SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
September 14, 2001
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Date of Report
(Date of Earliest Event Reported)
WIZZARD SOFTWARE CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
Colorado 333-69415 87-0575577
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(State or other (Commission File No.) (IRS Employer I.D. No.)
Jurisdiction)
424 Gold Way
Pittsburgh, Pennsylvania 15213
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(Address of Principal Executive Offices)
(412) 621-0902
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Registrant's Telephone Number
Not Applicable
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(Former Name or Former Address if changed Since Last Report)
Item 5. Other Information.
On September 14, 2001, the Company and Maricopa Equity Management Corp.,
a Minnesota corporation ("Maricopa"), executed a Securities Purchase Agreement
whereby the Company sold Maricopa Series 2001-A Eight Percent (8%) Convertible
Notes (the "Note" or "Notes") in the aggregate principal amount of $250,000.
The following exhibits were attached and incorporated into the Securities
Purchase Agreement: (i) Form of Note; (ii) Registration Rights Agreement;
(iii) Escrow Agreement; and (iv) Opinion of Counsel for the Company. Copies
of the Securities Purchase Agreement and these exhibits are attached hereto
and incorporated herein by reference. See Item 7.
The Securities Purchase Agreement and related exhibits provided, among
other provisions, that:
* The Notes are convertible (along with accrued interest, at the
Company's option) into shares of the Company's common stock at the lesser of
$0.50 per share or 75% of the closing bid price of the common stock on the
Conversion Date as reported on the OTC Bulletin Board or on such other
national securities exchange or market on which the common stock is traded.
* The Notes and the stock certificates that represent any shares of
common stock into which they are converted shall be imprinted with an
appropriate "restrictive" legend indicating that they may not be offered for
sale, sold, transferred or assigned in the absence of either (i) an effective
registration statement for the securities under the applicable laws, or (ii)
an opinion of counsel provided to the Company in form, substance and scope
reasonably acceptable to the Company to the effect that registration is not
required under the applicable laws due to an available exception to or an
exemption from the registration requirements of the applicable laws.
* Representations and warranties of Maricopa, among others, of
"investment intent" in the acquisition of these securities; its status as an
"accredited investor;" its acknowledgment of restrictions on resale of the
securities; and its authorization to execute and deliver the Securities
Purchase Agreement.
* Representations and warranties of the Company, among others, of
its organization and capitalization; its authorization to execute and deliver
the Securities Purchase Agreement and related exhibits; the due issuance and
fully-paid status of the Notes and securities on payment; its "current" status
in the reports that it is required to file with the Securities and Exchange
Commission; its eligibility to file an SB-2 Registration Statement with the
Securities and Exchange Commission covering the securities; the lack of
integration issues with respect to this offering of securities and other
offerings of securities by the Company; and its acknowledgment of the
potential of dilution to the Company by virtue of the conversion features of
the Note.
* Miscellaneous provisions, among others, regarding the Company's
compliance with applicable laws in the issuance of the securities; its
continuation as a "reporting issuer" so long as Maricopa owns the securities
that are being acquired; its reservation of shares of conversion of the
securities; its use of the proceeds from the sale of the Notes for advertising
and marketing, product development and general working capital purposes;
Maricopa's compliance with prospectus delivery requirements on registration of
the securities; Maricopa's prohibition against any "short sales" while it owns
any of the securities acquired; conversion restrictions that will prohibit
Maricopa from owning in excess of 4.99% of the outstanding securities of the
Company resulting from conversion, except on the occurrence of certain events;
and the limitations on the Company regarding issuing other securities without
the consent of Maricopa for a period of 12 months, which provide that the
Company shall not issue or agree to issue, other than (i) to the Maricopa
pursuant to the transactions contemplated herein; (ii) pursuant to any
employee stock option plan or employee stock purchase plan of the Company
established during the term of this restriction for a legitimate business
purpose and not to avoid these restrictions; (iii) pursuant to any existing
security, option, warrant, scrip, call or commitment or right in each case as
disclosed on any Schedule to the Securities Purchase Agreement; or (iv) with
the consent of the Maricopa (not to be unreasonably withheld), any equity
securities of the Company (or any security convertible into or exercisable or
exchangeable, directly or indirectly, for equity securities of the Company) or
debt securities of the Company if such securities are issued at a price (or
provide for a conversion, exercise or exchange price) which may be less than
the current market price for the Company's common stock on the date of
issuance (in the case of common stock) or the date of conversion, exercise or
exchange (in the case of securities convertible into or exercisable or
exchangeable, directly or indirectly, for common stock). Except as provided
with respect to the transactions contemplated by the Securities Purchase
Agreement and in subsections (i), (ii), (iii) or (iv) above, the Company shall
not grant any additional so-called "registration rights" covering any other
securities. Notwithstanding the foregoing, the Company shall have the right
to issue and sell up to 500,000 "restricted securities" of its common stock
during each three (3) month period, at such price as the Company deems
appropriate, subject to the requirement that the purchaser(s) of such shares
shall be contractually prohibited from selling more than fifteen percent (15%)
of such shares during any three (3) month period; may not sell any such
shares at the bid price; and may not sell any such shares at a price less than
$1.00 per share, in each case prior to conversion in full of the Notes by
Maricopa, without the prior written consent of Maricopa;
* Liquidated damage payments by the Company for non-timely
transfers of shares on conversion, ranging form $300 commencing on the 6th day
of demand of transfer, increasing by $100 for each of the next nine days,
increasing by $500 on the 10th day and increasing by $500 every day
thereafter;
* The shares that will be issued on conversion of the Notes shall
be registered by the Company at its sole cost and expense with the Securities
and Exchange Commission as a condition to conversion (except for the first
40,000 shares, as outlined below) on or before March 14, 2002, provided,
however, the Company shall be obligated to register the greater of 500,000
shares or 200% of the maximum number of shares of common stock that would have
been issued had the conversion taken place on September 14, 2001 or on the
filing date of the registration statement.
* If (i) the registration statement is not filed on or prior to the
October 14, 2002, or is not declared effective by the Securities and Exchange
Commission on or prior to the March 14, 2002 (or in the event an additional
registration statement is filed because the actual number of shares of common
stock into which the Note is convertible exceeds the number of shares of
common stock initially registered is not filed and declared effective within
these time periods, or (ii) the Company fails to file with the Securities and
Exchange Commission a request for acceleration in accordance with Rule 12dl-2
promulgated under the Exchange Act within five (5) business days of the date
that the Company is notified (orally or in writing, whichever is earlier) by
the Securities and Exchange Commission that a registration statement will not
be "reviewed," or not subject to further review, or (iii) the registration
statement is filed with and declared effective by the Securities and Exchange
Commission but thereafter ceases to be effective as to all registerable
securities at any time prior to the expiration of the Effectiveness Period
(until on or after the time when subparagraph (k) of Rule 144 is available for
resales of these securities), without being succeeded immediately by a
subsequent registration statement filed with and declared effective by the
Securities and Exchange Commission, or (iv) trading in the common stock shall
be suspended or if the common stock is delisted from the OTC Bulletin Board
for any reason for more than ninety (90) days in the aggregate, or (v) the
conversion rights of Maricopa are suspended for any reason, including by the
Company, or (vi) the Company breaches in a material respect any covenant or
other material term or condition to the Securities Purchase Agreement or any
related exhibit (other than a representation or warranty contained therein) or
any other agreement, document, certificate or other instrument delivered in
connection with the transactions contemplated hereby and thereby, and such
breach continues for a period of thirty (30) days after written notice thereof
to the Company, or (vii) the Company has otherwise breached the Registration
Rights Agreement (any such failure or breach being referred to as an "Event"),
the Company shall pay in cash as liquidated damages for such failure and not
as a penalty to the holder an amount equal to 3% of the purchase price paid by
the holder for all Notes (or common stock held by the holder upon conversion
or exercise thereof) purchased and then outstanding pursuant to the Securities
Purchase Agreement for the first thirty (30) day period, and 4% for each
additional thirty (30) day period until the applicable Event has been cured,
which shall be pro rated for such periods less than thirty (30) days (the
"Periodic Amount"). The payments shall be due and payable immediately upon
demand in immediately available funds. The parties agree that the Periodic
Amount represents a reasonable estimate on the part of the parties, as of the
date of the Registration Rights Agreement, of the amount of damages that may
be incurred by the holder if the registration statement is not filed on or
prior to the filing date or has not been declared effective by the Securities
and Exchange Commission on or prior to the March 14, 2002, and maintained in
the manner contemplated herein during the Effectiveness Period or if any other
Event as described herein has occurred.
* There are mutual indemnification provisions respecting each party
to the other party concerning information provided by each for use in the
registration statement.
* The Securities Purchase Agreement and all rights thereunder or in
the exhibits are assignable if made under applicable laws, with the written
consent of the other party and subject to the assignee's acknowledgment of
certain factual matters similar to those agreed upon by Maricopa.
* Maricopa shall have the right of specific performance of the
obligations of the Company as one of its remedies in the event of default by
the Company.
* All proceeds for the purchase of the Notes, along with the first
40,000 shares that could be issued on conversion of the Notes, shall be
deposited with the Escrow Agent, together with fully executed copies of the
Securities Purchase Agreement and all related exhibits, at which time
disbursement to the Company shall be made. The 40,000 shares so deposited can
be purchased by the exercise of conversion rights prior to the effective date
of the registration statement.
These are the material terms and provisions of the Securities Purchase
Agreement and related exhibits that are attached hereto and incorporated
herein. Further information can be obtained by reviewing the actual
instruments that are described below under Item 7.
Item 7. Financial Statements and Exhibits.
Exhibit No. Exhibit Description
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10 Securities Purchase Agreement
Schedule 3(c)
Schedule 3(g)
Schedule 3(h)
Schedule 3(i)
Schedule 3(j)
Exhibit A-Series 2001-A Eight Percent (8%)
Convertible Promissory Note due August 31,
2011
Exhibit B-Registration Rights Agreement
Exhibit C-Escrow Agreement
Exhibit D-Opinion of Counsel for Wizzard
Software Corp.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned hereunto duly authorized.
WIZZARD SOFTWARE CORPORATION
Date: 10/1/01 By/s/Christopher J. Spencer
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Christopher J. Spencer,
President, CEO and Director