U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______to________
Commission file number: 1-14076
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 22-3270045
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
3A Oak Road, Fairfield, New Jersey 07004
(Address of principal executive offices)
(973) 808-1992
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 11,586,074 shares of Common
Stock, as of May 11, 1998.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
PART I. FINANCIAL INFORMATION
Item Page
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets as of March 31, 1998
(Unaudited) and December 31, 1997.............................. 3
Condensed Consolidated Statements of Operations for the
Three Months Ended March 31, 1998 and 1997 (Unaudited)......... 4
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1998 and 1997 (Unaudited)......... 5
Notes to Condensed Financial Statements......................... 6
Item 2. Management's Discussion and Analysis or Plan
of Operation................................................... 9
<PAGE>
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
(Unaudited) (Note)
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents . . . . . . . . . . . $ 1,924,550 $ 2,586,753
Marketable securities . . . . . . . . . . . . . 50,000 173,600
Accounts receivable, net. . . . . . . . . . . . 1,741,599 1,324,102
Inventories . . . . . . . . . . . . . . . . . . 538,818 567,336
Prepaid expenses and other current assets . . . 289,878 329,591
------------- -------------
Total current assets . . . . . . . . . . . 4,544,845 4,981,382
Property and equipment, net. . . . . . . . . . . 491,068 568,888
Acquired software, net . . . . . . . . . . . . . 3,854,500 4,446,750
Goodwill, net. . . . . . . . . . . . . . . . . . 249,823 268,559
Restricted cash. . . . . . . . . . . . . . . . . 300,000 300,000
Other assets, net. . . . . . . . . . . . . . . . 92,879 63,923
------------- -------------
Total assets . . . . . . . . . . . . . . . 9,533,115 $ 10,629,502
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable. . . . . . . . . . . . . . . . $ 3,385,678 $ 3,015,198
Accrued liabilities . . . . . . . . . . . . . . 3,236,579 4,112,267
Current portion of long-term debt . . . . . . . 146,427 173,866
------------- -------------
Total current liabilities . . . . . . . . . . 6,768,684 7,301,331
Long-term debt, less current maturities. . . . . 158,638 184,765
------------- -------------
Total liabilities . . . . . . . . . . . . . . 6,927,322 7,486,096
Stockholders' equity:
Serial Preferred Stock, authorized 1,939,480 shares:
none issued and outstanding . . . . . . . . . -- --
Class B Voting Preferred Stock, authorized 60,520
shares: none issued and outstanding . . . . . -- --
Common stock, par value $.001 per share, authorized
30,000,000 shares; issued and outstanding 9,043,265
shares in 1998 and 9,011,418 shares in 1997. . 9,043 9,011
Additional paid-in capital . . . . . . . . . . . 42,997,031 42,965,813
Accumulated deficit . . . . . . . . . . . . . . (40,400,281) (39,831,418)
------------- -------------
Total stockholders' equity. . . . . . . . . . 2,605,793 3,143,406
------------- -------------
Total liabilities and stockholders' equity. . $ 9,533,115 $ 10,629,502
============= =============
<FN>
Note: The balance sheet at December 31, 1997 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
See notes to condensed financial statements.
</FN>
</TABLE>
<PAGE>
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1998 1997
<S> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . $ 3,923,446 $ 3,950,252
Cost of goods sold. . . . . . . . . . . . . . . 957,644 951,766
-------------- -------------
Gross profit. . . . . . . . . . . . . . . . . . 2,965,802 2,998,486
Selling, general and administrative expenses. . (2,644,242) (4,162,580)
Amortization of acquired software and
goodwill and depreciation . . . . . . . . . . (649,837) (866,919)
Product development . . . . . . . . . . . . . . (255,253) (756,212)
Other income, net . . . . . . . . . . . . . . . 59,638 89,624
-------------- -------------
Loss before income taxes. . . . . . . . . . . (523,892) (2,697,601)
Income taxes. . . . . . . . . . . . . . . . . . 44,971 --
============== =============
Net loss. . . . . . . . . . . . . . . . . . . $ (568,863) $ (2,697,601)
============== =============
Net loss per common share:
Net loss per common shares - basic and
diluted. . . . . . . . . . . . . . . . . . . (.06) $ (.34)
============== =============
Weighted average number of common shares
outstanding - basic and diluted. . . . . . 9,042,893 7,932,743
<FN>
See notes to condensed financial statements.
</FN>
</TABLE>
<PAGE>
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1998 1997
<S> <C> <C>
Operating activities:
Cash (used in) operations. . . . . . . . . $ (592,628) $ (2,780,212)
-------------- -------------
Investment activities:
Payment of acquisition costs. . . . . . . . . -- (959,935)
Purchase of property and equipment. . . . . . (16,009) (32,321)
Proceeds from sale of short-term
investments . . . . . . . . . . . . . . . . -- 1,968,843
-------------- -------------
Cash (used in) provided by investing
activities. . . . . . . . . . . . . . . . (16,009) 976,587
-------------- -------------
Financing activities:
Payment of long-term debt . . . . . . . . . . (53,566) --
Proceeds from sale of common stock. . . . . . -- 10,000
-------------- -------------
Cash (used in) provided by financing
activities . . . . . . . . . . . . . . . . (53,566) 10,000
-------------- -------------
Net (decrease) in cash and cash equivalents . . (662,203 (1,793,625)
Cash and cash equivalents at beginning
of period . . . . . . . . . . . . . . . . . 2,586,753 4,833,454
-------------- -------------
Cash and cash equivalents at end of period. . . $ 1,924,550 $ 3,039,829
============== =============
Supplemental disclosure of non-cash financing
and investing activities:
Common Stock issued in payment of
liabilities. . . . . . . . . . . . . . . . $ 31,250
<FN>
See notes to condensed financial statements.
</FN>
</TABLE>
<PAGE>
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation.
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310 of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended March 31, 1998
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1998. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1997.
2. Accounting Principles.
Recently Issued Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"). SFAS No. 130
establishes standards for reporting and displaying comprehensive income and its
components in financial statements. SFAS No. 130 is effective for fiscal years
beginning after December 15, 1997. Reclassification of financial statements for
earlier periods provided for comparative purposes is required. The adoption of
SFAS No. 130 has no impact on the Company's consolidated results of operations,
financial position or cash flows. The Company presently has no items of other
comprehensive income.
In June 1997, the FASB issued SFAS No. 131, "Disclosures About Segments of
an Enterprise and Related Information" ("SFAS No. 131"). SFAS No. 131
establishes standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports issued to stockholders. It also establishes standards
for related disclosures about products and services, geographic areas, and major
customers. SFAS No. 131 is effective for financial statements for fiscal years
beginning after December 15, 1997. Financial statement disclosures for prior
periods are required to be restated. The Company is in the process of evaluating
the disclosure requirements. The adoption of SFAS No. 131 will have no impact on
the Company's consolidated results of operations, financial position or cash
flows.
3. Loss Per Share.
Basic loss per share is computed based upon the weighted average number of
common shares outstanding during each period presented. Stock options did not
have an effect on the computation of diluted earnings per share in the three
month periods ended March 31, 1998 and 1997 since they were anti-dilutive.
4. Inventories.
Inventories consist of finished goods.
<PAGE>
5. Stockholders' Equity.
During the first three months of 1998, the Company issued an aggregate of
31,847 shares of the common stock, par value $.001 per share (the "Common
Stock"), of the Company to BizEd, Inc. and a designee of BizEd, Inc. in payment
for the acquisition of certain software which was previously accrued.
In March 1998, the Company authorized 100,000 shares of Junior
Participating Preferred Stock, Series A, par value $.001 per share. The Junior
Preferred Stock has preferential voting, dividend and liquidation rights over
the Common Stock. On March 31, 1998, the Company declared a dividend
distribution, payable April 30, 1998, of one Preferred Share Purchase Right
("Right") on each share of Common Stock. Each Right, when exercisable, entitles
the registered holder thereof to purchase from the Company one one-thousandth of
a share of Junior Preferred Stock at a price of $1.00 per one one-thousandth of
a share (subject to adjustment). The one one-thousandth of a share is intended
to be the functional equivalent of one share of the Common Stock. The Rights
will not be exercisable or transferable apart from the Common Stock until an
Acquiring Person, as defined in the Rights Agreement, dated as of March 31,
1998, between the Company and American Stock Transfer & Trust Company, without
the prior consent of the Company's Board of Directors, acquires 20% or more of
the voting power of the Common Stock or announces a tender offer that would
result in 20% ownership. The Company is entitled to redeem the Rights, at $.001
per Right, any time before a 20% position has been acquired or in connection
with certain transactions thereafter announced. Under certain circumstances,
including the acquisition of 20% of the Common Stock, each Right not owned by a
potential Acquiring Person will entitle its holder to purchase, at the Right's
then-current exercise price, shares of Common Stock having a market value of
twice the Right's exercise price. Holders of a Right will be entitled to buy
stock of an Acquiring Person at a similar discount if, after the acquisition of
20% or more of the Company's voting power, the Company is involved in a merger
or other business combination transaction with another person in which its
common shares are changed or converted, or the Company sells 50% or more of its
assets or earning power to another person. The Rights expire on April 20, 2008.
6. Pending Legal Matters.
On January 30, 1998, an action was commenced against the Company, Mark E.
Leininger and Barry A. Cinnamon in the United States District Court, Southern
District of New York. Mr. Leininger currently is President, Chief Operating
Officer and a director of the Company and Mr. Cinnamon formerly was Chairman of
the Board, President and Chief Executive Officer of the Company. In the action,
plaintiffs allege that, in October 1997, they purchased an aggregate 889,000
shares of the Company's common stock for gross proceeds of $919,495 based upon
certain statements made to one of the plaintiffs. Plaintiffs further allege that
such statements were intentional misrepresentations of material fact that were
designed to deceive plaintiffs as to the Company's true financial state and to
induce the plaintiffs to invest in the Company. Plaintiffs seek recision of
their investment and a return of their purchase price and certain other relief.
The Company believes that these claims are without merit and intends to
vigorously defend itself in this action. The Company has filed an answer in this
action denying the plaintiffs' allegations and asserting affirmative defenses,
including that the plaintiffs' subscription agreements bar plaintiffs' claims,
and asserting counterclaims that, among other things, plaintiffs breached
certain of the representations contained in their subscription agreements, that
plaintiff Altman breached his fiduciary duties to the Company and that
plaintiffs' violated Section 13(d) of the Exchange Act by filing a materially
false and misleading Schedule 13D with respect to the Common Stock. In May 1998,
the Company was served with a reply to the counterclaims of the Company and Mark
E. Leininger in this action in which the plaintiffs deny the allegations
contained in the counterclaims.
On February 13, 1998, a summons and complaint was filed in the Superior
Court of New Jersey, Essex County under the caption Barry Cinnamon and Lori
Kramer Cinnamon, suing derivatively on behalf of Software Publishing Corporation
Holdings, Inc. and its shareholders, and Barry Cinnamon and Lori Kramer
Cinnamon, individually, v. Software Publishing Corporation Holdings, Inc., Neil
M. Kaufman, Mark Leininger and John Does 1-10. Mr. Leininger is President, Chief
Operating Officer and a director of the Company; Mr. Kaufman is a director of
the Company, the principal of Kaufman & Associates, LLC, counsel to the Company,
and was Secretary of the Company from December 1996 to December 1997; Mr.
Cinnamon was Chairman of the Board, President and Chief Executive Officer of the
Company until December 19, 1997; and Ms Kramer Cinnamon was an officer and
director of the Company until
<PAGE>
December 19, 1997. To date, the summons and complaint has been served on
the Company and Mark E. Leininger, and has not been served on the other named
individual defendant or any of the other defendants. In this action, plaintiffs
seek (i) the recision of the Settlement and General Release Agreement, dated as
of December 19, 1998 (the "Cinnamon Settlement Agreement"), between the Company
and each plaintiff and the License Agreement, dated as of December 19, 1998 (the
"Cinnamon License Agreement," and, together with the Cinnamon Settlement
Agreement, the "Cinnamon Agreements"), between the Company and Mr. Cinnamon,
(ii) payment of the full amount of compensation due under their former
respective employment agreements with the Company, (iii) that Mr. Kaufman be
enjoined from continuing to act as a director and officer of, and counsel to,
the Company, (iv) that the Company be required to provide an "'opinion letter'
as required by the Securities Exchange Act of 1934, as amended, to permit the
sale of shares of stock held by the Cinnamons without restriction," (v) that the
Company be required to immediately register the stock held by plaintiffs and
(vi) compensatory and punitive damages, attorney's fees, and other relief.
Plaintiffs seek such relief based upon their allegations that the defendants
improperly caused the resignation of plaintiffs from their positions as officers
and directors of the Company, that Mr. Kaufman improperly influenced the
decision of the Board of Directors to adopt the Company's December 1997
restructuring plan (thereby rejecting Mr. Cinnamon's plans for the Company), and
that the Cinnamon Agreements were entered into by each plaintiff under duress
and the coercion of defendants (despite plaintiffs having been represented by
counsel in connection with these matters). The Company believes that the
plaintiff's allegations are without merit, and intends to vigorously defend
itself in this action. In April 1998, the Company, Mark E. Leininger and Neil M.
Kaufman filed a motion to dismiss and for attorneys fees in this action on the
grounds that (a) the Cinnamon Settlement Agreement provides for arbitration in
New York, New York, of all disputes between the parties, (b) the counts against
Messrs. Kaufman and Leininger should also be dismissed based upon the release
provisions contained in the Cinnamon Settlement Agreement, (c) the Cinnamons
having couched some of their claims as shareholder derivative actions does not
preclude dismissal of the complaint and (d) the defendants are entitled to
recover their attorney fees related to the defense of this action under the
terms of the Cinnamon Settlement Agreement.
7. Subsequent Events.
In April 1998, the Company retained Boru Enterprises, Inc. ("Boru") to
provide corporate advisory and consulting services for a one year term in
consideration of the Company's issuance to Boru of (a) 160,000 shares (the "Boru
Shares") of the common stock, par value $.001 per share (the "Common Stock"), of
the Company, (b) a warrant (the "First Boru Warrant") to purchase 50,000 shares
of Common Stock, at an exercise price of $1.00 per share, and (c) a warrant (the
"Second Boru Warrant") to purchase 50,000 shares of Common Stock, at an exercise
price of $2.00 per share. The Boru Shares, First Boru Warrant and Second Boru
Warrant are valued at an aggregate of $100,500.
In April 1998, the Company sold (a) 1,000,000 shares of Common Stock, (b)
warrants to purchase 550,000 shares of Common Stock, at an exercise price of
$.01 per share, and (c) warrants to purchase 250,000 shares of Common Stock, at
an exercise price of $.71875 per share, to an accredited investor for gross
proceeds of $500,000 in a private transaction.
In April and May 1998, the Company sold an aggregate of 1,383,116 shares of
Common Stock to a total of nineteen investors (including directors, officers and
employees of the Company) for proceeds of $553,264 (net of sales commissions of
$11,700) in private transactions.
In April 1998, the Company agreed to issue 35,714 shares of Common Stock to
an affiliate of a director of the Company in payment of $20,000 of legal
services.
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
Statements contained in this Quarterly Report on Form 10-QSB that are not
based upon historical fact are "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking statements included
in this Form 10-QSB involve known and unknown risks, uncertainties and other
factors which could cause actual results, performance (financial or operating)
or achievements expressed or implied by such forward looking statements not to
occur or be realized. Such forward looking statements generally are based upon
the best estimates by Software Publishing Corporation Holdings, Inc. (the
"Company") of future results, performance or achievement, based upon current
conditions and the most recent results of operations. Forward-looking statements
may be identified by the use of forward-looking terminology such as "may,"
"will," "expect," "believe," "estimate," "anticipate," "continue," or similar
terms, variations of those terms or the negative of those terms.
The Company acquired three operating software companies in 1996 and
conducted a restructuring of its management and operations in late 1997 and
early 1998 with the expectation that such transactions and restructuring will
result in long-term strategic benefits. The realization of these anticipated
benefits will depend in part on whether the cost savings intended to be realized
from the restructuring can be achieved. While the Company has substantially
implemented its integration and restructuring plans, there can be no assurance
that the expected long-term strategic benefits of the acquisitions and
restructuring will be realized.
Additional potential risks and uncertainties include, among other things,
such factors as the overall 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
continue to implement its reorganization plan efficiently and achieve the
anticipated results therefrom, the cost-effectiveness of the Company's product
development activities, the extent to which the Company is successful in
developing, acquiring or licensing successful products, and other factors and
information disclosed and discussed in this "Item 2. Management's Discussion and
Analysis or Plan of Operation" and in other sections of this Form 10-QSB.
Readers of this Form 10-QSB should carefully consider such risks, uncertainties
and other information, disclosures and discussions which contain cautionary
statements identifying important factors that could cause actual results to
differ materially from those provided in the forward looking statements.
General
The Company is an international developer, publisher and supplier of
proprietary computer software applications primarily targeted towards the visual
communications market segment through desktop publishing, presentation graphics
and business productivity software for the corporate and small office/home
office ("SOHO") markets. The Company's products produce documents through its
easy-to-use desktop publishing, drawing and presentation graphics applications,
and also improve the graphical appeal and overall effectiveness of documents
produced by either the Company's or third parties' desktop publishing,
presentation graphics, web page, e-mail, word processing and other similar
applications. The Company currently offers seventeen products, primarily Serif
PagePlus and Harvard Graphics , that operate on the Windows 95, Windows NT
Windows 3.1 and DOS operating systems for IBM personal computers and
compatibles. The Company has established a multi-channel distribution system
utilizing direct mail, telemarketing, retail, corporate and OEM sales channels
and also disseminates its software programs over the Internet. The Company
currently derives substantially all of its net sales from products sold directly
to end-users by its direct mail and telemarketing centers, and to retailers,
distributors and corporate purchasers by its internal corporate and retail sales
force and independent sales representatives.
In July 1996, the Company acquired Serif Inc. and Serif (Europe) Limited
(collectively, the "Serif companies"), which significantly expanded the
Company's product line to include desktop publishing titles Serif PagePlus and
Serif DrawPlus, among others. In December 1996, the Company acquired all of the
outstanding capital stock of Software Publishing Corporation ("SPC"), as a
result of which the Company's product line expanded further to include SPC's
presentation graphics and other visual communications and business productivity
software products. The Company
<PAGE>
continues to operate the Serif companies and SPC as wholly-owned
subsidiaries. Since January 1998, the operations of SPC have been significantly
reduced.
North America and international net revenues for the Company's three-month
periods ending March 31, 1998 and 1997, were as follows:
<TABLE>
<CAPTION>
Three Months Ended March 31,
1998 1997
$ % $ %
<S> <C> <C> <C> <C>
North America . . . . . . . . . . . $ 1,875,219 48 $ 1,872,165 47
International . . . . . . . . . . . 2,048,227 52 2,078,087 53
Total net revenues. . . . . . . . . $ 3,923,446 100 $ 3,950,252 100
</TABLE>
The Company believes that end users are continuing to migrate from the
Windows 3.1 to the Windows 95 and Windows NT platforms and potentially may
migrate to the anticipated Windows 98 and/or to Internet computing. The Company
expects increased competition, including price competition, in the Windows 95,
Windows NT and Windows 3.1 markets in the future. Several of the Company's
competitors have introduced suites of products which include products that
directly compete with the Company's products. These suites of products may be
bundled with other office software programs by the same or other competitors, or
are distributed at no charge or are included as part of the operating system.
The Company believes these offerings of product suites have adversely affected
net revenues, and will continue to adversely affect sales of the Company's
products in the future as the individual products within the suites continue to
gain increased levels of inter-operability and functionality. The Company
currently does not offer a suite of general purpose office products; however,
the Company currently offers one suite of products, Serif Publishing Power
Suite, as well as products that complement competitive suite products. The
Company believes that in order to increase its net revenues, it must continue to
expand its direct marketing and telemarketing operations, introduce new
marketing strategies and continue to introduce new technologies and products
through strategic alliances, acquisitions, licensing or distribution
arrangements or internal development. Any inability or delay in executing these
strategies, difficulties encountered in introducing new products or marketing
programs, or failures of the Company's current and future products to compete
successfully with products offered by competitors, could adversely affect the
Company's net revenues and profitability.
Results of Operations
Three Month Period Ended March 31, 1998 Compared to the Three Month Period
Ended March 31, 1997
Net Sales. Net sales remained essentially flat in the three month period
ended March 31, 1998 at $3,923,446, as compared to $3,950,252 in the three month
period ended March 31, 1997. However, direct sales increased from approximately
$2,636,000 in the 1997 period to $3,206,000 in the 1998 period, as the Company's
restructuring and focus on direct sales was implemented. In addition, the three
months ended March 31, 1997 included the introduction of the ActiveOffice
product, while there were no retail product introductions in the three months
ended March 31, 1998. The Company provided in the three month period ended March
31, 1998 for returns at approximately 4% of gross sales as compared to
approximately 22% in the three month period ended March 31, 1997 due to a shift
from primarily retail sales to more direct channels, which have historically
exhibited fewer returns than the retail sales channels.
Cost of Goods Sold. Cost of goods sold increased approximately 1% from
$952,000 in the three month period ended March 31, 1997 to $958,000 in the three
month period ended March 31, 1998, as a result of higher sales volumes of higher
cost product. As a percentage of net sales, cost of goods sold remained at
approximately 24% of net sales in the three month periods ended March 31, 1998
and 1997. Cost of goods sold consists primarily of product costs, royalties and
inventory allowances for damaged and obsolete products. Product costs consist of
the costs to purchase the underlying materials and print both boxes and manuals,
media costs (CD-ROMs and other media) and assembly.
The Company's gross margins and operating income may be affected in
particular periods by the timing of product introductions and promotional
pricing and rebate offers, as well as by return privileges and marketing
promotions in connection with new product introductions and upgrades. These
promotions may have a negative influence on average
<PAGE>
selling prices and gross margins. Gross margins have also been, and may
continue to be, adversely affected by competitive pricing strategies in the
industry as a whole, including competitive upgrade pricing, the OEM business and
alternative licensing arrangements.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased by approximately $1,518,000 or 36% from
$4,163,000 in the three month period ended March 31, 1997 to $2,644,000 in the
three month period March 31, 1998 primarily as a result of the implementation of
the Company's 1997 restructuring program, which significantly reduced these
costs by, among other things, closing the Company's San Jose, California office.
The Company establishes several of its marketing expenditure levels based
on expected net revenues. If orders and shipments do not occur when expected,
expenditure levels could be disproportionately high compared to recognized
revenues for the reported period, and the Company's operating results could be
adversely affected. The Company periodically reviews and adjusts its variable
expenditure levels based on actual sales volumes. In the future, the Company's
net revenues and operating results could be adversely affected by these and
other factors, such as delays in new product introductions, the mix of product
sales or distribution channels and customer choices regarding operating systems.
Amortization of Acquired Software and Goodwill and Depreciation. In the
three month period ended March 31, 1998, the Company recorded approximately
$611,000 in amortization of acquired software and goodwill associated with its
acquisitions of Serif and SPC, a decrease of $173,000 or 22% as compared to
$784,000 in the three-month period ended March 31, 1997, primarily as a result
of a write-off of goodwill in 1997. Depreciation and amortization decreased to
approximately $39,000 in the three month period ended March 31, 1998 from
$83,000 for the three month period ended March 31, 1997 due to a decrease in
depreciable assets resulting from the disposition of assets in connection with
the Company's 1997 restructuring.
Product Development. Product development expenses decreased approximately
$501,000 or 66% from $756,000 in the three month period ended March 31, 1997 to
$255,000 in the three month period ended March 31, 1998, principally as a result
of the Company's reduction in research and development personnel in the
Company's San Jose, California office in connection with the Company's 1997
restructuring. As a percentage of net sales, the Company's product development
expenses were approximately 7% in the three month period ended March 31, 1998,
compared to 19% in the three month period ended March 31, 1997. All internally
generated development costs have been expensed in the period incurred. The
Company intends to continue to acquire externally developed technology, explore
strategic alliances and other methods of acquiring or licensing technology, and
invest in certain internal development projects, including the updating of
existing products. The Company believes that development expenses may increase
in dollar amount in the future, although the Company's long-term goal is to
reduce product development costs as a percentage of sales. Because of the
inherent uncertainties associated with software development projects, there can
be no assurance that the Company's research and development efforts will result
in successful product introductions or increased revenues or profitability.
Other Income. Other income decreased from a net of approximately $90,000 in
the three month period ended March 31, 1997 to $60,000 in the three month period
ended March 31, 1998, primarily as a result of a reduction in interest income
associated with a decrease in cash balance levels.
Liquidity and Capital Resources
During the three-month period ended March 31, 1998, the Company's cash and
cash equivalents decreased by approximately $662,000 from $2,587,000 at December
31, 1997 to $1,925,000 at March 31, 1998, primarily as a result of using
$593,000 in operations, $54,000 to pay certain debt and $16,000 to purchase
property and equipment. The Company had a working capital deficit of $2,224,000
at March 31, 1998, a reduction of $96,000 from the Company's working capital
deficit at December 31, 1997, which resulted primarily from a decrease of
$875,000 in accrued liabilities which more than offset increases of $370,000 in
accounts payable and $417,000 in accounts receivable.
<PAGE>
In April and May 1998, the Company sold an aggregate 2,383,116 shares of
Common Stock, and warrants to purchase an additional aggregate 800,000 shares of
Common Stock, to a total of twenty investors, including certain directors,
officers and employees of the Company and their affiliates, for aggregate
proceeds of $1,053,264 (net of sales commissions of $11,700). The Company also
has implemented a cost reduction program relating to personnel and operating
expenses in connection with its 1997 restructuring. In addition, the Company has
a letter of credit facility of $300,000 relating to certain lease obligations
collateralized by $300,000 of restricted cash and has a debt facility of
approximately $200,000 with its primary bank in the United Kingdom, of which
$115,000 was outstanding at March 31, 1998. The Company intends to continue to
pursue a possible offering of its equity or debt securities; however, there can
be no assurance that the Company will be successful in completing such an
offering. The Company believes that its existing cash and cash equivalents, cash
generated from operations, if any, and the proceeds from the April and May 1998
sale of Company securities should be sufficient to meet its currently
anticipated liquidity and capital expenditure requirements for at least the next
approximately six to nine months. There can be no assurance, however, that the
Company will be successful in attaining its sales goals, nor that attaining such
goals will have the desired effect on the Company's cash resources.
The Company's operating activities for the first three months of 1998 used
cash of approximately $593,000 primarily related to costs associated with
development, sales and marketing the Company's products, an increase in accounts
receivable and a reduction of accrued expenses. The Company intends to continue
to utilize its working capital in 1998 for product development, marketing and
advertising, to finance the higher level of inventory and accounts receivable
necessary to support an anticipated increase in sales, for capital expenditures,
including the purchase of computer equipment, and for internal and external
software development. However, the Company's cash requirements may change
depending upon numerous factors, including, without limitation, the need to
finance the licensing or acquisition of third party software as well as
increased inventory and accounts receivable arising from the sale and shipment
of new products.
In the three-month period ended March 31, 1998, approximately 52% of the
Company's total sales were generated outside the United States. The Company
expects this pattern to continue as it continues to expand its foreign sales
operations. The Company's exposure to foreign currency gains and losses is
partially mitigated as the Company incurs operating expenses in the principal
foreign currency in which it invoices foreign customers. As of March 31, 1998
the Company had no foreign exchange contracts outstanding. The Company's foreign
exchange gains and losses may be expected to fluctuate from period to period
depending upon the movement in exchange rates.
In June 1994, SPC sold its Superbase product line to Computer Concepts
Corporation ("CCC") (NASDAQ: CCEE) for shares of CCC's restricted common stock.
As of March 31, 1998, SPC owned 125,000 shares of common stock of CCC which were
sold in April 1998 for gross proceeds of approximately $53,000.
Seasonality
The computer software market is characterized by significant seasonal
swings in demand, which typically peak in the fourth quarter of each calendar
year. The seasonal pattern is due primarily to the increased demand for software
during the year-end holiday buying season and reduced retail and corporate
demand for business software during the European summer vacation period. The
Company expects its net sales and operating results to continue to reflect this
seasonality. The Company's revenues may also experience substantial variations
as a result of a number of factors, such as consumer and business preferences
and introduction of competing titles by competitors, as well as limited time
promotional pricing offers. There can be no assurance that the Company will
achieve consistent growth or profitability on a quarterly or annual basis.
Inflation
The Company believes that inflation has generally not had a material impact
on its operations.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Reference is hereby made to Item 3 of the Company's Annual Report on Form
10-KSB, for the fiscal year ended December 31, 1997, filed April 15, 1997
(Commission File No.: 1-14076), and to the references therein, for a discussion
of all material pending legal proceedings to which the Company or any of its
subsidiaries are parties.
In May 1998, the Company was served with a reply to the counterclaims of
the Company and Mark E. Leininger in the action titled Howard Milstein and
Ronald Altman v. Software Publishing Corporation Holdings, Inc., Mark E.
Leininger and Barry A. Cinnamon in which the plaintiffs deny the allegations
contained in the counterclaims.
In April 1998, the Company, Mark E. Leininger and Neil M. Kaufman filed a
motion to dismiss and for attorneys fees in the action titled Barry Cinnamon and
Lori Kramer Cinnamon, suing derivatively on behalf of Software Publishing
Corporation Holdings, Inc. and its shareholders, and Barry Cinnamon and Lori
Kramer Cinnamon, individually, v. Software Publishing Corporation Holdings,
Inc., Neil M. Kaufman, Mark Leininger and John Does 1-10 on the grounds that (a)
the Settlement and General Release Agreement between the Company and the
Cinnamons (the "Release Agreement") provides for arbitration in New York, New
York, of all disputes between the parties, (b) the counts against Messrs.
Kaufman and Leininger should also be dismissed based upon the release provisions
contained in the Release Agreement, (c) the Cinnamons having couched some of
their claims as shareholder derivative actions does not preclude dismissal of
the complaint and (d) the defendants are entitled to recover their attorney fees
related to the defense of this action under the terms of the Release Agreement.
Item 2. Changes in Securities and Use of Proceeds.
In February 1998, the Company issued an aggregate of 31,847 shares (the
"BizEd Shares") of the common stock, par value $.001 per share (the "Common
Stock"), of the Company to BizEd, Inc. and a designee of BizEd, Inc. in payment
for the acquisition of certain software which was accrued as a liability in
1996. The issuance of the BizEd Shares was a private transaction exempt from
registration under Section 4(2) of the Securities Act.
In March 1998, the Company authorized 100,000 shares of Junior
Participating Preferred Stock, Series A, par value $.001 per share. The Junior
Preferred Stock has preferential voting, dividend and liquidation rights over
the Common Stock. On March 31, 1998, the Company declared a dividend
distribution, payable April 30, 1998, of one Preferred Share Purchase Right
("Right") on each share of Common Stock. Each Right, when exercisable, entitles
the registered holder thereof to purchase from the Company one one-thousandth of
a share of Junior Preferred Stock at a price of $1.00 per one one-thousandth of
a share (subject to adjustment). The one one-thousandth of a share is intended
to be the functional equivalent of one share of the Common Stock. The Rights
will not be exercisable or transferable apart from the Common Stock until an
Acquiring Person, as defined in the Rights Agreement, dated as of March 31,
1998, between the Company and American Stock Transfer & Trust Company, without
the prior consent of the Company's Board of Directors, acquires 20% or more of
the voting power of the Common Stock or announces a tender offer that would
result in 20% ownership. The Company is entitled to redeem the Rights, at $.001
per Right, any time before a 20% position has been acquired or in connection
with certain transactions thereafter announced. Under certain circumstances,
including the acquisition of 20% of the Common Stock, each Right not owned by a
potential Acquiring Person will entitle its holder to purchase, at the Right's
then-current exercise price, shares of Common Stock having a market value of
twice the Right's exercise price. Holders of a Right will be entitled to buy
stock of an Acquiring Person at a similar discount if, after the acquisition of
20% or more of the Company's voting power, the Company is involved in a merger
or other business combination transaction with another person in which its
common shares are changed or converted, or the Company sells 50% or more of its
assets or earning power to another person. The Rights expire on April 20, 2008.
In April 1998, the Company retained Boru Enterprises, Inc. ("Boru") to
provide corporate advisory and consulting services for a one year term in
consideration of the Company's issuance to Boru of (a) 160,000 shares (the "Boru
<PAGE>
Shares") of Common Stock, (b) a warrant (the "First Boru Warrant") to purchase
50,000 shares of Common Stock, at an exercise price of $1.00 per share, and (c)
a warrant (the "Second Boru Warrant") to purchase 50,000 shares of Common Stock,
at an exercise price of $2.00 per share. The Boru Shares, First Boru Warrant and
Second Boru Warrant are valued at an aggregate of $100,500. The issuance of the
Boru Shares, First Boru Warrant and Second Boru Warrant was a private
transaction exempt from registration under Section 4(2) of the Securities Act.
In April 1998, the Company sold (a) 1,000,000 shares of Common Stock, (b)
warrants to purchase 550,000 shares of Common Stock, at an exercise price of
$.01 per share, and (c) warrants to purchase 250,000 shares of Common Stock, at
an exercise price of $.71875 per share, to an accredited investor for gross
proceeds of $500,000 in a private transaction exempt from registration under
Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated
thereunder.
In April 1998, the Company agreed to issue 35,714 shares of Common Stock to
Kaufman & Associates, LLC, in payment of $20,000 of legal services. Neil M.
Kaufman, the principal of Kaufman & Associates, LLC, is a director of the
Company.
In April and May 1998, the Company sold an aggregate of 1,383,116 shares of
Common Stock to sixteen accredited investors (including five directors and
executive officers of the Company and the spouse of a director of the Company)
and three non-accredited investors (including two employees of the Company and
an affiliate of a director of the Company) (collectively, the "April/May 1998
Investors") for proceeds of $553,264 (net of sales commissions of $11,700) in
private transactions exempt from registration under Section 4(2) of the
Securities Act and Rule 506 of Regulation D promulgated thereunder.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Set forth below are all exhibits to this Quarterly Report on Form 10-QSB.
Exhibit
Number Description
10.53 Warrant, dated April 7, 1998, registered in the name of Boru
Enterprises, Inc., with respect to 50,000 shares of Common Stock.
10.54 Warrant, dated April 7, 1998, registered in the name of Boru
Enterprises, Inc., with respect to 50,000 shares of Common Stock.
10.55 Form of Subscription Agreement, dated April 28, 1998, between
the Company and The Whitehaven Group, LLC.
<PAGE>
10.56 Warrant, dated April 28, 1998, registered in the name of The
Whitehaven Group, LLC, with respect to 550,000 shares of Common Stock.
10.57 Warrant, dated April 28, 1998, registered in the name of The
Whitehaven Group, LLC, with respect to 250,000 shares of Common Stock.
10.58 Form of Subscription Agreement, each executed between April 29, and
May 6, 1998, between the Company and each of the April/May 1998
Investors.
10.59 Letter Agreement, dated April 28, 1998, between the Company and M.S.
Farrell & Co., Inc.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
On December 30, 1997, the Company filed a Current Report on Form 8-K (Date
of Report: December 19, 1997) with the Commission reporting, as an Item 5
disclosure, the restructuring of the Company's operations and management. No
financial statements were required to be or were filed with this Form 8-K. This
Form 8-K was amended by Amendment No. 1 on Form 8-K/A, filed with the Commission
on January 9, 1998.
On February 13, 1998 the Company filed a Current Report on Form 8-K (Date
of Report: February 11, 1998) with the Commission reporting, as an Item 4
disclosure, the change in the Company's auditors. This Form 8-K was amended by
Amendment No.1 on Form 8-K/A filed with the Commission on February 17, 1998.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SOFTWARE PUBLISHING
CORPORATION HOLDINGS, INC.
Dated: May 12, 1998 By: /s/ Mark E. Leininger
Mark E. Leininger
President and Chief Executive Officer
(Principal Executive Officer)
Dated: May 12, 1998 By: /s/ Kevin D. Sullivan
Kevin D. Sullivan
Vice President - Finance, Treasurer and
Chief Financial Officer
(Principal Financial Officer)
<PAGE>
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
FORM 10-QSB
Quarter Ended March 31, 1998
EXHIBIT INDEX
Exhibit
Number Description
10.53 Warrant, dated April 7, 1998, registered in the name of Boru
Enterprises, Inc., with respect to 50,000 shares of Common Stock.
10.54 Warrant, dated April 7, 1998, registered in the name of Boru
Enterprises, Inc., with respect to 50,000 shares of Common Stock.
10.55 Form of Subscription Agreement, dated April 28, 1998, between
the Company and The Whitehaven Group, LLC.
10.56 Warrant, dated April 28, 1998, registered in the name of The
Whitehaven Group, LLC, with respect to 550,000 shares of Common Stock.
10.57 Warrant, dated April 28, 1998, registered in the name of The
Whitehaven Group, LLC, with respect to 250,000 shares of Common Stock.
10.58 Form of Subscription Agreement, each executed between April 29, and
May 6, 1998, between the Company and each of the April/May 1998
Investors.
10.59 Letter Agreement, dated April 28, 1998, between the Company and M.S.
Farrell & Co., Inc.
27 Financial Data Schedule.
Warrant for the purchase of shares of Common Stock
50,000 shares
FOR VALUE RECEIVED, Software Publishing Corporation Holdings, Inc. (the
"Company"), hereby certifies that Boru Enterprises, Inc. or a permitted assignee
thereof, is entitled to purchase from the Company 50,000 fully paid and
nonassessable shares of the common stock, $.001 par value, of the Company at any
time or from time to time commencing April 7, 1998 and prior to 5:00 P.M., New
York city time, on April 6, 2000, for an aggregate purchase price of $50,000,
i.e., a per share price of $1.00. (Hereinafter, (i) said common stock, together
with any other equity securities which may be issued by the Company with respect
thereto or in substitution therefor, is referred to as the "Common Stock," (ii)
the shares of the Common Stock purchasable hereunder or under any other Warrant
(as hereinafter defined) are referred to as the "Warrant Shares," (iii) each
holder of the Warrant Shares is referred to as a "Warrant Shareholder" and all
holders of the Warrant Shares are collectively referred to as the "Warrant
Shareholders," (iv) the aggregate purchase price payable hereunder for the
Warrant Shares is referred to as the "Aggregate Warrant Price," (v) the price to
be paid for each of the Warrant Shares upon exercise of this Warrant is referred
to as the "Per Share Warrant Price," (vi) this Warrant, all identical warrants
issued on the date hereof and all warrants hereafter issued in exchange or
substitution for this Warrant or such other warrants are referred to as the
"Warrants" and (vi) the holder of this Warrant is referred to as the "Holder"
and the holder of this Warrant and all other Warrants are referred to as the
"Holders"). The Aggregate Warrant Price is not subject to adjustment. The Per
Share Warrant Price is subject to adjustment as hereinafter provided; in the
event of any such adjustment, the number of Warrant Shares shall be adjusted by
dividing the Aggregate Warrant Price by the Per Share Warrant Price in effect
immediately after such adjustment.
1. Exercise of Warrant. This Warrant may be exercised, in whole at any
time or in part from time to time, commencing April 7, 1998, and prior to
5:00 P.M., New York City time, on April 6, 2000, by the Holder by the
surrender of this Warrant (with the subscription form at the end hereof
duly executed) at the address set forth in Subsection 9(a) hereof, together
with proper payment of the Aggregate Warrant Price, or the proportionate
part thereof if this Warrant is exercised in part. Payment for Warrant
Shares shall be made by certified or official bank check payable to the
order of the Company. If this Warrant is exercised in part, this Warrant
must be exercised for a number of whole shares of the Common Stock. and the
Holder is entitled lo receive a new Warrant Covering the Warrant Shares
which have nor been exercised and setting forth the proportionate part of
the Aggregate Warrant Price applicable to such Warrant Shares. Upon such
surrender of this Warrant the Company will (a) issue a certificate or
certificates in the name of the Holder for the largest number of whole
shares of the Common Stock to which the Holder shall be entitled and, if
this Warrant is exercised in whole, in lieu of any fractional share of the
Common Stock to which the Holder shall be entitled, pay to the Holder cash
in an amount equal to the fair market value of such
<PAGE>
fractional share (determined in such reasonable manner as the Board of
Directors of the Company shall determine), and (b) deliver the other
securities and properties receivable upon the exercise of this Warrant, or
the proportionate part thereof if this Warrant is exercised in part,
pursuant to the provisions of this Warrant.
2. Reservation of Warrant Shares. The Company agrees that, prior to
the expiration of this Warrant, the Company will at all times have
authorized and in reserve, and will keep available, solely for issuance or
delivery upon the exercise of this Warrant, the shares of the Common Stock
and other securities and properties as from time to time shall be
receivable upon the exercise of this Warrant, free and clear of all
restrictions on sale or transfer (except for applicable state or federal
securities law restrictions) and free and clear of all pre-emptive rights.
3. Protection Against Dilution.
a) If, at any time or from time to time after the date of this
Warrant, the Company shall issue or distribute (for no consideration)
to the holders of shares of Common Stock evidences of its
indebtedness, any other securities of the Company or any cash,
property or other assets (excluding a subdivision, combination or
reclassification, or dividend or distribution payable in shares of
Common Stock, referred to in Subsection 3(b), and also excluding cash
dividends or cash distributions paid out of net profits legally
available therefor if the full amount thereof, together with the value
of other dividends and distributions made substantially concurrently
therewith or pursuant to a plan which includes payment thereof, is
equivalent to not more than 5% of the Company's net worth) (any such
nonexcluded event being herein called a "Special Dividend"), the Per
Share Warrant Price shall be adjusted by multiplying the Per Share
Warrant Price then in effect by a fraction, the numerator of which
shall be the then current market price of the Common Stock (defined as
the average for the thirty consecutive business day immediately prior
to the record date of the daily closing price of the Common Stock as
reported by the principal exchange or market on which the Common Stock
is listed) less the fair market value (as determined by the Company's
Board of Directors) of the evidences of indebtedness, securities or
property, or other assets issued or distributed in such Special
Dividend applicable to one share of Common Stock and the denominator
of which shall be such then current market price per share of Common
Stock. An adjustment made pursuant to this Subsection 3(a) shall
become effective immediately after the record date of any such Special
Dividend.
b) In case the Company shall hereafter (i) pay a dividend or make
a distribution on its capital stock in shares of Common Stock, (ii)
subdivide its outstanding shares of Common Stock into a greater number
of shares, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares or (iv) issue by reclassification of its
Common Stock any shares of capital stock of the Company, the Holder or
Holders of this Warrant shall thereafter be entitled, upon exercise of
this Warrant, to receive
<PAGE>
the number and kind of shares which, if this Warrant had been
exercised immediately prior to the happening of such event, the Holder
or Holders would have owned upon such exercise, and would have been
entitled to receive upon consummation of such dividend, distribution,
subdivision, combination or reclassification. An adjustment made
pursuant to this Subsection 3(b) shall become effective immediately
after the record date in the case of a dividend or distribution and
shall become effective immediately after the effective date in the
case of a subdivision, combination or reclassification. Whenever the
number of shares of Common Stock purchasable upon exercise of this
Warrant is adjusted pursuant to this Subsection 3(b), each Per Share
Warrant Price shall be adjusted simultaneously therewith by
multiplying the Per Share Warrant Price then in effect by a fraction,
the numerator of which shall be the number of Warrant Shares
purchasable at each Per Share Warrant Price upon exercise of this
Warrant immediately prior to such adjustment, and the denominator of
which shall be the number of Warrant Shares purchasable at each Per
Share Warrant Price upon exercise of this Warrant immediately after
such adjustment, so that the Aggregate Warrant Price shall remain the
same. If, as a result of an adjustment made pursuant to this
Subsection 3(b), the Holder of any Warrant thereafter surrendered for
exercise shall become entitled to receive shares of two or more
classes of capital stock or shares of Common Stock and other capital
stock of the Company, the Board of Directors (whose determination
shall be conclusive and shall be described in a written notice to the
Holder of any Warrant promptly after such adjustment) shall determine
the allocation of the adjusted Per Share Warrant Price between or
among shares of such classes or capital stock or shares of Common
Stock and other capital stock.
c) Except as provided in Subsection 3(e), in case the Company
shall at any time after October 31, 1998 issue or sell any shares of
Common Stock for a consideration per share less than the Per Share
Warrant Price on the date of such issuance or sale, the Per Share
Warrant Price shall be adjusted as of the date of such issuance or
sale so that the same shall equal the price determined by dividing (i)
the sum of (a) the number of shares of Common Stock outstanding on the
date of such issuance or sale multiplied by the Per Share Warrant
Price plus (b) the gross proceeds derived by the Company from the sale
or issuance of such Common Stock by (ii) the sum of (a) number of
shares of Common Stock outstanding on the date of such issuance or
sale plus (b) the number of additional shares of Common Stock issuable
upon exercise or conversion of such securities.
d) Except as provided in Subsection 3(a) and 3(e), in case the
Company shall hereafter issue or sell any rights, options, warrants or
securities convertible into Common Stock entitling the holders thereof
to purchase Common Stock or to convert such securities into Common
Stock at a price per share (determined by dividing (i) the total
amount, if any, received or receivable by the Company in consideration
of the issuance or sale of such rights, options, warrants or
convertible securities plus the total consideration, if any, payable
to the Company upon exercise or conversion
<PAGE>
thereof (the "Total Consideration") by (ii) the number of
additional shares of Common Stock issuable upon exercise or conversion
of such securities) less than the then current Per Share Warrant Price
in effect on the date of such issuance or sale, the Per Share Warrant
Price shall be adjusted as of the date of such issuance or sale so
that the same shall equal the price determined by dividing (i) the sum
of (a) the number of shares of Common Stock outstanding on the date of
such issuance or sale multiplied by the Per Share Warrant Price plus
(b) the Total Consideration by (ii) the sum of (a) the number of
shares of Common Stock outstanding on the date of such issuance or
sale plus (b) the number of additional shares of Common Stock issuable
upon exercise or conversion of such securities.
e) In case of any capital reorganization or reclassification, or
any consolidation or merger to which the Company is a party other than
a merger or consolidation in which the Company is the continuing
corporation, or in case of any sale or conveyance to another entity of
the property of the Company as an entirety or substantially as an
entirety, or in the case of any statutory exchange of securities with
another corporation (including any exchange effected in connection
with a merger of a third corporation into the Company), the Holder of
this Warrant shall have the right thereafter to convert such Warrant
into the kind and amount of securities, cash or other property which
he would have owned or have been entitled to receive immediately after
such reorganization, reclassification, consolidation, merger,
statutory exchange, sale or conveyance had this Warrant been exercised
immediately prior to the effective date of such reorganization,
reclassification, consolidation, merger, statutory exchange, sale or
conveyance and in any such case, if necessary, appropriate adjustment
shall be made in the application of the provisions set forth in this
Section 3 with respect to the rights and interests thereafter of the
Holder of this Warrant to the end that the provisions set forth in
this Section 3 shall thereafter correspondingly be made applicable as
nearly as may reasonably be, in relation to any shares of stock or
other securities or be, in relation to any shares of stock or other
securities or property thereafter deliverable on the conversion of
this Warrant. The above provisions of this Subsection 3(e) shall
similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, statutory exchanges, sales or conveyances.
The issuer of any shares of stock or other securities or property
thereafter deliverable on the conversion of this Warrant shall be
responsible for all of the agreements and obligations of the Company
hereunder. Notice of any such reorganization, reclassification,
consolidation, merger, statutory exchange, sale or conveyance and of
said provisions so proposed to be made, shall be mailed to the Holders
of the Warrants not less than 10 days prior co such event. A sale of
all or substantially all of the assets of the Company for a
consideration consisting primarily of securities shall be deemed a
consolidation or merger for the foregoing purposes.
f) No adjustment in the Per Share Warrant price shall be required
unless such adjustment would require an increase or decrease of at
least $0.05 per share of Common Stock; provided, however, that any
adjustments which by reason of this
<PAGE>
Subsection 3(f) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment; provided
further, however, that adjustments shall be required and made in
accordance with the provisions of this Section 3 (other than this
Subsection 3(f)) not later than such time as may be required in order
to preserve the tax-free nature of a distribution to the Holder of
this Warrant or Common Stock issuable upon exercise hereof. All
calculations under this Section 3 shall be made to the nearest cent.
Anything in this Section 3 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Per Share
Warrant Price, in addition to chose required by this Section 3, as it
in its discretion shall deem to be advisable in order that any stock
dividend, subdivision of shares or distribution of rights to purchase
stock or securities convertible or exchangeable for stock hereafter
made by the Company to its shareholders shall not be taxable.
g) If the Board of Directors of the Company shall declare any
dividend or other distribution with respect to the Common Stock, other
than a cash distribution out of earned surplus, the Company shall mail
notice thereof to the Holders of the Warrants not less than 10 days
prior to the record date fixed for determining shareholders entitled
to participate in such dividend or other distribution.
4. Fully Paid Stock, Taxes. The Company agrees that the shares of
the Common Stock represented by each and every certificate for Warrant
Shares delivered on the exercise of this Warrant in accordance with
the terms hereof shall, at the time of such delivery, be validly
issued and outstanding, fully paid and nonassessable, and not subject
to pre-emptive rights, and the Company will take all such actions as
may be necessary to assure that the par value or stated value, if any,
per share of the Common Stock is at all times equal to or less than
the then Per Share Warrant Price. The Company further covenants and
agrees that it will pay, when due and payable, any and all Federal and
state stamp, original issue or similar taxes which may be payable in
respect of the issue of any Warrant Share or certificate therefor.
5. Registration Under Securities Act of 1933.
a) The Company agrees that if, at any time and from time to time
during the period commencing on the date of execution of this Warrant
and ending on April 6, 2000, the Company shall undertake to prepare
and file a registration statement or a post-effective amendment to a
registration statement (any such registration statement being
hereinafter called a "Subsequent Registration Statement") under the
Securities Act of 1933, as amended (the "Act"), other than a
registration statement on Form S-4 or S-8 or any other form which does
not include substantially the same information as would be required in
a form for the general registration of securities) in connection with
the proposed offer of any of its securities by it or any of its
shareholders, the Company will (i) promptly notify the Holder and each
of the Holders, if any, of other Warrants and/or any Warrant
Shareholders that such Subsequent Registration Statement will be filed
and that the Warrant Shares which are then held, and/or which
<PAGE>
may be acquired upon the exercise of the Warrants, by the Holder
and such Holders, will at the Holder's and such Holders' and/or such
Warrant Shareholders' request, be included in such Subsequent
Registration Statement, (ii) include in the securities covered by such
Subsequent Registration Statement all Warrant Shares which it has been
so requested to include, all at the Company's sole cost and expense,
(iii) use its commercially reasonable best efforts to cause such
Subsequent Registration Statement to become effective as soon as
practicable and (iv) take all other action necessary under any Federal
or state law or regulation of any governmental authority to permit all
Warrant Shares which it has been so requested to include in such
Subsequent Registration Statement or to be sold or otherwise disposed
of, and will maintain such compliance with each such Federal and state
law and regulation of any governmental authority for the period
necessary for the Holder and such Holders to effect the proposed sale
or other disposition.
b) Whenever the Company is required pursuant to the provisions of
this Section 5 to include Warrant Shares in a registration statement
or a post-effective amendment to a registration statement, the Company
shall (i) furnish each Holder and/or Warrant Shareholder and each
underwriter of such Warrant Shares with such reasonable number of
copies of the prospectus, including the preliminary prospectus,
conforming to the Act, (and such other documents as each such Holder,
Warrant Shareholder or each such underwriter may reasonably request)
in order to facilitate the sale or distribution of the Warrant Shares,
(ii) use its best efforts to register or qualify such Warrant Shares
under the blue sky laws (to the extent applicable) of such
jurisdiction or jurisdictions as the Holders, Warrant Shareholders and
each underwriter of Warrant Shares being sold by such Holders and/or
Warrant Shareholders shall reasonably request and (iii) take such
other actions as may be reasonably necessary or advisable to enable
such Holders, Warrant Shareholders and such underwriters to consummate
the sale or distribution in such jurisdiction or jurisdictions in
which such Holders and Warrant Shareholders shall have reasonably
requested that the Warrant Shares be sold; provided, that nothing
herein shall require the Company to grant general consent to service
of process in any jurisdiction where it is not otherwise required to
do so.
c) The Company shall pay all expenses incurred in connection with
any registration or other action pursuant to the provisions of this
Section 5, other than underwriting discounts, commissions,
non-accountable expenses, if any, and applicable transfer taxes
relating to the Warrant Shares.
d) The Company will indemnify the Holders and Warrant Shareholders
who have included their respective securities in each Subsequent
Registration Statement substantially to the same extent as the
indemnification provided to the underwriters, if any, of the
offering to be made pursuant the underwriting agreement to be executed
upon effectiveness of such Subsequent Registration Statement, and such
Holders and/or Warrant Shareholders will indemnify the Company (and
the underwriters, if
<PAGE>
applicable) with respect to information furnished by them in
writing to the Company for inclusion therein substantially to the same
extent as the indemnification to be provided by the underwriters to
the Company pursuant to such underwriting agreement.
6. Transferability. The Company may treat the registered Holder of
this Warrant as he or it appears on the Company's books at any time as
the Holder for all purposes. The Company shall permit any Holder of a
Warrant or his duly authorized attorney, upon written request during
ordinary business hours, to inspect and copy or make extracts from its
books showing the registered holders of Warrants. All warrants issued
upon the transfer or assignment of this Warrant will be dated the same
date as this Warrant, and all rights of the Holders thereof shall be
identical to those of the Holder.
7. Loss, etc., of Warrant. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant, and
of indemnity reasonably satisfactory to the Company, if lost, stolen or
destroyed, and upon surrender and cancellation of this Warrant, if
mutilated, the Company shall execute and deliver to the Holder a new
Warrant of like date, tenor and denomination.
8. Warrant Holders Not Shareholders. Except as otherwise provided
herein, this Warrant does not confer upon the Holder any right to vote
or to consent to or receive notice as a shareholder of the Company, as
such, in respect of any matters whatsoever, or any other rights or
liabilities as a shareholder, prior to the exercise hereof.
9. Communication. No notice or other communication under this
Warrant shall be effective unless, but any notice or other
communication shall be effective and shall be deemed to have been
given if, the same is in writing and is mailed by first-class mail,
postage prepaid, delivered by nationally recognized overnight delivery
service or is sent by facsimile transmission electronically confirmed,
addressed to:
a) the Company at 3A Oak Road, Fairfield, New Jersey 07004, Fax no.
(973) 808-2645, or such other address as the Company has designated
in writing to the Holder, with a copy to Neil M. Kaufman, Esq.,
Kaufman & Associates, P.C., 50 Charles Lindbergh Blvd., Suite 206,
Mitchell Field, NY 11553, Fax no. (516) 222-5110; or
b) the Holder at 62 SE 6th Avenue, Delray Beach, Florida 33483,
Fax No. (561) 279- 0056, or such other address as the Holder has
designated in writing to the Company.
10. Headings. The headings of this Warrant have been inserted as a matter of
convenience and shall nor affect the construction hereof.
11. Applicable Law. This Warrant shall be governed by and construed in
accordance with the law of the State of Delaware without giving effect to
the principles of conflicts of law thereof.
<PAGE>
IN WITNESS WHEREOF, Software Publishing Corporation Holdings, Inc. has
caused this Warrant to be signed by its Chairman and its corporate seal to be
hereunto affixed by its Secretary as of, and with effect from this 7th day of
April, 1998.
Software Publishing Corporation Holdings, Inc.
By: /s/ Mark E. Leininger
Name: Mark E. Leininger
Title: President and
Chief Operating Officer
ATTEST:
/s/ Marc E. Jaffe
Marc E. Jaffe, Secretary
[Corporate Seal]
<PAGE>
SUBSCRIPTION
The undersigned, _____________________________ , pursuant to the provisions
of the foregoing Warrant, hereby agrees to subscribe for and purchase shares
of the Common Stock of Software Publishing Corporation Holdings, Inc. covered
by said Warrant, and makes payment therefor in full at the price per share
provided by said Warrant.
Dated: ____________________ Signature: ______________________________________
Address: ______________________________________
______________________________________
______________________________________
______________________________________
ASSIGNMENT
FOR VALUE RECEIVED ________________________ hereby sells, assigns and transfers
unto ____________________________ the foregoing Warrant and all rights evidenced
thereby, and does irrevocably constitute and appoint ________________________,
attorney, to transfer said Warrant on the books of Software Publishing
Corporation Holdings, Inc.
Dated: ____________________ Signature: _______________________________________
Address: _______________________________________
_______________________________________
_______________________________________
_______________________________________
<PAGE>
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED ___________________________ hereby assigns and transfers unto
______________________________________the right to purchase __________ shares of
the Common Stock of Software Publishing Corporation Holdings, Inc. by the
foregoing Warrant, and a proportionate part of said Warrant and the rights
evidenced hereby, and does irrevocably constitute and appoint attorney, to
transfer that part of said Warrant on the books of Software Publishing
Corporation Holdings, Inc.
Dated: _______________________ Signature: _____________________________________
Address: _____________________________________
_____________________________________
_____________________________________
_____________________________________
Warrant for the purchase of shares of Common Stock
50,000 shares
FOR VALUE RECEIVED, Software Publishing Corporation Holdings, Inc. (the
"Company"), hereby certifies that Boru Enterprises, Inc. or a permitted assignee
thereof, is entitled to purchase from the Company 50,000 fully paid and
nonassessable shares of the common stock, $.001 par value, of the Company at any
time or from time to time commencing April 7, 1998 and prior to 5:00 P.M., New
York city time, on April 6, 2000, for an aggregate purchase price of $100,000,
i.e., a per share price of $2.00. (Hereinafter, (i) said common stock, together
with any other equity securities which may be issued by the Company with respect
thereto or in substitution therefor, is referred to as the "Common Stock," (ii)
the shares of the Common Stock purchasable hereunder or under any other Warrant
(as hereinafter defined) are referred to as the "Warrant Shares," (iii) each
holder of the Warrant Shares is referred to as a "Warrant Shareholder" and all
holders of the Warrant Shares are collectively referred to as the "Warrant
Shareholders," (iv) the aggregate purchase price payable hereunder for the
Warrant Shares is referred to as the "Aggregate Warrant Price," (v) the price to
be paid for each of the Warrant Shares upon exercise of this Warrant is referred
to as the "Per Share Warrant Price," (vi) this Warrant, all identical warrants
issued on the date hereof and all warrants hereafter issued in exchange or
substitution for this Warrant or such other warrants are referred to as the
"Warrants" and (vi) the holder of this Warrant is referred to as the "Holder"
and the holder of this Warrant and all other Warrants are referred to as the
"Holders"). The Aggregate Warrant Price is not subject to adjustment. The Per
Share Warrant Price is subject to adjustment as hereinafter provided; in the
event of any such adjustment, the number of Warrant Shares shall be adjusted by
dividing the Aggregate Warrant Price by the Per Share Warrant Price in effect
immediately after such adjustment.
1. Exercise of Warrant. This Warrant may be exercised, in whole at any time
or in part from time to time, commencing April 7, 1998, and prior to 5:00
P.M., New York City time, on April 6, 2000, by the Holder by the surrender
of this Warrant (with the subscription form at the end hereof duly
executed) at the address set forth in Subsection 9(a) hereof, together with
proper payment of the Aggregate Warrant Price, or the proportionate part
thereof if this Warrant is exercised in part. Payment for Warrant Shares
shall be made by certified or official bank check payable to the order of
the Company. If this Warrant is exercised in part, this Warrant must be
exercised for a number of whole shares of the Common Stock. and the Holder
is entitled lo receive a new Warrant Covering the Warrant Shares which have
nor been exercised and setting forth the proportionate part of the
Aggregate Warrant Price applicable to such Warrant Shares. Upon such
surrender of this Warrant the Company will (a) issue a certificate or
certificates in the name of the Holder for the largest number of whole
shares of the Common Stock to which the Holder shall be entitled and, if
this Warrant is exercised in whole, in lieu of any fractional share of the
Common Stock to which the Holder shall be entitled, pay to the Holder cash
in an amount equal to the fair market value of such
<PAGE>
fractional share (determined in such reasonable manner as the Board of
Directors of the Company shall determine), and (b) deliver the other
securities and properties receivable upon the exercise of this Warrant,
or the proportionate part thereof if this Warrant is exercised in part,
pursuant to the provisions of this Warrant.
2. Reservation of Warrant Shares. The Company agrees that, prior to the
expiration of this Warrant, the Company will at all times have authorized
and in reserve, and will keep available, solely for issuance or delivery
upon the exercise of this Warrant, the shares of the Common Stock and other
securities and properties as from time to time shall be receivable upon the
exercise of this Warrant, free and clear of all restrictions on sale or
transfer (except for applicable state or federal securities law
restrictions) and free and clear of all pre-emptive rights.
3. Protection Against Dilution.
a) If, at any time or from time to time after the date of this
Warrant, the Company shall issue or distribute (for no consideration)
to the holders of shares of Common Stock evidences of its
indebtedness, any other securities of the Company or any cash,
property or other assets (excluding a subdivision, combination or
reclassification, or dividend or distribution payable in shares of
Common Stock, referred to in Subsection 3(b), and also excluding cash
dividends or cash distributions paid out of net profits legally
available therefor if the full amount thereof, together with the value
of other dividends and distributions made substantially concurrently
therewith or pursuant to a plan which includes payment thereof, is
equivalent to not more than 5% of the Company's net worth) (any such
nonexcluded event being herein called a "Special Dividend"), the Per
Share Warrant Price shall be adjusted by multiplying the Per Share
Warrant Price then in effect by a fraction, the numerator of which
shall be the then current market price of the Common Stock (defined as
the average for the thirty consecutive business day immediately prior
to the record date of the daily closing price of the Common Stock as
reported by the principal exchange or market on which the Common Stock
is listed) less the fair market value (as determined by the Company's
Board of Directors) of the evidences of indebtedness, securities or
property, or other assets issued or distributed in such Special
Dividend applicable to one share of Common Stock and the denominator
of which shall be such then current market price per share of Common
Stock. An adjustment made pursuant to this Subsection 3(a) shall
become effective immediately after the record date of any such Special
Dividend.
b) In case the Company shall hereafter (i) pay a dividend or make
a distribution on its capital stock in shares of Common Stock, (ii)
subdivide its outstanding shares of Common Stock into a greater number
of shares, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares or (iv) issue by reclassification of its
Common Stock any shares of capital stock of the Company, the Holder or
Holders of this Warrant shall thereafter be entitled, upon exercise of
this Warrant, to receive
<PAGE>
the number and kind of shares which, if this Warrant had been
exercised immediately prior to the happening of such event, the Holder
or Holders would have owned upon such exercise, and would have been
entitled to receive upon consummation of such dividend, distribution,
subdivision, combination or reclassification. An adjustment made
pursuant to this Subsection 3(b) shall become effective immediately
after the record date in the case of a dividend or distribution and
shall become effective immediately after the effective date in the
case of a subdivision, combination or reclassification. Whenever
the number of shares of Common Stock purchasable upon exercise of
this Warrant is adjusted pursuant to this Subsection 3(b), each Per
Share Warrant Price shall be adjusted simultaneously therewith by
multiplying the Per Share Warrant Price then in effect by a fraction,
the numerator of which shall be the number of Warrant Shares
purchasable at each Per Share Warrant Price upon exercise of this
Warrant immediately prior to such adjustment, and the denominator of
which shall be the number of Warrant Shares purchasable at each Per
Share Warrant Price upon exercise of this Warrant immediately after
such adjustment, so that the Aggregate Warrant Price shall remain
the same. If, as a result of an adjustment made pursuant to this
Subsection 3(b), the Holder of any Warrant thereafter surrendered
for exercise shall become entitled to receive shares of two or more
classes of capital stock or shares of Common Stock and other capital
stock of the Company, the Board of Directors (whose determination
shall be conclusive and shall be described in a written notice to the
Holder of any Warrant promptly after such adjustment) shall
determine the allocation of the adjusted Per Share Warrant Price
between or among shares of such classes or capital stock or shares of
Common Stock and other capital stock.
c) Except as provided in Subsection 3(e), in case the Company
shall at any time after October 31, 1998 issue or sell any shares of
Common Stock for a consideration per share less than the Per Share
Warrant Price on the date of such issuance or sale, the Per Share
Warrant Price shall be adjusted as of the date of such issuance or
sale so that the same shall equal the price determined by dividing (i)
the sum of (a) the number of shares of Common Stock outstanding on the
date of such issuance or sale multiplied by the Per Share Warrant
Price plus (b) the gross proceeds derived by the Company from the sale
or issuance of such Common Stock by (ii) the sum of (a) number of
shares of Common Stock outstanding on the date of such issuance or
sale plus (b) the number of additional shares of Common Stock issuable
upon exercise or conversion of such securities.
d) Except as provided in Subsection 3(a) and 3(e), in case the
Company shall hereafter issue or sell any rights, options, warrants or
securities convertible into Common Stock entitling the holders thereof
to purchase Common Stock or to convert such securities into Common
Stock at a price per share (determined by dividing (i) the total
amount, if any, received or receivable by the Company in consideration
of the issuance or sale of such rights, options, warrants or
convertible securities plus the total consideration, if any, payable
to the Company upon exercise or conversion
<PAGE>
thereof (the "Total Consideration") by (ii) the number of additional
shares of Common Stock issuable upon exercise or conversion of such
securities) less than the then current Per Share Warrant Price in
effect on the date of such issuance or sale, the Per Share Warrant
Price shall be adjusted as of the date of such issuance or sale so
that the same shall equal the price determined by dividing (i) the
sum f (a) the number of shares of Common Stock outstanding on the
date of such issuance or sale multiplied by the Per Share Warrant
Price plus (b) the Total Consideration by (ii) the sum of (a) the
number of shares of Common Stock outstanding on the date of such
issuance or sale plus (b) the number of additional shares of Common
Stock issuable upon exercise or conversion of such securities.
e) In case of any capital reorganization or reclassification, or
any consolidation or merger to which the Company is a party other than
a merger or consolidation in which the Company is the continuing
corporation, or in case of any sale or conveyance to another entity of
the property of the Company as an entirety or substantially as an
entirety, or in the case of any statutory exchange of securities with
another corporation (including any exchange effected in connection
with a merger of a third corporation into the Company), the Holder of
this Warrant shall have the right thereafter to convert such Warrant
into the kind and amount of securities, cash or other property which
he would have owned or have been entitled to receive immediately after
such reorganization, reclassification, consolidation, merger,
statutory exchange, sale or conveyance had this Warrant been exercised
immediately prior to the effective date of such reorganization,
reclassification, consolidation, merger, statutory exchange, sale or
conveyance and in any such case, if necessary, appropriate adjustment
shall be made in the application of the provisions set forth in this
Section 3 with respect to the rights and interests thereafter of the
Holder of this Warrant to the end that the provisions set forth in
this Section 3 shall thereafter correspondingly be made applicable as
nearly as may reasonably be, in relation to any shares of stock or
other securities or be, in relation to any shares of stock or other
securities or property thereafter deliverable on the conversion of
this Warrant. The above provisions of this Subsection 3(e) shall
similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, statutory exchanges, sales or conveyances.
The issuer of any shares of stock or other securities or property
thereafter deliverable on the conversion of this Warrant shall be
responsible for all of the agreements and obligations of the Company
hereunder. Notice of any such reorganization, reclassification,
consolidation, merger, statutory exchange, sale or conveyance and of
said provisions so proposed to be made, shall be mailed to the Holders
of the Warrants not less than 10 days prior co such event. A sale of
all or substantially all of the assets of the Company for a
consideration consisting primarily of securities shall be deemed a
consolidation or merger for the foregoing purposes.
f) No adjustment in the Per Share Warrant price shall be required
unless such adjustment would require an increase or decrease of at
least $0.05 per share of Common Stock; provided, however, that any
adjustments which by reason of this
<PAGE>
Subsection 3(f) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment; provided further,
however, that adjustments shall be required and made in accordance
with the provisions of this Section 3 (other than this Subsection
3(f)) not later than such time may be required in order to preserve
the tax-free nature of a distribution to the Holder of this Warrant
or Common Stock issuable upon exercise hereof. All calculations
under this Section 3 shall be made to the nearest cent. Anything in
this Section 3 to the contrary notwithstanding, the Company shall be
entitled to make such reductions in the Per Share Warrant Price, in
addition to chose required by this Section 3, as it in its discretion
shall deem to be advisable in order that any stock dividend,
subdivision of shares or distribution of rights to purchase stock
or securities convertible or exchangeable for stock hereafter made by
the Company to its shareholders shall not be taxable.
g) If the Board of Directors of the Company shall declare any
dividend or other distribution with respect to the Common Stock, other
than a cash distribution out of earned surplus, the Company shall mail
notice thereof to the Holders of the Warrants not less than 10 days
prior to the record date fixed for determining shareholders entitled
to participate in such dividend or other distribution.
4. Fully Paid Stock, Taxes. The Company agrees that the shares of the
Common Stock represented by each and every certificate for Warrant
Shares delivered on the exercise of this Warrant in accordance with
the terms hereof shall, at the time of such delivery, be validly
issued and outstanding, fully paid and nonassessable, and not
subject to pre-emptive rights, and the Company will take all such
actions as may be necessary to assure that the par value or stated
value, if any, per share of the Common Stock is at all times equal to
or less than the then Per Share Warrant Price. The Company further
covenants and agrees that it will pay, when due and payable, any and
all Federal and state stamp, original issue or similar taxes which
may be payable in respect of the issue of any Warrant Share or
certificate therefor.
5. Registration Under Securities Act of 1933.
a) The Company agrees that if, at any time and from time to time
during the period commencing on the date of execution of this Warrant
and ending on April 6, 2000, the Company shall undertake to prepare
and file a registration statement or a post-effective amendment to a
registration statement (any such registration statement being
hereinafter called a "Subsequent Registration Statement") under the
Securities Act of 1933, as amended (the "Act"), other than a
registration statement on Form S-4 or S-8 or any other form which does
not include substantially the same information as would be required in
a form for the general registration of securities) in connection with
the proposed offer of any of its securities by it or any of its
shareholders, the Company will (i) promptly notify the Holder and each
of the Holders, if any, of other Warrants and/or any Warrant
Shareholders that such Subsequent Registration Statement will be filed
and that the Warrant Shares which are then held, and/or which
<PAGE>
may be acquired upon the exercise of the Warrants, by the Holder and
such Holders, will at the Holder's and such Holders' and/or such
Warrant Shareholders' request, be included in such Subsequent
Registration Statement, (ii) include in the securities covered by such
Subsequent Registration Statement all Warrant Shares which it has
been so requested to include, all at the Company's sole cost and
expense, (ii) use its commercially reasonable best efforts to cause
such Subsequent Registration Statement to become effective as soon as
practicable and (iv) take all other action necessary under any Federal
or state law or regulation of any governmental authority to permit all
Warrant Shares which it has been so requested to include in such
Subsequent Registration Statement or to be sold or otherwise disposed
of, and will maintain such compliance with each such Federal and state
law and regulation of any governmental authority for the period
necessary for the Holder and such Holders to effect the proposed sale
or other disposition.
b) Whenever the Company is required pursuant to the provisions of
this Section 5 to include Warrant Shares in a registration statement
or a post-effective amendment to a registration statement, the Company
shall (i) furnish each Holder and/or Warrant Shareholder and each
underwriter of such Warrant Shares with such reasonable number of
copies of the prospectus, including the preliminary prospectus,
conforming to the Act, (and such other documents as each such Holder,
Warrant Shareholder or each such underwriter may reasonably request)
in order to facilitate the sale or distribution of the Warrant Shares,
(ii) use its best efforts to register or qualify such Warrant Shares
under the blue sky laws (to the extent applicable) of such
jurisdiction or jurisdictions as the Holders, Warrant Shareholders and
each underwriter of Warrant Shares being sold by such Holders and/or
Warrant Shareholders shall reasonably request and (iii) take such
other actions as may be reasonably necessary or advisable to enable
such Holders, Warrant Shareholders and such underwriters to consummate
the sale or distribution in such jurisdiction or jurisdictions in
which such Holders and Warrant Shareholders shall have reasonably
requested that the Warrant Shares be sold; provided, that nothing
herein shall require the Company to grant general consent to service
of process in any jurisdiction where it is not otherwise required to
do so.
c) The Company shall pay all expenses incurred in connection with
any registration or other action pursuant to the provisions of this
Section 5, other than underwriting discounts, commissions,
non-accountable expenses, if any, and applicable transfer taxes
relating to the Warrant Shares.
d) The Company will indemnify the Holders and Warrant Shareholders
who have included their respective securities in each Subsequent
Registration Statement substantially to the same extent as
the indemnification provided to the underwriters, if any, of the
offering to be made pursuant the underwriting agreement to be executed
upon effectiveness of such Subsequent Registration Statement, and such
Holders and/or Warrant Shareholders will indemnify the Company (and
the underwriters, if
<PAGE>
applicable) with respect to information furnished by them in writing
to the Company for inclusion therein substantially to the same
extent as the indemnification to be provided by the underwriters to
the Company pursuant to such underwriting agreement.
6. Transferability. The Company may treat the registered Holder of this
Warrant as he or it appears on the Company's books at any time as the
Holder for all purposes. The Company shall permit any Holder of a Warrant
or his duly authorized attorney, upon written request during ordinary
business hours, to inspect and copy or make extracts from its books showing
the registered holders of Warrants. All warrants issued upon the transfer
or assignment of this Warrant will be dated the same date as this Warrant,
and all rights of the Holders thereof shall be identical to those of the
Holder.
7. Loss, etc., of Warrant. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant, and
of indemnity reasonably satisfactory to the Company, if lost, stolen or
destroyed, and upon surrender and cancellation of this Warrant, if
mutilated, the Company shall execute and deliver to the Holder a new
Warrant of like date, tenor and denomination.
8. Warrant Holders Not Shareholders. Except as otherwise provided herein,
this Warrant does not confer upon the Holder any right to vote or to
consent to or receive notice as a shareholder of the Company, as such, in
respect of any matters whatsoever, or any other rights or liabilities as a
shareholder, prior to the exercise hereof.
9. Communication. No notice or other communication under this Warrant shall
be effective unless, but any notice or other communication shall be
effective and shall be deemed to have been given if, the same is in writing
and is mailed by first-class mail, postage prepaid, delivered by nationally
recognized overnight delivery service or is sent by facsimile transmission
electronically confirmed, addressed to:
a) the Company at 3A Oak Road, Fairfield, New Jersey 07004, Fax
no. (973) 808-2645, or such other address as the Company has
designated in writing to the Holder, with a copy to Neil M. Kaufman,
Esq., Kaufman & Associates, P.C., 50 Charles Lindbergh Blvd., Suite
206, Mitchell Field, NY 11553, Fax no. (516) 222-5110; or
b) the Holder at 62 SE 6th Avenue, Delray Beach, Florida 33483,
Fax No. (561) 279- 0056, or such other address as the Holder has
designated in writing to the Company.
10. Headings. The headings of this Warrant have been inserted as a matter
of convenience and shall nor affect the construction hereof.
11. Applicable Law. This Warrant shall be governed by and construed in
accordance with the law of the State of Delaware without giving effect to
the principles of conflicts of law thereof.
<PAGE>
IN WITNESS WHEREOF, Software Publishing Corporation Holdings, Inc. has caused
this Warrant to be signed by its Chairman and its corporate seal to be hereunto
affixed by its Secretary as of, and with effect from this 7th day of April,
1998.
Software Publishing Corporation Holdings, Inc.
By: /s/ Mark E. Leininger
Name: Mark E. Leininger
Title: President and
Chief Operating Officer
ATTEST:
/s/ Marc E. Jaffe
Marc E. Jaffe, Secretary
[Corporate Seal]
<PAGE>
SUBSCRIPTION
The undersigned, ____________________________ , pursuant to the provisions of
the foregoing Warrant, hereby agrees to subscribe for and purchase shares
of the Common Stock of Software Publishing Corporation Holdings, Inc. covered
by said Warrant, and makes payment therefor in full at the price per share
provided by said Warrant.
Dated: _____________________ Signature: _______________________________________
Address: _______________________________________
_______________________________________
_______________________________________
ASSIGNMENT
FOR VALUE RECEIVED _________________________ hereby sells, assigns and transfers
unto ______________________________________ the foregoing Warrant and all rights
Evidenced thereby, and does irrevocably constitute and appoint ________________,
attorney, to transfer said Warrant on the books of Software Publishing
Corporation Holdings, Inc.
Dated: ___________________________ Signature: _________________________________
Address: _________________________________
_________________________________
_________________________________
_________________________________
<PAGE>
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED _______________________ hereby assigns and transfers unto
____________________________________ the Right to purchase shares of the Common
Stock of Software Publishing Corporation Holdings, Inc. by the foregoing
Warrant, and a proportionate part of said Warrant and the rights evidenced
hereby, and does irrevocably constitute and appoint ________________________,
attorney, to transfer that part of said Warrant on the books of Software
Publishing Corporation Holdings, Inc.
Dated: _____________________________ Signature: ______________________________
Address: ______________________________
______________________________
______________________________
______________________________
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
SUBSCRIPTION AGREEMENT
April 28, 1998
Software Publishing Corporation Holdings, Inc.
3A Oak Road
Fairfield, New Jersey 07004
Dear Sirs/Madams:
Based upon the representations and warranties of Software Publishing
Corporation Holdings, Inc., a Delaware corporation (the "Company"), to the
extent and as set forth in Section 1 below, and subject to the other terms and
conditions hereinafter provided, the undersigned hereby irrevocably subscribes
(the "Subscription") to purchase (a) 1,000,000 shares (the "Shares") of common
stock, par value $.001 per share (the "Common Stock") of the Company, at a price
equal to $.30 per share of Common Stock, or $300,000.00 in the aggregate (the
"Common Stock Purchase Price"), (b) warrants to purchase 550,000 shares of
Common Stock at an exercise price of $.01 per share exercisable for a two year
period commencing 90 days after the effectiveness of the registration statement
on Form S-3 referred to in Section 2(k) below (the "$.01 Warrants"), for a
purchase price equal to $.29 per share, or an aggregate of $158,500 (the "$.01
Warrant Purchase Price"), and (c) warrants to purchase 250,000 shares of Common
Stock at an exercise price of $.71875 per share exercisable for a two year
period commencing 90 days after the effectiveness of the registration statement
on Form S-3 referred to in Section 2(k) below (the "$.71875 Warrants"; and,
together with the $.01 Warrants, hereinafter referred to as the "Warrants"), for
a purchase price equal to $41,500 (the "$.71875 Warrant Purchase Price"; and
together with the Common Stock Purchase Price and the $.01 Warrant Purchase
Price, collectively referred to herein as the "Subscription Price"), and hereby
tenders to the Company in full the Subscription Price in immediately available
funds. The shares of Common Stock issuable upon exercise of the Warrants are
hereinafter referred to as the "Warrant Shares". The date on which the Company
accepts this subscription is hereinafter referred to as the "Closing Date."
The Subscription of the undersigned being made hereby is subject to and is
made pursuant to the following terms and conditions:
1. Representations, Warranties and Covenants of the Company. By its
acceptance of this Subscription Agreement, the Company shall be deemed to
represent and warrant to and covenant with the undersigned as follows:
(a) Corporate Status. The Company (A) is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
(B) has all necessary corporate power and authority to own, operate or lease the
properties and assets now owned, operated or leased by
<PAGE>
the Company and to carry on the business of the Company, as it is now being
conducted, and (C) is duly licensed or qualified and in good standing as a
foreign corporation authorized to do business in each jurisdiction wherein the
character of the properties owned or leased by the Company and/or the nature of
the activities conducted by the Company makes such licensing or qualification
necessary, except where the failure to be so licensed or qualified and in good
standing would not prevent the Company from performing any of its material
obligations under this Subscription Agreement and would not have a material
adverse effect on the business, operations or financial condition of the Company
(a "Material Adverse Effect");
(b) Authority of Agreement. The Company has the power and authority to
accept, execute and deliver this Subscription Agreement and, upon acceptance by
the Company (in whole or part), to carry out its obligations hereunder; and the
execution, delivery and performance by the Company of this Subscription
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of the Company and
this Subscription Agreement, upon acceptance by the Company (in whole or part),
constitutes the valid and legally binding obligations of the Company enforceable
against the Company in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally now or hereafter in effect and
subject to the application of equitable principles and the availability of
equitable remedies. The shares of Common Stock to be issued hereunder and upon
exercise of the Warrants, upon issuance thereof in accordance with the terms
hereof and the Warrants, will be validly authorized, fully paid and
non-assessable. The Warrants constitute the valid and legally binding
obligations of the Company enforceable against the Company in accordance with
the terms thereof, except as the same may be limited by bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally now or hereafter in effect and subject to the application of equitable
principles and the availability of equitable remedies;
(c) Consents and Approvals; No Conflict.
(i) The acceptance, execution and delivery of this Subscription
Agreement by the Company does not, and the performance by the Company of
its obligations hereunder, upon acceptance by the Company (in whole or
part), will not, require any consent, approval, authorization or other
action by, or filing with or notification to, any governmental or
regulatory authority, other than in connection with state securities or
"blue sky" laws, except where failure to obtain such consent, approval,
authorization or action, or to make such filing or notification, would not
prevent the Company from performing any of its material obligations under
this Subscription and would not have a Material Adverse Effect; and
(ii) The acceptance, execution, delivery and performance of this
Subscription Agreement by the Company and the other agreements and
documents to be executed, delivered and performed by the Company pursuant
hereto and the consummation of the transactions contemplated hereby and
thereby by the Company do not and will not conflict with, violate or result
in a breach or termination of any provision of, or constitute a default
under (or event which with the giving of notice or lapse of time, or both,
would become a default under) the Certificate of Incorporation or By-laws
of the Company or, except as
<PAGE>
would not prevent the Company from performing any of its material
obligations under this Subscription Agreement and would not have a Material
Adverse Effect, any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award applicable to the Company or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of any lien or encumbrance on
any of the assets or properties of the Company pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise
or other instrument relating to such assets or properties to which the
Company is a party or by which any of such assets or properties is bound;
(d) Absence of Litigation. No claim, action, proceeding or investigation is
pending which seeks to delay or prevent the consummation of the transactions
contemplated hereby or which would be reasonably likely to adversely affect the
Company's ability to consummate the transactions contemplated hereby or which
would have a Material Adverse Effect, except as disclosed in the SEC reports (as
defined below);
(e) Extent of Offering. Subject in part to the truth and accuracy of the
undersigned's representations set forth in Section 2 of this Subscription
Agreement and the compliance by all agents of the Company with Rule 503(c) of
Regulation D ("Regulation D") promulgated under the Securities Act of 1933, as
amended (the "Securities Act"), the offer, sale and issuance of the shares of
Common Stock as contemplated by this Subscription Agreement (the "Shares") are
exempt from the registration requirements of the Securities Act and are exempt
or the Company has complied with registration requirements of each state where
the Shares are offered or sold, and the Company will not take any action
hereafter that would cause the loss of such exemption or registration;
(f) Accuracy of Reports and Information. The Company is in full compliance,
to the extent applicable, with all reporting obligations under Section 12(b), 12
(g) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). The Company has registered its Common Stock pursuant to
Section 12 of the Exchange Act and the Common Stock is listed and trades on the
Nasdaq SmallCap Market. The Company has filed all material required to be filed
pursuant to all reporting obligations, under either Section 13(a) or 15(d) of
the Exchange Act for a period of at least twelve (12) months immediately
preceding the offer or sale of the Shares.
(g) SEC Filings/Full Disclosure. None of the Company's filings with the
Securities and Exchange Commission since January 1, 1998 contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein in light of the
circumstances under which they were made, not misleading. The Company has, since
January 1, 1997, timely filed all requisite forms, reports and exhibits thereto
with the Securities and Exchange Commission ("SEC"). The Company's Annual Report
on Form 10-KSB for the year ended December 31, 1997 (the "1997 10-K"), and all
Current Reports on Form 8-K filed by the Company from January 1, 1998 to date
are referred to as the "SEC Reports."
There is no fact known to the Company (other than general economic
conditions known to the public generally) that has not been disclosed in writing
to the Purchaser which could reasonably
<PAGE>
be expected to materially and adversely affect the ability of the Company
to perform its obligations pursuant to this Agreement.
(h) Absence of Undisclosed Liabilities. The Company has no material
liabilities or obligations, absolute or contingent (individually or in the
aggregate), except as set forth in the financial statements included in the SEC
Reports (collectively, the "Financial Statements") or as incurred in the
ordinary course of business after the date of the Financial Statements.
(i) Governmental Consent, etc. No consent, approval or authorization of or
designation, declaration or filing with any governmental authority on the part
of the Company is required in connection with the valid execution and delivery
of this Agreement, or the offer, sale or issuance of the Shares, or the
consummation of any other transaction contemplated hereby, except the filing
with the SEC of a registration statement on Form S-3 for the purpose of
registering the Shares and the Common Stock underlying the Warrants and any
state securities laws filings or registrations.
(j) Intellectual Property Rights. Except as disclosed in the SEC Reports,
the Company has sufficient trademarks, trade names, patent rights, copyrights
and licenses to conduct its business as contemplated therein. To the Company's
knowledge, neither the Company nor its products is infringing or will infringe
any trademark, trade name, patent right, copyright, license, trade secret or
other similar right of others currently in existence; and there is no claim
being made against the Company regarding any trademark, trade name, patent,
copyright, license, trade secret or other intellectual property right which
could have a material adverse effect on the condition (financial or otherwise),
business, results of operations or prospects of the Company.
(k) Material Contracts. Except as set forth in the SEC Reports or disclosed
to the Purchaser, the agreements to which the Company is a party described
therein are valid agreements, in full force and effect, the Company is not in
material breach or material default (with or without notice or lapse of time, or
both) under any of such agreements, and, to the Company's knowledge, the other
contracting party or parties thereto are not in material breach or material
default (with or without notice or lapse of time, or both) under any of such
agreements.
(l) Title to Assets. Except as set forth in SEC Reports, the Company has
good and marketable title to all properties and material assets described
therein as owned by it, free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest other than such as are not material to
the business of the Company.
(m) Subsidiaries. The Company does not presently own or control, directly
or indirectly, any interest in any other corporation, partnership, association
or other business entity, except as stated in the SEC Reports.
(n) Required Governmental Permits. The Company is in possession of and
operating in compliance with all authorizations, licences, certificates,
consents, orders and permits from state, federal and other regulatory
authorities which are material to the conduct of its business, all of which are
valid and in full force and effect.
<PAGE>
(o) Listing. The Company will use its reasonable best efforts to maintain
the listing of its Common Stock on the Nasdaq SmallCap Market or other
organized, comparable United States market or quotation system.
(p) No Issuances Since December 31, 1997. Since December 31, 1997, the
Company has not issued any shares of Common Stock, other than (a) pursuant to
the exercise of stock options under the Company's existing stock option or
long-term incentive plans (b) 160,000 shares of Common Stock issued to Boru
Enterprises, Inc. or (c) as disclosed in its SEC Reports. As of the date hereof,
the Company has 9,042,958 shares of Common Stock issued and outstanding.
(q) Use of Proceeds. The Company represents that the net proceeds from this
offering will be used to fund the Company's working capital and general
corporate purposes.
(r) Registration of the Shares and the Warrant Shares. The Company intends
to register the Shares and the Warrant Shares for resale under the Securities
Act in its next filed registration statement on form S-3, which the Company
currently intends to file within 15 days after the date hereof.
2. Representations, Warranties and Covenants of the Undersigned. The
undersigned hereby represents, warrants and acknowledges to and covenants and
agrees with the Company as follows:
(a) Status. If the undersigned is a corporation or other entity, the
undersigned is a corporation or other entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization with
full power and authority to execute, deliver and perform its obligations under
this Subscription Agreement; and, if the undersigned is an individual or are
individuals, the undersigned has legal capacity to execute, deliver and perform
his, her or their obligations under this Subscription Agreement;
(b) Authority for Agreements. The undersigned has the power and authority
to execute and deliver this Subscription Agreement and to carry out the
undersigned's obligations hereunder; and the execution, delivery and performance
by the undersigned of this Subscription Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of the undersigned and this Subscription Agreement
constitutes the valid and legally binding obligation of the undersigned,
enforceable against the undersigned in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditors' rights generally now or hereafter in
effect and subject to the application of equitable principles and the
availability of equitable remedies;
(c) Consents and Approvals, No Conflicts.
(i) The execution and delivery of this Subscription Agreement by the
undersigned do not, and the performance by the undersigned of undersigned's
obligations hereunder will not, require any consent, approval,
authorization or other action by, or filing with or notification to, any
governmental or regulatory authority, except where failure to obtain such
consent, approval, authorization or action, or to make such filing or
notification,
<PAGE>
would not prevent the undersigned from performing any of undersigned's
material obligations under this Subscription Agreement; and
(ii) The execution, delivery and performance of this Subscription
Agreement by the undersigned and the other agreements and agreements to be
executed, delivered and performed by the undersigned pursuant hereto and
the consummation of the transactions contemplated hereby and thereby by the
undersigned do not and will not conflict with, violate or result in a
breach or termination of any provision of, or constitute a default under
(or event which with the giving of notice or lapse of time, or both, would
become a default under) the Certificate of Incorporation or By-laws of the
undersigned (if the undersigned is a corporation), any other organizational
instrument (if the undersigned is a legal entity other than a corporation),
or, except as would not prevent the undersigned from performing any of
undersigned's material obligations under this Subscription Agreement and
would not have a Material Adverse Effect, any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award applicable to
the undersigned or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of any lien or
encumbrance on any of the assets or properties of the undersigned pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument relating to such assets or
properties to which the undersigned is a party or by which any of such
assets or properties is bound;
(d) Investment Intent. The undersigned is acquiring the Shares for the
undersigned's own account, for investment only and not with a view to, or for
sale in connection with, a distribution thereof, within the meaning of the
Securities Act, and the rules and regulations promulgated thereunder, or any
applicable state securities or blue-sky laws;
(e) Investor Status. Either (i) the undersigned is an accredited investor
as such term is defined under Regulation D promulgated pursuant to the
Securities Act ("Regulation D") for the reason(s) as set forth in the Execution
Section of this Subscription Agreement or (ii) if not an accredited investor,
all the information which is set forth with respect to the undersigned in the
Qualified Purchaser Questionnaire executed by the undersigned and delivered to
the Company which is incorporated herein by this reference thereto, and, in
either event, all of the representations and warranties of the undersigned set
forth herein, are correct and complete as of the date of this Subscription
Agreement, shall be true and correct as of the Closing Date and shall survive
such closing; and if there should by any material change in such information
prior to the sale to the undersigned of the Shares, the undersigned will
immediately furnish such revised or corrected information to the Company;
(f) Intent to Transfer. The undersigned is not a party or subject to or
bound by any contract, undertaking, agreement or arrangement with any person to
sell, transfer or pledge the Shares or any part thereof to any person, and has
no present intention to enter into such a contract, undertaking, agreement or
arrangement;
<PAGE>
(g) Receipt of Disclosures. The undersigned acknowledges receipt of copies
of the Company's Annual Report on Form 10-KSB for the fiscal year ended December
31, 1997, and the Company's Current Reports on Form 8-K filed since January 1,
1998;
(h) Offering Exempt from Registration; Company's Reliance.
(i) The Company has advised the undersigned that the Shares have not
been registered under the Securities Act or under the laws of any state on
the basis that the issuance thereof is exempt from such registration;
(ii) The Company's reliance on the availability of such exemption is,
in part, based upon the accuracy and truthfulness of the undersigned's
representations contained herein; and
(iii) As a result of such lack of registration, the Shares may not be
resold or otherwise transferred or disposed without registration pursuant
to or an exemption therefrom available under the Securities Act and such
state securities laws;
(iv) In furtherance of the provisions of this Paragraph 2(h), all of
the certificate(s) representing the Shares shall bear a restrictive legend
substantially in the following form:
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE SHARES
HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO
DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SHARES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER OF THESE SHARES TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED
UNDER SUCH ACT AND SUCH STATE SECURITIES LAWS."
(i) Sophistication of the Undersigned. The undersigned has evaluated the
merits and risks of purchasing the Shares and has such knowledge and experience
in financial and business matters that the undersigned is capable of evaluating
the merits and risks of such purchase, is aware of and has considered the
financial risks and financial hazards of purchasing the Shares, and is able to
bear the economic risk of purchasing the Shares, including the possibility of a
complete loss with respect thereto;
(j) Access to Information. The undersigned has had access to such
information regarding the business and finances of the Company, and the offering
of the Shares, the receipt and careful reading of which is hereby acknowledged
by the undersigned, and has been provided the opportunity
<PAGE>
to discuss with the Company's management the business, affairs and
financial condition of the Company and such other matters with respect to the
Company as would concern a reasonable person considering the transactions
contemplated by this Subscription Agreement and/or concerned with the operation
of the Company including, without limitation, pursuant to a meeting and/or
discussions with management of the Company;
(k) No Guarantees. That it never has been represented, guaranteed or
warranted to the undersigned by the Company, or any of its officers, directors,
agents, representatives or employees, or any other person, expressly or by
implication, that:
(i) Any gain will be realized by the undersigned from the
undersigned's investment in the Shares;
(ii) That there will be any approximate or exact length of time that
the undersigned will be required to remain as a holder of the Shares; or
(iii) That the past performance or experience on the part of the
Company, its predecessors or of any other person, will in any way indicate
any future results of the Company;
(l) No Other Representations, Warranties, Covenants or Agreements of the
Company. Except as set forth in this Subscription Agreement or the documents
referred to herein, the Company has not made any representation, warranty,
covenant or agreement with respect to the matters contained herein;
(m) High Degree of Investment Risk. That the purchase of the Shares
involves a high degree of risk and may result in a loss of the entire amount
invested; that the Company has limited working capital and limited sources of
financing available; that there is no assurance that the Company's operations
will be profitable in the future; and that there is no assurance that a public
market for shares of Common Stock will continue to exist;
(n) State of Residence or Principal Place of Business. The address set
forth at the bottom of this Subscription is the undersigned's true and correct
residence (if an individual) or principal place of business (if a corporation or
other non-individual entity), and the undersigned has no present intention of
becoming a resident, or relocating its principal place of business to, of any
other state or jurisdiction;
(o) No Purchaser Representative. The undersigned has not authorized any
person or institution to act as the undersigned's "purchaser representative" (as
such term is defined in Rule 501 of Regulation D) in connection with the
undersigned's subscription being made pursuant to this Subscription Agreement,
except as set forth in any Qualified Purchaser Questionnaire delivered by the
undersigned to the Company in connection herewith;
(p) No General Solicitation. The undersigned has not received any general
solicitation or general advertising regarding the purchase of any of the Shares;
and
<PAGE>
(q) No Finder. There is no finder in connection with this transaction.
(r) No Insider Trading. The undersigned will not engage in any transaction
with respect to securities of the Company at any time if at the time of such
transaction the undersigned is aware of any material non-public information
relating to the Company or its securities.
3. Acceptance or Rejection of Subscription; Company Withdrawal of Offer. It
is understood and agreed that this Subscription Agreement is made subject to the
following terms and conditions:
(a) The Company shall have the right to accept or reject the Subscription
of the undersigned and this Subscription Agreement, in whole or in part, for any
reason, including, but not limited to, ineligibility of the undersigned under
the applicable Federal, state or foreign securities laws, for any other reason,
or for no reason;
(b) If the subscription of the undersigned is rejected, in whole or part,
any funds representing the Subscription Price previously delivered to the
Company will be returned to the undersigned without interest or penalty;
(c) If the subscription of the undersigned is accepted in part and rejected
in part, the undersigned will be so notified, at which time the excess
Subscription Price previously delivered to the Company shall promptly be
returned to the undersigned without interest or penalty;
(d) If the Company's offer of the Shares is withdrawn for any reason
whatsoever, the undersigned will promptly receive a full refund of the
Subscription Price, without interest or penalty, and will have no further
liability to the Company in connection with the Company's offer of the Shares,
and the Company will have no further liability to the undersigned.
4. Registration Rights.
4.1. Definitions.
(a) Defined Terms. As used in this Section 4, terms defined in the preamble
and forepart hereof and elsewhere herein shall have their assigned meanings and
each of the following terms shall have the following meanings (such definitions
to be applicable to both the plural and singular of the terms defined):
(i) Registerable Securities. The term "Registerable Securities" shall
mean the Shares and the Warrant Shares, including, in each case, any shares of
Common Stock or other securities received in connection with any stock split,
stock divided, merger, reorganization, recapitalization, reclassification or
other distribution payable or issuable upon shares of Common Stock. For the
purposes of this Agreement, securities will cease to be Registerable Securities
when (A) a registration statement under the Securities Act of 1933, as amended
(the "Securities Act"), covering such Registerable Securities has been
declared effective and such Registerable Securities have been disposed of
pursuant to such effective registration statement, (B) such Registerable
Securities are distributed to the public pursuant to the Securities Act or
pursuant to an exemption
<PAGE>
from the registration requirements of the Securities Act, including, but
not limited to, Rules 144 and 144A promulgated under the Securities Act, or (C)
such Registerable Securities have been otherwise transferred and the Company, in
accordance with applicable law and regulations, has delivered new certificates
or other evidences of ownership for such securities which are not subject to any
stop transfer order or other restriction on transfer.
(ii) Rightsholders. The term "Rightsholders" shall include the under-
signed, all successors and assigns of the undersigned, and all trans-
ferees of Registerable Securities where such transfer affirmatively includes the
transfer and assignment of the rights of the transferor Rightsholder under this
Agreement with respect to the transferred Registerable Securities; provided,
however, the term "Rightsholders" shall not include any person or entity who
has sold, transferred or assigned all of such person's or entity's Registerable
Securities.
(b) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Section 4 shall refer to this Section 4 as a whole and
not to any particular provision of this Section 4, and subsection, paragraph,
clause, schedule and exhibit references are to this Section 4 unless otherwise
specified.
4.2. Demand Registration.
(a) Right to Demand. Subject to Paragraph 4.2(b) hereof, at any time after
the date of this Agreement and on or prior to three years from the date of this
Agreement, the Initiating Holders (as defined in paragraph 4.2(f) below) may
make a written request (each, a "Demand Request") to the Company for
registration under the Securities Act of all or part of their Registerable
Securities (each, a "Demand Registration"). Within ten days after receipt of a
Demand Request, the Company shall deliver a written notice (the "Notice") of
such Demand Request to all other Rightsholders. The Company will include in such
Demand Registration all Registerable Securities with respect to which the
Company has been given written requests (each, "Tag-Along Request") for
inclusion therein within twenty days after the giving of the Notice. Each and
every Demand Request shall be required to specify the aggregate amount of the
Registerable Securities to be included in such Demand Registration, the amount
of Registerable Securities to be registered for each of the Initiating Holders
and the intended method(s) of disposition thereof, including whether or not such
Demand Registration or portion thereof is to relate to an underwritten offering,
the name of the managing underwriter(s), if any, and the terms of any such
underwriting. Each and every Tag-Along Request shall be required to specify the
amount of Registerable Securities to be registered in the Demand Registration
and the intended method(s) of disposition thereof, including whether or not the
Registerable Securities subject to such Tag-Along Request or portion thereof is
to relate to an underwritten offering, the name of the managing underwriter(s),
if any, and the terms of any such underwriting.
(b) Number of Demand Registrations; Expenses. Subject to the provisions of
Paragraph 4.2(c) hereof, the holders of Registerable Securities shall be
entitled, in the aggregate, to one Demand Registration, the Registration
Expenses (as defined in Section 4.5 hereof) of which, subject to the provisions
of Section 4.5, shall be borne by the Company. The Company shall not be deemed
<PAGE>
to have effected a Demand Registration unless and until such Demand
Registration is declared effective.
(c) Priority on Demand Registrations.
(i) Whenever the Company shall effect a Demand Registration in
connection with an underwritten offering by one or more Initiating Holders, no
other securities, including other Registerable Securities shall be included in
such Demand Registration, unless (A) the managing underwriter(s) with respect to
such Demand Registration shall have advised the Company and each Initiating
Holder whose Registerable Securities were included in the Demand Request, in
writing, that the inclusion of such other securities would not adversely affect
such underwritten offering or (B) each of the Initiating Holders shall each have
consented in writing to the inclusion of such other securities. In the event of
such written advice of the managing underwriter(s) or unanimous consent of such
Initiating Holders, the Company will include in such Demand Registration
securities in the following order of priority until the maximum number of
securities included in the written advice of the managing underwriter(s) or
unanimous consent of such Initiating Holders shall be reached: (A) first, pro
rata (based upon the amount of Registerable Securities) among the Registerable
Securities included in the Demand Request which are subject to the underwritten
offering, (B) second, pro rata (based upon the amount of Registerable
Securities) among the Registerable Securities of the Rightsholders who have
given a Tag-Along Request with respect to such Demand Registration where the
method of distribution shall be pursuant to an underwritten offering, (C) third,
pro rata (based upon the amount of Registerable Securities) among all other
Registerable Securities included in the Demand Request and Tag-Along Request(s)
and (D) fourth, pro rata (based upon the amount of securities owned which carry
registration rights) among all other securities to which the Company has granted
registration rights and for which a request for inclusion in the Demand
Registration shall have been made.
(ii) Whenever the Company shall effect a Demand Registration in
connection with an offering of Registerable Securities of Initiating Holders for
which the intended method(s) of distribution shall not include an underwritten
offering, and the holders of a majority of the Registerable Securities which
were subject to the Demand Request shall advise the Company in writing that in
the opinion of such Initiating Holders the number of securities proposed to be
sold in such Demand Registration would adversely affect such offering, the
Company will include in such Demand Registration securities in the following
order of priority until the maximum number of securities included in the written
advice of such Initiating Holders shall be reached: (A) first, pro rata
(based upon the amount of Registerable Securities) among the Registerable
Securities included in the Demand Request, (B) second, pro rata (based upon the
amount of Registerable Securities) among the Registerable Securities of the
Rightsholders who have given a Tag-Along Request with respect to such Demand
Registration where the method of distribution shall be pursuant to an
underwritten offering, (C) third, pro rata (based upon the amount of
Registerable Securities) among all other Registerable Securities included in
the Demand Request and Tag-Along Request(s) and (D) fourth, pro rata (based upon
the amount of securities owned which carry registration rights) among all other
securities to which the Company has granted registration rights and for which
a request for inclusion in the Demand Registration shall have been made.
<PAGE>
(iii) In the event that Initiating Holders and other Rightsholders who
have given a Tag-Along Request are unable to have registered the full amount of
Registerable Securities which they requested to be registered pursuant to a
Demand Request or Tag-Along Request, pursuant to the provisions of this Section
4.2, such Initiating Holders and other Rightsholders shall retain the right to
one Demand Registration with respect to such unregistered Registerable
Securities subject to such Demand Request and Tag-Along Request.
(d) Delay in Effecting Demand Registration. Notwithstanding anything in the
foregoing to the contrary, the Company shall not be obligated to effect a Demand
Registration at any time when the Company, in the good faith judgment of its
Board of Directors made no later than 30 days after the giving of the Demand
Request with respect to such Demand Registration, reasonably believes that the
filing thereof at the time requested, or the offering of securities pursuant
thereto, would be detrimental to the interests of Company or its stockholders.
The effectuation of a Demand Registration cannot be suspended, pursuant to the
provisions of the preceding sentence, for more than 120 days after the date of
the Board's determination referenced in the preceding sentence.
(e) Approval of Underwriter by the Company and Placement Agent. If the
Demand Registration is to involve an underwritten offering, the managing
underwriter(s) and each selling agent selected by those Rightsholders
participating in each such underwritten offering shall be subject to the written
approval of the Company, which approval may not be unreasonably withheld.
(f) "Initiating Holders" Defined. For purposes of this Agreement, the term
"Initiating Holders" shall mean, on any given date, those Rightsholders holding
Registerable Securitieswhich if the Warrants were to be exercised would
aggregate 50% or more of total Registerable Securities that would be outstanding
on such date if all of the then outstanding Warrants were to be exercised.
4.3. Piggy-Back Registration.
(a) If, at any time on or after the date hereof and on or prior to three
years from the date of this Agreement, the Company proposes to file a
registration statement under the Securities Act with respect to an offering by
the Company or any other party of any class of equity security similar to any
Registerable Securities (other than a registration statement on Form S-4 or S-8
or any successor form or a registration statement filed solely in connection
with an exchange offer, a business combination transaction or an offering of
securities solely to the existing stockholders or employees of the Company),
then the Company, on each such occasion, shall give written notice (each, a
"Company Piggy-Back Notice") of such proposed filing to all of the Rightsholders
owning Registerable Securities at least 30 days before the anticipated filing
date of such registration statement, and such Company Piggy-Back Notice also
shall be required to offer to such Rightsholders the opportunity to register
such aggregate number of Registerable Securities as each such Rightsholder may
request. Each such Rightsholder shall have the right, exercisable for the twenty
days immediately following the giving of the Company Piggy-Back Notice, to
request, by written notice (each, a "Holder Notice") to the Company, the
inclusion of all or any portion of the Registerable Securities of such
Rightsholders in such registration statement. The Company shall use reasonable
efforts to cause the managing underwriter(s) of a proposed underwritten offering
to permit the inclusion of the Registerable Securities which were the subject of
all Holder Notices in
<PAGE>
such underwritten offering on the same terms and conditions as any similar
securities of the Company included therein. Notwithstanding anything to the
contrary contained in this Paragraph 4.3(a), if the managing underwriter(s) of
such underwritten offering (or, in the case of an offering not being
underwritten, the Company) delivers a written opinion (or, in the case of the
Company, a resolution of its Board of Directors certified by the President or
Secretary of the Company) to the Rightsholders of Registerable Securities which
were the subject of all Holder Notices that the total amount and kind of
securities which they, the Company and any other person intend to include in
such offering is such as to materially and adversely affect the success of such
offering, then the amount of securities to be offered for the accounts of such
Rightsholders and persons other than the Company shall be eliminated or reduced
pro rata (based on the amount of securities owned which carry registration
rights) to the extent necessary to reduce the total amount of securities to be
included in such offering to the amount recommended by such managing
underwriter(s) in its written opinion (or the Board of Directors in its
resolution).
(b) Number of Piggy-Back Registrations; Expenses. The obligations of the
Company under this Section 4.3 shall be unlimited with respect to each
Rightsholder. Subject to the provisions of Section 4.5 hereof, the Company will
pay all Registration Expenses in connection with any registration of
Registerable Securities effected pursuant to this Section 4.3, but the Company
shall not be responsible for the payment of any underwriter's discount,
commission or selling concession in connection therewith.
(c) Withdrawal or Suspension of Registration Statement. Notwithstanding
anything contained to the contrary in this Section 4.3, the Company shall have
the absolute right, whether before or after the giving of a Company Piggy-Back
Notice or Holder Notice, to determine not to file a registration statement to
which the Rightsholders shall have the right to include their Registerable
Securities therein pursuant to this Section 4.3, to withdraw such registration
statement or to delay or suspend pursuing the effectiveness of such registration
statement. In the event of such a determination after the giving of a Company
Piggy-Back Notice, the Company shall give notice of such determination to all
Rightsholders and, thereupon, (i) in the case of a determination not to register
or to withdraw such registration statement, the Company shall be relieved of its
obligation under this Section 4.3 to register any of the Registerable Securities
in connection with such registration, and (ii) in the case of a determination to
delay the registration, the Company shall be permitted to delay or suspend the
registration of Registerable Securities pursuant to this Section 4.3 for the
same period as the delay in the registration of such other securities. No
registration effected under this Section 4.3 shall relieve the Company of its
obligation to effect any registration upon demand otherwise granted to a
Rightsholder under Section 4.2 hereof or any other agreement with the Company.
4.4. Registration Procedures.
(a) Obligations of the Company. The Company will, in connection with any
registration pursuant to Section 4.2 or 4.3 hereof, as expeditiously as
possible:
(i) prepare and file with the Securities and Exchange Commission
(the "Commission") a registration statement under the Securities Act on any
appropriate form chosen by
<PAGE>
the Company, in its sole discretion, which shall be available for the sale
of all Registerable Securities in accordance with the intended method(s) of
distribution thereof set forth in all applicable Demand Requests, Tag-Along
Requests and Holder Notices, and use its commercially reasonable best efforts to
cause such registration statement to become effective as soon thereafter as
reasonably practicable; provided, that, at least five business days before
filing with the Commission of such registration statement, the Company shall
furnish to each Rightsholder whose Registerable Securities are included therein
draft copies of such registration statement, including all exhibits thereto and
documents incorporated by reference therein, and, upon the reasonable request of
any such Rightsholder, shall continue to provide drafts of such registration
statement until filed, and, after such filing, the Company shall, as diligently
as practicable, provide to each such Rightsholders such number of copies of such
registration statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary prospectus),
all exhibits thereto and documents incorporated by reference therein and such
other documents as such Rightsholder may reasonably request in order to
facilitate the disposition of the Registerable Securities owned by such
Rightsholder and included in such registration statement; provided, further, the
Company shall modify or amend the registration statement as it relates to such
Rightsholder as reasonably requested by such Rightsholder on a timely basis, and
shall reasonably consider other changes to the registration statement (but not
including any exhibit or document incorporated therein by reference) reasonably
requested by such Rightsholder on a timely basis, in light of the requirements
of the Securities Act and any other applicable laws and regulations; and
provided, further, that the obligation of the Company to effect such
registration and/or cause such registration statement to become effective, may
be postponed for (A) such period of time when the financial statements of the
Company required to be included in such registration statement are not available
(due solely to the fact that such financial statements have not been prepared in
the regular course of business of the Company) or (B) any other bona fide
corporate purpose, but then only for a period not to exceed 90 days;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to a registration statement as may be necessary to
keep such registration statement effective for up to nine months; and cause the
related prospectus to be supplemented by any required prospectus supplement, and
as so supplemented to be filed to the extent required pursuant to Rule 424
promulgated under the Securities Act, during such nine month period; and
otherwise comply with the provisions of the Securities Act with respect to the
disposition of all Registerable Securities covered by such registration
statement during the applicable period in accordance with the intended method(s)
of disposition of such Registerable Securities set forth in such registration
statement, prospectus or supplement to such prospectus;
(iii) notify the Rightsholders whose Registerable Securities are
included in such registration statement and the managing underwriter(s), if any,
of an underwritten offering of any of the Registerable Securities included in
such registration statement, and confirm such advice in writing, (A) when
a prospectus or any prospectus supplement or post-effective amendment has been
filed, and, with respect to a registration statement or any post-effective
amendment, when the same has become effective, (B) of any request by the
Commission for amendments or supplements to a registration statement or related
prospectus or for additional information, (C) of the issuance by the Commission
of any stop order suspending the effectiveness of a registration statement or
the
<PAGE>
initiation of any proceedings for that purpose, (D) if at any time the
representations and warranties of the Company contemplated by clause (A) of
Paragraph 4.4(a)(x) hereof cease to be true and correct, (E) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of any of the Registerable Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose and (F) of
the happening of any event which makes any statement made in the registration
statement, the prospectus or any document incorporated therein by reference
untrue or which requires the making of any changes in the registration statement
or prospectus so that such registration statement, prospectus or document
incorporated by reference will not contain any untrue statement of material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading;
(iv) make reasonable efforts to obtain the withdrawal of any
order suspending the effectiveness of such registration statement at the
earliest possible moment and to prevent the entry of such an order;
(v) use reasonable efforts to register or qualify the
Registerable Securities included in such registration statement under such
other securities or blue sky laws of such jurisdictions as any Rightsholder
whose Registrable Securities are included in such registration statement
reasonably requests in writing and do any and all other acts and things which
may be necessary or advisable to enable such Rightsholder to consummate the
disposition in such jurisdictions of such Registerable Securities; provided,
that the Company will not be required to (A) qualify generally to do business
in any jurisdiction where it would not otherwise be required to qualify but
for this Paragraph 4.4(a)(v), (B) subject itself to taxation in any such
jurisdiction or (C) take any action which would subject it to general
service of process in any such jurisdiction;
(vi) make available for inspection by each Rightsholder whose
Registerable Securities are included in such registration, any underwriter(s)
participating in any disposition pursuant to such registration statement, and
any representative, agent or employee of or attorney or accountant retained by
any such Rightsholder or underwriter(s) (collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents and properties of the
Company (collectively, the "Records") as shall be reasonably necessary to enable
them to exercise their due diligence responsibility (or establish a due
diligence defense), and cause the officers, directors and employees of the
Company to supply all information reasonably requested by any such Inspector in
connection with such registration statement; provided, that records which the
Company determines, in good faith, to be confidential and which it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors, unless (A)
the release of such Records is ordered pursuant to a subpoena or other order
from a court of competent jurisdiction or (B) the disclosure of such Records is
required by any applicable law or regulation or any governmental regulatory body
with jurisdiction over such Rightsholder or underwriter; provided, further, that
such Rightsholder or underwriter(s) agree that such Rightsholder or
underwriter(s) will, upon learning the disclosure of such Records is sought in a
court of competent jurisdiction, give notice to the Company and allow the
Company, at the Company's expense, to undertake appropriate action to prevent
disclosure of the Records deemed confidential;
<PAGE>
(vii) cooperate with the Rightsholder whose Registerable Securities
are included in such registration statement and the managing underwriter(s), if
any, to facilitate the timely preparation and delivery of certificates
representing Registerable Securities to be sold thereunder, not bearing any
restrictive legends, and enable such Registerable Securities to be in such
denominations and registered in such names as such Rightsholder or any managing
underwriter(s) may reasonably request at least two business days prior to any
sale of Registerable Securities;
(viii) comply with all applicable rules and regulations of the
Commission and promptly make generally available to its security holders an
earnings statement covering a period of twelve months commencing, (A) in an
underwritten offering, at the end of any fiscal quarter in which Registerable
Securities are sold to underwriter(s), or (B) in a non-underwritten offering,
with the first month of the Company's first fiscal quarter beginning after the
effective date of such registration statement, which earnings statement in each
case shall satisfy the provisions of Section 11(a) of the Securities Act;
(ix) provide a CUSIP number for all Registerable Securities not later
than the effective date of the registration statement relating to the first
public offering of Registerable Securities of the Company pursuant hereto;
(x) enter into such customary agreements (including an underwriting
agreement in customary form) and take all such other actions reasonably
requested by the Rightsholders holding a majority of the Registerable Securities
included in such registration statement or the managing underwriter(s) in order
to expedite and facilitate the disposition of such Registerable Securities and
in such connection, whether or not an underwriting agreement is entered into and
whether or not the registration is an underwritten registration, (A) make such
representations and warranties, if any, to the holders of such Registerable
Securities and any underwriter(s) with respect to the registration statement,
prospectus and documents incorporated by reference, if any, in form, substance
and scope as are customarily made by issuers to underwriter(s) in underwritten
offerings and confirm the same if and when requested, (B) obtain opinions of
counsel to the Company and updates thereof addressed to each such Rightsholder
and the underwriter(s), if any, with respect to the registration statement,
prospectus and documents incorporated by reference, if any, covering the matters
customarily covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by such Rightsholders and
underwriter(s), (C) obtain a "cold comfort" letter and updates thereof from the
Company's independent certified public accountants addressed to such
Rightsholders and to the underwriter(s), if any, which letters shall be in
customary form and cover matters of the type customarily covered in "cold
comfort" letters by accountants in connection with underwritten offerings, and
(D) deliver such documents and certificates as may be reasonably requested by
the Rightsholders holding a majority of such Registerable Securities and
managing underwriter(s), if any, to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Company; each such action required by this Paragraph 4.4(a)(x) shall
be done at each closing under such underwriting or similar agreement or as and
to the extent required thereunder; and
(xi) if requested by the holders of a majority of the Registerable
Securities included in such registration statement, use its best efforts to
cause all Registerable Securities which
<PAGE>
are included in such registration statement to be listed, subject to notice
of issuance, by the date of the first sale of such Registerable Securities
pursuant to such registration statement, on each securities exchange, if any, on
which securities similar to the Registered Securities are listed.
(b) Obligations of Rightsholders. In connection with any registration of
Registerable Securities of a Rightsholder pursuant to Section 4.2 or 4.3 hereof:
(i) The Company may require that each Rightsholder whose Registerable
Securities are included in such registration statement furnish to the Company
such information regarding the distribution of such Registerable Securities and
such Rightsholder as the Company may from time to time reasonably request in
writing; and
(ii) Each Rightsholder, upon receipt of any notice from the Company of
the happening of any event of the kind described in clauses (B), (C), (E) and
(F) of Paragraph 4.4(a)(iii) hereof, shall forthwith discontinue disposition of
Registerable Securities pursuant to the registration statement covering such
Registerable Securities until such Rightsholder's receipt of the copies of the
supplemented or amended prospectus contemplated by clause (A) of Paragraph
4.4(a)(iii) hereof, or until such Rightsholder is advised in writing (the
"Advice") by the Company that the use of the applicable prospectus may be
resumed, and until such Rightsholder has received copies of any additional or
supplemental filings which are incorporated by reference in or to be attached to
or included with such prospectus, and, if so directed by the Company, such
Rightsholder will deliver to the Company (at the expense of the Company) all
copies, other than permanent file copies then in the possession of such
Rightsholder, of the current prospectus covering such Registerable Securities at
the time of receipt of such notice; the Company shall have the right to demand
that such Rightsholder or other holder verify its agreement to the provisions of
this Paragraph 4.4(b)(ii) in any Demand Request, Tag-Along Request or Holder
Notice of the Rightsholder or in a separate document executed by the
Rightsholder.
4.5. Registration Expenses. All expenses incident to the performance of or
compliance with this Agreement by the Company, including without imitation, all
registration and filing fees of the Commission, the National Association of
Securities Dealers, Inc. and other agencies, fees and expenses of compliance
with securities or blue sky laws (including reasonable fees and disbursements of
counsel in connection with blue sky qualifications of the Registerable
Securities), rating agency fees, printing expenses, messenger and delivery
expenses, internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the fees and expenses incurred in connection with the listing, if any, of the
Registerable Securities on any securities exchange and fees and disbursements of
counsel for the Company and the Company's independent certified public
accountants (including the expenses of any special audit or "cold comfort"
letters required by or incidental to such performance), Securities Act or other
liability insurance (if the Company elects to obtain such insurance), the fees
and expenses of any special experts retained by the Company in connection with
such registration and the fees and expenses of any other person retained by the
Company (but not including any underwriting discounts or commissions
attributable to the sale of Registerable Securities or other out-of-pocket
expenses of the Rightsholders, or the agents who act on their behalf, unless
reimbursement is specifically approved by the Company) will be borne by the
Company. All such
<PAGE>
expenses are herein referred to as "Registration Expenses." Notwithstanding
the foregoing, the Company shall not be required to pay for any Registration
Expenses of any Demand Registration if such Demand Request is subsequently
withdrawn at the request of the holders of a majority of the Registerable
Securities included in such Demand Registration (in which case all Rightsholders
which requested the withdrawal of the Demand Registration shall bear such
expenses pro rata); provided that, if, at the time of such withdrawal, such
Rightsholders have learned of a material adverse change in the condition,
business or prospects of the Company from that known to such Rightsholders at
the time of their Demand Request, such Rightsholders shall not be required to
pay any of such expenses. In either event, if such Rightsholders pay in full the
expenses of such withdrawn Demand Registration, such Rightsholders shall retain
the right to one Demand Registration.
4.6. Indemnification: Contribution.
(a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless, to the full extent permitted by law, each Rightsholder, its
officers and directors and each person who controls such Rightsholder (within
the meaning of the Securities Act), if any, and any agent thereof against all
losses, claims, damages, liabilities and expenses incurred by such party
pursuant to any actual or threatened suit, action, proceeding or investigation
(including reasonable attorney's fees and expenses of investigation) arising out
of or based upon any untrue or alleged untrue statement of a material fact
contained in any registration statement, prospectus or preliminary prospectus or
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case of a
prospectus, in the light of the circumstances under which they were made) not
misleading, except insofar as the same arise out of or are based upon, any such
untrue statement or omission based upon information with respect to such
Rightsholder furnished in writing to the Company by such Rightsholder expressly
for use therein.
(b) Indemnification by Rightsholder. In connection with any registration
statement in which a Rightsholder is participating, each such Rightsholder will
be required to furnish to the Company in writing such information with respect
to such Rightsholder as the Company reasonably requests for use in connection
with any such registration statement or prospectus, and each Rightsholder agrees
to the extent it is such a holder of Registerable Securities included in such
registration statement, and each other such holder of Registerable Securities
included in such Registration Statement will be required to agree, to indemnify,
to the full extent permitted by law, the Company, the directors and officers of
the Company and each person who controls the Company (within the meaning of the
Securities Act) and any agent thereof, against any losses, claims, damages,
liabilities and expenses (including reasonable attorney's fees and expenses of
investigation incurred by such party pursuant to any actual or threatened suit,
action, proceeding or investigation arising out of or based upon any untrue or
alleged untrue statement of a material fact or any omission or alleged omission
of a material fact necessary, to make the statements therein (in the case of a
prospectus, in the light of the circumstances under which they are made) not
misleading, to the extent, but only to the extent, that such untrue statement or
omission is based upon information relating to such Rightsholder or other holder
furnished in writing to the Company expressly for use therein.
<PAGE>
(c) Conduct of Indemnification Proceedings. Promptly after receipt by an
indemnified party under this Section 4.6 of written notice of the commencement
of any action, proceeding, suit or investigation or threat thereof made in
writing for which such indemnified party may claim indemnification or
contribution pursuant to this Agreement, such indemnified party shall notify in
writing the indemnifying party of such commencement or threat; but the omission
so to notify the indemnifying party shall not relieve the indemnifying party
from any liability which the indemnifying party may have to any indemnified
party (i) hereunder, unless the indemnifying party is actually prejudiced
thereby, or (ii) otherwise than under this Section 4.6. In case any such action,
suit or proceeding shall be brought against any indemnified party, and the
indemnified party shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and the
indemnifying party shall assume the defense thereof, with counsel reasonably
satisfactory to the indemnified party, and the obligation to pay all expenses
relating thereto. The indemnified party shall have the right to employ separate
counsel in any such action, suit or proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party has agreed to pay such
fees and expenses, (ii) the indemnifying party shall have failed to assume the
defense of such action, suit or proceeding or to employ counsel reasonably
satisfactory to the indemnified party therein or to pay all expenses relating
thereto or (iii) the named parties to any such action or proceeding (including
any impleaded parties) include both the indemnified party and the indemnifying
party and the indemnified party shall have been advised by counsel that there
may be one or more legal defenses available to the indemnified party which are
different from or additional to those available to the indemnifying party and
which may result in a conflict between the indemnifying party and such
indemnified party (in which case, if the indemnified party notifies the
indemnifying party in writing that the indemnified party elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such action or
proceeding on behalf of the indemnified party; it being understood, however,
that the indemnifying party shall not, in connection with any one such action,
suit or proceeding or separate but substantially similar or related actions,
suits or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys at any time for the indemnified party, which firm
shall be designated in writing by the indemnified party).
(d) Contribution. If the indemnification provided for in this Section 4.6
from the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits received by the indemnifying party on the one hand and the
indemnified party on the other but also the relative fault of the indemnifying
party and indemnified party, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and the
indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission
<PAGE>
to state a material fact, has been made by, or relates to information
supplied by, such indemnifying party or indemnified parties, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such action. The amount paid or payable by a party as a result of the
losses, claims, damages. liabilities and expenses referred to above shall be
deemed to include, subject to the limitation set forth in Section 4.6(e), any
legal or other fees or expenses reasonably incurred by such party in connection
with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Paragraph 4.6(d) were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to in clauses (i) and (ii) of the
immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) Limitation. Anything to the contrary contained in this Section 4.7 or
in Section 4.7 notwithstanding, no holder of Registerable Securities shall be
liable for indemnification and contribution payments aggregating an amount in
excess of the maximum amount received by such holder in connection with any sale
of Registerable Securities as contemplated herein.
4.7. Participation in Underwritten Registration. No Rightsholder may
participate in any underwritten registration hereunder unless such Rightsholder
(a) agrees to sell such holder's securities on the basis provided in any
underwriting arrangements approved by the persons entitled hereunder to approve
such arrangements and to comply with Rules 10b-6 and 10b-7 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and (b) completes and
executes all questionnaires, appropriate and limited powers of attorney, escrow
agreements, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangement; provided, that all
such documents shall be consistent with the provisions of Section 4.5 hereof.
5. Further Assurances. At any time and from time to time after the date
hereof, the undersigned shall, without further consideration, execute and
deliver to the Company, or such other party as the Company may direct, such
other instruments or documents and shall take such other actions as the Company
may reasonably request to carry out the transactions contemplated by this
Subscription Agreement.
6. Indemnification. The undersigned acknowledges that the undersigned
understands the meaning and legal consequences of the representations,
warranties, covenants and agreements contained herein, and the undersigned
hereby agrees to indemnify and hold harmless the Company, and its directors,
officers, employees, agents and controlling persons, from and against any and
all loss, damage or liability due to or arising out of a breach by the
undersigned of any such representations, warranties, covenants and agreements
contained herein.
7. Miscellaneous. The Company and undersigned may waive compliance by the
other with any of the provisions of this Subscription Agreement. No waiver of
any provision shall be construed as a waiver of any other provision. Any waiver
must be in writing. The headings contained in this
<PAGE>
Subscription Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Subscription Agreement. This
Subscription Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and may be amended only by a
writing executed by all parties. This Subscription Agreement may not be modified
or amended except in writing signed by both parties hereto. This Subscription
Agreement may be executed in several counterparts, each of which shall be deemed
an original, and all of which shall constitute one and the same instrument. This
Subscription Agreement shall be governed in all respects, including validity,
interpretation and effect, by the laws of the State of New York, without regard
to its conflicts of laws principles. This Subscription Agreement shall be
binding upon and inure to the benefit of and be enforceable by the successors
and assigns of the parties hereto. This Subscription Agreement shall not be
assignable by either party without the prior written consent of the other. The
rights and obligations contained in this Subscription Agreement are solely for
the benefit of the parties hereto and are not intended to benefit or be
enforceable by any other party, under the third party beneficiary doctrine or
otherwise.
THE SECURITIES BEING OFFERED HEREBY HAVE NOT BEEN REGISTERED OR
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES REGULATORY AUTHORITY OF ANY STATE, NOR HAS THE COMMISSION OR ANY SUCH
AUTHORITY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS SUBSCRIPTION AGREEMENT OR
THE AGREEMENTS AND DOCUMENTS REFERRED TO OR INCORPORATED BY REFERENCE HEREIN
(COLLECTIVELY, THE "OFFERING DOCUMENTS"). ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.
THE SECURITIES ARE BEING OFFERED BY THE COMPANY IN RELIANCE UPON AN
EXCEPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, WHICH
EXEMPTION DEPENDS UPON THE EXISTENCE OF CERTAIN FACTS INCLUDING, BUT NOT LIMITED
TO, THE REQUIREMENTS THAT THE SECURITIES ARE NOT BEING OFFERED THROUGH GENERAL
ADVERTISING OR GENERAL SOLICITATION, ADVERTISEMENTS OR COMMUNICATIONS IN
NEWSPAPERS, MAGAZINES OR OTHER MEDIA, OR BROADCASTS ON RADIO OR TELEVISION, AND
THAT THE OFFERING DOCUMENTS SHALL BE TREATED AS CONFIDENTIAL BY THE PERSONS TO
WHOM IT IS DELIVERED. ANY DISTRIBUTION OF THE OFFERING DOCUMENTS OR ANY PART
HEREOF OR DIVULGENCE OF ANY OF ITS CONTENTS SHALL BE UNAUTHORIZED.
IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THE SHARES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THE
OFFERING DOCUMENTS. ANY REPRESENTATION TO THE
<PAGE>
CONTRARY IS A CRIMINAL OFFENSE. THE SHARES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. IN ADDITION,
THE SHARES WILL BEAR A LEGEND TO SUCH EFFECT AS SET FORTH HEREIN. INVESTORS
SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
IN WITNESS WHEREOF, the undersigned has duly executed this
Subscription Agreement as of the date set forth below the undersigned's
signature in the Execution Section below.
<PAGE>
EXECUTION SECTION FOR SUBSCRIPTION BY INDIVIDUALS
I. SUBSCRIPTION AMOUNT:
The undersigned subscribes to purchase the Shares and Warrants set forth in
the first paragraph of this Agreement for the Subscription Price set forth
therein.
II. SUBSCRIBER STATUS:
The undersigned is (check appropriate box and, if applicable, fill in state
with jurisdiction over custodial account):
_ INDIVIDUAL OWNER (One signature required below). Note: In community
property states, both spouses are required to sign below, whether or not
being listed as co-subscribers.
_ HUSBAND AND WIFE AS TENANTS BY THE ENTIRETY (Husband and wife are both
required to sign below).
_ TWO OR MORE INDIVIDUALS AS TENANTS IN COMMON (All tenants are required
to sign below).
_ TWO OR MORE INDIVIDUALS AS JOINT TENANTS WITH RIGHT OF SURVIVORSHIP
(All tenants are required to sign below).
_ CUSTODIAL ACCOUNT UNDER UNIFORM GIFTS TO MINORS ACT OF THE STATE OF
___________________________________________________ (Fill in state).
III. INFORMATION AS IT IS TO APPEAR ON THE COMPANY RECORDS:
Name of
Subscriber(s): (1) ____________________________________________________________
(2) ____________________________________________________________
Social Security Number (for use in all notifications
and reports to governmental taxing authorities): ______________________________
State(s) of Permanent Residence: (1) ________________________________________
(2) ________________________________________
<PAGE>
Mailing Address: ____________________________________________________________
____________________________________________________________
____________________________________________________________
Telephone Number: ____________________________________________________________
Facsimile Number: ____________________________________________________________
IV. INVESTOR STATUS (check all appropriate boxes):
A. The undersigned is an accredited investor, as such term is defined under
Regulation D, by reason of the fact that the undersigned is:
_ An individual(1) whose net worth (or joint net worth with my spouse,
if greater) exceeds $1,000,000.
_ An individual with income(2) in excess of $200,000, or joint income
together with my spouse in excess of $300,000, in each of the two
most recent years and reasonably expects to reach the same income
level in the current year.
_ A director or executive officer of the Company.
_ An entity in which all of the equity owners are accredited investors,
as defined in Regulation D. (The Company has the right to request the
names of each such accredited investor equity owners and to require
such person(s) to complete a Qualified Purchaser Questionnaire prior
to the Company's acceptance of the undersigned's subscription.)
_ B. The undersigned is not an accredited investor, as such term is defined
under Regulation D, and agrees, that upon the request of the Company, to
complete a Qualified Purchaser Questionnaire and return an executed copy thereof
to the Company.
__________________________
1 For purposes hereof, net worth shall be deemed to include all of your
assets, liquid or illiquid (including such items as home, furnishings,
automobile and restricted securities), minus any liabilities (including such
items as home mortgages and other debt and liabilities).
2 For purposes hereof, the term "income" is not limited to "adjusted gross
income" as that term is defined for Federal Income Tax purposes, but rather
includes certain items of income which are deducted in computing "adjusted gross
income." For investors who are salaried employees, the gross salary of such
investor, minus any significant expenses personally incurred by such investor
in connection with earning the salary, plus any income from any other source,
including unearned income, is a fair measure of "income" for purposes hereof.
For investors who are self-employed, "income" is generally construed to mean
total revenues received during the calendar year minus significant expenses
incurred in connection with earning such revenues.
<PAGE>
V. SIGNATURE(S):
Signature(s) of Subscriber(s): (1) ________________________________________
(2) ________________________________________
Signature of Non-Subscribing Spouse (Community Property States Only):
(1) ________________________________________
(2) ________________________________________
Date: _______________________________________, 1998
<PAGE>
EXECUTION SECTION FOR SUBSCRIPTION BY NON-INDIVIDUALS
I. SUBSCRIPTION AMOUNT:
The undersigned subscribes to purchase the Shares and Warrants set
forth in the first paragraph of this Agreement for the Subscription Price
set forth therein.
II. SUBSCRIBER STATUS:
The undersigned is (check appropriate box and, if applicable, fill in state
with jurisdiction over custodial account):
_ CORPORATION (Please include certified corporate resolution authorizing
signature).
_ PARTNERSHIP.
_ TRUST.
_ OTHER (Including Employment Benefit Plans and Trusts, Individual
Retirement Accounts, and KEOUGH Plans).
III. INFORMATION AS IT IS TO APPEAR ON THE COMPANY RECORDS:
Name of
Subscriber: __Whitehaven Group, Inc._________________________________________
Tax Identification Number: __________________________________________________
State of Incorporation or Organization: ________________________________________
State of Principal Place of Business: ________________________________________
Mailing Address: ____________________________________________________________
____________________________________________________________
____________________________________________________________
Telephone Number: ____________________________________________________________
Facsimile Number: ____________________________________________________________
<PAGE>
IV. INVESTOR STATUS (check all appropriate boxes and, if applicable,
provide all information requested):
A. The undersigned is an accredited investor, as such term is defined under
Regulation D, by reason of the fact that the undersigned is:
_ A bank as defined in Section 3(a)(2) of the Securities Act, or
any savings and loan association or other institution as defined
in Section 3(a)(5)(A) of the Securities Act whether acting in
its individual or fiduciary capacity; a broker or dealer
registered pursuant to Section 15 of the Securities Exchange Act
of 1934 (the "Exchange Act"); an insurance company as defined in
Section 2(13) of the Securities Act; an investment company
registered under the Investment Company Act of 1940 or a business
development company as defined in Section 2(a)(48) of that Act; a
Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958; a plan established and
maintained by a state, its political subdivisions, or any agency
or instrumentality of a state or its political subdivisions, for
the benefit of its employees, and having total assets in excess
of $5,000,000; an employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974 ("ERISA") with
investment decisions made by a plan fiduciary, as defined in
Section 3(21) of such Act, which is either a bank, savings and
loan association, insurance company or registered investment
adviser; an employee benefit plan within the meaning of ERISA and
having total assets in excess of $5,000,000.
_ An employee benefit plan within the meaning of ERISA which
is a self-directed plan, with investment decisions made solely
by the following persons who are accredited investors, as defined
in Regulation D:
_________________________________________________________________
_________________________________________________________________
_ A private business development company as defined in section
202(a)(22) of the Investment Advisers Act of 1940.
_ An organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business
trust or partnership, not formed for the specific purpose of
acquiring the securities offered, with total assets in excess of
$5,000,000.
<PAGE>
_ A trust, with total assets in excess of $5,000,000, not formed for
the specific purpose of acquiring any shares of Common Stock, whose
purchase is directed by the following sophisticated person meeting the
description set forth in Rule 506(b)(2)(ii) of Regulation D:
______________________________________________________________________
_ An entity in which all of the equity owners are accredited investors,
as defined in Regulation D. (The Company has the right to request the
names of each such accredited investor equity owners and to require
such person(s) to complete a Qualified Purchaser Questionnaire prior
to the Company's acceptance of the undersigned's subscription.)
_ B. The undersigned is not an accredited investor, as such term is defined
under Regulation D, and agrees, that upon the request of the Company, to
complete a Qualified Purchaser Questionnaire and return an executed copy thereof
to the Company.
V. SIGNATURE(S)
The undersigned corporate officer, partner, trustee or fiduciary certifies
that the undersigned has full power and authority from all requisite
stockholders, partners, co-trustees, co-fiduciaries of the subscribing entity
named above to execute this Subscription Agreement on behalf of the subscribing
entity and to make the representations, warranties and agreements made herein on
its and their behalf and that investment in the Shares has been affirmatively
authorized by the governing board or body of such entity and is not prohibited
by law or the governing documents of the subscribing entity.
WHITEHAVEN GROUP, INC.
By: __________________________________ By: ____________________________________
(Signature of Authorized Signatory) (Signature of Authorized Co-Signatory)
__________________________________ ____________________________________
(Name of Authorized Signatory) (Name of Authorized Co-Signatory)
__________________________________ ____________________________________
(Title of Authorized Signatory) (Title of Authorized Co-Signatory)
Date:_______________________________________, 1998
<PAGE>
ACCEPTANCE PAGE
(To be completed by the Company)
SUBSCRIPTION AND SUBSCRIPTION AGREEMENT
ACCEPTED AND AGREED:
Number of Shares for which Subscription is Accepted: 1,000,000
Number of $.01 Warrants for which Subscription is Accepted: 550,000
Number of $.71875 Warrants for which Subscription is Accepted: 250,000
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
By: ____________________________________________________
Name:
Title:
Date: _______________________________________, 1998
VOID AFTER THE EXPIRATION TIME,
WARRANT TO PURCHASE 550,000 SHARES OF COMMON STOCK
WARRANT TO PURCHASE COMMON STOCK
of
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR THIS WARRANT AND/OR SUCH SHARES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER OF THIS WARRANT AND SUCH SHARES TO THE
EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND SUCH STATE
SECURITIES LAWS.
Warrant Certificate No. W-1
This is to Certify That, for value received, The Whitehaven Group, LLC, the
registered holder hereof, or its registered assigns (the registered holder or
assigns are being referred to hereinafter as the "Warrantholder"), is entitled
to purchase from Software Publishing Corporation Holdings, Inc., a Delaware
corporation (the "Company"), subject to the provisions of this Common Stock
Warrant Certificate, at any time and from time to time on or after the date
which is ninety (90) days after the date on which the Company's registration
statement on Form S-3 registering for resale the shares of common stock, par
value $.001 per share (the "Common Stock"), of the Company underlying this
Warrant becomes effective (the "Exercise Date"), and before 5:00 p.m., New York
City time, on the second anniversary of the Exercise Date (the "Expiration
Time"), at the price of $.01 per share (as
<PAGE>
adjusted as herein provided, the "Exercise Price"), up to five hundred
fifty thousand (550,000) shares of Common Stock (such number of shares of Common
Stock purchasable upon the exercise of this Warrant Certificate, as adjusted
from time to time pursuant to the provisions hereinafter set forth, are referred
to in this Warrant Certificate as the "Warrant Shares").
The number of Warrants (the "Warrants") evidenced by this Warrant
Certificate (the "Warrant Certificate"), the number and character of shares of
Warrant Shares and the Exercise Price are subject to adjustment from time to
time as provided herein.
The terms of the Warrants are as follows:
1. Exercise of Warrants.
(a) The Warrants may be exercised, in whole or in part, commencing on
the Exercise Date and on or prior to the Expiration Time by surrendering this
Warrant Certificate, with the purchase form provided for herein duly executed by
the Warrantholder or by the Warrantholder's duly authorized attorney-in-fact, at
the principal office of the Company, presently located at 3A Oak Road,
Fairfield, New Jersey 07004, or at such other office or agency in the United
States as the Company may designate by notice in writing to the Warrantholder
(in either event, the "Company Offices"), accompanied by payment in full, either
in the form of cash, bank cashier's check or certified check payable to the
order of the Company, of the Exercise Price payable in respect of the Warrants
being exercised. If fewer than all of the Warrants are exercised, the Company
shall, upon each exercise prior to the Expiration Time, execute and deliver to
the Warrantholder a new Warrant Certificate (dated the date hereof) evidencing
the balance of the Warrants that remain exercisable.
(b) On the date of exercise of the Warrants, the Warrantholder
exercising same shall be deemed to have become the holder of record for all
purposes of the Warrant Shares to which the exercise relates.
(c) As soon as practicable, but not in excess of ten days, after the
exercise of all or part of the Warrants, the Company, at its expense (including
the payment by it of any applicable issue taxes), will cause to be issued in the
name of and delivered to the Warrantholder a certificate or certificates
evidencing the number of fully-paid and nonassessable Warrant Shares to which
the Warrantholder shall be entitled upon such exercise.
(d) No certificates for fractional Warrant Shares shall be issued upon
the exercise of the Warrants but, in lieu thereof, the Company shall, upon
exercise of all the Warrants, round up any fractional Warrant Share to the
nearest whole share of Common Stock.
<PAGE>
2. Issuance of Common Stock; Reservation of Shares.
(a) The Company covenants and agrees that all Warrant Shares which may
be issued upon the exercise of all or part of the Warrants will, upon issuance
in accordance with the terms hereof, be validly issued, fully-paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof.
(b) The Company further covenants and agrees that if any shares of
Common Stock to be reserved for the purpose of the issuance of Warrant Shares
upon the exercise of Warrants require registration with, or approval of, any
governmental authority under any federal or state law before such shares may be
validly issued or delivered upon exercise, then the Company will promptly use
its best efforts to effect such registration or obtain such approval, as the
case may be.
3. Adjustments of Exercise Price, Number and Character of Warrant Shares,
and Number of Warrants.
The Exercise Price the number and kind of securities purchasable upon
the exercise of each Warrant shall be subject to adjustment from time to time
upon the happening of the events enumerated in this Section 3.
(a) Stock Dividends, Subdivisions and Combinations. If after the
date hereof the Company shall:
(i) pay a dividend or make a distribution in shares of Common
Stock to holders of its capital stock of any class;
(ii) subdivide the outstanding shares of its Common Stock into
a larger number of shares;
(iii) combine the outstanding shares of its Common Stock into a
smaller number of shares; or
(iv) issue by reclassification of its shares of Common Stock any
shares of capital stock of the Company;
then the Exercise Price shall be adjusted to that price determined by
multiplying the Exercise Price in effect immediately prior to such event by a
fraction (i) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such event and (ii) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such event. An adjustment made pursuant to this
Paragraph 3(a) shall become effective immediately after the record date, in the
case of a dividend or distribution, and the effective date, in the case of a
subdivision, combination or reclassification.
<PAGE>
(b) Issuance of Additional Shares of Common Stock. If, after the date
hereof, the Company shall (except as hereinafter provided) issue any Additional
Shares of Common Stock (as defined in Subparagraph 3(l) below) for a
consideration less than the Exercise Price then in effect, then, upon each such
issuance, the Exercise Price shall be adjusted to that price determined by
multiplying the Exercise Price in effect immediately prior to such event by a
fraction:
(i) the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to the issuance of such
Additional Shares of Common Stock plus the number of shares of Common
Stock which the aggregate consideration for the total number of such
Additional Shares of Common Stock so issued would purchase at the then
effective Exercise Price; and
(ii) the denominator of which shall be the number of shares of
Common Stock outstanding immediately prior to the issuance of such
Additional Shares of Common Stock plus the number of such Additional
Shares of Common Stock so issued.
The provisions of this Paragraph 3(b) shall not apply to any
Additional Shares of Common Stock which are distributed to holders of Common
Stock as a stock dividend or subdivision, for which an adjustment is provided
for under Paragraph 3(a). No adjustment of the Exercise Price shall be made
under this Paragraph 3(b) upon the issuance of any Additional Shares of Common
Stock which are issued pursuant to the exercise of any warrants or other
subscription or purchase rights or pursuant to the exercise of any conversion or
exchange rights in any Convertible Securities (as defined in Paragraph 3(c)
below) if any such adjustment shall previously have been made (or determined not
to be required) upon the date of issuance of such warrants or other rights or
upon the date of issuance of such convertible securities (or upon the date of
issuance of any warrants or other rights therefor) pursuant to Paragraphs 3(c)
or 3(d).
(c) Issuance of Warrants, Stock Options or Other Rights. In case the
Company shall issue any warrants, stock options or other rights to subscribe for
or purchase any Additional Shares of Common Stock or any securities convertible
into Additional Shares of Common Stock, other than Warrants (in each event,
"Convertible Securities"), or the Company shall amend, modify or otherwise
change the price of warrants, stock options or other rights outstanding on the
original issuance date of this Warrant to subscribe for or purchase any
Additional Shares of Common Stock or the conversion rate of any Convertible
Securities and the consideration per share for which Additional Shares of Common
Stock may at any time thereafter be issuable pursuant to such warrants, stock
options or other rights or pursuant to the terms of such Convertible Securities
shall be less than the Exercise Price in effect on the date of grant or the date
of price change of such warrants, stock options or other rights, then the
Exercise Price shall be adjusted in the manner prescribed in Paragraph 3(b) on
the basis that (i) the maximum number of Additional Shares of Common Stock
issuable pursuant to all such warrants, stock options or other rights or
necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued and (ii) the aggregate
consideration for such maximum number of Additional Shares of Common Stock shall
be deemed to be the minimum consideration received and receivable by the Company
for the issuance of such Additional Shares of Common Stock pursuant to such
warrants, stock options or other rights or pursuant to the terms of such
Convertible Securities.
<PAGE>
(d) Issuance of Convertible Securities. In case the Company shall
issue any Convertible Securities and the consideration per share for which
Additional Shares of Common Stock may at any time thereafter be issuable
pursuant to the terms of such Convertible Securities shall be less than the
Exercise Price in effect on the date of issuance of such Convertible Securities,
then the Exercise Price shall be adjusted in the manner prescribed in Paragraph
3(b) on the basis that (i) the maximum number of Additional Shares of Common
Stock necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued and (ii) the aggregate
consideration for such maximum number of Additional Shares of Common Stock shall
be deemed to be the minimum consideration received and receivable by the Company
for the issuance of such Additional Shares of Common Stock pursuant to the terms
of such Convertible Securities. No adjustment of the Exercise Price shall be
made under this Paragraph 3(d) upon the issuance of any Convertible Securities
which are issued pursuant to the exercise of any options, warrants or other
subscription or purchase rights therefor, if any, such adjustment shall
previously have been made upon the issuance of such options, warrants or other
rights pursuant to Paragraph 3(c) above.
(e) Other Provisions Applicable to Adjustments Under this Section 3.
The following provisions shall be applicable to the making of adjustments in the
Exercise Price hereinbefore provided in this Section 3.
(i) Computation of Consideration.
(A) To the extent that any Additional Shares of Common Stock
or any Convertible Securities or any options, warrants or other rights
to subscribe for or purchase any Additional Shares of Common Stock or
any Convertible Securities shall be issued for a cash consideration,
the consideration received by the Company shall be deemed to be the
amount of the cash received by the Company therefor, or, if such
Additional Shares of Common Stock or Convertible Securities or
options, warrants or other rights are offered by the Company for
subscription, the subscription price, or, if such Additional
Shares of Common Stock or Convertible Securities or options,
warrants or other rights are sold to underwriters or dealers for
public offering without a subscription offering, the initial
public offering price, in any such case excluding any amounts paid or
receivable for accrued interest or accrued dividends and without
deduction of any compensation, discounts or expenses paid or incurred
by the Company for and in the underwriting of, or otherwise in
connection with the issue thereof.
(B) To the extent that such issuance shall be for a
consideration other than cash, then, except as herein otherwise
expressly provided, the amount of such consideration shall be deemed
to be the fair value of such consideration as determined in good faith
by the Board of Directors of the Company
(C) The consideration for any Additional Shares of Common
Stock issuable pursuant to any options, warrants or other
rights to subscribe for or purchase the same shall be the
consideration received by the Company for issuing such
<PAGE>
options, warrants or other rights, plus the additional consideration
payable to the Company upon the exercise of such options, warrants
or other rights. The consideration for any Additional Shares of
Common Stock issuable pursuant to the terms of any Convertible
Securities shall be the consideration received by the Company for
issuing any options, warrants or other rights to subscribe for or
purchase such Convertible Securities plus the consideration paid or
payable to the Company in respect of the subscription for or purchase
of such Convertible Securities, plus the additional consideration,
if any, payable to the Company upon the exercise of the right of
conversion or exchange in such Convertible Securities.
(D) In case of the issuance at any time of any Additional
Shares of Common Stock or Convertible Securities in payment or
satisfaction of any dividend upon any class of equity securities
other than Common Stock, the Company shall be deemed to have received
for such Additional Shares of Common Stock or Convertible Securities
consideration equal to the amount of such dividend so paid or
satisfied.
(ii) Readjustment of Exercise Price. Subject to the
provisions of the second sentence of this Subparagraph 3(e)(ii), upon the
expiration of the right to convert or exchange any Convertible Securities,
or upon the expiration of any rights, options or warrants, or upon any
increase in the minimum consideration receivable by the Company for the
issuance of Additional Shares of Common Stock pursuant to such Convertible
Securities, rights, options or warrants, if any, if such Convertible
Securities shall not have been converted or exchanged, or if any such
rights, options or warrants shall not have been exercised, the number of
shares of Common Stock deemed to be issued and outstanding by reason of the
fact that they were issuable upon conversion or exchange of any such
Convertible Securities or upon exercise of any such rights, options or
warrants shall no longer be computed as set forth above, and the Exercise
Price shall forthwith be readjusted and thereafter be the price which it
would have been (but reflecting any other adjustments in the Exercise Price
made pursuant to the provisions of this Section 3 after the issuance of
such Convertible Securities, rights, options or warrants) had the
adjustment of the Exercise Price made upon the issuance or sale of such
Convertible Securities or the issuance of such rights, options or warrants
been made on the basis of the issuance only of the number of Additional
Shares of Common Stock actually issued upon conversion or exchange of such
Convertible Securities or upon the exercise of such rights, options or
warrants, or upon the basis of such increased minimum consideration, as the
case may be, and thereupon only the number of Additional Shares of Common
Stock actually so issued or the number thereof issuable upon the basis of
such increased minimum consideration shall be deemed to have been issued
and only the consideration actually received or such increased minimum
consideration receivable by the Company (computed as provided in
Subparagraph 3(i)(a) shall be deemed to have been received by the Company.
No such readjustment of the Exercise Price shall be made unless the
Exercise Price was adjusted under the provisions of Paragraph 3(c) above at
the time such rights, options or warrants were issued.
<PAGE>
(f) Extraordinary Dividends. In case the Company shall declare a
dividend upon its Common Stock (except a dividend payable in shares of Common
Stock referred to in clause (i) of Paragraph 3(a) or a dividend payable in
warrants, rights or Convertible Securities referred to in Paragraph 3(c) or 3(d)
payable otherwise than out of retained earnings), the Exercise Price in effect
immediately prior to the declaration of such dividend shall be reduced by an
amount equal, in the case of a dividend in cash, to the amount thereof payable
per share of Common Stock to the extent otherwise than out of retained earnings
or, in the case of any other dividend, to the fair value thereof per share of
Common Stock as determined in good faith by the Board of Directors of the
Company; provided, that in no event shall the Exercise Price be reduced to less
than the then current par value of the Common Stock per share. For the purposes
of the foregoing, a dividend payable other than in cash or capital stock of the
Company shall be considered payable out of retained earnings only to the extent
that such retained earnings are charged an amount equal to the fair value of
such dividend as determined by the Board of Directors of the Company. Such
reduction shall take effect as of the date on which a record is taken for the
purpose of such dividend or if a record is not taken, the date as of which the
holders of the Common Stock of record entitled to such dividend are to be
determined. Appropriate readjustment of the Exercise Price shall be made in the
event that any dividend referred to in this Paragraph 3(f) shall be lawfully
abandoned.
(g) Minimum Adjustment. Except as hereinafter provided, no adjustment
of the Exercise Price hereunder shall be made if such adjustment results in a
change of the Exercise Price then in effect of less than one cent ($.01) per
share. Any adjustment of less than one cent ($.01) per share of any Exercise
Price shall be carried forward and shall be made at the time of and together
with any subsequent adjustment which, together with adjustment or adjustments so
carried forward, amounts to one cent ($.01) per share or more. However, upon
exercise of this Warrant Certificate, the Company shall make all necessary
adjustments (to the nearest cent) not theretofore made to the Exercise Price up
to and including the effective date upon which this Warrant Certificate is
exercised.
(h) Notice of Adjustments. Whenever the Exercise Price shall be
adjusted pursuant to this Section 3, the Company shall promptly deliver a
certificate signed by the President or a Vice President and by the Treasurer or
an Assistant Treasurer or the Secretary or an Assistant Secretary of the
Company, setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated (including a description of the basis on which the Board of
Directors of the Company made any determination hereunder), by first class mail
postage prepaid to each Holder.
(i) Capital Reorganizations and Other Reclassifications. In case of
any capital reorganization of the Company, or of any reclassification of the
shares of Common Stock (other than a reclassification, subdivision or
combination of shares of Common Stock referred to in Paragraph 3(a)), or in case
of the consolidation of the Company with, or the merger of the Company with, or
merger of the Company into, any other corporation (other than a reclassification
of the shares of Common Stock referred to in Paragraph 3(a) or a consolidation
or merger which does not result in any reclassification or change of the
outstanding shares of Common Stock) or of the sale of the properties and assets
of the Company as, or substantially as, an entirety to any other corporation or
entity, each Warrant shall, after such capital reorganization, reclassification
of shares of Common
<PAGE>
Stock, consolidation, merger, or sale, be exercisable, upon the terms and
conditions specified in this Warrant Certificate, for the kind, amount and
number of shares or other securities, assets, or cash to which a holder of the
number of shares of Common Stock purchasable (at the time of such capital
reorganization, reclassification of shares of Common Stock, consolidation,
merger or sale) upon exercise of such Warrant would have been entitled to
receive upon such capital reorganization, reclassification of shares of Common
Stock, consolidation, merger, or sale; and in any such case, if necessary, the
provisions set forth in this Section 3 with respect to the rights and interests
thereafter of the Warrantholder shall be appropriately adjusted so as to be
applicable, as nearly equivalent as possible, to any shares or other securities,
assets, or cash thereafter deliverable on the exercise of the Warrants. The
Company shall not effect any such consolidation, merger, or sale, unless prior
to or simultaneously with the consummation thereof the successor corporation or
entity (if other than the Company) resulting from such consolidation or merger
or the corporation or entity purchasing such assets or other appropriate
corporation or entity shall assume, by written instrument, the obligation to
deliver to the Warrantholder such shares, securities, assets, or cash as, in
accordance with the foregoing provisions, such holders may be entitled to
purchase and the other obligations hereunder. The subdivision or combination of
shares of Common Stock at any time outstanding into a greater or lesser number
of shares shall not be deemed to be a reclassification of the shares of Common
Stock for purposes of this Paragraph 3(i).
(j) Adjustments to Other Securities. In the event that at any time, as
a result of an adjustment made pursuant to this Section 3, the Warrantholder
shall become entitled to purchase any shares or securities of the Company other
than the shares of Common Stock, thereafter the number of such other shares or
securities so purchasable upon exercise of each Warrant and the exercise price
for such shares or securities shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as possible to the provisions with
respect to the shares of Common Stock contained in Paragraphs 3(a) through (i),
inclusive.
(k) Deferral of Issuance of Additional Shares in Certain
Circumstances. In any case in which this Section 3 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event issuing to the Warrantholder exercised after such record date the shares
of Common Stock, if any, issuable upon such exercise over and above the Warrant
Shares, if any, issuable upon such exercise on the basis of the Exercise Price
in effect prior to such adjustment; provided, however, that the Company shall
deliver as soon as practicable to such holder a due bill or other appropriate
instrument provided by the Company evidencing such holder's right to receive
such additional shares of Common Stock upon the occurrence of the event
requiring such adjustment.
(l) Additional Shares of Common Stock Defined. For purposes of this
Warrant Certificate, the term "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued by the Company on or after the date hereof except
shares of Common Stock issued upon the exercise of any of options granted or
available for grant under the Company's 1994 Long-Term Incentive Plan, the
Company's Outside Director and Advisor Stock Option Plan, the Company's Software
Publishing Corporation 1989 Stock Plan and the Company's Software Publishing
Corporation 1991 Stock Option Plan.
<PAGE>
4. Definition of Common Stock.
The Common Stock issuable upon exercise of the Warrants shall be the
Common Stock as constituted on the date hereof except as otherwise provided in
Section 3.
5. Notices of Record Date, etc.
In the event the Company shall propose to take any action of the types
requiring an adjustment of the Exercise Price or the number or character of the
Warrant Shares or Warrants pursuant to Section 3 or a dissolution, liquidation
or winding up of the Company (other than in connection with a consolidation,
merger, or sale of all or substantially all of its property, assets, and
business as an entirety) shall be proposed, the Company shall give notice to
each Warrantholder as provided in Section 11, which notice shall specify the
record date, if any, with respect to any such action and the date on which such
action is to take place. Such notice shall also set forth such facts with
respect thereto as shall be reasonable necessary to indicate the effect of such
action (to the extent such effect may be known at the date of such notice) on
the Exercise Price and the number, kind or class of shares or other securities
or property which shall be deliverable or purchasable upon the occurrence of
such action or deliverable upon the exercise of the Warrants. In the case of any
action which will require the fixing of a record date, unless otherwise provided
in this Warrant Certificate, such notice shall be given at least twenty days
prior to the date so fixed, and in case of all other action, such notice shall
be given at least thirty days prior to the taking of such proposed action.
6. Replacement of Securities.
If this Warrant Certificate shall be lost, stolen, mutilated or
destroyed, the Company shall, on such terms as to indemnity or otherwise as the
Company may in its discretion reasonably impose, issue a new certificate of like
tenor or date representing in the aggregate the right to subscribe for and
purchase the number of shares of Common Stock which may be subscribed for and
purchased hereunder. Any such new certificate shall constitute an original
contractual obligation of the Company, whether or not the allegedly lost,
stolen, mutilated or destroyed Warrant Certificate shall be at any time
enforceable by anyone.
7. Registration.
This Warrant Certificate, as well as all other warrant certificates
representing Warrants shall be numbered and shall be registered in a register
(the "Warrant Register") maintained at the Company Office as they are issued.
The Warrant Register shall list the name, address and Social Security or other
Federal Identification Number, if any, of all Warrantholders. The Company shall
be entitled to treat the Warrantholder as set forth in the Warrant Register as
the owner in fact of the Warrants as set forth therein for all purposes and
shall not be bound to recognize any equitable or other claim to or interest in
such Warrant on the part of any other person, and shall not be liable for any
registration of transfer of Warrants that are registered or to be registered in
the name of a fiduciary or the nominee of a fiduciary unless made with the
actual knowledge that a fiduciary or
<PAGE>
nominee is committing a breach of trust in requesting such registration of
transfer, or with such knowledge of such facts that its participation therein
amounts to bad faith.
8. Transfer.
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR THIS WARRANT AND/OR SUCH SHARES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER OF THIS WARRANT AND SUCH SHARES TO THE
EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND SUCH STATE
SECURITIES LAWS.
9. Benefits and Obligations of Subscription Agreement.
The holder of any Warrant Shares shall receive the benefits of and be
subject to the obligations, including restrictions on the transferability of the
Warrant Shares, as set forth in that certain Subscription Agreement, dated April
27, 1998, between the Company and the Warrantholder pursuant to which this
Warrant Certificate was issued, a copy of which is on file at the Company
Offices.
10. Exchange of Warrant Certificates.
This Warrant Certificate may be exchanged for another certificate or
certificates entitling the Warrantholder thereof to purchase a like aggregate
number of Warrant Shares as this Warrant Certificate entitles such Warrantholder
to purchase. A Warrantholder desiring to so exchange this Warrant Certificate
shall make such request in writing delivered to the Company, and shall surrender
this Warrant Certificate therewith. Thereupon, the Company shall execute and
deliver to the person entitled thereto a new certificate or certificates, as the
case may be, as so requested.
11. Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed given when delivered in person, against written receipt
therefor, or two days after being sent, by registered or certified mail, postage
prepaid, return receipt requested, and, if to the Warrantholder, at such address
as is shown on the Warrant Register or as may otherwise may have been furnished
to the Company in writing by the Warrantholder and, if to the Company, at the
Company Offices.
<PAGE>
12. Miscellaneous.
This Warrant Certificate and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. This certificate is deemed to have been delivered in the State of New
York and shall be construed and enforced in accordance with and governed by the
laws of such State. The headings in this Warrant Certificate are for purposes of
reference only, and shall not limit or otherwise affect any of the terms hereof.
13. Expiration.
Unless as hereinafter provided, the right to exercise these Warrants
shall expire at the Expiration Time.
Dated: April 29, 1998
SOFTWARE PUBLISHING CORPORATION
HOLDINGS, INC.
By:_____________________________________
Mark E. Leininger, President
ATTEST:
_______________________________
Marc E. Jaffe, Secretary
<PAGE>
EXERCISE FORM
Dated:_______________, 19__
TO: SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.:
The undersigned hereby irrevocably elects to exercise the within
Warrant, to the extent of purchasing _________________ shares of Common Stock,
and hereby makes payment of _____________ in payment of the actual Exercise
Price thereof.
________________
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name: _____________________________________________________________________
(Please type or print in block letters)
Address: _________________________________________________________________
_________________________________________________________________
_________________________________________________________________
Signature:_________________________________________________________________
(Signature must conform in all respects to the name of the
Warrantholder as set forth on the face of this Warrant
Certificate.)
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, ___________________________________________ hereby
sells, assigns and transfers unto
Name: _____________________________________________________________________
(Please type or print in block letters)
Address: _____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
the right to purchase Common Stock represented by this Warrant Certificate
to the extent of ________________ shares as to which such right is exercisable
and does hereby irrevocably constitute and appoint ___________________________
Attorney-in-Fact, to transfer the same on the books of the Company with full
power of substitution in the premises.
Dated: ______________________________
Signature: ________________________________________________________________
(Signature must conform in all respects to the name of the
Warrantholder as set forth on the face of this Warrant
Certificate.)
VOID AFTER THE EXPIRATION TIME,
WARRANT TO PURCHASE 250,000 SHARES OF COMMON STOCK
WARRANT TO PURCHASE COMMON STOCK
of
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR THIS WARRANT AND/OR SUCH SHARES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER OF THIS WARRANT AND SUCH SHARES TO THE
EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND SUCH STATE
SECURITIES LAWS.
Warrant Certificate No. W-2
This is to Certify That, for value received, The Whitehaven Group, LLC, the
registered holder hereof, or its registered assigns (the registered holder or
assigns are being referred to hereinafter as the "Warrantholder"), is entitled
to purchase from Software Publishing Corporation Holdings, Inc., a Delaware
corporation (the "Company"), subject to the provisions of this Common Stock
Warrant Certificate, at any time and from time to time on or after the date
which is ninety (90) days after the date on which the Company's registration
statement on Form S-3 registering for resale the shares of common stock, par
value $.001 per share (the "Common Stock"), of the Company underlying this
Warrant becomes effective (the "Exercise Date"), and before 5:00 p.m., New York
City time, on the second anniversary of the Exercise Date (the "Expiration
Time"), at the price of $.71875 per share
<PAGE>
(as adjusted as herein provided, the "Exercise Price"), up to two hundred
fifty thousand (250,000) shares of Common Stock (such number of shares of Common
Stock purchasable upon the exercise of this Warrant Certificate, as adjusted
from time to time pursuant to the provisions hereinafter set forth, are referred
to in this Warrant Certificate as the "Warrant Shares").
The number of Warrants (the "Warrants") evidenced by this Warrant
Certificate (the "Warrant Certificate"), the number and character of shares
of Warrant Shares and the Exercise Price are subject to adjustment from time
to time as provided herein.
The terms of the Warrants are as follows:
1. Exercise of Warrants.
(a) The Warrants may be exercised, in whole or in part, commencing on
the Exercise Date and on or prior to the Expiration Time by surrendering this
Warrant Certificate, with the purchase form provided for herein duly executed by
the Warrantholder or by the Warrantholder's duly authorized attorney-in-fact, at
the principal office of the Company, presently located at 3A Oak Road,
Fairfield, New Jersey 07004, or at such other office or agency in the United
States as the Company may designate by notice in writing to the Warrantholder
(in either event, the "Company Offices"), accompanied by payment in full, either
in the form of cash, bank cashier's check or certified check payable to the
order of the Company, of the Exercise Price payable in respect of the Warrants
being exercised. If fewer than all of the Warrants are exercised, the Company
shall, upon each exercise prior to the Expiration Time, execute and deliver to
the Warrantholder a new Warrant Certificate (dated the date hereof) evidencing
the balance of the Warrants that remain exercisable.
(b) On the date of exercise of the Warrants, the Warrantholder
exercising same shall be deemed to have become the holder of record for all
purposes of the Warrant Shares to which the exercise relates.
(c) As soon as practicable, but not in excess of ten days, after the
exercise of all or part of the Warrants, the Company, at its expense (including
the payment by it of any applicable issue taxes), will cause to be issued in the
name of and delivered to the Warrantholder a certificate or certificates
evidencing the number of fully-paid and nonassessable Warrant Shares to which
the Warrantholder shall be entitled upon such exercise.
(d) No certificates for fractional Warrant Shares shall be issued upon
the exercise of the Warrants but, in lieu thereof, the Company shall, upon
exercise of all the Warrants, round up any fractional Warrant Share to the
nearest whole share of Common Stock.
<PAGE>
2. Issuance of Common Stock; Reservation of Shares.
(a) The Company covenants and agrees that all Warrant Shares which may
be issued upon the exercise of all or part of the Warrants will, upon issuance
in accordance with the terms hereof, be validly issued, fully-paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof.
(b) The Company further covenants and agrees that if any shares of
Common Stock to be reserved for the purpose of the issuance of Warrant Shares
upon the exercise of Warrants require registration with, or approval of, any
governmental authority under any federal or state law before such shares may be
validly issued or delivered upon exercise, then the Company will promptly use
its best efforts to effect such registration or obtain such approval, as the
case may be.
3. Adjustments of Exercise Price, Number and Character of Warrant Shares,
and Number of Warrants.
The Exercise Price the number and kind of securities purchasable upon
the exercise of each Warrant shall be subject to adjustment from time to time
upon the happening of the events enumerated in this Section 3.
(a) Stock Dividends, Subdivisions and Combinations. If after the
date hereof the Company shall:
(i) pay a dividend or make a distribution in shares of Common
Stock to holders of its capital stock of any class;
(ii) subdivide the outstanding shares of its Common Stock into
a larger number of shares;
(iii) combine the outstanding shares of its Common Stock into
a smaller number of shares; or
(iv) issue by reclassification of its shares of Common Stock any
shares of capital stock of the Company;
then the Exercise Price shall be adjusted to that price determined by
multiplying the Exercise Price in effect immediately prior to such event by a
fraction (i) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such event and (ii) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such event. An adjustment made pursuant to this
Paragraph 3(a) shall become effective immediately after the record date, in the
case of a dividend or distribution, and the effective date, in the case of a
subdivision, combination or reclassification.
<PAGE>
(b) Issuance of Additional Shares of Common Stock. If, after the date
hereof, the Company shall (except as hereinafter provided) issue any Additional
Shares of Common Stock (as defined in Subparagraph 3(l) below) for a
consideration less than the Exercise Price then in effect, then, upon each such
issuance, the Exercise Price shall be adjusted to that price determined by
multiplying the Exercise Price in effect immediately prior to such event by a
fraction:
(i) the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to the issuance of such
Additional Shares of Common Stock plus the number of shares of Common
Stock which the aggregate consideration for the total number of such
Additional Shares of Common Stock so issued would purchase at the then
effective Exercise Price; and
(ii) the denominator of which shall be the number of shares of
Common Stock outstanding immediately prior to the issuance of such
Additional Shares of Common Stock plus the number of such Additional
Shares of Common Stock so issued.
The provisions of this Paragraph 3(b) shall not apply to any
Additional Shares of Common Stock which are distributed to holders of Common
Stock as a stock dividend or subdivision, for which an adjustment is provided
for under Paragraph 3(a). No adjustment of the Exercise Price shall be made
under this Paragraph 3(b) upon the issuance of any Additional Shares of Common
Stock which are issued pursuant to the exercise of any warrants or other
subscription or purchase rights or pursuant to the exercise of any conversion or
exchange rights in any Convertible Securities (as defined in Paragraph 3(c)
below) if any such adjustment shall previously have been made (or determined
not to be required) upon the date of issuance of such warrants or other rights
or upon the date of issuance of such convertible securities (or upon the date
of issuance of any warrants or other rights therefor) pursuant to Paragraphs
3(c) or 3(d).
(c) Issuance of Warrants, Stock Options or Other Rights. In case the
Company shall issue any warrants, stock options or other rights to subscribe for
or purchase any Additional Shares of Common Stock or any securities convertible
into Additional Shares of Common Stock, other than Warrants (in each event,
"Convertible Securities"), or the Company shall amend, modify or otherwise
change the price of warrants, stock options or other rights outstanding on the
original issuance date of this Warrant to subscribe for or purchase any
Additional Shares of Common Stock or the conversion rate of any Convertible
Securities and the consideration per share for which Additional Shares of Common
Stock may at any time thereafter be issuable pursuant to such warrants, stock
options or other rights or pursuant to the terms of such Convertible Securities
shall be less than the Exercise Price in effect on the date of grant or the date
of price change of such warrants, stock options or other rights, then the
Exercise Price shall be adjusted in the manner prescribed in Paragraph 3(b) on
the basis that (i) the maximum number of Additional Shares of Common Stock
issuable pursuant to all such warrants, stock options or other rights or
necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued and (ii) the aggregate
consideration for such maximum number of Additional Shares of Common Stock shall
be deemed to be the minimum consideration received and receivable by the Company
for the issuance of such Additional Shares of Common Stock pursuant to such
warrants, stock options or other rights or pursuant to the terms of such
Convertible Securities.
<PAGE>
(d) Issuance of Convertible Securities. In case the Company shall
issue any Convertible Securities and the consideration per share for which
Additional Shares of Common Stock may at any time thereafter be issuable
pursuant to the terms of such Convertible Securities shall be less than the
Exercise Price in effect on the date of issuance of such Convertible Securities,
then the Exercise Price shall be adjusted in the manner prescribed in Paragraph
3(b) on the basis that (i) the maximum number of Additional Shares of Common
Stock necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued and (ii) the aggregate
consideration for such maximum number of Additional Shares of Common Stock shall
be deemed to be the minimum consideration received and receivable by the Company
for the issuance of such Additional Shares of Common Stock pursuant to the terms
of such Convertible Securities. No adjustment of the Exercise Price shall be
made under this Paragraph 3(d) upon the issuance of any Convertible Securities
which are issued pursuant to the exercise of any options, warrants or other
subscription or purchase rights therefor, if any, such adjustment shall
previously have been made upon the issuance of such options, warrants or other
rights pursuant to Paragraph 3(c) above.
(e) Other Provisions Applicable to Adjustments Under this Section 3.
The following provisions shall be applicable to the making of adjustments in the
Exercise Price hereinbefore provided in this Section 3.
(i) Computation of Consideration.
(A) To the extent that any Additional Shares of
Common Stock or any Convertible Securities or any options, warrants or
other rights to subscribe for or purchase any Additional Shares of
Common Stock or any Convertible Securities shall be issued for a cash
consideration, the consideration received by the Company shall be
deemed to be the amount of the cash received by the Company therefor,
or, if such Additional Shares of Common Stock or Convertible
Securities or options, warrants or other rights are offered by the
Company for subscription, the subscription price, or, if such
Additional Shares of Common Stock or Convertible Securities or
options, warrants or other rights are sold to underwriters or dealers
for public offering without a subscription offering, the initial
public offering price, in any such case excluding any amounts paid or
receivable for accrued interest or accrued dividends and without
deduction of any compensation, discounts or expenses paid or incurred
by the Company for and in the underwriting of, or otherwise in
connection with the issue thereof.
(B) To the extent that such issuance shall be for
a consideration other than cash, then, except as herein otherwise
expressly provided, the amount of such consideration shall be deemed
to be the fair value of such consideration as determined in good faith
by the Board of Directors of the Company
(C) The consideration for any Additional Shares of
Common Stock issuable pursuant to any options, warrants or other
rights to subscribe for or purchase the same shall be the
consideration received by the Company for issuing such
<PAGE>
options, warrants or other rights, plus the additional consideration
payable to the Company upon the exercise of such options, warrants or
other rights. The consideration for any Additional Shares of Common
Stock issuable pursuant to the terms of any Convertible Securities
shall be the consideration received by the Company for issuing any
options, warrants or other rights to subscribe for or purchase such
Convertible Securities plus the consideration paid or payable to the
Company in respect of the subscription for or purchase of such
Convertible Securities, plus the additional consideration, if any,
payable to the Company upon the exercise of the right of conversion
or exchange in such Convertible Securities.
(D) In case of the issuance at any time of any Additional
Shares of Common Stock or Convertible Securities in payment or
satisfaction of any dividend upon any class of equity securities other
than Common Stock, the Company shall be deemed to have received
for such Additional Shares of Common Stock or Convertible
Securities consideration equal to the amount of such dividend so
paid or satisfied.
(ii) Readjustment of Exercise Price. Subject to the
provisions of the second sentence of this Subparagraph 3(e)(ii), upon the
expiration of the right to convert or exchange any Convertible Securities,
or upon the expiration of any rights, options or warrants, or upon any
increase in the minimum consideration receivable by the Company for the
issuance of Additional Shares of Common Stock pursuant to such Convertible
Securities, rights, options or warrants, if any, if such Convertible
Securities shall not have been converted or exchanged, or if any such
rights, options or warrants shall not have been exercised, the number of
shares of Common Stock deemed to be issued and outstanding by reason of the
fact that they were issuable upon conversion or exchange of any such
Convertible Securities or upon exercise of any such rights, options or
warrants shall no longer be computed as set forth above, and the Exercise
Price shall forthwith be readjusted and thereafter be the price which it
would have been (but reflecting any other adjustments in the Exercise Price
made pursuant to the provisions of this Section 3 after the issuance of
such Convertible Securities, rights, options or warrants) had the
adjustment of the Exercise Price made upon the issuance or sale of such
Convertible Securities or the issuance of such rights, options or warrants
been made on the basis of the issuance only of the number of Additional
Shares of Common Stock actually issued upon conversion or exchange of such
Convertible Securities or upon the exercise of such rights, options or
warrants, or upon the basis of such increased minimum consideration, as the
case may be, and thereupon only the number of Additional Shares of Common
Stock actually so issued or the number thereof issuable upon the basis of
such increased minimum consideration shall be deemed to have been issued
and only the consideration actually received or such increased minimum
consideration receivable by the Company (computed as provided in
Subparagraph 3(i)(a) shall be deemed to have been received by the Company.
No such readjustment of the Exercise Price shall be made unless the
Exercise Price was adjusted under the provisions of Paragraph 3(c) above at
the time such rights, options or warrants were issued.
<PAGE>
(f) Extraordinary Dividends. In case the Company shall declare a
dividend upon its Common Stock (except a dividend payable in shares of Common
Stock referred to in clause (i) of Paragraph 3(a) or a dividend payable in
warrants, rights or Convertible Securities referred to in Paragraph 3(c) or 3(d)
payable otherwise than out of retained earnings), the Exercise Price in effect
immediately prior to the declaration of such dividend shall be reduced by an
amount equal, in the case of a dividend in cash, to the amount thereof payable
per share of Common Stock to the extent otherwise than out of retained earnings
or, in the case of any other dividend, to the fair value thereof per share of
Common Stock as determined in good faith by the Board of Directors of the
Company; provided, that in no event shall the Exercise Price be reduced to less
than the then current par value of the Common Stock per share. For the purposes
of the foregoing, a dividend payable other than in cash or capital stock of the
Company shall be considered payable out of retained earnings only to the extent
that such retained earnings are charged an amount equal to the fair value of
such dividend as determined by the Board of Directors of the Company. Such
reduction shall take effect as of the date on which a record is taken for the
purpose of such dividend or if a record is not taken, the date as of which the
holders of the Common Stock of record entitled to such dividend are to be
determined. Appropriate readjustment of the Exercise Price shall be made in the
event that any dividend referred to in this Paragraph 3(f) shall be lawfully
abandoned.
(g) Minimum Adjustment. Except as hereinafter provided, no adjustment
of the Exercise Price hereunder shall be made if such adjustment results in a
change of the Exercise Price then in effect of less than one cent ($.01) per
share. Any adjustment of less than one cent ($.01) per share of any Exercise
Price shall be carried forward and shall be made at the time of and together
with any subsequent adjustment which, together with adjustment or adjustments so
carried forward, amounts to one cent ($.01) per share or more. However, upon
exercise of this Warrant Certificate, the Company shall make all necessary
adjustments (to the nearest cent) not theretofore made to the Exercise Price up
to and including the effective date upon which this Warrant Certificate is
exercised.
(h) Notice of Adjustments. Whenever the Exercise Price shall be
adjusted pursuant to this Section 3, the Company shall promptly deliver a
certificate signed by the President or a Vice President and by the Treasurer or
an Assistant Treasurer or the Secretary or an Assistant Secretary of the
Company, setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated (including a description of the basis on which the Board of
Directors of the Company made any determination hereunder), by first class mail
postage prepaid to each Holder.
(i) Capital Reorganizations and Other Reclassifications. In case of
any capital reorganization of the Company, or of any reclassification of the
shares of Common Stock (other than a reclassification, subdivision or
combination of shares of Common Stock referred to in Paragraph 3(a)), or in case
of the consolidation of the Company with, or the merger of the Company with, or
merger of the Company into, any other corporation (other than a reclassification
of the shares of Common Stock referred to in Paragraph 3(a) or a consolidation
or merger which does not result in any reclassification or change of the
outstanding shares of Common Stock) or of the sale of the properties and assets
of the Company as, or substantially as, an entirety to any other corporation or
entity, each Warrant shall, after such capital reorganization, reclassification
of shares of Common
<PAGE>
Stock, consolidation, merger, or sale, be exercisable, upon the terms and
conditions specified in this Warrant Certificate, for the kind, amount and
number of shares or other securities, assets, or cash to which a holder of the
number of shares of Common Stock purchasable (at the time of such capital
reorganization, reclassification of shares of Common Stock, consolidation,
merger or sale) upon exercise of such Warrant would have been entitled to
receive upon such capital reorganization, reclassification of shares of Common
Stock, consolidation, merger, or sale; and in any such case, if necessary, the
provisions set forth in this Section 3 with respect to the rights and interests
thereafter of the Warrantholder shall be appropriately adjusted so as to be
applicable, as nearly equivalent as possible, to any shares or other securities,
assets, or cash thereafter deliverable on the exercise of the Warrants. The
Company shall not effect any such consolidation, merger, or sale, unless prior
to or simultaneously with the consummation thereof the successor corporation or
entity (if other than the Company) resulting from such consolidation or merger
or the corporation or entity purchasing such assets or other appropriate
corporation or entity shall assume, by written instrument, the obligation to
deliver to the Warrantholder such shares, securities, assets, or cash as, in
accordance with the foregoing provisions, such holders may be entitled to
purchase and the other obligations hereunder. The subdivision or combination of
shares of Common Stock at any time outstanding into a greater or lesser number
of shares shall not be deemed to be a reclassification of the shares of Common
Stock for purposes of this Paragraph 3(i).
(j) Adjustments to Other Securities. In the event that at any time, as
a result of an adjustment made pursuant to this Section 3, the Warrantholder
shall become entitled to purchase any shares or securities of the Company other
than the shares of Common Stock, thereafter the number of such other shares or
securities so purchasable upon exercise of each Warrant and the exercise price
for such shares or securities shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as possible to the provisions with
respect to the shares of Common Stock contained in Paragraphs 3(a) through (i),
inclusive.
(k) Deferral of Issuance of Additional Shares in Certain
Circumstances. In any case in which this Section 3 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event issuing to the Warrantholder exercised after such record date the shares
of Common Stock, if any, issuable upon such exercise over and above the Warrant
Shares, if any, issuable upon such exercise on the basis of the Exercise Price
in effect prior to such adjustment; provided, however, that the Company shall
deliver as soon as practicable to such holder a due bill or other appropriate
instrument provided by the Company evidencing such holder's right to receive
such additional shares of Common Stock upon the occurrence of the event
requiring such adjustment.
(l) Additional Shares of Common Stock Defined. For purposes of this
Warrant Certificate, the term "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued by the Company on or after the date hereof except
shares of Common Stock issued upon the exercise of any of options granted or
available for grant under the Company's 1994 Long-Term Incentive Plan, the
Company's Outside Director and Advisor Stock Option Plan, the Company's Software
Publishing Corporation 1989 Stock Plan and the Company's Software Publishing
Corporation 1991 Stock Option Plan.
<PAGE>
4. Definition of Common Stock.
The Common Stock issuable upon exercise of the Warrants shall be the
Common Stock as constituted on the date hereof except as otherwise provided in
Section 3.
5. Notices of Record Date, etc.
In the event the Company shall propose to take any action of the types
requiring an adjustment of the Exercise Price or the number or character of the
Warrant Shares or Warrants pursuant to Section 3 or a dissolution, liquidation
or winding up of the Company (other than in connection with a consolidation,
merger, or sale of all or substantially all of its property, assets, and
business as an entirety) shall be proposed, the Company shall give notice to
each Warrantholder as provided in Section 11, which notice shall specify the
record date, if any, with respect to any such action and the date on which such
action is to take place. Such notice shall also set forth such facts with
respect thereto as shall be reasonable necessary to indicate the effect of such
action (to the extent such effect may be known at the date of such notice) on
the Exercise Price and the number, kind or class of shares or other securities
or property which shall be deliverable or purchasable upon the occurrence of
such action or deliverable upon the exercise of the Warrants. In the case of any
action which will require the fixing of a record date, unless otherwise provided
in this Warrant Certificate, such notice shall be given at least twenty days
prior to the date so fixed, and in case of all other action, such notice shall
be given at least thirty days prior to the taking of such proposed action.
6. Replacement of Securities.
If this Warrant Certificate shall be lost, stolen, mutilated or
destroyed, the Company shall, on such terms as to indemnity or otherwise as the
Company may in its discretion reasonably impose, issue a new certificate of like
tenor or date representing in the aggregate the right to subscribe for and
purchase the number of shares of Common Stock which may be subscribed for and
purchased hereunder. Any such new certificate shall constitute an original
contractual obligation of the Company, whether or not the allegedly lost,
stolen, mutilated or destroyed Warrant Certificate shall be at any time
enforceable by anyone.
7. Registration.
This Warrant Certificate, as well as all other warrant certificates
representing Warrants shall be numbered and shall be registered in a register
(the "Warrant Register") maintained at the Company Office as they are issued.
The Warrant Register shall list the name, address and Social Security or other
Federal Identification Number, if any, of all Warrantholders. The Company shall
be entitled to treat the Warrantholder as set forth in the Warrant Register as
the owner in fact of the Warrants as set forth therein for all purposes and
shall not be bound to recognize any equitable or other claim to or interest in
such Warrant on the part of any other person, and shall not be liable for any
registration of transfer of Warrants that are registered or to be registered in
the name of a fiduciary or the nominee of a fiduciary unless made with the
actual knowledge that a fiduciary or
<PAGE>
nominee is committing a breach of trust in requesting such registration of
transfer, or with such knowledge of such facts that its participation therein
amounts to bad faith.
8. Transfer.
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR THIS WARRANT AND/OR SUCH SHARES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER OF THIS WARRANT AND SUCH SHARES TO THE
EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND SUCH STATE
SECURITIES LAWS.
9. Benefits and Obligations of Subscription Agreement.
The holder of any Warrant Shares shall receive the benefits of and be
subject to the obligations, including restrictions on the transferability of the
Warrant Shares, as set forth in that certain Subscription Agreement, dated April
27, 1998, between the Company and the Warrantholder pursuant to which this
Warrant Certificate was issued, a copy of which is on file at the Company
Offices.
10. Exchange of Warrant Certificates.
This Warrant Certificate may be exchanged for another certificate or
certificates entitling the Warrantholder thereof to purchase a like aggregate
number of Warrant Shares as this Warrant Certificate entitles such Warrantholder
to purchase. A Warrantholder desiring to so exchange this Warrant Certificate
shall make such request in writing delivered to the Company, and shall surrender
this Warrant Certificate therewith. Thereupon, the Company shall execute and
deliver to the person entitled thereto a new certificate or certificates, as the
case may be, as so requested.
11. Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed given when delivered in person, against written receipt
therefor, or two days after being sent, by registered or certified mail, postage
prepaid, return receipt requested, and, if to the Warrantholder, at such address
as is shown on the Warrant Register or as may otherwise may have been furnished
to the Company in writing by the Warrantholder and, if to the Company, at the
Company Offices.
<PAGE>
12. Miscellaneous.
This Warrant Certificate and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. This certificate is deemed to have been delivered in the State of New
York and shall be construed and enforced in accordance with and governed by the
laws of such State. The headings in this Warrant Certificate are for purposes of
reference only, and shall not limit or otherwise affect any of the terms hereof.
13. Expiration.
Unless as hereinafter provided, the right to exercise these Warrants
shall expire at the Expiration Time.
Dated: April 29, 1998
SOFTWARE PUBLISHING CORPORATION
HOLDINGS, INC.
By: ___________________________________
Mark E. Leininger, President
ATTEST:
_______________________________
Marc E. Jaffe, Secretary
<PAGE>
EXERCISE FORM
Dated:_______________, 19__
TO: SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.:
The undersigned hereby irrevocably elects to exercise the within
Warrant, to the extent of purchasing _________________ shares of Common Stock,
and hereby makes payment of _____________ in payment of the actual Exercise
Price thereof.
_________
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name: ________________________________________________________________
(Please type or print in block letters)
Address: _________________________________________________________________
_________________________________________________________________
_________________________________________________________________
Signature: _________________________________________________________________
(Signature must conform in all respects to the name of the
Warrantholder as set forth on the face of this Warrant
Certificate.)
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, _____________________________________ hereby
sells, assigns and transfers unto
Name: _____________________________________________________________________
(Please type or print in block letters)
Address: _____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
the right to purchase Common Stock represented by this Warrant Certificate
to the extent of ________________ shares as to which such right is exercisable
and does hereby irrevocably constitute and appoint ___________________________
Attorney-in-Fact, to transfer the same on the books of the Company with full
power of substitution in the premises.
Dated: ______________________________
Signature: ________________________________________________________________
(Signature must conform in all respects to the name of the
Warrantholder as set forth on the face of this Warrant
Certificate.)
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
SUBSCRIPTION AGREEMENT
April 30, 1998
Software Publishing Corporation Holdings, Inc.
3A Oak Road
Fairfield, New Jersey 07004
Dear Sirs/Madams:
Based upon the representations and warranties of Software Publishing
Corporation Holdings, Inc., a Delaware corporation (the "Company"), to the
extent and as set forth in Section 1 below, and subject to the other terms and
conditions hereinafter provided, the undersigned hereby irrevocably subscribes
(the "Subscription") to purchase ________________ shares (the "Shares") of
common stock, par value $.001 per share (the "Common Stock") of the Company, at
a price equal to $_____ per share of Common Stock, or $___________in the
aggregate (the "Purchase Price"), and hereby tenders to the Company in full the
Subscription Price in immediately available funds. The date on which the Company
accepts this subscription is hereinafter referred to as the "Closing Date."
The Subscription of the undersigned being made hereby is subject to
and is made pursuant to the following terms and conditions:
1. Representations, Warranties and Covenants of the Company. By its
acceptance of this Subscription Agreement, the Company shall be deemed to
represent and warrant to and covenant with the undersigned as follows:
(a) Corporate Status. The Company (A) is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
(B) has all necessary corporate power and authority to own, operate or lease the
properties and assets now owned, operated or leased by the Company and to carry
on the business of the Company, as it is now being conducted, and (C) is duly
licensed or qualified and in good standing as a foreign corporation authorized
to do business in each jurisdiction wherein the character of the properties
owned or leased by the Company and/or the nature of the activities conducted by
the Company makes such licensing or qualification necessary, except where the
failure to be so licensed or qualified and in good standing would not prevent
the Company from performing any of its material obligations under this
Subscription Agreement and would not have a material adverse effect on the
business, operations or financial condition of the Company (a "Material Adverse
Effect");
(b) Authority of Agreement. The Company has the power and authority to
accept, execute and deliver this Subscription Agreement and, upon acceptance by
the Company (in whole
<PAGE>
or part), to carry out its obligations hereunder; and the execution,
delivery and performance by the Company of this Subscription Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company and this
Subscription Agreement, upon acceptance by the Company (in whole or part),
constitutes the valid and legally binding obligations of the Company enforceable
against the Company in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally now or hereafter in effect and
subject to the application of equitable principles and the availability of
equitable remedies. The shares of Common Stock to be issued hereunder will be
validly authorized, fully paid and non-assessable.
(c) Consents and Approvals; No Conflict.
(i) The acceptance, execution and delivery of this Subscription
Agreement by the Company does not, and the performance by the Company of
its obligations hereunder, upon acceptance by the Company (in whole or
part), will not, require any consent, approval, authorization or other
action by, or filing with or notification to, any governmental or
regulatory authority, other than in connection with state securities or
"blue sky" laws, except where failure to obtain such consent, approval,
authorization or action, or to make such filing or notification, would not
prevent the Company from performing any of its material obligations under
this Subscription and would not have a Material Adverse Effect; and
(ii) The acceptance, execution, delivery and performance of this
Subscription Agreement by the Company and the other agreements and
documents to be executed, delivered and performed by the Company pursuant
hereto and the consummation of the transactions contemplated hereby and
thereby by the Company do not and will not conflict with, violate or result
in a breach or termination of any provision of, or constitute a default
under (or event which with the giving of notice or lapse of time, or both,
would become a default under) the Certificate of Incorporation or By-laws
of the Company or, except as would not prevent the Company from performing
any of its material obligations under this Subscription Agreement and would
not have a Material Adverse Effect, any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award applicable to the
Company or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of any lien or
encumbrance on any of the assets or properties of the Company pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument relating to such assets or properties
to which the Company is a party or by which any of such assets or
properties is bound;
(d) Absence of Litigation. No claim, action, proceeding or investigation is
pending which seeks to delay or prevent the consummation of the transactions
contemplated hereby or which would be reasonably likely to adversely affect the
Company's ability to consummate the transactions contemplated hereby or which
would have a Material Adverse Effect, except as disclosed in the SEC reports (as
defined below);
<PAGE>
(e) Extent of Offering. Subject in part to the truth and accuracy of the
undersigned's representations set forth in Section 2 of this Subscription
Agreement and the compliance by all agents of the Company with Rule 503(c) of
Regulation D ("Regulation D") promulgated under the Securities Act of 1933, as
amended (the "Securities Act"), the offer, sale and issuance of the shares of
Common Stock as contemplated by this Subscription Agreement (the "Shares") are
exempt from the registration requirements of the Securities Act and are exempt
or the Company has complied with registration requirements of each state where
the Shares are offered or sold, and the Company will not take any action
hereafter that would cause the loss of such exemption or registration;
(f) Accuracy of Reports and Information. The Company is in full compliance,
to the extent applicable, with all reporting obligations under Section 12(b), 12
(g) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). The Company has registered its Common Stock pursuant to
Section 12 of the Exchange Act and the Common Stock is listed and trades on the
Nasdaq SmallCap Market. The Company has filed all material required to be filed
pursuant to all reporting obligations, under either Section 13(a) or 15(d) of
the Exchange Act for a period of at least twelve (12) months immediately
preceding the offer or sale of the Shares.
(g) SEC Filings/Full Disclosure. None of the Company's filings with the
Securities and Exchange Commission since January 1, 1998 contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein in light of the
circumstances under which they were made, not misleading. The Company has, since
January 1, 1997, timely filed all requisite forms, reports and exhibits thereto
with the Securities and Exchange Commission ("SEC"). The Company's Annual Report
on Form 10-KSB for the year ended December 31, 1997 (the "1997 10-K"), and all
Current Reports on Form 8-K filed by the Company from January 1, 1998 to date
are referred to as the "SEC Reports."
There is no fact known to the Company (other than general economic
conditions known to the public generally) that has not been disclosed in writing
to the Purchaser which could reasonably be expected to materially and adversely
affect the ability of the Company to perform its obligations pursuant to this
Agreement.
(h) Absence of Undisclosed Liabilities. The Company has no material
liabilities or obligations, absolute or contingent (individually or in the
aggregate), except as set forth in the financial statements included in the SEC
Reports (collectively, the "Financial Statements") or as incurred in the
ordinary course of business after the date of the Financial Statements.
(i) Governmental Consent, etc. No consent, approval or authorization of or
designation, declaration or filing with any governmental authority on the part
of the Company is required in connection with the valid execution and delivery
of this Agreement, or the offer, sale or issuance of the Shares, or the
consummation of any other transaction contemplated hereby, except the filing
with the SEC of a registration statement on Form S-3 for the purpose of
registering the Shares and any state securities laws filings or registrations.
(j) Intellectual Property Rights. Except as disclosed in the SEC Reports,
the Company has sufficient trademarks, trade names, patent rights, copyrights
and licenses to conduct its business
<PAGE>
as contemplated therein. To the Company's knowledge, neither the Company
nor its products is infringing or will infringe any trademark, trade name,
patent right, copyright, license, trade secret or other similar right of others
currently in existence; and there is no claim being made against the Company
regarding any trademark, trade name, patent, copyright, license, trade secret or
other intellectual property right which could have a material adverse effect on
the condition (financial or otherwise), business, results of operations or
prospects of the Company.
(k) Material Contracts. Except as set forth in the SEC Reports or disclosed
to the Purchaser, the agreements to which the Company is a party described
therein are valid agreements, in full force and effect, the Company is not in
material breach or material default (with or without notice or lapse of time, or
both) under any of such agreements, and, to the Company's knowledge, the other
contracting party or parties thereto are not in material breach or material
default (with or without notice or lapse of time, or both) under any of such
agreements.
(l) Title to Assets. Except as set forth in SEC Reports, the Company has
good and marketable title to all properties and material assets described
therein as owned by it, free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest other than such as are not material to
the business of the Company.
(m) Subsidiaries. The Company does not presently own or control, directly
or indirectly, any interest in any other corporation, partnership, association
or other business entity, except as stated in the SEC Reports.
(n) Required Governmental Permits. The Company is in possession of and
operating in compliance with all authorizations, licences, certificates,
consents, orders and permits from state, federal and other regulatory
authorities which are material to the conduct of its business, all of which are
valid and in full force and effect.
(o) Listing. The Company will use its reasonable best efforts to maintain
the listing of its Common Stock on the Nasdaq SmallCap Market or other
organized, comparable United States market or quotation system.
(p) No Issuances Since December 31, 1997. Since December 31, 1997, the
Company has not issued any shares of Common Stock, other than (a) pursuant to
the exercise of stock options under the Company's existing stock option or
long-term incentive plans (b) 160,000 shares of Common Stock issued to Boru
Enterprises, Inc. or (c) as disclosed in its SEC Reports. As of the date hereof,
the Company has 9,042,958 shares of Common Stock issued and outstanding.
(q) Use of Proceeds. The Company represents that the net proceeds from this
offering will be used to fund the Company's working capital and general
corporate purposes.
2. Representations, Warranties and Covenants of the Undersigned. The
undersigned hereby represents, warrants and acknowledges to and covenants and
agrees with the Company as follows:
<PAGE>
(a) Status. If the undersigned is a corporation or other entity, the
undersigned is a corporation or other entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization with
full power and authority to execute, deliver and perform its obligations under
this Subscription Agreement; and, if the undersigned is an individual or are
individuals, the undersigned has legal capacity to execute, deliver and perform
his, her or their obligations under this Subscription Agreement;
(b) Authority for Agreements. The undersigned has the power and authority
to execute and deliver this Subscription Agreement and to carry out the
undersigned's obligations hereunder; and the execution, delivery and performance
by the undersigned of this Subscription Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of the undersigned and this Subscription Agreement
constitutes the valid and legally binding obligation of the undersigned,
enforceable against the undersigned in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditors' rights generally now or hereafter in
effect and subject to the application of equitable principles and the
availability of equitable remedies;
(c) Consents and Approvals, No Conflicts.
(i) The execution and delivery of this Subscription Agreement by the
undersigned do not, and the performance by the undersigned of undersigned's
obligations hereunder will not, require any consent, approval,
authorization or other action by, or filing with or notification to, any
governmental or regulatory authority, except where failure to obtain such
consent, approval, authorization or action, or to make such filing or
notification, would not prevent the undersigned from performing any of
undersigned's material obligations under this Subscription Agreement; and
(ii) The execution, delivery and performance of this Subscription
Agreement by the undersigned and the other agreements and agreements to be
executed, delivered and performed by the undersigned pursuant hereto and
the consummation of the transactions contemplated hereby and thereby by the
undersigned do not and will not conflict with, violate or result in a
breach or termination of any provision of, or constitute a default under
(or event which with the giving of notice or lapse of time, or both, would
become a default under) the Certificate of Incorporation or By-laws of the
undersigned (if the undersigned is a corporation), any other organizational
instrument (if the undersigned is a legal entity other than a corporation),
or, except as would not prevent the undersigned from performing any of
undersigned's material obligations under this Subscription Agreement and
would not have a Material Adverse Effect, any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award applicable to
the undersigned or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of any lien or
encumbrance on any of the assets or properties of the undersigned pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument relating to such assets or
properties to which the undersigned is a party or by which any of such
assets or properties is bound;
<PAGE>
(d) Investment Intent. The undersigned is acquiring the Shares for the
undersigned's own account, for investment only and not with a view to, or for
sale in connection with, a distribution thereof, within the meaning of the
Securities Act, and the rules and regulations promulgated thereunder, or any
applicable state securities or blue-sky laws;
(e) Investor Status. Either (i) the undersigned is an accredited investor
as such term is defined under Regulation D promulgated pursuant to the
Securities Act ("Regulation D") for the reason(s) as set forth in the Execution
Section of this Subscription Agreement or (ii) if not an accredited investor,
all the information which is set forth with respect to the undersigned in the
Qualified Purchaser Questionnaire executed by the undersigned and delivered to
the Company which is incorporated herein by this reference thereto, and, in
either event, all of the representations and warranties of the undersigned set
forth herein, are correct and complete as of the date of this Subscription
Agreement, shall be true and correct as of the Closing Date and shall survive
such closing; and if there should by any material change in such information
prior to the sale to the undersigned of the Shares, the undersigned will
immediately furnish such revised or corrected information to the Company;
(f) Intent to Transfer. The undersigned is not a party or subject to or
bound by any contract, undertaking, agreement or arrangement with any person to
sell, transfer or pledge the Shares or any part thereof to any person, and has
no present intention to enter into such a contract, undertaking, agreement or
arrangement;
(g) Receipt of Disclosures. The undersigned acknowledges receipt of copies
of the Company's Annual Report on Form 10-KSB for the fiscal year ended December
31, 1997, and the Company's Current Reports on Form 8-K filed since January 1,
1998;
(h) Offering Exempt from Registration; Company's Reliance.
(i) The Company has advised the undersigned that the Shares have not
been registered under the Securities Act or under the laws of any state on
the basis that the issuance thereof is exempt from such registration;
(ii) The Company's reliance on the availability of such exemption is,
in part, based upon the accuracy and truthfulness of the undersigned's
representations contained herein; and
(iii) As a result of such lack of registration, the Shares may not be
resold or otherwise transferred or disposed without registration pursuant
to or an exemption therefrom available under the Securities Act and such
state securities laws;
(iv) In furtherance of the provisions of this Paragraph 2(h), all of
the certificate(s) representing the Shares shall bear a restrictive legend
substantially in the following form:
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE
<PAGE>
SECURITIES ACT OF 1933, AS AMENDED. THESE SHARES HAVE BEEN ACQUIRED
FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE,
AND MAY NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SHARES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE
ISSUER OF THESE SHARES TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED
UNDER SUCH ACT AND SUCH STATE SECURITIES LAWS."
(i) Sophistication of the Undersigned. The undersigned has evaluated the
merits and risks of purchasing the Shares and has such knowledge and experience
in financial and business matters that the undersigned is capable of evaluating
the merits and risks of such purchase, is aware of and has considered the
financial risks and financial hazards of purchasing the Shares, and is able to
bear the economic risk of purchasing the Shares, including the possibility of a
complete loss with respect thereto;
(j) Access to Information. The undersigned has had access to such
information regarding the business and finances of the Company, and the offering
of the Shares, the receipt and careful reading of which is hereby acknowledged
by the undersigned, and has been provided the opportunity to discuss with the
Company's management the business, affairs and financial condition of the
Company and such other matters with respect to the Company as would concern a
reasonable person considering the transactions contemplated by this Subscription
Agreement and/or concerned with the operation of the Company including, without
limitation, pursuant to a meeting and/or discussions with management of the
Company;
(k) No Guarantees. That it never has been represented, guaranteed or
warranted to the undersigned by the Company, or any of its officers, directors,
agents, representatives or employees, or any other person, expressly or by
implication, that:
(i) Any gain will be realized by the undersigned from the
undersigned's investment in the Shares;
(ii) That there will be any approximate or exact length of time that
the undersigned will be required to remain as a holder of the Shares; or
(iii) That the past performance or experience on the part of the
Company, its predecessors or of any other person, will in any way indicate
any future results of the Company;
(l) No Other Representations, Warranties, Covenants or Agreements of the
Company. Except as set forth in this Subscription Agreement or the documents
referred to herein, the Company
<PAGE>
has not made any representation, warranty, covenant or agreement with
respect to the matters contained herein;
(m) High Degree of Investment Risk. That the purchase of the Shares
involves a high degree of risk and may result in a loss of the entire amount
invested; that the Company has limited working capital and limited sources of
financing available; that there is no assurance that the Company's operations
will be profitable in the future; and that there is no assurance that a public
market for shares of Common Stock will continue to exist;
(n) State of Residence or Principal Place of Business. The address set
forth at the bottom of this Subscription is the undersigned's true and correct
residence (if an individual) or principal place of business (if a corporation or
other non-individual entity), and the undersigned has no present intention of
becoming a resident, or relocating its principal place of business to, of any
other state or jurisdiction;
(o) No Purchaser Representative. The undersigned has not authorized any
person or institution to act as the undersigned's "purchaser representative" (as
such term is defined in Rule 501 of Regulation D) in connection with the
undersigned's subscription being made pursuant to this Subscription Agreement,
except as set forth in any Qualified Purchaser Questionnaire delivered by the
undersigned to the Company in connection herewith;
(p) No General Solicitation. The undersigned has not received any general
solicitation or general advertising regarding the purchase of any of the Shares;
and
(q) No Finder. There is no finder in connection with this transaction.
(r) No Insider Trading. The undersigned will not engage in any transaction
with respect to securities of the Company at any time if at the time of such
transaction the undersigned is aware of any material non-public information
relating to the Company or its securities.
3. Acceptance or Rejection of Subscription; Company Withdrawal of Offer. It
is understood and agreed that this Subscription Agreement is made subject to the
following terms and conditions:
(a) The Company shall have the right to accept or reject the Subscription
of the undersigned and this Subscription Agreement, in whole or in part, for any
reason, including, but not limited to, ineligibility of the undersigned under
the applicable Federal, state or foreign securities laws, for any other reason,
or for no reason;
(b) If the subscription of the undersigned is rejected, in whole or part,
any funds representing the Subscription Price previously delivered to the
Company will be returned to the undersigned without interest or penalty;
(c) If the subscription of the undersigned is accepted in part and rejected
in part, the undersigned will be so notified, at which time the excess
Subscription Price previously delivered to the Company shall promptly be
returned to the undersigned without interest or penalty;
<PAGE>
(d) If the Company's offer of the Shares is withdrawn for any reason
whatsoever, the undersigned will promptly receive a full refund of the
Subscription Price, without interest or penalty, and will have no further
liability to the Company in connection with the Company's offer of the Shares,
and the Company will have no further liability to the undersigned.
4. Registration Rights.
4.1. Definitions.
(a) Defined Terms. As used in this Section 4, terms defined in the preamble
and forepart hereof and elsewhere herein shall have their assigned meanings and
each of the following terms shall have the following meanings (such definitions
to be applicable to both the plural and singular of the terms defined):
(i) Registerable Securities. The term "Registerable Securities" shall
mean the Shares, including, in each case, any shares of Common Stock or other
securities received in connection with any stock split, stock divided, merger,
reorganization, recapitalization, reclassification or other distribution payable
or issuable upon shares of Common Stock. For the purposes of this Agreement,
securities will cease to be Registerable Securities when (A) a registration
statement under the Securities Act of 1933, as amended (the "Securities Act"),
covering such Registerable Securities has been declared effective and such
Registerable Securities have been disposed of pursuant to such effective
registration statement, (B) such Registerable Securities are distributed to the
public pursuant to the Securities Act or pursuant to an exemption from the
registration requirements of the Securities Act, including, but not limited to,
Rules 144 and 144A promulgated under the Securities Act, or (C) such
Registerable Securities have been otherwise transferred and the Company, in
accordance with applicable law and regulations, has delivered new certificates
or other evidences of ownership for such securities which are not subject to any
stop transfer order or other restriction on transfer.
(ii) Rightsholders. The term "Rightsholders" shall include the
undersigned, all successors and assigns of the undersigned, and all
transferees of Registerable Securities where such transfer affirmatively
includes the transfer and assignment of the rights of the transferor
Rightsholder under this Agreement with respect to the transferred Registerable
Securities; provided, however, the term "Rightsholders" shall not include any
person or entity who has sold, transferred or assigned all of such person's
or entity's Registerable Securities.
(b) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Section 4 shall refer to this Section 4 as a whole and
not to any particular provision of this Section 4, and subsection, paragraph,
clause, schedule and exhibit references are to this Section 4 unless otherwise
specified.
4.2. Demand Registration.
(a) Right to Demand. Subject to Paragraph 4.2(b) hereof, at any time after
the date of this Agreement and on or prior to three years from the date of this
Agreement, the Initiating Holders
<PAGE>
(as defined in paragraph 4.2(f) below) may make a written request (each, a
"Demand Request") to the Company for registration under the Securities Act of
all or part of their Registerable Securities (each, a "Demand Registration").
Within ten days after receipt of a Demand Request, the Company shall deliver a
written notice (the "Notice") of such Demand Request to all other Rightsholders.
The Company will include in such Demand Registration all Registerable Securities
with respect to which the Company has been given written requests (each,
"Tag-Along Request") for inclusion therein within twenty days after the giving
of the Notice. Each and every Demand Request shall be required to specify the
aggregate amount of the Registerable Securities to be included in such Demand
Registration, the amount of Registerable Securities to be registered for each of
the Initiating Holders and the intended method(s) of disposition thereof,
including whether or not such Demand Registration or portion thereof is to
relate to an underwritten offering, the name of the managing underwriter(s), if
any, and the terms of any such underwriting. Each and every Tag-Along Request
shall be required to specify the amount of Registerable Securities to be
registered in the Demand Registration and the intended method(s) of disposition
thereof, including whether or not the Registerable Securities subject to such
Tag-Along Request or portion thereof is to relate to an underwritten offering,
the name of the managing underwriter(s), if any, and the terms of any such
underwriting.
(b) Number of Demand Registrations; Expenses. Subject to the provisions of
Paragraph 4.2(c) hereof, the holders of Registerable Securities shall be
entitled, in the aggregate, to one Demand Registration, the Registration
Expenses (as defined in Section 4.5 hereof) of which, subject to the provisions
of Section 4.5, shall be borne by the Company. The Company shall not be deemed
to have effected a Demand Registration unless and until such Demand Registration
is declared effective.
(c) Priority on Demand Registrations.
(i) Whenever the Company shall effect a Demand Registration in
connection with an underwritten offering by one or more Initiating Holders,
no other securities, including other Registerable Securities shall be included
in such Demand Registration, unless (A) the managing underwriter(s) with respect
to such Demand Registration shall have advised the Company and each Initiating
Holder whose Registerable Securities were included in the Demand Request, in
writing, that the inclusion of such other securities would not adversely
affect such underwritten offering or (B) each of the Initiating Holders shall
each have consented in writing to the inclusion of such other securities. In
the event of such written advice of the managing underwriter(s) or unanimous
consent of such Initiating Holders, the Company will include in such Demand
Registration securities in the following order of priority until the maximum
number of securities included in the written advice of the managing
underwriter(s) or unanimous consent of such Initiating Holders shall be
reached: (A) first, pro rata (based upon the amount of Registerable Securities)
among the Registerable Securities included in the Demand Request which are
subject to the underwritten offering, (B) second, pro rata (based upon the
amount of Registerable Securities) among the Registerable Securities of the
Rightsholders who have given a Tag-Along Request with respect to such Demand
Registration where the method of distribution shall be pursuant to an
underwritten offering, (C) third, pro rata (based upon the amount of
Registerable Securities) among all other Registerable Securities included in
the Demand Request and Tag-Along Request(s) and (D) fourth, pro rata (based upon
the
<PAGE>
amount of securities owned which carry registration rights) among all other
securities to which the Company has granted registration rights and for which
a request for inclusion in the Demand Registration shall have been made.
(ii) Whenever the Company shall effect a Demand Registration in
connection with an offering of Registerable Securities of Initiating Holders for
which the intended method(s) of distribution shall not include an underwritten
offering, and the holders of a majority of the Registerable Securities which
were subject to the Demand Request shall advise the Company in writing that in
the opinion of such Initiating Holders the number of securities proposed to be
sold in such Demand Registration would adversely affect such offering, the
Company will include in such Demand Registration securities in the following
order of priority until the maximum number of securities included in the written
advice of such Initiating Holders shall be reached: (A) first, pro rata (based
upon the amount of Registerable Securities) among the Registerable Securities
included in the Demand Request, (B) second, pro rata (based upon the amount of
Registerable Securities) among the Registerable Securities of the Rightsholders
who have given a Tag-Along Request with respect to such Demand Registration
where the method of distribution shall be pursuant to an underwritten offering,
(C) third, pro rata (based upon the amount of Registerable Securities) among all
other Registerable Securities included in the Demand Request and Tag-Along
Request(s) and (D) fourth, pro rata (based upon the amount of securities owned
which carry registration rights) among all other securities to which the Company
has granted registration rights and for which a request for inclusion in the
Demand Registration shall have been made.
(iii) In the event that Initiating Holders and other Rightsholders who
have given a Tag-Along Request are unable to have registered the full amount of
Registerable Securities which they requested to be registered pursuant to a
Demand Request or Tag-Along Request, pursuant to the provisions of this Section
4.2, such Initiating Holders and other Rightsholders shall retain the right to
one Demand Registration with respect to such unregistered Registerable
Securities subject to such Demand Request and Tag-Along Request.
(d) Delay in Effecting Demand Registration. Notwithstanding anything in the
foregoing to the contrary, the Company shall not be obligated to effect a Demand
Registration at any time when the Company, in the good faith judgment of its
Board of Directors made no later than 30 days after the giving of the Demand
Request with respect to such Demand Registration, reasonably believes that the
filing thereof at the time requested, or the offering of securities pursuant
thereto, would be detrimental to the interests of Company or its stockholders.
The effectuation of a Demand Registration cannot be suspended, pursuant to the
provisions of the preceding sentence, for more than 120 days after the date of
the Board's determination referenced in the preceding sentence.
(e) Approval of Underwriter by the Company and Placement Agent. If the
Demand Registration is to involve an underwritten offering, the managing
underwriter(s) and each selling agent selected by those Rightsholders
participating in each such underwritten offering shall be subject to the written
approval of the Company, which approval may not be unreasonably withheld.
<PAGE>
(f) "Initiating Holders" Defined. For purposes of this Agreement, the term
"Initiating Holders" shall mean, on any given date, those Rightsholders holding
Registerable Securities which would aggregate 50% or more of total Registerable
Securities that are outstanding on such date.
4.3. Piggy-Back Registration.
(a) If, at any time on or after the date hereof and on or prior to three
years from the date of this Agreement, the Company proposes to file a
registration statement under the Securities Act with respect to an offering by
the Company or any other party of any class of equity security similar to any
Registerable Securities (other than a registration statement on Form S-4 or S-8
or any successor form or a registration statement filed solely in connection
with an exchange offer, a business combination transaction or an offering of
securities solely to the existing stockholders or employees of the Company),
then the Company, on each such occasion, shall give written notice (each, a
"Company Piggy-Back Notice") of such proposed filing to all of the Rightsholders
owning Registerable Securities at least 30 days before the anticipated filing
date of such registration statement, and such Company Piggy-Back Notice also
shall be required to offer to such Rightsholders the opportunity to register
such aggregate number of Registerable Securities as each such Rightsholder may
request. Each such Rightsholder shall have the right, exercisable for the twenty
days immediately following the giving of the Company Piggy-Back Notice, to
request, by written notice (each, a "Holder Notice") to the Company, the
inclusion of all or any portion of the Registerable Securities of such
Rightsholders in such registration statement. The Company shall use reasonable
efforts to cause the managing underwriter(s) of a proposed underwritten offering
to permit the inclusion of the Registerable Securities which were the subject of
all Holder Notices in such underwritten offering on the same terms and
conditions as any similar securities of the Company included therein.
Notwithstanding anything to the contrary contained in this Paragraph 4.3(a), if
the managing underwriter(s) of such underwritten offering (or, in the case of an
offering not being underwritten, the Company) delivers a written opinion (or, in
the case of the Company, a resolution of its Board of Directors certified by the
President or Secretary of the Company) to the Rightsholders of Registerable
Securities which were the subject of all Holder Notices that the total amount
and kind of securities which they, the Company and any other person intend to
include in such offering is such as to materially and adversely affect the
success of such offering, then the amount of securities to be offered for the
accounts of such Rightsholders and persons other than the Company shall be
eliminated or reduced pro rata (based on the amount of securities owned which
carry registration rights) to the extent necessary to reduce the total amount of
securities to be included in such offering to the amount recommended by such
managing underwriter(s) in its written opinion (or the Board of Directors in its
resolution).
(b) Number of Piggy-Back Registrations; Expenses. The obligations of the
Company under this Section 4.3 shall be unlimited with respect to each
Rightsholder. Subject to the provisions of Section 4.5 hereof, the Company will
pay all Registration Expenses in connection with any registration of
Registerable Securities effected pursuant to this Section 4.3, but the Company
shall not be responsible for the payment of any underwriter's discount,
commission or selling concession in connection therewith.
<PAGE>
(c) Withdrawal or Suspension of Registration Statement. Notwithstanding
anything contained to the contrary in this Section 4.3, the Company shall have
the absolute right, whether before or after the giving of a Company Piggy-Back
Notice or Holder Notice, to determine not to file a registration statement to
which the Rightsholders shall have the right to include their Registerable
Securities therein pursuant to this Section 4.3, to withdraw such registration
statement or to delay or suspend pursuing the effectiveness of such registration
statement. In the event of such a determination after the giving of a Company
Piggy-Back Notice, the Company shall give notice of such determination to all
Rightsholders and, thereupon, (i) in the case of a determination not to register
or to withdraw such registration statement, the Company shall be relieved of its
obligation under this Section 4.3 to register any of the Registerable Securities
in connection with such registration, and (ii) in the case of a determination to
delay the registration, the Company shall be permitted to delay or suspend the
registration of Registerable Securities pursuant to this Section 4.3 for the
same period as the delay in the registration of such other securities. No
registration effected under this Section 4.3 shall relieve the Company of its
obligation to effect any registration upon demand otherwise granted to a
Rightsholder under Section 4.2 hereof or any other agreement with the Company.
4.4. Registration Procedures.
(a) Obligations of the Company. The Company will, in connection with any
registration pursuant to Section 4.2 or 4.3 hereof, as expeditiously as
possible:
(i) prepare and file with the Securities and Exchange Commission (the
"Commission") a registration statement under the Securities Act on any
appropriate form chosen by the Company, in its sole discretion, which shall be
available for the sale of all Registerable Securities in accordance with the
intended method(s) of distribution thereof set forth in all applicable Demand
Requests, Tag-Along Requests and Holder Notices, and use its commercially
reasonable best efforts to cause such registration statement to become effective
as soon thereafter as reasonably practicable; provided, that, at least five
business days before filing with the Commission of such registration statement,
the Company shall furnish to each Rightsholder whose Registerable Securities are
included therein draft copies of such registration statement, including all
exhibits thereto and documents incorporated by reference therein, and, upon the
reasonable request of any such Rightsholder, shall continue to provide drafts of
such registration statement until filed, and, after such filing, the Company
shall, as diligently as practicable, provide to each such Rightsholders such
number of copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement (including each
preliminary prospectus), all exhibits thereto and documents incorporated by
reference therein and such other documents as such Rightsholder may reasonably
request in order to facilitate the disposition of the Registerable Securities
owned by such Rightsholder and included in such registration statement;
provided, further, the Company shall modify or amend the registration statement
as it relates to such Rightsholder as reasonably requested by such Rightsholder
on a timely basis, and shall reasonably consider other changes to the
registration statement (but not including any exhibit or document incorporated
therein by reference) reasonably requested by such Rightsholder on a timely
basis, in light of the requirements of the Securities Act and any other
applicable laws and regulations; and provided, further, that the obligation of
the Company to effect such registration and/or cause such registration
<PAGE>
statement to become effective, may be postponed for (A) such period of time
when the financial statements of the Company required to be included in such
registration statement are not available (due solely to the fact that such
financial statements have not been prepared in the regular course of business of
the Company) or (B) any other bona fide corporate purpose, but then only for a
period not to exceed 90 days;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to a registration statement as may be necessary to
keep such registration statement effective for up to nine months; and cause the
related prospectus to be supplemented by any required prospectus supplement, and
as so supplemented to be filed to the extent required pursuant to Rule 424
promulgated under the Securities Act, during such nine month period; and
otherwise comply with the provisions of the Securities Act with respect to the
disposition of all Registerable Securities covered by such registration
statement during the applicable period in accordance with the intended method(s)
of disposition of such Registerable Securities set forth in such registration
statement, prospectus or supplement to such prospectus;
(iii) notify the Rightsholders whose Registerable Securities are
included in such registration statement and the managing underwriter(s), if any,
of an underwritten offering of any of the Registerable Securities included in
such registration statement, and confirm such advice in writing, (A) when a
prospectus or any prospectus supplement or post-effective amendment has been
filed, and, with respect to a registration statement or any post-effective
amendment, when the same has become effective, (B) of any request by the
Commission for amendments or supplements to a registration statement or related
prospectus or for additional information, (C) of the issuance by the Commission
of any stop order suspending the effectiveness of a registration statement or
the initiation of any proceedings for that purpose, (D) if at any time the
representations and warranties of the Company contemplated by clause (A) of
Paragraph 4.4(a)(x) hereof cease to be true and correct, (E) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of any of the Registerable Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose and (F) of
the happening of any event which makes any statement made in the registration
statement, the prospectus or any document incorporated therein by reference
untrue or which requires the making of any changes in the registration statement
or prospectus so that such registration statement, prospectus or document
incorporated by reference will not contain any untrue statement of material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading;
(iv) make reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of such registration statement at the earliest
possible moment and to prevent the entry of such an order;
(v) use reasonable efforts to register or qualify the Registerable
Securities included in such registration statement under such other securities
or blue sky laws of such jurisdictions as any Rightsholder whose Registrable
Securities are included in such registration statement reasonably requests in
writing and do any and all other acts and things which may be necessary or
advisable to enable such Rightsholder to consummate the disposition in such
jurisdictions of such Registerable Securities; provided, that the Company will
not be required to (A)
<PAGE>
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Paragraph 4.4(a)(v), (B) subject
itself to taxation in any such jurisdiction or (C) take any action which would
subject it to general service of process in any such jurisdiction;
(vi) make available for inspection by each Rightsholder whose
Registerable Securities are included in such registration, any underwriter(s)
participating in any disposition pursuant to such registration statement, and
any representative, agent or employee of or attorney or accountant retained by
any such Rightsholder or underwriter(s) (collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents and properties of the
Company (collectively, the "Records") as shall be reasonably necessary to enable
them to exercise their due diligence responsibility (or establish a due
diligence defense), and cause the officers, directors and employees of the
Company to supply all information reasonably requested by any such Inspector in
connection with such registration statement; provided, that records which the
Company determines, in good faith, to be confidential and which it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors, unless (A)
the release of such Records is ordered pursuant to a subpoena or other order
from a court of competent jurisdiction or (B) the disclosure of such Records is
required by any applicable law or regulation or any governmental regulatory body
with jurisdiction over such Rightsholder or underwriter; provided, further, that
such Rightsholder or underwriter(s) agree that such Rightsholder or
underwriter(s) will, upon learning the disclosure of such Records is sought in a
court of competent jurisdiction, give notice to the Company and allow the
Company, at the Company's expense, to undertake appropriate action to prevent
disclosure of the Records deemed confidential;
(vii) cooperate with the Rightsholder whose Registerable Securities
are included in such registration statement and the managing underwriter(s), if
any, to facilitate the timely preparation and delivery of certificates
representing Registerable Securities to be sold thereunder, not bearing any
restrictive legends, and enable such Registerable Securities to be in such
denominations and registered in such names as such Rightsholder or any managing
underwriter(s) may reasonably request at least two business days prior to any
sale of Registerable Securities;
(viii) comply with all applicable rules and regulations of the
Commission and promptly make generally available to its security holders an
earnings statement covering a period of twelve months commencing, (A) in an
underwritten offering, at the end of any fiscal quarter in which Registerable
Securities are sold to underwriter(s), or (B) in a non-underwritten offering,
with the first month of the Company's first fiscal quarter beginning after the
effective date of such registration statement, which earnings statement in each
case shall satisfy the provisions of Section 11(a) of the Securities Act;
(ix) provide a CUSIP number for all Registerable Securities not later
than the effective date of the registration statement relating to the first
public offering of Registerable Securities of the Company pursuant hereto;
(x) enter into such customary agreements (including an underwriting
agreement in customary form) and take all such other actions reasonably
requested by the Rightsholders holding a majority of the Registerable Securities
included in such registration statement or the managing
<PAGE>
underwriter(s) in order to expedite and facilitate the disposition of such
Registerable Securities and in such connection, whether or not an underwriting
agreement is entered into and whether or not the registration is an underwritten
registration, (A) make such representations and warranties, if any, to the
holders of such Registerable Securities and any underwriter(s) with respect to
the registration statement, prospectus and documents incorporated by reference,
if any, in form, substance and scope as are customarily made by issuers to
underwriter(s) in underwritten offerings and confirm the same if and when
requested, (B) obtain opinions of counsel to the Company and updates thereof
addressed to each such Rightsholder and the underwriter(s), if any, with respect
to the registration statement, prospectus and documents incorporated by
reference, if any, covering the matters customarily covered in opinions
requested in underwritten offerings and such other matters as may be reasonably
requested by such Rightsholders and underwriter(s), (C) obtain a "cold comfort"
letter and updates thereof from the Company's independent certified public
accountants addressed to such Rightsholders and to the underwriter(s), if any,
which letters shall be in customary form and cover matters of the type
customarily covered in "cold comfort" letters by accountants in connection with
underwritten offerings, and (D) deliver such documents and certificates as may
be reasonably requested by the Rightsholders holding a majority of such
Registerable Securities and managing underwriter(s), if any, to evidence
compliance with any customary conditions contained in the underwriting agreement
or other agreement entered into by the Company; each such action required by
this Paragraph 4.4(a)(x) shall be done at each closing under such underwriting
or similar agreement or as and to the extent required thereunder; and
(xi) if requested by the holders of a majority of the Registerable
Securities included in such registration statement, use its best efforts to
cause all Registerable Securities which are included in such registration
statement to be listed, subject to notice of issuance, by the date of the first
sale of such Registerable Securities pursuant to such registration statement, on
each securities exchange, if any, on which securities similar to the Registered
Securities are listed.
(b) Obligations of Rightsholders. In connection with any registration of
Registerable Securities of a Rightsholder pursuant to Section 4.2 or 4.3 hereof:
(i) The Company may require that each Rightsholder whose Registerable
Securities are included in such registration statement furnish to the Company
such information regarding the distribution of such Registerable Securities and
such Rightsholder as the Company may from time to time reasonably request in
writing; and
(ii) Each Rightsholder, upon receipt of any notice from the Company of
the happening of any event of the kind described in clauses (B), (C), (E) and
(F) of Paragraph 4.4(a)(iii) hereof, shall forthwith discontinue disposition of
Registerable Securities pursuant to the registration statement covering such
Registerable Securities until such Rightsholder's receipt of the copies of the
supplemented or amended prospectus contemplated by clause (A) of Paragraph
4.4(a)(iii) hereof, or until such Rightsholder is advised in writing (the
"Advice") by the Company that the use of the applicable prospectus may be
resumed, and until such Rightsholder has received copies of any additional or
supplemental filings which are incorporated by reference in or to be attached to
or included with such prospectus, and, if so directed by the Company, such
Rightsholder will deliver to the Company (at the expense of the Company) all
copies, other than permanent file copies then
<PAGE>
in the possession of such Rightsholder, of the current prospectus covering
such Registerable Securities at the time of receipt of such notice; the Company
shall have the right to demand that such Rightsholder or other holder verify its
agreement to the provisions of this Paragraph 4.4(b)(ii) in any Demand Request,
Tag-Along Request or Holder Notice of the Rightsholder or in a separate document
executed by the Rightsholder.
4.5. Registration Expenses. All expenses incident to the performance of or
compliance with this Agreement by the Company, including without imitation, all
registration and filing fees of the Commission, the National Association of
Securities Dealers, Inc. and other agencies, fees and expenses of compliance
with securities or blue sky laws (including reasonable fees and disbursements of
counsel in connection with blue sky qualifications of the Registerable
Securities), rating agency fees, printing expenses, messenger and delivery
expenses, internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the fees and expenses incurred in connection with the listing, if any, of the
Registerable Securities on any securities exchange and fees and disbursements of
counsel for the Company and the Company's independent certified public
accountants (including the expenses of any special audit or "cold comfort"
letters required by or incidental to such performance), Securities Act or other
liability insurance (if the Company elects to obtain such insurance), the fees
and expenses of any special experts retained by the Company in connection with
such registration and the fees and expenses of any other person retained by the
Company (but not including any underwriting discounts or commissions
attributable to the sale of Registerable Securities or other out-of-pocket
expenses of the Rightsholders, or the agents who act on their behalf, unless
reimbursement is specifically approved by the Company) will be borne by the
Company. All such expenses are herein referred to as "Registration Expenses."
Notwithstanding the foregoing, the Company shall not be required to pay for any
Registration Expenses of any Demand Registration if such Demand Request is
subsequently withdrawn at the request of the holders of a majority of the
Registerable Securities included in such Demand Registration (in which case all
Rightsholders which requested the withdrawal of the Demand Registration shall
bear such expenses pro rata); provided that, if, at the time of such withdrawal,
such Rightsholders have learned of a material adverse change in the condition,
business or prospects of the Company from that known to such Rightsholders at
the time of their Demand Request, such Rightsholders shall not be required to
pay any of such expenses. In either event, if such Rightsholders pay in full the
expenses of such withdrawn Demand Registration, such Rightsholders shall retain
the right to one Demand Registration.
4.6. Indemnification: Contribution.
(a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless, to the full extent permitted by law, each Rightsholder, its
officers and directors and each person who controls such Rightsholder (within
the meaning of the Securities Act), if any, and any agent thereof against all
losses, claims, damages, liabilities and expenses incurred by such party
pursuant to any actual or threatened suit, action, proceeding or investigation
(including reasonable attorney's fees and expenses of investigation) arising out
of or based upon any untrue or alleged untrue statement of a material fact
contained in any registration statement, prospectus or preliminary prospectus or
any omission or alleged omission to state therein a material fact required to be
stated
<PAGE>
therein or necessary to make the statements therein (in the case of a
prospectus, in the light of the circumstances under which they were made) not
misleading, except insofar as the same arise out of or are based upon, any such
untrue statement or omission based upon information with respect to such
Rightsholder furnished in writing to the Company by such Rightsholder expressly
for use therein.
(b) Indemnification by Rightsholder. In connection with any registration
statement in which a Rightsholder is participating, each such Rightsholder will
be required to furnish to the Company in writing such information with respect
to such Rightsholder as the Company reasonably requests for use in connection
with any such registration statement or prospectus, and each Rightsholder agrees
to the extent it is such a holder of Registerable Securities included in such
registration statement, and each other such holder of Registerable Securities
included in such Registration Statement will be required to agree, to indemnify,
to the full extent permitted by law, the Company, the directors and officers of
the Company and each person who controls the Company (within the meaning of the
Securities Act) and any agent thereof, against any losses, claims, damages,
liabilities and expenses (including reasonable attorney's fees and expenses of
investigation incurred by such party pursuant to any actual or threatened suit,
action, proceeding or investigation arising out of or based upon any untrue or
alleged untrue statement of a material fact or any omission or alleged omission
of a material fact necessary, to make the statements therein (in the case of a
prospectus, in the light of the circumstances under which they are made) not
misleading, to the extent, but only to the extent, that such untrue statement or
omission is based upon information relating to such Rightsholder or other holder
furnished in writing to the Company expressly for use therein.
(c) Conduct of Indemnification Proceedings. Promptly after receipt by an
indemnified party under this Section 4.6 of written notice of the commencement
of any action, proceeding, suit or investigation or threat thereof made in
writing for which such indemnified party may claim indemnification or
contribution pursuant to this Agreement, such indemnified party shall notify in
writing the indemnifying party of such commencement or threat; but the omission
so to notify the indemnifying party shall not relieve the indemnifying party
from any liability which the indemnifying party may have to any indemnified
party (i) hereunder, unless the indemnifying party is actually prejudiced
thereby, or (ii) otherwise than under this Section 4.6. In case any such action,
suit or proceeding shall be brought against any indemnified party, and the
indemnified party shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and the
indemnifying party shall assume the defense thereof, with counsel reasonably
satisfactory to the indemnified party, and the obligation to pay all expenses
relating thereto. The indemnified party shall have the right to employ separate
counsel in any such action, suit or proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party has agreed to pay such
fees and expenses, (ii) the indemnifying party shall have failed to assume the
defense of such action, suit or proceeding or to employ counsel reasonably
satisfactory to the indemnified party therein or to pay all expenses relating
thereto or (iii) the named parties to any such action or proceeding (including
any impleaded parties) include both the indemnified party and the indemnifying
party and the indemnified party shall have been advised by counsel that there
may be one or more legal defenses available to the indemnified party which are
different from or additional
<PAGE>
to those available to the indemnifying party and which may result in a
conflict between the indemnifying party and such indemnified party (in which
case, if the indemnified party notifies the indemnifying party in writing that
the indemnified party elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such action or proceeding on behalf of the indemnified party; it
being understood, however, that the indemnifying party shall not, in connection
with any one such action, suit or proceeding or separate but substantially
similar or related actions, suits or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys at any time for
the indemnified party, which firm shall be designated in writing by the
indemnified party).
(d) Contribution. If the indemnification provided for in this Section 4.6
from the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits received by the indemnifying party on the one hand and the
indemnified party on the other but also the relative fault of the indemnifying
party and indemnified party, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and the
indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages. liabilities
and expenses referred to above shall be deemed to include, subject to the
limitation set forth in Section 4.6(e), any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Paragraph 4.6(d) were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to in clauses (i) and (ii) of the
immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) Limitation. Anything to the contrary contained in this Section 4.7 or
in Section 4.7 notwithstanding, no holder of Registerable Securities shall be
liable for indemnification and contribution payments aggregating an amount in
excess of the maximum amount received by such holder in connection with any sale
of Registerable Securities as contemplated herein.
4.7. Participation in Underwritten Registration. No Rightsholder may
participate in any underwritten registration hereunder unless such Rightsholder
(a) agrees to sell such holder's
<PAGE>
securities on the basis provided in any underwriting arrangements approved
by the persons entitled hereunder to approve such arrangements and to comply
with Rules 10b-6 and 10b-7 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and (b) completes and executes all questionnaires,
appropriate and limited powers of attorney, escrow agreements, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangement; provided, that all such documents shall be
consistent with the provisions of Section 4.5 hereof.
5. Further Assurances. At any time and from time to time after the date
hereof, the undersigned shall, without further consideration, execute and
deliver to the Company, or such other party as the Company may direct, such
other instruments or documents and shall take such other actions as the Company
may reasonably request to carry out the transactions contemplated by this
Subscription Agreement.
6. Indemnification. The undersigned acknowledges that the undersigned
understands the meaning and legal consequences of the representations,
warranties, covenants and agreements contained herein, and the undersigned
hereby agrees to indemnify and hold harmless the Company, and its directors,
officers, employees, agents and controlling persons, from and against any and
all loss, damage or liability due to or arising out of a breach by the
undersigned of any such representations, warranties, covenants and agreements
contained herein.
7. Miscellaneous. The Company and undersigned may waive compliance by the
other with any of the provisions of this Subscription Agreement. No waiver of
any provision shall be construed as a waiver of any other provision. Any waiver
must be in writing. The headings contained in this Subscription Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Subscription Agreement. This Subscription Agreement
constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof and may be amended only by a writing executed by all
parties. This Subscription Agreement may not be modified or amended except in
writing signed by both parties hereto. This Subscription Agreement may be
executed in several counterparts, each of which shall be deemed an original, and
all of which shall constitute one and the same instrument. This Subscription
Agreement shall be governed in all respects, including validity, interpretation
and effect, by the laws of the State of New York, without regard to its
conflicts of laws principles. This Subscription Agreement shall be binding upon
and inure to the benefit of and be enforceable by the successors and assigns of
the parties hereto. This Subscription Agreement shall not be assignable by
either party without the prior written consent of the other. The rights and
obligations contained in this Subscription Agreement are solely for the benefit
of the parties hereto and are not intended to benefit or be enforceable by any
other party, under the third party beneficiary doctrine or otherwise.
THE SECURITIES BEING OFFERED HEREBY HAVE NOT BEEN REGISTERED OR
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES REGULATORY AUTHORITY OF ANY STATE, NOR HAS THE COMMISSION OR ANY SUCH
AUTHORITY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS SUBSCRIPTION AGREEMENT OR
<PAGE>
THE AGREEMENTS AND DOCUMENTS REFERRED TO OR INCORPORATED BY REFERENCE HEREIN
(COLLECTIVELY, THE "OFFERING DOCUMENTS"). ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.
THE SECURITIES ARE BEING OFFERED BY THE COMPANY IN RELIANCE UPON AN
EXCEPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, WHICH
EXEMPTION DEPENDS UPON THE EXISTENCE OF CERTAIN FACTS INCLUDING, BUT NOT LIMITED
TO, THE REQUIREMENTS THAT THE SECURITIES ARE NOT BEING OFFERED THROUGH GENERAL
ADVERTISING OR GENERAL SOLICITATION, ADVERTISEMENTS OR COMMUNICATIONS IN
NEWSPAPERS, MAGAZINES OR OTHER MEDIA, OR BROADCASTS ON RADIO OR TELEVISION, AND
THAT THE OFFERING DOCUMENTS SHALL BE TREATED AS CONFIDENTIAL BY THE PERSONS TO
WHOM IT IS DELIVERED. ANY DISTRIBUTION OF THE OFFERING DOCUMENTS OR ANY PART
HEREOF OR DIVULGENCE OF ANY OF ITS CONTENTS SHALL BE UNAUTHORIZED.
IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THE SHARES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THE
OFFERING DOCUMENTS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. IN ADDITION, THE SHARES WILL BEAR A LEGEND TO SUCH EFFECT
AS SET FORTH HEREIN. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR
THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
IN WITNESS WHEREOF, the undersigned has duly executed this
Subscription Agreement as of the date set forth below the undersigned's
signature in the Execution Section below.
<PAGE>
EXECUTION SECTION FOR SUBSCRIPTION BY INDIVIDUALS
I. SUBSCRIPTION AMOUNT:
The undersigned subscribes to purchase the Shares set forth in the first
paragraph of this Agreement for the Subscription Price set forth therein.
II. SUBSCRIBER STATUS:
The undersigned is (check appropriate box and, if applicable, fill in state
with jurisdiction over custodial account):
_ INDIVIDUAL OWNER (One signature required below). Note: In community
property states, both spouses are required to sign below, whether or not
being listed as co-subscribers.
_ HUSBAND AND WIFE AS TENANTS BY THE ENTIRETY (Husband and wife are both
required to sign below).
_ TWO OR MORE INDIVIDUALS AS TENANTS IN COMMON (All tenants are required
to sign below).
_ TWO OR MORE INDIVIDUALS AS JOINT TENANTS WITH RIGHT OF SURVIVORSHIP
(All tenants are required to sign below).
_ CUSTODIAL ACCOUNT UNDER UNIFORM GIFTS TO MINORS ACT OF THE STATE OF
___________________________________________________ (Fill in state).
III. INFORMATION AS IT IS TO APPEAR ON THE COMPANY RECORDS:
Name of
Subscriber(s): (1) ____________________________________________________________
(2) ____________________________________________________________
Social Security Number (for use in all notifications
and reports to governmental taxing authorities): _______________________________
State(s) of Permanent Residence: (1) ________________________________________
(2) ________________________________________
<PAGE>
Mailing Address: ____________________________________________________________
____________________________________________________________
____________________________________________________________
Telephone Number: ____________________________________________________________
Facsimile Number: ____________________________________________________________
IV. INVESTOR STATUS (check all appropriate boxes):
A. The undersigned is an accredited investor, as such term is defined under
Regulation D, by reason of the fact that the undersigned is:
_ An individual whose net worth(1) (or joint net worth with my spouse,
if greater) exceeds $1,000,000.
_ An individual with income(2) in excess of $200,000, or joint income
together with my spouse in excess of $300,000, in each of the two
most recent years and reasonably expects to reach the same income
level in the current year.
_ A director or executive officer of the Company.
_ An entity in which all of the equity owners are accredited investors,
as defined in Regulation D. (The Company has the right to request the
names of each such accredited investor equity owners and to require
such person(s) to complete a Qualified Purchaser Questionnaire prior
to the Company's acceptance of the undersigned's subscription.)
_ B. The undersigned is not an accredited investor, as such term is defined
under Regulation D, and agrees, that upon the request of the Company, to
complete a Qualified Purchaser Questionnaire and return an executed copy thereof
to the Company.
__________________________________
1 For purposes hereof, net worth shall be deemed to include all of your
assets, liquid or illiquid (including such items as home, furnishings,
automobile and restricted securities) minus any liabilities (including such
items as home mortgages and other debts and liabilities).
2 For purposes hereof, the term "income" is not limited to "adjusted
gross income" as that term is defined for Federal Income tax purposes, but
rather includes certain items of income which are deducted in computing
"adjusted gross income." For investors who are salaried employees, the gross
salary of such investor, minus any significant expenses personally incurred by
such investor in connection with earning the salary, plus any income from any
other source, including unearned income, is a fair measure of "income" for
purposes hereof. For investors who are self-employed, "income is generally
construed to mean total revenues received during the calendar year minus
significant expenses incurred in connection with earning such revenues.
<PAGE>
V. SIGNATURE(S):
Signature(s) of Subscriber(s): (1) __________________________________________
(2) __________________________________________
Signature of Non-Subscribing Spouse (Community Property States Only):
(1) __________________________________________
(2) __________________________________________
Date: _______________________________________, 1998
<PAGE>
EXECUTION SECTION FOR SUBSCRIPTION BY NON-INDIVIDUALS
I. SUBSCRIPTION AMOUNT:
The undersigned subscribes to purchase the Shares set forth in the
first paragraph of this Agreement for the Subscription Price set forth therein.
II. SUBSCRIBER STATUS:
The undersigned is (check appropriate box and, if applicable, fill in
state with jurisdiction over custodial account):
_ CORPORATION (Please include certified corporate resolution authorizing
signature).
_ PARTNERSHIP.
_ TRUST.
_ OTHER (Including Employment Benefit Plans and Trusts, Individual
Retirement Accounts, and KEOUGH Plans).
III. INFORMATION AS IT IS TO APPEAR ON THE COMPANY RECORDS:
Name of
Subscriber: __________________________________________________________________
Tax Identification Number: _____________________________________________________
State of Incorporation or Organization: ________________________________________
State of Principal Place of Business: ________________________________________
Mailing Address: ____________________________________________________________
____________________________________________________________
____________________________________________________________
Telephone Number: ____________________________________________________________
Facsimile Number: ____________________________________________________________
<PAGE>
IV. INVESTOR STATUS (check all appropriate boxes and, if applicable,
provide all information requested):
A. The undersigned is an accredited investor, as such term is defined under
Regulation D, by reason of the fact that the undersigned is:
_ A bank as defined in Section 3(a)(2) of the Securities Act,
or any savings and loan association or other institution as defined in
Section 3(a)(5)(A) of the Securities Act whether acting in its
individual or fiduciary capacity; a broker or dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934 (the
"Exchange Act"); an insurance company as defined in Section 2(13) of
the Securities Act; an investment company registered under the
Investment Company Act of 1940 or a business development company as
defined in Section 2(a)(48) of that Act; a Small Business Investment
Company licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act of 1958; a
plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, and having
total assets in excess of $5,000,000; an employee benefit plan within
the meaning of the Employee Retirement Income Security Act of 1974
("ERISA") with investment decisions made by a plan fiduciary, as
defined in Section 3(21) of such Act, which is either a bank, savings
and loan association, insurance company or registered investment
adviser; an employee benefit plan within the meaning of ERISA and
having total assets in excess of $5,000,000.
_ An employee benefit plan within the meaning of ERISA which
is a self-directed plan, with investment decisions made solely by the
following persons who are accredited investors, as defined in
Regulation D:
______________________________________________________________________
______________________________________________________________________
_ A private business development company as defined in section
202(a)(22) of the Investment Advisers Act of 1940.
_ An organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar business
trust or partnership, not formed for the specific purpose of acquiring
the securities offered, with total assets in excess of $5,000,000.
<PAGE>
_ A trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring any shares of Common
Stock, whose purchase is directed by the following sophisticated
person meeting the description set forth in Rule 506(b)(2)(ii) of
Regulation D:
______________________________________________________________________
_ An entity in which all of the equity owners are accredited
investors, as defined in Regulation D. (The Company has the right to
request the names of each such accredited investor equity owners and
to require such person(s) to complete a Qualified Purchaser
Questionnaire prior to the Company's acceptance of the undersigned's
subscription.)
_ B. The undersigned is not an accredited investor, as such term is defined
under Regulation D, and agrees, that upon the request of the Company, to
complete a Qualified Purchaser Questionnaire and return an executed copy thereof
to the Company.
V. SIGNATURE(S)
The undersigned corporate officer, partner, trustee or fiduciary certifies
that the undersigned has full power and authority from all requisite
stockholders, partners, co-trustees, co-fiduciaries of the subscribing entity
named above to execute this Subscription Agreement on behalf of the subscribing
entity and to make the representations, warranties and agreements made herein on
its and their behalf and that investment in the Shares has been affirmatively
authorized by the governing board or body of such entity and is not prohibited
by law or the governing documents of the subscribing entity.
By: __________________________________ By: _____________________________________
(Signature of Authorized Signatory) (Signature of Authorized Co-Signatory)
__________________________________ _____________________________________
(Name of Authorized Signatory) (Name of Authorized Co-Signatory)
__________________________________ _____________________________________
(Title of Authorized Signatory) (Title of Authorized Co-Signatory)
Date: _______________________________________, 1998
<PAGE>
ACCEPTANCE PAGE
(To be completed by the Company)
SUBSCRIPTION AND SUBSCRIPTION AGREEMENT
ACCEPTED AND AGREED:
Number of Shares for which Subscription is Accepted: _______________
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
By: ____________________________________________________
Name:
Title:
Date: _______________________________________, 1998
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
3A Oak Road
Fairfield, New Jersey 07004
April 28, 1998
M.S. Farrell & Co., Inc.
M.S. Farrell Holdings, Inc.
67 Wall Street
New York, New York 10005
Gentlemen:
Notwithstanding the terms of the Financial Advisory Agreement between us
dated November 20, 1997, as amended (the "Agreement"), we hereby agree as
follows:
1. With respect to any funds raised for Software Publishing Corporation
Holdings, Inc. (the "Company") by MSF in connection with the offer and sale in
April or early May 1998 of the Company's common stock, par value $.001 per share
(the "Common Stock"), by Messrs. Michael Garnick, Arno Ruben (or any entities
affiliated with them) or any other investors introduced by MSF on which a
commission is payable (collectively the "Subscribers"), the subscription price
per share shall be $.43 and the commission or fee to be paid to MSF shall be
6.9% of the gross amount paid for the Common Stock sold to the Subscribers, so
that the Company receives $.40 per share net.
2. Any other subscription for Common Stock of the Company in connection
with which no commission fee shall be payable to MSF shall be at a price equal
to $.40 per share.
3. All warrants and options to purchase shares of Common Stock owned by
M.S. Farrell & Co., Inc. or M.S. Farrell Holdings, Inc. and the assignees
thereof shall have an exercise price of $1.06 per share as a result of the sale
of Common Stock to the Subscribers, pursuant to the terms of the Agreement. In
addition, pursuant to Section 5.7 of the warrants issued to M.S. Farrell
Holdings, Inc. and its assignees, the exercise price of all such warrants shall
hereafter be $1.0075 per share of Common Stock and the number of shares of
Common Stock issuable upon exercise thereof shall equal 1.1945 times the number
of shares of Common Stock issuable upon exercise thereof as set forth in the
terms thereof.
<PAGE>
4 No other compensation or remuneration, including any warrants or options,
shall be paid to MSF in connection with the above-described transactions.
If the above is your understanding of this Agreement, please sign on the
line where indicated below.
SOFTWARE PUBLISHING CORPORATION
HOLDINGS, INC.
By: /s/ Mark E. Leininger
Mark E. Leininger
President and Chief Operating Officer
Accepted and agreed to as
of the date first above written:
M.S. FARRELL & CO., INC.
By: /s/ Martin F. Schacker
Martin F. Schacker
Chairman
M.S. FARRELL HOLDINGS, INC.
By: /s/ Martin F. Schacker
Martin F. Schacker
Chairman
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED
FINANCIAL STATEMENTS FOR THE PERIOD ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-31-1998
<PERIOD-END> Mar-31-1998
<CASH> 1,924,550
<SECURITIES> 50,000
<RECEIVABLES> 1,741,599
<ALLOWANCES> 0
<INVENTORY> 538,818
<CURRENT-ASSETS> 4,544,845
<PP&E> 491,068
<DEPRECIATION> 0
<TOTAL-ASSETS> 9,533,115
<CURRENT-LIABILITIES> 6,768,684
<BONDS> 0
0
0
<COMMON> 9,043
<OTHER-SE> 2,596,750
<TOTAL-LIABILITY-AND-EQUITY> 9,533,115
<SALES> 3,923,446
<TOTAL-REVENUES> 3,923,446
<CGS> 957,644
<TOTAL-COSTS> 957,644
<OTHER-EXPENSES> 905,090
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (59,638)
<INCOME-PRETAX> (523,892)
<INCOME-TAX> 44,971
<INCOME-CONTINUING> (568,863)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (568,863)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
