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EXHIBIT 10.39
PURCHASE AGREEMENT
This Purchase Agreement and its Exhibit A ("Form of Warrant"), Exhibit B
("Registration Rights Agreement"), Exhibit C ("Convertible Note"), and Exhibit
D ("Legal Opinion of Company Counsel") are made as of May 28, 1996, by and
between VASCO CORP., a Delaware corporation ("Company") with its principal
office at 0000 Xxxxx Xxxxxxxx, Xxxxxxx, Xxxxxxxx 00000 ("Company") and KYOTO
SECURITIES, LTD., a Bahamian corporation ("Purchaser").
IN CONSIDERATION of the mutual covenants contained in this Agreement, the
Company and the Purchaser agree as follows:
SECTION 1.
Authorization and Sale of Shares of Common Stock, and Warrants
1.1 Authorization of Sale of Shares of Common Stock and Warrants. Subject
to the terms and conditions of this Purchase Agreement, the Company has
authorized the private placement sale to the Purchaser of up $3,000,000 worth
of the Company's common stock, par value $0.001 per share (the "Shares of
Common Stock"), consisting of up to 666,666 Shares of Common Stock, at a price
per share of $4.50 per share, and a total of 100,000 Common Stock warrants
("Warrants").
(a) Each Common Stock Warrant authorizes the purchase of one (1) Share of
Common Stock of the Company at an exercise price of $4.50 per share for up to
five (5) years after closing of this Offering ( "Closing").
(b) The Company's Shares of Common Stock; the Shares of Common Stock to be
issued upon exercise of the Warrants ("Warrant Shares"); the shares of Company
Common Stock to be issued upon the conversion of all or a portion of the
Convertible Note issued to Purchaser pursuant to the terms of this Purchase
Agreement ("Note Conversion Shares"); and the shares of Company Common Stock
received by Purchaser in lieu of cash interest payments as identified in
Section 2.1 (a) herein ("Note Interest Shares") are restricted from sale,
through any transaction on any exchange or market where the Company's Shares of
Common Stock are listed or traded, until June 7, 1998, except in a private
transaction, or in accordance with the Registration Rights Agreement referred
to in Section 1.2 below, and will bear the following legend:
"The shares represented by this certificate have not been registered under the
Securities Act of 1933, as Amended, or the securities law of any state and thus
may not be offered for sale, sold, transferred or otherwise disposed of through
any transaction on any exchange or market where the Company's Shares of Common
Stock are listed or traded, until June 7, 1998, unless registered under the
Securities Act of 1933, as Amended, and the securities laws of the applicable
State, or in accordance with a Registration Rights Agreement, dated May 28,
1996, on file with the Company, or unless exemptions from such registration are
available."
(c) The certificates representing the Warrants (the "Warrant
Certificates") shall be in substantially the form attached hereto as Exhibit A.
The Warrants are exercisable immediately into the restricted Shares of the
Common Stock of the Company.
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1.2 Sale of Shares of Common Stock and Warrants. The Company agrees to
sell to the Purchaser, and Purchaser agrees to buy from the Company, upon the
terms and conditions hereinafter set forth, 666,666 Shares of Common Stock at a
price of $4.50 per Share of Common Stock, including 100,000 Warrants for a
total purchase price for both Shares and Warrants of three million dollars
($3,000,000.00). The Company will grant to Purchaser certain registration
rights ("Registration Rights") for all Shares of Common Stock and Warrants
issued pursuant to this Purchase Agreement as set forth in Exhibit B hereto.
1.3 Payment Schedule. The Purchaser agrees to make the following
Non-refundable Deposit and Purchase Payments, in accordance with the following
payment schedule:
(a) At the time of the execution of this Purchase Agreement, Purchaser
will make a non-refundable cash deposit, by wire transfer, to the Company in
the amount of $250,000 ("Non-refundable Deposit") to an account designated by
the Company in consideration of Purchaser's agreement to the terms and
conditions of this Purchase Agreement, and Purchaser's undertaking to provide
all of the funds identified herein on or before the dates specified for the
purchase of the Shares of Common Stock, Warrants, and the Note, defined in
Section 2 below.
(i) This deposit is irrevocable by the Purchaser and is solely in
consideration of the parties hereto executing this Purchase Agreement, and it
shall immediately become the property of the Company. After the execution and
receipt of the Non-refundable Deposit by the Company, Purchaser will have no
further claim of any kind on Non-refundable Deposit funds, except as set forth
below.
(ii) However, in the event that Purchaser makes all of the Purchase
Payments specified in Section 1 herein required by this Purchase Agreement and
fulfills all of the terms and conditions set forth in Section 2 below regarding
the purchase of the Note, as defined therein, the Non-refundable Deposit shall
be applied against the Purchase Payment for the last 55,555 Shares of Common
Stock purchased pursuant to this Purchase Agreement.
(b) On or before June 7, 1996, Purchaser will make a cash deposit, by wire
transfer, to an account designated by the Company, in the amount of no less
than $1,000,000 to be applied against the purchase of the Company's Shares of
Common Stock ("First Purchase Payment"). The Company agrees to deliver to
Purchaser within 10 business days of receipt of the First Purchase Payment,
certificates, representing the exact number of 222,222 Shares and 33,333
Warrants purchased by Purchaser, registered in the Purchaser's name, or its
nominee.
(c) On or before June 30, 1996, Purchaser will make a cash deposit, by
wire transfer, to an account designated by the Company, in an amount equal to
$1,750,000 ("Second Purchase Payment"). This Second Purchase Payment will be
applied against the purchase of the remaining 444,444 Shares of Common Stock
and remaining 66,667 Warrants covered by this Purchase Agreement. The Company
agrees to deliver to Purchaser within 10 business days of receipt of the First
Purchase Payment, certificates, representing the exact number of Shares and
Warrants purchased by Purchaser, registered in the Purchaser's name, or its
nominee.
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SECTION 2.
Authorization and Sale of 9%, Convertible Note
2.1 Authorization of Sale of 9% Convertible Note. Subject to the terms and
conditions of this Purchase Agreement, the Company has authorized the private
placement sale to the Purchaser of a $5,000,000 Convertible Note, attached
hereto as Exhibit C, which will pay interest at the rate of 9% per year,
payable quarterly with a term of 5 years and one (1) day ("Note"). To the
extent that any of the terms and conditions of this Purchase Agreement are in
conflict with any of the terms and conditions of the Note, the terms and
conditions of the Note shall control.
(a) The Purchaser will have the ongoing option to elect at each interest
payment due date to pay the interest payment due in either cash or stock. If
the payment is in Note Interest Shares, they will be restricted in accordance
Section 1.1(b) above, and the value of said Note Interest Shares will be
determined as set forth in paragraph 2.1(d ) below.
(b) The conversion price for the Common Shares underlying the Note during
the first twelve (12) months from date of issuance ("First Year") will be
$15.00.
(i) The Company may force conversion of the Note during the First Year
if, during any 20 day trading period, the average closing price of the Company's
Common Stock as reported on the National Association of Securities Dealer's
NASDAQ market ("NASDAQ") is at or above $22.50 per share.
(ii) At any time during the First Year, Purchaser may elect to convert
the Note at a price of $15.00 per Common Share underlying the Note.
(iii) At the end of the First Year, the conversion price will be
$12.00 per Common Share underlying the Note for the remaining term of the Note.
(c) If at any time during the term of the Note, Company shall propose to
publicly offer shares of its common stock at a gross price of $22.50 per share,
or less ("Low Offering Price"), Purchaser shall have the following redemption
rights ("Purchaser Redemption Rights"): (i) at such time as the Company
proposes to make a Low Price Offering, Company shall notify Purchaser of such
proposal: (ii) at any time up to and including the completion and closing of
the Low Price Offering, including the receipt of proceeds from such offering,
Purchaser shall have the right to send notice to the Company of its election to
have the Note and all amounts payable thereunder paid to Purchaser ("Redemption
Notice"): and (iii) within five (5) business days of the Redemption Notice, the
Company shall pay to Purchaser all amounts due and owing pursuant to the Note.
(d) If Purchaser shall have had a Purchase Redemption Right pursuant to
Subsection C above, and if Purchaser shall not have exercised such right and
the time for exercise of such right shall have elapsed, then the Company shall
have the following rights: at any time during the term of the Note, the Company
may force an automatic conversion of the Note at a price of $15.00 per Common
Share underlying the Note, if the Company files a registration statement that:
(a) becomes
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effective with the Securities Exchange Commission allowing a public offering
of the Common Stock of the Company at an effective offering price of $15.00, or
above; and (b) generates proceeds to the Company in excess of $5,000,000.
Nothing contained in this Section 2.1 (d) shall limit or terminate any right of
Purchaser to convert the Note at any time into shares of the Company's common
stock pursuant to the other provisions of this Purchase Agreement or the
provisions of the Note.
(e) The determination of the average trading price of the Shares of Common
Stock of the Company shall be defined as the average NASDAQ, or NASDAQ
"Bulletin Board" closing price for the prior 20 trading days from the date of
such determination.
2.2 Sale of Convertible Note. The Company agrees to sell to the
Purchaser, and Purchaser agrees to buy from the Company, the Note attached
hereto as Exhibit C.
2.3 Payment Schedule. The Purchaser agrees to purchase the Note for the
following ("Note Payments") in accordance with the following note schedule.
(a) On or before June 7, 1996, Purchaser, at its own cost, will provide
the Company with a $5,000,000 (U.S. Funds) letter of credit ("Letter of
Credit") or guarantee of equal credit worthiness, satisfactory to the Company,
in order for the Company to comply with the terms and conditions of the Heads
of Agreement, as identified in Section 4 herein. However, the Letter of Credit
may not be drawn upon before July 24, 1996.
(b) On or before July 24, 1996 ("Final Funding Date"), Purchaser will
purchase the Note for $5,000,000 and Company will release the Letter of Credit
to Purchaser.
(c) If the Letter of Credit is drawn upon, such draw shall constitute full
and final payment by Purchaser for the Note.
SECTION 3.
Sale of Additional Shares of Common Stock
3.1 Subsequent Sales of Shares of Common Stock At any time on or after
the date hereof, the Company may sell additional Shares of Common Stock with
15% Warrant Coverage, as defined herein, to such persons and upon such terms as
may be approved by the Board of Directors of the Company.
SECTION 4.
Representations and Warranties of the Company
The Company represents and warrants to the Purchaser as follows:
(a) The Company has provided Purchaser with documents, records and books
pertaining to this investment, including the Company's December 31, 1995
year-end Consolidated Financial
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Statements as set forth in Form 10-SB, ("December 31, 1995 Audited
Financials"), First Quarter unaudited summary financials ("First Quarter
Results"), the Company's Form 10-SB, filed with the Securities and Exchange
Commission on May 10, 1996 ("Registration Statement"); and the Company's
confidential 1996-7 projected income statements ("Confidential Company
Projections").
(b) The "December 31, 1995 Audited Financial Statements and the related
statement of income, accumulated deficit and cash flow for the year then ended
(together with the notes thereto, if any): (A) are in accordance with the books
and records of the Company; (B) are complete and correct. (C) present fairly
the financial position and results of operations of the Company as of the date
and for the period indicated; and (D) have been prepared in accordance with
generally accepted accounting principles consistently applied. Also, as of the
date of this Subscription Agreement, the Company has released its First Quarter
unaudited summary financials.
(c) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with full
corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Company's Registration Statement; the
Company is duly qualified to do business as a foreign corporation in good
standing in each jurisdiction where the ownership or leasing of its properties
or the conduct of its business requires such qualification, except where the
failure to so qualify would not have a material adverse effect on the Company.
(d) The Company has full power and authority (corporate and otherwise) to
enter into this Purchase Agreement and to perform the transactions contemplated
hereby. Each of this Purchase Agreement, Registration Rights Agreement, and
the Warrant Certificates has been duly authorized, executed and delivered by
the Company and is a valid and binding agreement on the part of the Company,
enforceable against the Company in accordance with its terms, except as rights
may be limited or by equitable principles and except as enforcement hereof may
be limited to applicable bankruptcy, insolvency, reorganization or other
similar laws relating to or affecting creditors' rights generally or by general
equitable principles; the execution and performance of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby and thereby will not result in a breach or violation of any of the terms
and provisions of, or constitute a default under, (i) any lease, contract or
other agreement or instrument to which the Company is a party or by which its
properties are bound, or (ii) the Certificate of Incorporation or By-Laws of
the Company or (iii) any, law, order, rule, regulation, writ, injunction or
decree of any court or governmental agency or body binding on the company; and
the Company is not required to obtain or make (as the case may be) any consent,
approval, authorization, order, designation or filing by or with any court or
regulatory, administrative or other governmental agency or body is required for
the consummation by the Company of the transactions herein contemplated, except
such as may be required under the Securities Act of 1933, as amended (the
"Act") and state securities laws. The Company has reserved, from its
authorized but unissued Common Stock, a sufficient number of shares of Common
Stock to provide for the exercise of the Warrants in accordance with the terms
of the Warrant Certificates.
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(e) The authorized capital stock of the Company is as stated in the
Registration Statement under the caption "Capitalization," and, as of the date
hereof, the Company has outstanding 15,793,575 shares of Common Stock, all of
which are validly issued, fully paid and non-assessable and which represent all
of the outstanding shares of capital stock of the Company.
(f) The shares of Common Stock to be purchased from the Company hereunder,
and the shares of Common Stock issuable upon the exercise of the Warrants, have
been duly authorized for issuance and, when issued and delivered to the
Purchaser by the Company against payment therefor in accordance with the terms
of this Agreement will be duly and validly issued and fully paid and
nonassessable.
(g) Subsequent to the respective dates as of which information is given in
the Registration Statement and which information supplied to the Purchaser
under subparagraph 4(a) above, there has not been (i) any material adverse
change, or any development which, in the Company's reasonable judgment, is
likely to cause a material adverse change, in the business, properties or
assets described or referred to in the Registration Statement, or the results
of operations, condition (financial or otherwise), business or operations of
the Company or its future prospects, (ii) any transaction which is material to
the Company, except transactions in the ordinary course of business, (iii) any
obligation, direct or contingent, which is material to the Company, incurred by
the Company, except obligations incurred in the ordinary course of business,
(iv) any change in the capital stock or outstanding indebtedness of the Company
or (v) any dividend or distribution of any kind declared, paid or made on the
capital stock of the Company.
(h) The Company presently has two wholly owned subsidiaries: VASCO Data
Security, Inc. ( "VDSI") and VASCO Data Security Europe ("VDSE"). In addition,
the Company owns a 15% interest in Lintel Security SA/NV ("Lintel"). The
Company has agreed to acquire another 36% interest on or before July 1, 1996,
resulting in a 51% ownership. The Company is required to acquire the remaining
49% of Lintel subject to the occurrence of certain events and criteria,
including profitability and certain product sales volumes achieved through
December 31, 2001. Except for these holdings, the Company does not presently
have any other subsidiaries, nor does it presently own any capital stock or
other proprietary interest, directly or indirectly, in any corporation,
association, trust, partnership, joint venture or other entity. The
Subsidiaries are corporations duly organized, validly existing and in good
standing under the laws of the applicable jurisdiction of their incorporation
and have all requisite corporate power and authority to own and lease their
properties, and to carry on their business as presently conducted and as
proposed to be conducted.
(i) The Company covenants that the specific use of the proceeds of the
Note is to secure a $5,000,000 (U.S. Funds) guaranteed payment No. 1 as set
forth in, and in accordance with the terms and conditions of a certain Heads of
Agreement, dated May 13, 1996, by and among, VASCO CORP., VASCO DATA SECURITY
EUROPE S.A. and DIGILINE INTERNATIONAL LUXEMBOURG, DIGILINE S.A., DIGIPASS
S.A., and XXXXXXXXX XXXXXX and TOPS S.A.
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("Heads of Agreement"). If the Company fails to apply the note proceeds in
accordance with Payment No. 1 of the Heads of Agreement, the Company shall
redeem the Note by January 10, 1996.
SECTION 5.
Representations and Warranties of the Purchaser
The Purchaser, its agents, nominees, successors, and assigns hereby
represent and warrant to the Company as follows:
(a) The Purchaser hereby acknowledges: (a) that it, and all of the
investors are "accredited investors;" as that term is defined in the 1933 Act;
(b) that now or hereafter all investors in the Purchaser are non-United States
citizens; (c) that a portion of the Note interest payments it receives from the
Company may be subject to tax withholding under United States Income Tax laws.
Purchaser further acknowledges that this transaction has not been scrutinized
by the Commission or any officer of any jurisdiction.
(b) The Purchaser acknowledges that all documents, records and books
pertaining to this investment, including the Company's December 31, 1995
Audited Financials, First Quarter Results, the Company's Form 10-SB, filed with
the Securities and Exchange Commission on May 10, 1996 ("Form 10-SB"); and the
Company's confidential 1996-7 projected income statements ("Confidential
Company Projections") have been made available to the Purchaser and the
Purchaser understands that the books and records of the Company will be
available prior to its execution hereof, upon reasonable notice, for its
inspection during reasonable business hours at the Company's principal office.
The Purchaser further acknowledges that it has signed a confidentiality
agreement ("Confidentiality Agreement") with the Company as it pertains to
certain information deemed to be confidential by the Company, including, but
not limited to, the Confidential Company Projections.
(c) The Purchaser further acknowledges, represents and warrants that it
understands that neither the Shares of Common Stock, nor the Common Stock
underlying the Warrants have been registered under the Securities Act of 1933,
as amended (the "Act"), or any state securities, laws, and such securities are
being offered and sold under the exemption from registration provided by Rules
505 and 506 promulgated by the Commission under the Act. The Purchaser is aware
of the risks associated with an investment in the unregistered securities of
the Company; and confirms it has read and understands The Registration Rights
Agreement, identified as Exhibit B hereto.
(d) This Agreement has been duly authorized, executed and delivered by the
Purchaser and constitutes a valid and legally binding obligation of the
Purchaser, individually, and as agent for a yet to be formed investment fund,
enforceable personally, and in accordance with its terms, except as may be
limited by applicable laws or equitable principles and except as enforcement
hereof may be limited by applicable bankruptcy, insolvency, reorganization or
other similar laws relating to or affecting creditors' rights generally or by
general equitable principles. Purchaser is an accredited investor as such term
is defined in Regulation D.
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SECTION 6.
Commission Schedule
6.1 The Commission Schedule for Shares of Common Stock and Warrants. The
Company agrees to pay to the parties identified below in this Section 6,
commissions for the purchase of the Shares of Common Stock with 15% Warrant
Coverage as follows:
(a) For the first $2,000,000, the Company will pay a total of 7% in cash
and 7% in Warrants, for a total of $140,000 in cash and 31,111 Warrants, as
follows:
(i) To Purchaser, 5% cash, or $100,000 and 5% Warrants, or 22,222
Warrants;
(ii) To Company's investment banker, First Analysis Securities
Corporation ("First Analysis"), 2% cash, or $40,000, and 2% Warrants, or 8,889
Warrants.
(b) For the next $1,000,000, the Company will pay to Purchaser only, a
total of 7% in cash and 7% in Warrants, for a total of $70,000 in cash and
15,555 Warrants.
(c) Purchaser shall have no obligation for the above representative's
commissions.
6.2 Commission for the Purchase of the Note. For the purchase of the Note,
as defined below, the Company agrees to pay to Purchaser only, a 7% commission,
payable in the amount of 55,555 Shares of Common Stock, and 7% Warrants. The
exact number of Warrants issued will be based upon the actual conversion price,
as determined in Section 2 to this Purchase Agreement, and as set forth
immediately below:
(i) If the conversion price is at $15.00, the number of Warrants will
be 23,333;
(ii) If the conversion price is at $12.00, the number of Warrants will
be 29,166.
(c) Purchaser shall have no obligation for the above representative's
commissions.
SECTION 7.
Conditions to Closing of Purchaser
The Purchaser's obligation to purchase the Shares of Common Stock with
Warrants, and the Note in the stated amounts and on or before the dates
specified herein is subject to fulfillment or waiver, as of the Purchase
Payment Dates or Final Funding Date specified herein, of the following
conditions:
(a) The representations and warranties made by the Company herein shall be
true and correct in all material respects when made, and shall be true and
correct in all material respects on the date of each payment with the same
force and effect as if they had been made on and as of said date.
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(b) All covenants, agreements and conditions contained in this Purchase
Agreement to be performed by the Company on or prior to the Final Funding Date
shall have been performed or complied with in all respects.
(c) The Purchaser shall have received a legal opinion of Laidley, Xxxxxx &
Xxxxxx, counsel to the Company, insubstantially the form of Exhibit D.
SECTION 8.
Conditions to Closing of Company
The Company's obligation to sell and issue the Shares of Common Stock,
Warrants, and the Note is subject to the fulfillment or waiver, as of the
Purchase Payment dates or Final Funding date specified herein, of the following
conditions:
(a) The representation made by each Purchaser in Section 4 hereof shall be
true and correct when made, and shall be true and correct on the Closing Date.
(b) All covenants, agreements and conditions contained in the Agreement to
be performed by the Purchaser on or prior to the Closing Date shall have been
performed or complied with in all material respects.
SECTION 9.
Miscellaneous
7.1. Waivers and Amendments. The terms of this Agreement (including,
without limitation, the Warrant Certificates) may be waived or amended only
with the written consent of the Company and Purchaser. The failure by any party
at any time to enforce or to require the performance of any provision of this
Purchase Agreement shall in no way be construed to be a waiver of any such
provision and shall not affect the rights of such party hereunder thereafter to
enforce or require the performance of such provision in accordance with the
terms of this Agreement.
7.2 Governing Law. This Agreement shall be governed in all respects by
the laws of the State of Illinois, without regard to the conflict of laws rules
thereof.
7.3. Successors and Assigns. This Agreement may not be assigned by a
Purchaser without the written consent of the Company.
7.4. Entire Agreement. This Agreement, which includes Exhibits A, B, C, &
D attached hereto, constitutes the full and entire understanding and agreement
between the parties with regard to the subjects thereof.
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7.5 Notices, etc. All notices and other communications required or
permitted under this Agreement shall be in writing and may be sent by personal
delivery, by telecopy, overnight delivery service or U.S. Mail, in which event
it shall be mailed first-class, certified or registered, postage prepaid. All
such notices and communications must be addressed to the Company or the
Purchaser, as the case may be, at their respective addresses and telecopy
number set forth herein, or at such other address or telecopy number as the
Company or the Purchaser shall have furnished to the other party in writing.
All notices and other communications shall be effective upon the earlier of
actual receipt thereof and (A) in the case of notices and communications sent
by personal delivery or telecopy, three hours after such notice or
communication arrives at the applicable addresses or was successfully sent to
the applicable telecopy number (B) in the case of notices and communications
sent by overnight delivery service, at noon (local time) on the first business
day following the day such notice or communication was sent, and (C) in the
case of notices and communications sent by U.S. mail, five days after such
notice or communication shall have been deposited in the U.S. mail.
7.6 Titles and Subtitles. The titles of the paragraphs and subparagraphs
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
7.7. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
7.8 Further Assurances. Each party to this Agreement shall do and perform
or cause to be done and performed all such further acts and things and shall
execute and deliver all such other agreements, certificates, instruments and
documents as the other party hereto may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the Transactions contemplated hereby.
7.9. Expenses. The Company and each Purchaser shall bear its own expense
incurred on its behalf with respect to this Purchase Agreement and the
transactions contemplated hereby, including fees of legal counsel.
7.10. Survivability. The respective representations and covenants of the
parties hereto shall survive the Closing of the transactions contemplated
hereby, including issuance of the Shares of Common Stock and the Common Stock
underlying the Warrants.
7.11. Information. The Company shall furnish to each Purchaser, upon the
request of such Purchaser, any publicly-available filing made by the Company
with the Securities and Exchange Commission and such other publicly-available
information as may be reasonably requested by the Purchaser for so long as the
Purchaser is the holder of any Warrant purchased hereunder.
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The foregoing agreement is hereby executed as of the date first above
written.
COMPANY:
VASCO CORP.
a Delaware Corporation.
By: /s/ T. Xxxxxxx Xxxx
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Title: President
PURCHASER:
KYOTO SECURITIES, LTD.
a Bahamian corporation
By: /s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------------
Title: President
By: /s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxxxxx
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EXHIBIT A
Number: **_______** Shares
VASCO
Incorporated under the laws of the State of Delaware
COMMON STOCK PURCHASE WARRANTS
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This certifies that _______________ (the "holder") is the owner of _________
Common Stock Purchase Warrants (the "warrants"), each Warrant giving the holder
the right to purchase one (1) fully paid and non-assessable share of Common
Stock, $.001 par value, of VASCO (the "Company") at any time through June 1,
2001, (the "exercise date") at an exercise price of $4.50 per Warrant and
subject to the terms, conditions and limitations set forth herein. The shares
of Common Stock underlying these Warrants shall have 'piggy back registration
rights" as set forth in a Registration Rights Agreement dated May 28, 1996 by
and between Company and Holder The effective date of these Warrants is May 28,
1996.
As of Midnight of the exercise date, any unexercised Warrants issued herein
will automatically and without notice terminate and become null and void,
unless extended by action of the Board of Directors. Any exercise of these
Warrants shall be in writing, addressed to the Secretary of the Corporation at
its principal place of business, using the form attached hereto, and shall be
accompanied by payment in full by check.
In the event, at the time of exercise of the Warrants, there does not exist a
Registration Statement on an appropriate Form under the Securities Act of 1933,
as amended (the "Act"), which Registration Statement shall have become
effective and shall be current with respect to the underlying shares being
purchased, and in the opinion of counsel to the Company such underlying shares
will upon issuance be "restricted" securities within the meaning of Rule 144
under the Act, you will represent and warrant to the Company (i) that, upon
exercise of the Warrants, you are purchasing the underlying shares for
investment only and not with a view to the resale or distribution thereof and
(ii) that any subsequent resale or distribution of any such underlying shares
shall be made either pursuant to (x) a Registration Statement on an appropriate
Form under the Act, which Registration Statement shall have become effective
and shall be current with respect to the underlying shares being sold, or (y) a
specific exemption from the registration requirements of the Act, but in
claiming such exemption, you shall, prior to any offer for sale or sales of
such underlying shares, obtain a favorable written opinion from counsel for, or
approved by the Company, as the applicability of such exemption.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be
signed by its authorized officers, and its Corporate Seal, to be hereunto
affixed this ____ day of _________, 1996.
______________________ ____________________________________
Secretary President
(Apply Corporate Seal)
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EXHIBIT B
Registration Right Agreement
This Agreement by and between VASCO CORP. ("Company") and KYOTO SECURITIES,
LTD., a Bahamian corporation ("Purchaser") is made as of May 28, 1996.
Definitions: As used in this Registration Rights Agreement, the following
defined terms shall have the following meanings:
"Purchase Agreement" shall mean that certain Purchase Agreement by and
between VASCO CORP. and Kyoto Securities, Ltd., dated May 28, 1996.
"Shares" shall mean 666,666 shares of VASCO Common Stock issued to
Purchaser pursuant to the Purchase Agreement.
"Warrants" shall mean 100,000 Warrants to purchase VASCO Common Stock
pursuant to the terms of the Purchase Agreement
"Warrant Shares" shall mean 100,000 shares of VASCO Common Stock to be
issued upon exercise of the Warrants.
"Note Conversion Shares" shall mean shares of VASCO Common Stock to be
issued upon conversion of all or a portion of the principal and interest
of the Convertible Note issued to Purchaser pursuant to the terms of the
Purchase Agreement.
"Convertible Note" to be issued to Purchaser pursuant to the terms of the
Purchase Agreement.
The Company agrees to register all Shares, Warrants, Warrant Shares, and Note
Conversion Shares (collectively "Payment Shares") under the following terms:
A. If, at any time commencing from the date of this Agreement
until June 1, 2001, the Company proposes to file a registration
statement for the public sale of Shares of its Common Stock, written
notice of such proposal, will be given to Purchaser at least 60 days
prior to the filing of such registration statement. The term
"Registration Statement" as used in this Section shall be deemed to
include any form which may be used to register a distribution of
securities to the public. Company agrees that on written notice
received from Purchaser, within 20 days after Purchaser's receipt of
the notice to file a registration statement, Company shall afford the
holders of Payment Shares the opportunity to have the Payment Shares
included in such Registration Statement. The registration rights set
out in this Paragraph A shall apply each and every time the Company
proposes to file a registration statement for the public sale of
shares of its Common Stock, until June 1, 2001.
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B. Notwithstanding the provisions of this Agreement, Company shall
have the right, at any time after it shall have given written notice
to Purchaser pursuant to this Agreement, to elect to offer none, or
only a portion of the Payment Shares in such Registration Statement,
if, in the good faith and reasonable opinion of the Company's
managing underwriter to the offering, the sale of the Payment Shares
to be included would be materially detrimental to the success of the
offering. The Purchaser shall be entitled to receive a written
explanation from the Company's Managing Underwriter of such
determination.
C. Notwithstanding any provision to the contrary contained herein,
Company shall not be required to include any of the Payment Shares in
any Registration Statement with respect to shares offered in any
underwriting, unless Purchaser agrees to offer such shares, on the
same terms and conditions as Company shares are being offered, and to
sign an underwriting agreement in the form to be signed by the other
offerors, if any.
D. The shareholders desiring to sell shares of common stock
pursuant to the registration rights granted herein shall provide
Company with all reasonable information relating to such sale and on
which Company shall be entitled to rely and to include such
information in any such Registration Statement.
E. All sales pursuant to any such Registration Statement shall be
made in accordance with the provision of the Securities Act of 1933,
as amended (the "Securities Act") and the Securities Exchange Act of
1934 as amended, (the "Exchange Act") and Company shall not be
required to include any such Payment Shares in any registration until
is has received written assurances reasonably satisfactory in form
and substance to Company from the shareholders offering such Payment
Shares that such sales shall be so conducted.
F. All expenses incurred by Company in complying with the
registration requirements hereof shall be borne by Company. On notice
to any shareholder offering Payment Shares covered by a Registration
Statement that such Registration Statement or prospectus relating
thereto requires revision, such holder will immediately cease to make
offers or sale pursuant to such Registration Statement and return all
such Registration Statements and prospectuses to Company. All
registration rights granted herein may apply only to shares of common
stock issued by Company. Company is under no obligation to maintain
the effectiveness of any Registration Statement for more than an
aggregate of 90 days.
G. In connection with the filing of any Registration Statement or
offering statement under this Agreement, Company covenants and agrees
that it will take all necessary action which may be required in
qualifying or registering the Payment Shares included in a
Registration Statement or offering statement for the offer and sale
under the securities or blue sky laws of such states as may be
reasonably requested
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by the holders of the Payment Shares; provided, that Company shall
not be obligated to execute or file any general consent to service
of process or to qualify as a foreign corporation to do business
under the laws of any such jurisdiction.
H. In the event that the payment Shares are the subject of or are
included in any Registration Statement or offering statement which is
filed and becomes effective, Company agrees to utilize its best
efforts to keep the same, including blue sky filings, for an
effective period of not less than 90 days. The holders of the
Payment Shares shall cooperate with Company and shall furnish such
information as Company may reasonably request in connection with any
such registration or offering statement hereunder, on which Company
shall be entitled to rely.
I. Company further agrees that in the event that the Payment
Shares are transferred, sold or otherwise disposed of in compliance
with the Purchase Agreement, the new owner of the transferred Payment
Shares will be entitled to the registration rights set forth herein
until June 1, 2001. Company will fully cooperate in connection with
such transfer and/or sale at Company's sole expense.
J. Company further agrees and represents that while any of the
Payment Shares are outstanding and held by Purchaser or Purchaser's
affiliates, Company will timely file or cause to be filed all reports
and documents required under the Act as well as such additional
information as if necessary in order to allow the holder of the
Payment Shares to rely upon the provisions of Rule 144 promulgated
under the Act with respect to the current public information
requirements contained in Rule 144.
K. In the event of any registration of any Company common stock
under the Securities Act pursuant to this section, Company shall
indemnify and hold Purchaser or any subsequent transferee of the
Payment Shares harmless against any losses, claims, damages or
liabilities, joint or several, to which such holder may become
subject under the Securities Act or any other statute or at common
law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any
alleged untrue statement of any material fact contained, on the
effective date thereof, in any Registration Statement under which
such securities were registered under the Securities Act, any
preliminary prospectus or final prospectus contained herein, or any
amendment required to be stated therein or necessary to make the
statements therein not misleading, and shall reimburse such holder
for any legal or any other expenses reasonably incurred by such
holder in connection with investigating or defending any such loss,
claims, damage, liability or action; provided, however, that Company
shall not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any
alleged untrue statement or alleged omission made in such
Registration Statement, preliminary prospectus, prospectus or
amendment or supplement in reliance upon and in conformity with
written information furnished to Company by such holder specifically
for use therein. Such indemnity shall remain in full force and
effect
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regardless of any investigation made by or on behalf of such holder
and shall survive the transfer of such securities by such holder and
consummation of the transactions contemplated by this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officer of each party hereto, as of the date first above
written.
COMPANY:
VASCO CORP.
BY:
--------------------------
T. Xxxxxxx Xxxx, President
PURCHASER:
KYOTO SECURITIES, LTD.,
a Bahamian corporation
BY:
------------------------------
Its President
BY:
------------------------------
Xxxxxxx X. Xxxxxxxxxx
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EXHIBIT C
[LAIDLEY, SUTTER, & XXXXXX LETTERHEAD]
May 28, 1996
To Purchaser,
as specifically identified
in a certain Purchase Agreement,
dated May 28, 1996
Dear Sir:
We have acted as counsel for VASCO CORP., a Delaware corporation ( the
"Company"), in connection with a certain Purchase Agreement, by and between the
Company and Kyoto Securities, Ltd., dated May 28, 1996 ("Purchase Agreement"),
and its attached exhibits: Exhibit A ("Form of Warrant"), Exhibit B
("Registration Rights Agreement"), Exhibit C ("Convertible Note"), and Exhibit
D ("Legal Opinion of Company Counsel"), authorizing the issuance and private
placement sale by the Company of: (a) 666,666 Shares of the Company's common
stock, par value $0.001 per share at a price per share of $4.50 per share
("Shares of Common Stock"); (b) 100,000 Common Stock warrants ("Warrants"); (c)
100,000 shares of Company Common Stock to be issued upon exercise of the
Warrants ("Warrant Shares"); (d) the Convertible Note ("Note"); and (e) shares
of the Company's Common Stock to be issued upon conversion of all or a portion
of the Note issued pursuant to the Purchase Agreement ("Note Conversion
Shares"). This opinion in furnished to you pursuant to Section 4 of the
Purchase Agreement.
We have assisted in the preparation of the Purchase Agreement and the
Exhibits thereto. We have examined signed copies of the registration statement
of the Company of Form 10-SB, together with all exhibits thereto ("Registration
Statement"), all as filed with Securities and Exchange Commission
("Commission") under the Securities Act of 1934, as amended ("Act of 1934"); an
executed copy of the Purchase Agreement, executed copies of the certificates
evidencing the Warrants ("Warrant Certificate"), and such other documents as we
have deemed necessary as a basis for the opinions expressed herein.
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We express no opinion as to the laws of any jurisdiction other than those
of the State of Illinois, the General Corporation Law of the State of Delaware
and the federal laws of the United Sates of America. For purposes of our
opinion expressed in the last sentence of paragraph 2, we have relied solely on
a certificate of the chief financial officer of the Company as to locations
where the Company owns or leases real property and on certificates of public
officials as to the qualification of the Company as a foreign corporation in
each foreign jurisdiction.
Insofar as this opinion relates to factual matters, information with
respect to which is in the possession of the company, we have made inquiries to
the extent we believe reasonable with respect to such matters and have relied
upon representations made by the Company in the Purchase Agreement and
representations made to us by one or more officers of the Company. Although we
have not independently verified the accuracy of such representations, we do not
know of he existence or absence of any fact contradicting such representations.
Any reference herein to "our knowledge," "known to us" or any variation
thereof shall mean the actual knowledge of lawyers in this firm who have
participated in our representation of the Company in connection with the
preparation of the Registration Statement.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing
and in good standing with the Secretary of State under the laws of
the State of Delaware.
2. The Company has the corporate power and authority to own, lease
and operate its properties and conduct its business as described in
the Form 10-SB. The Company is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which it
owns or leases real property.
3. The Shares of Common Stock, the Warrants, the Warrant Shares,
the Note, and the Note Conversion Shares have been duly authorized
and will be validly issued, fully paid and non-assessable when issued
and paid for as contemplated by the Purchase Agreement.
4. The Purchase Agreement, the Warrant Certificates, and the Note
have been duly authorized, executed and when delivered by the
Company, subject to the qualifications stated in the last paragraph
of this opinion, constitute legal, valid and binding obligations of
the Company, enforceable against the Company in accordance with their
terms. When issued, the Shares of Common Stock, the Warrant Shares
and the Note Conversion Shares will be duly authorized, executed and
delivered by the Company and, subject to the qualifications stated in
the last paragraph of this opinion, constitute legal, valid and
binding obligations of the Company, enforceable against the Company
in accordance with their terms.
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5. The execution and delivery by the Company of the Purchase
Agreement, the Warrant Certificate, and the Note, and the issuance by
the Company of the Shares of Common Stock, the Warrants, the Warrant
Shares, the Note and the Note Conversion Shares will not (i) violate
the Certificate of Incorporation or By-Laws of the Company, (ii)
breach or result in a default under any agreement or instrument
listed as an Exhibit to the Registration Statement or (iii) violate
any applicable law or regulation or, to our knowledge, any order,
writ, injunction or decree, of any jurisdiction, court or
governmental instrumentally binding upon the Company or any of its
properties, except that we express no opinion as to state securities
or blue sky laws or the antifraud provisions of federal securities
laws.
6. No approval, authorizations or consents of any governmental
entity are required for the execution and delivery of the Purchase
Agreement, the Warrant Certificates, or the Note, to permit the
Company to sell the Shares of Common Stock, the Warrants, and the
Note, and to issue and sell the Shares of Common Stock, the Warrant
Shares, or the Note Conversion Shares, except such as may be required
under state securities or blue sky laws, as to which we express no
opinion.
7. The Company has reserved the number of shares of its duly
authorized, but unissued, Common Stock as is necessary to provide for
the exercise of the Warrants and conversion of the Convertible Note,
except to the extent that the number of shares of Common Stock
potentially issuable on exercise of the Warrants pursuant to the Note
conversion price provisions thereof may currently be indeterminate.
8. The Shares of Common Stock, the Warrants, and the Note conform
as to xxxxxx of law with the description thereof contained in the
Purchase Agreement.
9. The Form 10-SB filed by the Company, to the best of the
undersigned's knowledge, accurately describes the Company and
contains no untrue or inaccurate statements.
Our opinion that the Purchase Agreement, the Warrant Certificates, and the
Note are enforceable against the Company in accordance with its terms, is
subject to (i) bankruptcy, insolvency, reorganization, moratorium or similar
laws of general application affecting the rights and remedies of creditors and
(ii) general principles of equity, regardless of whether enforcement is sought
in proceedings in equity or at law.
Sincerely,
Xxxxxxx X. Xxxxxxx
Laidley, Xxxxxx & Xxxxxx
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EXHIBIT D
CONVERTIBLE NOTE
(TO FOLLOW ON NEXT 7 PAGES)
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