EXHIBIT 10.1
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COMMON STOCK PURCHASE AGREEMENT
By and Among
GEM SINGAPORE PTE LTD.
TURBO INTERNATIONAL LTD.
(the "Purchasers")
and
RACOM SYSTEMS, INC.
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Dated as of June 8, 1999
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TABLE OF CONTENTS
Page
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Article I Certain Definitions............................ 1
Article II Purchase of Common Stock....................... 2
Article III Representations and Warranties................. 3
Article IV Other Agreements of the Parties................ 7
Article V Conditions Precedent to Closing................ 10
Article VI Termination.................................... 12
Article VII Legal Fees..................................... 13
Article VIII Miscellaneous.................................. 13
Schedule 1 List of Purchasers
Schedule 3.1(a) Subsidiaries
Schedule 3.1(c) Capitalization
Schedule 3.1(f) Required Consents and Approvals
Schedule 3.1(g) Litigation
Schedule A List of Creditors
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COMMON STOCK PURCHASE AGREEMENT, dated as of June 8, 1999 (this
"Agreement"), by and among Racom Systems, Inc., a Delaware corporation (the
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"Company"), and the purchasers listed on Schedule 1 attached hereto (each
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individually, the "Purchaser" and collectively, the "Purchasers").
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WHEREAS, the Company desires to issue and sell to the Purchasers and
the Purchasers desire to acquire an aggregate of Seventeen Million (17,000,000)
shares (the "Shares") of the authorized but unissued common stock, $.01 par
value per share (the "Common Stock") of the Company.
IN CONSIDERATION of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
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Section 1.1. Certain Definitions. As used in this Agreement, and unless the
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context requires a different meaning, the following terms have the meanings
indicated:
"Affiliate" means, with respect to any Person, any Person that,
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directly or indirectly, controls, is controlled by or is under common control
with such Person. For the purposes of this definition, "control" (including,
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with correlative meanings, the terms "controlled by" and "under common control
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with") shall mean the possession, directly or indirectly, of the power to direct
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or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities by contract or otherwise.
"Business Day" means any day except Saturday, Sunday and any day which
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is a legal holiday or a day on which banking institutions in the state of New
York are authorized or required by law or other government actions to close,
between the hours of 9:30 a.m. and 6:00 p.m. New York Time.
"Closing" shall have the meaning set forth in Section 2.1(b).
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"Closing Date" shall mean the date of Closing, as set forth in Section
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2.1(b).
"Code" means the Internal Revenue Code of 1986, as amended, and the
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rules and regulations thereunder as in effect on the date hereof.
"Commission" means the Securities and Exchange Commission.
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"Common Stock" means the Company's common stock, par value $.01 per
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share.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Lien" means, with respect to any asset, any mortgage, lien, pledge,
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encumbrance, charge or security interest of any kind in or on such asset or the
revenues or income thereon or therefrom.
"Material" shall mean having a financial consequence in excess of
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$100,000.
"Material Adverse Effect" shall have the meaning set forth in Section
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3.1(a).
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"NASD" means the National Association of Securities Dealers, Inc.
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"Per Share Consideration" shall have the meaning set forth in Section
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2.1(a).
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"Person" means an individual or a corporation, partnership, trust,
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incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Purchase Price" shall have the meaning set forth in Section 2.1(a).
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"Required Approvals" shall have the meaning set forth in Section
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3.1(f).
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"Securities Act" means the Securities Act of 1933, as amended.
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"Subsidiaries" shall have the meaning set forth in Section 3.1(a).
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ARTICLE II
PURCHASE OF COMMON STOCK
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Section 2.1. Purchase of Common Stock; Closing
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(a) Subject to the terms and conditions herein set forth, the Company
shall issue and sell to the Purchasers, and the Purchasers shall purchase from
the Company on the Closing Date the number of Shares of Common Stock listed
opposite the Purchasers' names on Schedule 1, at a price per Share of US$.01
(the "Per Share Consideration"). The Per Share Consideration multiplied by the
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number of Shares to be purchased by the Purchasers hereunder is hereinafter
referred to as the "Purchase Price." The total number of Shares to be
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purchased by the Purchasers is Seventeen Million (17,000,000) and the total
Purchase Price shall be $170,000.
(b) The closing of the purchase and sale of the Shares of Common Stock
(the "Closing") shall take place at the offices of the escrow agent (the "Escrow
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Agent"), immediately upon the Escrow Agent's receipt of the Purchase Price and
the authorization from the Company to
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issue the Shares of Common Stock to the Purchasers. The date of the Closing is
hereinafter referred to as the "Closing Date".
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(c) At the Closing, (i) the Company shall deliver to the Escrow Agent
(A) the proper authorizations and instructions to issue the Shares of Common
Stock to the Purchasers and (B) all documents, instruments and writings required
to have been delivered at or prior to Closing by the Company pursuant to this
Agreement, and (ii) the Purchaser shall deliver to the Transfer Agent (A)
$70,000 of the Purchase Price as determined pursuant to this Article I in United
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States dollars in immediately available funds by wire transfer to an account
designated in writing by the Company prior to the Closing and (B) all documents,
instruments and writings required to have been delivered at or prior to Closing
by the Purchaser pursuant to this Agreement.
(d) Pursuant to the escrow agreement which is dated the date hereof
and is incorporated herein by reference, the Escrow Agent shall hold $100,000 in
escrow pursuant to Racom's entering into settlement agreements with all the
creditors listed on Schedule A to this Agreement, for no more than the aggregate
settlement amount listed on Schedule A. Upon Racom entering into settlement
agreements with all the creditors listed on Schedule A for the aggregate
settlement amount, the Escrow Agent shall transfer the specified settlement
amount opposite each creditor's name in exchange for a release of Racom from the
creditor. Any excess funds held in escrow after settlement with the creditors
listed on Schedule A shall be released to Racom.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
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3.1. Representations and Warranties of the Company. The Company hereby
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represents and warrants to the Purchaser as follows:
(a) Organization and Qualification. The Company is a corporation,
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duly incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with the requisite corporate power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. The Company has no subsidiaries other than as set forth
in Schedule 3.1(a) (collectively, the "Subsidiaries"). Each of the Subsidiaries
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is a corporation, duly incorporated, validly existing and in good standing under
the laws of the jurisdiction of its incorporation, with the full corporate power
and authority to own and use its properties and assets and to carry on its
business as currently conducted. Each of the Company and the Subsidiaries is
duly qualified to do business and is in good standing as a foreign corporation
in each jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to be
so qualified or in good standing, as the case may be, could not reasonably be
expected to have, individually or in the aggregate, a material adverse effect on
(a) the results of operations, assets, prospects, or financial condition of the
Company and the Subsidiaries, or (b) the Purchaser's rights under this Agreement
(a "Material Adverse Effect").
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(b) Authorization; Enforcement. The Company has the requisite
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corporate power and authority to enter into and to consummate the transactions
contemplated hereby and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized by all necessary action on the part of the Company. This
Agreement has been duly executed and delivered by the Company and constitutes
the valid and binding obligation of the Company enforceable against the Company
in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application.
(c) Capitalization. The authorized, issued and outstanding capital
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stock of the Company and each of the Subsidiaries is set forth in Schedule
3.1(c). No shares of Common Stock are entitled to preemptive or similar rights.
Except as specifically disclosed in Schedule 3.1(c), there are no outstanding
options, warrants, script rights to subscribe to, calls or commitments of any
character whatsoever relating to, or, securities, rights or obligations
convertible into or exchangeable for, or giving any person any right to
subscribe for or acquire any shares of Common Stock, or contracts, commitments,
understandings, or arrangements by which the Company or any Subsidiary is or may
become bound to issue additional shares of Common Stock, or securities or rights
convertible or exchangeable into shares of Common Stock. Neither the Company
nor any Subsidiary is in violation of any of the provisions of its respective
certificate of incorporation, bylaws or other charter documents.
(d) Issuance of the Common Stock. The Shares of Common Stock have been
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duly and validly authorized for issuance, offer and sale pursuant to this
Agreement and, when issued and delivered as provided hereunder against payment
in accordance with the terms hereof, shall be valid and binding obligations of
the Company enforceable in accordance with their terms. When issued in
accordance with the terms hereof, the Shares of Common Stock will be duly
authorized, validly issued, fully paid and nonassessable.
e) No Conflicts. The execution, delivery and performance of this
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Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby do not and will not (i) conflict with or violate
any provision of its certificate of incorporation or bylaws or (ii) subject to
obtaining the consents referred to in Section 3.1(f), conflict with, or
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constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company is a party, or (iii) to the knowledge of the
Company result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority
to which the Company is subject (including Federal and state securities laws and
regulations), or by which any property or asset of the Company is bound or
affected, except in the case of each of clauses (ii) and (iii), such conflicts,
defaults, terminations, amendments, accelerations, cancellations and violations
as would not, individually or in the aggregate, have a Material Adverse Effect.
The business of the Company is
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not being conducted in violation of any law, ordinance or regulation of any
governmental authority, except for violations which, individually or in the
aggregate, do not have a Material Adverse Effect.
(f) Consents and Approvals. Except as specifically set forth in
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Schedule 3.1(f), neither the Company nor any Subsidiary is required to obtain
any consent, waiver, authorization or order of, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of this Agreement, other than the making
of the applicable blue-sky filings under state securities laws, and other than,
in all cases, where the failure to obtain such consent, waiver, authorization or
order, or to give or make such notice or filing, would not materially impair or
delay the ability of the Company to effect the Closing and deliver to the
Purchaser the Shares of Common Stock free and clear of all Liens (collectively,
the "Required Approvals").
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(g) Litigation; Proceedings. Except as specifically disclosed in
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Schedule 3.1(g), there is no action, suit, notice of violation, proceeding or
investigation pending or, to the best knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries or any of their
respective properties before or by any court, governmental or administrative
agency or regulatory authority (Federal, State, county, local or foreign) which
(i) relates to or challenges the legality, validity or enforceability of this
Agreement or the Shares of Common Stock (ii) could, individually or in the
aggregate, have a Material Adverse Effect or (iii) could, individually or in the
aggregate, materially impair the ability of the Company to perform fully on a
timely basis its obligations under this Agreement.
(h) No Default or Violation. Neither the Company nor any Subsidiary
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(i) is in default under or in violation of any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound, except such conflicts or defaults as
do not have a Material Adverse Effect, (ii) is in violation of any order of any
court, arbitrator or governmental body, except for such violations as do not
have a Material Adverse Effect, or (iii) is in violation of any statute, rule or
regulation of any governmental authority which could (individually or in the
aggregate) (x) adversely affect the legality, validity or enforceability of this
Agreement, (y) have a Material Adverse Effect or (z) adversely impair the
Company's ability or obligation to perform fully on a timely basis its
obligations under this Agreement.
(i) Certain Fees. No fees or commission will be payable by the
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Company to any investment banker or bank with respect to the consummation of the
transactions contemplated hereby, except that part or all of the Purchase Price
shall be used to pay any fees, commissions or any other remunerations due to
Xxxxxxx Xxxxxxx and Xxxxxx and Xxxxx, LLC in connection with the transaction
contemplated in the Letter of Intent dated June 4, 1999, to which the Company is
a party.
(j) Non-Registered Offering. Neither the Company nor any Person
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acting on its behalf has taken or will take any action (including, without
limitation, any offering of any securities of the Company under circumstances
which would require the integration of such offering with the offering of the
Shares of Common Stock under the Securities Act) which might subject the
offering,
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issuance or sale of the Shares of Common Stock to the registration requirements
of Section 5 of the Securities Act.
(k) Reporting Company; Eligibility to use Exemption under Section
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4(2). The Company is subject to the reporting requirements of Section 13 or
Section 15(d) of the Exchange Act. The Company is eligible to issue securities
exempt from registration pursuant to Section 4(2) of the Securities Act.
Section 3.2. Representations and Warranties of the Purchasers. The
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Purchasers hereby represents and warrants to the Company as follows:
(a) Organization; Authority. Each of the Purchasers is a corporation
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duly and validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Each of the Purchasers has the requisite
power and authority to enter into and to consummate the transactions
contemplated hereby and otherwise to carry out its obligations hereunder and
thereunder. The purchase of the Shares of Common Stock by the Purchasers
hereunder has been duly authorized by all necessary action on the part of each
of the Purchasers. Each of this Agreement has been duly executed and delivered
by the Purchasers or on its behalf and constitutes the valid and legally binding
obligation of the Purchasers, enforceable against the Purchasers in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights generally and to general principles of equity.
(b) Investment Intent. The Purchasers are acquiring the Shares of
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Common Stock for their own account for investment purposes only and not with a
view to or for distributing or reselling such Shares or any part thereof or
interest therein, without prejudice, however, to the Purchaser's right, subject
to the provisions of this Agreement, at all times to sell or otherwise dispose
of all or any part of such Shares in compliance with applicable federal and
State securities laws.
(c) Purchasers' Status. At the time the Purchasers were offered the
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Shares, each was, and at the date hereof, each is, and at the Closing Date, each
will be, an "accredited investor" as defined in Rule 501(a) under the Securities
Act, in that it is a broker-dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934, as amended. The Purchasers are purchasing the
Shares for its own account.
(d) Experience of Purchasers. The Purchasers, either alone or
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together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Shares, and has so
evaluated the merits and risks of such investment.
(e) Ability of Purchasers to Bear Risk of Investment. The Purchasers
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are able to bear the economic risk of an investment in the Shares and, at the
present time, are able to afford a complete loss of such investment.
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(f) Prohibited Transactions. The Shares to be purchased by the
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Purchasers are not being acquired, directly or indirectly, with the assets of
any "employee benefit plan", within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended.
(g) Access to Information. The Purchasers acknowledges that they have
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been afforded (i) the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the Shares and the merits
and risks of investing in the Shares; (ii) access to information about the
Company and the Company's financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate its
investment in the Common Stock; and (iii) the opportunity to obtain such
additional information which the Company possesses or can acquire without
unreasonable effort or expense that is necessary to make an informed investment
decision with respect to the Shares.
(h) Reliance. The Purchasers understand and acknowledge that (i) the
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Shares are being offered and sold, to them without registration under the
Securities Act in a transaction that is exempt from the registration provisions
of the Securities Act, (ii) the availability of such exemption, depends in part
on, and that the Company will rely upon the accuracy and truthfulness of, the
foregoing representations and the Purchaser hereby consents to such reliance,
and (iii) that the certificates representing the Shares will bear the
appropriate legend stating the restrictions on the resale and transfer of the
Shares.
The Company acknowledges and agrees that the Purchasers make no
representation or warranty with respect to the transactions contemplated hereby
other than those specifically set forth in Article III herein.
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ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
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Section 4.1. Manner of Offering. The Shares of Common Stock are being
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issued pursuant to Section 4(2) of the Securities Act. The Shares will not be
exempt from restrictions on transfer, and will carry a restrictive legend with
respect to the resale and transfer of the Shares.
Section 4.2. Furnishing of Information. As long as the Purchasers owns
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Shares, the Company will promptly furnish to it all annual and quarterly reports
comparable to those required by Section 13(a) or 15(d) of the Exchange Act.
Section 4.3. Notice of Certain Events. The Company shall (i) advise the
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Purchasers promptly after obtaining knowledge thereof, and, if requested by the
Purchasers, confirm such advice in writing, of (A) the issuance by any state
securities commission of any stop order suspending the qualification or
exemption from qualification of the Common Stock for offering or sale in any
jurisdiction, or the initiation of any proceeding for such purpose by any state
securities commission
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or other regulatory authority, or (B) any event that makes any statement of a
material fact made by the Company in Section III untrue or that requires the
making of any additions to or changes in the Company's representations or
warranties in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading, (ii) use its best
efforts to prevent the issuance of any stop order or order suspending the
qualification or exemption from qualification of the Common Stock under any
state securities or Blue Sky laws, and (iii) if at any time any state securities
commission or other regulatory authority shall issue an order suspending the
qualification or exemption from qualification of the Common Stock under any such
laws, use its best efforts to obtain the withdrawal or lifting of such order at
the earliest possible time.
Section 4.4. Blue Sky Laws. The Company shall cooperate with the
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Purchasers in connection with the qualification of the Shares under the
securities or Blue Sky laws of such jurisdictions as the Purchasers may request
and to continue such qualification at all times through the fifth anniversary of
the Closing Date; provided, however, that neither the Company nor its
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Subsidiaries shall be required in connection therewith to qualify as a foreign
corporation where they are not now so qualified. The Company agrees that it
will execute all necessary documents and pay all necessary state filing or
notice fees to enable the Company to sell the Shares to the Purchasers.
Section 4.5 Integration. The Company shall not and shall use its best
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efforts to ensure that no Affiliate shall sell, offer for sale or solicit offers
to buy or otherwise negotiate in respect of any security (as defined in Section
2 of the Securities Act) that would be integrated with the offer or sale of the
Shares in a manner that would require the registration under the Securities Act
of the sale of the Shares to the Purchasers.
. Section 4.6 Solicitation Materials. The Company shall not (i) distribute
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any offering materials in connection with the offering and sale of the Shares
other than the information previously supplied to the Purchasers or (ii) solicit
any offer to buy or sell the Shares by means of any form of general solicitation
or advertising.
Section 4.7. Prohibition on Certain Actions. From the date hereof through
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the Closing Date, the Company shall not and shall cause the Subsidiaries not to,
without the consent of the Purchasers, (i) amend its Certificate of
Incorporation, bylaws or other charter documents so as to adversely affect any
rights of the Purchasers; (ii) split, combine or reclassify its outstanding
capital stock; (iii) declare, authorize, set aside or pay any dividend or other
distribution with respect to the Common Stock; (iv) redeem, repurchase or offer
to repurchase or otherwise acquire shares of its Common Stock; or (v) enter into
any agreement with respect to any of the foregoing.
Section 4.8. Listing of Shares. The Company shall use its best efforts to
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maintain the quote for its common stock on the NASD OTC Electronic Bulletin
Board (or listing on a national securities exchange or market on which the
Common Stock is listed).
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Section 4.9 Demand Registration
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At any time commencing after the Closing Date, the Purchasers shall
have the right, exercisable by written notice to the Company (the "Demand
Registration Request"), to have the Company prepare and file with the
Commission, on one occasion, at the sole expense of the Company, in respect of
all the Shares of Common Stock purchased under this Agreement (the "Registrable
Securities"), a Registration Statement so as to permit a public offering and
sale of the Registrable Securities. On or prior to each Filing Date, the
Company shall prepare and file with the Commission a "Shelf" Registration
Statement covering the resale of all Registrable Securities for an offering to
be made on a continuous basis pursuant to Rule 415. The Registration Statement
shall be on Form S-1 or another appropriate form permitting registration of
Registrable Securities for resale by the Holders in the manner or manners
designated by them (including, without limitation, public or private sales and
one or more Underwritten Offerings). The Company shall (i) not permit any
securities other than the Registrable Securities to be included in the
Registration Statement and (ii) use its best efforts to cause the Registration
Statement to be declared effective under the Securities Act as promptly as
practicable after the filing thereof, but in any event prior 120 days after the
filing of such Registration Statement, and to keep such Registration Statement
continuously effective under the Securities Act until the date which is five
years after the date of this Agreement or such earlier date when all Registrable
Securities covered by such Registration Statement have been sold or may be sold
pursuant to Rule 144 as determined by the counsel to the Company pursuant to a
written opinion letter, addressed to the Holders, to such effect (the
"Effectiveness Period"); provided, however, that the Company shall not be deemed
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to have used its best efforts to keep the Registration Statement effective
during the Effectiveness Period if it voluntarily takes any action that would
result in the Holders not being able to sell the Registrable Securities covered
by such Registration Statement during the Effectiveness Period, unless such
action is required under applicable law or the Company has filed a post-
effective amendment to the Registration Statement and the Commission has not
declared it effective.
a. If the Holders of a majority of the Registrable Securities so
elect, an offering of Registrable Securities pursuant to a Registration
Statement may be effected in the form of an Underwritten Offering. In such
event, and if the managing underwriters advise the Company and such Holders in
writing that in their opinion the amount of Registrable Securities proposed to
be sold in such offering exceeds the amount of Registrable Securities which can
be sold in such offering, there shall be included in such Underwritten Offering
the amount of such Registrable Securities which in the opinion of such managing
underwriters can be sold, and such amount shall be allocated pro rata among the
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Holders proposing to sell Registrable Securities in such Underwritten Offering.
b. If any of the Registrable Securities are to be sold in an
Underwritten Offering, the investment banker or investment bankers and manager
or managers that will administer the offering will be selected by the Holders of
a majority of the Registrable Securities included in such offering and the
Company shall be advised in advance of the identity of any underwriter and the
general terms of the proposed offering. No Holder may participate in any
Underwritten Offering hereunder unless such Person (i) agrees to sell its
Registrable Securities on the basis provided in any underwriting agreements
approved by the Persons entitled hereunder to approve such arrangements
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and (ii) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents required under the
terms of such arrangements.
Section 4.10 Resignation of Directors; Appointment of Purchasers
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Designees. Upon the Closing of this Agreement, four (4) of the members of the
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Company's Board of Directors shall resign from the Board. The remaining two
members of the Board of Directors shall decrease the number of the members of
the Company's Board of Directors to five (5) persons and appoint the following
designees of the Purchasers as directors:
Xxxxxxxxxxx X. Xxxxx
Xxxxxx Xxxxx
Xxxxxx Xxxxxx
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
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Section 5.1. Conditions Precedent to Obligations of the Purchasers. The
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obligation of the Purchasers to purchase the Shares is subject to the
satisfaction or waiver by the Purchasers, at or prior to the Closing, of each of
the following conditions:
(a) Legal Opinion. The Purchasers shall have received the legal
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opinion, addressed to it and dated the Closing Date of the Counsel for the
Company. Such legal opinion shall address the Company's authority to enter into
this Agreement and the availability of Section 4(2)to the offer and sale of the
Shares;
(b) Accuracy of the Company's Representations and Warranties. The
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representations and warranties of the Company contained herein shall be true and
correct in all material respects as of the date when made and as of the Closing
Date as though made at that time (except that representations and warranties
that are made as of a specific date need be true in all material respects only
as of such date);
(c) Performance by the Company. The Company shall have performed,
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satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing;
(d) No Material Adverse Effect. There has been no event which had a
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Material Adverse Effect on the Company which has not been disclosed to the
Purchasers;
(e) No Prohibitions. The purchase of and payment for the Shares
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hereunder (i) shall not be prohibited or enjoined (temporarily or permanently)
by any applicable law or governmental regulation and (ii) shall not subject the
Purchasers to any penalty, or in its reasonable judgment, other onerous
condition under or pursuant to any applicable law or governmental
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regulation that would materially reduce the benefits to the Purchaser of the
purchase of the Shares (provided, however, that such regulation, law or onerous
condition was not in effect in such form at the date of this Agreement);
(f) Company Certificates. The Purchasers shall have received a
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certificate, dated the Closing Date, signed by the Secretary or an Assistant
Secretary of the Company and certifying (i) that attached thereto is a true,
correct and complete copy of (A) the Company's Certificate of Incorporation, as
amended to the date thereof, (B) the Company's By-Laws, as amended to the date
thereof, (C) resolutions duly adopted by the Board of Directors of the Company
authorizing the execution and delivery of this Agreement, the issuance and sale
of the Shares and (D) a certificate of good standing from the Secretary of State
of Delaware and (ii) the incumbency of officers executing this Agreement;
(g) No Suspensions of Trading in Common Stock. Trading in the Common
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Stock shall not have been suspended by the Commission or the NASD or other
exchange or market on which the Common Stock is listed or quoted (except for any
suspension of trading of limited duration solely to permit dissemination of
material information regarding the Company);
(h) Required Approvals. All Required Approvals shall have been
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obtained;
(i) Delivery of Instructions. The Company shall have delivered to the
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Transfer Agent the necessary instructions and authorizations to cause the
issuance of certificates for the Shares to be issued to and registered in the
names of to the Purchasers; and
Section 5.2. Conditions Precedent to Obligations of the Company. The
--------------------------------------------------
obligation of the Company to issue and sell the Shares of Common Stock hereunder
is subject to the satisfaction or waiver by the Company, at or to the Closing,
of each of the following conditions:
(a) Accuracy of the Purchasers' Representations and Warranties. The
----------------------------------------------------------
representations and warranties of the Purchasers shall be true and correct in
all material respects as of the date when made and as of the Closing Date as
though made at that time (except that representations and warranties that are
made as of a specific date need be true in all material respects only as of such
date);
(b) Performance by the Purchasers. The Purchasers shall have
-----------------------------
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by it at or prior to the Closing; and
(c) No Prohibitions. The sale of the Shares of Common Stock hereunder
---------------
(i) shall not be prohibited or enjoined (temporarily or permanently) by any
applicable law or governmental regulation and (ii) shall not subject the Company
to any penalty, or in its reasonable judgment, any other onerous condition under
or pursuant to any applicable law or governmental regulation that would
materially reduce the benefits to the Company of the sale of Shares to the
Purchasers
Page 11 of 18
(provided, however, that such regulation, law or onerous condition was not in
effect in such form at the date of this Agreement).
ARTICLE VI
TERMINATION
-----------
Section 6.1. Termination by Mutual Consent. This Agreement may be
-----------------------------
terminated at any time prior to Closing by the mutual consent of the Company and
the Purchasers.
Section 6.2. Termination by the Company or the Purchaser. This Agreement
-------------------------------------------
may be terminated prior to Closing by either the Company or the Purchasers, by
giving written notice of such termination to the other party, if:
(a) the Closing shall not have occurred by June 30, 1999; provided
--------
that the terminating party is not then in material breach of its obligations
----
under this Agreement in any manner that shall have caused the failure referred
to in this paragraph (a);
(b) there shall be in effect any statute, rule, law or regulation that
prohibits the consummation of the Closing or if the consummation of the Closing
would violate any non-appealable final judgment, order, decree, ruling or
injunction of any court of or governmental authority having competent
jurisdiction; or
Section 6.3. Termination by the Company. This Agreement may be
--------------------------
terminated prior to Closing by the Company, by giving written notice of such
termination to the Purchasers, if the Purchasers have materially breached any
representation, warranty, covenant or agreement contained in this Agreement and
such breach is not cured within five business days following receipt by the
Purchasers of notice of such breach.
Section 6.4. Termination by the Purchasers. This Agreement may be
-----------------------------
terminated prior to Closing by the Purchasers, by giving written notice of such
termination to the Company, if:
(a) the Company has breached any representation, warranty, covenant or
agreement contained in this Agreement and such breach is not cured within five
business days following receipt by the Company of notice of such breach;
(b) there has occurred an event which could reasonably be expected to
have a Material Adverse Effect and which is not disclosed in this Agreement; or
(c) trading in the Common Stock has been suspended by the Commission
or the NASD or other exchange or market on which the Common Stock is listed or
quoted (except for any suspension of trading of limited duration solely to
permit dissemination of material information regarding the Company).
Page 12 of 18
ARTICLE VII
LEGAL FEES
----------
In the event any Party commences a legal action to enforce its rights under
this Agreement, the non-prevailing party shall pay all reasonable costs and
expenses (including reasonable attorney's fees) incurred in enforcing such
rights.
ARTICLE VIII
MISCELLANEOUS
-------------
Section 8.1. Fees and Expenses. Except as set forth above, each party
-----------------
shall pay the fees and expenses of its advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement.
The Company shall pay all stamp and other taxes and duties levied in connection
with the issuance of the Shares pursuant hereto. The Purchaser shall be
responsible for its own tax liability that may arise as a result of the
investment hereunder or the transactions contemplated by this Agreement.
Whether or not the transactions contemplated by this Agreement are consummated
or this Agreement is terminated, the Company shall pay (i) all costs, expenses,
fees and all taxes incident to and in connection with: (A) all preliminary and
final Blue Sky memoranda and all other agreements, memoranda, correspondence and
other documents prepared and delivered in connection herewith (B) the issuance
and delivery of the Shares, (C) the qualification of the Shares for offer and
sale under the securities or Blue Sky laws of the several states (including,
without limitation, the fees and disbursements of the Purchasers' counsel
relating to such registration or qualification), and (D) the preparation of
certificates for the Shares (including, without limitation, printing and
engraving thereof), (ii) all fees and expenses of the counsel and accountants of
the Company and (iii) all expenses and listing fees on Securities Exchanges, if
any.
Section 8.2. Entire Agreement; Amendments. This Agreement, together with
----------------------------
the Schedules hereto, contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters.
Section 8.3. Notices. Any notice or other communication required or
-------
permitted to be given hereunder shall be in writing and shall be deemed to have
been made upon facsimile (with transmission confirmation report) at the number
designated below (if delivered on a Business Day during normal business hours
where such notice is to be received), or the first Business Day following such
delivery (if delivered other than on a Business Day during normal business hours
where such notice is to be received) whichever shall first occur. The addresses
for such communications shall be:
Page 13 of 18
If to the Company: Art Rancis
Chief Executive Officer
Racom Systems, Inc.
0000 Xxxxxxxxx Xxxxx Xxxxxxxxx
Xxxxxxxxx Xxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
With copies to: Xxxx Xxxxx, Esq.
__________________
__________________
__________________
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Purchasers:
See Schedule 1 - Schedule of Purchasers (attached hereto)
With copies to: Xxxx X. Xxxxxxxxxx
Xxxxxx Xxxxxxxxxx & Xxxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
or such other address as may be designated in writing hereafter, in the same
manner, by such person.
Section 8.4 Amendments; Waivers. No provision of this Agreement may be
-------------------
waived or amended except in a written instrument signed, in the case of an
amendment, by both the Company and the Purchaser, or, in the case of a waiver,
by the party against whom enforcement of any such waiver is sought. No waiver
of any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right accruing to it thereafter.
Section 8.5. Headings. The headings herein are for convenience only, do
--------
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
Section 8.6. Successors and Assigns. This Agreement may not be assigned
----------------------
by any party without the prior written consent of all the parties hereto. This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The assignment by a party of this
Agreement or any rights hereunder shall not affect the obligations of such party
under this Agreement.
Page 14 of 18
Section 8.7. No Third Party Beneficiaries. This Agreement is intended
----------------------------
for the benefit of the parties hereto and their respective permitted successors
and assigns and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
Section 8.8. Governing Law. This Agreement shall be governed by and
-------------
construed and enforced in accordance with the internal laws of the State of New
York without regard to the principles of conflicts of law thereof. Any action
to enforce the terms of this Agreement or any of its exhibits shall be
exclusively brought in the state and/or federal courts in the State and County
of New York.
Section 8.9. Survival. The representations and warranties of the Company
--------
and the Purchaser contained in Article III and the agreements and covenants of
-----------
the parties contained in Article IV and this Article VIII shall survive the
---------- ------------
Closing (or any earlier termination of this Agreement).
Section 8.10. Counterpart Signatures. This Agreement may be executed in
----------------------
two or more counterparts, all of which when taken together shall be considered
one and the same agreement and shall become effective when counterparts have
been signed by each party and delivered to the other party, it being understood
that both parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature page were an original thereof.
Section 8.11. Publicity. The Company and the Purchasers shall consult
---------
with each other in issuing any press releases or otherwise making public
statements with respect to the transactions contemplated hereby and neither
party shall issue any such press release or otherwise make any such public
statement without the prior written consent of the other, which consent shall
not be unreasonably withheld or delayed.
Section 8.12. Severability. In case any one or more of the provisions of
------------
this Agreement shall be invalid or unenforceable in any respect, the validity
and enforceability of the remaining terms and provisions of this Agreement shall
not in any way be affecting or impaired thereby and the parties will attempt to
agree upon a valid and enforceable provision which shall be a reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.
Section 8.13. Remedies. In addition to being entitled to exercise all
--------
rights provided herein or granted by law, including recovery of damages, the
Purchasers will be entitled to specific performance of the obligations of the
Company under this Agreement and the Company will be entitled to specific
performance of the obligations of the Purchasers hereunder with respect to the
subsequent transfer of Shares. Each of the Company and the Purchasers agrees
that monetary damages would not be adequate compensation for any loss incurred
by reason of any breach of its obligations described in the foregoing sentence
and hereby agrees to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate.
Page 15 of 18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first indicated above.
Company:
RACOM SYSTEM, INC.
By: /s/ Art Rancis
-----------------------------------
Name: Art Rancis
Title: Chief Executive Officer
Purchasers:
GEM SINGAPORE PTE LTD.
By: /s/ Xxxxxxxxx Xxxxxxxx
------------------------------------
Name: Xxxxxxxxx Xxxxxxxx
Title: President
TURBO INTERNATIONAL LTD.
By: /s/ Xxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Director
Page 16 of 18
SCHEDULE 1
----------
Purchaser
Name & Address Number of Shares
-------------- ----------------
GEM Singapore Pte Ltd. 8,500,000
c/x Xxxxxxxx & Co.
00 Xxxxxxxx Xxxxxx
Xxxxxx X0X 0XX
Xxxxxxx
Tel: 000.00.000.000.0000
Fax: 000.00.000.000.0000
Turbo International Ltd. 8,500,000
Xxxxxxx Xxxxx
00 Xxxxxxx Xxxxxx
P. O. Box N-7755
Nassau, Bahamas
Tel: (000) 000-0000
Fax:(000) 000-0000
Page 17 of 18
SCHEDULE A
----------
Creditor Amount Owed Settlement Amount
-------- ----------- -----------------
Arapahoe County Treasurer $ 6,769.91 $ 3,385
Holland & Xxxx $ 24,973.67 $ 12,487
Xxxx X. Xxxxx $ 20,000 $ 0
LaSalle Partners $ 38,893.87 $ 19,447
Xxxxxxx Corporation $ 7,650.11 $ 3,825
Xxxxxx Public Relations $ 16,006.09 $ 8,003
NASDAQ Stock Market $ 5,000 $ 5,000
Picopak $ 32,417.43 $ 16,209
Ramtron International $ 52,802.82 $ 26,401
US West Communications $ 8,176.11 $ 4,088
=========== ========
Total $212.690.01 $100,000
Page 18 of 18
