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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): FEBRUARY 18, 1998
NATIONAL DATACOMPUTER, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-15885 04-2942832
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
900 MIDDLESEX TURNPIKE, BUILDING 5
BILLERICA, MA 01821
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (978) 663-7677
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ITEM 7. EXHIBITS
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NO. TITLE
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4(a) Statement of Designation of Series E Convertible Preferred Stock.
4(b) Form of Regulation S Offshore Subscription Agreement.
4(c) Form of Warrant to Purchase Seven Hundred Thousand (700,000)
Shares of Common Stock of National Datacomputer, Inc.
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S
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(a) SECURITIES SOLD. On February 18, 1998, the Registrant issued 500 shares of
Series E Convertible Preferred Stock, $.001 par value (the "Series E
Preferred"), and a warrant (the "Warrant") to purchase up to 700,000 shares
of the Registrant's Common Stock, $.08 par value (the "Common Stock").
(b) UNDERWRITERS AND OTHER PURCHASERS. No underwriters were involved. The
securities were sold only to accredited investors.
(c) CONSIDERATION. The aggregate offering price was $500,000.00. There were no
underwriting discounts or commissions.
(d) EXEMPTION FROM REGISTRATION CLAIMED. The Registrant claimed exemption from
registration pursuant to Rule 903 of Regulation S promulgated under the
Securities Act of 1933, as amended. In claiming this exemption, the
Registrant relied on certain facts, including without limitation, the
following: that the offer and sale were made in an offshore transaction;
that no directed selling efforts were made in the United States by the
Registrant, a distributor, any of their respective affiliates, or any
person acting on behalf of the foregoing; that the Registrant is a
reporting issuer; that offering restrictions were implemented; and that the
sale was not made to a U.S. person or for the account or benefit of a U.S.
person.
(e) TERMS OF CONVERSION OR EXERCISE. Each share of Series E Preferred has a
stated value of $1,000.00 (the "Stated Value"). The holder of any share or
shares of Series E Preferred has the right to convert each such share of
Series E Preferred into an amount of shares of Common Stock equal to the
Stated Value of such share or shares of Series E Preferred divided by
$0.75. On or after December 31, 1998, the conversion price will be equal to
sixty percent (60%) of the Registrant's average closing bid price for the
20 trading days preceding the date of such conversion but in any event no
less than the Stated Value of such share or shares of Series E Preferred
divided by $.60 per share but in any event no more than $.75 per share
(subject to adjustment in the event that the Registrant's total
stockholders' equity does not exceed a certain level at the end of any
fiscal quarter). The conversion prices described above are subject to
adjustment for splits, combinations, dilutive issuances and the like.
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The holder of the Warrant is entitled to subscribe for and purchase up to
700,000 shares of Common Stock at an exercise price of $0.75 per share,
subject to adjustment for reorganizations, splits, stock dividends and the
like.
(f) USE OF PROCEEDS. Not applicable.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NATIONAL DATACOMPUTER, INC.
(Registrant)
Date: March 6, 1998 /S/ MALCOLM M. BIBBY
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Malcolm M. Bibby
President
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EXHIBIT 4(a)
STATEMENT OF DESIGNATION
OF
SERIES E CONVERTIBLE PREFERRED STOCK
OF
NATIONAL DATACOMPUTER, INC.
NATIONAL DATACOMPUTER, INC., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware
(hereinafter the "Corporation"), DOES HEREBY CERTIFY:
That by unanimous written consent, dated January 29, 1998, the
directors of the Corporation adopted the following resolution setting forth the
designations, powers, preferences and rights of its Series E Convertible
Preferred Stock:
RESOLVED: That the designations, powers, preferences and rights of
the Series E Convertible Preferred Stock be, and hereby
are, as set forth below:
1. NUMBER OF SHARES OF SERIES E CONVERTIBLE PREFERRED STOCK.
Of the 50,000 shares of authorized and unissued Preferred Stock, $.001
par value per share ("Preferred Stock") of the Corporation, five hundred (500)
shares shall be designated and known as "Series E Convertible Preferred Stock."
Each share of Series E Preferred Stock shall have a stated value of One Thousand
Dollars ($1,000.00).
2. VOTING.
(a) Each holder of outstanding shares of Series E Convertible
Preferred Stock at each meeting of stockholders of the Corporation (and written
actions of stockholders in lieu of meetings) with respect to any and all matters
presented to the stockholders of the Corporation for their action or
consideration shall be entitled to the number of votes equal to the number of
whole shares of Common Stock, as hereinafter defined, into which the shares of
Series E Convertible Preferred Stock held by such holder are convertible on the
record date established for such meeting. Except as provided by law, by the
provisions of Subparagraph 2(b) below, or by the provisions establishing any
other series of Preferred Stock, holders of Series E
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Convertible Preferred Stock shall vote together with the holders of all other
classes and series of securities of the Corporation as a single class.
(b) The Corporation shall not amend, alter or repeal the
preferences, special rights or other powers of the Series E Convertible
Preferred Stock so as to affect adversely the Series E Convertible Preferred
Stock, without the written consent or affirmative vote of the holders of at
least a majority of the then outstanding shares of Series E Convertible
Preferred Stock to be affected by amendment, alteration or repeal, given in
writing or by vote at a meeting, consenting or voting (as the case may be)
separately as a class. For this purpose, without limiting the generality of the
foregoing, the authorization or issuance of any series of Preferred Stock with
preference or priority over the Series E Convertible Preferred Stock as to the
right to receive either dividends or amounts distributable upon liquidation,
dissolution or winding up of the Corporation shall be deemed to affect adversely
the designated class of Series E Convertible Preferred Stock, and the
authorization or issuance of any series of Preferred Stock on a parity with
Series E Convertible Preferred Stock as to the right to receive either dividends
or amounts distributable upon liquidation, dissolution or winding up of the
Corporation shall not be deemed to affect adversely the Series E Convertible
Preferred Stock. The number of authorized shares of Preferred Stock may be
increased or decreased (but not below the number of shares then outstanding) by
the affirmative vote of the holders of a majority of the then outstanding shares
of all other classes or series of stock of the Corporation entitled to vote
thereon, voting as a single class.
3. DIVIDENDS.
(a) The holders of shares of Series E Convertible Preferred
Stock shall be entitled to receive, before any cash dividend shall be declared
and paid upon or set aside for the Common stock in any fiscal year of the
Corporation, only when, as and if declared by the Board of Directors of the
Corporation out of the funds legally available for that purpose, dividends
payable in cash or Common Stock in an amount per share for such fiscal year
equal to the product of (i) the per share amount, if any, of the cash dividend
declared, paid or set aside for the Common Stock during such fiscal year,
multiplied by (ii) the number of whole shares of Common Stock into which each
such share of Series E Convertible Preferred Stock is then convertible as
determined by Paragraph 6 below.
(b) The Corporation shall not declare or pay any dividends or
any other distributions of property or assets on shares of Common Stock, other
than dividends payable solely in cash or Common Stock, without the prior written
consent or affirmative vote of the holders of at least a majority of the then
outstanding shares of Series E Preferred Stock given in writing or by vote at a
meeting, voting as a single class.
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4. LIQUIDATION.
In the event of a voluntary or involuntary dissolution, liquidation, or
winding up of the Corporation, the holders of shares of Series E Convertible
Preferred Stock shall be entitled to receive out of the assets of the
Corporation legally available for distribution to holders of its capital stock,
before any payment or distribution shall be made to holders of Common Stock or
any other class of stock ranking junior to Series E Convertible Preferred Stock,
an amount per share equal to the Stated Value of such shares of Series E
Convertible Preferred Stock plus all dividends which have accrued and are unpaid
and therefore are in arrears. If upon such liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, the assets to be
distributed among the holders of Series E Convertible Preferred Stock shall be
insufficient to permit payment to the holders of Series E Convertible Preferred
Stock of the amount distributable as aforesaid, then the entire assets of the
Corporation to be so distributed shall be distributed ratably among the holders
of Series E Convertible Preferred Stock. Upon any such liquidation, dissolution
or winding up of the Corporation, after the holders of Series E Convertible
Preferred Stock shall have been paid in full the amounts to which they shall be
entitled, the remaining net assets of the Corporation may be distributed to the
holders of stock ranking on liquidation junior to the Series E Convertible
Preferred Stock. Written notice of such liquidation, dissolution or winding up,
stating a payment date, the amount of the liquidation payments and the place
where said liquidation payments shall be payable, shall be given by mail,
postage prepaid, or by telex to non-U.S. residents, not less than 10 days prior
to the payment date stated therein, to the holders of record of Series E
Convertible Preferred Stock, such notice to be addressed to each such holder at
its address as shown by the records of the Corporation. For purposes hereof, the
Common Stock shall rank on liquidation junior to the Series E Convertible
Preferred Stock.
5. RESTRICTIONS.
At any time when shares of Series E Convertible Preferred Stock are
outstanding, except where the vote or written consent of the holders of a
greater number of shares of the Corporation is required by law or by the
Corporation's Certificate of Incorporation, as amended, without the approval of
the holders of at least a majority of the then outstanding shares of Series E
Convertible Preferred Stock given in writing or by vote at a meeting, consenting
or voting (as the case may be) separately as a series, the Corporation will not
create or authorize the creation of any additional class or series of shares of
stock unless the same ranks junior to the Series E Convertible Preferred Stock
as to the distribution of assets on the liquidation, dissolution or winding up
of the Corporation; or increase the authorized amount of the Series E
Convertible Preferred Stock or increase the authorized amount of any additional
class or series of shares of stock unless the same ranks junior to the Series E
Convertible Preferred Stock as to the distribution of assets on the liquidation,
dissolution or winding up of the Corporation; or create or authorize any
obligation or security convertible into shares of Series E Convertible Preferred
Stock as to the distribution of assets on the liquidation, dissolution or
winding up of the Corporation, whether any such creation, authorization or
increase shall be by means of
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amendment to the Corporation's Certificate of Incorporation or by merger,
consolidation or otherwise.
6. OPTIONAL CONVERSION.
The holders of shares of Series E Convertible Preferred Stock shall have
the following conversion rights:
(a)(i) RIGHT TO CONVERT; CONVERSION PRICE. Subject to the
terms, conditions, and restrictions of this Paragraph 6, the holder of any share
or shares of Series E Convertible Preferred Stock shall have the right to
convert each such share of Series E Convertible Preferred Stock (except that
upon any liquidation of the Corporation, the right of conversion shall terminate
at the close of business on the business day fixed for payment of the amount
distributable on the Series E Convertible Preferred Stock) into an amount of
shares of Common Stock equal to the Stated Value of such share or shares of
Series E Convertible Preferred Stock divided by $0.75.
(ii) On or after December 31, 1998, the Conversion Price shall
equal sixty percent (60%) of the Corporation's average closing bid price for the
twenty (20) trading days preceding the date of such conversion but in any event
no less than the Stated Value of such share or shares of Series E Convertible
Preferred Stock divided by $.60 per share but in any event no more than $.75 per
share. If at any time after the date of the filing of this Certificate of
Designation and prior to January 31, 2003, the Corporation's stockholders equity
at the end of any fiscal quarter (as reported on the Company's Form 10-Q or Form
10-K filing with the Securities and Exchange Commission) does not exceed
$1,500,000 plus 50% of the net proceeds of any future equity financing by any
third party, then the Conversion Price shall equal the lesser of $0.75 or sixty
percent (60%) of the Corporation's bid price for the five trading days prior to
the date of such conversion notice.
(iii) If after the date of filing of this Certificate of
Designation (a) the closing price (or the average of the closing bid and asked
price if the principal exchange on which the Corporation's common stock trades
does not report a closing price) for the Corporation's Common Stock shall trade
below $1.00 for any twenty (20) consecutive trading days on the NASDAQ Small Cap
Market, the NASDAQ National Market System, or the American Stock Exchange, and
(b) the holders of a majority of the Series E Convertible Preferred Stock
request that the Corporation seek a reverse stock split, which reverse split is
necessary in order to maintain a listing on its then current trading exchange,
then the Corporation agrees to take all efforts necessary to effect an
appropriate reverse stock split of the Corporation's Common Stock. In the event
of such a reverse stock split, the Conversion Price described above shall not be
modified.
(iv) Notwithstanding the foregoing, the provisions of Section
6(a) (exclusive of the Section 6(a)(i)) shall terminate immediately following
the issuance of a majority of the
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Corporation's Common Stock (or other securities convertible into Common Stock)
to a third party or parties in a merger or similar transaction.
(b) RESTRICTIONS ON CONVERSION. The holder of any share or
shares of Series E Convertible Preferred Stock may not convert any of such
shares for a period of at least forty (40) days following the date upon which
the Series E Convertible Preferred Stock was originally issued (the "Original
Issuance Date").
(c) NOTICE OF CONVERSION. The right of conversion shall be
exercised by the holder thereof by giving written notice (the "Conversion
Notice") to the Corporation that the holder elects to convert a specified number
of shares of Series E Convertible Preferred Stock representing a specified
Stated Value thereof into Common Stock and by surrender of a certificate or
certificates for the shares so to be converted to the Corporation at its
principal office (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to the holders of the Series E
Convertible Preferred Stock) at any time during its usual business hours on the
date set forth in the Conversion Notice, together with a statement of the name
or names (with address) in which the certificate or certificates for shares of
Common Stock shall be issued. The Conversion Notice shall include therein the
Stated Value of shares of Series E Convertible Preferred Stock to be converted,
and the number of shares of Common Stock to be issued in connection with such
conversion. The Corporation shall have the right to review the calculations
included in the Conversion Notice, and shall provide notice of any discrepancy
or dispute therewith within three business days of the receipt thereof.
(d) ISSUANCE OF CERTIFICATES; TIME CONVERSION EFFECTED.
Promptly, but in no event more than seven (7) business days, after the receipt
of the Conversion Notice referred to in Subparagraph 6(e) and surrender of the
certificate or certificates for the share or shares of Series E Convertible
Preferred Stock to be converted, the Corporation shall issue and deliver, or
cause to be issued and delivered, to the holder, registered in such name or
names as such holder may direct, a certificate or certificates for the number of
whole shares of Common Stock into which such shares of Series E Convertible
Preferred Stock are converted. To the extent permitted by law, such conversion
shall be deemed to have been effected as of the close of business on the date
(the "Conversion Date") on which such Conversion Notice shall have been received
by the Corporation and the certificate and certificates for such share or shares
shall have been surrendered as aforesaid, and at such time the rights of the
holder of such share or shares of Series E Convertible Preferred Stock shall
cease, and the person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such conversion
shall be deemed to have become the holder or holders of record of the shares
represented thereby. If the Corporation shall fail to issue such certificates
within the time frame described above, then the Corporation shall pay to the
holders of such certificates a penalty for each trading day after the initial
seven trading days in which such certificate is not issued equal to $1,000.00.
Notwithstanding the foregoing, the penalty described above shall not apply if
the delay is caused by forces outside of the control of the Corporation (e.g.,
flood, earthquake, natural disaster or labor work stoppage) or if the
Corporation does not then have adequate shares
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of Common Stock available for issuance upon conversion. If the delay is caused
because the Corporation does not have adequate shares of Common Stock available
for issuance upon conversion, then the Corporation shall use its best efforts to
cause a stockholders' meeting to be held within ninety (90) days of the date it
first determines additional shares of Common Stock are needed in order to amend
its Certificate of Incorporation to increase the number of authorized shares of
Common Stock. Thereafter, the Corporation shall issue such Common Stock as set
forth above within seven days of the date the Corporation's stockholders approve
such proposal, and failure to comply with the provisions of this Subsection (d)
thereafter shall subject the Corporation to the penalties provided above unless
the failure to cause the issuance of such shares of Common Stock thereafter is
caused by failure to obtain the necessary votes required for stockholder
approval for such amendment to the Certificate of Incorporation (including the
votes of all of the holders of then outstanding classes of Preferred Stock of
the Corporation).
(e) FRACTIONAL SHARES; DIVIDENDS; PARTIAL CONVERSION. No
fractional shares shall be issued upon conversion of Series E Convertible
Preferred Stock into Common Stock. In case the number of shares of Series E
Convertible Preferred Stock represented by the certificate or certificates
surrendered pursuant to Subparagraph 6(a) exceeds the number of shares
converted, the Corporation shall, upon such conversion, execute and deliver to
the holder, at the expense of the Corporation, a new certificate or certificates
for the number of shares of Series E Convertible Preferred Stock represented by
the certificate or certificates surrendered which are not to be converted.
(f) REORGANIZATION OR RECLASSIFICATION. If any capital
reorganization or reclassification of the capital stock of the Corporation shall
be effected in such a way that holders of Common Stock shall be entitled to
receive stock, securities or assets with respect to or in exchange for Common
Stock, then, as a condition of such reorganization or reclassification, lawful
and adequate provisions shall be made whereby each holder of a share or shares
of Series E Convertible Preferred Stock shall thereupon have the right to
receive, upon the basis and upon the terms and conditions specified herein and
in lieu of the shares of Common Stock immediately theretofore receivable upon
the conversion of such share or shares of Series E Convertible Preferred Stock,
such shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for a number of outstanding shares of such Common
Stock equal to the number of shares of such Common Stock immediately theretofore
receivable upon such conversion had such reorganization or reclassification not
taken place, and in any such case appropriate provisions shall be made with
respect to the rights and interests of such holder to the end that the
provisions hereof (including without limitation provisions for adjustments of
the conversion rights) shall thereafter be applicable, as nearly as may be, in
relation to any shares of stock, securities or assets thereafter deliverable
upon the exercise of such conversion rights.
(g) ADJUSTMENTS FOR SPLITS, COMBINATIONS, ETC. Except as set
forth in Section 6(a)(ii), the Conversion Price and the number of shares of
Common Stock into which the Series E Convertible Preferred Stock shall be
convertible shall be adjusted appropriately for stock splits, combinations, or
other similar events. Additionally, an adjustment will be made in the case of
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an exchange of Common Stock, consolidation or merger of the Company with or into
another corporation or sale of all or substantially all of the assets of the
Company in order to enable the holder of Series E Convertible Preferred Stock to
acquire the kind and the number of shares of stock or other securities or
property receivable in such event by a holder of the Series E Convertible
Preferred Stock of the number of shares that might otherwise have been purchased
upon the conversion of the Series E Convertible Preferred Stock. No adjustment
to the Conversion Price will be made for dividends (other than stock dividends),
if any, paid on the Common Stock or for securities issued pursuant to exercise
of the currently outstanding options, warrants, or options that may be granted
or shares issued in connection with the acquisition of another business by the
Company.
(h) PROTECTION AGAINST DILUTIVE ISSUANCES. If the Corporation
shall at any time after the issue date of the Series E Preferred Stock issue
additional shares of Common Stock (other than upon the exercise of any warrant,
option or other security convertible into the Corporation's Common Stock
outstanding at the date of the filing of this Certificate of Designation), but
excluding shares issued as a dividend or distribution or stock split as provided
herein, without consideration, or for a consideration per share less than the
applicable conversion price of the Series E Convertible Preferred Stock in
effect on the date of and immediately prior to such issue, then and in such
event, the Conversion Price will be the Conversion Price determined in
accordance with the following formula:
Conversion Price = (P1*Q1) + (P2*Q2)
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(Q1+Q2)
P1 = Conversion Price in effect immediately prior to such
issue or sale
Q1 = Number of Shares of Common Stock deemed outstanding
(including all shares issuable upon exercise of all
currently outstanding options and warrants)
P2 = Average price per share received by the Corporation upon
such issue or sale; and
Q2 = Number of shares of Common Stock issued or sold, or
deemed to have been issued or sold, in the subject
transaction
All shares of stock issuable upon conversion of preferred stock issued
or issuable to holders of Series E Convertible Preferred Stock, as well as
warrants to be issued to holders of the Series E Convertible Preferred Stock
pursuant to the terms of the Subscription Agreements relating to the sale of the
Series E Convertible Preferred Stock, as well as any additional securities
issued to holders of Series E Convertible Preferred Stock under the right of
first refusal formula set forth in such Subscription Agreements, would be deemed
to be outstanding (rather than a new Q2 new issuance).
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Notwithstanding the foregoing, (I) the applicable Conversion
Price shall not be so reduced at such time if the amount of such reduction would
be an amount less than $.02, but any such amount shall be carried forward and
reduction with respect thereto made at the time of and together with any
subsequent reduction which, together with such amount and any other amount or
amounts so carried forward, shall aggregate $.02 or more, and (II) the
provisions of this Section 6(h) shall terminate immediately following the filing
by the Corporation with the Securities and Exchange Commission of an
announcement relating to the issuance of a majority of the Corporation's issued
and outstanding shares to any third party in a merger or similar transaction;
and (III) the provisions of this Section 6(h) will not apply to any shares
subsequently issued to a holder of the Series E Preferred Stock issued in
accordance with the provisions of Section 5.6 of the Subscription Agreement.
7. MANDATORY CONVERSION.
(a) MANDATORY CONVERSION DATE. If at January 31, 2001 (the
"Mandatory Conversion Date"), there remains issued and outstanding any shares of
Series E Convertible Preferred Stock, then the Corporation shall be entitled to
require all (but not less than all) holders of shares of Series E Convertible
Preferred Stock then outstanding to convert their shares of Series E Convertible
Preferred Stock into shares of Common Stock pursuant to Subparagraph 6(a). The
Corporation shall provide written notice (the "Mandatory Conversion Notice") to
the holders of shares of Series E Convertible Preferred Stock of such mandatory
conversion. The Mandatory Conversion Notice shall include the Stated Value of
the shares of Series E Convertible Preferred Stock to be converted, and the
number of shares of the Corporation's Common Stock to be issued upon such
mandatory conversion. On the Mandatory Conversion Date, the Corporation may, at
its option if it elects to convert the shares of Series E Convertible Preferred
Stock, cause the conversion of such shares at the lesser of $.00075 per share or
60% of the bid price (or the average of the closing bid and ask price as
reported by the principal exchange on which the Corporation's securities trade
if such exchange does not report a closing price) for the five trading days
preceding January 31, 2001. Alternatively, the Corporation may elect to redeem
all or a portion of the Series E Preferred Stock on the Mandatory Conversion
Date at its face value and any accrued but unpaid dividends in cash.
(b) SURRENDER OF CERTIFICATES. On or before the Mandatory
Conversion Date, each holder of shares of Series E Convertible Preferred Stock
shall surrender his, her or its certificate or certificates for all such shares
to the Corporation at the place designated in such Mandatory Conversion Notice,
and shall thereafter receive certificates for the number of shares of Common
Stock to which such holder is entitled or a check for sums due as described in
Subsection (a) above. On the Mandatory Conversion Rate, all rights with respect
to the Series E Convertible Preferred Stock so converted, including the rights,
if any, to receive notices and vote, will terminate. All certificates evidencing
shares of Series E Convertible Preferred Stock that are required to be
surrendered for conversion in accordance with the provisions hereof, from and
after the Mandatory Conversion Date, shall be deemed to have been retired and
canceled and the
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shares of Series E Convertible Preferred Stock represented thereby converted
into Common Stock for all purposes, notwithstanding the failure of the holder or
holders thereof to surrender such certificates on or prior to such date. The
Corporation may thereafter take such appropriate action as may be necessary to
reduce the authorized Series E Convertible Preferred Stock accordingly.
8. REDEMPTION OF SERIES E CONVERTIBLE PREFERRED STOCK.
(a) RIGHT TO REDEEM SERIES E CONVERTIBLE PREFERRED STOCK. At
any time, and from time to time, on and after the expiration of the restrictions
of conversion contained in Subparagraph 6(b), if the closing bid price of the
Company's Common Stock as reported by the principal stock exchange on which the
Corporation's Common Stock then trades 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 shares of Series E Convertible Preferred Stock, at a price of $1,000
per share of such Series E Convertible Preferred Stock (the "Redemption Price"),
subject to adjustment as provided in Paragraph 6.
(b) NOTICE OF REDEMPTION. The Corporation shall provide each
holder of record of the Series E Convertible Preferred Stock with written notice
of redemption (the "Redemption Notice") not less than 30 days prior to any date
stipulated by the Corporation for the redemption of the Series E Convertible
Preferred Stock (the "Redemption Date"). The Redemption Notice shall contain (i)
the Redemption Date, (ii) the number of shares of Series E Convertible Preferred
Stock to be redeemed from the holder to whom the Redemption Notice is delivered,
(iii) instructions for surrender to the Corporation of the certificate or
certificates representing the shares of Series E Convertible Preferred Stock to
be redeemed, and (iv) instructions as to how to specify to the Corporation the
number of shares of Series E Convertible Preferred Stock to be redeemed as
provided in this Paragraph 8, and the number of shares of Series E Convertible
Preferred Stock to be converted into Common Stock pursuant to Paragraph 6.
(c) RIGHT TO CONVERT SERIES E CONVERTIBLE PREFERRED STOCK UPON
RECEIPT OF REDEMPTION NOTICE. Upon receipt of the Redemption Notice, the
recipient thereof shall have the option, at is sole election, to specify what
portion of the Series E Convertible Preferred Stock called for redemption in the
Redemption Notice shall be redeemed as provided in this Paragraph 8 or converted
into Common Stock in the manner provided in Paragraph 6. If the holder of the
Series E Convertible Preferred Stock called for redemption elects to convert
such shares, then such conversion shall take place on the Redemption Date, in
accordance with the terms of Paragraph 6.
(d) SURRENDER OF CERTIFICATES; PAYMENT OF REDEMPTION PRICE. On
or before the Redemption Date, each holder of the shares of Series E Convertible
Preferred Stock to be redeemed shall surrender the required certificate or
certificates representing such shares to the
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Corporation, in the manner and at the place designated in the Redemption Notice,
and upon the Redemption Date, the Redemption Price for such shares shall be paid
by the Corporation via check to the order of the person whose name appears on
such certificate or certificates as the owner thereof, and each such surrendered
certificate shall be canceled and retired. If a certificate is surrendered and
all the shares evidenced thereby are not being redeemed, the Corporation shall
issue new certificates to be registered in the names of the person(s) whose
name(s) appear(s) as the owners on the respective surrendered certificates and
deliver such certificate to such person(s).
(e) DEPOSIT OF REDEMPTION PRICE. On the Redemption Date in
respect to any shares of Series E Convertible Preferred Stock, or prior thereto,
the Corporation shall deposit with any bank or trust company (the "Depository")
having a capital and surplus of at least $50,000,000, a sum equal to (i) the
aggregate Redemption Price of all such shares called for redemption, less (ii)
the aggregate Redemption Price for those shares of Series E Convertible
Preferred Stock in respect of which the Corporation has received notice from the
holder thereof of its election, pursuant to Subparagraph 6(c), to convert shares
of Series E Convertible Preferred Stock into Common Stock. The Corporation shall
provide instructions and authority to the Depository to pay, on or after the
Redemption Date, the Redemption Price to the respective holders upon the
surrender of their share certificates. The deposit of the Redemption Price by
the Corporation with the Depository shall constitute full payment for the shares
of Series E Convertible Preferred Stock to be redeemed, and from and after that
date of the deposit, the redeemed shares shall be deemed to be no longer issued
and outstanding, and the holders thereof shall cease to be holders with respect
to such shares and shall have no rights with respect thereto, except the right
to receive from the Depository payment of the Redemption Price, without
interest, upon surrender of their certificates therefor. Any funds so deposited
and unclaimed at the end of one year from the Redemption Date shall be released
and delivered to the Corporation, after which the former holders of shares of
Series E Convertible Preferred Stock called for redemption shall be entitled to
receive payment of the Redemption Price in respect of their shares only from the
Corporation.
9. NOTICES.
In case at any time:
(a) the Corporation shall declare any dividend upon its Common
Stock payable in cash or stock or make any other pro rata distribution to the
holders of its Common Stock; or
(b) the Corporation shall offer for subscription pro rata to
the holders of its Common Stock any additional shares of stock of any class or
other rights; or
10
<PAGE> 11
(c) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or a consolidation or
merger of the Corporation with or into, or a sale of all or substantially all
its assets to, another entity or entities; or
(d) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall
give, by first class mail, postage prepaid, or by facsimile to non-U.S.
residents, addressed to each holder of any shares of Series E Convertible
Preferred Stock at the address of such holder as shown on the books of the
Corporation, (i) at least 10 days' prior to written notice of the date on which
the books of the Corporation shall close or a record shall be taken for such
dividend, distribution or subscription rights or for determining rights to vote
in respect of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding up and (ii) in the case of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, at least 10 days' prior written notice of the date
when the same shall take place. Such notice in accordance with the foregoing
clause (i) shall also specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of Common Stock shall be
entitled thereto and (ii) shall also specify the date on which the holders of
Common Stock shall be entitled to exchange their Common Stock for securities or
other property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, as the case
may be.
10. STOCK TO BE RESERVED.
The Corporation, upon the effective date of this Statement of
Designation, has a sufficient number of shares of Common Stock available to
reserve for issuance upon the conversion of all outstanding shares of Series E
Convertible Preferred Stock. The Corporation will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of issuance
upon the conversion of Series E Convertible Preferred Stock as herein provided,
such number of shares of Common Stock as shall then be issuable upon the
conversion of all outstanding shares of Series E Convertible Preferred. The
Corporation covenants that all shares of Common Stock which shall be so issued
shall be duly and validly issued without violation of any applicable law or
regulation, or of any requirement of any national securities exchange upon which
the Common Stock may be listed.
11. NO REISSUANCE OF SERIES E CONVERTIBLE PREFERRED STOCK.
Shares of Series E Convertible Preferred Stock which are converted into
shares of Common Stock as provided herein shall not be reissued.
11
<PAGE> 12
12. ISSUE TAX.
The issuance of certificates for shares of Common Stock upon conversion
of Series E Convertible Preferred Stock shall be made without charge to the
holder thereof for any issuance tax in respect thereof, provided that the
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any certificate in a
name other than that of the holder of the Series E Convertible Preferred Stock
which is being converted.
13. CLOSING OF BOOKS.
The Corporation will at no time close its transfer books against the
transfer of any Series E Convertible Preferred Stock or of any shares of Common
Stock issued or issuable upon the conversion of any shares of Series E
Convertible Preferred Stock in any manner which interferes with the timely
conversion of such Series E Convertible Preferred Stock, except as may otherwise
be required to comply with applicable securities laws.
14. DEFINITION OF COMMON STOCK.
As used in this Statement of Designation, the term "Common Stock" shall
mean and include the Corporation's authorized Common Stock, $.08 par value per
share, as constituted on the date of filing of these terms of the Series E
Convertible Preferred Stock, and shall also include any capital stock of any
class of the Corporation thereafter authorized which shall neither be limited to
a fixed sum or percentage of par value in respect of the rights of the holders
thereof to participate in dividends nor entitled to a preference in the
distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation; provided that the shares of Common
Stock receivable upon conversion of shares of Series E Convertible Preferred
Stock shall include only shares designated as Common Stock of the Corporation on
the date of filing of this instrument, or in case of any reorganization,
reclassification, or stock split of the outstanding shares thereof, the stock,
securities or assets provided for in Subparagraph 6(f).
15. AMENDMENTS.
No provision of these terms of the Series E Convertible Preferred Stock
may be amended, modified or waived without the written consent or affirmative
vote of the holders of at least a majority of the then outstanding shares of
Series E Convertible Preferred Stock
RESOLVED: That the President and Secretary be, and hereby are,
authorized and directed to execute and file a Statement
of Designation with the Delaware Secretary of State.
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<PAGE> 13
IN WITNESS WHEREOF, the said National Datacomputer, Inc. has caused its
corporate seal to be hereunto affixed and this Statement of Designation to be
signed by Malcolm M. Bibby, Ph.D., its President and Secretary, this 29th day of
January, 1998.
NATIONAL DATACOMPUTER, INC.
By: /S/ MALCOLM M. BIBBY
-----------------------------
Malcolm M. Bibby, Ph.D.
President
/s/ MALCOLM M. BIBBY
- -------------------------------
Malcolm M. Bibby, Ph.D.
Secretary
[SEAL]
<PAGE> 1
EXHIBIT 4(b)
NATIONAL DATACOMPUTER, INC.
OFFERING OF UNITS, EACH UNIT CONSISTING OF
FIVE HUNDRED (500) SHARES OF
SERIES E CONVERTIBLE PREFERRED STOCK,
$.08 PAR VALUE PER SHARE,
OF NATIONAL DATACOMPUTER, INC.
AND A WARRANT TO PURCHASE UP TO
SEVEN HUNDRED THOUSAND (700,000)
SHARES OF COMMON STOCK,
$.08 PAR VALUE PER SHARE
OF NATIONAL DATACOMPUTER, INC.
SUBSCRIPTION AGREEMENT
FOR ACCREDITED INVESTORS ONLY
January 27, 1998
<PAGE> 2
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THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATORY AGENCY NOR HAS THE COMMISSION NOR ANY STATE SECURITIES REGULATORY
AGENCY PASSED UPON THE ACCURACY OR ADEQUACY OR ANY OFFERING MATERIALS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED FOR OFFERING AND
SALE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR HAS ANY STATE SECURITIES
COMMISSION OR REGULATORY AUTHORITY APPROVED, PASSED UPON OR ENDORSED THE MERITS
TO THIS OFFERING, NOR IS IT INTENDED THAT ANY SUCH AGENCY WILL DO SO. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL. THE SECURITIES MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF BY A SUBSCRIBER EXCEPT IN COMPLIANCE WITH
THE FEDERAL AND RELEVANT STATE SECURITIES LAWS AND THE REQUIREMENTS AND
LIMITATIONS IN THE SUBSCRIPTION AGREEMENT AS WELL AS A SATISFACTORY OPINION OF
COUNSEL REGARDING SAME. NO ASSURANCE CAN BE GIVEN THAT A PUBLIC MARKET FOR THE
SECURITIES WILL EVER DEVELOP. THE TRANSFER OF THE SECURITIES WILL BE SUBJECT TO
CERTAIN RESTRICTIONS UNDER REGULATION S.
INVESTMENT IN THE CORPORATION INVOLVES CERTAIN RISKS AND RESTRICTIONS
ON TRANSFER. IN VIEW OF THESE RISKS AND THE RESTRICTIONS ON TRANSFER, THE
PURCHASE OF SECURITIES SHOULD BE CONSIDERED ONLY BY PERSONS OF SUBSTANTIAL MEANS
WHO HAVE NO NEED FOR LIQUIDITY WITH RESPECT TO THIS INVESTMENT, WHO CAN HOLD
THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME AND WHO CAN BEAR THE ECONOMIC
RISK OF A TOTAL LOSS OF THEIR INVESTMENT. IN ADDITION, TO THE EXTENT THAT A
SUBSCRIBER'S INVESTMENT RESULTS IN DEFERRAL OF TAX LIABILITY, ONLY SUBSCRIBERS
WHOSE INCOME IS TAXABLE AT RELATIVELY HIGH RATES MAY BE IN A POSITION TO REALIZE
SIGNIFICANT FINANCIAL BENEFIT FROM SUCH DEFERRAL.
NO PERSON HAS BEEN AUTHORIZED BY THE CORPORATION TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OF ANY KIND WHATSOEVER CONCERNING THE
CORPORATION OR THIS OFFERING OTHER THAN THE REPRESENTATIONS CONTAINED OR
REFERRED TO HEREIN, AND, IF GIVEN OR MADE, SUCH OTHER REPRESENTATIONS OR
INFORMATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
CORPORATION. NEITHER THE DELIVERY OF THIS OFFER NOR ANY SALES MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, IMPLY THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE PARTIES DESCRIBED HEREIN SINCE THE DATE HEREOF, OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF
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<PAGE> 3
ANY TIME AFTER THE DATE IT WAS FIRST OFFERED. THIS DOES NOT CONSTITUTE AN OFFER
OR SOLICITATION IN ANY JURISDICTION TO ANY PERSON TO WHOM SUCH OFFER OR
SOLICITATION WOULD BE UNLAWFUL.
THE OFFERING PRICE OF THE SECURITIES HAS BEEN FIXED ARBITRARILY BY THE
CORPORATION. NO ESTABLISHED MARKET VALUE FOR THE SECURITIES EXISTS. EACH
PROSPECTIVE SUBSCRIBER IS URGED TO MAKE AN INDEPENDENT EVALUATION OF THE
FAIRNESS OF THE OFFERING PRICE.
EACH SUBSCRIBER IS CAUTIONED TO CONSULT WITH HIS OWN LEGAL COUNSEL,
ACCOUNTANT, AND INVESTMENT REPRESENTATIVE, IF ANY, AS TO TAX AND RELATED MATTERS
CONCERNING THE CORPORATION AND INVESTMENTS HEREIN. NO REPRESENTATIONS OR
WARRANTIES OF ANY KIND ARE INTENDED OR SHOULD BE INFERRED CONCERNING ANY
ECONOMIC RETURN OR TAX ADVANTAGES WHICH MAY ACCRUE AS A RESULT OF AN INVESTMENT
IN THE CORPORATION.
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<PAGE> 4
SUBSCRIPTION AGREEMENT
Limited Offering of Units, each Unit consisting of
five hundred (500) shares of Series E Convertible Preferred Stock,
$.08 par value per share, at $1,000.00 per share,
and a Warrant to purchase up to seven hundred thousand (700,000)
shares of Common Stock, $.08 par value,
of NATIONAL DATACOMPUTER, INC.
(a) Number of Units subscribed for 1
(b) Total Subscription Price
(multiply (a) by $500,000 per Share) $500,000
--------
THE UNDERSIGNED ("Subscriber") hereby subscribes for the number of
Units (the "Units"), offered by NATIONAL DATACOMPUTER, INC. (the "Corporation"),
a Delaware corporation, set forth in (a) above.
The Subscriber hereby agrees to pay the amount set forth in (b) above
upon execution of this Agreement, subject to and in accordance with the
following terms, conditions, and investment risks.
SECTION 1. SUBSCRIPTION FOR UNITS
1.1 Subscriber hereby deposits with Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C., as escrow agent for the Corporation, the amount set forth in
(b) above via wire transfer. Should this Agreement not be accepted by the
Corporation, the proceeds shall be returned to the Subscriber.
1.2 Within five (5) days from the date of acceptance of this Agreement,
there shall be a closing (the "Closing") of the purchase of the Unit and the
Corporation shall deliver to the Subscriber a stock certificate representing the
shares of Series E Convertible Preferred Stock purchased by Subscriber
hereunder, registered in the Subscriber's name and a warrant for the purchase of
the shares of Common Stock underlying the Warrant. The Unit issued hereunder,
when delivered to the Subscriber in accordance with the terms hereof, shall be
duly authorized by
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<PAGE> 5
appropriate corporate action and shall constitute validly issued and outstanding
securities of the Corporation.
THE SUBSCRIBER UNDERSTANDS THAT AN INVESTMENT IN THE SECURITIES OF THE
CORPORATION IS SPECULATIVE, AND IT HAS CAREFULLY CONSIDERED THE IMPACT OF THE
FOLLOWING RISKS:
SECTION 2. RISK FACTORS
2.1 FINANCIAL CONDITION. The Corporation's ongoing business has been
operating at a net operating loss for the majority of the last five years. Sales
of the Corporation's products have not sustained the Corporation to date, and no
assurance can be given that the Corporation's products can be produced and
marketed on a profitable basis. A copy of the Corporation's most recent
published financial statements for the period ending September 30, 1997 as filed
on Form 10-Q has been provided to Subscriber.
2.2 NEED FOR ADDITIONAL FINANCING. The Corporation will use the
proceeds of this offering for general working capital purposes. The Corporation
believes that the anticipated proceeds from the sale of the Unit will be
sufficient to sustain the Corporation's operations for the next six (6) months.
However, the Corporation may require additional future financing for general
working capital and other purposes. In addition, the Corporation may require
additional capital to commence and/or continue research and development of other
planned products. No assurance can be given that subsequent financings will be
available to the Corporation, or if such financing is available, that it will be
on terms favorable to the Corporation.
2.3 DEPENDENCE UPON KEY PERSONNEL. The Corporation's ability to
continue to develop new products, to market its products and to establish and
maintain a competitive position will depend in part upon its ability to attract
and retain qualified management, technical and sales personnel. Competition for
such personnel is intense, and no assurance can be given that the Corporation
will be able to attract and retain such personnel.
2.4 RAPID TECHNOLOGICAL CHANGE; FUTURE DEVELOPMENT EFFORTS; AND
COMPETITION. The Corporation is engaged in the field of data collection,
computer and electronics, which is characterized by extensive research and rapid
technological innovations and intense competition. The Corporation's ability to
compete effectively will depend in large part upon whether it is able to develop
and manufacture superior and innovative products. The Corporation's competitors
generally have greater capital resources and larger research and development and
marketing staffs and facilities than the Corporation. No assurance can be given
that (i) products which will render the Corporation's products inferior or too
costly are not already in development by these competitors and (ii) the
Corporation can adapt to a potentially evolving market, develop new products
which have significant market acceptance, and maintain a technological
advantage, and the failure of the Corporation to do so would have a materially
adverse impact on the Corporation.
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<PAGE> 6
2.5 PATENTS AND PROPRIETARY INFORMATION. The Corporation holds no
patents on any element of its products. However, the Corporation does not
believe that patents are necessary for the protection of its technology or that
the failure to obtain patents would be materially adverse to its business taken
as a whole. The Corporation relies primarily on unpatented proprietary know-how
and unregistered copyright protection of its software. Although the Corporation
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 Corporation's know-how
or that others may not obtain patents which require licensing by the Corporation
for the pursuit of its business.
2.6 PRIOR ISSUANCES OF PREFERRED STOCK. As reflected in its filings
with the Securities and Exchange Commission, the Corporation has previously
issued preferred stock which preferred stock retains liquidation and certain
other preferences over the Series E Preferred Stock, as well as the Common Stock
of the Corporation.
2.7 NO MARKET FOR RESALE OF UNREGISTERED SECURITIES. The securities
offered hereby are not registered under the Securities Act of 1933, as amended
(the "Securities Act"), and may not be resold unless and until such time as the
securities are registered under applicable federal and state securities laws or
unless an exemption from registration is available. The certificates
representing the Series E Preferred Stock and the shares underlying the Warrant
will bear a legend to the effect that such securities cannot be sold or
transferred unless registered under the Securities Act or unless an opinion of
counsel satisfactory to the Corporation is received to the effect that such
registration is not required. The Corporation's Common Stock is currently traded
on the NASDAQ Small Cap Market under the symbol "IDCP" and the public market for
the Common Stock into which the securities may be converted (the "Conversion
Shares") is very limited. No assurance can be given that an active market for
the Common Stock is likely to further develop in the near future. If, as a
result of some change in circumstances arising from an event not presently
contemplated, a Subscriber wishes to transfer his securities or any portion
thereof, he may find no market for such securities.
2.8 DETERMINATION OF OFFERING PRICE. The offering price of the Unit has
been fixed arbitrarily by the Corporation and bears no direct relationship to
earnings, book value or other objective standards of worth and is not to be
considered a representation that the Unit has a market value of $500,000 or
could be resold at this price. No established market for the Units exists. Each
Subscriber is urged to make an independent evaluation of the fairness of the
offering price.
SECTION 3. REPRESENTATIONS, WARRANTIES, AND ACKNOWLEDGEMENTS
OF SUBSCRIBERS
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<PAGE> 7
The Subscriber acknowledges that the Corporation is offering the Unit
in reliance upon the representations, warranties, and other information
presented by the Subscriber herein. The Subscriber undertakes to notify the
Corporation immediately of any changes in any of the representations,
warranties, and other information contained herein.
In order to induce the Corporation to accept the subscription made
hereby, the Subscriber hereby represents, warrants and acknowledges to the
Corporation as follows:
3.1 SOPHISTICATION. The Subscriber represents that it has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of acquisition of the Unit and of making an
informed investment decision with respect thereto.
3.2 ACCESS TO INFORMATION. The Subscriber acknowledges that it and its
representatives, if any, have been given access through meetings with
representatives of the Corporation to current and other information about the
Corporation as well as an opportunity to ask questions of the Corporation's
officers and directors about the information to which it and its representatives
have been given access. The Subscriber understands all of the risk factors
related to the purchase of the Unit. The Subscriber or its legal counsel or
investment advisor has been given a full opportunity to ask questions of, and to
receive answers from, the Corporation and its officers and directors concerning
the terms and conditions of the offering and the business of the Corporation and
to obtain additional information necessary to verify the accuracy of the
information concerning the Corporation, or such other information as it or its
legal counsel or investment advisor desired in order to evaluate an investment
in the Unit, and all such questions have been answered to the full satisfaction
of the undersigned.
3.3 INVESTMENT REPRESENTATION. The Subscriber represents that it is
acquiring the securities hereunder for the accounts of its clients (the
"Investors"), each of whom would individually qualify as an investor eligible to
participate in a Regulation S offering, and not with a view to reselling or
otherwise distributing such securities in violation of any federal securities
laws and understands and agrees that the securities to be issued hereunder are
restricted on transfer and must be held unless they are registered under the
Securities Act or an exemption from registration is available, and the
Corporation has received an opinion of counsel, in form and substance
satisfactory to it, to such effect. No Investor will even after full conversion
of all preferred shares ever beneficially own more than 4,9% of the outstanding
common shares of the Company. The Subscriber does not have voting control or
power of disposition over securities owned by the Investors and no Investor is
an affiliate of another Investor. This representation is hereby acknowledged and
accepted by the Company. Whenever the term Subscriber is used in this
transaction it refers to the actual Investors and RBB Bank has full
authorization from all investors to make the representations.
Each Subscriber agrees that the Unit and the shares of Common Stock
issuable thereunder may only be transferred if registered under the Securities
Act or pursuant to an exemption from such registration requirements.
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<PAGE> 8
3.4 AUTHORITY. The Subscriber represents that it has full legal power
and authority to enter into this Subscription Agreement and to purchase the
Unit.
3.5 VALUATION OF THE UNITS. The Subscriber understands that the
valuation placed upon the Units has been made solely by the Corporation and not
by an independent accountant, auditor or other third party. The Subscriber
represents that it has independently evaluated the fairness of the offering
price for the Unit.
3.6 NET WORTH EFFECT FROM INVESTMENT; ABILITY TO RISK LOSS OF
INVESTMENT. The Subscriber represents that its overall commitment to investments
which are not readily marketable is not disproportionate to its net worth and
that his investment in the Corporation will not cause such overall commitment to
become excessive. The Subscriber further warrants and represents that (a) its
financial condition is such that it is able to bear all risks of (i) holding the
Unit for an indefinite period of time and (ii) losing its entire investment and
(b) it has such knowledge and experience in financial and business matters that
it is capable of evaluating the merits and risks of acquisition of the Unit and
of making an informed investment decision with respect thereto.
3.7 DECISION TO INVEST. In making its decision to purchase the Unit
herein subscribed for, the Subscriber has relied solely upon the public
information filings about the Corporation provided to it and upon independent
investigations made by it or its legal counsel or investment advisor. It is not
relying on any representations or warranties from the Corporation or any of its
officers, directors, affiliates, employees or agents other than the information
provided by the Corporation to it in writing in this offering. The Subscriber
has consulted with its own legal counsel, accountant, and investment
representative as to tax and related matters concerning the Corporation and
investments therein; no representations or warranties of any kind are intended
or should be inferred concerning any economic returns or tax related effects
which may result from an investment in the Corporation. No assurances are given
that existing tax or securities laws will not be changed or interpreted
adversely to the Subscriber. In addition, it is not subscribing pursuant hereto
for any Unit as a result of or subsequent to (i) any advertisement, article,
notice or other communication published in any newspaper, magazine or similar
media or broadcast over television or radio or (ii) any seminar or meeting whose
attendees, including the undersigned, had been invited as a result of,
subsequent to, or pursuant to, any of the foregoing.
3.8 UNREGISTERED SECURITIES. The Subscriber understands that the Unit
and the securities underlying the Unit have not been registered under the
Securities Act in reliance upon specific exemptions from registration
thereunder, and it agrees that the securities underlying the Unit may be neither
sold, offered for sale, transferred, pledged, hypothecated or otherwise disposed
of except in compliance with the Securities Act and applicable state securities
laws. The undersigned has been advised that the Corporation may be unable to
comply with any exemption under that Act. The undersigned understands that it is
not anticipated that there will be any market for resale of the securities
underlying the Unit and that it may not be possible for
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<PAGE> 9
the undersigned to liquidate an investment in the securities underlying the Unit
on an emergency basis.
3.9 SUBSCRIBER'S UNDERSTANDING. The Subscriber has read and understands
the written material supplied by the Corporation. This Agreement contains the
complete understanding between Subscriber and the Corporation and no
representative of the Corporation or any other person has any power or authority
to change or alter the terms hereof. This Agreement is subject to acceptance by
the Corporation, which may accept or reject subscriptions in whole or in part,
in its sole discretion, and is not assignable without the written consent of the
Corporation.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
The Corporation hereby represents and warrants to the Subscribers that
as of the date hereof, except as otherwise set forth herein:
4.1 AUTHORIZATION OF SERIES E CONVERTIBLE PREFERRED STOCK. The
Corporation has duly authorized the sale and issuance of up to five hundred
(500) shares of Series E Convertible Preferred Stock containing the rights and
preferences set forth in the Certificate of Amendment to be filed with the
Delaware Secretary of State, a copy of which is attached hereto as Exhibit "A."
4.2 ORGANIZATION AND CORPORATE POWER. The Corporation is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and is qualified to do business as a foreign corporation in
each jurisdiction in which such qualification is required, except where failure
so to qualify would not have a material adverse effect on the Corporation. The
Corporation has all required corporate power and authority to own its property,
to carry on its business as presently conducted or contemplated, to enter into
and perform this Agreement and generally to carry out the transactions
contemplated hereby. The Corporation is not in violation of any term of its
Certificate of Incorporation or its Bylaws, or any material instrument,
agreement, judgment, decree, order, statute, rule or regulation of any federal,
state or local government or agency applicable to the Corporation.
4.3 CAPITALIZATION. As of the date of this Agreement, the authorized
capital stock of the Corporation consists of 5,000,000 shares of Common Stock,
$.08 par value per share. The Corporation's issued and outstanding securities
are as reflected on Exhibit "B" attached hereto. The Series E Convertible
Preferred Stock has the rights and preferences set forth in the Certificate of
Amendment attached hereto as Exhibit A. As of the date of this offering, the
Corporation has a sufficient number of authorized shares of Common Stock for
issuance upon the conversion of all of the securities, upon exercise of all
outstanding options and warrants. Subject to the provisions of applicable
federal securities laws, upon the consummation of the transactions contemplated
hereby, the Series E Convertible Preferred Stock, the Common Stock issued
thereunder and under the Warrant and the shares of Common Stock issuable
thereunder after payment of the exercise price for such shares will be free and
clear of all liens and
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<PAGE> 10
encumbrances, other than liens, encumbrances or restrictions on transfer arising
out of agreements entered into or actions taken by the Subscribers or as may be
imposed by federal securities laws. The Corporation does not have outstanding
any other equity securities including any options, warrants or other rights to
purchase or any securities convertible or exchangeable into any shares of its
capital stock or other equity securities, other than options and warrants to
purchase shares of Common Stock granted under the Corporation's stock option
plans.
4.4 AUTHORIZATION. This Agreement, and all documents and instruments
executed pursuant hereto, are legal, valid and binding obligations of the
Corporation, enforceable in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other laws applicable to
creditors' rights and remedies and to the exercise of judicial discretion in
accordance with general principles of equity. The execution, delivery and
performance of this Agreement and the issuance of the shares of Series E
Convertible Preferred Stock and the Warrant have been duly authorized by all
necessary corporate or other action of the Corporation.
4.5 TAX MATTERS. All federal, state, county and local taxes, and all
applicable taxes owed to foreign jurisdictions and for which the Corporation has
been billed, have been paid by the Corporation. No billed and unpaid assessments
nor any basis for the assessment of additional federal income taxes on the
Corporation for any fiscal period exists. The Corporation has duly filed all
federal, state, county and local tax returns required to have been filed by it
and there are in effect no waivers of applicable statutes of limitations with
respect to taxes for any fiscal period. The federal tax returns of the
Corporation have not been audited by the Internal Revenue Service, and no notice
of audit has been received by the Corporation.
4.6 EFFECT OF TRANSACTIONS. The execution, delivery and performance by
the Corporation of this Agreement and the agreements and transactions
contemplated hereby will not conflict with or result in any default under any
material contract, obligation or commitment of the Corporation, or any charter
provision, bylaw or corporate restriction of the Corporation, or the creation of
any lien, charge, restriction or encumbrance of any nature upon any of the
properties or assets of the Corporation. The Corporation's execution and
delivery of this Agreement and its performance of the transactions contemplated
hereby and thereby, will not violate any material instrument, agreement,
judgment, decree, order, statute, rule or regulation of any federal, state or
local government or agency applicable to the Corporation.
SECTION 5. COVENANTS OF THE CORPORATION
The Corporation shall comply with the covenants set forth in paragraphs
5.1 through 5.5 below, until such time as all of the Series B, C, D, and E
classes of Convertible Preferred Stock are converted to Common Stock of the
Corporation as follows:
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5.1 CORPORATE EXISTENCE. The Corporation shall maintain its corporate
existence and comply with all laws, government regulations, rules and ordinances
and judicial orders, judgments, or decrees applicable to the Corporation, its
subsidiaries, their business and properties.
5.2 MAINTENANCE OF PROPERTIES. The Corporation shall maintain all
properties used or useful in the conduct of its business in good repair, working
order and condition as necessary to permit such business to be properly and
advantageously conducted.
5.3 AFFILIATE TRANSACTIONS. All transactions by and between the
Corporation and any officer, key employee or stockholder of the Corporation, or
persons controlled by or affiliated with such officer, key employee or
stockholder, shall be conducted on an arm's-length basis, shall be on terms and
conditions no less favorable to the Corporation than could be obtained from
non-related persons and shall be approved in advance by the Board of Directors
(excluding interested Directors, where applicable) after full disclosure of the
terms thereof.
5.4 USE OF PROCEEDS. The Corporation shall use the proceeds of the sale
of the Units for general working capital purposes.
5.5 REDUCTION IN CONVERSION PRICE; CANCELLATION OF WARRANTS; REDEMPTION
OF SERIES B PREFERRED STOCK; APPOINTMENT OF INDEPENDENT DIRECTORS.
(a) The Corporation shall take all action necessary to reduce
the conversion prices of the Series B, Series C, and Series D classes of the
Corporation's Convertible Preferred Stock to $2.74 and to provide to such
classes of Convertible Preferred Stock "anti-dilution" protection for any
issuances below the then applicable Conversion Price for such class of Preferred
Stock in form identical to the protection provided for holders of the Series E
Preferred Stock as set forth in Section 6(h) of the Certificate of Designation
of the Series E Convertible Preferred Stock (including the provisions relating
to termination of the anti-dilution protection as set forth in Section 6(h) of
the Certificate of Designation).
(b) If at any time prior to January 31, 2003, the
Corporation's stockholders equity at the end of any fiscal quarter (as reported
on the Company's Form 10-Q or Form 10-K filing with the Securities and Exchange
Commission) does not exceed $1,500,000 plus 50% of the net proceeds of any
future equity financing, then the Conversion Price for the Series B, C and D
classes of Convertible Preferred Stock shall equal the lesser of $2.74 or sixty
percent (60%) of the Corporation's average closing price for the five trading
days prior to the conversion. If, after this date (a) the closing price (or the
average of the closing bid and asked price if the principal exchange on which
the Corporation's common stock trades does not report a closing price) for the
Corporation's Common Stock shall trade below $1.00 for any twenty (20)
consecutive trading days on the NASDAQ Small Cap Market, the NASDAQ National
Market System, or the American Stock Exchange, and (b) the holders of a majority
of the Convertible Preferred Stock request that the Corporation seek a reverse
stock split, which reverse split is necessary in order to
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maintain a listing on its then current trading exchange, then the Corporation
agrees to take all efforts necessary to effect an appropriate reverse stock
split of the Corporation's Common Stock. In the event of such a reverse stock
split, the Conversion Price described above shall not be modified.
Notwithstanding the foregoing, the provisions of this paragraph 5.5 (b) shall
terminate immediately following the issuance of a majority of the Corporation's
Common Stock (or other securities convertible into Common Stock) to a third
party or parties in a merger or similar transaction.
(c) In further consideration for the preceding provisions,
which consideration is hereby acknowledged and received, the Subscriber (being
the holder of all of the Series B, Series C and Series D Convertible Preferred
Stock of the Corporation) hereby returns to the Corporation, for cancellation
upon acceptance of this Subscription Agreement by the Corporation, Warrants Nos.
RBB-1 and RBB-2, constituting warrants to purchase 700,000 shares of the
Corporation's Common Stock at $4.00 per share. In further consideration for the
agreements contained herein, and in consideration of the payment of Two Thousand
One Hundred Dollars ($2,100.00) from the Corporation to the Subscriber
simultaneous with the closing of this Agreement, the Subscriber hereby agrees to
deposit with the Corporation's counsel certificates representing 2,100 shares of
the Series B Preferred Stock (the "Escrowed Shares"). The Escrowed Shares shall
not be convertible for a period through January 31, 2000 and, at the option of
the Corporation at any time through January 31, 2000, may be redeemed at a price
of One Thousand Two Hundred Fifty Dollars ($1,250) per share.
(d) For as long as any of the shares of Series B, C, D, or E
classes of Convertible Preferred Stock are issued and outstanding, the Company
shall nominate for election at the Annual Meeting of the Stockholders an
independent director nominated by RBB Bank and reasonably acceptable to the
Company's Board of Directors. Notwithstanding the foregoing, the provisions of
this Section 5.5(d) shall terminate immediately following the issuance of a
majority of the Corporation's Common Stock (or other securities convertible into
Common Stock) to a third party or parties in a merger or similar transaction.
5.6 RIGHT OF FIRST REFUSAL. The Corporation hereby grants the
Subscriber, which right shall not be assignable, the Right of First Refusal, as
set forth herein.
(a) RIGHT OF FIRST REFUSAL. Before the Corporation shall
issue, sell or exchange, agree or obligate itself to issue, sell or exchange, or
reserve or set aside for issuance, sale or exchange, any (i) shares of Common
Stock, (ii) any other equity security of the Corporation, including without
limitation, shares of Preferred Stock, (iii) any convertible debt security of
the Corporation, including without limitation, any debt security which by its
terms is convertible into or exchangeable for any equity security of the
Corporation, (iv) any security of the Corporation that is a combination of debt
and equity, or (v) any option, warrant or other right to subscribe for, purchase
or otherwise acquire any interest relating to such equity or debt security of
the Corporation, the Corporation shall, in each case, first offer to sell such
securities (the "Offered Securities") to the Subscriber then holding capital
stock of the Corporation as
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follows: The Corporation shall offer to sell to each Subscriber that portion of
the Offered Securities as the number of shares of Preferred Stock (on an
as-converted basis) then held by a Subscriber bears to the total number of
outstanding shares of capital stock of the Corporation including the shares
issuable upon conversion of the Preferred Stock (the "Basic Amount"), at a price
and on such other terms as shall have been specified by the Corporation in
writing delivered to the Subscriber (the "Offer"), which Offer by its terms
shall remain open and irrevocable for a period of fourteen (14) days from
receipt of the Offer.
(b) NOTICE OF ACCEPTANCE. Notice of Subscriber's intention to
accept, in whole or in part, any Offer made pursuant to Section 5.6(a) shall be
evidenced by a writing signed by such Subscriber and delivered to the
Corporation prior to the end of the 14-day period of such offer, setting forth
such of the Subscriber's Basic Amount as such Subscriber elects to purchase (the
"Notice of Acceptance").
(c) CONDITIONS TO ACCEPTANCES AND PURCHASE.
(i) PERMITTED SALES OF REFUSED SECURITIES. In the
event that a Notice of Acceptance is not given by the Subscriber in
respect of all the Offered Securities, the Corporation shall have
seventy-five (75) days from the end of said 14-day period to sell any
such Offered Securities as to which a Notice of Acceptance has not been
given by the Subscriber (the "Refused Securities") to the Person or
Persons specified in the Offer, but only for cash and otherwise in all
respects upon terms and conditions, including, without limitation, unit
price and interest rates, which are no more favorable, in the
aggregate, to such other Person or Persons or less favorable to the
Corporation than those set forth in the Offer.
(ii) REDUCTION IN AMOUNT OF OFFERED SECURITIES. In
the event the Corporation shall propose to sell less than all of the
Refused Securities (any such sale to be in the manner and on the terms
specified in Section 5.6(a) above), then the Subscriber shall reduce
the number of shares or other units of the Offered Securities specified
in its Notice of Acceptance to an amount which shall be not less than
the amount of the Offered Securities which the Subscriber elected to
purchase pursuant to this Section multiplied by a fraction, (i) the
numerator of which shall be the amount of Offered Securities which the
Corporation actually proposes to sell, and (ii) the denominator of
which shall be the amount of all Offered Securities. In the event that
any Subscriber so elects to reduce the number or amount of Offered
Securities specified in its respective Notices of Acceptance, the
Corporation may not sell or otherwise dispose of more than the reduced
amount of the Offered Securities until such securities have again been
offered to the Subscriber in accordance with Section 5.6(a).
(iii) CLOSING. Upon the closing, which shall include
full payment to the Corporation, of the sale to such other Person or
Persons of all or less than all the Refused Securities, the Subscriber
shall purchase from the Corporation, and the Corporation shall
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<PAGE> 14
sell to the Subscriber, the number of Offered Securities specified in
the Notices of Acceptance, as reduced pursuant to Section 5.6(c)(ii) if
the Subscriber has so elected, upon the terms and conditions specified
in the Offer. The purchase by the Subscriber of any Offered Securities
is subject in all cases to the preparation, execution and delivery by
the Corporation and the Subscriber of a purchase agreement relating to
such Offered Securities reasonably satisfactory in form and substance
to the Subscriber and its respective counsel.
(d) FURTHER SALE. In each case, any Offered Securities not
purchased by the Subscriber or other Person or Persons in accordance with
Section 5.6(c) may not be sold or otherwise disposed of until they are again
offered to the Subscriber under the procedures specified in Sections 5.6(a), (b)
and (c).
(e) TERMINATION AND WAIVER OF RIGHT OF FIRST REFUSAL. The
rights of the Subscriber under this Section 5.6 may be waived only upon the
prior written consent of the holders of 60% of the outstanding shares of
Preferred Stock and shall terminate on January 31, 2000.
(f) EXCEPTION. The rights of the Subscriber under this Section
5.6 shall not apply to:
(i) Common Stock issued as a stock dividend to
holders of Common Stock or upon any subdivision or combination of
shares of Common Stock;
(ii) Preferred Stock or Common Stock issued as a
dividend to holders of Preferred Stock upon any subdivision or
combination of shares of Preferred Stock;
(iii) the Conversion Shares or shares issued upon
conversion of currently outstanding shares of Preferred Stock;
(iv) Shares of Common Stock, or options or warrants
exercisable therefor, issued on or after the date hereof to directors,
officers, employees or consultants of the Corporation and any
subsidiary pursuant to any qualified or non-qualified stock option plan
or agreement, employee stock ownership plan, employee benefit plan,
stock purchase agreement, stock plan, stock restriction agreement, or
consulting agreement or such other options, warrants, equity
arrangements, agreements or plans approved by two-thirds of the members
of the Board of Directors of the Corporation;
(v) Shares of capital stock or options or warrants
therefor, to be issued to equipment leasing organizations in connection
with any equipment leasing arrangements to which the Corporation is a
party and which have been approved by the Board of Directors including
a majority of the Investor Directors; or
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<PAGE> 15
(vi) shares of capital stock issued in connection
with a merger or acquisition approved by the Board of Directors or a public
offering of the Company's securities.
Each of the foregoing numbers shall be subject to equitable adjustment
in the event of any stock dividend, stock split, combination, reorganization,
recapitalization, reclassification or other similar event.
5.7 LOCK-UP AGREEMENT. The Corporation shall enter into an agreement
with Malcolm Bibby prohibiting him from selling any of his stock of the
Corporation or receiving any additional stock options (other than options which
he typically receives under his existing employment agreement with the
Corporation) upon the earlier of (I) the date the Corporation makes any public
announcements announcing the issuance of a majority of the Corporation's Common
Stock to a third party in a merger or similar transaction, or (II) August 15,
1998.
5.8 STOCK OPTIONS. As long as any shares of Series B, C, D, or E
classes of Convertible Preferred Stock are issued and outstanding, the
Corporation shall not issue stock options to any employee or consultant at a
price lower than the greater of (a) fair market value price of such stock which
price shall equal the closing bid price of the Corporation's Common Stock as
reported on the principal stock exchange on which the Corporation's Common Stock
is then traded on the date such option is issued. or (b) $.75, for any officer
or director or any affiliate of an officer or director.
SECTION 6. MISCELLANEOUS PROVISIONS.
6.1 DEFINITION OF COMMON STOCK. As used in this Agreement, the term
"Common Stock" shall mean and include the Corporation's authorized Common Stock,
$.08 par value per share.
6.2 USE OF SPEECH. All pronouns contained herein and any variations
thereof, shall be deemed to refer to the masculine, feminine or neuter, singular
or plural, as the identity of the parties may require.
6.3 WAIVER. No waiver of any right under this Agreement shall be deemed
effective unless contained in a writing signed by the party charged with such
waiver, and no waiver of any right arising from any breach or failure to perform
shall be deemed to be a waiver of any future such right or of any other right
arising under this Agreement.
6.4 ENTIRE AGREEMENT; MODIFICATION. This Agreement constitutes the
entire agreement between the parties and supersedes any prior understanding or
agreements concerning the subject matter hereof. This Agreement may be amended,
modified, or terminated only by a written instrument signed by the Corporation
and at least holders of two-thirds (2/3) of the Units issued to the Subscribers
hereunder.
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<PAGE> 16
6.5 SEVERABILITY. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision.
6.6 GOVERNING LAW. This Agreement shall be deemed to have been made and
defined in the Commonwealth of Massachusetts and the validity and interpretation
hereof and thereof and the performance hereunder and thereunder shall be
governed by and construed in accordance with the laws of the Commonwealth of
Massachusetts (without regard to the conflict of law principles 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.
6.7 NOTICES. All notices, requests, demands, and communications related
to this Agreement will be deemed given if and when delivered personally or sent
by registered or certified mail, return receipt requested, postage prepaid, to
the following addresses:
If to the Corporation: National Datacomputer, Inc.
900 Middlesex Turnpike, Building 5
Billerica, Massachusetts 01021
Attention: President
With a copy to: Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Attention: Neil H. Aronson, Esquire
or, as to each of the foregoing, at such other address as shall be designated by
the addressee in a written notice to the other parties complying as to delivery
with the terms of this Section 6.7 Notwithstanding anything to the contrary
contained in this Agreement, all notices, requests, demands and other
communications shall be effective when received.
6.8 BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective legal representatives and
successors.
6.9 HEADINGS. Headings contained in this Agreement are only as a matter
of convenience and in no way define, limit, extend, or describe the scope of
this Agreement or the intent of any provisions hereof.
6.10 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.
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<PAGE> 17
6.11 ASSIGNMENT. The Subscriber may not assign this Agreement or its
rights hereunder without the Corporation's written consent.
6.12 MULTIPLE SUBSCRIBERS. If more than one person is signing this
Agreement, each representation, warranty, and undertaking stated herein shall be
the joint and several representation, warranty, and undertaking of each such
person. The Subscribers understand the meaning and legal consequences of the
representations and warranties contained in this Agreement.
6.13 COUNTERPARTS. This Agreement may be executed simultaneously in any
number of counterparts, each of which when so executed and delivered shall be
taken to be an original; but such counterparts shall together constitute but one
and the same document.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned parties have executed this
Agreement as a sealed instrument as of the day and year first above written.
NATIONAL DATACOMPUTER, INC.
By:
----------------------------
Malcolm M. Bibby, President
The undersigned represents that (a) it has read and understands the
Subscription Agreement, and (b) the person signing the Subscription Agreement on
behalf of the Subscriber has been duly authorized by all requisite action on the
part of the Subscriber to acquire the Units and sign the Subscription Agreement
on behalf of the Subscriber and, further, that the undersigned Subscriber has
all requisite authority to purchase the Units and enter into the Subscription
Agreement.
1
- ------------------------------ ----------------------------------------
Number of Units Subscribed for Date
----------------------------------------
Name of Corporation (Please Type or Print)
By:
------------------------------------
Signature
Title:
---------------------------------
(Please Type or Print)
THE UNITS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") OR UNDER ANY STATE LAWS, AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED UNLESS SUCH SECURITIES ARE INCLUDED IN AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL, CONCURRED IN BY
COUNSEL TO THE CORPORATION, HAS BEEN DELIVERED TO THE EFFECT THAT REGISTRATION
OF SUCH SECURITIES IS NOT REQUIRED.
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EXHIBIT 4(c)
THIS WARRANT AND THE SECURITIES THAT MAY BE ACQUIRED UPON THE EXERCISE
OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") OR UNDER THE PROVISIONS OF ANY APPLICABLE STATE SECURITIES
LAWS. NEITHER THIS WARRANT NOR THE SECURITIES THAT MAY BE ACQUIRED UPON THE
EXERCISE OF THIS WARRANT MAY BE SOLD, PLEDGED, TRANSFERRED, ASSIGNED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER PROVISIONS OF THE ACT AND ALL APPLICABLE STATE SECURITIES LAWS;
AND IN THE CASE OF ANY EXEMPTION, ONLY IF THE COMPANY HAS RECEIVED AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH TRANSACTION DOES NOT REQUIRE
REGISTRATION OF THE WARRANT OR THE OTHER SECURITIES.
WARRANT TO PURCHASE SEVEN HUNDRED THOUSAND (700,000) SHARES OF COMMON STOCK
OF NATIONAL DATACOMPUTER, INC.
Warrant No. RBB-3 Void After January 31, 2001
------------------------------------
THIS CERTIFIES THAT, for value received, RBB Bank Aktiengesellschaft of
Burgring 16, 8010 Graz, Austria ("RBB") or assigns (RBB, or such assigns who may
be the registered holder or holders hereof, are hereinafter referred to as the
"Holder") is entitled to subscribe for and purchase Seven Hundred Thousand
(700,000) shares of the fully paid and nonassessable Common Stock (as adjusted
pursuant to Section 4 hereof, hereinafter, the "Shares") of NATIONAL
DATACOMPUTER, INC., a Delaware corporation (hereinafter, the "Company"), at the
price of $0.75 per share (such price and such other price as shall result, from
time to time, from the adjustments specified in Section 4 hereof is herein
referred to as the "Exercise Price"), subject to the provisions and upon the
terms and conditions hereinafter set forth. As used herein, the term "Common
Stock" shall mean the Company's presently authorized Common Stock, $.08 par
value per share, and any stock into which such Common Stock may hereafter be
exchanged.
This Warrant is issued pursuant to the Regulation S Offshore
Subscription Agreement (the "Agreement"), dated as of January 31, 1998, between
the Company and RBB, a copy of which is on file at the principal office of the
Company. By acceptance of this Warrant the Holder agrees to comply with the
terms, conditions and obligations imposed by the Agreement.
1. TERM. The purchase right represented by this Warrant is exercisable,
in whole or in part, at any time or from time to time prior to 5:00 p.m. Boston
time on January 31, 2001.
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<PAGE> 2
2. METHOD OF EXERCISE; PAYMENT; ISSUANCE OF NEW WARRANT.
(a) Subject to the terms hereof, the purchase right
represented by this Warrant may be exercised by the Holder hereof, in whole or
in part, by the surrender of this Warrant (with the notice of exercise form
attached hereto as EXHIBIT A duly executed) at the principal office of the
Company and by the payment to the Company, pursuant to Section 2(b) below, of an
amount equal to then applicable Exercise Price per share multiplied by the
number of Shares then being purchased. Certificates for the Shares purchased
shall be delivered to the Holder hereof within 30 days of the date of exercise
and, unless this Warrant has been fully exercised or expired, a new Warrant
representing the unexercised portion shall also be issued to the Holder hereof
within such 30 day period.
(b) METHOD OF PAYMENT. Payment shall be made (i) by check
payable to the Company, or (ii) by wire transfer in accordance with the
Company's written instructions.
3. STOCK FULLY PAID; RESERVATION OF SHARES. All Shares which may be
issued pursuant to this Warrant, shall, upon issuance, be duly authorized,
validly issued, fully paid and nonassessable, and free of any liens and
encumbrances except for restriction on transfer provided for herein or under
applicable federal and state securities laws. While this Warrant is outstanding,
the Company shall at all times have authorized, and reserved for the purpose of
the issue pursuant to this Warrant, a sufficient number of shares of the Common
Stock to provide for the exercise of the purchase right represented by this
Warrant.
4. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES. The number and
kind of securities purchasable upon the exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time upon the
occurrence of certain events, as follows:
(a) RECLASSIFICATION, CONSOLIDATION OR MERGER. In the case of
any reclassification or change of the Common Stock issuable upon exercise of
this Warrant, the Company shall execute a new Warrant, providing that the Holder
of this Warrant shall have the right to exercise such new Warrant and upon such
exercise to receive, in lieu of each share of Common Stock theretofore issuable
upon exercise of this Warrant, the number and kind of shares of stock, other
securities, money or property receivable upon such reclassification or change in
respect of one share of the Common Stock. Such new Warrant shall provide for
further adjustments which shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section.
(b) SPLIT, SUBDIVISION OR COMBINATION OF SHARES. If the
Company at any time while this Warrant remains outstanding shall split,
subdivide or combine its Common Stock, the Exercise Price shall be
proportionately decreased in the case of a split or subdivision and increased in
the case of a combination.
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(c) STOCK DIVIDENDS. If the Company at any time while this
Warrant is outstanding shall pay a dividend with respect to the Common Stock
payable in, or make any other distribution with respect to the Common Stock
(except any distribution specifically provided for in Section 4(a) or 4(b)
above) of, shares of the Common Stock, then the Exercise Price shall be
adjusted, from and after the date of determination of the shareholders entitled
to receive such dividend or distribution, to that price determined by
multiplying the Exercise Price in effect immediately prior to such date of
determination by a fraction (i) the numerator of which shall be the total number
of the Common Stock outstanding immediately prior to such dividend or
distribution, and (ii) the denominator of which shall be the total number of
shares of the Common Stock outstanding immediately after such dividend or
distribution.
(d) ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment in
the Exercise Price, the number of Shares purchasable hereunder shall be
adjusted, to the nearest whole share, to the product obtained by multiplying the
number of Shares purchasable immediately prior to such adjustment in the
Exercise Price by a fraction (i) the numerator of which shall be the Exercise
Price immediately prior to such adjustment, and (ii) the denominator of which
shall be the Exercise Price immediately after such adjustment.
5. TRANSFERABILITY. The Holder hereby acknowledges that neither this
Warrant nor any of the securities that may be acquired upon exercise of this
Warrant have been registered under the Securities Act of 1933, as amended, or
under the securities laws of any state. The Holder acknowledges that, upon
exercise of this Warrant, the securities to be issued upon such exercise may
come under applicable federal and state securities (or other) laws requiring
registration, qualification or approval of governmental authorities before such
securities may be validly issued or delivered upon notice of such exercise. The
Company's sole obligation to any Holder upon exercise hereof shall be to use its
best efforts to obtain exemptions from registration or qualification for the
issuance of such securities under applicable state and federal securities (or
other) laws, and the Holder further agrees that the issuance of such securities
shall be deferred until such exemptions shall have been obtained. With respect
to any such securities, this Warrant may not be exercised by, and securities
shall not be issued to, any Holder in any state in which such exercise would be
unlawful. The Holder agrees that the Company may place such legend or legends on
certificates representing securities issued upon exercise of this Warrant as the
Company may reasonably deem necessary to comply with applicable state and
federal securities laws for the issuance of such securities. The provisions of
this Section shall apply to the transfer of this Warrant and the shares of
Common Stock purchasable upon exercise of this Warrant.
6. NOTICE OF ADJUSTMENTS. Whenever any Exercise Price shall be adjusted
pursuant to Section 4 hereof, the Company shall issue a certificate signed by
its Chief Financial Officer setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated and the Exercise Price or Exercise Prices after giving
effect to such adjustment, and shall cause a copy of such certificate to be
mailed (by first class mail, postage prepaid) to the Holder of this Warrant.
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<PAGE> 4
7. FRACTIONAL SHARES. No fractional shares of the Common Stock shall be
issued in connection with any exercise hereunder, but in lieu of such fractional
shares the Company shall make a cash payment therefor upon the basis of the
Exercise Price then in effect.
8. PRIOR NOTICE OF CERTAIN EVENTS. The Company shall give the Holder of
this Warrant prior written notice of any of the following transactions: (a) any
consolidation, merger or other corporate reorganization involving the Company;
(b) any transaction or series of related transactions by the Company in which in
excess of 50% of the Company's voting power is transferred; (c) any
reclassification of the Common Stock; or (d) a sale of all or substantially all
of the assets of the Company. Such notice shall be given to the Holder not later
than the earlier of (x) 20 days prior to the consummation of the transaction, or
(y) 15 days prior to the record date for shareholders entitled to vote on or
participate in the transaction. Such notice shall provide the Holder with a
description of the transaction. The Holder may, by so stating in its notice of
exercise, make any exercise of its rights under this Warrant to purchase Shares
for the Exercise Price effective immediately prior to but conditional upon, the
consummation of any such transaction.
9. NO RIGHTS OF SHAREHOLDERS. No Holder of this Warrant shall be
entitled to vote or receive dividends or be deemed the holder of Common Stock or
any other securities of the Company which may at any time be issuable on the
exercise thereof for any purpose, nor shall anything contained herein be
construed to confer upon the Holder of this Warrant, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value or change of stock to no par value, consolidation, merger, conveyance or
otherwise) or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise until the Warrant shall have been exercised as
provided herein. Immediately upon any exercise of this Warrant, and without
waiting for the certificates for such Shares to be issued and delivered, the
Holder shall be deemed to be the record holder of, and to have all rights of a
shareholder with respect to, the Shares issuable upon such exercise.
10. NOTICES. All notices and other communications from the Company to
the Holder of this Warrant shall be mailed by first class registered or
certified mail, postage prepaid, or sent by telecopier, facsimile machine or
telex to such address as may have been furnished to the Company in writing by
such Holder or, until any such Holder furnishes to the Company an address, then
to, and at the address of, the last Holder of this Warrant who has so furnished
an address to the Company.
11. TRANSFER. Subject to the provisions of this Warrant and the
Agreement, including without limitation the provisions of Section 5 hereof, this
Warrant and all rights hereunder are transferable, in whole or in part, at the
office or agency of the Company by the registered Holder thereof in person or by
a duly authorized attorney, upon surrender of this Warrant together with an
Assignment in the form attached hereto as EXHIBIT B properly endorsed. Until
transfer hereof
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on the registration books of the Company, the Company may treat the registered
Holder hereof as the owner hereof for all purposes. Any transferee of this
Warrant and any rights hereunder, by acceptance thereof, agrees to assume all of
the obligations of a Holder thereunder and to be bound by all of the terms and
provisions of the Agreement.
12. MISCELLANEOUS. In case any provision of this Warrant shall be
invalid, illegal or unenforceable, or partially invalid, illegal or
unenforceable, the provision shall be enforced to the extent, if any, that it
may legally be enforced and the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby. This
Warrant and any term hereof may be changed, a waived, discharged or terminated
only by a statement in writing signed by the party against which enforcement of
such change, waiver, discharge or termination is sought. This Warrant
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreements. This Warrant shall be
governed by and construed in accordance with the domestic substantive laws (and
not the conflict of law rules) of The Commonwealth of Massachusetts. The
headings in this Warrant are for purposes of reference only, and shall not limit
or otherwise affect any of the terms hereof. This Warrant shall take effect as
an instrument under seal.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized officer as of this 31st day of January, 1998.
NATIONAL DATACOMPUTER, INC.
By:
------------------------------------
Malcolm M. Bibby, Ph.D., President
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EXHIBIT A
NOTICE OF EXERCISE
TO: NATIONAL DATACOMPUTER, INC.
1. The undersigned hereby elects to purchase _____________________
shares of the Common Stock of NATIONAL DATACOMPUTER, INC. pursuant to the terms
of the attached Warrant, and tenders herewith
____________________________________ ($_______) in payment of the purchase price
of such shares in full, together with all applicable transfer taxes, if any.
2. Please issue a certificate or certificates representing said shares
of the Common Stock in the name of the undersigned or in such other name as is
specified below:
---------------------------------
(Name)
---------------------------------
---------------------------------
(Address)
3. The undersigned represents that the aforesaid shares of the Common
Stock are being acquired solely for his own account (or a trust account if the
holder is a trust) and not as a nominee for any other party, for investment only
and not with a view toward the resale or distribution thereof and that the
undersigned has no present intention of reselling, granting any participation in
or otherwise distributing such shares.
Date: By:
----------------------- ---------------------------------------
(Signature must conform in all respects
to name of Holder as specified on the
face of the Warrant)
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<PAGE> 7
EXHIBIT B
FORM OF ASSIGNMENT
The undersigned holder of this Warrant hereby sells, assigns and
transfers to ____________________________ all of the rights of the undersigned
under this Warrant with respect to ________________________ (________) shares of
the Common Stock of NATIONAL DATACOMPUTER, INC. and requests that a new Warrant
of like tenor evidencing this assignment be issued and delivered to
___________________________________ with an address at
_____________________________________________.
BY:
(Signature must conform in all respects to
name of Holder as specified on the face of
the Warrant)
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