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): January 11, 1999
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)
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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 (the "Securities Act"),
and Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements 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.
Item 5. Other Events.
(a) On January 11, 1999, the Company was advised by The Nasdaq Stock
Market, Inc. ("Nasdaq") that a Nasdaq Listing Qualifications Panel (the "Panel")
had determined that the Company had complied with both of the requirements
imposed by the Panel for continued listing of the common stock, par value $.001
per share (the "Common Stock"), of the Company, on The Nasdaq SmallCap Market
(the "SmallCap Market") and that the Common Stock will continue to be listed on
the SmallCap Market. The Company was further advised that the fifth character to
the Common Stock's trading symbol on the SmallCap Market would be removed as of
the opening of business on Wednesday, January 13, 1999, so that, as of such
date, the Common Stock's trading symbol would be "SPCO."
(b) Pursuant to a Letter Agreement, dated January 4, 1999, between
the Company and Seafish Partners, the holder of all 930 shares (the "Class A
Shares") of the Class A 14% Cumulative Non-Convertible Redeemable Preferred
Stock, par value $.001 per share (the "Class A Preferred Stock"), of the
Company, Seafish Partners exchanged the Class A Shares for (i) the issuance of
930 shares (the "Class C Shares") of the Class C 11% Cumulative Non-Convertible
Redeemable Preferred Stock, par value $.001 per share (the "Class C Preferred
Stock), of the Company, (ii) the issuance of warrants (the "Seafish Warrants")
to purchase 260,000 shares of Common Stock, at an exercise price of $1.0625 per
share, exercisable immediately and expiring on January 3, 2006, (c) a payment of
$7,134.25 representing all accrued dividends on the Class A Shares through
January 4, 1998. On January 4, 1999, the closing bid price of the Common Stock
was $1.0625 per share. The Class C Shares and Seafish Warrants are exempt
securities under Section 3(9) of the Securities Act and the issuance of the
Class C Shares and Seafish Warrants was a private transaction exempt from
registration under the Securities Act pursuant to Section 4(2) thereof.
The Certificate of Designations with respect to the Class C Preferred
Stock authorizes a class of 1,000 shares of Class C Preferred Stock. Holders of
shares of Class C Preferred Stock will be entitled to (a) cumulative dividends
of $110 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 Class C Preferred
Stock, in part or whole, at any time, upon payment of $1,000 per share of Class
C Preferred Stock.
(c) Pursuant to a Letter Agreement, dated December 17, 1998 between
the Company and Marc E. Jaffe, the Company sold and issued to Mr. Jaffe, the
Chairman of the Board of the Company, 30,000 shares (the "Jaffe Shares") of
Common Stock in consideration for $22,500 due Mr. Jaffe for services rendered to
the Company. On December 17, 1998, the closing bid price of the Common Stock was
$.75 per share. The issuance of the Jaffe Shares was a private transaction
exempt from registration under the Securities Act pursuant to Section 4(2) and
Section 4(6) thereof.
(d) Pursuant to a Consulting Agreement, between the Company and
Target Capital Corporation ("Target"), the Company retained Target to
provide consulting services to the Company for a five year period in
consideration for (i) the issuance to Target of warrants (the "Target
Warrants") to purchase 520,000 shares of Common Stock, at an exercise price of
$.75 per share, exercisable immediately and expiring on December 16, 2005, (ii)
the payment to Target of certain cash consideration, including an amount equal
to .30% of the Company's net revenue, with a minimum of $125,000 per annum
and a maximum of $250,000 per annum, and (iii) the issuance to United Krasna
Organizations of warrants (the "Krasna Warrants") to purchase 120,000 shares of
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Common Stock, at an exercise price of $.75 per share, exercisable immediately
and expiring on December 16, 2005. The issuance of the Target Warrant and
Krasna Warrant were private transactions exempt from registration under the
Securities Act pursuant to Section 4(2) thereof.
(e) Pursuant to a Consulting Agreement, between the Company and
Michele Ladovich (the "European Consulting Agreement"), the Company retained
Mr. Ladovich to provide public and investor relations consulting services
to the Company in the European Union and the United Kingdom for a five year
period in consideration for the issuance of warrants (the "European Warrant")
to purchase 600,000 shares of Common Stock, at an exercise price of $.75
per share, exercisable immediately with respect to 500,000 shares and
commencing June 17, 1999, with respect to 100,000 shares, and all expiring on
December 16, 2005. The issuance of the European Warrant was a private
transaction exempt from registration under the Securities Act pursuant to
Section 4(2) thereof.
(f) Kevin D. Sullivan has left the Company. Mark E. Leininger, the
Company's President and former Chief Financial Officer, will assume the duties
of chief financial officer of the Company until a replacement is retained.
On December 11, 1998, Neil R. Austrian, Jr. resigned as a director of the
Company. On December 17, 1998, Peter N. Detkin resigned as a director of the
Company.
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 Consulting Agreement between the Company and Target Capital Corp.
10.2 Consulting Agreement between the Company and Michele Ladovich.
10.3 Letter Agreement, dated January 4, 1999, between the Company
and Seafish Partners.
10.4 Letter Agreement, dated December 17, 1998, between the
Company Marc E. Jaffe.
10.5 Warrant Certificate, with respect to 520,000 shares of Common
Stock, registered in the name of Target Capital Corp.
10.6 Warrant Certificate, with respect to 120,000 shares of Common
Stock, registered in the name of United Krasna Organizations.
10.7 Form of Warrant Certificate, with respect to 600,000 shares of
Common Stock, to be issued pursuant to the European Consulting
Agreement.
10.8 Warrant Certificate, with respect to 260,000 shares of Common
Stock, registered in the name of Seafish Partners.
<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: January 18, 1999
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 Consulting Agreement between the Company and Target Capital Corp.
10.2 Consulting Agreement between the Company and Michele Ladovich.
10.3 Letter Agreement, dated January 4, 1999, between the Company
and Seafish Partners.
10.4 Letter Agreement, dated December 17, 1998, between the
Company Marc E. Jaffe.
10.5 Warrant Certificate, with respect to 520,000 shares of Common
Stock, registered in the name of Target Capital Corp.
10.6 Warrant Certificate, with respect to 120,000 shares of Common
Stock, registered in the name of United Krasna Organizations.
10.7 Form of Warrant Certificate, with respect to 600,000 shares of
Common Stock, to be issued pursuant to the European Consulting
Agreement.
10.8 Warrant Certificate, with respect to 260,000 shares of Common
Stock, registered in the name of Seafish Partners.
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,
<PAGE>
without 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.
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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;
(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
<PAGE>
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.
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 Preferred 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 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
<PAGE>
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 corporation or otherwise for the protection of the
rights of the holders of shares of Class A Preferred Stock.
<PAGE>
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;
(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
<PAGE>
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 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.
<PAGE>
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.
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
<PAGE>
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.
Class C 11% Cumulative Non-Convertible Redeemable Preferred Stock,
Series A
Section 1. Designation and Amount. The shares of
such class shall be designated as "Class C 11% Cumulative
Non-Convertible Redeemable Preferred Stock, Series A" (the "Class C
Preferred Stock") and the number of shares constituting the Class C
Preferred Stock shall be 1,000. 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 Class C 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 C
Preferred Stock.
Section 2. Dividends.
2.1. The dividend rate on the shares
of Class C Preferred Stock shall be $110.00 per share
per annum. Such dividends shall be cumulative on each
share of Class C 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
<PAGE>
year, commencing with June 30, 1999. Each such dividend shall be
paid to the holders of record of shares of the Class C 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 C Preferred Stock and any
other Serial Preferred Stock ranking on a parity as to
dividends with the Class C Preferred Stock, all dividends
declared upon shares of Class C 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 C 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 C 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 C 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 C 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 C
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 C Preferred Stock as
to dividends and liquidation rights).
Section 3. Conversion Provisions. The Class C
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 C 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 C 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 C Preferred Stock and
any other shares of stock of the Corporation ranking (as to any such
distribution) on a parity with the Class C Preferred Stock are not
paid in full, holders of the Class C 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 C 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
<PAGE>
and surviving corporation or otherwise for the protection of the
rights of the holders of shares of Class C 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 C
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 $1,000 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 C Preferred Stock may not be
redeemed in part.
(b) If less than all of the
outstanding shares of Class C 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 C 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 C 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 C 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 C 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 C 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 C 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 C 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
<PAGE>
obligations of which are backed by the full faith
and credit of the United States Government;
(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 C 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 C Preferred Stock shall
have no voting rights with respect to their Class C
Preferred Stock.
6.2. If any three consecutive semi-
annual dividends payable on Class C Preferred Stock,
or on any other class or series of Serial Preferred Stock
ranking on a parity with Class C Preferred Stock as to
dividends or liquidation rights, shall not be paid in full
when payable (a "Default"), the holders of Class C Preferred
Stock and all outstanding series of Serial Preferred Stock
ranking on a parity with the Class C 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
<PAGE>
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 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.
6.4. 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
<PAGE>
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.
6.8. So long as any shares of Class
C 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 C 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 C
Preferred Stock so as to affect the Class C Preferred
Stock adversely; or
(ii) issue any Serial
Preferred Stock which ranks senior to the Class C
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 C Preferred Stock and/or
Pari Passu Preferred Stock at any annual or special meeting
of holders of Class C 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 C 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 C
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 C 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 C Preferred Stock and/or Pari Passu Preferred Stock
have concurred in any vote, consent, waiver or other action hereunder,
shares of Class C 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 C 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 C 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
<PAGE>
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 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.
<PAGE>
(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 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
<PAGE>
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 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 depositories, 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.
CONSULTING AGREEMENT
Consulting Agreement ("Agreement") by and between Software Publishing
Corporation Holdings, Inc., a Delaware corporation (the "Company"), and Target
Capital Corp. ("Target"), and Yitz Grossman ("YG") as of the 17th day of
December, 1998 (the "Effective Date").
In consideration of the mutual covenants hereinafter set forth, and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. TERMS.
1.1 Services. The Company hereby retains Target to provide consulting
services of YG for and during the term hereof, subject to the direction of the
Board of Directors of the Company and the terms and conditions hereof. Target
and YG hereby accept such retention under the terms and conditions set forth in
this Agreement.
1.2 Duties of YG. YG shall provide consulting services for the Company and
shall have such duties as may be reasonably assigned to him from time to time by
the Board of Directors of the Company. YG agrees to devote part of his business
time and services to the faithful performance of the duties, responsibilities,
and authorities which may be reasonably assigned to him hereunder. It is
understood that YG will not be providing his services on a full-time basis.
1.3 Term. Unless sooner terminated as provided in Section 1.5 hereof, this
Agreement has become effective as of the date set forth above and shall continue
in force and effect until the fifth anniversary of the date hereof, unless
extended as further described as follows. The term of this Agreement shall be
extended for an additional 18 month period if at any time during the term of
this Agreement the Company reports net revenues of $40 million or more in any
fiscal year, and shall be extended for another 18 month period if at any time
during the term of this Agreement the Company reports net revenues of $60
million or more in any fiscal year.
1.4 Compensation. Subject to provisions of Section 1.5 hereof as
compensation for services rendered by YG as a consultant under this Agreement,
subject to ratification by the Board of Directors of the Company:
(a) the Company shall pay Target a base compensation equal to
.30% of the Company's net revenue, payable quarterly in arrears; provided,
that the amount payable under this Section 1.4(a) shall be not less than
$125,000 per annum and shall not exceed $250,000 per annum; and provided,
further, that any amount payable under this section 1.4 (a) which exceeds
$125,000 per annum shall be payable only commencing upon such time as the
Company has received net proceeds in an amount not less than $2,000,000
from the sale of equity securities;
(b) the Company shall pay to Target such additional amounts as
may be determined by the Board of Directors of the Company in its sole
discretion;
<PAGE>
(c) the Company shall grant to (i) Target 520,000 warrants, and
(ii) United Krasna Organizations 120,000 warrants, each such warrant to
purchase one share of common stock at an exercise price of $.75, each
exercisable immediately and expiring on the seventh anniversary of the date
of this agreement. A form of Warrant is attached as Exhibit "A" hereto. The
Company may also grant such other stock options and other incentives as the
Company's Board of Directors may determine in its sole discretion;
(d) Target shall be entitled to a fee equal to 5% of the net
proceeds of any sale of equity securities by the Company where such net
proceeds equal or exceed $2,500,000 and the placement agent for such sale
was introduced to the Company by Target or YG.
1.5 Termination. Notwithstanding any other provisions in this Agreement:
(a) Death. If YG dies during the term of this Agreement, this
Agreement shall automatically terminate as of the date of YG's death; and
the Company shall have no further obligation to Target or YG or his estate,
except to pay Target any accrued but unpaid compensation under Section 1.4
hereof.
(b) Disability. The Company will provide disability insurance on
YG. In the event YG becomes permanently disabled (as hereinafter defined)
during the term of this Agreement, the Company may terminate this Agreement
by giving one hundred eighty (180) days notice to Target of its intent to
terminate. Upon notice of termination, the Company will provide a
disability payment to Target to provide 75% of Target's then current annual
compensation (including bonuses) for a period of not less than one (1) year
after termination takes effect.
"Permanently Disabled" for the purpose of this Agreement
shall mean the inability to perform all of the duties of YG due to physical
or mental ill health, or any reason beyond the control of YG to perform his
duties, for a minimum on one hundred and eighty (180) consecutive days.
(c) Termination by the Company for Cause. Upon 180 days notice
during the term of this Agreement, the Company may terminate this Agreement
for cause without and further liability hereunder to Target, YG or his
estate, except to pay any accrued but unpaid compensation hereunder. For
purposes of this Agreement, a "for cause" shall mean termination of Target
upon written notification to Target limited, however, to one or more of the
following reasons:
(i) Fraud, misappropriation or embezzlement by Target
or YG in connection with the Company; or
(ii) Gross neglect of duties which has a detrimental
effect on the Company after notice to Target of the particular details
thereof and a period of ninety (90) days to correct such mismanagement
or neglect, if any; or
<PAGE>
(iii) Conviction by a court of competent jurisdiction
in the United States of a crime which involves moral turpitude and
management services provided by YG to the Company; or
(iv) Willful and unauthorized disclosure of information
confidential to the Company.
(d) Voluntary Termination by Target. In the event that during the
term hereof, Target shall voluntarily terminate this Agreement, or YG shall
refuse to perform the services required hereunder, then, in such event,
this Agreement shall automatically be terminated and Target shall have the
right to receive any unpaid compensation to the date of termination, but no
other compensation.
1.6 Expense Reimbursement and Travel Advances. Target shall be entitled to
reimbursement for any and all reasonable expenses, including travel and
entertainment, incurred by Target or YG in the performance of this Agreement.
Target will take all actions necessary to maintain the tax deductibility of any
such expenses by the Company and shall submit vouchers prior to reimbursement
for expenses. All expense report vouchers of Target shall be approved by the
President of the Company. Expenses in excess of $1,000.00 per occurrence must be
approved in advance by the President of the Company.
1.7 Protection from Liability. The Company may provide Target and YG with
appropriate insurance coverage as necessary to protect Target and YG from any
and all personal liability incurred in the normal performance of YG's designated
duties. The Company agrees to indemnify Target and YG to the fullest extent
permitted by law for any liabilities in connection with the lawful performance
of services hereunder.
1.8 Medical, Dental and Life Insurance and Disability. Upon the request of
Target or YG, the Company shall, at the Company's sole expense, promptly cause
YG and his immediate family to be included in the group medical, hospital,
dental and drug plans of the Company, in effect and at the time, subject to the
insurance company's requirements being met by YG, which the Company undertakes
to satisfy to the extent within its control.
1.9 Automobile. At the request of Target, the Company shall promptly make
available to YG an automobile and shall pay all business expenses associated
with said automobile. Said automobile may be leased or purchased at the
Company's sole choice and expense and shall be a new full size automobile, which
shall be replaced every three (3) years.
2. PROTECTIVE COVENANTS. Because (i) Target and YG will become fully familiar
with all aspects of the Company's business during the period of this Agreement
with the Company, (ii) certain information of which Target and YG will gain
knowledge during this Agreement is proprietary and confidential information
which is of special and peculiar value to the Company, (iii) if any such
proprietary and confidential information were imparted to or became known by any
persons, including Target or YG, engaging in a business in competition with that
<PAGE>
of the Company, hardship, loss and irreparable injury and damage could result to
the Company, the measurement of which would be difficult if not impossible to
ascertain, and (iv) it is necessary for the Company to protect its business from
such damage, the following covenants constitute a reasonable and appropriate
means, consistent with the best interests of Target, YG and the Company, to
protect the Company against such damage and shall apply to and be binding upon
Target and YG as provided herein:
2.1 Non-Competition by Target and YG. Target and YG covenant that, during
the term of this Agreement and for a period of one year thereafter, neither
Target nor YG will engage in or participate in any business which is in
competition with the business of the Company on the date of termination and
which continues during the period of non-competition.
2.2 Trade Secrets, Proprietary and Confidential Information. Target and YG
recognize that this position with the Company is one of the highest trust and
confidence by reason of Target and YG's access to and contact with trade secrets
and confidential and proprietary information of the Company. Target and YG shall
use their best efforts and exercise utmost diligence to protect and safeguard
the trade secrets and confidential and proprietary information of the Company.
Target and YG covenant that during the term of this Agreement and thereafter,
they will not disclose disseminate or distribute to another, nor induce any
other person to disclose, disseminate, or distribute, any trade secret or
proprietary or confidential information of the Company, directly or indirectly,
either Target or YG's own benefit or for the benefit of another, whether or not
acquired, learned, obtained or developed by Target or YG use or cause to be
used, any trade secret, proprietary or confidential information in any way
except as is required in the course of the services to the Company hereunder.
The foregoing shall not apply to information which becomes public or other than
as a result of the prohibited acts of Target of YG. All confidential information
relating to the business of the Company, whether prepared by Target or YG or
otherwise coming into their possession, shall remain the exclusive property of
the Company and shall not, except in the furtherance of the business of the
Company, be removed from the premises of the Company under any circumstances
whatsoever without the prior written consent of the Company.
2.3 Remedies. In the event of breach or threatened breach by Target or YG
of any provision of this Section 2, the Company shall be entitled to apply for
relief by temporary restraining order, temporary injunction, or permanent
injunction and to all other relief to which it may be entitled, including any
said breach, violation or threatened breach or violation. The Company may pursue
any remedy available to it concurrently or consecutively in any order as to any
breach, violation, and the pursuit of any one of such remedies at any time will
not be deemed an election of remedies or waiver of the right to pursue any other
of such remedies as to such breach, violation, or as to any other breach,
violation, or threatened breach or violation.
3. MISCELLANEOUS.
3.1 Notices. All notices, requests, consents and other communications under
this Agreement shall be in writing and shall be deemed to have been delivered
(i) on the date personally delivered or (ii) two days after the date deposited
in a receptacle maintained by the United States Postal Services for such
<PAGE>
purpose, addressed as set forth below, or (iii) one day after properly sent by
Federal Express, addressed as set forth below:
If to Target: 40 Fulton Street, 7th Floor
New York, New York 10038
If to the Company: Software Publishing Corporation Holdings, Inc.
3A Oak Road
Fairfield, New Jersey 07004
with a copy to: Kaufman & Moomjian, LLC
50 Charles Lindbergh Boulevard - Suite 206
Mitchel Field, New York 11553
Either party hereto may designate a different address by providing written
notice of such new address to the other party hereto as provided above.
3.2 Severability. If any provision contained in this Agreement is
determined to be void, illegal or unenforceable, in whole or in part, then the
other provisions contained herein shall remain in full force and effect as if
the provision which was determined to be void, illegal, or unenforceable had not
been contained herein.
3.3 Waiver, Modification and Integration. The waiver by any party hereto of
a breach of any provision of this Agreement shall not operate or be construed as
a waiver of any subsequent breach of any party. This instrument, and the
documents referred to herein, contain the entire agreement of the parties and
supersede any and all other agreements either oral or in writing, between the
parties hereto with respect to services of Target or YG to the Company and
contain all of the covenants and agreements between the parties with respect to
such services in any manner whatsoever. This Agreement may not be modified,
altered or amended except by written agreement of all parties hereto.
3.4 Binding Effect. This Agreement shall be binding and effective upon the
Company and its successors and permitted assigns, and upon Target and YG, their
successors, heirs, representatives, and assigns, as the case may be.
3.5 Governing Law. This Agreement shall be governed by the internal laws of
the State of New York, without regard to its conflicts of law principles.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
TARGET CAPITAL CORP. SOFTWARE PUBLISHING
CORPORATION HOLDINGS, INC.
By: /s/ Yitz Grossman By: /s/ Mark E. Leininger
------------------------ --------------------------
Name: Yitz Grossman Name: Mark E. Leininger
Title: Title: President
/s/ Yitz Grossman
-------------------------
Yitz Grossman, Personally
CONSULTING AGREEMENT
Consulting Agreement ("Agreement") by and between Software Publishing
Corporation Holdings, Inc., a Delaware corporation (the "Company"), and Michele
Ladovich ("ML")as of the 17th day of December, 1998 (the "Effective Date").
In consideration of the mutual covenants hereinafter set forth, and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. TERMS.
1.1 Services. The Company hereby retains ML to provide investor relations
and public relations consulting services within the European Union and the
United Kingdom for and during the term hereof, subject to the direction of the
Board of Directors of the Company and the terms and conditions hereof. ML hereby
accepts such retention under the terms and conditions set forth in this
Agreement.
1.2 Duties of ML. ML shall provide consulting services for the Company and
shall have such duties as may be reasonably assigned to him from time to time by
the Board of Directors of the Company. ML agrees to devote part of his business
time and services to the faithful performance of the duties, responsibilities,
and authorities which may be reasonably assigned to him hereunder. It is
understood that ML will not be providing his services on a full-time basis.
1.3 Term. Unless sooner terminated as provided in Section 1.5 hereof, this
Agreement has become effective as of the date set forth above and shall continue
in force and effect until the fifth anniversary of the date hereof, unless
extended as further described as follows:
1.4 Compensation. Subject to provisions of Section 1.5 hereof as
compensation for services rendered by ML as a consultant under this Agreement,
subject to ratification by the Board of Directors of the Company, the Company
shall grant to ML 600,000 warrants, each such warrant to purchase one share of
common stock at an exercise price of $.75, 500,000 of which warrants being
exercisable immediately and 100,000 of such warrants being exercisable on June
17, 1999, and all of such warrants expiring on the seventh anniversary of the
date of this agreement. A form of Warrant is attached as Exhibit "A" hereto. The
Company may also grant such other stock options and other incentives as the
Company's Board of Directors may determine in its sole discretion.
1.5 Termination. Notwithstanding any other provisions in this Agreement:
(a) Death. If ML dies during the term of this Agreement, this
Agreement shall automatically terminate as of the date of ML's death; and
the Company shall have no further obligation to ML or his estate, except to
pay ML any accrued, but unpaid compensation under Section 1.4 hereof.
<PAGE>
(b) Voluntary Termination by ML. In the event that during the
term hereof, ML shall voluntarily terminate this Agreement, or ML shall
refuse to perform the services required hereunder, then, in such event,
this Agreement shall automatically be terminated and ML shall have the
right to receive any unpaid compensation to the date of termination, but no
other compensation.
1.6 Expense Reimbursement and Travel Advances. ML shall be entitled to
reimbursement for any and all reasonable expenses, including travel and
entertainment, incurred by ML in the performance of this Agreement. ML will take
all actions necessary to maintain the tax deductibility of any such expenses by
the Company and shall submit vouchers prior to reimbursement for expenses. All
expense report vouchers of ML shall be approved by the President of the Company.
Expenses in excess of $1,000.00 per occurrence must be approved in advance by
the President of the Company.
1.7 Protection from Liability. The Company may provide ML with appropriate
insurance coverage as necessary to protect ML from any and all personal
liability incurred in the normal performance of ML's designated duties. The
Company agrees to indemnify ML to the fullest extent permitted by law for any
liabilities in connection with the lawful performance of services hereunder.
2. PROTECTIVE COVENANTS. Because (i) ML will become fully familiar with all
aspects of the Company's business during the period of this Agreement with the
Company, (ii) certain information of which ML will gain knowledge during this
Agreement is proprietary and confidential information which is of special and
peculiar value to the Company, (iii) if any such proprietary and confidential
information were imparted to or became known by any persons, including ML,
engaging in a business in competition with that of the Company, hardship, loss
and irreparable injury and damage could result to the Company, the measurement
of which would be difficult if not impossible to ascertain, and (iv) it is
necessary for the Company to protect its business from such damage, the
following covenants constitute a reasonable and appropriate means, consistent
with the best interests of ML and the Company, to protect the Company against
such damage and shall apply to and be binding upon ML as provided herein:
2.1 Non-Competition by ML. ML covenants that, during the term of this
Agreement and for a period of one year thereafter, ML will not engage in or
participate in any business which is in competition with the business of the
Company on the date of termination and which continues during the period of
non-competition.
2.2 Trade Secrets, Proprietary and Confidential Information. ML recognizes
that his position with the Company is one of the highest trust and confidence by
reason of ML's access to and contact with trade secrets and confidential and
proprietary information of the Company. ML shall use his best efforts and
exercise utmost diligence to protect and safeguard the trade secrets and
confidential and proprietary information of the Company. ML covenants that
during the term of this Agreement and thereafter, he will not disclose
disseminate or distribute to another, nor induce any other person to disclose,
disseminate, or distribute, any trade secret or proprietary or confidential
information of the Company, directly or indirectly, ML's own benefit or for the
<PAGE>
benefit of another, whether or not acquired, learned, obtained or developed by
ML use or cause to be used, any trade secret, proprietary or confidential
information in any way except as is required in the course of the services to
the Company hereunder. The foregoing shall not apply to information which
becomes public or other than as a result of the prohibited acts of ML. All
confidential information relating to the business of the Company, whether
prepared by ML or otherwise coming into their possession, shall remain the
exclusive property of the Company and shall not, except in the furtherance of
the business of the Company, be removed from the premises of the Company under
any circumstances whatsoever without the prior written consent of the Company.
2.3 Remedies. In the event of breach or threatened breach by ML of any
provision of this Section 2, the Company shall be entitled to apply for relief
by temporary restraining order, temporary injunction, or permanent injunction
and to all other relief to which it may be entitled, including any said breach,
violation or threatened breach or violation. The Company may pursue any remedy
available to it concurrently or consecutively in any order as to any breach,
violation, and the pursuit of any one of such remedies at any time will not be
deemed an election of remedies or waiver of the right to pursue any other of
such remedies as to such breach, violation, or as to any other breach,
violation, or threatened breach or violation.
3. MISCELLANEOUS.
3.1 Notices. All notices, requests, consents and other communications under
this Agreement shall be in writing and shall be deemed to have been delivered
(i) on the date personally delivered or (ii) two days after the date deposited
in a receptacle maintained by the United States Postal Services for such
purpose, addressed as set forth below, or (iii) one day after properly sent by
Federal Express, addressed as set forth below:
If to ML: 103 Rue Caulaincourt
75018 Paris
France
Fax: 011 460 62422
If to the Company: Software Publishing Corporation Holdings, Inc.
3A Oak Road
Fairfield, New Jersey 07004
Fax: (973) 808-2645
with a copy to: Kaufman & Moomjian, LLC
50 Charles Lindbergh Boulevard - Suite 206
Mitchel Field, New York 11553
Fax: (516) 222-5110
Either party hereto may designate a different address by providing written
notice of such new address to the other party hereto as provided above.
<PAGE>
3.2 Severability. If any provision contained in this Agreement is
determined to be void, illegal or unenforceable, in whole or in part, then the
other provisions contained herein shall remain in full force and effect as if
the provision which was determined to be void, illegal, or unenforceable had not
been contained herein.
3.3 Waiver, Modification and Integration. The waiver by any party hereto of
a breach of any provision of this Agreement shall not operate or be construed as
a waiver of any subsequent breach of any party. This instrument, and the
documents referred to herein, contain the entire agreement of the parties and
supersede any and all other agreements either oral or in writing, between the
parties hereto with respect to services of ML to the Company and contain all of
the covenants and agreements between the parties with respect to such services
in any manner whatsoever. This Agreement may not be modified, altered or amended
except by written agreement of all parties hereto.
3.4 Binding Effect. This Agreement shall be binding and effective upon the
Company and its successors and permitted assigns, and upon ML, his successors,
heirs, representatives, and assigns, as the case may be.
3.5 Governing Law. This Agreement shall be governed by the internal laws of
the State of New York, without regard to its conflicts of law principles.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
SOFTWARE PUBLISHING CORPORATION
HOLDINGS, INC.
By: /s/ Mark E. Leininger
Mark E. Leininger, President
/s/ Michele Ladovich
Michele Ladovich
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
3A Oak Road
Fairfield, New Jersey 07004
January 4, 1999
Seafish Partners
c/o Estudio Chimel
Avenue Luis Maria Campos 799
1426 Capital Federal
Buenos Aires, Argentina
Dear Sirs/Madams:
This letter will serve to confirm and memorialize the agreement of
Seafish Partners ("Seafish"), as the holder of 930 shares (the "Class A Shares")
of the Class A 14% Cumulative NonConvertible Redeemable Preferred Stock, Series
A, par value $.001 per share (the "Class A Preferred Stock"), of Software
Publishing Corporation Holdings, Inc. (the "Company"), to exchange the Class A
Shares for (a) 930 shares (the "Class C Shares") of Class C 11% Cumulative
Non-Convertible Redeemable Preferred Stock, Series A, par value $.001 per share
(the "Class C Preferred Stock") of the Company, and (b) the issuance by the
Company to Seafish of warrants (the "Seafish Warrants") to purchase 260,000
shares of the common stock, par value $.001 per share (the "Common Stock"), of
the Company, exercisable immediately, expiring at the close of business on
January 3, 2006, having an exercise price of $1.0625 per share of Common Stock,
and evidenced by a warrant certificate (the "Warrant Certificate") in
substantially the form attached as Appendix A to this Letter Agreement. The
Class C Preferred Stock shall have the powers, designation, preferences and
relative, participating, optional and other rights as set forth in the
Certificate of Designations of the Company (the "Certificate of Designations")
with respect to the Class C Preferred Stock to be filed with the Secretary of
State of the State of Delaware in substantially the form attached as Appendix B
to this Letter Agreement. The Company covenants and agrees to (a) file the
Certificate of Designations and forward to Seafish a fully executed Warrant
Certificate no later than twenty business days from receipt by the Company of
Seafish's acknowledgment and acceptance of this Letter Agreement, (b) forward to
Seafish a stock certificate evidencing the Class C Shares registered in the name
of Seafish within twenty business days from receipt by the Company of the stock
certificate evidencing the Class A Shares, duly endorsed in blank for transfer
into the name of the Company, and (c) tender to Seafish within twenty business
days from receipt by the Company of Seafish's acknowledgment and acceptance of
this Letter Agreement a check in the amount of $7,134.25 representing the
accrued dividends due on the Class A Shares for the period of December 15, 1998
through January 4, 1998. Notwithstanding the immediately preceding sentence, the
Class C Shares and Seafish Warrants shall be deemed to have been issued and
outstanding and the Class A Shares shall be deemed to have been transferred to
<PAGE>
the Company as of the date of this Letter Agreement. It is the intention of the
Company and Seafish that the exchange of the Class A Shares for the Class C
Shares and Seafish Warrants is exempt from registration under the Securities Act
of 1933, as amended (the "Act"), pursuant to Section 3(9) and Section 4(2) of
the Act.
If the foregoing accurately reflects your understanding, agreement and
consent as to the foregoing matters, kindly acknowledge such by executing the
duplicate copy of this Letter Agreement in the space designated for such below,
and return such duplicate copy to the Company.
Very truly yours,
SOFTWARE PUBLISHING CORPORATION
HOLDINGS, INC.
By: /s/ Mark E. Leininger
----------------------------
Mark E. Leininger, President
Acknowledged, agreed and consented to:
SEAFISH PARTNERS
By: /s/ Paul Stark
---------------------------------
Paul Stark
Agent
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
3A Oak Road
Fairfield, New Jersey 07004
December 17, 1998
Mr. Marc E. Jaffe
c/o Electronic Licensing Organization
386 Park Avenue
New York, New York 10016
Re: Common Stock Subscription
Dear Mr. Jaffe:
This letter sets forth your agreement with Software Publishing
Corporation Holdings, Inc., a Delaware corporation (the "Company"), as follows:
1. You agree that $22,500 of the $30,000 owed by the Company to you in
respect of your compensation for 1998 shall be converted into an aggregate of
30,000 shares (the "Shares") of common stock, par value $.001 per share (the
"Common Stock"), of the Company, effective as of the date hereof.
2. The Company will pay to you the remaining $7,500 due to you with
respect to your compensation for 1998 upon the Company raising more than
$500,000 in a financing transaction.
3. The Shares will be registered for resale in the Company's proposed
registration statement on Form S-3 which is next filed with the Securities and
Exchange Commission.
4. You acknowledge that you are an accredited investor by virtue of
your being an officer and director of the Company, and that you are purchasing
the Common Stock for investment, and not with a view to distribution, and have
no contacts, arrangements or understandings with respect to any disposition of
the Shares.
<PAGE>
If the foregoing accurately sets forth our understanding, please sign
where indicated below.
Very truly yours,
SOFTWARE PUBLISHING CORPORATION
HOLDINGS, INC.
By: /s/ Mark E. Leininger
-----------------------------
Mark E. Leininger, President
Accepted and agreed as of
the date first above written:
/s/ Marc E. Jaffe
- ----------------------------
Marc E. Jaffe
VOID AFTER DECEMBER 16, 2005
WARRANT TO PURCHASE 520,000 SHARES OF COMMON STOCK
WARRANT TO PURCHASE COMMON STOCK
of
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR THIS WARRANT AND/OR SUCH SHARES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER OF THIS WARRANT AND SUCH SHARES TO THE
EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND SUCH STATE
SECURITIES LAWS.
Warrant Certificate No. TCC-1
This is to Certify That, for value received, Target Capital Corp., the
registered holder hereof, or its registered assigns (the registered holder or
assigns are being referred to hereinafter as the "Warrantholder"), is entitled
to purchase from Software Publishing Corporation Holdings, Inc., a Delaware
corporation (the "Company"), subject to the provisions of this Common Stock
Warrant Certificate, at any time and from time to time on or after December 17,
1998 (the "Exercise Date"), and before 5:00 p.m., New York City time, on
December 16, 2005 (the "Expiration Time"), at the price of $.75 per share (as
adjusted as herein provided, the "Exercise Price"), up to 520,000 shares of the
common stock, par value $.001 per share (the "Common Stock"), of the Company
(such number of shares of Common Stock purchasable upon the exercise of this
Warrant Certificate, as
<PAGE>
adjusted from time to time pursuant to the provisions hereinafter set forth,
are referred to in this Warrant Certificate as the "Warrant Shares").
The number of Warrants (the "Warrants") evidenced by this Warrant
Certificate (the "Warrant Certificate"), the number and character of shares of
Warrant Shares and the Exercise Price are subject to adjustment from time to
time as provided herein.
The terms of the Warrants are as follows:
1. Exercise of Warrants.
(a) The Warrants may be exercised, in whole or in part, commencing on
the Exercise Date and on or prior to the Expiration Time by surrendering this
Warrant Certificate, with the purchase form provided for herein duly executed by
the Warrantholder or by the Warrantholder's duly authorized attorney-in-fact, at
the principal office of the Company, presently located at 3A Oak Road,
Fairfield, New Jersey 07004, or at such other office or agency in the United
States as the Company may designate by notice in writing to the Warrantholder
(in either event, the "Company Offices"), accompanied by payment in full, either
in the form of cash, bank cashier's check or certified check payable to the
order of the Company, of the Exercise Price payable in respect of the Warrants
being exercised. If fewer than all of the Warrants are exercised, the Company
shall, upon each exercise prior to the Expiration Time, execute and deliver to
the Warrantholder a new Warrant Certificate (dated the date hereof) evidencing
the balance of the Warrants that remain exercisable.
(b) On the date of exercise of the Warrants, the Warrantholder
exercising same shall be deemed to have become the holder of record for all
purposes of the Warrant Shares to which the exercise relates.
(c) As soon as practicable, but not in excess of ten days, after the
exercise of all or part of the Warrants, the Company, at its expense (including
the payment by it of any applicable issue taxes), will cause to be issued in the
name of and delivered to the Warrantholder a certificate or certificates
evidencing the number of fully-paid and nonassessable Warrant Shares to which
the Warrantholder shall be entitled upon such exercise.
(d) No certificates for fractional Warrant Shares shall be issued upon
the exercise of the Warrants but, in lieu thereof, the Company shall, upon
exercise of all the Warrants, round up any fractional Warrant Share to the
nearest whole share of Common Stock.
2. Issuance of Common Stock; Reservation of Shares.
(a) The Company covenants and agrees that all Warrant Shares which may
be issued upon the exercise of all or part of the Warrants will, upon issuance
in accordance with the
<PAGE>
terms hereof, be validly issued, fully-paid and nonassessable and free
from all taxes, liens and charges with respect to the issue thereof.
(b) The Company further covenants and agrees that if any shares of
Common Stock to be reserved for the purpose of the issuance of Warrant Shares
upon the exercise of Warrants require registration with, or approval of, any
governmental authority under any federal or state law before such shares may be
validly issued or delivered upon exercise, then the Company will promptly use
its best efforts to effect such registration or obtain such approval, as the
case may be.
3. Adjustments of Exercise Price, Number and Character of Warrant Shares,
and Number of Warrants.
The Exercise Price the number and kind of securities purchasable upon
the exercise of each Warrant shall be subject to adjustment from time to time
upon the happening of the events enumerated in this Section 3.
(a) Stock Dividends, Subdivisions and Combinations. If after the
date hereof the Company shall:
(i) pay a dividend or make a distribution in shares of
Common Stock to holders of its capital stock of any class;
(ii) subdivide the outstanding shares of its Common Stock
into a larger number of shares;
(iii) combine the outstanding shares of its Common Stock
into a smaller number of shares; or
(iv) issue by reclassification of its shares of Common Stock
any shares of capital stock of the Company;
then the Exercise Price shall be adjusted to that price determined by
multiplying the Exercise Price in effect immediately prior to such event by a
fraction (i) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such event and (ii) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such event. An adjustment made pursuant to this
Paragraph 3(a) shall become effective immediately after the record date, in the
case of a dividend or distribution, and the effective date, in the case of a
subdivision, combination or reclassification.
(b) Extraordinary Dividends. In case the Company shall declare a
dividend upon its Common Stock (except a dividend payable in shares of Common
Stock referred to in clause (i) of Paragraph 3(a) or a dividend payable in
warrants, rights or convertible securities (payable otherwise than out of
retained earnings), the Exercise Price in effect immediately prior to the
declaration of such dividend shall be reduced by an amount equal, in the case of
a dividend in cash, to the amount thereof payable per share of Common Stock to
the extent otherwise than out of
<PAGE>
retained earnings or, in the case of any other dividend, to the fair value
thereof per share of Common Stock as determined in good faith by the Board of
Directors of the Company; provided, that in no event shall the Exercise Price
be reduced to less than the then current par value of the Common Stock per
share. For the purposes of the foregoing, a dividend payable other than in
cash or capital stock of the Company shall be considered payable out of retained
earnings only to the extent that such retained earnings are charged an amount
equal to the fair value of such dividend as determined by the Board of Directors
of the Company. Such reduction shall take effect as of the date on which a
record is taken for the purpose of such dividend or if a record is not taken,
the date as of which the holders of the Common Stock of record entitled to
such dividend are to be determined. Appropriate readjustment of the Exercise
Price shall be made in the event that any dividend referred to in this Paragraph
3(b) shall be lawfully abandoned.
(c) Minimum Adjustment. Except as hereinafter provided, no adjustment
of the Exercise Price hereunder shall be made if such adjustment results in a
change of the Exercise Price then in effect of less than one cent ($.01) per
share. Any adjustment of less than one cent ($.01) per share of any Exercise
Price shall be carried forward and shall be made at the time of and together
with any subsequent adjustment which, together with adjustment or adjustments so
carried forward, amounts to one cent ($.01) per share or more. However, upon
exercise of this Warrant Certificate, the Company shall make all necessary
adjustments (to the nearest cent) not theretofore made to the Exercise Price up
to and including the effective date upon which this Warrant Certificate is
exercised.
(d) Notice of Adjustments. Whenever the Exercise Price shall be
adjusted pursuant to this Section 3, the Company shall promptly deliver a
certificate signed by the President or a Vice President and by the Treasurer or
an Assistant Treasurer or the Secretary or an Assistant Secretary of the
Company, setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated (including a description of the basis on which the Board of
Directors of the Company made any determination hereunder), by first class mail
postage prepaid to each Holder.
(e) Capital Reorganizations and Other Reclassifications. In case of
any capital reorganization of the Company, or of any reclassification of the
shares of Common Stock (other than a reclassification, subdivision or
combination of shares of Common Stock referred to in Paragraph 3(a)), or in case
of the consolidation of the Company with, or the merger of the Company with, or
merger of the Company into, any other corporation (other than a reclassification
of the shares of Common Stock referred to in Paragraph 3(a) or a consolidation
or merger which does not result in any reclassification or change of the
outstanding shares of Common Stock) or of the sale of the properties and assets
of the Company as, or substantially as, an entirety to any other corporation or
entity, each Warrant shall, after such capital reorganization, reclassification
of shares of Common Stock, consolidation, merger, or sale, be exercisable, upon
the terms and conditions specified in this Warrant Certificate, for the kind,
amount and number of shares or other securities, assets, or cash to which a
holder of the number of shares of Common Stock purchasable (at the time of such
capital reorganization, reclassification of shares of Common Stock,
consolidation, merger or sale) upon exercise of such Warrant would have been
entitled to receive upon such capital reorganization, reclassification of shares
of Common Stock, consolidation, merger, or sale; and in any such case, if
<PAGE>
necessary, the provisions set forth in this Section 3 with respect to the rights
and interests thereafter of the Warrantholder shall be appropriately adjusted so
as to be applicable, as nearly equivalent as possible, to any shares or other
securities, assets, or cash thereafter deliverable on the exercise of the
Warrants. The Company shall not effect any such consolidation, merger, or sale,
unless prior to or simultaneously with the consummation thereof the successor
corporation or entity (if other than the Company) resulting from such
consolidation or merger or the corporation or entity purchasing such assets or
other appropriate corporation or entity shall assume, by written instrument, the
obligation to deliver to the Warrantholder such shares, securities, assets, or
cash as, in accordance with the foregoing provisions, such holders may be
entitled to purchase and the other obligations hereunder. The subdivision or
combination of shares of Common Stock at any time outstanding into a greater or
lesser number of shares shall not be deemed to be a reclassification of the
shares of Common Stock for purposes of this Paragraph 3(e).
(f) Adjustments to Other Securities. In the event that at any time, as
a result of an adjustment made pursuant to this Section 3, the Warrantholder
shall become entitled to purchase any shares or securities of the Company other
than the shares of Common Stock, thereafter the number of such other shares or
securities so purchasable upon exercise of each Warrant and the exercise price
for such shares or securities shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as possible to the provisions with
respect to the shares of Common Stock contained in Paragraphs 3(a) through (e),
inclusive.
(g) Deferral of Issuance of Additional Shares in Certain
Circumstances. In any case in which this Section 3 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event issuing to the Warrantholder exercised after such record date the shares
of Common Stock, if any, issuable upon such exercise over and above the Warrant
Shares, if any, issuable upon such exercise on the basis of the Exercise Price
in effect prior to such adjustment; provided, however, that the Company shall
deliver as soon as practicable to such holder a due bill or other appropriate
instrument provided by the Company evidencing such holder's right to receive
such additional shares of Common Stock upon the occurrence of the event
requiring such adjustment.
4. Definition of Common Stock.
The Common Stock issuable upon exercise of the Warrants shall be the
Common Stock as constituted on the date hereof except as otherwise provided in
Section 3.
5. Notices of Record Date, etc.
In the event the Company shall propose to take any action of the types
requiring an adjustment of the Exercise Price or the number or character of the
Warrant Shares or Warrants pursuant to Section 3 or a dissolution, liquidation
or winding up of the Company (other than in connection with a consolidation,
merger, or sale of all or substantially all of its property, assets, and
business as an entirety) shall be proposed, the Company shall give notice to
each Warrantholder as provided in Section 10, which notice shall specify the
record date, if any, with respect to any such action and the date on which such
action is to take place. Such notice shall also set forth such facts with
<PAGE>
respect thereto as shall be reasonably necessary to indicate the effect of such
action (to the extent such effect may be known at the date of such notice) on
the Exercise Price and the number, kind or class of shares or other securities
or property which shall be deliverable or purchasable upon the occurrence of
such action or deliverable upon the exercise of the Warrants. In the case of any
action which will require the fixing of a record date, unless otherwise provided
in this Warrant Certificate, such notice shall be given at least twenty days
prior to the date so fixed, and in case of all other action, such notice shall
be given at least thirty days prior to the taking of such proposed action.
6. Replacement of Securities.
If this Warrant Certificate shall be lost, stolen, mutilated or
destroyed, the Company shall, on such terms as to indemnity or otherwise as the
Company may in its discretion reasonably impose, issue a new certificate of like
tenor or date representing in the aggregate the right to subscribe for and
purchase the number of shares of Common Stock which may be subscribed for and
purchased hereunder. Any such new certificate shall constitute an original
contractual obligation of the Company, whether or not the allegedly lost,
stolen, mutilated or destroyed Warrant Certificate shall be at any time
enforceable by anyone.
7. Registration.
This Warrant Certificate, as well as all other warrant certificates
representing Warrants shall be numbered and shall be registered in a register
(the "Warrant Register") maintained at the Company Office as they are issued.
The Warrant Register shall list the name, address and Social Security or other
Federal Identification Number, if any, of all Warrantholders. The Company shall
be entitled to treat the Warrantholder as set forth in the Warrant Register as
the owner in fact of the Warrants as set forth therein for all purposes and
shall not be bound to recognize any equitable or other claim to or interest in
such Warrant on the part of any other person, and shall not be liable for any
registration of transfer of Warrants that are registered or to be registered in
the name of a fiduciary or the nominee of a fiduciary unless made with the
actual knowledge that a fiduciary or nominee is committing a breach of trust in
requesting such registration of transfer, or with such knowledge of such facts
that its participation therein amounts to bad faith.
8. Transfer.
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR THIS WARRANT AND/OR SUCH SHARES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND APPLICABLE
<PAGE>
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER
OF THIS WARRANT AND SUCH SHARES TO THE EFFECT THAT REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT AND SUCH STATE SECURITIES LAWS.
9. Exchange of Warrant Certificates.
This Warrant Certificate may be exchanged for another certificate or
certificates entitling the Warrantholder thereof to purchase a like aggregate
number of Warrant Shares as this Warrant Certificate entitles such Warrantholder
to purchase. A Warrantholder desiring to so exchange this Warrant Certificate
shall make such request in writing delivered to the Company, and shall surrender
this Warrant Certificate therewith. Thereupon, the Company shall execute and
deliver to the person entitled thereto a new certificate or certificates, as the
case may be, as so requested.
10. Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed given when delivered in person, against written receipt
therefor, or two days after being sent, by registered or certified mail, postage
prepaid, return receipt requested, and, if to the Warrantholder, at such address
as is shown on the Warrant Register or as may otherwise may have been furnished
to the Company in writing by the Warrantholder and, if to the Company, at the
Company Offices.
11. Registration Rights.
(a) Defined Terms. As used in this Section 11, 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 Warrant 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 either (1) such Registerable Securities have been disposed of
pursuant to such effective registration statement or (2) such Registrable
Securities remain covered by such effective Registration Statement, such
Registerable Securities have been withdrawn from such Registration
Statement at the request or demand of the holder of such Registerable
Securities or such registration statement has been withdrawn at the request
or demand of the holder of such Registerable Securities, (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
<PAGE>
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 Warrantholder, all successors and assigns of the Warrantholder, 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 11 shall refer to this Section
4 as a whole and not to any particular provision of this Section 11, and
subsection, paragraph, clause, schedule and exhibit references are to this
Section 11 unless otherwise specified.
(b) Demand Registration.
(i) Right to Demand. Subject to Paragraph 11(b)(ii) hereof,
at any time on or after the Exercise Date and on or prior to two years from
the Expiration Time, the Initiating Holders (as defined in Paragraph
11(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 11(b)(iii) hereof, the holders of Registerable
Securities shall be entitled, in the aggregate, to one Demand Registration,
the Registration Expenses (as defined in Paragraph 11(e) hereof) of which,
subject to the provisions of Paragraph 11(e), shall be borne by the
Company, but the Company shall not be responsible for the payment of any
<PAGE>
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 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
<PAGE>
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 Paragraph 11(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 Exercise Date and on or
prior to two years from the Termination 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
<PAGE>
solely in connection with an exchange offer, a business combination
transaction or an offering of securities solely to the existing
stockholders or employees of the Company), then the Company, on each such
occasion, shall give written notice (each, a "Company Piggy-Back Notice")
of such proposed filing to all of the Rightsholders owning Registerable
Securities at least 30 days before the anticipated filing date of such
registration statement, and such Company Piggy-Back Notice also shall be
required to offer to such Rightsholders the opportunity to register such
aggregate number of Registerable Securities as each such Rightsholder may
request. Each such Rightsholder shall have the right, exercisable for the
twenty days immediately following the giving of the Company Piggy-Back
Notice, to request, by written notice (each, a "Holder Notice") to the
Company, the inclusion of all or any portion of the Registerable Securities
of such Rightsholders in such registration statement. The Company shall use
reasonable efforts to cause the managing underwriter(s) of a proposed
underwritten offering to permit the inclusion of the Registerable
Securities which were the subject of all Holder Notices in such
underwritten offering on the same terms and conditions as any similar
securities of the Company included therein. Notwithstanding anything to the
contrary contained in this Paragraph 11(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 Paragraph 11(c) shall be unlimited
with respect to each Rightsholder. Subject to the provisions of Paragraph
11(e) hereof, the Company will pay all Registration Expenses in connection
with any registration of Registerable Securities effected pursuant to this
Paragraph 11(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 Paragraph 11(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
Paragraph 11(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
<PAGE>
register or to withdraw such registration statement, the Company shall be
relieved of its obligation under this Paragraph 11(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 Paragraph 11(c) for the same period as the delay in the
registration of such other securities. No registration effected under this
Paragraph 11(c) shall relieve the Company of its obligation to effect any
registration upon demand otherwise granted to a Rightsholder under
Paragraph 11(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 Paragraph 11(b) or (c) hereof,
as expeditiously as possible:
(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
<PAGE>
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;
(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
11(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
<PAGE>
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 11(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 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
<PAGE>
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 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 11(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
Paragraph 11(b) or (c) hereof:
<PAGE>
(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 11(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 11(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 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
11(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
<PAGE>
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
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.
<PAGE>
(iii) Conduct of Indemnification Proceedings. Promptly after
receipt by an indemnified party under this Paragraph 11(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 Paragraph 11(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
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 Paragraph 11(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
<PAGE>
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
Paragraph 11(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 11(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 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
Paragraph 11(f) or in Paragraph 11(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 Paragraph 11(e) hereof.
12. Miscellaneous.
This Warrant Certificate and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. This certificate is deemed to have been delivered in the State of New
York and shall be construed and enforced in accordance with and governed by the
laws of such State. The headings in this Warrant Certificate are for purposes of
reference only, and shall not limit or otherwise affect any of the terms hereof.
<PAGE>
13. Expiration.
Unless as hereinafter provided, the right to exercise these Warrants
shall expire at the Expiration Time.
Dated: As of December 17, 1998
SOFTWARE PUBLISHING
CORPORATION HOLDINGS, INC.
By: /s/ Mark E. Leininger
---------------------------
Mark E. Leininger, President
ATTEST:
/s/ Marc E. Jaffe
- ------------------------------
Marc E. Jaffe, Secretary
<PAGE>
EXERCISE FORM
Dated:_______________, ____
TO: SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.:
The undersigned hereby irrevocably elects to exercise the within
Warrant, to the extent of purchasing _________________ shares of Common Stock,
and hereby makes payment of _____________ in payment of the actual Exercise
Price thereof.
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INSTRUCTIONS FOR REGISTRATION OF STOCK
Name:
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(Please type or print in block letters)
Address:
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Signature:
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(Signature must conform in all respects to the name of the
Warrantholder as set forth on the face of this
Warrant Certificate.)
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, _____________________________________ hereby sells,
assigns and transfers unto
Name:
------------------------------------------------------------------
(Please type or print in block letters)
Address: ------------------------------------------------------------------
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the right to purchase Common Stock represented by this Warrant Certificate to
the extent of ________________ shares as to which such right is exercisable and
does hereby irrevocably constitute and appoint ___________________________
Attorney-in-Fact, to transfer the same on the books of the Company with full
power of substitution in the premises.
Dated:
-----------------------------
Signature:
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(Signature must conform in all respects to the name of the
Warrantholder as set forth on the face of this
Warrant Certificate.)
VOID AFTER THE EXPIRATION TIME,
WARRANT TO PURCHASE 120,000 SHARES OF COMMON STOCK
WARRANT TO PURCHASE COMMON STOCK
of
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR THIS WARRANT AND/OR SUCH SHARES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER OF THIS WARRANT AND SUCH SHARES TO THE
EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND SUCH STATE
SECURITIES LAWS.
Warrant Certificate No. UKO-1
This is to Certify That, for value received, United Krasna Organizations,
the registered holder hereof, or its registered assigns (the registered holder
or assigns are being referred to hereinafter as the "Warrantholder"), is
entitled to purchase from Software Publishing Corporation Holdings, Inc., a
Delaware corporation (the "Company"), subject to the provisions of this Common
Stock Warrant Certificate, at any time and from time to time on or after
December 17, 1998 (the "Exercise Date"), and before 5:00 p.m., New York City
time, on December 16, 2005 (the "Expiration Time"), at the price of $.75 per
share (as adjusted as herein provided, the "Exercise Price"), up to 120,000
shares of the common stock, par value $.001 per share (the "Common Stock"), of
the Company (such number of shares of Common Stock purchasable upon the exercise
<PAGE>
of this Warrant Certificate, as adjusted from time to time pursuant to the
provisions hereinafter set forth, are referred to in this Warrant Certificate as
the "Warrant Shares").
The number of Warrants (the "Warrants") evidenced by this Warrant
Certificate (the "Warrant Certificate"), the number and character of shares of
Warrant Shares and the Exercise Price are subject to adjustment from time to
time as provided herein.
The terms of the Warrants are as follows:
1. Exercise of Warrants.
(a) The Warrants may be exercised, in whole or in part, commencing on
the Exercise Date and on or prior to the Expiration Time by surrendering this
Warrant Certificate, with the purchase form provided for herein duly executed by
the Warrantholder or by the Warrantholder's duly authorized attorney-in-fact, at
the principal office of the Company, presently located at 3A Oak Road,
Fairfield, New Jersey 07004, or at such other office or agency in the United
States as the Company may designate by notice in writing to the Warrantholder
(in either event, the "Company Offices"), accompanied by payment in full, either
in the form of cash, bank cashier's check or certified check payable to the
order of the Company, of the Exercise Price payable in respect of the Warrants
being exercised. If fewer than all of the Warrants are exercised, the Company
shall, upon each exercise prior to the Expiration Time, execute and deliver to
the Warrantholder a new Warrant Certificate (dated the date hereof) evidencing
the balance of the Warrants that remain exercisable.
(b) On the date of exercise of the Warrants, the Warrantholder
exercising same shall be deemed to have become the holder of record for all
purposes of the Warrant Shares to which the exercise relates.
(c) As soon as practicable, but not in excess of ten days, after the
exercise of all or part of the Warrants, the Company, at its expense (including
the payment by it of any applicable issue taxes), will cause to be issued in the
name of and delivered to the Warrantholder a certificate or certificates
evidencing the number of fully-paid and nonassessable Warrant Shares to which
the Warrantholder shall be entitled upon such exercise.
(d) No certificates for fractional Warrant Shares shall be issued upon
the exercise of the Warrants but, in lieu thereof, the Company shall, upon
exercise of all the Warrants, round up any fractional Warrant Share to the
nearest whole share of Common Stock.
2. Issuance of Common Stock; Reservation of Shares.
(a) The Company covenants and agrees that all Warrant Shares which may
be issued upon the exercise of all or part of the Warrants will, upon issuance
<PAGE>
in accordance with the terms hereof, be validly issued, fully-paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof.
(b) The Company further covenants and agrees that if any shares of
Common Stock to be reserved for the purpose of the issuance of Warrant Shares
upon the exercise of Warrants require registration with, or approval of, any
governmental authority under any federal or state law before such shares may be
validly issued or delivered upon exercise, then the Company will promptly use
its best efforts to effect such registration or obtain such approval, as the
case may be.
3. Adjustments of Exercise Price, Number and Character of Warrant Shares,
and Number of Warrants.
The Exercise Price the number and kind of securities purchasable upon
the exercise of each Warrant shall be subject to adjustment from time to time
upon the happening of the events enumerated in this Section 3.
(a) Stock Dividends, Subdivisions and Combinations. If after the
date hereof the Company shall:
(i) pay a dividend or make a distribution in shares of
Common Stock to holders of its capital stock of any class;
(ii) subdivide the outstanding shares of its Common Stock
into a larger number of shares;
(iii) combine the outstanding shares of its Common Stock
into a smaller number of shares; or
(iv) issue by reclassification of its shares of Common Stock
any shares of capital stock of the Company;
then the Exercise Price shall be adjusted to that price determined by
multiplying the Exercise Price in effect immediately prior to such event by a
fraction (i) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such event and (ii) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such event. An adjustment made pursuant to this
Paragraph 3(a) shall become effective immediately after the record date, in the
case of a dividend or distribution, and the effective date, in the case of a
subdivision, combination or reclassification.
(b) Extraordinary Dividends. In case the Company shall declare a
dividend upon its Common Stock (except a dividend payable in shares of Common
Stock referred to in clause (i) of Paragraph 3(a) or a dividend payable in
warrants, rights or convertible securities (payable otherwise than out of
retained earnings), the Exercise Price in effect immediately prior to the
declaration of such dividend shall be reduced by an amount equal, in the case of
a dividend in cash, to the amount thereof payable per share of Common Stock to
<PAGE>
the extent otherwise than out of retained earnings or, in the case of any other
dividend, to the fair value thereof per share of Common Stock as determined in
good faith by the Board of Directors of the Company; provided, that in no event
shall the Exercise Price be reduced to less than the then current par value of
the Common Stock per share. For the purposes of the foregoing, a dividend
payable other than in cash or capital stock of the Company shall be considered
payable out of retained earnings only to the extent that such retained earnings
are charged an amount equal to the fair value of such dividend as determined by
the Board of Directors of the Company. Such reduction shall take effect as of
the date on which a record is taken for the purpose of such dividend or if a
record is not taken, the date as of which the holders of the Common Stock of
record entitled to such dividend are to be determined. Appropriate readjustment
of the Exercise Price shall be made in the event that any dividend referred to
in this Paragraph 3(b) shall be lawfully abandoned.
(c) Minimum Adjustment. Except as hereinafter provided, no adjustment
of the Exercise Price hereunder shall be made if such adjustment results in a
change of the Exercise Price then in effect of less than one cent ($.01) per
share. Any adjustment of less than one cent ($.01) per share of any Exercise
Price shall be carried forward and shall be made at the time of and together
with any subsequent adjustment which, together with adjustment or adjustments so
carried forward, amounts to one cent ($.01) per share or more. However, upon
exercise of this Warrant Certificate, the Company shall make all necessary
adjustments (to the nearest cent) not theretofore made to the Exercise Price up
to and including the effective date upon which this Warrant Certificate is
exercised.
(d) Notice of Adjustments. Whenever the Exercise Price shall be
adjusted pursuant to this Section 3, the Company shall promptly deliver a
certificate signed by the President or a Vice President and by the Treasurer or
an Assistant Treasurer or the Secretary or an Assistant Secretary of the
Company, setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated (including a description of the basis on which the Board of
Directors of the Company made any determination hereunder), by first class mail
postage prepaid to each Holder.
(e) Capital Reorganizations and Other Reclassifications. In case of
any capital reorganization of the Company, or of any reclassification of the
shares of Common Stock (other than a reclassification, subdivision or
combination of shares of Common Stock referred to in Paragraph 3(a)), or in case
of the consolidation of the Company with, or the merger of the Company with, or
merger of the Company into, any other corporation (other than a reclassification
of the shares of Common Stock referred to in Paragraph 3(a) or a consolidation
or merger which does not result in any reclassification or change of the
outstanding shares of Common Stock) or of the sale of the properties and assets
of the Company as, or substantially as, an entirety to any other corporation or
entity, each Warrant shall, after such capital reorganization, reclassification
of shares of Common Stock, consolidation, merger, or sale, be exercisable, upon
the terms and conditions specified in this Warrant Certificate, for the kind,
amount and number of shares or other securities, assets, or cash to which a
holder of the number of shares of Common Stock purchasable (at the time of such
capital reorganization, reclassification of shares of Common Stock,
consolidation, merger or sale) upon exercise of such Warrant would have been
entitled to receive upon such capital reorganization, reclassification of shares
of Common Stock, consolidation, merger, or sale; and in any such case, if
<PAGE>
necessary, the provisions set forth in this Section 3 with respect to the rights
and interests thereafter of the Warrantholder shall be appropriately adjusted so
as to be applicable, as nearly equivalent as possible, to any shares or other
securities, assets, or cash thereafter deliverable on the exercise of the
Warrants. The Company shall not effect any such consolidation, merger, or sale,
unless prior to or simultaneously with the consummation thereof the successor
corporation or entity (if other than the Company) resulting from such
consolidation or merger or the corporation or entity purchasing such assets or
other appropriate corporation or entity shall assume, by written instrument, the
obligation to deliver to the Warrantholder such shares, securities, assets, or
cash as, in accordance with the foregoing provisions, such holders may be
entitled to purchase and the other obligations hereunder. The subdivision or
combination of shares of Common Stock at any time outstanding into a greater or
lesser number of shares shall not be deemed to be a reclassification of the
shares of Common Stock for purposes of this Paragraph 3(e).
(f) Adjustments to Other Securities. In the event that at any time, as
a result of an adjustment made pursuant to this Section 3, the Warrantholder
shall become entitled to purchase any shares or securities of the Company other
than the shares of Common Stock, thereafter the number of such other shares or
securities so purchasable upon exercise of each Warrant and the exercise price
for such shares or securities shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as possible to the provisions with
respect to the shares of Common Stock contained in Paragraphs 3(a) through (e),
inclusive.
(g) Deferral of Issuance of Additional Shares in Certain
Circumstances. In any case in which this Section 3 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event issuing to the Warrantholder exercised after such record date the shares
of Common Stock, if any, issuable upon such exercise over and above the Warrant
Shares, if any, issuable upon such exercise on the basis of the Exercise Price
in effect prior to such adjustment; provided, however, that the Company shall
deliver as soon as practicable to such holder a due bill or other appropriate
instrument provided by the Company evidencing such holder's right to receive
such additional shares of Common Stock upon the occurrence of the event
requiring such adjustment.
4. Definition of Common Stock.
The Common Stock issuable upon exercise of the Warrants shall be the
Common Stock as constituted on the date hereof except as otherwise provided in
Section 3.
5. Notices of Record Date, etc.
In the event the Company shall propose to take any action of the types
requiring an adjustment of the Exercise Price or the number or character of the
Warrant Shares or Warrants pursuant to Section 3 or a dissolution, liquidation
or winding up of the Company (other than in connection with a consolidation,
merger, or sale of all or substantially all of its property, assets, and
business as an entirety) shall be proposed, the Company shall give notice to
each Warrantholder as provided in Section 10, which notice shall specify the
record date, if any, with respect to any such action and the date on which such
action is to take place. Such notice shall also set forth such facts with
<PAGE>
respect thereto as shall be reasonably necessary to indicate the effect of such
action (to the extent such effect may be known at the date of such notice) on
the Exercise Price and the number, kind or class of shares or other securities
or property which shall be deliverable or purchasable upon the occurrence of
such action or deliverable upon the exercise of the Warrants. In the case of any
action which will require the fixing of a record date, unless otherwise provided
in this Warrant Certificate, such notice shall be given at least twenty days
prior to the date so fixed, and in case of all other action, such notice shall
be given at least thirty days prior to the taking of such proposed action.
6. Replacement of Securities.
If this Warrant Certificate shall be lost, stolen, mutilated or
destroyed, the Company shall, on such terms as to indemnity or otherwise as the
Company may in its discretion reasonably impose, issue a new certificate of like
tenor or date representing in the aggregate the right to subscribe for and
purchase the number of shares of Common Stock which may be subscribed for and
purchased hereunder. Any such new certificate shall constitute an original
contractual obligation of the Company, whether or not the allegedly lost,
stolen, mutilated or destroyed Warrant Certificate shall be at any time
enforceable by anyone.
7. Registration.
This Warrant Certificate, as well as all other warrant certificates
representing Warrants shall be numbered and shall be registered in a register
(the "Warrant Register") maintained at the Company Office as they are issued.
The Warrant Register shall list the name, address and Social Security or other
Federal Identification Number, if any, of all Warrantholders. The Company shall
be entitled to treat the Warrantholder as set forth in the Warrant Register as
the owner in fact of the Warrants as set forth therein for all purposes and
shall not be bound to recognize any equitable or other claim to or interest in
such Warrant on the part of any other person, and shall not be liable for any
registration of transfer of Warrants that are registered or to be registered in
the name of a fiduciary or the nominee of a fiduciary unless made with the
actual knowledge that a fiduciary or nominee is committing a breach of trust in
requesting such registration of transfer, or with such knowledge of such facts
that its participation therein amounts to bad faith.
8. Transfer.
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR THIS WARRANT AND/OR SUCH SHARES UNDER THE SECURITIES ACT OF
<PAGE>
1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER OF THIS WARRANT AND SUCH SHARES TO THE
EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND SUCH STATE
SECURITIES LAWS.
9. Exchange of Warrant Certificates.
This Warrant Certificate may be exchanged for another certificate or
certificates entitling the Warrantholder thereof to purchase a like aggregate
number of Warrant Shares as this Warrant Certificate entitles such Warrantholder
to purchase. A Warrantholder desiring to so exchange this Warrant Certificate
shall make such request in writing delivered to the Company, and shall surrender
this Warrant Certificate therewith. Thereupon, the Company shall execute and
deliver to the person entitled thereto a new certificate or certificates, as the
case may be, as so requested.
10. Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed given when delivered in person, against written receipt
therefor, or two days after being sent, by registered or certified mail, postage
prepaid, return receipt requested, and, if to the Warrantholder, at such address
as is shown on the Warrant Register or as may otherwise may have been furnished
to the Company in writing by the Warrantholder and, if to the Company, at the
Company Offices.
11. Registration Rights.
(a) Defined Terms. As used in this Section 11, 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 Warrant 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 either (1) such Registerable Securities have been disposed of
pursuant to such effective registration statement or (2) such Registrable
Securities remain covered by such effective Registration Statement, such
Registerable Securities have been withdrawn from such Registration
Statement at the request or demand of the holder of such Registerable
Securities or such registration statement has been withdrawn at the request
or demand of the holder of such Registerable Securities, (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
<PAGE>
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 Warrantholder, all successors and assigns of the Warrantholder, 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 11 shall refer to this Section
4 as a whole and not to any particular provision of this Section 11, and
subsection, paragraph, clause, schedule and exhibit references are to this
Section 11 unless otherwise specified.
(b) Demand Registration.
(i) Right to Demand. Subject to Paragraph 11(b)(ii) hereof,
at any time on or after the Exercise Date and on or prior to two years from
the Expiration Time, the Initiating Holders (as defined in Paragraph
11(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 11(b)(iii) hereof, the holders of Registerable
Securities shall be entitled, in the aggregate, to one Demand Registration,
the Registration Expenses (as defined in Paragraph 11(e) hereof) of which,
subject to the provisions of Paragraph 11(e), shall be borne by the
Company, but the Company shall not be responsible for the payment of any
<PAGE>
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 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
<PAGE>
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 Paragraph 11(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 Exercise Date and on or
prior to two years from the Termination 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
<PAGE>
solely in connection with an exchange offer, a business combination
transaction or an offering of securities solely to the existing
stockholders or employees of the Company), then the Company, on each such
occasion, shall give written notice (each, a "Company Piggy-Back Notice")
of such proposed filing to all of the Rightsholders owning Registerable
Securities at least 30 days before the anticipated filing date of such
registration statement, and such Company Piggy-Back Notice also shall be
required to offer to such Rightsholders the opportunity to register such
aggregate number of Registerable Securities as each such Rightsholder may
request. Each such Rightsholder shall have the right, exercisable for the
twenty days immediately following the giving of the Company Piggy-Back
Notice, to request, by written notice (each, a "Holder Notice") to the
Company, the inclusion of all or any portion of the Registerable Securities
of such Rightsholders in such registration statement. The Company shall use
reasonable efforts to cause the managing underwriter(s) of a proposed
underwritten offering to permit the inclusion of the Registerable
Securities which were the subject of all Holder Notices in such
underwritten offering on the same terms and conditions as any similar
securities of the Company included therein. Notwithstanding anything to the
contrary contained in this Paragraph 11(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 Paragraph 11(c) shall be unlimited
with respect to each Rightsholder. Subject to the provisions of Paragraph
11(e) hereof, the Company will pay all Registration Expenses in connection
with any registration of Registerable Securities effected pursuant to this
Paragraph 11(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 Paragraph 11(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
Paragraph 11(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
<PAGE>
register or to withdraw such registration statement, the Company shall be
relieved of its obligation under this Paragraph 11(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 Paragraph 11(c) for the same period as the delay in the
registration of such other securities. No registration effected under this
Paragraph 11(c) shall relieve the Company of its obligation to effect any
registration upon demand otherwise granted to a Rightsholder under
Paragraph 11(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 Paragraph 11(b) or (c) hereof,
as expeditiously as possible:
(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
<PAGE>
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;
(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
11(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
<PAGE>
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 11(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 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
<PAGE>
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 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 11(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
Paragraph 11(b) or (c) hereof:
<PAGE>
(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 11(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 11(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 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
11(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
<PAGE>
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
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.
<PAGE>
(iii) Conduct of Indemnification Proceedings. Promptly after
receipt by an indemnified party under this Paragraph 11(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 Paragraph 11(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
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 Paragraph 11(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
<PAGE>
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
Paragraph 11(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 11(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 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
Paragraph 11(f) or in Paragraph 11(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 Paragraph 11(e) hereof.
12. Miscellaneous.
This Warrant Certificate and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. This certificate is deemed to have been delivered in the State of New
York and shall be construed and enforced in accordance with and governed by the
laws of such State. The headings in this Warrant Certificate are for purposes of
reference only, and shall not limit or otherwise affect any of the terms hereof.
<PAGE>
13. Expiration.
Unless as hereinafter provided, the right to exercise these Warrants
shall expire at the Expiration Time.
Dated: As of December 17, 1998
SOFTWARE PUBLISHING
CORPORATION HOLDINGS, INC.
By: /s/ Mark E. Leininger
--------------------------------
Mark E. Leininger, President
ATTEST:
/s/ Marc E. Jaffe
- ---------------------------
Marc E. Jaffe, Secretary
<PAGE>
EXERCISE FORM
Dated:_______________, ____
TO: SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.:
The undersigned hereby irrevocably elects to exercise the within
Warrant, to the extent of purchasing _________________ shares of Common Stock,
and hereby makes payment of _____________ in payment of the actual Exercise
Price thereof.
----------
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name: ---------------------------------------------------------------------
(Please type or print in block letters)
Address: ---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
Signature: ---------------------------------------------------------------------
(Signature must conform in all respects to the name of the
Warrantholder as set forth on the face of this
Warrant Certificate.)
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, _____________________________________ hereby sells,
assigns and transfers unto
Name: ---------------------------------------------------------------------
(Please type or print in block letters)
Address: ---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
the right to purchase Common Stock represented by this Warrant Certificate to
the extent of ________________ shares as to which such right is exercisable and
does hereby irrevocably constitute and appoint ___________________________
Attorney-in-Fact, to transfer the same on the books of the Company with full
power of substitution in the premises.
Dated:
----------------------------
Signature: -------------------------------------------------------------------
(Signature must conform in all respects to the name of the
Warrantholder as set forth on the face of this
Warrant Certificate.)
VOID AFTER THE EXPIRATION TIME,
WARRANT TO PURCHASE 600,000 SHARES OF COMMON STOCK
WARRANT TO PURCHASE COMMON STOCK
of
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR THIS WARRANT AND/OR SUCH SHARES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER OF THIS WARRANT AND SUCH SHARES TO THE
EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND SUCH STATE
SECURITIES LAWS.
Warrant Certificate No. ML-1
This is to Certify That, for value received, , the
registered holder hereof, or its registered assigns (the registered holder or
assigns are being referred to hereinafter as the "Warrantholder"), is entitled
to purchase from Software Publishing Corporation Holdings, Inc., a Delaware
corporation (the "Company"), subject to the provisions of this Common Stock
Warrant Certificate, at any time and from time to time on or after December 17,
1998 (the "Exercise Date"), and before 5:00 p.m., New York City time, on
December 16, 2005 (the "Expiration Time"), at the price of $.75 per share (as
adjusted as herein provided, the "Exercise Price"), up to 600,000 shares of the
common stock, par value $.001 per share (the "Common Stock"), of the Company
(such number of shares of Common Stock purchasable upon the exercise of this
Warrant Certificate, as adjusted from time to time pursuant to the provisions
<PAGE>
hereinafter set forth, are referred to in this Warrant Certificate as the
"Warrant Shares").
The number of Warrants (the "Warrants") evidenced by this Warrant
Certificate (the "Warrant Certificate"), the number and character of shares of
Warrant Shares and the Exercise Price are subject to adjustment from time to
time as provided herein.
The terms of the Warrants are as follows:
1. Exercise of Warrants.
(a) Subject to the provisions of Paragraph 1(e) below, the Warrants
may be exercised, in whole or in part, commencing on the Exercise Date and on or
prior to the Expiration Time by surrendering this Warrant Certificate, with the
purchase form provided for herein duly executed by the Warrantholder or by the
Warrantholder's duly authorized attorney-in-fact, at the principal office of the
Company, presently located at 3A Oak Road, Fairfield, New Jersey 07004, or at
such other office or agency in the United States as the Company may designate by
notice in writing to the Warrantholder (in either event, the "Company Offices"),
accompanied by payment in full, either in the form of cash, bank cashier's check
or certified check payable to the order of the Company, of the Exercise Price
payable in respect of the Warrants being exercised. If fewer than all of the
Warrants are exercised, the Company shall, upon each exercise prior to the
Expiration Time, execute and deliver to the Warrantholder a new Warrant
Certificate (dated the date hereof) evidencing the balance of the Warrants that
remain exercisable.
(b) On the date of exercise of the Warrants, the Warrantholder
exercising same shall be deemed to have become the holder of record for all
purposes of the Warrant Shares to which the exercise relates.
(c) As soon as practicable, but not in excess of ten days, after the
exercise of all or part of the Warrants, the Company, at its expense (including
the payment by it of any applicable issue taxes), will cause to be issued in the
name of and delivered to the Warrantholder a certificate or certificates
evidencing the number of fully-paid and nonassessable Warrant Shares to which
the Warrantholder shall be entitled upon such exercise.
(d) No certificates for fractional Warrant Shares shall be issued upon
the exercise of the Warrants but, in lieu thereof, the Company shall, upon
exercise of all the Warrants, round up any fractional Warrant Share to the
nearest whole share of Common Stock.
(e) Notwithstanding anything to the contrary contained herein, this
Warrant may be exercised (a) with respect to 500,000 Warrant Shares, at any time
and from time to time commencing the Exercise Date and terminating at the
<PAGE>
Expiration Time, and (b) with respect to the balance of 100,000 Warrant Shares,
at any time and from time to time commencing six months from the Exercise Date
and terminating at the Expiration Time.
2. Issuance of Common Stock; Reservation of Shares.
(a) The Company covenants and agrees that all Warrant Shares which may
be issued upon the exercise of all or part of the Warrants will, upon issuance
in accordance with the terms hereof, be validly issued, fully-paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof.
(b) The Company further covenants and agrees that if any shares of
Common Stock to be reserved for the purpose of the issuance of Warrant Shares
upon the exercise of Warrants require registration with, or approval of, any
governmental authority under any federal or state law before such shares may be
validly issued or delivered upon exercise, then the Company will promptly use
its best efforts to effect such registration or obtain such approval, as the
case may be.
3. Adjustments of Exercise Price, Number and Character of Warrant Shares,
and Number of Warrants.
The Exercise Price the number and kind of securities purchasable upon
the exercise of each Warrant shall be subject to adjustment from time to time
upon the happening of the events enumerated in this Section 3.
(a) Stock Dividends, Subdivisions and Combinations. If after the
date hereof the Company shall:
(i) pay a dividend or make a distribution in shares of
Common Stock to holders of its capital stock of any class;
(ii) subdivide the outstanding shares of its Common Stock
into a larger number of shares;
(iii) combine the outstanding shares of its Common Stock
into a smaller number of shares; or
(iv) issue by reclassification of its shares of Common Stock
any shares of capital stock of the Company;
then the Exercise Price shall be adjusted to that price determined by
multiplying the Exercise Price in effect immediately prior to such event by a
fraction (i) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such event and (ii) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such event. An adjustment made pursuant to this
Paragraph 3(a) shall become effective immediately after the record date, in the
case of a dividend or distribution, and the effective date, in the case of a
subdivision, combination or reclassification.
<PAGE>
(b) Extraordinary Dividends. In case the Company shall declare a
dividend upon its Common Stock (except a dividend payable in shares of Common
Stock referred to in clause (i) of Paragraph 3(a) or a dividend payable in
warrants, rights or convertible securities (payable otherwise than out of
retained earnings), the Exercise Price in effect immediately prior to the
declaration of such dividend shall be reduced by an amount equal, in the case of
a dividend in cash, to the amount thereof payable per share of Common Stock to
the extent otherwise than out of retained earnings or, in the case of any other
dividend, to the fair value thereof per share of Common Stock as determined in
good faith by the Board of Directors of the Company; provided, that in no event
shall the Exercise Price be reduced to less than the then current par value of
the Common Stock per share. For the purposes of the foregoing, a dividend
payable other than in cash or capital stock of the Company shall be considered
payable out of retained earnings only to the extent that such retained earnings
are charged an amount equal to the fair value of such dividend as determined by
the Board of Directors of the Company. Such reduction shall take effect as of
the date on which a record is taken for the purpose of such dividend or if a
record is not taken, the date as of which the holders of the Common Stock of
record entitled to such dividend are to be determined. Appropriate readjustment
of the Exercise Price shall be made in the event that any dividend referred to
in this Paragraph 3(b) shall be lawfully abandoned.
(c) Minimum Adjustment. Except as hereinafter provided, no adjustment
of the Exercise Price hereunder shall be made if such adjustment results in a
change of the Exercise Price then in effect of less than one cent ($.01) per
share. Any adjustment of less than one cent ($.01) per share of any Exercise
Price shall be carried forward and shall be made at the time of and together
with any subsequent adjustment which, together with adjustment or adjustments so
carried forward, amounts to one cent ($.01) per share or more. However, upon
exercise of this Warrant Certificate, the Company shall make all necessary
adjustments (to the nearest cent) not theretofore made to the Exercise Price up
to and including the effective date upon which this Warrant Certificate is
exercised.
(d) Notice of Adjustments. Whenever the Exercise Price shall be
adjusted pursuant to this Section 3, the Company shall promptly deliver a
certificate signed by the President or a Vice President and by the Treasurer or
an Assistant Treasurer or the Secretary or an Assistant Secretary of the
Company, setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated (including a description of the basis on which the Board of
Directors of the Company made any determination hereunder), by first class mail
postage prepaid to each Holder.
(e) Capital Reorganizations and Other Reclassifications. In case of
any capital reorganization of the Company, or of any reclassification of the
shares of Common Stock (other than a reclassification, subdivision or
combination of shares of Common Stock referred to in Paragraph 3(a)), or in case
of the consolidation of the Company with, or the merger of the Company with, or
merger of the Company into, any other corporation (other than a reclassification
of the shares of Common Stock referred to in Paragraph 3(a) or a consolidation
or merger which does not result in any reclassification or change of the
outstanding shares of Common Stock) or of the sale of the properties and assets
<PAGE>
of the Company as, or substantially as, an entirety to any other corporation or
entity, each Warrant shall, after such capital reorganization, reclassification
of shares of Common Stock, consolidation, merger, or sale, be exercisable, upon
the terms and conditions specified in this Warrant Certificate, for the kind,
amount and number of shares or other securities, assets, or cash to which a
holder of the number of shares of Common Stock purchasable (at the time of such
capital reorganization, reclassification of shares of Common Stock,
consolidation, merger or sale) upon exercise of such Warrant would have been
entitled to receive upon such capital reorganization, reclassification of shares
of Common Stock, consolidation, merger, or sale; and in any such case, if
necessary, the provisions set forth in this Section 3 with respect to the rights
and interests thereafter of the Warrantholder shall be appropriately adjusted so
as to be applicable, as nearly equivalent as possible, to any shares or other
securities, assets, or cash thereafter deliverable on the exercise of the
Warrants. The Company shall not effect any such consolidation, merger, or sale,
unless prior to or simultaneously with the consummation thereof the successor
corporation or entity (if other than the Company) resulting from such
consolidation or merger or the corporation or entity purchasing such assets or
other appropriate corporation or entity shall assume, by written instrument, the
obligation to deliver to the Warrantholder such shares, securities, assets, or
cash as, in accordance with the foregoing provisions, such holders may be
entitled to purchase and the other obligations hereunder. The subdivision or
combination of shares of Common Stock at any time outstanding into a greater or
lesser number of shares shall not be deemed to be a reclassification of the
shares of Common Stock for purposes of this Paragraph 3(e).
(f) Adjustments to Other Securities. In the event that at any time, as
a result of an adjustment made pursuant to this Section 3, the Warrantholder
shall become entitled to purchase any shares or securities of the Company other
than the shares of Common Stock, thereafter the number of such other shares or
securities so purchasable upon exercise of each Warrant and the exercise price
for such shares or securities shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as possible to the provisions with
respect to the shares of Common Stock contained in Paragraphs 3(a) through (e),
inclusive.
(g) Deferral of Issuance of Additional Shares in Certain
Circumstances. In any case in which this Section 3 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event issuing to the Warrantholder exercised after such record date the shares
of Common Stock, if any, issuable upon such exercise over and above the Warrant
Shares, if any, issuable upon such exercise on the basis of the Exercise Price
in effect prior to such adjustment; provided, however, that the Company shall
deliver as soon as practicable to such holder a due bill or other appropriate
instrument provided by the Company evidencing such holder's right to receive
such additional shares of Common Stock upon the occurrence of the event
requiring such adjustment.
4. Definition of Common Stock.
The Common Stock issuable upon exercise of the Warrants shall be the
Common Stock as constituted on the date hereof except as otherwise provided in
Section 3.
<PAGE>
5. Notices of Record Date, etc.
In the event the Company shall propose to take any action of the types
requiring an adjustment of the Exercise Price or the number or character of the
Warrant Shares or Warrants pursuant to Section 3 or a dissolution, liquidation
or winding up of the Company (other than in connection with a consolidation,
merger, or sale of all or substantially all of its property, assets, and
business as an entirety) shall be proposed, the Company shall give notice to
each Warrantholder as provided in Section 10, which notice shall specify the
record date, if any, with respect to any such action and the date on which such
action is to take place. Such notice shall also set forth such facts with
respect thereto as shall be reasonably necessary to indicate the effect of such
action (to the extent such effect may be known at the date of such notice) on
the Exercise Price and the number, kind or class of shares or other securities
or property which shall be deliverable or purchasable upon the occurrence of
such action or deliverable upon the exercise of the Warrants. In the case of any
action which will require the fixing of a record date, unless otherwise provided
in this Warrant Certificate, such notice shall be given at least twenty days
prior to the date so fixed, and in case of all other action, such notice shall
be given at least thirty days prior to the taking of such proposed action.
6. Replacement of Securities.
If this Warrant Certificate shall be lost, stolen, mutilated or
destroyed, the Company shall, on such terms as to indemnity or otherwise as the
Company may in its discretion reasonably impose, issue a new certificate of like
tenor or date representing in the aggregate the right to subscribe for and
purchase the number of shares of Common Stock which may be subscribed for and
purchased hereunder. Any such new certificate shall constitute an original
contractual obligation of the Company, whether or not the allegedly lost,
stolen, mutilated or destroyed Warrant Certificate shall be at any time
enforceable by anyone.
7. Registration.
This Warrant Certificate, as well as all other warrant certificates
representing Warrants shall be numbered and shall be registered in a register
(the "Warrant Register") maintained at the Company Office as they are issued.
The Warrant Register shall list the name, address and Social Security or other
Federal Identification Number, if any, of all Warrantholders. The Company shall
be entitled to treat the Warrantholder as set forth in the Warrant Register as
the owner in fact of the Warrants as set forth therein for all purposes and
shall not be bound to recognize any equitable or other claim to or interest in
such Warrant on the part of any other person, and shall not be liable for any
registration of transfer of Warrants that are registered or to be registered in
the name of a fiduciary or the nominee of a fiduciary unless made with the
actual knowledge that a fiduciary or nominee is committing a breach of trust in
requesting such registration of transfer, or with such knowledge of such facts
that its participation therein amounts to bad faith.
<PAGE>
8. Transfer.
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR THIS WARRANT AND/OR SUCH SHARES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER OF THIS WARRANT AND SUCH SHARES TO THE
EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND SUCH STATE
SECURITIES LAWS.
9. Exchange of Warrant Certificates.
This Warrant Certificate may be exchanged for another certificate or
certificates entitling the Warrantholder thereof to purchase a like aggregate
number of Warrant Shares as this Warrant Certificate entitles such Warrantholder
to purchase. A Warrantholder desiring to so exchange this Warrant Certificate
shall make such request in writing delivered to the Company, and shall surrender
this Warrant Certificate therewith. Thereupon, the Company shall execute and
deliver to the person entitled thereto a new certificate or certificates, as the
case may be, as so requested.
10. Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed given when delivered in person, against written receipt
therefor, or two days after being sent, by registered or certified mail, postage
prepaid, return receipt requested, and, if to the Warrantholder, at such address
as is shown on the Warrant Register or as may otherwise may have been furnished
to the Company in writing by the Warrantholder and, if to the Company, at the
Company Offices.
11. Registration Rights.
(a) Defined Terms. As used in this Section 11, 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 Warrant 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
<PAGE>
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 either (1) such Registerable Securities have been disposed of
pursuant to such effective registration statement or (2) such Registrable
Securities remain covered by such effective Registration Statement, such
Registerable Securities have been withdrawn from such Registration
Statement at the request or demand of the holder of such Registerable
Securities or such registration statement has been withdrawn at the request
or demand of the holder of such Registerable Securities, (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 Warrantholder, all successors and assigns of the Warrantholder, 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 11 shall refer to this Section
4 as a whole and not to any particular provision of this Section 11, and
subsection, paragraph, clause, schedule and exhibit references are to this
Section 11 unless otherwise specified.
(b) Demand Registration.
(i) Right to Demand. Subject to Paragraph 11(b)(ii) hereof,
at any time on or after the Exercise Date and on or prior to two years from
the Expiration Time, the Initiating Holders (as defined in Paragraph
11(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
<PAGE>
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 11(b)(iii) hereof, the holders of Registerable
Securities shall be entitled, in the aggregate, to one Demand Registration,
the Registration Expenses (as defined in Paragraph 11(e) hereof) of which,
subject to the provisions of Paragraph 11(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 Registerable 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 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.
<PAGE>
(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 Paragraph 11(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.
<PAGE>
(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 Exercise Date and on or
prior to two years from the Termination 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
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 11(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 Paragraph 11(c) shall be unlimited
with respect to each Rightsholder. Subject to the provisions of Paragraph
11(e) hereof, the Company will pay all Registration Expenses in connection
with any registration of Registerable Securities effected pursuant to this
<PAGE>
Paragraph 11(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 Paragraph 11(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
Paragraph 11(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 Paragraph 11(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 Paragraph 11(c) for the same period as the delay in the
registration of such other securities. No registration effected under this
Paragraph 11(c) shall relieve the Company of its obligation to effect any
registration upon demand otherwise granted to a Rightsholder under
Paragraph 11(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 Paragraph 11(b) or (c) hereof,
as expeditiously as possible:
(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
<PAGE>
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;
(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
11(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
<PAGE>
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 Registerable 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 11(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 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
<PAGE>
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 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 11(d)(i)(J) shall be done at each closing
under such underwriting or similar agreement or as and to the extent
required thereunder; and
<PAGE>
(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
Paragraph 11(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 11(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 11(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 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
11(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"
<PAGE>
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
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,
<PAGE>
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 Paragraph 11(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 Paragraph 11(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
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).
<PAGE>
(iv) Contribution. If the indemnification provided for in
this Paragraph 11(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
Paragraph 11(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 11(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 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
Paragraph 11(f) or in Paragraph 11(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 Paragraph 11(e) hereof.
<PAGE>
12. Miscellaneous.
This Warrant Certificate and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. This certificate is deemed to have been delivered in the State of New
York and shall be construed and enforced in accordance with and governed by the
laws of such State. The headings in this Warrant Certificate are for purposes of
reference only, and shall not limit or otherwise affect any of the terms hereof.
13. Expiration.
Unless as hereinafter provided, the right to exercise these Warrants
shall expire at the Expiration Time.
Dated: As of December 17, 1998
SOFTWARE PUBLISHING
CORPORATION HOLDINGS, INC.
By: -----------------------------
Mark E. Leininger, President
ATTEST:
- -----------------------------
Marc E. Jaffe, Secretary
<PAGE>
EXERCISE FORM
Dated:_______________, ____
TO: SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.:
The undersigned hereby irrevocably elects to exercise the within
Warrant, to the extent of purchasing _________________ shares of Common Stock,
and hereby makes payment of _____________ in payment of the actual Exercise
Price thereof.
----------
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name: --------------------------------------------------------------------
(Please type or print in block letters)
Address: --------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
Signature: --------------------------------------------------------------------
(Signature must conform in all respects to the name of the
Warrantholder as set forth on the face of this
Warrant Certificate.)
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, _____________________________________ hereby sells,
assigns and transfers unto
Name:
-------------------------------------------------------------------
(Please type or print in block letters)
Address:
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
the right to purchase Common Stock represented by this Warrant Certificate to
the extent of ________________ shares as to which such right is exercisable and
does hereby irrevocably constitute and appoint ___________________________
Attorney-in-Fact, to transfer the same on the books of the Company with full
power of substitution in the premises.
Dated:
-------------------------------
Signature: -------------------------------------------------------------------
(Signature must conform in all respects to the name of the
Warrantholder as set forth on the face of this
Warrant Certificate.)
VOID AFTER THE EXPIRATION TIME,
WARRANT TO PURCHASE 260,000 SHARES OF COMMON STOCK
WARRANT TO PURCHASE COMMON STOCK
of
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR THIS WARRANT AND/OR SUCH SHARES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER OF THIS WARRANT AND SUCH SHARES TO THE
EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND SUCH STATE
SECURITIES LAWS.
Warrant Certificate No. SFP-1
This is to Certify That, for value received, Seafish Partners, the
registered holder hereof, or its registered assigns (the registered holder or
assigns are being referred to hereinafter as the "Warrantholder"), is entitled
to purchase from Software Publishing Corporation Holdings, Inc., a Delaware
corporation (the "Company"), subject to the provisions of this Common Stock
Warrant Certificate, at any time and from time to time on or after January 4,
1999 (the "Exercise Date"), and before 5:00 p.m., New York City time, on January
3, 2006 (the "Expiration Time"), at the price of $1.0625 per share (as adjusted
as herein provided, the "Exercise Price"), up to 260,000 shares of the common
stock, par value $.001 per share (the "Common Stock"), of the Company (such
number of shares of Common Stock purchasable upon the exercise of this Warrant
<PAGE>
Certificate, as adjusted from time to time pursuant to the provisions
hereinafter set forth, are referred to in this Warrant Certificate as the
"Warrant Shares").
The number of Warrants (the "Warrants") evidenced by this Warrant
Certificate (the "Warrant Certificate"), the number and character of shares of
Warrant Shares and the Exercise Price are subject to adjustment from time to
time as provided herein.
The terms of the Warrants are as follows:
1. Exercise of Warrants.
(a) The Warrants may be exercised, in whole or in part, commencing on
the Exercise Date and on or prior to the Expiration Time by surrendering this
Warrant Certificate, with the purchase form provided for herein duly executed by
the Warrantholder or by the Warrantholder's duly authorized attorney-in-fact, at
the principal office of the Company, presently located at 3A Oak Road,
Fairfield, New Jersey 07004, or at such other office or agency in the United
States as the Company may designate by notice in writing to the Warrantholder
(in either event, the "Company Offices"), accompanied by payment in full, either
in the form of cash, bank cashier's check or certified check payable to the
order of the Company, of the Exercise Price payable in respect of the Warrants
being exercised. If fewer than all of the Warrants are exercised, the Company
shall, upon each exercise prior to the Expiration Time, execute and deliver to
the Warrantholder a new Warrant Certificate (dated the date hereof) evidencing
the balance of the Warrants that remain exercisable.
(b) On the date of exercise of the Warrants, the Warrantholder
exercising same shall be deemed to have become the holder of record for all
purposes of the Warrant Shares to which the exercise relates.
(c) As soon as practicable, but not in excess of ten days, after the
exercise of all or part of the Warrants, the Company, at its expense (including
the payment by it of any applicable issue taxes), will cause to be issued in the
name of and delivered to the Warrantholder a certificate or certificates
evidencing the number of fully-paid and nonassessable Warrant Shares to which
the Warrantholder shall be entitled upon such exercise.
(d) No certificates for fractional Warrant Shares shall be issued upon
the exercise of the Warrants but, in lieu thereof, the Company shall, upon
exercise of all the Warrants, round up any fractional Warrant Share to the
nearest whole share of Common Stock.
2. Issuance of Common Stock; Reservation of Shares.
(a) The Company covenants and agrees that all Warrant Shares which may
be issued upon the exercise of all or part of the Warrants will, upon issuance
<PAGE>
in accordance with the terms hereof, be validly issued, fully-paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof.
(b) The Company further covenants and agrees that if any shares of
Common Stock to be reserved for the purpose of the issuance of Warrant Shares
upon the exercise of Warrants require registration with, or approval of, any
governmental authority under any federal or state law before such shares may be
validly issued or delivered upon exercise, then the Company will promptly use
its best efforts to effect such registration or obtain such approval, as the
case may be.
3. Adjustments of Exercise Price, Number and Character of Warrant Shares,
and Number of Warrants.
The Exercise Price the number and kind of securities purchasable upon
the exercise of each Warrant shall be subject to adjustment from time to time
upon the happening of the events enumerated in this Section 3.
(a) Stock Dividends, Subdivisions and Combinations. If after the
date hereof the Company shall:
(i) pay a dividend or make a distribution in shares of
Common Stock to holders of its capital stock of any class;
(ii) subdivide the outstanding shares of its Common Stock
into a larger number of shares;
(iii) combine the outstanding shares of its Common Stock
into a smaller number of shares; or
(iv) issue by reclassification of its shares of Common Stock
any shares of capital stock of the Company;
then the Exercise Price shall be adjusted to that price determined by
multiplying the Exercise Price in effect immediately prior to such event by a
fraction (i) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such event and (ii) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such event. An adjustment made pursuant to this
Paragraph 3(a) shall become effective immediately after the record date, in the
case of a dividend or distribution, and the effective date, in the case of a
subdivision, combination or reclassification.
(b) Extraordinary Dividends. In case the Company shall declare a
dividend upon its Common Stock (except a dividend payable in shares of Common
Stock referred to in clause (i) of Paragraph 3(a) or a dividend payable in
warrants, rights or convertible securities (payable otherwise than out of
retained earnings), the Exercise Price in effect immediately prior to the
declaration of such dividend shall be reduced by an amount equal, in the case of
a dividend in cash, to the amount thereof payable per share of Common Stock to
<PAGE>
the extent otherwise than out of retained earnings or, in the case of any other
dividend, to the fair value thereof per share of Common Stock as determined in
good faith by the Board of Directors of the Company; provided, that in no event
shall the Exercise Price be reduced to less than the then current par value of
the Common Stock per share. For the purposes of the foregoing, a dividend
payable other than in cash or capital stock of the Company shall be considered
payable out of retained earnings only to the extent that such retained earnings
are charged an amount equal to the fair value of such dividend as determined by
the Board of Directors of the Company. Such reduction shall take effect as of
the date on which a record is taken for the purpose of such dividend or if a
record is not taken, the date as of which the holders of the Common Stock of
record entitled to such dividend are to be determined. Appropriate readjustment
of the Exercise Price shall be made in the event that any dividend referred to
in this Paragraph 3(b) shall be lawfully abandoned.
(c) Minimum Adjustment. Except as hereinafter provided, no adjustment
of the Exercise Price hereunder shall be made if such adjustment results in a
change of the Exercise Price then in effect of less than one cent ($.01) per
share. Any adjustment of less than one cent ($.01) per share of any Exercise
Price shall be carried forward and shall be made at the time of and together
with any subsequent adjustment which, together with adjustment or adjustments so
carried forward, amounts to one cent ($.01) per share or more. However, upon
exercise of this Warrant Certificate, the Company shall make all necessary
adjustments (to the nearest cent) not theretofore made to the Exercise Price up
to and including the effective date upon which this Warrant Certificate is
exercised.
(d) Notice of Adjustments. Whenever the Exercise Price shall be
adjusted pursuant to this Section 3, the Company shall promptly deliver a
certificate signed by the President or a Vice President and by the Treasurer or
an Assistant Treasurer or the Secretary or an Assistant Secretary of the
Company, setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated (including a description of the basis on which the Board of
Directors of the Company made any determination hereunder), by first class mail
postage prepaid to each Holder.
(e) Capital Reorganizations and Other Reclassifications. In case of
any capital reorganization of the Company, or of any reclassification of the
shares of Common Stock (other than a reclassification, subdivision or
combination of shares of Common Stock referred to in Paragraph 3(a)), or in case
of the consolidation of the Company with, or the merger of the Company with, or
merger of the Company into, any other corporation (other than a reclassification
of the shares of Common Stock referred to in Paragraph 3(a) or a consolidation
or merger which does not result in any reclassification or change of the
outstanding shares of Common Stock) or of the sale of the properties and assets
of the Company as, or substantially as, an entirety to any other corporation or
entity, each Warrant shall, after such capital reorganization, reclassification
of shares of Common Stock, consolidation, merger, or sale, be exercisable, upon
the terms and conditions specified in this Warrant Certificate, for the kind,
amount and number of shares or other securities, assets, or cash to which a
holder of the number of shares of Common Stock purchasable (at the time of such
capital reorganization, reclassification of shares of Common Stock,
consolidation, merger or sale) upon exercise of such Warrant would have been
<PAGE>
entitled to receive upon such capital reorganization, reclassification of shares
of Common Stock, consolidation, merger, or sale; and in any such case, if
necessary, the provisions set forth in this Section 3 with respect to the rights
and interests thereafter of the Warrantholder shall be appropriately adjusted so
as to be applicable, as nearly equivalent as possible, to any shares or other
securities, assets, or cash thereafter deliverable on the exercise of the
Warrants. The Company shall not effect any such consolidation, merger, or sale,
unless prior to or simultaneously with the consummation thereof the successor
corporation or entity (if other than the Company) resulting from such
consolidation or merger or the corporation or entity purchasing such assets or
other appropriate corporation or entity shall assume, by written instrument, the
obligation to deliver to the Warrantholder such shares, securities, assets, or
cash as, in accordance with the foregoing provisions, such holders may be
entitled to purchase and the other obligations hereunder. The subdivision or
combination of shares of Common Stock at any time outstanding into a greater or
lesser number of shares shall not be deemed to be a reclassification of the
shares of Common Stock for purposes of this Paragraph 3(e).
(f) Adjustments to Other Securities. In the event that at any time, as
a result of an adjustment made pursuant to this Section 3, the Warrantholder
shall become entitled to purchase any shares or securities of the Company other
than the shares of Common Stock, thereafter the number of such other shares or
securities so purchasable upon exercise of each Warrant and the exercise price
for such shares or securities shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as possible to the provisions with
respect to the shares of Common Stock contained in Paragraphs 3(a) through (e),
inclusive.
(g) Deferral of Issuance of Additional Shares in Certain
Circumstances. In any case in which this Section 3 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event issuing to the Warrantholder exercised after such record date the shares
of Common Stock, if any, issuable upon such exercise over and above the Warrant
Shares, if any, issuable upon such exercise on the basis of the Exercise Price
in effect prior to such adjustment; provided, however, that the Company shall
deliver as soon as practicable to such holder a due bill or other appropriate
instrument provided by the Company evidencing such holder's right to receive
such additional shares of Common Stock upon the occurrence of the event
requiring such adjustment.
4. Definition of Common Stock.
The Common Stock issuable upon exercise of the Warrants shall be the
Common Stock as constituted on the date hereof except as otherwise provided in
Section 3.
5. Notices of Record Date, etc.
In the event the Company shall propose to take any action of the types
requiring an adjustment of the Exercise Price or the number or character of the
Warrant Shares or Warrants pursuant to Section 3 or a dissolution, liquidation
or winding up of the Company (other than in connection with a consolidation,
merger, or sale of all or substantially all of its property, assets, and
business as an entirety) shall be proposed, the Company shall give notice to
each Warrantholder as provided in Section 10, which notice shall specify the
record date, if any, with respect to any such action and the date on which such
action is to take place. Such notice shall also set forth such facts with
<PAGE>
respect thereto as shall be reasonably necessary to indicate the effect of such
action (to the extent such effect may be known at the date of such notice) on
the Exercise Price and the number, kind or class of shares or other securities
or property which shall be deliverable or purchasable upon the occurrence of
such action or deliverable upon the exercise of the Warrants. In the case of any
action which will require the fixing of a record date, unless otherwise provided
in this Warrant Certificate, such notice shall be given at least twenty days
prior to the date so fixed, and in case of all other action, such notice shall
be given at least thirty days prior to the taking of such proposed action.
6. Replacement of Securities.
If this Warrant Certificate shall be lost, stolen, mutilated or
destroyed, the Company shall, on such terms as to indemnity or otherwise as the
Company may in its discretion reasonably impose, issue a new certificate of like
tenor or date representing in the aggregate the right to subscribe for and
purchase the number of shares of Common Stock which may be subscribed for and
purchased hereunder. Any such new certificate shall constitute an original
contractual obligation of the Company, whether or not the allegedly lost,
stolen, mutilated or destroyed Warrant Certificate shall be at any time
enforceable by anyone.
7. Registration.
This Warrant Certificate, as well as all other warrant certificates
representing Warrants shall be numbered and shall be registered in a register
(the "Warrant Register") maintained at the Company Office as they are issued.
The Warrant Register shall list the name, address and Social Security or other
Federal Identification Number, if any, of all Warrantholders. The Company shall
be entitled to treat the Warrantholder as set forth in the Warrant Register as
the owner in fact of the Warrants as set forth therein for all purposes and
shall not be bound to recognize any equitable or other claim to or interest in
such Warrant on the part of any other person, and shall not be liable for any
registration of transfer of Warrants that are registered or to be registered in
the name of a fiduciary or the nominee of a fiduciary unless made with the
actual knowledge that a fiduciary or nominee is committing a breach of trust in
requesting such registration of transfer, or with such knowledge of such facts
that its participation therein amounts to bad faith.
8. Transfer.
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR THIS WARRANT AND/OR SUCH SHARES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
<PAGE>
COUNSEL SATISFACTORY TO THE ISSUER OF THIS WARRANT AND SUCH SHARES TO THE
EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND SUCH STATE
SECURITIES LAWS.
9. Exchange of Warrant Certificates.
This Warrant Certificate may be exchanged for another certificate or
certificates entitling the Warrantholder thereof to purchase a like aggregate
number of Warrant Shares as this Warrant Certificate entitles such Warrantholder
to purchase. A Warrantholder desiring to so exchange this Warrant Certificate
shall make such request in writing delivered to the Company, and shall surrender
this Warrant Certificate therewith. Thereupon, the Company shall execute and
deliver to the person entitled thereto a new certificate or certificates, as the
case may be, as so requested.
10. Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed given when delivered in person, against written receipt
therefor, or two days after being sent, by registered or certified mail, postage
prepaid, return receipt requested, and, if to the Warrantholder, at such address
as is shown on the Warrant Register or as may otherwise may have been furnished
to the Company in writing by the Warrantholder and, if to the Company, at the
Company Offices.
11. Registration Rights.
(a) Defined Terms. As used in this Section 11, 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 Warrant 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 either (1) such Registerable Securities have been disposed of
pursuant to such effective registration statement or (2) such Registrable
Securities remain covered by such effective Registration Statement, such
Registerable Securities have been withdrawn from such Registration
Statement at the request or demand of the holder of such Registerable
Securities or such registration statement has been withdrawn at the request
or demand of the holder of such Registerable Securities, (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
<PAGE>
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 Warrantholder, all successors and assigns of the Warrantholder, 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 11 shall refer to this Section
4 as a whole and not to any particular provision of this Section 11, and
subsection, paragraph, clause, schedule and exhibit references are to this
Section 11 unless otherwise specified.
(b) Demand Registration.
(i) Right to Demand. Subject to Paragraph 11(b)(ii) hereof,
at any time on or after the Exercise Date and on or prior to two years from
the Expiration Time, the Initiating Holders (as defined in Paragraph
11(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 11(b)(iii) hereof, the holders of Registerable
Securities shall be entitled, in the aggregate, to one Demand Registration,
the Registration Expenses (as defined in Paragraph 11(e) hereof) of which,
subject to the provisions of Paragraph 11(e), shall be borne by the
Company, but the Company shall not be responsible for the payment of any
<PAGE>
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 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
<PAGE>
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 Paragraph 11(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 Exercise Date and on or
prior to two years from the Termination 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
<PAGE>
solely in connection with an exchange offer, a business combination
transaction or an offering of securities solely to the existing
stockholders or employees of the Company), then the Company, on each such
occasion, shall give written notice (each, a "Company Piggy-Back Notice")
of such proposed filing to all of the Rightsholders owning Registerable
Securities at least 30 days before the anticipated filing date of such
registration statement, and such Company Piggy-Back Notice also shall be
required to offer to such Rightsholders the opportunity to register such
aggregate number of Registerable Securities as each such Rightsholder may
request. Each such Rightsholder shall have the right, exercisable for the
twenty days immediately following the giving of the Company Piggy-Back
Notice, to request, by written notice (each, a "Holder Notice") to the
Company, the inclusion of all or any portion of the Registerable Securities
of such Rightsholders in such registration statement. The Company shall use
reasonable efforts to cause the managing underwriter(s) of a proposed
underwritten offering to permit the inclusion of the Registerable
Securities which were the subject of all Holder Notices in such
underwritten offering on the same terms and conditions as any similar
securities of the Company included therein. Notwithstanding anything to the
contrary contained in this Paragraph 11(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 Paragraph 11(c) shall be unlimited
with respect to each Rightsholder. Subject to the provisions of Paragraph
11(e) hereof, the Company will pay all Registration Expenses in connection
with any registration of Registerable Securities effected pursuant to this
Paragraph 11(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 Paragraph 11(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
Paragraph 11(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
<PAGE>
register or to withdraw such registration statement, the Company shall be
relieved of its obligation under this Paragraph 11(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 Paragraph 11(c) for the same period as the delay in the
registration of such other securities. No registration effected under this
Paragraph 11(c) shall relieve the Company of its obligation to effect any
registration upon demand otherwise granted to a Rightsholder under
Paragraph 11(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 Paragraph 11(b) or (c) hereof,
as expeditiously as possible:
(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
<PAGE>
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;
(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
11(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
<PAGE>
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 11(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 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
<PAGE>
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 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 11(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
Paragraph 11(b) or (c) hereof:
<PAGE>
(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 11(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 11(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 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
11(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
<PAGE>
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
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.
<PAGE>
(iii) Conduct of Indemnification Proceedings. Promptly after
receipt by an indemnified party under this Paragraph 11(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 Paragraph 11(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
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 Paragraph 11(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
<PAGE>
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
Paragraph 11(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 11(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 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
Paragraph 11(f) or in Paragraph 11(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 Paragraph 11(e) hereof.
12. Miscellaneous.
This Warrant Certificate and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. This certificate is deemed to have been delivered in the State of New
York and shall be construed and enforced in accordance with and governed by the
laws of such State. The headings in this Warrant Certificate are for purposes of
reference only, and shall not limit or otherwise affect any of the terms hereof.
<PAGE>
13. Expiration.
Unless as hereinafter provided, the right to exercise these Warrants
shall expire at the Expiration Time.
Dated: As of January 4, 1999
SOFTWARE PUBLISHING
CORPORATION HOLDINGS, INC.
By: /s/ Mark E. Leininger
--------------------------------
Mark E. Leininger, President
ATTEST:
/s/ Marc E. Jaffe
- --------------------------
Marc E. Jaffe, Secretary
<PAGE>
EXERCISE FORM
Dated:_______________, ____
TO: SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.:
The undersigned hereby irrevocably elects to exercise the within
Warrant, to the extent of purchasing _________________ shares of Common Stock,
and hereby makes payment of _____________ in payment of the actual Exercise
Price thereof.
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INSTRUCTIONS FOR REGISTRATION OF STOCK
Name:
-----------------------------------------------------------------
(Please type or print in block letters)
Address:
-----------------------------------------------------------------
-----------------------------------------------------------------
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Signature: -----------------------------------------------------------------
(Signature must conform in all respects to the name of the
Warrantholder as set forth on the face of this
Warrant Certificate.)
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, _____________________________________ hereby sells,
assigns and transfers unto
Name:
-------------------------------------------------------------------
(Please type or print in block letters)
Address: -------------------------------------------------------------------
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the right to purchase Common Stock represented by this Warrant Certificate to
the extent of ________________ shares as to which such right is exercisable and
does hereby irrevocably constitute and appoint ___________________________
Attorney-in-Fact, to transfer the same on the books of the Company with full
power of substitution in the premises.
Dated:
-------------------------------
Signature:
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(Signature must conform in all respects to the name of the
Warrantholder as set forth on the face of this
Warrant Certificate.)
