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As filed with the Securities and Exchange Commission on February 8, 1999
SEC Registration No. 333-
U.S. SECURITIES AND EXCHANGE COMMISSION
FORM S-3 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
DATALINK SYSTEMS CORPORATION
-----------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Nevada 36-3574355
- ---------------------------- -----------------------------------
(State or Other Jurisdiction (IRS Employer Identification Number)
of Incorporation)
1735 Technology Drive, Suite 790, San Jose, California 95110
(408) 367-1700
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(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
Anthony N. LaPine, President
1735 Technology Drive, Suite 790, San Jose, California 95110
(408) 367-1700
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(Name, Address and Telephone Number of Agent for Service)
Copy to:
Jon D. Sawyer, Esq.
Krys Boyle Freedman & Sawyer, P.C.
600 17th Street, Suite 2700 South Tower
Denver, Colorado 80202
(303) 893-2300
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: ___
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box: _X_
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: ___
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the
same offering: ___
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: ___
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximum
Title of Each Class Offering Aggregate Amount of
of Securities to be Amount to be Price Per Offering Registration
Registered Registered Unit Price Fee
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 4,390,006<FN1> $2.625<FN2> $11,523,766 $3,203.61
Par Value <FN2>
Common Stock 2,054,313 $ -- $ -- $ - <FN3>
Purchase Warrants
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<FN>
<FN1>
In accordance with Rule 416 under the Securities Act of 1933, this
Registration Statement also covers an indeterminable number of shares of
Common Stock, $.001 par value, as may become issuable upon conversion of the
Series A Convertible Preferred Stock and the exercise of the Common Stock
Purchase Warrants to prevent dilution resulting from stock splits, stock
dividends, and similar transactions in accordance with the terms of the Series
A Convertible Preferred Stock and the Common Stock Purchase Warrants.
<FN2>
Estimated solely for the purpose of calculating the registration fee pursuant
to Rule 457(c) based on the average of the closing bid and ask prices of the
Common Stock as reported on the OTC Bulletin Board on February 4, 1999.
<FN3>
Pursuant to Rule 457(g), no registration fee is required for the Common Stock
Purchase Warrants since the shares of Common Stock underlying such warrants
are being registered hereby.
</FN>
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(a), MAY DETERMINE.
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PROSPECTUS SUBJECT TO COMPLETION DATED FEBRUARY 8, 1999
- ------------------------------------------------------------------------------
The information in this Prospectus is not complete and may be changed. The
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This Prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
DATALINK SYSTEMS CORPORATION
4,390,006 Shares of Common Stock
2,054,313 Warrants
The Shares of Common Stock and the Warrants are being offered by certain
Selling Securityholders. We will not receive any of the proceeds from the
sale of the Shares or the Warrants by the Selling Securityholders. We will
receive proceeds from any exercise of the Warrants.
The Common Stock is traded in the over-the-counter market and is quoted
on the OTC Bulletin Board (Symbol: NETD). On February 4, 1999, the closing
bid and ask prices of the Common Stock were $2.4375 and $2.8125, respectively.
This investment involves a high degree of risk. You should purchase
shares only if you can afford a complete loss. See "Risk Factors" beginning
on page 4.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this Prospectus is truthful or complete. Any representation to the contrary
is a criminal offense.
_________, 1999
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TABLE OF CONTENTS
PAGE
COMPANY SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . 3
RISK FACTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
RECENT EVENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 7
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . 9
SELLING SECURITYHOLDERS . . . . . . . . . . . . . . . . . . . . . 9
PLAN OF DISTRIBUTION. . . . . . . . . . . . . . . . . . . . . . . 14
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . 16
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE . . . . . . . . 16
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COMPANY SUMMARY
Datalink is an Internet-based company that provides personalized
financial and lifestyle information to customers' wireless communication
devices. We have developed technology that combines real-time data feeds, the
World Wide Web and wireless communications to provide individually tailored
information services to customers' pagers and digital cellular phones. Our
web site and customer support team provide account maintenance services that
allow subscribers to customize the types of information alerts they receive.
All services are marketed from our web site as well as through direct and re-
seller distribution channels. Our re-sellers currently include broker-dealers,
information service providers, wireless network carriers, and other Internet
companies.
The first of our financial information services is QuoteXpress, an
investment monitoring tool that alerts subscribers with stock quote
information they pre-specify, such as price changes and volume. Other
financial services include SplitXpress, a service that notifies subscribers of
stock splits, buy-backs, takeovers, mergers and surprise earnings
announcements. CommmodityXpress tracks futures contract prices for
commodities trading on all the major US commodities markets. CompanyNews
provides the latest news stories and press releases for specific companies
selected by the subscriber. The headlines are delivered to the wireless
device and the complete story may be delivered to their email address, and is
also available on our web site.
In the last six months we introduced two new lifestyle services.
Sports2Go provides personalized real-time sports coverage with up-to-the-
minute scores and breaking game events. InfoXtra allows subscribers to
receive personalized information from a wide range of categories that include:
local weather forecasts, horoscopes, winning lottery numbers, ski conditions,
beach forecasts, top ten video rentals, and news headlines.
We currently market two message services that link the Internet with
wireless communications. MailXpress alerts subscribers when important email
arrives in their mailbox. MessageX allows anyone with Internet access to send
a message to the subscriber's pager or cell phone using the subscriber's email
address.
Our corporate offices are located at 1735 Technology Drive, Suite 790,
San Jose California 95110. Our telephone number is (408) 367-1700 and our
World Wide Web site is www.datalink.net.
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RISK FACTORS
Investing in the Shares or Warrants is very risky. You should be able to
bear a complete loss of your investment. In deciding whether to purchase the
Shares or Warrants, you should carefully consider the following factors, among
others, as well as information contained in this Prospectus, our most recent
Annual Report on Form 10-KSB, as amended, and the other documents incorporated
by reference into this Prospectus:
Recently Started Business; Our current business commenced operations
Losses During Start-up during 1996. During the fiscal year ended
Operations. March 31, 1998, the Company had a net loss
available to common shareholders of
We have incurred losses $14,738,804, and during the six months ended
since we began doing September 30, 1998, we had a net loss of
business. $2,775,036. Through September 30, 1998, we had
an accumulated deficit of $24,449,446. Our
ability to operate profitably depends on
increasing our sales through increased market
acceptance and successfully competing with
other companies. We are also subject to other
risks associated with new business enterprises.
We cannot assure you that Datalink will operate
profitably.
Planned Research and We plan to use any cash flow we generate to
Development Expenditures. research and develop improvements and upgrades
to our current services and adapt them to new
We plan to use any technologies. We cannot assure you that our
cash-flows generated revenues will grow enough to pay for the
to research and develop research and development needed to improve our
products. services so that they compete in the
marketplace. If we are unable to further
research and develop our services, our ability
to achieve profitability on a long-term basis
will be adversely affected.
Competition. Our market is very competitive. There are a
number of competitors who are larger and have
We have several compe- much greater resources than we do. Our
titors, and they are industry is subject to rapid technological
larger and have greater changes. Our competitors have more experienced
resources. people and larger facilities and budgets than
we do. These competitors could use their
resources to conduct greater amounts of research
and development and to offer services at lower
prices than we can. These factors may adversely
affect our ability to compete.
Future Capital Needs. During 1997, we received $8,000,000 from the
sale of securities in private transactions. We
We have met capital cannot assure you that we will not need addi-
needs with private tional funds or that any needed funds will be
sales of securities. available, if at all, on acceptable terms. If
we need additional funds, our inability to
raise them will have a very adverse effect on
our operations. If we raise funds by selling
equity securities, sales may dilute your share
ownership. If we raise funds by forming joint
ventures with other companies, we may have to
give up some of our rights to certain
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technologies, products or marketing terri-
tories.
Dependence on Management. Our business is largely dependent on our
ability to hire and retain quality managers.
We have a few key Although we have a written employment agreement
officers and directors. with Anthony N. LaPine, the Company's Chairman,
CEO and President, the loss of Mr. LaPine or any
other Officer could have an adverse effect on
our business and prospects.
Key-man insurance. We currently maintain key-man life insurance on
only one of our employees. That policy is in
the face amount of $3 million on Anthony N.
LaPine.
Risks Relating to Patents. We currently own a number of patents related to
our products, and have applied for additional
patents. We are not certain whether any new
patents will be granted in the future. Even if
we receive additional patents, they may not
provide us with protection from competitors.
Patent protection is Our failure to obtain patent protection, or
uncertain. illegal use by others of any patents we have
or may obtain could adversely effect our
business, financial condition and operating
results. In addition, the laws of certain
foreign countries do not protect proprietary
rights to the same extent as the laws of the
United States.
Costs of prosecuting Claims for damages resulting from any such
and defending patent infringement may be asserted or prosecuted
infringement claims against us. The validity of any patents we have
are significant. or obtain could also be challenged. Any such
claims could be time consuming and costly to
defend, diverting management's attention and our
resources.
Potential Liquidity Our Shares are not listed on Nasdaq or any
Problems. exchange. Trading is conducted in the over-
the-counter market on the OTC Bulletin Board,
which was established for securities that do
not meet the Nasdaq or exchange listing
requirements. Consequently, selling Datalink
Shares is more difficult because smaller
quantities of shares are bought and sold and
security analysts' and new media's coverage
of Datalink is limited. These factors could
result in lower prices and larger spreads in
the bid and ask prices for our shares.
Risks of Low-Priced Because our Shares are not currently listed on
Shares. Nasdaq or an exchange, they are subject to Rule
15g-9 under the Exchange Act. That rule imposes
additional sales practice requirements on
broker-dealers that sell low-priced securities
to persons other than established customers and
institutional accredited investors. For
transactions covered by this rule, a broker-
dealer must make a special suitability
determination for the purchaser and have
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received the purchaser's written consent to
the transaction prior to sale. Consequently,
the rule affects the ability of broker-dealers
to sell our Shares and may affect the ability
of holders to sell Datalink Shares in the
market.
No Market for Warrants. There is presently no market for the Warrants
and no market is expected to develop. Conse-
quently, it will be difficult for anyone who
buys Warrants from a Selling Securityholder
to resell the Warrants. In addition, we have
only registered Shares that would be issued on
the exercise of the Warrants for resale using
this Prospectus. As a result, investors who
buy Warrants and then exercise them would have
to use this Prospectus, as amended or
supplemented to show their ownership, to resell
the Shares.
No Dividends We intend to retain any future earnings to fund
Anticipated. the operation and expansion of our business.
We do not anticipate paying cash dividends on
our Shares in the foreseeable future.
Shares Eligible for Of the 2,157,779 Shares issued and outstanding
for Future Sale. as of December 31, 1998, 595,474 Shares
are "restricted securities," as that term
We cannot predict the is defined under Rule 144, all of which
depressive effect of are currently eligible for sale under Rule 144.
resales. In addition, 4,390,006 Shares which may be
issued on the conversion of the Preferred Stock
and exercise of Warrants are being registered
for resale by this Prospectus. We are unable
to predict the effect that sales made in this
offering or under Rule 144 may have on the then
prevailing market price of our Shares. It is
likely that market sales of large amounts of
Datalink Shares (or the potential for those
sales even if they do not actually occur) will
have the effect of depressing the market price
of our Shares.
Year 2000 Compliance. We anticipate that there will be little or no
Year 2000 issues and therefore little or no cost
will be incurred therefrom. Our internal
systems meet Year 2000 compliance standards.
However, although compliance confirmation has
been provided by seventy-five percent of our
vendors, and the remaining twenty-five percent
have indicated that they are currently Year 2000
compliant, there can be no assurance that these
vendors will not experience some level of Year
2000 issues that may have an adverse effect on
our systems. We have assessed our risk related
to this occurrence as very low. Our contingency
plan in the event that an unforeseen Year 2000
issue should occur will be to change to another
vendor that is Year 2000 compliant. For this
reason, we are developing an inventory of back-
up vendors that may be called upon to provide
services in accordance with Year 2000 compliance
standards.
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RECENT EVENTS
In July 1998, Datalink announced a strategic re-seller alliance with
SkyTel Communications, a wireless messaging service with over 1.4 million
customers. Under the alliance, SkyTel markets a number of Datalink's services
branded on SkyTel for subscription fees starting under $10. Subscribers will
not incur any additional charges from SkyTel for receiving information
services to the pagers.
Also in July 1998, the Company announced the introduction of its first
lifestyle information service, InfoXtra. InfoXtra was designed specifically
with Datalink's Internet and wireless carrier partners in mind. Subscribers
may chose from a variety of information categories such as weather forecasts,
beach and ski conditions, daily horoscopes, top video rentals, new updates,
lottery announcements and a weekly trivia question. Subscribers may also
schedule the time of day they receive the alerts, and the information alerts
may be configured to meet the specific demographic preferences and interests
of a re-seller's subscriber base.
In September 1998, Datalink announced a new sports service called
Sports2Go. Sports2Go features real-time sports coverage allowing subscribers
to follow any U.S. professional or collegiate sporting event when they can't
be at the actual game. This services sends alerts with real-time scores,
breaking sports news and statistics. Subscribers to this service customize
the information they want to receive by using the account maintenance feature
on the Datalink web site.
In October 1998, Datalink announced the launch of a new financial
information service, CompanyNews. This service tracks information about all
publicly traded U.S. and Canadian companies, and delivers the breaking news
specified by subscribers to their wireless device in headline form,
simultaneous to the release of the news over wire services. Subscribers then
have the option to have the full story delivered to their email address, or
they can also read the full story on the Datalink web site. Subscribers can
track an unlimited number of publicly traded companies. As information about
companies is released to the wire services, the subscriber is notified
automatically. As with all other Datalink services, CompanyNews can be
ordered and the subscriber's tracking portfolio can be managed from the
Datalink web site at www.Datalink.net.
Effective October 5, 1998, William A. Mahan became the Company's Chief
Financial Officer and Treasurer. Mr. Mahan, age 57, has extensive experience
in corporate finance, operations, shareholder reporting and investor services
and has served as chief financial officer or chief accounting officer for
various public and privately held companies for the last 30 years, including
New York Stock Exchange and American Stock Exchange listed companies.
Additionally, Mr. Mahan was President and Chief Executive Officer of a
privately held technology company from 1989 to 1993, prior to its acquisition
by a New York Stock Exchange listed company. Mr. Mahan started his career
with the Los Angeles office of Haskins & Sells, CPA's (now Deloitte & Touche,
LLP), where he was a senior accountant working in auditing and tax for clients
in a wide variety of industries. He received his degree in Finance and
Accounting from Arizona State University, subsequently earning his CPA
certificate while at Haskins & Sells.
On October 30, 1998, Robert L. Priddy was elected to serve as an
additional Director of the Company. Mr. Priddy has served as chairman and
chief executive officer of RMC Capital, LLC since its inception in October
1995. In addition, he was one of the four founding partners of ValuJet
Airlines. Mr. Priddy served as chief executive officer, director and chairman
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of the airline, a wholly-owned subsidiary of Valujet, Inc., from July 1992
until November 1996. Mr. Priddy also serves on the Board of Directors of
Accumed International and Advamtel.
In January 1999, the Company announced the launch of a new retail
marketing program to sell its wireless information services with Totally
Wireless, a West coast wireless retail chain. Totally Wireless will market
all of Datalink's wireless information services to customers nationwide, both
in their retail stores and on the Internet.
Also in January 1999, Datalink changed its OTC Bulletin Board symbol from
"DASY" to "NETD" and announced that upon shareholder approval it plans to
change its corporate name to Datalink.net.
8
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USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Common
Stock or Warrants by the Selling Securityholders.
To the extent that any of the Warrants are exercised, up to $9,941,000
may be received by the Company. Any net proceeds received from the exercise
of the Warrants will be used for general corporate purposes.
SELLING SECURITYHOLDERS
Included in the securities being offered hereby are 4,390,006 shares of
Common Stock being offered for resale by certain Securityholders of the
Company. Up to 2,335,693 of those shares are issuable upon conversion by the
holders of Series A Convertible Preferred Stock ("Preferred Stock"). Up to
2,054,313 shares are issuable upon exercise of the Warrants held by the
holders of the Preferred Stock. This Prospectus also relates to the resale of
the Warrants by the holders thereof. All shares and Warrants, to the extent
they are being offered, are being offered for the account of the following
Securityholders and their donees or pledgees (the "Selling Securityholders").
The following table sets forth certain information with respect to the
Selling Securityholders for whom the Company is registering the Common Stock
for resale to the public, including: (i) the maximum number of shares issuable
upon conversion of the Preferred Stock;(ii) the number of shares issuable upon
exercise of the Warrants; and (iii) the number of shares and Warrants offered
by each Selling Securityholder. The Company has no knowledge of the
intentions of any Selling Securityholder to actually sell any of the
securities listed under the columns "Shares Offered" or "Warrants Offered."
There are no material relationships between any of the Selling Securityholders
and the Company other than as disclosed below.
<TABLE>
<CAPTION>
Beneficial Ownership Before Offering<FN1>
-----------------------------------------
Number of
Shares
Issuable Shares
on Conver- Issuable
sion of on Exer- Shares
Preferred cise of Offered Warrants
Selling Securityholder Stock Warrants <FN2> Offered
- ---------------------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Richard N. Abrams 21,328 10,664 31,992 10,664
Shannon P. Acks 6,660 3,330 9,990 3,300
James Adametz 5,000 2,500 7,500 2,500
Anasazi Partners, L.P. 6,660 3,330 9,990 3,330
Baker Family Revocable
Trust u/a 10/8/91 10,000 5,000 15,000 5,000
John P. Becker 9,000 4,500 13,500 4,500
William D. Bennett, Jr. 6,660 3,330 9,990 3,330
Dr. Donald Berglund 6,660 3,330 9,990 3,330
Sandra and Howard
Bernstein, JTROS -0- 21,320 21,320 21,320
Robert Bettinger 10,000 5,000 15,000 5,000
Dennis Brubaker 2,660 1,330 3,990 1,330
Felix Campos 25,320 12,660 37,980 12,660
John A. Catsimatidis 20,000 10,000 30,000 10,000
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Willard E. Childress 8,000 4,000 12,000 4,000
Clariden Bank 41,332 20,666 61,998 20,666
David Cohen 26,640 13,320 39,960 13,320
Jonathan R. Cohen and
Nancy D. Shapiro, JTROS 5,320 2,660 7,980 2,660
Julia R. Cole 10,000 5,000 15,000 5,000
Robert H. Cole 10,000 5,000 15,000 5,000
Robert H. Cole, IRA 5,000 2,500 7,500 2,500
Robert S. Cole 2,500 1,250 3,750 1,250
Riley B. and Marilyn E.
Collins, JTROS 6,660 3,330 9,990 3,330
Conzett Europa Invest 80,000 40,000 120,000 40,000
Bruce Corbin -0- 2,600 2,600 2,600
Jeffrey S. Corbin 1,332 666 1,998 666
Richard Corbin -0- 6,660 6,600 6,660
Gerald B. Cramer 40,000 20,000 60,000 20,000
Bruce Cunningham 6,660 3,330 9,990 3,330
Richard G. and Priscilla
A. Dahlen, JTROS -0- 5,500 5,500 5,500
Thomas and Marie D'Avanzo,
JTROS 4,000 2,000 6,000 2,000
David DeAtkine, Jr. 5,000 2,500 7,500 2,500
Mario and Ruth Deliberty,
JTROS 8,000 4,000 12,000 4,000
David and Suellen Dercher,
JTROS 13,320 6,660 19,980 6,660
Hare & Co. 18,000 10,000 28,000 10,000
Fiducie Desjardins A/C
900595-0-59 Retirement Plan 20,000 10,000 30,000 10,000
Sidney and Sonia Deutsch,
JTROS 34,700 17,350 52,050 17,350
Paul R. Doering 6,660 3,330 9,990 3,330
Steven C. Dorfman -0- 4,000 4,000 4,000
Hugh W. Downs IRA 6,660 3,330 9,990 3,330
John P. and Agnes P. Duffy,
JTROS 6,660 3,330 9,990 3,330
DW Trustees (B.V.I.) Limited 6,660 3,330 9,990 3,330
Elite Sales, Inc. 5,328 2,664 7,992 2,664
Michael S. Falk -0- 200,767 200,767 200,767
S. Marcus Finkle 26,640 13,320 39,960 13,320
Baruch B. and Andrea
Fischhoff, JTROS 5,000 2,500 7,500 2,500
Timothy P. Flynn 40,000 20,000 60,000 20,000
Gallagher Corporation 40,000 20,000 60,000 20,000
Edith D. Gampel Revocable
Trust 20,000 10,000 30,000 10,000
Gregg M. Gaylord 10,000 5,000 15,000 5,000
Marshall S. Geller <FN3> 17,760 8,880 26,640 8,880
Paul Goldenheim 6,660 3,330 9,990 3,330
Grayson Financial Management
Corp. 10,000 5,000 15,000 5,000
Alan Hammerman 6,660 3,330 9,990 3,330
M. Ponder Harrison 4,000 2,000 6,000 2,000
Hathaway Partners Invest-
ment Limited Partnership 40,000 20,000 60,000 20,000
Heinecken & Associates
Profit Sharing Plan
dated 10/12/77 6,660 3,330 9,990 3,330
Harold B. and Jane H. Hess,
JTROS 1,332 666 1,998 666
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Neal Holtvogt 4,000 2,000 6,000 2,000
Chatri and Lourdes
Jhunjhnuwala, JTROS 26,664 13,332 39,996 13,332
Ramesh Jhunjhnuwala 5,328 2,664 7,992 2,664
Peggy Jordan 100,000 50,000 150,000 50,000
Kabuki Partners ADP GP 20,000 10,000 30,000 10,000
Mitchell A. Kaufman 5,320 2,660 7,980 2,660
Neeklanund Kaulpatrra 6,660 3,330 9,990 3,330
Thomas Keeney 5,000 2,500 7,500 2,500
Monsour Khayyam 40,000 20,000 60,000 20,000
Hamilton S. Kingsley 6,660 3,330 9,990 3,330
Bernard Kirsner Trust 6,660 3,330 9,990 3,330
Garth A. Koniver 5,320 2,660 7,980 2,660
Robert A. and Barbara
Koplow, JTROS 10,693 5,347 16,040 5,347
LAD Partners, LP 40,000 20,000 60,000 20,000
Lagunitas Partners, LP 40,000 20,000 60,000 20,000
James R. Landers, TTEE
FBO Deer Park School
District 13,320 6,660 19,980 6,660
David S. Lawi 6,660 3,330 9,990 3,330
Lawrence Lieberman 5,328 2,664 7,992 2,664
John V. Luck 6,660 3,330 9,990 3,330
Maerki, Baumann & Co. AG 66,664 33,332 99,996 33,332
Jed Manocherian 6,660 3,330 9,990 3,330
Anthony P. and Susan Q.
Mazzarella, JTROS 8,880 4,440 13,320 4,440
Alan Mirken 6,660 3,330 9,990 3,330
William T. McCaffrey 40,000 20,000 60,000 20,000
F. Andrew and Gail
Morfesis, JTROS 10,000 5,000 15,000 5,000
David Morley 4,000 2,000 6,000 2,000
Ryan Cassidy Morrow 6,660 3,330 9,990 3,330
Ronald Moschetta 6,660 13,998 20,658 13,998
Mulkey II Limited Partnership 40,000 20,000 60,000 20,000
Mercury L.P. 6,660 3,330 9,990 3,330
David R. and Donna L.
Nelson, JTROS 7,992 3,996 11,988 3,996
Orbis Pension Trustees
Limited 266,640 133,320 399,960 133,320
Allen Ozdemir 13,320 6,660 19,980 6,660
Richard and Lynne M.
Palmer, JTROS 4,680 2,340 7,020 2,340
Garo A. Partoyan 6,660 3,330 9,990 3,330
James Peloquen 1,332 666 1,998 666
John Piccolo 10,000 5,000 15,000 5,000
Anna M. Pocisk 13,320 6,660 19,980 6,660
Michael A. and Angela G.
Poujol, JTROS 20,000 10,000 30,000 10,000
Robert Priddy <FN4> 100,000 50,000 150,000 50,000
Kurt V. and Laura M.
Reichelt, JTROS 12,000 6,000 18,000 6,000
11
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<PAGE>
James H. and Jean A. Rion,
JTROS 4,000 2,000 6,000 2,000
Ben Rosenbloom 10,660 5,330 15,990 5,330
Adam and Lisa Ross, JTROS 10,660 5,330 15,990 5,330
Royal Bank of Canada Trust
Company (Jersey) Limited 25,540 12,770 38,310 12,770
Roybec & Co. 2,000 -0- 2,000 -0-
Bernard Sadow 13,320 6,660 19,980 6,660
Monroe H. and Barbara P.
Schenker, JTROS 20,000 10,000 30,000 10,000
William R. Schoen IRA/SEP 6,660 3,330 9,990 3,330
Rodney N. and Vikki K.
Schorlemmer, JTROS 13,320 6,660 19,980 6,660
Douglas Schwarzwaelder 5,000 2,500 7,500 2,500
J.F. Shea Co., Inc. as
Nominee 1997-60 266,660 133,330 399,990 133,330
Charles M. Sheaff, IRA 13,320 6,660 19,980 6,660
Michael A. Singer 26,640 13,320 39,960 13,320
SJG Management, Inc. Profit
Sharing Plan 6,660 3,330 9,990 3,330
Stephen Skoly 4,000 2,000 6,000 2,000
David Stellway 10,000 5,000 15,000 5,000
David and Susan Stollwerk,
JTROS 6,660 3,330 9,990 3,330
Rick Glenn Tachibana 5,000 2,500 7,500 2,500
Matthew T. Tarantelli -0- 2,000 2,000 2,000
Walter F. Toombs 40,000 20,000 60,000 20,000
James M. Totaro 20,000 10,000 30,000 10,000
Salvatore Trupiano 9,300 4,650 13,950 4,650
Barry L. and Patricia L.
Veazey, JTROS 2,500 1,250 3,750 1,250
Harold M. Wasserman 6,660 3,330 9,990 3,330
Elizabeth Weber 10,000 5,000 15,000 5,000
Arlene Weiner 6,660 3,330 9,990 3,330
Warren J. Weinstein 2,660 1,330 3,990 1,330
Walter E. Williams 6,660 3,330 9,990 3,330
Charles L. Wisseman III 5,000 2,500 7,500 2,500
The Yorkin Trust 20,000 10,000 30,000 10,000
Keith Rosenbloom -0- 47,235 47,235 47,235
Robert O'Sullivan -0- 23,617 23,617 23,617
Seth Elliott -0- 17,458 17,458 17,458
Cornelia Eldridge -0- 16,558 16,558 16,558
Inder Tallur -0- 9,893 9,893 9,893
Robert Beuret -0- 9,967 9,967 9,967
Eric Rubenstein -0- 9,792 9,792 9,792
Joseph P. Wynne -0- 7,973 7,973 7,973
David Stein -0- 7,135 7,135 7,135
Lisa Letteri -0- 7,046 7,046 7,046
Michael Rolnick -0- 5,000 5,000 5,000
Mark Danielli -0- 4,893 4,893 4,893
Michael R. Lyall -0- 3,987 3,987 3,987
Anthony Giardina -0- 2,990 2,990 2,990
Ed Downs -0- 2,760 2,760 2,760
Michael Appelbaum -0- 2,699 2,699 2,699
Peter Fulton -0- 2,475 2,475 2,475
Vladik Vainberg -0- 2,100 2,100 2,100
Eric Rand -0- 1,993 1,993 1,993
Richard White -0- 1,800 1,800 1,800
George Tsamutalis -0- 1,364 1,364 1,364
Eric Handler -0- 971 971 971
12
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<PAGE>
Sandesh Seth -0- 971 971 971
Craig Leppla -0- 997 997 997
Robert Nass -0- 997 997 997
Stephen Labarbara -0- 997 997 997
Michael Volpe -0- 997 997 997
Juan Lopera -0- 900 900 900
James Walker -0- 485 485 485
Susan Hoffman -0- 500 500 500
Richard Perreira -0- 500 500 500
Peter Dellaquilla -0- 479 479 479
Brad Van Siclen -0- 400 400 400
Travis Brock -0- 400 400 400
Darren Saltzberg -0- 338 338 338
Commonwealth Associates -0- 434,284 434,284 434,284
--------- --------- --------- ---------
Total 2,335,693 2,054,313 4,390,006 2,054,313
____________________
<FN>
<FN1>
No information is given with respect to beneficial ownership after the
offering because the number of Shares of Common Stock and Warrants would be
zero, except as follows:
a. After the sale of all of the securities offered hereby, Marshall S.
Geller would beneficially own 10,000 shares of Common Stock, consisting of
shares underlying options, which would represent less than one percent of the
outstanding shares.
b. After the sale of all of the securities offered hereby, Robert L.
Priddy would beneficially own 241,000 shares of Common Stock, consisting of
231,000 shares of Common Stock held directly and 10,000 shares underlying
options, which would represent approximately 10.4% of the outstanding shares
if no other Preferred Stock is converted or Warrants are exercised.
c. After the sale of all of the securities offered hereby, Commonwealth
Associates would beneficially own 100,000 shares of Common Stock held
directly, which would represent approximately 3.9% of the outstanding shares
if no Preferred Stock or other Warrants are exercised.
<FN2>
Assumes the conversion of all of the Preferred Stock and the exercise of all
of the warrants.
<FN3>
Mr. Geller has served as a Director of the Company since November 1997.
<FN4>
Mr. Priddy has served as a Director of the Company since October 1998
</FN>
</TABLE>
The information concerning the Selling Securityholders may change from
time to time and will be set forth in Supplements to this Prospectus.
13
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<PAGE>
PLAN OF DISTRIBUTION
The purpose of this Prospectus is to permit the Selling Securityholders,
if they desire, to offer and sell up to 4,390,006 Shares and 2,054,313
Warrants (the "Selling Securityholder Securities") at such times and at such
places as the Selling Securityholders choose.
The decision to convert the Preferred Stock into Shares, to exercise the
Warrants, or to sell any shares or Warrants, is within the sole discretion of
the holders thereof. There can be no assurance that any of the Preferred
Stock will be converted or any of the Warrants will be exercised, or any
shares or Warrants will be sold by the Selling Securityholders.
The distribution of the Selling Securityholder Securities may be effected
from time to time in one or more transactions. Any of the Selling
Securityholder Securities may be offered for sale, from time to time, by the
Selling Securityholders, or by permitted transferees or successors of the
Selling Securityholders, in the over-the-counter market, or otherwise, at
prices and on terms then obtainable, at fixed prices, at prices then
prevailing at the time of sale, at prices related to such prevailing prices,
or in negotiated transactions at negotiated prices or otherwise. The Selling
Securityholder Securities offered hereby may be sold by one or more of the
following: (i) through underwriters, or through underwriting syndicates; (ii)
through one or more dealers or agents (which may include one or more
underwriters), including, but not limited to: (a) block trades in which the
broker or dealer act as principal to facilitate the transactions; (b)
purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this Prospectus; (c) ordinary brokerage
transactions; and (d) transactions in which the broker solicits purchasers;
(iii) directly to one or more purchasers; or (iv) a combination of these
methods. The names of any underwriters or agents involved in the sale of the
Selling Securityholder Securities will be set forth in a Prospectus
Supplement. In connection with the distribution of the Selling Securityholder
Securities or otherwise, the Selling Securityholders may enter into hedging
transactions with broker-dealers or other financial institutions. In
connection with such transactions, broker-dealers or other financial
institutions may engage in short sales of Common Stock in the course of
hedging the positions they assume with the Selling Securityholders. The
Selling Securityholders may also sell Common Stock short and redeliver the
shares to close out such short positions. The Selling Securityholders may
also enter into options or other transactions with broker-dealers or other
financial institutions which require the delivery to such broker-dealers or
other financial institutions of the Selling Securityholder Securities, which
shares such broker-dealers or financial institutions may resell pursuant to
this Prospectus (as supplemented or amended to reflect this transaction). The
Selling Securityholders may also pledge the Selling Securityholder Securities
registered hereunder to a broker-dealer or other financial institution and,
upon a default, such broker-dealer or other financial institution may effect
sales of the pledged shares pursuant to this Prospectus (as supplemented or
amended to reflect such transaction). In addition, any Selling Securityholder
Securities covered by this Prospectus that qualify for sale pursuant to Rule
144 under the Securities Act may be sold under Rule 144 rather than pursuant
to this Prospectus.
The Selling Securityholders or their underwriters, dealers or agents may
sell the Selling Securityholder Securities to or through underwriters, dealers
or agents, and such underwriters, dealers or agents may receive compensation
in the form of discounts or concessions allowed or reallowed. Underwriters,
dealers, brokers or other agents engaged by the Selling Securityholders may
arrange for other such persons to participate. Any fixed public offering
14
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<PAGE>
price and any discounts and concessions may be changed from time to time.
Underwriters, dealers and agents who participate in the distribution of the
Selling Securityholder Securities may be deemed to be underwriters within the
meaning of the Securities Act, and any discounts or commissions received by
them or any profit on the resale of shares by them may be deemed to be
underwriting discounts and commissions thereunder. The proposed amounts of
Selling Securityholder Securities, if any, to be purchased by underwriters and
the compensation, if any, of underwriters, dealers or agents will be set forth
in a Prospectus Supplement.
Unless granted an exemption by the Commission from Rule 10b-6 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or unless
otherwise permitted under Rule 10b-6A, the Selling Securityholders will not
engage in any stabilization activity in connection with the Company's
securities, will furnish each broker or dealer engaged by the Selling
Securityholders and each other participating broker or dealer the number of
copies of this Prospectus required by such broker or dealer, and will not bid
for or purchase any securities of the Company or attempt to induce any person
to purchase any of the Company's securities other than as permitted under the
Exchange Act.
The Company will not receive any proceeds from any sales of the Selling
Securityholder Securities, but will receive the proceeds from the exercise of
the Warrants held by the Selling Securityholders, which proceeds, if any, will
be used for general corporate purposes.
In connection with the registration by the Company, the Company shall use
its best efforts to prepare and file with the Commission such amendments and
supplements to the registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective and to comply with the provisions of the Securities Act with respect
to the disposition of the Securities covered by the registration statement for
the period required to effect the distribution of such Securities.
The Company is paying certain expenses (other than commissions and
discounts of underwriters, dealers or agents) incident to the offering and
sale of the Selling Shareholder Securities to the public, which are estimated
to be approximately $17,000. If the Company is required to update this
Prospectus during such period, it may incur additional expenses in excess of
the amount estimated above.
In order to comply with certain states' securities laws, if applicable,
the Securities will be sold in such jurisdictions only through registered or
licensed brokers or dealers. In certain states the Securities may not be sold
unless they have been registered or qualify for sale in such state or an
exemption from registration or qualification is available and is complied
with.
15
<PAGE>
<PAGE>
LEGAL MATTERS
The legality of the Common Stock and Warrants offered hereby is being
passed upon for the Company by Krys Boyle Freedman & Sawyer, P.C., 600 17th
Street, Suite 2700 South, Denver, Colorado 80202.
EXPERTS
The financial statements incorporated by reference in this Prospectus
have been audited by BDO Seidman LLP, independent certified public
accountants, to the extent and for the periods set forth in their report,
incorporated by reference herein, and are incorporated herein in reliance upon
such report given upon the authority of that firm as experts in accounting and
auditing.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(a) The Company's Annual Report on Form 10-KSB, as amended, for the
fiscal year ended March 31, 1998, filed pursuant to Section 13 of the 1934 Act
(File No. 0-21069.)
(b) The Company's Quarterly Report on Form 10-QSB for the quarter ended
June 30, 1998, filed pursuant to Section 13 of the 1934 Act (File No. 0-
21069).
(c) The Company's Quarterly Report on Form 10-QSB for the quarter ended
September 30, 1998, filed pursuant to Section 13 of the 1934 Act (File No. 0-
21069).
(d) The Company's Current Report on Form 8-K, as amended, dated July 17,
1998, filed pursuant to Section 13 of the 1934 Act (File No. 0-21069).
(e) The Company's Current Report on Form 8-K dated September 3, 1998,
filed pursuant to Section 13 of the 1934 Act (File No. 0-21069).
(f) The description of the Company's common stock contained in the
Company's registration statement on Form 8-A (File No. 0-21069) declared
effective on September 20, 1996.
All reports and other documents subsequently filed by the Company with
the Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the 1934
Act, prior to the filing of a post-effective amendment which indicates that
all securities covered by this Prospectus have been sold or which deregisters
all such securities then remaining unsold, shall be deemed to be incorporated
by reference herein and to be a part hereof from the date of the filing of
such reports and documents.
AVAILABLE INFORMATION
The Company is subject to certain informational reporting requirements of
the Securities Exchange Act of 1934, as amended (the "1934 Act"), and in
accordance therewith files reports and other information with the Securities
and Exchange Commission (the "Commission"). These reports, proxy statements
and other information can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024 of the Commission's
office at 450 Fifth Street, N.W., Judiciary Plaza, Washington, DC 20549, and
at its regional offices located at 7 World Trade Center, Suite 1300, New York,
16
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<PAGE>
NY 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, IL
60661. Copies of such reports, proxy statements and other information can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Judiciary Plaza, Washington, DC 20549 at prescribed rates. The
Commission maintains a Web site (http://www.sec.gov) that contains reports,
proxy and information statements and other information regarding registrants
that file electronically. Additional updating information with respect to the
securities covered herein may be provided in the future to purchasers by means
of appendices to this Prospectus.
The Company has filed with the Commission in Washington, DC a
registration statement (herein, together with all amendments and exhibits,
referred to as the "Registration Statement") under the 1933 Act with respect
to the securities offered or to be offered hereby. This Prospectus does not
contain all of the information included in the Registration Statement, certain
items of which are omitted in accordance with the rules and regulations of the
Commission. For further information about the Company and the securities
offered hereby, reference is made to the Registration Statement and the
exhibits thereto. The Registration Statement has been filed electronically
through the Commission's Electronic Data Gathering, Analysis and Retrieval
System and may be obtained through the Commission's Web site
(http://www.sec.gov.).
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any document incorporated herein by reference, excluding exhibits. Requests
should be made to Datalink Systems Corporation, 1735 Technology Drive, Suite
790, San Jose, California 95110, telephone (408) 367-1700, and directed to
the attention of Anthony N. LaPine.
17
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<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following expenses incurred in connection with the sale of the
securities being registered will be borne by the Registrant. Other than the
registration fee, the amounts stated are estimates.
Registration Fees . . . . . . . . . . . . . . $ 3,203.61
Legal Fees and Expenses . . . . . . . . . . . 8,000.00
Accounting Fees and Expenses. . . . . . . . . 4,000.00
Miscellaneous . . . . . . . . . . . . . . . . 1,796.39
----------
TOTAL . . . . . . . . . . . . . . . . . . $17,000.00
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The only statute, charter provision, bylaw, contract, or other arrange
ment under which any controlling person, Director or Officer of the Company is
insured or indemnified in any manner against any liability which he may incur
in his capacity as such, is as follows:
(a) Subsection (1) of Section 78.751 of the Nevada Corporation Law
empowers a corporation to "indemnify any person who is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses, including attorneys' fees, judgments,
fines and amounts paid in settlement actually and reasonably incurred by him
in connection with the action, suit or proceeding if he acted in good faith
and in a manner which he reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person did not act in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and that, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was unlawful."
Subsection (2) of Section 78.751 empowers a corporation to "indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he
is or was a director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses, including amounts paid in settlement and
attorneys' fees actually and reasonably incurred by him in connection with the
defense or settlement of the action or suit if he acted in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation. Indemnification may not be made for any claim,
issue or matter as to which such a person has been adjudged by a court of
competent jurisdiction, after exhaustion of all appeals therefrom, to be
liable to the corporation or for amounts paid in settlement to the
II-1
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<PAGE>
corporation, unless and only to the extent that the court in which the action
or suit was brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnify for such expenses as the court
deems proper."
Subsection 78.751(3) further provides that "to the extent that a
director, officer, employee or agent of a corporation has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred
to in subsections 1 and 2, or in defense of any claim, issue or matter herein,
he must be indemnified by the corporation against expenses, including
attorneys' fees, actually and reasonably incurred by him in connection with
the defense."
(b) Article VII of the Registrant's Articles of Incorporation provides
that the Corporation is authorized to indemnify directors, officers, employees
and agents to the full extent allowed for under the Nevada Business
Corporation Act.
(c) Article XI of the Articles of Incorporation of the Registrant
provides that no director, officer or stockholder of the Company shall be
personally liable for damages for breach of fiduciary duty as a director or
officer; provided, that this provision shall not eliminate liability of a
director or officer for acts or omissions involving intentional misconduct,
fraud or a knowing violation of law or payments or distributions in violation
of Nevada law.
ITEM 16. EXHIBITS.
Exhibit
Number Description
- ------- -----------
4.1 Certificate of the Designations, Powers, Preferences and Rights
of the Series A Convertible Preferred Stock (incorporated by
reference to Exhibit 3.1 to the Registrant's Annual Report on
Form 10-KSB/A for the fiscal year ended March 31, 1998)
4.2 Warrant Agreement (including form of Warrant Certificate)
5 Opinion of Krys Boyle Freedman & Sawyer, P.C., with respect to
the legality of the securities being registered
23.1 Consent of BDO Seidman, LLP, Independent Certified Public
Accountants
23.2 Consent of Krys Boyle Freedman & Sawyer, P.C. (contained in
Exhibit 5)
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
1933 Act;
II-2
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<PAGE>
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) ([Section] 230.424(b) of this chapter) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
Provided, however, that paragraphs (l)(i) and (l)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to Section 13
or Section 15(d) of the 1934 Act that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the 1933
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of the registrant's
annual report pursuant to section 13(a) or section 15(d) of the 1934 Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the 1934 Act) that is incorporated by reference
in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the 1933 Act may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the 1933 Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
II-3
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement on Form S-3 to be signed on its behalf by the
undersigned, hereunto duly authorized, in San Jose, California, on February 5,
1999.
DATALINK SYSTEMS CORPORATION
By:/s/ Anthony N. LaPine
Anthony N. LaPine, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
SIGNATURES TITLE DATE
/s/ Anthony N. LaPine Chief Executive Officer, February 5, 1999
Anthony N. LaPine President and Chairman
of the Board
/s/ William A. Mahan Chief Financial Officer February 8, 1999
William A. Mahan
__________________________ Director
Marshall Geller
/s/ Frederick M. Hoar Director February 8, 1999
Frederick M. Hoar
__________________________ Director
David Ladd
/s/ Robert L. Priddy Director February 8, 1999
Robert L. Priddy
<PAGE>
<PAGE>
DATALINK SYSTEMS CORPORATION
INDEX TO EXHIBITS FILED WITH
FORM S-3 REGISTRATION STATEMENT
Exhibit
Number Description
- ------- -----------
4.1 Certificate of the Designations, Powers, Preferences and Rights
of the Series A Convertible Preferred Stock (incorporated by
reference to Exhibit 3.1 to the Registrant's Annual Report on
Form 10-KSB/A for the fiscal year ended March 31, 1998)
4.2 Warrant Agreement (including form of Warrant Certificate)
5 Opinion of Krys Boyle Freedman & Sawyer, P.C., with respect to
the legality of the securities being registered
23.1 Consent of BDO Seidman, LLP, Independent Certified Public
Accountants
23.2 Consent of Krys Boyle Freedman & Sawyer, P.C. (contained in
Exhibit 5)
WARRANT AGREEMENT
AGREEMENT, dated as of this 5th day of November, 1997, by and among
DATALINK SYSTEMS CORPORATION, a Nevada corporation ("Company"), AMERICAN
SECURITIES TRANSFER & TRUST, INC., as Warrant Agent (the "Warrant Agent"), and
COMMONWEALTH ASSOCIATES, a New York limited partnership ("Commonwealth").
W I T N E S S E T H
WHEREAS, in connection with a private placement (the "Private Placement")
of a minimum of twenty-seven (27) and a maximum of sixty-eight and one-half
(68.5) units ("Units"), each Unit consisting of 40,000 shares (the "Shares")
of Series A Convertible Preferred Stock, par value $.001 per share (the
"Preferred Stock") and 200,000 common stock purchase warrants ("Warrants")
pursuant to an agency agreement (the "Agency Agreement") dated as of September
24, 1997 between the Company and Commonwealth, the Company may issue Warrants
to purchase up to 13,700,000 shares of Common Stock (as defined below); and
WHEREAS, in connection with the Private Placement, the Company may issue to
Commonwealth or its designees up to 8,243,906 warrants which are convertible
at the option of Commonwealth into an equal number of Warrants (the "Agent's
Warrants"), and
WHEREAS, each Warrant initially entitles the Registered Holder thereof to
purchase one share of Common Stock; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer exchange and redemption of the Warrants, the
issuance of certificates representing the Warrants, the exercise of the
Warrants, and the rights of the holders thereof;
NOW THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth and for the purpose of defining the terms and provisions
of the Warrants and the certificates representing the Warrants and the
respective rights and obligations thereunder of the Company, the holders of
certificates representing the Warrants and the Warrant Agent, the parties
hereto agree as follows:
SECTION 1. Definitions. As used herein, the following terms shall have
the following meanings, unless the context shall otherwise require:
(a) "Common Stock" shall mean stock of the Company of any class, whether
now or hereafter authorized, which has the right to participate in the
distribution of earnings and assets of the Company without limit as to amount
or percentage, which at the date hereof consists of 50,000,000 authorized
shares of Common Stock, $.001 per value.
(b) "Corporate Office" shall mean the office of the Warrant Agent (or its
successor) at which at any particular time its principal business shall be
administered, which office is located at the date hereof et 983 Quail Street,
No. 101, Lakewood, Colorado 80215.
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(c) "Exercise Date" shall mean, as to any Warrant, the date on which the
Warrant Agent shall have received both (a) the Warrant Certificate
representing such Warrant, with the exercise form thereon duly executed by the
Registered Holder thereof or his attorney-in-fact duly authorized in writing,
and (b) payment in cash, or by official bank or certified check made payable
to the Company, of an amount in lawful money of the United States of America
equal to the applicable Purchase Price.
(d) "Initial Warrant Exercise Date" shall mean the later of (i) November
5, 1998 or (ii) the date on which the Company files an amendment to its
articles of incorporation increasing its authorized shares of Common Stock to
not less than 70,000,000 (the "Amendment").
(e) "Purchase Price" shall mean the purchase price to be paid upon
exercise of each Warrant in accordance with the terms hereof, which price
shall be $.50, subject to adjustment from time to time pursuant to the
provisions of Section 9 hereof, and subject to the Company's right to reduce
the Purchase Price upon notice to all warrantholders.
(f) "Redemption Price" shall mean the price at which the Company may, at
its option in accordance with the terms hereof, redeem the Warrants, which
price shall be $0.05 per Warrant.
(g) "Registered Holder" shall mean as to any Warrant and as of any
particular date, the person in whose name the certificate representing the
Warrant shall be registered on that date on the books maintained by the
Warrant Agent pursuant to Section 6.
(h) "Transfer Agent" shall mean American Securities Transfer & Trust,
Inc., as the Company's transfer agent, or its authorized successor, as such.
(i) "Warrant Expiration Date" shall mean 5:00 P.M. (New York time) on
November 5, 2002 or, with respect to Warrants which are outstanding as of the
Redemption Date (but specifically excluding the Agent's Warrants), the
Redemption Date as defined in Section 8, whichever is earlier; provided that
if such date shall in the State of New York be a holiday or a day on which
banks are authorized or required to close, then 5:00 P.M. (New York time) on
the next following day which in the State of New York is not a holiday or a
day on which banks are authorized or required to close. Upon notice to all
warrantholders the Company shall have the right to extend the Warrant
Expiration Date.
SECTION 2. Warrants and Issuance of Warrant Certificates.
(a) A Warrant initially shall entitle the Registered Holder of the
Warrant Certificate representing such Warrant to purchase one share of Common
Stock upon the exercise thereof, in accordance with the terms hereof, subject
to modification and adjustment as provided in Section 9.
(b) The Warrants included in the offering of Units will be detachable and
separately transferable from the shares of Preferred Stock constituting part
of such Units commencing on the Initial Exercise Date.
(c) Upon execution of this Agreement, Warrant Certificates representing
the number of Warrants sold in the Private Placement shall be executed by the
Company and delivered to the Warrant Agent. Upon written order of the Company
signed by its President or Chairman or a Vice President and by its Secretary
or an Assistant Secretary, the Warrant Certificates shall be countersigned,
issued and delivered by the Warrant Agent as part of the Units.
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(d) From time to time, up to the Warrant Expiration Date, the Transfer
Agent shall countersign and deliver stock certificates in required whole
number denominations representing up to the number of shares of Common Stock
as shall be issuable on exercise of the Warrants, subject to adjustment as
described herein, upon the exercise of Warrants in accordance with this
Agreement.
(e) From time to time, up to the Warrant Expiration Date, the Warrant
Agent shall countersign and deliver Warrant Certificates in required whole
number denominations to the persons entitled thereto in connection with any
transfer or exchange permitted under this Agreement; provided that no Warrant
Certificates shall be issued except (i) those initially issued hereunder, (ii)
those issued on or after the Initial Warrant Exercise Date, upon the exercise
of fewer than all Warrants represented by any Warrant Certificate, to evidence
any unexercised Warrants held by the exercising Registered Holder, (iii) those
issued upon any transfer or exchange pursuant to Section 6; (iv) those issued
in replacement of lost, stolen, destroyed or mutilated Warrant Certificates
pursuant to Section 7; and (v) at the option of the Company, in such form as
may be approved by its Board of Directors, to reflect any adjustment or change
in the Purchase Price, the number of shares of Common Stock purchasable upon
exercise of the Warrants or the Redemption Price therefor made pursuant to
Section 9 hereof.
(f) Notwithstanding anything to the contrary contained herein, the
Agent's Warrants shall not be subject to redemption by the Company.
SECTION 3. Form and Execution of Warrant Certificates.
(a) The Warrant Certificates shall be substantially in the form annexed
hereto as Exhibit A (the provisions of which are hereby incorporated herein)
and may have such letters, numbers or other marks of identification or
designation and such legends, summaries or endorsements printed, lithographed
or engraved thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any law or with any rule or regulation made pursuant thereto or
with any rule or regulation of any stock exchange on which the Warrants may be
listed, or to conform to usage or to the requirements of Section 2(b). The
Warrant Certificates shall be dated the date of issuance thereof (whether upon
initial issuance, transfer, exchange or in lieu of mutilated, lost, stolen, or
destroyed Warrant Certificates) and issued in registered form. Warrant
Certificates shall be numbered serially with the letter W on Warrants of all
denominations.
(b) Warrant Certificates shall be executed on behalf of the Company by
its Chairman of the Board, President or any Vice President and by its
Secretary or an Assistant Secretary, by manual signatures or by facsimile
signatures printed thereon, and shall have imprinted thereon a facsimile of
the Company's seal. Warrant Certificates shall be manually countersigned by
the Warrant Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any of
the Warrant Certificates shall cease to be an officer of the Company or to
hold the particular office referenced in the Warrant Certificate before the
date of issuance of the Warrant Certificates or before countersignature by the
Warrant Agent and issue and delivery thereof, such Warrant Certificates may
nevertheless be countersigned by the Warrant Agent, issued and delivered with
the same force and effect as though the person who signed such Warrant
Certificates had not ceased to be an officer of the Company or to hold such
office. After countersignature by the Warrant Agent, Warrant Certificates
shall be delivered by the Warrant Agent to the Registered Holder without
further action by the Company, except as otherwise provided by Section 4(a)
hereof.
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SECTION 4. Exercise.
(a) Each Warrant may be exercised by the Registered Holder thereof at any
time on or after the Initial Warrant Exercise Date, but not after the Warrant
Expiration Date, upon the terms and subject to the conditions set forth herein
and in the applicable Warrant Certificate. A Warrant shall be deemed to have
been exercised immediately prior to the close of business on the Exercise Date
and the person entitled to receive the securities deliverable upon such
exercise shall be treated for all purposes as the holder of those securities
upon the exercise of the Warrant as of the close of business on the Exercise
Date. As soon as practicable on or after the Exercise Date the Warrant Agent
shall deposit the proceeds received from the exercise of a Warrant and shall
notify the Company in writing of the exercise of the Warrants. Promptly
following, and in any event within five days after the date of such notice
from the Warrant Agent, the Warrant Agent, on behalf of the Company, shall
cause to be issued and delivered by the Transfer Agent, to the person or
persons entitled to receive the same, a certificate or certificates for the
securities deliverable upon such exercise, (plus a certificate for any
remaining unexercised Warrants of the Registered Holder) unless prior to the
date of issuance of such certificates the Company shall instruct the Warrant
Agent to refrain from causing such issuance of certificates pending clearance
of checks received in payment of the Purchase Price pursuant to such Warrants.
Notwithstanding the foregoing, in the case of payment made in the form of a
check drawn on an account of Commonwealth or such other investment banks and
brokerage houses as the Company shall approve in writing to the Warrant Agent,
certificates shall immediately be issued without prior notice to the Company
or any delay. Upon the exercise of any Warrant and clearance of the funds
received, the Warrant Agent shall promptly remit the payment received for the
Warrant (the "Warrant Proceeds") to the Company or as the Company may direct
in writing.
SECTION 5. Reservation of Shares; Listing; Payment of Taxes; etc.
(a) The Company covenants that from and after the Initial Warrant
Exercise Date, it will at all times after the effective date of the Amendment
reserve and keep available out of its authorized Common Stock, solely for the
purpose of issue upon exercise of Warrants, such number of shares of Common
Stock as shall then be issuable upon the exercise of all outstanding Warrants.
The Company covenants that all shares of Common Stock which shall be issuable
upon exercise of the Warrants shall, at the time of delivery, be duly and
validly issued, fully paid, nonassessable and free from all taxes, liens and
charges with respect to the issue thereof, (other than those which the Company
shall promptly pay or discharge) and that upon issuance such shares, if
registered under the Securities Act of 1933 (as amended, the "Act"), or if
exempt from such registration, shall be listed on each national securities
exchange, including the Nasdaq National Market, or the Nasdaq SmallCap Market,
on which the other shares of outstanding Common Stock of the Company are then
listed.
(b) The Company covenants that if any securities to be reserved for the
purpose of exercise of Warrants hereunder require registration with, or
approval of, any governmental authority under any federal securities law
before such securities may be validly issued or delivered upon such exercise,
then the Company will in good faith and as expeditiously as reasonably
possible and in accordance with the terms of the Private Placement offering
documents, endeavor to secure such registration or approval. The Company will
use reasonable efforts to obtain appropriate approvals or registrations under
state "blue sky" securities laws. With respect to any such securities,
however, Warrants may not be exercised by, or shares of Common Stock or other
securities underlying the Warrants issued to, any Registered Holder in any
state in which such exercise would be unlawful.
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(c) The Company shall pay all documentary, stamp or similar taxes and
other governmental charges that may be imposed with respect to the issuance of
Warrants, or the issuance or delivery of any shares upon exercise of the
Warrants; provided, however, that if the shares of Common Stock are to be
delivered in a name other than the name of the Registered Holder of the
Warrant Certificate representing any Warrant being exercised, then no such
delivery shall be made unless the person requesting the same has paid to the
Warrant Agent the amount of transfer taxes or charges incident thereto, if
any.
(d) The Warrant Agent is hereby irrevocably authorized to requisition the
Company's Transfer Agent from time to time for certificates representing
shares of Common Stock issuable upon exercise of the Warrants, and the Company
will authorize the Transfer Agent to comply with all such proper requisitions.
The Company will file with the Warrant Agent a statement setting forth the
name and address of the Transfer Agent of the Company for shares of Common
Stock issuable upon exercise of the Warrants.
SECTION 6. Exchange and Registration of Transfer.
(a) Warrant Certificates may be exchanged for other Warrant Certificates
representing an equal aggregate number of Warrants of the same class or may be
transferred in whole or in part. Warrant Certificates to be exchanged shall be
surrendered to the Warrant Agent at its Corporate Office, and upon
satisfaction of the terms and provisions hereof, the Company shall execute and
the Warrant Agent shall countersign, issue and deliver in exchange therefor
the Warrant Certificate or Certificates which the Registered Holder making the
exchange shall be entitled to receive.
(b) The Warrant Agent shall keep at its office books in which, subject to
such reasonable regulations as it may prescribe, it shall register Warrant
Certificates and the transfer thereof in accordance with its regular practice.
Upon due presentment for registration of transfer of any Warrant Certificate
at such office, the Company shall execute and the Warrant Agent shall issue
and deliver to the transferee or transferees a new Warrant Certificate or
Certificates representing an equal aggregate number of Warrants.
(c) With respect to all Warrant Certificates presented for registration
or transfer, or for exchange or exercise, the subscription form on the reverse
thereof shall be duly endorsed, or be accompanied by a written instrument or
instruments of transfer and subscription, in form satisfactory to the Company
and the Warrant Agent, duly executed by the Registered Holder or his
attorney-in-fact duly authorized in writing.
(d) A service charge may be imposed by the Warrant Agent for any exchange
or registration of transfer of Warrant Certificates. In addition, the Company
may require payment by such holder of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection therewith.
(e) All Warrant Certificates surrendered for exercise or for exchange in
case of mutilated Warrant Certificates shall be promptly cancelled by the
Warrant Agent and thereafter retained by the Warrant Agent until termination
of this Agreement or resignation as Warrant Agent, or, with the prior written
consent of Commonwealth, disposed of or destroyed, at the direction of the
Company.
(f) Prior to due presentment for registration of transfer thereof, the
Company and the Warrant Agent may deem and treat the Registered Holder of any
Warrant Certificate as the absolute owner thereof and of each Warrant
represented thereby (notwithstanding any notations of ownership or writing
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thereon made by anyone other than a duly authorized officer of the Company or
the Warrant Agent) for all purposes and shall not be affected by any notice to
the contrary.
SECTION 7. Loss or Mutilation. Upon receipt by the Company and the
Warrant Agent of evidence satisfactory to them of the ownership of and loss,
theft, destruction or mutilation of any Warrant Certificate and (in case of
loss, theft or destruction) of indemnity satisfactory to them, and (in the
case of mutilation) upon surrender and cancellation thereof, the Company shall
execute and the Warrant Agent shall ( in the absence of notice to the Company
and/or Warrant Agent that the Warrant Certificate has been acquired by a bona
fide purchaser) countersign and deliver to the Registered Holder in lieu
thereof a new Warrant Certificate of like tenor representing an equal
aggregate number of Warrants Applicants for a substitute Warrant Certificate
shall comply with such other reasonable regulations and pay such other
reasonable charges as the Warrant Agent may prescribe.
SECTION 8. Redemption.
(a) Commencing May 5, 1999 (18 months from the date of this Agreement),
on not less than thirty (30) days notice to Registered Holders of the Warrants
being redeemed, the Warrants may be redeemed, at the option of the Company, at
a redemption price of $.05 per Warrant, provided the Market Price of the
Common Stock receivable upon exercise of such Warrants shall exceed $1.25 (the
"Target Price"), subject to adjustment as set forth in Section 8(f), below.
Market Price for the purpose of this Section 8 shall mean (i) the average
closing bid price, for thirty (30) consecutive business days ending with the
date ofthe notice of redemption, which notice shall be mailed no later than
five days thereafter, of the Common Stock as reported by Nasdaq or (ii) the
average of the last reported sale prices for thirty (30) consecutive business
days ending with the date of the notice of redemption, which notice shall be
mailed no later than five days thereafter, on the primary exchange on which
the Common Stock is traded, if the Common Stock is traded on a national
securities exchange, including the Nasdaq National Market. The date fixed for
redemption of the Warrants is referred to herein as the "Redemption Date. "
(b) If the conditions set forth in Section 8(a) are met, and the Company
desires to exercise its right to redeem the Warrants, it shall mail a notice
of redemption to each of the Registered Holders of the Warrants to be
redeemed, first class, postage prepaid, not later than the thirtieth day
before the date fixed for redemption, at their last address as shall appear on
the records maintained pursuant to Section 6(b). Any notice mailed in the
manner provided herein shall be conclusively presumed to have been duly given
whether or not the Registered Holder receives such notice.
(c) The notice of redemption shall specify (i) the redemption price, (ii)
the Redemption Date, (iii) the place where the Warrant Certificates shall be
delivered and the redemption price paid, (iv) that Commonwealth will assist
each Registered Holder of a Warrant in connection with the exercise thereof
and (v) that the right to exercise the Warrant shall terminate at 5:00 P.M.
(New York time) on the business day immediately preceding the Redemption Date.
No failure to mail such notice nor any defect therein or in the mailing
thereof shall affect the validity of the proceedings for such redemption
except as to a Registered Holder (a) to whom notice was not mailed or (b)
whose notice does not substantially comply with the preceding sentence. An
affidavit of the Warrant Agent or of the Secretary or an Assistant Secretary
of the Company that notice of redemption has been mailed shall, in the absence
of fraud, be prima facie evidence of the facts stated therein.
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(d) Any right to exercise a Warrant shall terminate at 5:00 P.M. (New
York time) on the business day immediately preceding the Redemption Date. On
and after the Redemption Date, Holders of the Warrants shall have no further
rights except to receive, upon surrender of the Warrant, the Redemption Price.
(e) From and after the Redemption Date, the Company shall, at the place
specified in the notice of redemption, upon presentation and surrender to the
Company by or on behalf of the Registered Holder thereof of one or more
Warrant Certificates evidencing Warrants to be redeemed, deliver or cause to
be delivered to or upon the written order of such Holder a sum in cash equal
to the redemption price of each such Warrant. From and after the Redemption
Date and upon the deposit or setting aside by the Company of a sum sufficient
to redeem all the Warrants called for redemption, such Warrants shall expire
and become void and all rights hereunder and under the Warrant Certificates,
except the right to receive payment of the redemption price, shall cease.
(f) Notwithstanding anything to the contrary contained on this Section 8,
the Company may not redeem the Warrants unless at the time of the mailing of
the notice of redemption a registration statement covering the Warrants and
the shares of Common Stock issuable upon exercise thereof has been declared
effective and remains effective through the Redemption Date.
(g) If the shares of the Company's Common Stock are subdivided or
combined into a greater or smaller number of shares of Common Stock by one or
more stock dividends or a stock split or a reverse stock split, the Target
Price shall be proportionally adjusted by the ratio which the total number of
shares of Common Stock outstanding immediately prior to such event bears to
the total number of shares of Common Stock to be outstanding immediately after
such event.
SECTION 9. Adjustment of Exercise Price and Number of Shares of Common
Stock or Warrants.
(a) Subject to the exceptions referred to in Section 9(h) below, in the
event the Company shall, at any time during the one-year period commencing on
the initial closing date of the Private Placement, sell any shares of Common
Stock for a consideration per share less than the Purchase Price, the Purchase
Price shall be immediately adjusted to equal such issuance price.
(b) Subject to the exceptions referred to in Section 9(h) below, in the
event the Company shall, at any time or from time to time after the date
hereof, sell any shares of Common Stock for a consideration per share less
than the Market Price of the Common Stock (as defined in Section 8(a)) on the
date of the sale or issue any shares of Common Stock as a stock dividend to
the holders of Common Stock, or subdivide or combine the outstanding shares of
Common Stock into a greater or lesser number of shares (any such sale,
issuance, subdivision or combination being herein called a "Change of
Shares"), then, and thereafter upon each further Change of Shares, the
Purchase Price in effect immediately prior to such Change of Shares shall be
changed to a price (including any applicable fraction of a cent) determined by
multiplying the Purchase Price in effect immediately prior thereto by a
fraction, the numerator of which shall be the sum of the number of shares of
Common Stock outstanding immediately prior to the issuance of such additional
shares plus the number of shares of Common Stock which the aggregate
consideration received (determined as provided in subsection 9(g)(F) below)
for the issuance of such additional shares would purchase at the Market Price
and the denominator of which shall be the sum of the number of shares of
Common Stock outstanding immediately after the issuance of such additional
shares. Such adjustment shall be made successively whenever such an issuance
is made.
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Upon each adjustment of the Purchase Price pursuant to this Section 9,
the total number of shares of Common Stock purchasable upon the exercise of
each Warrant shall (subject to the provisions contained in Section 9(c)
hereof) be such number of shares (calculated to the nearest tenth) purchasable
at the Purchase Price in effect immediately prior to such adjustment
multiplied by a fraction, the numerator of which shall be the Purchase Price
in effect immediately prior to such adjustment and the denominator of which
shall be the Purchase Price in effect immediately after such adjustment.
(c) The Company may elect, upon any adjustment of the Purchase Price
hereunder, to adjust the number of Warrants outstanding, in lieu of the
adjustment in the number of shares of Common Stock purchasable upon the
exercise of each Warrant as hereinabove provided, so that each Warrant
outstanding after such adjustment shall represent the right to purchase one
share of Common Stock. Each Warrant held of record prior to such adjustment of
the number of Warrants shall become that number of Warrants (calculated to the
nearest tenth) determined by multiplying the number one by a fraction, the
numerator of which shall be the Purchase Price in effect immediately prior to
such adjustment and the denominator of which shall be the Purchase Price in
effect immediately after such adjustment. Upon each adjustment of the number
of Warrants pursuant to this Section 9, the Company shall, as promptly as
practicable, cause to be distributed to each Registered Holder of Warrant
Certificates on the date of such adjustment Warrant Certificates evidencing,
subject to Section 10 hereof, the number of additional Warrants to which such
Holder shall be entitled as a result of such adjustment or, at the option of
the Company, cause to be distributed to such Holder in substitution and
replacement for the Warrant Certificates held by him prior to the date of
adjustment (and upon surrender thereof, if required by the Company) new
Warrant Certificates evidencing the number of Warrants to which such Holder
shall be entitled after such adjustment.
(d) In case of any reclassification, capital reorganization or other
change of outstanding shares of Common Stock, or in case of any consolidation
or merger of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the continuing corporation and
which does not result in any reclassification, capital reorganization or other
change of outstanding shares of Common Stock), or in case of any sale or
conveyance to another corporation of the property of the Company as, or
substantially as, an entirety (other than a sale/leaseback, mortgage or other
financing transaction), the Company shall cause effective provision to be made
so that each holder of a Warrant then outstanding shall have the right
thereafter, by exercising such Warrant, to purchase the kind and number of
shares of stock or other securities or property (including cash) receivable
upon such reclassification, capital reorganization or other change,
consolidation, merger, sale or conveyance by a holder of the number of shares
of Common Stock that might have been purchased upon exercise of such Warrant
immediately prior to such reclassification, capital reorganization or other
change, consolidation, merger, sale or conveyance. Any such provision shall
include provision for adjustments that shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 9. The Company
shall not effect any such consolidation, merger or sale unless prior to or
simultaneously with the consummation thereof the successor (if other than the
Company) resulting from such consolidation or merger or the corporation
purchasing assets or other appropriate corporation or entity shall assume, by
written instrument executed and delivered to the Warrant Agent, the obligation
to deliver to the holder of each Warrant such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such holders may be
entitled to purchase and the other obligations under this Agreement. The
foregoing provisions shall similarly apply to successive reclassifications,
capital reorganizations and other changes of outstanding shares of Common
Stock and to successive consolidations, mergers, sales or conveyances.
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(e) Irrespective of any adjustments or changes in the Purchase Price or
the number of shares of Common Stock purchasable upon exercise of the
Warrants, the Warrant Certificates theretofore and thereafter issued shall,
unless the Company shall exercise its option to issue new Warrant Certificates
pursuant to Section 2(d) hereof, continue to express the Purchase Price per
share, the number of shares purchasable thereunder and the Redemption Price
therefor as the Purchase Price per share, and the number of shares purchasable
and the Redemption Price therefore were expressed in the Warrant Certificates
when the same were originally issued
(f) After each adjustment of the Purchase Price pursuant to this Section
9, the Company will promptly prepare a certificate signed by the Chairman or
President, and by the Treasurer or an Assistant Treasurer or the Secretary or
an Assistant Secretary, of the Company setting forth: (i) the Purchase Price
as so adjusted, (ii) the number of shares of Common Stock purchasable upon
exercise of each Warrant after such adjustment, and, if the Company shall have
elected to adjust the number of Warrants, the number of Warrants to which the
registered holder of each Warrant shall then be entitled, and the adjustment
in Redemption Price resulting therefrom, and (iii) a brief statement of the
facts accounting for such adjustment. The Company will promptly file such
certificate with the Warrant Agent and cause a brief summary thereof to be
sent by ordinary first class mail to Commonwealth and to each registered
holder of Warrants at his last address as it shall appear on the registry
books of the Warrant Agent. No failure to mail such notice nor any defect
therein or in the mailing thereof shall affect the validity thereof except as
to the holder to whom the Company failed to mail such notice, or except as to
the holder whose notice was defective. The affidavit of an offcer of the
Warrant Agent or the Secretary or an Assistant Secretary of the Company that
such notice has been mailed shall, in the absence of fraud, be prima facie
evidence of the facts stated therein.
(g) For purposes of Section 9(b) and 9(c) hereof, the following
provisions (A) to (F) shall also be applicable:
(A) The number of shares of Common Stock outstanding at any given
time shall include shares of Common Stock owned or held by or for the account
of the Company and the sale or issuance of such treasury shares or the
distribution of any such treasury shares shall not be considered a Change of
Shares for purposes of said sections.
(B) No adjustment of the Purchase Price shall be made unless such
adjustment would require an increase or decrease of at least $.025 in such
price; provided that any adjustments which by reason of this clause (B) are
not required to be made shall be carried forward and shall be made at the time
of and together with the next subsequent adjustment which, together with any
adjustment(s) so carried forward, shall require an increase or decrease of at
least $.025 in the Purchase Price then in effect hereunder.
(C) In case of (1) the sale by the Company for cash (or as a
component of a unit being sold for cash) of any rights or warrants to
subscribe for or purchase, or any options for the purchase of, Common Stock or
any securities convertible into or exchangeable for Common Stock without the
payment of any further consideration other than cash, if any (such securities
convertible, exercisable or exchangeable into Common Stock being herein called
"Convertible Securities"), or (2) the issuance by the Company, without the
receipt by the Company of any consideration therefor, of any rights or
warrants to subscribe for or purchase, or any options for the purchase of,
Common Stock or Convertible Securities, in each case, if (and only if) the
consideration payable to the Company upon the exercise of such rights,
warrants or options shall consist of cash, whether or not such rights,
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warrants or options, or the right to convert or exchange such Convertible
Securities, are immediately exercisable, and the price per share for which
Common Stock is issuable upon the exercise of such rights, warrants or options
or upon the conversion or exchange of such Convertible Securities (determined
by dividing (x) the minimum aggregate consideration payable to the Company
upon the exercise of such rights, warrants or options, plus the consideration
received by the Company for the issuance or sale of such rights, warrants or
options, plus, in the case of such Convertible Securities, the minimum
aggregate amount of additional consideration, if any, other than such
Convertible Securities, payable upon the conversion or exchange thereof, by
(y) the total maximum number of shares of Common Stock issuable upon the
exercise of such rights, warrants or options or upon the conversion or
exchange of such Convertible Securities issuable upon the exercise of such
rights, warrants or options) is less than the Market Price of the Common Stock
on the date of the issuance or sale of such rights, warrants or options, then
the total maximum number of shares of Common Stock issuable upon the exercise
of such rights, warrants or options or upon the conversion or exchange of such
Convertible Securities (as of the date of the issuance or sale of such rights,
warrants or options) shall be deemed to be outstanding shares of Common Stock
for purposes of Sections 9(b) and 9(c) hereof and shall be deemed to have been
sold for cash in an amount equal to such price per share.
(D) In case of the sale by the Company for cash of any Convertible
Securities, whether or not the right of conversion or exchange thereunder is
immediately exercisable, and the price per share for which Common Stock is
issuable upon the conversion or exchange of such Convertible Securities
(determined by dividing (x) the total amount of consideration received by the
Company for the sale of such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, other than such
Convertible Securities, payable upon the conversion or exchange thereof, by
(y) the total maximum number of shares of Common Stock issuable upon the
conversion or exchange of such Convertible Securities) is less than the Market
Price of the Common Stock on the date of the sale of such Convertible
Securities, then the total maximum number of shares of Common Stock issuable
upon the conversion or exchange of such Convertible Securities (as of the date
of the sale of such Convertible Securities) shall be deemed to be outstanding
shares of Common Stock for purposes of Sections 9(b) and 9(c) hereof and shall
be deemed to have been sold for cash in an amount equal to such price per
share.
(E) In case the Company shall modify the rights of conversion,
exchange or exercise of any of the securities referred to in (C) above or any
other securities of the Company convertible, exchangeable or exercisable for
shares of Common Stock, for any reason other than an event that would require
adjustment to prevent dilution, so that the consideration per share received
by the Company after such modification is less than the Market Price on the
date prior to such modification, the Purchase Price to be in effect after such
modification shall be determined by multiplying the Purchase Price in effect
immediately prior to such event by a fraction, of which the numerator shall be
the number of shares of Common Stock outstanding multiplied by the Market
Price on the date prior to the modification plus the number of shares of
Common Stock which the aggregate consideration receivable by the Company for
the securities affected by the modification would purchase at the Market Price
and of which the denominator shall be the number of shares of Common Stock
outstanding on such date plus the number of shares of Common Stock to be
issued upon conversion, exchange or exercise of the modified securities at the
modified rate. Such adjustment shall become effective as of the date upon
which such modification shall take effect. On the expiration of any such
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right, warrant or option or the termination of any such right to convert or
exchange any such Convertible Securities referred to in Paragraph (C) or (D)
above, the Purchase Price then in effect hereunder shall forthwith be
readjusted to such Purchase Price as would have obtained (a) had the
adjustments made upon the issuance or sale of such rights, warrants, options
or Convertible Securities been made upon the basis of the issuance of only the
number of shares of Common Stock theretofore actually delivered (and the total
consideration received therefor) upon the exercise of such rights, warrants or
options or upon the conversion or exchange of such Convertible Securities and
(b) had adjustments been made on the basis of the Purchase Price as adjusted
under clause (a) for all transactions (which would have affected such adjusted
Purchase Price) made after the issuance or sale of such rights, warrants,
options or Convertible Securities.
(F) In case of the sale for cash of any shares of Common Stock, any
Convertible Securities, any rights or warrants to subscribe for or purchase,
or any options for the purchase of, Common Stock or Convertible Securities,
the consideration received by the Company therefore shall be deemed to be the
gross sales price therefor without deducting therefrom any expense paid or
incurred by the Company or any underwriting discounts or commissions or
concessions paid or allowed by the Company in connection therewith.
(h) No adjustment to the Purchase Price of the Warrants or to the number
of shares of Common Stock purchasable upon the exercise of each Warrant will
be made, however,
(i) upon the exercise of any of the options presently outstanding
under the Company's Stock Option Plan (the "Plan") for officers, directors and
certain other key personnel of the Company; or
(ii) upon the sale or exercise of the Warrants, or
(iii) upon the sale of any shares of Common Stock or Convertible
Securities in a firm commitment underwritten public offering, including,
without limitation, shares sold upon the exercise of any overallotment option
granted to the underwriters in connection with such offering, or
(iv) upon the issuance or sale of Common Stock or Convertible
Securities upon the exercise of any rights or warrants to subscribe for or
purchase, or any options for the purchase of, Common Stock or Convertible
Securities, whether or not such rights, warrants or options were outstanding
on the date of the original sale of the Warrants or were thereafter issued or
sold; or
(v) upon the issuance or sale of Common Stock upon conversion or
exchange of any Convertible Securities, whether or not any adjustment in the
Purchase Price was made or required to be made upon the issuance or sale of
such Convertible Securities and whether or not such Convertible Securities
were outstanding on the date of the original sale of the Warrants or were
thereafter issued or sold;
(i) As used in this Section 9, the term "Common Stock" shall mean and
include the Company's Common Stock authorized on the date of the original
issue of the Units and shall also include any capital stock of any class of
the Company thereafter authorized which shall not be limited to a fixed sum or
percentage in respect of the rights of the holders thereof to participate in
dividends and in the distribution of assets upon the voluntary liquidation,
dissolution or winding up of the Company; provided, however, that the shares
issuable upon exercise of the Warrants shall include only shares of such class
designated in the Company's Articles of Incorporation as Common Stock on the
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date of the original issue of the Units or (i), in the case of any
reclassification, change, consolidation, merger, sale or conveyance of the
character referred to in Section 9(d) hereof, the stock, securities or
property provided for in such section or (ii), in the case of any
reclassification or change in the outstanding shares of Common Stock issuable
upon exercise of the Warrants as a result of a subdivision or combination or
consisting of a change in par value, or from par value to no par value, or
from no par value to par value, such shares of Common Stock as so reclassified
or changed.
(j) Any determination as to whether an adjustment in the Purchase Price
in effect hereunder is required pursuant to Section 9, or as to the amount of
any such adjustment, if required, shall be binding upon the holders of the
Warrants and the Company if made in good faith by the Board of Directors of
the Company.
(k) If and whenever the Company shall grant to the holders of Common
Stock, as such, rights or warrants to subscribe for or to purchase, or any
options for the purchase of, Common Stock or securities convertible into or
exchangeable for or carrying a right, warrant or option to purchase Common
Stock, the Company shall concurrently therewith grant to each Registered
Holder as of the record date for such transaction of the Warrants then
outstanding, the rights, warrants or options to which each Registered Holder
would have been entitled if, on the record date used to determine the
stockholders entitled to the rights, warrants or options being granted by the
Company, the Registered Holder were the holder of record of the number of
whole shares of Common Stock then issuable upon exercise (assuming, for
purposes of this section 9(j), that exercise of Warrants is permissible during
periods prior to the Initial Warrant Exercise Date) of his Warrants. Such
grant by the Company to the holders of the Warrants shall be in lieu of any
adjustment which otherwise might be called for pursuant to this Section 9.
SECTION 10. Registration Under The Securities Act of 1933. The Company
agrees to register for resale the Warrants and the shares of Common Stock
issued or issuable upon exercise of the Warrants under the Securities Act of
1933, as amended (the "Act") no later than August 5, 1998, as more fully set
forth in Section IV of the Subscription Agreement between the Company and each
of the investors in the Private Placement, subject to certain contractual
restrictions on transfer and exercise applicable to the Holder.
SECTION 11. Fractional Warrants and Fractional Shares.
(a) If the number of shares of Common Stock purchasable upon the exercise
of each Warrant is adjusted pursuant to Section 9 hereof, the Company
nevertheless shall not be required to issue fractions of shares, upon exercise
of the Warrants or otherwise, or to distribute certificates that evidence
fractional shares. With respect to any fraction of a share called for upon any
exercise hereof, the Company shall pay to the Holder an amount in cash equal
to such fraction multiplied by the current market value of such fractional
share, determined as follows:
(1) If the Common Stock is listed on a National Securities Exchange
or admitted to unlisted trading privileges on such exchange or listed for
trading on the Nasdaq National Market, the current market value shall be the
last reported sale price of the Common Stock on such exchange or market on the
last business day prior to the date of exercise of this Warrant or if no such
sale is made on such day, the average of the closing bid and asked prices for
such day on such exchange or market; or
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(2) If the Common Stock is not listed or admitted to unlisted trading
privileges, the current market value shall be the mean of the last reported
bid and asked prices reported by the Nasdaq SmallCap Market or, if not traded
thereon, by the National Quotation Bureau, Inc. on the last business day prior
to the date of the exercise of this Warrant; or
(3) If the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and asked prices are not so reported, the current
market value shall be an amount determined in such reasonable manner as may be
prescribed by the Board of Directors of the Company.
SECTION 12. Warrant Holders Not Deemed Stockholders. Subject to Section
9(k), no holder of Warrants shall, as such, be entitled to vote or to receive
dividends or be deemed the holder of Common Stock that may at any time be
issuable upon exercise of such Warrants for any purpose whatsoever, nor shall
anything contained herein be construed to confer upon the holder of Warrants,
as such, any of the rights of a stockholder of the Company or any right to
vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any recapitalization, issue or reclassification
of stock, change of par value or change of stock to no par value,
consolidation, merger or conveyance or otherwise), or to receive notice of
meetings, or to receive dividends or subscription rights, until such Holder
shall have exercised such Warrants and been issued shares of Common Stock in
accordance with the provisions hereof.
SECTION 13. Rights of Action. All rights of action with respect to this
Agreement are vested in the respective Registered Holders of the Warrants, and
any Registered Holder of a Warrant, without consent of the Warrant Agent or of
the holder of any other Warrant, may, in his own behalf and for his own
benefit, enforce against the Company his right to exercise his Warrants for
the purchase of shares of Common Stock in the manner provided in the Warrant
Certificate and this Agreement.
SECTION 14. Agreement of Warrant Holders. Every holder of a Warrant, by
his acceptance thereof, consents and agrees with the Company, the Warrant
Agent and every other holder of a Warrant that:
(a) The Warrants are transferable only on the registry books of the
Warrant Agent by the Registered Holder thereof in person or by his
attorney-in-fact duly authorized in writing and only if the Warrant
Certificates representing such Warrants are surrendered at the office of the
Warrant Agent, duly endorsed or accompanied by a proper instrument of transfer
satisfactory to the Warrant Agent and the Company in their sole discretion,
together with payment of any applicable transfer taxes; and
(b) The Company and the Warrant Agent may deem and treat the person in
whose name the Warrant Certificate is registered as the holder and as the
absolute, true and lawful owner of the Warrants represented thereby for all
purposes, and neither the Company nor the Warrant Agent shall be affected by
any notice or knowledge to the contrary, except as otherwise expressly
provided in Section 7 hereof.
SECTION 15. Cancellation of Warrant Certificates. If the Company shall
purchase or acquire any Warrant or Warrants, the Warrant Certificate or
Warrant Certificates evidencing the same shall thereupon be delivered to the
Warrant Agent and cancelled by it and retired. The Warrant Agent shall also
cancel the Warrant Certificate or Warrant Certificates following exercise of
any or all of the Warrants represented thereby or delivered to it for
transfer, split up, combination or exchange.
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SECTION 16. Concerning the Warrant Agent. The Warrant Agent acts
hereunder as agent and in a ministerial capacity for the Company, and its
duties shall be determined solely by the provisions hereof. The Warrant Agent
shall not, by issuing and delivering Warrant Certificates or by any other act
hereunder be deemed to make any representations as to the validity, value or
authorization of the Warrant Certificates or the Warrants represented thereby
or of any securities or other property delivered upon exercise of any Warrant
or whether any stock issued upon exercise of any Warrant is fully paid and
nonassessable.
The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of Warrant Certificates to make or cause to be
made any adjustment of the Purchase Price or the Redemption Price provided in
this Agreement, or to determine whether any fact exists which may require any
such adjustments, or with respect to the nature or extent of any such
adjustment, when made, or with respect to the method employed in making the
same. It shall not (i) be liable for any recital or statement of facts
contained herein or for any action taken, suffered or omitted by it in
reliance on any Warrant Certificate or other document or instrument believed
by it in good faith to be genuine and to have been signed or presented by the
proper party or parties, (ii) be responsible for any failure on the part of
the Company to comply with any of its covenants and obligations contained in
this Agreement or in any Warrant Certificate, or (iii) be liable for any act
or omission in connection with this Agreement except for its own negligence or
wilful misconduct.
The Warrant Agent may at any time consult with counsel satisfactory to it
(who may be counsel for the Company) and shall incur no liability or
responsibility for any action taken, suffered or omitted by it in good faith
in accordance with the opinion or advice of such counsel.
Any notice, statement, instruction, request, direction, order or demand
of the Company shall be sufficiently evidenced by an instrument signed by the
Chairman of the Board, President, any Vice President, its Secretary, or
Assistant Secretary, (unless other evidence in respect thereof is herein
specifically prescribed). The Warrant Agent shall not be liable for any action
taken, suffered or omitted by it in accordance with such notice, statement,
instruction, request, direction, order or demand believed by it to be genuine.
The Company agrees to pay the Warrant Agent reasonable compensation for
its services hereunder and to reimburse it for its reasonable expenses
hereunder; it further agrees to indemnify the Warrant Agent and save it
harmless against any and all losses, expenses and liabilities, including
judgments, costs and counsel fees, for anything done or omitted by the Warrant
Agent in the execution of its duties and powers hereunder except losses,
expenses and liabilities arising as a result of the Warrant Agent's negligence
or wilful misconduct.
The Warrant Agent may resign its duties and be discharged from all
further duties and liabilities hereunder (except liabilities arising as a
result of the Warrant Agent's own negligence or wilful misconduct), after
giving 30 days' prior written notice to the Company. At least 15 days prior to
the date such resignation is to become effective, the Warrant Agent shall
cause a copy of such notice of resignation to be mailed to the Registered
Holder of each Warrant Certificate at the Company's expense. Upon such
resignation, or any inability of the Warrant Agent to act as such hereunder,
the Company shall appoint a new warrant agent in writing. If the Company shall
fail to make such appointment within a period of 15 days after it has been
notified in writing of such resignation by the resigning Warrant Agent, then
the Registered Holder of any Warrant Certificate may apply to any court of
14
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competent jurisdiction for the appointment of a new warrant agent. Any new
warrant agent, whether appointed by the Company or by such a court, shall be a
bank or trust company having a capital and surplus, as shown by its last
published report to its stockholders, of not less than $10,000,000 or a stock
transfer company. After acceptance in writing of such appointment by the new
warrant agent is received by the Company, such new warrant agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named herein as the Warrant Agent, without any further
assurance, conveyance, act or deed; but if for any reason it shall be
necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the resigning
Warrant Agent. Not later than the effective date of any such appointment the
Company shall file notice thereof with the resigning Warrant Agent and shall
forthwith cause a copy of such notice to be mailed to the Registered Holder of
each Warrant Certificate.
Any corporation into which the Warrant Agent or any new warrant agent may
be converted or merged or any corporation resulting from any consolidation to
which the Warrant Agent or any new warrant agent shall be a party or any
corporation succeeding to the trust business of the Warrant Agent shall be a
successor warrant agent under this Agreement without any further act, provided
that such corporation is eligible for appointment as successor to the Warrant
Agent under the provisions of the preceding paragraph. Any such successor
warrant agent shall promptly cause notice of its succession as warrant agent
to be mailed to the Company and to the Registered Holder of each Warrant
Certificate.
The Warrant Agent, its subsidiaries and affiliates, and any of its or
their officers or directors, may buy and hold or sell Warrants or other
securities of the Company and otherwise deal with the Company in the same
manner and to the same extent and with like effects as though it were not
Warrant Agent. Nothing herein shall preclude the Warrant Agent from acting in
any other capacity for the Company or for any other legal entity.
SECTION 17. Modification of Agreement. The parties hereto may by
supplemental agreement make any changes or corrections in this Agreement (i)
that they shall deem appropriate to cure any ambiguity or to correct any
defective or inconsistent provision or manifest mistake or error herein
contained; (ii) to reflect an increase in the number of Warrants which are to
be governed by this Agreement resulting from a subsequent public offering of
Company securities which includes Warrants having the same terms and
conditions as the Warrants originally covered by or subsequently added to this
Agreement under this Section 17; or (iii) that they may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Warrant Certificates; provided, however, that this Agreement shall not
otherwise be modified, supplemented or altered in any respect except with the
consent in writing of the Registered Holders of Warrant Certificates
representing not less than 50% of the Warrants then outstanding; and provided,
further, that no change in the number or nature of the securities purchasable
upon the exercise of any Warrant, or the Purchase Price therefor, or the
acceleration of the Warrant Expiration Date, shall be made without the consent
in writing of the Registered Holder of the Warrant Certificate representing
such Warrant, other than such changes as are specifically prescribed by this
Agreement as originally executed or are made in compliance with applicable
law.
SECTION 18. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
made when delivered or mailed first class registered or certified mail,
postage prepaid as follows: if to the Registered Holder of a Warrant
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Certificate, at the address of such holder as shown on the registry books
maintained by the Warrant Agent; if to the Company, at Datalink Systems
Corporation, 1735 Technology Drive, Suite 790, San Jose, California, 95110,
attention: Anthony LaPine, or at such other address as may have been furnished
to the Warrant Agent in writing by the Company; if to the Warrant Agent, at
its Corporate Office, if to Commonwealth, at Commonwealth Associates, 830
Third Avenue, New York, New York 10022.
SECTION 19. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without
reference to principles of conflict of laws.
SECTION 20. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Company and, the Warrant Agent and their
respective successors and assigns, and the holders from time to time of
Warrant Certificates . Nothing in this Agreement is intended or shall be
construed to confer upon any other person any right, remedy or claim, in
equity or at law, or to impose upon any other person any duty, liability or
obligation.
SECTION 21. Termination. This Agreement shall terminate at the close of
business on the earlier of the Warrant Expiration Date or the date upon which
all Warrants have been exercised, except that the Warrant Agent shall account
to the Company for cash held by it and the provisions of Section l 5 hereof
shall survive such termination.
SECTION 22. Counterparts. This Agreement may be executed in several
counterparts, which taken together shall constitute a single document.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
DATALINK SYSTEMS CORPORATION
By: /s/ Anthony LaPine
Anthony LaPine, Chief Executive Officer
AMERICAN SECURITIES TRANSFER & TRUST, INC.
By: /s/
Authorized Officer
COMMONWEALTH ASSOCIATES, a New York limited
partnership
By: COMMONWEALTH MANAGEMENT CO., INC.
a New York corporation, its general partner
By: /s/ Joseph P. Wynne
Name: Joseph P. Wynne
Title: Chief Financial Officer
16
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THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUABLE UPON ITS EXERCISE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE
TRANSFERRED UNTIL (1) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933 (THE "ACT") SHALL HAVE BECOME EFFECTIVE WITH RESPECT THERETO, OR (2)
RECEIPT BY THE ISSUER OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
ISSUER TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED IN
CONNECTION WITH SUCH PROPOSED TRANSFER NOR IS SUCH TRANSFER IN VIOLATION OF
ANY APPLICABLE STATE SECURITIES LAWS.
EXHIBIT A
[FORM OF FACE OF WARRANT CERTIFICATE]
No. W _____ Warrants
VOID AFTER NOVEMBER 5, 2002
WARRANT CERTIFICATE FOR PURCHASE
OF COMMON STOCK
DATALINK SYSTEMS CORPORATION
This certifies that FOR VALUE RECEIVED ____________________________ or
registered assigns (the "Registered Holder") is the owner of the number of
Warrants ("Warrants") specified above. Each Warrant represented hereby
initially entitles the Registered Holder to purchase, subject to the terms and
conditions set forth in this Warrant Certificate and the Warrant Agreement (as
hereinafter defined), one fully paid and nonassessable share of Common Stock,
$.001 par value ("Common Stock"), of Datalink Systems Corporation, a Nevada
corporation (the "Company"), at any time commencing November 5, 1998 and prior
to the Expiration Date (as hereinafter defined), upon the presentation and
surrender of this Warrant Certificate with the Subscription Form on the
reverse hereof duly executed, at the corporate office of American Securities
Transfer & Trust, Inc. as Warrant Agent, or its successor (the "Warrant
Agent"), accompanied by payment of $. 50 (the "Purchase Price") in lawful
money of the United States of America in cash or by official bank or certified
check made payable to Company.
This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject in all respects to the terms and conditions set
forth in the Warrant Agreement (the "Warrant Agreement"), dated November 5,
1997, by and among the Company, the Warrant Agent and Commonwealth Associates.
In the event of certain contingencies provided for in the Warrant
Agreement, the Purchase Price or the number of shares of Common Stock subject
to purchase upon the exercise of each Warrant represented hereby are subject
to modification or adjustment.
Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional shares of Common Stock will be issued. In
the case of the exercise of less than all the Warrants represented hereby, the
Company shall cancel this Warrant Certificate upon the surrender hereof and
shall execute and deliver a new Warrant Certificate or Warrant Certificates of
like tenor, which the Warrant Agent shall countersign, for the balance of such
Warrants.
A-1
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The term "Expiration Date" shall mean 5:00 P.M. (New York time) on
November 5, 2002 or such earlier date as the Warrants shall be redeemed. If
such date shall in the State of New York be a holiday or a day on which banks
are authorized to close, then the Expiration Date shall mean 5:00 P.M. New
York time) the next following day which in the State of New York is not a
holiday or a day on which banks are authorized to close.
The Company shall not be obligated to deliver any securities pursuant to
the exercise of the Warrants represented hereby unless a registration
statement under the Securities Act of 1933, as amended, with respect to such
securities is effective. The Company has covenanted and agreed that it will
file a registration statement in accordance with the terms of the subscription
agreements executed in connection with the Company's 1997 private placement.
The Warrants represented hereby shall not be exercisable by a Registered
Holder in any state where such exercise would be unlawful.
This Warrant Certificate is exchangeable, upon the surrender hereof by
the Registered Holder at the corporate office of the Warrant Agent, for a new
Warrant Certificate or Warrant Certificates of like tenor representing an
equal aggregate number of Warrants, each of such new Warrant Certificates to
represent such number of Warrants as shall be designated by such Registered
Holder at the time of such surrender. Upon due presentment with any transfer
fee, tax, or governmental charge imposed in connection therewith, for
registration of transfer of this Warrant Certificate at such office, a new
Warrant Certificate or Warrant Certificates representing an equal aggregate
number of Warrants will be issued to the transferee in exchange therefor,
subject to the limitations provided in the Warrant Agreement.
Prior to the exercise of any Warrant represented hereby, the Registered
Holder shall not be entitled to any rights of a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends or
other distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided in the Warrant Agreement.
The Warrants represented hereby may be redeemed at the option of the
Company, at a redemption price of $.05 per Class A Warrant at any time
commencing May 5, 1999 provided the Market Price (as defined in the Warrant
Agreement) for the Common Stock shall exceed $1.25 per share. Notice of
redemption shall be given not later than the thirtieth day before the date
fixed for redemption, all as provided in the Warrant Agreement. On and after
the date fixed for redemption, the Registered Holder shall have no rights with
respect to the Warrants represented hereby except to receive the $.05 per
Warrant upon surrender of this Warrant Certificate.
Prior to due presentment for registration of transfer hereof, the Company
and the Warrant Agent may deem and treat the Registered Holder as the absolute
owner hereof and of each Warrant represented hereby (notwithstanding any
notations of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and
shall not be affected by any notice to the contrary.
This Warrant Certificate shall be governed by and construed in accordance
with the laws of the State of New York.
This Warrant Certificate is not valid unless countersigned by the Warrant
Agent.
A-2
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IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed, manually or in facsimile, by two of its officers "hereunto duly
authorized and a facsimile of its corporate seal to be imprinted hereon.
DATALINK SYSTEMS CORPORATION
Dated:________________ By:____________________________________
By:____________________________________
[seal]
Countersigned:
AMERICAN SECURITIES TRANSFER & TRUST, INC.,
as Warrant Agent
By:___________________________________
Authorized Officer
A-3
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[FORM OF REVERSE OF WARRANT CERTIFICATE]
SUBSCRIPTION FORM
To Be Executed by the Registered Holder
in Order to Exercise Warrants
The undersigned Registered Holder hereby irrevocably elects to exercise
_________ Warrants represented by this Warrant Certificate, and to purchase
the securities issuable upon the exercise of such Warrants, and requests that
certificates for such securities shall be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
__________________
__________________
__________________
[please print or type name and address]
and be delivered to
__________________
__________________
__________________
[please print or type name and address]
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
A-4
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ASSIGNMENT
To Be Executed by the Registered Holder
in Order to Assign Warrants
FOR VALUE RECEIVED, ____________________ hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
__________________
__________________
__________________
[please print or type name and address]
___________ of the Warrants represented by this Warrant Certificate, and
hereby irrevocably constitutes and appoints ______________ Attorney to
transfer this Warrant Certificate on the books of the Company, with full power
of substitution in the premises
Dated: ______________________ X _________________________________
Signature Guaranteed
__________________________________
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO
THE NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND
MUST BE GUARANTEED BY A MEMBER OF THE MEDALLION STAMP PROGRAM.
A-5
KRYS BOYLE FREEDMAN & SAWYER, P.C.
ATTORNEYS AT LAW
Telephone 600 17th Street, Suite 2700 S Facsimile
(303) 893-2300 Denver, Colorado 80202 (303) 893-2882
February 8, 1999
Datalink Systems Corporation
1735 Technology Way, Suite 790
San Jose, California 95110
Gentlemen:
We have acted as counsel to Datalink Systems Corporation, a Nevada
corporation (the "Company"), in connection with the preparation and filing
with the Securities and Exchange Commission of a Registration Statement on
Form S-3 (the "Registration Statement"), pursuant to which the Company is
registering under the Securities Act of 1933, as amended, 4,390,006 shares
(the "Shares") of its common stock, $.001 par value (the "Common Stock"), and
2,054,313 common stock purchase warrants (the "Warrants") which may be sold by
Selling Securityholders. Of the Shares of Common Stock which may be sold,
2,335,693 Shares are issuable upon the conversion of Series A Convertible
Preferred Stock and 2,054,313 Shares are issuable upon the exercise of the
Warrants. This opinion is being rendered in connection with the filing of the
Registration Statement. All capitalized terms used herein and not otherwise
defined shall have the respective meanings given to them in the Registration
Statement.
In connection with this opinion, we have examined the Company's Articles
of Incorporation and Bylaws, both as currently in effect; such other records
of the corporate proceedings of the Company and certificates of the Company's
officers as we have deemed relevant; and the Registration Statement and the
exhibits thereto.
In our examination, we have assumed the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies.
Based upon the foregoing, and subject to the limitations set forth below,
we are of the opinion that the 2,054,313 Warrants being offered for resale
have been duly and validly authorized by the Company and have been duly and
validly issued and are fully paid and non-assessable.
Based upon the foregoing and in reliance thereon, and subject to the
limitations set forth below, we are of the opinion that the 2,335,693 shares
of Common Stock issuable upon the conversion of the Series A Convertible
Preferred Stock and the 2,054,313 shares of Common Stock issuable upon
exercise of the outstanding Warrants in accordance with their respective
terms, when issued, will be duly and validly authorized, legally issued, fully
paid and non-assessable.
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We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We hereby further consent to the reference to us
under the caption "Legal Matters" in the prospectus included in the
Registration Statement.
Very truly yours,
KRYS BOYLE FREEDMAN & SAWYER, P.C.
By:/s/ Jon D. SAwyer
Jon D. Sawyer
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Datalink Systems Corporation
San Jose, California
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement on Form S-3 of our report
dated December 2, 1998, appearing in the Company's Annual Report on Form 10-
KSB, as amended, relating to the consolidated financial statements of Datalink
Systems Corporation for the fiscal year ended March 31, 1998. We also consent
to the reference to our firm under the heading "Experts" in the Prospectus.
/s/ BDO Seidman, L.L.P.
BDO SEIDMAN, L.L.P.
San Jose, California
February 8, 1999
