EXHIBIT 2.7
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BROADBAND NETWORKS, INC.,
SHAREHOLDERS' AGREEMENT
among
BROADBAND NETWORKS, INC.,
NUMEREX CORP.
and
THE SHAREHOLDERS LISTED ON EXHIBIT A
February 28, 1997
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TABLE OF CONTENTS
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PAGE
SECTION 1: GENERAL RESTRICTIONS..............................................2
1.1 Restriction on Transfers...................................2
1.2 Permitted Transferees......................................2
1.3 Representation.............................................2
1.4 Non-Compliance.............................................2
1.5 Corporate Action...........................................3
1.6 No Implied Employment......................................3
1.7 Execution and Delivery.....................................3
1.8 No Conflict................................................3
SECTION 2: TRIGGERING EVENTS.................................................3
2.1 Definition.................................................3
2.2 Notice of Occurrence.......................................4
SECTION 3: OPTIONAL AND MANDATORY PURCHASE...................................4
3.1 Option to Numerex..........................................5
3.2 Option to the Company......................................5
3.3 Option to Remaining Shareholders...........................5
3.4 Mandatory Purchase by the Company and Limited Transfer.....5
3.5 Purchase of All Shares.....................................6
3.6 Closing on Optional or Mandatory Purchase..................6
3.7 Right to Transfer..........................................6
3.8 Right to Participate in Sales..............................7
3.9 Requirement to Participate in Sales........................7
SECTION 4: CALL OPTIONS OF NUMEREX...........................................8
4.1 Call Options in Years Three, Four and Five.................8
4.2 Call Option in After Termination of First Call.............8
4.3 Demand Registration Rights.................................8
4.4 Forced Sale Option.........................................8
4.5 Closing of Option Exercise.................................9
SECTION 5: PURCHASE AND CALL PRICE...........................................9
5.1 Third Party Offers.........................................9
5.2 Other Triggering Events....................................9
5.3 First Call................................................10
5.4 Second Call...............................................10
5.5 Appraisal For Fair Market Value...........................10
SECTION 6: PAYMENT TERMS....................................................12
SECTION 7: OTHER PROVISIONS.................................................13
7.1 Board of Directors........................................13
7.2 Failure to Transfer Shares................................13
7.3 Endorsement Upon Share Certificate........................13
7.4 Further Assurances........................................13
7.5 Joinder of Spouse.........................................13
7.6 Inconsistent Agreements...................................14
7.7 Notices...................................................14
7.8 Settlement of Disputes....................................14
7.9 Amendment.................................................14
7.10 Waiver....................................................14
7.11 Termination of Prior Agreements...........................14
7.12 Entire Understanding......................................15
7.13 Parties In Interest.......................................15
7.14 Severability..............................................15
7.15 Counterparts..............................................15
7.16 No Third Party Beneficiaries..............................15
7.17 Section Headings..........................................15
7.18 References................................................15
7.19 Controlling Law...........................................15
7.20 Jurisdiction and Process..................................15
7.21 Certain Definitions.......................................16
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SHAREHOLDERS' AGREEMENT
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PARTIES: BROADBAND NETWORKS, INC.,
-------- a Delaware Corporation (the "Company")
0000 Xxxx Xxxxxxx Xxxxxx,
Xxxxx X
Xxxxx Xxxxxxx, XX 00000
NUMEREX CORP.,
a Pennsylvania corporation ("Numerex")
Rose Tree Corporate Center II, Suite 5500
0000 X. Xxxxxxxxxx Xxxx
Xxxxx, XX 00000
Certain shareholders listed on
Exhibit A attached hereto and
designated thereon as
"Management Shareholders" and
"Non-Management Shareholders."
DATE: February 28, 1997
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BACKGROUND: The Company is a engaged in the business of developing, designing,
marketing and implementing complex solutions for broadband, fiberoptic,
interactive video and data networks (the "Business"). On the date hereof, the
Company, Numerex, the Management Shareholders and the Non-Management
Shareholders (collectively, the Management Shareholders and Non-Management
Shareholders shall sometimes be referred to as the "Other Shareholders") entered
into a Securities Purchase Agreement (the "Purchase Agreement"), pursuant to
which Numerex purchased shares of Common Stock of the Company ("Shares") from
(i) certain of the shareholders of the Company and (ii) directly from the
Company. Upon the date hereof, Numerex shall be the legal and beneficial owner
of 203,817 Shares. Subject to certain terms and conditions, Numerex may in the
future acquire all or a part of the remaining issued and outstanding Shares.
The Company, Numerex and the Other Shareholders desire to enter into an
agreement which (i) grants certain rights to, and imposes certain restrictions
and obligations on them in respect of the Shares of the Company which are now or
hereafter owned or held by them or any Person (as hereinafter defined) to whom
they Transfer (as hereinafter defined) such shares in accordance with this
Agreement, and (ii) provides for the management and conduct of the business of
the Company, all on the terms and conditions stated in this Agreement. Numerex,
the Other Shareholders and the Persons to whom they Transfer Shares in
accordance with this Agreement are sometimes referred to individually as a
"Shareholder" and collectively as "Shareholders".
INTENDING TO BE LEGALLY BOUND HEREBY, and in consideration of the mutual
agreements stated below, the parties agree as follows:
SECTION 1: GENERAL RESTRICTIONS
1.1 Restriction on Transfers. Each Shareholder severally agrees with each
other Shareholder and with the Company that such Shareholder shall not Transfer
or attempt to Transfer, or solicit any offer for the purchase of, any Shares now
owned by such Shareholder or which such Shareholder may at any time hereafter
own, acquire or be entitled to, except in strict accordance with the provisions
of this Agreement.
1.2 Permitted Transferees. Notwithstanding Section 1.1 hereof, (a) a
Shareholder shall have the right to Transfer inter vivos or by will or the laws
of descent and distribution of all or a portion of his Shares outright to a
family member or to a trust for the benefit of a family member, if such
transferee agrees in writing to be bound by the terms and conditions of this
Agreement as if he were the transferor, (b) a Shareholder shall have the right
to Transfer inter vivos all or a portion of his Shares to another Shareholder,
provided that the transferee is already bound by the terms and conditions of
this Agreement, and (c) Numerex shall have the right to Transfer all or a
portion of the Shares of the Company owned by it to any affiliate of Numerex or
to a company which it owns, provided that as a condition to receiving such
shares, such affiliate or company agrees in writing to be bound by the terms and
conditions of this Agreement as if it were Numerex (collectively, "Permitted
Transferees"). For purposes of this Agreement, "affiliate" shall be defined as
any entity that is controlled by Numerex or the Other Shareholders, as
applicable, of which Numerex or the Other Shareholders, as applicable, holds at
least an eighty percent (80%) controlling interest.
1.3 Representation. Each Shareholder represents and warrants to the other
Shareholders that his will and other estate planning documents and techniques do
not and shall not provide for any Transfer of Shares in violation of Section 1.1
or any other provision of this Agreement.
1.4 Non-Compliance. Unless otherwise unanimously agreed upon by the
Company's board of directors, in the event any Shareholder shall Transfer or
attempt to Transfer any Shares otherwise than in strict accordance with the
provisions of this Agreement, such action shall be void and of no effect, and no
dividends or distributions of any kind whatsoever shall be paid by the Company
in respect of such Shares (all such dividends and distributions being deemed
waived by such Shareholder), and the voting rights of such Shares shall be
suspended during the period commencing with such Shareholder's initial failure
to comply with the provisions of this Agreement and ending when (i) the
Shareholder complies with the provisions of this Agreement, or (ii) the Company,
based on the unanimous approval of its board of directors, agrees in writing to
terminate such suspension and to permit such Transfer.
1.5 Corporate Action. The Company shall not register the transfer of Shares
to any transferee of any Shareholder, issue any certificate in lieu of such
Shares, or issue any new
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Shares, unless each and every condition hereof affecting such Shares or
certificates has been satisfied.
1.6 No Implied Employment. Each Shareholder acknowledges and agrees that
neither the issuance of Shares to such Shareholder nor anything contained in
this Agreement gives such Shareholder, if an employee of the Company, any right
to be retained in the employ of the Company, or affect the Company's right at
any time to discharge or discipline such Shareholder or to terminate his
employment.
1.7 Execution and Delivery. All consents, approvals, authorizations and
order necessary for the execution, delivery and performance by the Other
Shareholders have been duly and lawfully obtained, and the Other Shareholders
have, and as of the Closing Date will have, full right, power, authority and
capacity to execute, deliver and perform the Shareholders' Agreement. The
Shareholders' Agreement has been duly executed and delivered by Numerex and the
Other Shareholders and constitutes a legal, valid and binding agreement by
Numerex and the Other Shareholders enforceable against the Other Shareholders in
accordance with its terms.
1.8 No Conflicts. The execution, delivery and performance of the
Shareholders' Agreement and the consummation of the transactions contemplated
hereby will not conflict with or result in a material breach or violation of any
term or provision, or (with or without notice or passage of time, or both)
constitute a default under, any indenture, mortgage, deed of trust, trust
(constructive or other), loan agreement or other agreement or instrument to
which Numerex or the Other Shareholders are a party or by which Numerex or the
Other Shareholders or the Shares of Numerex or the Other Shareholders are bound,
or violate any Legal Requirement applicable to or binding upon Numerex or the
Other Shareholders.
SECTION 2: TRIGGERING EVENTS
2.1 Definition. The following events are "Triggering Events" with respect
to (a) the Shareholder to whom the event relates and (b) to the Permitted
Transferees of the Shareholder to whom the event relates (such Shareholder and
all Permitted Transferees of such Shareholder pursuant to Section 2 are
sometimes collectively referred to as an "Affected Shareholder"):
(i) The receipt by a Shareholder (sometimes referred to as a "Selling
Shareholder") of a bona fide written offer, which it desires to accept,
acceptable to such Shareholder, to acquire all or some portion of such
Shareholder's Shares ("Offer").
(ii) The death of an individual Shareholder (sometimes referred to as a
"Deceased Shareholder") and the transfer of such Shareholder's Shares by will or
the laws of descent and distribution to a Person other than a Permitted
Transferee.
(iii) The commencement of bankruptcy, reorganization or similar
proceedings by a Shareholder, the commencement of bankruptcy or similar
proceedings against a Shareholder that
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are not terminated within 120 days after commencement, the appointment of a
bankruptcy or other judicial representative for a Shareholder, such
Shareholder's Shares or any material part of his or her properties, provided
that any such appointment that was involuntary is not terminated within 120
days, the attachment of, execution against, levy upon or other seizure of the
Shares of a Shareholder (other than an attachment solely for jurisdictional
purposes) unless and only as long as the Company's counsel determines that the
same is being contested in good faith, an assignment by a Shareholder for the
benefit of creditors, whether or not such assignment includes Shares, an
admission by a Shareholder in writing of his or her inability to pay such
Shareholder's debts as they become due, or the attempted rejection of this
Agreement by a bankruptcy or other judicial representative who succeeds to the
Shares of a Shareholder.
(iv) The transfer or attempted Transfer by a Shareholder or any party
acting on behalf of a Shareholder of any of his or her Shares in violation of
any provision of this Agreement, or any material breach by a Shareholder of any
provision of this Agreement.
2.2 Notice of Occurrence. Within 15 days after the occurrence of any
Triggering Event, the Affected Shareholder (or his or her personal
representative) shall give notice of the occurrence ("Notice") to the Company
and the other Shareholders. Failure to give Notice shall neither prevent nor
relieve any of the parties from exercising their rights or satisfying their
obligations under this Agreement, and any other party to this Agreement may at
any time give Notice on behalf of the Affected Shareholder (or his or her legal
or personal representative). If the Affected Shareholder is a Selling
Shareholder, the Notice shall include a copy of the Offer, stating the name of
the offeror ("Offeror") and the price ("Offer Price") and other terms ("Offer
Terms") of the Offer.
SECTION 3: OPTIONAL AND MANDATORY PURCHASE
Upon the occurrence of any Triggering Events, the Affected Shareholder's
Shares shall be sold in accordance with this Section 3. For purposes of this
Section 3, "Remaining Shareholders" shall mean all Shareholders except Numerex
and the Affected Shareholders; and (ii) "Non-Affected Shareholders" shall mean
all Shareholders except for the Affected Shareholder.
3.1 Option to Numerex. Numerex shall have the first option to purchase all
or any of the Shares owned by the Affected Shareholder on the date the
Triggering Event occurred, for the Purchase Price (as defined in Section 5) and
on the Payment Terms (as defined in Section 6), by giving notice, within thirty
(30) days after the date of the Notice, to the Affected Shareholder (or his
personal representative) and to the Remaining Shareholders of the exercise of
its option. The exercise of the option by Numerex shall be effective only if the
notices given by Numerex, the Company, if applicable, and the Remaining
Shareholders, if applicable, who exercised their options indicate that Numerex,
the Company and the Remaining Shareholders together intend to purchase all of
the Shares owned by the Affected Shareholder.
3.2 Option to the Company. The Company shall have the option to purchase
all or any Shares of the Affected Shareholder ("Remaining Stock") that was not
purchased by Numerex in
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accordance with Section 3.1, for the Purchase Price and on the Payment Terms, by
giving written notice, within forty-five (45) days after the date of Notice, to
the Affected Shareholder (or his personal representative) and Numerex of the
exercise of its option. The notice shall state whether the Company intends to
purchase all or only a part of the Remaining Stock. The Company may only
purchase, pursuant to this Section 3.2, that number of shares of the Remaining
Stock to the extent the Company has sufficient capital surplus on retained
earnings to permit it to lawfully purchase and pay for any such shares. The
exercise of the option by the Company shall be effective only if the notices
given by the Company and the Remaining Shareholders, if applicable, who
exercised their options indicate that the Company and the Remaining Shareholders
together intend to purchase all of the Remaining Stock.
3.3 Option to Remaining Shareholders. The Remaining Shareholders shall have
the option to purchase all or any of the Remaining Stock that was not purchased
by Numerex in accordance with Section 3.1 or by the Company in accordance with
Section 3.2, for the Purchase Price and on the Payment Terms, by giving notice,
within sixty (60) days after the date of Notice, to the Affected Shareholder (or
his personal representative), Numerex and the Company of the exercise of his
option. The notice shall state whether such Remaining Shareholder intends to
purchase all or only a part of the Affected Shareholder's Shares that such
holder is entitled to purchase under this Section 3.3 and the number of the
Affected Shareholder's Shares to be purchased by him, if less than all. The
exercise of the options by the Remaining Shareholders shall be effective only if
the notices given by the Remaining Shareholders who exercised their options
indicate that such the Remaining Shareholders together intend to purchase all of
the Remaining Stock. Unless otherwise agreed upon in writing by all of the
Remaining Shareholders, each of the Remaining Shareholders shall have the option
to purchase that proportion, rounded to the nearest whole number to eliminate
fractional shares, of the Remaining Stock which the number of Shares held by him
bears to the number of Shares held by all Remaining Shareholders who exercised
their options. If any Remaining Shareholder does not exercise his option to
purchase his full proportionate share of the Remaining Stock, the other
Remaining Shareholders may purchase that proportion, rounded to the nearest
whole number to eliminate fractional shares, of the Shares not so purchased
which the number of Shares held by him bears to the number of Shares held by all
Remaining Shareholders who exercised their options, by giving written notice of
the exercise of his option to the Affected Shareholder, the other Remaining
Shareholders, the Company and Numerex within fifteen (15) days after the notice,
pursuant to this Section 3.3, is given.
3.4 Mandatory Purchase by the Company and Limited Transfer. If the Affected
Shareholder is a Deceased Shareholder and a transfer of the Deceased
Shareholders' Shares occurs by will or the laws of descent and distribution to a
Person other than a Permitted Transferee, then the Company shall purchase and
such Affected Shareholder or Shareholder's personal representative shall sell
all of such Affected Shareholder's Shares that were not purchased in accordance
with Sections 3.1, 3.2 or 3.3, for the Purchase Price and on the Payment Terms.
If the Company does not have sufficient capital surplus or retained earnings to
permit it to lawfully purchase and pay for any such Shares, or if the Company is
otherwise prohibited by law or agreement from purchasing and paying for any such
Shares, then the Non-Affected Shareholders shall use their best efforts to
remedy that situation if reasonably possible. If that situation cannot be
remedied within 90 days after the Triggering Event occurred, then, at the end of
that 90-day period, the Company's obligation to purchase and pay for any such
Shares shall be assumed by the Non-Affected Shareholders. If all of the Affected
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Shareholder's Shares are not purchased pursuant to this Section 3.4, then,
unless the failure to purchase was due to a legal prohibition caused by
insufficient retained earnings and/or capital surplus, the holders of the
unpurchased stock may (i) xxx for specific performance, (ii) xxx for damages,
(iii) transfer the unpurchased Shares to any Person free of the restrictions
contained in this Agreement and/or (iv) exercise any other remedies they may
have. If the Triggering Event shall be as described in Sections 2.1(iii) or
2.1(iv), then the Affected Shareholder shall be free to sell all of such
Affected Shareholder's Shares that were not purchased in accordance with
Sections 3.1, 3.2 and 3.3, provided such transferee shall agree in writing to be
bound by the terms and conditions of this Agreement as if the transferee were
the Shareholder who sold such Shares.
3.5 Purchase of All Shares. Unless otherwise agreed to by the Affected
Shareholder, all and not less than all of the Affected Shareholder's Shares must
be purchased pursuant to Sections 3.1, 3.2, 3.3 or 3.4 hereof, as the case may
be, in order that there shall be a purchase of such Affected Shareholder's
Shares within the intent, scope and terms of this Agreement, except with regard
to the Triggering Events described in Sections 2.1(iii) and 2.1(iv) where all of
the Affected Shareholder's Shares need not be purchased pursuant to Sections
3.1, 3.2, 3.3 or 3.4.
3.6 Closing on Optional or Mandatory Purchase. If Numerex, the Company
and/or the Remaining Shareholders shall have exercised their options to purchase
the Affected Shareholder's Shares pursuant to Sections 3.1, 3.2 or 3.3 hereof,
the closing of the purchase and sale contemplated by this Section 3.6 shall be
held at 10:00 a.m., on the earlier of the 90th day following the date Notice is
given or the 30th day after the exercise of the option that results in options
to purchase all (but not less than all) of the Affected Shareholder's Shares
being exercised, at the then principal office of the Company, or at such other
time and place as the parties shall mutually agree. At the closing, the Affected
Shareholder (or his personal representative) shall deliver to the purchasers
certificates for the Affected Shareholder's Shares, duly endorsed for transfer,
and the purchasers shall pay the Purchase Price to the Selling Shareholder in
accordance with the Payment Terms.
3.7 Right to Transfer. If the Triggering Event is the event described in
Section 2.1(i) and all of the Affected Shareholder's Shares are not purchased
pursuant to Sections 3.1, 3.2, and 3.3 hereof, as the case may be, the Affected
Shareholder may, for a period of ninety (90) days following the final date for
acceptance under Section 3.1, 3.2 or 3.3 thereof, as the case may be, sell all
such Shares related to such Offer to the Offeror; provided, however, that no
such Shares shall be sold to the Offeror upon any terms or conditions more
favorable to Offeror than the Offer Terms; and provided further that such
Offeror shall agree in writing to be bound by the terms and conditions of this
Agreement as if the Offeror were the Shareholder who sold such Shares. If the
Affected Shareholder wishes to sell such Shares on terms and conditions more
favorable to the Offeror than the Offer Terms or has not sold such Shares on the
Offer Terms within such ninety (90) day period, the Affected Shareholder shall
be obligated to make new offers and re-offers to Numerex, the Company and the
Remaining Shareholders in accordance with this Section 3 before the Affected
Shareholder shall be permitted to Transfer such Affected Shareholder's Shares,
or any part thereof, to any Person.
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3.8 Right to Participate in Sales. In the event an Affected Shareholder
shall be permitted to sell its Shares to an Offeror pursuant to Section 3.7
hereof, the Affected Shareholder shall give the Non-Affected Shareholders
written notice at least twenty (20) days prior to the consummation of any and
all such sales. Except as modified hereunder, each Non-Affected Shareholder
shall have the right, as a condition of such sale by the Affected Shareholder,
to sell to the Offeror, on the same terms and conditions as the Affected
Shareholder, that proportion, rounded to the nearest whole number to eliminate
fractional shares, of the Shares proposed to be sold by the Affected Shareholder
which the number of Shares owned by such Non-Affected Shareholder bears to the
number of Shares owned by all Shareholders (including the Affected Shareholder),
and the number of Shares that the Affected Shareholder may sell pursuant to such
Offer shall be correspondingly reduced. Each Non-Affected Shareholder desiring
to participate in any such sale shall notify the Affected Shareholder of such
intention within ten (10) days after notice is given in accordance with the
first sentence of this Section 3.8.
3.9 Requirement to Participate in Sales. If the Triggering Event that
occurs is described in Section 2.1(i), (i) Numerex is permitted to sell its
Shares pursuant to Section 3.7 and (ii) the Offeror requires, as a condition of
the sale, that the Offeror acquire all of the Shares of the Non-Affected
Shareholders, then the Non-Affected Shareholders shall sell all of their Shares
to the Offeror for not less than the same price terms and other terms and
conditions as those offered to Numerex.
SECTION 4: CALL OPTIONS OF NUMEREX
4.1 Call Options in Years Two, Three, and Four. At any time and from time
to time during the thirty (30) days following the second, third and fourth
anniversary of the date hereof, Numerex shall have the right to purchase ("First
Call"):
(a) all or any portion of the Shares held by Non-Management
Shareholders at the First Call Price (as hereinafter defined in Section 5.3).
Numerex may exercise this right by giving written notice ("Call Notice") to the
Non-Management Shareholders, the Management Shareholders and the Company at any
time prior to the termination of this right. In the event that Numerex elects to
exercise the First Call for less than all of the then outstanding Shares held by
Non-Management Shareholders, each Non-Management Shareholder shall sell that
proportion, rounded to the nearest whole number to eliminate fractional shares,
of the Shares owned by such Non-Management Shareholder divided by the number of
Shares owned by all of the Non-Management Shareholders at the time the Call
Notice is given pursuant to this Section 4.1.
(b) up to twenty-five percent (25%) of the Shares held by each
Management Shareholder at the First Call Price. Numerex may exercise this right
by giving Call Notice to the Management Shareholders ("Management Shareholder
Call Notice"), the Non-Management Shareholders and the Company at any time prior
to the termination of this right. In the event that Numerex elects to exercise
the First Call for less than twenty-five percent (25%) of the then outstanding
Shares held by Management Shareholders, each Management Shareholder shall sell
that proportion, rounded to the nearest whole number to eliminate fractional
shares, of the Shares owned by such Management Shareholder divided by the number
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of Shares owned by all of the Management Shareholders at the time the Call
Notice is given pursuant to this Section 4.1. Notwithstanding anything herein to
the contrary, in the event that a Management Shareholder objects to the
Management Shareholder Call Notice, for any reason whatsoever, in writing and
within ten (10) days after receipt of the Management Shareholder Call Notice
("Objection"), with respect to any Management Shareholder that files an
Objection with Numerex, the Management Shareholder Call Notice shall not be
effective and such Management Shareholder(s) shall not be obligated to sell his
or their Shares or any portion thereof.
4.2 Call Option After Termination of First Call. For a period of thirty
(30) days after the termination of the First Call following the fourth
anniversary of the date hereof, Numerex shall have the right to purchase
("Second Call") all, but not less than all of the Shares at the Second Call
Price (as hereinafter defined in Section 5.4). Numerex may exercise this right
by giving Call Notice to the Other Shareholders and the Company at any time
prior to the termination of this right.
4.3 Demand Registration Rights. For a period of ninety (90) days following
the termination of the Second Call, the Other Shareholders shall have demand
registration rights ("Demand Rights") with respect to their Shares in accordance
with the Shareholder Registration Rights Agreement, attached hereto as Exhibit
4.3, provided that the Company has completed the initial offer and sale of its
capital stock pursuant to an effective registration statement.
4.4 Forced Sale Option. In the event that Numerex does not exercise the
Second Call and the Other Shareholders do not exercise their Demand Rights
pursuant to Section 4.3, both Numerex and the Other Shareholders shall have the
option at any time after the termination of the Demand Rights to cause a Forced
Sale (as defined below) of the Company. A Forced Sale shall occur when either
Numerex or a majority of the Other Shareholders consent in writing to such
Forced Sale and deliver such consent to the Company ("Forced Sale Notice"). A
"Forced Sale" shall mean an obligation of the Company to use its best efforts,
including, but not limited to the engagement of a broker, to sell all of the
Shares to a third-party purchaser. The Forced Sale shall be made at the Forced
Sale price ("Forced Sale Price"), as such value is agreed to by Numerex on the
one hand and a majority of the Other Shareholders on the other hand. In the
event that Numerex and the Other Shareholders cannot agree in writing upon a
Forced Sale Price within ten (10) days of the receipt of the Forced Sale Notice
by the Company, then the Forced Sale Price shall be Fair Market Value, as such
term is defined in Section 5.5; provided however, that for purposes of
determining Fair Market Value under this Section 4.4, (i) if Numerex on the one
hand or the Other Shareholders on the other hand shall deliver a Forced Sale
Notice, such party or parties shall be deemed "Affected Shareholder(s)" and the
other party or parties shall be deemed "Non-Affected Shareholder(s)", (ii) the
provisions of Section 5.5(a)(i) shall not be applicable and (iii) the
determination of Fair Market Value shall be made as of the time of the Forced
Sale. Once written consents are obtained by the Company to cause a Forced Sale
as provided hereunder, all of the Shareholders hereto agree to sell their Shares
in the manner and on the terms and conditions described herein.
4.5 Closing of Option Exercise. Upon the giving of any Call Notice, the
parties shall promptly determine either the First Call Price or Second Call
Price, as applicable, pursuant to Section 5. The closing of the purchase and
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sale contemplated by Sections 4.1 and 4.2 shall be held at 10:00 a.m., on a date
within ninety (90) days after the Call Notice is given, provided that in the
event the First Call Price or Second Call Price has not been determined within
ninety (90) days after the Call Notice is given, then the closing shall be held
as soon as reasonably practicable after determination of the First Call Price or
Second Call Price, as applicable. At the closing, any Shareholder selling his
Shares shall deliver to Numerex certificates for the Shares owned by such
Shareholder, duly endorsed for transfer, and Numerex shall pay the First Call
Price or the Second Call Price, as applicable, to such Shareholder by certified
check or wire transfer in accordance with the terms set forth in Section 6.
SECTION 5: PURCHASE AND CALL PRICE
5.1 Third Party Offers. In the event that a Triggering Event described in
Section 2.1(i) takes place, the Purchase Price, for purposes of Section 3, shall
be (i) the Offer Price in writing to the Affected Shareholder by such third
party, in the event that Numerex is the Affected Shareholder or (ii) in the
event that the Affected Shareholder is an Other Shareholder, seventy-five
percent (75%) of the per share price paid under the Securities Purchase
Agreement ("Per Share Price").
5.2 Other Triggering Events. In the event that a Triggering Event takes
place other than that described in Section 2.1(i), the Purchase Price shall be:
(a) one hundred percent (100%) of the Per Share Price upon the
occurrence of the Triggering Event described in either Section 2.1(ii) or
Section 2.1(iii).
(b) seventy-five percent (75%) of the Per Share Price upon the
occurrence of the Triggering Event described in Section 2.1(iv).
5.3 First Call. The price of the Shares to be sold upon the exercise of the
First Call ("First Call Price") shall be determined in accordance with the
formula set forth below.
In the event that the First Call is exercised during:
(a) the ninety (90) days following the second anniversary of the date
hereof, the First Call Price shall be one hundred twenty-five percent (125%) of
the Per Share Price;
(b) the ninety (90) days following the third anniversary of the date
hereof, the First Call Price shall be one hundred fifty percent (150%) of the
Per Share Price; and
(c) the ninety (90) days following the fourth anniversary of the date
hereof, the First Call Price shall be one hundred seventy percent (170%) of the
Per Share Price.
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5.4 Second Call. The price of the Shares to be sold upon the exercise of
the Second Call ("Second Call Price") shall be one-hundred percent (100%) of the
Fair Market Value as determined through the appraisal process described in
Section 5.5, hereof.
5.5 Appraisal For Fair Market Value.
(a) Fair Market Value. "Fair Market Value" shall mean the fair market
value of the Company as a going concern, assuming that the Company is sold
pursuant to a sale of capital stock.
(i) Fair Market Value shall be determined by the agreement of the
Non-Affected Shareholders and the Affected Shareholder(s), through a majority
vote the Shares of each of the Affected Shareholders and the Non-Affected
Shareholder(s), in each case acting as an independent class, within ten (10)
days of the date on which any party notifies all Shareholders that this
Agreement then requires that "Fair Market Value" be determined, specifically
referring to the paragraph and subparagraphs of this Agreement that require such
determination.
(ii) If the Affected Shareholders and the Non-Affected
Shareholders(s) shall not so agree on the amount of the Fair Market Value within
such ten-day period, then within ten (10) days after such initial ten-day
period, each of the Non-Affected Shareholders and the Affected Shareholder(s),
acting in each case as an independent class, by a majority vote of the Shares
each of the Affected Shareholders and the Non-Affected Shareholder(s), will
appoint a qualified investment banking firm to make the determination, within
thirty (30) days of such appointment, of the proposed fair market value of the
Company as a going concern and the average of the determinations by such
investment banking firms of the proposed fair market value of the Company as a
going concern (the "Proposed Value") will be the Fair Market Value; provided,
however, that if the difference between such Proposed Values is more than 15% of
the amount of the lower Proposed Value, then the two investment banking firms
will appoint a third investment banking firm to determine, within thirty (30)
days of its appointment, a Proposed Value and the Fair Market Value shall be
equal to the average of all three Proposed Values; provided, further, that if
the Proposed Value of the investment banking firms appointed by either the
Non-Affected Shareholders or the Affected Shareholder(s) shall vary by more than
15% from the Proposed Value determined by the third investment banking firm,
such varying Proposed Value shall not be included in such average in determining
Fair Market Value. If only two investment banking firms are appointed, each of
the Non-Affected Shareholder and the Affected Shareholder(s), in each case, as
an independent class, shall pay the cost of their respectively appointed
investment banking firm and if a third investment firm is appointed, each of the
Non-Affected Shareholders (pro rata based on their respective ownership of
Shares owned by Non-Affected Stockholders), in each case, as an independent
class, shall pay one-half the cost of the third investment banking firm. In
connection with any determination of Fair Market Value, (A) a majority vote of
the Shares of the Non-Affected Shareholders (or in the case of a Forced Sale,
either Numerex or a majority of the Other Shareholders) shall have the right to
request an audit of the financial statements for the Company's applicable "stub"
period (the "Stub Audit"), at the Company's expense, if such determination of
Fair Market Value shall be made more than ninety (90) days after the end of the
Company's fiscal year, and (B) any revenues or costs associated with business
transactions between the Company and the Affected Shareholder(s) or any
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affiliates of the Affected Shareholder(s) shall be restated by the investment
banking firm(s), to the extent necessary, to reflect the revenues or costs which
would have recognized had such transactions been on an arm's length basis (the
"Revenue Restatement"). Notwithstanding anything contained herein to the
contrary, any required periods for the determination of Fair Market Value shall
be extended to the extent necessary to permit the completion of any Stub Audit
requested to be made under the terms of this Agreement and any Stub Audit and/or
Revenue Restatement shall be considered by the parties and the relevant
investment banking firm(s) in determining Fair Market Value. If Fair Market
Value is required, under the terms of this Agreement, to be stated on a per
Share basis, the calculation thereof shall be based on the total number of
shares of Common Stock outstanding, assuming exercise of all the outstanding
options and receipt of the aggregate maximum number of shares of Common Stock
issued, delivered or exchanged therefore or thereunder.
(b) Qualified Appraisal Firm. "Qualified Appraisal Firm" means any firm
engaged in business valuation services, but excluding any firm which received
more than $15,000 in fees during the preceding 24 calendar months from any party
hereto.
(c) Inspection. The investment banking firms engaged for the purpose of
providing an appraisal under Section 5.5(a) hereof ("Appraisers") shall have the
right, during normal business hours, to (i) inspect and make copies of all
documents and other information relating to the Company or its business,
including accountants' work papers, (ii) inspect all properties and assets used
by the Company in its business, and (iii) consult with the officers, employees,
accountants, counsel and advisors of the Company, for the purpose of rendering
their appraisals, provided such Appraisers shall have entered into a
confidentiality agreement with the Company pursuant to which the Appraisers
agree to maintain the confidentiality of all confidential and proprietary
information obtained by the appraisers in performing their appraisals.
(d) Disclosure. Whenever the Fair Market Value must be determined under
this Agreement, the Company and the Shareholder or Shareholders selling his or
their Shares shall disclose in writing to the purchaser or purchasers of those
Shares and the appraisers referred to in Section 5.5 all facts of which it, he
or they have knowledge and which may affect the determination of Fair Market
Value.
SECTION 6: PAYMENT TERMS
As used in this Agreement, "Payment Terms" means, except as otherwise
agreed to by the selling and purchasing Shareholders, the Purchase Price, First
Call Price and Second Call Price, as the case may be, that shall be paid on the
Closing Date via certified check or wire transfer of funds.
SECTION 7: OTHER PROVISIONS
7.1 Board of Directors. The Shareholders agree to vote all Shares now owned
or hereafter acquired or controlled by them, and otherwise use their best
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efforts as Shareholders of the Company, (i) to set the number of directors of
the Company at five, and (ii) to elect as directors those persons that are
nominated by Numerex on the one hand, and the Other Shareholders on the other
hand, in a proportion equal to, or as near as equal as possible, to the number
of Shares held by (x) Numerex and (y) all of the other Shareholders, each of (x)
and (y) being compared to the total number of Shares outstanding, assuming the
exercise of all then outstanding options and receipt of the aggregate maximum
number of shares of Common Stock issued, delivered or exchanged therefore or
thereunder, at the time of such election; provided however, that the proportion
of directors elected to the board of directors and nominated by Numerex shall be
no less than the percentage of Shares held by Numerex to the total number of
Shares outstanding, assuming the exercise of all then outstanding options and
receipt of the aggregate maximum number of shares of Common Stock issued,
delivered or exchanged therefore or thereunder, at the time of such election.
The Other Shareholders' initial representative on the Board of Directors shall
be Xxxxxx Xxxxxx.
7.2 Failure to Transfer Shares. If any Shareholder whose Shares are subject
to purchase hereunder does not assign and transfer such Shares to a purchaser as
required hereunder, such Shares shall be deemed assigned and transferred to the
purchaser. The Company, upon receipt of written notice, shall xxxx its records
to indicate that the certificates have been canceled and shall, if necessary,
issue new certificates to the purchaser. Each Shareholder hereby gives the
Secretary of the Company an irrevocable power of attorney to make assignments
and transfers on the Company's books on behalf of such Shareholder in accordance
with the foregoing.
7.3 Endorsement Upon Share Certificate. Each Shareholder acknowledges that
all certificates for Shares shall bear the following legend in addition to any
other legend that may be required by law or agreement:
"The shares represented by this certificate may not be
transferred, hypothecated, pledged or otherwise
disposed of, except in compliance with the Agreement,
dated February ___, 1997 between the Company and its
Shareholders, copies of which are on file in the office
of the Secretary of the Company."
7.4 Further Assurances. Each Shareholder agrees that he shall promptly
execute and deliver all such further agreements, certificates, instruments and
documents, and perform such further actions, as the Company or any other
Shareholder may reasonably request in order to fully carry out the purposes and
intent of this Agreement.
7.5 Joinder of Spouse. Each Shareholder who is a natural person shall cause
such Shareholder's spouse to execute and deliver the Joinder of Spouse attached
hereto as Exhibit C, approving this Agreement and waiving any and all rights
such spouse may have relating to this Agreement or such Shareholder's Shares.
7.6 Inconsistent Agreements. No Shareholder shall enter into any agreement
or arrangement that conflicts with, or is inconsistent with, any of the terms or
conditions of this Agreement.
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7.7 Notices. All notices and other communications under or in connection
with this Agreement shall be in writing and shall be deemed given (a) if
delivered personally (including by overnight express or messenger), upon
delivery, (b) if delivered by registered or certified mail (return receipt
requested), upon the earlier of actual delivery or three days after being
mailed, or (c) if given by telecopy, upon confirmation of transmission by
telecopy, in each case to the parties at the following addresses:
(a) If to Numerex, addressed to:
Numerex Corp.
Rose Tree Corporate Center II
0000 Xxxxx Xxxxxxxxxx Xxxx
Xxxxx 0000
Xxxxx, XX 00000
Attention: Xxxx X. Xxxx
Telecopy: (000) 000-0000
With a copy to:
Blank Rome Xxxxxxx & XxXxxxxx
0000 Xxxx Xxxx Xxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Esquire
Telecopy: (000) 000-0000
(b) If to the Company, address to:
Broadband Networks, Inc.
0000 Xxxx Xxxxxxx Xxxxxx, Xxxxx X
Xxxxx Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx, President
Telecopy: (000) 000-0000
With a copy to:
Xxxxxxxx, Xxxxxxx & Xxxxxxx
A Professional Corporation
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Xx., Esquire
Telecopy: (000) 000-0000
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(c) If to any Shareholder, to the
address set forth below such
Shareholder's name on Exhibit A,
attached hereto.
7.8 Settlement of Disputes. Other than for claims in equity, any claims,
controversies, demands, disputes, or differences between or among the parties
hereto or any persons bound hereby shall be submitted to and settled by
arbitration in the City of Philadelphia, Pennsylvania, before a single
arbitrator chose by mutual agreement of the disputing parties who shall be
knowledgeable in the field of business law and such arbitration shall be before
and in accordance with the rules then obtaining of the American Arbitration
Association. The parties agree to bear joint and equal responsibility for all
fees, abide by any decision rendered as final and binding and waive the right to
submit the dispute to a jury trial. Judgment upon any award may be entered in
any court of competent jurisdiction. Notwithstanding any of the foregoing,
nothing herein contained shall preclude a party hereto from resort to judicial
process if such party, in its or his sole discretion, chooses to seek any form
of equitable or injunctive relief.
7.9 Amendment. This Agreement may be amended, modified or supplemented by
the parties hereto, provided that any such amendment, modification or supplement
shall be in writing and signed by the parties hereto and in a form consistent
with Exhibit D attached hereto.
7.10 Waiver. No waiver with respect to this Agreement shall be enforceable
unless in writing and signed by the party against whom enforcement is sought.
Except as otherwise expressly provided herein, no failure to exercise, delay in
exercising, or single or partial exercise of any right, power or remedy by any
party, and no course of dealing between or among any of the parties, shall
constitute a waiver of, or shall preclude any other or further exercise of, any
right, power or remedy.
7.11 Termination of Prior Agreements. The parties hereby terminate,
effective immediately, any and all existing buy-sell, shareholders' or similar
agreements to which any or all of them are parties to the extent any such
agreement governs any Shares.
7.12 Entire Understanding. This Agreement states the entire understanding
among the parties with respect to the subject matter hereof, and supersedes all
prior oral and written communications and agreements, and all contemporaneous
oral communications and agreements, with respect to the subject matter hereof.
7.13 Parties In Interest. This Agreement shall bind, benefit and be
enforceable by and against each party hereto and its successors, assigns, heirs
and legal and personal representatives. No party shall in any manner assign any
of its or his rights or obligations under this Agreement, except as permitted by
this Agreement, without the express prior written consent of the other parties.
7.14 Severability. If any provision of this Agreement is construed to be
invalid, illegal or unenforceable, then the remaining provisions hereof shall
not be affected thereby and shall be enforceable without regard thereto.
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7.15 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall constitute an
original hereof, and it shall not be necessary in making proof of this Agreement
to produce or account for more than one original counterpart hereof.
7.16 No Third Party Beneficiaries. No provision of this Agreement is
intended to or shall be construed to grant or confer any right to enforce this
Agreement, or any remedy for breach of this Agreement, to or upon any Person
other than the parties hereto.
7.17 Section Headings. Section and subsection headings in this Agreement
are for convenience of reference only, do not constitute a part of this
Agreement, and shall not affect its interpretation.
7.18 References. All words used in this Agreement shall be construed to be
of such number and gender as the context requires or permits. Unless a
particular context clearly provides otherwise, the words "hereof" and
"hereunder" and similar references refer to this Agreement in its entirety and
not to any specific Section or subsection hereof. For the purpose of this
Agreement, "including" means including without limitation.
7.19 Controlling Law. This Agreement is made under, and shall be construed
and enforced in accordance with, the laws of the Commonwealth of Pennsylvania
applicable to agreements made and to be performed solely therein, without giving
effect to principles of conflicts of law.
7.20 Jurisdiction and Process. Each of the parties (a) irrevocably consents
to the exclusive jurisdiction of the Courts of Common Pleas of Philadelphia
County, Pennsylvania, or the United States District Court for the Eastern
District of Pennsylvania, in any and all actions between or among any of the
parties, whether arising hereunder or otherwise, and (b) irrevocably consents to
service of process by first class certified mail, return receipt requested,
postage prepaid, to the address as which such party is to receive notice in
accordance with Section 7.7.
7.21 Certain Definitions.
(a) "Person" means any individual, sole proprietorship, joint venture,
partnership, corporation, association, cooperative, trust, estate, government
body, administrative agency, regulatory authority, or other entity of any
nature.
(b) "Shareholder" shall be deemed to include any and all Option
Holders.
(c) "Transfer" means any sale, exchange, gift, bequest, pledge,
hypothecation, encumbrance, descent or distribution pursuant to any intestacy
laws or other operation of law, or any other direct or indirect disposition of
Shares which would change the legal or beneficial ownership thereof, including,
without limitation, any transaction that creates any form of joint or common
ownership in Shares between a Shareholder and one or more Persons (whether or
not that other Person is the spouse of such Shareholder).
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(d) The terms "affiliate," "Closing Date," "Legal Requirement,"
"Option Holders" and "Permits" shall have the meanings given to those terms in
the Securities Purchase Agreement.
* * *
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IN WITNESS WHEREOF, the parties have executed this Agreement or have caused
this Agreement to be executed on their behalf by their duly authorized officers
as of the date first stated above.
BROADBAND NETWORKS, INC. NUMEREX CORP.
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxx X. Xxxx
----------------------- ----------------
Name: Name:
Title: Title:
MANAGEMENT SHAREHOLDERS:
(OPTION HOLDERS)
/s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxxx Xxxxxxx
---------------------------------
Xxxxxx Xxxxxxx
/s/ Xxxxxx Xxxxx
---------------------------------
Xxxxxx Xxxxx
/s/ Xxxxxx Xxxxx
---------------------------------
Xxxxxx Xxxxx
NON-MANAGEMENT SHAREHOLDERS:
(OPTION HOLDERS)
/s/ Xxxxx Xxxx
---------------------------------
Xxxxx Xxxx
/s/ Xxxxxx Xxxxxxxxx
---------------------------------
Xxxxxx Xxxxxxxxx
(SIGNATURES CONTINUED ON NEXT PAGE)
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/s/ Xxxxx Xxxxx
---------------------------------
Xxxxx Xxxxx
/s/ Xxxxx Xxxxxxx
---------------------------------
Xxxxx Xxxxxxx
/s/ Xxxxxx Xxxx
---------------------------------
Xxxxxx Xxxx
/s/ Xxxxxx Xxxxxxxxxx
---------------------------------
Xxxxxx Xxxxxxxxxx
/s/ Xxxxxxx Xxxxxx
---------------------------------
Xxxxxxx Xxxxxx
/s/ Xxxxxx Xxxxxx
---------------------------------
Xxxxxx Xxxxxx
/s/ Xxxxxxx Xxxxxxxx
---------------------------------
Xxxxxxx Xxxxxxxx
/s/ Xxxxxx Xxxxxxx
---------------------------------
Xxxxxx Xxxxxxx
/s/ Xxxx Xxxxxxxxx
---------------------------------
Xxxx Xxxxxxxxx
/s/ Xxxxxxx Xxxxx
---------------------------------
Xxxxxxx Xxxxx
/s/ Xxxxxx Xxxxxx
---------------------------------
Xxxxxx Xxxxxx
(SIGNATURES CONTINUED ON NEXT PAGE)
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/s/ Xxxxx Xxxxxx
---------------------------------
Xxxxx Xxxxxx
/s/ Xxxxx Xxxxxx
---------------------------------
Xxxxx Xxxxxx
/s/ Xxxx Xxxxx
---------------------------------
Xxxx Xxxxx
/s/ Xxxxx Falls
---------------------------------
Xxxxx Falls
/s/ Xxxxxx Xxxx
---------------------------------
Xxxxxx Xxxx
/s/ Xxxx Xxxx
---------------------------------
Xxxx Xxxx
/s/ Xxxxxxx Xxxxx
---------------------------------
Xxxxxxx Xxxxx
/s/ Xxxxxxx Xxxx
---------------------------------
Xxxxxxx Xxxx
/s/ Xxxxx Xxxx
---------------------------------
Xxxxx Xxxx
/s/ Xxxxx X. Xxxxx
---------------------------------
Xxxxx Xxxxx
(SIGNATUES CONTINUED ON NEXT PAGE)
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/s/ Xxxxx Xxxxxxx
---------------------------------
Xxxxx Xxxxxxx
WARRANT HOLDER:
/s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx
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