SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
SUBSCRIPTION AGREEMENT
Software Publishing Corporation Holdings, Inc.
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Dear Sirs/Madams:
Based upon the representations and warranties of Software Publishing
Corporation Holdings, Inc., a Delaware corporation (the "Company"), to the
extent and as set forth in Section 1 below, and subject to the other terms and
conditions hereinafter provided, the undersigned hereby irrevocably subscribes
(the "Subscription") to purchase shares (each, a "Share") of the common stock,
par value $.001 per share (the "Common Stock"), of the Company at a purchase
price per Share equal to 80% of the average closing price per share of Common
Stock for the 30 trading days immediately preceeding the third trading day prior
to the date (the "Subscription Acceptance Date") on which the Company accepts
the Subscription. The Subscription is in the aggregate amount of
$_______________ (the "Subscription Price"), and the undersigned hereby tenders
to the Company in full the Subscription Price in immediately available funds.
The undersigned has been advised, and the Subscription is being made based upon
such advice, that (a) the Shares are being offered (the "Offering") by the
Company pursuant to the Company's Confidential Private Placement Memorandum,
dated September 9, 1998 (the "Memorandum"), on a "best efforts, minimum
aggregate accepted subscriptions $300,000, maximum 782,000 shares, plus such
number of shares equal to 20% of the total number of shares of Common Stock
issued by the Company subsequent to the date of the Memorandum, if any,
otherwise than pursuant to the Offering" basis, (b) the Shares are being offered
for a period (the "Offering Period") commencing on the date of the Memorandum
and terminating 90 days thereafter, (c) the Offering Period may be extended, at
the discretion of the Company and the Placement Agent, for an additional 60 days
or for such additional period of time (in either case, the "Extension Period")
as the Company and the Placement Agent may agree, (d) all proceeds of the
Offering, including the funds representing the Subscription Price, will be
deposited in a non-interest bearing escrow account (the "Escrow Account")
maintained at European American Bank in the name of "SPCH, EAB as Escrow Agent,"
(e) unless a minimum of $300,000 of Shares are subscribed to, paid for and
accepted during the Offering Period and any Extension Period thereafter, the
Offering will terminate and all subscription funds, including the funds
representing the Subscription Price, will be promptly refunded to the
subscribers, including the undersigned, in full, without interest or deduction,
(f) the minimum subscription for Shares is $25,000, although the Company and the
Placement Agent reserve the right to accept subscriptions for less than $25,000,
(g) the Offering will terminate upon the earlier of (i) 90 days from the date of
the Memorandum, unless extended by the Company and the Placement Agent, in their
sole discretion, for an additional 60 days or for such additional period of time
as the Company and Placement Agent may agree, (ii)
the acceptance by the Company of subscriptions for 782,000 shares, plus
such number of shares equal to 20% of the total number of shares of Common Stock
issued by the Company subsequent to the date of the Memorandum, if any,
otherwise than pursuant to the Offering or (iii) such earlier date as may be
determined by the Company and the Placement Agent, in their sole discretion, and
(h) (i) the event that (A) the Offering is withdrawn pursuant to Section 3
hereof, (B) the Company does not receive and accept subscriptions, including the
Subscription being made hereby, to purchase not less than $300,000 of Shares,
during the Offering Period and Extension Period, if any, or (C) the Subscription
being made hereby is rejected for any reason whatsoever, then the Subscription
and this Subscription Agreement shall automatically become null and void, except
that the Subscription Price shall be promptly returned to the undersigned,
without interest or deduction, and (ii) in all other events, on the Subscription
Acceptance Date, the funds representing the Subscription Price, to the extent
the Subscription is accepted by the Company, and the funds representing
subscriptions made by others whose subscriptions to purchase Shares pursuant to
the Offering are accepted by the Company on such Subscription Acceptance Date,
shall be released from the Escrow Account to the Company.
The Subscription of the undersigned being made hereby is subject to
and is made pursuant to the following terms and conditions:
1. Representations, Warranties and Covenants of the Company. By its
acceptance of this Subscription Agreement, the Company shall be deemed to
represent and warrant to and covenant with the undersigned as follows:
(a) Corporate Status. The Company (i) is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
(ii) has all necessary corporate power and authority to own, operate or lease
the properties and assets now owned, operated or leased by the Company and to
carry on the business of the Company, as it is now being conducted, and (iii) is
duly licensed or qualified and in good standing as a foreign corporation
authorized to do business in each jurisdiction wherein the character of the
properties owned or leased by the Company and/or the nature of the activities
conducted by the Company makes such licensing or qualification necessary, except
where the failure to be so licensed or qualified and in good standing would not
prevent the Company from performing any of its material obligations under this
Subscription Agreement and would not have a material adverse effect on the
business, operations or financial condition of the Company (a "Material Adverse
Effect");
(b) Authority of Agreement. The Company has the power and authority to
accept, execute and deliver this Subscription Agreement and, upon acceptance by
the Company (in whole or part), to carry out its obligations hereunder; and the
execution, delivery and performance by the Company of this Subscription
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of the Company and
this Subscription Agreement, upon acceptance by the Company (in whole or part),
constitutes the valid and legally binding obligations of the Company enforceable
against the Company in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally now or hereafter
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in effect and subject to the application of equitable principles and the
availability of equitable remedies; the Shares to be issued hereunder, upon
issuance thereof in accordance with the terms hereof, will be validly
authorized, fully paid and non-assessable;
(c) Consents and Approvals; No Conflict.
(i) The acceptance, execution and delivery of this Subscription
Agreement by the Company does not, and the performance by the Company of
its obligations hereunder, upon acceptance by the Company (in whole or
part), will not, require any consent, approval, authorization or other
action by, or filing with or notification to, any governmental or
regulatory authority, other than in connection with state securities or
"blue sky" laws, except where failure to obtain such consent, approval,
authorization or action, or to make such filing or notification, would not
prevent the Company from performing any of its material obligations under
this Subscription and would not have a Material Adverse Effect; and
(ii) The acceptance, execution, delivery and performance of this
Subscription Agreement by the Company and the other agreements and
documents to be executed, delivered and performed by the Company pursuant
hereto and the consummation of the transactions contemplated hereby and
thereby by the Company do not and will not conflict with, violate or result
in a breach or termination of any provision of, or constitute a default
under (or event which with the giving of notice or lapse of time, or both,
would become a default under) the Certificate of Incorporation or By-laws
of the Company or, except as would not prevent the Company from performing
any of its material obligations under this Subscription Agreement and would
not have a Material Adverse Effect, any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award applicable to the
Company or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of any lien or
encumbrance on any of the assets or properties of the Company pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument relating to such assets or properties
to which the Company is a party or by which any of such assets or
properties is bound;
(d) Absence of Litigation. No claim, action, proceeding or investigation is
pending which seeks to delay or prevent the consummation of the transactions
contemplated hereby or which would be reasonably likely to adversely affect the
Company's ability to consummate the transactions contemplated hereby or which
would have a Material Adverse Effect, except as disclosed in the SEC Reports (as
defined below);
(e) Extent of Offering. Subject in part to the truth and accuracy of the
undersigned's representations set forth in Section 2 of this Subscription
Agreement and the compliance by all agents of the Company with Rule 503(c) of
Regulation D ("Regulation D") promulgated under the Securities Act of 1933, as
amended (the "Securities Act"), the offer, sale and issuance of the Shares, as
contemplated by this Subscription Agreement, are exempt from the registration
requirements of the Securities Act and are exempt or the Company has complied
with registration requirements of
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each state where the Shares are offered or sold, and the Company will not
take any action hereafter that would cause the loss of such exemption or
registration;
(f) Accuracy of Reports and Information. The Company is in full compliance,
to the extent applicable, with all reporting obligations under Section 12(b), 12
(g) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"); the Company has registered its Common Stock pursuant to
Section 12 of the Exchange Act and the Common Stock is listed and trades on The
Nasdaq SmallCap Market; and the Company has filed all material required to be
filed pursuant to all reporting obligations, under either Section 13(a) or 15(d)
of the Exchange Act for a period of at least twelve months immediately preceding
the offer or sale of the Shares.
(g) SEC Filings/Full Disclosure. None of the Company's filings with the
Securities and Exchange Commission (the "Commission") since January 1, 1998
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading; the
Company has, since January 1, 1998, timely filed all requisite forms, reports
and exhibits thereto with the Commission; and the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1997, Quarterly Reports on Forms
10-QSB for the quarters ended March 31, and June 30, 1998, and the Company's
Current Reports on Form 8-K (Date of Reports: February 11, 1998 and May 26,
1998) filed by the Company with the Commission (collectively, the "SEC Reports")
did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading;
There is no fact known to the Company (other than general economic
conditions known to the public generally) that has not been disclosed in writing
to the undersigned which could reasonably be expected to materially and
adversely affect the ability of the Company to perform its obligations pursuant
to this Agreement;
(h) Absence of Undisclosed Liabilities. The Company has no material
liabilities or obligations, absolute or contingent (individually or in the
aggregate), except as set forth in the financial statements included in the SEC
Reports (collectively, the "Financial Statements") or as incurred in the
ordinary course of business after the date of the Financial Statements;
(i) Governmental Consent, etc. No consent, approval or authorization of or
designation, declaration or filing with any governmental authority on the part
of the Company is required in connection with the valid execution and delivery
of this Agreement, or the offer, sale or issuance of the Shares, or the
consummation of any other transaction contemplated hereby, except the filing
with the Commission of a registration statement on Form S-3 for the purpose of
registering the Shares and any state securities laws filings or registrations;
(j) Intellectual Property Rights. Except as disclosed in the SEC Reports,
the Company has sufficient trademarks, trade names, patent rights, copyrights
and licenses to conduct its business as contemplated therein; and to the
Company's knowledge, neither the Company nor its products is
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infringing or will infringe any trademark, trade name, patent right,
copyright, license, trade secret or other similar right of others currently in
existence; and there is no claim being made against the Company regarding any
trademark, trade name, patent, copyright, license, trade secret or other
intellectual property right which could have a material adverse effect on the
condition (financial or otherwise), business, results of operations or prospects
of the Company;
(k) Material Contracts. Except as set forth in the SEC Reports or disclosed
to the undersigned, the agreements to which the Company is a party described
therein are valid agreements, in full force and effect, the Company is not in
material breach or material default (with or without notice or lapse of time, or
both) under any of such agreements, and, to the Company's knowledge, the other
contracting party or parties thereto are not in material breach or material
default (with or without notice or lapse of time, or both) under any of such
agreements;
(l) Title to Assets. Except as set forth in SEC Reports, the Company has
good and marketable title to all properties and material assets described
therein as owned by it, free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest other than such as are not material to
the business of the Company;
(m) Subsidiaries. The Company does not presently own or control, directly
or indirectly, any interest in any other corporation, partnership, association
or other business entity, except as stated in the SEC Reports;
(n) Required Governmental Permits. The Company is in possession of and
operating in compliance with all authorizations, licences, certificates,
consents, orders and permits from state, federal and other regulatory
authorities which are material to the conduct of its business, all of which are
valid and in full force and effect;
(o) Listing. The Company will use its reasonable best efforts to maintain
the listing of its Common Stock on The Nasdaq SmallCap Market or other
organized, comparable United States market or quotation system;
(p) No Issuances Since June 30, 1998. Since June 30, 1998 and through the
date of the Memorandum, the Company has not issued any shares of Common Stock,
other than (a) pursuant to the exercise of stock options under the Company's
existing stock option or long-term incentive plans, (b) 60,000 shares of Common
Stock pursuant to a Consulting Agreement with the Placement Agent or (c) as
disclosed in its SEC Reports; and as of the date of the Memorandum, the Company
has 3,964,476 shares of Common Stock issued and outstanding; and
(q) Use of Proceeds. The Company represents that the net proceeds from the
Offering will be used to fund the Company's working capital and general
corporate purposes.
2. Representations, Warranties and Covenants of the Undersigned. The
undersigned hereby represents, warrants and acknowledges to and covenants and
agrees with the Company as follows:
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(a) Status. If the undersigned is a corporation or other entity, the
undersigned is a corporation or other entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization with
full power and authority to execute, deliver and perform undersigned's
obligations under this Subscription Agreement; and, if the undersigned is an
individual or are individuals, the undersigned has legal capacity to execute,
deliver and perform his, her or their obligations under this Subscription
Agreement;
(b) Authority for Agreements. The undersigned has the power and authority
to execute and deliver this Subscription Agreement and to carry out the
undersigned's obligations hereunder; and the execution, delivery and performance
by the undersigned of this Subscription Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of the undersigned and this Subscription Agreement
constitutes the valid and legally binding obligation of the undersigned,
enforceable against the undersigned in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditors' rights generally now or hereafter in
effect and subject to the application of equitable principles and the
availability of equitable remedies;
(c) Consents and Approvals, No Conflicts.
(i) The execution and delivery of this Subscription Agreement by
the undersigned do not, and the performance by the undersigned of
undersigned's obligations hereunder will not, require any consent,
approval, authorization or other action by, or filing with or notification
to, any governmental or regulatory authority, except where failure to
obtain such consent, approval, authorization or action, or to make such
filing or notification, would not prevent the undersigned from performing
any of undersigned's material obligations under this Subscription
Agreement; and
(ii) The execution, delivery and performance of this Subscription
Agreement by the undersigned and the other agreements and agreements to be
executed, delivered and performed by the undersigned pursuant hereto and
the consummation of the transactions contemplated hereby and thereby by the
undersigned do not and will not conflict with, violate or result in a
breach or termination of any provision of, or constitute a default under
(or event which with the giving of notice or lapse of time, or both, would
become a default under) the Certificate of Incorporation or By-laws of the
undersigned (if the undersigned is a corporation), any other organizational
instrument (if the undersigned is a legal entity other than a corporation),
or, except as would not prevent the undersigned from performing any of
undersigned's material obligations under this Subscription Agreement and
would not have a Material Adverse Effect, any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award applicable to
the undersigned or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of any lien or
encumbrance on any of the assets or properties of the undersigned pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument relating to such assets or
properties to which the undersigned is a party or by which any of such
assets or properties is bound;
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(d) Investment Intent. The undersigned is acquiring the Shares for the
undersigned's own account, for investment only and not with a view to, or for
sale in connection with, a distribution thereof or any part thereof, within the
meaning of the Securities Act, and the rules and regulations promulgated
thereunder, or any applicable state securities or blue-sky laws;
(e) Investor Status. Either (i) the undersigned is an accredited investor
as such term is defined under Regulation D promulgated pursuant to the
Securities Act ("Regulation D") for the reason(s) as set forth in the Execution
Section of this Subscription Agreement or (ii) if not an accredited investor,
all the information which is set forth with respect to the undersigned in the
Qualified Purchaser Questionnaire executed by the undersigned and delivered to
the Company which is incorporated herein by this reference thereto, and, in
either event, all of the representations and warranties of the undersigned set
forth herein, are correct and complete as of the date of this Subscription
Agreement, shall be true and correct as of the Closing Date and shall survive
such closing; and, if there should by any material change in such information
prior to the sale to the undersigned of the Shares, the undersigned will
immediately furnish such revised or corrected information to the Company;
(f) Intent to Transfer. The undersigned is not a party or subject to or
bound by any contract, undertaking, agreement or arrangement with any person to
sell, transfer or pledge the Shares or any part thereof to any person, and has
no present intention to enter into such a contract, undertaking, agreement or
arrangement;
(g) Receipt of Disclosures. The undersigned acknowledges receipt of the
Memorandum, which includes, as Exhibits thereto, copies of the Company's (i)
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1997, (ii)
Quarterly Report on Form 10-QSB for the quarter ended ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇▇)
Quarterly Report on Form 10-QSB for the quarter ended June 30, 1998, (iv)
Current Report on Form 8-K (Date of Report: February 11, 1998), as amended, and
(v) Current Report on Form 8-K (Date of Report: May 26, 1998); and the
undersigned has read the Memorandum, including all Exhibits thereto, and
understands the contents thereof.
(h) Offering Exempt from Registration; Company's Reliance.
(i) The Company has advised the undersigned that the Shares have
not been registered under the Securities Act or under the laws of any state
on the basis that the issuance thereof is exempt from such registration;
(ii) The Company's reliance on the availability of such exemption
is, in part, based upon the accuracy and truthfulness of the undersigned's
representations contained herein; and
(iii) As a result of such lack of registration, none of the
Shares may be resold or otherwise transferred or disposed without
registration pursuant to or an exemption therefrom available under the
Securities Act and such state securities laws;
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(iv) In furtherance of the provisions of this Paragraph 2(h), all
of the certificate(s) representing the Shares shall bear a restrictive
legend substantially in the following form:
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THESE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, ASSIGNED,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SHARES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION
OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE SHARES TO THE EFFECT
THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND SUCH STATE
SECURITIES LAWS;"
(i) Sophistication of the Undersigned. The undersigned has evaluated the
merits and risks of purchasing Shares and has such knowledge and experience in
financial and business matters that the undersigned is capable of evaluating the
merits and risks of such purchase, is aware of and has considered the financial
risks and financial hazards of purchasing Shares, and is able to bear the
economic risk of purchasing Shares, including the possibility of a complete loss
with respect thereto;
(j) Access to Information. The undersigned has had access to such
information regarding the business and finances of the Company, and the Offering
of the Shares, the receipt and careful reading of which is hereby acknowledged
by the undersigned, and has been provided the opportunity to discuss with the
Company's management the business, affairs and financial condition of the
Company and such other matters with respect to the Company as would concern a
reasonable person considering the transactions contemplated by this Subscription
Agreement and/or concerned with the operation of the Company including, without
limitation, pursuant to a meeting and/or discussions with management of the
Company;
(k) No Guarantees. That it never has been represented, guaranteed or
warranted to the undersigned by the Company, or any of its officers, directors,
agents, representatives or employees, or any other person, expressly or by
implication, that:
(i) Any gain will be realized by the undersigned from the
undersigned's investment in the Shares;
(ii) That there will be any approximate or exact length of time
that the undersigned will be required to remain as a holder of Shares; or
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(iii) That the past performance or experience on the part of the
Company, its predecessors or of any other person, will in any way indicate
any future results of the Company;
(l) No Other Representations, Warranties, Covenants or Agreements of the
Company. Except as set forth in this Subscription Agreement, the Memorandum or
the documents referred to herein or therein, the Company has not made any
representation, warranty, covenant or agreement with respect to the matters
contained herein;
(m) High Degree of Investment Risk. That the purchase of Shares involves a
high degree of risk and may result in a loss of the entire amount invested; that
the Company has limited working capital and limited sources of financing
available; that there is no assurance that the Company's operations will be
profitable in the future; and that there is no assurance that a public market
for shares of Common Stock will continue to exist;
(n) State of Residence or Principal Place of Business. The address set
forth at the bottom of this Subscription Agreement is the undersigned's true and
correct residence (if an individual) or principal place of business (if a
corporation or other non-individual entity), and the undersigned has no present
intention of becoming a resident, or relocating its principal place of business
to, of any other country, state or jurisdiction;
(o) No Purchaser Representative. The undersigned has not authorized any
person or institution to act as the undersigned's "purchaser representative" (as
such term is defined in Rule 501 of Regulation D) in connection with the
undersigned's subscription being made pursuant to this Subscription Agreement,
except as set forth in any Qualified Purchaser Questionnaire delivered by the
undersigned to the Company in connection herewith;
(p) No General Solicitation. The undersigned has not received any general
solicitation or general advertising regarding the purchase of any of the Shares;
and
(q) No Finder. There is no finder in connection with this transaction; and
(r) No ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇. The undersigned will not engage in any transaction
with respect to securities of the Company at any time if at the time of such
transaction the undersigned is aware of any material non-public information
relating to the Company or its securities.
3. Acceptance or Rejection of Subscription; Company Withdrawal of Offer. It is
understood and agreed that this Subscription Agreement is made subject to the
following terms and conditions:
(a) The Company shall have the right to accept or reject the Subscription
of the undersigned and this Subscription Agreement, in whole or in part, for any
reason, including, but not limited to, ineligibility of the undersigned under
the applicable Federal, state or foreign securities laws, for any other reason,
or for no reason;
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(b) If the subscription of the undersigned is rejected, in whole or part,
any funds representing the Subscription Price previously delivered to the
Company will be returned to the undersigned without interest or penalty;
(c) If the subscription of the undersigned is accepted in part and rejected
in part, the undersigned will be so notified, at which time the excess
Subscription Price previously delivered to the Company shall promptly be
returned to the undersigned without interest or penalty;
(d) If the Company's offer of the Shares is withdrawn for any reason
whatsoever, the undersigned will promptly receive a full refund of the
Subscription Price, without interest or penalty, and will have no further
liability to the Company in connection with the Company's offer of the Shares,
and the Company will have no further liability to the undersigned.
4. Registration Rights.
(a) Defined Terms. As used in this Section 4, terms defined elsewhere
herein shall have their assigned meanings and each of the following terms shall
have the following meanings (such definitions to be applicable to both the
plural and singular of the terms defined):
(i) Registerable Securities. The term "Registerable Securities"
shall mean any of the Shares, including any shares of Common Stock or other
securities received in connection with any stock split, stock divided,
merger, reorganization, recapitalization, reclassification or other
distribution payable or issuable upon shares of Common Stock. For the
purposes of this Agreement, securities will cease to be Registerable
Securities when (A) a registration statement under the Securities Act
covering such Registerable Securities has been declared effective and such
Registerable Securities have been disposed of pursuant to such effective
registration statement, (B) such Registerable Securities are distributed to
the public pursuant to the Securities Act or pursuant to an exemption from
the registration requirements of the Securities Act, including, but not
limited to, Rules 144 and 144A promulgated under the Securities Act, or (C)
such Registerable Securities have been otherwise transferred and the
Company, in accordance with applicable law and regulations, has delivered
new certificates or other evidences of ownership for such securities which
are not subject to any stop transfer order or other restriction on
transfer.
(ii) Rightsholders. The term "Rightsholders" shall include the
undersigned, all successors and assigns of the undersigned, and all
transferees of Registerable Securities where such transfer affirmatively
includes the transfer and assignment of the rights of the transferor
Rightsholder under this Agreement with respect to the transferred
Registerable Securities; provided, however, the term "Rightsholders" shall
not include any person or entity who has sold, transferred or assigned all
of such person's or entity's Registerable Securities.
(iii) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Section 4 shall refer to this Section 4 as
a whole and not to any particular
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provision of this Section 4, and subsection, paragraph, clause, schedule
and exhibit references are to this Section 4 unless otherwise specified.
(b) Demand Registration.
(i) Right to Demand. Subject to Paragraph 4(b)(ii) hereof, at any
time on or after the Subscription Acceptance Date and on or prior to three
years from the Subscription Acceptance Date, the Initiating Holders (as
defined in paragraph 4(b)(vi) below) may make a written request (each, a
"Demand Request") to the Company for registration under the Securities Act
of all or part of their Registerable Securities (each, a "Demand
Registration"). Within ten days after receipt of a Demand Request, the
Company shall deliver a written notice (the "Notice") of such Demand
Request to all other Rightsholders. The Company will include in such Demand
Registration all Registerable Securities with respect to which the Company
has been given written requests (each, "Tag-Along Request") for inclusion
therein within twenty days after the giving of the Notice. Each and every
Demand Request shall be required to specify the aggregate amount of the
Registerable Securities to be included in such Demand Registration, the
amount of Registerable Securities to be registered for each of the
Initiating Holders and the intended method(s) of disposition thereof,
including whether or not such Demand Registration or portion thereof is to
relate to an underwritten offering, the name of the managing
underwriter(s), if any, and the terms of any such underwriting. Each and
every Tag-Along Request shall be required to specify the amount of
Registerable Securities to be registered in the Demand Registration and the
intended method(s) of disposition thereof, including whether or not the
Registerable Securities subject to such Tag- Along Request or portion
thereof is to relate to an underwritten offering, the name of the managing
underwriter(s), if any, and the terms of any such underwriting.
(ii) Number of Demand Registrations; Expenses. Subject to the
provisions of Paragraph 4(b)(iii) hereof, the holders of Registerable
Securities shall be entitled, in the aggregate, to one Demand Registration,
the Registration Expenses (as defined in Section 4(e) hereof) of which,
subject to the provisions of Section 4(e), shall be borne by the Company,
but the Company shall not be responsible for the payment of any
underwriter's discount, commission or selling concession in connection with
any of the Registrable Securities. The Company shall not be deemed to have
effected a Demand Registration unless and until such Demand Registration is
declared effective.
(iii) Priority on Demand Registrations.
(A) Whenever the Company shall effect a Demand
Registration in connection with an underwritten offering by one or
more Initiating Holders, no other securities, including other
Registerable Securities shall be included in such Demand Registration,
unless (1) the managing underwriter(s) with respect to such Demand
Registration shall have advised the Company and each Initiating Holder
whose Registerable Securities were included in the Demand Request, in
writing, that the inclusion of such other securities would not
adversely affect such underwritten offering or (2) each of the
Initiating Holders shall each have consented in writing to
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the inclusion of such other securities. In the event of such written
advice of the managing underwriter(s) or unanimous consent of such
Initiating Holders, the Company will include in such Demand
Registration securities in the following order of priority until the
maximum number of securities included in the written advice of the
managing underwriter(s) or unanimous consent of such Initiating
Holders shall be reached: (1) first, pro rata (based upon the amount
of Registerable Securities) among the Registerable Securities included
in the Demand Request which are subject to the underwritten offering,
(2) second, pro rata (based upon the amount of Registerable
Securities) among the Registerable Securities of the other holders
(each, a "Rightsholder") of registration rights granted by the Company
in connection with the sale of the Shares who have given a Tag-Along
Request with respect to such Demand Registration where the method of
distribution shall be pursuant to an underwritten offering, (3) third,
pro rata (based upon the amount of Registerable Securities) among all
other Registerable Securities included in the Demand Request and
Tag-Along Request(s) and (4) fourth, pro rata (based upon the amount
of securities owned which carry registration rights) among all other
securities to which the Company has granted registration rights and
for which a request for inclusion in the Demand Registration shall
have been made.
(B) Whenever the Company shall effect a Demand
Registration in connection with an offering of Registerable Securities
of Initiating Holders for which the intended method(s) of distribution
shall not include an underwritten offering, and the holders of a
majority of the Registerable Securities which were subject to the
Demand Request shall advise the Company in writing that, in the
opinion of such Initiating Holders, the number of securities proposed
to be sold in such Demand Registration would adversely affect such
offering, the Company will include in such Demand Registration
securities in the following order of priority until the maximum number
of securities included in the written advice of such Initiating
Holders shall be reached: (1) first, pro rata (based upon the amount
of Registerable Securities) among the Registerable Securities included
in the Demand Request, (2) second, pro rata (based upon the amount of
Registerable Securities) among the Registerable Securities of the
Rightsholders who have given a Tag-Along Request with respect to such
Demand Registration where the method of distribution shall be pursuant
to an underwritten offering, (3) third, pro rata (based upon the
amount of Registerable Securities) among all other Registerable
Securities included in the Demand Request and Tag-Along Request(s) and
(4) fourth, pro rata (based upon the amount of securities owned which
carry registration rights) among all other securities to which the
Company has granted registration rights and for which a request for
inclusion in the Demand Registration shall have been made.
(C) In the event that Initiating Holders and other
Rightsholders who have given a Tag-Along Request are unable to have
registered the full amount of Registerable Securities which they
requested to be registered pursuant to a Demand Request or Tag-Along
Request, pursuant to the provisions of this Section 4(b), such
Initiating Holders and other Rightsholders shall retain the right to
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one Demand Registration with respect to such unregistered Registerable
Securities subject to such Demand Request and Tag-Along Request.
(iv) Delay in Effecting Demand Registration. Notwithstanding
anything in the foregoing to the contrary, the Company shall not be
obligated to effect a Demand Registration at any time when the Company, in
the good faith judgment of its Board of Directors made no later than 30
days after the giving of the Demand Request with respect to such Demand
Registration, reasonably believes that the filing thereof at the time
requested, or the offering of securities pursuant thereto, would be
detrimental to the interests of Company or its stockholders. The
effectuation of a Demand Registration cannot be suspended, pursuant to the
provisions of the preceding sentence, for more than 120 days after the date
of the Board's determination referenced in the preceding sentence.
(v) Approval of Underwriter by the Company and Placement Agent.
If the Demand Registration is to involve an underwritten offering, the
managing underwriter(s) and each selling agent selected by those
Rightsholders participating in each such underwritten offering shall be
subject to the written approval of the Company, which approval may not be
unreasonably withheld.
(vi) "Initiating Holders" Defined. For purposes of this
Agreement, the term "Initiating Holders" shall mean, on any given date,
those Rightsholders holding Registerable Securities which would aggregate
50% or more of the total Registerable Securities that would be outstanding
on such date.
(c) Piggy-Back Registration.
(i) If, at any time on or after the Subscription Acceptance Date
and on or prior to three years from the Subscription Acceptance Date, the
Company proposes to file a registration statement under the Securities Act
with respect to an offering by the Company or any other party of any class
of equity security similar to any Registerable Securities (other than a
registration statement on Form S-4 or S-8 or any successor form or a
registration statement filed solely in connection with an exchange offer, a
business combination transaction or an offering of securities solely to the
existing stockholders or employees of the Company), then the Company, on
each such occasion, shall give written notice (each, a "Company Piggy-Back
Notice") of such proposed filing to all of the Rightsholders owning
Registerable Securities at least 30 days before the anticipated filing date
of such registration statement, and such Company Piggy-Back Notice also
shall be required to offer to such Rightsholders the opportunity to
register such aggregate number of Registerable Securities as each such
Rightsholder may request. Each such Rightsholder shall have the right,
exercisable for the twenty days immediately following the giving of the
Company PiggyBack Notice, to request, by written notice (each, a "Holder
Notice") to the Company, the inclusion of all or any portion of the
Registerable Securities of such Rightsholders in such registration
statement. The Company shall use reasonable efforts to cause the managing
underwriter(s) of a proposed underwritten offering to permit the inclusion
of the Registerable Securities which were the subject of all Holder Notices
in such underwritten offering on the same terms and conditions as any
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similar securities of the Company included therein. Notwithstanding
anything to the contrary contained in this Paragraph 4(c)(i), if the
managing underwriter(s) of such underwritten offering (or, in the case of
an offering not being underwritten, the Company) delivers a written opinion
(or, in the case of the Company, a resolution of its Board of Directors
certified by the President or Secretary of the Company) to the
Rightsholders of Registerable Securities which were the subject of all
Holder Notices that the total amount and kind of securities which they, the
Company and any other person intend to include in such offering is such as
to materially and adversely affect the success of such offering, then the
amount of securities to be offered for the accounts of such Rightsholders
and persons other than the Company shall be eliminated or reduced pro rata
(based on the amount of securities owned by such Rightsholders and other
persons which carry registration rights) to the extent necessary to reduce
the total amount of securities to be included in such offering to the
amount recommended by such managing underwriter(s) in its written opinion
(or the Board of Directors in its resolution).
(ii) Number of Piggy-Back Registrations; Expenses. The
obligations of the Company under this Section 4(c) shall be unlimited with
respect to each Rightsholder. Subject to the provisions of Section 4(e)
hereof, the Company will pay all Registration Expenses in connection with
any registration of Registerable Securities effected pursuant to this
Section 4(c), but the Company shall not be responsible for the payment of
any underwriter's discount, commission or selling concession in connection
therewith.
(iii) Withdrawal or Suspension of Registration Statement.
Notwithstanding anything contained to the contrary in this Section 4(c),
the Company shall have the absolute right, whether before or after the
giving of a Company Piggy-Back Notice or Holder Notice, to determine not to
file a registration statement to which the Rightsholders shall have the
right to include their Registerable Securities therein pursuant to this
Section 4(c), to withdraw such registration statement or to delay or
suspend pursuing the effectiveness of such registration statement. In the
event of such a determination after the giving of a Company Piggy-Back
Notice, the Company shall give notice of such determination to all
Rightsholders and, thereupon, (A) in the case of a determination not to
register or to withdraw such registration statement, the Company shall be
relieved of its obligation under this Section 4(c) to register any of the
Registerable Securities in connection with such registration and (B) in the
case of a determination to delay the registration, the Company shall be
permitted to delay or suspend the registration of Registerable Securities
pursuant to this Section 4(c) for the same period as the delay in the
registration of such other securities. No registration effected under this
Section 4(c) shall relieve the Company of its obligation to effect any
registration upon demand otherwise granted to a Rightsholder under Section
4(b) hereof or any other agreement with the Company.
(d) Registration Procedures.
(i) Obligations of the Company. The Company will, in connection
with any registration pursuant to Section 4(b) or (c) hereof, as
expeditiously as possible:
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(A) prepare and file with the Commission a registration
statement under the Securities Act on any appropriate form chosen by
the Company, in its sole discretion, which shall be available for the
sale of all Registerable Securities in accordance with the intended
method(s) of distribution thereof set forth in all applicable Demand
Requests, Tag-Along Requests and Holder Notices, and use its
commercially reasonable best efforts to cause such registration
statement to become effective as soon thereafter as reasonably
practicable; provided, that, at least five business days before filing
with the Commission of such registration statement, the Company shall
furnish to each Rightsholder whose Registerable Securities are
included therein draft copies of such registration statement,
including all exhibits thereto and documents incorporated by reference
therein, and, upon the reasonable request of any such Rightsholder,
shall continue to provide drafts of such registration statement until
filed, and, after such filing, the Company shall, as diligently as
practicable, provide to each such Rightsholders such number of copies
of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus), all exhibits thereto and documents
incorporated by reference therein and such other documents as such
Rightsholder may reasonably request in order to facilitate the
disposition of the Registerable Securities owned by such Rightsholder
and included in such registration statement; provided, further, the
Company shall modify or amend the registration statement as it relates
to such Rightsholder as reasonably requested by such Rightsholder on a
timely basis, and shall reasonably consider other changes to the
registration statement (but not including any exhibit or document
incorporated therein by reference) reasonably requested by such
Rightsholder on a timely basis, in light of the requirements of the
Securities Act and any other applicable laws and regulations; and
provided, further, that the obligation of the Company to effect such
registration and/or cause such registration statement to become
effective, may be postponed for (1) such period of time when the
financial statements of the Company required to be included in such
registration statement are not available (due solely to the fact that
such financial statements have not been prepared in the regular course
of business of the Company) or (2) any other bona fide corporate
purpose, but then only for a period not to exceed 90 days;
(B) prepare and file with the Commission such
amendments and post-effective amendments to a registration statement
as may be necessary to keep such registration statement effective for
up to nine months; and cause the related prospectus to be supplemented
by any required prospectus supplement, and as so supplemented to be
filed to the extent required pursuant to Rule 424 promulgated under
the Securities Act, during such nine-month period; and otherwise
comply with the provisions of the Securities Act with respect to the
disposition of all Registerable Securities covered by such
registration statement during the applicable period in accordance with
the intended method(s) of disposition of such Registerable Securities
set forth in such registration statement, prospectus or supplement to
such prospectus;
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(C) notify the Rightsholders whose Registerable
Securities are included in such registration statement and the
managing underwriter(s), if any, of an underwritten offering of any of
the Registerable Securities included in such registration statement,
and confirm such advice in writing, (1) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and,
with respect to a registration statement or any post-effective
amendment, when the same has become effective, (2) of any request by
the Commission for amendments or supplements to a registration
statement or related prospectus or for additional information, (3) of
the issuance by the Commission of any stop order suspending the
effectiveness of a registration statement or the initiation of any
proceedings for that purpose, (4) if at any time the representations
and warranties of the Company contemplated by clause (1) of Paragraph
4(d)(i)(J) hereof cease to be true and correct, (5) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of any of the Registerable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose and (6) of the happening of any event which makes any
statement made in the registration statement, the prospectus or any
document incorporated therein by reference untrue or which requires
the making of any changes in the registration statement or prospectus
so that such registration statement, prospectus or document
incorporated by reference will not contain any untrue statement of
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading;
(D) make reasonable efforts to obtain the withdrawal of
any order suspending the effectiveness of such registration statement
at the earliest possible moment and to prevent the entry of such an
order;
(E) use reasonable efforts to register or qualify the
Registerable Securities included in such registration statement under
such other securities or blue sky laws of such jurisdictions as any
Rightsholder whose Registrable Securities are included in such
registration statement reasonably requests in writing and do any and
all other acts and things which may be necessary or advisable to
enable such Rightsholder to consummate the disposition in such
jurisdictions of such Registerable Securities; provided, that the
Company will not be required to (1) qualify generally to do business
in any jurisdiction where it would not otherwise be required to
qualify but for this Paragraph 4(d)(i)(E), (2) subject itself to
taxation in any such jurisdiction or (3) take any action which would
subject it to general service of process in any such jurisdiction;
(F) make available for inspection by each Rightsholder
whose Registerable Securities are included in such registration, any
underwriter(s) participating in any disposition pursuant to such
registration statement, and any representative, agent or employee of
or attorney or accountant retained by any such Rightsholder or
underwriter(s) (collectively, the "Inspectors"), all financial and
other records, pertinent corporate documents and properties of the
Company (collectively, the "Records") as shall be reasonably necessary
-16-
to enable them to exercise their due diligence responsibility (or
establish a due diligence defense), and cause the officers, directors
and employees of the Company to supply all information reasonably
requested by any such Inspector in connection with such registration
statement; provided, that records which the Company determines, in
good faith, to be confidential and which it notifies the Inspectors
are confidential shall not be disclosed by the Inspectors, unless (1)
the release of such Records is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction or (2) the disclosure of
such Records is required by any applicable law or regulation or any
governmental regulatory body with jurisdiction over such Rightsholder
or underwriter; provided, further, that such Rightsholder or
underwriter(s) agree that such Rightsholder or underwriter(s) will,
upon learning the disclosure of such Records is sought in a court of
competent jurisdiction, give notice to the Company and allow the
Company, at the Company's expense, to undertake appropriate action to
prevent disclosure of the Records deemed confidential;
(G) cooperate with the Rightsholder whose Registerable
Securities are included in such registration statement and the
managing underwriter(s), if any, to facilitate the timely preparation
and delivery of certificates representing Registerable Securities to
be sold thereunder, not bearing any restrictive legends, and enable
such Registerable Securities to be in such denominations and
registered in such names as such Rightsholder or any managing
underwriter(s) may reasonably request at least two business days prior
to any sale of Registerable Securities;
(H) comply with all applicable rules and regulations of
the Commission and promptly make generally available to its security
holders an earnings statement covering a period of twelve months
commencing, (1) in an underwritten offering, at the end of any fiscal
quarter in which Registerable Securities are sold to underwriter(s),
or (2) in a non-underwritten offering, with the first month of the
Company's first fiscal quarter beginning after the effective date of
such registration statement, which earnings statement in each case
shall satisfy the provisions of Section 11(a) of the Securities Act;
(I) provide a CUSIP number for all Registerable
Securities not later than the effective date of the registration
statement relating to the first public offering of Registerable
Securities of the Company pursuant hereto;
(J) enter into such customary agreements (including an
underwriting agreement in customary form) and take all such other
actions reasonably requested by the Rightsholders holding a majority
of the Registerable Securities included in such registration statement
or the managing underwriter(s) in order to expedite and facilitate the
disposition of such Registerable Securities and in such connection,
whether or not an underwriting agreement is entered into and whether
or not the registration is an underwritten registration, (1) make such
representations and warranties, if any, to the holders of such
-17-
Registerable Securities and any underwriter(s) with respect to the
registration statement, prospectus and documents incorporated by
reference, if any, in form, substance and scope as are customarily
made by issuers to underwriter(s) in underwritten offerings and
confirm the same if and when requested, (2) obtain opinions of counsel
to the Company and updates thereof addressed to each such Rightsholder
and the underwriter(s), if any, with respect to the registration
statement, prospectus and documents incorporated by reference, if any,
covering the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably
requested by such Rightsholders and underwriter(s), (3) obtain a "cold
comfort" letter and updates thereof from the Company's independent
certified public accountants addressed to such Rightsholders and to
the underwriter(s), if any, which letters shall be in customary form
and cover matters of the type customarily covered in "cold comfort"
letters by accountants in connection with underwritten offerings, and
(4) deliver such documents and certificates as may be reasonably
requested by the Rightsholders holding a majority of such Registerable
Securities and managing underwriter(s), if any, to evidence compliance
with any customary conditions contained in the underwriting agreement
or other agreement entered into by the Company; each such action
required by this Paragraph 4(d)(i)(J) shall be done at each closing
under such underwriting or similar agreement or as and to the extent
required thereunder; and
(K) if requested by the holders of a majority of the
Registerable Securities included in such registration statement, use
its best efforts to cause all Registerable Securities which are
included in such registration statement to be listed, subject to
notice of issuance, by the date of the first sale of such Registerable
Securities pursuant to such registration statement, on each securities
exchange, if any, on which securities similar to the Registered
Securities are listed.
(ii) Obligations of Rightsholders. In connection with any
registration of Registerable Securities of a Rightsholder pursuant to
Section 4(b) or (c) hereof:
(A) The Company may require that each Rightsholder
whose Registerable Securities are included in such registration
statement furnish to the Company such information regarding the
distribution of such Registerable Securities and such Rightsholder as
the Company may from time to time reasonably request in writing; and
(B) Each Rightsholder, upon receipt of any notice from
the Company of the happening of any event of the kind described in
clauses (2), (3), (5) and (6) of Paragraph 4(d)(i)(C) hereof, shall
forthwith discontinue disposition of Registerable Securities pursuant
to the registration statement covering such Registerable Securities
until such Rightsholder's receipt of the copies of the supplemented or
amended prospectus contemplated by clause (1) of Paragraph 4(d)(i)(C)
hereof, or until such Rightsholder is advised in writing (the
"Advice") by the Company that the use of the applicable prospectus may
be resumed, and until such Rightsholder has received copies of any
additional or supplemental filings which are incorporated by reference
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in or to be attached to or included with such prospectus, and, if so
directed by the Company, such Rightsholder will deliver to the Company
(at the expense of the Company) all copies, other than permanent file
copies then in the possession of such Rightsholder, of the current
prospectus covering such Registerable Securities at the time of
receipt of such notice; the Company shall have the right to demand
that such Rightsholder or other holder verify its agreement to the
provisions of this Paragraph 4(d)(ii)(B) in any Demand Request,
Tag-Along Request or Holder Notice of the Rightsholder or in a
separate document executed by the Rightsholder.
(e) Registration Expenses. All expenses incident to the performance of or
compliance with this Agreement by the Company, including, without imitation, all
registration and filing fees of the Commission, National Association of
Securities Dealers, Inc. and other agencies, fees and expenses of compliance
with securities or blue sky laws (including reasonable fees and disbursements of
counsel in connection with blue sky qualifications of the Registerable
Securities), rating agency fees, printing expenses, messenger and delivery
expenses, internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the fees and expenses incurred in connection with the listing, if any, of the
Registerable Securities on any securities exchange and fees and disbursements of
counsel for the Company and the Company's independent certified public
accountants (including the expenses of any special audit or "cold comfort"
letters required by or incidental to such performance), Securities Act or other
liability insurance (if the Company elects to obtain such insurance), the fees
and expenses of any special experts retained by the Company in connection with
such registration and the fees and expenses of any other person retained by the
Company (but not including any underwriting discounts or commissions
attributable to the sale of Registerable Securities or other out-of-pocket
expenses of the Rightsholders, or the agents who act on their behalf, unless
reimbursement is specifically approved by the Company) will be borne by the
Company. All such expenses are herein referred to as "Registration Expenses."
Notwithstanding the foregoing, the Company shall not be required to pay for any
Registration Expenses of any Demand Registration if such Demand Request is
subsequently withdrawn at the request of the holders of a majority of the
Registerable Securities included in such Demand Registration (in which case all
Rightsholders which requested the withdrawal of the Demand Registration shall
bear such expenses pro rata); provided that, if, at the time of such withdrawal,
such Rightsholders have learned of a material adverse change in the condition,
business or prospects of the Company from that known to such Rightsholders at
the time of their Demand Request, such Rightsholders shall not be required to
pay any of such expenses. In either event, if such Rightsholders pay in full the
expenses of such withdrawn Demand Registration, such Rightsholders shall retain
the right to one Demand Registration.
(f) Indemnification: Contribution.
(i) Indemnification by the Company. The Company agrees to
indemnify and hold harmless, to the full extent permitted by law, each
Rightsholder, its officers and directors and each person who controls such
Rightsholder (within the meaning of the Securities Act), if any, and any
agent thereof against all losses, claims, damages, liabilities and expenses
incurred by such party pursuant to any actual or threatened suit, action,
proceeding or investigation (including reasonable attorney's fees and
-19-
expenses of investigation) arising out of or based upon any untrue or
alleged untrue statement of a material fact contained in any registration
statement, prospectus or preliminary prospectus or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a prospectus, in
the light of the circumstances under which they were made) not misleading,
except insofar as the same arise out of or are based upon, any such untrue
statement or omission based upon information with respect to such
Rightsholder furnished in writing to the Company by such Rightsholder
expressly for use therein.
(ii) Indemnification by Rightsholder. In connection with any
registration statement in which a Rightsholder is participating, each such
Rightsholder will be required to furnish to the Company in writing such
information with respect to such Rightsholder as the Company reasonably
requests for use in connection with any such registration statement or
prospectus, and each Rightsholder agrees to the extent it is such a holder
of Registerable Securities included in such registration statement, and
each other such holder of Registerable Securities included in such
Registration Statement will be required to agree, to indemnify, to the full
extent permitted by law, the Company, the directors and officers of the
Company and each person who controls the Company (within the meaning of the
Securities Act) and any agent thereof, against any losses, claims, damages,
liabilities and expenses (including reasonable attorney's fees and expenses
of investigation incurred by such party pursuant to any actual or
threatened suit, action, proceeding or investigation arising out of or
based upon any untrue or alleged untrue statement of a material fact or any
omission or alleged omission of a material fact necessary, to make the
statements therein (in the case of a prospectus, in the light of the
circumstances under which they are made) not misleading, to the extent, but
only to the extent, that such untrue statement or omission is based upon
information relating to such Rightsholder or other holder furnished in
writing to the Company expressly for use therein.
(iii) Conduct of Indemnification Proceedings. Promptly after
receipt by an indemnified party under this Section 4(f) of written notice
of the commencement of any action, proceeding, suit or investigation or
threat thereof made in writing for which such indemnified party may claim
indemnification or contribution pursuant to this Agreement, such
indemnified party shall notify in writing the indemnifying party of such
commencement or threat; but the omission so to notify the indemnifying
party shall not relieve the indemnifying party from any liability which the
indemnifying party may have to any indemnified party (A) hereunder, unless
the indemnifying party is actually prejudiced thereby, or (B) otherwise
than under this Section 4(f). In case any such action, suit or proceeding
shall be brought against any indemnified party, and the indemnified party
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and the
indemnifying party shall assume the defense thereof, with counsel
reasonably satisfactory to the indemnified party, and the obligation to pay
all expenses relating thereto. The indemnified party shall have the right
to employ separate counsel in any such action, suit or proceeding and to
participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (A) the
indemnifying party has agreed to pay such fees and expenses, (B) the
-20-
indemnifying party shall have failed to assume the defense of such action,
suit or proceeding or to employ counsel reasonably satisfactory to the
indemnified party therein or to pay all expenses relating thereto or (C)
the named parties to any such action or proceeding (including any impleaded
parties) include both the indemnified party and the indemnifying party and
the indemnified party shall have been advised by counsel that there may be
one or more legal defenses available to the indemnified party which are
different from or additional to those available to the indemnifying party
and which may result in a conflict between the indemnifying party and such
indemnified party (in which case, if the indemnified party notifies the
indemnifying party in writing that the indemnified party elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such action or
proceeding on behalf of the indemnified party; it being understood,
however, that the indemnifying party shall not, in connection with any one
such action, suit or proceeding or separate but substantially similar or
related actions, suits or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the fees
and expenses of more than one separate firm of attorneys at any time for
the indemnified party, which firm shall be designated in writing by the
indemnified party).
(iv) Contribution. If the indemnification provided for in this
Section 4(f) from the indemnifying party is unavailable to an indemnified
party hereunder in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages, liabilities or expenses (A) in such proportion as is appropriate
to reflect the relative benefits received by the indemnifying party on the
one hand and the indemnified party on the other or (B) if the allocation
provided by clause (A) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
received by the indemnifying party on the one hand and the indemnified
party on the other but also the relative fault of the indemnifying party
and indemnified party, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and the
indemnified parties shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged
untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied
by, such indemnifying party or indemnified parties, and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such action. The amount paid or payable by a party as a
result of the losses, claims, damages. liabilities and expenses referred to
above shall be deemed to include, subject to the limitation set forth in
Section 4(f)(v), any legal or other fees or expenses reasonably incurred by
such party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Paragraph 4(f)(iv) were determined by pro
rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to in clauses (A) and
(B) of the immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
-21-
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.
(v) Limitation. Anything to the contrary contained in this
Section 4(f) or in Section 4(g) notwithstanding, no holder of Registerable
Securities shall be liable for indemnification and contribution payments
aggregating an amount in excess of the maximum amount received by such
holder in connection with any sale of Registerable Securities as
contemplated herein.
(g) Participation in Underwritten Registration. No Rightsholder may
participate in any underwritten registration hereunder unless such Rightsholder
(i) agrees to sell such holder's securities on the basis provided in any
underwriting arrangements approved by the persons entitled hereunder to approve
such arrangements and to comply with Rules 10b-6 and 10b-7 under the Exchange
Act and (ii) completes and executes all questionnaires, appropriate and limited
powers of attorney, escrow agreements, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangement; provided, that all such documents shall be consistent with the
provisions of Section 4(e) hereof.
5. Further Assurances. At any time and from time to time after the date
hereof, the undersigned shall, without further consideration, execute and
deliver to the Company, or such other party as the Company may direct, such
other instruments or documents and shall take such other actions as the Company
may reasonably request to carry out the transactions contemplated by this
Subscription Agreement.
6. Indemnification. The undersigned acknowledges that the undersigned
understands the meaning and legal consequences of the representations,
warranties, covenants and agreements contained herein, and the undersigned
hereby agrees to indemnify and hold harmless the Company, and the Company's
directors, officers, employees, agents and controlling persons, from and against
any and all loss, damage or liability due to or arising out of a breach by the
undersigned of any such representations, warranties, covenants and agreements
contained herein.
7. Miscellaneous. The Company and undersigned may waive compliance by the
other with any of the provisions of this Subscription Agreement. No waiver of
any provision shall be construed as a waiver of any other provision. Any waiver
must be in writing. The headings contained in this Subscription Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Subscription Agreement. This Subscription Agreement
constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof and may be amended only by a writing executed both parties
hereto. This Subscription Agreement may be executed in several counterparts,
each of which shall be deemed an original, and all of which shall constitute one
and the same instrument. This Subscription Agreement shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of New York, without regard to its conflicts of laws principles. This
Subscription Agreement shall be binding upon and inure to the benefit of and be
enforceable by the successors and assigns of the parties hereto. This
Subscription Agreement shall not be assignable by either party without the prior
written consent of the other. The rights and obligations contained in this
Subscription Agreement are solely for the benefit of the
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parties hereto and are not intended to benefit or be enforceable by any
other party, under the third party beneficiary doctrine or otherwise.
THE SHARES BEING OFFERED HEREBY HAVE NOT BEEN REGISTERED OR APPROVED
OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
REGULATORY AUTHORITY OF ANY STATE, NOR HAS THE COMMISSION OR ANY SUCH AUTHORITY
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS SUBSCRIPTION AGREEMENT OR THE
AGREEMENTS AND DOCUMENTS REFERRED TO OR INCORPORATED BY REFERENCE HEREIN
(COLLECTIVELY, THE "OFFERING DOCUMENTS"). ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.
THE SHARES ARE BEING OFFERED BY THE COMPANY IN RELIANCE UPON AN
EXCEPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, WHICH
EXEMPTION DEPENDS UPON THE EXISTENCE OF CERTAIN FACTS INCLUDING, BUT NOT LIMITED
TO, THE REQUIREMENTS THAT THE SHARES ARE NOT BEING OFFERED THROUGH GENERAL
ADVERTISING OR GENERAL SOLICITATION, ADVERTISEMENTS OR COMMUNICATIONS IN
NEWSPAPERS, MAGAZINES OR OTHER MEDIA, OR BROADCASTS ON RADIO OR TELEVISION, AND
THAT THE OFFERING DOCUMENTS SHALL BE TREATED AS CONFIDENTIAL BY THE PERSONS TO
WHOM IT IS DELIVERED. ANY DISTRIBUTION OF THE OFFERING DOCUMENTS OR ANY PART
HEREOF OR DIVULGENCE OF ANY OF ITS CONTENTS SHALL BE UNAUTHORIZED.
IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THE SHARES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THE
OFFERING DOCUMENTS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. IN ADDITION, THE SHARES WILL BEAR A LEGEND TO SUCH EFFECT
AS SET FORTH HEREIN. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR
THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
IN WITNESS WHEREOF, the undersigned has duly executed this
Subscription Agreement as of the date set forth below the undersigned's
signature in the Execution Section below.
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EXECUTION SECTION FOR SUBSCRIPTION BY INDIVIDUALS
I. SUBSCRIPTION AMOUNT:
The undersigned subscribes to purchase Shares for the Subscription Price
set forth in the first paragraph of this Agreement.
II. SUBSCRIBER STATUS:
The undersigned is (check appropriate box and, if applicable, fill in state
with jurisdiction over custodial account):
___ INDIVIDUAL OWNER (One signature required below). Note: In community
property states, both spouses are required to sign below, whether or not
being listed as co-subscribers.
___ HUSBAND AND WIFE AS TENANTS BY THE ENTIRETY (Husband and wife are both
required to sign below).
___ TWO OR MORE INDIVIDUALS AS TENANTS IN COMMON (All tenants are required
to sign below).
___ TWO OR MORE INDIVIDUALS AS JOINT TENANTS WITH RIGHT OF SURVIVORSHIP
(All tenants are required to sign below).
___ CUSTODIAL ACCOUNT UNDER UNIFORM GIFTS TO MINORS ACT OF THE STATE OF
___________________________________________________ (Fill in state).
III. INFORMATION AS IT IS TO APPEAR ON THE COMPANY RECORDS:
Name of
Subscriber(s): (1) ____________________________________________________________
(2) ____________________________________________________________
Social Security Number (for use in all notifications
and reports to governmental taxing authorities): ______________________________
State(s) of Permanent Residence: (1) ________________________________________
(2) ________________________________________
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Mailing Address: ____________________________________________________________
____________________________________________________________
____________________________________________________________
Telephone Number: ____________________________________________________________
Facsimile Number: ____________________________________________________________
IV. INVESTOR STATUS (check all appropriate boxes):
A. The undersigned is an accredited investor, as such term is defined under
Regulation D, by reason of the fact that the undersigned is:
___ An individual whose net worth(1) (or joint net worth with my spouse,
if greater) exceeds $1,000,000.
___ An individual with income(2) in excess of $200,000, or joint income
together with my spouse in excess of $300,000, in each of the two most
recent years and reasonably expects to reach the same income level in
the current year.
___ A director or executive officer of the Company.
___ An entity in which all of the equity owners are accredited investors,
as defined in Regulation D. (The Company has the right to request
the names of each such accredited investor equity owners and to
require such person(s) to complete a Qualified Purchaser
Questionnaire prior to the Company's acceptance of the undersigned's
subscription.)
___ B. The undersigned is not an accredited investor, as such term is defined
under Regulation D, and agrees, that upon the request of the Company, to
complete a Qualified Purchaser Questionnaire and return an executed copy thereof
to the Company.
_____________________
(1) For purposes hereof, net worth shall be deemed to include all of your
assets, liquid or illiquid (including such items as home, furnishing, automobile
and restricted securities), minus any liabilities (including such items as home
mortgages and other debts and liabilities).
(2) For purposes hereof, the term "income" is not limited to "adjusted
gross income" as that term is defined for Federal Income Tax purposes, but
rather includes certain items of income which are deducted in computing
"adjusted gross income." For investors who are salaried employees, the gross
salary of such investor, minus any significant expenses personally incurred by
such investor in connection with earning the salary, plus any income from any
other source, including unearned income, is a fair measure of "income" for
purposes hereof. For investors who are self-employed, "income" is generally
construed to mean total revenues received during the calendar year minus
significant expenses incurred in connection with earnings such revenues.
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V. SIGNATURE(S):
Signature(s) of Subscriber(s): (1) ________________________________________
(2) ________________________________________
Signature of Non-Subscribing Spouse (Community Property States Only):
(1) ________________________________________
(2) ________________________________________
Date: _______________________________________, 199__
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EXECUTION SECTION FOR SUBSCRIPTION BY NON-INDIVIDUALS
I. SUBSCRIPTION AMOUNT:
The undersigned subscribes to purchase Shares for the Subscription Price
set forth in the first paragraph of this Agreement.
II. SUBSCRIBER STATUS:
The undersigned is (check appropriate box and, if applicable, fill in state
with jurisdiction over custodial account):
___ CORPORATION (Please include certified corporate resolution authorizing
signature).
___ PARTNERSHIP.
___ TRUST.
___ OTHER (Including Employment Benefit Plans and Trusts, Individual
Retirement Accounts, and ▇▇▇▇▇▇ Plans).
III. INFORMATION AS IT IS TO APPEAR ON THE COMPANY RECORDS:
Name of
Subscriber: _________________________________________________________________
Tax Identification Number: __________________________________________________
State of Incorporation or Organization: ________________________________________
State of Principal Place of Business: ________________________________________
Mailing Address: ____________________________________________________________
____________________________________________________________
____________________________________________________________
Telephone Number: ____________________________________________________________
Facsimile Number: ____________________________________________________________
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IV. INVESTOR STATUS (check all appropriate boxes and, if applicable, provide all
information requested):
A. The undersigned is an accredited investor, as such term is defined under
Regulation D, by reason of the fact that the undersigned is:
___ A bank as defined in Section 3(a)(2) of the Securities Act,
or any savings and loan association or other institution as defined in
Section 3(a)(5)(A) of the Securities Act whether acting in its
individual or fiduciary capacity; a broker or dealer registered
pursuant to Section 15 of the Securities Exchange Act of ▇▇▇▇ (▇▇▇
"▇▇▇▇▇▇▇▇ ▇▇▇"); an insurance company as defined in Section 2(13) of
the Securities Act; an investment company registered under the
Investment Company Act of 1940 or a business development company as
defined in Section 2(a)(48) of that Act; a Small Business Investment
Company licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act of 1958; a
plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, and having
total assets in excess of $5,000,000; an employee benefit plan within
the meaning of the Employee Retirement Income Security Act of 1974
("ERISA") with investment decisions made by a plan fiduciary, as
defined in Section 3(21) of such Act, which is either a bank, savings
and loan association, insurance company or registered investment
adviser; an employee benefit plan within the meaning of ERISA and
having total assets in excess of $5,000,000.
___ An employee benefit plan within the meaning of ERISA which is a self
directed plan, with investment decisions made solely by the following
persons who are accredited investors, as defined in Regulation D:
______________________________________________________________________
______________________________________________________________________
___ A private business development company as defined in section
202(a)(22) of the Investment Advisers Act of 1940.
___ An organization described in Section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust or
partnership, not formed for the specific purpose of acquiring the
securities offered, with total assets in excess of $5,000,000.
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___ A trust, with total assets in excess of $5,000,000, not formed for
the specific purpose of acquiring any shares of Common Stock, whose
purchase is directed by the following sophisticated person meeting
the description set forth in Rule 506(b)(2)(ii) of Regulation D:
______________________________________________________________________
___ An entity in which all of the equity owners are accredited investors,
as defined in Regulation D. (The Company has the right to request the
names of each such accredited investor equity owners and to require
such person(s) to complete a Qualified Purchaser Questionnaire prior
to the Company's acceptance of the undersigned's subscription.)
B. The undersigned is a qualified institutional investor, as such term is
defined in Rule 144A, by reason of the fact that the undersigned is
___ A bank, with an audited net worth of at least $25 million, that in
the aggregate owns and invests on a discretionary basis at least
$100 million in securities (excluding United States government
securities and other specified investments) of unaffiliated issuers.
___ A registered dealer, owning and investing on a discretionary basis at
least $10 million of non-affiliated securities or is acting as a
riskless principal for qualified institutional buyers, that in the
aggregate owns and invests on a discretionary basis at least $100
million in securities (excluding United States government securities
and other specified investments) of unaffiliated issuers.
___ Either (a) an insurance company, (b) registered investment company,
(c) registered investment advisor, (d) government established and
administered employee benefit plan, (e) entity exempt from United
States federal income taxes under Section 501(c)(3) of the Code or (f)
a corporation, business trust, partnership or other entity entirely
owned by other qualified institutional buyers, in any event, that in
the aggregate owns and invests on a discretionary basis at least $100
million in securities (excluding United States government securities
and other specified investments) of unaffiliated issuers.
___ C. The undersigned is neither an accredited investor, as such term is
defined under Regulation D, nor a qualified institutional buyer, as such term is
defined in Rule 144A, and agrees, that upon the request of the Company, to
complete a Qualified Purchaser Questionnaire and return an executed copy thereof
to the Company.
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V. SIGNATURE(S)
The undersigned corporate officer, partner, trustee or fiduciary certifies
that the undersigned has full power and authority from all requisite
stockholders, partners, co-trustees, co-fiduciaries of the subscribing entity
named above to execute this Subscription Agreement on behalf of the subscribing
entity and to make the representations, warranties and agreements made herein on
its and their behalf and that investment in the Shares has been affirmatively
authorized by the governing board or body of such entity and is not prohibited
by law or the governing documents of the subscribing entity.
By:__________________________________ By:_____________________________________
(Signature of Authorized Signatory) (Signature of Authorized Co-Signatory)
__________________________________ _____________________________________
(Name of Authorized Signatory) (Name of Authorized Co-Signatory)
__________________________________ _____________________________________
(Title of Authorized Signatory) (Title of Authorized Co-Signatory)
Date: _______________________________________, 199__
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ACCEPTANCE PAGE
(To be completed by the Company)
SUBSCRIPTION AND SUBSCRIPTION AGREEMENT
ACCEPTED AND AGREED:
Subscription Price amount for which the Subscription is accepted: _____________
Number of Shares for which Subscription is accepted: _____________
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
By: ____________________________________________________
Name:
Title:
Date: _______________________________________, 199__
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