SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
Date of Report: September 18, 1996
NATIONAL DATACOMPUTER, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-15885 04-2942832
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification
Number)
900 Middlesex Turnpike, Bldg. 5, Billerica, Massachusetts 01821
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(Address of Principal Executive Offices)
(508) 663-7677
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(Registrant's Telephone Number Including Area Code)
AMENDMENT NO. 1
The undersigned hereby amends the following items, financial statements,
exhibits or other portions of its Form 8-K dated September 16, 1996 as set forth
in the pages attached hereto:
1. Item 7 - Exhibits - Amended to provide a Form of Regulation S Offshore
Subscription Agreement.
TABLE OF CONTENTS
FORM 8-K/A
September 18, 1996
Item Page
---- ----
Item 7. Exhibits 1
Signatures 2
Exhibits 3
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ITEM 7. EXHIBITS
4(a)* Statement of Designation of Series B Convertible Preferred Stock.
4(b)* Certificate of Increase of Shares Designated as Series B Convertible
Preferred Stock
4(c) Form of Regulation S Offshore Subscription Agreement.
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* Previously filed with the Securities and Exchange Commission on September
16, 1996.
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
NATIONAL DATACOMPUTER, INC.
By: /s/ Malcolm M. Bibby
------------------------
Malcolm M. Bibby, Ph.D.
President
Date: September 18, 1996
2
EXHIBITS
Exhibit No. Title
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4(c) Form of Regulation S Offshore Subscription
Agreement.
3
EXHIBIT 4(c)
FORM OF
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REGULATION S OFFSHORE SUBSCRIPTION AGREEMENT
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National Datacomputer, Inc.
900 Middlesex Turnpike, Bldg. 5
Billerica, Massachusetts 01821
Attention: Malcolm M. Bibby, Ph.D., President
Dear Mr. Bibby:
This Subscription Agreement (the "Agreement") is being executed and
delivered by the prospective purchaser identified on the signature page to this
Agreement (the "Purchaser") in connection with the [___________] offering (the
"Offering") by National Datacomputer, Inc., a Delaware corporation (the
"Company"), and the related materials described in Schedule 1 hereto
(collectively, the "Offering Materials") and any subsequent amendments or
supplements thereto, of [_______________] shares of the Company's Series B
Convertible Preferred Stock (the "Shares") as set forth in the Statement of
Designation of Rights and Preference of the Series B Convertible Preferred Stock
(the "Designation") attached hereto and made a part hereof as Exhibit A. The
Offering is being conducted in reliance on Regulation S ("Regulation S"),
promulgated by the Securities and Exchange Commission under the Securities Act
of 1933, as amended (the "Securities Act").
1. SUBSCRIPTION AND PAYMENT FOR SHARES; DELIVERY OF SHARES. Subject to
the terms and conditions of this Agreement, the Purchaser hereby subscribes for
and agrees to purchase from the Company the number of Shares (the "Purchased
Shares") set out on the signature page to this Agreement. The price for the
Purchased Shares will be the price per share set forth on the signature page,
and Purchaser shall pay to the Company the amount set out opposite Purchaser's
address on the signature page to this Agreement (the "Purchase Price").
(a) Upon receipt of notification from the Company of the
Company's acceptance of this subscription and of the date for payment (the
"Payment Date") for the Purchased Shares, the Purchaser shall make payment of
the Purchase Price on the Payment Date, as follows:
(i) Purchaser shall cause U.S. funds in the amount of
the Purchase Price to be sent by wire transfer as follows:
Cambridge Trust Company, 494 Boston Post Road, Weston, Massachusetts,
ABA number 011300595, for deposit to "National Datacomputer, Inc.,
O'Connor, Broude & Aronson, Escrow Agent," account number 76-959-2-16.
or
(ii) Purchaser shall cause a bank, brokerage firm, or
other financial institution with offices in New York City, as Purchaser's agent,
to make payment of the Purchase Price in U.S. dollars to the Company by
certified or bank check in immediately available funds.
(b) The Company shall deliver the certificate or certificates
evidencing the Purchased Shares, pursuant to delivery instructions provided by
the Purchaser to the Company, against payment of the Purchase Price pursuant to
the provisions of subsections (a) (i) or (ii) of this Section 1. The Company
expects to hold one closing (the "Closing") of this Offering and the date of
such Closing shall be referred to as the "Closing Date."
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER. Purchaser
hereby acknowledges that the Company is offering the Shares in reliance upon the
representations, warranties, and other information set forth by the Purchaser
herein. Purchaser hereby undertakes to notify the Company immediately of any
changes in any of the representations, warranties, and other information
contained herein. In order to induce the Company to accept the subscription made
hereby, the Purchaser hereby represents, warrants, and acknowledges to the
Company as follows:
2.1 COMPLIANCE WITH UNITED STATES SECURITIES LAWS. Purchaser
understands that the Shares are being offered and sold to in reliance upon
specific exemptions from the registration requirements of federal and state
securities laws pursuant to Regulation S and that the Company is relying upon
the truth and accuracy of the representations, warranties, agreements,
acknowledgments, and understandings of Purchaser set forth herein in order to
determine the applicability of such exemptions and the suitability of Purchaser
to acquire the Shares. The Purchaser understands and acknowledges that the
Shares have not been registered under the Securities Act, and such Shares may
not be offered or sold in the United States or to any "U.S. Person" (as defined
in Rule 902(o) of Regulation S, which definition is set forth in Schedule 2
hereto and is hereby incorporated by reference) for a period of 40 days
following the Closing (the "Restricted Period") and thereafter unless such
Shares are registered under the Securities Act and any applicable state
securities law in the United States or such offer or sale is made pursuant to
exemptions from those registration requirements. The Shares are being offered
and sold pursuant to the terms of Regulation S, which permits the Shares to be
sold by the Company solely to non-U.S. Persons in transactions outside of the
United States, subject to certain terms and conditions. The Purchaser further
acknowledges that neither the Securities and Exchange Commission nor any other
United States or foreign federal or state agency or authority has passed on or
endorsed the merits of this Offering.
2.2 PURCHASER NOT A U.S. PERSON. Purchaser is purchasing the
Shares, for its own account or for persons or accounts as to which it exercises
investment discretion. PURCHASER AND EACH SUCH PERSON OR ACCOUNT ARE NOT U.S.
PERSONS. THE SECURITIES WERE NOT OFFERED TO THE PURCHASER IN THE UNITED STATES,
AND THE PURCHASER HAS EXECUTED THIS AGREEMENT OUTSIDE THE UNITED STATES.
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2.3 INVESTMENT EXPERIENCE OF PURCHASER. Either alone or
together with a "purchaser representative" (as defined in Rule 501(h) under the
Securities Act), the Purchaser is knowledgeable, sophisticated and experienced
in making, and is qualified to make, decisions with respect to investments in
securities such as the Shares and has requested, received, reviewed and
considered the Offering Materials (set forth in Schedule I attached hereto) and
all other information it deems relevant in making a decision to execute this
Agreement and to purchase the Purchased Shares. The Purchaser has had the
opportunity to request additional information from and to ask questions of the
officers and directors of the Company. The Purchaser understands the risks
associated with investment in the Company, the most significant of which are the
Company's financial condition as set forth in the Company's audited financial
statements for the fiscal year ended December 31, 1995, and those enumerated in
Section 2.8 below, and the Purchaser, or the person or account for which it is
acting, is able to bear indefinitely the economic risk of acquiring the Shares,
has other adequate means of providing for current needs and contingencies, has
no need for liquidity with respect to such investment and could afford the
complete loss thereof.
2.4 RESTRICTIONS ON RESALE. Purchaser shall not engage in any
activity for the purpose of, or which may reasonably be expected to have the
effect of, conditioning the market in the United States for the Shares or the
Common Stock, as defined below, or, during the Restricted Period, offer or sell
any of the Shares or any Shares of Common Stock into which the Shares are
convertible (the "Underlying Shares") in the United States to or for the benefit
or account of a U.S. Person. Purchaser understands that the Shares and
Underlying Shares are only transferable on the books and records of the Company
and its transfer agent and that the Company and the transfer agent will not
register any transfer of Shares or Underlying Shares which the Company in good
faith believes violates applicable federal or state securities law in the United
States or the restrictions set forth herein. All subsequent offers and sales of
the Shares and Underlying Shares by Purchaser shall be made in compliance with
Regulation S under the Securities Act, pursuant to registration under the
Securities Act or an exemption from such registration. In any case, the Shares
and Underlying Shares shall not be resold to U.S. persons or within the United
States during the period of forty (40) days commencing upon the completion of
this Offering and as otherwise restricted herein with respect to the limitations
on converting the Shares to the Underlying Shares, as set forth in Section 2.5
below. Any proposed offer, sale or transfer of any of the Shares or Underlying
Shares during the Restricted Period shall be subject to the condition that
Purchaser deliver to the Company (i) a written certification of the proposed
transferee, acceptable in form and substance to the Company's counsel, that such
transferee is not a U.S. Person and is acquiring the Shares or Underlying Shares
for such transferee's own account and (ii) a written opinion of counsel to the
Purchaser, acceptable in form and substance to the Company's counsel, to the
effect that the offer, sale and transfer of such Shares or Underlying Shares is
permissible under the provisions of Regulation S. The Purchaser understands that
this resale restriction will continue to apply to the Shares and Underlying
Shares if disposed of by the Purchaser during the Restricted Period and consents
to the issuance of appropriate stop transfer instructions to the Company's
transfer agent with respect to the Shares and Underlying Shares.
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2.5 RESTRICTIONS ON CONVERSION. Purchaser understands and
acknowledges that, in accordance with the terms of Subparagraph 4(d) of the
Designation, the Shares cannot be converted, in whole or in part, for shares of
the Company's Common Stock, $.02 par value per share (the "Common Stock"), for a
period of at least 45 calendar days following the date of issuance of the Shares
(the "Original Issuance Date"); and that commencing on the 45th calendar day
following the Original Issuance Date and continuing up to and including the 74th
calendar day following the Original Issuance Date, the Purchaser may convert up
to one-third (1/3) of the Purchased Shares (i.e. - no more than $400,000 of the
Stated Value [as defined in the Designation] of such Purchased Shares) held by
Purchaser on such day for shares of Common Stock, in accordance with the terms
of the Designation; and that commencing on the 75th calendar day following the
Original Issuance Date and continuing up to and including the 104th calendar day
following the Original Issuance Date, the Purchaser may convert up to two-thirds
(2/3) of the Purchased Shares (i.e. - no more than $800,000 of the Stated Value
of such Purchased Shares) held by Purchaser on such day for shares of Common
Stock, in accordance with the terms of the Designation; and that commencing on
the 105th calendar day following the Original Issuance Date, the Purchaser may
convert up to 100% of the Purchased Shares (i.e. - the Original Aggregate Stated
Value [as defined in the Designation] of such Purchased Shares) held by
Purchaser on such day for shares of Common Stock, in accordance with the terms
of the Designation.
2.6 LEGENDS. Purchaser agrees that the certificates
representing the Purchased Shares shall bear legends substantially in the form
set forth below, and understands that the first legend may be removed at the end
of the Restricted Period:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"), of
the United States of America and have been issued in reliance upon the
exemption from such registration contained in Regulation S under the
Act. They may not be offered, sold or transferred in the United States
or to any "U.S. Person" (as defined in Regulation S)."
"The securities represented by this certificate may not be converted
except in accordance with the terms and conditions of a certain
Offshore Subscription Agreement between National Datacomputer, Inc. and
the holder hereof, dated ______ __, 1996."
Following any holding period imposed by Regulation S or other
applicable securities laws, the Company, upon the receipt of an opinion of
counsel to the Purchaser, satisfactory in form and substance to the Company's
Counsel, shall request the transfer agent to remove said legend and reissue the
Shares represented by the certificate.
2.7 DUE EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT
AND OTHER OBLIGATIONS. Purchaser has full right, power, authority and capacity
to enter into this Agreement and to consummate the transactions contemplated
hereby; and, if Purchaser is a company or corporation, the execution, delivery
and performance of this Agreement by Purchaser have been duly authorized by all
requisite corporate and shareholder action of Purchaser. Upon the execution and
delivery of this Agreement and its acceptance by the Company, this Agreement
shall constitute the legal, valid
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and binding obligations of Purchaser, enforceable against Purchaser in
accordance with its terms (except insofar as the enforcement thereof may be
limited by any applicable laws relating to or affecting the enforcement of
creditors' rights generally or by general equitable principles).
2.8 RISK FACTORS. The Purchaser acknowledges that an
investment in the Shares is speculative and is suitable only for investors who
are capable of bearing the economic risk of the investment, including the total
loss thereof. Prior to purchasing Shares, prospective investors should carefully
consider the following risk factors as well as any other information provided.
NEED FOR ADDITIONAL FUNDS
Even if all of the Shares offered hereby are sold, as to which no
assurance can be given, the Company may in the future require additional funds
from borrowings or equity financings. No assurance can be given that such funds,
if needed, will be available on terms that are satisfactory or advantageous to
the Company or its stockholders. Based on management's current operating plan,
the Company believes that the net proceeds to be raised hereunder together with
cash generated by operations will be adequate to finance the Company's
operations for at least the next 12 to 24 months.
NO ASSURANCE OF LISTING ON NASDAQ
An important purpose of this Offering is to have the Company meet the
initial listing application requirements maintained by NASDAQ for its small
capitalization market ("Initial Listing Requirements"). Pursuant to the Initial
Listing Requirements, the Company must have a total stockholders' equity of at
least $2,000,000 and a minimum bid price for its Common Stock of $3.00.
Management believes that net proceeds from the sale of the Shares will be
sufficient to increase the Company's total stockholders' equity to in excess of
$2,000,000. In addition, the bid price for the Common Stock has recently ranged
from $3.00 to $3.375. No assurance can be given that the bid price will remain
at its recent levels, which is necessary to satisfy the Initial Listing
Requirements.
COMPETITION
The hand-held computer industry is highly competitive. The Company
competes and expects to compete in the future with several competitors, many of
whom have substantially greater financial, technical and managerial resources
than the Company and may be able to adapt more quickly to new or emerging
technologies and changes in customer requirements or to devote greater resources
to the promotion and sale of their products than can the Company. The hand-held
computer industry is also characterized generally by low barriers to entry and
as a result new competitors possessing technological, marketing or other
competitive advantages may emerge and rapidly acquire a market share. Although
the Company believes its products have features and functionality that will
enable the Company to compete effectively with competitive products, ongoing
enhancements to its products will be required to enable the Company to maintain
its competitive position.
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TECHNOLOGICAL CHANGE
The market for hand-held computers is characterized by technological
developments and ongoing changes in customer requirements. As a result, the
Company's future success will depend upon its ability to continue to enhance its
current products and to develop and introduce in a timely manner new products
that take advantage of technological advances and respond to new and changing
customer requirements. No assurance can be given that the Company will be
successful in developing and marketing enhancements to its products or new
products incorporating new technology on a timely basis, or that its products
will adequately address the changing needs of the marketplace.
LACK OF PATENTS AND PROTECTION OF PROPRIETARY INFORMATION
The Company does not hold any patents. However, the Company does not
believe that patents are necessary for the protection of its technology or that
the lack of patents materially adversely affects the Company's business. The
Company relies primarily on unpatented proprietary know-how and unregistered
copyright protection of its software. In addition, the Company relies upon
confidentiality agreements with its employees. No assurance can be given that
others do not have or will not develop substantially equivalent proprietary
information or otherwise obtain access to the Company's know-how or that others
may not obtain patents which require licensing by the Company for the pursuit of
its business. No assurance can be given that others will not independently
develop substantially equivalent or superior proprietary technology or otherwise
gain access to the Company's trade secrets, that any obligations of
confidentiality will be honored or that the Company will be able to effectively
protect its rights to proprietary information.
ATTRACTION AND RETENTION OF QUALIFIED PERSONNEL; DEPENDENCE ON KEY
EMPLOYEES
The Company's success depends in part upon attracting and retaining the
services of its executive officers and technical personnel. Competition for
qualified personnel is intense, and the loss of certain key personnel could have
an adverse impact on the Company. All key personnel devote their full time to
the business of the Company.
ABSENCE OF DIVIDENDS
The Company has not paid any dividends on its capital stock to date,
and it is unlikely that the Company will declare or pay dividends in the
foreseeable future. The Directors presently intend to retain earnings to fund
continued operations and development.
LIMITED TRADING MARKET FOR COMMON STOCK
The Company's Common Stock is currently traded on the NASD Electronic
Bulletin Board under the symbol "NDCP" and the public market for the Common
Stock is very limited. No
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assurance can be given that an active market for the Company's securities is
likely to further develop until the Company's Common Stock is listed and traded
on the NASDAQ Small-Cap Market.
POSSIBLE ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER PROVISIONS
The Company's Certificate of Incorporation, as amended, authorizes the
Board of Directors to issue up to 50,000 shares of Preferred Stock. To date, 20
shares of Preferred Stock have been designated as Series A Convertible Preferred
Stock, none of which are currently issued and outstanding, and 4,200 shares of
Preferred Stock have been designated as Series B Convertible Preferred Stock,
[__________] of which are currently issued and outstanding. At this time, the
Company has no present plans other than this Offering for the issuance of
additional shares of Preferred Stock. The Preferred Stock may be issued in one
or more series, the terms of which may be determined at the time of issuance by
the Board of Directors, without further action by stockholders, and may include
voting rights (including the right to vote as a series on particular matters),
preferences as to dividends and liquidation, conversion and redemption rights
and sinking fund provisions. However, the issuance of any such shares of
Preferred Stock could adversely affect the rights of holders of Common Stock
and, therefore, could reduce the value of the Common Stock. In addition, the
ability of the Board of Directors to issue Preferred Stock could discourage,
delay, or prevent a takeover of the Company.
In addition, the Company, as a Delaware corporation, is subject to the
General Corporation Law of the State of Delaware, including Section 203, an
anti-takeover law enacted in 1988. In general, the law restricts the ability of
a public Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder. As a result of
the application of Section 203 and certain provisions in the Company's
Certificate of Incorporation and Bylaws, as amended, potential acquirors of the
Company may find it more difficult or be discouraged from attempting to effect
an acquisition transaction with the Company, thereby possibly depriving holders
of the Company's securities of certain opportunities to sell or otherwise
dispose of such securities at above-market prices pursuant to such transactions.
POSSIBLE VOLATILITY OF COMMON STOCK PRICES
The markets for equity securities in general and for those of
manufacturers and sellers of high technology products, in particular, have been
volatile and the price of the Common Stock in the future could be subject to
wide fluctuations in response to quarterly variations in operating results, news
and product announcements, trading volume, general market trends and other
factors.
2.9 BINDING EFFECT OF SUBSCRIPTION AGREEMENT. This Agreement
shall not be binding on the Company until such Agreement is accepted by the
Company. The Purchaser hereby acknowledges and agrees, subject to any applicable
securities law, that the subscription hereunder is irrevocable, that the
Purchaser is not entitled to cancel, terminate or revoke this Agreement or any
agreements of the Purchaser hereunder and that this Agreement and such other
agreements shall
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survive the death or disability of the undersigned and shall be binding upon and
inure to the benefit of the parties and their heirs, executors, administrators,
successors, legal representatives and assigns. If the Purchaser is more than one
person, the obligations of the undersigned hereunder shall be joint and several,
and the agreements, representations, warranties and acknowledgments herein
contained shall be deemed to be made by and be binding upon each such person and
his heirs, executors, administrators, successors, legal representatives and
assigns.
2.10 DECISION TO INVEST. In making his decision to purchase
the Shares herein subscribed for, the Purchaser has relied solely upon the
information about the Company contained in the Agreement and Offering Materials
provided to him, and upon independent investigations made by him or his legal
counsel or investment advisor. He is not relying on any representations or
warranties from the Company or any of its officers, directors, affiliates,
employees or agents, other than the information provided by the Company to him
in this Offering.
2.11 PURCHASER'S RESIDENCE. The Purchaser represents that he
is a resident and domiciliary (not a temporary or transient resident) of the
state (or province), county, and country set forth below, has no present
intention to become a resident of any other jurisdiction, and all
communications, written or oral, concerning the Shares have been directed to the
Purchaser in, and received by him in, such jurisdiction.
2.12 PURCHASER AS REPRESENTATIVE. The Purchaser represents and
warrants that if the Purchaser is executing this Agreement in a representative
or fiduciary capacity, the Purchaser has full power and authority to execute and
deliver the Agreement on behalf of the subscribing corporation, partnership,
trust or other entity for whom the Purchaser is executing this Agreement, and
such corporation, partnership, trust or other entity has full right and power to
enter into and perform this Agreement.
2.13 PURCHASER AS AGENT. The Purchaser may purchase Shares as
agent for various principals to be designated, in which case it shall hereby
make the above representations and warranties on behalf of such principals.
2.14 NO PROTECTION OF PURCHASER'S INTERESTS. The Purchaser has
been advised that the Company has not retained any independent professionals to
review or comment on this Offering or otherwise protect the interests of the
Purchaser. Although the Company has retained its own counsel, neither such firm
nor any other firm has acted on behalf of the Purchaser, and any purchaser of
the Shares offered hereby should not rely on the firm so retained by the Company
with respect to any matters herein described.
2.15 NO SHORT POSITION. Neither Purchaser nor any of its
affiliates will directly or indirectly maintain any short position in any
securities of the Company until after the end of the Restricted Period.
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2.16 VALUATION OF THE COMMON STOCK. The Purchaser represents
that he has independently evaluated the fairness of the offering price for the
Shares.
3. ADDITIONAL COVENANTS OF THE COMPANY AND THE PURCHASER
3.1 ISSUANCE OF BONUS WARRANTS. In the event that the
Conversion Price, as determined in accordance with the Designation, for the
Shares upon conversion would have been below the Minimum Conversion Price
($1.00), as defined in the Designation, at the time of any conversion of the
Shares prior to March 31, 1997, then the Company shall issue to the Purchaser
warrants exercisable for a period of three years to purchase Common Stock at an
exercise price of $1.00 per share (the "Bonus Warrants"), as follows:
If the Company does not achieve the aggregate levels of net
operating income listed below in the period between April 1, 1996 and March 31,
1997 (the "Bonus Warrants Earnings Period"), as determined by (i) the Company's
audited financial statements and report of the Company's independent certified
public accountants included in the Company's Form 10-KSB to be filed the
Securities and Exchange Commission ("SEC") for the fiscal year ending December
31, 1996; and (ii) the Company's Form 10-QSBs to be filed with the SEC for the
Company's fiscal quarters ending June 30, 1996, September 30, 1996, and March
31, 1997, then the Company will issue to the Purchaser by September 30, 1997, on
a pro-rata basis based upon the Purchaser's subscription in the Offering, the
Bonus Warrants, in the amounts determined below:
<TABLE>
<CAPTION>
Net Operating Income ("NOI") Amount of Bonus Warrants
---------------------------- ------------------------
<S> <C>
NOI <= $0 [Number of Purchased Shares x 1000 x (2/3)]
$0 < NOI < $100,000 [Number of Purchased Shares x 1000 x (1/2)]
$100,000 <= NOI < $250,000 [Number of Purchased Shares x 1000 x (1/3)]
$250,000 <= NOI < $500,000 [Number of Purchased Shares x 1000 x (1/6)]
$500,000 <= NOI none
</TABLE>
By way of example only, if the Company's NOI during the Bonus Warrants
Earnings Period is $120,000, then the Company will be required to issue an
aggregate of [Number of Purchased Shares x 1000 x (1/3)] Bonus Warrants, to be
divided among all of the Purchasers in the Offering.
3.2 CONVERSION PRICE. The Company and Purchaser acknowledge
that the Designation provides that the conversion price (the "Conversion Price")
of the Shares shall be the lower of $1.50 or the price as determined based upon
the average bid price of the Common Stock as reported by the Nasdaq SmallCap
Market or in the "Pink Sheets" during the period of five trading days
immediately preceding the date of conversion (the "Average Closing Price") and
discounting the Average Closing Price by an amount equal to 40% thereof. In no
event, except as set forth in Section 3.4 below and as more fully set forth in
the Designation, shall the Conversion Price be less than $1.00. The Conversion
Price and the number of shares of Common Stock into which the Shares shall be
convertible shall be adjusted appropriately for stock splits, combinations, or
other similar
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events in accordance with Paragraph 7 of the Designation. The specific terms of
conversion are more fully set forth in Paragraph 7 of the Designation.
3.3 LACK OF AUTHORIZED SHARES. If the Company is required to
issue Bonus Warrants pursuant to Section 3.1 above, then the Purchaser
acknowledges and understands that the Company does not currently have authorized
and available for issuance enough shares of Common Stock issuable upon exercise
of more than 500,000 Bonus Warrants. The Purchaser further understands that the
Company's Board of Directors has authorized such additional shares, but such
authorization must be approved by the affirmative vote of the holders of a
majority of the Common Stock. The Company hereby undertakes to use its best
efforts to complete all action required in order to authorize and reserve a
sufficient amount of shares of Common Stock to satisfy the Company's obligations
underlying the Bonus Warrants. The Company plans to hold an Annual Meeting of
Stockholders in September 1996. Among other things, the Company will propose
that the stockholders authorize an increase in the number of shares of Common
Stock that the Company is authorized to issue, such that the Company will have a
sufficient number of shares of Common Stock to reserve for issuance upon
exercise of the maximum amount of Bonus Warrants that may be issued to the
Purchaser hereunder. No assurance can be given that the Company's stockholders
will approve such a proposal. The Purchaser explicitly consents to this state of
affairs.
3.4 ELIMINATION OF MINIMUM CONVERSION PRICE.
(a) In the event that at any time prior to March 31, 1999, the
Company's Stockholders' Equity, as set forth in any of the Company's Annual
Reports on Form 10-K(SB) or Quarterly Reports on Form 10-Q(SB) to be filed with
SEC during such period, is less than $1,000,000, then the Minimum Conversion
Price as applied to any future conversion into Common Stock of the Shares
pursuant to the Designation shall be eliminated, and the Conversion Price shall
be that price as determined in accordance with the terms of the Designation
without any minimum price in effect.
(b) In the event that the Minimum Conversion Price is
eliminated pursuant to Section 3.4(a) prior to March 31, 1997, then the Company
shall not be required to issue the Bonus Warrants pursuant to Section 3.1 above.
The Purchaser acknowledges that if no Minimum Conversion Price is applied to the
conversion into Common Stock of the Shares, then the provisions of Section 3.1
with respect to the Bonus Warrants shall be null and void, and of no effect
against the Company.
3.5 NASDAQ LISTING APPLICATION. The Company has filed a Nasdaq
SmallCap Market Application for Initial Inclusion (the "Application") of the
Company's Common Stock. In the event that the Application has not been accepted
and the Company's Common Stock has not been approved for listing on the Nasdaq
SmallCap Market within 60 days from the date the Application is filed because
the Common Stock fails to meet the minimum bid price requirements, then the
Company will use its best efforts after such time to effectuate a reverse stock
split on its Common Stock so that it may meet such minimum bid price
requirements. The Purchaser acknowledges that
-10-
such a reverse split may not necessarily guarantee that the Application will be
accepted or result in the Company's Common Stock being approved for listing on
the Nasdaq SmallCap Market.
3.6 ADDITIONAL PAYMENTS. The Company acknowledges that the
Purchaser shall be entitled to receive interest at the rate of eight percent
(8%) per annum on the stated value of the Shares at the Closing. Such interest
shall be calculated and payable quarterly, in cash or Common Stock of the
Company, all as more fully set forth in Paragraph 4 of the Designation.
3.7 MANDATORY CONVERSION. If at March 31, 1999 (the "Mandatory
Conversion Date"), there remains issued and outstanding any of the Purchased
Shares, then the Corporation shall be entitled to require all (but not less than
all) holders of the Purchased Shares then outstanding to convert their Purchased
Shares into shares of Common Stock pursuant to Paragraph 8 of the Designation.
3.8 REDEMPTION At any time, and from time to time, on and
after the expiration of the restrictions of conversion contained in Section 2.5
of this Agreement and Subparagraph 7(d) of the Designation, if the closing bid
price of the Company's Common Stock as reported by the Nasdaq SmallCap Market or
in the "Pink Sheets" equals or exceeds $5.00 for 20 consecutive trading days,
then the Corporation may, in its sole discretion, but shall not be obligated to,
redeem, in whole or in part, the then issued and outstanding Purchased Shares,
at a price of $1,000 per share of such Series B Convertible Preferred Stock (the
"Redemption Price"), subject to adjustment, all as more fully set forth in
Paragraphs 7 and 9 of the Designation.
3.9 LEGAL EXPENSES FOR ENFORCEMENT. In the event that the
Purchaser must resort to legal process in order to enforce the Company's
obligations under this Agreement, the Company agrees to reimburse the Purchaser
for all reasonable attorney's fees incurred in such enforcement, provided that
such enforcement action by the Purchaser is successful.
4. NOTICES. All notices, demands, consents or similar communications
under this Agreement shall be given or made in writing and shall be delivered
personally, or sent by registered or certified airmail, postage prepaid or by
overnight courier services and shall be deemed given when so delivered or three
(3) business days after so mailed:
(a) if to the Company, at its address as set out at the head
of this Agreement, or at such address or addresses as may have been furnished to
Purchaser in writing by the Company;
(b) if to Purchaser, at its address as set out following
Purchaser's signature on the signature page to this Agreement, or at such other
address or addresses as may have been furnished to the Company in writing; or
(c) if to any transferee or transferees of Purchaser, at such
address or addresses as shall have been furnished to the Company or its transfer
agent at the time of the transfer or
-11-
transfers, or at such other address or addresses as may have been furnished by
such transferee or transferees to the Company or its transfer agent in writing.
5. AMENDMENTS. No amendment, interpretation or waiver of any of the
provisions of this Agreement shall be effective unless made in writing and
signed by the Company and at least a majority of the Purchasers hereunder.
6. HEADINGS. The headings of the sections of this Agreement are used
for convenience only and shall not affect the meaning or interpretation of the
contents of this Agreement.
7. WAIVER. The failure to enforce or to require the performance at any
time of any of the provisions of this Agreement shall in no way be construed to
be a waiver of such provisions, and shall not affect either the validity of this
Agreement or any part hereof or the right of any party thereafter to enforce
every provision in accordance with the terms of this Agreement.
8. GOVERNING LAW. This Agreement and the relationships of the parties
in connection with the subject matter of this Agreement shall be governed by and
determined in accordance with the internal laws of the Commonwealth of
Massachusetts, in the United States of America, without regard to the principles
of choice or conflict of law thereof. Venue for any dispute relating to the
provisions of this Agreement shall be in the United States District Court for
the District of Massachusetts.
9. SUBMISSION TO JURISDICTION. Each of the parties submits to the
jurisdiction of any state or federal court sitting in the Commonwealth of
Massachusetts, in any action or proceeding arising out of or relating to this
Agreement and Offering and agrees that all claims in respect of the action or
proceeding may be heard and determined in any such court. Each party also agrees
not to bring any action or proceeding arising out of or relating to this
Agreement or Offering in any other court. Each of the parties waives any defense
of inconvenient forum to the maintenance of any action or proceeding so brought
and waives any bond, surety, or other security that might be required of any
other party with respect thereto.
10. SEVERABILITY. If any severable provision of this Agreement, or the
application thereof to any person or circumstance, is held to be void, invalid
or unenforceable by any judgment of a tribunal of competent jurisdiction, the
remainder of this Agreement shall not be affected by such judgment, and the
remainder of this Agreement shall be enforced as nearly as possible according to
its original terms and intent.
11. ENTIRE AGREEMENT. This Agreement, and the exhibits and schedules
attached hereto and made a part hereof constitute the entire agreement between
the parties and supersedes any prior understanding or agreements concerning the
subject matter hereof.
12. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective legal representatives and
successors.
-12-
13. UNENFORCEABILITY. If any provision of this Agreement is or becomes
or is deemed invalid, illegal, or unenforceable in any jurisdiction, to the
maximum extent permissible, such provision shall be deemed amended to conform to
applicable laws so as to be materially altering the intention of the parties, it
shall be stricken and the remainder of this Agreement shall remain in full force
and effect.
14. COUNTERPARTS. This Agreement may be executed in counterparts, all
of which shall constitute one agreement, and each such counterpart shall be
deemed to have been made, executed and delivered on the date of execution of
this Agreement by the Purchaser, without regard to the dates or times when such
counterparts may actually have been made, executed or delivered.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-13-
IN WITNESS WHEREOF, the Purchaser has caused this Agreement to be
executed as of the ____ day of June 1996, at the location stated below.
PURCHASER: (if an Individual) PURCHASER: (other than an Individual
purchasing for his own account)
- ---------------------------- ------------------------------------
(Signature) (Printed Name of Purchaser)
- ----------------------------
(Signature of Joint Holder,
if Applicable)
- ---------------------------- By:
(Printed Name of Joint ---------------------------------
Holder, if Applicable) (Signature of Authorized
Officer or Other Representative)
Purchaser's Permanent Address:
- ---------------------------- ------------------------------------
(Printed Name and Title of
- ---------------------------- Signatory)
- ---------------------------- ------------------------------------
(Purchaser's Country or (Purchaser's Jurisdiction
Jurisdiction of Citizenship) of Organization)
If this Agreement is being If this Agreement is being executed
in a jurisdiction executed elsewhere than the
other than the jurisdiction set jurisdiction set forth above,
forth above, indicate such indicate such location:
location:
------------------ ------------------------------------
Purchaser's Telephone Number: Purchaser's Telephone Number:
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Number of Purchased Shares: ___________________
Price per Share: $1,000
Aggregate Purchase Price: $____________________
Stock certificates should be registered in the Company's records and delivered
to the address as follows:
-----------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-14-
The foregoing Subscription Agreement, executed by as Purchaser, is
hereby accepted and agreed to by National Datacomputer, Inc., as of the ___ day
of _______ 1996, as to $________ and shares of Series B Convertible Preferred
Stock.
NATIONAL DATACOMPUTER, INC.
By:___________________________________
Malcolm M. Bibby, Ph.D., President
-15-
SCHEDULE 1 - OFFERING MATERIALS
1. The Company's Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1996;
2. The Company's Annual Report on Form 10-KSB for the year ended December
31, 1995;
3. The Company's Annual Report on Form 10-KSB for the year ended December
31, 1994;
4. The Company's Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1995;
5. The Company's Quarterly Report on Form 10-QSB for the quarter ended
June 30, 1995; and
6. The Company's Quarterly Report on Form 10-QSB for the quarter ended
September 30, 1995.
-16-
SCHEDULE 2 - DEFINITION OF "U.S. PERSON"
The term "U.S. Person" means:
1. any natural person resident in the United States;
2. any partnership or corporation organized or incorporated under
the laws of the United States;
3. any estate of which any executor or administrator is a U.S.
Person;
4. any trust of which any trustee is a U.S. Person;
5. any agency or branch of a foreign entity located in the United
States;
6. any non-discretionary account or similar account (other than
an estate or trust) held by a dealer or other fiduciary for
the benefit or account of a U.S. Person;
7. any discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary
organized, incorporated, or (if an individual) resident in the
United States; and
8. any partnership or corporation if: (a) organized or
incorporated under the laws of any foreign jurisdiction; and
(b) formed by a U.S. Person principally for the purpose of
investing in securities not registered under the Securities
Act of 1933, as amended (the "Act"), unless it is organized or
incorporated, and owned, by accredited investors (as defined
in Rule 501(a) under the Act) who are not natural persons,
estates or trusts.
Notwithstanding paragraphs 1 through 8 above, any discretionary account
or similar account (other than an estate or trust) held for the benefit or
account of a non-U.S. Person by a dealer or other professional fiduciary
organized, incorporated, or (if an individual) resident in the United States
shall not be deemed a "U.S. Person."
Notwithstanding paragraphs 1 through 8 above, any estate of which any
professional fiduciary acting as executor or administrator is a U.S. Person
shall not be deemed a U.S. Person if:
1. an executor or administrator of the estate who is not a U.S.
Person has sole or shared investment discretion with respect
to the assets of the estate; and
2. the estate is governed by foreign law.
-17-
Notwithstanding paragraphs 1 through 8 above, any trust of which any
professional fiduciary acting as trustee is a U.S. Person shall not be deemed a
U.S. Person if a trustee who is not a U.S. Person has sole or shared investment
discretion with respect to the trust assets, and no beneficiary of the trust
(and no settlor if the trust is revocable) is a U.S. Person.
Notwithstanding paragraphs 1 through 8 above, an employee benefit plan
established and administered in accordance with the law of a country other than
the United States and customary practices and documentation of such country
shall not be deemed a U.S. Person.
Notwithstanding paragraphs 1 through 8 above, any agency or branch of a
U.S. Person located outside the United States shall not be deemed a "U.S.
Person" if:
1. the agency or branch operates for valid business reasons; and
2. the agency or branch is engaged in the business of insurance
or banking and is subject to substantive insurance or banking
regulation, respectively, in the jurisdiction where located.
The International Monetary Fund, the International Bank for
Reconstruction and Development, the Inter-American Development Bank, the Asian
Development Bank, the African Development Bank, the United Nations, and their
agencies, affiliates and pension plans, and any other similar international
organizations, their agencies, affiliates and pension plans shall not be deemed
"U.S. Persons."
-18-
NATIONAL DATACOMPUTER, INC.
900 MIDDLESEX TURNPIKE, BLDG. 5
BILLERICA, MASSACHUSETTS 01821
TELEPHONE: (508) 663-7677
PROSPECTIVE PURCHASER QUESTIONNAIRE
An offering pursuant to Regulation S under the Securities Act of 1933,
as amended (the "Securities Act"), may not be made in the United States or to
any "U.S. Person" as defined in Rule 902(o) of Regulation S. The Purpose of the
Questionnaire is to determine whether a prospective purchaser is a "U.S.
Person." Please complete this Questionnaire and attach it to your Subscription
Agreement.
1. Name:__________________________________________________________________
2. Is the Prospective Purchaser:
(a) a natural person resident in the United States?
Yes ____ No ____
(b) a partnership or corporation organized or incorporated under
the laws of the United States?
Yes ____ No ____
(c) an estate of which any executor or administrator is a person
described by (a), (b) or (e)?
Yes ____ No ____
If the answer to this item is "yes," please state whether (i)
any executor or administrator of the estate who is not a U.S.
person has sole or shared investment discretion with respect
to the assets of the estate, and naming such fiduciary, and
(ii) the estate is governed by foreign law, giving the
controlling jurisdiction.
______________________________________________________________
______________________________________________________________
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(d) a trust of which any trustee is a person described by (a), (b)
or (e)?
Yes ____ No ____
If the answer to this item is "yes," please state whether any
trustee of the trust has sole or shared investment discretion
with respect to the trust assets (and naming such fiduciary)
and whether any beneficiary of the trust (and no settlor if
the trust is revocable) is a U.S. person.
(e) an agency or branch of a foreign entity located in the United
States?
Yes ____ No ____
(f) a non-discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary for the
benefit or account of any of the foregoing?
Yes ____ No ____
(g) a discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary
organized, incorporated, or (if an individual) resident in the
United States?
Yes ____ No ____
If the answer to this item is "yes," please state the name,
address and citizenship of the person or entity for whose
benefit the account is maintained.
(h) a partnership or corporation which is:
(i) organized or incorporated under the laws of any
non-U.S. jurisdiction; and
(ii) formed by a U.S. person principally for the purpose
of investing in securities not registered under the
Securities Act, unless it is organized or
incorporated, and owned, by accredited investors (as
defined in Rule 501(a) under the Securities Act) who
are not natural persons, estates or trusts.
Yes ____ No ____
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Dated:______________
(For Prospective Purchasers Who are (For Prospective Purchasers Who are Not
Purchasing for Their Own Account) Purchasing for Their Own Account)
- --------------------------------- --------------------------------------
(Signature of Purchaser)
- --------------------------------- By:
(Printed Name of Purchaser) -----------------------------------
(Signature of Officer or
Other Authorized
Representative)
- --------------------------------- --------------------------------------
(Signature of Joint Purchaser) (Printed Name/Title of
Officer or Other Authorized
Representative)
- ---------------------------------
(Printed Name of Joint Holder)
-21-
