SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 13(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 15, 1998
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-14076 22-3270045
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
3A Oak Road, Fairfield, New Jersey 07004
(Address of principal executive offices) (Zip Code)
(973) 808-1992
(Registrant's telephone number, including area code)
<PAGE>
Statements contained in this Current Report on Form 8-K 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 8-K 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. 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 5. Other Events" and in other sections of this Form 8-K. Readers
of this Form 8-K 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.
Item 5. Other Events.
In October 1998, a Nasdaq Listing Qualifications Panel (the "Panel") of The
Nasdaq Stock Market, Inc. ("Nasdaq") determined to continue the listing of the
common stock, par value $.001 per share (the "Common Stock") of the Company on
The Nasdaq SmallCap Market, subject to the condition that the Company make a
public filing with the Securities and Exchange Commission and Nasdaq on or prior
to December 15, 1998, indicating net tangible assets (including acquired
software costs) of not less than $3,500,000 as of October 31, 1998, adjusted on
a pro forma basis for any significant events or transactions occurring on or
before the filing date. The Company had $2,486,205 of net tangible assets
(including acquired software costs) as of September 30, 1998. The Panel has also
imposed on the Company the requirement that the bid price for the Company's
Common Stock meet or exceed $1.00 per share on or prior to January 21, 1999, and
thereafter have a closing bid price of $1.00 or more per share for a minimum of
ten consecutive trading days. Until such time as Nasdaq determines that the
Company meets such Panel's net tangible asset and bid price requirements, the
Nasdaq symbol for the Company's Common Stock will be SPCOC.
This Current Report on Form 8-K is being filed solely to demonstrate the
Company's compliance with the Panel's requirement that the Company make a public
filing with the Securities and Exchange Commission and Nasdaq evidencing a
minimum of $3,500,000 in net tangible assets. The following unaudited balance
sheet as of October 31, 1998 and the pro forma information set forth below have
been prepared solely for this purpose and should not be relied on for any other
purpose, including, without limitation, any evaluation of the Company's results
of operations for the fiscal quarter or fiscal year ended December 31, 1998 or
the Company's financial condition as of December 31, 1998. No assurance can be
given that the Company's results of operations for the periods ending and
financial condition at December 31, 1998 will not differ from that indicated
herein for the period ended October 31, 1998.
<PAGE>
On December 11, 1998, pursuant to a private placement (the "Private
Placement") conducted in accordance with Regulation D promulgated under the
Securities Act of 1933, as amended (the "Securities Act"), the Company sold an
aggregate 243,604 shares of Common Stock, to a total of six investors for
aggregate proceeds of $161,996.66. In connection with the Private Placement, the
Company incurred sales commissions and other expenses aggregating approximately
$30,000.
On December 15, 1998, the Company purchased an aggregate of 120,000 freely
tradeable shares (the "X-ceed Shares") of the common stock, par value $.01 per
share (the "X-ceed Common Stock"), of X-ceed, Inc., from one entity, in exchange
for the Company's issuance of an aggregate of 930 shares (the "Preferred
Shares") of the Class A 14% Cumulative Non-Convertible Redeemable Preferred
Stock, Series A, par value $.001 per share (the "Preferred Stock"), of the
Company. The Certificate of Designations with respect to the Preferred Stock,
which was filed with the Secretary of State of the State of Delaware on December
15, 1998, authorizes a class of 1,500 shares of Preferred Stock. Holders of
shares of Preferred Stock will be entitled to (a) cumulative dividends of $140
per share per annum, payable semi-annually on June 30 and December 31 of each
calendar year, commencing on June 30, 1999, (b) a liquidation preference of
$1,000 per share and (c) the right to elect one director in the event the
Corporation fails to tender in full three consecutive semi-annual dividend
payments. In addition, the Company has the right to redeem the Preferred Stock,
in part or whole, at any time, upon payment of $1,300 per share of Preferred
Stock. The X-ceed Common Stock is listed and traded on The Nasdaq SmallCap
Market and the closing per share sale price of the X-ceed Common Stock on
December 14, 1998 was $7-3/4. Accordingly, the X-ceed Shares are included on the
Company's pro forma balance sheet set forth below as marketable securities,
valued at $930,000.
On December 15, 1998, the Company also sold (the "Common Stock Sales"), in
accordance with Regulation D promulgated under the Securities Act, an aggregate
of 840,000 shares of Common Stock to a total of four investors for aggregate
proceeds of $336,000. In connection with the Common Stock Sales, the Company
incurred expenses of approximately $5,000.
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
Set forth below are unaudited historical condensed consolidated balance
sheets of the Company as of October 31, 1998 and pro forma to give effect to the
following significant events: (a) the value of the X-ceed Shares and Preferred
Shares, (b) the net proceeds received by the Company in connection with the
Private Placement and (c) the net proceeds received by the Company in connection
with the Common Stock Sales, each as set forth in the accompanying note. The
unaudited balance sheets and pro forma information do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. The unaudited balance sheets and pro forma
information should be read in conjunction with the Company's financial
statements and accompanying notes included in the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1997 and Quarterly Report on Form
10-QSB for the quarter ended September 30, 1998. Operating results for the
period ended October 31, 1998 are not necessarily indicative of the results that
may be expected for the fiscal quarter or fiscal year ending December 31, 1998.
<PAGE>
<TABLE>
<CAPTION>
October 31, 1998
(unaudited)
________________________________
Actual Pro Forma
_____________ ____________
(Note 1)
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents . . . . . . . . . . . $ 1,746,800 $ 2,209,800
Restricted cash . . . . . . . . . . . . . . . . 100,000 100,000
Marketable securities . . . . . . . . . . . . . -- 930,000
Accounts receivable, net. . . . . . . . . . . . 1,673,689 1,673,689
Inventories . . . . . . . . . . . . . . . . . . 589,410 589,410
Prepaid expenses and other current assets . . . 395,357 395,357
______________ _____________
Total current assets . . . . . . . . . . . 4,505,256 5,898,256
Property and equipment, net. . . . . . . . . . . 375,171 375,171
Acquired software, net . . . . . . . . . . . . . 2,528,139 2,528,139
Goodwill, net. . . . . . . . . . . . . . . . . . 206,104 206,104
Restricted cash. . . . . . . . . . . . . . . . . 200,000 200,000
Other assets . . . . . . . . . . . . . . . . . . 123,071 123,071
______________ _____________
Total assets . . . . . . . . . . . . . . . $ 7,937,741 $ 9,330,741
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable. . . . . . . . . . . . . . . . $ 3,316,154 $ 3,316,154
Accrued liabilities . . . . . . . . . . . . . . 1,970,908 1,970,908
Current portion of long-term debt . . . . . . . 106,092 106,092
______________ _____________
Total current liabilities. . . . . . . . . 5,393,154 5,393,154
Long-term debt, less current maturities. . . . . 140,677 140,677
______________ _____________
Total liabilities. . . . . . . . . . . . . 5,533,831 5,533,831
______________ _____________
Commitments and contingencies. . . . . . . . . . -- --
Stockholders' equity:
Serial Preferred Stock, authorized 1,939,480
shares, none issued and outstanding . . . . . -- --
ClassA Preferred Stock, par value $.001 per
share, authorized 1,500 shares, issued no
shares (actual) and 930 shares (pro forma)
at October 31, 1998 . . . . . . . . . . . . . -- 930,000
Common stock, par value $.001 per share,
authorized 30,000,000 shares, issued
3,970,049 (actual) and 5,053,653 shares
(pro forma) at October 31, 1998 . . . . . . . 3,970 5,054
Additional paid-in capital . . . . . . . . . . . 44,290,458 44,752,374
Accumulated deficit. . . . . . . . . . . . . . . (41,880,123) (41,880,123)
______________ _____________
2,414,305 3,807,305
Less treasury shares (3,095 at October 31,
1998), at cost. . . . . . . . . . . . . . . . (10,395) (10,395)
______________ _____________
Total stockholders' equity. . . . . . . . . 2,403,910 3,796,910
______________ _____________
Total liabilities and stockholders' equity $ 7,937,741 $ 9,330,741
============== =============
- ---------
<FN>
(1) Pro forma adjustments include giving effect to the (a) purchase on December
15, 1998 by the Company of 120,000 shares of X-ceed and the payment therefor by
the issuance of 930 shares of Preferred Stock, (b) the net proceeds of
approximately $132,000 from the Private Placement and (c) the net proceeds of
approximately $331,000 from the Common Stock Sales.
</FN>
</TABLE>
<PAGE>
Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits.
Listed below are all exhibits to this Current
Report on Form 8-K.
Exhibit
Number Description
3.1 Composite of Certificate of Incorporation of the Company, as amended
to date.
10.1 Form of Subscription Agreement utilized in the Private Placement.
10.2 Stock Exchange Agreement, dated December 15, 1998, between the
Company and Seafish Partners.
10.3 Form of Subscription Agreement utilized in the Common Stock Sales.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: December 15, 1998
SOFTWARE PUBLISHING
CORPORATION HOLDINGS, INC.
By: /s/ Mark E. Leininger
Mark E. Leininger, President
(Principal Executive Officer)
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
3.1 Composite of Certificate of Incorporation of the Company, as amended
to date.
10.1 Form of Subscription Agreement utilized in the Private Placement.
10.2 Stock Exchange Agreement, dated December 15, 1998, between the
Company and Seafish Partners.
10.3 Form of Subscription Agreement utilized in the Common Stock Sales.
COMPOSITE
CERTIFICATE OF INCORPORATION
of
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
(a Delaware corporation)
* * * * * *
FIRST: The name of the corporation is:
Software Publishing Corporation Holdings, Inc.
SECOND: The location of the registered office of the Corporation in the State
of Delaware is at Corporation Trust Center, 1209 Orange Street, City of
Wilmington, County of New Castle. The name of the registered agent of the
Corporation in the State of Delaware at such address upon whom process against
the Corporation may be served is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: (a) The total number of shares of all classes of stock which the
Corporation shall have authority to issue is THIRTY-TWO MILLION (32,000,000)
shares. Of these (i) THIRTY MILLION (30,000,000) shares shall be shares of
Common Stock of the par value of $.001 per share; (ii) ONE MILLION NINE HUNDRED
THIRTY-NINE THOUSAND FOUR HUNDRED EIGHTY (1,939,480) shares shall be Serial
Preferred Stock of the par value of $.001 per share; and (iii) SIXTY-THOUSAND
FIVE HUNDRED TWENTY (60,520) shares shall be Class B Voting Preferred Stock,
Series A of the par value of $.001 per share.
(b) The statement of the relative rights, preferences and limitations
of the shares of each class is as follows:
A. Serial Preferred Stock. The Serial Preferred Stock may be
issued from time to time in classes or series and shall have such voting
powers, full or limited, or no voting powers, and such designations,
preferences and relative, participating, optional or other special rights,
and qualifications, limitations or restrictions thereof, as shall be stated
and expressed in the resolution or resolutions of the Board of Directors
providing for the issuance of such stock.
Class B Voting Preferred Stock, Series A:
1. Designation. (a) The designation of the series of
Serial Preferred Stock created hereby shall be "Class B
Voting Preferred Stock, Series A" (hereinafter called the "Class
B Preferred"), and the number of shares constituting the Class B
Preferred is 60,520.
(b) All shares of Class B Preferred shall be
identical with each other in all respects. All shares of Class B
Preferred shall rank, as to the payment of dividends and of
distributions of assets upon any dissolution, liquidation or
winding up of the Corporation, prior to the common stock, par
value $.001 per share, of the Corporation, and any other stock
which by its terms ranks junior to the Class B Preferred and on a
parity with any other class or series of stock of the Corporation
ranking on a parity with the Class B Preferred as to distribution
upon dissolution, liquidation or winding up of the Corporation.
(c) Shares of the Class B Preferred that have been
redeemed, purchased or otherwise acquired by the Corporation
shall not be reissued as Class B Preferred and when retired as
provided by the General Corporation Law of the State of Delaware,
shall have the status of authorized but unissued shares of Serial
Preferred Stock, without
<PAGE>
designation as to series until such shares are once more
designated as part of a particular series by the Board of
Directors of the Corporation or a duly authorized committee
thereof.
2. Dividends. Each holder of shares of Class B Preferred
(each a "Holder") shall not be entitled to receive any dividends.
3. Liquidation Rights. (a) Upon the dissolution,
liquidation or winding up of the affairs of the Corporation,
whether voluntary or involuntary, the Holders of shares of Class
B Preferred then outstanding shall be entitled to receive, out of
the assets of the Corporation available for distribution to
stockholders after satisfying claims of creditors but before
distributions of assets shall be made on the Common Stock or any
other class or series of stock ranking junior to the shares of
Class B Preferred upon liquidation, dissolution or winding
up of the Corporation, the amount of $ .001 per share plus
an amount equal to all accrued but unpaid dividends on such
shares to the date of final distribution.
(b) Neither the sale, lease or exchange (for cash,
shares of stock, securities or other consideration) of all or
substantially all the property and assets of the Corporation,
nor the merger or consolidation of the Corporation into or
with any other corporation, or the merger or consolidation
of any other corporation into or with the Corporation, shall be
deemed to be a dissolution, liquidation or winding up, voluntary
or involuntary, for the purposes of this paragraph.
(c) After payment to the Holders of the full
preferential amount provided for in this paragraph 3 ($605.20),
holders of shares of Class B Preferred in their capacity as
holders shall have no right or claim to any of the remaining
assets of the Corporation.
(d) If the assets of the Corporation available for
distribution to the Holders upon dissolution, liquidation or
winding up of the Corporation, whether voluntary or involuntary,
shall be insufficient to pay in full all amounts to which the
Holders are entitled pursuant to clause (a) of this paragraph 3,
and to which holders of any other class or series of stock of the
Corporation ranking on a parity with the Class B Preferred as to
distribution upon dissolution, liquidation or winding up of the
Corporation (collectively, the "Parity Stockholders")are entitled
pursuant to the Certificate of Incorporation, as it may be
amended from time to time (including any Certificate of
Designations), then such assets shall be distributed among the
Holders of the Class B Preferred and the Parity Stockholders
ratably in proportion to the full amounts otherwise due such
Holders and Parity Stockholders.
4. Voting Rights. (a) The Holders of shares of Class B
Preferred shall vote together with the shares of Common Stock
of the Corporation. The Holder of each share of Class B
Preferred shall be entitled to ten (10) votes per share of Class
B Preferred.
(b) Voting rights hereunder shall be exercised at each
meeting of stockholders for the election of directors or
otherwise or in connection with a written consent in lieu
thereof, as the case may be.
Junior Participating Preferred Stock, Series A:
Section 1. Designation and Amount. The shares
of such series shall be designated as "Junior Participating
Preferred Stock, Series A" (the "Series A Preferred Stock") and
the number of shares constituting the Series A Preferred Stock
shall be 100,000. Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided, that
no decrease shall reduce the number of shares of Series A
Preferred Stock to a number less than the number of shares then
<PAGE>
outstanding plus the number of shares reserved for issuance upon
the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the
Company convertible into Series A Preferred Stock.
Section 2. Dividends and Distributions.
(a) Subject to the rights of the holders of any
shares of any series of Preferred Stock (or any similar stock)
ranking prior and superior to the Series A Preferred Stock with
respect to dividends, the holders of shares of Series A Preferred
Stock, in preference to the holders of Common Stock, par value
$.001 per share (the "Common Stock"), of the Company, and of any
other junior stock, shall be entitled to receive, when, as and
if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash
on the first day of January, April, July and October in each
year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to
the greater of (i) $10 or (ii) subject to the provision for
adjustment hereinafter set forth, 1,000 times the aggregate
per share amount of all cash dividends, and 1,000 times
the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, other than a dividend payable
in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preferred Stock. In the
event the Company shall at any time declare or pay any dividend
on the Common Stock payable in shares of Common Stock, or effect
a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater
or lesser number of shares of Common Stock, then, in each such
case, the amount to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event under clause
(ii) of the preceding sentence shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such
event.
(b) The Company shall declare a dividend or
distribution on the Series A Preferred Stock as provided
in paragraph (a) of this Section immediately after the
Company declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common
Stock); provided that, in the event no dividend or distribution
shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend of
$10 per share on the Series A Preferred Stock shall nevertheless
be payable on such subsequent Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be
cumulative on outstanding shares of Series A Preferred Stock
from the Quarterly Dividend Payment Date next preceding the
date of issue of such shares, unless the date of issue of
such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue
of such shares, or, unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock
entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events, such
dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends
shall not bear interest. Dividends paid on the shares
<PAGE>
of Series A Preferred Stock in an amount less than the
total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date
for the determination of holders of shares of Series A
Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not
more than 50 days prior to the date fixed for the payment
thereof.
Section 3. Voting Rights. The holders of shares of
Series A Preferred Stock shall have the following voting rights:
(a) Subject to the provision for adjustment
hereinafter set forth, each share of Series A Preferred Stock
shall entitle the holder thereof to 1,000 votes on all
matters submitted to a vote of the stockholders of the Company.
In the event the Company shall at any time declare or
pay any dividend on the Common Stock payable in shares
of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares
of Common Stock, then, in each such case, the number of votes per
share to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to
such event.
(b) Except as otherwise provided herein, in
any other Certificate of Designations creating a series of
Serial Preferred Stock or any similar stock, or by law,
the holders of shares of Series A Preferred Stock and
the holders of shares of Common Stock and any other capital stock
of the Company having general voting rights shall vote together
as one class on all matters submitted to a vote of shareholders
of the Company.
(c) Except as set forth herein, or as otherwise
provided by law, holders of Series A Preferred Stock shall have
no special voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders
of Common Stock as set forth herein) for taking any corporate
action.
Section 4. Certain Restrictions.
(a) Whenever quarterly dividends or other
dividends or distributions payable on the Series A Preferred
Stock as provided in Section 2 are in arrears, thereafter and
until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Company shall not:
(i) declare or pay dividends, or make any
other distributions, on any shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution
or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any
other distributions, on any shares of stock ranking on
a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred
Stock, except dividends paid ratably on the Series A
Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares
are then entitled;
<PAGE>
(iii) redeem or purchase or otherwise
acquire for consideration shares of any stock ranking junior
(either as to dividends or upon liquidation, dissolution
or winding up) to the Series A Preferred Stock; provided
that the Company may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in
exchange for shares of any stock of the Company ranking
junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Preferred
Stock; or
(iv) redeem or purchase or otherwise acquire
for consideration any shares of Series A Preferred Stock,
or any shares of stock ranking on a parity with the Series A
Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(b) The Company shall not permit any subsidiary
of the Company to purchase or otherwise acquire for consideration
any shares of stock of the Company unless the Company could,
under paragraph (a) of this Section 4, purchase or otherwise
acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A
Preferred Stock purchased or otherwise acquired by the
Company in any manner whatsoever shall be retired and canceled
promptly after the acquisition thereof. All such shares shall,
upon their cancellation, become authorized but unissued shares of
Serial Preferred Stock and may be reissued as part of a new
series of Serial Preferred Stock subject to the conditions and
restrictions on issuance set forth herein, in the Certificate of
Incorporation, or in any other Certificate of Designations
creating a series of Serial Preferred Stock or any similar stock
or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up.
Upon any liquidation, dissolution or winding up of
the Company, no distribution shall be made (a) to the holders of
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $1,000 per share, plus an
amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment;
provided that the holders of shares of Series A Preferred Stock
shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth,
equal to 1,000 times the aggregate amount to be distributed per
share to holders of shares of Common Stock, or (b) to the holders
of shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except distributions made ratably on the Series
A Preferred Stock and all such parity stock in proportion to the
total amounts to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding up. In the
event the Company shall at any time declare or pay any dividend
on the Common Stock payable in shares of Common Stock, or effect
a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater
or lesser number of shares of Common Stock, then, in each such
case, the aggregate amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event
under the proviso in clause (a) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock
outstanding immediately after
<PAGE>
such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to
such event.
Section 7. Consolidation, Merger, etc. In case the
Company shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common
Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then, in any such
case, each share of Series A Preferred Stock shall at the same
time be similarly exchanged or changed into an amount per share,
subject to the provision for adjustment hereinafter set forth,
equal to 1,000 times the aggregate amount of stock, securities,
cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed
or exchanged. In the event the Company shall at any time declare
or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares
of Common Stock, then, in each such case, the amount set forth in
the preceding sentence with respect to the exchange or change of
shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately
after such event and the nominator of which is the number of
shares of Common Stock that were outstanding immediately prior to
such event.
Section 8. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank,
with respect to the payment of dividends and the distribution of
assets, junior to all series of any other class of the Serial
Preferred Stock.
Section 10. Amendment. The Certificate of Incorporation
of the Company shall not be amended in any manner which
would materially alter or change the powers, preferences or
special rights of the Series A Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Series A Preferred
Stock, voting together as a single class.
Class A 14% Cumulative Non-Convertible Redeemable Prefferred Stock,
Series A
Section 1. Designation and Amount. The shares of such
class shall be designated as "Class A 14% Cumulative
Non-Convertible Redeemable Preferred Stock, Series A" (the "Class
A Preferred Stock") and the number of shares constituting the
Class A Preferred Stock shall be 1,500. Such number of shares may
be increased or decreased by resolution of the Board of
Directors; provided, that no decrease shall reduce the number of
shares of Class A Preferred Stock to a number less than the
number of shares then outstanding, plus the number of shares
reserved for issuance upon the exercise of outstanding options,
rights or warrants or upon the conversion of any outstanding
securities issued by the Company convertible into Class A
Preferred Stock.
Section 2. Dividends.
2.1. The dividend rate on the shares of Class A
Preferred Stock shall be $140.00 per share per annum. Such
dividends shall be cumulative on each share of Class A Preferred
Stock from the date of issuance and shall be payable in cash if,
when and as declared by the Board of Directors, on June 30, and
December 31, of each year, commencing with June 30, 1999. Each
such dividend shall be paid to the holders of record of shares of
<PAGE>
the Class A Preferred Stock as they appear on the stock register
of the Corporation on such record date, not exceeding 30 days nor
less than ten days preceding the payment date thereof, as shall
be fixed by the Board of Directors of the Corporation or a duly
authorized committee thereof.
2.2. When dividends are not paid in full or declared in
full and sums set apart for the payment thereof upon the Class
A Preferred Stock and any other Serial Preferred Stock
ranking on a parity as to dividends with the Class A Preferred
Stock, all dividends declared upon shares of Class A Preferred
Stock and any other Serial Preferred Stock ranking on a parity as
to dividends shall be declared pro rata so that in all cases the
amount of dividends declared per share on the Class A Preferred
Stock and such other Serial Preferred Stock shall bear to each
other the same ratio that accumulated dividends per share,
including dividends accrued or in arrears, on the shares of Class
A Preferred Stock and such other Serial Preferred Stock bear to
each other. Except as provided in the preceding sentence, unless
full cumulative dividends on the Class A Preferred Stock have
been paid, or declared in full and sums set apart for the payment
thereof, no dividends shall be declared or paid or set aside for
payment or other distribution made upon the common stock, par
value $.001 per share (the "Common Stock"), of the Corporation or
any other stock of the Corporation ranking junior to or on a
parity with the Class A Preferred Stock as to dividends or
liquidation rights, nor shall any Common Stock or any other stock
of the Corporation ranking junior to or on a parity with the
Class A Preferred Stock as to dividends or upon liquidation be
redeemed, purchased, exchanged or otherwise acquired for any
consideration (or any payment made to or available for a sinking
fund for the redemption of any shares of such stock) by the
Corporation or any subsidiary (except by conversion into or
exchange for stock of the Corporation ranking junior to the Class
A Preferred Stock as to dividends and liquidation rights).
Section 3. Conversion Provisions. The Class A Preferred
Stock is not convertible into shares of Common Stock or any other
capital stock of the Corporation.
Section 4. Liquidation Rights. In the event of any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the holders of shares of Class A
Preferred Stock shall be entitled to receive out of the remaining
assets of the Corporation available for distribution to
stockholders, before any distribution of assets is made to
holders of Common Stock or any other class of stock of the
Corporation ranking junior to the Class A Preferred Stock,
liquidating distributions in an amount equal to $1,000 per share,
plus an amount equal to all accrued and unpaid dividends on each
such share up to the date fixed for such distribution. If, upon
any voluntary or involuntary liquidation, dissolution or winding
up of the Corporation, the amounts payable with respect to the
Class A Preferred Stock and any other shares of stock of the
Corporation ranking (as to any such distribution) on a parity
with the Class A Preferred Stock are not paid in full, holders of
the Class A Preferred Stock and of such other shares of stock
will share ratably in any such distribution of assets of the
Corporation in proportion to the full respective preferential
amounts to which they are entitled. After payment of the full
amount of the liquidating distribution to which they are
entitled, the holders of shares of Class A Preferred Stock will
not be entitled to any further participation in any distribution
of assets by the Corporation.
For purposes of this Section 4, a distribution of assets
in any dissolution, winding up, liquidation or reorganization
shall not include (a) any consolidation or merger of the
Corporation with or into any other corporation, (b) any
dissolution, liquidation, winding up or reorganization of
the Corporation immediately followed by reincorporation
of another corporation or (c) a sale or other disposition
of all or substantially all of the Corporation's assets to
another corporation; provided, that in each such case, effective
provision is made in the certificate of incorporation of the
resulting and surviving
<PAGE>
corporation or otherwise for the protection of the rights
of the holders of shares of Class A Preferred Stock.
Section 5. Redemption.
5.1. The Corporation shall have the right, at the
Corporation's option and by resolution of the Corporation's
Board of Directors, to redeem the Class A Preferred Stock out of
funds legally available therefor, as a whole or in part, at any
time (or from time to time) (in each case, a "Redemption Date"),
upon payment (in respect of each share redeemed) of $1,300 per
share, plus all accrued and unpaid dividends to the Redemption
Date (the "Redemption Price").
5.2. (a) If full cumulative dividends on all outstanding
Series C Preferred Stock have not been paid in full, the Class A
Preferred Stock may not be redeemed in part.
(b) If less than all of the outstanding shares of
Class A Preferred Stock are to be redeemed, the Corporation will
select those to be redeemed pro rata, as nearly as practicable,
or by lot, as the Board of Directors may determine.
(c) Notice of redemption specifying the Redemption
Date fixed for said redemption and the place where the amount
to be paid upon redemption is payable will be mailed postage
prepaid, by first-class mail, at least five days but not more
than 60 days before the Redemption Date to each holder of shares
of Class A Preferred Stock to be redeemed, at the address shown
on the books of the Corporation. On and after the Redemption
Date, notwithstanding that any certificate representing
Class A Preferred Stock so called for redemption shall not
have been surrendered for cancellation (provided the funds
for redemption have been set aside in trust as provided in
clause (d) of this paragraph 5.2.), the shares of Class A
Preferred Stock represented thereby shall no longer be
deemed outstanding, and the holder of such certificate or
certificates shall have (with respect to the Corporation) no
right other than the right to receive the Redemption Price,
without interest, upon the surrender of such certificate;
and such Class A Preferred Stock shall not be transferable
on the books of the Corporation except to the Corporation.
(d) On or before the Redemption Date specified
therein, the Corporation may irrevocably (subject to clause (e)
of this paragraph 5.2) deposit with a bank or trust company in
New York, New York having a capital and surplus of at least
$50,000,000, in a trust to be applied to the redemption of
the shares of Class A Preferred Stock so called for
redemption, the funds necessary for such redemption. From
and after the date of such deposit all rights of the holders
of the shares of Class A Preferred Stock so called for
redemption shall cease and terminate, excepting only the
right to receive the Redemption Price therefor, without
interest. The Corporation may direct the bank or trust
company to invest the funds deposited in trust to be applied
to the redemption of Class A Preferred Stock so called for
redemption into one or more of the following obligations or
securities:
(i) direct obligations of, and obligations fully
guaranteed by, the United States of America, or any
agency thereof, the obligations of which are backed
by the full faith and credit of the United States
Government;
<PAGE>
(ii) certificates of deposit, time deposits,
commercial paper, and bankers' acceptances issued
by any bank (or its holding company) whose senior
unsecured debt has the highest rating given by Standard
& Poor's Corporation, a New York corporation, or any
successor thereto by merger, consolidation, sale of
substantially all of its assets or otherwise; and
(iii) deposits which are fully insured by the
Federal Deposit Insurance Corporation or the Federal
Savings and Loan Insurance Corporation;
provided, that prior to the Redemption Date, such
investments shall be made in such manner as to
mature by their terms not later than the day preceding the
Redemption Date.
(e) In case the holders of shares of Class A
Preferred Stock which have been called for redemption shall
not, within six years after the Redemption Date, claim the
amount deposited with respect to the redemption thereof,
any such bank or trust company shall, upon demand, pay over
to the Corporation such unclaimed amounts and thereupon
such bank or trust company shall be relieved of all
responsibility in respect thereof to such holder and such
holder shall look only to the Corporation for the payment
of the Redemption Price. Any interest accrued on funds
so deposited shall be paid to the Corporation at such times
as the Corporation may request.
Section 6. Voting Rights.
6.1. Except as provided in this Section 6, holders of
shares of Class A Preferred Stock shall have no voting rights
with respect to their Class A Preferred Stock.
6.2. If any three consecutive semi-annual dividends
payable on Class A Preferred Stock, or on any other
class or series of Serial Preferred Stock ranking on a parity
with Class A Preferred Stock as to dividends or liquidation
rights, shall not be paid in full when payable (a "Default"), the
holders of Class A Preferred Stock and all outstanding series of
Serial Preferred Stock ranking on a parity with the Class A
Preferred Stock as to dividends or liquidation rights
(collectively, the "Pari Passu Preferred Stock"), voting as a
single class without regard to the class or series, shall
thereafter automatically have the right to elect one member of
the Board of Directors of the Corporation (in which event the
number of directors shall automatically be increased accordingly)
until all dividends in arrears on all such Pari Passu Preferred
Stock have been paid or declared and set apart for payment in
trust with a bank or trust company in accordance with clause (d)
of paragraph 5.2. Each director elected by the holders of Pari
Passu Preferred Stock pursuant to this paragraph 5.2. (herein
called a "Preferred Director"), shall serve as such a director of
the Corporation in the class of directors designated by the Board
of Directors of the Corporation, subject to the provisions of
this Section 6, until the Default shall be cured, at which time
the term of each such Preferred Director shall terminate and the
number of directors shall be reduced accordingly.
6.3. Voting rights under paragraph 6.2. may be initially
exercised either at a special meeting of the holders of Pari
Passu Preferred Stock or at any annual stockholders'
meeting. A special meeting for the exercise of such rights shall
be called by the Secretary of the Corporation as promptly as
possible, and in any event within ten days after receipt of a
written request signed by the holders of record of at least 10%
of the outstanding shares of Pari Passu Preferred Stock, in each
case by sending written notice of such meeting to each
<PAGE>
holder of Pari Passu Preferred Stock at such holder's registered
address on the books of the Corporation. Such notice shall state
the purpose the meeting and the place and time for the meeting.
6.4. Any director who shall have been elected by the
holders of Pari Passu Preferred Stock may be removed at
any time, either for or without cause, by, and only by, an
affirmative vote of the holders of record of a majority of the
Pari Passu Preferred Stock, given at a special meeting of such
stockholders called for such purpose, and any vacancy created by
such removal may also be filled at such meeting. A meeting for
the removal of a director elected by the holders of Pari Passu
Preferred Stock and/or the filling of the vacancy created thereby
shall be called by the Secretary of the Corporation within ten
days after receipt of a written request signed by the holders of
record of at least 10% of the outstanding shares of Pari Passu
Preferred Stock by sending, in each case, written notice of such
meeting to each holder of Pari Passu Preferred Stock at such
holder's registered address on the books of the Corporation. Such
meeting shall be held at the earliest practicable date
thereafter. Such notice shall state the purpose of the meeting
and the place and time for the meeting. The giving of such notice
shall constitute the only obligation of the Corporation pursuant
to this paragraph 6.4.
6.5. Any vacancy caused by the death or resignation
of a Preferred Director may be filled only by the holders
of Pari Passu Preferred Stock at a meeting called for
such purpose. Such meeting of the holders of Pari Passu Preferred
Stock shall be called by the Secretary of the Corporation at the
earliest practicable date after any such death or resignation
and, in any event, within ten days after receipt of a written
request signed by the holders of record of at least 10% of the
outstanding shares of Pari Passu Preferred Stock by sending, in
each case, written notice of such meeting to each holder of Pari
Passu Preferred Stock at such holder's registered address on the
books of the Corporation. Such notice shall state the purpose of
the meeting and the place and time for the meeting.
6.6. If any meeting of the holders of Pari
Passu Preferred Stock required by this Section 6 to be called
shall not have been called within ten days after personal service
of a written request therefor upon the Secretary of the
Corporation, or within fifteen days after mailing the same within
the United States of America by registered mail addressed to the
Secretary of the Corporation at the Corporation's principal
office, then the holders of record of at least 10% of the
outstanding shares of Pari Passu Preferred Stock may designate in
writing one of their number to give notice of such meeting at the
expense of the Corporation and such meeting may be called by such
person so designated upon the notice required for annual meetings
of stockholders of the Corporation. Any holder of Pari Passu
Preferred Stock so designated shall have access to the stock
books of the Corporation for the purpose of causing meetings of
holders of Pari Passu Preferred Stock to be called pursuant to
these provisions.
6.7. Any meeting of the holders of the Pari Passu
Preferred Stock for the purposes of voting as a class for
the election or removal of directors may be held within or
without the State of Delaware, at a place suitable for such
meeting of holders, or if such action is taken in conjunction
with an annual stockholders' meeting, at the location of such
annual stockholders' meeting. The Corporation shall pay all
expenses associated with such meeting. At such meeting, the
presence in person or by proxy of the holders of a majority of
the outstanding shares of Pari Passu Preferred Stock shall be
required to constitute a quorum; in the absence of a quorum, a
majority of the holders present in person or by proxy shall have
the power to adjourn the meeting from time to time without
notice, other than announcement at the meeting, until the quorum
shall be present.
<PAGE>
6.8. So long as any shares of Class A Preferred
Stock are outstanding, the Corporation shall not,
without the written consent or the affirmative vote at a meeting
called for that purpose of holders of at least a majority of the
shares of Class A Preferred Stock then outstanding, in any
manner, whether by amendment to the Certificate of Incorporation
or By-Laws of the Corporation, by merger (whether or not the
Corporation is a surviving corporation in such merger), by
consolidation, or otherwise:
(i) amend, modify or affect the designations, powers,
preferences and relative and other special rights or the
limitations of the Class A Preferred Stock so as to affect
the Class A Preferred Stock adversely; or
(ii) issue any Serial Preferred Stock which ranks
senior to the Class A Preferred Stock as to dividends or
liquidation rights.
6.9. Notwithstanding anything contained herein to
the contrary, any action required or permitted to be taken
by the holders of Class A Preferred Stock and/or Pari Passu
Preferred Stock at any annual or special meeting of holders of
Class A Preferred Stock and/or Pari Passu Preferred Stock may be
taken without a meeting, at any time, without prior notice and
without a vote, if a consent in writing, setting forth the action
so taken, shall be signed by the holders of outstanding shares of
Class A Preferred Stock and/or Pari Passu Preferred Stock having
not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares
of Class A Preferred Stock and Pari Passu Preferred Stock
entitled to vote thereon were present and voted. Prompt notice of
the taking of corporate action without a meeting by less than
unanimous written consent shall be given to those holders of
Class A Preferred Stock and/or Pari Passu Preferred Stock who
have not consented thereto in writing. Such notice shall be made
to each such holder at the holder's registered addresses on the
books of the Corporation.
Section 7. Shares held by the Corporation. In determining
whether the holders of the requisite aggregate number of shares
of Class A Preferred Stock and/or Pari Passu Preferred
Stock have concurred in any vote, consent, waiver or other action
hereunder, shares of Class A Preferred Stock which are owned by
the Corporation or by any majority-owned subsidiary of the
Corporation shall be disregarded and deemed not to be outstanding
for such purpose.
Section 8. Retirement of Redeemed Shares, etc. Shares
of the Class A Preferred Stock which have been
redeemed shall have the status of authorized and unissued Serial
Preferred Stock, par value $.001 per share, of the Corporation,
but shall not be reissued as Class A Preferred Stock.
B. Common Stock. Subject to the rights, privileges,
preferences and priorities of any holders of Serial Preferred Stock, the
Common Stock shall be entitled to dividends out of funds legally available
therefor, when, as and if declared and paid to the holders of Common Stock,
and upon liquidation, dissolution or winding up of the Corporation, to
share ratably in the assets of the Corporation available for distribution
to the holders of Common Stock. Except as otherwise provided herein or by
law, the holders of the Common Stock shall have full voting rights and
powers, and each share of Common Stock shall be entitled to one vote. All
shares of Common Stock shall be identical with each other in every respect.
Each issued and outstanding share of Common Stock, par value
of $.001 per share, of the Corporation (the "Old Common Stock") as of the
close of business on May 27, 1998 (the "Effective Date") shall
automatically and without any action on the part of the holder thereof, be
reclassified as and changed into one-third (1/3) of one share of Common
Stock, par value of $.001 per share (the "New Common Stock"), of the
Corporation, subject to the treatment of fractional share interests as
described below. Each holder of a
<PAGE>
certificate or certificates which immediately prior to the Effective
Date represented outstanding shares of Old Common Stock (each, an
"Old Certificate") shall be entitled to receive upon surrender of such
Old Certificate to the Company's Transfer Agent for cancellation, a
certificate or certificates (each, a "New Certificate")
representing the number of whole shares of the New Common Stock into which
the Old Common Stock formerly represented by the Old Certificate so
surrendered are reclassified under the terms hereof. From and after the
Effective Date, Old Certificates shall represent only the right to receive
New Certificates (and, where applicable, cash in lieu of fractional shares,
as provided below) pursuant to the provisions hereof. No certificates or
scrip representing fractional share interests in New Common Stock will be
issued, and no such fractional share interest will entitle the holder
thereof to vote, or to any rights of a stockholder, of the Corporation. A
holder of Old Certificates shall receive, in lieu of any fraction of a
share of New Common Stock to which the holder would otherwise be entitled,
a cash payment therefor on the basis of the average of the last sale price
of the Old Common Stock on The Nasdaq Stock Market on the Effective Date
(or in the event the Company's Common Stock is not so traded on the
Effective Date, such sale price on the next preceding day on which such
stock was traded on The Nasdaq Stock Market). If more than one Old
Certificate shall be surrendered at one time for the account of the same
stockholder, the number of full shares of New Common Stock for which New
Certificates shall be issued shall be computed on the basis of the
aggregate number of shares represented by the Old Certificates so
surrendered. In the event that the Company's Transfer Agent determines that
a holder of Old Certificates has not tendered all of such holder's Old
Certificates for exchange, the Transfer Agent shall carry forward any
fractional share until all Old Certificates of such holder have been
presented for exchange such that payment for fractional shares to any one
person shall not exceed the value of one share of New Common Stock. If any
New Certificate is to be issued in a name other than that in which the Old
Certificates surrendered for exchange are issued, the Old Certificates so
surrendered shall be properly endorsed and otherwise in proper form for
transfer, and the person or persons requesting such exchange shall affix
any requisite stock transfer tax stamps to the Old Certificates
surrendered, or provide funds for their purchase, or establish to the
satisfaction of the Transfer Agent that such taxes are not payable. From
and after the Effective Date, the amount of capital represented by the
shares of the New Common Stock into which and for which the shares of the
Old Common Stock are reclassified under the terms hereof shall be the same
as the amount of capital represented by the shares of Old Common Stock so
reclassified, until thereafter reduced or increased in accordance with
applicable law.
FIFTH: The name and mailing address of the incorporator is as follows:
Neil M. Kaufman
Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Suite 225
Jericho, New York 11753
SIXTH: (a) The number of directors of the corporation shall be determined in
the manner prescribed by the by-laws of this corporation.
(b) The Board of Directors shall be divided into three (3) classes as
nearly equal in number as possible, and no class shall include less than one (1)
director. The terms of the office of the directors initially classified shall be
as follows: that of Class I shall expire at the next annual meeting of
shareholders to be held in 1994, Class II at the second annual meeting of
shareholders to be held in 1995 and Class III at the third succeeding annual
meeting of shareholders to be held in 1996. The foregoing notwithstanding, each
director shall serve until his successor shall have been duly elected and
qualified, unless he shall resign, become disqualified, disabled or shall
otherwise be removed. Whenever a vacancy occurs on the Board of Directors, a
majority of the remaining directors have the power to fill the vacancy by
electing a successor director to fill that portion of the unexpired term
resulting from the vacancy.
(c) At each annual meeting of shareholders after such initial
classification, directors chosen to succeed those whose terms then expire at
such annual meeting shall be elected for a term of office expiring at the third
succeeding annual meeting of shareholders after their election. When the number
of directors is increased by the Board of Directors and any newly created
directorships are filled by the Board of Directors, there shall be no
classification of
<PAGE>
the additional directors until the next annual meeting of shareholders.
Directors elected, whether by the Board of Directors or by the shareholders, to
fill a vacancy, subject to the foregoing, shall hold office for a term expiring
at the annual meeting at which the term of the Class to which they shall have
been elected expires. Any newly created directorships or any decrease in
directorships shall be so apportioned among the classes as to make all classes
as nearly equal in number as possible.
SEVENTH: Meetings of stockholders may be held within or without the State
of Delaware as the by-laws may provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the by-laws of the corporation. Election of directors
need not be by written ballot unless the by-laws of the corporation shall so
provide.
EIGHTH: Subject to the provisions contained in Article TWELFTH hereof, the
corporation reserves the right to amend, alter, change or repeal any provision
contained in this Certificate of Incorporation, in the manner now or hereafter
prescribed by statute, and all rights conferred upon stockholders herein are
granted subject to this reservation.
NINTH: Any action required to be taken or which may be taken at any annual or
special meeting of stockholders of the corporation may be taken without a
meeting, without prior notice and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted.
TENTH: Special meetings of stockholders may be called by the Chairman of the
Board, President or a majority of the Board of Directors or at the written
request of stockholders owning at least sixty-six and two-thirds percent
(66-2/3%) of the entire voting power of the corporation's capital stock.
ELEVENTH: In the event that it is proposed that the corporation enter into a
merger or consolidation with any other corporation and such other corporation or
its affiliates singly or in the aggregate own or control directly or indirectly
fifteen (15%) percent or more of the outstanding voting power of the capital
stock of this corporation, or that the corporation sell substantially all of its
assets or business to such other corporation, the affirmative vote of the
holders of not less than sixty-six and two-thirds (66-2/3%) percent of the total
voting power of all outstanding shares of capital stock of this corporation
shall be required for the approval of any such proposal; provided, however, that
the foregoing shall not apply to any such merger, consolidation or sale of
assets or business which was approved by resolutions of the Board of Directors
of this corporation prior to the acquisition of the ownership or control of
fifteen (15%) percent of the outstanding shares of this corporation by such
other corporation or its affiliates, nor shall it apply to any such merger,
consolidation or sale of assets or business between this corporation and another
corporation, fifty (50%) percent or more of the total voting power of which is
owned by this corporation. For the purposes hereof, an "affiliate" is any person
(including a corporation, partnership, trust, estate or individual) who directly
or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, the person specified; and "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of management and policies of a person, whether through the ownership
of voting securities, by contract, or otherwise.
TWELFTH: The provisions set forth in Articles SIXTH, NINTH, TENTH AND
ELEVENTH above may not be altered, amended or repealed in any respect unless
such alteration, amendment or repeal is approved by the affirmative vote of the
holders of not less than sixty-six and two-thirds percent (66-2/3%) of the total
voting power of all outstanding shares of capital stock of the corporation.
THIRTEENTH: Each person who at any time is or shall have been a director or
officer of the Corporation and is threatened to be or is made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is, or
he or his testator or intestate was, a director, officer, employee or agent of
the Corporation, or served at the request of the Corporation as a director,
officer, employee, trustee or agent of another corporation, partnership, joint,
venture, trust or other enterprise, shall be indemnified against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with any such threatened,
pending or completed action, suit or proceeding
<PAGE>
to the full extent authorized under Section 145 of the General Corporation
Law of the State of Delaware. The foregoing right of indemnification shall in no
way be exclusive of any other rights of indemnification to which such director,
officer, employee or agent may be entitled under any By-Law, agreement, vote of
stockholders or disinterested directors, or otherwise.
FOURTEENTH: Any and all right, title, interest and claim in or to any dividends
declared by the Corporation, whether in cash, stock, or otherwise, which are
unclaimed by the stockholder entitled thereto for a period of six (6) years
after the close of business on the payment date shall be and be deemed to be
extinguished and abandoned; such unclaimed dividends in the possession of the
Corporation, its transfer agents, or other agents or depositaries, shall at such
time become the absolute property of the Corporation, free and clear of any and
all claims for any person whatsoever.
FIFTEENTH: Any and all directors of the Corporation shall not be liable to the
Corporation or any stockholder thereof for monetary damages for breach of
fiduciary duty as director except as otherwise required by law. No amendment to
or repeal of this Article FIFTEENTH shall apply to or have any effect on the
liability or alleged liability of any director of the Corporation for or with
respect to any act or omission of such director occurring prior to such
amendment or repeal.
SIXTEENTH: The Board of Directors of the Corporation shall expressly have the
power and authorization to make, alter and repeal the By-Laws of the
Corporation, subject to the reserved power of the stockholders to make, alter
and repeal any By-Laws adopted by the Board of Directors.
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
SUBSCRIPTION AGREEMENT
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 (each, a "Share") of the common stock,
par value $.001 per share (the "Common Stock"), of the Company at a purchase
price per Share equal to 80% of the average closing price per share of Common
Stock for the 30 trading days immediately preceeding the third trading day prior
to the date (the "Subscription Acceptance Date") on which the Company accepts
the Subscription. The Subscription is in the aggregate amount of
$_______________ (the "Subscription Price"), and the undersigned hereby tenders
to the Company in full the Subscription Price in immediately available funds.
The undersigned has been advised, and the Subscription is being made based upon
such advice, that (a) the Shares are being offered (the "Offering") by the
Company pursuant to the Company's Confidential Private Placement Memorandum,
dated September 9, 1998 (the "Memorandum"), on a "best efforts, minimum
aggregate accepted subscriptions $300,000, maximum 782,000 shares, plus such
number of shares equal to 20% of the total number of shares of Common Stock
issued by the Company subsequent to the date of the Memorandum, if any,
otherwise than pursuant to the Offering" basis, (b) the Shares are being offered
for a period (the "Offering Period") commencing on the date of the Memorandum
and terminating 90 days thereafter, (c) the Offering Period may be extended, at
the discretion of the Company and the Placement Agent, for an additional 60 days
or for such additional period of time (in either case, the "Extension Period")
as the Company and the Placement Agent may agree, (d) all proceeds of the
Offering, including the funds representing the Subscription Price, will be
deposited in a non-interest bearing escrow account (the "Escrow Account")
maintained at European American Bank in the name of "SPCH, EAB as Escrow Agent,"
(e) unless a minimum of $300,000 of Shares are subscribed to, paid for and
accepted during the Offering Period and any Extension Period thereafter, the
Offering will terminate and all subscription funds, including the funds
representing the Subscription Price, will be promptly refunded to the
subscribers, including the undersigned, in full, without interest or deduction,
(f) the minimum subscription for Shares is $25,000, although the Company and the
Placement Agent reserve the right to accept subscriptions for less than $25,000,
(g) the Offering will terminate upon the earlier of (i) 90 days from the date of
the Memorandum, unless extended by the Company and the Placement Agent, in their
sole discretion, for an additional 60 days or for such additional period of time
as the Company and Placement Agent may agree, (ii)
<PAGE>
the acceptance by the Company of subscriptions for 782,000 shares, plus
such number of shares equal to 20% of the total number of shares of Common Stock
issued by the Company subsequent to the date of the Memorandum, if any,
otherwise than pursuant to the Offering or (iii) such earlier date as may be
determined by the Company and the Placement Agent, in their sole discretion, and
(h) (i) the event that (A) the Offering is withdrawn pursuant to Section 3
hereof, (B) the Company does not receive and accept subscriptions, including the
Subscription being made hereby, to purchase not less than $300,000 of Shares,
during the Offering Period and Extension Period, if any, or (C) the Subscription
being made hereby is rejected for any reason whatsoever, then the Subscription
and this Subscription Agreement shall automatically become null and void, except
that the Subscription Price shall be promptly returned to the undersigned,
without interest or deduction, and (ii) in all other events, on the Subscription
Acceptance Date, the funds representing the Subscription Price, to the extent
the Subscription is accepted by the Company, and the funds representing
subscriptions made by others whose subscriptions to purchase Shares pursuant to
the Offering are accepted by the Company on such Subscription Acceptance Date,
shall be released from the Escrow Account to the Company.
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 (i) is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
(ii) 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 (iii) 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
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<PAGE>
in effect and subject to the application of equitable principles and the
availability of equitable remedies; the Shares to be issued hereunder, upon
issuance thereof in accordance with the terms hereof, 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);
(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, as
contemplated by this Subscription Agreement, are exempt from the registration
requirements of the Securities Act and are exempt or the Company has complied
with registration requirements of
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<PAGE>
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; and 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 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 (the "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, 1998, timely filed all requisite forms, reports
and exhibits thereto with the Commission; and the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1997, Quarterly Reports on Forms
10-QSB for the quarters ended March 31, and June 30, 1998, and the Company's
Current Reports on Form 8-K (Date of Reports: February 11, 1998 and May 26,
1998) filed by the Company with the Commission (collectively, the "SEC Reports")
did not 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;
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 undersigned 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 Commission 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 as contemplated therein; and to the
Company's knowledge, neither the Company nor its products is
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<PAGE>
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 undersigned, 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 June 30, 1998. Since June 30, 1998 and through the
date of the Memorandum, 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) 60,000 shares of Common
Stock pursuant to a Consulting Agreement with the Placement Agent or (c) as
disclosed in its SEC Reports; and as of the date of the Memorandum, the Company
has 3,964,476 shares of Common Stock issued and outstanding; and
(q) Use of Proceeds. The Company represents that the net proceeds from the
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:
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<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 undersigned's
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;
-6-
<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 or any part 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 the
Memorandum, which includes, as Exhibits thereto, copies of the Company's (i)
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1997, (ii)
Quarterly Report on Form 10-QSB for the quarter ended March 31, 1998, (iii)
Quarterly Report on Form 10-QSB for the quarter ended June 30, 1998, (iv)
Current Report on Form 8-K (Date of Report: February 11, 1998), as amended, and
(v) Current Report on Form 8-K (Date of Report: May 26, 1998); and the
undersigned has read the Memorandum, including all Exhibits thereto, and
understands the contents thereof.
(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, none of the
Shares may 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;
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<PAGE>
(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 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 Shares, and is able to bear the
economic risk of purchasing 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 Shares; or
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<PAGE>
(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, the Memorandum or
the documents referred to herein or therein, 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 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 Agreement 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 country, 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; and
(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;
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<PAGE>
(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.
(a) Defined Terms. As used in this Section 4, terms defined 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 any of the Shares, including 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
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.
(iii) 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
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<PAGE>
provision of this Section 4, and subsection, paragraph, clause, schedule
and exhibit references are to this Section 4 unless otherwise specified.
(b) Demand Registration.
(i) Right to Demand. Subject to Paragraph 4(b)(ii) hereof, at any
time on or after the Subscription Acceptance Date and on or prior to three
years from the Subscription Acceptance Date, the Initiating Holders (as
defined in paragraph 4(b)(vi) 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.
(ii) Number of Demand Registrations; Expenses. Subject to the
provisions of Paragraph 4(b)(iii) hereof, the holders of Registerable
Securities shall be entitled, in the aggregate, to one Demand Registration,
the Registration Expenses (as defined in Section 4(e) hereof) of which,
subject to the provisions of Section 4(e), shall be borne by the Company,
but the Company shall not be responsible for the payment of any
underwriter's discount, commission or selling concession in connection with
any of the Registrable Securities. The Company shall not be deemed to have
effected a Demand Registration unless and until such Demand Registration is
declared effective.
(iii) Priority on Demand Registrations.
(A) 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 (1) 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 (2) each of the
Initiating Holders shall each have consented in writing to
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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: (1) 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,
(2) second, pro rata (based upon the amount of Registerable
Securities) among the Registerable Securities of the other holders
(each, a "Rightsholder") of registration rights granted by the Company
in connection with the sale of the Shares 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, (3) 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 (4) 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.
(B) 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: (1) first, pro rata (based upon the amount
of Registerable Securities) among the Registerable Securities included
in the Demand Request, (2) 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, (3) 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
(4) 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.
(C) 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(b), such
Initiating Holders and other Rightsholders shall retain the right to
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one Demand Registration with respect to such unregistered Registerable
Securities subject to such Demand Request and Tag-Along Request.
(iv) 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.
(v) 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.
(vi) "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 the total Registerable Securities that would be outstanding
on such date.
(c) Piggy-Back Registration.
(i) If, at any time on or after the Subscription Acceptance Date
and on or prior to three years from the Subscription Acceptance Date, 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 PiggyBack 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
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similar securities of the Company included therein. Notwithstanding
anything to the contrary contained in this Paragraph 4(c)(i), 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 by such Rightsholders and other
persons 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).
(ii) Number of Piggy-Back Registrations; Expenses. The
obligations of the Company under this Section 4(c) shall be unlimited with
respect to each Rightsholder. Subject to the provisions of Section 4(e)
hereof, the Company will pay all Registration Expenses in connection with
any registration of Registerable Securities effected pursuant to this
Section 4(c), but the Company shall not be responsible for the payment of
any underwriter's discount, commission or selling concession in connection
therewith.
(iii) Withdrawal or Suspension of Registration Statement.
Notwithstanding anything contained to the contrary in this Section 4(c),
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(c), 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, (A) 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(c) to register any of the
Registerable Securities in connection with such registration and (B) 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(c) for the same period as the delay in the
registration of such other securities. No registration effected under this
Section 4(c) shall relieve the Company of its obligation to effect any
registration upon demand otherwise granted to a Rightsholder under Section
4(b) hereof or any other agreement with the Company.
(d) Registration Procedures.
(i) Obligations of the Company. The Company will, in connection
with any registration pursuant to Section 4(b) or (c) hereof, as
expeditiously as possible:
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(A) prepare and file with 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 statement to become
effective, may be postponed for (1) 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 (2) any other bona fide corporate
purpose, but then only for a period not to exceed 90 days;
(B) 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;
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<PAGE>
(C) 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, (1) 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, (2) of any request by
the Commission for amendments or supplements to a registration
statement or related prospectus or for additional information, (3) 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, (4) if at any time the representations
and warranties of the Company contemplated by clause (1) of Paragraph
4(d)(i)(J) hereof cease to be true and correct, (5) 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 (6) 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;
(D) 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;
(E) 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 (1) qualify generally to do business
in any jurisdiction where it would not otherwise be required to
qualify but for this Paragraph 4(d)(i)(E), (2) subject itself to
taxation in any such jurisdiction or (3) take any action which would
subject it to general service of process in any such jurisdiction;
(F) 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
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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 (1)
the release of such Records is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction or (2) 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;
(G) 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;
(H) 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, (1) in an underwritten offering, at the end of any fiscal
quarter in which Registerable Securities are sold to underwriter(s),
or (2) 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;
(I) 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;
(J) 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, (1) make such
representations and warranties, if any, to the holders of such
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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, (2) 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), (3) 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
(4) 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(d)(i)(J) shall be done at each closing
under such underwriting or similar agreement or as and to the extent
required thereunder; and
(K) 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.
(ii) Obligations of Rightsholders. In connection with any
registration of Registerable Securities of a Rightsholder pursuant to
Section 4(b) or (c) hereof:
(A) 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
(B) Each Rightsholder, upon receipt of any notice from
the Company of the happening of any event of the kind described in
clauses (2), (3), (5) and (6) of Paragraph 4(d)(i)(C) 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 (1) of Paragraph 4(d)(i)(C)
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
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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(d)(ii)(B) in any Demand Request,
Tag-Along Request or Holder Notice of the Rightsholder or in a
separate document executed by the Rightsholder.
(e) 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, 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.
(f) Indemnification: Contribution.
(i) 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
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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.
(ii) 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.
(iii) Conduct of Indemnification Proceedings. Promptly after
receipt by an indemnified party under this Section 4(f) 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 (A) hereunder, unless
the indemnifying party is actually prejudiced thereby, or (B) otherwise
than under this Section 4(f). 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 (A) the
indemnifying party has agreed to pay such fees and expenses, (B) the
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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 (C)
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).
(iv) Contribution. If the indemnification provided for in this
Section 4(f) 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 (A) 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 (B) if the allocation
provided by clause (A) 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(f)(v), 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(f)(iv) 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 (A) and
(B) of the immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
-21-
<PAGE>
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.
(v) Limitation. Anything to the contrary contained in this
Section 4(f) or in Section 4(g) 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.
(g) Participation in Underwritten Registration. No Rightsholder may
participate in any underwritten registration hereunder unless such Rightsholder
(i) 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 Exchange
Act and (ii) 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(e) 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 the Company's
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 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
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<PAGE>
parties hereto and are not intended to benefit or be enforceable by any
other party, under the third party beneficiary doctrine or otherwise.
THE SHARES 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 SHARES 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 SHARES 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.
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<PAGE>
EXECUTION SECTION FOR SUBSCRIPTION BY INDIVIDUALS
I. SUBSCRIPTION AMOUNT:
The undersigned subscribes to purchase Shares for the Subscription Price
set forth in the first paragraph of this Agreement.
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) ________________________________________
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<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, furnishing, 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 earnings such revenues.
-25-
<PAGE>
V. SIGNATURE(S):
Signature(s) of Subscriber(s): (1) ________________________________________
(2) ________________________________________
Signature of Non-Subscribing Spouse (Community Property States Only):
(1) ________________________________________
(2) ________________________________________
Date: _______________________________________, 199__
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<PAGE>
EXECUTION SECTION FOR SUBSCRIPTION BY NON-INDIVIDUALS
I. SUBSCRIPTION AMOUNT:
The undersigned subscribes to purchase Shares for the Subscription Price
set forth in the first paragraph of this Agreement.
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: ____________________________________________________________
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<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.
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<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 a qualified institutional investor, as such term is
defined in Rule 144A, by reason of the fact that the undersigned is
___ A bank, with an audited net worth of at least $25 million, that in
the aggregate owns and invests on a discretionary basis at least
$100 million in securities (excluding United States government
securities and other specified investments) of unaffiliated issuers.
___ A registered dealer, owning and investing on a discretionary basis at
least $10 million of non-affiliated securities or is acting as a
riskless principal for qualified institutional buyers, that in the
aggregate owns and invests on a discretionary basis at least $100
million in securities (excluding United States government securities
and other specified investments) of unaffiliated issuers.
___ Either (a) an insurance company, (b) registered investment company,
(c) registered investment advisor, (d) government established and
administered employee benefit plan, (e) entity exempt from United
States federal income taxes under Section 501(c)(3) of the Code or (f)
a corporation, business trust, partnership or other entity entirely
owned by other qualified institutional buyers, in any event, that in
the aggregate owns and invests on a discretionary basis at least $100
million in securities (excluding United States government securities
and other specified investments) of unaffiliated issuers.
___ C. The undersigned is neither an accredited investor, as such term is
defined under Regulation D, nor a qualified institutional buyer, as such term is
defined in Rule 144A, and agrees, that upon the request of the Company, to
complete a Qualified Purchaser Questionnaire and return an executed copy thereof
to the Company.
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<PAGE>
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: _______________________________________, 199__
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<PAGE>
ACCEPTANCE PAGE
(To be completed by the Company)
SUBSCRIPTION AND SUBSCRIPTION AGREEMENT
ACCEPTED AND AGREED:
Subscription Price amount for which the Subscription is accepted: _____________
Number of Shares for which Subscription is accepted: _____________
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
By: ____________________________________________________
Name:
Title:
Date: _______________________________________, 199__
-31-
STOCK EXCHANGE AGREEMENT
BY AND AMONG
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
-AND-
SEAFISH PARTNERS
DATED DECEMBER 15, 1998
<PAGE>
This STOCK EXCHANGE AGREEMENT, dated December 15, 1998, is by and among
Software Publishing Corporation Holdings, Inc., a Delaware corporation ("Buyer")
with its principal place of business at 3A Oak Road, Fairfield, New Jersey
07004, and Seafish Partners, a partnership with an address of c/o Estudio
Chimel, Avenue Luis Maria Campos 799, 1426 Capital Federal, Buenos Aires,
Argentina ("Seller").
RECITALS:
WHEREAS, Buyer desires to acquire 120,000 outstanding shares of the common
stock, par value $.01 per share (the "X-ceed Common Stock"), of X-ceed, Inc., a
Delaware corporation (the "Company"), from the Seller; and
WHEREAS, the Seller desires to sell to Buyer such outstanding shares of
X-ceed Common Stock; and
WHEREAS, the Board of Directors of Buyer has determined that it is
advisable and in Buyer's advantage and benefit to effect a purchase of such
shares of X-ceed Common Stock from the Seller; and
WHEREAS, the Board of Directors of Buyer has approved and adopted this
Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties and covenants herein contained, and
other good and valuable consideration, the receipt and adequacy is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I - PURCHASE AND SALE
1.1. Sale and Purchase of Shareholder Shares. On the Closing Date (as
hereinafter defined), in accordance with the provisions of this Agreement and
applicable law, Seller will sell, assign, transfer and convey to Buyer, and
Buyer will purchase from the Seller, 120,000 shares (the "X-ceed Shares") of
X-ceed Common Stock.
ARTICLE II - CONSIDERATION
2.1. Amount of Consideration. In consideration for the sale, assignment,
transfer and conveyance of the X-ceed Shares to Buyer from Seller pursuant to
Paragraph 1.1. above, Buyer shall issue, pay and deliver, at the Closing (as
hereinafter defined), an aggregate of 930 shares (the "SPCH Shares") of the
Class A 14% Cumulative Non-Convertible Redeemable Preferred Stock, Series A, par
value $.001 per share (the "SPCH Preferred Stock"), of Buyer.
<PAGE>
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents, warrants and acknowledges to and covenants and agrees
with Buyer as follows:
3.1. Status; Authority Seller has legal capacity to execute, deliver and
perform Seller's obligations under this Agreement; and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of Seller and this Agreement constitutes the valid and
legally binding obligation of Seller, enforceable against Seller 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;
3.2. Consents and Approvals, No Conflicts.
(a) The execution and delivery of this Agreement by Seller do
not, and the performance by Seller of Seller'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 Seller
from performing any of Seller's material obligations under this Agreement;
and
(b) The execution, delivery and performance of this Agreement by
Seller and the other agreements and agreements to be executed, delivered
and performed by Seller pursuant hereto and the consummation of the
transactions contemplated hereby and thereby by Seller do not and will not
conflict with, violate or result in a breach or termination of any
provision of, or constitute a default under any law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award
applicable to Seller 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 Seller
pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument relating to such
assets or properties to which Seller is a party or by which any of such
assets or properties is bound, except as would not prevent Seller from
performing any of Seller's material obligations under this Agreement and
would not have a material adverse effect on Seller or Seller's assets;
3.3. Investment Intent. Seller is acquiring the SPCH Shares for Seller's
own account, for investment only and not with a view to, or for sale in
connection with, a distribution thereof or any part thereof, within the meaning
of the Securities Act, and the rules and regulations promulgated thereunder, or
any applicable state securities or blue-sky laws;
3.4. Investor Status. Seller is an accredited investor as such term is
defined under Regulation D promulgated pursuant to the Securities Act
("Regulation D"); and, if there should by any material change in such status
prior to the Closing, Seller will immediately advise Buyer of such change in
accredited investor status;
<PAGE>
3.5. Intent to Transfer. Seller 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 SPCH Shares or any part thereof to any person, and has no
present intention to enter into such a contract, undertaking, agreement or
arrangement;
3.6. Receipt of Disclosures. Seller acknowledges receipt of Buyer's (a)
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1997, (b)
Quarterly Report on Form 10- QSB for the quarter ended March 31, 1998, (c)
Quarterly Report on Form 10-QSB for the quarter ended June 30, 1998, (d)
Quarterly Report on Form 10-QSB for the quarter ended September 30, 1998, (e)
Current Report on Form 8-K (Date of Report: February 11, 1998), as amended,(f)
Current Report on Form 8-K (Date of Report: May 26, 1998) and (g) Certificate of
Designations, in the form attached as Exhibit 3.6 to this Agreement (the
"Certificate of Designations"); and Seller has read the such reports, including
all exhibits thereto, and Certificate of Designations and understands the
contents thereof;
3.7. Offering Exempt from Registration; Buyer's Reliance.
(a) Buyer has advised Seller that the SPCH 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;
(b) Buyer's reliance on the availability of such exemption is, in
part, based upon the accuracy and truthfulness of Seller's representations
contained herein; and
(c) As a result of such lack of registration, none of the SPCH
Shares may 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;
(d) In furtherance of the provisions of this Paragraph 3.7, all
of the certificate(s) representing the SPCH Shares shall bear a restrictive
legend substantially in the following form:
"THE SHARES OF PREFERRED 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;"
<PAGE>
3.9. Sophistication of Seller. Seller has evaluated the merits and risks of
purchasing the SPCH Shares and has such knowledge and experience in financial
and business matters that Seller 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 SPCH Shares, and is able to bear the
economic risk of purchasing the SPCH Shares, including the possibility of a
complete loss with respect thereto;
3.10. Access to Information. Seller has had access to such information
regarding the business and finances of Buyer, and has been provided the
opportunity to discuss with Buyer's management the business, affairs and
financial condition of Buyer and such other matters with respect to Buyer as
would concern a reasonable person considering the transactions contemplated by
this Agreement and/or concerned with the operation of Buyer including, without
limitation, pursuant to a meeting and/or discussions with management of Buyer;
3.11. No Guarantees. That it never has been represented, guaranteed or
warranted to Seller by Buyer, or any of Buyer's officers, directors, agents,
representatives or employees, or any other person, expressly or by implication,
that:
(a) Any gain will be realized by Seller from Seller's investment
in the SPCH Shares;
(ii) That there will be any approximate or exact length of time
that Seller will be required to remain as a holder of the SPCH Shares; or
(iii) That the past performance or experience on the part of
Buyer, its predecessors or of any other person, will in any way indicate
any future results of Buyer;
3.12. High Degree of Investment Risk. That the purchase of SPCH Shares
involves a high degree of risk and may result in a loss of the entire amount
invested; that Buyer has limited working capital and limited sources of
financing available; and that there is no assurance that Buyer's operations will
be profitable in the future;
3.13. State of Residence or Principal Place of Business. The address set
forth at the beginning of this Agreement is Seller's true and correct residence,
and Buyer has no present intention of becoming a resident of any other country,
state or jurisdiction;
3.14. No Purchaser Representative. Seller has not authorized any person or
institution to act as Seller's "purchaser representative" (as such term is
defined in Rule 501 of Regulation D) in connection with Seller's acquisition of
the SPCH Shares pursuant to this Agreement;
3.15. No General Solicitation. Seller has not received any general
solicitation or general advertising regarding the purchase of any of the SPCH
Shares;
3.16. No Finder. There is no finder in connection with this transaction;
<PAGE>
3.17. No Insider Trading. Seller will not engage in any transaction with
respect to securities of Buyer at any time if, at the time of such transaction,
Seller is aware of any material non- public information relating to Buyer or
Buyer's securities;
3.18. X-ceed Shares. Seller is the lawful owner of and has the full right,
power, and authority to sell, transfer, and deliver to the Buyer the X-ceed
Shares in accordance with the terms hereof and the sale, transfer, and delivery
of the X-ceed Shares in accordance with the terms hereof will transfer good,
valid and marketable title thereto free and clear of all liens, encumbrances,
claims or rights of every kind and nature whatsoever;
3.19. Valid Issuance. All of the X-ceed Shares have been duly authorized,
are validly issued and outstanding, are fully paid and nonassessable, and no
liability attaches to the holders thereof. The X-ceed Shares are owned by Seller
free and clear of any and all restrictions, liens, claims, or encumbrances or
rights of third parties of any nature whatsoever; there are no existing options,
warrants, calls, or commitments on the part of Seller of any character relating
to the X-ceed Shares; and no voting agreements or restrictions of any kind
affect the rights of any of the X-ceed Shares or the holders thereof.
3.20. Freely Tradeable X-ceed Shares. As of the date hereof and on the
Closing Date, the X-ceed Shares are either (a) freely tradeable,(b) registered
for resale by Seller under the Securities Act and the consummation of the
transactions contemplated by this Agreement is not in conflict with the manner
of sale provisions contained in the current prospectus included in the an
effective registration statement under the Securities Act covering the X-ceed
Shares, (c) the Seller is not currently and, for the twelve months immediately
preceding the date of this Agreement, has not been, an affiliate of X-ceed and
Seller has held the X-ceed Shares, free of any liens or encumbrances, for at
least the twelve months immediately preceding the date of this Agreement or (d)
the Seller is an affiliate of X-ceed and Seller has held the X-ceed Shares, free
of any and all liens or encumbrances, for at least the two years immediately
preceding the date of this Agreement; and
3.21. No Other Representations, Warranties, Covenants or Agreements of
Buyer. Except as set forth in this Agreement, or the documents referred to
herein, Buyer has not made any representation, warranty, covenant or agreement
with respect to the matters contained herein.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents, warrants and acknowledges to and covenants and agrees
with Seller as follows:
4.1. Corporate Status. Buyer (i) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, (ii) has
all necessary corporate power and authority to own, operate or lease the
properties and assets now owned, operated or leased by Seller and to carry on
the business of Buyer, as it is now being conducted, and (iii) is duly licensed
or qualified and in good standing as a foreign corporation authorized to do
business in each jurisdiction
<PAGE>
wherein the character of the properties owned or leased by Buyer and/or the
nature of the activities conducted by Buyer makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
and in good standing would not prevent Buyer from performing any of its material
obligations under this Agreement and would not have a material adverse effect on
the business, operations or financial condition of Buyer (a "Material Adverse
Effect");
4.2. Authority of Agreement. Buyer has the power and authority to accept,
execute and deliver this Agreement and, upon acceptance by Buyer (in whole or
part), to carry out its obligations hereunder; and the execution, delivery and
performance by Buyer of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Buyer and this Agreement, upon acceptance by Buyer (in whole or
part), constitutes the valid and legally binding obligations of Buyer
enforceable against Buyer 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 SPCH Shares to be issued hereunder, upon issuance
thereof in accordance with the terms hereof, will be validly authorized, fully
paid and non-assessable;
4.3. Consents and Approvals; No Conflict.
(a) The acceptance, execution and delivery of this Agreement by
Buyer does not, and the performance by Buyer of its obligations hereunder,
upon acceptance by Buyer (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 Buyer from performing any of its material
obligations under this Agreement and would not have a Material Adverse
Effect; and
(b) The acceptance, execution, delivery and performance of this
Agreement by Buyer and the other agreements and documents to be executed,
delivered and performed by Buyer pursuant hereto and the consummation of
the transactions contemplated hereby and thereby by Buyer 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 Buyer or, except as would not
prevent Buyer from performing any of its material obligations under this
Agreement and would not have a Material Adverse Effect, any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or
award applicable to Buyer 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 Buyer
pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument relating to such
assets or properties to which Buyer is a party or by which any of such
assets or properties is bound;
<PAGE>
4.4. 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
Buyer'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);
4.5. Extent of Offering. Subject in part to the truth and accuracy of
Seller's representations set forth in Section 3 of this Agreement and the
compliance by all agents of Buyer 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 SPCH Shares, as contemplated by this
Agreement, are exempt from the registration requirements of the Securities Act
and are exempt or Buyer has complied with registration requirements of each
state where the SPCH Shares are offered or sold, and Buyer will not take any
action hereafter that would cause the loss of such exemption or registration;
4.6 Accuracy of Reports and Information. Buyer 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"); Buyer has registered the SPCH Common Stock pursuant to
Section 12 of the Exchange Act and the SPCH Common Stock is listed and trades on
The Nasdaq SmallCap Market; and Buyer 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 months immediately preceding
the offer or sale of the SPCH Shares.
4.7. SEC Filings/Full Disclosure. None of Buyer's filings with the
Securities and Exchange Commission (the "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; Buyer
has, since January 1, 1998, timely filed all requisite forms, reports and
exhibits thereto with the Commission; and Buyer's Annual Report on Form 10-KSB
for the year ended December 31, 1997, Quarterly Reports on Forms 10-QSB for the
quarters ended March 31, June 30, and September 30, 1998, and Buyer's Current
Reports on Form 8-K (Date of Reports: February 11, 1998 and May 26, 1998) filed
by Buyer with the Commission (collectively, the "SEC Reports") did not 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;
There is no fact known to Buyer (other than general economic conditions
known to the public generally) that has not been disclosed in writing to the
undersigned which could reasonably be expected to materially and adversely
affect the ability of Buyer to perform its obligations pursuant to this
Agreement;
4.8. Absence of Undisclosed Liabilities. Buyer has no material liabilities
or obligations, absolute or contingent (individually or in the aggregate),
except as set forth in the SEC Reports, including the financial statements
included in the SEC Reports (collectively, the "Financial
<PAGE>
Statements"), or as incurred in the ordinary course of business after the
date of the Financial Statements;
4.9. Governmental Consent, etc. No consent, approval or authorization of or
designation, declaration or filing with any governmental authority on the part
of Buyer is required in connection with the valid execution and delivery of this
Agreement, or the offer, sale or issuance of the SPCH Shares, or the
consummation of any other transaction contemplated hereby;
4.10. Investment Intent. Buyer is acquiring the X-ceed Shares for Buyer's
own account, for investment only and not with a view to, or for sale in
connection with, a distribution thereof or any part thereof, within the meaning
of the Securities Act, and the rules and regulations promulgated thereunder, or
any applicable state securities or blue-sky laws;
4.11. Investor Status. Buyer is an accredited investor as such term is
defined under Regulation D promulgated pursuant to the Securities Act
("Regulation D"); and, if there should by any material change in such status
prior to the Closing, Seller will immediately advise Seller of such change in
accredited investor status;
4.12. Intent to Transfer. Buyer 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 X-ceed Shares or any part thereof to any person, and has
no present intention to enter into such a contract, undertaking, agreement or
arrangement;
4.13. Sophistication of Buyer. Buyer, through its officers and directors,
has evaluated the merits and risks of purchasing the X-ceed Shares and has such
knowledge and experience in financial and business matters that Buyer 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 X-ceed
Shares, and is able to bear the economic risk of purchasing the X-ceed Shares,
including the possibility of a complete loss with respect thereto;
4.14. Access to Information. Buyer has had access to such information
regarding the business and finances of the Company, 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 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;
4.15. No Guarantees. That it never has been represented, guaranteed or
warranted to Buyer by Seller, the Company or any of Seller's or the Company's
officers, directors, agents, representatives or employees, or any other person,
expressly or by implication, that:
(a) Any gain will be realized by Buyer from Buyer's investment in
the X-ceed Shares;
<PAGE>
(ii) That there will be any approximate or exact length of time
that Buyer will be required to remain as a holder of the X-ceed 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;
4.16. No Other Representations, Warranties, Covenants or Agreements of
Seller. Except as set forth in this Agreement, or the documents referred to
herein, Seller has not made any representation, warranty, covenant or agreement
with respect to the matters contained herein;
4.17. High Degree of Investment Risk. That the purchase of X-ceed Shares
involves a high degree of risk and may result in a loss of the entire amount
invested; that Seller 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 X-ceed Common Stock will continue to exist;
4.18. State of Residence or Principal Place of Business. The address set
forth at the beginning of this Agreement is Buyer's true and correct principal
place of business, and Buyer has no present intention of relocating to any other
country, state or jurisdiction;
4.19. No Purchaser Representative. Buyer has not authorized any person or
institution to act as Buyer's "purchaser representative" (as such term is
defined in Rule 501 of Regulation D) in connection with Buyer's acquisition of
the X-ceed Shares pursuant to this Agreement;
4.20. No General Solicitation. Buyer has not received any general
solicitation or general advertising regarding the purchase of any of the X-ceed
Shares; and
4.21. No Finder. There is no finder in connection with this transaction.
ARTICLE V - CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement are, at the option of Buyer,
subject to the satisfaction at and prior to the Closing Date of the following
conditions:
5.1. Fulfillment of Covenants. All the terms, covenants and conditions of
this Agreement to be complied with and performed by Seller on or before the
Closing Date shall have been duly complied with and performed, and there shall
have been delivered to Buyer a certificate to such effect dated the Closing
Date, signed by Seller.
5.2. Accuracy of Representations and Warranties. All of the representations
and warranties made by Seller in this Agreement shall be true as of the Closing
Date with the same force and effect as though such representations and
warranties had been made as of the Closing Date, and Seller shall have delivered
to Buyer a certificate to such effect, dated the Closing Date, and signed by
Seller.
<PAGE>
5.3. No Litigation. There shall be no action, proceeding, investigation or
pending or actual litigation the purpose of which is to enjoin or may be to
enjoin the transactions contemplated by this Agreement or which would have the
effect, if successful, of imposing a material liability upon Buyer, or any of
the officers or directors thereof, because of or due to, in many respects, the
consummation of the transactions contemplated by this Agreement. There shall be
no action, proceeding, investigation or pending or actual litigation against or
with respect to the Company, Seller, outstanding shares of X-ceed Common Stock
or the X-ceed Shares which could, in any way, invalidate or damage this
Agreement or value of the assets which Buyer is acquiring pursuant to this
Agreement.
ARTICLE VI - CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement are, at the option of Seller
subject to the satisfaction at and prior to the Closing Date of the following
conditions:
6.1. Fulfillment of Covenants. All the terms, covenants and conditions of
this Agreement to be complied with and performed by Buyer on or before the
Closing Date shall have been duly complied with and performed, and there shall
have been delivered to Seller a certificate to such effect dated the Closing
Date, signed by Buyer's President and Secretary.
6.2. Accuracy of Representations and Warranties. All of the representations
and warranties made by Buyer in this Agreement shall be true as of the Closing
Date with the same force and effect as though such representations and
warranties had been made as of the Closing Date, and Buyer shall have delivered
to Seller a certificate to such effect dated the Closing Date, signed by Buyer's
President and Secretary.
6.3. No Litigation. There shall be no action, proceeding, investigation or
pending or actual litigation the purpose of which is to enjoin or may be to
enjoin the transactions contemplated by this Agreement or which would have the
effect, if successful, of imposing a material liability upon Seller because of
or due to, in many respects, the consummation of the transactions contemplated
by this Agreement. There shall be no action, proceeding, investigation or
pending or actual litigation against or with respect to Buyer, the outstanding
shares of SPCH Common Stock or the SPCH Shares which could, in any way,
invalidate or damage this Agreement or value of the assets which Seller is
acquiring pursuant to this Agreement.
6.4. Filing of Certificate of Designation. Buyer shall have filed with the
Secretary of State of the State of Delaware the Certificate of Designations,
substantially in the form attached hereto as Exhibit 3.6 to this Agreement.
ARTICLE VII - CLOSING
7.1. Closing Date. The consummation of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Buyer's
counsel, Kaufman & Associates, LLC, at
<PAGE>
50 Charles Lindbergh Boulevard - Suite 206, Mitchel Field, New York 11553,
at 10:00 a.m., local time, on December __, 1998 (the "Closing Date"), or such
other time or place as shall be mutually agreed upon by the parties to this
Agreement.
7.2. Effectiveness. When the transactions contemplated by this Agreement
are consummated on the Closing Date, the acquisition of the X-ceed Shares by
Buyer and the acquisition of the SPCH Shares by Seller shall be effective as of
the Effective Date.
ARTICLE VIII - INDEMNIFICATION
8.1. Right of Indemnification. From and after the date hereof, each party
hereto will indemnify and hold harmless the other party, and such other party's,
its officers, directors, employees and agents against any and all liability,
damage, deficiency, loss, cost or expense (including reasonable attorneys' fees
and expenses) that are based upon or that arise out of any misrepresentation or
breach of any warranty or agreement made by such party herein.
8.2. Indemnification Procedure. Each party (the "Indemnified Party")
entitled to indemnification under this Agreement shall give prompt notice to the
party (the "Indemnifying Party") required to provide indemnification under this
Agreement after such Indemnified Party has received actual knowledge of any
third-party claim as to which indemnity may be sought, and shall permit the
Indemnifying Party (at its expense) to assume the defense of any claim or any
litigation resulting therefrom; provided, that counsel for the Indemnifying
Party who shall conduct the defense of such claim or litigation, shall be
reasonably satisfactory to the Indemnified Party, and the Indemnified Party may
participate in such defense, but only at such Indemnified Party's expense; and
provided, further, that the omission by any Indemnified Party to give prompt
notice as provided herein shall not relieve the Indemnifying Party of its
indemnification obligations under this Agreement, except to the extent that the
omission results in a failure of actual prompt notice to the Indemnifying Party
and such Indemnifying Party is damaged as a result of the failure to give prompt
notice. No Indemnifying Party, in the defense of the such claim or litigation,
shall, except with the consent of each Indemnified Party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability with respect to such claim or
litigation. In the event that the Indemnifying Party does not accept the defense
of any matter as above provided, the Indemnified Party shall have the full right
to defend against any such claim or demand, and shall be entitled to settle or
agree to pay in full such claim or demand in the Indemnified Party's sole
discretion. In any event, each Transferor and the Transferee shall cooperate in
the defense of such action and the records of each shall be available to the
other with respect to such defense.
8.3. Indemnification Notice. Any notice of a claim by reason of any of the
representations, warranties and agreements contained in this Agreement, shall
state specifically the representation, warranty, covenant or agreement with
respect to which the claim is made and the amount of liability asserted against
the other party by reason of the claim. The representations, warranties,
covenants, agreements and indemnities contained in this Agreement shall survive
the
<PAGE>
execution and delivery of this Agreement, any examination by or on behalf
of such parties, the Closing and the completion of the Transactions as
contemplated herein.
ARTICLE IX - PROXY
Seller hereby appoints the President of Buyer as attorney and proxy, with
full power of substitution, in the name and place of Seller, to vote as proxy
all of the SPCH Shares owned beneficially or of record by Seller in such manner
as may be determined by the President of Buyer, in such President's sole
discretion. Seller hereby acknowledges that Buyer would not agree to this
Agreement in the absence of this proxy, that this proxy is a requirement for
Buyer to enter into this Agreement and that this proxy is and shall at all times
be irrevocable and coupled with an interest. Seller further acknowledges that
this proxy shall remain in effect for ten years, except to the extent that the
SPCH Shares subject to this proxy are no longer owned beneficially or of record
by Seller or any member of their family or any affiliate thereof.
ARTICLE X - GENERAL
10.1. Payment of Expenses. Each party shall bear its own expenses with
respect to this Agreement and the transactions contemplated hereby.
10.2. Consent to Jurisdiction and Waivers. The parties hereto each
irrevocably consents that any legal action or proceeding against any of them
under, arising out of or in any manner relating to, this Agreement or any other
document delivered in connection herewith, may be brought in any court of the
State of New York located within Nassau County or in the United States District
Court for the Eastern District of New York. The parties hereto, by the execution
and delivery of this Agreement, expressly and irrevocably consent and submit to
the personal jurisdiction of any of such courts in any such action or
proceeding. The parties hereto further irrevocably consent to the service of any
complaint, summons, notice or other process relating to any such action or
proceeding by delivery thereof to it by hand or by any other manner provided for
in paragraph 9(d) below. The parties hereto hereby expressly and irrevocably
waive any claim or defense in any such action or proceeding based on any alleged
lack of personal jurisdiction, improper venue or forum non convenient or any
similar basis. Nothing in this paragraph 9(b) shall affect or impair in any
manner or to any extent the right of either party to commence legal proceedings
or otherwise proceed against any other party hereto in any jurisdiction or to
serve process in any manner permitted by law.
10.3. Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may not be amended, modified or supplemented
without the written consent of each of the parties hereto. Any of the parties
hereto may, by written notice to the other, (a) waive any of the conditions to
its obligations hereunder or extend the time for the performance of any of the
obligations or actions of the other, (b) waive any inaccuracies in the
representations of the other contained in this Agreement or in any documents
delivered pursuant to this Agreement, (c) waive compliance with any of the
covenants of the other contained in this Agreement and (d) waive or modify
performance of any of the obligations of the other. No action taken pursuant to
this
<PAGE>
Agreement, including without limitation, any investigation by or on behalf
of any party, shall be deemed to constitute a waiver by the party taking such
action or compliance with any representation, warranty, condition or agreement
contained herein. Waiver of the breach of any one or more provisions of this
Agreement shall not be deemed or construed to be a waiver of other breaches or
subsequent breaches of the same provisions.
10.4. Notices. All notices, demands, requests, demands and other
communications required or otherwise given under this Agreement shall be in
writing and shall be deemed to have been duly given if: (i) delivered by hand
against written receipt therefor, (ii) forwarded by a third party company or
governmental entity providing delivery services in the ordinary course of
business which guarantees delivery the following business day, (iii) mailed by
registered or certified mail, return receipt requested, postage prepaid, or (iv)
transmitted by facsimile transmission electronically confirmed for receipt, in
full, by the other party no later than 5:00 pm, local time, on the date of
transmission, addressed as follows:
If to Seller, to: Seafish Partners
c/o Estudio Chimel
Avenue Luis Maria Campos 799
1426 Capital Federal
Buenos Aires, Argentina
If to Buyer, to: 3A Oak Road
Fairfield, New Jersey 07004
Attn.: President
Facsimile: (973) 808-2645
with a copy to: Kaufman & Associates, LLC
50 Charles Lindbergh Boulevard - Suite 206
Mitchel Field, New York 11553
Attn: Neil M. Kaufman, Esq.
Facsimile: (516) 222-5100
or, in the case of any of the parties hereto, at such other address as such
party shall have furnished to each of the other parties hereto in accordance
with this Paragraph 10.4. Each such notice, demand, request or other
communication shall be deemed given (a) on the date of such delivery by hand,
(b) on the first business day following the date of such delivery to the
overnight delivery service or facsimile transmission or (c) three business days
following such mailing.
<PAGE>
10.5. Successors and Assigns: Holders and Third Parties as Beneficiaries.
This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and assigns.
10.6. Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
10.7. Headings. The headings of the articles, sections, paragraphs and
clauses in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meanings or interpretations of the terms contained
therein.
10.8. Governing Law. This Agreement and the rights, obligations and
liabilities of the parties hereto shall be governed by and construed and
interpreted in accordance with the laws of the State of New York without regard
to the conflicts of laws principles thereof.
10.9. Severability: Specific Enforcement. In the event that any one or more
of the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal, or unenforceable for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law. Each
of the parties hereto acknowledge that the other party(ies) hereto would not
have an adequate remedy at law for money damages in the event that any of the
covenants or agreements of any other party in this Agreement were not performed
in accordance with its terms and therefore agrees that the other party(ies)
shall be entitled to specific enforcement of such covenants or agreements and to
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled, at law or in equity.
10.10. Entire Agreement; Survival. This Agreement and the agreements
referred to herein are intended by the parties as a final expression of their
agreements and are intended to be a complete and exclusive statement of the
agreements and understandings of the parties hereto in respect of the subject
matter contained herein and therein. There are no restrictions, promises,
representations, warranties or undertakings, with respect to the subject matter
hereof, other than those set forth or referred to herein and therein. This
Agreement and the agreements referred to herein are supersede all prior
agreements and understandings between the parties with respect to such subject
matters.
10.11 Binding Nature. This Agreement shall be binding upon and inure to the
benefit of the parties hereto. Neither party to this Agreement may assign or
transfer any rights under this Agreement.
10.12. Use of Certain Terms and References. The words "hereof," "herein"
and "hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement; the term "or" shall be deemed to include the term "and/or;" singular
or plural tenses shall be deemed to include the opposite whenever the context
<PAGE>
so indicates or requires; and article, section, subsection, paragraph,
clause, schedule and exhibit references are to this Agreement unless otherwise
specified.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
SELLER:
SEAFISH PARTNERS
/s/
Partner
BUYER:
SOFTWARE PUBLISHING CORPORATION
HOLDINGS, INC.
By:/s/Mark E. Leininger
Mark E. Leininger, President
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
SUBSCRIPTION AGREEMENT
December 15, 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 the common
stock, par value $.001 per share (the "Common Stock") of the Company, at a price
equal to $.40 per share of Common Stock, or $_______ the aggregate (the
"Purchase Price"), and hereby tenders to the Company in full the Purchase 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 (i) is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
(ii) 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 (iii) 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");
<PAGE>
(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 to be issued hereunder, upon issuance thereof in
accordance with the terms hereof, 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
<PAGE>
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, as
contemplated by this Subscription Agreement, 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; and 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 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 (the "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, 1998, timely filed all requisite forms, reports
and exhibits thereto with the Commission; and the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1997, Quarterly Reports on Forms
10-QSB for the quarters ended March 31, June 30, and September 30, 1998, and the
Company's Current Reports on Form 8-K (Date of Reports: February 11, 1998 and
May 26, 1998) filed by the Company with the Commission (collectively, the "SEC
Reports") did not 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;
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 undersigned 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;
<PAGE>
(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 Commission 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 as contemplated therein; and 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 undersigned, 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 September 30, 1998. Since September 30, 1998 and
through the date of the Memorandum, the Company has not issued any shares of
Common Stock, other than as disclosed in its SEC Reports; and as of the date of
the Memorandum, the Company has 3,966,954 shares of Common Stock issued and
outstanding; and
<PAGE>
(q) Use of Proceeds. The Company represents that the net proceeds from the
Purchase Price 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:
(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 undersigned's
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
<PAGE>
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 or any part 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 (i) Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1997, (ii) Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1998, (iii) Quarterly Report on Form 10-QSB for the quarter ended June
30, 1998, (iv) Quarterly Report on Form 10-QSB for the quarter ended September
30, 1998, (v) Current Report on Form 8-K (Date of Report: February 11, 1998), as
amended, and (vi) Current Report on Form 8-K (Date of Report: May 26, 1998); and
the undersigned has read the Memorandum, including all Exhibits thereto, and
understands the contents thereof.
(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;
<PAGE>
(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, none of the
Shares may 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 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 Shares, and is able to bear the
economic risk of purchasing 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;
<PAGE>
(ii) That there will be any approximate or exact length of time
that the undersigned will be required to remain as a holder of 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, the Memorandum or
the documents referred to herein or therein, 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 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 Agreement 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 country, 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; and
(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
<PAGE>
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 Purchase 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 Purchase
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 Purchase
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.
(a) Defined Terms. As used in this Section 4, terms defined 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 any of the Shares, including 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
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.
<PAGE>
(iii) 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.
(b) Demand Registration.
(i) Right to Demand. Subject to Paragraph 4(b)(ii) hereof, at any
time on or after the Closing Date and on or prior to three years from the
Closing Date, the Initiating Holders (as defined in paragraph 4(b)(vi)
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.
(ii) Number of Demand Registrations; Expenses. Subject to the
provisions of Paragraph 4(b)(iii) hereof, the holders of Registerable
Securities shall be entitled, in the aggregate, to one Demand Registration,
the Registration Expenses (as defined in Section 4(e) hereof) of which,
subject to the provisions of Section 4(e), shall be borne by the Company,
but the Company shall not be responsible for the payment of any
underwriter's discount, commission or selling concession in connection with
any of the Registrable Securities. The Company shall not be deemed to have
effected a Demand Registration unless and until such Demand Registration is
declared effective.
(iii) Priority on Demand Registrations.
(A) 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 (1) 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
<PAGE>
writing, that the inclusion of such other securities would not
adversely affect such underwritten offering or (2) 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: (1) 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,
(2) second, pro rata (based upon the amount of Registerable
Securities) among the Registerable Securities of the other holders
(each, a "Rightsholder") of registration rights granted by the Company
in connection with the sale of the Shares 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, (3) 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 (4) 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.
(B) 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: (1) first, pro rata (based upon the amount
of Registerable Securities) among the Registerable Securities included
in the Demand Request, (2) 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, (3) 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
(4) 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.
(C) 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
<PAGE>
Request, pursuant to the provisions of this Section 4(b), 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.
(iv) 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.
(v) 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.
(vi) "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 the total Registerable Securities that would be outstanding
on such date.
(c) Piggy-Back Registration.
(i) If, at any time on or after the Closing Date and on or prior
to three years from the Closing Date, 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
<PAGE>
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(c)(i), 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 by such Rightsholders and other
persons 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).
(ii) Number of Piggy-Back Registrations; Expenses. The
obligations of the Company under this Section 4(c) shall be unlimited with
respect to each Rightsholder. Subject to the provisions of Section 4(e)
hereof, the Company will pay all Registration Expenses in connection with
any registration of Registerable Securities effected pursuant to this
Section 4(c), but the Company shall not be responsible for the payment of
any underwriter's discount, commission or selling concession in connection
therewith.
(iii) Withdrawal or Suspension of Registration Statement.
Notwithstanding anything contained to the contrary in this Section 4(c),
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(c), 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, (A) 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(c) to register any of the
Registerable Securities in connection with such registration and (B) 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(c) for the same period as the delay in the
registration of such other securities. No registration effected under this
Section 4(c) shall relieve the Company of its obligation to effect any
registration upon demand otherwise granted to a Rightsholder under Section
4(b) hereof or any other agreement with the Company.
(d) Registration Procedures.
(i) Obligations of the Company. The Company will, in connection
with any registration pursuant to Section 4(b) or (c) hereof, as
expeditiously as possible:
<PAGE>
(A) prepare and file with 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 statement to become
effective, may be postponed for (1) 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 (2) any other bona fide corporate
purpose, but then only for a period not to exceed 90 days;
(B) 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;
<PAGE>
(C) 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, (1) 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, (2) of any request by
the Commission for amendments or supplements to a registration
statement or related prospectus or for additional information, (3) 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, (4) if at any time the representations
and warranties of the Company contemplated by clause (1) of Paragraph
4(d)(i)(J) hereof cease to be true and correct, (5) 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 (6) 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;
(D) 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;
(E) 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 (1) qualify generally to do business
in any jurisdiction where it would not otherwise be required to
qualify but for this Paragraph 4(d)(i)(E), (2) subject itself to
taxation in any such jurisdiction or (3) take any action which would
subject it to general service of process in any such jurisdiction;
(F) 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
<PAGE>
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 (1)
the release of such Records is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction or (2) 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;
(G) 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;
(H) 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, (1) in an underwritten offering, at the end of any fiscal
quarter in which Registerable Securities are sold to underwriter(s),
or (2) 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;
(I) 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;
(J) 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, (1) make such
representations and warranties, if any, to the holders of such
<PAGE>
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, (2) 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), (3) 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
(4) 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(d)(i)(J) shall be done at each closing
under such underwriting or similar agreement or as and to the extent
required thereunder; and
(K) 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.
(ii) Obligations of Rightsholders. In connection with any
registration of Registerable Securities of a Rightsholder pursuant to
Section 4(b) or (c) hereof:
(A) 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
(B) Each Rightsholder, upon receipt of any notice from
the Company of the happening of any event of the kind described in
clauses (2), (3), (5) and (6) of Paragraph 4(d)(i)(C) 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 (1) of Paragraph 4(d)(i)(C)
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
<PAGE>
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(d)(ii)(B) in any Demand Request,
Tag-Along Request or Holder Notice of the Rightsholder or in a
separate document executed by the Rightsholder.
(e) 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, 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.
(f) Indemnification: Contribution.
(i) 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
<PAGE>
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.
(ii) 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.
(iii) Conduct of Indemnification Proceedings. Promptly after
receipt by an indemnified party under this Section 4(f) 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 (A) hereunder, unless
the indemnifying party is actually prejudiced thereby, or (B) otherwise
than under this Section 4(f). 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 (A) the
indemnifying party has agreed to pay such fees and expenses, (B) the
<PAGE>
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 (C)
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).
(iv) Contribution. If the indemnification provided for in this
Section 4(f) 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 (A) 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 (B) if the allocation
provided by clause (A) 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(f)(v), 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(f)(iv) 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 (A) and
(B) of the immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
<PAGE>
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.
(v) Limitation. Anything to the contrary contained in this
Section 4(f) or in Section 4(g) 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.
(g) Participation in Underwritten Registration. No Rightsholder may
participate in any underwritten registration hereunder unless such Rightsholder
(i) 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 Exchange
Act and (ii) 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(e) 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 the Company's
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 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
<PAGE>
not intended to benefit or be enforceable by any other party, under the third
party beneficiary doctrine or otherwise.
THE SHARES 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 SHARES 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 SHARES 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 Shares for the Purchase Price set
forth in the first paragraph of this Agreement.
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, furnishing, automobile
and restricted securits), 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: _______________________________________, 199__
<PAGE>
EXECUTION SECTION FOR SUBSCRIPTION BY NON-INDIVIDUALS
I. SUBSCRIPTION AMOUNT:
The undersigned subscribes to purchase Shares for the Purchase Price
set forth in the first paragraph of this Agreement.
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.
___ LIMITED LIABILITY COMPANY.
___ 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 a qualified institutional investor, as such term is
defined in Rule 144A, by reason of the fact that the undersigned is
___ A bank, with an audited net worth of at least $25 million,
that in the aggregate owns and invests on a discretionary basis at
least $100 million in securities (excluding United States government
securities and other specified investments) of unaffiliated issuers.
___ A registered dealer, owning and investing on a discretionary
basis at least $10 million of non-affiliated securities or is acting
as a riskless principal for qualified institutional buyers, that in
the aggregate owns and invests on a discretionary basis at least $100
million in securities (excluding United States government securities
and other specified investments) of unaffiliated issuers.
___ Either (a) an insurance company, (b) registered investment
company, (c) registered investment advisor, (d) government established
and administered employee benefit plan, (e) entity exempt from United
States federal income taxes under Section 501(c)(3) of the Code or (f)
a corporation, business trust, partnership or other entity entirely
owned by other qualified institutional buyers, in any event, that in
the aggregate owns and invests on a discretionary basis at least $100
million in securities (excluding United States government securities
and other specified investments) of unaffiliated issuers.
___ C. The undersigned is neither an accredited investor, as such term is
defined under Regulation D, nor a qualified institutional buyer, as such term is
defined in Rule 144A, and agrees, that upon the request of the Company, to
complete a Qualified Purchaser Questionnaire and return an executed copy thereof
to the Company.
<PAGE>
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: _______________________________________, 199__
<PAGE>
ACCEPTANCE PAGE
(To be completed by the Company)
SUBSCRIPTION AND SUBSCRIPTION AGREEMENT
ACCEPTED AND AGREED:
Purchase Price amount for which the Subscription is accepted: _______________
Number of Shares for which Subscription is accepted: _______________
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
By: _____________________________________________
Name:
Title:
Date: ________________________, 199__
