-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PXydD3dAYldh2o2297Gqz+G34UHIz8/H8pmFKZDXwe9XuQ+4JGkyETDmQvfTt4iW MgyMODe3LdIS+pas7Ts2rw== 0000950144-97-008225.txt : 19970729 0000950144-97-008225.hdr.sgml : 19970729 ACCESSION NUMBER: 0000950144-97-008225 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 19970728 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARBINGER CORP CENTRAL INDEX KEY: 0000947116 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 581817306 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-31191 FILM NUMBER: 97646373 BUSINESS ADDRESS: STREET 1: 1055 LENOX PARK BLVD CITY: ATLANTA STATE: GA ZIP: 30319 BUSINESS PHONE: 4048414334 S-3/A 1 HARBINGER CORPORATION 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 28, 1997 REGISTRATION NO. 333-31191 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- AMENDMENT NO. 2 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------------- HARBINGER CORPORATION (Exact name of issuer as specified in its charter) GEORGIA 58-1817306 (State of Incorporation) (I.R.S. Employer Identification Number)
1055 LENOX PARK BOULEVARD ATLANTA, GEORGIA 30319 (404) 467-3000 (Address, including zip code and telephone number, including area code, of registrant's principal executive offices and principal place of business) --------------------- LOREN B. WIMPFHEIMER DIRECTOR OF LEGAL AFFAIRS HARBINGER CORPORATION 1055 LENOX PARK BOULEVARD ATLANTA, GEORGIA 30319 (404) 467-3000 (404) 841-3380 (FAX) (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: JOHN C. YATES, ESQ. ROBERT W. SMITH, JR., ESQ. LARRY W. SHACKELFORD, ESQ. PIPER & MARBURY L.L.P. MORRIS, MANNING & MARTIN, L.L.P. 36 S. CHARLES STREET 1600 ATLANTA FINANCIAL CENTER BALTIMORE, MARYLAND 21201 3343 PEACHTREE ROAD, N.E. (410) 539-2530 ATLANTA, GEORGIA 30326 (410) 576-1700 (FAX) (404) 233-7000 (404) 365-9532 (FAX)
--------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement. If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, please check the following box. [ ] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] --------------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE. The Index to Exhibits is located at Page II-11. ================================================================================ 2 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION JULY 28, 1997 2,900,000 SHARES (LOGO) HARBINGER COMMON STOCK ------------------ Of the 2,900,000 shares of common stock ("Common Stock") offered hereby, 1,800,000 shares are being sold by Harbinger Corporation ("Harbinger" or the "Company") and 1,100,000 shares are being sold by the selling shareholders named herein (the "Selling Shareholders"). See "Principal and Selling Shareholders." The Company will not receive any proceeds from the sale of shares of Common Stock sold by the Selling Shareholders. The Company's Common Stock is traded on the Nasdaq National Market under the symbol "HRBC." On July 15, 1997, the last reported sale price for the Common Stock on the Nasdaq National Market was $36.625 per share. See "Price Range of Common Stock." THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 6 HEREOF. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
======================================================================================================================= PRICE UNDERWRITING PROCEEDS PROCEEDS TO DISCOUNTS AND TO TO SELLING PUBLIC COMMISSIONS COMPANY(1) SHAREHOLDERS - ----------------------------------------------------------------------------------------------------------------------- Per Share.............................. $ $ $ $ - ----------------------------------------------------------------------------------------------------------------------- Total(2)............................... $ $ $ $ =======================================================================================================================
(1) Before deducting estimated expenses of the offering estimated at $350,000. None of the expenses of the offering are being paid by the Selling Shareholders. (2) The Company and the Selling Shareholders have granted the Underwriters a 30-day option to purchase up to 435,000 additional shares of Common Stock solely to cover over-allotments, if any. To the extent that the option is exercised, the Underwriters will offer the additional shares at the Price to the Public shown above. If the option is exercised in full, the total Price to Public, Underwriting Discounts and Commissions, Proceeds to the Company and Proceeds to the Selling Shareholders will be $ , $ , $ and $ , respectively. See "Underwriting." ------------------ The shares of Common Stock are offered by the Underwriters, subject to prior sale, when, as and if delivered to and accepted by them and subject to the right of the Underwriters to reject any order in whole or in part. It is expected that delivery of the shares of Common Stock will be made at the offices of Alex. Brown & Sons Incorporated, Baltimore, Maryland, on or about July , 1997. ALEX. BROWN & SONS INCORPORATED THE ROBINSON-HUMPHREY COMPANY, INC. ROBERTSON, STEPHENS & COMPANY INTERSTATE/JOHNSON LANE CORPORATION THE DATE OF THIS PROSPECTUS IS JULY , 1997. 3 [ACTIVE REVENUE GENERATING CUSTOMERS GRAPH] IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SPECIFICALLY, THE UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH THE OFFERING AND MAY BID FOR AND PURCHASE STOCK IN THE OPEN MARKET. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING." IN CONNECTION WITH THIS OFFERING, CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK OF THE COMPANY ON NASDAQ IN ACCORDANCE WITH RULE 103 UNDER REGULATION M. SEE "UNDERWRITING." 2 4 PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information, including "Risk Factors" and consolidated financial statements and notes thereto, appearing elsewhere or incorporated by reference in this Prospectus. THE COMPANY Harbinger Corporation ("Harbinger" or the "Company") is a leading worldwide provider of electronic commerce products and services to businesses and offers comprehensive, customizable, standards-based electronic commerce solutions. The Company develops, markets and supports software products and provides computer communications network and consulting services which enable businesses to engage in electronic commerce. These electronic commerce solutions are provided over the Harbinger value-added network ("VAN") or the Company's Internet value-added servers ("IVAS"), or directly over standard telephone lines, the Internet, or private internal computer networks known as intranets. Harbinger offers software products that operate on multiple computer platforms, secure and reliable computer networks and secure Internet communications to facilitate the transmission of business information and transactions, and value-added products and services to enable businesses of all sizes to maximize the number and value of their electronic trading relationships. As of March 31, 1997 the Company's customers included leading U.S. and international corporations and government agencies, including Northrop, Compaq Computer, Digital Equipment Corporation, Hewlett-Packard, Westinghouse Electric, Baxter Healthcare, Johnson & Johnson, Amoco, Chevron, Mobil, Pacific Gas & Electric, Southern California Edison, Bank of America and Barnett Banks. The Company's products and services facilitate electronic commerce and electronic data interchange ("EDI") by businesses and financial institutions by providing the ability to electronically transmit and receive routine business information and documents in a standard format. The Harbinger VAN and IVAS serve as electronic communications links for computer systems by receiving, storing and forwarding electronically transmitted business documents and data for re- transmission in a form that can be received and interpreted by the computer of another commercial business. The method of document exchange is user configurable by trading partner and by document type (such as purchase order, invoice, quote or bid request). Both the Harbinger VAN and IVAS provide encryption and other document management and security methods to allow documents to be exchanged securely and reliably. Harbinger facilitates the electronic link to its computer communications network through its electronic commerce software packages for use in a broad range of computing environments, including PC-based solutions for DOS and Windows (3.x, 95 and NT Workstation), and client-server solutions for Windows NT Server, UNIX, IBM AS/400 midrange and IBM MVS mainframe platforms. The Company also provides professional services to assist businesses in the installation, customization, operation and maintenance of their electronic trading relationships. An important part of the Company's strategy is to enhance its suite of electronic commerce products and services and to address new electronic trading communities. The Company believes that the addition of new products and markets from its recent acquisitions enhance Harbinger's ability to provide a comprehensive range of solutions for trading partners to conduct business electronically over the Harbinger VAN, IVAS, the Internet or private intranets. The Company has made the following significant acquisitions since January 1, 1997: - SupplyTech -- On January 3, 1997, the Company completed a merger with SupplyTech, Inc. and its affiliate (collectively, "SupplyTech"), with operations in the U.S., United Kingdom, Italy, Australia and Mexico. SupplyTech, one of the largest providers of PC-based EDI software in the United States, provides its STX family of electronic commerce software products and services to, and allows the Company to expand into, trading communities in the automotive, retail, aerospace and heavy manufacturing markets. 3 5 - HNS -- On January 1, 1997, the Company purchased the remaining equity interest in Harbinger NET Services, LLC ("HNS") and the related $3.0 million Subordinated Convertible Debenture (the "Debenture") held by BellSouth Telecommunications, Inc. ("BellSouth"), thereby obtaining direct ownership of products designed to facilitate electronic commerce over the Internet. These products include IVAS, the Company's Internet value added server, TrustedLink Guardian, a security and encryption document management program, Harbinger Express, designed to permit EDI over the World Wide Web using a browser, and TrustedLink INP, a web site development tool. HNS was capitalized by the Company and certain other investors in 1995 to develop EDI products and services for the Internet, and prior to 1997 operated as a joint venture with BellSouth in which the Company held a 66.1% fully-diluted equity interest. In connection with the SupplyTech transaction, the Company incurred in the first quarter of 1997 a $7.1 million charge related to merger expenses and $4.8 million of integration costs. In connection with the HNS transactions, the Company incurred in the first quarter 1997 a $2.4 million loss on the extinguishment of the Debenture, a $2.7 million charge for in-process product development, and $1.6 million of integration costs. See "Business -- Recent Developments." The Company was incorporated in Georgia in 1988. The Company's principal executive offices are located at 1055 Lenox Park Boulevard, Atlanta, Georgia 30319 and its telephone number is (404) 467-3000. SECOND QUARTER RESULTS OF OPERATIONS On July 16, 1997, the Company announced its results of operations for the quarter ended June 30, 1997. Revenue for the quarter ended June 30, 1997 was $19.7 million compared to revenue of $14.8 million for the quarter ended June 30, 1996. Net income applicable to common shareholders for the quarter ended June 30, 1997 was $2.2 million ($.11 per share) compared to net loss applicable to common shareholders of $1.5 million (or($.08) per share) in the same period in 1996. Operating income for the quarter ended June 30, 1997 was $3.7 million compared to operating income of $252,000 for the same period in 1996. Adjusted net income from the Company's core business (excluding the equity in loss of HNS in 1996, net of related income taxes) was $2.2 million (or $.11 per share) for the quarter ended June 30, 1997 compared to adjusted net income of $157,000 (or $.01 per share) in the same period in 1996. THE OFFERING Common Stock offered by the Company.......... 1,800,000 shares Common Stock offered by the Selling Shareholders................................. 1,100,000 shares Common Stock to be outstanding after this offering(1).................................. 21,092,886 shares Use of Proceeds.............................. Working capital and general corporate purposes, including acquisitions. Nasdaq National Market symbol................ HRBC - --------------- (1) Excludes additional shares of Common Stock issuable upon the exercise of outstanding options and warrants, of which 1,175,823 shares are issuable under options and warrants exercisable at July 1, 1997. Except as otherwise noted, all information contained in this Prospectus (i) assumes no exercise of the Underwriters' over-allotment option, (ii) reflects a 3-for-2 stock split paid in the form of a stock dividend on January 31, 1997 to shareholders of record on January 17, 1997 and (iii) gives effect to the restatement of the financial statements of the Company to reflect the acquisition of SupplyTech, which was accounted for under the pooling-of-interests method of accounting. This Prospectus (including the documents incorporated by reference herein) contains forward-looking statements that are based on the beliefs of, and estimates and assumptions made by and information currently available to, the Company's management. Such statements are subject to certain risks, uncertainties and assumptions. Actual results may vary materially from those expected or anticipated in these forward-looking statements as a result of certain factors, including those set forth under "Risk Factors" and elsewhere in this Prospectus. See "Certain Forward Looking Statements." 4 6 SUMMARY FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED YEARS ENDED DECEMBER 31, MARCH 31, ---------------------------- ------------------ 1994 1995 1996 1996 1997 ------- ------- -------- ------- -------- (UNAUDITED) STATEMENT OF OPERATIONS DATA: Total revenues................................ $27,893 $37,830 $ 59,263 $11,504 $ 17,003 Gross margin.................................. 20,475 27,545 42,726 8,410 12,476 Charge for purchased in-process product development and acquisition related charges..................................... 4,317 1,160 8,775 8,350 16,236 Operating income (loss)....................... (2,667) 659 (5,736) (7,876) (13,326) Loss before income taxes and extraordinary item........................................ (2,921) (539) (12,921) (8,965) (13,280) Loss before extraordinary item................ (1,888) (1,742) (13,067) (9,014) (13,303) Extraordinary loss on debt extinguishment..... -- -- -- -- 2,419 ------- ------- -------- ------- -------- Net loss...................................... (1,888) (1,742) (13,067) (9,014) (15,722) Preferred stock dividends..................... (200) (199) (28) (28) -- ------- ------- -------- ------- -------- Net loss applicable to common shareholders.... $(2,088) $(1,941) $(13,095) $(9,042) $(15,722) ======= ======= ======== ======= ======== Net loss per share of common stock: Loss before extraordinary item applicable to common shareholders...................... $ (0.16) $ (0.13) $ (0.71) $ (0.51) $ (0.70) Extraordinary loss on debt extinguishment... -- -- -- -- (0.13) ------- ------- -------- ------- -------- Net loss per share of common stock............ $ (0.16) $ (0.13) $ (0.71) $ (0.51) $ (0.83) ======= ======= ======== ======= ======== Weighted average common and common equivalent shares outstanding.......................... 12,693 15,007 18,465 17,903 18,930 ======= ======= ======== ======= ======== SUPPLEMENTAL DATA: Adjusted operating income(1).................. $ 1,650 $ 1,819 $ 3,039 $ 474 $ 2,910 ======= ======= ======== ======= ======== Adjusted net income applicable to common shareholders(2)............................. $ 652 $ 762 $ 1,715 $ 274 $ 1,803 ======= ======= ======== ======= ======== Adjusted net income per common share(2)....... $ 0.05 $ 0.05 $ 0.09 $ 0.01 $ 0.09 ======= ======= ======== ======= ========
MARCH 31, 1997 ---------------------------- ACTUAL AS ADJUSTED(3) ----------- -------------- (UNAUDITED) (UNAUDITED) BALANCE SHEET DATA: Working capital (deficit)................................. $(3,140) $ 59,139 Total assets.............................................. 47,143 109,422 Long-term obligations..................................... 1,305 1,305 Shareholders' equity...................................... 18,676 80,955
- --------------- (1) Excludes charges for purchased in-process product development and acquisition related charges. (2) Excludes equity in loss of HNS, expected to recur, of $954,000, $7.0 million and $1.1 million for 1995, 1996, and the three months ended March 31, 1996, respectively, and $4.3 million, $1.2 million, $8.8 million, $8.4 million and $16.2 million in charges for 1994, 1995, 1996, and the three months ended March 31, 1996, and 1997, respectively, for purchased in-process product development and acquisition related charges. The three months ended March 31, 1997 also excludes the extraordinary loss on debt extinguishment. All amounts are net of related income taxes. See "Acquisition-Related Charges; Loss in 1997 First Quarter and Expected Loss in Year Ended December 31, 1997." (3) Adjusted to reflect the sale by the Company of 1,800,000 shares of Common Stock at an assumed offering price of $36.625 per share, less estimated underwriting discounts and commissions and offering expenses of the Company, and the application of the net proceeds therefrom. 5 7 RISK FACTORS In addition to the other information in this Prospectus, the following factors should be considered in evaluating the Company and its business before purchasing the Shares of Common Stock offered hereby. Integration of Recent Acquisitions. The Company has completed a number of acquisitions since January 1, 1996, including the acquisitions of SupplyTech and the minority interests of HNS. SupplyTech and HNS have historically reported significant operating losses. The Company's acquisitions present a number of risks and challenges, including the historical operating losses of SupplyTech and HNS, the integration of the SupplyTech software products into the Company's current suite of products, the integration of the sales force of SupplyTech into the Company's existing sales operations, the coordination of customer support services, the integration of international operations of SupplyTech with the Company's international affiliates, the development and commercialization of HNS's Internet-related products and the integration of those products with the Company's existing products, and the diversion of management's attention from other business concerns. Several of the newly acquired products address the same markets as, and may therefore be competitive with, existing Company products. There can be no assurance that the Company can successfully assimilate its operations and integrate its software products with these recently acquired operations, software products and technologies, or that the Company will be successful in repositioning its products on a timely basis to achieve market acceptance. Any delay in such integration could have a material adverse effect on the Company. See "Business -- Recent Developments." Factors Affecting Operating Results; Potential Fluctuations in Quarterly Results. The Company's quarterly operating results have in the past and may in the future vary or decrease significantly depending on factors such as revenue from software sales, the timing of new product and service announcements, changes in pricing policies by the Company and its competitors, market acceptance of new and enhanced versions of the Company's products, the size and timing of significant orders, changes in operating expenses, changes in Company strategy, personnel changes, government regulation, the introduction of alternative technologies, the effect of acquisitions and general economic factors. The Company has limited or no control over many of these factors. The Company has experienced losses in the past, and at March 31, 1997, the Company had an accumulated deficit of approximately $36.6 million. The Company operates with virtually no software product order backlog because its software products typically are shipped shortly after orders are received. As a result, revenues in any quarter are substantially dependent on the quantity of purchases of services requested and product orders received in that quarter. Quarterly revenues also are difficult to forecast because the market for electronic commerce and EDI software products is rapidly evolving and the Company's revenues in any period may be significantly affected by the announcements and product offerings of the Company's competitors as well as alternative technologies. The Company's IVAS product is more complex and expensive compared to the Company's other electronic commerce and Internet products introduced to date, and will generally involve significant investment decisions by prospective customers. Accordingly, the Company expects that in selling its IVAS product it will encounter risks typical of companies that rely on large dollar purchase decisions, including the reluctance of purchasers to commit to major investments in new products and protracted sales cycles, both of which add to the difficulty of predicting future revenues and may result in quarterly fluctuations. The Company's expense levels are based, in part, on its expectations as to future revenues. If revenue levels are below expectations, the Company may be unable or unwilling to reduce expenses proportionately and operating results are likely to be adversely affected. As a result, the Company believes that period-to-period comparisons of its results of operations are not necessarily meaningful and should not be relied upon as indications of future performance. Due to all of the foregoing factors, it is likely that in some future quarter or quarters the Company's operating results will be below the expectations of public market analysts and investors. In such event, the price of the Company's Common Stock will likely be adversely affected. 6 8 The Company recognizes revenues for software license fees upon shipment, net of estimated returns. Customers using the Company's PC products are permitted to return products after delivery for a specified period, generally 60 days. The Company generally has experienced returns of approximately 20% of the PC product license fees, and the Company records revenues after a deduction for estimated returns. Any material increase in the Company's return experience could have an adverse effect on its operating results. See "Acquisition-Related Charges; Loss in 1997 First Quarter and Expected Loss in Year Ended December 31, 1997." Acquisition-Related Charges; Loss in 1997 First Quarter and Expected Loss in Year Ended December 31, 1997. In January 1997, the Company completed the merger with SupplyTech, accounted for as a pooling of interests, and incurred a $7.1 million first quarter 1997 charge related to merger related expenses. Additionally, the Company incurred integration costs related to the merger of $4.8 million during the first quarter of 1997. In January 1997, the Company completed the purchase of the $3.0 million Subordinated Convertible Debenture of HNS (the "Debenture") from BellSouth and the remaining equity in HNS from other shareholders for an aggregate of approximately $9.8 million in consideration. The Company incurred integration costs related to the HNS transaction of $1.6 million during the first quarter of 1997. Additionally, the Company incurred a $2.4 million loss on extinguishment of the Debenture related to its purchase and a $2.7 million charge for in-process product development related to the acquisition of the minority interest of HNS in the first quarter of 1997. As a result of these charges, the Company incurred a net loss for the first quarter of 1997 and expects to incur a net loss for the year ending December 31, 1997. The costs and expenses incurred in connection with the SupplyTech and HNS integration activities included certain internal expense allocations which may recur in other expense categories in the future and may result in an increase in some expense categories as a percentage of total revenues. See "Integration of Recent Acquisitions," "Risks of Potential Future Acquisitions" and "Business -- Recent Developments." Intense Competition. The electronic commerce, EDI and network services and products businesses are intensely competitive, and the Company has many competitors with substantially greater financial, marketing, personnel and technological resources than the Company. Other companies offer products and services that may be considered by customers to be acceptable alternatives to the Company's products and services. Certain companies also operate private computer networks for transacting business with their trading partners. It is expected that other companies may develop and implement similar computer-to-computer networks, some of which may be "public" networks such as the Company's and others may be "private," providing services only to a specific group of trading partners, thereby reducing the Company's ability to increase sales of its network services. In addition, several companies offer PC-based, UNIX, midrange and mainframe and Internet computer software products which compete with the Company's software products. Advanced operating systems and applications software from Microsoft and other vendors also may offer electronic commerce functions that limit the Company's ability to sell its software products. The Company believes that the continuing acceptance of electronic commerce and EDI will attract new competitors, including software applications and operating systems companies that may bundle electronic commerce solutions with their programs, and alternative technologies that may be more sophisticated and cost effective than the Company's products and services. Competitive companies may offer certain electronic commerce products or services, such as communications software or network transactional services, at no charge or a deeply discounted charge, in order to obtain the sale of other products or services. Since the Company's agreements with its network subscribers are terminable upon 30 days' notice, the Company does not have the contractual right to prevent its customers from changing to a competing network. See "Dependence on New Products; Industry Standards." Competitors that offer products and/or services that compete with various of the Company's products and services include, among others, Advantis Systems, Inc.; AT&T; Computer Associates International, Inc.; EDS; General Electric Information Systems; Premenos Technology Corp.; QuickResponse Services, Inc.; Sterling Commerce, Inc. and a joint venture between British 7 9 Telecommunications Plc and MCI Communications Corporation; as well as the internal programming staffs of various businesses engaging in electronic commerce. Emergence of Electronic Commerce Over the Internet. The Internet provides a potential alternative means of providing electronic commerce to business trading partners. The market for Internet software and services is both emerging and highly competitive, ranging from small companies with limited resources to large companies with substantially greater financial, technical and marketing resources than the Company. In addition to the Company's Internet related products and services, several existing competitors of the Company have introduced their own Internet electronic commerce products and services. Moreover, new competitors, which may include telephone companies and media companies, are likely to increase the provision of business-to-business data transmission services using the Internet. There is no assurance that the Company's TrustedLink Guardian end user software and IVAS, which enable electronic commerce over the Internet, will be accepted in the Internet market or can be competitive with other products based on evolving technologies. If the Internet becomes an accepted method of electronic commerce, the Company could also lose network customers from its VAN which would reduce recurring revenue from network services and have a material adverse effect on the Company. The use of the Company's Internet electronic commerce products and services will depend in large part upon the continued development of the infrastructure for providing Internet access and services. Use of the Internet for business-to-business electronic commerce services raises numerous issues that greatly impact the development of this market. These issues include reliability, data security and data integrity, timely transmission, and pricing of products and services. Because global commerce and online exchange of information on the Internet is new and evolving, it is difficult to predict with any assurance whether the Internet will prove to be a viable commercial marketplace. The Internet has experienced, and is expected to continue to experience, substantial growth in the number of users and the amount of traffic. There can be no assurance that the Internet will continue to be able to support the demands placed on it by this continued growth. In addition, the Internet could lose its viability due to delays in the adoption of new standards and protocols to handle increased levels of Internet activity, or due to increased governmental regulation. There can be no assurance that the infrastructure or complementary services necessary to make the Internet a viable commercial marketplace will be developed, or, if developed, that the Internet will become a viable commercial marketplace for products and services such as those offered by the Company. If the necessary infrastructure or complementary services or facilities are not developed, or if the Internet does not become a viable commercial marketplace, the Company's business, operating results or financial condition will be materially adversely affected. See "Dependence on New Products; Industry Standards." Risks of Potential Future Acquisitions. The Company's growth has been significantly enhanced through acquisitions of other businesses, products and licenses. Following this offering, the Company will have significant cash resources, which may be used for acquisitions. There can be no assurance that in the future the Company will be able to identify suitable acquisition candidates available for sale at reasonable prices, consummate any acquisition or successfully integrate any acquired business into the Company's operations. Operational and software integration problems may arise if the Company undertakes future acquisitions of complementary products, technologies or businesses. Future acquisitions may also result in potentially dilutive issuances of equity securities, the incurrence of additional debt, the write-off of in-process product development and capitalized product costs, integration costs, and the amortization of expenses related to goodwill and other intangible assets, all of which could have a material adverse effect on the Company. Acquisitions involve numerous additional risks, including difficulties in the assimilation of the operations, products and personnel of the acquired company, differing company cultures, the diversion of management's attention from other business concerns, risks of entering markets in which the Company has little or no direct prior experience, and the potential loss of key employees of the acquired company. Customer satisfaction or performance problems at a single acquired firm could have a material adverse impact on the reputation of the Company as a whole. The Company 8 10 expects to finance any future acquisitions with the proceeds of this offering as well as with possible debt financing, the issuance of equity securities (common or preferred stock) or a combination of the foregoing. There can be no assurance that the Company will be able to arrange adequate financing on acceptable terms. See "Ability to Manage Growth." Dependence on New Products; Industry Standards. The electronic commerce industry is characterized by rapid technological change, frequent new product and service introductions and evolving industry standards. The Company's future success will depend in significant part on its ability to anticipate industry standards, continue to apply advances in electronic commerce product and service technologies, enhance existing products and services and introduce and acquire new products and services on a timely basis to keep pace with technological developments. There can be no assurance that the Company will be successful in developing, acquiring or marketing new or enhanced products or services that respond to technological change or evolving industry standards, that the Company will not experience difficulties that could delay or prevent the successful development, acquisition or marketing of such products or services or that its new or enhanced products and services will adequately meet the requirements of the marketplace and achieve market acceptance. In the past, the Company has experienced delays in the commencement of commercial shipments of new products and enhancements, resulting in delays or losses of product revenues. Such delays or failure in the introduction of new or enhanced products or services, or the failure of such products or services to achieve market acceptance, could have a material adverse effect on the business, results of operations and financial condition of the Company. Ability to Manage Growth. The Company has recently experienced significant growth in revenue, operations and personnel as it has made strategic acquisitions, added subscribers to the Harbinger VAN and IVAS and increased the number of licensees of its software products. This growth could continue to place a significant strain on the Company's management and operations, including its sales, marketing, customer support, research and development, finance and administrative operations. Achieving and maintaining profitability during a period of expansion will depend, among other things, on the Company's ability to successfully expand its products, services and markets and to manage its operations and acquisitions effectively. Difficulties in managing growth, including difficulties in obtaining and retaining talented management and product development personnel, especially following an acquisition, could have a material adverse effect on the Company. Investment in International Subsidiaries; International Growth and Operations. The Company believes that its continued growth and profitability will require expansion of its international operations through its international subsidiaries, including NTEX Holding, B.V. ("NTEX") and INOVIS GmbH & Co. ("INOVIS") in Germany as well as the international operations of SupplyTech in the United Kingdom, Italy, Australia and Mexico (the "International Subsidiaries"). This expansion will require financial resources and significant management attention, particularly by certain members of the management of the Company. The Company's ability to successfully expand its business internationally will also depend upon its ability to attract and retain both talented and qualified managerial, technical and sales personnel and electronic commerce services customers outside the United States and its ability to continue to effectively manage its domestic operations while focusing on international expansion. Certain of the International Subsidiaries have experienced operating losses in their recent histories and some have experienced significant operating losses in their recent histories. To the extent that the International Subsidiaries are unable to penetrate international markets in a timely and profitable manner, the Company's growth, if any, in international sales will be limited, and the Company could be materially adversely affected. Moreover, the Company's ability to successfully implement its international strategy may require installation and operation of a value-added network and implementation of its IVAS software in other countries, as well as additional improvements to its infrastructure and management information systems, including its international customer support systems. In addition, there can be no assurance that the Company will be able to maintain or increase international market demand for the Company's products or services. See "Integration of Recent Acquisitions" and "Risks of Potential Future Acquisitions." 9 11 International operations are subject to certain inherent risks, including unexpected changes in regulatory requirements and tariffs, longer payment cycles, increased difficulties in collecting accounts receivable and potentially adverse tax consequences. To the extent international sales are denominated in foreign currencies, gains and losses on the conversion to U.S. dollars of revenues, operating expenses, accounts receivable and accounts payable arising from international operations may contribute to fluctuations in the Company's results of operations. The Company has not entered into any hedging or other arrangements for the purpose of guarding against the risk of currency fluctuation. In addition, sales in Europe and certain other parts of the world typically are adversely affected in the third calendar quarter of each year because many customers reduce their business activities in the summer months. Dependence on Key Management and Personnel; Ability to Attract and Retain Qualified Personnel. The Company's success is largely dependent upon its executive officers and key sales and technical personnel, the loss of one or more of whom could have a material adverse effect on the Company. The future success of the Company will depend in large part upon its ability to attract and retain talented and qualified personnel. In particular, the Company believes that it will be important for the Company to hire experienced product development and sales personnel. Competition in the recruitment of highly-qualified personnel in the computer software and electronic commerce industries is intense. The inability of the Company to locate and retain such personnel may have a material adverse effect on the Company. No assurance can be given that the Company can retain its key employees or that it can attract qualified personnel in the future. The Company currently carries key-person life insurance policies on the lives of Messrs. Howle and Leach, and expects to purchase such insurance on the lives of Messrs. Davis, Travers and Annis. See "Management." Dependence on Alliance Partners. The Company has various agreements with alliance partners for the distribution and marketing of certain software products of the Company. These alliance partners pay the Company royalties representing a percentage of fees generated from the sale of software licensed from the Company. For the years ended December 31, 1995 and 1996, revenues from one of these alliance partners were approximately $1.4 million and $5.7 million, respectively, which equaled the contractual minimum royalty during those years. There is no minimum royalty obligation after 1996, and the Company believes that revenues from this alliance partner will substantially decline in 1997 as compared to 1996. Further, based on recent amendments to the arrangement, the Company believes that the average collection period related to cash flows derived from royalty revenues earned from this alliance partner will lengthen substantially. Risks of Product Development. Software products as complex as those offered by the Company may contain undetected errors or failures when first introduced or when new versions are released. If software errors are discovered after introduction, the Company could experience delays or lost revenues during the period required to correct these errors. There can be no assurance that, despite testing by the Company and by current and potential customers, errors will not be found in new products or releases after commencement of commercial shipments, resulting in loss of or delay in market acceptance, additional and unexpected expenses to fund further product development or to add programming personnel to complete a development project, and loss of revenue because of the inability to sell the new product on a timely basis, any one or more of which could have a material adverse effect on the Company. See "Business -- Products and Services." Dependence on Data Centers. The network service operations of the Company are dependent upon the ability to protect computer equipment and the information stored in the Company's data centers against damage that may be caused by fire, power loss, telecommunication failures, unauthorized intrusion, computer viruses and disabling devices and other similar events. Notwithstanding precautions the Company has taken, there can be no assurance that a fire or other natural disaster, including national, regional or local telecommunications outages, would not result in a prolonged outage of the Company's network services. In the event of a disaster, and depending on the nature of the disaster, it may take from several hours to several days before the Company's off-site computer system can become operational for all of the Company's customers, and use of the alternative off-site computer would result in substantial additional cost to the Company. In the event 10 12 that an outage of the Company's network extends for more than several hours, the Company will experience a reduction in revenues by reason of such outage. In the event that such outage extends for one or more days, the Company could potentially lose many of its customers, which may have a material adverse effect on the Company. Dependence upon Certain Licenses. The Company relies on certain technology that it licenses from third parties and other products that are integrated with internally developed software and used in the Company's products to perform key functions or to add important features. There can be no assurance that the Company will be successful in negotiating third-party technology licenses on suitable terms or that such licenses will not be terminated in the future. Moreover, any delay or product problems experienced by such third party suppliers could result in delays in introduction of the Company's products and services until equivalent technology, if available, is identified, licensed and integrated, which could have a material adverse effect on the Company's business, operating results and financial condition. Limited Protection of Proprietary Technology; Risks of Infringement. The Company relies primarily on a combination of copyright, patent and trademark laws, trade secrets, confidentiality procedures and contractual provisions to protect its proprietary rights. The Company seeks to protect its software, documentation and other written materials principally under trade secret and copyright laws, which afford only limited protection. The Company presently has one patent for an electronic document interchange test facility and a patent application pending for an EDI communication system. Despite the Company's efforts to protect its proprietary rights, unauthorized parties may attempt to copy aspects of the Company's products or to obtain and use information that the Company regards as proprietary. There can be no assurance that the Company's means of protecting its proprietary rights will be adequate or that the Company's competitors will not independently develop similar technology. In distributing many of its products, the Company relies primarily on "shrink wrap" licenses that are not signed by licensees and, therefore, may be unenforceable under the laws of certain jurisdictions. In addition, the Company has licensed it products to users and distributors in other countries, and the laws of some foreign countries do not protect the Company's proprietary rights to as great an extent as the laws of the United States. The Company does not believe that any of its products infringe the proprietary rights of third parties. There can be no assurance, however, that third parties will not claim infringement by the Company with respect to current or future products, and the Company has agreed to indemnify many of its customers against such claims. The Company expects that software product developers will increasingly be subject to infringement claims as the number of products and competitors in electronic commerce grows and the functionality of products in different industry segments overlaps. Any such claims, with or without merit, could be time-consuming, result in costly litigation, cause product shipment delays or require the Company to enter into royalty or licensing agreements and indemnify its customers against resulting liability, if any. Such royalty or licensing agreements, if required, may not be available on terms acceptable to the Company or at all, which could have a material adverse effect on the Company. Government Regulatory and Industrial Policy Risks. The Company's network services are transmitted to its customers over dedicated and public telephone lines. These lines are governed by Federal and state regulations establishing the rates, terms and conditions for their use. Changes in the legislative and regulatory environment relating to online services, EDI or the Internet access industry, including regulatory or legislative changes which directly or indirectly affect telecommunication costs, restrict content or increase the likelihood of competition from regional telephone companies or others, could have an adverse effect on the Company's business. The Telecommunications Act of 1996 ("Act") amended the federal telecommunications laws by lifting restrictions on regional telephone companies and others competing with the Company and imposed certain restrictions regarding obscene and indecent content communicated to minors over the Internet or through interactive computer services. The Act set in motion certain events that will lead to the elimination of restrictions on regional telephone companies providing transport between defined 11 13 geographic boundaries associated with the provision of their own information services. This will enable regional telephone companies to more readily compete with the Company by packaging information service offerings with other services and providing them on a wider geographic scale. While provisions of the Act prohibiting the use of a telecommunications device or interactive computer service to send or display indecent material to minors have been held by the U.S. Supreme Court to be unconstitutional, there can be no assurance that future legislative or regulatory efforts to limit use of the Internet in a manner harmful to the Company will not be successful. The Clinton administration has announced an initiative to establish a framework for global electronic commerce. Also, some countries such as Germany have adopted laws regulating aspects of the Internet, and there are a number of bills currently being considered in the United States at the federal and state levels involving encryption and digital signatures, all of which may impact the Company. The Company cannot predict the impact, if any, that the Act and future court opinions, legislation, regulations or regulatory changes in the United States or other countries may have on its business. Management believes that the Company is in compliance with all material applicable regulations. Anti-Takeover Provisions. The Board of Directors has authority to issue up to 20,000,000 shares of preferred stock and to fix the rights, preferences, privileges and restrictions, including voting rights, of the preferred stock without further vote or action by the Company's shareholders. The rights of the holders of Common Stock will be subject to, and may be adversely affected by, the rights of the holders of any preferred stock that may be issued in the future. While the Company has no present intention to issue additional shares of preferred stock, such issuance, while providing desired flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of making it more difficult for a third party to acquire a majority of the outstanding voting stock of the Company. In addition, the Company's Amended and Restated Articles of Incorporation and Bylaws contain provisions that may discourage proposals or bids to acquire the Company. This could limit the price that certain investors might be willing to pay in the future for shares of Common Stock. The Company's Amended and Restated Articles of Incorporation provide for a classified Board of Directors with three-year, staggered terms for its members. The classification of the Board of Directors could have the effect of making it more difficult for a third party to acquire control of the Company. 12 14 USE OF PROCEEDS The net proceeds to the Company from the sale of the 1,800,000 shares of Common Stock offered by it hereby are estimated to be $62.3 million ($71.7 million if the Underwriters' over-allotment option is exercised in full) after deducting estimated underwriting discounts and commissions and offering expenses and assuming a public offering price of $36.625 per share (the last reported sale price of the Common Stock on the Nasdaq National Market on July 15, 1997). The Company will not receive any of the proceeds from the sale of the shares by the Selling Shareholders. The Company intends to use such proceeds for working capital and general corporate purposes, which may include acquisitions and possible facilities expansion. From time to time, the Company evaluates various acquisition candidates. As of the date hereof, the Company has no definitive agreement to acquire any business whose operations are significant to the Company. Pending such use, the Company currently intends to invest the net proceeds of this offering in short term, investment grade debt securities and other marketable securities. PRICE RANGE OF COMMON STOCK The Company's Common Stock is listed on the Nasdaq National Market under the symbol "HRBC." The following table sets forth the range of high and low closing sale prices for the Company's Common Stock on the Nasdaq National Market during the periods indicated commencing August 22, 1995, the date of the Company's initial public offering. The prices reported reflect the Company's 3-for-2 stock split paid in the form of a stock dividend on January 31, 1997 to shareholders of record as of January 17, 1997.
HIGH LOW ---- --- Year Ended December 31, 1995: Quarter Ended: September 30, 1995..................................... $11 5/8 $ 8 5/8 December 31, 1995...................................... 19 5/8 8 1/8 Year Ended December 31, 1996: Quarter Ended: March 31, 1996......................................... 15 5/8 10 1/8 June 30, 1996.......................................... 18 1/2 10 September 30, 1996..................................... 18 5/8 13 1/4 December 31, 1996...................................... 19 1/4 16 5/8 Year Ended December 31, 1997: Quarter Ended: March 31, 1997......................................... 29 17 5/8 June 30, 1997.......................................... 31 1/2 19 1/4 September 30, 1997 (through July 15, 1997)............. 36 5/8 27 1/4
On July 15, 1997, the closing sale price of the Common Stock on the Nasdaq National Market was $36.625 per share. DIVIDEND POLICY The Company has never declared or paid any cash dividends on its Common Stock. The Company currently anticipates that it will retain all future earnings for use in its business and does not anticipate paying cash dividends in the foreseeable future. In addition, the Company's loan agreements contain covenants which restrict the Company's ability to pay cash dividends. 13 15 CAPITALIZATION The following table sets forth the capitalization of the Company as of March 31, 1997, and the capitalization as adjusted to give effect to the completion of this offering and the receipt by the Company of the estimated net proceeds therefrom, assuming a public offering price of $36.625 per share. See "Use of Proceeds" and "Description of Capital Stock." This table should be read in conjunction with the Company's historical consolidated financial statements and the other information included and incorporated by reference in this Prospectus.
MARCH 31, 1997 ------------------------- HISTORICAL AS ADJUSTED ---------- ----------- (IN THOUSANDS) Long-term debt, excluding current portion................... $ 1,305 $ 1,305 -------- -------- Redeemable preferred stock: Zero Coupon; 4,000,000 shares issued and outstanding...... -- -- Shareholders' equity: Preferred stock, 20,000,000 shares authorized, none issued or outstanding......................................... -- -- Common Stock, $.0001 par value per share; 100,000,000 shares authorized; 19,007,855 shares issued and outstanding; 20,807,855 issued and outstanding, as adjusted (1)........................................... 2 2 Additional paid-in capital................................ 55,320 117,599 Accumulated deficit....................................... (36,646) (36,646) -------- -------- Total shareholders' equity........................ $ 18,676 $ 80,955 -------- -------- Total capitalization............................ $ 19,981 $ 82,260 ======== ========
- --------------- (1) Excludes approximately 3,373,385 additional shares of Common Stock issuable upon the exercise of outstanding options and warrants, 1,175,823 of which shares are issuable under options and warrants exercisable at July 1, 1997. 14 16 SELECTED FINANCIAL DATA The following selected financial data should be read in conjunction with the consolidated financial statements and notes thereto of the Company and "Management's Discussion and Analysis of Financial Condition and Results of Operations" incorporated by reference in this Prospectus. See "Incorporation of Certain Information by Reference." The consolidated financial data for the three months ended March 31, 1996 and 1997 have been derived from the unaudited consolidated financial statements of the Company, but include all adjustments (consisting only of normal recurring adjustments) which the Company considers necessary for a fair presentation of the results of operations for the periods presented. The results of operations for the three month period ended March 31, 1997 may not be indicative of the operating results that may be expected for the Company's fiscal year ended December 31, 1997.
THREE MONTHS ENDED MARCH 31, YEAR ENDED DECEMBER 31, (UNAUDITED) ------------------------------------------------ ------------------ 1992 1993 1994 1995 1996 1996 1997 ------- ------- ------- ------- -------- ------- -------- (IN THOUSANDS, EXCEPT PER SHARE DATA) STATEMENT OF OPERATIONS DATA: Revenues: Services........................................... $ 8,721 $12,502 $17,481 $24,494 $ 37,822 $ 7,497 $ 12,117 Software........................................... 8,061 10,098 10,412 13,336 21,441 4,007 4,886 ------- ------- ------- ------- -------- ------- -------- Total revenues................................. 16,782 22,600 27,893 37,830 59,263 11,504 17,003 ------- ------- ------- ------- -------- ------- -------- Direct costs: Services........................................... 3,833 5,179 6,321 8,334 13,625 2,419 3,883 Software........................................... 609 837 1,097 1,951 2,912 675 694 ------- ------- ------- ------- -------- ------- -------- Total direct costs............................. 4,442 6,016 7,418 10,285 16,537 3,094 4,527 ------- ------- ------- ------- -------- ------- -------- Gross margin......................................... 12,340 16,584 20,475 27,545 42,726 8,410 12,476 ------- ------- ------- ------- -------- ------- -------- Operating costs: Selling and marketing.............................. 5,008 6,802 7,995 9,791 15,057 3,056 3,482 General and administrative......................... 4,418 5,302 5,884 8,647 12,664 2,752 3,356 Depreciation and amortization...................... 656 841 1,046 1,361 2,966 491 985 Product development................................ 1,893 2,827 3,900 5,927 9,000 1,637 1,743 Charge for purchased in-process product development and acquisition related charges.................. -- -- 4,317 1,160 8,775 8,350 16,236 ------- ------- ------- ------- -------- ------- -------- Total operating costs.......................... 11,975 15,772 23,142 26,886 48,462 16,286 25,802 ------- ------- ------- ------- -------- ------- -------- Operating income (loss).............................. 365 812 (2,667) 659 (5,736) (7,876) (13,326) Reorganization costs................................. 194 -- -- -- -- -- -- Interest expense (income), net....................... 128 4 27 (68) (7) (90) (64) Equity in losses of joint ventures................... -- 41 227 1,266 7,192 1,179 18 ------- ------- ------- ------- -------- ------- -------- Income (loss) before income tax expense (benefit) and extraordinary item............. 43 767 (2,921) (539) (12,921) (8,965) (13,280) Income tax expense (benefit)......................... 65 (2,631) (1,033) 1,203 146 49 23 ------- ------- ------- ------- -------- ------- -------- Income (loss) before extraordinary item........ (22) 3,398 (1,888) (1,742) (13,067) (9,014) (13,303) Extraordinary loss on debt extinguishment............ -- -- -- -- -- -- 2,419 ------- ------- ------- ------- -------- ------- -------- Net income (loss).............................. (22) 3,398 (1,888) (1,742) (13,067) (9,014) (15,722) Preferred stock dividends............................ (200) (327) (200) (199) (28) (28) -- ------- ------- ------- ------- -------- ------- -------- Net income (loss) applicable to common shareholders.. $ (222) $ 3,071 $(2,088) $(1,941) $(13,095) $(9,042) $(15,722) ======= ======= ======= ======= ======== ======= ======== Net income (loss) per share of common stock: Income (loss) before extraordinary item applicable to common shareholders........................... $ (0.02) $ 0.25 $ (0.16) $ (0.13) $ (0.71) $ (0.51) $ (0.70) Extraordinary loss on debt extinguishment.......... -- -- -- -- -- -- (0.13) ------- ------- ------- ------- -------- ------- -------- Net income (loss) per share applicable to common shareholders....................................... $ (0.02) $ 0.25 $ (0.16) $ (0.13) $ (0.71) $ (0.51) $ (0.83) ======= ======= ======= ======= ======== ======= ======== Weighted average common and common equivalent shares outstanding........................................ 10,867 12,515 12,693 15,007 18,465 17,903 18,930 ======= ======= ======= ======= ======== ======= ======== Pro forma net loss data(1): Pro forma net loss applicable to common shareholders....................................... $(1,425) $(13,095) ======= ======== Pro forma net loss per common share.................. $ (0.10) $ (0.71) ======= ======== Weighted average common and common equivalent shares outstanding........................................ 15,007 18,465 ======= ======== SUPPLEMENTAL DATA: Adjusted operating income(2)......................... $ 365 $ 812 $ 1,650 $ 1,819 $ 3,039 $ 474 $ 2,910 ======= ======= ======= ======= ======== ======= ======== Adjusted net income (loss) applicable to common shareholders(3).................................... $ (222) $ 3,071 $ 652 $ 762 $ 1,715 $ 274 $ 1,803 ======= ======= ======= ======= ======== ======= ======== Adjusted net income (loss) per common share(3)....... $ (0.02) $ 0.25 $ 0.05 $ 0.05 $ 0.09 $ 0.01 $ 0.09 ======= ======= ======= ======= ======== ======= ========
15 17
DECEMBER 31, ------------------------------------------------ MARCH 31, 1992 1993 1994 1995 1996 1997 ------- ------- ------- ------- -------- ----------- (UNAUDITED) BALANCE SHEET DATA: Working capital (deficit)............................... $ 590 $ 3,964 $ 2,838 $11,564 $ 3,190 $(3,140) Total assets............................................ 9,038 16,923 21,347 46,404 48,793 47,143 Long-term obligations, redeemable preferred stock, and puttable common stock................................. 7,331 5,146 3,016 6,347 1,449 1,305 Shareholders' equity.................................... (2,973) 5,649 6,734 27,509 24,842 18,676
- --------------- (1) The pro forma net loss reflects the income tax expense that would have been reported if SupplyTech, Inc. (an S corporation for income tax reporting purposes) and SupplyTech International, LLC (a limited liability corporation for income tax reporting purposes) had been C corporations during these periods. (2) Excludes purchased in-process product development and acquisition related charges. See "Acquisition - Related Charges; Loss in 1997 First Quarter and Expected Loss in Year Ended December 31, 1997." (3) Excludes equity in loss of HNS, expected to recur, of $954,000, $7.0 million, and $1.1 million for 1995, 1996, and the three months ended March 31, 1996, respectively, and $4.3 million, $1.2 million, $8.8 million, $8.4 million and $16.2 million in charges for 1994, 1995, 1996, and the three months ended March 31, 1996, and 1997, respectively, for purchased in-process product development and acquisition related charges. The three months ended March 31, 1997 also excludes the extraordinary loss on debt extinguishment. All amounts are net of related income taxes. See "Acquisition - Related Charges; Loss in 1997 First Quarter and Expected Loss in Year Ended December 31, 1997." 16 18 BUSINESS The Company is a leading worldwide provider of electronic commerce products and services to businesses and offers comprehensive, customizable, standards-based electronic commerce solutions. Harbinger develops, markets and supports software products and provides computer communications network and consulting services which enable businesses to engage in electronic commerce. These electronic commerce solutions are provided over the Harbinger VAN or the Company's IVAS, or directly over standard telephone lines, the Internet, or private internal computer networks known as Intranets. Harbinger offers software products that operate on multiple computer platforms, secure and reliable computer networks to facilitate the transmission of business information and transactions, and value-added products and services to enable businesses of all sizes to maximize the number and value of their electronic trading relationships. As of March 31, 1997, the Company's customers included leading U.S. and international corporations and government agencies, including Northrop, Compaq Computer, Digital Equipment Corporation, Hewlett-Packard, Westinghouse Electric, Baxter Healthcare, Johnson & Johnson, Amoco, Chevron, Mobil, Pacific Gas & Electric, Southern California Edison, Bank of America and Barnett Banks. The Company's products and services facilitate electronic commerce and EDI by businesses and financial institutions by providing the ability to electronically transmit and receive routine business information and documents in a standard format. The Harbinger VAN and IVAS serve as electronic communications links for computer systems by receiving, storing and forwarding electronically transmitted business documents and data for re-transmission in a form that can be received and interpreted by the computer of another commercial business. The method of document exchange is user configurable by trading partner and by document type (such as purchase order, invoice, quote and similar business documents). Both the Harbinger VAN and IVAS provide encryption and other document management and security methods to allow documents to be exchanged securely and reliably. Harbinger facilitates the electronic link to its computer communications network through its electronic commerce software packages for use in a broad range of computing environments, including PC-based solutions for DOS and Windows (3.x, 95 and NT Workstation), and client-server solutions for Windows NT Server, UNIX, IBM AS/400 midrange and IBM MVS mainframe platforms. The Company also provides professional services to assist businesses in the installation and customization, operation and maintenance of their electronic trading relationships. RECENT DEVELOPMENTS In January 1997, the Company consummated the merger with SupplyTech. SupplyTech provides electronic commerce software products and services under the "STX" brand. The acquisition allowed the Company to expand into trading communities in the automotive, retail, aerospace and heavy manufacturing markets. In addition to being one of the largest providers of PC-based EDI translation software in the United States, SupplyTech also has operations in the United Kingdom, Italy, Australia and Mexico. The merger was accounted for as a pooling-of-interests. Management of the Company anticipates that this merger will broaden the Company's markets and customer base, add complementary products and technologies, strengthen its ability to offer electronic commerce software and services to its customers and diversify its revenue base. SupplyTech now operates under the name Harbinger SupplyTech. In January 1997, the Company purchased the remaining equity interest in HNS and the Debenture, thereby obtaining direct ownership of products designed to facilitate electronic commerce over the Internet. These products include IVAS, TrustedLink Guardian, a security and encryption document management program, Harbinger Express, designed to permit EDI over the World Wide Web using a browser, and TrustedLink INP, a web site development tool. HNS was capitalized by the Company in 1995 to develop EDI products and services for the Internet, and prior to 1997 operated as a joint venture with BellSouth in which the Company held a 66.1% fully-diluted equity interest. 17 19 ELECTRONIC COMMERCE AND EDI Electronic commerce involves the automation of business transactions through the use of telecommunications and computers to exchange and electronically process commercial information and transactional documents. Electronic commerce typically involves the use of a third-party or private value-added computer network to perform EDI, electronic funds transfer, electronic forms, and bulletin board and electronic catalog services. EDI is a cornerstone of electronic commerce and has historically been the source of the majority of the Company's revenue. The advantages of EDI include one-time data entry, reduced clerical workload and the elimination of paper records, rapid, accurate and secure exchange of business data, and reduced operating and inventory carrying costs. EDI facilitates uniform communications with different trading partners in different industries, including customers, suppliers, common carriers, and banks or other financial institutions. EDI Transaction Flow. In a typical EDI transaction, a trading partner (the "sending partner") first creates with its computer, either manually or electronically, the business data used for the completion of a particular set of documents, described by EDI standards as a transaction set. Transaction sets include requests for quotes, quotes, purchase orders, invoices, shipping notices, and other related documents and messages. Second, a translation software program on the sending partner's computer converts the document or transaction set into a standard EDI format. The most frequently used such formats are ANSI X.12 in the United States and EDIFACT in the rest of the world. Third, this information is electronically transmitted through telecommunications links from the sending partner's computer to a central computer system that serves as a value-added network shared by many trading partners. Value-added networks receive documents for subsequent delivery to the intended trading partner (the "receiving partner"), and connect many types of computer hardware and communications devices, convert multiple transaction sets from one industry standard to another, and maintain security by reducing the possibility of one trading partner obtaining unauthorized access to another computer. Trading Communities. Groups of companies that regularly trade with each other generate significant repetitive business transactions. These existing trading communities are natural prospects for implementation of EDI. The expansion of EDI has been possible through the establishment of repetitive transactions using the two major standards noted above. In addition, there are now subsets of these standards used in specific industries such as automotive, banking, chemical, financial, grocery, healthcare, petroleum, retail and utilities. The adoption of EDI as an accepted means of transmitting business documents and data has also occurred, in part, because many trade organizations or groups and many large companies within a trading community increasingly recommend or require their member organizations or trading partners to adopt and use EDI as the primary method of communicating business documents. Hubs and Spokes. Large companies within a trading community often are described as "hubs" and their trading partners as "spokes." A hub company and its trading partners communicate through electronic networks. These can be third party networks and, for a few larger businesses, private networks owned and operated by the hub company. Hub companies often initially justify EDI programs with direct cost savings to reduce the administrative handling costs and to eliminate data entry errors of the documents that they send and receive from trading partners. Advanced EDI implementations by a hub company may be more strategic in nature, being utilized as enabling technologies for business processes such as supply chain management and just-in-time manufacturing, and efficient consumer response and vendor managed inventory in retailing. For these reasons, a hub company often adopts as a stated business objective that all of its trading partners use EDI as the principal means of communicating business documents. Spoke companies, in turn, often expand the electronic commerce community by also requesting or requiring their other trading partners to communicate through EDI. This expanding number of trading partners adopting EDI results in the establishment of distinct trading communities comprising potential software customers and network subscribers for EDI services. 18 20 According to International Data Corporation, the worldwide market for electronic commerce was an estimated $1.5 billion in revenues in 1995 and is estimated to increase to almost $4.0 billion by 2000, an average annual growth rate of approximately 21%. Furthermore, it is estimated by The EDI Group, Ltd. that of the 3 million U.S. companies with five or more employees, approximately 120,000 have elected to date to make use of EDI. Although many of these current users of EDI are members of defined trading communities, the Company believes that the majority of the members of these trading communities use electronic commerce solutions to communicate with a very small percentage of their trading partners. Acceptance of electronic commerce and expansion within trading communities will depend on various factors, such as the extent of automation in the industry, the degree to which hub companies require electronic trading from their trading partners, the level of computer sophistication of businesses in the trading community, the frequency of transactions among trading partners in the community and the economic benefits derived from the trading community by implementing electronic trading which historically have accrued principally to the larger members of the community. To date, EDI has minimal penetration in small companies because (i) current EDI solutions have not provided significant added value, and (ii) EDI is not pervasive among the average small company's trading partners. THE HARBINGER SOLUTION The Harbinger solution to addressing electronic commerce is based on the following five components which are designed to build trading partner relationships and generate recurring revenue. The Company believes these components differentiate it from its competitors in the market. - Comprehensive Product Offering. The Company offers a range of electronic commerce software solutions for trading communities, including a suite of fully scaleable EDI translation software, EDI modules for supply chain management, its VAN and IVAS solutions, electronic catalogs, and web site creation and management software for small businesses. - Mass Deployment Services. The Company provides mass deployment services to trading community leaders to permit them to plan, manage and deploy EDI and electronic commerce solutions to their trading partners through the use of trading partner conferences and direct marketing services. - Trading Relationship Management Services. The Company provides a range of trading relationship management services, including installation assistance, trading partner certification and rules, and services such as customization, training and consulting. - Vertical Market Expertise. The Company has developed vertical market expertise in selected industries such as aerospace, automotive, electronics, financial services, food and beverage, government, healthcare, heavy manufacturing, petroleum/chemicals, retail and utilities. - Flexible, Secure Value Added Architecture. The Company has developed a combined network architecture utilizing the VAN and the IVAS which permits secure and reliable network and secure Internet communications to facilitate the transmission of business information and transactions. 19 21 PRODUCTS AND SERVICES The Company offers a comprehensive range of electronic commerce products and services for entire trading communities. These Company offerings are divided into three categories, providing electronic commerce solutions for large companies, solutions designed for small and mid-sized companies, and services for entire trading communities engaged in electronic commerce. The following chart summarizes the functions and platforms of the Company's principal electronic commerce software products and includes a description of the services available to software customers and network subscribers:
COMPUTER PRODUCT NAME FUNCTION PLATFORM - ---------------------------- ------------------------------------------------------- ------------------------ SOLUTIONS FOR LARGE BUSINESSES TrustedLink Enterprise EDI translation communications, document management, UNIX, Windows NT, IBM plus import/export of data from software applications MVS, IBM AS/400 STX EDI translation communications, document management, IBM MVS, IBM AS/400, plus import/export of data from software applications DOS/VSE TrustedLink Guardian Data encryption and communications software for Windows 95/NT, UNIX transmitting EDI documents over the Internet Internet Value Added Intermediation, archival, standards compliance and Unix/Windows NT Server (IVAS) trusted third party services via the Internet EDI*Benchmark and EDI translation software IBM MVS, DOS/VSE EDI*Central SOLUTIONS FOR SMALL AND MID-SIZE BUSINESSES TrustedLink Commerce EDI translation communications, document management and DOS, Windows, Windows forms creation, plus import/export of data from 95/NT software applications STX EDI translation communications, document management and DOS, Windows forms creation, plus import/export of data from software applications Harbinger Express Software allowing users with only a web browser to send Web browser on Windows and receive EDI documents STSECURITY Software for encrypting EDI documents for transmission Windows over the Internet TrustedLink Banker Small business cash management, electronic funds DOS, Windows transfer, wire transfers, direct deposits and debits TrustedLink Distributor EDI communications, document management and forms Windows for Petroleum creation for petroleum manufacturers and distributors Third Party Ticket System Translation of EDI documents to facilitate ownership Windows tracking for petroleum companies ESRS Solution for complying with retail vendor shipping DOS, Windows requirements STBAR Bar code labeling software DOS, Windows Pronto Software for profiling government suppliers to submit DOS, Windows response to bids TrustedLink INP Software permitting rapid development of a World Wide Windows Web site for promoting and selling products and services via the Internet
20 22
SERVICES DESCRIPTION - ---------------------------------- ------------------------------------------------------------ Value-Added Network Services Fault tolerant, store and forward, retrieval services, protocol conversion, electronic mail box Internet Value-Added Server (IVAS) Intermediation, archival, standards compliance monitoring, Services and trusted third party services via the Internet Harbinger Net Access Internet access EDI to Fax Services Translation of EDI documents to fax format Trading Partner Certification Information seminars, support materials, testing and confirmation of EDI communications with trading partners Trading Partner Implementation Creation of trading partner packs for users to exchange Service documents with other trading partners Consulting and Programming Development of computer programs needed to integrate EDI Services with customers other software applications Electronic Catalogs Comprehensive electronic catalog solutions for supply chain management and maintenance, repair and operating initiatives Customer Support Telephone hotline, support documentation, network transmission support, electronic software updates Bid Filtering and Profiling Service which matches government bids with product suppliers Service FAX-2-EDI Service which converts Faxes to EDI format for submitting to government agencies
Solutions for Large Businesses TrustedLink Enterprise for High-End Computing Platforms. The TrustedLink Enterprise product permits fast receipt and transmission of EDI documents and supports a comprehensive range of EDI standards across all major computing platforms. The Company offers this product for MVS mainframe, UNIX and Windows NT Server. The product facilitates the creation and control of business documents, such as order forms and invoices, in complex client/server computing environments, and provides data linking and messaging functions which act as a gateway to update a trading partner's accounting system. The product also offers mapping, translation, communication and trading partner management tools and utilize standard EDI formats. TrustedLink Guardian. TrustedLink Guardian is an open, standards-based solution for enabling secure EDI over the Internet. TrustedLink Guardian is available for both UNIX and Windows systems. It consists of messaging, security, authentication and management modules which automatically integrate with the Company's existing EDI translators. Internet Value-Added Server (IVAS). Similar to the Harbinger VAN, the Company's IVAS offers many of the same value-added services over the Internet. The IVAS provides intermediation, archiving, standards compliance monitoring and third-party services via the Internet. In conjunction with the Company's VAN, the IVAS permits participants in a trading community to select the desired communications transport mechanism for individual documents of a typical EDI transaction. IVAS is also offered as a product for license by end users. IVAS/P is tailored to enable public operators to offer electronic commerce services in their local market, while IVAS/E is intended for large enterprises directly operating a server platform to link members of the enterprise's trading community typically through a private intranet. Mass Deployment Services. Harbinger offers mass deployment services to trade organizations or hub companies within selected industries to establish and promote the growth of trading communities. Initially, the Company develops marketing and technical competence within an industry by learning the trading customs and practices of their trading partners. The Company then defines the software and computer system requirements for the promotion of electronic commerce in the trading community. These definitions are used to develop standard and customized software products to meet the needs of trading partners within their own markets. These products are complemented by an array of services to facilitate the adoption and implementation of EDI and other electronic commerce services throughout that industry. Web Application Services. Harbinger offers an array of electronic commerce products and services for the World Wide Web. This includes the design and creation of customized web sites and 21 23 the hosting of these sites. The hosting service is designed for large companies that desire high levels of security, reliability, and customer support. Other services included are domain name registration, usage statistics, web registration with Internet directories and Common Gateway Interface development. Solutions for Small and Mid-Size Businesses TrustedLink Commerce. The TrustedLink Commerce product family is designed for small to mid-sized companies which are new to electronic commerce. The products perform the critical tasks to create, format and electronically transmit and receive business documents and data between trading partners. The products convert a customer's documents and data into EDI format, translate the document to a standard form for use with the designated trading partner, transmit the information to the Harbinger networks, the Internet, or other third party networks and convert EDI documents and data received from their trading partners into a format that may be interpreted by the user's personal computer. Additionally, TrustedLink Guardian, which provides encryption and decryption for secure transmission over the Internet, can be used with TrustedLink Commerce for Windows 95, NT Workstation and TrustedLink Enterprise for UNIX, enabling a variety of communication options. STX Translation Software. These EDI translation software programs for DOS and Windows allow companies to exchange business documents electronically. The products are network independent with a large number of predefined network connections available. They provide for automatic operation of EDI functions without operator intervention, including scheduling to send and/or receive EDI transactions, translating application files to an EDI format or translating EDI files to an application-file format, and printing or deleting transactions. Products in the STX family include STFORMS which enables the user to customize the format of EDI documents, STBAR which allows the entry of data via bar code scanning and STSECURITY which allows users to perform secure EDI over the Internet. Additionally, STMAP mapping integration software allows users to download EDI data seamlessly from an application already integrated with STX and to move data electronically between business programs and EDI applications. Harbinger Express. Harbinger Express allows small and mid-size businesses to perform EDI and electronic commerce using a web browser. The product is designed for companies that conduct low EDI transaction volumes and have limited requirements for integrating with other software applications. Harbinger Express translates EDI documents into an HTML form which can be accessed by the trading partner via the Internet. Harbinger Express users can also initiate EDI documents simply by filling out a browser-based HTML form at the Harbinger Express Website. The product converts the resulting document into EDI format and transmits it to the receiving trading partner over the Harbinger networks or the Internet. TrustedLink INP. TrustedLink INP allows a user to establish an instant presence on the Internet through the creation of a web site for the business user. Users create their web site by entering information in an interview format. The user can then preview their site using the included Netscape Navigator software and publish the site on Harbinger's IVAS web hosting service. TrustedLink INP includes an electronic catalog and purchase order system for conducting commerce over the Internet. TrustedLink Banker. TrustedLink Banker allows a user to access its bank records through the Harbinger networks and translates documents and data through industry standard formats including NACHA, BAI and Fedwire. Businesses use TrustedLink Banker to access balance and transaction histories for various financial accounts, perform electronic funds transfers between financial accounts (within a single bank or among banks), register stop payments, write checks, reconcile accounts, send and receive messages to and from financial institutions, perform budgeting and cash flow analysis, and schedule activities by means of an electronic calendar. The product is also used to perform direct deposits into payroll accounts, fund tax payments and direct debit transactions and 22 24 perform funds transfers. Banks and financial institutions access the Harbinger network to exchange information, electronic mail and messages with their trading partners. Trading Partner Packs and STX Forms Overlays. Harbinger develops custom software templates, known as Trading Partner Packs and STX Forms Overlays, to conform with guidelines and parameters identified by the major purchasers and suppliers within various trading communities. For example, Harbinger can customize its software to utilize only a specified subset of the ANSI X.12 or EDIFACT standard that the major trading partners have defined for the trading relationship. In this way, each trading partner is assured that only the data elements that the trading partners expect are sent and received. The Company distributes these customized products to help hub companies expand the acceptance of EDI among trading partners. Harbinger maintains an extensive library of Trading Partner Packs and STX Forms Overlays. Services for Entire Trading Communities Value-Added Network Services. Harbinger operates its VAN and IVAS as value-added networks that provide the central point for document and data receipt, translation and transmission and serve as a communication link between the members of a trading community. With more than 38,000 revenue generating customers, Harbinger believes that its VAN is one of the largest EDI networks in the United States as measured by the number of billable subscribers. Harbinger offers trading partners a wide range of network services including batch communication of purchase orders, invoices, shipping confirmations, e-mail between trading partners and electronic catalogs. The Company believes that its value-added network offers several advantages to trading partners, including protocol conversion, transmission speed conversion, flexibility in mail pick-up and drop-off times, and security and reliability. The Company provides network services pursuant to subscriber agreements which can be terminated by either party without cause at any time with 30 days written notice. Customers are required to pay for services in accordance with the then applicable service fees, which include set-up fees, monthly mailbox fees and transaction fees. No minimum revenue commitment or annual fee is required. Consulting and Programming Services. Harbinger technical consultants work with trading communities to create the functional specifications to develop computer programs necessary to integrate EDI with other software applications. This process, known as "mapping," requires the identification of internal data file and record formats along with the creation of functional specifications to integrate EDI with trading partner applications. Harbinger also provides software programming services to trading communities to create the application interface programs necessary to translate data into and out of EDI standards. Trading Partner Implementation and Certification. Harbinger offers several programs to assist its hub customers in maximizing the use of EDI and electronic commerce among its trading partners. These programs communicate the advantages of EDI and electronic commerce to potential trading partners of a major hub, regardless of size, and include information seminars, support materials and the trading partner certification program. This program assists trading partners in installing, testing and confirming EDI capabilities with hub companies using the Harbinger networks. Customer Training. Harbinger offers training classes for various stages of EDI implementation by trading partners. These classes provide instruction on the use of the Company software products operating either alone or together with other application software. The classes explain the basics of EDI and its integration with other application software and provide basic information for creating application interface programs to connect trading partners. Electronic Catalogs. Harbinger offers its customers electronic catalog technology, which allows purchasers to significantly streamline their purchasing processes. This technology provides purchasers with online vendor catalogs in real-time, offering up-to-date pricing, accurate descriptions, lead time and other critical information, thereby saving companies the expense of maintaining or otherwise accessing vendor information. Electronic catalog technology has been applied in both 23 25 supply chain management initiatives for production goods and services, and maintenance, repair and operating supplies for non-production goods and services. Harbinger provides its solution in the form of an easy-to-use, web-based application which allows users to search and source data from electronic vendor catalogs and from their own internal inventory. Customer Support Services. Harbinger provides extensive customer service and support to trading partners on the use and operation of its software products and the business processes associated with electronic commerce. The Company's support of EDI communication standards enables its customer support personnel to perform file transfers to analyze problems on a customer's computer system and to transmit software or EDI standard updates to a customer where necessary. SALES AND MARKETING The Company's principal marketing strategy focuses on establishing electronic trading communities and expanding the number of trading partners using the Harbinger networks and software products. The Company seeks to target trading communities composed of electronic trading partners in common industries or markets conducting recurring business transactions. To achieve this objective, the Company has developed a three-tiered sales and marketing program. First, the Company identifies potential hub companies that either seek to formulate an electronic commerce program, or that have made the decision to implement an electronic commerce program. The Company representatives meet with the hub company and discuss the procedure for establishing electronic commerce relationships with trading partners. Second, the Company contacts the hub company's trading partners through seminars and by telemarketing, informing these parties of the electronic commerce requirements of the hub company and implementation procedures. The Company schedules and conducts half-day information seminars with potential trading partners of a major hub company highlighting the benefits of electronic commerce, explaining the hub organization's electronic commerce initiative, and demonstrating the Company's products and services. Representatives of the hub company generally attend these seminars to present their electronic commerce recommendations and requirements. Third, Harbinger uses telemarketing, direct mail and advertising activities that are targeted at potential customers who are not trading partners of a specific hub. The Company's marketing and sales activities are centered around the implementation of electronic commerce within these trading communities through hub and spoke programs, particularly within selected vertical markets. Harbinger also markets and sells its products through distributors in the United States and numerous international markets. Through the Marketing Partners Program, the Company has established alliances with application software developers, systems integrators and value-added resellers of computer products. The Company's objective is to integrate Harbinger's products with those of its Marketing Partners and to promote distribution of Harbinger software along with products and services sold by its Marketing Partners. The Company markets and distributes its TrustedLink Banker products and related services through commercial banks and holding companies and bank processors, and directly to the customers of certain banks and financial service organizations. The Company's markets TrustedLink INP through a private-label distribution agreement with Peachtree Software as well as through its World Wide Web site, from where customers can download an evaluation version of the software. As of March 31, 1997, the Company employed approximately 185 sales and marketing personnel who concentrate their efforts in direct sales of the Company's software products and services. The Company is in the process of training and educating these new sales personnel on the range of its products and services and obtaining from them an understanding of the new markets made available through the acquisitions. Management believes that the addition of these sales persons will allow the Company to expand many of its product and service offerings into additional trading communities. The Company's compensation strategies are designed to reward sales personnel based upon sales to new customers and the sale of additional products and services to existing customers. In addition to the Company's internal sales and marketing personnel, the Company markets its products through several licensees, distributors and co-marketers. 24 26 MANAGEMENT EXECUTIVE OFFICERS AND DIRECTORS The executive officers and directors of the Company and their ages as of July 1, 1997, are as follows:
NAME AGE POSITION - ---- --- -------- C. Tycho Howle............... 48 Chairman of the Board of Directors David T. Leach............... 46 Chief Executive Officer and Director James C. Davis............... 45 President and Chief Operating Officer and Director James M. Travers............. 46 President, Harbinger Enterprise Solutions Theodore C. Annis............ 54 President, Harbinger SupplyTech David A. Meeker.............. 54 Senior Vice President, Sales A. Gail Jackson.............. 48 Senior Vice President, Harbinger SupplyTech Joel G. Katz................. 33 Chief Financial Officer and Secretary William D. Savoy(2).......... 32 Director William B. King(2)........... 52 Director Stuart L. Bell(1)(2)......... 44 Director Benn R. Konsynski(1)......... 46 Director Klaus Neugebauer(1).......... 59 Director Ad Nederlof.................. 51 Director
- --------------- (1) Member of the Audit Committee. (2) Member of the Compensation Committee. Mr. Howle has served as Chairman of the Board of Directors of the Company and its predecessors since 1983. Mr. Howle also served as the Chief Executive Officer until March 1997. From 1981 to 1983, Mr. Howle was a consultant with McKinsey & Company, Inc., a management consulting firm. From 1979 to 1981, Mr. Howle was a Product Line Manager with the Hewlett-Packard Company. From 1973 to 1977, Mr. Howle was a project manager with Booz, Allen & Hamilton's Applied Research Unit. Mr. Leach has served as Chief Executive Officer of the Company since March 1997 and a Director of the Company since February 1994. From February 1994 until March 1997, Mr. Leach served as President and Chief Operating Officer of the Company, and from June 1992 until February 1994, Mr. Leach was Group Executive Vice President, Sales and Operations of the Company. Mr. Leach served as Senior Vice President of Harbinger Computer Services, Inc. ("HCS") from 1988 until 1990 and was President of HCS from 1990 until its reorganization into Harbinger Corporation in 1992. Prior to joining HCS, Mr. Leach was a consultant with McKinsey & Company, Inc., a management consulting firm. Mr. Davis has served as Director of the Company since April 1997 and as President and Chief Operating Officer of Harbinger since March 1997. From January 1995 until March 1997, Mr. Davis served as President of Harbinger Group Operations. Mr. Davis served as President of the Company from January 1989 until December 1993, when Mr. Davis resigned as an officer and director of the Company. Mr. Davis was Vice President and Senior Vice President of HCS from May 1984 until December 1988. Mr. Travers has served as President of Harbinger Enterprise Solutions since January 1995. In this capacity, Mr. Travers manages the business operations acquired in the TI Acquisition. From 1978 through 1994, Mr. Travers served in various managerial positions with TI, including the position as Director of Business Development for TI's Worldwide Applications Software Business and General Manager of TI's EDI business unit from June 1992 through December of 1994. Mr. Annis has served as President of Harbinger SupplyTech since January 1997. Mr. Annis served as Chief Executive Officer and Treasurer of SupplyTech, Inc. from its inception in 1984 until its merger with the Company in January 1997. 25 27 Mr. Meeker has served as Senior Vice President, North American Sales since January 1997. From January 1995 until January 1997, Mr. Meeker served as Vice President, Sales of the Company and from September 1992 through December 1994, Mr. Meeker served as Vice President, Sales for National Data Corp., a credit card processing company. From January 1992 through August 1992, Mr. Meeker served as Vice President, Sales and Marketing for Software Alternatives, a computer software and systems vendor. From January 1990 to January 1992, Mr. Meeker served as Manager, U.S. Channel Operations for IBM. Ms. Jackson has served as Senior Vice President of Harbinger SupplyTech since March 1997 and as Vice President from January 1997 until March 1997. Ms. Jackson served as President of SupplyTech, Inc. from its inception in 1984 until its merger with the Company in January 1997. Mr. Katz has served as Chief Financial Officer since January 1997 and Secretary since February 1994. He served as Vice President, Finance from January 1995 until January 1997 and as Senior Director of Finance from February 1994 to January 1995. Mr. Katz joined Harbinger in 1990 as Controller and became Director of Finance in December 1991. From 1985 to 1990, Mr. Katz was a certified public accountant in the audit division of Arthur Andersen LLP. Mr. Savoy has been a director of the Company since May 1993. Under the Company's policy statement regarding term limits for non-employee directors, Mr. Savoy will be eligible to serve as a director through the date of the Company's Annual Meeting to be held in 2001. Mr. Savoy has served as President of Vulcan Northwest, Inc. since 1988. Mr. Savoy is also a director of Telescan, Inc., C/Net, Inc., U.S. Satellite Broadcasting Co., Inc. and Ticketmaster Corporation. Mr. King has been a director of the Company since January 1993. Under the Company's policy statement regarding term limits for non-employee directors, Mr. King will be eligible to serve as a director through the Company's Annual Meeting to be held in 2001. Mr. King has served as Chairman of Private Business, Inc., a banking software provider, since 1991. From 1986 until February 1995, Mr. King served as Chairman of FISI-Madison Financial Corporation, Chairman of CUC Europe, and served on the Board of Directors of CUC International. Mr. Bell has been a director of the Company since April 1995. Under the Company's policy statement regarding term limits for non-employee directors, Mr. Bell will be eligible to serve as a director through the date of the Company's Annual Meeting to be held in 2003. Mr. Bell served as Executive Vice President and Chief Financial Officer of CUC International from 1983 to January 1995, and has served as Assistant to the Chief Executive Officer of CUC International since February 1995. Mr. Bell is also a director of International Telephone Data Services and Alarmguard Holdings, Inc. Dr. Konsynski has been a director of the Company since December 1996. Under the Company's policy statement regarding term limits for non-employee directors, Dr. Konsynski will be eligible to serve as a director through the date of the Company's Annual Meeting to be held in 2004. Since 1993, Dr. Konsynski has been the George S. Craft Professor of Business Administration at the Goizueta Business School at Emory University. From 1987 to 1993, Dr. Konsynski was on the faculty at Harvard Business School. Prior to the dissolution of HNS, Dr. Konsynski was a member of the Board of Managers of HNS. Dr. Konsynski also serves as a director of Tessco Technologies, Inc. Dr. Neugebauer has served as a Director of the Company since April 1997. Under the Company's policy statement regarding term limits for non-employee directors, Dr. Neugebauer will be eligible to serve as a director through the date of the Company's Annual Meeting to be held in 2005. Dr. Neugebauer was a co-founder of Softlab GmbH, an international software development company which was sold to BMW AG in 1991. Dr. Neugebauer is a member of a number of German industrial boards and acts as a strategic information technology advisor to the State of Bavaria and the German Federal Government, and since 1991, has been a partner in NSE Inc., an investment firm that specializes in the software industry. Mr. Nederlof has served as a Director of the Company since April 1997. Under the Company's policy statement regarding term limits for non-employee directors, Mr. Nederlof will be eligible to serve as a director through the date of the Company's Annual Meeting to be held in 2005. Mr. Nederlof currently serves as an independent software consultant. Mr. Nederlof served as Vice President of Oracle Northern Europe from 1994 to 1996, with responsibility for all Northern European subsidiaries. From 1991 to 1994, he served as a Managing Director of Oracle Nederland BV, Oracle's Dutch subsidiary. 26 28 PRINCIPAL AND SELLING SHAREHOLDERS The following table sets forth certain information regarding beneficial ownership of the Company's Common Stock as of July 24, 1997, the number of shares being offered and the beneficial ownership of the Company's Common Stock upon consummation of the offering with respect to the following: (i) each shareholder known by the Company to be the beneficial owner of more than five percent of the Company's Common Stock, (ii) the Selling Shareholders, (iii) each director, (iv) each executive officer, and (iv) all directors and executive officers as a group.
SHARES BENEFICIALLY SHARES BENEFICIALLY OWNED PRIOR TO OWNED AFTER OFFERING(1) NUMBER OF OFFERING(1) ------------------- SHARES ------------------- NAME OF BENEFICIAL OWNER NUMBER PERCENT OFFERED NUMBER PERCENT - ------------------------ --------- ------- --------- --------- ------- C. Tycho Howle(2)......................... 1,206,117 6.2% -- 1,206,117 5.7% David T. Leach(3)......................... 482,104 2.5% -- 482,104 2.3% James C. Davis(4)......................... 308,333 1.6% -- 308,333 1.5% Joel G. Katz(5)........................... 44,498 * -- 44,498 * William B. King(6)........................ 58,566 * -- 58,566 * Stuart L. Bell(7)......................... 37,125 * -- 37,125 * William D. Savoy(8)....................... 2,457,736 12.7% 500,000 1,957,736 9.2% Benn R. Konsynski(9)...................... 11,926 * -- 11,926 * David A. Meeker(10)....................... 9,700 * -- 9,700 * James M. Travers(11)...................... 8,400 * -- 8,400 * Theodore C. Annis......................... 520,776 2.7% -- 520,776 2.5% A. Gail Jackson(12)....................... 908,552 4.7% -- 908,552 4.3% Klaus Neugebauer(13)...................... 3,000 * -- 3,000 * Ad Nederlof(14)........................... 28,000 * -- 28,000 * --------- --------- --------- All executive officers and directors as a group (14 persons)(15).................. 6,084,833 30.6% 500,000 5,584,833 25.8% AXA Equity & Law Assurance Society Plc(16)................................. 1,240,401 6.4% 300,000 940,401 4.5% Orbis Pension Trustees Limited(17)........ 882,369 4.6% 300,000 582,369 2.8% Vulcan Ventures, Inc./Paul G. Allen(18)... 2,402,236 12.4% 500,000 1,902,236 9.0% Warburg, Pincus Counsellors, LLC(19)...... 1,276,350 6.6% -- 1,276,350 6.0% Total Shares Offered by Selling Shareholders.................. 1,100,000
- --------------- * Less than 1% of the outstanding Common Stock. (1) Information with respect to "beneficial ownership" shown in the table above is based on information supplied by the directors, executive officers of the Company and filings made with the Commission or furnished to the Company by other shareholders. (2) Includes 838,910 shares held of record by Mr. Howle, 53,600 shares held of record by Mr. Howle's wife, an aggregate of 14,391 shares held by Mr. Howle's children, 173,400 shares held in a family limited partnership for the benefit of Mr. Howle, his wife and children, 75,000 shares held by a charitable remainder unitrust for the benefit of Mr. Howle, his wife and certain designated charities, 13,316 shares held in a charitable foundation created by Mr. Howle, and 37,500 shares subject to options exercisable within 60 days. Mr. Howle disclaims beneficial ownership of all such shares, other than the shares held of record by Mr. Howle or for his benefit. Mr. Howle's address is 1055 Lenox Park Boulevard, Atlanta, Georgia 30319. (3) Includes 276,792 shares held jointly by Mr. Leach and his wife, and 205,312 shares subject to options exercisable within 60 days. 27 29 (4) Includes 224,896 shares held jointly by Mr. Davis and his wife, and 83,437 shares subject to options exercisable within 60 days. (5) Includes 40,000 shares subject to options exercisable within 60 days. (6) Includes 39,000 shares subject to options exercisable within 60 days. (7) Includes 14,625 shares subject to options exercisable within 60 days. (8) Includes 34,875 shares subject to options exercisable within 60 days. Also includes 2,345,986 shares (1,845,986 shares after this offering) and 56,250 shares subject to warrants exercisable within 60 days beneficially owned by Vulcan Ventures, Inc. and Paul G. Allen, as to which Mr. Savoy disclaims beneficial ownership. All 500,000 shares offered are being offered by Vulcan Ventures, Inc. and Paul G. Allen. Mr. Savoy's address is 110 110th Avenue, N.E., Suite 550, Bellevue, Washington 98004. (9) Includes 8,626 shares subject to options exercisable within 60 days. (10) Includes 8,950 shares subject to options exercisable within 60 days. (11) Includes 8,400 shares subject to options exercisable within 60 days. (12) Includes 214,148 shares held jointly By Ms. Jackson and her husband. Ms. Jackson's address is 1000 Campus Drive, Ann Arbor, Michigan 48104. (13) Includes 3,000 shares subject to options exercisable within 60 days. (14) Includes 28,000 shares subject to options exercisable within 60 days. (15) Includes 567,975 shares subject to options and warrants exercisable within 60 days. (16) Includes 1,218,651 shares (918,651 shares after this offering) and 3,000 shares subject to options and 18,750 shares subject to warrants exercisable within 60 days. AXA Equity & Law Assurance Society Plc's address is 20 Lincoln's Inn Field, London, England WC2A 3E5. (17) Orbis Pension Trustees Limited's address is 1 Connaught Place, London, England W2 2DY. (18) Includes 2,345,986 shares (1,845,986 shares after this offering) and 56,250 shares subject to warrants exercisable within 60 days beneficially owned by Paul G. Allen. Excludes 34,875 shares held beneficially by Mr. Savoy, as to which Mr. Allen disclaims beneficial ownership. The address of Vulcan Ventures, Inc. and Paul G. Allen is 110 110th Avenue, N.E., Suite 550, Bellevue, Washington 98004. (19) According to a Schedule 13G filed by Warburg, Pincus Counselors, Inc. ("Warburg, Pincus") dated January 9, 1997, Warburg, Pincus, a registered investment advisor beneficially owns 1,276,350 shares of Common Stock. According to the Schedule 13G, Warburg, Pincus has sole voting power to 868,050 shares, shared voting power as to 197,850 shares and sole dispositive power as to 1,272,300 shares. Warburg, Pincus's address is 466 Lexington Avenue, New York, New York 10017. 28 30 DESCRIPTION OF CAPITAL STOCK The authorized capital stock of the Company consists of 100,000,000 shares of Common Stock, par value $.0001 per share, and 20,000,000 shares of Preferred Stock. The following summary is qualified in its entirety by reference to the Company's Amended and Restated Articles of Incorporation (the "Articles"), and by the provisions of applicable law. COMMON STOCK As of July 1, 1997, there were 19,292,886 shares of Common Stock outstanding, held of record by approximately 180 shareholders. Holders of Common Stock are entitled to one vote for each share held on all matters submitted to a vote of shareholders and do not have cumulative voting rights. Accordingly, holders of a majority of the shares of Common Stock entitled to vote in any election of directors may elect all of the directors standing for election. Holders of Common Stock are entitled to receive ratably such dividends, if any, as may be declared by the Board of Directors out of funds legally available therefor, subject to any preferential dividend rights of outstanding preferred stock. Upon the liquidation, dissolution or winding up of the Company, the holders of Common Stock are entitled to receive ratably the net assets of the Company available after the payment of all debts and other liabilities and subject to the prior rights of any outstanding preferred stockholders of Common Stock, as such, have no preemptive, subscription, redemption or conversion rights. The outstanding shares of Common Stock are, and the shares offered by the Company in this offering will be, when issued and paid for, fully paid and nonassessable. The rights, preferences and privileges of holders of Common Stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock which the Company may designate and issue from time to time in the future. PREFERRED STOCK The Board of Directors is authorized, subject to certain limitations prescribed by law, without further shareholder approval, to issue from time to time up to an aggregate of 20,000,000 shares of preferred stock in one or more series and to fix or alter the designations, preferences, rights and any qualifications, limitations or restrictions on the shares of each such series thereof, including the dividend rights, dividend rates, conversion rights, voting rights, terms of redemption (including sinking fund provisions), redemption price or prices, liquidation preferences and the number of shares constituting any series or designations of such series. The issuance of preferred stock may have the effect of delaying, deferring or preventing a change of control of the Company. The only outstanding shares of preferred stock are 4,000,000 shares of Zero Coupon Preferred Stock issued to an alliance partner of the Company subject to performance vesting criteria. See Note 3 of the Notes to Consolidated Financial Statements incorporated by reference in this Prospectus. There are no other designated series of preferred stock. CERTAIN CHARTER AND BYLAW PROVISIONS Shareholders' rights and related matters are governed by the Georgia Business Corporation Code and the Company's Articles and its Amended and Restated Bylaws (the "Bylaws"). Certain provisions of the Articles and Bylaws, which are summarized below, could, either alone or in combination with each other, have the effect of preventing a change in control of the Company or making changes in management more difficult. Corporate Takeover Provisions. The Company's Bylaws made applicable to the Company provisions authorized by the Georgia Business Corporation Code relating to business combinations with interested shareholders ("Corporate Takeover Provisions"). The Corporate Takeover Provisions are designed to encourage any person, before acquiring 10% of the Company's voting shares, to seek approval of the Board of Directors for the terms of any contemplated business combination. The Corporate Takeover Provisions will prevent for five years certain business combinations with an 29 31 "interested shareholder" (as defined in the Corporate Takeover Provisions) unless (i) prior to the time such shareholder became an interested shareholder the Board of Directors approved either the business combination or the transaction that resulted in the shareholder becoming an interested shareholder, (ii) in the transaction that resulted in the shareholder becoming an interested shareholder, the interested shareholder became the beneficial owner of at least 90% of the outstanding voting shares of the Company excluding, however, shares owned by the Company's officers, directors, affiliates, subsidiaries and certain employee stock plans or (iii) subsequent to becoming an interested shareholder, such shareholder acquired additional shares resulting in the interested shareholder becoming the owner of at least 90% of the Company's outstanding voting shares and the business combination is approved by the holders of majority of the Company's voting shares, excluding from said vote the stock owned by the interested shareholder or by the Company's officers, directors, affiliates, subsidiaries and certain employee stock plans. Shareholders of the Company who became interested shareholders prior to the time of the adoption of the Corporate Takeover Provisions are not subject to such provisions. The Board of Directors is divided into three classes, as nearly equal in size as possible, with staggered three-year terms. One class is elected each year. The classification of the Board of Directors could have the effect of making it more difficult for a third party to acquire control of the Company. Constituency Considerations. The Company's Articles provide for the right of the Board of Directors to consider the interests of various constituencies, including employees, customers, suppliers and creditors of the Company, as well as the communities in which the Company is located, in addition to the interest of the Company and its shareholders, in discharging their duties in determining what is in the Company's best interests. Limitation of Directors' Liability. The Company's Articles eliminate, subject to certain exceptions, the personal liability of directors to the Company or its shareholders for monetary damages for breaches of such directors' duty of care or other duties as a director. The Articles do not provide for the elimination of or any limitation on the personal liability of a director for (i) any appropriation, in violation of the director's duties, of any business opportunity of the Company, (ii) acts or omissions that involve intentional misconduct or a knowing violation of law, (iii) unlawful corporate distributions or (iv) any transaction from which the director received an improper benefit. In addition, the Company's Bylaws provide broad indemnification rights to directors and officers so long as the director or officer acted in a manner believed in good faith to be in or not opposed to the best interest of the Company, and with respect to criminal proceedings, if the director has no reasonable cause to believe his or her conduct was unlawful. These provisions of the Articles and Bylaws will limit the remedies available to a shareholder who is dissatisfied with a Board decision protected by these provisions. The Articles provide that the affirmative vote of holders of at least 75% of shares of Common Stock entitled to vote generally in the election of directors, voting as a single voting group, is required to alter or amend the provisions of the Articles providing for a staggered board of directors, or to alter or amend the following provisions of the Bylaws: indemnification of officers and directors, the vote required to amend the Bylaws, fair price provisions, business combinations with interested shareholders, special meetings of shareholders, the number of the Company's directors, removal of directors, and who may fill vacancies within the board of directors. TRANSFER AGENT AND REGISTRAR The transfer agent and registrar for the Common Stock is First Union National Bank, Charlotte, North Carolina. 30 32 UNDERWRITING Subject to the terms and conditions of the Underwriting Agreement, the Underwriters named below (the "Underwriters") through their Representatives, Alex. Brown & Sons Incorporated, The Robinson-Humphrey Company, Inc., Robertson, Stephens & Company LLC and Interstate/Johnson Lane Corporation, have severally agreed to purchase from the Company and the Selling Shareholders the following respective numbers of shares of Common Stock at the initial public offering price less the underwriting discounts and commission set forth on the cover page of this Prospectus:
NUMBER OF UNDERWRITER SHARES ----------- --------- Alex. Brown & Sons Incorporated............................. The Robinson-Humphrey Company, Inc.......................... Robertson, Stephens & Company LLC........................... Interstate/Johnson Lane Corporation......................... --------- Total....................................................... 2,900,000 =========
The Underwriting Agreement provides that the obligations of the Underwriters are subject to certain conditions precedent and that the Underwriters will purchase all shares of the Common Stock offered hereby if any of such shares are purchased. The Company and Selling Shareholders have been advised by the Underwriters that the Underwriters propose to offer the shares of Common Stock to the public at the public offering price set forth on the cover page of this Prospectus, and to certain dealers at such price less a concession not in excess of $ per share. The Underwriters may allow, and such dealers may reallow, a concession not in excess of $ share to certain other dealers. After the public offering, the offering price and other selling terms may be changed by the Representatives of the Underwriters. The Company and the Selling Shareholders have granted to the Underwriters an option, exercisable not later than 30 days after the date of this Prospectus, to purchase up to 435,000 additional shares of Common Stock at the public offering price less the underwriting discounts and commissions set forth on the cover page of this Prospectus. To the extent that the Underwriters exercise such option, each of the Underwriters will have a firm commitment to purchase approximately the same percentage thereof that the number of shares of Common Stock to be purchased by it shown in the above table bears to 2,900,000, and the Company and the Selling Shareholders will be obligated, pursuant to the option, to sell such shares to the Underwriters. The Underwriters may exercise such option only to cover over-allotments made in connection with the sale of the Common Stock offered hereby. If purchased, the Underwriters will offer such additional shares on the same terms as those on which the 2,900,000 shares are being offered. In connection with the offering, certain Underwriters may engage in passive market making transactions in the Common Stock on the Nasdaq National Market immediately prior to the commencement of sales in the offering in accordance with Rule 103 of Regulation M. Passive market making consists of displaying bids on the Nasdaq National Market limited by the bid prices of independent market makers and making purchases limited by such prices and effected in response to order flow. Net purchases by a passive market maker on each day are limited to a specified percentage of the passive market maker's average daily trading volume in the Common Stock during a specified period and must be discontinued when such limit is reached. Passive market making may stabilize the market price of the Common Stock at a level above that which might otherwise prevail and, if commenced, may be discontinued at any time. Subject to applicable limitations, the Underwriters, in connection with the offering, may place bids for or make purchases of the Common Stock in the open market or otherwise, for long or short account, or cover short positions incurred, to stabilize, maintain or otherwise prevail in the open market. There can be no assurance that the price of the Common Stock will be stabilized, or that stabilizing, if commenced, will not be discontinued at any time. Subject to applicable limitations, 31 33 the Underwriters may also place bids or make purchases on behalf of the underwriting syndicate to reduce a short position created in connection with the offering. The Underwriters are not required to engage in these activities and may end these activities at any time. The Company and the Selling Shareholders have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act. The Selling Shareholders, directors, executive officers of the Company, and certain of their respective family members, who will hold in the aggregate 6,517,878 shares of Common Stock, and options and warrants that are exercisable within 60 days of July 1, 1997 to purchase an aggregate of 589,725 shares of Common Stock of the Company after the offering, have agreed not to offer, sell or otherwise dispose of 6,925,234 of such shares of Common Stock for a period of 90 days after the date of this Prospectus, without the prior written consent of the Representatives of the Underwriters. The Company has agreed not to offer, sell or otherwise dispose of any shares of Common Stock for a period of 90 days from the date of this Prospectus without the prior consent of the Representatives of the Underwriters, except that the Company may issue shares of Common Stock under its current stock option plans and stock purchase plan. LEGAL MATTERS The validity of the Common Stock offered hereby and the issuance thereof will be passed upon for the Company by Morris, Manning & Martin, L.L.P., Atlanta, Georgia. Certain legal matters will be passed upon for the Underwriters by Piper & Marbury L.L.P., Baltimore, Maryland. CERTAIN FORWARD LOOKING STATEMENTS This Prospectus (including the documents incorporated herein by reference) contains or may contain certain forward-looking statements and information that are based on beliefs of, and information currently available to, the Company's management as well as estimates and assumptions made by the Company's management. When used in this Prospectus, words such as "anticipate," "believe," "estimate," "expect," "future," "intend," "plan" and similar expressions as they relate to the Company or the Company's management, identify forward-looking statements. Such statements reflect the current views of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions relating to the Company's operations and results of operations, competitive factors and pricing pressures, shifts in market demand, the performance and needs of the industries served by the Company, the costs of product development and other risks and uncertainties, including the risk and uncertainties identified in risk factors. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results or outcomes may vary significantly from those anticipated, believed, estimated, expected, intended or planned. EXPERTS The consolidated financial statements and financial statement schedule of the Company as of December 31, 1996 and 1995, and for each of the years in the two-year period ended December 31, 1996, have been incorporated by reference herein and in the registration statement from the Company's Current Report on Form 8-K filed on July 1, 1997 in reliance upon the report of KPMG Peat Marwick LLP, independent certified public accountants, incorporated by reference herein and in the registration statement and upon the authority of said firm as experts in accounting and auditing. The report of KPMG Peat Marwick LLP expressed reliance on the report of other auditors as it relates to the amounts included for SupplyTech, Inc. and SupplyTech International, LLC for 1995. The financial statements of Harbinger NET Services, LLC as of December 31, 1996 and 1995 and for the periods ended December 31, 1996 and 1995 have been incorporated by reference herein and in the registration statement from the Company's Current Report on Form 8-K/A Amendment No. 1 32 34 filed on March 14, 1997 in reliance upon the report of KPMG Peat Marwick LLP, independent certified public accountants, incorporated by reference herein and in the registration statement and upon the authority of said firm or experts in accounting and auditing. The combined financial statements of SupplyTech, Inc. and SupplyTech International, LLC as of December 31, 1996 and for the year then ended have been incorporated by reference herein and in the registration statement from the Company's Current Report on Form 8-K/A Amendment No. 1 filed on March 18, 1997 in reliance upon the report of KPMG Peat Marwick LLP, independent certified public accountants, incorporated by reference herein and in the registration statement and upon the authority of said firm as experts in accounting and auditing. The financial statements and schedule of the Company for the year ended December 31, 1994, which have been incorporated by reference herein and in the registration statement from the Company's Current Report on Form 8-K filed on July 1, 1997 have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their report with respect thereto, and are incorporated by reference herein and in the registration statement in reliance upon the authority of said firm as experts in accounting and auditing in giving said reports. The combined financial statements of SupplyTech, Inc. and SupplyTech International, LLC as of December 31, 1995 and for each of the years in the two-year period ended December 31, 1995 have been incorporated by reference herein and in the registration statement from the Company's Current Report on Form 8-K/A Amendment No. 1 filed on March 18, 1997 in reliance upon the report of Ciulla, Smith & Dale, LLP, independent certified public accountants, incorporated by reference herein and in the registration statement and upon the authority of said firm as experts in accounting and auditing. The consolidated financial statements of NTEX Holding, B.V. as of December 31, 1995 and for the year then ended, have been incorporated by reference herein and in the registration statement from the Company's Current Report on Form 8-K/A Amendment No. 1 filed on June 17, 1996 in reliance upon the report of Moret Ernst & Young Accountants, independent certified public accountants, incorporated by reference herein and in the registration statement and upon the authority of said firm as experts in accounting and auditing. The financial statements of INOVIS GmbH & Co. computergestuzte Informationssysteme as of December 31, 1995, and for the year then ended have been incorporated by reference herein and in the registration statement from the Company's Current Report of Form 8-K/A Amendment No. 1 filed on July 1, 1996 in reliance upon the report of KPMG Deutsche TreuhandGesellschaft AG, independent certified public accountants, incorporated by reference herein and in the registration statement and upon the authority of said firm as experts in accounting and auditing. The consolidated financial statements of Harbinger N.V. and subsidiaries as of December 31, 1995, 1994, and 1993, and for the two years ended December 31, 1995, and 1994, and the one month ended December 31, 1993, have been incorporated by reference herein and in the registration statement from the Company's Current Report on Form 8-K/A Amendment No. 1 filed on July 2, 1996 in reliance upon the report of KPMG Accountants N.V., independent certified public accountants, incorporated by reference herein and in the registration statement and upon the authority of said firm as experts in accounting and auditing. The statement of operations of EDI (formerly a business unit of Texas Instruments, Incorporated) for the year ended December 31, 1994, incorporated by reference in this Prospectus and registration statement, has been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon included in the Company's registration statement (Form S-1, No. 33-93804). Such financial statements have been incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. 33 35 AVAILABLE INFORMATION This Prospectus constitutes a part of a Registration Statement which the Company has filed with the Commission under the Securities Act of 1933, as amended, with respect to the Shares of Common Stock. This Prospectus omits certain of the information contained in the Registration Statement, and reference is hereby made to the Registration Statement and related exhibits thereto for further information with respect to the Company and the securities offered hereby. Such additional information can be obtained from the Commission's office in Washington, D.C. Any statements contained herein concerning the provisions of any documents are not necessarily complete, and, in each instance, reference is made to the copy of such document filed as an exhibit to the Registration Statement or otherwise filed with the Commission. Each such statement is qualified in its entirety by such reference. The Company is subject to the informational requirements of the Securities Exchange Act of 1934 and files reports and other information with the Securities and Exchange Commission (the "Commission") in accordance therewith. Such reports, proxy statements, and other information filed by the Company are available for inspection and copying at the public reference facilities of the Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the Commission's Regional Offices located at Room 1028, Jacob K. Javits Federal Building, 26 Federal Plaza, New York, New York 10278 and Room 3190, Kluczynski Federal Building, 230 South Dearborn Street, Chicago, Illinois 60604. Copies of such material may be obtained by mail from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, at prescribed rates. The Commission maintains a World Wide Web site on the Internet that contains reports, proxy and information statements and other information regarding registrants which file electronically with the Commission at http://www.sec.gov. The Company's common stock is listed on the Nasdaq Stock Market. In addition to the addresses listed above, reports, proxy statements, and other information concerning the Company can be inspected at the offices of the Nasdaq Stock Market. INCORPORATION OF CERTAIN INFORMATION BY REFERENCE The following documents filed by the Company with the Commission are incorporated by reference in this Prospectus: (i) the Company's Annual Report on Form 10-K for the year ended December 31, 1996; (ii) the Company's Proxy Statement dated April 2, 1997; (iii) the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997; (iv) the description of the Common Stock of the Company which is contained in the Company's Form 8-A/A Amendment No. 1 dated August 21, 1995, as incorporated by reference therein from the Company's Pre-Effective Amendment No. 4 to its Registration Statement on Form S-1 dated August 18, 1995; (v) the statement of operations of EDI (formerly a business unit of Texas Instruments, Incorporated) for the year ended December 31, 1994, included in the Company's Registration Statement (File No. 33-93804) on Form S-1; (vi) the Company's Current Report on Form 8-K dated April 4, 1996, and filed on April 18, 1996, as amended by its Current Report on Form 8-K/A Amendment No. 1 filed June 17, 1996; (vii) the Company's Current Report on Form 8-K dated April 19, 1996, and filed on May 2, 1996, as amended by its Current Report on Form 8-K/A Amendment No. 1 filed July 1, 1996; (viii) the Company's Current Report on Form 8-K dated April 20, 1996, and filed on May 3, 1996, as amended by its Current Report on Form 8-K/A Amendment No. 1 filed July 2, 1996; (ix) the Company's Current Report on Form 8-K dated January 1, 1997, and filed on January 15, 1997, as amended by its Current Report on Form 8-K/A Amendment No. 1 filed March 14, 1997; (x) the Company's Current Report on Form 8-K dated January 3, 1997, and filed on January 16, 1997, as amended by its Current Report on Form 8-K/A Amendment No. 1 filed March 18, 1997; (xi) the Company's Current Report on Form 8-K dated April 28, 1997, and filed on April 28, 1997; and (xii) the Company's Current Report on Form 8-K dated July 1, 1997, and filed on July 1, 1997. 34 36 All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Shares offered hereby shall be deemed to be incorporated by reference into this Prospectus and to be a part hereof. The Company hereby undertakes to provide without charge to each person to whom this Prospectus has been delivered, upon the written or oral request of any such person, a copy of any and all of the foregoing documents incorporated herein by reference (other than exhibits to such documents which are not specifically incorporated by reference into the information that this Prospectus incorporates). Written or telephone requests should be directed to Investor Relations Department, Harbinger Corporation, 1055 Lenox Park Boulevard, Atlanta, Georgia 30319, telephone number (404) 467-3000. 35 37 ====================================================== NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN SO AUTHORIZED BY THE COMPANY, ANY SELLING SHAREHOLDER OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE ANY OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF. ------------------ TABLE OF CONTENTS
PAGE ---- Risk Factors.......................... 6 Use of Proceeds....................... 13 Price Range of Common Stock........... 13 Dividend Policy....................... 13 Capitalization........................ 14 Selected Financial Data............... 15 Business.............................. 17 Management............................ 25 Principal and Selling Shareholders.... 27 Description of Capital Stock.......... 29 Underwriting.......................... 31 Legal Matters......................... 32 Certain Forward Looking Statements.... 32 Experts............................... 32 Available Information................. 34 Incorporation of Certain Information by Reference........................ 34
------------------ ====================================================== ====================================================== 2,900,000 SHARES (LOGO) HARBINGER COMMON STOCK ------------------- PROSPECTUS ------------------- ALEX. BROWN & SONS INCORPORATED THE ROBINSON-HUMPHREY COMPANY, INC. ROBERTSON, STEPHENS & COMPANY INTERSTATE/JOHNSON LANE CORPORATION July , 1997 ====================================================== 38 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. None of the expenses relating to the registration of Shares will be borne by the Selling Shareholders. The expenses of registration are estimated to be as follows: Securities and Exchange Commission registration fee.............................. $28,994.29 National Association of Securities Dealers, Inc. filing fee...................... 10,368.00 Nasdaq National Market additional listing fee.................................... 17,500.00 Accountants' fees and expenses................................................... 65,000.00 Legal fees and expenses.......................................................... 130,000.00 Printing expenses................................................................ 50,000.00 Miscellaneous.................................................................... 48,137.71 ----------- Total Expenses....................................................... $350,000.00
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Georgia Business Corporation Code permits a corporation to eliminate or limit the personal liability of a director to the corporation or its shareholders for monetary damages for breach of duty of care of other duty as a director, provided that no provision shall eliminate or limit the liability of a director: (A) for an appropriation, in violation of his duties, of any business opportunity of the corporation; (B) for acts or omissions which involve intentional misconduct or a knowing violation of law; (C) for unlawful corporate distributions; or (D) for any transaction from which the director received an improper personal benefit. This provision pertains only to breaches of duty by directors in their capacity as directors (and not in any other corporate capacity, such as officers) and limits liability only for breaches of fiduciary duties under Georgia corporate law (and not for violation of other laws, such as the federal securities laws). The Company's Amended and Restated Articles of Incorporation (the "Restated Articles") exonerate the Company's directors from monetary liability to the extent permitted by this statutory provision. The Company's Restated Articles and Amended and Restated Bylaws (the "Restated Bylaws") also provide that the Company shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including any action by or in the right of the Company), by reason of the fact that such person is or was a director or officer of the Company, or is or was serving at the request of the Company as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including reasonable attorneys' fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Company (and with respect to any criminal action or proceeding, if such person had no reasonable cause to believe such person's conduct was unlawful), to the maximum extent permitted by, and in the manner provided by, the Georgia Business Corporation Code. Notwithstanding any provisions of the Company's Restated Articles and Bylaws to the contrary, the Georgia Business Corporation Code provides that the Company shall not indemnify a director or officer for any liability incurred in a proceeding in which the director is adjudged liable to the Company or is subjected to injunctive relief in favor of the Company: (1) for any appropriation, in violation of his duties, of any business opportunity of the Company; (2) for acts or omissions which involve intentional misconduct or a knowing violation of law; (3) for unlawful corporate distributions; or (4) for any transaction from which the director or officer received an improper personal benefit. II-1 39 The officers and directors of the Company are entitled to indemnification by the Selling Shareholders against any cause of action, loss, claim, damage or liability to the extent it arises out of or is based upon the failure of the Selling Shareholders (or his donees, legatees, or pledgees) and each underwriter to comply with the Prospectus delivery requirements under the federal securities laws or any applicable state securities laws or upon any untrue statement or alleged untrue statement or omission or alleged omission made in this Registration Statement and the Prospectus contained herein, as the same shall be amended or supplemented, made in reliance upon or in conformity with written information furnished to the Company by such Selling Shareholder or such underwriter. ITEM 16. LIST OF EXHIBITS. The following exhibits are filed as part of, or are incorporated by reference into, this report on Form S-3:
EXHIBIT NUMBER DESCRIPTION -------------- ---------------------------------------------------------------------------------------- 1.1 Form of Underwriting Agreement 2.1 Share Purchase Agreement effective as of March 31, 1996 among F.J. Nederlof B.V., H.W.I. Bol, Arthur Nederlof B.V. (the "NTEX Shareholders") and the Company (incorporated by reference to Exhibit 2(a) filed with the Company's Current Report on Form 8-K dated April 18, 1996). 2.2 Share Purchase Agreement effective as of March 31, 1996 among Jakob Karszt, Helmut Grimm, Hans Rauh, Nikolai Preis, Ulrich Rehn, Eugen Volbers, Jurgen M. Diet, Wolffried Stucky and Jorg Blum (the "INOVIS Shareholders") and the Company (incorporated by reference to Exhibit 2(a) filed with the Company's Current Report on Form 8-K dated May 2, 1996). 2.3 Debenture Purchase Agreement effective as of January 1, 1997 between BellSouth Telecommunications, Inc. and the Company (incorporated by reference to Exhibit 2.1 filed with the Company's Current Report on Form 8-K dated January 15, 1997). 2.4 Merger Agreement dated January 3, 1997 among SupplyTech, Inc., Harbinger Acquisition Corporation II and the Company (incorporated by reference to Exhibit 2.1 filed with the Company's Current Report on Form 8-K dated January 16, 1997). 2.5 Agreement and Plan of Reorganization between and among Vulcan Ventures, Inc., AXA Equity & Law Life Assurance Society, Ltd. (the "HNV Shareholders"), Harbinger N.V. and the Company effective as of March 29, 1996 (incorporated by reference to Exhibit 2(a) filed with the Company's Current Report on Form 8-K dated May 3, 1996). 3.1 Amended and Restated Articles of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 3.2 Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996). 4.1 Provisions of the Amended and Restated Articles of Incorporation and Amended and Restated Bylaws of the Company defining rights of the holders of the Common Stock (incorporated by reference to Exhibits 3.1 through 3.4 to the Company's Registration Statement on Form S-1 (File No. 33-93804) declared effective on August 22, 1995).
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EXHIBIT NUMBER DESCRIPTION --------------- ------------------------------------------------------------------------- 4.2 Specimen Stock Certificate (incorporated by reference to Exhibit 4.3 to the Company's Registration Statement on Form S-1 (File 33-93804)). 4.3 Form of Registration Rights Agreement effective March 31, 1996 between the Company and each of the NTEX Shareholders (incorporated by reference to Exhibit 2(a) filed with the Company's Current Report on Form 8-K dated April 18, 1996). 4.4 Form of Registration Rights Agreement effective March 29, 1996 between each of the Harbinger N.V. Shareholders and the Company (incorporated by reference to Exhibit 2(a) filed with the Company's Current Report on Form 8-K dated May 3, 1996). 4.5 Form of Warrant issued to former Harbinger N.V. Shareholders on July 18, 1996 (incorporated by reference to Exhibit 4.5 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996). 4.6 Registration Rights Agreement among the former shareholders of SupplyTech, Inc. and the Company effective January 3, 1997 (incorporated by reference to Exhibit 4.1 filed with the Company's Current Report on Form 8-K dated January 16, 1997). 4.7 Form of Warrant issued to former INOVIS Shareholders on April 19, 1996 (incorporated by reference to Exhibit 2(a) filed with the Company's Current Report on Form 8-K dated July 1, 1996). 4.8 Form of Registration Rights Agreement effective March 31, 1996 between each of the former INOVIS Shareholders and the Company (incorporated by reference to Exhibit 2(a) filed with the Company's Current Report on Form 8-K dated July 1, 1996). 5.1** Form of opinion of Morris, Manning & Martin, L.L.P. as to the legality of the securities being registered. 10.1 Promissory Note for $10,000,000 payable by the Company to NationsBank of Georgia, N.A. dated April 16, 1997 (incorporated by reference to Exhibit 10.1 filed to the Company's Registration Statement on Form S-3 (File No. 333-30501) declared effective on July 3, 1997). 10.2 Loan Agreement between the Company and NationsBank of Georgia, N.A. dated as of August 15, 1994, with First Amendment dated as of May 2, 1995 (incorporated by reference to Exhibit 10.13 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995).
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EXHIBIT NUMBER DESCRIPTION --------------- ---------------------------------------------------------------------------------------- 10.3 Second Amendment to Loan Agreement between the Company and NationsBank, National Association (South) dated April 16, 1997 (incorporated by reference to Exhibit 10.3 filed to the Company's Registration Statement on Form S-3 (File No. 333-30501) declared effective on July 3, 1997). 10.4 Employment Agreement between the Company and Mr. James M. Travers effective as of February 1, 1995 with letter from the Company to Mr. Travers dated December 27, 1994 (incorporated by reference to Exhibit 10.14 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.5** Employment Agreement between the Company and Mr. James C. Davis effective as of July 1, 1997. 10.6 Assignment of Invention and Patents Thereon (Patent 5,367,664) by Texas Instruments, Incorporated ("TI") to the Company dated January 12, 1995 as recorded with United States Patent and Trademark Office on March 13, 1995 (incorporated by reference to Exhibit 10.16 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.7 U.S. Patent 5,367,664 issued November 22, 1994 (incorporated by reference to Exhibit 10.17 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.8 Assignment of Invention and Patents Thereon (Application 07/502,955) by TI to the Company dated January 12, 1995 as recorded with United States Patent and Trademark Office on March 13, 1995 (incorporated by reference to Exhibit 10.18 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.9 Asset Purchase Agreement between the Company and TI dated as of December 31, 1994 (incorporated by reference to Exhibit 10.19 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.10 Employment Agreement between the Company and Mr. David A. Meeker effective as of December 21, 1994 (incorporated by reference to Exhibit 10.21 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.11 401(k) Profit Sharing Plan amended and restated effective as of September 1, 1994; original effective date October 1, 1991 (incorporated by reference to Exhibit 10.24 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.12 Employment Agreement between the Company and Mr. C. Tycho Howle effective as of March 4, 1997 (incorporated by reference to Exhibit 10.11 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996).
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EXHIBIT NUMBER DESCRIPTION -------------- ----------------------------------------------------------------------------------------- 10.13** First Amendment to Employment Agreement between the Company and Mr. C. Tycho Howle effective as of July 1, 1997. 10.14 Employment Agreement between the Company and Mr. Joel G. Katz effective as of March 7, 1994 (incorporated by reference to Exhibit 10.26 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.15** Employment Agreement between the Company and Mr. David T. Leach effective as of July 1, 1997. 10.16 License and Service Agreement between the Company and Bank of America National Trust and Savings Association dated as of February 18, 1994 (incorporated by reference to Exhibit 10.29 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.17 Amended and Restated 1993 Stock Option Plan for Nonemployee Directors effective as of August 11, 1993 (incorporated by reference to Exhibit 10.33 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.18 Third Amendment to Amended and Restated 1993 Stock Option Plan for Nonemployee Directors (incorporated by reference to Exhibit 10.17 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996). 10.19 Co-Marketing Agreement between the Company and Sprint Communications Company Limited Partnership of Delaware made as of August 9, 1993 (incorporated by reference to Exhibit 10.34 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.20 Lease between the Company and Lenox Park Development 1 L.P. for office located at 1055 Lenox Park Boulevard, Atlanta, Georgia dated July 16, 1992 with First Amendment dated July 22, 1993 and Second Amendment dated December 27, 1993 (incorporated by reference to Exhibit 10.38 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.21 Amended and Restated 1989 Stock Option Plan effective as of April 15, 1992 (incorporated by reference to Exhibit 10.39 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.22+ Harbinger Business Financial Management System License Agreement between the Company as assignee of Harbinger Computer Services, Inc. and Barnett Banks, Inc. dated November 18, 1991 with amendment dated May 21, 1992 (incorporated by reference to Exhibit 10.40 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995).
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EXHIBIT NUMBER DESCRIPTION -------------- ---------------------------------------------------------------------------------------- 10.23 Software License and Distribution Agreement between the Company and Sprint International Communications Corporation ("Sprint") effective July 27, 1990 with First Amendment effective as of May 24, 1993 (incorporated by reference to Exhibit 10.41 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.24 Reseller Agreement (now known as Service Management Agreement) between the Company and Sprint effective July 27, 1990 with First Amendment effective as of May 1, 1991, Second Amendment effective as of May 1, 1992, and Third Amendment dated July 1, 1994 (incorporated by reference to Exhibit 10.42 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.25 Form of Indemnification Agreement between the Company and Directors (incorporated by reference to Exhibit 10.43 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.26 Harbinger Corporation 1996 Stock Option Plan (incorporated by reference to Exhibit 10.48 to the Company's Annual Report on Form 10-K for the year ended December 31, 1995). 10.27 First Amendment to Harbinger Corporation 1996 Stock Option Plan. (incorporated by reference to Exhibit 10.26 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996). 10.28 Amended and Restated Harbinger Corporation Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.49 to the Company's Annual Report on Form 10-K for the year ended December 31, 1995). 10.29 First Amendment to Harbinger Corporation Employee Stock Purchase Plan. (incorporated by reference to Exhibit 10.28 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996). 10.30 First Amendment to Harbinger Corporation Amended and Restated 1989 Stock Option Plan (incorporated by reference to Exhibit 10.50 to the Company's Annual Report on Form 10-K for the year ended December 31, 1995). 10.31 Alliance Agreement dated July 21, 1995 between Systems Software Associates, Inc. and the Company (incorporated by reference to Exhibit 10.47 to the Company's Registration Statement on Form S-1 (File No. 33-93804)). 10.32 First Amendment to Alliance Agreement between System Software Associates, Inc. and Harbinger Corporation (incorporated by reference to Exhibit 10.51 to the Company's Annual Report on Form 10-K for the year ended December 31, 1995). 10.33 Employment Agreement between the Company and Mr. Theodore C. Annis effective January 3, 1997 (incorporated by reference to Exhibit 99.2 filed with the Company's Current Report on Form 8-K/A dated March 17, 1997).
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EXHIBIT NUMBER DESCRIPTION -------------- ---------------------------------------------------------------------------------------- 10.34 Employment Agreement between the Company and Ms. A. Gail Jackson effective January 3, 1997 (incorporated by reference to Exhibit 99.3 filed with the Company's Current Report on Form 8-K/A dated March 17, 1997). 23.1 Consents of KPMG Peat Marwick LLP. 23.2 Consent of Arthur Andersen LLP. 23.3 Consent of Ciulla, Smith & Dale, LLP. 23.4 Consent of Moret Ernst & Young Accountants. 23.5 Consent of KPMG Deutsche Treuhand-Gesellschaft AG. 23.6 Consent of KPMG Accountants N.V. 23.7 Consent of Ernst & Young LLP. 23.8 Consent of Morris Manning & Martin, L.L.P. (included in Exhibit 5.1). 24.1 Power of Attorney (include at Page II-9 of this Registration Statement).
- ------- ** Previously filed. + The Company has received confidential treatment with respect to portions of these Exhibits. ITEM 17. UNDERTAKINGS. The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement. (i) To include in any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; 11-7 45 provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Company pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") that are incorporated by reference in this Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) For purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-8 46 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Atlanta, State of Georgia on the 28th day of July, 1997. HARBINGER CORPORATION By: /s/ Joel G. Katz ---------------------------------------- Joel G. Katz, Chief Financial Officer II-9 47 Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
* Chairman of the Board of Directors July 28, 1997 - --------------------------- C. Tycho Howle * Chief Executive Officer July 28, 1997 - --------------------------- and Director David T. Leach (Principal Executive Officer) * President, Chief Operating Officer July 28, 1997 - --------------------------- and Director James C. Davis * Chief Financial Officer and Secretary July 28, 1997 - --------------------------- (Principal Financial Officer and Principal Joel G. Katz Accounting Officer) * Director July 28, 1997 - --------------------------- William D. Savoy * Director July 28, 1997 - --------------------------- William B. King * Director July 28, 1997 - --------------------------- Stuart L. Bell * Director July 28, 1997 - --------------------------- Benn R. Konsynski * Director July 28, 1997 - --------------------------- Klaus Neugebauer * Director July 28, 1997 - --------------------------- Ad Nederlof
*By: /s/ Joel G. Katz ----------------------- Joel G. Katz Attorney-in-Fact II-10 48 EXHIBIT INDEX The following exhibits are filed with or incorporated by reference into this Registration Statement pursuant to Item 601 of Regulation S-K:
EXHIBIT SEQUENTIAL PAGE NUMBER DESCRIPTION NUMBER -------------- ------------------------------------------------------------------------------------------------- 1.1 Form of Underwriting Agreement 2.1 Share Purchase Agreement effective as of March 31, 1996 N/A among F.J. Nederlof B.V., H.W.I. Bol, Arthur Nederlof B.V. (the "NTEX Shareholders") and the Company (incorporated by reference to Exhibit 2(a) filed with the Company's Current Report on Form 8-K dated April 18, 1996). 2.2 Share Purchase Agreement effective as of March 31, 1996 N/A among Jakob Karszt, Helmut Grimm, Hans Rauh, Nikolai Preis, Ulrich Rehn, Eugen Volbers, Jurgen M. Diet, Wolffried Stucky and Jorg Blum (the "INOVIS Shareholders") and the Company (incorporated by reference to Exhibit 2(a) filed with the Company's Current Report on Form 8-K dated May 2, 1996). 2.3 Debenture Purchase Agreement effective as of January 1, 1997 N/A between BellSouth Telecommunications, Inc. and the Company (incorporated by reference to Exhibit 2.1 filed with the Company's Current Report on Form 8-K dated January 15, 1997). 2.4 Merger Agreement dated January 3, 1997 among SupplyTech, N/A Inc., Harbinger Acquisition Corporation II and the Company (incorporated by reference to Exhibit 2.1 filed with the Company's Current Report on Form 8-K dated January 16, 1997). 2.5 Agreement and Plan of Reorganization between and among N/A Vulcan Ventures, Inc., AXA Equity & Law Life Assurance Society, Ltd. (the "HNV Shareholders"), Harbinger N.V. and the Company effective as of March 29, 1996 (incorporated by reference to Exhibit 2(a) filed with the Company's Current Report on Form 8-K dated May 3, 1996). 3.1 Amended and Restated Articles of Incorporation of the N/A Company (incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 3.2 Amended and Restated Bylaws of the Company (incorporated by N/A reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996).
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EXHIBIT SEQUENTIAL PAGE NUMBER DESCRIPTION NUMBER --------------- --------------------------------------------------------------------------------------------------- 4.1 Provisions of the Amended and Restated Articles of N/A Incorporation and Amended and Restated Bylaws of the Company defining rights of the holders of the Common Stock (incorporated by reference to Exhibits 3.1 through 3.4 to the Company's Registration Statement on Form S-1 (File No. 33-93804) declared effective on August 22, 1995). 4.2 Specimen Stock Certificate (incorporated by reference to N/A Exhibit 4.3 to the Company's Registration Statement on Form S-1 (File 33-93804)). 4.3 Form of Registration Rights Agreement effective March 31, N/A 1996 between the Company and each of the NTEX Shareholders (incorporated by reference to Exhibit 2(a) filed with the Company's Current Report on Form 8-K dated April 18, 1996). 4.4 Form of Registration Rights Agreement effective N/A March 29, 1996 between each of the Harbinger N.V. Shareholders and the Company (incorporated by reference to Exhibit 2(a) filed with the Company's Current Report on Form 8-K dated May 3, 1996). 4.5 Form of Warrant issued to former Harbinger N.V. Shareholders N/A on July 18, 1996 (incorporated by reference to Exhibit 4.5 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996). 4.6 Registration Rights Agreement among the former shareholders N/A of SupplyTech, Inc. and the Company effective January 3, 1997 (incorporated by reference to Exhibit 4.1 filed with the Company's Current Report on Form 8-K dated January 16, 1997). 4.7 Form of Warrant issued to former INOVIS Shareholders on N/A April 19, 1996 (incorporated by reference to Exhibit 2(a) filed with the Company's Current Report on Form 8-K dated July 1, 1996). 4.8 Form of Registration Rights Agreement effective March 31, N/A 1996 between each of the former INOVIS Shareholders and the Company (incorporated by reference to Exhibit 2(a) filed with the Company's Current Report on Form 8-K dated July 1, 1996). 5.1** Opinion of Morris, Manning & Martin, L.L.P. as to the N/A legality of the securities being registered. 10.1 Promissory Note for $10,000,000 payable by the Company to N/A NationsBank of Georgia, N.A. dated April 16, 1997 (incorporated by reference to Exhibit 10.1 filed to the Company's Registration Statement on Form S-3 (File No. 333-30501) declared effective on July 3, 1997).
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EXHIBIT SEQUENTIAL PAGE NUMBER DESCRIPTION NUMBER ---------------- ------------------------------------------------------------------------------------------------- 10.2 Loan Agreement between the Company and NationsBank of N/A Georgia, N.A. dated as of August 15, 1994 with First Amendment dated as of May 2, 1995 (incorporated by reference to Exhibit 10.13 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.3 Second Amendment to Loan Agreement between the Company and N/A NationsBank, National Association (South) dated April 16, 1997 (incorporated by reference to Exhibit 10.3 filed to the Company's Registration Statement on Form S-3 (File No. 333-30501) declared effective on July 3, 1997). 10.4 Employment Agreement between the Company and Mr. James M. N/A Travers effective as of February 1, 1995 with letter from the Company to Mr. Travers dated December 27, 1994 (incorporated by reference to Exhibit 10.14 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.5** Employment Agreement between the Company and Mr. James C. N/A Davis effective as of July 1, 1997. 10.6 Assignment of Invention and Patents Thereon (Patent N/A 5,367,664) by Texas Instruments, Incorporated ( "TI ") to the Company dated January 12, 1995 as recorded with United States Patent and Trademark Office on March 13, 1995 (incorporated by reference to Exhibit 10.16 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.7 U.S. Patent 5,367,664 issued November 22, 1994 (incorporated N/A by reference to Exhibit 10.17 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.8 Assignment of Invention and Patents Thereon (Application N/A 07/502,955) by TI to the Company dated January 12, 1995 as recorded with United States Patent and Trademark Office on March 13, 1995 (incorporated by reference to Exhibit 10.18 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.9 Asset Purchase Agreement between the Company and TI dated as N/A of December 31, 1994 (incorporated by reference to Exhibit 10.19 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995).
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EXHIBIT SEQUENTIAL PAGE NUMBER DESCRIPTION NUMBER --------------- ------------------------------------------------------------------------------------------------- 10.10 Employment Agreement between the Company and Mr. David A. N/A Meeker effective as of December 21, 1994 (incorporated by reference to Exhibit 10.21 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.11 401(k) Profit Sharing Plan amended and restated effective as N/A of September 1, 1994; original effective date October 1, 1991 (incorporated by reference to Exhibit 10.24 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.12 Employment Agreement between the Company and Mr. C. Tycho N/A Howle effective as of March 4, 1997 (incorporated by reference to Exhibit 10.11 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996). 10.13** First Amendment to Employment Agreement between the Company N/A and Mr. C. Tycho Howle effective as of July 1, 1997. 10.14 Employment Agreement between the Company and Mr. Joel G. N/A Katz effective as of March 7, 1994 (incorporated by reference to Exhibit 10.26 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.15** Employment Agreement between the Company and Mr. David T. N/A Leach effective as of July 1, 1997. 10.16+ License and Service Agreement between the Company and Bank N/A of America National Trust and Savings Association dated as of February 18, 1994 (incorporated by reference to Exhibit 10.29 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.17 Amended and Restated 1993 Stock Option Plan for Nonemployee N/A Directors effective as of August 11, 1993 (incorporated by reference to Exhibit 10.33 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.18 Third Amendment to Amended and Restated 1993 Stock Option N/A Plan for Nonemployee Directors (incorporated by reference to Exhibit 10.17 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996).
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EXHIBIT SEQUENTIAL PAGE NUMBER DESCRIPTION NUMBER --------------- ----------------------------------------------------------------------------------------------- 10.19 Co-Marketing Agreement between the Company and Sprint N/A Communications Company Limited Partnership of Delaware made as of August 9, 1993 (incorporated by reference to Exhibit 10.34 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.20 Lease between the Company and Lenox Park Development 1 L.P. N/A for office located at 1055 Lenox Park Boulevard, Atlanta, Georgia dated July 16, 1992 with First Amendment dated July 22, 1993 and Second Amendment dated December 27, 1993 (incorporated by reference to Exhibit 10.38 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.21 Amended and Restated 1989 Stock Option Plan effective as of N/A April 15, 1992 (incorporated by reference to Exhibit 10.39 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.22+ Harbinger Business Financial Management System License N/A Agreement between the Company as assignee of Harbinger Computer Services, Inc. and Barnett Banks, Inc. dated November 18, 1991 with amendment dated May 21, 1992 (incorporated by reference to Exhibit 10.40 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.23 Software License and Distribution Agreement between the N/A Company and Sprint International Communications Corporation ("Sprint") effective July 27, 1990 with First Amendment effective as of May 24, 1993 (incorporated by reference to Exhibit 10.41 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.24 Reseller Agreement (now known as Service Management N/A Agreement)between the Company and Sprint effective July 27, 1990 with First Amendment effective as of May 1, 1991, Second Amendment effective as of May 1, 1992, and Third Amendment dated July 1, 1994 (incorporated by reference to Exhibit 10.42 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995). 10.25 Form of Indemnification Agreement between the Company and N/A Directors (incorporated by reference to Exhibit 10.43 filed to the Company's Registration Statement on Form S-1 (File 33-93804) declared effective on August 22, 1995).
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EXHIBIT SEQUENTIAL PAGE NUMBER DESCRIPTION NUMBER --------------- ---------------------------------------------------------------------------------------------------- 10.26 Harbinger Corporation 1996 Stock Option Plan (incorporated N/A by reference to Exhibit 10.48 to the Company's Annual Report on Form 10-K for the year ended December 31, 1995). 10.27 First Amendment to Harbinger Corporation 1996 Stock Option N/A Plan (incorporated by reference to Exhibit 10.26 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996). 10.28 Amended and Restated Harbinger Corporation Employee Stock N/A Purchase Plan (incorporated by reference to Exhibit 10.49 to the Company's Annual Report on Form 10-K for the year ended December 31, 1995). 10.29 First Amendment to Harbinger Corporation Employee Stock N/A Purchase Plan. (incorporated by reference to Exhibit 10.28 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996). 10.30 First Amendment to Harbinger Corporation Amended and N/A Restated 1989 Stock Option Plan (incorporated by reference to Exhibit 10.50 to the Company's Annual Report on Form 10-K for the year ended December 31, 1995). 10.31 Alliance Agreement dated July 21, 1995 between Systems N/A Software Associates, Inc. and the Company (incorporated by reference to Exhibit 10.47 to the Company's Registration Statement on Form S-1 (File No. 33-93804)). 10.32 First Amendment to Alliance Agreement between System N/A Software Associates, Inc. and Harbinger Corporation (incorporated by reference to Exhibit 10.51 to the Company's Annual Report on Form 10-K for the year ended December 31, 1995). 10.33 Employment Agreement between the Company and Mr. Theodore C. N/A Annis effective January 3, 1997 (incorporated by reference to Exhibit 99.2 filed with the Company's Current Report on Form 8-K/A dated March 17, 1997). 10.34 Employment Agreement between the Company and Ms. A. Gail N/A Jackson effective January 3, 1997 (incorporated by reference to Exhibit 99.3 filed with the Company's Current Report on Form 8-K/A dated March 17, 1997). 23.1 Consents of KPMG Peat Marwick LLP. 23.2 Consent of Arthur Andersen LLP. 23.3 Consent of Ciulla, Smith & Dale, LLP.
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EXHIBIT SEQUENTIAL PAGE NUMBER DESCRIPTION NUMBER --------------- -------------------------------------------------------------------------------------------------- 23.4 Consent of Moret Ernst & Young Accountants. 23.5 Consent of KPMG Deutsche Treuhand-Gesellschaft AG. 23.6 Consent of KPMG Accountants N.V. 23.7 Consent of Ernst & Young LLP. 23.8 Consent of Morris Manning & Martin, L.L.P. (included in N/A Exhibit 5.1). 24.1 Power of Attorney (include at Page II-9 of this Registration N/A Statement).
- ----------- **Previously filed. + The Company has received confidential treatment with respect to portions of these Exhibits. II-17 EX-1.1 2 UNDERWRITING AGREEMENT 1 EXHIBIT 1.1 2,900,000 Shares HARBINGER CORPORATION Common Stock (Par Value $.0001 per share) UNDERWRITING AGREEMENT July __, 1997 ALEX. BROWN & SONS INCORPORATED ROBERTSON, STEPHENS & COMPANY LLC THE ROBINSON-HUMPHREY COMPANY, INC. INTERSTATE JOHNSON LANE CORPORATION As the Representatives of the Several Underwriters c/o ALEX. BROWN & SONS INCORPORATED 1 South Street Baltimore, Maryland 21202 Ladies and Gentlemen: Harbinger Corporation, a Georgia corporation (the "Company") and certain shareholders of the Company named in Schedule II hereto (the "Selling Shareholders"), propose to sell to the several underwriters (the "Underwriters") named in Schedule I hereto for whom you are acting as representatives (the "Representatives") an aggregate of 2,900,000 shares of the Company's Common Stock, par value $.0001 per share (the "Firm Shares") of which 1,800,000 shares will be sold by the Company and 1,100,000 shares will be sold by the Selling Shareholders. The respective amounts of the Firm Shares to be so purchased by the several Underwriters are set forth opposite their names in Schedule I hereto. Certain Selling Shareholders named in Schedule II and the Company also propose to sell at the Underwriters' option an aggregate of up to 435,000 additional shares of the Company's Common Stock (the "Option Shares") as set forth on Schedule II. The Selling Shareholders have executed Custody Agreements (the "Custody Agreement") and certain of them have executed Powers of Attorney, the forms of which have been previously delivered to you, pursuant to which the Selling Shareholders have - 1 - 2 placed their respective Selling Shareholder Shares in custody with the Company and agreed to take certain other actions with respect thereto and hereto. As the Representatives of the Underwriters, you have advised the Company and the Selling Shareholders (a) that you are authorized to enter into this Agreement on behalf of the several Underwriters, and (b) that the Underwriters are willing, acting severally and not jointly, to purchase the numbers of Firm Shares set forth opposite their respective names in Schedule I, plus their pro rata portion of the Option Shares if you elect to exercise the over-allotment option in whole or in part. The Firm Shares and the Option Shares (to the extent the aforementioned option is exercised) are herein collectively called the "Shares." In consideration of the mutual agreements contained herein and of the interests of the parties in the transactions contemplated hereby, the parties hereto agree as follows: 1. Representations and Warranties of the Company and the Selling Shareholders. (a) The Company represents and warrants as follows: (i) A registration statement on Form S-3 (File No. 333-_________) with respect to the Shares has been carefully prepared by the Company in conformity with the requirements of the Securities Act of 1933, as amended (the "Act"), and the Rules and Regulations (the "Rules and Regulations") of the Securities and Exchange Commission (the "Commission") thereunder and has been filed with the Commission under the Act. The Company has complied with the conditions for the use of Form S-3. Copies of such registration statement, including any amendments thereto, the preliminary prospectuses contained therein and the exhibits, financial statements and schedules, as finally amended and revised, have heretofore been delivered by the Company to you. Such registration statement, together with any registration statement filed by the Company pursuant to Rule 462(b) of the Act, herein referred to as the "Registration Statement," which shall be deemed to include all information omitted therefrom in reliance upon Rule 430A and contained in the Prospectus referred to below, has been declared effective by the Commission under the Act and no post-effective amendment to the Registration Statement has been filed as of the date of this Agreement. "Prospectus" means (i) the form of prospectus first filed by the Company with the Commission pursuant to its Rule 424(b) or (ii) the last preliminary prospectus included in the Registration Statement filed prior to the time it becomes effective or filed pursuant to Rule 424(a) under the Act that is delivered by the Company to the Underwriters for delivery to purchasers of the Shares, together with any term sheet or abbreviated term sheet filed with the Commission pursuant to Rule 424(b)(7) under the Act. Each preliminary prospectus included in the Registration Statement prior to the time it becomes - 2 - 3 effective is herein referred to as a "Preliminary Prospectus." Except as specifically set forth herein, (i) any reference herein to any Preliminary Prospectus or the Prospectus, as the case may be, and (ii) in the case of any reference herein to any Prospectus, shall be deemed to include any documents incorporated by reference therein, and any supplements or amendments thereto, filed with the Commission after the date of filing of the Prospectus under Rules 424(b) and 430A, and prior to the termination of the offering of the Shares by the Underwriters. (ii) The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Georgia, with corporate power and authority to own or lease its properties and conduct its business as described in the Registration Statement; each of the subsidiaries of the Company listed on Schedule III hereto (collectively, the "Subsidiaries") has been duly organized and is validly existing as a corporation or limited liability company, as the case may be, in good standing under the laws of the jurisdiction of its organization, with power and authority to own or lease their respective properties and conduct their respective businesses as described in the Registration Statement. The Company and each of the Subsidiaries are duly qualified to transact business in all jurisdictions in which the conduct of their business requires such qualification except where the failure to so qualify would not, in the aggregate, have a material adverse effect on the Company or any of its Subsidiaries; the outstanding capital shares of each of the Subsidiaries have been duly authorized and validly issued, are fully paid and non-assessable and the outstanding capital shares of each of the Subsidiaries owned by the Company as described in the Registration Statement are owned free and clear of all liens, encumbrances and security interests except as described the Registration Statement and no options, warrants or other rights to purchase, agreements or other obligations to issue or other rights to convert any obligations into shares of capital stock or ownership interests in the Subsidiaries are outstanding. Except for its investment in securities of the Subsidiaries as described in the Registration Statement, the Company has no equity or other interest in, or right to acquire, an equity or other interest in, any corporation, partnership, trust or other entity. (iii) The authorized shares of Common Stock of the Company have been duly authorized. The outstanding shares of Common Stock of the Company, including all shares to be sold by the Selling Shareholders, have been duly authorized and validly issued and are fully paid and non-assessable; the Shares to be issued and sold by the Company have been duly authorized and when issued and paid for as contemplated herein will be validly issued, fully-paid and non-assessable; and no preemptive rights of stockholders exist with respect to any of the Shares or the issue and sale thereof. Neither the filing of the Registration Statement nor the offering or sale of the Shares as contemplated by this - 3 - 4 Agreement gives rise to any rights, other than those which have been waived or satisfied, for or relating to the registration of any shares of Common Stock. (iv) This Agreement has been duly authorized, executed and delivered by the Company and is a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms. (v) The information set forth under the caption "Capitalization" in the Prospectus is true and correct. The Shares conform with the statements concerning them in the Registration Statement. (vi) The Commission has not issued an order preventing or suspending the use of any Prospectus or Preliminary Prospectus relating to the proposed offering of the Shares nor instituted proceedings for that purpose. The Registration Statement contains and the Prospectus and any amendments or supplements thereto will contain all statements which are required to be stated therein by, and in all respects conform or will conform, as the case may be, to the requirements of, the Act and the Rules and Regulations. The documents incorporated by reference in the Prospectus, at the time they were filed with the Commission conformed in all material respects to the requirements of the Securities Exchange Act of 1934 or the Act, as applicable, and the Rules and Regulations of the Commission thereunder. Neither the Registration Statement nor any amendment thereto, and neither the Prospectus nor any supplement thereto, including any documents incorporated by reference therein, contains or will contain, as the case may be, any untrue statement of a material fact or omits or will omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company makes no representations or warranties as to information contained in or omitted from the Registration Statement or the Prospectus, or any such amendment or supplement, or any documents incorporated by reference therein, in reliance upon, and in conformity with, written information furnished to the Company by or on behalf of any Underwriter through the Representatives, specifically for use in the preparation thereof. (vii) The financial statements of the Company, together with related notes and schedules as set forth and incorporated by reference in the Registration Statement, present fairly the financial position and the results of operations of the Company, at the indicated dates and for the indicated periods. Such financial statements have been prepared in accordance with generally accepted principles of accounting, consistently applied throughout the periods involved, and all adjustments necessary for a fair presentation of results for such periods have been made. The summary financial and statistical data included in the Registration - 4 - 5 Statement present fairly the information shown therein and have been compiled on a basis consistent with the financial statements presented therein. (viii) The statements of operations of EDI, a former business unit of Texas Instruments Incorporated ("EDI"), together with related notes and schedules as set forth in the Registration Statement, present fairly the results of operations of EDI for the indicated periods. Such statements of operations have been prepared in accordance with generally accepted principles of accounting, consistently applied throughout the periods involved, and all adjustments necessary for a fair presentation of results for such periods have been made. Supply Tech (ix) The Pro Forma Financial Statements of the Company incorporated by reference in the Prospectus and in the Registration Statement have been prepared in conformity with the requirements of Article 11 of Regulation S-X and present fairly the information shown therein. (x) There is no action or proceeding pending or, to the knowledge of the Company, threatened against the Company or any of the Subsidiaries before any court or administrative agency or by any regulatory authority which might result in any material adverse change in the business or financial condition of the Company, except as set forth in the Registration Statement. (xi) The Company and the Subsidiaries have good and marketable title to all of the properties and assets reflected in the financial statements herein above described (or as described in the Registration Statement), subject to no lien, mortgage, pledge, charge or encumbrance of any kind except those reflected in such financial statements (or as described in the Registration Statement) or which are not material in amount. The Company and the Subsidiaries occupy their leased properties under valid and binding leases conforming to the description thereof set forth in the Registration Statement. (xii) The Company and the Subsidiaries have filed all Federal, State and foreign income tax returns which have been required to be filed and have paid all taxes indicated by said returns and all assessments received by them or any of them to the extent that such taxes have become due and are not being contested in good faith. (xiii) Since the respective dates as of which information is given in the Registration Statement, as it may be amended or supplemented, there has not been any material adverse change or any development involving a prospective material adverse change in or affecting the earnings, business, management, assets, rights, operations, condition (financial or otherwise) or business prospects of the Company and its Subsidiaries (taken as a whole), whether or not occurring in the ordinary course of business, and there has not been any material transaction entered into by the Company or the Subsidiaries, other than transactions in the - 5 - 6 ordinary course of business and changes and transactions contemplated by the Registration Statement, as it may be amended or supplemented. None of the Company or the Subsidiaries have any material contingent obligations which are not disclosed in the Registration Statement, as it may be amended or supplemented. (xiv) Neither the Company nor any of the Subsidiaries is, nor with the giving of notice, lapse of time or both, will be, in default under their respective Articles of Incorporation or Bylaws (or in the case of HNS, its Articles of Organization or its Operating Agreement) or under any agreement, lease, contract, indenture or other instrument or obligation to which it is a party or by which it or any of its properties is bound and which default is of material significance in respect of the business or financial condition of the Company and the Subsidiaries taken as a whole. The execution and delivery of this Agreement and the consummation of the transactions herein contemplated and the fulfillment of the terms hereof will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust or other agreement or instrument to which the Company or any Subsidiary is a party, or of the Articles of Incorporation or Bylaws of the Company or any order, rule or regulation applicable to the Company or the Subsidiaries of any court or of any regulatory body or administrative agency or other governmental body having jurisdiction. (xv) Each approval, consent, order, authorization, designation, declaration or filing by or with any regulatory, administrative or other governmental body necessary in connection with the execution and delivery by the Company of this Agreement and the consummation of the transactions herein contemplated (except such additional steps as may be required by the National Association of Securities Dealers, Inc. (the "NASD") or may be necessary to qualify the Shares for public offering by the Underwriters under State securities or Blue Sky laws) has been obtained or made and is in full force and effect. (xvi) The Company and each of the Subsidiaries hold all material licenses, certificates and permits from governmental authorities which are necessary to the conduct of its business; and neither the Company nor any of the Subsidiaries has reason to believe that it has, and has not received notice of any claim that it has, infringed any patents, patent rights, trade names, trademarks or copyrights, which infringement if successfully prosecuted, would have a material adverse effect on the business or financial condition of the Company. (xvii) KPMG Peat Marwick LLP, Arthur Andersen LLP, Ernst & Young LLP, Ciulla, Smith & Dale, LLP, Moret Ernst & Young Accountants, KPMG - 6 - 7 Deutsche TreuhandGesellschaft AG and KPMG Accountants N.V., who have certified certain of the financial statements incorporated by reference in the Registration Statement and the Prospectus, are independent public accountants as required by the Act and the Rules and Regulations. (xviii) Neither the Company, nor to the Company's knowledge, any of the Subsidiaries, has taken or may take, directly or indirectly, any action designed to cause or result in, or which has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of the shares of Common Stock to facilitate the sale or resale of the Shares. The Company acknowledges that the Underwriters may engage in passive market making transactions in the Shares on The NYSE in accordance (and in compliance) with Regulation M under the Exchange Act. (xix) Neither the Company nor any Subsidiary has ever been, is now, and immediately after the sale of the Shares under this Agreement will be, an "investment company" within the meaning of the Investment Company Act of 1940, as amended. (b) Each Selling Shareholder severally and not jointly represents and warrants to the Underwriters as follows: (i) Such Selling Shareholder now has and at the Closing Date or the Option Closing Date, as the case may be (as such dates are hereinafter defined), will have, good and marketable title to the Firm Shares or the Option Shares to be sold by such Selling Shareholder, as applicable, free of any liens, encumbrances, equities and claims, and full right, power and authority to effect the sale and delivery of such Firm Shares or Option Shares; and upon the delivery of and payment for such Firm Shares and Option Shares pursuant to this Agreement, the Underwriters will acquire good and marketable title thereto, free of any liens, encumbrances, security interests, rights, subscriptions, warrants, calls, preemptive rights, options or other agreements of any kind. (ii) Such Selling Shareholder has full right, power and authority to execute and deliver this Agreement, the Custodian Agreement and the Power of Attorney referred to below, and to perform its obligations under such agreements. The consummation by such Selling Shareholder of the transactions herein contemplated and the fulfillment by such Selling Shareholder of the terms hereof will not (A) require any consent, approval, authorization or other order of any court, regulatory body, administrative agency or other governmental body (except as may be required under the Act, state securities laws or Blue Sky Laws) or (ii) result in a breach of any of the terms and provisions of, or constitute a default under, any indenture, mortgage, deed of trust or other agreement or instrument to which such Selling Shareholder is a party, or of any order, rule or regulation - 7 - 8 applicable to such Selling Shareholder of any court or of any regulatory body or administrative agency or other governmental body having jurisdiction. (iii) Such Selling Shareholder has not taken and will not take, directly or indirectly, any action designed to, or which has constituted, or which might reasonably be expected to cause or result in stabilization or manipulation of the price of the Common Stock of the Company. (iv) Such Selling Shareholder has executed and delivered this Agreement and the Custody Agreement, and in connection herewith, such Selling Shareholder further represents, warrants and agrees that such Selling Shareholder has deposited with ____________, pursuant to the Custody Agreement, the certificates in negotiable form representing such Selling Shareholder Shares for the purpose of further delivery pursuant to this Agreement; and the form of the Custody Agreement has been previously delivered to you. (v) No offering, sale or other disposition of any Common Stock of the Company will be made for a period of 90 days after the date of this Agreement, directly or indirectly, by such Seller otherwise than hereunder or with the prior written consent of the Underwriters. (vi) The Power of Attorney appointing certain individuals as such Selling Shareholder's attorney-in-fact to the extent set forth therein and in the Custodian Agreement (as defined in Section 2) have been duly executed and delivered by such Selling Shareholder and are the valid and binding agreements of such Selling Shareholder. (viii) To the best knowledge and without having undertaken to determine independently the accuracy or completeness of either the representations and warranties of the Company contained herein or the information contained in the Registration Statement, such Selling Shareholder has no reason to believe that the representations and warranties of the Company contained in this Section 1 are not true and correct, and has no knowledge of any material fact, condition or information not disclosed in the Registration Statement which has adversely affected or may adversely affect the business of the Company or any Subsidiary; and the sale of the Firm Shares by such Selling Shareholder pursuant hereto is not prompted by any information concerning the Company or any Subsidiary which is not set forth in the Registration Statement. The information pertaining to such Selling Shareholder under the caption "Principal and Selling Shareholders" in the Prospectus is complete and accurate in all material respects and does 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 not misleading. - 8 - 9 2. Purchase, Sale and Delivery of the Firm Shares. (a) On the basis of the representations, warranties and covenants herein contained, and subject to the conditions herein set forth, the Company and the Selling Shareholders agree to sell to the Underwriters and each Underwriter agrees, severally and not jointly, to purchase, at a price of $____ per share, the number of Firm Shares set forth opposite the name of each Underwriter in Schedule I hereof, subject to adjustments in accordance with Section 9 hereof. The number of Firm Shares to be purchased by each Underwriter from each Seller shall be as nearly as practicable in the same proportion to the total number of Firm Shares being sold by each Seller as the number of Firm Shares being purchased by each Underwriter bears to the total number of Firm Shares to be sold hereunder. The obligations of the Company and the Selling Shareholders shall be several and not joint. (b) Certificates in negotiable form for the total number of the Shares to be sold hereunder by the Selling Shareholders have been placed in custody with the ___________ (the "Custodian") pursuant to the Custodian Agreement executed by each Selling Shareholder for delivery of all Shares to be sold hereunder by the Selling Shareholders. Each Selling Shareholder specifically agrees that the Firm Shares represented by the certificates held in custody for such Selling Shareholder under the Custody Agreement are subject to the interest of the Underwriters hereunder, and that the arrangements made by such Selling Shareholder for such custody are to that extent irrevocable, and that the obligations of such Selling Shareholder hereunder shall not be terminable by any act or deed of the Selling Shareholder (or by any other person, firm or corporation, including the Company, the Custodian or the Underwriters) or by operation of law or by the occurrence of any other event or events, except as set forth in the Custody Agreement. If any such event should occur prior to the delivery to the Underwriters of the Firm Shares hereunder, certificates for the Firm Shares shall be delivered by the Custodian in accordance with the terms and conditions of this Agreement as if such event had not occurred. The Custodian is authorized to receive and acknowledge receipt of the proceeds of the sale of the Selling Shareholder Shares held by it against the delivery of such Shares. The Attorneys or either of them are authorized to receive and acknowledge receipt of the proceeds of sale of the Shares held by it against delivery of such Shares. (c) Payment for the Firm Shares to be sold hereunder is to be made by wire transfer of immediately available funds to the order of the Company for the shares to be sold by it and to the order of the Custodian for the shares to be sold by the Selling Shareholders, in each case against delivery of certificates therefor to the Underwriters. Such payment and delivery are to be made at the offices of Alex. Brown & Sons Incorporated, 1 South Street, Baltimore, Maryland, at 10:00 A.M., Baltimore time, on the third business day after the date of this Agreement or at such other time and date not later than three business days thereafter as you and the Company shall agree upon, such time and date being herein referred to as the "Closing Date." (As used herein, "business day" - 9 - 10 means a day on which the New York Stock Exchange is open for trading and on which banks in New York are open for business and are not permitted by law or executive order to be closed.) The certificates for the Firm Shares will be delivered in such denominations and in such registrations as the Representatives of the Underwriters request in writing not later than the second full business day prior to the Closing Date, and will be made available for inspection by the Underwriters at least one business day prior to the Closing Date. (d) In addition, on the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company and the Selling Shareholders listed on Schedule II hereto hereby grant an option to the Underwriters to purchase the Option Shares at the price per share as set forth in the first paragraph of this Section 2. The maximum number of Option Shares to be sold by the Company and the Selling Shareholders is set forth opposite their respective names on Schedule II hereto. The option granted hereby may be exercised in whole or in part but only once and at any time upon written notice given within 30 days after the date of this Agreement, by you, the Underwriters, to the Company setting forth the number of Option Shares as to which the several Underwriters are exercising the option, the names and denominations in which the Option Shares are to be registered and the time and date at which such certificates are to be delivered. If the option granted hereby is exercised in part, the respective number of Option Shares to be sold by the Company and each of the Option Selling Shareholders listed in Schedule II hereto shall be determined on a pro rata basis in accordance with the percentages set forth opposite their names on Schedule II hereto, adjusted by you in such manner as to avoid fractional shares. The time and date at which certificates for Option Shares are to be delivered shall be determined by the Underwriters but shall not be earlier than three nor later than 10 full business days after the exercise of such option, nor in any event prior to the Closing Date (such time and date being herein referred to as the "Option Closing Date"). If the date of exercise of the option is three or more days before the Closing Date, the notice of exercise shall set the Closing Date as the Option Closing Date. The number of Option Shares to be purchased by each Underwriter shall be in the same proportion to the total number of Option Shares being purchased as the number of Firm Shares being purchased by such Underwriter bears to the total number of Firm Shares, adjusted by you in such manner as to avoid fractional shares. The option with respect to the Option Shares granted hereunder may be exercised only to cover over-allotments in the sale of the Firm Shares by the Underwriters. You, as Representatives of the Underwriters, may cancel such option at any time prior to its expiration by giving written notice of such cancellation to the Company. To the extent, if any, that the option is exercised, payment for the Option Shares shall be made on the Option Closing Date by wire transfer of immediately available funds to the order of "___________, Custodian for Harbinger Selling Shareholders" for the Option Shares to be sold by the Selling Shareholders against delivery of certificates therefor at the offices of Alex. Brown & Sons Incorporated, 1 South Street, Baltimore, Maryland. - 10 - 11 3. Offering by the Underwriters. It is understood that the Underwriters are to make a public offering of the Firm Shares as soon as the Representatives deem it advisable to do so. The Firm Shares are to be initially offered to the public at the initial public offering price and on the selling terms set forth in the Prospectus. The Representatives may from time to time thereafter change the public offering price and other selling terms. To the extent, if at all, that any Option Shares are purchased pursuant to Section 2 hereof, the Underwriters will offer them to the public on the foregoing terms. It is further understood that you will act as the Representatives for the Underwriters in the offering and sale of the Shares in accordance with a Master Agreement Among Underwriters entered into by you and the several other Underwriters. 4. Covenants of the Company. (a) The Company covenants and agrees with the several Underwriters that: (i) The Company will (i) prepare and timely file with the Commission under Rule 424(b) of the Rules and Regulations a Prospectus containing information previously omitted at the time of effectiveness of the Registration Statement in reliance on Rule 430A of the Rules and Regulations, (ii) not file any amendment to the Registration Statement or supplement to the Prospectus or documents incorporated by reference therein of which the Representatives shall not previously have been advised and furnished with a copy or to which the Representatives shall have reasonably objected in writing or which is not in compliance with the Rules and Regulations and (iii) file on a timely basis all reports and any definitive proxy or information statements required to be filed by the Company with the Commission subsequent to the date of the Prospectus and prior to the termination of the offering of the Shares by the Underwriters. (ii) The Company will advise the Representatives promptly of any request of the Commission for amendment of the Registration Statement or for supplement to the Prospectus or for any additional information, or of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the use of the Prospectus or of the institution of any proceedings for that purpose, and the Company will use its best efforts to prevent the issuance of any such stop order preventing or suspending the use of the Prospectus and to obtain as soon as possible the lifting thereof, if issued. (iii) The Company will deliver to, or upon the order of, the Representatives, from time to time, as many copies of any Preliminary Prospectus as the Representatives may reasonably request. The Company will deliver to, or upon the order of, the Representatives during the period when delivery of a Prospectus is required under the Act, as many copies of the Prospectus in final form, or as thereafter amended or supplemented, as the Representatives may - 11 - 12 reasonably request. The Company will deliver to the Underwriters at or before the Closing Date, four signed copies of the Registration Statement and all amendments thereto including all exhibits filed therewith, and will deliver to the Underwriters such number of copies of the Registration Statement, but without exhibits, and of all amendments thereto, as the Representatives may reasonably request. (iv) If during the period in which a prospectus is required by law to be delivered by an Underwriter or dealer any event shall occur as a result of which, in the judgment of the Company or in the reasonable opinion of counsel for the Underwriters, it becomes necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances existing at the time the Prospectus is delivered to a purchaser, not misleading, or, if it is necessary at any time to amend or supplement the Prospectus to comply with any law, the Company promptly will either (i) prepare and file with the Commission an appropriate amendment to the Registration Statement or supplement to the Prospectus or (ii) prepare and file with the Commission an appropriate filing under the Securities Exchange Act of 1934 which shall be incorporated by reference in the Prospectus so that the Prospectus as so amended or supplemented will not, in the light of the circumstances when it is so delivered, be misleading, or so that the Prospectus will comply with law. (v) The Company will make generally available to its security holders, as soon as it is practicable to do so, but in any event not later than 15 months after the effective date of the Registration Statement, an earning statement (which need not be audited) in reasonable detail, covering a period of at least 12 consecutive months beginning after the effective date of the Registration Statement, which earning statement shall satisfy the requirements of Section 11(a) of the Act and Rule 158 of the Rules and Regulations and will advise you in writing when such statement has been so made available. (vi) The Company will, for a period of five years from the Closing Date, deliver to the Representatives copies of annual reports and copies of all other documents, reports and information furnished by the Company to its stockholders or filed with any securities exchange pursuant to the requirements of such exchange or with the Commission pursuant to the Act or the Securities Exchange Act of 1934, as amended. (vii) No offering, sale, short sale or other disposition of any Common Stock or other securities convertible into or exchangeable or exercisable for shares of Common Stock of the Company will be made for a period of 90 days after the date of this Agreement, directly or indirectly, by the Company otherwise than hereunder or with the prior written consent of the Representatives except that the Company may, without such consent, issue shares upon the exercise of options outstanding on the date of this Agreement issued pursuant to the Company's stock - 12 - 13 option plans, issued as consideration for future acquisitions or issued pursuant to the Company's dividend reinvestment plan. (ix) The Company will use its best efforts to list, subject to notice of issuance, the Shares on the Nasdaq National Market ("Nasdaq National Market"). (b) The Selling Shareholders covenant and agree with the Underwriters and the Company that: (i) No offering, sale or other disposition of any Common Stock of the Company held by such Selling Shareholder will be made for a period of 90 days after the date of this Agreement otherwise than under this Agreement or with the prior written consent of the Representatives. (ii) In order to document the Underwriters' compliance with the reporting and withholding provisions of the Tax Equity and Fiscal Responsibility Act of 1982 and the Interest and Dividend Tax Compliance Act of 1983 with respect to the transactions herein contemplated, the Selling Shareholders agree to deliver to you prior to or at the Closing Date, a properly completed and executed United States Treasury Department Form W-9 (or other applicable form or statement specified by Treasury Department regulations in lieu thereof). 5. Costs and Expenses. The Company will pay all costs, expenses and fees incident to the performance of the obligations of the Company under this Agreement, including, without limiting the generality of the foregoing, the following: accounting fees of the Company; the fees and disbursements of counsel for the Company; the cost of printing and delivering to, or as requested by, the Underwriters copies of the Registration Statement, Preliminary Prospectuses, the Prospectus, this Agreement, the Agreement Among Underwriters, the Underwriters' Selling Memorandum, the Underwriters' Questionnaire, the Invitation Letter, the Power of Attorney; the filing fees of the Commission; and the filing fees and expenses incident to securing any required review by the NASD of the terms of the sale of the Shares; the listing on the Nasdaq National Market. To the extent, if at all, that any of the other Selling Shareholders engage special legal counsel to represent them in connection with this offering, the fees and expenses of such counsel shall be borne by such Selling Shareholder. Any transfer taxes imposed on the sale of the Shares to the several Underwriters will be paid by the Company and the Selling Shareholders pro rata. The Selling Shareholders shall not, however, be required to pay for any of the Underwriters' expenses except that, if this Agreement shall not be consummated because the conditions in Section 7 hereof are not satisfied, or because this Agreement is terminated by the Representatives pursuant to Section 6 hereof, or by reason of any failure, refusal or inability on the part of any Seller to perform any undertaking or satisfy any condition of this Agreement or to comply with any of the terms hereof on its part to be performed, unless such failure to satisfy said condition or to comply with said terms be due to the default or omission of any Underwriter, then the - 13 - 14 Company shall reimburse the several Underwriters for reasonable out-of-pocket expenses, including fees and disbursements of counsel, reasonably incurred in connection with investigating, marketing and proposing to market the Shares or in contemplation of performing their obligations hereunder; but the Selling Shareholders shall not in any event be liable to any of the several Underwriters for damages on account of loss of anticipated profits from the sale by them of the Shares. 6. Conditions of Obligations of the Underwriters. The several obligations of the Underwriters to purchase the Firm Shares on the Closing Date and the Option Shares, if any, on the Option Closing Date are subject to the accuracy, as of the Closing Date or the Option Closing Date, as the case may be, of the representations and warranties of the Company contained herein, and to the performance by the Company of its covenants and obligations hereunder and to the following additional conditions: (a) The Registration Statement and all post-effective amendments thereto shall have become effective and any and all filings required by Rule 424 and Rule 430A of the Rules and Regulations shall have been made, and any request of the commission for additional information (to be included in the Registration Statement or otherwise) shall have been disclosed to the Underwriters and complied with to their reasonable satisfaction. No stop order suspending the effectiveness of the Registration Statement, as amended from time to time, shall have been issued and no proceedings for that purpose shall have been taken or, to the knowledge of the Company, shall be contemplated by the Commission. (b) The Representatives shall have received on the Closing Date or the Option Closing Date, as the case may be, the opinion of Morris, Manning & Martin, counsel for the Company and the Selling Shareholders, dated the Closing Date or the Option Closing Date, as the case may be, addressed to the Underwriters to the effect that: (i) The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Georgia, with corporate power and authority to own its properties and conduct its business as described in the Prospectus; each of the Subsidiaries has been duly organized and is validly existing as a corporation (or, in the case of HNS, as a limited liability company) in good standing under the laws of the jurisdiction of its incorporation or organization, with corporate power and authority to own its properties and conduct its business as described in the Prospectus; the Company and each of the Subsidiaries are duly qualified to transact business in all jurisdictions in which the conduct of their business requires such qualification, or in which the failure to qualify would have a materially adverse effect upon the business of the Company or any of the Subsidiaries; and the outstanding capital shares of each of the Subsidiaries have been validly issued, are fully paid and non-assessable; and, to such counsel's knowledge, the outstanding capital shares of each of the Subsidiaries owned by the Company as described in the Registration Statement are owned free and clear of all - 14 - 15 liens, encumbrances and security interests, and no options, warrants or other rights to purchase, such shares are outstanding. (ii) The Company has authorized and outstanding capital stock as set forth under the caption "Capitalization" in the Prospectus; the authorized shares of its Common Stock, have been duly authorized. (iii) The outstanding shares of the Company's Common Stock, including the Shares to be sold by the Selling Shareholders, have been duly authorized and validly issued and are fully paid and non-assessable; all of the Shares conform to the description thereof contained in the Prospectus; and the certificates for the Shares are in due and proper form. (iv) The shares of Common Stock to be sold by the Company pursuant to this Agreement have been duly authorized and will be validly issued, fully paid and non-assessable when issued and paid for as contemplated by this Agreement; and no preemptive rights of stockholders exist with respect to any of the Shares or the issue and sale thereof. (v) The Registration Statement has become effective under the Act and, to the best of the knowledge of such counsel, no stop order proceedings with respect thereto have been instituted or are pending or threatened under the Act. (vi) The Registration Statement, all Preliminary Prospectuses, the Prospectus and each amendment or supplement thereto and documents incorporated by reference therein (each as amended to date) comply as to form in all material respects with the requirements of the Act or the Exchange Act, as applicable, and the applicable rules and regulations thereunder (except that such counsel need express no opinion as to the financial statements, schedules and other financial information included or incorporated by reference therein). (vii) The statements under the caption "Description of Capital Stock" in the Prospectus, insofar as such statements constitute a summary of documents referred to therein or matters of law, are accurate summaries in all material respects and fairly present the information called for with respect to such documents and matters. (viii) The statements under the caption "Business - Recent Developments" in the Prospectus, insofar as such statements constitute a summary of documents referred to therein, are accurate summaries in all material respects. (ix) Such counsel does not know of any contracts or documents required to be filed as exhibits to the Registration Statement or described in the Registration Statement or the Prospectus which are not so filed or described as required, and - 15 - 16 such contracts and documents as are summarized in the Registration Statement or the Prospectus are fairly summarized in all material respects. (x) Such counsel knows of no material legal proceedings or regulatory or other claims pending or threatened against the Company or any of the Subsidiaries except as set forth in the Prospectus. (xi) The execution and delivery of this Agreement and the consummation of the transactions herein contemplated do not and will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, the Articles of Incorporation or Bylaws of the Company, or any agreement or instrument known to such counsel to which the Company is a party or by which the Company may be bound. (xii) This Agreement has been duly authorized, executed and delivered by the Company. (xiii) No approval, consent, order, authorization, designation, declaration or filing by or with any regulatory, administrative or other governmental body is necessary in connection with the execution and delivery of this Agreement and the consummation of the transactions herein contemplated (other than as may be required by the NASD or as required by State securities and Blue Sky laws as to which such counsel need express no opinion) except such as have been obtained or made, specifying the same. (xiv) To such counsel's knowledge, the Company is not, and will not become as a result of the consummation of the transactions contemplated by this Agreement, an "investment company" within the meaning of the Investment Company Act of 1940, as amended, and has not been an "investment company" at any time since 1988. (xv) This Agreement has been duly authorized, executed and delivered on behalf of the Selling Shareholders. In rendering such opinion, Morris, Manning & Martin may rely as to matters governed by the laws of states other than Georgia or Federal laws on local counsel in such jurisdictions and as to matters set forth in subparagraphs (xiv), (xv) and (xvi) on an opinion of other counsel representing the Selling Shareholders, provided that in each case Morris, Manning & Martin shall state that they believe that they and the Underwriters are justified in relying on such other counsel and such other counsel's opinion is also addressed to the Underwriters. In addition to the matters set forth above, such opinion shall also include a statement to the effect that nothing has come to the attention of such counsel which leads them to believe that the Registration Statement, as of the time it - 16 - 17 became effective under the Act, the Prospectus or any amendment or supplement thereto, on the date it was filed pursuant to Rule 424(b), as of the date of effectiveness of the Registration Statement, as the case may be, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading (except that such counsel need express no view as to financial statements, schedules and other financial information included or incorporated by reference therein). With respect to such statement, Morris, Manning & Martin may state that their belief is based upon the procedures set forth therein, but is without independent check and verification. (c) The Representatives shall have received on the Closing Date or the Option Closing Date, as the case may be, the opinion of _____________________, counsel for the Selling Shareholders, dated the Closing Date or the Option Closing Date, as the case may be, addressed to the Underwriters to the effect that: (i) Each Selling Shareholder has been duly organized and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation with corporate power and authority to execute and deliver this Agreement. (ii) The execution and delivery of this Agreement and the Custodian Agreement executed by each Selling Shareholder and the consummation of the transactions contemplated herein and therein do not and will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, the Articles of Incorporation or Bylaws of any Selling Shareholder, or any agreement or instrument known to such counsel to which the Selling Shareholder is a party or by which the Selling Shareholder may be bound. (iii) Each Selling Shareholder has full legal right, power and authority, and any approval required by law (other than as required by State securities and Blue Sky laws as to which such counsel need express no opinion), to sell assign, transfer and deliver the portion of the Shares to be sold by such Selling Shareholder. (iv) The Custodian Agreement and Power of Attorney executed and delivered by each Selling Shareholder are valid, irrevocable instruments legally sufficient for the respective purposes intended. (v) The Underwriters (assuming that they are bona fide purchasers within the meaning of the Uniform Commercial Code) will have acquired good and marketable title to the Shares being sold by each of the Selling Shareholders on the Closing Date or the Option Closing Date, as the case may be, free and clear of all claims, liens, encumbrances and security interests whatsoever. - 17 - 18 (d) The Representatives shall have received from Piper & Marbury L.L.P., counsel for the Representatives, an opinion dated the Closing Date or the Option Closing Date, as the case may be, substantially to the effect specified in subparagraphs (ii), (iv), (v) and (xii) of Paragraph (b) of this Section 6, and that the Company is a validly organized and existing corporation under the laws of the State of Georgia. In rendering such opinion Piper & Marbury L.L.P. may rely as to all matters governed other than by the laws of the State of Maryland or Federal laws on the opinion of counsel referred to in paragraph (b) of this Section 6. In addition to the matters set forth above, such opinion shall also include a statement to the effect that nothing has come to the attention of such counsel which leads them to believe that the Registration Statement, as of the time it became effective under the Act, and the Prospectus or any amendment or supplement thereto, on the date it was filed pursuant to Rule 424(b) and the Registration Statement and the Prospectus, or any amendment or supplement thereto, as of the Closing Date or the Option Closing Date, as the case may be, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading (except that such counsel need express no view as to financial statements, schedules and other financial information included or incorporated by reference therein). With respect to such statement, Piper & Marbury L.L.P. may state that their belief is based upon the procedures set forth therein, but is without independent check and verification. (e) The Representatives shall have received on the Closing Date or the Option Closing Date, as the case may be, a signed letter from KPMG Peat Marwick LLP and Ciulla, Smith & Dale, LLP, dated the Closing Date or the Option Closing Date, as the case may be, which shall confirm, on the basis of a review in accordance with the procedures set forth in the letter signed by such firm and dated and delivered to the Representatives on the date hereof that nothing has come to their attention during the period from the date five days prior to the date hereof, to a date not more than five days prior to the Closing Date or the Option Closing Date, as the case may be, which would require any change in their letter dated the date hereof if it were required to be dated and delivered on the Closing Date or the Option Closing Date, as the case may be. All such letters shall be in form and substance reasonably satisfactory to the Representatives. (f) The Representatives shall have received on the Closing Date or the Option Closing Date, as the case may be, a certificate or certificates of the Chief Executive Officer and the President and Chief Operating Officer of the Company to the effect that, as of the Closing Date or the Option Closing Date, as the case may be, each of them severally represents as follows: (i) The Registration Statement has become effective under the Act and no stop order suspending the effectiveness of the Registration Statement has been issued, and no proceedings for such purpose have been taken or are, to such officer's knowledge, contemplated by the Commission. - 18 - 19 (ii) Such officer does not know of any litigation instituted or threatened against the Company of a character required to be disclosed in the Registration Statement which is not so disclosed; such officer does not know of any material contract required to be filed as an exhibit to the Registration Statement which is not so filed; and the representations and warranties of the Company contained in Section 1 hereof are true and correct as of the Closing Date or the Option Closing Date, as the case may be. (iii) Such officer has carefully examined the Registration Statement and the Prospectus and, in such officer's opinion, as of the effective date of the Registration Statement, the statements contained in the Registration Statement were true and correct, and such Registration Statement and Prospectus did not omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading and, in such officer's opinion, since the effective date of the Registration Statement, no event has occurred which should have been set forth in a supplement to or an amendment of the Prospectus which has not been so set forth in such supplement or amendment. (g) The Selling Shareholders shall have furnished to the Representatives such further certificates and documents confirming the representations and warranties contained herein and related matters as the Representatives may reasonably have requested. (h) The Firm Shares, and Option Shares, if any, have been approved for listing upon official notice of issuance on the Nasdaq National Market System. (i) The Representatives shall have received from each officer and director of the Company and each Selling Shareholder, a letter or letters, in form and substance satisfactory to the Underwriters, pursuant to which such person shall agree not to offer, sell, sell short or otherwise dispose of any shares of Common Stock of the Company or other capital stock of the Company, or any other securities convertible, exchangeable or exercisable for Common Stock or derivative of Common Stock owned by such person (or as to which such person has the right to direct the disposition of) for a period of 90 days after the date of this Agreement, except with the prior written consent of the Underwriters. The opinions and certificates mentioned in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in all material respects satisfactory to the Representatives and to Piper & Marbury L.L.P., counsel for the Underwriters. If any of the conditions herein above provided for in this Section 6 shall not have been fulfilled when and as required by this Agreement to be fulfilled, the obligations of the Underwriters hereunder may be terminated by the Representatives by notifying the Company of such termination in writing, by facsimile, or by telegram at or prior to the - 19 - 20 Closing Date or the Option Closing Date, as the case may be. In such event, the Company and the Selling Shareholders and the Underwriters shall not be under any obligation to each other (except to the extent provided in Sections 5 and 8 hereof). 7. Conditions of the Obligations of the Selling Shareholders. The obligations of the Selling Shareholders to sell and deliver the portion of the Shares required to be delivered as and when specified in this Agreement are subject to the conditions that at the Closing Date or the Option Closing Date, as the case may be, no stop order suspending the effectiveness of the Registration Statement shall have been issued and in effect or proceedings therefor initiated or threatened. 8. Indemnification (a) The Company and each Selling Shareholder agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of the Act against any losses, claims, damages or liabilities to which such Underwriter or such controlling person may become subject under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, any Preliminary Prospectus, the Prospectus or any amendment or supplement thereto, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter and each such controlling person for any legal or other expenses reasonably incurred by such Underwriter or such controlling person in connection with investigating or defending any such loss, claim, damage, liability, action or proceeding; provided, however, that the Company and the Selling Shareholders will not be liable in any such case to the extent that (i) any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement, or omission or alleged omission made in the Registration Statement, any Preliminary Prospectus, the Prospectus, or such amendment or supplement, in reliance upon and in conformity with written information furnished to the Company by or through the Representatives specifically for use in the preparation thereof or, (ii) such statement or omission was contained or made in any Preliminary Prospectus and corrected in the Prospectus and (a) any such loss, claim, damage or liability suffered or incurred by any Underwriter (or any person who controls any Underwriter) resulted from an action, claim or suit by any person who purchased Shares which are the subject thereof from such Underwriter in the offering and (b) such Underwriter failed to deliver or provide a copy of the Prospectus to such person at or prior to the confirmation of the sale of such Shares in any case where such delivery is required by the Act. In no event, however, shall the aggregate liability of any Selling Shareholder for indemnification under this Section 8(a) exceed the lesser of (i) that proportion of the total of such losses, claims, damages or liabilities indemnified against equal to the proportion of the total Shares sold hereunder which is being sold by such Selling Shareholder, or (ii) the net proceeds after underwriters discounts and commissions - 20 - 21 received by such Selling Shareholder from the Underwriters in the offering. This indemnity agreement will be in addition to any liability which the Company or the Selling Shareholders may otherwise have. (b) Each Underwriter will indemnify and hold harmless the Company, each of its directors, each of its officers who have signed the Registration Statement, each of the Selling Shareholders, and each person, if any, who controls the Company within the meaning of the Act, against any losses, claims, damages or liabilities to which the Company or any such director, officer, Selling Shareholder or controlling person may become subject under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, any Preliminary Prospectus, the Prospectus or any amendment or supplement thereto, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made; and will reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, Selling Shareholder or controlling person in connection with investigating or defending any such loss, claim, damage, liability, action or proceeding; provided, however, that each Underwriter will be liable in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission has been made in the Registration Statement, any Preliminary Prospectus, the Prospectus or such amendment or supplement, in reliance upon and in conformity with written information furnished to the Company by or through the Representatives specifically for use in the preparation thereof. This indemnity agreement will be in addition to any liability which such Underwriter may otherwise have. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to this Section 8, such person (the "indemnified party") shall promptly notify the person against whom such indemnity may be sought (the "indemnifying party") in writing. No indemnification provided for in Section 8(a) or (b) shall be available to any party who shall fail to give notice as provided in this Section 8(c) if the party to whom notice was not given was unaware of the proceeding to which such notice would have related and was prejudiced by the failure to give such notice, but the failure to give such notice shall not relieve the indemnifying party or parties from any liability which it or they may have to the indemnified party for contribution or otherwise than on account of the provisions of Section 8(a) or (b). In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party and shall pay as incurred the fees and disbursements of such counsel related to such proceeding. In any - 21 - 22 such proceeding, any indemnified party shall have the right to retain its own counsel at its own expense. Notwithstanding the foregoing, the indemnifying party shall pay as incurred the fees and expenses of the counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm for all such indemnified parties. Such firm shall be designated in writing by you in the case of parties indemnified pursuant to Section 8(a) and by the Company in the case of parties indemnified pursuant to Section 8(b). The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. (d) If the indemnification provided for in this Section 8 is unavailable to or insufficient to hold harmless an indemnified party under Section 8(a) or (b) above in respect of any losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Selling Shareholders on the one hand and the Underwriters on the other from the offering of the Shares. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required under Section 8(c) above, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company and the Selling Shareholders on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions or proceedings in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company and the Selling Shareholders on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company and the Selling Shareholders bear to the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover page of the Prospectus. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and the Selling Shareholders on the one - 22 - 23 hand or the Underwriters on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Selling Shareholders and the Underwriters agree that it would not be just and equitable if contributions pursuant to this Section 8(d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 8(d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to above in this Section 8(d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), (i) no Underwriter shall be required to contribute any amount in excess of the underwriting discounts and commissions applicable to the Shares purchased by such Underwriter, (ii) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation, and (iii) no Selling Shareholder shall be required to contribute any amount in excess of the lesser of (A) that proportion of the total of such losses, claims, damages or liabilities indemnified or contributed against equal to the proportion of the total Shares sold hereunder which is being sold by such Selling Shareholder, or (B) the net proceeds after underwriting discounts and commissions received by such Selling Shareholder from the Underwriters in the offering. The Underwriters' obligations in this Section 8(d) to contribute are several in proportion to their respective underwriting obligations and not joint. (e) In any proceeding relating to the Registration Statement, any Preliminary Prospectus, the Prospectus or any supplement or amendment thereto, each party against whom contribution may be sought under this Section 8 hereby consents to the jurisdiction of any court having jurisdiction over any other contributing party, agrees that process issuing from such court may be served upon him or it by any other contributing party and consents to the service of such process and agrees that any other contributing party may join him or it as an additional defendant in any such proceeding in which such other contributing party is a party. 9. Default by Underwriters. If on the Closing Date or the Option Closing Date, as the case may be, any Underwriter shall fail to purchase and pay for the portion of the Shares which such Underwriter has agreed to purchase and pay for on such date (otherwise than by reason of any default on the part of the Company or the Selling Shareholders), you, as the Representatives of the Underwriters, shall use your best efforts to procure within 24 hours thereafter one or more other Underwriters, or any others, to purchase from the Company and the Selling Shareholders such amounts as may be agreed upon and upon the terms set forth herein, the Firm Shares or Option Shares, as the case may be, which the defaulting Underwriter or Underwriters failed to purchase. If during - 23 - 24 such 24 hours you as such Representatives, shall not have procured such other Underwriters, or any others, to purchase the Firm Shares or Option Shares, as the case may be, agreed to be purchased by the defaulting Underwriter or Underwriters, then (a) if the aggregate number of shares with respect to which such default shall occur does not exceed 10% of the Firm Shares or Option Shares, as the case may be, covered hereby, the other Underwriters shall be obligated, severally, in proportion to the respective numbers of Firm Shares or Option Shares, as the case may be, which they are obligated to purchase hereunder, to purchase the Firm Shares or Option Shares, as the case may be, which such defaulting Underwriter or Underwriters failed to purchase, or (b) if the aggregate number of shares of Firm Shares or Option Shares, as the case may be, with respect to which such default shall occur exceeds 10% of the Firm Shares or Option Shares, as the case may be, covered hereby, the Company or you as the Representatives of the Underwriters will have the right, by written notice given within the next 24-hour period to the parties to this Agreement, to terminate this Agreement without liability on the part of the non-defaulting Underwriters or of the Company and the Selling Shareholders except to the extent provided in Section 8 hereof. In the event of a default by any Underwriter or Underwriters, as set forth in this Section 9, the Closing Date or Option Closing Date, as the case may be, may be postponed for such period, not exceeding seven days, as you, as Representatives, may determine in order that the required changes in the Registration Statement or in the Prospectus or in any other documents or arrangements may be effected. The term "Underwriter" includes any person substituted for a defaulting Underwriter. Any action taken under this Section 9 shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement. 10. Notices. All communications hereunder shall be in writing and, except as otherwise provided herein, will be mailed, delivered or telegraphed and confirmed as follows: if to the Underwriters, to Alex. Brown & Sons Incorporated, 1 South Street, Baltimore, Maryland 21202, Attention: David Weaver, Principal; if to the Company or the Selling Shareholders, to Harbinger Corporation, 1055 Lenox Park Boulevard, Atlanta, Georgia 30319, Attention: C. Tycho Howle, Chairman of the Board. 11. Termination. This Agreement may be terminated by you by notice to the Company as follows: (a) at any time prior to the earlier of (i) the time the Shares are released by you for sale by notice to the Underwriters, or (ii) 11:30 A.M. on the first business day following the date of this Agreement; (b) at any time prior to the Closing Date if any of the following has occurred: (i) since the respective dates as of which information is given in the Registration Statement and the Prospectus, any material adverse change or any development involving a prospective material adverse change in or affecting the condition, financial or otherwise, of the Company or the earnings, business affairs, management or business - 24 - 25 prospects of the Company, whether or not arising in the ordinary course of business, (ii) any outbreak or escalation of hostilities or declaration of war or national emergency after the date hereof or other national or international calamity or crisis or change in economic or political conditions if the effect of such outbreak, escalation, declaration, emergency, calamity, crisis or change on the financial markets of the United States would, in your reasonable judgment, make the offering or delivery of the Shares impracticable, (iii) trading in securities on the New York Stock Exchange or the American Stock Exchange shall have been suspended or materially limited (other than limitations on hours or numbers of days of trading) or minimum prices shall have been established for securities on either such Exchange, (iv) the enactment, publication, decree or other promulgation of any federal or state statute, regulation, rule or order of any court or other governmental authority which in your reasonable opinion materially and adversely affects or will materially or adversely affect the business or operations of the Company, (v) declaration of a banking moratorium by either federal or New York State authorities, (vi) the taking of any action by any governmental body or agency in respect of its monetary or fiscal affairs which in your reasonable opinion has a material adverse effect on the securities markets in the United States or elsewhere, or (vii) any litigation or proceeding is pending or threatened against the Underwriters which seeks to enjoin or otherwise restrain, or seeks damages in connection with, or questions the legality or validity of this Agreement or the transactions contemplated hereby; or (c) as provided in Sections 6 and 9 of this Agreement. This Agreement also may be terminated by you, by notice to the Company and the Selling Shareholders, as to any obligation of the Underwriters to purchase the Option Shares, upon the occurrence at any time prior to the Option Closing Date of any of the events described in subparagraph (b) above or as provided in Sections 6 and 9 of this Agreement. 12. Successors. This Agreement has been and is made solely for the benefit of the Underwriters, the Company and the Selling Shareholders and their respective successors, executors, administrators, heirs and assigns, and the officers, directors and controlling persons referred to herein, and no other person will have any right or obligation hereunder. The term "successors" shall not include any purchaser of the Shares merely because of such purchase. 13. Miscellaneous. The reimbursement, indemnification and contribution agreements contained in this Agreement and the representations, warranties and covenants in this Agreement shall remain in full force and effect regardless of (a) any termination of this Agreement, (b) any investigation made by or on behalf of any Underwriter or controlling person thereof, or by or on behalf of the Company or its directors or officers and (c) delivery of and payment for the Shares under this Agreement. - 25 - 26 This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Maryland. If the foregoing letter is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicates hereof, whereupon it will become a binding agreement among the Company, the Selling Shareholders and the several Underwriters in accordance with its terms. Very truly yours, HARBINGER CORPORATION By --------------------------------- C. Tycho Howle Chairman Selling Shareholders listed on Schedule II By ----------------------------------- [Joel G. Katz, Attorney-in-Fact] The foregoing Underwriting Agreement is hereby confirmed and accepted as of the date first above written. ALEX. BROWN & SONS INCORPORATED ROBERTSON, STEPHENS & COMPANY LLC THE ROBINSON-HUMPHREY COMPANY, INC. INTERSTATE JOHNSON LANE CORPORATION As Representatives of the Several Underwriters listed on Schedule I By ALEX. BROWN & SONS INCORPORATED By --------------------------------- Authorized Officer - 26 - 27 SCHEDULE I SCHEDULE OF UNDERWRITERS
Number of Firm Shares Underwriter to be Purchased ----------- --------------------- Alex. Brown & Sons Incorporated The Robinson-Humphrey Company, Inc. Robertson, Stephens & Company, L.P. Interstate/Johnson Lane Corporation --------- Total 2,900,000
========= - 27 - 28 SCHEDULE II SCHEDULE OF SELLING SHAREHOLDERS
Number of Maximum Number of Option Shares Name of Seller Shares to be Sold -------------- ------ ---------------- Harbinger Corporation 1,800,000 270,000 Vulcan Ventures, Inc. 500,000 75,000 AXA Equity & Law Assurance Society Plc 300,000 45,000 Orbis Pension Trustees Limited 300,000 45,000 Total 2,900,000 435,000
- 28 - EX-23.1 3 CONSENTS OF KPMG PEAT MARWICK LLP 1 EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT The Board of Directors Harbinger Corporation We consent to the use of our reports dated May 13, 1997, relating to the consolidated balance sheets of Harbinger Corporation as of December 31, 1996 and 1995, and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the years in the two-year period ended December 31, 1996, and the related financial statement schedule, which reports appear in Harbinger Corporation's Current Report on Form 8-K filed on July 1, 1997 and are incorporated by reference in Amendment No.2 to the Form S-3 registration statement of Harbinger Corporation and to the reference to our firm under the heading "Experts" in the Prospectus. Our reports dated May 13, 1997, included a reference to other auditors with respect to 1995, as those reports, as they relate to the 1995 combined financial statements for Supply Tech, Inc. and Supply Tech International, LLC which are included in the consolidated financial statements of Harbinger Corporation, are based solely on the report of the other auditors as it relates to the amounts included for Supply Tech, Inc. and Supply Tech International, LLC. Our reports dated May 13, 1997 also indicated that the financial statements of Harbinger Corporation and Supply Tech, Inc. and Supply Tech International, LLC for 1994 were audited by other auditors, although the reports also indicated that we audited the combination of the accompanying financial statements and financial statement schedule for 1994. KPMG Peat Marwick LLP Atlanta, Georgia July 25, 1997 2 EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT The Board of Directors Harbinger Corporation: We consent to the use of our report dated February 19, 1997 relating to the combined balance sheet of Supply Tech, Inc. and Supply Tech International, LLC as of December 31, 1996 and the related combined statements of operations, shareholders' equity (deficit), and cash flows for the year then ended included in Harbinger Corporation's Current Report on Form 8-K/A Amendment No. 1 filed on March 18, 1997 and incorporated by reference in Amendment No.2 to the Form S-3 registration statement of Harbinger Corporation and to the reference to our firm under the heading "Experts" in the Prospectus. KPMG Peat Marwick LLP Atlanta, Georgia July 25, 1997 3 EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT The Board of Directors Harbinger Corporation: We consent to the use of our report dated February 7, 1997 relating to the balance sheets of Harbinger Net Services, LLC as of December 31, 1996 and 1995, and the related statements of operations, shareholders' equity, and cash flows for the periods ended December 31, 1996 and 1995 included in Harbinger Corporation's Current Report on Form 8-K/A Amendment No. 1 filed on March 14, 1997 and incorporated by reference in Amendment No. 2 to the Form S-3 registration statement of Harbinger Corporation and to the reference to our firm under the heading "Experts" in the Prospectus. KPMG Peat Marwick LLP Atlanta, Georgia July 25, 1997 EX-23.2 4 CONSENT OF ARTHUR ANDERSEN LLP 1 EXHIBIT 23.2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in Amendment No. 2 to this Form S-3 Registration Statement of our report dated March 14, 1995 included in Harbinger Corporation's Current Report on Form 8-K filed on July 1, 1997 and to all references to our firm included in Amendment No.2 to this registration statement. Arthur Andersen LLP Atlanta, Georgia July 25, 1997 EX-23.3 5 CONSENT OF CIULLA, SMITH & DALE, LLP 1 EXHIBIT 23.3 INDEPENDENT AUDITORS' CONSENT The Board of Directors Harbinger Corporation: We consent to the use of our report dated February 19, 1997 relating to the combined balance sheet of Supply Tech, Inc. and Supply Tech International, LLC as of December 31, 1995 and the related combined statements of operations, shareholders' equity (deficit), and cash flows for each of the years in the two-year period ended December 31, 1995 included in Harbinger Corporation's Current Report on Form 8-K/A Amendment No. 1 filed on March 18, 1997 and Harbinger Corporation's Current Report on Form 8-K filed on July 1, 1997 and incorporated by reference in Amendment No. 2 to the Form S-3 registration statement of Harbinger Corporation. Ciulla, Smith & Dale, LLP Southfield, Michigan July 25, 1997 EX-23.4 6 CONSENT OF MORET ERNST & YOUNG ACCOUNTANTS 1 EXHIBIT 23.4 INDEPENDENT AUDITORS' CONSENT The Board of Directors Harbinger Corporation: We consent to the use of our report dated June 14, 1996 relating to the consolidated balance sheets of NTEX Holding B.V. as of December 31, 1995, and the related consolidated statements of operations, shareholders' equity, and cash flows for the year then ended included in Harbinger Corporation's Current Report on Form 8-K/A Amendment No. 1 filed on June 17, 1996 and incorporated by reference in Amendment No. 2 to the Form S-3 registration statement of Harbinger Corporation. Moret Ernst & Young Accountants The Hague July 25, 1997 EX-23.5 7 CONSENT OF KPMG DUETSCHE TREUHAND-GESELLSCHAFT AG 1 EXHIBIT 23.5 INDEPENDENT AUDITORS' CONSENT The Board of Directors Harbinger Corporation: We consent to the use of our report dated June 11, 1996 relating to the balance sheet of INOVIS GmbH & Co. computergestuzte Informationssysteme as of December 31, 1995 and the related statements of operations and accumulated deficit, partners' equity, and cash flows for the year then ended included in Harbinger Corporation's Form 8-K/A Amendment No. 1 filed on July 1, 1996 and incorporated by reference in Amendment No. 2 to the Form S-3 registration statement of Harbinger Corporation and to the reference to our firm under the heading "Experts" in the Prospectus. KPMG Deutsche Treuhand-Gesellschaft AG Germany July 25, 1997 EX-23.6 8 CONSENT OF KPMG ACCOUNTANTS N.V. 1 EXHIBIT 23.6 INDEPENDENT AUDITORS' CONSENT The Board of Directors Harbinger Corporation: We consent to the use of our report dated June 5, 1996 relating to the consolidated balance sheets of Harbinger N.V. and subsidiaries as of December 31, 1995, 1994 and 1993 and the related consolidated statements of operations, shareholders' equity, and cash flows for the two years ended December 31, 1995 and 1994 and the one month ended December 31, 1993 included in Harbinger Corporation's Current Report on Form 8-K/A Amendment No. 1 filed on July 2, 1996 and incorporated by reference in Amendment No. 2 to the Form S-3 registration statement of Harbinger Corporation and to the reference to our firm under the heading "Experts" in the Prospectus. KPMG Accountants N.V. The Hague July 25, 1997 EX-23.7 9 CONSENT OF ERNST & YOUNG LLP 1 EXHIBIT 23.7 CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" in the registration statement (Amendment No. 2 to Form S-3) and related Prospectus of Harbinger Corporation for the registration of up to 3,335,000 shares of its common stock and to the incorporation therein of our report dated April 28, 1995, with respect to the statement of operations of EDI (formerly a business of Texas Instruments, Incorporated) for the year ended December 31, 1994 included in Harbinger Corporation's registration statement (Form S-1, No. 33-93804) filed with the Securities and Exchange Commission. Ernst & Young LLP Atlanta, Georgia July 28, 1997 -----END PRIVACY-ENHANCED MESSAGE-----