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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No._________)*
Datalink Systems Corporation
- -------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.001 per share
- -------------------------------------------------------------------------------
(Title of Class of Securities)
23804 A 10 7
------------------------------------------------------------
(CUSIP Number)
Michael Lyall, 830 Third Avenue, Fourth Floor, New York, NY 10022
- -------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
September 5, 1997
------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
(Continued on the following page(s))
Page 1 of 17 Pages
<PAGE>
_______________________________________________________________________________
CUSIP No. 23804 A 10 7 13D Page 2 of 17 Pages
_______________________________________________________________________________
1 NAME OF REPORTING PERSONS
S.S OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Commonwealth Associates
13-3467952
______________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
______________________________________________________________________________
3 SEC USE ONLY
______________________________________________________________________________
4 SOURCE OF FUNDS*
WC
______________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) [ ]
______________________________________________________________________________
6 CITIZENSHIP OR PLACE OR ORGANIZATION
New York
_______________________________________________________________________________
| |
NUMBER OF | 7 | SOLE VOTING POWER
SHARES | |
BENEFICIALLY |_____|________________________________________________________
OWNED BY | |
EACH | 8 | SHARED VOTING POWER
REPORTING | | 1,000,000
PERSON WITH |_____|________________________________________________________
| |
| 9 | SOLE DISPOSITIVE POWER
| |
|_____|________________________________________________________
| |
| 10 | SHARED DISPOSITIVE POWER
| | 1,000,000
_______________|_____|_________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,000,000
______________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
______________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.2%
______________________________________________________________________________
14 TYPE OF REPORTING PERSON*
PN
______________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
_______________________________________________________________________________
CUSIP No. 23804 A 10 7 13D Page 3 of 17 Pages
_______________________________________________________________________________
1 NAME OF REPORTING PERSONS
S.S OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Michael Falk
______________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
______________________________________________________________________________
3 SEC USE ONLY
______________________________________________________________________________
4 SOURCE OF FUNDS*
00
______________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) [ ]
______________________________________________________________________________
6 CITIZENSHIP OR PLACE OR ORGANIZATION
USA
_______________________________________________________________________________
| |
NUMBER OF | 7 | SOLE VOTING POWER
SHARES | |
BENEFICIALLY |_____|________________________________________________________
OWNED BY | |
EACH | 8 | SHARED VOTING POWER
REPORTING | | 1,000,000
PERSON WITH |_____|________________________________________________________
| |
| 9 | SOLE DISPOSITIVE POWER
| |
|_____|________________________________________________________
| |
| 10 | SHARED DISPOSITIVE POWER
| | 1,000,000
_______________|_____|_________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,000,000
______________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
______________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.2%
______________________________________________________________________________
14 TYPE OF REPORTING PERSON*
IN
______________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 4 of 17 Pages
Item 1. Security and Issuer.
This statement relates to the common stock, par value $.001 per share
("Common Stock"), of Datalink Systems Corporation, a Nevada
corporation (the "Company"). The address of the Company's principal
executive office is 2105 Hamilton Avenue, San Jose, CA 95125.
Item 2. Identity and Background.
This statement is filed jointly by Commonwealth Associates
("Commonwealth"), a limited partnership organized under the laws of
New York, whose principal business is investment banking and advisory
services and Michael Falk (the "Reporting Persons"). Mr Falk is the
Chairman and controlling equity owner of Commonwealth. The business
address for the Reporting Persons is 830 Third Avenue, 4th Floor, New
York, New York 10022. During the past five years, neither of the
Reporting Persons has been convicted in a criminal proceeding or been
a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding, was or is
subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with
respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Commonwealth acquired the Company's Common Stock on September 5, 1997
pursuant to a Stock Purchase Agreement with Silhouette Investment
Ltd. filed as Exhibit (1) hereto, for a purchase price of $215,000
with funds provided from working capital. In no case were any funds
borrowed.
Item 4. Purpose of Transaction.
The Common Stock was acquired by Commonwealth solely for investment
purposes and not for the purpose of acquiring control of the Company.
Commonwealth has entered into a Letter of Intent with the Company
filed as Exhibit (2) hereto, the contents of which are hereby
incorporated by reference herein, to act as placement agent for a
proposed private placement of a minimum of $4,000,000 and a maximum
of $8,000,000 of shares of convertible preferred stock. In connection
therewith, the Company has agreed to issue to Commonwealth upon the
sale of such securities warrants to purchase up to 6,450,000 shares
of the Company's Common Stock, exercisable at $.375 for a five-year
period.
Other than as set forth above, the Reporting Persons have no present
plans or proposals which relate to, or could result in, any of the
matters referred to in paragraphs (a) through (j), inclusive, of Item
4 of Schedule 13D. The Reporting Persons may, at any time and from
time to time, review or reconsider their position and formulate plans
or proposals with respect thereto, but have no present intention of
doing so.
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Page 5 of 17 Pages
Item 5. Interest in Securities of the Issuer.
(a) Commonwealth is the beneficial owner of a total of 1,000,000
shares of Common Stock, representing approximately 5.2% of the
issued and outstanding shares of Common Stock of the Company.
Mr. Falk, in his capacity as Chairman and controlling equity
owner of Commonwealth, shares voting and dispositive power
with respect to such securities and may be deemed to be the
beneficial owner of such securities
The percentage of outstanding shares of Common Stock of the
Company set out in the preceding paragraph is computed based
on a total of 19,182,925 shares of Common Stock outstanding.
(b) Number of shares as to which such person has:
(i) sole power to vote or to direct the vote:
---------
(ii) shared power to vote or to direct the vote:
1,000,000
(iii) sole power to dispose or to direct the disposition of:
---------
(iv) shared power to dispose of or to direct the disposition
of:
1,000,000
(c) Inapplicable
(d) Inapplicable
(e) Inapplicable
<PAGE>
Page 6 of 17 Pages
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
See Response to Item 4
Item 7. Materials to be Filed as Exhibits.
(1) Stock Purchase Agreement dated as of August 14, 1997 between
Commonwealth and Silhouette Investment Ltd.
(2) Letter of Intent dated July 7, 1997 between Commonwealth and
the Company
(3) Joint Statement on Schedule 13D, as required by Rule
13d-1(f)(1) under the Exchange Act.
<PAGE>
Page 7 of 17 Pages
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certify that the information set forth in this statement is
true, complete and correct.
Dated: September 15, 1997 Commonwealth Associates
New York, New York
By: /s/ Michael Falk
----------------------
Michael Falk
Chief Executive Officer
Dated: September 15, 1997 s/ Michael Falk
New York, New York ---------------------------
Michael Falk
<PAGE>
Page 8 of 17 Pages
EXHIBIT INDEX
Exhibit No. Page
- ----------- ----
(1) Stock Purchase Agreement dated as of August 14, 1997
between Commonwealth and Silhouette Investment Ltd.
(2) Letter of Intent dated July 7, 1997 between Commonwealth
and the Company
(3) Joint Statement on Schedule 13D, as required by Rule
13d-1(f)(1) under the Exchange Act.
<PAGE>
Page 9 of 17 Pages
EXHIBIT 1
STOCK PURCHASE AGREEMENT
THIS AGREEMENT dated as of August 14, 1997 by and between SILHOUETTE
INVESTMENT LTD. (the "Seller"), a corporation with offices at 4352 Bedford Road,
Kelowna, BC, Canada and COMMONWEALTH ASSOCIATES (the "Buyer"), a corporation
with offices at 830 Third Avenue, New York, New York 110022.
WITNESSETH:
WHEREAS, Seller owns one million (1,000,000) shares (the "Shares") of
the Common Stock, par value $.001 per share, of Datalink Systems Corporation
("Datalink"), a corporation whose shares are quoted on the OTC Bulletin Board;
and
WHEREAS, Seller desires to sell the Shares and Buyer desires to
purchase the Shares upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the respective
agreements hereinafter set forth, the parties agree as follows:
1) Sale and Purchase of Shares. At the closing ("Closing"), the Seller
will sell to Buyer, and Buyer, in reliance upon the representations and
warranties contained herein and subject to the terms and conditions hereof, will
purchase the Shares for a purchase price of Two Hundred Fifteen Thousand Dollars
($215,000).
2) Closing, Payment and Delivery. The Closing shall be held as soon as
practicable, and in no event later than the third business day, following the
execution of this Agreement on such date as the parties may agree to and shall
be held at the offices of Buyer or such other place as the parties may agree to.
At the Closing, the Buyer will pay or cause to be paid to the Seller by
certified or bank check or by wire funds transfer $215,000. The Seller shall
deliver at the Closing certificates for the Shares so purchased, together with
executed stock powers.
3. Representations and Warranties of Seller. The Seller represents and
warrants to the Buyer that:
a. The Seller has all requisite corporate power and authority to
enter into and to carry out and perform its obligations under this Agreement.
b. The Seller is the owner of the Shares, free and clear of any
claim, lien, charge or encumbrance.
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Page 10 of 17 Pages
c. The sale of the Shares to the Buyer in accordance with the terms
and provisions of this Agreement will not constitute a default under any
agreement to which the Seller is a party, and such execution, delivery or
performance would not require the consent of any individual, corporation or
other entity.
d. The Seller acknowledges that he has been advised by the Buyer
that (i) Commonwealth Associates has executed a letter of intent with Datalink
to act as placement agent for a proposed private placement of convertible
preferred stock at an effective per share purchase price of $.375, (ii) it is
expected that the private placement will result in gross proceeds to Datalink of
between $4 million and $8 million and (iii) Commonwealth Associates believes
that the completion of the private placement may enhance the value of Datalink.
4 Nature and Survival of Representation and Warranties. All
representations and warranties made by the Seller in this Agreement shall
survive the Closing hereunder.
5 Governing Law. This Agreement shall be construed and enforced solely
in accordance with the laws of the State of New York.
6 General. This Agreement may be amended only by a written instrument
executed by the Seller and Buyer or by their heirs, legal representatives,
successors and assigns. The headings contained herein are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
agreement. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
SILHOUETTE INVESTMENT LTD.
By: /s/ Tim Werry
-----------------------------
Tim Werry, President
COMMONWEALTH ASSOCIATES
By: /s/
-----------------------------
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Page 11 of 17 Pages
EXHIBIT 2
July 7, 1997
Attention: Mr. Anthony LaPine
Chief Executive Officer
Datalink Systems Corporation
2105 Hamilton Avenue, Suite 240
San Jose, CA 95125.
Gentlemen:
This letter agreement ("Agreement") will confirm that Commonwealth Associates
("Commonwealth") intends to act as exclusive placement agent and financial
advisor for Datalink Systems Corporation (the "Company"), for the Engagement
Period (as hereinafter defined) in connection with a proposed private offering
of the Company's Convertible Preferred Securities (the "Preferred Stock") with a
minimum aggregate principal amount of $4,000,000 and a maximum aggregate
principal amount of $8,000,000 (the "Transaction"). The Transaction is to be
placed by Commonwealth on a "best efforts" basis to accredited investors, with
the intent of closing on the Transaction within sixty (60) days of receiving a
final private placement memorandum reasonably acceptable to Commonwealth. The
terms and conditions of the Transaction are substantially defined and set forth
in Exhibit I.
In consideration of the premises and the mutual covenants and agreements
contained herein, the parties agree as follows:
Engagement
Except for the provisions which are intended to apply in the future, this
Agreement shall end on the earlier of: i) the funding of the Transaction; ii)
twelve months from the date of this or; iii) until terminated pursuant to the
Termination section of this Letter of Agreement ("Engagement Period"). The
Company agrees that, during the Engagement Period, all discussions with
potential investors shall be conducted by Commonwealth, and the Company shall
inform Commonwealth of any contacts with potential investors.
Information
In connection with Commonwealth's activities on the Company's behalf, the
Company will furnish Commonwealth with information concerning the Company, as is
reasonably required. To the best of the Company's knowledge, the information
provided by the Company will be materially complete and correct and will not
contain any untrue statement of material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in light of the
circumstances under which the statements are made. At each closing the Company's
officers will deliver signed certificates on behalf of the Company representing
the veracity of such statements. The Company acknowledges and agrees that in
rendering services hereunder, Commonwealth will be using and relying solely on
the information provided by the Company without independent verification thereof
by Commonwealth or independent appraisal by Commonwealth of any of the Company's
assets. Commonwealth does not assume responsibility for the accuracy or
completeness of any information regarding the Company or the Transaction.
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Page 12 of 17 Pages
Termination
Except as set forth in this paragraph and in the paragraph below, this letter is
not intended to be a binding legal document, as the agreement between the
parties hereto on these matters will be embodied in an agency agreement
containing customary terms, conditions, representations, warranties covenants
and indemnities (the "Agency Agreement"). Until the Agency Agreement has been
finally negotiated and signed, but subject to the last sentence of this section,
the Company or Commonwealth may at any time terminate its further participation
in the proposed private placement Transaction and the party so terminating shall
have no liability to the other on account of any matter provided for herein,
except that, regardless of which party elects to terminate, the Company agrees
to reimburse Commonwealth for, or otherwise pay and bear, Commonwealth's
accountable and reasonable out-of-pocket expenses, not to exceed $95,000,
incurred to such date, less amounts previously paid to Commonwealth pursuant to
the Transaction Fee.
Should Commonwealth raise at least $4,000,000 in escrow, and the Company choose
not to utilize Commonwealth's funds, the Company will pay to Commonwealth a fee
consisting of $520,000 and 3,650,000 warrants to purchase Common Stock, with an
exercise price of $.375 per share, and the Company shall not be liable for any
other fees enumerated below. Notwithstanding the above, in such circumstances,
the Company shall also pay to Commonwealth all of Commonwealth's actual and
reasonable out-of-pocket and legal expenses, not to exceed $95,000.
Fees
In consideration for its services, the Company agrees to pay Commonwealth fees
(the "Transaction Fee") in the amount and at the time specified below.
a) Upon execution of this Agreement, the Company shall pay to Commonwealth
the sum of $15,000, which amount shall be a non-refundable Commonwealth
fee but shall be credited against the non-accountable expense allowance
pursuant to paragraph (d) below; and
b) Upon each closing of the Transaction, seven percent (7%) of such gross
proceeds generated by and attributable to the Transaction; and
c) Upon each closing of the Transaction, three percent (3%) of such gross
proceeds as a structuring fee; and
d) Upon each closing of the Transaction, two percent (2%) of such gross
proceeds as a non-accountable expense allowance; and
e) Upon execution of this Agreement, the Company shall enter into a twelve
month advisory agreement. Such fee shall take the form of a monthly
payment in the amount of $15,000 from the Company to Commonwealth. Such
fee shall be reviewed after the first 90 days, but in no case shall it
be less than $7,500 for the following nine months; and
f) Upon the closing of the minimum Transaction and upon each subsequent
closing thereafter, based on the amount raised, the Company will sell
at nominal value ($.005 per Warrant) to Commonwealth 6,450,000 Warrants
to purchase Common Stock of the Company at $.375, exercisable for five
years.
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Page 13 of 17 Pages
Commonwealth shall be entitled to receive the Transaction Fee whether or not the
Transaction results from the efforts of Commonwealth, the Company, or third
parties, for a period of twelve months from the date of this Agreement.
Additionally, if the Company consummates any equity or debt financing on or
after the date hereof, but in no event later than twelve months after the date
of termination of this Agreement, with any party initially contacted by
Commonwealth during the Engagement Period, Commonwealth shall be entitled to
receive the full Transaction Fee, as outlined in paragraphs b), c) d)
and f) above.
The Company will pay all expenses incurred in connection with the preparation
and printing of the Private Placement Memorandum, the preliminary and final Blue
Sky memoranda, the certificates for the Preferred Stock and Commonwealth's
warrants, and all other documents and instruments required in connection with
the proposed Transaction, and will also pay its own expenses for accounting,
legal, and other costs involved with the Transaction. Should the Company not use
its own Blue Sky counsel, and in the event that for any reason the Transaction
does not close within 120 days of the date of the Private Placement Memorandum,
the Company will pay all reasonable accountable Blue Sky counsel fees as billed,
not to exceed $30,000.
Indemnification
The Company agrees to the indemnification and other agreements set forth in the
Indemnification Agreement attached hereto, the provisions of which are
incorporated herein by reference and shall survive the termination, expiration
or supersession of this Agreement.
Future Offerings
For a one-year period commencing on the closing date of the Transaction, the
Company and all of its stockholders owning at least five percent (5%) of the
Company's common stock, either currently or immediately preceding the closing of
the Transaction, will grant Commonwealth the right of first refusal (on terms
comparable to those that can be obtained from other sources) to act as lead
manager, placement agent, or investment banker with respect to any proposed
underwritten public distribution or private placement of the Company's
securities or any merger, acquisition, or disposition of assets of the Company,
if the Company uses a lead manager, placement agent or investment banker or
person performing such functions for a fee. Commonwealth will advise the Company
promptly (but in no event later than ten business days following the submission
to Commonwealth in writing of any such proposed transaction) of Commonwealth's
election to exercise such right. If any such proposal is not accepted by
Commonwealth, but later modified, the Company will resubmit such proposal to
Commonwealth. Should Commonwealth elect, at any time, not to exercise said right
this will not effect preferential rights for future transactions.
Entire Agreement
This Agreement and the Indemnification Agreement incorporate the entire
understanding of the parties with respect to the subject matter of this
agreement and supersedes all previous agreements or understandings. This
Agreement may be modified only by a written agreement signed by both parties.
This Agreement may not be assigned by either party. In the event either party
shall resort to legal counsel in order to construe or enforce any rights or
obligation hereunder, the prevailing party shall be entitled to reasonable costs
and expenses, including reasonable attorney's fees, in connection therewith.
Resolution of Disputes
This Agreement shall be interpreted and governed by the laws of the State of New
York. Commonwealth and the Company will attempt to settle any claim or
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Page 14 of 17 Pages
controversy arising out of this Agreement through consultation and negotiation
in good faith and a spirit of mutual cooperation. If those attempts fail, then
the dispute will be mediated by a mutually acceptable mediator to be chosen by
Commonwealth and the Company within 15 days after written notice from either
party demanding mediation. Neither party may unreasonably withhold consent to
the selection of a mediator, and the parties will share the costs of the
mediation equally. Any dispute which the parties cannot resolve through
negotiation or mediation within six months of the date of the initial demand for
it by one of the parties may then be submitted to the courts for resolution. The
use of mediation will not be construed under the doctrine of latches, waiver or
estoppel to affect adversely the rights of either party. Nothing in this
paragraph will prevent either party from resorting to judicial proceedings if
(a) good faith efforts to resolve the dispute under these procedures have been
unsuccessful or (b) interim relief from a court is necessary to prevent serious
and irreparable injury.
General Conditions
Commonwealth's intention as expressed in this Agreement is subject to the
following general conditions:
1) In its sole discretion, Commonwealth shall be satisfied with the
results of its reasonable due diligence investigation of the Company.
2) There will have been no material adverse change in the business or
financial condition of the Company. In its sole reasonable discretion,
Commonwealth shall be satisfied with the Company's progress as well as
its outlook for the future.
3) The Company will provide two-year quarterly financial projections which
have been reviewed and approved by both the Company and Commonwealth.
4) Quarterly budgets for the Company must be approved in advance by a
majority of the Board of Directors and submitted to Commonwealth for as
long as the Preferred Stock is outstanding.
5) The Company will retain an accounting firm to which Commonwealth
consents, such consent not to be unreasonably withheld, upon closing of
the Transaction. Further, the Company shall not effect a change in its
accounting firm for a period of three years from this Agreement without
the prior written consent of Commonwealth, except that no such consent
shall be required if the new firm is a member of the so-called "Big
Six".
6) All relevant terms, conditions, and circumstances relating to the
proposed Transaction will be reasonably satisfactory to Commonwealth
and its counsel.
7) The Agency Agreement will contain appropriate representations and
covenants of the Company, including reciprocal covenants of indemnity,
and will provide for a satisfactory opinion of counsel to Commonwealth.
8) Anthony LaPine shall serve as Co-Chairman and CEO of the Company.
Nicholas Miller shall serve as Co-Chairman and Chief Information
Officer of the Company. Commonwealth will have the right to appoint a
director and one oberserver to the Board of Directors. New directors,
to be added upon the close of the Transaction, shall be acceptable to
Commonwealth. Management Compensation will not be changed without the
unanimous vote of the Board of Directors.
9) It is the opinion of Commonwealth that effective management, while key
in any company, is critical to firms operating at the development stage
(particularly in the technology arena). It is imperative, therefore,
that top management be properly incented to perform and remain with the
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<PAGE>
Page 15 of 17 Pages
company. One of the most effective ways to obtain performance and
tenure of such managers is by ensuring that such individuals maintain
significant equity stake in the companies. By creating
"owner-managers," Commonwealth believes overall corporate performance
will be dramatically improved. As such, it is the opinion of
Commonwealth that both Nicholas Miller and Anthony LaPine maintain
substantive equity stakes in the Company. Anthony LaPine shall purchase
200,000 Preferred Shares of the offering. Such purchase shall be
transacted through a $750,000 non-interest bearing note payable to the
Company, personally secured by certain assets of Anthony LaPine.
Additionally, the Company will issue 2,000,000 options, exercisable at
$0.375 for five years, to Anthony LaPine. Such options shall vest over
a three (3) year period, 33% each year on the anniversary of the
issuance date. Additionally, the Company will issue 2,000,000 options,
exercisable at $0.375 for five years, to Nicholas Miller. 1,500,000 of
such options shall be performance based and vest over a three (3) year
period, the performance targets and vesting schedule to be mutually
agreed upon between Mr. Miller and the Company's Chief Executive
Officer. The additional 500,000 options shall vest over a three (3)
year period, 33% each year on the anniversary of the issuance date.
10) Mr. Anthony LaPine and Mr. Nicholas Miller will each enter into a three
year employment agreement with the Company that, subject to applicable
law, will contain standard covenants not to compete with the Company
during the term of such agreement and for one year thereafter, and will
provide that each will devote his full time to the business of the
Company; and that each will have no other interest in, whether as an
investor, employee or otherwise, or other business relationship with,
any other venture in or related to the business of data/information
services.
11) Completion of satisfactory background checks on the Company's
principals.
12) Commonwealth reserves the right to solicit the assistance of outside
agents ("Dealers") to assist in the offer and sale of the Preferred
Stock; provided that any such Dealers agree in writing to be bound by
the terms of the Agency Agreement. It is understood that Commonwealth,
in its sole discretion, shall be entitled to pay over to any such
Dealers any portion of the Transaction Fee received by Commonwealth.
The Company shall have no financial liability for any transaction or
other fees to or expenses of any such Dealers.
13) Upon execution of this Agreement, the Company will have total of
19,500,000 fully diluted shares of Common Stock outstanding and
3,000,000 unexercised management options outstanding. Upon final
closing of the Transaction, investors shall hold 2,133,333 Preferred
shares, which would be initially convertible into 21,333,333 shares of
Common Stock.
14) Prior to the consummation of the Transaction (unless this Agreement has
terminated), the Company will not, without consent of Commonwealth,
such consent not to be unreasonably withheld, issue additional shares
of Common Stock or warrants, options or other securities for the
purchase of, exchangeable for, or convertible into, shares of Common
Stock, except as described herein.
-15-
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Page 16 of 17 Pages
Please confirm that the foregoing is in accordance with our understanding by
signing and returning to Commonwealth a check for $15,000 with the enclosed copy
of this Agreement.
Please be advised that this Agreement expires July 11, 1997 if not executed by
both parties.
Very truly yours,
COMMONWEALTH ASSOCIATES
By:
--------------------------
Michael S. Falk
Chairman
Accepted and agreed to as of the date first above written:
DATALINK, INC.
By: /s/
----------------------------
Name:
Title:
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Page 17 of 17 Pages
EXHIBIT 3
AGREEMENT
JOINT FILING OF SCHEDULE 13D
The undersigned hereby agree to jointly prepare and file with
regulatory authorities a Schedule 13D and any future amendments thereto
reporting each of the undersigned's ownership of securities of Datalink Systems
Corporation and hereby affirm that such Schedule 13D is being filed on behalf of
each of the undersigned.
Dated: September 15, 1997 Commonwealth Associates
New York, New York
By: /s/ Michael Falk
------------------------
Michael Falk
Chairman
Dated: September 15, 1997 /s/ Michael Falk
New York, New York ------------------------
Michael Falk
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