EXHIBIT 13
December 20, 1995
Xxxxxx X. Xxxxxxxx Xxxx X. Xxxxxxx
Computone Corporation Leopard Industries, Inc.
Xxxxx 000 Xxxxx 000
0000 Xxxxxxxxxxx Xxxxxxx 0000 Xxxxxxxx Xxxx
Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
Xxxxxxx X. Xxxxxx Xxxxxxx X. Lovely
Pennsylvania Merchant Group Ltd Leopard Industries, Inc.
Xxxxx 000 - Xxxxxxxx Xxxxx Xxxxx 000
000 Xxxxxx-Xxxxxxx Xxxx 0000 Xxxxxxxx Xxxx
Xxxxxx, XX 00000 Xxxxxxx, XX 00000
Gentlemen:
As Secretary of Computone Corporation ("Computone") and on its
behalf, I am writing this letter to evidence the agreements reached
among Computone, Jaguar, Inc. ("Jaguar"), Xxxxxxx X. Xxxxxx ("Han-
sen"), Xxxx X. Xxxxxxx ("Xxxxxxx"), Xxxxxx X. Xxxxxxxx ("Xxxxxxxx")
and Xxxxxxx X. Lovely ("Lovely"). Each of you, by your execution and
delivery of this letter or a counterpart thereof, agrees to be legally
bound by all of the provisions of this letter insofar as such provi-
sions are applicable to you.
1. Not later than December 20, 1995, Jaguar agrees to, and each of
Freitag, Lovely and Xxxxxxxx agrees to take all such action as is necessary to
cause Jaguar to, execute and deliver that certain Agreement to Release Pledged
Collateral to be dated as of December 20, 1995 among Primary Holdings Limited, a
Bermuda corporation ("PHL"), Jaguar and Xxxxxx (the "Release") and that certain
Agreement to be dated as of December 20, 1995 between Jaguar and Xxxxxx in favor
of PHL (the "Agreement"), in substantially the form of Exhibits A and B hereto,
respectively, and to consummate on behalf of Jaguar the transactions
contemplated by the Release and the Agreement.
2. Not later than December 20, 1995, Xxxxxx agrees to execute and
deliver the Release and the Agreement, in substantially the form of Exhibits A
and B hereto, respectively, and to consummate the transactions contemplated by
the Release and the Agreement.
3. Pursuant to the Agreement and the Release, Jaguar, with the
consent of PHL, has agreed to sell 2,619,266 shares (the "Shares") of
Xxxxxx X. Xxxxxxxx, Xxxx X. Xxxxxxx,
Xxxxxxx X. Xxxxxx, Xxxxxxx X. Lovely
Page 2
December 20, 1995
Common Stock of Computone for a purchase price in the aggregate of $750,000; or
approximately $.286 per Share. Xxxxxx agrees to pay the purchase price for the
Shares by prepayment of $750,000 of a $14,100,000 indebtedness of Jaguar to PHL.
Of the $750,000, $444,750 represents the purchase price of 1,553,225 shares (the
"Xxxxxx Shares") being purchased by Xxxxxx and $305,250, which is the amount of
a loan (the "Loan") by Xxxxxx to Xxxxxxxx and Lovely, represents the purchase
price of 866,041 shares (the "Xxxxxxxx Shares") being purchased by Xxxxxxxx and
200,000 shares (the "Lovely Shares") being purchased by Lovely.
4. Not later than December 20, 1995, (a) Xxxxxxxx agrees to execute and
deliver to Xxxxxx: (i) a promissory note (the "Xxxxxxxx Note") payable to Xxxxxx
in the principal amount of $247,982 due on demand by Xxxxxx after June 30, 1996,
together with interest on the unpaid balance of the Xxxxxxxx Note at the annual
rate 8% and (ii) a pledge agreement whereby Xxxxxxxx pledges the Xxxxxxxx Shares
to Xxxxxx as security for the timely payment of the principal and interest on
the Xxxxxxxx Note and (b) Lovely agrees to execute and deliver to Xxxxxx: (i) a
promissory note (the "Lovely Note") payable to Xxxxxx in the principal amount of
$57,268 due on demand by Xxxxxx after June 30, 1996, together with interest on
the unpaid balance of the Lovely Note at the annual rate of 8% and (ii) a pledge
agreement whereby Lovely pledges the Lovely Shares to Xxxxxx as security for the
timely payment of the principal and interest on the Lovely Note.
5. Xxxxxx, Xxxxxxxx and Lovely acknowledge that Freitag shall on and
after December 20, 1995 be the sole stockholder of Jaguar and that Jaguar is the
owner of 66,932 shares (the "Jaguar Shares") of Common Stock of Computone.
6. Not later than February 1, 1996, Computone agrees to, and Freitag,
Hansen, Xxxxxxxx and Lovely as the sole directors of Computone agree to cause
Computone to, file a registration statement with the Securities and Exchange
Commission (the "SEC") on Form S-3 or other appropriate SEC form for the purpose
of registering under the Securities Act of 1933 the Shares, including any Shares
purchased by Lovely under his option, and the shares of Common Stock of
Computone issuable to Freitag and Lovely upon the conversion of the Series D
Preferred Stock of Computone held by Freitag and Lovely. Computone agrees to use
its best efforts to cause such registration statement to become effective as
promptly as practicable.
7. Not later than December 20, 1995, Freitag and Lovely each shall
furnish Computone with written notice of conversion of all of the shares of
Series D Preferred Stock of Computone respectively held by them. Computone,
Freitag and Lovely agree that the accrued but unpaid dividends on the Series D
Preferred Stock of Computone from the date of issuance thereof through the date
of conversion shall be paid by Computone not later than June 30, 1996.
Xxxxxx X. Xxxxxxxx, Xxxx X. Xxxxxxx,
Xxxxxxx X. Xxxxxx, Xxxxxxx X. Lovely
Page 3
December 20, 1995
8. Computone agrees to, and Freitag, Hansen, Xxxxxxxx and Lovely as the
sole directors of Computone agree to cause Computone to, call and hold an annual
meeting of stockholders (the "Annual Meeting") not later than July 31, 1996.
Between the date hereof and the date of the Annual Meeting, Freitag, Hansen,
Xxxxxxxx and Lovely shall constitute the sole members of the Board of Directors
of Computone. Freitag, Hansen, Xxxxxxxx and Lovely agree that Freitag shall
serve as Chairman of the Board of Computone from the date hereof through April
6, 1996 and that Xxxxxx shall serve as Chairman of the Board of Computone from
April 6, 1996 through the date of the Annual Meeting. Freitag, Hansen, Xxxxxxxx
and Lovely, as the sole directors of Computone, agree to nominate seven persons
for election as directors of Computone at the Annual Meeting, of whom three
shall be persons designated by Xxxxxxxx, of whom three shall be persons
designated by Xxxxxx and of whom one shall be a person mutually acceptable to
the three Xxxxxxxx designees and the three Xxxxxx designees. For a period of not
less than one year following the Annual Meeting, Freitag shall be a Director
Emeritus of Computone and shall be entitled to notice of and to attend all
meetings of the Board of Directors of Computone.
9. Not later than December 20, 1995, Computone agrees to, and Xxxxxx,
Xxxxxxxx and Lovely as directors of Computone agree to cause Computone to, (a)
xxxxx Xxxxxxx an option (the "Freitag Option"), which shall be fully vested upon
the date of grant, to purchase 100,000 shares of Common Stock of Computone at a
price of $1.00 per share exercisable for a period of five years following the
date of grant in consideration of consulting services to be rendered by Freitag
to Computone as and when requested by the Board of Directors of Computone and
(b) file a registration statement with the SEC on Form S-8 or other appropriate
SEC form for the purpose of registering, not later than December 31, 1996, the
shares of Common Stock of Computone underlying the Freitag Option. If, on
January 1, 1997, the value of 100,000 shares of Common Stock of Computone,
determined by multiplying the closing bid price of Computone Common Stock as
reported by Nasdaq for the ten business days next preceding January 1, 1997 by
100,000, is $350,000 or more, whether or not Freitag has then exercised all or
any part of the Freitag Option and whether or not Freitag has sold any shares of
Computone Common Stock acquired upon exercise of the Freitag Option, Computone
shall have no obligation to pay Freitag any other consulting fee. If, however,
the value of 100,000 shares of Computone Common Stock on January 1, 1997,
determined as aforesaid, is less than $350,000, Computone agrees to pay Freitag
a consulting fee equal to the difference between $350,000 and the value of
100,000 shares of Computone Common Stock on January 1, 1997, determined as
aforesaid, but in no event more than $250,000. Such consulting fee shall be paid
in five equal annual installments, commencing on June 30, 1997 and continuing on
June 30 of the four succeeding years.
10. Not later than December 31, 1996, Computone agrees to and
Xxxxxx, Xxxxxxxx and Lovely as directors of Computone agree to use
their best efforts to cause Computone to, obtain the release of
Xxxxxx X. Xxxxxxxx, Xxxx X. Xxxxxxx,
Xxxxxxx X. Xxxxxx, Xxxxxxx X. Lovely
Page 4
December 20, 1995
Freitag as guarantor of any loan or credit arrangements between Computone and
NationsBank, including the termination of any pledges by Freitag securing such
guaranty.
11. In connection with the sale of Shares pursuant to the registration
statement referenced in paragraph 6 hereof, Xxxxxx, Xxxxxxxx and Lovely agree
that each of them shall be free to offer such Shares for sale as and when
determined by each of them in his sole discretion, provided, however, that
Xxxxxx agrees to take no action that would have the effect of substantially
interfering with the disposition of any Xxxxxxxx Shares by Xxxxxxxx to the
extent such disposition is made for the purpose of repaying the Xxxxxxxx Note
and of any Lovely Shares by Lovely to the extent such distribution is made for
the purpose of repaying the Lovely Note.
12. Xxxxxx agrees with Xxxxxxxx and Lovely that in the event Xxxxxx
determines to effect a registered public offering of more than 10% of the Xxxxxx
Shares or if Xxxxxx seeks to sell more than 10% of the Xxxxxx Shares in a
private transaction, excluding a transaction with affiliates of Xxxxxx or
Pennsylvania Merchant Group Ltd ("PMG") or affiliates of PMG, Xxxxxx will use
his best efforts to include in such public offering or other transaction, on a
pro rata basis according to number of Shares held, Shares held by Xxxxxxxx and
Lovely on the same terms and provisions, and subject to the same conditions, as
those applicable to Xxxxxx'x participation in such offering or other
transaction.
13. All notices and other communications to any party hereto provided
for in this agreement shall be in writing and addressed to such party at his
address as stated above unless such party shall have theretofore notified the
other parties hereto that such notices and communications should be sent to a
different address. Notices shall be sent via confirmed facsimile, federal
express or first class postage paid mail. Notices shall be effective upon
receipt.
14. In case any one or more of the provisions contained herein shall,
for any reason, be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of this agreement and this agreement shall be construed as if such
invalid, illegal or unenforceable provision or provisions had never been
contained herein unless the deletion of such provision or provisions would
result in such a material change as to cause performance of this agreement to be
unreasonable.
15. The rights and obligations under this agreement of the parties to
this agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the parties hereto; provided, however, that the rights
and obligations set forth in paragraphs 11 and 12 hereof are not assignable.
Xxxxxx X. Xxxxxxxx, Xxxx X. Xxxxxxx,
Xxxxxxx X. Xxxxxx, Xxxxxxx X. Lovely
Page 5
December 20, 1995
16. Computone, Jaguar, Freitag, Hansen, Xxxxxxxx and Lovely acknowledge
that Xxxxxxxxx X. Xxxxxx, Esq. and Duane, Morris & Heckscher have, with the
consent of Jaguar, Freitag, Hansen, Xxxxxxxx and Lovely, represented Computone
with respect to this agreement, and that each of Jaguar, Freitag, Hansen,
Xxxxxxxx and Lovely has read and understands all of the provisions of this
agreement and that each of Jaguar, Freitag, Hansen, Xxxxxxxx and Lovely has been
represented, or has been given the opportunity to be represented, by legal
counsel of its or his own choosing in connection with the negotiation, execution
and delivery of this agreement and the other agreements related to or
contemplated by this agreement.
If the foregoing correctly sets forth your agreements, please return an
executed copy of this agreement by faxing it to Xxxxxxxxx X. Xxxxxx at (215)
979-1213 who will forward to you a copy of this agreement executed by all of the
parties hereto.
Sincerely,
Xxxxxxxxx X. Xxxxxx
for DUANE, MORRIS & HECKSCHER
Accepted and agreed to, intending to be legally bound hereby, this 20th
day of December, 1995.
COMPUTONE CORPORATION JAGUAR, INC.
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxx
---------------------------- -------------------------
Xxxxxx X. Xxxxxxxx, President Xxxx X. Xxxxxxx, President
/s/ Xxxxxx X. Xxxxxxxx /s/ Xxxx X. Xxxxxxx
-------------------------------- -----------------------------
Xxxxxx X. Xxxxxxxx, individually Xxxx X. Xxxxxxx, individually
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxxxxx X. Lovely
---------------------------- --------------------------
Xxxxxxx X. Xxxxxx Xxxxxxx X. Lovely
