PURCHASE AGREEMENT dated as of September 22, 1995 by and
among PENRIL DATACOMM NETWORKS, INC., a Delaware corporation (the
"Company"), PEQUOT PARTNERS FUND, L.P., a Delaware limited
partnership ("Partners"), PEQUOT ENDOWMENT FUND, L.P., a Delaware
limited partnership ("Endowment"), and PEQUOT INTERNATIONAL FUND
INC., a British Virgin Islands corporation ("International" and
together with Partners and Endowment, the "Investors").
W I T N E S S E T H :
WHEREAS, the Company wishes to issue to the Investors and
the Investors wish to purchase from the Company an aggregate of
1,465,000 shares of common stock, $.01 par value (the "Common
Stock"), of the Company;
NOW, THEREFORE, in consideration of the mutual
covenants and agreements herein contained, the parties hereto
agree as follows:
1. Issuance and Sale of Common Stock.
1.1. Issuance, Purchase and Sale of Shares. Upon the
terms and subject to the conditions hereof, the Company has
authorized the issuance of 1,465,000 shares of Common Stock
(the "Shares").
1.2. Agreement to Sell and Purchase the Common Stock.
Upon the terms and subject to the conditions hereof,
simultaneously with the execution and delivery of this
Agreement, the Company is issuing and selling to each
Investor, and each Investor is subscribing for and
purchasing from the Company, the number of Shares set forth
opposite such Investor's name on Schedule I hereto for an
aggregate purchase price equal to the dollar amount opposite
such Investor's name on Schedule I hereto (the "Purchase
Price").
1.3. Deliveries. Simultaneously with the execution and
delivery of this Agreement, the following actions are being
taken:
(a) The Company is issuing and delivering to each
Investor one or more certificates representing the
number of Shares set forth opposite such Investor's
name on Schedule I hereto, each registered in the name
of such Investor (the "Stock Certificates"). Delivery
of each such Stock Certificate to each Investor is
being made against payment to the Company by each
Investor of the Purchase Price, which is being paid by
delivery of a certified check or cashier's check
payable to the order of the Company or by a wire
transfer in such amount to an account previously
designated by the Company.
(b) A registration rights agreement (the
"Registration Rights Agreement") between the Company
and the Investors, in the form of Exhibit A hereto, is
being executed and delivered by each of the Company and
the Investors.
(c) The Company is delivering to the Investors
(i) long form and bring down certificates of good
standing for the Company for the states of Delaware and
Maryland; (ii) resolutions of the Board of Directors in
form and substance satisfactory to the Investors
authorizing the execution, delivery and performance of
this Agreement, the Registration Rights Agreement and
the transactions contemplated hereby and thereby,
including, without limitation, the issuance of the
Shares; (iii) the by-laws of the Company; and (iv) an
incumbency certificate; in each case certified by the
Secretary of the Company as of the Closing Date, which
certification shall be satisfactory in form and
substance to the Investors and shall state that the
resolutions of the Board of Directors and the by-laws
certified thereby are in full force and effect and have
not been amended, modified, revoked or rescinded.
(d) The Company is causing to be delivered to the
Investors an opinion from Benesch, Friedlander, Xxxxxx
& Xxxxxxx, addressed to the Investors, dated as of the
date hereof, as to the matters set forth in Exhibit B
hereto.
1.4. The Closing. The closing (the "Closing")
hereunder with respect to the transactions contemplated
hereby is taking place simultaneously with the execution and
delivery of this Agreement at the offices of Fried, Frank,
Harris, Xxxxxxx & Xxxxxxxx, Xxx Xxx Xxxx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000.
2. Representations and Warranties of the Company. The
Company hereby represents and warrants to each Investor as
follows:
2.1. Organization and Good Standing; Power and
Authority; Qualifications. The Company is a corporation
duly organized, validly existing and in good standing under
the laws of the State of Delaware and has all requisite
corporate power and authority to (i) own or lease and
operate its properties and to carry on its business as
presently conducted and as currently proposed to be
conducted and (ii) execute and deliver and perform this
Agreement and the Registration Rights Agreement and to issue
and sell the Shares to the Investors. Each of the Company
and its Subsidiaries (as hereinafter defined) is qualified
as a foreign corporation in, and is in good standing under
the laws of, each jurisdiction where the character of the
property owned or leased or the nature of the activities
conducted by the Company or such Subsidiary makes such
qualification necessary and in which the failure to so
qualify would have a material adverse effect on the
business, financial position, results of operations,
properties or prospects of the Company and its Subsidiaries
taken as a whole (a "Company Material Adverse Effect").
2.2. Subsidiaries. Schedule 2.2. contains a true and
complete list of each corporation, partnership, joint
venture, business trust or other entity in which the
Company, directly or indirectly, has any ownership interest
(collectively, the "Subsidiaries"). Each of the outstanding
shares of capital stock of each of the Subsidiaries is duly
authorized, validly issued, fully paid and nonassessable,
and, except as set forth on Schedule 2.2, is owned, directly
or indirectly, by the Company free and clear of any liens,
pledges, security interests, claims or other encumbrances
other than liens imposed by law which are not material to
the business of the Company and its Subsidiaries taken as a
whole. Each of the Company's Subsidiaries is a corporation
duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation.
Schedule 2.2 sets forth the following information for each
Subsidiary of the Company: (i) its name and jurisdiction of
incorporation or organization; (ii) its authorized capital
stock or equity capital; and (iii) the number of issued and
outstanding shares of capital stock or equity capital.
Except for the interests in the Subsidiaries, neither the
Company nor any of its Subsidiaries owns directly or
indirectly any interest or investment (whether equity or
debt) in any corporation, partnership, joint venture,
business trust or other entity.
2.3. Authorization; Enforceable Obligations. The
execution, delivery and performance by the Company of this
Agreement and the Registration Rights Agreement and the
issuance, sale, and delivery of the Shares have been duly
authorized by all requisite corporate action by the Company.
Each of this Agreement and the Registration Rights Agreement
constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its
terms. Upon payment by the Investors pursuant to this
Agreement, the Shares will be validly issued and
outstanding, fully paid and nonassessable with no personal
liability attaching to the ownership thereof, and are not
subject to preemptive or any other similar rights of the
stockholders of the Company or others except as contemplated
hereby.
2.4 No Violation. The execution, delivery and
performance of this Agreement and the Registration Rights
Agreement, the issuance, sale, delivery of the Shares, the
consummation of the transactions contemplated hereby and
thereby, and compliance with the provisions hereof and
thereof by the Company will not (a) violate any provision of
any law, statute, rule or regulation, or any ruling, writ,
injunction, order, judgment or decree of any court,
administrative agency or other governmental body applicable
to the Company or any of its Subsidiaries, properties or
assets or (b) conflict with or result in any breach of any
of the terms, conditions or provisions of, or constitute
(with due notice or lapse of time, or both) a default (or
give rise to any right of termination, cancellation or
acceleration) under the Certificate of Incorporation or the
By-laws of the Company or any of its Subsidiaries or any
note, indenture, mortgage, lease agreement or other material
contract, agreement or instrument to which the Company or
any of its Subsidiaries is a party or by which any of them
or any of their properties is bound or affected. No permit,
authorization, consent or approval of or by, or any
notification of, or filing with, any person (governmental or
private) is required in connection with the execution,
delivery and performance by the Company of this Agreement or
the Registration Rights Agreement or the issuance, sale or
delivery of the Shares (other than such notifications or
filings required under applicable state securities laws, if
any, which shall be made on a timely basis).
2.5. Capitalization. As of the date hereof, and
immediately prior to the consummation of the transactions
contemplated hereby and before giving effect to such
transactions, the authorized capital stock of the Company
consists of 100,000 shares of Serial Preferred Stock, $.01
par value, none of which is issued and outstanding, and
20,000,000 shares of Common Stock, of which 7,586,202 shares
are issued and outstanding (exclusive of treasury stock).
As of the date hereof, other than options to purchase an
aggregate of 1,599,618 shares of Common Stock outstanding
under the Company's 1986 Incentive Plan, adopted on
October 8, 1986, and the Non-Employee Directors' Stock
Option Plan, adopted on December 9, 1987, and except as
contemplated by this Agreement, there are no outstanding
warrants, options, agreements, convertible securities or
other commitments pursuant to which the Company is or may
become obligated to issue any shares of the capital stock or
other securities of the Company, except for the proposed
sale (the "Proposed Sale") of 50,000 shares of Common Stock
to a third party investor on or prior to October 15, 1995 at
a per share price of not less than $5.00. As of the date
hereof, except as contemplated by this Agreement and the
Registration Rights Agreement, there are, no preemptive or
similar rights to purchase or otherwise acquire shares of
the capital stock of the Company pursuant to any provision
of law, the Certificate of Incorporation or By-laws (in each
case, as amended and in effect on the date hereof), or any
agreement to which the Company is a party; and, except as
contemplated by this Agreement and the Registration Rights
Agreement, the Company is not a party to any agreement,
restriction or encumbrance (such as a right of first
refusal, right of first offer, proxy, voting agreement,
voting trust, registration rights agreement, stockholders'
agreement, etc.) with respect to the sale or voting of any
shares of capital stock of the Company (whether outstanding
or issuable upon conversion or exercise of outstanding
securities). The transactions contemplated by this
Agreement and the Registration Rights Agreement will not
cause any anti-dilution protection provisions given by the
Company to any person or entity (including without
limitation, any stockholder, lender, warrant holder, lessor
and/or licensee) to become operative.
2.6. SEC Documents. The Company has filed all
registration statements, reports, proxy statements or
information statements (collectively, the "SEC Reports")
required to be filed by the Company with the Securities and
Exchange Commission (the "SEC") since July 31, 1992. Except
as set forth on Schedule 2.6, as of their respective dates,
each SEC Report (including exhibits and any amendments
thereto), filed by the Company with the SEC, (i) was
prepared in all material respects in accordance with the
applicable requirements of the Securities Act of 1933 (the
"Securities Act") or the Securities Exchange Act of 1934
(the "Securities Exchange Act"), as the case may be, and the
respective rules and regulations promulgated thereunder and
(ii) did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in
the light of the circumstances under which they were made,
not misleading. Each of the consolidated balance sheets of
the Company included in or incorporated by reference into
the SEC Reports (including the related notes and schedules)
fairly presents the consolidated financial position of the
Company and its Subsidiaries as of its date and each of the
consolidated statements of income, retained earnings and
cash flows of the Company included in or incorporated by
reference into the SEC Reports (including any related notes
and schedules) fairly presents the results of operations,
retained earnings or cash flows, as the case may be, of the
Company and its Subsidiaries for the periods set forth
therein (subject, in the case of unaudited statements, to
normal year-end audit adjustments), in each case in
accordance with generally accepted accounting principles
consistently applied during the periods involved, except as
noted therein. As of the date hereof, the Company is
eligible to file registration statements under the
Securities Act on Form S-3 and the Company is not aware of
any facts or circumstances which would cause it to fail to
meet the eligibility requirements for use of Form S-3.
2.7 Projections. Each of (i) the detailed monthly
financial forecast in the form of an income statement and a
balance sheet for each of the Company, Electro-Metrics,
Inc., Technipower, Inc. and Perfect Power Systems, Inc. for
the fiscal year ending July 31, 1996 and (ii) the Forecast
Income Statements for the Company and the Penril Datability
Networks Division for the fiscal years ending on July 31,
1995 through 1998, (collectively, the "Projections")
delivered to the Investors, discloses all material
assumptions made with respect to general economic, financial
and market conditions used in formulating such Projections.
To the knowledge of the Company, no facts exist which would
result in any material change in any of such Projections.
The Projections are based upon reasonable estimates and
assumptions, all of which are fair in light of current
conditions, have been prepared on the basis of the
assumptions stated therein, and reflect the reasonable
estimate of the Company of the results of operations,
assets, liabilities and other information projected therein.
2.8. Litigation; Undisclosed Liabilities.
(a) Except as disclosed in the SEC Reports, there
are no actions, suits or proceedings pending against
the Company or any of its Subsidiaries or any of their
respective directors or executive officers in their
capacity as such or, to the best knowledge of the
Company, threatened against the Company or any of its
Subsidiaries or any of their respective directors or
executive officers, at law or in equity, or before or
by any federal or state commission, board, bureau,
agency or instrumentality, that, individually or in the
aggregate, are or could reasonably be expected to be
material to the Company and its Subsidiaries taken as a
whole.
(b) Except as set forth in the Company's Annual
Report on Form 10-K for the fiscal year ended July 31,
1994 or the Company's Quarterly Report on Form 10-Q for
the quarter ended April 30, 1995, except for the
matters disclosed in the Company's news release, dated
September 19, 1995 and except for the treatment of
Technipower, Inc. as a discontinued operation, the
Company has no liability of any nature (matured or
unmatured, fixed or contingent) which has or could
reasonably be expected to have a Company Material
Adverse Effect.
2.9. Absence of Certain Changes. Since April 30, 1995
the Company has conducted its business only in the ordinary
course consistent with past practice and there has not been
(a) except for the matters disclosed in the Company's news
release, dated September 19, 1995 any event or events which,
individually or in the aggregate, have or could reasonably
be expected to have a Company Material Adverse Effect,
(b) any declaration, setting aside or payment of any
dividend or other distribution with respect to its capital
stock or any redemption or repurchase of any shares of its
capital stock, (c) any material change in its accounting
principles, practices or methods, (d) any asset or property
of the Company made subject to a lien of any kind, (e) any
waiver of any valuable right of the Company, or the
cancellation of any material debt or claim held by the
Company, (f) any sale, assignment or transfer of any
tangible or intangible assets of the Company, except in the
ordinary course of business, (g) any loan by the Company to
any officer, director, employee, consultant or shareholder
of the Company, or any agreement or commitment therefor
(other than advances to such persons in the ordinary course
of business in connection with travel and travel related
expenses), (h) except as set forth on Schedule 2.9, any
increase in the salaries or other compensation payable to
any officer, director or employee of the Company or any of
its Subsidiaries (except for normal increases in the
ordinary course of business consistent with past practice)
or any increase in, or addition to, other benefits to which
any officer, director or employee may be entitled (except as
required by the terms of plans as in effect on the date of
this Agreement or as required by law), (i) any incurrence of
indebtedness for borrowed money (except in the ordinary
course of business consistent with past practice), (j)
except as set forth on Schedule 2.9, any amendment to,
termination or threat of termination of any material right
or agreement to which the Company is a party, (k) any
material adverse change or threat of a material adverse
change in the Company's or any of its Subsidiaries'
relations with, or any loss or threat of loss of, any of the
Company's important suppliers or customers or (l) any
material damage, destruction or loss, whether or not covered
by insurance, adversely affecting the properties, business
or prospects of the Company and its Subsidiaries taken as a
whole, or any deterioration in the operating condition of
the assets of the Company and its Subsidiaries which would
have a Company Material Adverse Effect.
2.10. Taxes.
(a) Except as set forth on Schedule 2.10, the
Company and each of its Subsidiaries (i) have timely
filed all federal, state, local and foreign tax returns
required to be filed by any of them prior to the date
of this Agreement and all such returns are complete in
all material respects, (ii) have paid or accrued all
Taxes (as hereinafter defined) that may be due and
payable with respect to such returns and (iii) have
properly accrued in all material respects all Taxes for
such periods subsequent to the periods covered by such
returns. "Taxes," for purposes of this Agreement,
means any taxes, assessments, duties, fees, levies,
imposts, deductions, withholdings, including, without
limitation, income, gross receipts, ad valorem, value
added, excise, real or personal property, asset, sales,
use, license, payroll, transaction, capital, net worth
and franchise taxes, estimated taxes, withholding,
employment, social security, workers compensation,
utility, severance, production, unemployment
compensation, occupation, premium, windfall profits,
transfer and gains taxes, or other governmental charges
of any nature whatsoever imposed by any government or
taxing authority of any country or political
subdivision of any country and any liabilities with
respect thereto, including any penalties, additions to
tax, fines or interest thereon, and includes any
liability of the Company or any of its Subsidiaries
arising under any tax sharing agreement to which the
Company or any of its Subsidiaries is or has been a
party.
(b) As of the close of the Company's taxable year
ended July 31, 1994, the Company and its Subsidiaries
had a consolidated net operating loss carryover for
federal income tax purposes of not less than
$1,500,000. There are no limitations pursuant to
Section 382 of the Code or any of the provisions of
Treasury Regulation Section 1502-21 on the ability of
the Company and its Subsidiaries to utilize the net
operating loss carryovers described in the preceding
sentence, and the ability of the Company and its
Subsidiaries to utilize such net operating loss
carryovers will not become subject to any such
limitation by reason of this Agreement or any of the
transactions contemplated hereby.
2.11. Employee Benefit Plan; Labor and Employment
Matters.
(a) To the best knowledge of the Company, with
respect to each Company Benefit Plan (as hereinafter
defined) (i) the Company and each Subsidiary have
performed all obligations required to be performed by
them under each Company Benefit Plan and Employee
Agreement (as hereinafter defined) and neither the
Company nor any Subsidiary is in default under or in
violation of, any Company Benefit Plan; (ii) each
Company Benefit Plan has been established and
maintained in accordance with its terms and in
compliance with all applicable laws, statutes, orders,
rules and regulations, including but not limited to
ERISA (as hereinafter defined) and the Internal Revenue
Code of 1986, as amended, and any regulations
promulgated or proposed thereunder (collectively, the
"Code"); (iii) each Company Benefit Plan intended to
qualify under Section 401 of the Code is, and since its
inception has been, so qualified and a determination
letter has been issued by the IRS to the effect that
each such Company Benefit Plan is so qualified and that
each trust forming a part of any such Company Benefit
Plan is exempt from tax pursuant to Section 501(a) of
the Code and no circumstances exist which would
adversely affect this qualification or exemption and
(iv) no non-exempt "prohibited transaction," within the
meaning of Section 4975 of the Code or Section 406 of
ERISA, has occurred with respect to any Company Benefit
Plan, Employee Agreement, or against any Company
Benefit Plan or against the assets of any Company
Benefit Plan.
(b) None of the Company, any Subsidiary, or any
ERISA Affiliate (as hereinafter defined) presently
sponsors, maintains, contributes to, nor is the
Company, any Subsidiary or any ERISA Affiliate required
to contribute to, nor has the Company, any Subsidiary
nor any ERISA Affiliate ever sponsored, maintained,
contributed to, or been required to contribute to, a
Pension Plan (as hereinafter defined).
(c) Except as disclosed on Schedule 2.11(c), the
execution of, and the performance of the transactions
contemplated in, this Agreement will not (either alone
or upon the occurrence of any additional or subsequent
events) constitute an event under any Company Benefit
Plan, Employee Agreement, trust or loan that will or
may result in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness,
vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any
Employee (as hereinafter defined). No payment or
benefit which will or may be made by the Company, any
Subsidiary, any Investor or any of their respective
affiliates with respect to any Employee will be
characterized as an "excess parachute payment," within
the meaning of Section 280G(b)(1) of the Code.
(d) No work stoppage or labor strike against the
Company or any Subsidiary by Employees is pending or
threatened. Neither the Company nor any Subsidiary
(i) is involved in or threatened with any labor
dispute, grievance, or litigation relating to labor
matters involving any Employees, including, without
limitation, violation of any federal, state or local
labor, safety or employment laws (domestic or foreign),
charges of unfair labor practices or discrimination
complaints; (ii) has engaged in any unfair labor
practices within the meaning of the National Labor
Relations Act; or (iii) is presently, nor has been in
the past a party to, or bound by, any collective
bargaining agreement or union contract with respect to
Employees and no such agreement or contract is
currently being negotiated by the Seller or any of its
affiliates. No Employees are currently represented by
any labor union for purposes of collective bargaining
and no activities the purpose of which is to achieve
such representation of all or some of such Employees
are threatened or ongoing.
(e) None of the Employees listed on Schedule
2.11(e) has threatened to resign or announced his
resignation and, to the best knowledge of the Company,
no third party may assert any valid claim against the
Company, the Investors or any of the Designated Persons
(as hereinafter defined) with respect to (i) the
continued employment by, or association with, the
Company, of any of the present officers or employees of
or consultants to the Company (collectively, the
"Designated Persons") or (ii) the use, in connection
with any business presently conducted or proposed to be
conducted by the Company or any of the Designated
Persons of any information which the Company or any of
the Designated Persons would be prohibited from using
under any prior agreements or arrangements or any legal
considerations applicable to unfair competition, trade
secrets or proprietary information.
(f) For purposes of this Agreement, the following
terms shall have the following meanings: "Benefit
Plan" means each plan, program, policy, payroll
practice, contract, agreement or other arrangement
providing for compensation, severance, termination pay,
performance awards, stock or stock-related awards,
fringe benefits or other employee benefits of any kind,
including, without limitation, each "employee benefit
plan," within the meaning of Section 3(3) of ERISA.
"Company Benefit Plan" means each Benefit Plan (other
than an Employee Agreement) which is now or previously
has been sponsored, maintained, contributed to, or
required to be contributed to, by the Company, any
Subsidiary or any ERISA Affiliate for the benefit of
any Employee, and pursuant to which the Company, any
Subsidiary or any ERISA Affiliate has or may have any
liability, contingent or otherwise (all of which
Company Benefit Plans are listed on Schedule 2.11(f)).
"Employee" means each current, former, or retired
employee, officer, consultant, independent contractor,
agent or director of the Company or any Subsidiary.
"Employee Agreement" means each management, employment,
severance, consulting, non-compete, confidentiality, or
similar agreement or contract between the Company or
any Subsidiary and any Employee pursuant to which the
Company or any Subsidiary has or may have any
liability, contingent or otherwise (all of which
Employee Agreements are listed on Schedule 2.11(f)).
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended. "ERISA Affiliate" means each
business or entity which is a member of a "controlled
group of corporations," under "common control" or an
"affiliated service group" with the Company within the
meaning of Section 414(b), (c) or (m) of the Code, or
required to be aggregated with the Company under
Section 414(o) of the Code, or is under "common
control" with the Company, within the meaning of
Section 4001(a)(14) of ERISA. "Pension Plan" means
each Company Benefit Plan which is a pension plan
subject to Title IV of ERISA.
2.12. Intellectual Property Rights.
(a) The Company owns or has the right to use all
Intellectual Property Rights (as hereinafter defined)
necessary, required or desirable for the conduct of its
business as presently conducted or as presently
proposed to be conducted. The material licenses,
patents, trademarks, patent applications and trade
names of the Company and its Subsidiaries are
identified on Schedule 2.12 (collectively, the
"Requisite Rights").
(b) Except as disclosed on Schedule 2.12, to the
knowledge of the Company no product, service or process
manufactured, marketed, sold or used, or proposed to be
manufactured, marketed, sold or used, by the Company
violates, or will violate, any license or knowingly
infringes upon, or will infringe upon, any Intellectual
Property Rights or assumed name of another; and there is no
pending or threatened claim or litigation against the
Company (nor does there exist any basis therefor) contesting
the validity of or the right to use any of the foregoing,
nor has the Company received any notice that any of the
Requisite Rights or the operation or proposed operation of
the Company's business conflicts, or will conflict, with the
asserted rights of others, nor does there exist any basis
for any such conflict.
As used herein, the term "Intellectual Property Rights"
means all industrial and intellectual property rights, including,
without limitation, Proprietary Technology (as hereinafter
defined), patents, patent applications, patent rights,
trademarks, trademark applications, trade names, service marks,
service xxxx applications, copyrights, know-how, certificates of
public convenience and necessity, franchises, licenses, trade
secrets, proprietary processes and formulae. As used herein,
"Proprietary Technology" means all source and object code,
algorithms, architecture, structure, display screens, layouts,
processes, inventions, trade secrets, know-how, development tools
and other proprietary rights owned by the Company, pertaining to
any product or service manufactured, marketed or sold, or
proposed to be manufactured, marketed or sold (as the case may
be), by the Company, or used, employed or exploited in the
development, license, sale, marketing, distribution or
maintenance thereof, and all documentation and media
constituting, describing or relating to the above, including,
without limitation, manuals, memoranda, know-how, notebooks,
patents and patent applications, trademarks and trademark
applications, copyrights and copyright applications, records and
disclosures.
2.13. Title to Properties; Insurance. The Company
and its Subsidiaries have good and valid title to, or, in
the case of property leased by any of them as lessee, a
valid leasehold interest in, their respective properties
(whether real, personal or mixed) and assets, free of all
liens and encumbrances other than those referred to in the
financial statements of the Company (or the notes thereto)
for the fiscal year ended July 31, 1994 or the quarter ended
April 30, 1995, included in the SEC Reports, except in each
case for such defects in title and such other liens and
encumbrances which are disclosed in the SEC Reports or which
do not in the aggregate materially detract from the value to
the Company of the properties and assets of the Company and
its Subsidiaries taken as a whole. The Company and its
Subsidiaries maintain insurance in such amounts (to the
extent available in the public market), including
self-insurance, retainage and deductible arrangements, and
of such a character as is reasonable for companies engaged
in the same or similar business.
2.14. No Defaults. The Company is not in default
(a) under its Certificate of Incorporation or By-laws,
(b) under any indenture, mortgage, lease, purchase or sales
order, or any other contract, agreement or instrument to
which the Company is a party or by which the Company or any
of its respective properties is bound or affected, which
default or defaults would, in the aggregate, have a Company
Material Adverse Effect or (c) with respect to any order,
writ, injunction or decree of any court of any Federal,
state, municipal or other domestic or foreign governmental
department, commission, board, bureau, agency or
instrumentality, which default or defaults would, in the
aggregate, have a Company Material Adverse Effect. There
exists no condition, event or act which constitutes, or
which after notice, lapse of time or both, would constitute,
a default under any of the foregoing, which default would
have a Company Material Adverse Effect.
2.15. Compliance with Law.
(a) Except as disclosed on Schedule 2.15, to the
best knowledge of the Company, the Company (i) is and
has been in compliance in all material respects with
all Federal, state, local and foreign laws, rules,
ordinances, codes, consents, authorizations,
registrations, regulations, decrees, directives,
judgments and orders applicable to it, its business and
the ownership of its assets, including, but not limited
to Environmental Laws (as hereinafter defined), and
(ii) has all Federal, state, local and foreign
governmental licenses, permits and qualifications
material to and necessary in the conduct of its
business, such licenses, permits and qualifications are
in full force and effect, and, to the best knowledge of
the Company, no violations have been recorded in
respect of any such licenses, permits and
qualifications, no proceeding is pending or threatened
to revoke or limit any such license, permit or
qualification and there is no reason why any such
license, permit or qualification would not be renewed
in the ordinary course.
(b) For purposes of this Agreement,
"Environmental Laws" means, without limitation, the
Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. 9601, et seq.; the
Emergency Planning and Community Right-to-Know Act of
1986, 42 U.S.C. 11001, et seq.; the Resource
Conservation and Recovery Act, 42 U.S.C. 6901, et
seq.; the Toxic Substances Control Act, 15 U.S.C.
2601, et seq.; the Federal Insecticide, Fungicide,
and Rodenticide Act, 7 U.S.C. 136, et seq.; the
Clean Air Act, 42 U.S.C. 7401, et seq.; the Clean
Water Act (Federal Water Pollution Control Act), 33
U.S.C. 1251, et seq.; the Safe Drinking Xxxxx Xxx,
00 X.X.X. 000x, et seq.; the Occupational Safety and
Health Act, 29 U.S.C. 641, et seq.; the Hazardous
Materials Transportation Act, 49 U.S.C. 1801, et
seq.; as any of the above statutes have been or may be
amended from time to time, all rules and regulations
promulgated pursuant to any of the above statutes, and
any other foreign, federal, state or local law,
statute, ordinance, rule or regulation governing
environmental matters, as the same have been or may be
amended from time to time, including any common law
cause of action providing any right or remedy with
respect to environmental matters, and all applicable
judicial and administrative decisions, orders, and
decrees relating to environmental matters.
2.16. Related Party Transactions. Except as
disclosed in the SEC Reports or on Schedule 2.16, there are
no contracts, arrangements or transactions in effect between
the Company or any of its Subsidiaries, on the one hand, and
any officer, director or 5% stockholder of the Company, or
any affiliate or immediate family member of any of the
foregoing persons, on the other hand.
2.17. Use of Proceeds. The net proceeds received
by the Company from the sale of the Shares will be used by
the Company to repay indebtedness in an aggregate amount of
$1,500,000 and for general working capital purposes and
expenses incurred in connection with this Agreement.
2.18. Offering Exemption. Assuming the
representations and warranties in Section 3.3 are true and
correct, the offering and sale of the Shares pursuant hereto
is exempt from registration under the Securities Act and the
aforesaid offering and sale is also exempt from registration
under applicable state securities and "blue sky" laws.
3. Representations and Warranties of the Investors. Each
Investor represents and warrants as to itself to the Company as
follows:
3.1. Organization; Power and Authority; Authorization;
Enforceable Obligations. The Investor is a limited
partnership, or in the case of International, a corporation,
duly organized, validly existing under the laws of the
jurisdiction of its formation having all partnership or
corporate power and authority, as the case may be, and all
necessary licenses and permits required to carry on its
business as now conducted and to enter into and perform this
Agreement. The execution, delivery and performance by the
Investor of this Agreement and the Registration Rights
Agreement has been duly authorized by all necessary action
on the part of the Investor. Each of this Agreement and the
Registration Rights Agreement constitutes a valid and
binding agreement of such Investor enforceable against such
Investor in accordance with its terms.
3.2. No Violation. The execution, delivery and
performance of this Agreement and the Registration Rights
Agreement and the consummation of the transactions
contemplated hereby and thereby, and compliance with the
provisions hereof and thereof by the Investor will not
violate (a) any provision of any law, statute, rule or
regulation, or any ruling, writ, injunction, order, judgment
or decree of any court, administrative agency or other
governmental body applicable to the Investor or any of its
properties or assets or (b) conflict with or result in any
breach of any of the terms, conditions or provisions of, or
constitute (with due notice or lapse of time, or both) a
default (or give rise to any right of termination,
cancellation or acceleration) under the Investor's
partnership agreement or any note, indenture, mortgage,
lease agreement or other contract, agreement or instrument
to which the Investor is a party or by which any of them or
any of their properties is bound or affected. No permit,
authorization, consent or approval of or by, or any
notification of, or filing with, any person (governmental or
private) is required in connection with the execution,
delivery and performance by the Investor of this Agreement
or the Registration Rights Agreement.
3. Securities Act Representations.
(a) The Investor is acquiring its Shares for its
own account, for investment and not with a view to the
distribution thereof within the meaning of the
Securities Act. The Investor is an "Accredited
Investor" (as defined in Rule 501(a) under the
Securities Act).
(b) Each Investor acknowledges and agrees that
the Shares have not been registered under the
Securities Act or the securities laws of any state and
that they may be sold or otherwise disposed of only in
one or more transactions registered under the
Securities Act and, where applicable, such laws or
transactions as to which an exemption from the
registration requirements of the Securities Act and,
where applicable, such laws are available. Each
Investor acknowledges that, except as provided in the
Registration Rights Agreement, such Investor has no
right to require the Company to register the Shares.
Each Investor understands and agrees that the Shares
are subject to stop transfer orders and each Stock
Certificate shall bear the following legends:
"THE SHARES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN
APPLICABLE EXEMPTION TO THE REGISTRATION
REQUIREMENTS OF SUCH ACT OR SUCH LAWS."
4. Covenants and Agreements.
4.1. Board Membership.
(a) The Board of Directors of the Company shall
take all necessary action to increase the size of the
Board of Directors by one and to fill the vacancy
created thereby by electing the person designated by
the following Investor (the "Designating Investor");
Partners, so long as it holds Shares and thereafter
International so long as it holds Shares and thereafter
Endowment; within 10 days after such designation, to
the Board of Directors as a Class II director and, so
long as any Investors hold shares of Common Stock
representing 10% of all shares of the Common Stock then
outstanding (exclusive of any treasury stock), at each
subsequent annual meeting for the election of directors
of Class II, the Designating Investor will be entitled
to propose (and the Board of Directors will elect to
fill the vacancy or the Company will nominate and
recommend, as the case may be) one person as a member
of the Company's Board of Directors; provided, that the
Designating Investor shall be entitled to designate
(and the Company will nominate and recommend) as a
member of the Board of Directors any person reasonably
acceptable to the Board of Directors of the Company.
In the event of any vacancy arising by reason of the
resignation, death, removal (including, but not limited
to, a resignation pursuant to Section 4.1(c) hereof) or
inability to serve of the Designating Investor's
nominee, the Designating Investor shall be entitled,
subject to the foregoing proviso, to designate a
successor to fill such vacancy until the next annual
meeting for the election of Class II directors. The
Company agrees that if the Designating Investor's
nominee is not elected, the Designating Investor will
be entitled to have one observer selected by the
Designating Investor present at all meetings of the
Board of Directors and such observer shall have the
same access to information concerning the business and
operations of the Company and its Subsidiaries and at
the same time as directors of the Company and shall be
entitled to participate in discussions and consult with
the Board of Directors, without voting.
(b) Without the prior consent of the Investors,
the Company shall not change the size of the Board of
Directors, the classification of any director or
otherwise change or modify Article Seventh of the
Company's Certificate of Incorporation or Sections 2 or
3 of the Company's By-laws.
(c) The Designating Investor shall use its best
efforts to cause their designee to provide to the
Company in connection with disclosures required in
filings with the SEC such information as is required by
Items 401 through 405 of Regulation S-K or any
successor or new rule or regulation promulgated by the
SEC with respect to the disclosure of information
relating to directors. If, notwithstanding the
Designating Investor's best efforts, the Designating
Investor's designee fails to provide such information,
subject to applicable law, the Designating Investor
shall cause such designee to resign from the Board of
Directors and the Designating Investor shall not be
entitled to designate such designee as a member of the
Board of Directors, but shall continue to be entitled
to designate another person (subject to the provisions
of Section 4.1(a)) as a member of the Board of
Directors.
(d) All rights and obligations pursuant to this
Section 4.1 terminate when the Investors collectively
own in the aggregate less than ten percent of the
issued and outstanding Common Stock (exclusive of any
treasury stock) or any Investor fails to comply with
the terms of this Agreement.
4.2. Right of First Offer.
(a) Except for (i) shares of Common Stock issued
or sold to employees or directors of the Company
pursuant to an existing Benefit Plan or any new Benefit
Plan adopted by the Company in good faith, (ii) the
Proposed Sale, (iii) a public offering of Common Stock
by the Company or (iv) the issuance or transfer of
shares of Common Stock to unaffiliated third parties in
connection with licensing or similar arrangements
consistent with past practice, in the event that the
Company proposes to issue or sell any shares of Common
Stock or securities convertible into or exercisable for
shares of Common Stock and the purchase price for such
shares of Common Stock, or the conversion price or
exercise price for the shares of Common Stock into
which such securities are convertible or for which such
securities are exercisable, as the case may be, shall
be less than the Market Value (as hereinafter defined)
on the date notice is given pursuant to clause (i)
below:
(i) the Company shall give each of the
Investors written notice of its intent to issue or
sell such shares of Common Stock or other
securities, specifying the number thereof to be
sold, the purchase price and the terms and
conditions of such sale and offering;
(ii) if, within 5 Business Days (as
hereinafter defined) after receipt of the notice
given pursuant to clause (i) above one or more
Investors shall not have accepted such offer in
writing with respect to any shares of Common Stock
or other securities specified in such notice, then
the Company shall be free to issue or sell to any
third party such shares of Common Stock or other
securities with respect to which such offer has
not been accepted at a price equal to or above the
purchase price and on other terms and conditions
no less favorable to the Company than those
specified in such notice at any time within 45
days of the expiration of such 5-Business Day
period; provided that if such shares of Common
Stock shall be sold to an officer, director or an
affiliate of the Company, either (x) the material
facts as to such officer's, director's or
affiliate's relationship and as to the sale of
Common Stock are disclosed or are known to the
Board of Directors, and the Board of Directors in
good faith authorizes the sale by the affirmative
votes of a majority of the disinterested
directors, even though the disinterested directors
be less than a quorum, or (y) the material facts
as to such officer's, director's or affiliate's
relationship and as to the sale of Common Stock
are disclosed or are known to the shareholders
entitled to vote thereon, and the sale is
specifically approved in good faith by vote of the
shareholders, or (z) the sale of Common Stock is
fair to the Company as of the time it is
authorized, approved or ratified, by the Board of
Directors or the shareholders;
(iii) if the Company shall not have
consummated such issuance or sale within the 45-
day period referred to in clause (ii) above, then
the Company may not thereafter sell such Shares or
other securities without complying again with the
provisions of this Section 4.2; and
(iv) if one or more Investors shall have
accepted such offer in whole or in part within 5
Business Days after receipt of the notice given
pursuant to clause (i) above, then such Investor
or Investors shall purchase such shares of Common
Stock and/or other securities as to which such
offer has been accepted as promptly as is
reasonably practicable.
(b) For purposes of this Section 4.2, "Market
Value" means (1) if the Common Stock is quoted on the
National Market System of the National Association of
Securities Dealers, Inc. Automated Quotation System
(the "National Market System") or is listed on one or
more stock exchanges, the average of the closing sales
prices of a share of Common Stock on the National
Market System if quoted thereon or on the primary
national or regional stock exchange on which such
shares are listed or (2) if the Common Stock is not so
quoted or listed but is traded in the over-the-counter
market (other than the National Market System), the
average of the closing bid and asked prices of a share
of Common Stock, in the case of clauses (1) and (2),
for the 20 trading days (or such lesser number of
trading days as the Common Stock shall have been so
listed, quoted or traded) next preceding the date of
measurement or (3) if the Common Stock is not so quoted
or listed and is not traded in the over-the-counter
market, the fair market value of a share of Common
Stock shall be determined reasonably and in good faith
by the Board of Directors of the Company. "Business
Day" means a day on which federal or state chartered
banking institutions located in the State of
Connecticut are authorized by law to close.
(c) All rights and obligations pursuant to this
Section 4.2 terminate when the Investors collectively
own in the aggregate less than ten percent of the
issued and outstanding Common Stock (exclusive of any
treasury stock) or any Investor fails to comply with
the terms of this Agreement.
4.3. Use of Proceeds. The Company shall apply the net
proceeds from the sale of the Shares as provided in
Section 2.17 hereof.
4.4. Standstill. Subject to the continued compliance
of the Company with the terms of this Agreement and the
Registration Rights Agreement, so long as any obligations of
the Company remain pursuant to this Agreement or the
Registration Rights Agreement, until the later to occur of
the expiration of (i) a period of 12 months from the date of
this Agreement or (ii) the permanent waiver effected in
compliance with Section 10.5 hereof, following the
resignation or removal of the Investor's designee from the
Board of Directors, of the Investors' rights under Section
4.1 and 4.2 hereof, none of the Investors will, without the
prior written consent of the Company's Board of Directors:
(a) make, or in any way participate, directly or
indirectly, in any solicitation of proxies or consents
(as such terms are used in the rules of the SEC), or
seek to advise or influence any person or entity, with
respect to the voting of any voting securities of the
Company;
(b) initiate or propose any stockholder proposal
with respect to the Company as described in Rule 14a-8
under the Securities Exchange Act;
(c) make any public announcement with respect to,
or submit a proposal for, or offer of (with or without
conditions) any extraordinary transaction involving the
Company or any Subsidiary or division thereof or any of
their securities or assets (it being acknowledged that
informal discussions with the Board of Directors shall
not be a breach of this provision);
(d) otherwise act alone or in concert with
others, to seek to control or influence the management,
Board of Directors or policies of the Company
(provided, however, that nothing herein shall restrict
the Investors from exercising their rights pursuant to
Section 4.1 hereof and the rights of their designee on
the Board of Directors under applicable law and the
Company's Certificate of Incorporation and By-laws); or
(e) form, join or in any way participate in a
"group" as defined in the Securities Exchange Act, or
advise, assist or encourage any other person in
connection with any of the foregoing.
Each Investor shall promptly advise the Company of any
inquiry or proposal made to such Investor with respect to any of
the foregoing.
5. Transfer Taxes. The Company agrees that it will pay,
and will hold the Investor harmless from any and all liability
with respect to any stamp or similar taxes which may be
determined to be payable in connection with the execution and
delivery and performance of this Agreement or any modification,
amendment or alteration of the terms or provisions of this
Agreement, and that it will similarly pay and hold the Investors
harmless from all issue taxes in respect of the issuance of the
Shares to the Investors.
6. Survival of Representations, Warranties and Agreements,
Etc. All representations, warranties and statements contained in
any agreement, certificate or other instrument delivered by the
Company pursuant to this Agreement (including, but not limited to
the Registration Rights Agreement) or in connection with the
transactions contemplated by this Agreement shall constitute
representations and warranties by the Company under this
Agreement. All representations and warranties made or deemed to
be made hereunder by the Company or the Investors shall survive
the Closing until the later of (i) the filing of the Company's
Annual Report on Form 10-K for the fiscal year ended July 31,
1995 or (ii) the expiration of a period of six months from the
date hereof or, with respect to representations or warranties
deemed to be made hereunder pursuant to the previous sentence,
for such longer period, if any, for which the agreement,
certificate or instrument wherein such representation, warranty
or statement is made, is effective by its terms. All agreements
and covenants contained herein and in the Registration Rights
Agreement shall survive indefinitely until, by their respective
terms, they are no longer operative.
7. Indemnification.
(a) The Company agrees to indemnify and save harmless
each Investor and its officers, directors, partners,
employees and agents and each person who controls the
Investor within the meaning of the Securities Act or the
Securities Exchange Act, from and against any and all costs,
expenses (including attorney's fees), damages or other
liabilities resulting from any breach by the Company of this
Agreement or the Registration Rights Agreement or (subject
to Section 2.6 of the Registration Rights Agreement) any
legal, administrative or other proceedings arising out of
the transactions contemplated hereby (other than such costs,
expenses, damages or other liabilities resulting, directly
or indirectly, (i) from the breach by such Investor of any
of its agreements contained herein or (ii) from the gross
negligence or willful misconduct of such Investor or any of
its officers, directors, partners, employees or agents, or
any person who controls such Investor within the meaning of
the Securities Act or Securities Exchange Act.
(b) Each Investor severally, but not jointly, agrees
to indemnify and save harmless the Company and its officers,
directors, employees and agents and each person who controls
the Company within the meaning of the Securities Act or the
Securities Exchange Act, from and against any and all costs,
expenses (including attorney's fees), damages or other
liabilities resulting from any breach by such Investor of
its representations, warranties and covenants contained in
this Agreement or any legal, administrative or other
proceedings arising out of the transactions contemplated
hereby (other than such costs, expenses, damages or other
liabilities resulting, directly or indirectly, (i) from the
breach by the Company of any of its agreements contained
herein or (ii) from the gross negligence or willful
misconduct of the Company or any of its officers, directors,
employees or agents or any person who controls the Company
within the meaning of the Securities Act or the Securities
Exchange Act).
(c) Promptly after receipt by an indemnified party of
notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subsections
of this Section 7, such indemnified party shall, if a claim
in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the commencement
of such action or proceeding; provided, however, that the
failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its
obligations under the preceding subsections of this
Section 7, except to the extent that the indemnifying party
is actually prejudiced by such failure to give notice, and
shall not relieve the indemnifying party from any liability
which it may have to the indemnified party otherwise than
under this Section 7. In case any such action or proceeding
is brought against an indemnified party, the indemnifying
party shall be entitled to participate therein and, unless
in the opinion of outside counsel to the indemnified party a
conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, to
assume the defense thereof, jointly with any other
indemnifying party similarly notified to the extent that it
may wish, with counsel reasonably satisfactory to such
indemnified party; provided, however, that if the defendants
in any such action or proceeding include both the
indemnified party and the indemnifying party and if in the
opinion of outside counsel to the indemnified party there
may be legal defenses available to such indemnified party
and/or other indemnified parties which are different from or
in addition to those available to the indemnifying party,
the indemnified party or parties shall have the right to
select separate counsel to defend such action or proceeding
on behalf of such indemnified party or parties; provided,
however, that the indemnifying party shall be obligated to
pay for only one counsel for all indemnified parties. After
notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof and
approval by the indemnified party of such counsel, the
indemnifying party shall not be liable to such indemnified
party for any legal expenses subsequently incurred by the
latter in connection with the defense thereof other than
reasonable costs of investigation (unless the first proviso
in the preceding sentence shall be applicable). No
indemnifying party shall be liable for any settlement of any
action or proceeding effected without its written consent.
No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter
into any settlement which does not include as an
unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation.
(d) Contribution. If the indemnification provided for
in this Section 7 shall for any reason be held by a court to
be unavailable to an indemnified party under subsection (a)
or (b) hereof in respect of any loss, claim, damage or
liability, or any action in respect thereof, then, in lieu
of the amount paid or payable under subsection (a) or (b)
hereof, the indemnified party and the indemnifying party
under subsection (a) or (b) hereof shall contribute to the
aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection
with investigating the same), (i) in such proportion as is
appropriate to reflect the relative fault of the
indemnifying party on the one hand, and the indemnified
party on the other, which resulted in such loss, claim,
damage or liability, or action in respect thereof, with
respect to the statements or omissions which resulted in
such loss, claim, damage or liability, or action in respect
thereof, as well as any other relevant equitable
considerations, or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law or if the
allocation provided in this clause (ii) provides a greater
amount to the indemnified party than clause (i) above, in
such proportion as shall be appropriate to reflect not only
the relative fault but also the relative benefits received
by the indemnifying party and the indemnified party from the
offering of the securities covered by such registration
statement as well as any other relevant equitable
considerations. The parties hereto agree that it would not
be just and equitable if contributions pursuant to this
Section 7(c) were to be determined by pro rata allocation or
by any other method of allocation which does not take into
account the equitable considerations referred to in the
preceding sentence of this Section 7(c). No Person guilty
of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such
fraudulent misrepresentation. The Investors' obligations to
contribute as provided in this subsection (c) are several
and not joint and shall be in proportion to the relative
value of the respective number of shares of Common Stock
then held by them. In addition, no Person shall be
obligated to contribute hereunder any amounts in payment for
any settlement of any action or claim effected without such
Person's consent, which consent shall not be unreasonably
withheld.
(e) Indemnification Payments. The indemnification and
contribution required by this Section 7 shall be made by
periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred; provided,
however, that such periodic payments shall only be made upon
delivery of an agreement to the indemnifying party by the
indemnified party to repay the amounts advanced to the
extent it is ultimately determined that the indemnified
party is not entitled to indemnification pursuant to this
Section 7 or otherwise. The parties hereto agree that for
each of them such agreement shall be deemed to be contained
herein.
8. Specific Performance; Remedies.
(a) The Investors, on the one hand, and the Company,
on the other hand, acknowledge and agree that irreparable
damage would occur in the event that any of the provisions
of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an
injunction to prevent breaches of the provisions of this
Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any
state thereof having jurisdiction, this being in addition to
any other remedy to which they may be entitled at law or in
equity.
(b) In case any one or more of the representations,
warranties, covenants and/or agreements set forth in this
Agreement shall have been breached by the a party hereto,
each of the other parties may proceed to protect and enforce
its rights either by suit in equity and/or by action at law,
including, but not limited to, an action for damages as a
result of any such breach and/or an action for specific
performance of any such covenant or agreement contained in
this Agreement.
9. Expenses. Except as otherwise provided herein, the
Company and the Investors shall each pay all costs and expenses
incurred by each of them or on its behalf in connection with this
Agreement and the transactions contemplated hereby, including,
without limiting the generality of the foregoing, fees and
expenses of its own financial consultants, accountants and
counsel; provided, that the Company shall pay the Investors'
costs and expenses in connection with this Agreement in an
aggregate amount not exceeding $20,000.
10. Miscellaneous.
10.1. Successors and Assigns. This Agreement shall
bind and inure to the benefit of and be binding upon the
Company and the Investors and the respective successors,
assigns, heirs and personal representatives of the Company
and the Investors. This Agreement may not be assigned by
the Company. Each Investor shall be entitled to assign its
rights under this Agreement.
10.2. Transfer of Securities. Each Investor shall
be entitled to transfer all or any part of the Shares
purchased by it hereunder to any person in compliance with
the provisions of the Securities Act and the rules and
regulations promulgated thereunder.
10.3. Entire Agreement. This Agreement and the
Registration Rights Agreement and the other writings
referred to herein or delivered pursuant hereto which form a
part hereof contain the entire agreement among the parties
with respect to the subject matter hereof and supersede all
prior and contemporaneous arrangements or understandings
with respect thereto.
10.4. Notices. All notices, requests, consents and
other communications hereunder to any party shall be deemed
to be sufficient if contained in a written instrument
delivered in person or sent by telecopy, nationally-
recognized overnight courier or first class registered or
certified mail, return receipt requested, postage prepaid,
addressed to such party at the address set forth below or
such other address as may hereafter be designated in writing
by such party to the other parties:
(a) If to any Investor, to it at:
000 Xxxxxx Xxxxxx
XX Xxx 000
Xxxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx
Telecopier: (000) 000-0000
With a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Telecopier: (000) 000-0000
(b) If to the Company, to it at:
Penril DataComm Networks, Inc.
0000 Xxxxxx Xxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attention: Chairman
With a copy to:
Benesch, Friedlander, Xxxxxx & Aronoff
0000 XX Xxxxxxx Xxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Telecopier: (000) 000-0000
All such notices, requests, consents and other communications
shall be deemed to have been given when received.
10.5. Amendments. The terms and provisions of this
Agreement may not be modified or amended, or any of the
provisions hereof waived, temporarily or permanently, except
pursuant to the written consent of the Company and Investors
holding a majority of the Shares then held by the Investors.
10.6. Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be deemed
an original, but all such counterparts shall together shall
constitute one and the same instrument.
10.7. Headings. Headings of the Articles and
Sections of this Agreement are for convenience only, and
shall be given no substantive or interpretive effect
whatsoever.
10.8. Interpretation. In this Agreement, unless
the context otherwise requires, words describing the
singular number shall include the plural and vice versa, and
words denoting any gender shall include all genders and
words denoting natural persons shall include corporations
and partnerships and vice versa.
10.9. Waivers. Except as provided in this
Agreement, no action taken pursuant to this Agreement,
including, without limitation, any investigation by or on
behalf of any party, shall be deemed to constitute a waiver
by the party taking such action of compliance with any
representations, warranties, covenants or agreements
contained in this Agreement. The waiver by any party hereto
of a breach of any provision hereunder shall not operate or
be construed as a waiver of any prior or subsequent breach
of the same or any other provision hereunder.
10.10. Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and
provisions of this Agreement or otherwise affecting the
validity or enforceability of any of the terms or provisions
of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only
so broad as is enforceable.
10.11. Governing Law; Jurisdiction.
(a) This Agreement shall be construed and
enforced in accordance with and governed by the laws of
the State of Delaware, without giving effect to the
conflicts of law principles thereof.
(b) Each of the parties hereto irrevocably and
unconditionally consents to the jurisdiction of the
courts of Delaware in respect of the interpretation and
enforcement of the provisions of this Agreement, and
hereby agrees that service of process in any such
action, suit or proceeding against the other party with
respect to this Agreement may be made upon it in any
manner permitted by the laws of Delaware or the federal
laws of the United States.
10.12. Public Announcements. The Company and the
Investors shall, subject to their respective legal
obligations (including requirements of stock exchanges and
other similar regulatory bodies), consult with each other,
and use reasonable efforts to agree upon the text of any
press release, before issuing any such press release or
otherwise making public statements with respect to the
transactions contemplated hereby and in making any filings
with any federal or state governmental or regulatory agency
or with any national securities exchange with respect
thereto.
IN WITNESS WHEREOF, the parties hereto have duly executed
this agreement as of the date first above written.
PENRIL DATACOMM NETWORKS, INC.
By:
Title:
PEQUOT PARTNERS FUND, L.P.
By: Pequot General Partners,
its general partner
By:
Managing Partner
PEQUOT ENDOWMENT FUND, L.P.
By: Pequot Endowment
Partners, L.P.,
Its general partner
By:
Managing Partner
PEQUOT INTERNATIONAL FUND INC.
By:
Name:
Title:
Schedule I
to
Stock Purchase Agreement
# Shares of Aggregate
Investor Common Stock Purchase Price
Pequot Partners Fund, L.P. 636,000 $3,180,000
Pequot Endowment Fund, L.P. 260,000 $1,300,000
Pequot International Fund Inc. 569,000 $2,845,000
--------- ---------
TOTAL 1,465,000 $7,325,000
September 25, 1995 - 3:57pm - JRO
CLE2 - 166861.1B - 03780\418
