As Filed With the Securities and Exchange Commission on May 22, 1996
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PaperClip Imaging Software, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
22-3137907
(I.R.S. employer identification no.)
Three University Plaza
Hackensack, New Jersey 07601
(Address of principal executive offices) (Zip Code)
PaperClip Imaging Software, Inc. - 1993 Stock Option Plan
PaperClip Imaging Software, Inc. - 1995 Stock Option Plan
(Full title of the plan)
William Weiss
Chief Executive Officer
PaperClip Imaging Software, Inc.
Three University Plaza
Hackensack, New Jersey 07601
(Name and address of agent for service)
(201) 487-3503
(Telephone number, including area code, of agent for service)
Copy to:
Nahum Gordon, Esq.
Moroze Sherman Gordon & Gordon, P.C.
521 Fifth Avenue
New York, NY 10175
Telephone No: (212) 867-0300
Fax No: (212) 682-7935
<PAGE>
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
Proposed
Proposed maximum
Title of maximum aggregate Amount of
securities to Amount to be offering price offering registration
be registered registered <F1> per share price fee
<C> <C> <C> <C> <C>
Common Stock,
$.01 par value 389,510 Shares $2.05 <F2> $798,496 $275
Common Stock,
$.01 par value 668,616 Shares $ 5.38 <F3> $3,597,154 $1,241
TOTAL 1,058,126 Shares $4,395,650 $1,516
<FN>
<F1>
Reflects two-for-one stock split authorized on May 10, 1996,
record date May 23, 1996 and payable on May 30, 1996. In addition,
pursuant to Rule 416(a) under the Securities Act of 1933, as amended,
this Registration Statement also covers any additional securities to be
offered or issued in connection with a stock split, stock dividend or
similar transaction, as well as such indeterminate number of shares as
may become subject to options under the 1993 and 1995 Stock Option Plans
as a result of the adjustment provisions.
<F2>
Estimated for the sole purpose of calculating the
registration fee in accordance with Rule 457(h) under the Securities Act
of 1993, as amended, based upon the average exercise price at which such
outstanding options to purchase shares of common stock under the 1993
and 1995 Stock Option Plans may be exercised, adjusted for the two-for-
one stock split. See Note (F1).
<F3>
Estimated pursuant to Rule 457(h) solely for the purposes of
calculating the registration fee for the shares of common stock
underlying options which may be granted under the 1993 and 1995 Stock
Option Plans based upon the last sale reported for the Common Stock as
quoted on Nasdaq on May 17, 1996, as adjusted for the two-for-one
stock split. See Note (F1).
</FN>
</TABLE>
(i)
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information*
Item 2. Registrant Information and Employee Plan Annual Information*
* Information required by Part I to be contained in the Section
10(a) prospectus is omitted from the Registration Statement in
accordance with Rule 428 under the Securities Act of 1933, as
amended, and the Note to Part I of Form S-8.
1
<PAGE>
PAPERCLIP IMAGING SOFTWARE, INC.
1993 STOCK OPTION PLAN
1995 STOCK OPTION PLAN
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents filed by the Company with the Securities
and Exchange Commission ("Commission") are incorporated by reference in
this Registration Statement.
(1) Annual Report on Form 10-KSB, as amended by Form 10-KSB/A for the
year ended December 31, 1995 (Commission File No. 0-26598);
(2) Quarterly Report on Form 10-QSB for the quarterly period ended
March 31, 1996 (Commission File No. 0-26598);
(3) The Section entitled "Description of Securities -- Common Stock"
of the Company's Registration Statement on Form SB-2, as amended
(File No. 33-92768NY), which is incorporated by reference in the
Company's Registration Statement on Form 8-A dated August 8, 1995;
(4) All documents subsequently filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934 ("Exchange Act"), including, but not limited to
subsequently filed amendments to the above listed documents and
subsequently filed Forms 10-KSB, 10-QSB and 8-K, prior to the
filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be
a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a
statement contained herein or in any subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute
a part of this Registration Statement. All information appearing in
this Registration Statement is qualified in its entirety by the
information and financial statements (including notes thereto) appearing
in the documents incorporated herein by reference, except to the extent
set forth in the immediately preceding statement.
The Company will provide without charge to each person to whom a
copy of a Section 10(a) Prospectus hereunder is delivered upon the oral
or written request of such person, a copy of any document incorporated
in this Registration Statement by reference, except exhibits to such
information, unless such exhibits are also expressly incorporated by
reference herein. Requests for such information should be directed to
PaperClip Imaging Software, Inc., Three University Plaza, Hackensack,
New Jersey 07601, Attn: Wayne Hendon, Controller.
II-1
<PAGE>
Item 4. Description of Securities
Not Applicable
Item 5. Interests of Named Experts and Counsel
The validity of the shares of Common Stock to be issued pursuant
to the Plans is being passed upon for the Company by Moroze Sherman
Gordon & Gordon, P.C., 521 Fifth Avenue, New York, New York 10175,
counsel to the Company.
Nahum L. Gordon, a member of Moroze Sherman Gordon & Gordon, P.C.,
and David Z. Gordon, a former member of such firm, were directors of the
Company from April 5, 1992 to April 10, 1995.
David Z. Gordon owns 31,546 shares of Common Stock, warrants to
purchase 7,087 shares of Common Stock, and options issued under the 1995
Stock Plan to purchase 25,000 shares of Common Stock. Mr. Gordon
disclaims ownership and control of 15,601 shares held by The David Z.
Gordon 1994 Family Trust.
Nahum L. Gordon owns 9,978 of Common Stock, warrants to purchase
4,008 shares of Common Stock, and options issued under the 1995 Stock
Plan to purchase 25,000 shares of Common Stock. Nahum Gordon disclaims
ownership and control of 43,180 shares held by The Nahum L. Gordon 1994
Family Trust.
Isaac Sherman, a member of Moroze Sherman Gordon & Gordon, P.C.,
who owns 1,853 shares of Common Stock, has never served as a director of
the Company.
Item 6. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of
Delaware (the "DGCL") provides the statutory basis for the
indemnification by a corporation of its officers and directors under
certain circumstances as stated in the statute and subject to specified
limitations set forth therein. Section 102(b)(7) of the DGCL provides
the statutory basis for the limitation or elimination of the personal
liability of directors to the corporation and its stockholders under
certain circumstances as stated in the statute and subject to specified
limitations set forth therein.
Articles Eighth and Ninth of the Company's Certificate of
Incorporation, last amended on March 1, 1995 (the "Restated
Certificate"), provide for indemnification of directors and officers of
the Company to the full extent then permitted by the DGCL. The detailed
provisions of the Restated Certificate are incorporated by reference to
the Company's Registration Statement on Form SB-2, as amended (File No.
33-92768NY), Part II, Item 27.
Item 7. Exemption from Registration Claimed
Not Applicable
II-2
<PAGE>
Item 8. Exhibits
4.1 Certificate of Incorporation of Registrant, as amended (1)
4.2 ByLaws of Registrant, as amended (1)
5 Opinion of Moroze Sherman Gordon & Gordon, P.C., Counsel for the
Registrant (2)
10.5 1993 Stock Option Plan (1)
10.6 1995 Stock Option Plan as amended (2)
10.7 Consulting Agreement with Stephen Kornfeld dated as of January 1,
1996, as clarified (2)
23.1 Consent of Arthur Andersen LLP (2)
23.2 Consent of Moroze Sherman Gordon & Gordon, P.C. (included in
Exhibit 5) (2)
24 Power of Attorney (included on signature page of this Registration
Statement on Form S-8) (2)
_______________
(1) Incorporated by reference to the Registrant's Registration
Statement on Form SB-2, as amended (Reg. No. 33-92768NY).
(2) Filed herewith.
Item 9. Undertakings
The undersigned registrant undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of
the Act;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the
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; and
(iii) to 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;
II-3
<PAGE>
provided, however, that paragraph 9(a) (1) (i) and (a) (1) (ii) do
not apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic
reports filed by the Company pursuant to Section 15(d) of the
Exchange Act that are incorporated by reference in this
registration statement.
(2) That, for the purpose of determining any liability under the Act,
each such post-effective amendment 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 in the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) Insofar as indemnification for liabilities arising under the Act
may be permitted to directors, officers and controlling persons of
the Company pursuant to any charter provision, by-law contract
arrangements statute, or otherwise, the Company has been advised
that in the opinion of the Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of
expenses incurred or paid by a director, officer or controlling
person of the Company 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 Company will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the questions whether such
indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
II-4
<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-8 and has duly caused
this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Town of Hackensack, State
of New Jersey, on the 13 day of May, 1996.
PAPERCLIP IMAGING SOFTWARE, INC.
By:/s/ William Weiss
William Weiss, Chief Executive Officer,
Principal Executive Officer and
Principal Financial Officer
POWER OF ATTORNEY
Each director and/or officer of the Company whose signature
appears below hereby appoints William Weiss or Sol Rosenberg as his
attorney-in-fact to sign in his name and behalf, in any and all
capacities stated below and to file with the Commission, any and all
amendments, including post-effective amendments, to this Registration
Statement.
Pursuant to the requirements of the Act, this registration
statement has been signed by the following persons in the capacities and
on the dates indicated.
Signature Title Date
/s/ William Weiss Chief Executive Officer, 13-May-96
William Weiss Principal Executive Officer,
Principal Financial Officer
and Director
/s/ Sol Rosenberg President and 13-May-96
Sol Rosenberg Director
/s/ Michael A. Suleski Vice President and 13-May-96
Michael A. Suleski Director
II-5
<PAGE>
PAPERCLIP IMAGING SOFTWARE, INC.
EXHIBIT INDEX
5 Opinion of Moroze Sherman Gordon & Gordon, P.C., Counsel for the
Registrant
10.6 1995 Stock Option Plan as amended
10.7 Consulting Agreement with Stephen Kornfeld dated as of January 1,
1996, as clarified
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Moroze Sherman Gordon & Gordon, P.C., (included in
Exhibit 5)
24 Power of Attorney (included on signature page of this Registration
Statement on Form S-8)
MOROZE SHERMAN GORDON & GORDON, P.C.
521 FIFTH AVENUE
NEW YORK, NEW YORK 10175
(212) 867-0300
TELECOPIER (212) 682-7935
Exhibit 5
May 14, 1996
PaperClip Imaging Software, Inc.
Three University Plaza
Hackensack, NJ 07061
Gentlemen:
We have acted as counsel to PAPERCLIP IMAGING SOFTWARE, INC., a
Delaware corporation (the "Company"), in connection with the preparation
and filing of a Registration Statement on Form S-8 (the "Registration
Statement") under the Securities Act of 1933, as amended (the
"Securities Act") with respect to the 58,126 shares of the Company's
common stock, $.01 par value (the "Common Stock"), underlying the
Company's 1993 Stock Option Plan, and the 1,000,000 shares of Common
Stock underlying the Company's 1995 Stock Option Plan (such 58,126
shares and 1,000,000 shares, which reflects a two-for-one stock split
approved on May 10, 1996, are hereinafter collectively, the "Shares").
We have examined the Registration Statement, originals or copies,
certified or otherwise identified to our satisfaction, of the Restated
Certificate of Incorporation, and the By-Laws of the Company and such
other documents, corporate records, certificates of public officials and
instruments as we have considered necessary or advisable for the purpose
of this opinion. We have assumed the authenticity of all documents
submitted to us as originals and the conformity to original documents of
all documents submitted to us as copies. We have not independently
verified such information and assumptions.
Subject to the foregoing and based on such examination and review,
we are of the opinion that:
1. The Company is a corporation organized and existing in good
standing under the laws of the State of Delaware.
2. The Shares, when issued and delivered in accordance with the
Option Plans described above, and when the consideration therefore has
been fully paid as provided therein, will be duly authorized, validly
issued, fully paid and non-assessable Shares of Common Stock.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement.
Very truly yours,
/s/ Moroze Sherman Gordon & Gordon, P.C.
MOROZE SHERMAN GORDON & GORDON, P.C.
PAPERCLIP IMAGING SOFTWARE, INC.
1995 STOCK OPTION PLAN, AS AMENDED
PAPERCLIP IMAGING SOFTWARE, INC. hereby adopts a stock option plan
upon and subject to the terms and provisions set forth below for the
benefit of certain of its key employees; directors; former directors;
consultants; and other persons who have conferred substantial benefit
upon the Company:
1. Definitions. The following terms shall have the meanings
set forth below whenever used in this instrument:
(a) The word "Board" shall mean the Board of Directors of the
Company.
(b) The word "Code" shall mean the United States Internal
Revenue Code (Title 26 of the United States Code).
(c) The word "Committee" shall mean the Compensation Committee
appointed by the Board or, until such committee shall have
been appointed, the Board itself.
(d) The words "Common Stock" shall mean the common shares, $.01
par value, of the Company.
(e) The word "Company" shall mean PaperClip Imaging Software,
Inc., a Delaware Corporation, and any successor thereto
which shall maintain this Plan.
(f) The words "Incentive Stock Option" shall mean any option
which qualifies as an incentive stock option under terms of
Section 422A of the Code.
(g) The words "Key Employee" shall mean any person whose
performance as an employee of the Company or a subsidiary
is, in the judgment of the Committee, important to the
successful operation of the Company or a Subsidiary.
(h) The word "Optionee" shall mean any Key Employee, director,
former director, or consultant or other person (who has
conferred substantial benefit upon the Company), to whom a
stock option has been granted pursuant to this Plan.
<PAGE>
(i) The word "Plan" shall mean the PaperClip Imaging Software,
Inc. 1995 Stock Option Plan, as it is originally adopted in
the form of this document, and as it may be amended
hereafter.
(j) The word "Subsidiary" shall mean any corporation at least
50% of the common stock of which is owned directly or
indirectly by the Company.
(k) The words "Substantial Shareholder" shall mean any Optionee
who owns more than 10% of the total combined voting power of
all classes of stock of either the Company or any
Subsidiary. Ownership shall be determined in accordance
with Section 425(d) of the Code and lawful applicable
regulations.
2. Purpose of the Plan. The purpose of the Plan is to provide
Key Employees, directors, former directors, consultants, and other
persons who have conferred substantial benefit upon the Company, with
greater incentive to serve and promote the interests of the Company and
its shareholders and/or to reward such persons for extraordinary
services rendered to the Company or on its behalf or substantial benefit
conferred upon it. Accordingly, the Company will, from time to time
during the effective period of the Plan, grant to such Key Employees,
directors, former directors, consultants, and other persons who have
conferred substantial benefit upon the Company, as may be selected to
participate in the Plan, options to purchase Common Stock on the terms
and subject to the conditions set forth in the Plan.
3. Effective Date of the Plan. The Plan shall become effective
as of May 1, 1995, subject to approval by holders of a majority of the
outstanding shares of voting capital stock of the Company. In the event
the Plan is not so approved by December 31, l995, the Plan and any
options granted hereunder shall be null and void. If, however, the Plan
is so approved, then (subject to the provisions of Section 8), no
further shareholder approval shall be required with respect to the
granting of any options pursuant to the Plan.
4. Administration of the Plan. The Plan shall be administered
by the Committee. The Committee shall consist of no fewer than two (2)
members of the Board, who shall be designated by the Board. A majority
of the Committee shall constitute a quorum, and the acts of a majority
of the members present at any meeting at which a quorum is present, or
acts approved in writing by all of the members, shall be acts of the
Committee. Subject to the terms and conditions of the Plan, and in
addition to the other authorizations granted to the Committee under the
Plan, the Committee shall have full and final authority in its absolute
discretion:
<PAGE>
(a) to select the Key Employees, directors, former directors,
consultants, and other persons who have conferred
substantial benefit upon the Company, to whom options will
be granted;
(b) to determine the number of shares of Common Stock subject to
any option;
(c) to determine the time when options will be granted;
(d) to determine the option price of Common Stock subject to an
option;
(e) to determine the time when each option may be exercised;
(f) to determine at the time of grant of an option whether and
to what extent such option is an Incentive Stock Option;
(g) to prescribe the form of the option agreements governing the
options which are granted under the Plan and to set the
provisions of such option agreements as the Committee may
deem necessary or desirable, provided such provisions are
not contrary to the terms and conditions of either the Plan
or, where the option is an Incentive Stock Option, Section
422A of the Code;
(h) to adopt, amend, and rescind such rules and regulations as,
in the Committee's opinion, may be advisable in the
administration of the Plan; and
(i) to construe and interpret the Plan, the rules and
regulations and the instruments evidencing options granted
under the Plan and to make all other determinations deemed
necessary or advisable for the administration of the Plan.
Any decision made or action taken by the Committee in connection with
the administration, interpretation, and implementation of the Plan and
of its rules and regulations, shall, to the extent permitted by law, be
conclusive and binding upon all Optionees under the Plan and upon any
person claiming under or through such an Optionee. Neither the
Committee nor any of its members shall be liable for any act taken in
good faith by the Committee pursuant to the Plan. No member of the
Committee shall be liable for the act of any other member.
5. Persons Eligible for Options. Subject to the restrictions
herein contained, options may be granted from time to time in the
discretion of the Committee only to such Key Employees, directors,
former directors, consultants and other persons who have conferred
substantial benefit upon the Company, as designated by the Committee,
whose initiative and efforts, in the Committee's judgment, have
contributed or may be expected to contribute to the continued growth and
future success of the Company and/or its Subsidiaries. No option shall
be granted to any Key Employee during any period of time when he is on
leave of absence. The Committee may grant more than one option to the
same Optionee.
<PAGE>
6. Shares Subject to the Plan. (a) Subject to the provisions
of the provisions of paragraph (b) of this Section 6, the
aggregate number of shares of Common Stock for which options may be
granted under the Plan shall be 1,000,000 shares of Common Stock.
Either treasury or authorized and unissued shares of Common Stock, or
both, in such amounts, within the maximum limit of the Plan, as the
Committee shall from time to time determine, may be so issued. All
shares of Common Stock which are the subject of any lapsed, expired or
terminated options may be made available for reoffering under the Plan
to any Optionee. If an option granted under this Plan is exercised, any
Common shares which are the subject thereof shall not thereafter be
available for reoffering under the Plan.
(b) In the event that subsequent to the date of adoption of the
Plan by the Board, the outstanding shares of Common Stock are, as a
result of a stock split, stock dividend, combination or exchange of
shares, exchange for other securities, reclassification, reorganization,
redesignation, merger, consolidation, recapitalization or other such
change, including without limitation any transaction described in
Section 425(a) of the Code, increased or decreased or change into or
exchanged for a different number or kind of shares of stock or other
securities of the Company, then (i) there shall automatically be
substituted for each share of Common Stock subject to an unexercised
option granted under the Plan and each share of Common Stock available
for additional grants of options under the Plan the number and kind of
shares of stock or other securities into which each outstanding share of
Common Stock shall be exchanged, (ii) the option price per share of
Common Stock or unit of securities shall be increased or decreased
proportionately so that the aggregate purchase price for the securities
subject to the option shall remain the same as immediately prior to such
event, and (iii) the Committee shall make such other adjustments to the
securities subject to options, the provisions of the Plan, and option
agreements as may be appropriate, equitable and in compliance with the
provisions of Section 425(a) of the Code to the extent applicable and
any such adjustment shall be final, binding and conclusive as to each
Optionee. Any such adjustment shall provide for the elimination of
fractional shares.
7. Option Provisions
(a) Option Price. The option price per share of Common Stock
which is the subject of an Incentive Stock Option shall be determined by
the Committee at the time of grant but shall not be less than one
hundred percent (100%) of the fair market value of a share of Common
Stock on the date the option is granted; provided, however, that if a
Key Employee to whom an Incentive Stock Option is granted is, at the
time of the grant, a Substantial Shareholder, the option price per share
of Common Stock shall be determined by the Committee but shall not be
less than one hundred ten percent (110%) of the fair market value of a
share of Common Stock on the date the option is granted. The option
price per share of Common Stock under each option granted pursuant to
the Plan which is not an Incentive Stock Option shall be determined by
the Committee at the time of grant but shall not be less than one
hundred percent (100%) of the fair market value of a share of Common
Stock on the date the option is granted, unless the Board shall have
approved a lower percentage with respect to such option. Such fair
market value shall be determined in accordance with procedures to be
established by the Committee. The day on which the Committee approves
the granting of an option shall be deemed for all purposes hereunder the
date on which the option is granted.
<PAGE>
(b) Period of Option. The Committee shall determine when each
option is to expire, but no option shall be exercisable after ten (10)
years have elapsed from the date upon which the option is granted;
provided, however, that no Incentive Stock Option granted to a person
who is a Substantial Shareholder at the time of the grant of such option
shall be exercisable after five (5) years have elapsed from the date
upon which the option is granted.
(c) Limitation on Exercise and Transfer of Option. Except as
otherwise provided in paragraph (e) of this Section 7, only the Optionee
(personally) may exercise an option; provided, however, that a guardian
or other legal representative who has been duly appointed for such
Optionee may exercise an option on behalf of the Optionee. No option
granted hereunder shall be transferable otherwise than (i) by the Last
Will and Testament of the Optionee or, if the Optionee dies intestate,
by the applicable laws of descent and distribution, or (ii) to the
extent approved by the Committee, pursuant to a qualified domestic
relations order as defined by the Code, or the rules thereunder. No
option granted hereunder may be pledged or hypothecated, nor shall any
such option be subject to execution, attachment or similar process.
(d) Conditions Governing Exercise of Option. The Committee may,
in its absolute discretion, either require that, prior to the exercise
of any option granted hereunder, the Optionee shall have been an
employee for a specified period of time after the date such option was
granted, or make any option granted hereunder immediately exercisable.
Each option shall be subject to such additional restrictions or
conditions with respect to the time and method of exercise as shall be
prescribed by the Committee. Upon satisfaction of any such conditions,
the option may be exercised in whole or in part at any time during the
option period. Options shall be exercised by the Optionee giving
written notice to the Company of the Optionee's exercise of the option
accompanied by full payment of the purchase price either in cash or,
with the consent of the Committee, in whole or in part in shares of
Common Stock having a fair market value on the date the option is
exercised equal to that portion of the purchase price for which payment
in cash is not made. A dissolution or liquidation of the Company or,
unless the surviving corporation assumes said options, a merger or
consolidation in which the Company is not the surviving corporation,
shall cause each outstanding option to terminate, provided that during
the option period each Optionee shall have the right during the period
prescribed in the option agreement prior to such dissolution or
liquidation, or merger or consolidation in which the Company is not the
surviving corporation, to exercise his option in whole or in part.
(e) Termination of Employment, Etc. If an Optionee who is a Key
Employee ceases to be an employee of the Company and all Subsidiaries,
his option shall, unless otherwise provided in the option agreement
between the Optionee and the Company, terminate on the date which is
three (3) months after the date he ceases to be so employed and neither
he nor any other person shall have any rights after the date he ceases
to be so employed to exercise all or any part of the option. An
Optionee's employment shall not be deemed to have terminated while he is
on a military, sick or other bona fide approved leave of absence from
the Company or a Subsidiary as such a leave of absence is described in
Section 1.421-7(h) of the Federal Income Tax Regulations or any lawful
successor regulations thereto. If the stock option is an Incentive
Stock Option, no option agreement shall:
<PAGE>
(i) permit any Optionee to exercise any Incentive Stock Option
more than three (3) months after the date the Optionee
ceased to be employed by the Company or any Subsidiary if
the reason for the Optionee's cessation of employment was
other than his death or his disability (as such term is
defined by Section 105(d)(4) of the Code); or
(ii) permit any Optionee to exercise any Incentive Stock Option
more than one (l) year after the date the Optionee ceased to
be employed by the Company or any Subsidiary if the reason
for the Optionee's cessation of employment was the
Optionee's disability (as such term is defined by Section
105(d)(4) of the Code); or
(iii) permit any person to exercise any Incentive Stock
Option more than one (l) year after the date the Optionee
ceased to be employed by the Company or any Subsidiary if
either (A) the reason for the Optionee's cessation of
employment was his death or (B) the Optionee died within
three (3) months after ceasing to be employed by the Company
or any Subsidiary.
If any option is by terms of the option agreement exercisable following
the Optionee's death, then such option shall be exercisable by the
Optionee's estate, or the person designated in the Optionee's Last Will
and Testament, or the person to whom the option was transferred by the
applicable laws of descent and distribution.
(f) Limitations on Grant of Incentive Stock Options. During the
calendar year in which any Incentive Stock Option first becomes
exercisable, the aggregate fair market value of the shares of Common
Stock which are subject to such Incentive Stock Option (determined as of
the date the Incentive Stock Option was granted) shall not exceed the
sum of One Hundred Thousand ($100,000). Options which are not
designated as Incentive Stock Options shall not be subject to the
limitations described in the preceding sentence and shall not be counted
when applying such limitation.
(g) Prohibition of Alternative Options. It is intended that
Optionees who are Key Employees may be granted, simultaneously or from
time to time, Incentive Stock Options or other stock options, but no Key
Employees shall be granted alternative rights in Incentive Stock Options
and other stock options so as to prevent options granted as Incentive
Stock Options from qualifying as such within the meaning of Section 422A
of the Code.
8. Amendments to the Plan. The Committee is authorized to
interpret the Plan and from time to time adopt any rules and regulations
for carrying out the Plan that it may deem advisable. Subject to the
approval of the Board, the Committee may at any time amend, modify,
suspend or terminate the Plan. In no event, however, without the
approval of the Company's shareholders, shall any action of the
Committee or the Board result in:
(a) amending, modifying or altering the eligibility requirements
provided in Section 5 hereof; or
(b) increasing or decreasing, except as provided in Section 6
hereof, the maximum number of shares for which options may
be granted; or
<PAGE>
(c) decreasing the minimum option price per share at which
options may be granted under the Plan, as provided in
Section 7(a) hereof; or
(d) extending either the maximum period during which an option
is exercisable as provided in Section 7(b) hereof or the
date on which the Plan shall be terminated as provided in
Section 12 hereof; or
(e) changing the requirements relating to the Committee; or
(f) making any other change which would cause any option granted
under the Plan as an Incentive Stock Option not to qualify
as an Incentive Stock Option; or
(g) amending, modifying or altering the plan to the extent that
such action would require approval of the Company's
shareholders under Section 16 of the Securities Exchange Act
of 1934, as amended, or rules and regulations promulgated
thereunder ("Section 16");
except as necessary to conform the Plan and the option agreements to
changes in the Code or other governing law, including Section 16.
9. Investment Representation, Approvals and Listing. The
Committee may condition its grant of any option hereunder upon receipt
of an investment representation from the Optionee which shall be
substantially similar to the following:
"Optionee agrees that any shares of Common Stock of
PaperClip Imaging Software, Inc. (the "Company") which he
may acquire by virtue of the exercise of this option shall
be acquired for investment purposes only and not with a view
to distribution or resale; provided, however, that this
restriction shall become inoperative in the event the
underlying shares of Common Stock of the Company which are
subject to this option shall be registered under the
Securities Act of 1933, as amended, or in the event there is
presented to the Company an opinion of counsel satisfactory
to counsel for the Company to the effect that the offer or
sale of the shares of Common Stock of the Company which are
subject to this option may lawfully be made without
registration under the Securities Act of l933, as amended."
The Company shall not be required to issue any certificates for shares
of Common Stock upon the exercise of an option granted under the Plan
prior to (i) obtaining any approval from any governmental agency which
the Committee shall, in its sole discretion, determine to be necessary
or advisable, (ii) the admission of such shares to listing on any
national securities exchange on which the shares of Common Stock may be
listed, (iii) completion of any registration or other qualification of
the shares of Common Stock under any state or federal law or ruling or
regulations of any governmental body which the Committee shall, in its
sole discretion, determine to be necessary or advisable, or the
determination by the Committee, in its sole discretion, that any
registration or other qualification of the shares of Common Stock is not
necessary or advisable, and (iv) obtaining an investment representation
from the Optionee in the form set forth above or in such other form as
the Committee, in its sole discretion, shall determine to be adequate.
<PAGE>
10. General Purposes.
(a) Option Agreements Need Not be Identical. The form and
substance of option agreements, whether granted at the same or different
times, need not be identical.
(b) No Right to be Employed, Etc. Nothing in the Plan or in any
option agreement shall confer upon any Optionee any right to continue in
the employ of the Company or a Subsidiary, or to serve as a member of
the Board, or to be entitled to receive any remuneration or benefits not
set forth in the Plan or such option agreement, or to interfere with or
limit either the right of the Company or a Subsidiary to terminate the
employment of such Optionee at any time or the right of the shareholders
of the Company to remove him as a member of the Board with or without
cause.
(c) Optionee Does Not Have Rights of Shareholder. Nothing
contained in the Plan or in any option agreement shall be construed as
entitling any Optionee to any rights of a shareholder as a result of the
grant of an option until such time as shares of Common Stock are
actually issued to such Optionee pursuant to the exercise of an option.
(d) Successors in Interest. The Plan shall be binding upon the
successors and assigns of the Company.
(e) No Liability Upon Distribution of Shares. The liability of
the Company under the Plan and any distribution of shares of Common
Stock made hereunder is limited to the obligations set forth herein with
respect to such distribution and no term or provision of the Plan shall
be construed to impose any liability on the Company or the Committee in
favor of any person with respect to any loss, cost or expense which the
person may incur in connection with or arising out of any transaction in
connection with the Plan.
(f) Use of Proceeds. The cash proceeds received by the Company
from the issuance of shares of Common Stock pursuant to the Plan will be
used for general corporate purposes.
(g) Expenses. The expenses of administering the Plan shall be
borne by the Company.
(h) Captions. The captions and section numbers appearing in the
Plan are inserted only as a matter of convenience. They do not define,
limit, construe or describe the scope or intent of the provisions of the
Plan.
(i) Number. The use of the singular or plural herein shall not
be restrictive as to number and shall be interpreted in all cases as the
context may required.
(j) Gender. The use of the feminine, masculine or neuter
pronoun shall not be restrictive as to gender and shall be interpreted
in all cases as the context may require.
<PAGE>
11. Termination of the Plan. The Plan shall terminate on March
1, 2005, and thereafter no options shall be granted under the Plan. All
options outstanding at the time of termination of the Plan shall
continue in full force and effect according to the terms of the option
agreements governing such options and the terms and conditions of the
Plan.
IN WITNESS WHEREOF, the Company, by its appropriate officers duly
authorized, has executed this document as of the 1st day of May, 1995.
PAPERCLIP IMAGING SOFTWARE, INC.
By_/s/ William Weiss_____________________
Chief Executive Officer
By_/s/ Sol Rosenberg_____________________________
President
CONSULTING AGREEMENT
This Agreement made as of January 1, 1996, by and between
PaperClip Imaging Software, Inc., a Delaware corporation,
having its business address at Three University Plaza,
Hackensack, New Jersey 07601 (the "Company"), and Stephen
Kornfeld, having a business address at 719 North Ocean
Boulevard, Delray Beach, Florida 33483 ("Consultant").
______________________
A. Consultant has performed various consulting services
to the Company and is willing to continue to perform such
services, and the Company desires to continue to avail itself
of Consultant's services.
B. The Company wishes to compensate Consultant for
services heretofore rendered to the Company and to establish a
compensation arrangement for services to be rendered by
Consultant in the future.
THEREFORE, in consideration of the mutual promises
contained herein and on the terms and conditions hereinafter
set forth, the Company and Consultant agree as follows:
1. Provision of Services.
(a) Consultant agrees, to the extent reasonably
required in the conduct of the business of the Company, to
place at the disposal of the Company his judgment and
experience and to provide consulting services to the Company
including the following:
(i) assist in the evaluation of the Company's
executive, managerial, financial research and
development and marketing requirements;
(ii) assist in the preparation of budgets and business
plans and in evaluating the Company's financial
requirements and opportunities;
(iii) assist in recruiting, screening, evaluating and
recommending key personnel, directors, accountants,
commercial and investment bankers, underwriters,
and other professional consultants;
(iv) advise with regard to sales planning and sales
activities;
(v) advise with regard to stockholder relations and
public relations matters; and
(vi) serve as a member of the Company's Advisory
Committee.
(b) All services shall be rendered by Consultant at the
request of the Company at such times and at such locations as
shall be mutually agreed upon from time to time.
<PAGE>
2. Term. Consultant's retention hereunder shall be for a
term of three (3) years commencing as of January 1, 1996.
3. Compensation.
(a) As full consideration for services previously
rendered by Consultant and to be rendered by Consultant
hereunder, the Company agrees to issue to Consultant, in
arrears, and Consultant agrees to accept, options, exercisable
for a period of five (5) years from the date of issuance, to
purchase shares of its Common Stock at an exercise price of
$2.50 per share, as follows:
(i) As of January 1, 1996, for services rendered
through December 31, 1995, options to purchase
10,000 shares;
(ii) As of January 1, 1997, for services rendered from
January 1, 1996 through December 31, 1996, options
to purchase 10,000 shares;
(iii) As of January 1, 1998, for services rendered from
January 1, 1997 through December 31, 1997, options
to purchase 10,000 shares; and
(iv) As of January 1, 1999, for services rendered from
January 1, 1998 through December 31, 1998, options
to purchase 10,000 shares.
(b) If Consultant dies or becomes disabled in any
calendar year during the terms of this Agreement, Consultant
(or his estate or legal representative) shall receive the
options issuable to Consultant hereunder for that calendar
year and, if one or more years remain in the term of this
Agreement, for the next such year. Consultant shall be deemed
to be disabled if for any period of 90 consecutive days, he is
unable to render services to the Company. Options shall be
issued pursuant to this Section 3(b) within 30 days of the end
of such 90 day period or notification by Consultant's estate
of the appointment of an executor or administrator.
(c) In the event Consultant notifies the Company at any
time during the term of this Agreement that Consultant is
unable or unwilling to continue to provide services to the
Company hereunder, then within 30 days of receipt of such
notice by the Company, the Company will issue to Consultant
options for a number of shares that is pro rata to the portion
of the term of the Agreement for which Consultant has not
received compensation; and thereafter, the Company shall have
no further obligation to Consultant.
<PAGE>
(d) Upon the "commencement of a tender offer" for the
Company's Common Stock, as defined in Rule 14d-2 promulgated
under the Securities and Exchange Act of 1934, or any
subsequent comparable Federal rule or regulation governing
tender offers, or thirty (30) days prior to: (i) a
dissolution or liquidation of the Company, (ii) the effective
date a merger or consolidation in which the Company is not the
surviving corporation, (iii) the effective date a merger or
consolidation in which the Common Shares of the Company are
converted into cash or other consideration (other than stock
or securities of the Company), or (iv) the effective date of
any sale of all or substantially all of the assets of the
Company are sold, all of the options issuable to Consultant
pursuant to this Agreement for the years remaining in the term
of this Agreement but not yet issued, shall be issued to
Consultant. The Consultant shall be entitled to exercise all
options issued pursuant to the immediately preceding sentence
or prior thereto regardless of whether the tender offer is
successful or such merger, consolidation or sale is completed.
Upon the dissolution or liquidation of the Company, any
options issued hereunder shall terminate. Upon (i) the
occurrence of a merger or consolidation in which the Company
is not the surviving corporation, or (ii) a merger or
consolidation in which the Common Stock of the Company is
converted into cash or other consideration (other than stock
or securities of the Company), the options issued pursuant to
this Agreement shall not terminate but shall be subject to
such adjustment or amendment as the Board of Directors of the
Company may deem appropriate and equitable, and any such
adjustment shall be final, binding and conclusive.
(e) The Company shall use its best efforts, as soon as
practicable, in its sole discretion, to cause the shares
underlying the options to be registered under the Securities
Act of 1933 on Form S-8 or other appropriate form and shall
use its best efforts to maintain the effectiveness thereof
until such shares have been sold or until an exemption from
the registration requirements of such Act shall be available.
4. Expenses. The Company agrees to reimburse Consultant,
promptly upon receipt of documentation, for reasonable
expenses authorized by the Company and incurred by the
Consultant in connection with services rendered hereunder.
5. Liability of Consultant.
(a) In furnishing the Company with management advice
and other services as herein provided, Consultant shall not be
liable to the Company or its creditors for errors of judgment
or for anything except willful malfeasance, bad faith or gross
negligence in the performance of his duties or reckless
disregard of his obligations and duties under the terms of
this Agreement.
(b) It is further understood and agreed that Consultant
may rely upon information furnished to him reasonably believed
to be accurate and reliable and that, except as herein
provided, Consultant shall not be accountable for any loss
suffered by the Company by reason of the Company's action or
non-action on the basis of any advice, recommendation or
approval of Consultant.
<PAGE>
6. Status of Consultant. Consultant shall be deemed to be an
independent contractor and, except as expressly provided or
authorized in this Agreement, shall have no authority to act
or represent the Company.
7. Other Activities of Consultant. The Company recognizes
that Consultant now renders and may continue to render
management and other services to other companies. Consultant
shall be free to render such advice and other services and the
Company hereby consents thereto. Consultant shall not be
required to devote his full time and attention to the
performance of his duties under this Agreement, but shall
devote only so much of his time and attention as he and the
Chief Executive Officer of the Company shall agree from time
to time is reasonable or necessary for such purposes.
8. Confidentiality. Consultant shall execute a
confidentiality agreement in the form executed by employees
and consultants of the Company generally or in such other form
as shall be reasonably required by the Company, and the
provisions of such agreement shall survive the termination or
expiration of this Agreement.
9. Miscellaneous.
(a) This Agreement may not be assigned by either party,
except that the Company may assign it in connection with the
transfer of all or substantially of all its assets. This
Agreement shall be binding on the successors and
representatives of the parties.
(b) Any notice required to be given pursuant to this
Agreement shall be in writing and shall be effective when
delivered by hand, overnight courier service, telefax or mail.
(c) This Agreement sets forth the entire agreement and
understanding between the parties and supersedes all prior
discussions, agreements and understandings between them
regarding the subject matter hereof. This Agreement shall be
construed and interpreted according to the laws of the State
of New Jersey, without giving effect to its conflicts of laws
provisions.
IN WITNESS WHEREOF, the parties have executed, or caused
to be executed by their officers or representatives duly
authorized, this Consulting Agreement as of the day and year
first above written.
PAPERCLIP IMAGING SOFTWARE, INC.
By: /s/ William Weiss
William Weiss, Chief Executive Officer
/s/ Stephen Kornfeld
Stephen Kornfeld
<PAGE>
CLARIFICATION
It is understood and agreed that the stock options referred to in Paragraph
3 of the Consulting Agreement between the undersigned as of January 1, 1996,
will all be issued pursuant to the Company's 1995 Stock Option Plan.
Dated: as of 1/1/96
PAPERCLIP IMAGING SOFTWARE, INC.
By\s\ William Weiss
William Weiss, CEO
\s\ Stephen Kornfeld
Stephen Kornfeld
Exhibit 23.2
CONSENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report
dated March 16, 1996 included in the PaperClip Imaging Software, Inc.
Form 10-KSB and Form 10-KSB/A for the year ended December 31, 1995 and
to all references to our Firm included in this registration statement.
/S/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Roseland, New Jersey
May 15, 1996
