Exhibit 1.2
AGREEMENT
This Agreement ("Agreement"), effective as of January 17, 2001, is entered into
by and between CyberGuard Corporation, a Florida corporation with principal
place of business at 0000 X. Xxxxxxxxxx Xxxx., Xxxxx 000, Xxxx Xxxxxxxxxx, XX
00000 ("CyberGuard" or "Company"), and Xxxxx X. Xxxxxxx, an individual residing
at Lake Bluff, IL ("Xx. Xxxxxxx").
WHEREAS, CyberGuard and Xx. Xxxxxxx entered into that certain Agreement
effective as of December 26, 2000 ("First Agreement") which provided, among
other things, that Xx. Xxxxxxx would participate in a financing transaction
effected by the Company as the next financing transaction after the date of the
First Agreement ("Next Financing Transaction") and that Xx. Xxxxxxx would
participate in the Next Financing Transaction by making an additional aggregate
investment of $250,000.00 on the same terms and conditions as the other
investors therein; and
WHEREAS, CyberGuard and Xx. Xxxxxxx agree that Xx. Xxxxxxx'x investment under
this Agreement represents the contemplated investment in the Next Financing
Transaction of CyberGuard.
NOW THEREFORE, CyberGuard and Xx. Xxxxxxx agree as follows:
A. The recitals set forth above are true and correct.
B. Xx. Xxxxxxx shall pay to CyberGuard two hundred fifty thousand U.S.
Dollars (U.S. $250,000.00) in cash by no later than January 26, 2001.
C. In exchange for the above payment and subject to the terms of this
Agreement, CyberGuard shall issue to Xx. Xxxxxxx 62,500 shares of
Common Stock of CyberGuard at the price of $4.00 per share (the
"Securities").
D. In connection with the purchase of the Securities, Xx. Xxxxxxx
represents to the Company, and understands and agrees that:
1. He is acquiring all of the Securities for his own account for
investment and not with a view to, with the present intention
of, or in connection with, any resale or distribution of the
Securities or any interest therein.
2. He has carefully considered and has, to the extent he believes
such discussion to be necessary, discussed with professional
legal, tax and financial advisors the suitability of an
investment in the Securities, and Xx. Xxxxxxx has determined
that the Securities are a suitable investment for him.
3. He is an accredited investor as such term is defined in
Regulation D under the Securities Act of 1933, as amended (the
"Act"), and has sufficient knowledge and experience in
financial and business matters to evaluate the merits and
risks of this investment.
4. He has been afforded full access to all of the publicly
available filings and financial information filed by the
Company with the U.S. Securities and Exchange Commission and
the opportunity to ask questions of representatives of the
Company and obtain answers to any questions he may have had
with respect to the Company.
5. The Securities have not been registered under the Act or under
the laws of any jurisdiction, and, except as otherwise
specifically provided in Appendix A to this Agreement, the
Company is under no obligation to so register the Securities
under the Act or under the laws of any jurisdiction. The Xx.
Xxxxxxx also understands that he must hold the Securities
indefinitely unless they are subsequently registered under the
Act or an exemption from such registration is then available.
6. Xx. Xxxxxxx agrees not to sell, transfer, assign, hypothecate,
pledge or otherwise dispose of the Securities unless (a) such
transaction has been registered under the Act and applicable
state securities and other laws, or (b) in the opinion of
counsel for the Company the proposed sale, transfer,
assignment, encumbrance or other disposition will not result
in the violation of the registration provisions of the Act or
any other applicable federal, state or other securities laws,
rules and regulations.
7. The Securities will bear the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED ("THE SECURITIES ACT"), OR ANY STATE
SECURITIES LAW. THEY MAY NOT BE OFFERED OR TRANSFERRED UNLESS
(I) A REGISTRATION STATEMENT FOR THE SALE OF THE SECURITIES
HAS BEEN FILED UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS AND IS EFFECTIVE OR (II) THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL, WHICH OPINION IS SATISFACTORY
TO THE COMPANY, TO THE EFFECT THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OR STATE SECURITIES LAWS.
E. Xx. Xxxxxxx shall be entitled to the registration rights described in
Appendix A hereto.
F. The Securities to be issued by the Company to Xx. Xxxxxxx hereunder
shall be subject to anti-dilusion rights in the event that shares of
the Company stock are issued in settlement of any lawsuit pending
against the Company.
G. If any action at law or in equity is necessary to enforce or interpret
the terms of this Agreement the prevailing party shall be entitled to
reasonable attorneys' fees, costs and expenses in addition to any other
relief to which it may be entitled.
H. This Agreement may not be assigned by either party without the prior
written consent of the non-assigning party; provided, however, that
CyberGuard may assign this Agreement to any assignee, transferee, "spin
off" or successor in interest of substantially all of the assets of the
Company.
I. Except for the parties to this Agreement and their respective
successors and assigns, no third party beneficiaries are intended by
this Agreement.
J. This Agreement shall be governed by and construed in accordance with
the substantive laws of the State of Florida.
K. Any action or proceeding arising under or relating to this Agreement
shall be brought exclusively in the federal or state courts sitting in
Broward County, Florida and the parties hereto submit to the
jurisdiction of the state and federal courts in the State of Florida
and agree that the venue of any such action or proceeding shall be laid
in Broward County, Florida.
L. The failure of any party hereto at any time to require strict
performance of any condition, promise, agreement or understanding set
forth herein shall not be construed as a waiver or relinquishment of
the right to require strict performance of the same condition, promise,
agreement or understanding at a subsequent time.
M. This Agreement and its Exhibits and Appendices constitute the entire
agreement between the parties with respect to the subject matter hereof
and may not be modified or amended except in writing, signed by each
party.
IN WITNESS WHEREOF, the above Agreement was executed by both parties hereto
effective as of January 17, 2001.
CYBERGUARD CORPORTION XXXXX X. XXXXXXX
By:
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Title:
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APPENDIX A
Registration Rights
1. The Company agrees that if, at any time following the date of this
Agreement and while the provisions of this Appendix remain in effect, the Board
of Directors of the Company shall authorize the filing of a registration
statement on Form S-1 or Form S-3 (any such registration statement being
hereinafter called a "Registration Statement") under the Act in connection with
a proposed underwritten public offering of Company Common Stock effected on
behalf of the Company solely for cash, the Company will promptly notify Xx.
Xxxxxxx that such Registration Statement will be filed and that the Securities
that are then held by Xx. Xxxxxxx (the "Xxxxxxx Shares"), will, at Xx. Xxxxxxx'x
request, be included in such Registration Statement, and (ii) upon the written
request of Xx. Xxxxxxx within 15 days after the giving of such notice by the
Company, include in the securities covered by such Registration Statement all
Xxxxxxx Shares which it has been so requested to include.
2. The Company shall pay all expenses incurred in connection with any
Registration Statement, other than underwriting discounts or fees, applicable
transfer taxes relating to Xxxxxxx Shares and the fees and expenses of counsel
for Xx. Xxxxxxx.
3. The Company shall not be required to include in such registration
any Xxxxxxx Shares held by Xx. Xxxxxxx unless Xx. Xxxxxxx agrees to the terms of
the underwriting agreement between the Company and the managing underwriter of
such offering, which agreement may require that any shares of Company capital
stock owned by Xx. Xxxxxxx be withheld from the market by Xx. Xxxxxxx for a
period of time after the effective date of the registration statement by which
such public offering is being effected. Furthermore, the Company shall be
obligated to include in such registration only the quantity of Xxxxxxx Shares,
if any, as will not, in the opinion of the managing underwriter, jeopardize the
success of the offering by the Company. If the managing underwriter for the
offering advises the Company in writing that the total amount of securities
sought to be registered by Xx. Xxxxxxx and other shareholders of the Company
having similar registration rights as of the date thereof (collectively, the
"Company Shareholders") exceeds the amount of securities that can be offered
without adversely affecting the offering by the Company, then the Company may
reduce the number of shares to be registered by Company for the Company
Shareholders, including the Xxxxxxx Shares requested to be included therein, to
a number satisfactory to such managing underwriter, which number may be zero.
Any such reduction shall be pro rata, based upon the percentage that the shares
requested to be included in the Registration Statement by each Company
Shareholder constitutes of the total number of shares requested to be included
therein on behalf of the Company Shareholders.
4. The Company shall not be obligated to register any Xxxxxxx Shares
pursuant to this Appendix A at any time when the resale provisions of Rule 144
promulgated under the Securities Act are available to Xx. Xxxxxxx for the sale
of the Xxxxxxx Shares.
