Registration No. _________
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SECURITIES AND EXCHANGE COMMISSION
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-3270045
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3A Oak Road, Fairfield, New Jersey 07004 - (973) 808-1992
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Mark E. Leininger
President and Chief Executive Officer
Software Publishing Corporation Holdings, Inc.
3A Oak Road
Fairfield, New Jersey 07004
(973) 808-1992
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
Neil M. Kaufman, Esq.
Kaufman & Moomjian, LLC
50 Charles Lindbergh Boulevard - Suite 206
Mitchel Field, New York 11553
(516) 222-5100
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Amount to maximum maximum Amount of
Title of each class of be offering price aggregate registration
securities to be registered registered per unit offering price fee
<S> <C> <C> <C> <C>
Common Stock, par value $.001 per share
(the "Common Stock") . . . . . . . . . . . . 1,178,825 $2.84 (1) $3,347,863.00 (1) $930.71
Placement Agent Warrants (2) . . . . . . . . 17,052 (3)
Common Stock issuable upon exercise of the
Placement Agent Warrants (2) . . . . . . . . 17,052 $1.50 (4) $25,578.00 (4) $7.11
Investment Banking Warrants. . . . . . . . . 150,000 (3)
Common Stock issuable upon exercise of
Investment Banking Warrants (2). . . . . . . 150,000 $.86 (4) $129,000.00 (4) $35.86
Common Stock issuable upon exercise of
European Consultant Warrants . . . . . . . . 600,000 $.75 (4) $450,000.00 (4) $125.10
Common Stock issuable upon exercise of
Consultant Warrants. . . . . . . . . . . . . 640,000 $.75 (4) $480,000.00 (4) $133.44
Common Stock issuable upon exercise of
Investment Advisor Warrants. . . . . . . . . 145,000 $1.125 (4) $163,125.00 (4) $ 45.35
Common Stock issuable upon exercise of
Employee and Consultant Options. . . . . . . 385,000 $1.03125 (4) $397,031.25 (4) $110.37
Common Stock issuable upon exercise of
Preferred Stockholders Warrants. . . . . . . 260,000 $1.0625 (4) $276,250.00 (4) $76.80
TOTAL. . . . . . . . . . . . . . . . . . . . $1,464.74
<FN>
(1) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(c) promulgated under the Securities Act of 1933, as
amended, (the "Securities Act"), based upon a per share last sale price for
the Common Stock on June 4, 1999.
(2) Pursuant to Rule 416, there are also being registered such
indeterminable additional Placement Agent Warrants, Investment Banking
Warrants and shares of Common Stock as may become issuable pursuant to
anti-dilution provisions contained in the Placement Agent Warrants,
Investment Banking Warrants, European Consultant Warrants, Consultant
Warrants and Preferred Stockholder Warrants.
(3) No fee required pursuant to Rule 457(g) promulgated under the Securities
Act.
(4) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(g) promulgated under the Securities Act.
</FN>
</TABLE>
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The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>
The information contained in this Prospectus is not complete and may be changed.
The Company may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is declared effective. This
Prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
SUBJECT TO COMPLETION, DATED JUNE __, 1999
PRELIMINARY PROSPECTUS
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
3,375,877 Shares of Common Stock
and
167,052 Warrants to Purchase Common Stock
This prospectus is part of a Registration Statement filed by Software
Publishing Corporation Holdings, Inc. ("we," "us" or the "Company") with the
Securities and Exchange Commission (the "SEC") using the "shelf" registration
process. The Registration Statement covers 3,375,877 shares (the "Shares") of
the Company's common stock, par value $.001 per share (the "Common Stock"), and
167,052 warrants (the "Registered Warrants") to purchase shares of Common Stock.
The Shares include 1,178,825 shares of Common Stock that are currently
outstanding and 2,197,052 shares of Common Stock underlying outstanding options
and warrants (the "Derivative Securities"), including the 167,052 Registered
Warrants. The Shares and Registered Warrants may be offered and sold from time
to time by the holders (the "Selling Securityholders") of the Shares and
Derivative Securities and any pledgees and donees of the Shares and Derivative
Securities. Information regarding the identities of the Selling Securityholders,
the manner in which they acquired their Shares and Derivative Securities and the
manner in which the Shares and Registered Warrants are being offered and sold is
provided in the "Selling Securityholders" and "Plan of Distribution" sections of
this Prospectus.
The Company will not receive any of the proceeds from the sale of the
Shares and Derivative Securities, other than the exercise price, if any, to be
received upon exercise of the Derivative Securities. The Company has agreed to
bear all of the expenses in connection with the registration and sale (other
than commissions) of the Shares and Registered Warrants, which expenses we
estimate to be $80,000.00.
The Common Stock is currently traded on the Nasdaq SmallCap Market
("Nasdaq") under the symbol "SPCO" and listed on the Boston Stock Exchange
("BSE") under the symbol "SPO." On June 4, 1999, the last sales price for the
Common Stock, as reported by Nasdaq, was $2-27/32 per share.
--------------
The securities offered in this Prospectus involve a high degree of risk.
You should carefully read and consider the "Risk Factors," commencing on page 5
for information that should be considered in determining whether to purchase any
of the securities.
--------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------
The date of this Prospectus is June __, 1999
<PAGE>
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED
BY REFERENCE IN THIS PROSPECTUS AND IN ANY ACCOMPANYING PROSPECTUS
SUPPLEMENT. NO ONE HAS BEEN AUTHORIZED TO PROVIDE YOU WITH DIFFERENT
INFORMATION.
THE SECURITIES ARE NOT BEING OFFERED IN ANY JURISDICTION WHERE THE OFFER IS
NOT PERMITTED.
YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE
FRONT OF SUCH DOCUMENTS.
WHERE YOU CAN FIND MORE INFORMATION
Government Filings. The Company is subject to the information reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). As such, the Company files annual, quarterly and special reports, proxy
statements and other documents with the SEC. These reports, proxy statements and
other documents may be inspected and copied at the public reference facilities
maintained by the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, NW,
Washington, D.C. 20549, and at the SEC's regional offices located at Seven World
Trade Center, Suite 1300, New York, New York 10048, and at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60601-2511. You may also obtain copies of
such material by mail from the public reference facilities of the SEC's
Washington, D.C. offices, at prescribed rates. Please call the SEC at
1-800-SEC-0330 for further information on their public reference facilities. In
addition, the SEC maintains a Worldwide Web site that contains reports, proxy
and information statements and other information regarding companies, including
the Company, that file electronically with the SEC at the address
"http://www.sec.gov."
Stock Market. The Common Stock is listed on The Nasdaq SmallCap Market
("Nasdaq") and the Boston Stock Exchange (the "BSE"). Material filed by the
Company can also be inspected and copied at the offices of Nasdaq at 1735 K
Street, N.W., Washington, D.C. 20006, and the BSE, at One Boston Place, Boston,
Massachusetts 02108.
The Company. Most of the Company's SEC filings are also available to you at
the Company's web site at "http://www.spch.com." Further, the Company will
provide you without charge, upon your request, with a copy of any or all
reports, proxy statements and other documents filed by the Company with the SEC,
as well as any or all of the documents incorporated by reference in this
Prospectus or the Registration Statement (other than exhibits to such documents
unless such exhibits are specifically incorporated by reference into such
documents). Requests for such copies should be directed to:
Software Publishing Corporation Holdings, Inc.
Attention: Investor Relations Department
3A Oak Road
Fairfield, New Jersey 07004
Telephone number: (973) 808-1992
Information Incorporated by Reference. The SEC allows the Company to
"incorporate by reference" the information the Company files with the SEC, which
means that:
- incorporated documents are considered part of this Prospectus,
- the Company can disclose important information to you by
referring you to those documents and
- information that the Company files after the date of this Prospectus
with the SEC will automatically update and supersede information
contained in this Prospectus and the Registration Statement.
2
<PAGE>
The Company incorporates by reference the documents listed below and any
future filings the Company will make with the SEC under Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act until this offering has been completed:
1. The Company's Annual Report on Form 10-KSB, for the fiscal year
ended December 31, 1998;
2. The Company's Quarterly Report on Form 10-QSB, for the quarter
ended March 31, 1999; and
3. The description of the Common Stock contained in the
Company's Registration Statement on Form 8-A, declared effective
on December 6, 1995, including any amendment(s) or report(s) filed
for the purpose of updating such description.
FORWARD-LOOKING STATEMENTS
This Prospectus and the documents incorporated by reference into this
Prospectus include "forward- looking statements" within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking
statements involve known and unknown risks, uncertainties and other factors
which could cause the Company's 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 Company's best estimates 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. Potential risks and uncertainties include,
among other things, such factors as:
- the overall level of business and consumer spending for
computer software,
- the market acceptance and amount of sales of the Company's products,
- the extent that the Company's direct mail programs achieve
satisfactory response rates,
- the ability of the Company to obtain sufficient supplies of
successful products,
- the efficiency of the Company's telemarketing operations,
- the competitive environment within the computer software and direct
mail industries,
- the Company's ability to raise additional capital,
- unforeseen operational difficulties and financial losses due to year
2000 computer problems,
- the cost-effectiveness of the Company's product development
activities,
- the extent to which the Company is successful in developing,
acquiring or licensing products which are accepted by the market, and
- the other factors and information disclosed and discussed
under "Risk Factors" and in other sections of this Prospectus.
Investors should carefully consider such risks, uncertainties and other
information, disclosures and discussions which contain cautionary statements
identifying important factors that could cause actual results to differ
materially from those provided in the forward-looking statements. We undertake
no obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
THE COMPANY
The Company makes and sells computer software products for both the United
States domestic and international markets. Most of these products are visual
communication tools comprised of desktop publishing, presentation graphics and
graphics/drawing software for the corporate, small office and home office
("SOHO") and consumer markets. Our software and hardware products are intended
to allow the user to improve the visual and graphical appeal as well as the
overall effectiveness of documents and digital images produced by either the
Company's or third parties' desktop publishing, web publishing, presentation
graphics, e-mail, word processing
3
<PAGE>
and other similar applications and products. We currently offer twenty-eight
products that operate on the Windows(R) 98, Windows 95, Windows NT(R), Windows
3.1 and DOS operating systems for IBM personal computers and compatibles. We
also sell software products together with certain computer hardware, such as
"mouse pens," new personal computers and digital cameras. We have established
a multi-channel distribution system utilizing direct mail, telemarketing,
retail, corporate and OEM sales channels and also disseminate our software
programs over the Internet. The Company currently derives substantially all
of its net sales from products sold directly to end-users by its direct mail
and telemarketing centers, and to retailers, distributors and corporate
purchasers by its internal sales force and independent sales representatives.
We estimate that approximately 84% of our net sales for the year ended
December 31, 1998 (the "1998 Fiscal Year") and 93% of our net sales for the
three months ended March 31, 1999 (the "1999 Fiscal Period") were generated
through the Company's direct sales and telemarketing efforts.
North America and international net sales for the 1998 Fiscal Year and the
year ended December 31, 1997 (the "1997 Fiscal Year") were as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------
1998 1997
--------------------- ---------------------
Amount % Amount %
------------ ------ ------------ ------
<S> <C> <C> <C> <C>
North America . . . . . . . . $ 8,431,271 46.1 $ 8,770,684 51.1
International . . . . . . . . 9,840,462 53.9 8,386,181 48.9
Total . . . . . . . . . . . . 18,271,733 100.0 $ 17,156,865 100.0
</TABLE>
North America and international net sales for the 1999 Fiscal Period and
the three months ended March 31, 1998 (the "1998 Fiscal Period") were as
follows:
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------------------------
1999 1998
--------------------- ---------------------
Amount % Amount %
------------ ------ ------------ ------
<S> <C> <C> <C> <C>
North America . . . . . . . . $ 1,685,370 34.1 $ 1,875,219 47.8
International . . . . . . . . 3,250,158 65.9 2,048,227 52.2
Net sales . . . . . . . . . . $ 4,935,528 100.0 $ 3,923,446 100.0
</TABLE>
We believe that end users are continuing to migrate from the Windows 3.1
and Windows 95 environments to the Windows NT and Windows 98 platforms and to
Internet computing. We expect increased competition, including price
competition, in the computer software and hardware markets in the future.
Several of our competitors sell suites of products which include products that
directly compete with our products. We believe that these offerings of product
suites have and will continue to adversely affect sales of our products as the
individual products within the suites continue to gain increased levels of
inter-operability and functionality. The Company currently does not offer a
suite of general purpose office products; however, we currently offer one
product suite, Serif Publishing Power Suite, as well as products that complement
competitive suite products.
The Company currently is in the process of developing a new website
entitled VisualCities.com. The Company contemplates that this website will be an
Internet portal/community which would provide information, content, goods and
services to users. No assurance can be given that the Company will be able to
successfully develop and operate this website, that it will attract a
significant number of users or that the Company will achieve significant
revenues therefrom.
In July 1996, we acquired Serif Inc. and Serif (Europe) Limited
(collectively, the "Serif companies"), which significantly expanded our product
line to include desktop publishing and drawing titles Serif PagePlus and Serif
DrawPlus, among others. In December 1996, we acquired all of the outstanding
capital stock of Software Publishing Corporation ("SPC"), as a result of which
our product line expanded further to include SPC's presentation graphics and
other visual communications and business productivity software products. We
continue to operate the Serif companies and SPC as wholly-owned subsidiaries.
Since January 1998, the operations of SPC have been significantly reduced.
4
<PAGE>
We are currently substantially dependent upon sales of our Serif line of
software programs. Microsoft Corporation ("Microsoft"), Corel Corporation, Adobe
Systems and others sell products targeted for substantially the same market as
the Serif product line, some of which are included in product suites.
We believe that in order to increase net revenues, we must continue to
develop and introduce new technologies and products internally, obtain
additional technologies and products through strategic alliances and
acquisitions and introduce new marketing strategies to include strengthening our
marketing through e-commerce and the Internet. Any inability or delay in
executing these strategies, difficulties encountered in introducing new products
or marketing programs, or failures of our current and future products to compete
successfully with products offered by other vendors, could adversely affect our
performance. The Company's growth is expected to require increases in the number
of employees, expenditures for new product development and expansion of our e-
commerce and Internet sites, the acquisition of product rights, sales and
marketing expenses, and general and administrative expenses.
In the third quarter of the 1998 Fiscal Year, we began selling our Go
Digital Camera Pak, which consists of a digital camera and digital imaging
software licensed from a third party, as well as certain accessories. The
digital imaging market is fairly new and we may not sustain a profitable level
of sales as competitors focus their marketing efforts, develop enhancements to
their products and develop products that take advantage of technological
advances.
Unless the context otherwise requires, all references herein to the Company
include Software Publishing Corporation Holdings, Inc. and its subsidiaries,
including SPC and the Serif companies, on a consolidated basis.
Principal Offices
The Company's principal executive offices are located at 3A Oak Road,
Fairfield, New Jersey 07004; telephone (973) 808-1992. The Company maintains
websites at www.spch.com, www.serif.com and www.harvardgraphics.com.
RISK FACTORS
The securities offered in this Prospectus are speculative and involve a
high degree of risk. Only those persons able to lose their entire investment
should purchase any of the securities. Prior to making an investment decision,
you should carefully read this Prospectus and consider, along with other matters
referred to herein, the following risk factors.
No Assurance of Profitability; Losses to Date
The Company has been unprofitable since inception in July 1992 and may
continue to incur operating losses in the future. For the year ended December
31, 1998, we had a net loss of approximately $2,407,000 and, for the three
months ended March 31, 1999, we had a net loss of $671,942. Our operating losses
may increase as we develop, produce and distribute additional products,
de-emphasize other products and continue to develop our business. We may not be
able to become profitable or, if we obtain profitability, we may thereafter not
be able to maintain profitability.
Competition May Adversely Affect Results of Operations
The market for our software products is characterized by:
- ongoing technological developments,
- evolving industry standards,
- licensing of technology between companies,
5
<PAGE>
- cross and collateral marketing of products by two or more
companies,
- alliances between companies,
- joint marketing campaigns and
- rapid changes in customer requirements and increasing customer
demands.
We believe that the principal competitive factors in the corporate, SOHO
and consumer software markets include:
- pricing (which includes individual product pricing, standard and
competitive upgrade pricing, licensing and volume discounting),
- product functionality,
- ease-of-use,
- bundling in suites of related products,
- distribution through existing and new channels and
- brand name recognition.
As a result, we believe that our success in this market depends upon our
ability to continue to:
- provide continued enhancement of our existing and future
products,
- correctly identify and enter new markets,
- effectively market and sell our current and future products,
- expand our existing distribution channels while also
developing new distribution channels, including e-commerce,
- timely and efficiently acquire, license or develop and introduce
new products that take advantage of technological advances and
- respond to new requirements and demands of the market.
To the extent one or more of our competitors introduce products that better
address market requirements, our business could be adversely affected. We may
not be successful in developing and marketing enhancements to our existing
products or new products incorporating new technology on a timely basis. Also,
our existing and new products may not adequately address the changing needs of
the marketplace. If we are unable to timely develop and introduce new products
or enhance existing products, our business and results of operations could be
materially and adversely affected.
The dominant position of Microsoft in the personal computer operating
system and application program marketplace provides Microsoft with a range of
competitive advantages, including its ability to determine the direction of
future operating systems and to leverage its strength in one or more product
areas to achieve a dominant position in new markets. This position may enable
Microsoft to increase its market position even with respect to products having
superior performance, price and ease-of-use features. Microsoft's ability to:
- offer corporate and SOHO operating systems combined with its own
productivity software,
- bundle software,
- provide incentives to customers to purchase certain products
in order to obtain favorable sales terms or necessary compatibility or
information with respect to other products,
- pre-load such bundled software on new computers, and
- purchase advantageous product positioning and presentations in
various distribution channels
may significantly inhibit our ability to maintain or expand our business. In
addition, as Microsoft or other companies create new operating systems and
applications, we may not be able to re-work our products in order for the
products to remain compatible with these new systems and applications. The
introduction of upgrades to operating systems or the introduction of new
operating systems and standardized software by Microsoft and others, over which
we have no control, may adversely affect our ability to upgrade our own products
and may cause a reduction in sales of our products.
6
<PAGE>
We believe that competition will continue to intensify in the future and
that new product introductions, as well as potential price reductions, strategic
alliances and other actions by competitors could materially and adversely affect
our competitive position.
Short Product Life Cycles May Adversely Affect Revenues
From time to time we or our competitors may announce new products,
capabilities or technologies that have the potential to replace or shorten the
life cycles of our existing products. Such announcements of currently planned or
other new products may cause customers to defer purchasing our existing
products.
Seasonality Is Expected to Cause Fluctuations in Revenues and Operating Results
The computer software market is characterized by significant seasonal
swings in demand, which typically peak in the fourth quarter of each calendar
year. The seasonal pattern is due primarily to the increased demand for software
during the year-end holiday buying season and reduced retail and corporate
demand for business software during the summer vacation period. We expect our
net sales and operating results to reflect this seasonality.
Fluctuations in Quarterly Results and the Uncertainty of Future Operating
Results May Cause Significant Fluctuations in Our Stock Price
Our quarterly operating results have and, in the future, may fluctuate
significantly, depending on factors such as:
- demand for our products,
- the size, timing and timely fulfilment of orders,
- the number, timing and significance of new product
announcements by us and our competitors, our ability to
develop, introduce and market new products, as well as
enhanced versions of our current products on a timely basis,
- the level of product and price competition,
- changes in operating expenses,
- changes in average selling prices and product mix,
- changes in our sales incentive strategy, as well as sales
personnel changes,
- the mix of direct and indirect sales, product returns and rebates,
- changes in technology,
- general economic factors, and
- seasonality.
Our expense levels, however, are expected to be based in large part on our
expectations of future revenues. Therefore, if revenue levels are below
expectations, operating results are likely to be adversely affected. Net income
may be disproportionately affected by an unanticipated decline in revenue for a
particular quarter because a relatively small amount of our expenses will vary
with our revenue in the short term. As a result, we believe that
period-to-period comparisons of our results of operations are not and will not
necessarily be meaningful and should not be relied upon as any indication of
future performance. Due to all of the foregoing factors, it is likely that in
some future quarter our operating results will be below expectations. In such
event, the market price of the Common Stock could be materially adversely
affected.
Volatility of Stock Prices
The market for the Common Stock is highly volatile. The trading price of
the Common Stock could be subject to wide fluctuations in response to, among
other things:
- quarterly variations in operating and financial results,
- announcements of technological innovations or new products
by us or our competitors,
- changes in prices of our products or our competitors' products
and services,
7
<PAGE>
- changes in product mix,
- changes in our revenue and revenue growth rates as a whole or for
individual geographic areas, business units, products or product
categories, and
- response to the Company's strategies concerning e-commerce and
the Internet.
Statements or changes in opinions, ratings, or earnings estimates made by
brokerage firms or industry analysts relating to the market in which we do
business or relating to us could result in an immediate and adverse effect on
the market price of the Common Stock. In addition, the stock market has from
time to time experienced extreme price and volume fluctuations which have
particularly affected the market price for the securities of many software and
Internet companies and which often have been unrelated to the operating
performance of these companies. These broad market fluctuations may adversely
affect the market price of the Common Stock.
Rapid Technological Changes Could Cause Delay in New Products; Delays May Cause
Reduced Revenues
The software market is characterized by ongoing technological developments,
evolving industry standards, frequent new product introductions and rapid
changes in customer requirements and preferences. The introduction of products
embodying new technologies and the emergence of new industry standards and
practices can rapidly render existing products obsolete and unmarketable. In the
past, we have experienced delays in software development and may experience
delays in connection with current product developments or future development
activities. Such delays may prevent the successful introduction or marketing of
these products. Further, our new products and product enhancements may not
adequately meet the requirements of the marketplace and achieve market
acceptance. Delays in the commencement of commercial shipments of new products
or enhancements may also result in customer dissatisfaction and delay or loss of
product revenues.
Product Defects Could Delay or Prevent Market Acceptance of New or Upgraded
Products
Software products as complex as those offered by the Company may contain
undetected errors or failures when first introduced or as new versions are
released. Despite testing internally or by current or potential customers,
errors may be found in new products after commencement of commercial shipments,
resulting in loss of or delay in market acceptance.
Although we have a number of ongoing development projects, the following
risks still exist:
- development may not be completed successfully on time or
within our projected cost,
- projects may not include the features required to achieve
market acceptance, and
- enhancements to our products may not keep pace with
broadening market requirements.
Product Returns and Difficulties in the Collection of Accounts Receivable Could
Result in Reductions in Cash Flows
Some of our sales are made on credit terms which may vary substantially. We
do not hold collateral to secure payment. Therefore, a default in payment on a
significant scale could materially adversely affect our business, results of
operations and financial condition. In addition, it is difficult for us to
ascertain future demand for our existing products and anticipated demand for
newly introduced products. Consistent with industry practices, we may accept
product returns or provide other credits in the event that a retailer or
distributor holds excess inventory of our products, even when we are not legally
required to do so. Accordingly, we are exposed to the risk of product returns
from retailers, distributors and direct sales customers. While we believe that
we have established appropriate allowances for collection problems and
anticipated returns based on our historical experience and industry norms,
actual returns and uncollectible receivables may exceed such allowances.
Defective products also may result in higher customer support costs and product
returns.
8
<PAGE>
Customer Concentration and Credit Risk
The Company had one customer which accounted for approximately 5% of the
Company's net sales for the three months ended March 31, 1999 and 13% of net
sales for the year ended December 31, 1998. This same customer accounted for
approximately 41% of the Company's accounts receivable at March 31, 1999 and 36%
of accounts receivable at December 31, 1998. The Company considers several of
its customers to be significant. The loss of any of such customers, a
significant decrease in product shipments to one or more of them or an inability
to collect receivables from one or more of them could adversely affect the
Company's business, operating results and financial condition.
Dependence on Key Personnel
Significant historical growth from acquisitions and operational
restructurings have placed strain upon our personnel, management systems and
resources. In the future, we expect to continue to improve our financial and
management controls, reporting systems and procedures on a timely basis and
train and manage our employee work force. An inability to do so may inhibit our
ability to grow. Competition for qualified sales, technical and other qualified
personnel, including expert Windows-environment programmers, is intense, and we
may not be able to attract or retain highly qualified employees in the future.
Our future success depends in significant part upon the continued service of our
current key technical, sales and senior management personnel. The loss of the
services of one or more of these key employees could have a material adverse
effect on our business, operating results and financial condition. Additions of
new and departures of existing personnel, particularly in key positions, can be
disruptive, which could have a material adverse effect upon the Company.
International Sales and Operations and Currency Fluctuations Could Have an
Adverse Affect
International sales are a significant source of revenue for the Company.
International sales represented approximately 65.9% of our net sales for the
three months ended March 31, 1999 and 53.9% of our net sales for the year ended
December 31, 1998. We believe that achieving profitability will require, among
other matters, additional expansion of sales in foreign markets. In order to
increase international sales, we may be required to establish additional foreign
operations, hire additional personnel and recruit additional international
resellers. Currently, our international sales are denominated in either U.S.
dollars, the Euro or local currency and we do not anticipate engaging in any
hedging activities. The introduction of the Euro may have an impact on currency
fluctuations. Although exposure to currency fluctuations to date has not been
significant, fluctuations in currency exchange rates in the future could have a
material adverse impact on the Company. Additional risks inherent in our
international business activities include:
- unexpected changes in regulatory requirements,
- tariffs and other trade barriers,
- costs of localizing products for foreign countries,
- lack of acceptance of localized products in foreign countries,
- longer accounts receivable payment cycles,
- difficulties in collecting payment,
- difficulties in managing international operations,
- potentially adverse tax consequences including limitations
on the repatriation of earnings,
- reduced protection for intellectual property,
- the burdens of complying with a wide variety of foreign laws, and
- the effects of potentially high local wage scales, employment
customs and other expenses.
Any of these factors or others not presently contemplated by the Company
could have a material adverse effect on our future international operations.
9
<PAGE>
Dependence on Manufacturers and Suppliers of Hardware
In the third quarter of the 1998 Fiscal Year, we began selling our Go
Digital Camera Pak, which consists of a digital camera and digital imaging
software licensed from a third party, as well as certain accessories. In the
1999 Fiscal Period, the Company began to experience delays in shipments of
digital cameras from cameras' respective manufacturer/suppliers, which delays
have continued. As of March 31, 1999, the Company had a backlog of $603,000
relating to this product. While the Company believes that these delays are only
temporary, the Company is presently investigating alternative
manufacturer/suppliers for hardware similar in quality to the digital cameras
presently included in the Go Digital Camera Pak and those offered as upgrade
cameras. No assurance can be given that the Company will, in the future, not
experience delays in receipt of these digital cameras or other hardware
sold by the Company from its manufacturers/suppliers, or identify
alternative suppliers and acquire the alternative hardware on terms as
beneficial to the Company as the Company's present hardware purchase terms.
Litigation and Potential Litigation May be Costly and/or Time-Consuming
Our competitors and potential competitors may resort to litigation as a
means of competition. Any litigation involving the Company, whether as plaintiff
or defendant, regardless of the outcome, may result in substantial costs and
expenses to the Company and significant diversion of effort by our management
and technical personnel. In the event of an adverse result in any such
litigation, we could be required to:
- expend significant resources to develop non-infringing technology,
- obtain licenses to the technology which is the subject of the
litigation on terms not advantageous to the Company,
- pay damages, and/or
- cease the use of any infringing technology.
There can be no assurance that we would be successful in such development,
that any such licenses would be available and/or that we would have available
funds sufficient to satisfy any cash awards.
In the first quarter of 1998, the Company and certain of our current and
former executive officers and directors were named as defendants in an action
claiming that such defendants made intentional misrepresentations of material
facts in connection with such plaintiffs' purchases of an aggregate 296,333
shares of Common Stock for $919,495. While we believe this action to be without
merit, the ultimate outcome of such lawsuit is unknown at this time. Any adverse
decision in this action may have a material adverse effect on our business,
operating results and financial condition.
We are also a defendant in litigations involving disputes with a landlord
and several vendors. These litigations generally arise out of our ordinary
course of business, and we believe that any adverse decision resulting from any
of these litigations will not have a materially adverse effect on the Company;
however, no assurance can be given in this regard.
Software Piracy and Intellectual Property Infringement May Adversely Affect Our
Revenues
We believe that our success depends significantly upon our proprietary
technology. We currently rely on a combination of copyright and trademark laws,
trade secrets, confidentiality procedures and contractual provisions and other
written materials under trade secret, patent and copyright laws to protect our
proprietary technology; however, these methods generally afford only limited
protection. Despite our efforts to protect our proprietary rights, unauthorized
parties may attempt to copy aspects of our products or services or to obtain and
use information that we regard as proprietary. In addition, the laws of some
foreign countries do not protect proprietary rights to as great an extent as do
the laws of the United States. Monitoring and identifying unauthorized use of
personal computer software is difficult. We expect software piracy to be a
continuing problem resulting in a reduction of our potential revenues.
10
<PAGE>
Dependence on Third Party Licenses Could Have Adverse Affects
We rely on certain software, technology and content that we license or have
licensed from third parties, including software, technology and content that is
integrated with internally developed software and used in our products to
perform key functions. These third-party software licenses may not continue to
be available to us on commercially reasonable terms. Also, such software may not
be appropriately supported, maintained or enhanced by the licensors such that
the licensed software would not continue to provide the necessary commercial
benefits to our products. In addition, we may not be able to license such
software, technology and content on terms advantageous to the Company. The loss
of or inability to obtain or replace licenses to, or inability to support,
maintain and enhance, any of such licensed software, could result in increased
costs, including the expense of internally developing the required software,
technology and/or content, as well as delays or reductions in product shipments.
Dependence on Retailers, Distributors and Sales Representatives May Adversely
Affect Sales and Cash Flows
Our customers are not contractually required to make future purchases of
our products and could discontinue carrying or purchasing our products, at any
time and for any reason. Retailers and distributors generally are in a strong
position to negotiate favorable terms of sale, including price discounts and
product return policies. Retailers also often require software publishers to pay
fees in exchange for preferred shelf space. Further, resellers may give higher
priority to products other than ours, thus reducing their efforts to sell our
products. We may not be able to increase or sustain the current amount of our
retail shelf space and, as a result, our operating results could be adversely
affected.
Use of Net Operating Loss Carryforwards is Limited
We estimate our consolidated tax net operating loss carryforwards to be
approximately $84 million at December 31, 1998, which expire in years 2002
through 2018, and our general business credit carryover to be approximately $1.5
million, which expires in years 2005 and 2006. These carryforwards are subject
to certain limitations described below. Under Section 382 of the Internal
Revenue Code of 1986, as amended (the "Code"), changes in the ownership or the
business of a corporation that has net operating loss carryforwards can result
in the inability to use or the imposition of significant restrictions on the use
of such net operating loss carryforwards to offset future income and tax
liability of such corporation. An "ownership change" may be deemed to have
occurred under Section 382 of the Code and the regulations thereunder with
respect to both the Company and its wholly-owned subsidiary, Software Publishing
Corporation ("SPC"), which the Company acquired in December 1996, and the use by
the Company of these net operating loss carryforwards will be limited.
Utilization of the net operating loss carryforwards of SPC may be further
limited by reason of the consolidated return/separate return limitation year
rules. In addition, the SPC net operating loss carryforwards are also subject
to the additional limitation that such losses can only be utilized to offset the
separate taxable income of SPC. We estimate the maximum utilization of such net
operating loss carryforwards to be approximately $1,200,000 per year for losses
through December 31, 1996; losses incurred thereafter can be fully utilized
until expired under present circumstances. There can be no assurance that we
will be able to utilize all of our net operating loss carryforwards. In
addition, the foreign losses incurred by SPC may decrease or otherwise restrict
our ability to claim U.S. tax credits for foreign income taxes.
Failure to Obtain IRS Closing Agreement Could Result in Large Tax Payment
We have applied for a closing agreement with the Internal Revenue Service
(the "IRS") pursuant to which we would become jointly and severally liable for
SPC's tax obligations upon occurrence of a "triggering event" requiring
recapture of dual consolidated losses previously utilized by SPC. Such closing
agreement would avoid SPC's being required to recognize a tax of approximately
$8 million on approximately $24.5 million of SPC's previous dual consolidated
losses. The IRS has, to date, refused to grant the Company's application for
such a closing agreement because of alleged deficiencies in SPC's
pre-acquisition dual loss certifications. The IRS has indicated that it will
consider alternative measures, which the Company is presently evaluating, to
correct these deficiencies and allow for such a closing agreement. While the
Company believes that the IRS should agree to such
11
<PAGE>
a closing agreement, no assurance can be given that the IRS will do so and,
absent extraordinary relief, any failure to do so could result in the
recognition of this tax liability. Should such a closing agreement be obtained,
in certain circumstances, a future acquirer of the Company may also be required
to agree to a similar closing agreement in order to avoid the same tax
liability, to the extent it is able to do so. This could have a material
adverse effect on our future ability to sell SPC. The report of our auditors
covering the December 31, 1998 consolidated financial statements contains a
paragraph emphasizing these dual consolidated losses and the absence of a
closing agreement relating thereto.
Year 2000 Compliance Issues
We are in the process of conducting a review of issues related to our Year
2000 compliance. In connection with this evaluation, we intend to review all
Company products for Year 2000 compliance, as well as to review our vendors and
suppliers for Year 2000 compliance, and to effect changes where necessary. We
expect to be able to conduct our review within our current resources, but no
assurance can be given that we have sufficient resources to complete the review
process in a timely manner. We have not determined, at this time, what total
costs we will incur to conduct the review process and to implement any necessary
corrections. At this time, we do not know of any of our products, processes or
systems, which, if found to be non-Year 2000 compliant, would have any
significant impact on the Company. We believe that all of our current products
are Year 2000 compliant. We are currently developing contingency plans to
address the failure of our products, vendors or information technology systems
to be Year 2000 compliant.
Change in Product Strategy May Not be Successful
The Company acquired SPC in December 1996. In SPC's fiscal year ended
September 30, 1996, approximately 70% of SPC's net revenue was derived from the
Harvard Graphics line of products. However, net revenues for that line of
products declined substantially over the previous few years and has continued to
decline. While we believe that the market for the Harvard Graphics product line
has matured, we also believe that our Harvard and Serif brands have attracted
significant customer bases. Accordingly, we intend to utilize these brand
strengths for our current and certain anticipated new products, including our
proposed VisualCities.com Internet portal/community . This product line and
brand transition, and the development of the VisualCities.com Internet
portal/community, may not be accomplished in a timely or efficient manner and
may not be successful.
Potential Anti-Takeover Effects of Delaware Law, Certificate of Incorporation,
Stockholder Rights Plan and Possible Issuances of Preferred Stock Could Impede
a Takeover of the Company
Certain provisions of Delaware law and our Certificate of Incorporation
could make it more difficult to complete a merger, tender offer or proxy contest
involving the Company, even if such events could be beneficial to the interests
of our stockholders. These provisions include:
- Section 203 of the Delaware General Corporation Law,
- the classification of the Company's Board of Directors into
three classes,
- the requirement that 66-2/3% of our stockholders are needed
to request a special meeting of stockholders (other than a special
meeting called by the Board of Directors or the President),
- the "golden parachute" provisions of the Company's agreement with
its President, the requirement that 66-2/3% of the stockholders
of the Company entitled to vote thereon approve transactions such as
a merger, consolidation or sale of assets with or to an entity
controlling 15% or more of the voting power of the Company's
capital stock, unless approved by the Board of Directors prior
to such entity's acquisition of 15% or more of such voting
power,
- the existence of "blank check" preferred stock that may be
issued by our Board of Directors without stockholder approval on such
terms as the Board may determine, and
- the existence of a "poison pill."
Under the poison pill, the Company has declared a dividend of one Preferred
Share Purchase Right (each, a "Right") on each outstanding share of Common
Stock. Each Right becomes exercisable only if a person or group acquires 20% or
more of the outstanding Common Stock or announces a tender offer the
consummation of which
12
<PAGE>
would result in ownership by a person or group of 20% or more of the Common
Stock. If we are acquired in a merger or other business combination transaction
after a person or group has acquired 20% or more of the outstanding Common
Stock, each Right will entitle its holder to purchase, at the Right's then
current exercise price (currently, $1,000), a number of the acquiring
company's common shares having a market value of twice such price. In addition,
if a person or group acquires 20% or more of the outstanding Common
Stock, each Right will entitle its holder (other than such person or members of
such group) to purchase, at the Right's then current exercise price, a number of
shares of Common Stock having a market value of twice such price.
The rights of the holders of Common Stock also will be subject to, and may
be adversely affected by, the rights of the holders of additional or other
classes of preferred stock that may be issued in the future, including the blank
check preferred stock. Such issuance may make it more difficult for a third
party to acquire, or may discourage a third party from acquiring, a majority of
the voting stock of the Company. These provisions could limit the price that
certain investors might be willing to pay in the future for shares of Common
Stock.
Limited Directors' Liability Could Prevent Stockholders From Holding Directors
Responsible for a Lack of Care
The Company's Certificate of Incorporation provides that our directors (but
not our officers) will not be held liable to the Company or our stockholders for
monetary damages upon breach of a director's fiduciary duty, except to the
extent otherwise required by law.
No Dividends
The Company has never paid any cash dividends on the Common Stock and we do
not anticipate paying any dividends in the foreseeable future.
Possible Issuance of Substantial Amounts of Additional Shares Without
Stockholder Approval Could Dilute Stockholders
As of May 25, 1999, we have an aggregate of 5,263,891 shares of Common
Stock outstanding. In addition, as of May 25, 1999, we have 1,939,480 shares of
Serial Preferred Stock authorized but unissued, of which, 1,836,980 shares are
not reserved for specific purposes, and an additional (a) aggregate of 1,717,115
shares of Common Stock issuable upon the exercise of stock options granted or
available for grant under our various stock plans and (b) aggregate of 2,590,369
shares of Common Stock issuable upon exercise of other stock options or warrants
previously granted and outstanding. All of such shares may be issued without any
action or approval by our stockholders. Although there are no other material
present plans, agreements, commitments or undertakings with respect to the
issuance of additional shares of Common Stock or securities convertible into any
such shares, other than in connection with the exercise of outstanding stock
options and warrants, any shares issued would further dilute the percentage
ownership of the Company held by our stockholders.
Any Delisting of Securities from Nasdaq System Could Precipitate Risks
Associated with Low-Priced Stocks
The Common Stock is listed on the Nasdaq SmallCap Market and the Boston
Stock Exchange. To remain eligible for listing on the Nasdaq SmallCap Market, we
must comply with the following:
- The Common Stock must have a minimum bid price of $1.00,
- we must have either minimum tangible net assets of
$2,000,000, a market capitalization of $35,000,000 or net income of
$500,000 in two of the three prior fiscal years and
- we must have a public float of at least 500,000 shares with
a market value of at least $1,000,000, at least 300 stockholders must
hold shares of Common Stock and at least two market makers must make a
market in the Common Stock.
These maintenance standards may be changed by Nasdaq. While we presently
comply with the Nasdaq listing maintenance requirements, the failure to maintain
these requirements or other requirements of Nasdaq could
13
<PAGE>
result in de-listing of our securities from Nasdaq. In the event our securities
are de-listed from Nasdaq, you may be affected in any one or more of the
following ways:
- our securities will have to trade on a non-NASDAQ, and possibly less
efficient, "over-the-counter" market,
- fewer brokerage firms and dealers may make a market in our securities
which may cause a decline in the trading price of our securities,
- you may also find it more difficult to dispose of, or obtain accurate
quotations, as to the market value of our securities,
- our securities may no longer be eligible for sale in certain
jurisdictions without additional compliance with such jurisdictions'
laws and regulations and
- the market for our securities may become illiquid.
No Trading Market for Registered Warrants
There is no trading market for the Registered Warrants and we have no
obligation to create or maintain a market for the Registered Warrants.
Accordingly, if you purchase any of the Registered Warrants you must be prepared
to bear the economic risk of investment for an indefinite period of time.
Possible Inability to Exercise the Registered Warrants
We intend to qualify the sales of the Common Stock and Registered Warrants
in a limited number of states. Although the securities laws of certain states
may permit the Registered Warrants to be transferred to purchasers in states
other than those in which the Registered Warrants were initially qualified, we
will be prevented from issuing Common Stock to persons or entities in such other
states upon the exercise of the Registered Warrants unless an exemption from
qualification is available or unless the issuance of Common Stock upon exercise
of the Registered Warrants is qualified. We are under no obligation to seek, and
may decide not to seek or may not be able to obtain, qualification of the
issuance of such Common Stock in all of the states in which the holders of the
Registered Warrants reside. In such case, the Registered Warrants held by such
holders will expire and have no value if such Registered Warrants cannot be
exercised or sold. Accordingly, the market for the Registered Warrants may be
limited. Further, a current prospectus covering the Common Stock issuable upon
exercise of the Registered Warrants must be in effect before the Company may
accept Registered Warrant exercises. We may not be able to have a prospectus in
effect if this Prospectus is no longer current, notwithstanding our commitment
to use our best efforts to do so.
USE OF PROCEEDS
The proceeds from the sale of the Shares and Registered Warrants by the
Selling Stockholders will belong to the individual Selling Securityholders. The
Company will not receive any of the proceeds from the sale of the Shares and
Derivative Securities, except with respect to the exercise price of the
Derivative Securities. We expect to utilize any such exercise price received
upon exercise of the Derivative Securities for general corporate and working
capital purposes.
PRICE RANGE OF COMMON STOCK
The Common Stock was traded on the Nasdaq SmallCap Market under the symbol
"ANMI" from December 6, 1995 through December 27, 1996, under the symbol "SPCOD"
from December 28, 1996 through January 27, 1997 and from May 28, 1998 through
June 24, 1998, under the symbol "SPCOC" from October 23, 1998 through January
14, 1999, and otherwise has been traded under the symbol "SPCO" since January
28, 1997. The Common Stock was also traded on the Boston Stock Exchange under
the symbol "APO" from December 6, 1995 through January 20, 1997 and has been
traded under the symbol "SPO" since January 20, 1997. The following table sets
forth the range of high and low bid prices for the Common Stock for the periods
indicated as
14
<PAGE>
derived from reports furnished by Nasdaq, adjusted to reflect the Company's
one-for-three reverse stock split made effective as of May 27, 1998
(the "Reverse Stock Split"). Such adjustment has been made by multiplying the
closing prices by three and does not necessarily reflect the prices for the
Common Stock had the Reverse Stock Split occurred prior to the periods
indicated. The information reflects inter-dealer prices, without retail
mark-ups, mark-downs or commissions and may not necessarily represent actual
transactions.
<TABLE>
<CAPTION>
High Bid Low Bid
-------- -------
Fiscal 1997
- -----------
<S> <C> <C>
First Quarter . . . . . . . . . . . . . $ 14-1/4 $ 8-13/16
Second Quarter. . . . . . . . . . . . . 9-9/16 5-5/8
Third Quarter . . . . . . . . . . . . . 7-1/8 3
Fourth Quarter. . . . . . . . . . . . . 6-15/16 2-5/32
Fiscal 1998
- -----------
First Quarter . . . . . . . . . . . . . 2-13/16 1-1/2
Second Quarter . . . . . . . . . . . . 3 1-3/8
Third Quarter . . . . . . . . . . . . . 1-5/8 5/8
Fourth Quarter. . . . . . . . . . . . . 1-1/8 9/16
Fiscal 1999
- -----------
First Quarter . . . . . . . . . . . . . 1-31/32 15/16
Second Quarter (through June 4, 1999) . 4-7/16 1-21/32
</TABLE>
As of June 4, 1999, the closing price for the Common Stock as reported on
Nasdaq was $2-27/32. On May 27, 1999, there were 657 stockholders of record of
the Company. The Company estimates, based upon surveys conducted by its transfer
agent in connection with the Company's 1999 Annual Meeting of Stockholders, that
there are approximately 5,000 beneficial stockholders.
DIVIDEND POLICY
The Company has never paid cash dividends on its capital stock and does not
anticipate paying cash dividends in the foreseeable future. The Company
currently intends to retain any future earnings for reinvestment in its
business. Any future determination to pay cash dividends will be at the
discretion of the Board of Directors and will be dependent upon the Company's
financial condition, results of operations, capital requirements and other
relevant factors.
SELLING SECURITYHOLDERS
An aggregate of 3,375,877 Shares, including 2,197,052 Shares issuable upon
exercise of the Derivative Securities, as well as the Registered Warrants to
purchase 167,052 Shares, may be offered for sale and sold pursuant to this
Prospectus by the Selling Securityholders. The Shares and Registered Warrants
are to be offered by and for the respective accounts of the Selling
Securityholders and any pledgees or donees of the Selling Securityholders. The
Company has agreed to register all of the Shares and Registered Warrants under
the Securities Act and to pay all of the expenses in connection with such
registration and sale of the Shares and Registered Warrants (other than
underwriting discounts and selling commissions and the fees and expenses of
counsel and other advisors to the Selling Securityholders). The Company will not
receive any proceeds from the sale of the Shares and Registered Warrants by the
Selling Securityholders, except for the exercise price, if any, paid in
connection with the exercise of the Derivative Securities.
Certain information with respect to the Selling Securityholders, the Shares
and Registered Warrants is set forth in the following table. None of the Selling
Securityholders has had any material relationship with the Company within the
past three years, except as noted in the following table.
15
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial
Ownership of
Common Stock
Ownership Prior Amount After Sale of
to Sale Offered Hereby the Securities
-------------------------- -------------------------- --------------------------
Registered Registered
Selling Securityholder Shares Warrants Shares Warrants Number Percent
------ ---------- ------ ----------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gary Bates (1) (2) . . . . . . . . . 48,201 (3) -0- 100,000 (4) -0- 21,849 (3) -0-
Peter Beedham (1) (5). . . . . . . . 34,812 (6) -0- 3,921 -0- 30,891 (6) *
Jacques Boutin (5) (7) . . . . . . . 1,238 -0- 1,238 -0- -0- -0-
Shaya Boymelgreen (8). . . . . . . . 210,000 -0- 210,000 -0- -0- -0-
Keith S. Braun (9) . . . . . . . . . 3,750 (10) -0- 15,000 (11) -0- -0- -0-
Paulette Broadchandel (8). . . . . . 210,000 -0- 210,000 -0- -0- -0-
Tiffany Brown (12) . . . . . . . . . 250 (13) -0- 1,000 (14) -0- -0- -0-
Anthony Broy (15). . . . . . . . . . 210,000 -0- 210,000 -0- -0- -0-
James Bryce (1) (16) (17). . . . . . 47,506 (18) -0- 105,159 (19) -0- 22,506 (18) *
Deborah J. Charney (20). . . . . . . 750 (21) -0- 3,000 (22) -0- -0- -0-
John Chianello (23). . . . . . . . . 18,796 -0- 18,796 -0- -0- -0-
Howard Cohen and Helene Cohen,
JTWROS (23). . . . . . . . . . . . 37,593 -0- 37,593 -0- -0- -0-
Mark Daintree (5)(7) . . . . . . . . 10,318 -0- 5,366 -0- 4,952 *
Darren Darvill (1) (5) . . . . . . . 17,253 (24) -0- 5,366 -0- 11,887 (24) *
Gary Dunning (1) (5) . . . . . . . . 15,940 (25) -0- 5,366 -0- 10,574 (25) *
First Builder Associates, Inc. (8) . 210,000 -0- 210,000 -0- -0- -0-
Barbara A. Gombert (26). . . . . . . 750 (27) -0- 3,000 (28) -0- -0- -0-
Ira Scott Greenspan (29) . . . . . . 10,000 (30) -0- 10,000 (30) -0- -0- -0-
HD Brous & Co., Inc (31) . . . . . . 80,000 (32) -0- 80,000 (32) -0- -0- -0-
Paul Hempstock (1) (5) . . . . . . . 12,303 (33) -0- 2,683 -0- 9,620 (33) *
John D. Hodel and Linda M. Hodel
JTWROS (23). . . . . . . . . . . . 37,593 -0- 37,593 -0- -0- -0-
Andrew Jeffrey (5) (7) . . . . . . . 343 -0- 206 -0- 137 *
Joel Katz Keogh Profit Sharing
Plan (23). . . . . . . . . . . . . 37,593 -0- 37,593 -0- -0- -0-
Ronniel Levy (34). . . . . . . . . . 750 (35) -0- 3,000 (36) -0- -0- -0-
Donald Markowitz (23). . . . . . . . 37,593 -0- 37,593 -0- -0- -0-
Marquis Capital, LLC (37). . . . . . 45,000 (38) -0- 45,000 (38) -0- -0- -0-
Mark Ramsey (1) (5). . . . . . . . . 21,098 (39) -0- 5,366 -0- 15,732 (39) *
Regency Investment Partners (40) . . 600,000 (41) -0- 600,000 (41) -0- -0- -0-
Charles S. Ruppman Revocable Living
Trust (23) . . . . . . . . . 74,436 -0- 74,436 -0- -0- -0-
Alan W. Schoenbart (1) (42). . . . . 50,000 (43) -0- 110,000 (44) -0- -0- -0-
Seafish Partners (45). . . . . . . . 260,000 (46) -0- 260,000 (46) -0- -0- -0-
Seneca Associates (47) . . . . . . . 260,000 (48) -0- 260,000 (48) -0- -0- -0-
Steven D. Shaffer (49) . . . . . . . 10,000 (50) -0- 10,000 (50) -0- -0- -0-
Denise Shapiro (51). . . . . . . . . 77,052 (52) 17,052 77,052 (52) 17,052 -0- *
Southeast Research
Partners, Inc. (53) . . . . . . . 150,000 (54) 150,000 150,000 (54) 150,000 -0- -0-
David Southgate (1) (55). . . . . . 40,275 (56) -0- 50,000 (57) -0- 27,775 (56) -0-
Target Capital Corp. (58). . . . . . 260,000 (59) -0- 260,000 (59) -0- -0- -0-
United Krasna Organizations (60) . . 120,000 (61) -0- 120,000 (61) -0- -0- -0-
Michael Wells (1). . . . . . . . . . 2,924 (39) -0- 550 -0- 2,374 (39) *
- ----------
* Less than 1%.
16
<PAGE>
<FN>
(1) Employee of the Company.
(2) Acquired an option (an "Employee/Consultant Option") to purchase
100,000 Shares in April 1999. The Employee/Consultant Option held by Mr.
Bates is exercisable, with respect to 25,000 Shares, immediately and,
with respect to an additional 25,000 Shares, on each of April 6, 2000,
2001 and 2002. Mr. Bates' Employee/Consultant Option expires on April 5,
2009 and is exercisable at $1.03125 per Share.
(3) Includes (a) for ownership prior to sale only, 25,000 Shares issuable
upon exercise of an Employee/Consultant Option granted to Mr. Bates
outside of the Company's various stock plans which are exercisable within
the next 60 days and (b) 21,849 shares of Common Stock issuable upon
exercise of options granted Mr. Bates under the Company's various stock
plans which are exercisable within the next 60 days. Does not include (a)
75,000 shares of Common Stock issuable upon exercise of the
Employee/Consultant Option held by Mr. Bates which are not exercisable
within the next 60 days nor (b) 39,609 shares of Common Stock issuable
upon exercise of options granted Mr. Bates under the Company's various
stock plans which are not exercisable within the next 60 days.
(4) Represents all 100,000 Shares issuable upon exercise of the
Employee/Consultant Option held by Mr. Bates.
(5) Acquired the Shares so listed from the Serif (Europe) Limited
Employee Share Option Scheme (the "Scheme") for nominal consideration.
The Scheme may be deemed an affiliate of the Company.
(6) Includes 11,185 shares of Common Stock issuable upon exercise of
options granted Mr. Beedham under the Company's various stock plans which
are exercisable within the next 60 days. Does not include 32,397 shares
of Common Stock issuable upon exercise of options granted Mr. Beedham
under the Company's various stock plans which are not exercisable within
the next 60 days.
(7) Former employee of the Company.
(8) Acquired the Shares so listed pursuant to a Subscription Agreement,
dated December 15, 1998, at a purchase price of $.40 per Share.
(9) Acquired an Employee/Consultant Option to purchase 15,000 Shares in
April 1999. The Employee Consultant Option held by Mr. Braun is
exercisable, with respect to 3,750 Shares, immediately and, with respect
to an additional 3,750 Shares, on each of April 6, 2000, 2001 and 2002.
Mr. Braun's Employee/Consultant Option expires on April 5, 2009 and is
exercisable at $1.03125 per Share.
(10) Represents 3,750 Shares issuable upon exercise of an Employee/Consultant
Option held by Mr. Braun which are exercisable within the next 60 days.
Does not include 11,250 Shares issuable upon exercise of an
Employee/Consultant Option held by Mr. Braun which are not exercisable
within the next 60 days.
(11) Represents all 15,000 Shares issuable upon exercise of the
Employee/Consultant Option held by Mr. Braun.
(12) Acquired an Employee/Consultant Option to purchase 1,000 Shares in
April 1999. The Employee Consultant Option held by Ms. Brown is
exercisable, with respect to 250 Shares, immediately and, with respect to
an additional 250 Shares, on each of April 6, 2000, 2001 and 2002. Ms.
Brown's Employee/Consultant Option expires on April 5, 2009 and is
exercisable at $1.03125 per Share.
(13) Represents 250 Shares issuable upon exercise of an
Employee/Consultant Option held by Ms. Brown which are exercisable within
the next 60 days. Does not include 750 Shares issuable upon exercise of
an Employee/Consultant Option held by Ms. Brown which are not exercisable
within the next 60 days.
17
<PAGE>
(14) Represents all 1,000 Shares issuable upon exercise of the
Employee/Consultant Option held by Ms. Brown.
(15) Acquired the Shares so listed as an assignee of an individual who
acquired the Shares pursuant to a Subscription Agreement, dated December
15, 1998, at a purchase price of $.40 per Share.
(16) Acquired 5,159 Shares so listed from the Scheme for nominal
consideration. The Scheme may be deemed an affiliate of the Company.
(17) Acquired an Employee/Consultant Option to purchase 100,000 Shares in
April 1999. The Employee Consultant Option held by Mr. Bryce is
exercisable, with respect to 25,000 Shares, immediately and, with respect
to an additional 25,000 Shares, on each of April 6, 2000, 2001 and 2002.
Mr. Bryce's Employee/Consultant Option expires on April 5, 2009 and is
exercisable at $1.03125 per Share.
(18) Includes (a) for ownership prior to sale only, 25,000 Shares
issuable upon exercise of an Employee/Consultant Option granted Mr. Bryce
which are exercisable within the next 60 days and (b) 6,492 shares of
Common Stock issuable upon exercise of options granted Mr. Bryce under
the Company's various stock plans which are exercisable within the next
60 days. Does not include (a) 18,011 shares of Common Stock issuable upon
exercise of options granted Mr. Bryce under the Company's various stock
plans which are not exercisable within the next 60 days and (b) 75,000
Shares issuable upon exercise of the Employee/Consultant Option held by
Mr. Bryce which are not exercisable within the next 60 days.
(19) Includes all 100,000 Shares issuable upon exercise of the
Employee/Consultant Option held by Mr. Bryce.
(20) Acquired an Employee/Consultant Option to purchase 3,000 Shares in
April 1999. The Employee Consultant Option held by Ms. Charney is
exercisable, with respect to 750 Shares, immediately and, with respect to
an additional 750 Shares, on each of April 6, 2000, 2001 and 2002. Ms.
Charney's Employee/Consultant Option expires on April 5, 2009 and is
exercisable at $1.03125 per Share.
(21) Represents 750 Shares issuable upon exercise of an
Employee/Consultant Option held by Ms. Charney which are exercisable
within the next 60 days. Does not include 250 Shares issuable upon
exercise of an Employee/Consultant Option held by Ms. Charney which are
not exercisable within the next 60 days.
(22) Represents all 3,000 Shares issuable upon exercise of the
Employee/Consultant Option held by Ms. Charney.
(23) Acquired the Shares so listed as of December 11, 1998, at a purchase
price of $.665 per Share, pursuant to the Company's private placement
("Private Placement"), for which Parker Bromley Ltd. ("P-B") acted as
Placement Agent.
(24) Includes 6,935 shares of Common Stock issuable upon exercise of
options granted Mr. Darvill under the Company's various stock plans which
are exercisable within the next 60 days. Does not include 18,731 shares
of Common Stock issuable upon exercise of options granted Mr. Darvill
under the Company's various stock plans which are not exercisable within
the next 60 days.
(25) Includes 6,998 shares of Common Stock issuable upon exercise of
options granted Mr. Dunning under the Company's various stock plans which
are exercisable within the next 60 days. Does not include 18,668 shares
of Common Stock issuable upon exercise of options granted Mr. Dunning
under the Company's various stock plans which are not exercisable within
the next 60 days.
(26) Acquired an Employee/Consultant Option to purchase 3,000 Shares in
April 1999. The Employee Consultant Option held by Ms. Gombert is
exercisable, with respect to 750 Shares, immediately and, with respect to
an additional 750 Shares, on each of April 6, 2000, 2001 and 2002. Ms.
Gombert's Employee/Consultant Option expires on April 5, 2009 and is
exercisable at $1.03125 per Share.
18
<PAGE>
(27) Represents 750 Shares issuable upon exercise of an
Employee/Consultant Option held by Ms. Gombert which are exercisable
within the next 60 days. Does not include 2,250 Shares issuable upon
exercise of an Employee/Consultant Option held by Ms. Gombert which are
not exercisable within the next 60 days.
(28) Represents all 3,000 Shares issuable upon exercise of the
Employee/Consultant Option held by Ms. Gombert.
(29) Acquired warrants (the "Brous Warrants") to purchase 10,000 Shares
as an assignee of HD Brous & Co., Inc. ("Brous"). (See note (31) below.)
(30) Represents all 10,000 Shares issuable upon exercise of the Brous Warrants
held by Mr. Greenspan.
(31) Acquired Brous Warrants to purchase 100,000 shares pursuant to a
Financial Advisory and Investment Banking Agreement, dated April 7, 1999
(the "Brous Agreement"), between the Company and Brous, pursuant to which
the Company retained Brous to provide investment banking services for a
one year period. Brous has assigned Brous Warrants to purchase 10,000
Shares to each of Ira Scott Greenspan and Steven D. Schaffer (See notes
(29) and (49).) In addition to the Brous Warrants, the Company is to pay
Brous an aggregate $30,000 as consideration for the services to be
rendered by Brous under the Brous Agreement. The Brous Warrants are
exercisable at any time, in whole or part, through April 6, 2004, at an
exercise price of $1.50 per share.
(32) Represents all 80,000 Shares issuable upon exercise of the Brous Warrants
held by Brous.
(33) Includes 7,832 shares of Common Stock issuable upon exercise of
options granted Mr. Hempstock under the Company's various stock plans
which are exercisable within the next 60 days. Does not include 20,334
shares of Common Stock issuable upon exercise of options granted Mr.
Hempstock under the Company's various stock plans which are not
exercisable within the next 60 days.
(34) Acquired an Employee/Consultant Option to purchase 3,000 Shares in
April 1999. The Employee Consultant Option held by Mr. Levy is
exercisable, with respect to 750 Shares, immediately and, with respect to
an additional 750 Shares, on each of April 6, 2000, 2001 and 2002. Mr.
Levy's Employee/Consultant Option expires on April 5, 2009 and is
exercisable at $1.03125 per Share.
(35) Represents 750 Shares issuable upon exercise of an
Employee/Consultant Option held by Mr. Levy which are exercisable within
the next 60 days. Does not include 2,250 Shares issuable upon exercise of
an Employee/Consultant Option held by Mr. Levy which are not exercisable
within the next 60 days.
(36) Represents all 3,000 Shares issuable upon exercise of the
Employee/Consultant Option held by Mr Levy
(37) Acquired warrants ("Marquis Warrants") to purchase 45,000 shares
pursuant to a Financial Advisory and Investment Banking Agreement, dated
April 6, 1999 (the "Marquis Agreement"), between the Company and Marquis
Capital, LLC ("Marquis"), pursuant to which the Company retained Marquis
to provide investment banking services for a one year period. The Marquis
Warrants are exercisable at anytime, in whole or part, through April 5,
2004, at an exercise price of $1.125 per share.
(38) Represents all 45,000 Shares issuable upon exercise of the Marquis
Warrants.
(39) Includes 10,320 shares of Common Stock issuable upon exercise of
options granted Mr. Ramsey under the Company's various stock plans which
are exercisable within the next 60 days. Does not include 15,096 shares
of Common Stock issuable upon exercise of options granted Mr. Ramsey
under the Company's various stock plans which are not exercisable within
the next 60 days.
(40) Acquired warrants (the "European Consultant Warrants") to purchase
600,000 Shares pursuant to a Consulting Agreement, dated as of December
17, 1998, between the Company and Michele Ladovich (sic),
19
<PAGE>
pursuant to which the Company retained Michel Ladovitch to provide investor
relations services in the European Union and United Kingdom for a five
year period. Mr. Ladovitch directed that the European Consultant Warrants
be registered in the name of Regency Investment Partners. The European
Consultant Warrants are exercisable, with respect to 500,000 Shares,
immediately and, with respect to 100,000 Shares, on June 17, 1999. The
European Consultant Warrants expire on December 16, 2005 and have an
exercise price of $.75 per Share.
(41) Represents all 600,000 Shares issuable upon exercise of the European
Consultant Warrants.
(42) Acquired an Employee/Consultant Options to purchase 110,000 Shares
upon commencement of employment with the Company. Mr. Schoenbart is
currently Vice President-Finance and Chief Financial Officer of the
Company. Mr. Schoenbart's Employee/Consultant Option is exercisable, with
respect to 50,000 Shares, immediately and, with respect to an additional
15,000 Shares, on each of April 6, 2000, 2001, 2002 and 2003. Mr.
Schoenbart's Employee/Consultant Option expires on April 5, 2009 and is
exercisable at $1.03125 per Share.
(43) Represents 50,000 Shares issuable upon exercise of Mr. Schoenbart's
Employee/Consultant Option which are exercisable with in the next 60
days. Does not include 60,000 Shares issuable upon exercise of Mr.
Schoenbart's Employee/Consultant Option which are not exercisable within
the next 60 days.
(44) Represents all 110,000 Shares issuable upon exercise of Mr. Schoenbart's
Employee/Consutant Options.
(45) Acquired warrants (the "Seafish Warrants") to purchase 260,000
Shares pursuant to an Agreement, dated as of January 4, 1999, between the
Company and Seafish Partners ("Seafish"), whereby Seafish, as the holder
of all outstanding shares of the Company's Class A 14% Cumulative
Non-Convertible Preferred Stock, Series A (the "Class A Preferred
Stock"), exchanged its 930 shares of Class A Preferred Stock for (a) 930
shares of the Company's Class C 11% Cumulative Non-Convertible Preferred
Stock, Series A (the "Class C Preferred Stock") and (b) the Seafish
Warrants. The Class C Preferred Stock is identical to the Class A
Preferred Stock, except the Class C Preferred Stock has a reduced rate of
dividends on the Class A Preferred Stock of 11% per annum, compared to
14% per annum for the Class A Preferred Stock, and the Class C Preferred
Stock does not require the Company to pay a redemption premium upon a
redemption of shares of the Class C Preferred Stock, compared to a
premium of $300 per share for the Class A Preferred Stock. The Seafish
Warrants are exercisable immediately, expire on January 3, 2006 and have
an exercise price of $1.062 per share.
(46) Represents all 260,000 Shares issuable upon exercise of the Seafish
Warrants.
(47) Acquired warrants (the "Seneca Warrants") to purchase 260,000 Shares
as an assignee of Target Capital Corp. ("Target"). See note (17) below.
The Seneca Warrants are exercisable immediately, expire on December 16,
2005 and have an exercise price of $.75 per Share.
(48) Represents all 260,000 Shares issuable upon exercise of the Seneca
Warrants.
(49) Acquired Brous Warrants to purchase 10,000 Shares as an assignee of Brous.
(See note (31) above.)
(50) Represents all 10,000 Shares issuable upon exercise of the Brous Warrants
held by Mr. Schaffer.
(51) Acquired 17,052 Registered Warrants to purchase an aggregate 17,025
Shares (the "Agency Warrants") and 60,000 Shares as assignee of P-B. P-B
acquired the Agency Warrants in connection with acting as Placement Agent
for the Private Placement. P-B also received $16,200 as fees and $4,860
as a non-accountable expense allowance in connection with acting as
placement agent for the Private Placement. The Agency Warrants are
exercisable from December 11, 1998 through December 10, 2000, at an
exercise price of $1.50 per Share. P-B acquired such 60,000 Shares
pursuant to the terms of a Consulting
20
<PAGE>
Agreement, dated August 12, 1998, between the Company and P-B, pursuant to
which the Company retained P-B to provide consulting services for a one
year period.
(52) Includes 17,052 Shares issuable upon exercise of the Agency Warrants.
(53) Acquired Registered Warrants (the "SERP Warrants") to purchase
150,000 Shares pursuant to an Investment Banking Service Agreement, dated
October 23, 1998 (the "SERP Agreement"), between the Company and
Southeast Research Partners, Inc. ("SERP"), pursuant to which the Company
retained SERP to provide investment banking services for a two year
period. In addition to the SERP Warrants, the Company is to pay SERP an
aggregate of $102,000 as consideration for the services to be rendered by
SERP under the SERP Agreement. The SERP Warrants are exercisable at any
time, in whole or in part, through October 22, 2003, at an exercise price
of $.86 per Share.
(54) Represents all 150,000 Shares issuable upon exercise of the SERP Warrants.
(55) Acquired an Employee/Consultant Option to purchase 50,000 Shares in
April 1999. The Employee Consultant Option held by Mr. Southgate is
exercisable, with respect to 12,500 Shares, immediately and, with respect
to an additional 12,500 Shares, on each of April 6, 2000, 2001 and 2002.
Mr. Southgate's Employee/Consultant Option expires on April 5, 2009 and
is exercisable at $1.03125 per Share.
(56) Includes (a) for ownership in prior to sale only, 12,500 Shares
issuable upon exercise of an Employee/Consultant Option granted to Mr.
Southgate outside of the Company's various stock plans which are
exercisable within the next 60 days and (b) 26,423 shares of Common
Stock issuable upon exercise of options granted Mr. Southgate under the
Company's various stock plans which are exercisable within the next 60
days. Does not include (a) 37,500 Shares issuable upon exercise of the
Employee/Consultant Option held by Mr. Southgate which are not
exercisable within the next 60 days nor (b) 45,492 shares of Common
Stock issuable upon exercise of options granted Mr. Southgate under the
Company's various stock plans which are not exercisable within the next
60 days.
(57) Represents all 50,000 Shares issuable upon exercise of the
Employee/Consultant Option held by Mr. Southgate.
(58) Acquired warrants (the "Consultant Warrants") to purchase 260,000
Shares pursuant to a Consulting Agreement, dated as of December 17, 1998
(the "Target Consulting Agreement"), between the Company and Target,
pursuant to which the Company retained Target to provide consulting
services for a five year period. The Consultant Warrants are exercisable
immediately, expire on December 16, 2005 and have an exercise price of
$.75 per Share.
(59) Represents all 260,000 Shares issuable upon exercise of the Consultant
Warrants retained by Target.
(60) Acquired warrants (the "Krasna Warrants") to purchase 120,000 Shares
pursuant to the Target Consulting Agreement. (See note (58) above.) The
Krasna Warrants are exercisable immediately, expire on December 16, 2005
and have an exercise price of $.75 per Share.
(61) Represents all 120,000 Shares issuable upon exercise of the Krasna
Warrants.
(62) Includes 2,374 of Common Stock issuable upon exercise of options
granted Mr. Wells under the Company's various stock plans which are
exercisable within the next 60 days. Does not include 3,958 shares of
Common Stock issuable upon exercise of options granted Mr. Wells under
the Company's various stock plans which are not exercisable within the
next 60 days.
</FN>
</TABLE>
21
<PAGE>
PLAN OF DISTRIBUTION
The Shares and Registered Warrants offered hereby may be sold from time to
time by the Selling Securityholders for their respective own accounts. The
Company will receive none of the proceeds from this offering. The Selling
Securityholders will pay or assume brokerage commissions or other charges and
expenses incurred in the sale of the Shares and Registered Warrants.
The distribution of the Shares and Registered Warrants by the Selling
Securityholders is not subject to any underwriting agreement. The Shares and
Registered Warrants covered by this Prospectus may be sold by the Selling
Securityholders or by pledgees and donees of the Selling Securityholders. The
Shares and Registered Warrants offered by the Selling Securityholders may be
sold from time to time at market prices prevailing at the time of sale, at
prices relating to such prevailing market prices or at negotiated prices. The
Selling Securityholders may sell their Shares and Registered Warrants covered by
this Prospectus through customary brokerage channels, either through
broker-dealers acting as agents or brokers, or through broker-dealers acting as
principals, who may then resell the Shares and Registered Warrants, or at
private sale or otherwise, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices. The
Selling Securityholders may effect such transactions by selling the Shares and
Registered Warrants to or through broker-dealers, and such broker-dealers may
receive compensation in the form of underwriting discounts, concessions,
commissions, or fees from the Selling Securityholders and/or purchasers of the
Shares and Registered Warrants for whom such broker-dealers may act as agent or
to whom they sell as principal, or both (which compensation to a particular
broker-dealer might be in excess of customary commissions). Any broker dealers
that participate with the Selling Securityholders in the distribution of the
Shares and Registered Warrants may be deemed to be underwriters and any
commissions received by them and any profit on the resale of the Shares and
Registered Warrants positioned by them might be deemed to be underwriting
discounts and commissions within the meaning of the Securities Act, in
connection with such sales.
Any Shares and Registered Warrants covered by the Prospectus that qualify
for sale pursuant to Rule 144 under the Securities Act may be sold under Rule
144 rather than pursuant to this Prospectus.
The 2,172,052 Shares offered hereby upon the exercise of the Derivative
Securities will be issuable in accordance with the terms of the Derivative
Securities. Among other things, the Derivative Securities provide that, upon
surrender at the Company's principal offices of a certificate evidencing any of
the Derivative Securities, with the annexed form to exercise the Warrant duly
executed, together with payment of the exercise price of the Derivative
Securities so exercised, the registered holder of a Warrant (or assignee) will
be entitled to receive a certificate for the Shares so purchased.
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock currently consists of 30,000,000
shares of Common Stock, $.001 par value per share, 1,939,480 shares of Serial
Preferred Stock, $.001 par value per share (the "Serial Preferred Stock"), of
which 1,500 shares have been designated Class A Preferred Stock, 1,000 shares
have been designated as Class C Preferred Stock and 100,000 shares have been
designated Junior Participating Preferred Stock (the "Junior Preferred Stock"),
and 60,520 shares of Class B Voting Preferred Stock, Series A, par value $.001
per share (the "Class B Voting Preferred Stock").
Common Stock
As of the date of this Prospectus, there were 5,263,891 shares of Common
Stock outstanding held of record by approximately 7,000 beneficial stockholders
of Common Stock. The Common Stock is currently listed on Nasdaq under the
trading symbol "SPCO" and also traded on the BSE under the symbol "SPO." Holders
of Common Stock do not have subscription, redemption, conversion or preemptive
rights. Each share of Common
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<PAGE>
Stock is entitled to participate pro rata in any distribution upon liquidation,
subject to the rights of holders of preferred stock, and to one vote on all
matters submitted to a vote of stockholders. The holders of Common Stock may
receive cash dividends as declared by the Board of Directors out of funds
legally available therefor, subject to the rights of any holders of preferred
stock.
Holders of Common Stock are entitled to elect all directors of the Company.
The Board of Directors consists of three classes, each of which serves for a
term of three years. At each annual meeting of the stockholders the directors in
only one class will be elected. The holders of Common Stock do not have
cumulative voting rights, which means that the holders of more than half of the
shares voting for the election of a class of directors can elect all of the
directors of such class and in such event the holders of the remaining shares
will not be able to elect any of such directors.
Class A 14% Cumulative Non-Convertible Redeemable Preferred Stock, Series A
On December 15, 1998, the Company authorized 1,500 shares of Class A
Preferred Stock. Under the Company's Certificate of Designation, holders of
shares of Class A Preferred Stock are entitled to (a) cumulative dividends of
$140 per share per annum, payable semi-annually on June 30 and December 31 of
each calendar year, commencing on June 30, 1999, (b) a liquidation preference of
$1,000 per share and (c) the right to elect one director in the event the
Corporation fails to tender in full three consecutive semi-annual dividend
payments. In addition, the Company has the right to redeem the Class A Preferred
Stock, in part or whole, at any time, upon payment of $1,300 per share of Class
A Preferred Stock plus any accrued and unpaid dividends on the Class A Preferred
Stock so redeemed. The Company currently has no shares of Class A Preferred
Stock outstanding.
Class C 11% Cumulative Non-Convertible Redeemable Preferred Stock, Series A
On January 4, 1999, the Company authorized 1,000 shares of Class C
Preferred Stock. Under the Company's Certificate of Designation, holders of
shares of Class C Preferred Stock are 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 plus any accrued and unpaid dividends on the Class C Preferred
Stock so redeemed. The Company currently has outstanding 930 shares of Class C
Preferred Stock.
Junior Participating Preferred Stock
In March 1998, the Company authorized 100,000 shares of Junior
Participating Preferred Stock, Series A, par value $.001 per share (the "Junior
Preferred Stock"). The Junior Preferred Stock has preferential voting, dividend
and liquidation rights over the Common Stock. On March 31, 1998, the Company
declared a dividend distribution, payable April 30, 1998, of one Preferred Share
Purchase Right ("Right") on each share of Common Stock. Each Right, when
exercisable, entitles the registered holder thereof to purchase from the Company
one one-thousandth of a share of Junior Preferred Stock at a price of $1.00 per
one one-thousandth of a share (subject to adjustment). The one one-thousandth of
a share is intended to be the functional equivalent of one share of the Common
Stock. The Rights will not be exercisable or transferable apart from the Common
Stock until an Acquiring Person, as defined in the Rights Agreement, dated as of
March 31, 1998, between the Company and American Stock Transfer & Trust Company,
without the prior consent of the Company's Board of Directors, acquires 20% or
more of the voting power of the Common Stock or announces a tender offer that
would result in 20% ownership. The Company is entitled to redeem the Rights, at
$.001 per Right, any time before a 20% position has been acquired or in
connection with certain transactions thereafter announced. Under certain
circumstances, including the acquisition of 20% of the Common Stock, each Right
not owned by a potential Acquiring Person will entitle its holder to purchase,
at the Right's then-current exercise price, shares of Common Stock having a
market value of twice the Right's exercise price. Holders of a Right will be
entitled to buy stock of an Acquiring Person at a similar discount if, after the
acquisition of 20% or more of the Company's voting power, the Company is
involved in a merger or other business combination transaction with another
person in which its common shares are changed
23
<PAGE>
or converted, or the Company sells 50% or more of its assets or earning power
to another person. The Rights expire on April 20, 2008.
Class B Voting Preferred Stock
As of the date of this Prospectus, there are no shares of Class B Voting
Preferred Stock issued and outstanding. The Class B Preferred Stock, if issued
and outstanding, votes together with the Common Stock other than, pursuant to
the Delaware General Corporation Law, with respect to proposals to increase the
number of authorized shares of Common Stock and certain other specified matters.
Each share of Class B Preferred Stock entitles the holder thereof to ten votes
on each matter subject to stockholder approval. Shares of Class B Preferred
Stock have no right to dividends and have a liquidation preference of $.001 per
share.
Serial Preferred Stock
The Board of Directors is authorized by the Company's Certificate of
Incorporation to issue up to 1,939,480 shares of one or more series of Serial
Preferred Stock. No shares of Serial Preferred Stock have been authorized for
future issuance by the Board, and the Company has no present plans to issue any
such shares, except with respect to (a) the authorization of 100,000 shares of
Junior Preferred Stock and reservations of such 100,000 shares for issuance upon
exercise of rights and (b) the authorization of 1,500 shares of Class A
Preferred Stock and the issuance of 930 shares of Class A Preferred Stock. In
the event that the Board does issue additional shares of Serial Preferred Stock,
it may exercise its discretion in establishing the terms of such Serial
Preferred Stock. In the exercise of such discretion, the Board may determine the
voting rights, if any, of the series of Serial Preferred Stock being issued,
which could include the right to vote separately or as a single class with the
Common Stock and/or other series of Serial Preferred Stock; to have more or less
voting power per share than that possessed by the Common Stock or other series
of Serial Preferred Stock; and to vote on certain specified matters presented to
the stockholders or on all of such matters or upon the occurrence of any
specified event or condition. On liquidation, dissolution or winding up of the
Company, the holders of Serial Preferred Stock may be entitled to receive
preferential cash distributions fixed by the Board of Directors when creating
the particular series thereof before the holders of the Common Stock are
entitled to receive anything. Serial Preferred Stock authorized by the Board
could be redeemable or convertible into shares of any other class or series of
stock of the Company.
The issuance of Serial Preferred Stock by the Board could adversely affect
the rights of holders of the Common Stock by, among other things, establishing
preferential dividends, liquidation rights or voting powers. The issuance of
Serial Preferred Stock could be used to discourage or prevent efforts to acquire
control of the Company through the acquisition of shares of Common Stock.
SERP Warrants
The SERP Warrants are exercisable from April 23, 1999 through October 22,
2003 at an exercise price of $.86 per Share. Each SERP Warrant entitles the
holder thereof to purchase one Share. The Company has the right to cancel SERP
Warrants to purchase 75,000 Shares in the event the Company terminates SERP's
investment banking services on or before April 23, 1999. The SERP Warrants are
subject to adjustment in their exercise price and the number of Shares issuable
upon exercise in certain circumstances, including in the event of a stock
dividend, recapitalization, reorganization, merger or consolidation of the
Company.
Agency Warrants
The Agency Warrants are exercisable immediately, expire on December 10,
2000 and have an exercise price of $1.50 per Share. Each Agency Warrant entitles
the holder thereof to purchase one Share. The Agency Warrants are redeemable by
the Company. The Agency Warrants are subject to adjustment in their exercise
price and the number of Shares issuable upon exercise in certain circumstances,
including in the event of a stock dividend, recapitalization, reorganization,
merger or consolidation of the Company.
24
<PAGE>
Transfer Agent and Registrar
The Transfer Agent and Registrar for the Common Stock is American Stock
Transfer and Trust Company, 40 Wall Street, New York, NY 10005, telephone
number: (212) 936-5100.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1998, and for the two years then ended, have been incorporated by reference in
this Prospectus and in the Registration Statement in reliance upon the report of
Richard A. Eisner & Company, LLP, independent auditors, and, in part, on the
report of Ernst & Young, independent auditors of the financial statements of a
wholly-owned subsidiary of the Company, Serif (Europe) Limited, as of December
31, 1998 and for the two years then ended, incorporated by reference herein, and
upon the authority of said firms as experts in accounting and auditing. The
report of Richard A. Eisner & Company, LLP covering the December 31, 1998
consolidated financial statements also contains an emphasis paragraph discussing
a federal income tax contingency.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company and the Selling Securityholders by Kaufman & Moomjian, LLC, Mitchel
Field, New York. Neil M. Kaufman, Esq., a director of the Company and a member
of Kaufman & Moomjian, LLC, owns 19,238 shares of Common Stock and options to
purchase 105,000 shares of Common Stock.
25
<PAGE>
================================================================================
No person has been authorized in connection with the offering made hereby to
give any information or to make any representation not contained in this
prospectus and, if given or made, such information or representation must not be
relied upon as having been authorized by the Company, any Selling Securityholder
or any other person. This Prospectus does not constitute an offer to sell or a
solicitation of any offer to buy any of the securities offered hereby to any
person or by anyone in any jurisdiction in which it is unlawful to make such
offer or solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall, except as otherwise contemplated by the rules and regulations
of the Securities and Exchange Commission, create any implication that the
information contained herein is correct as of any date subsequent to the date
hereof.
----------------------
TABLE OF CONTENTS
Where You Can Find More Information. . . . . . . . . . . . . . . . . . . . . . 2
Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Price Range of Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . .14
Dividend Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Selling Securityholders. . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Description of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . .22
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
================================================================================
<PAGE>
3,375,877 SHARES
and
WARRANTS TO PURCHASE
167,052 SHARES
SOFTWARE PUBLISHING
CORPORATION HOLDINGS,
INC.
---------------
PROSPECTUS
---------------
June __, 1999
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses of the distribution, all of which are to be borne by
the Registrant, are as follows:
<TABLE>
<S> <C>
SEC Registration Fee . . . . . . . . . . . . . . . . . . . . . $ 1,435.25
Blue Sky Fees and Expenses . . . . . . . . . . . . . . . . . . 15,000.00*
Accounting Fees and Expenses . . . . . . . . . . . . . . . . . 9,000.00*
Legal Fees and Expenses. . . . . . . . . . . . . . . . . . . . 40,000.00*
Printing and Engraving . . . . . . . . . . . . . . . . . . . . 10,000.00*
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . 4,564.75*
Total . . . . . . . . . . . . . . . . . . . . . . . . . . $ 80,000.00*
<FN>
- ----------
*Estimated
</FN>
</TABLE>
Item 15. Indemnification of Directors and Officers.
Under the provisions of the Certificate of Incorporation and By-Laws of the
Registrant, each person who is or was a director or officer of Registrant shall
be indemnified by the Registrant as of right to the full extent permitted or
authorized by the General Corporation Law of Delaware. Under such law, to the
extent that such person is successful on the merits of defense of a suit or
proceeding brought against such person by reason of the fact that such person is
a director or officer of the Registrant, such person shall be indemnified
against expenses (including attorneys' fees) reasonably incurred in connection
with such action. If unsuccessful in defense of a third-party civil suit or a
criminal suit is settled, such a person shall be indemnified under such law
against both (1) expenses (including attorneys' fees) and (2) judgments, fines
and amounts paid in settlement if such person acted in good faith and in a
manner such person reasonably believed to be in, or not opposed to, the best
interests of the Registrant, and with respect to any criminal action, had no
reasonable cause to believe such person's conduct was unlawful. If unsuccessful
in defense of a suit brought by or in the right of the Registrant, or if such
suit is settled, such a person shall be indemnified under such law only against
expenses (including attorneys' fees) incurred in the defense or settlement of
such suit if such person acted in good faith and in a manner such person
reasonably believed to be in, or not opposed to, the best interests of the
Registrant except that if such a person is adjudicated to be liable in such suit
for negligence or misconduct in the performance of such person's duty to the
Registrant, such person cannot be made whole even for expenses unless the court
determines that such person is fairly and reasonably entitled to be indemnified
for such expenses.
The officers and directors of the Registrant are covered by officers' and
directors' liability insurance. The policy coverage is $3,000,000, which
includes reimbursement for costs and fees. There is a maximum aggregate
deductible for each loss under the policy of $200,000. The Registrant has
entered into Indemnification Agreements with each of its executive officers and
directors. The Agreements provide for reimbursement for all direct and indirect
costs of any type or nature whatsoever (including attorneys' fees and related
disbursements) actually and reasonably incurred in connection with either the
investigation, defense or appeal of a Proceeding, as defined, including amounts
paid in settlement by or on behalf of an Indemnitee, as defined.
II-1
<PAGE>
Item 16. Exhibits.
Number Description
- ------ -----------
4.1 Specimen Common Stock Certificate. (Incorporated by reference to
Exhibit 4.1 to the Company's Annual Report on Form 10-KSB (Commission
File Number: 1-14076), for the year ended December 31, 1997, filed
with the Commission on April 15, 1998.)
4.2 Warrant to purchase 17,052 shares of Common Stock, registered in
the name of Denise Shapiro.
4.3 Warrant to purchase 150,000 shares of Common Stock, registered
in the name of Southeast Research Partners, Inc.
5 Opinion and consent of Kaufman & Moomjian, LLC. 23.1 Consent of
Ernst & Young.
23.2 Consent of Richard A. Eisner & Company, LLP. 23.3 Consent of Kaufman
& Moomjian, LLC. (Included in legal opinion filed as Exhibit 5)
24 Powers of Attorney (set forth on the signature page of this
Registration Statement on Form S-3).
Item 17. Undertakings.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to any of the provisions
described under Item 15 above, or otherwise, the Registrant has been advised
that in the opinion of the Securities and Exchange Commission (the "Commission")
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
The Registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(a) include any prospectus required by Section 10(a)(3) of
the Securities Act;
(b) reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or most recent
post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
notwithstanding the forgoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in the volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement; and
(c) Include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in
the Registration Statement;
provided, however, the undertakings set forth in clauses (1)(a) and (1)(b)
above shall not apply if the information required to be included in a
post-effective amendment by such clauses is contained in periodic reports
filed with or furnished to the Commission by the Registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), that are incorporated by reference in the
Registration Statement.
II-2
<PAGE>
(2) For determining any liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering; and
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the termination of the offering.
The Registrant hereby further undertakes that it will:
(1) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act as part of this Registration Statement as
of the time the Commission declared it effective; and
(2) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the Registration
Statement, and that offering of such securities at that time as the initial
bona fide offering of those securities.
The Registrant hereby further undertakes that, for purposes of determining
liability under the Securities Act, each of the Registrant's annual report
pursuant to section 13(a) or section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
section 15(d) of the Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The Registrant hereby further undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X are not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Fairfield, State of New Jersey, this 2nd day of June,
1999.
SOFTWARE PUBLISHING CORPORATION
HOLDINGS, INC.
By: /s/ Mark E. Leininger
------------------------------------
Mark E. Leininger
President and Chief Executive Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed on June 2, 1999 by the following
persons in the capacities indicated. Each person whose signature appears below
constitutes and appoints Mark E. Leininger with full power of substitution,
his/her true and lawful attorney-in-fact and agent to do any and all acts and
things in his/her name and on his/her behalf in his/her capacities indicated
below which he may deem necessary or advisable to enable Software Publishing
Corporation Holdings, Inc. to comply with the Securities Act of 1933, as
amended, and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with this Registration Statement including
specifically, but not limited to, power and authority to sign for him/her in
his/her name in the capacities stated below, any and all amendments (including
post-effective amendments) thereto, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in such connection, as fully to all intents
and purposes as we might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue thereof.
/s/ Mark E. Leininger President, Chief Executive Officer and
- ------------------------------------ Director (Principal Executive Officer)
Mark E. Leininger
/s/ Alan W. Schoenbart Vice President - Finance, Chief Financial
- ------------------------------------ Officer (Principal Accounting and
Alan W. Schoenbart Financial Officer)
/s/ Marc E. Jaffe Chairman of the Board, Secretary and
- ------------------------------------ Director
Marc E. Jaffe
/s/ Norman W. Alexander Director
- ------------------------------------
Norman W. Alexander
- ------------------------------------ Director
Werner G. Haase
/s/ Neil M. Kaufman Director
- ------------------------------------
Neil M. Kaufman
- ------------------------------------ Director
Martin F. Schacker
II-4
<PAGE>
EXHIBIT INDEX
Number Description
- ------ -----------
4.1 Specimen Common Stock Certificate. (Incorporated by reference to
Exhibit 4.1 to the Company's Annual Report on Form 10-KSB (Commission
File Number: 1-14076), for the year ended December 31, 1997,
filed with the Commission on April 15, 1998.)
4.2 Warrant to purchase 17,052 shares of Common Stock, registered in
the name of Denise Shapiro.
4.3 Warrant to purchase 150,000 shares of Common Stock, registered
in the name of Southeast Research Partners, Inc.
5 Opinion and consent of Kaufman & Moomjian, LLC.
23.1 Consent of Ernst & Young.
23.2 Consent of Richard A. Eisner & Company, LLP.
23.3 Consent of Kaufman & Moomjian, LLC. (Included in legal opinion
filed as Exhibit 5)
24 Powers of Attorney (set forth on the signature page of this
Registration Statement on Form S-3).
VOID AFTER THE EXPIRATION TIME,
WARRANT TO PURCHASE 17,052 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. P-2
This is to Certify That, for value received, Denise Shapiro, the registered
holder hereof, or 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 11, 1998 (the "Exercise
Date"), and before 5:00 p.m., New York City time, on December 10, 2000 (the
"Expiration Time"), at the price of $1.50 per share (as adjusted as herein
provided, the "Exercise Price"), up to eleven thousand and fifty two (11,052)
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
<PAGE>
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
in accordance with the
-2-
<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
-3-
<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
-4-
<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.
(h) Additional Shares of Common Stock Defined. For purposes of this
Warrant Certificate, the term "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued by the Company on or after the date hereof except
shares of Common Stock issued upon the exercise of any of options granted or
available for grant under the Company's 1994 Long-Term Incentive Plan, the
Company's Outside Director and Advisor Stock Option Plan, the Company's Software
Publishing Corporation 1989 Stock Plan and the Company's Software Publishing
Corporation 1991 Stock Option Plan.
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-
<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 11, which notice shall specify the
record date, if any, with respect to any such action and the date on which such
action is to take place. Such notice shall also set forth such facts with
respect thereto as shall be 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.
-6-
<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. 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.
-7-
<PAGE>
12. Expiration.
Unless as hereinafter provided, the right to exercise these Warrants
shall expire at the Expiration Time.
Dated: As of December 11, 1998
SOFTWARE PUBLISHING CORPORATION
HOLDINGS, INC.
By: /s/ Mark E. Leininger
--------------------------------
Mark E. Leininger, President
ATTEST:
/s/ Marc E. Jaffe
- ------------------------------
Marc E. Jaffe, Secretary
-8-
<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.)
-9-
<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.)
-10-
THE REGISTERED HOLDER OF THIS WARRANT, BY ITS ACCEPTANCE
HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER OR ASSIGN
THIS WARRANT EXCEPT AS HEREIN PROVIDED.
VOID AFTER 5:00 P.M. EASTERN TIME, OCTOBER 23, 2003
WARRANT
For the Purchase of
150,000 Shares of Common Stock
of
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
1. Warrant.
THIS CERTIFIES THAT, in consideration of $10.00 and other good and valuable
consideration, duly paid on October 23, 1998 ("Issue Date") by or on behalf of
Southeast Research Partners, Inc. ("Holder"), as registered owner of this
Warrant, to Software Publishing Corporation Holdings, Inc. ("Company"), Holder
is entitled, at any time or from time to time at or after April 23, 1999
("Commencement Date"), subject to Section 6.3 hereof, and at or before 5:00
p.m., Eastern Time October 23, 2003 ("Expiration Date"), but not thereafter, to
subscribe for, purchase and receive, in whole or in part, up to One Hundred
Fifty Thousand (150,000) shares of Common Stock of the Company, $.001 par value
("Common Stock"). If the Expiration Date is a day on which banking institutions
are authorized by law to close, then this Warrant may be exercised on the next
succeeding day which is not such a day in accordance with the terms herein.
During the period ending on the Expiration Date, the Company agrees not to take
any action that would terminate the Warrant. This Warrant is initially
exercisable at $0.86 per share of Common Stock purchased; provided, however,
that upon the occurrence of any of the events specified in Section 6 hereof, the
rights granted by this Warrant, including the exercise price and the number of
shares of Common Stock to be received upon such exercise, shall be adjusted as
therein specified. The term "Exercise Price" shall mean the initial exercise
price or the adjusted exercise price, depending on the context, of a share of
Common Stock. The term "Securities" shall mean the shares of Common Stock
issuable upon exercise of this Warrant.
2. Exercise.
2.1 Exercise Form. In order to exercise this Warrant, the exercise form
attached hereto must be duly executed and completed and delivered to the
Company, together with this Warrant and payment of the Exercise Price for the
Securities being purchased. If the subscription rights represented hereby shall
not be exercised at or before 5:00 p.m., Eastern time, on the Expiration Date,
this Warrant shall become and be void without further force or effect, and all
rights represented hereby shall cease and expire.
2.2 Legend. Each certificate for Securities purchased under this Warrant
shall bear a legend as follows, unless the issuance such Securities to the
Holder has been registered under the Securities Act of 1933, as amended ("Act"):
<PAGE>
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended ("Act") or
applicable state law. The securities may not be offered for sale, sold or
otherwise transferred except pursuant to an effective registration
statement under the Act, or pursuant to an exemption from registration
under the Act and applicable state law."
3. Transfer.
3.1 General Restrictions. The registered Holder of this Warrant, by its
acceptance hereof, agrees that it will not sell, transfer or assign or
hypothecate this Warrant to anyone except upon compliance with, or pursuant to
exemptions from, applicable securities laws. In order to make any permitted
assignment, the Holder must deliver to the Company the assignment form attached
hereto duly executed and completed, together with this Warrant and payment of
all transfer taxes, if any, payable in connection therewith. The Company shall
immediately transfer this Warrant on the books of the Company and shall execute
and deliver a new Warrant or Warrants of like tenor to the appropriate
assignee(s) expressly evidencing the right to purchase the aggregate number of
shares of Common Stock purchasable hereunder or such portion of such number as
shall be contemplated by any such assignment.
3.2 Restrictions Imposed by the Securities Act. This Warrant and the
Securities underlying this Warrant shall not be transferred unless and until (i)
the Company has received the opinion of counsel for the Holder that such
securities may be sold pursuant to an exemption from registration under the Act,
and applicable state law, the availability of which is established to the
reasonable satisfaction of the Company and its counsel, or (ii) a registration
statement relating to such Securities has been filed by the Company and declared
effective by the Securities and Exchange Commission (and is effective at the
time of transfer) and compliance with applicable state law.
4. New Warrants to be Issued.
4.1 Partial Exercise or Transfer. Subject to the restrictions in Section 3
hereof, this Warrant may be exercised or assigned in whole or in part. In the
event of the exercise or assignment hereof in part only, upon surrender of this
Warrant for cancellation, together with the duly executed exercise or assignment
form and funds sufficient to pay any Exercise Price and/or transfer tax, the
Company shall cause to be delivered to the Holder without charge a new Warrant
of like tenor to this Warrant in the name of the Holder evidencing the right of
the Holder to purchase the aggregate number of shares of Common Stock and
Warrants purchasable hereunder as to which this Warrant has not been exercised
or assigned.
4.2 Lost Certificate. Upon receipt by the Company of evidence satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant and of
reasonably satisfactory indemnification, the Company shall execute and deliver a
new Warrant of like tenor and date. Any such new Warrant executed and delivered
as a result of such loss, theft, mutilation or destruction shall constitute a
substitute contractual obligation on the part of the Company.
5. Registration Rights.
5.1 Demand Registration.
5.1.1 Grant of Right. The Company, upon written demand ("Initial
Demand Notice") of the Holder(s) of at least 51% of the Warrant and/or the
underlying shares of Common Stock ("Majority Holders"), agrees to register on
one occasion, all or any portion of the underlying shares requested by the
Majority Holders in the Initial Demand Notice (collectively, the "Registrable
Securities"). On such occasion, the Company will file a registration statement
covering the Registrable Securities within forty-five days after receipt of the
<PAGE>
Initial Demand Notice and use its best efforts to have such registration
statement declared effective promptly thereafter. Should this registration or
the effectiveness thereof be delayed by the Company, the exercisability of the
Warrant shall be extended for a period of time equal to the delay in registering
the Registrable Securities. Moreover, if the Company fails to comply with the
provisions of this Section 5.1.1, the Company shall, in addition to any other
equitable or other relief available to the Holder(s), be liable for any and all
incidental, special and consequential damages sustained by the Holder(s). The
Company covenants and agrees to give written notice of its receipt of any
Initial Demand Notice by any Holder(s) to all other registered Holders of the
Warrant and/or the Registrable Securities within ten days from the date of the
receipt of any such Initial Demand Notice.
5.1.2 Terms. The Company shall bear all fees and expenses attendant
upon registering the Registrable Securities, but the Holders shall pay any and
all underwriting commissions and the expenses of any legal counsel selected by
the Holders to represent them in connection with the sale of the Registrable
Securities. The Company agrees to use its best efforts to cause the filing
required herein to become effective promptly and to qualify or register the
Registrable Securities in such States as are reasonably requested by the
Holder(s); provided, however, that in no event shall the Company be required to
register the Registrable Securities in a State in which such registration would
cause (i) the Company to be obligated to register or license to do business in
such State, or (ii) the principal stockholders of the Company to be obligated to
escrow their shares of capital stock of the Company. The Company shall cause any
registration statement filed pursuant to the demand rights granted under Section
5.1.1 to remain effective the earlier of (a) all Registrable Securities
thereunder have been sold, or (b) are freely saleable, without volume
limitation, under an exemption from the registration requirements.
5.2 "Piggy-Back" Registration.
5.2.1 Grant of Right. The Holders of this Warrant shall have the right
for a period of five years from the Issue Date to include all or any part of
this Warrant and the shares of Common Stock underlying this Warrant
(collectively, the "Registrable Securities") as part of any registration of
securities filed by the Company (other than in connection with a transaction
contemplated by Rule 145(a) promulgated under the Act or pursuant to Form S-4 or
S-8 or any equivalent form); provided, however, that if, in the written opinion
of the Company's managing underwriter or underwriters, if any, for such offering
("Underwriter"), the inclusion of the Registrable Securities, when added to the
securities being registered by the Company or the selling stockholder(s), will
exceed the maximum amount of the Company's securities which can be marketed (i)
at a price reasonably related to their then current market value, or (ii)
without materially and adversely affecting the entire offering, the Company
shall nevertheless register all or any portion of the Registrable Securities
required to be so registered but such Registrable Securities shall not be sold
by the Holders until 90 days after the registration statement for such offering
has become effective; and provided further that, if any securities are
registered for sale on behalf of other stockholders in such offering and such
stockholders have not agreed to defer such sale until the expiration of such 90
day period, the number of securities to be sold by all stockholders in such
public offering during such 90 day period shall be apportioned pro rata among
all such selling stockholders, including all holders of the Registrable
Securities, according to the total amount of securities of the Company proposed
to be sold by said selling stockholders, including all holders of the
Registrable Securities. To the extent any Registrable Securities are registered
by the Company ("Registered Securities"), the Holder may not request that the
Registered Securities be registered under another registration statement unless
the Company breaches its obligation to keep the registration statement effective
until all such securities have been sold set forth in accordance with Section
5.2.2 below.
5.2.2 Terms. The Company shall bear all fees and expenses attendant to
registering the Registrable Securities, including any filing fees payable to the
National Association of Securities Dealers, Inc., but the Holders shall pay any
<PAGE>
and all underwriting commission, discounts and allowances and the expenses of
any legal counsel selected by the Holders to represent them in connection with
the sale of the Registrable Securities. In the event of a proposed registration,
the Company shall furnish the then Holders of outstanding Registrable Securities
with not less than 15 days written notice prior to the proposed date of filing
of such registration statement. Such notice to the Holders shall continue to be
given for each registration statement filed by the Company until such time as
all of the Registrable Securities have been registered for resale by the Holder.
The holders of the Registrable Securities shall exercise the "piggy-back" rights
provided for herein by giving written notice, within 10 days of the receipt of
the Company's notice of its intention to file a registration statement. The
Company shall cause any registration statement filed pursuant to the above
"piggyback" rights to remain effective until the earlier of (a) all Registrable
Securities thereunder have been sold, or (b) are freely saleable, without volume
limitation, under an exemption from the registration requirements. Nothing
contained in this Warrant shall be construed as requiring any Holder to exercise
this Warrant or any part thereof prior to the initial filing of any registration
statement or the effectiveness thereof.
5.3 General Terms
5.3.1 Indemnification.
(a) The Company shall indemnify the Holder(s) of the Registrable
Securities to be sold pursuant to any registration statement hereunder and any
underwriter or person deemed to be an underwriter under the Act and each person,
if any, who controls such Holders or underwriters or persons deemed to be
underwriters within the meaning of Section 15 of the Act or Section 20(a) of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), against all loss,
claim, damage, expense or liability (including all reasonable attorneys' fees
and other expenses reasonably incurred in investigating, preparing or defending
against any claim whatsoever) to which any of them may become subject under the
Act, the Exchange Act or otherwise, arising from such registration statement,
other than any such loss, damage, expense or liability arising from information
furnished by or on behalf of such Holders, in writing, for specific inclusion in
such registration statement. The Holder(s) of the Registrable Securities to be
sold pursuant to such registration statement, and their successors and assigns,
shall severally, and not jointly, indemnify the Company, its officers and
directors and each person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act, against all loss,
claim, damage, expense or liability (including all reasonable attorneys' fees
and other expenses reasonably incurred in investigating, preparing or defending
against any claim whatsoever) to which they may become subject under the Act,
the Exchange Act or otherwise, arising from information furnished by or on
behalf of such Holders, in writing, for specific inclusion in such registration
statement.
(b) If any action is brought against a party hereto ("Indemnified
Party"), in respect of which indemnity may be sought against the other party
("Indemnifying Party"), such Indemnified Party shall promptly notify
Indemnifying Party in writing of the institution of such action and Indemnifying
Party shall assume the defense of such action, including the employment and fees
of counsel reasonably satisfactory to the Indemnified Party. Such Indemnified
Party shall have the right to employ its or their own counsel in any such case,
but the fees and expenses of such counsel shall be at the expense of such
Indemnified Party unless (i) the employment of such counsel shall have been
authorized in writing by Indemnifying Party in connection with the defense of
such action, or (ii) Indemnifying Party shall not have employed counsel to
defend such action, or (iii) such Indemnified Party shall have been advised by
counsel that there are one or more legal defenses available to it which may
result in a conflict between the Indemnified Party and Indemnifying Party (in
which case Indemnifying Party shall not have the right to direct the defense of
such action on behalf of the Indemnified Party), in any of which events, the
reasonable fees and expenses of not more than one additional firm of attorneys
designated in writing by the Indemnified Party shall be borne by Indemnifying
<PAGE>
Party. Notwithstanding anything to the contrary contained herein, if Indemnified
Party shall assume the defense of such action as provided above, Indemnifying
Party shall not be liable for any settlement of any such action effected without
its written consent.
(c) If the indemnification or reimbursement provided for
hereunder is finally judicially determined by a court of competent jurisdiction
to be unavailable to an Indemnified Party (other than as a consequence of a
final judicial determination of willful misconduct, bad faith or gross
negligence of such Indemnified Party), then Indemnifying Party agrees, in lieu
of indemnifying such Indemnified Party, to contribute to the amount paid or
payable by such Indemnified Party (i) in such proportion as is appropriate to
reflect the relative benefits received, or sought to be received, by
Indemnifying Party on the one hand and by such Indemnified Party on the other or
(ii) if (but only if) the allocation provided in clause (i) of this sentence is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in such clause (i) but also the
relative fault of Indemnifying Party and of such Indemnified Party; provided,
however, that in no event shall the aggregate amount contributed by a Holder
exceed the profit, if any, earned by such Holder as a result of the exercise by
him of the Warrants and the sale by him of the underlying shares of Common
Stock.
(d) The rights accorded to Indemnified Parties hereunder shall be
in addition to any rights that any Indemnified Party may have at common law, by
separate agreement or otherwise.
5.3.2 Exercise of Warrants. Nothing contained in this Warrant shall be
construed as requiring the Holder(s) to exercise their Warrants prior to or
after the initial filing of any registration statement or the effectiveness
thereof.
5.3.3 Documents Delivered to Holders. In the event that the
Registerable Securities are to be sold in an underwriter offering, the Company
shall furnish to each Holder participating in any of the foregoing offerings and
to each Underwriter of any such offering, if any, a signed counterpart,
addressed to such Holder or Underwriter, of (i) an opinion of counsel to the
Company, dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, an opinion dated the date
of the closing under any underwriting agreement related thereto), and (ii) a
"cold comfort" letter dated the effective date of such registration statement
(and, if such registration includes an underwritten public offering, a letter
dated the date of the closing under the underwriting agreement) signed by the
independent public accountants who have issued a report on the Company's
financial statements included in such registration statement, in each case
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of such
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to underwriters in underwritten public
offerings of securities. The Company shall also deliver promptly to each Holder
participating in the offering requesting the correspondence and memoranda
described below and to the managing underwriter copies of all correspondence
between the Commission and the Company, its counsel or auditors and all
memoranda relating to discussions with the Commission or its staff with respect
to the registration statement and permit each Holder and underwriter to do such
investigation, upon reasonable advance notice, with respect to information
contained in or omitted from the registration statement as it deems reasonably
necessary to comply with applicable securities laws or rules of the NASD. Such
investigation shall include access to books, records and properties and
opportunities to discuss the business of the Company with its officers and
independent auditors, all to such reasonable extent and at such reasonable times
and as often as any such Holder shall reasonably request.
<PAGE>
6. Adjustments
6.1 Adjustments to Exercise Price and Number of Securities. The Exercise
Price and the number of shares of Common Stock underlying this Warrant shall be
subject to adjustment from time to time as hereinafter set forth:
6.1.1 Stock Dividends - Recapitalization, Reclassification, Split-Ups.
If, after the date hereof, and subject to the provisions of Section 6.2 below,
the number of outstanding shares of Common Stock is increased by a stock
dividend on the Common Stock payable in shares of Common Stock or by a split-up,
recapitalization or reclassification of shares of Common Stock or other similar
event, then, on the effective date thereof, the number of shares of Common Stock
issuable on exercise of this Warrant shall be increased in proportion to such
increase in outstanding shares.
6.1.2 Aggregation of Shares. If after the date hereof, and subject to
the provisions of Section 6.2, the number of outstanding shares of Common Stock
is decreased by a consolidation, combination or reclassification of shares of
Common Stock or other similar event, then, upon the effective date thereof, the
number of shares of Common Stock issuable on exercise of this Warrant shall be
decreased in proportion to such decrease in outstanding shares.
6.1.3 Adjustments in Exercise Price. Whenever the number of shares of
Common Stock purchasable upon the exercise of this Warrant is adjusted, as
provided in this Section 6.1, the Exercise Price shall be adjusted (to the
nearest cent) by multiplying such Exercise Price immediately prior to such
adjustment by a fraction (x) the numerator of which shall be the number of
shares of Common Stock purchasable upon the exercise of this Warrant immediately
prior to such adjustment, and (y) the denominator of which shall be the number
of shares of Common Stock so purchasable immediately thereafter.
6.1.4 Replacement of Securities upon Reorganization, etc. In case of
any reclassification or reorganization of the outstanding shares of Common Stock
other than a change covered by Section 6.1.1 hereof or which solely affects the
par value of such shares of Common Stock, or in the case of any merger or
consolidation of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the continuing corporation and
which does not result in any reclassification or reorganization of the
outstanding shares of Common Stock), or in the case of any sale or conveyance to
another corporation or entity of the property of the Company as an entirety or
substantially as an entirety in connection with which the Company is dissolved,
the Holder of this Warrant shall have the right thereafter (until the expiration
of the right of exercise of this Warrant) to receive upon the exercise hereof,
for the same aggregate Exercise Price payable hereunder immediately prior to
such event, the kind and amount of shares of stock or other securities or
property (including cash) receivable upon such reclassification, reorganization,
merger or consolidation, or upon a dissolution following any such sale or other
transfer, by a Holder of the number of shares of Common Stock of the Company
obtainable upon exercise of this Warrant immediately prior to such event; and if
any reclassification also results in a change in shares of Common Stock covered
by Sections 6.1.1 or 6.1.2, then such adjustment shall be made pursuant to
Sections 6.1.1, 6.1.2, 6.1.3 and this Section 6.1.4. The provisions of this
Section 6.1.4 shall similarly apply to successive reclassifications,
reorganizations, mergers or consolidations, sales or other transfers.
6.1.5 Changes in Form of Warrant. This form of Warrant need not be
changed because of any change pursuant to this Section, and Warrants issued
after such change may state the same Exercise Price and the same number of
shares of Common Stock and Warrants as are stated in the Warrants initially
issued pursuant to this Agreement. The acceptance by any Holder of the issuance
of new Warrants reflecting a required or permissive change shall not be deemed
to waive any rights to a prior adjustment or the computation thereof.
<PAGE>
6.2 Elimination of Fractional Interests. The Company shall not be required
to issue certificates representing fractions of shares of Common Stock upon the
exercise of this Warrant, nor shall it be required to issue scrip or pay cash in
lieu of any fractional interests, it being the intent of the parties that all
fractional interests shall be eliminated by rounding any fraction up to the
nearest whole number of shares of Common Stock or other securities, properties
or rights.
6.3 Effect of Termination of Advisory Agreement. Notwithstanding anything
to the contrary contained herein, in the event that the Company terminates the
Financial Advisory and Investment Banking Agreement dated October 23, 1998
between the Company and Southeast Research Partners, Inc. in accordance with the
terms thereof on or before December 23, 1999, then the number of shares of
common stock subject to this Warrant will be reduced to 75,000 shares.
7. Reservation and Listing. The Company shall at all times reserve and keep
available out of its authorized shares of Common Stock, solely for the purpose
of issuance upon exercise of this Warrant, such number of shares of Common Stock
or other securities, properties or rights as shall be issuable upon the exercise
thereof. The Company covenants and agrees that, upon exercise of the Warrants
and payment of the Exercise Price therefor, all shares of Common Stock and other
securities issuable upon such exercise shall be duly and validly issued, fully
paid and non-assessable and not subject to preemptive rights of any stockholder.
As long as the Warrants shall be outstanding and in accordance with Section 5.1
hereof, the Company shall use its best efforts to cause all shares of Common
Stock issuable upon exercise of the Warrants to be listed (subject to official
notice of issuance) on all securities exchanges (or, if applicable on Nasdaq) on
which the Common Stock is then listed and/or quoted.
8. Certain Notice Requirements.
8.1 Holder's Right to Receive Notice. Nothing herein shall be construed as
conferring upon the Holders the right to vote or consent or to receive notice as
a stockholder for the election of directors or any other matter, or as having
any rights whatsoever as a stockholder of the Company. If, however, at any time
prior to the expiration of the Warrants and their exercise, any of the events
described in Section 8.2 shall occur, then, in one or more of said events, the
Company shall give written notice of such event at least seven days prior to the
date fixed as a record date or the date of closing the transfer books for the
determination of the stockholders entitled to such dividend, distribution,
conversion or exchange of securities or subscription rights, or entitled to vote
on such proposed dissolution, liquidation, winding up or sale. Such notice shall
specify such record date or the date of the closing of the transfer books, as
the case may be.
8.2 Events Requiring Notice. The Company shall be required to give the
notice described in this Section 8 upon one or more of the following events: (i)
if the Company shall take a record of the holders of its shares of Common Stock
for the purpose of entitling them to receive a dividend or distribution, or (ii)
the Company shall offer to all the holders of its Common Stock any additional
shares of capital stock of the Company or securities convertible into or
exchangeable for shares of capital stock of the Company, or any option, right or
warrant to subscribe therefor, or (iii) a merger or reorganization in which the
Company is not the surviving party, or (iv) a dissolution, liquidation or
winding up of the Company (other than in connection with a consolidation or
merger) or a sale of all or substantially all of its property, assets and
business shall be proposed.
8.3 Notice of Change in Exercise Price. The Company shall, promptly after
an event requiring a change in the Exercise Price pursuant to Section 6 hereof,
send notice to the Holders of such event and change ("Price Notice"). The Price
Notice shall describe the event causing the change and the method of calculating
same and shall be certified as being true and accurate by the Company's
President and Chief Financial Officer.
<PAGE>
8.4 Transmittal of Notices. All notices, requests, consents and other
communications under this Warrant shall be in writing and shall be deemed to
have been duly made on the date of delivery if delivered personally or sent by
overnight courier, with acknowledgment of receipt by the party to which notice
is given, or on the fifth day after mailing if mailed to the party to whom
notice is to be given, by registered or certified mail, return receipt
requested, postage prepaid and properly addressed as follows: (i) if to the
registered Holder of this Warrant, to the address of such Holder as shown on the
books of the Company, or (ii) if to the Company, to its principal executive
office.
9. Miscellaneous.
9.1 Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Warrant.
9.2 Entire Agreement. This Warrant (together with the other agreements and
documents being delivered pursuant to or in connection with this Warrant)
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and understandings of
the parties, oral and written, with respect to the subject matter hereof.
9.3 Binding Effect. This Warrant shall inure solely to the benefit of and
shall be binding upon, the Holder and the Company and their respective
successors, legal representatives and assigns, and no other person shall have or
be construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Warrant or any provisions herein contained.
9.4 Governing Law; Submission to Jurisdiction. This Warrant shall be
governed by and construed and enforced in accordance with the law of the State
of New York, without giving effect to conflict of laws. The Company hereby
agrees that any action, proceeding or claim against it arising out of, or
relating in any way to this Warrant shall be brought and enforced in the courts
of the State of New York or of the United States of America for the Southern
District of New York, and irrevocably submits to such jurisdiction, which
jurisdiction shall be exclusive. The Company hereby waives any objection to such
exclusive jurisdiction and that such courts represent an inconvenient forum. Any
process or summons to be served upon the Company may be served by transmitting a
copy thereof by registered or certified mail, return receipt requested, postage
prepaid, addressed to it at the address set forth in Section 8 hereof. Such
mailing shall be deemed personal service and shall be legal and binding upon the
Company in any action, proceeding or claim. The Company agrees that the
prevailing party(ies) in any such action shall be entitled to recover from the
other party(ies) all of its reasonable attorneys' fees and expenses relating to
such action or proceeding and/or incurred in connection with the preparation
therefor.
9.5 Waiver, Etc. The failure of the Company or the Holder to at any time
enforce any of the provisions of this Warrant shall not be deemed or construed
to be a waiver of any such provision, nor to in any way affect the validity of
this Warrant or any provision hereof or the right of the Company or any Holder
to thereafter enforce each and every provision of this Warrant. No waiver of any
breach, non-compliance or non-fulfillment of any of the provisions of this
Warrant shall be effective unless set forth in a written instrument executed by
the party or parties against whom or which enforcement of such waiver is sought;
and no waiver of any such breach, non-compliance or non-fulfillment shall be
construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer as of the 23rd day of October, 1998.
SOFTWARE PUBLISHING
CORPORATION HOLDINGS, INC.
By: /s/ Mark E. Leininger
--------------------------------
Mark E. Leininger, President
<PAGE>
Form to be used to exercise Warrant:
- -----------------------------------
- -----------------------------------
- -----------------------------------
Date: _____________________, 19___
The undersigned hereby elects irrevocably to exercise the within
Warrant and to purchase ________ shares of Common Stock of
_________________________ and hereby makes payment of $____________ (at the rate
of $_________ per share of Common Stock) in payment of the Exercise Price
pursuant thereto. Please issue the Common Stock as to which this Warrant is
exercised in accordance with the instructions given below.
--------------------------------------
Signature
NOTICE: The signature to this form must correspond with the name as
written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever.
INSTRUCTIONS FOR REGISTRATION OF SECURITIES
Name ________________________________________________________
(Print in Block Letters)
Address ________________________________________________________
<PAGE>
Form to be used to assign Warrant:
ASSIGNMENT
(To be executed by the registered Holder to effect a transfer of the
within Warrant):
FOR VALUE RECEIVED, ________________________________ does hereby sell,
assign and transfer unto _________________________________ the right to purchase
_____________________ shares of Common Stock of
_________________________________ ("Company") evidenced by the within Warrant
and does hereby authorize the Company to transfer such right on the books of the
Company.
Dated:____________________, 19___
--------------------------------------
Signature
NOTICE: The signature to this form must correspond with the name as
written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
KAUFMAN & MOOMJIAN, LLC
50 Charles Lindbergh Boulevard
Suite 206
Mitchel Field, New York 11553
June 7, 1999
Software Publishing Corporation Holdings, Inc.
3A Oak Road
Fairfield, New Jersey 07004
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel for Software Publishing Corporation Holdings,
Inc., a Delaware corporation (the "Company"), in connection with the
registration under the Securities Act of 1933, as amended, of an aggregate
3,375,877 shares (the "Shares") of the common stock, par value $.001 per share
(the "Common Stock"), of the Company, and 167,052 warrants (the "Registered
Warrants") to purchase an aggregate 167,052 shares of Common Stock, to be
offered and sold by certain securityholders of the Company (the "Selling
Securityholders"). In this regard, we have participated in the preparation of a
Registration Statement on Form S-3 (the "Registration Statement") relating to
the Shares and Registered Warrants. The Shares include an aggregate 2,197,052
shares (the "Underlying Shares") of Common Stock issuable upon exercise of
outstanding options and warrants (the "Derivative Securities") of the Company,
including the Registered Warrants. In such connection, the Company is offering
the Underlying Shares to the holders of the Derivative Securities.
We are of the opinion that (a) the Derivative Securities, including
the Registered Warrants, are valid and binding obligations of the Company,
enforceable in accordance with their respective terms, (b) the Shares issued and
outstanding on the date hereof are duly authorized, legally issued, fully paid
and non-assessable and (c) the Underlying Shares, upon issuance in accordance
with the terms of the respective Derivative Securities, will be duly authorized,
legally issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Registration Statement and in the Prospectus included therein.
Very truly yours,
/s/ Kaufman & Moomjian, LLC
Kaufman & Moomjian, LLC
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-3) and related Prospectus of Software Publishing Corporation Holdings, Inc. of
our report dated April 1, 1999 with respect to the financial statements of
Serif (Europe) Limited included in the Annual Report (Form 10-KSB) of
Software Publishing Corporation Holdings, Inc. for the year ended December 31,
1998 filed with the Securities and Exchange Commission.
/s/ Ernst & Young
ERNST & YOUNG
Chartered Accountants
Nottingham, England
June 7, 1999
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the use of our report on our audit of the consolidated financial
statements of Software Publishing Corporation Holdings, Inc. as of and for the
year ended December 31, 1998 included in the Company's annual report on Form
10-KSB incorporated herein by reference and to the reference to our firm under
the heading "Experts" in the prospectus.
Our report, dated April 8, 1999, which was based in part upon the report of
other independent auditors, contains an emphasis paragraph regarding a federal
income tax contingency.
/s/ Richard A. Eisner & Company, LLP
New York, New York
June 4, 1999
