SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
SUBSCRIPTION AGREEMENT
April 28, 1998
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 (a) 1,000,000 shares (the "Shares") of common
stock, par value $.001 per share (the "Common Stock") of the Company, at a price
equal to $.30 per share of Common Stock, or $300,000.00 in the aggregate (the
"Common Stock Purchase Price"), (b) warrants to purchase 550,000 shares of
Common Stock at an exercise price of $.01 per share exercisable for a two year
period commencing 90 days after the effectiveness of the registration statement
on Form S-3 referred to in Section 2(k) below (the "$.01 Warrants"), for a
purchase price equal to $.29 per share, or an aggregate of $158,500 (the "$.01
Warrant Purchase Price"), and (c) warrants to purchase 250,000 shares of Common
Stock at an exercise price of $.71875 per share exercisable for a two year
period commencing 90 days after the effectiveness of the registration statement
on Form S-3 referred to in Section 2(k) below (the "$.71875 Warrants"; and,
together with the $.01 Warrants, hereinafter referred to as the "Warrants"), for
a purchase price equal to $41,500 (the "$.71875 Warrant Purchase Price"; and
together with the Common Stock Purchase Price and the $.01 Warrant Purchase
Price, collectively referred to herein as the "Subscription Price"), and hereby
tenders to the Company in full the Subscription Price in immediately available
funds. The shares of Common Stock issuable upon exercise of the Warrants are
hereinafter referred to as the "Warrant Shares". The date on which the Company
accepts this subscription is hereinafter referred to as the "Closing Date."
The Subscription of the undersigned being made hereby is subject to and is
made pursuant to the following terms and conditions:
1. Representations, Warranties and Covenants of the Company. By its
acceptance of this Subscription Agreement, the Company shall be deemed to
represent and warrant to and covenant with the undersigned as follows:
(a) Corporate Status. The Company (A) is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
(B) 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 (C) 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 in effect and
subject to the application of equitable principles and the availability of
equitable remedies. The shares of Common Stock to be issued hereunder and upon
exercise of the Warrants, upon issuance thereof in accordance with the terms
hereof and the Warrants, will be validly authorized, fully paid and
non-assessable. The Warrants constitute the valid and legally binding
obligations of the Company enforceable against the Company in accordance with
the terms thereof, 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 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 of
Common Stock as contemplated by this Subscription Agreement (the "Shares") are
exempt from the registration requirements of the Securities Act and are exempt
or the Company has complied with registration requirements of each state where
the Shares are offered or sold, and the Company will not take any action
hereafter that would cause the loss of such exemption or registration;
(f) Accuracy of Reports and Information. The Company is in full compliance,
to the extent applicable, with all reporting obligations under Section 12(b), 12
(g) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). The Company has registered its Common Stock pursuant to
Section 12 of the Exchange Act and the Common Stock is listed and trades on the
Nasdaq SmallCap Market. 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 (12) 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 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, 1997, timely filed all requisite forms, reports and exhibits thereto
with the Securities and Exchange Commission ("SEC"). The Company's Annual Report
on Form 10-KSB for the year ended December 31, 1997 (the "1997 10-K"), and all
Current Reports on Form 8-K filed by the Company from January 1, 1998 to date
are referred to as the "SEC Reports."
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 Purchaser 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 SEC of a registration statement on Form S-3 for the purpose of
registering the Shares and the Common Stock underlying the Warrants 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. To the Company's
knowledge, neither the Company nor its products is infringing or will infringe
any trademark, trade name, patent right, copyright, license, trade secret or
other similar right of others currently in existence; and there is no claim
being made against the Company regarding any trademark, trade name, patent,
copyright, license, trade secret or other intellectual property right which
could have a material adverse effect on the condition (financial or otherwise),
business, results of operations or prospects of the Company.
(k) Material Contracts. Except as set forth in the SEC Reports or disclosed
to the Purchaser, 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 December 31, 1997. Since December 31, 1997, 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) 160,000 shares of Common Stock issued to ▇▇▇▇
Enterprises, Inc. or (c) as disclosed in its SEC Reports. As of the date hereof,
the Company has 9,042,958 shares of Common Stock issued and outstanding.
(q) Use of Proceeds. The Company represents that the net proceeds from this
offering will be used to fund the Company's working capital and general
corporate purposes.
(r) Registration of the Shares and the Warrant Shares. The Company intends
to register the Shares and the Warrant Shares for resale under the Securities
Act in its next filed registration statement on form S-3, which the Company
currently intends to file within 15 days after the date hereof.
2. Representations, Warranties and Covenants of the Undersigned. The
undersigned hereby represents, warrants and acknowledges to and covenants and
agrees with the Company as follows:
(a) Status. If the undersigned is a corporation or other entity, the
undersigned is a corporation or other entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization with
full power and authority to execute, deliver and perform its 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;
(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, within the meaning of the
Securities Act, and the rules and regulations promulgated thereunder, or any
applicable state securities or blue-sky laws;
(e) Investor Status. Either (i) the undersigned is an accredited investor
as such term is defined under Regulation D promulgated pursuant to the
Securities Act ("Regulation D") for the reason(s) as set forth in the Execution
Section of this Subscription Agreement or (ii) if not an accredited investor,
all the information which is set forth with respect to the undersigned in the
Qualified Purchaser Questionnaire executed by the undersigned and delivered to
the Company which is incorporated herein by this reference thereto, and, in
either event, all of the representations and warranties of the undersigned set
forth herein, are correct and complete as of the date of this Subscription
Agreement, shall be true and correct as of the Closing Date and shall survive
such closing; and if there should by any material change in such information
prior to the sale to the undersigned of the Shares, the undersigned will
immediately furnish such revised or corrected information to the Company;
(f) Intent to Transfer. The undersigned is not a party or subject to or
bound by any contract, undertaking, agreement or arrangement with any person to
sell, transfer or pledge the Shares or any part thereof to any person, and has
no present intention to enter into such a contract, undertaking, agreement or
arrangement;
(g) Receipt of Disclosures. The undersigned acknowledges receipt of copies
of the Company's Annual Report on Form 10-KSB for the fiscal year ended December
31, 1997, and the Company's Current Reports on Form 8-K filed since January 1,
1998;
(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, the Shares may not be
resold or otherwise transferred or disposed without registration pursuant
to or an exemption therefrom available under the Securities Act and such
state securities laws;
(iv) In furtherance of the provisions of this Paragraph 2(h), all of
the certificate(s) representing the Shares shall bear a restrictive legend
substantially in the following form:
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE SHARES
HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO
DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SHARES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER OF THESE SHARES TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED
UNDER SUCH ACT AND SUCH STATE SECURITIES LAWS."
(i) Sophistication of the Undersigned. The undersigned has evaluated the
merits and risks of purchasing the 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 the Shares, and is able to
bear the economic risk of purchasing the 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 the Shares; or
(iii) That the past performance or experience on the part of the
Company, its predecessors or of any other person, will in any way indicate
any future results of the Company;
(l) No Other Representations, Warranties, Covenants or Agreements of the
Company. Except as set forth in this Subscription Agreement or the documents
referred to herein, 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 the 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 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 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.
(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;
(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.
4.1. Definitions.
(a) Defined Terms. As used in this Section 4, terms defined in the preamble
and forepart hereof and 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 the Shares and the Warrant Shares, including, in each case, 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 of 1933, as amended
(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 under-
signed, all successors and assigns of the undersigned, and all trans-
ferees 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.
(b) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Section 4 shall refer to this Section 4 as a whole and
not to any particular provision of this Section 4, and subsection, paragraph,
clause, schedule and exhibit references are to this Section 4 unless otherwise
specified.
4.2. Demand Registration.
(a) Right to Demand. Subject to Paragraph 4.2(b) hereof, at any time after
the date of this Agreement and on or prior to three years from the date of this
Agreement, the Initiating Holders (as defined in paragraph 4.2(f) 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.
(b) Number of Demand Registrations; Expenses. Subject to the provisions of
Paragraph 4.2(c) hereof, the holders of Registerable Securities shall be
entitled, in the aggregate, to one Demand Registration, the Registration
Expenses (as defined in Section 4.5 hereof) of which, subject to the provisions
of Section 4.5, shall be borne by the Company. The Company shall not be deemed
to have effected a Demand Registration unless and until such Demand
Registration is declared effective.
(c) Priority on Demand Registrations.
(i) 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 (A) 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 (B) each of the Initiating Holders shall each have
consented in writing to the inclusion of such other securities. In the event of
such written advice of the managing underwriter(s) or unanimous consent of such
Initiating Holders, the Company will include in such Demand Registration
securities in the following order of priority until the maximum number of
securities included in the written advice of the managing underwriter(s) or
unanimous consent of such Initiating Holders shall be reached: (A) 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, (B) 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, (C) 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 (D) 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.
(ii) 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: (A) first, pro rata
(based upon the amount of Registerable Securities) among the Registerable
Securities included in the Demand Request, (B) 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, (C) 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 (D) 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.
(iii) 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
4.2, such Initiating Holders and other Rightsholders shall retain the right to
one Demand Registration with respect to such unregistered Registerable
Securities subject to such Demand Request and Tag-Along Request.
(d) 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.
(e) 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.
(f) "Initiating Holders" Defined. For purposes of this Agreement, the term
"Initiating Holders" shall mean, on any given date, those Rightsholders holding
Registerable Securitieswhich if the Warrants were to be exercised would
aggregate 50% or more of total Registerable Securities that would be outstanding
on such date if all of the then outstanding Warrants were to be exercised.
4.3. Piggy-Back Registration.
(a) If, at any time on or after the date hereof and on or prior to three
years from the date of this Agreement, the Company proposes to file a
registration statement under the Securities Act with respect to an offering by
the Company or any other party of any class of equity security similar to any
Registerable Securities (other than a registration statement on Form S-4 or S-8
or any successor form or a registration statement filed solely in connection
with an exchange offer, a business combination transaction or an offering of
securities solely to the existing stockholders or employees of the Company),
then the Company, on each such occasion, shall give written notice (each, a
"Company Piggy-Back Notice") of such proposed filing to all of the Rightsholders
owning Registerable Securities at least 30 days before the anticipated filing
date of such registration statement, and such Company Piggy-Back Notice also
shall be required to offer to such Rightsholders the opportunity to register
such aggregate number of Registerable Securities as each such Rightsholder may
request. Each such Rightsholder shall have the right, exercisable for the twenty
days immediately following the giving of the Company Piggy-Back Notice, to
request, by written notice (each, a "Holder Notice") to the Company, the
inclusion of all or any portion of the Registerable Securities of such
Rightsholders in such registration statement. The Company shall use reasonable
efforts to cause the managing underwriter(s) of a proposed underwritten offering
to permit the inclusion of the Registerable Securities which were the subject of
all Holder Notices in
such underwritten offering on the same terms and conditions as any similar
securities of the Company included therein. Notwithstanding anything to the
contrary contained in this Paragraph 4.3(a), 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 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).
(b) Number of Piggy-Back Registrations; Expenses. The obligations of the
Company under this Section 4.3 shall be unlimited with respect to each
Rightsholder. Subject to the provisions of Section 4.5 hereof, the Company will
pay all Registration Expenses in connection with any registration of
Registerable Securities effected pursuant to this Section 4.3, but the Company
shall not be responsible for the payment of any underwriter's discount,
commission or selling concession in connection therewith.
(c) Withdrawal or Suspension of Registration Statement. Notwithstanding
anything contained to the contrary in this Section 4.3, 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 4.3, 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, (i) 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 4.3 to register any of the Registerable Securities
in connection with such registration, and (ii) 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 4.3 for the
same period as the delay in the registration of such other securities. No
registration effected under this Section 4.3 shall relieve the Company of its
obligation to effect any registration upon demand otherwise granted to a
Rightsholder under Section 4.2 hereof or any other agreement with the Company.
4.4. Registration Procedures.
(a) Obligations of the Company. The Company will, in connection with any
registration pursuant to Section 4.2 or 4.3 hereof, as expeditiously as
possible:
(i) prepare and file with the Securities and Exchange Commission
(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 (A) 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 (B) any other bona fide
corporate purpose, but then only for a period not to exceed 90 days;
(ii) 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;
(iii) 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, (A) 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, (B) of any request by the
Commission for amendments or supplements to a registration statement or related
prospectus or for additional information, (C) 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, (D) if at any time the
representations and warranties of the Company contemplated by clause (A) of
Paragraph 4.4(a)(x) hereof cease to be true and correct, (E) 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 (F) 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;
(iv) 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;
(v) 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 (A) qualify generally to do business
in any jurisdiction where it would not otherwise be required to qualify but
for this Paragraph 4.4(a)(v), (B) subject itself to taxation in any such
jurisdiction or (C) take any action which would subject it to general
service of process in any such jurisdiction;
(vi) make available for inspection by each Rightsholder whose
Registerable Securities are included in such registration, any underwriter(s)
participating in any disposition pursuant to such registration statement, and
any representative, agent or employee of or attorney or accountant retained by
any such Rightsholder or underwriter(s) (collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents and properties of the
Company (collectively, the "Records") as shall be reasonably necessary to enable
them to exercise their due diligence responsibility (or establish a due
diligence defense), and cause the officers, directors and employees of the
Company to supply all information reasonably requested by any such Inspector in
connection with such registration statement; provided, that records which the
Company determines, in good faith, to be confidential and which it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors, unless (A)
the release of such Records is ordered pursuant to a subpoena or other order
from a court of competent jurisdiction or (B) 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;
(vii) 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;
(viii) 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, (A) in an
underwritten offering, at the end of any fiscal quarter in which Registerable
Securities are sold to underwriter(s), or (B) 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;
(ix) 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;
(x) 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, (A) make such
representations and warranties, if any, to the holders of such Registerable
Securities and any underwriter(s) with respect to the registration statement,
prospectus and documents incorporated by reference, if any, in form, substance
and scope as are customarily made by issuers to underwriter(s) in underwritten
offerings and confirm the same if and when requested, (B) 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), (C) 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
(D) 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 4.4(a)(x) shall
be done at each closing under such underwriting or similar agreement or as and
to the extent required thereunder; and
(xi) 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.
(b) Obligations of Rightsholders. In connection with any registration of
Registerable Securities of a Rightsholder pursuant to Section 4.2 or 4.3 hereof:
(i) 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
(ii) Each Rightsholder, upon receipt of any notice from the Company of
the happening of any event of the kind described in clauses (B), (C), (E) and
(F) of Paragraph 4.4(a)(iii) 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 (A) of Paragraph
4.4(a)(iii) hereof, or until such Rightsholder is advised in writing (the
"Advice") by the Company that the use of the applicable prospectus may be
resumed, and until such Rightsholder has received copies of any additional or
supplemental filings which are incorporated by reference in or to be attached to
or included with such prospectus, and, if so directed by the Company, such
Rightsholder will deliver to the Company (at the expense of the Company) all
copies, other than permanent file copies then in the possession of such
Rightsholder, of the current prospectus covering such Registerable Securities at
the time of receipt of such notice; the Company shall have the right to demand
that such Rightsholder or other holder verify its agreement to the provisions of
this Paragraph 4.4(b)(ii) in any Demand Request, Tag-Along Request or Holder
Notice of the Rightsholder or in a separate document executed by the
Rightsholder.
4.5. 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, the 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.
4.6. Indemnification: Contribution.
(a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless, to the full extent permitted by law, each Rightsholder, its
officers and directors and each person who controls such Rightsholder (within
the meaning of the Securities Act), if any, and any agent thereof against all
losses, claims, damages, liabilities and expenses incurred by such party
pursuant to any actual or threatened suit, action, proceeding or investigation
(including reasonable attorney's fees and expenses of investigation) arising out
of or based upon any untrue or alleged untrue statement of a material fact
contained in any registration statement, prospectus or preliminary prospectus or
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case of a
prospectus, in the light of the circumstances under which they were made) not
misleading, except insofar as the same arise out of or are based upon, any such
untrue statement or omission based upon information with respect to such
Rightsholder furnished in writing to the Company by such Rightsholder expressly
for use therein.
(b) 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.
(c) Conduct of Indemnification Proceedings. Promptly after receipt by an
indemnified party under this Section 4.6 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 (i) hereunder, unless the indemnifying party is actually prejudiced
thereby, or (ii) otherwise than under this Section 4.6. 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 (i) the indemnifying party has agreed to pay such
fees and expenses, (ii) the indemnifying party shall have failed to assume the
defense of such action, suit or proceeding or to employ counsel reasonably
satisfactory to the indemnified party therein or to pay all expenses relating
thereto or (iii) 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).
(d) Contribution. If the indemnification provided for in this Section 4.6
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 (i) 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
(ii) if the allocation provided by clause (i) 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 4.6(e), 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 4.6(d) 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 (i) and (ii) of the
immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) Limitation. Anything to the contrary contained in this Section 4.7 or
in Section 4.7 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.
4.7. Participation in Underwritten Registration. No Rightsholder may
participate in any underwritten registration hereunder unless such Rightsholder
(a) 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 Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and (b) 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 4.5 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 its 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 by all parties. This Subscription Agreement may not be modified
or amended except in writing signed by both parties hereto. This Subscription
Agreement may be executed in several counterparts, each of which shall be deemed
an original, and all of which shall constitute one and the same instrument. This
Subscription Agreement shall be governed in all respects, including validity,
interpretation and effect, by the laws of the State of New York, without regard
to its conflicts of laws principles. This Subscription Agreement shall be
binding upon and inure to the benefit of and be enforceable by the successors
and assigns of the parties hereto. This Subscription Agreement shall not be
assignable by either party without the prior written consent of the other. The
rights and obligations contained in this Subscription Agreement are solely for
the benefit of the parties hereto and are not intended to benefit or be
enforceable by any other party, under the third party beneficiary doctrine or
otherwise.
THE SECURITIES 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 SECURITIES 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 SECURITIES 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.
EXECUTION SECTION FOR SUBSCRIPTION BY INDIVIDUALS
I. SUBSCRIPTION AMOUNT:
The undersigned subscribes to purchase the Shares and Warrants set forth in
the first paragraph of this Agreement for the Subscription Price set forth
therein.
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) ________________________________________
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(1) whose net worth (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, furnishings,
automobile and restricted securities), minus any liabilities (including such
items as home mortgages and other debt and liabilities).
2 For purposes hereof, the term "income" is not limited to "adjusted gross
income" as that term is defined for Federal Income Tax purposes, but rather
includes certain items of income which are deducted in computing "adjusted gross
income." For investors who are salaried employees, the gross salary of such
investor, minus any significant expenses personally incurred by such investor
in connection with earning the salary, plus any income from any other source,
including unearned income, is a fair measure of "income" for purposes hereof.
For investors who are self-employed, "income" is generally construed to mean
total revenues received during the calendar year minus significant expenses
incurred in connection with earning such revenues.
V. SIGNATURE(S):
Signature(s) of Subscriber(s): (1) ________________________________________
(2) ________________________________________
Signature of Non-Subscribing Spouse (Community Property States Only):
(1) ________________________________________
(2) ________________________________________
Date: _______________________________________, 1998
EXECUTION SECTION FOR SUBSCRIPTION BY NON-INDIVIDUALS
I. SUBSCRIPTION AMOUNT:
The undersigned subscribes to purchase the Shares and Warrants set
forth in the first paragraph of this Agreement for the Subscription Price
set forth therein.
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: __Whitehaven Group, Inc._________________________________________
Tax Identification Number: __________________________________________________
State of Incorporation or Organization: ________________________________________
State of Principal Place of Business: ________________________________________
Mailing Address: ____________________________________________________________
____________________________________________________________
____________________________________________________________
Telephone Number: ____________________________________________________________
Facsimile Number: ____________________________________________________________
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.
_ 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 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.
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.
WHITEHAVEN GROUP, INC.
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:_______________________________________, 1998
ACCEPTANCE PAGE
(To be completed by the Company)
SUBSCRIPTION AND SUBSCRIPTION AGREEMENT
ACCEPTED AND AGREED:
Number of Shares for which Subscription is Accepted: 1,000,000
Number of $.01 Warrants for which Subscription is Accepted: 550,000
Number of $.71875 Warrants for which Subscription is Accepted: 250,000
SOFTWARE PUBLISHING CORPORATION HOLDINGS, INC.
By: ____________________________________________________
Name:
Title:
Date: _______________________________________, 1998