Agreement.
11. GENERAL PROVISIONS
(a) Assignment. This Agreement may not be assigned by Publisher or by
operation of law to any other person, persons, firms, or corporation without the
express written approval of Developer, which approval will not be unreasonably
withheld. Notwithstanding the foregoing, Publisher may assign this Agreement to
a corporation of which Publisher is a majority stockholder.
(b) Notices. All requests, demands, notices and other communications
required or otherwise given under this Agreement shall be sufficiently given if
delivered by hand against written receipt therefor, or forwarded by overnight
courier, facsimile transmission or mailed by registered or certified mail,
postage prepaid, addressed as follows:
If to the Publisher, to: Barry A. Cinnamon
18480 Hillview Drive
Las Gatos, California 95030
If to Developer, to: Software Publishing Corporation Holdings, Inc.
3 Oak Road
Fairfield, New Jersey 07004
Attn: President
With a Copy to: Kaufman & Braun, LLP
400 Garden City Plaza
Suite 202
Garden City, New York 11530
or, in the case of any of the parties hereto, at such other address as such
party shall have furnished in writing, in accordance with this Paragraph 11(b),
to each of the other parties hereto. Each such request, demand, notice or other
communication shall be deemed given (i) on the date of delivery by hand, or by
facsimile transmission, (ii) on the first business day following the date of
delivery to an overnight courier or (iii) three business days following mailing
by registered or certified mail.
(c) Successors and Assigns: Holders as Beneficiaries. This Agreement shall
inure to the benefit of and be binding upon the parties and their respective
successors and assigns. Nothing in this Agreement shall be deemed to impose on
any of the Rightsholders any obligations to or in respect of any other
Rightsholder.
<PAGE>
(d) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(e) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to the
conflicts of laws principles thereof.
(g) Severability: Specific Enforcement. In the event that any one or more
of the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal, or unenforceable in any respect of any
reason, the validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions contained herein shall not be in
any way impaired thereby, it being intended that all of the rights and
privileges of the parties hereto shall be enforceable to the fullest extent
permitted by law. Each of the parties hereto acknowledge that the other party
hereto would not have an adequate remedy at law for money damages in the event
that any of the covenants or agreements of any other party in this Agreement
were not performed in accordance with its terms and therefore agrees that the
other parties shall be entitled to specific enforcement of such covenants or
agreements and to injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
(h) Entire Agreement; Survival; Termination. This Agreement is intended by
the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein and therein.
There are no restrictions, promises, warranties or undertakings, with respect to
the subject matter hereof, other than those set forth or referred to herein and
therein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matters.
(i) Relationship of the Parties. Each party is acting as an independent
contractor and not as an agent, partner, or joint venturer with the other party
for any purpose. Except as provided in this Agreement, neither party shall have
any right, power, or authority to act or to create any obligation, express or
implied, on behalf of the other.
(j) Force Majeure. Neither party shall be responsible for delays or failure
of performance resulting from acts beyond the reasonable control of such party.
Such acts shall include, but not be limited to, acts of God, strikes, walkouts,
riots, acts of war, epidemics, failure of suppliers to perform, governmental
regulations, power failure(s), earthquakes, or other disasters.
(k) Survival of Certain Provisions. The warranties and indemnification and
confidentiality obligations set forth in the Agreement shall survive the
termination of this Agreement by either party for any reason.
<PAGE>
(h) All Amendments In Writing. No provisions in either party's purchase
orders, or in any other business forms employed by either party will supersede
the terms and conditions of this Agreement, and no supplement, modification, or
amendment of this Agreement shall be binding, unless executed in writing by a
duly authorized representative of each party to this Agreement.
(i) Entire Agreement. The parties have read this Agreement and agree to be
bound by its terms, and further agree that it constitutes the complete and
entire agreement of the parties and supersedes all previous communications, oral
or written, and all other communications between them relating to the license
and to the subject matter hereof. No representations or statements of any kind
made by either party, which are not expressly stated herein, shall be binding on
such party.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first specified above.
"DEVELOPER" "PUBLISHER"
SOFTWARE PUBLISHING CORPORATION BARRY A. CINNAMON
By: /s/ Mark E. Leininger /s/ Barry A. Cinnamon
Name: Mark E. Leininger Barry A. Cinnamon
Title: Vice President and Chief Operating
Officer
For Further Information Contact:
Mark E. Leininger
(408) 537-3104 or (973) 808-1992
[email protected]
For Immediate Release
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
ANNOUNCES OPERATIONAL AND MANAGEMENT RESTRUCTURING
New York, New York, December 22, 1997 - Software Publishing Corporation
Holdings, Inc. (Nasdaq: SPCO) announced today the restructuring of its
operations and management team. The Board of Directors of the Company has
decided to move the Company's principal executive offices to Fairfield, New
Jersey and to close the Company's San Jose, California office in an effort to
significantly reduce the Company's expenses. Additional revenue enhancement,
cost-cutting and productivity improvement measures have also been adopted. Barry
A. Cinnamon, the Company's former Chairman of the Board, President and Chief
Executive Officer has resigned these positions and has also resigned as a
director of the Company. Lori Kramer Cinnamon has also resigned as a director
and officer of the Company. Mark E. Leininger, the Company's Chief Operating
Officer, will assume Mr. Cinnamon's responsibilities and will be responsible for
the Company's operations, including the implementation of the restructuring. The
Company also announced the appointment of a new Chief Financial Officer, Kevin
D. Sullivan, CPA. Mr. Sullivan has previously held two positions as Chief
Financial Officer and formerly was the Treasurer of Prime Hospitality Corp., a
New York Stock Exchange company, when it was known as Prime Motor Inns.
Mark E. Leininger stated that: "We have taken these dramatic actions
pursuant to a plan which we believe will result in the Company operating
successfully. We believe that by continuing to develop and enhance our
successful direct mail and telemarketing operations, eliminating the overhead
associated with operations in the high-cost northern California environment and
by improving our operations at the Company's Nashua, New Hampshire telemarketing
and warehouse facilities, the Company can establish a positive cash flow;
however, no assurance can be given in this regard. The Company expects to
continue to market and sell its existing products, including Serif PagePlus,
Serif DrawPlus, Serif MailPlus and Software Publishing Corporation's Harvard
Graphics, ActiveMail and other products. With the benefit of our profitable
direct mail and telemarketing operations in the United Kingdom and with the
anticipated increased efficiencies in our United States direct mail and
telemarketing facilities and operations, we anticipate that the Company can
continue to increase its sales of these products, as well as any other product
which the Company may develop, acquire or license."
In connection with these actions, the Company expects to classify its
Intelligent Formatting technology as a discontinued operation, and anticipates
that implelmenting the restructuring plan will result in non-recurring charges
of approximately $4,000,000 in the fourth quarter of fiscal 1997, including
expenses of approximately $500,000 anticipated to be incurred in connection with
closing
<PAGE>
the San Jose office. In connection with the resignation of Mr. Cinnamon,
the Company has agreed to license a portion of its Intelligent Formatting
technology to him for use in connection with a proposed Internet database
product that the Company has no current plans to develop. The Company will be
entitled to receive royalties and commissions in connection therewith.
Additionally, Mr. Cinnamon has surrendered his 60,520 shares of Class B Voting
Preferred Stock to the Company for cancellation and has granted to an officer of
the Company a 10-year voting proxy with respect to the shares of Common Stock of
the Company owned by him.
About the Company
Software Publishing Corporation Holdings, Inc., through its subsidiaries
Software Publishing Corporation, Serif Inc. and Serif (Europe) Limited
(collectively, "Serif"), is an international developer, publisher and supplier
of proprietary computer software applications and companion utilities programs,
primarily targeted towards the visual communications and presentation graphics,
desktop publishing, e-mail and business productivity segments of the corporate
and small office/home office ("SOHO") markets. The Company's products are
designed to improve the graphical appeal and overall effectiveness of documents
produced by desktop publishing, presentation graphics, web page, e-mail, word
processing and similar applications, as well as to produce documents through the
Company's easy-to-use desktop publishing and presentation graphics applications.
The Company's product lines include several products based upon its
patent-pending Intelligent Formatting technology, including ActiveMail , Active
Presenter , ActiveOffice, ASAP WordPower , ASAP WebShow , ASAP and Serif
MailPlus , as well as its traditional products such as Serif PagePlus , Serif
DrawPlus , Harvard Graphics , Harvard ChartXL , Harvard Spotlight , Learn to Do
Windows 95 with John C. Dvorak, and a line of interactive multimedia products
based on Entrepreneur Magazine publications.
Safe Harbor Statement
Except for historical information contained herein, the matters set forth
in this new release are forward-looking statements that involve certain risks
and uncertainties that could cause actual results to differ from those in the
forward-looking statements. Potential risks and uncertainties include such
factors as the level of business and consumer spending for computer software,
the market acceptance and amount of sales of the Company's products, the extent
that the Company's direct mail programs achieve satisfactory response rates, the
efficiency of the Company's telemarketing operations, the competitive
environment within the computer software and direct mail industries, the
Company's ability to raise additional capital, the ability of the Company to
implement its reorganization plans efficiently and achieve the anticipated
results thereof, the cost-effectiveness of the Company's product development
activities and the extent to which the Company is successful in developing,
acquiring or licensing successful products. Investors are directed to consider
other risks and uncertainties as discussed in documents filed by the Company
with the Securities and Exchange Commission.
The Harvard product line is a group of products having no connection with
Harvard University. All trademarks are the property of their respective owners.
