Exhibit 10.6
MASTER AGREEMENT
This Master Agreement (the "AGREEMENT") is made and entered into as of
May 31, 1996 by and among Retix, a California corporation ("RETIX") and
Wireless Solutions, a California corporation ("WIRELESS SOLUTIONS").
RECITALS
A. The parties desire to cause Wireless Solutions to be formed to operate
as a separate entity the wireless communications business presently conducted by
Retix.
B. The parties further wish to set forth the terms and conditions
governing the relationships among them.
NOW, THEREFORE, in consideration of the covenants and agreements contained
in this Agreement and the Other Agreements (as defined below), and other good
and valuable consideration the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
1. DEFINITIONS. The following terms, whenever used in this Agreement,
shall have the following meanings:
1.1 "AFFILIATE" shall mean, with respect to any person, any other
person which, directly or indirectly, controls, is controlled by or is under
common control with, such person. For purposes of this definition, (i)
"CONTROL" shall mean the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a person through
the ownership of voting securities or by contract or otherwise, and (ii)
Wireless Solutions and any corporation which joins with Wireless Solutions in
the filing of a consolidated federal income tax return shall not be deemed to be
Affiliates of Retix or any corporation which joins with Retix in the filing of
a consolidated federal income tax return, and vice versa.
1.2 "CHANGE OF CONTROL" shall mean any consolidation, merger, sale
of assets or combination of Wireless Solutions, whether or not Wireless
Solutions is the surviving entity, other than where shareholders of Wireless
Solutions immediately prior to the closing of such consolidation, merger, sale
of assets or combination own at least a majority of the voting equity securities
of the successor entity immediately following such closing by virtue of voting
equity securities of the successor entity received in connection with such
transaction in exchange for shares or other securities of Wireless Solutions
owned immediately prior to the closing of such transaction.
1.3 "BUSINESS OF WIRELESS SOLUTIONS" shall mean (i) operation of the
worldwide wireless communications business presently conducted within Retix
being transferred to Wireless Solutions and consisting of the development,
manufacture, sale, licensing, maintenance and service of CDPD MD-IS and related
wireless or cellular infrastructure products; (ii) engaging in such other
activities as may be approved by the Board of Directors of Wireless Solutions ;
and (iii) performing all things necessary or incidental to or connected with or
growing
1
out of the foregoing activities in accordance with the terms and provisions of
this Agreement and the Other Agreements.
1.4 "CLOSING" shall have the meaning set forth in Section 2.3 of
this Agreement.
1.5 "CLOSING DATE" shall mean the date first set forth above, or
such other date as the parties shall mutually agree upon which the Closing shall
occur.
1.6 "CODE" shall mean the Internal Revenue Code of 1986, as amended.
1.7 "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
1.8 "FACILITY" shall mean any property owned, leased, operated or
occupied by the Retix related to or affecting the Transferred Business.
1.9 "GRANT-BACK LICENSE AGREEMENT" shall mean the Grant-Back License
Agreement between Wireless Solutions and Retix dated as of the date of this
Agreement and attached to this Agreement as EXHIBIT A.
1.10 "GOVERNMENTAL ENTITY" shall mean any court, tribunal,
administrative agency, commission, or other governmental authority or
instrumentality.
1.11 "INITIAL PUBLIC OFFERING" shall mean the initial sale of
Wireless Solutions' Common Stock to the public pursuant to an effective
registration statement under the Securities Act of 1933, as amended, with an
aggregate offering price, net of underwriting discounts and commissions, in
excess of $10,000,000, and with an offering price to the public of at least
$5.00 per share.
1.12 "LAWS" shall mean all applicable international, federal, state
and local statutes, ordinances, rules and regulations.
1.13 "LIENS" shall mean mortgages, deeds of trust, pledges, security
interests, charges, liens, leases, licenses, liabilities, assessments,
encumbrances, costs, claims, conditions or restrictions of any nature
whatsoever, direct or indirect, whether accrued, absolute, contingent or
otherwise (including, without limitation any conditional sale or other title
retention agreement and any agreement to give any security interest).
1.14 "LOAN AGREEMENT" shall mean the Loan Agreement between Wireless
Solutions and Retix dated as of the date of this Agreement and attached to this
Agreement as EXHIBIT B.
1.15 KEY EMPLOYEE OPTION AGREEMENT(S)" shall mean any of the Key
Employee Stock Option Agreements between Wireless Solutions and Wireless
Solutions Management in the form attached to this Agreement as EXHIBIT C.
2
1.16 "WIRELESS SOLUTIONS DISCLOSURE STATEMENT" shall mean the
Disclosure Statement of Wireless Solutions attached to this Agreement as EXHIBIT
D.
1.17 "WIRELESS SOLUTIONS MANAGEMENT" shall mean the principal
executive officers of Wireless Solutions, as determined by the Board of
Directors of Wireless Solutions.
1.18 "OTHER AGREEMENTS" shall mean the Preferred Stock Purchase
Agreement, the Rights Agreement, the Loan Agreement, the Grant-Back License
Agreement, and the Security Agreement.
1.19 "PERMITS" shall mean all applicable licenses, permits,
authorizations, approvals, clearances and consents.
1.20 "PERSON" shall mean any individual, firm, trust, partnership,
joint venture, association, corporation, unincorporated organization, or a
government or any department or agency thereof.
1.21 "PREFERRED STOCK PURCHASE AGREEMENT" shall mean the Preferred
Stock Purchase Agreement between Wireless Solutions and Retix dated as of the
date of this Agreement and attached to this Agreement as EXHIBIT E.
1.22 "PRODUCTS" shall mean the products described on EXHIBIT F to
this Agreement.
1.23 "RETIX DISCLOSURE STATEMENT" shall mean the Disclosure Statement
of Retix attached to this Agreement as EXHIBIT G.
1.24 "RIGHTS AGREEMENT" shall mean the Rights Agreement between
Wireless Solutions and Retix dated as of the date of this Agreement and attached
to this Agreement as EXHIBIT H.
1.25 "SALE OF WIRELESS SOLUTIONS STOCK" shall mean any sale by Retix
of all of the Wireless Solutions securities owned by Retix to any third party,
including Wireless Solutions Management.
1.26 "SECURITY AGREEMENT" shall mean the Security Agreement between
Wireless Solutions and Retix dated as of the date of this Agreement and attached
to this Agreement as EXHIBIT I.
1.27 "TAX" or "TAXES" shall mean any and all taxes or other
liability imposed by any governmental entity or similarly empowered entity,
including without limitation any charge, obligation, assessment or fee for
federal, state, county, city and foreign income, profits, gross receipts,
withholding, payroll, stamp, sales, use, employment, environmental, occupation,
net worth, property, excise, estimated, recapture, ad valorem, custom, duty,
unitary and any other taxes, obligations and assessments of any kind whatsoever
and any withholding obligation for FICA, FUTA, SSI or analogous or similar
state, local and foreign withholding obligation or
3
employer contribution, together with all interest, penalties and additions to
tax or other assessment imposed with regard thereto; the foregoing shall include
any transferee or secondary liability for any tax and any liability arising as a
result of being a member of any affiliated, consolidated, combined or unitary
group which is required to be included in any Tax return or report as well as
any Tax arising out of a tax sharing agreement, indemnity agreement or any
similar agreement to which one or more of Retix is a party. "TAX" or "TAXES"
shall, however, not include any Taxes arising from operation of Wireless
Solutions or Retix on or after the Closing Date.
1.28 "TRANSFERRED ASSETS" shall mean the assets to be transferred by
Retix to Wireless Solutions as described in EXHIBIT J to this Agreement, which
assets shall specifically exclude any accounts receivable accrued by Retix prior
to the Closing Date in accordance with its historical practices for revenue
recognition but which shall include any maintenance revenue received by Retix
prior to the Closing Date which remains unearned as of the Closing Date.
1.29 "TRANSFERRED BUSINESS" shall mean the worldwide wireless
communications business presently conducted within Retix to be transferred to
Wireless Solutions pursuant to the provisions of this Agreement and consisting
of the development, manufacture, sale, licensing, maintenance and service of
wireless communications products.
1.30 "TRANSFERRED CONTRACTS" shall mean the contracts to be
transferred by Retix to Wireless Solutions as determined by Retix and
Wireless Solutions in good faith.
1.31 "TRANSFERRED LIABILITIES" shall mean the liabilities to be
transferred by Retix to Wireless Solutions as described on EXHIBIT K to this
Agreement.
2. FORMATION OF WIRELESS SOLUTIONS; CLOSING.
2.1 FORMATION OF WIRELESS SOLUTIONS. Upon and subject to the terms
and conditions of this Agreement and in reliance upon the representations,
warranties and agreements contained in this Agreement, Wireless Solutions and
Retix shall at the Closing execute and deliver (or cause to be executed and
delivered) the Other Agreements, all substantially in the respective forms
attached to this Agreement, together with such other documents and funds as may
be necessary or advisable to form Wireless Solutions and effect the transactions
described in this Agreement and the Other Agreements.
2.2 TRANSFER OF ASSETS. Subject to the terms and conditions of this
Agreement and the Other Agreements, at the Closing Retix shall transfer to
Wireless Solutions, and Wireless Solutions shall receive from Retix, all of
Retix's right, title and interest in and to the Transferred Business, including
without limitation the Transferred Assets, the Transferred Contracts, the
Transferred Liabilities and inventory of the Transferred Business (collectively,
the "TRANSFERRED ITEMS"). Retix will deliver to Wireless Solutions possession
of the Transferred Items, and will further deliver to Wireless Solutions proper
instruments sufficient to transfer to Wireless Solutions the rights to the
Transferred Items specified in this Agreement and such other instruments of
transfer as counsel for Wireless Solutions may reasonable deem necessary or
desirable to effect or evidence the transfers contemplated hereby, free and
clear of all mortgages,
4
pledges, liens, licenses, rights of possession, security interests,
restrictions, encumbrances, charges, title retention, conditional sale or other
security arrangement except for the Transferred Liabilities or as may be
contained in the Transferred Contracts or as provided in this Agreement or in
the Other Agreements. Except for the Transferred Liabilities, Wireless
Solutions is not assuming, and Retix shall remain responsible for and pay on a
timely basis, any liabilities of Retix, whether or not arising from or
associated with the Transferred Business and whether accrued or unaccrued,
contingent or actual, or asserted or unasserted. Retix will promptly pay over
to Wireless Solutions any amounts received in respect of the Transferred
Business following the Closing Date, except for amounts which Retix is expressly
authorized by this Agreement to retain.
2.3 CLOSING. The transactions contemplated by Section 2.1
(the "CLOSING") shall be consummated at the offices of Venture Law Group, A
Professional Corporation, 0000 Xxxx Xxxx Xxxx, Xxxxx Xxxx, Xxxxxxxxxx
simultaneous with the execution and delivery of this Agreement and the Other
Agreements, or at such other place and time as the parties may agree, on the
Closing Date.
2.4 TAX TREATMENT. The parties intend that the transactions
contemplated by this Agreement will constitute a tax-free exchange as described
in Section 351 of the Code.
2.5 SALES AND OTHER TAXES. Wireless Solutions shall pay all sales,
use, transfer, excise or other similar taxes, if any, arising out of the
transfer of the Transferred Assets or Transferred Business, or otherwise as a
consequence of the transactions contemplated by this Agreement or the Other
Agreements. The parties shall cooperate with each other to the extent
reasonably requested and legally permitted to minimize the above-described
taxes.
3. REPRESENTATIONS AND WARRANTIES OF RETIX. Except as set forth in the
Retix Disclosure Statement, Retix represents and warrants that:
3.1 EXISTENCE AND RIGHTS. Retix (a) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California, (b) has all corporate power and authority to own or lease its
properties and to carry on the Transferred Business as now being conducted, (c)
possesses all licenses, franchises, rights and privileges necessary to the
conduct of the Transferred Business as now being conducted, and (d) has all
corporate power and authority to carry out this Agreement and the Other
Agreements to which Retix is a party and the transactions contemplated herein
and therein.
3.2 AUTHORIZATION. The execution, delivery and performance of this
Agreement and the Other Agreements to which Retix is a party has been, or will
be prior to the Closing, duly authorized by all necessary corporate and other
action and does not require notice to, or the consent or approval of, any
governmental body or other regulatory authority. This Agreement and the Other
Agreements to which Retix is a party have been duly executed or will be at the
Closing, as the case may be, and delivered to Wireless Solutions by Retix. This
Agreement and the Other Agreements to which Retix is a party constitute, or when
executed and delivered will constitute, legal, valid and binding obligations of
Retix, enforceable in accordance with their terms.
5
3.3 LITIGATION. There is no litigation, investigation, arbitration,
claim, action or other proceeding pending or, to the best of Retix's knowledge,
threatened against or affecting Retix or the Transferred Assets, which if
determined adversely to Retix, would have an adverse effect on the conduct of
the Transferred Business, Wireless Solutions or the Transferred Assets or in
which it is sought to restrain, prohibit or otherwise adversely affect the
ability of Retix to perform any or all of the obligations required of it under
this Agreement or the Other Agreements or the consummation of the transactions
contemplated herein or therein.
3.4 FIXED ASSETS. The fixed assets used in the ordinary course of
the operations of the Transferred Business are in satisfactory operating
condition, reasonable wear and tear excepted and except for such minor defects
as do not substantially interfere with the continued use thereof in the conduct
of normal operations.
3.5 TITLE TO PROPERTIES; ENCUMBRANCES; CONDITION OF PROPERTY.
(a) Retix has valid and marketable title to the Transferred
Assets and to all personal property and other assets, tangible or intangible,
required to be used in the conduct of the Transferred Business as it is
currently conducted.
(b) The Transferred Assets are free and clear of all title
defects and Liens, except the following: (i) unperfected mechanics', carriers',
workers' and other similar liens arising after the date of this Agreement in the
ordinary course of business consistent with past practice which are or will be
reflected in the balance sheet as of the Closing Date to be delivered pursuant
to this Agreement; (ii) imperfections of title which do not materially or
unreasonably detract from the value, marketability, financial ability or use of
such items; and (iii) property taxes which are a lien not yet due and payable.
(c) The Transferred Assets are in a condition suitable and
adequate for the conduct of the Transferred Business as such business is
presently being conducted. Retix is not aware of any facts which would prevent
Wireless Solutions from using such assets after the Closing generally in the
manner in which such assets have been used and operated prior to the date of
this Agreement.
3.6 BANKRUPTCY PROCEEDINGS. No petition has been filed by, or to
the best of Retix's knowledge against, Retix for relief under any applicable
bankruptcy, insolvency or similar law; no decree or order for relief has been
entered in respect of Retix, voluntarily or involuntarily, under any such law;
and, no receiver, liquidator, sequestrator, trustee, custodian or other officer
has been appointed with respect to Retix or its assets and liabilities pursuant
to any such law. No warrant of attachment, execution or similar process has
been executed against Retix or any of its assets or properties. Retix has not
made any assignment for the benefit of creditors. The consummation of the
transactions contemplated hereby will not render Retix insolvent or unable to
pay its liabilities as they come due.
6
3.7 PRODUCTS.
(a) Retix owns, or will own by the Closing Date, or has
sufficient rights to, all rights to make, use and sell the Products. No Product
is subject to any pending or, to the best of Retix's knowledge, any threatened
challenge of infringement of the rights of others, nor to the best of Retix's
knowledge is there any basis for a challenge of infringement of any such rights
of others.
(b) To the best of Retix's knowledge, no party other than Retix
(prior to the Closing) and Wireless Solutions and their respective agents and
representatives (following the Closing) and their permitted licensees possesses
any copy of all or any part of the designs, flow charts, algorithms, schematics
of the Products or source code contained in the Products (except to the extent
it has been licensed from other persons (including other subsidiaries of
Retix)). No person other than Retix owns any right, title or interest in or to
any such Product, except as set forth in the Retix Disclosure Statement.
(c) Wireless Solutions shall not by virtue of any contractual
arrangement between Retix and any third party be obligated to provide to any
such third party any modifications, enhancements or upgrades to the Products or
derivative works thereof, other than pursuant to a Transferred Contract.
3.8 TRADEMARKS, COPYRIGHTS, AND PATENTS.
(a) Retix has provided Wireless Solutions with a true and
complete list describing all of the trademarks, trade names and service and
other marks which are related to the Transferred Business. Except as
contemplated or described in this Agreement or the Other Agreements, Retix owns
all right, title and interest in and to such marks.
(b) Retix has provided Wireless Solutions with a true and
complete list describing all of the patents, patent rights, patent applications,
copyrights and copyright applications relating to the Products. Retix owns all
right, title and interest to, or has sufficient licenses under, all such
patents, patent rights, patent application, copyrights and copyright
applications.
(c) Upon consummation of the transactions contemplated by this
Agreement, Wireless Solutions will have all rights, including without limitation
rights under patents, trademarks, trade secrets, trade rights, trade names, and
copyrights, necessary to operate the Transferred Business in the manner it was
operated prior to the Closing Date. To the best of Retix's knowledge, none of
the rights described in the prior sentence conflict with or infringe on the
proprietary rights of others. There are no outstanding rights, licenses or
grants by Retix relating to the use of any of the same, and none of them is
subject to any pending or, to the best of Retix's knowledge, threatened claim of
infringement of the right of others. Retix has not agreed to indemnify any
person for or against any infringement of any patent, patent right, trademark,
trade secret, trade right, trade name, commercial name, computer software
program, or copyright related to the Transferred Business, other than as part of
its license arrangements with its customers.
7
3.9 AGREEMENTS LIST. Retix has provided Wireless Solutions with a
list of all contracts, agreements, understandings, licenses, franchises, leases
(written and oral) or other instruments which are both (i) material to the
Transferred Business, and (ii) relate to or affect the Transferred Assets or
under which any portion of the Transferred Assets are used or held or subject,
including without limitation all related supply, in-license, marketing and end-
user agreements, and all related agreements for the testing, modification,
development, trial, license, sale or other use of the Transferred Assets (in
each such case identifying the nature of such agreements).
3.10 NO FINDER'S FEES. Retix is not obligated, either directly or
indirectly, to any person for brokerage or finders' fees or agents' commissions
or any similar charges in connection with this Agreement and the Other
Agreements.
3.11 BINDING AGREEMENTS, NO DEFAULT. Each of the Transferred
Contracts is a legal, binding, and enforceable obligation of Retix and, to the
best of Retix's knowledge, the other party(s) thereto, and no party with whom
Retix has an agreement, contract or other instrument relating to or affecting
the Transferred Business is known by Retix to be in default thereunder or to
have breached any material terms or provisions thereof.
3.12 REPRESENTATIONS AND WARRANTIES TRUE AS OF CLOSING DATE. All of
the representatives and warranties of Retix contained herein will be true in all
material respects upon and as of the Closing Date.
4. REPRESENTATIONS AND WARRANTIES OF WIRELESS SOLUTIONS. Except as set
forth in the Wireless Solutions Disclosure Statement, Wireless Solutions
represents and warrants that:
4.1 EXISTENCE AND RIGHTS. Wireless Solutions (a) is a corporation
duly organized, validly existing and in good standing under the laws of State of
California, and (b) has all corporate power and authority to carry out this
Agreement and the Other Agreements to which Wireless Solutions is a party and
the transactions contemplated herein and therein. Wireless Solutions is not
qualified or licensed to do business as a foreign corporation in any state.
Wireless Solutions does not own, directly or indirectly, any equity or other
interest in any other corporation, association, partnership or other business
entity.
4.2 CAPITALIZATION. The authorized capital stock of Wireless
Solutions consists of 20,000,000 shares of Common Stock, par value $0.01 per
share, none of which were issued and outstanding prior to the Closing, and
17,000,000 shares of Preferred Stock, par value $0.01 per share, none of which
were issued and outstanding prior to the Closing. All shares of Wireless
Solutions stock to be issued pursuant to this Agreement and the Other Agreements
have been duly authorized and, upon issuance in accordance with the terms hereof
and thereof, will be validly issued, fully paid and nonassessable. All
securities of Wireless Solutions that will be issued as of the Closing will be
issued in compliance with applicable federal and state securities laws. Except
as provided in the Other Agreements, there are no preemptive rights, voting
agreements, options or warrants or other conversion privileges or rights
presently outstanding to purchase any of the authorized but unissued stock of
Wireless Solutions.
8
4.3 AUTHORIZATION. The execution, delivery and performance of this
Agreement and the Other Agreements to which Wireless Solutions is a party by
Wireless Solutions has been duly authorized by all necessary corporate and other
action and do not require notice to, or the consent or approval of, any
governmental body or other regulatory authority. This Agreement and the Other
Agreements to which Wireless Solutions is a party are, or when executed and
delivered will be, legal, valid and binding obligations of Wireless Solutions,
enforceable in accordance with their terms.
4.4 LITIGATION. There is no litigation, investigation, arbitration,
claim, action or other proceeding pending or, to the best of Wireless Solutions'
knowledge, threatened against or affecting Wireless Solutions, which if
determined adversely to Wireless Solutions, would have an adverse effect on the
Transferred Assets or in which it is sought to restrain, prohibit or otherwise
adversely affect the ability of any of Wireless Solutions to perform any or all
of the obligations required of it under this Agreement or the Other Agreements
or the consummation of the transactions contemplated herein or therein.
4.5 NO FINDER'S FEES. Wireless Solutions is not obligated, either
directly or indirectly, to any person for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement and the
Other Agreements.
4.6 BANKRUPTCY PROCEEDINGS. No petition has been filed by, or to
the best of Wireless Solutions' knowledge against, Wireless Solutions for relief
under any applicable bankruptcy, insolvency or similar law; no decree or order
for relief has been entered in respect of Wireless Solutions, voluntarily or
involuntarily, under any such law, and, no receiver, liquidator, sequestrator,
trustee, custodian or other officer has been appointed with respect to Wireless
Solutions or its assets and liabilities pursuant to any such law. No warrant of
attachment, execution or similar process has been executed against Wireless
Solutions or any of its assets or properties. Wireless Solutions has not made
any assignment for the benefit of creditors.
4.7 NO FINANCIAL STATEMENTS. Wireless Solutions has not prepared
any balance sheet, income statement, statement of operations, statement of
changes in financial position and shareholders' equity or other financial
statement.
4.8 REPRESENTATIONS AND WARRANTIES TRUE AS OF CLOSING DATE. All of
the representations and warranties of Wireless Solutions contained herein will
be true in all material respects upon and as of the Closing Date.
5. COVENANTS AND AGREEMENTS OF THE PARTIES.
5.1 CONDUCT OF BUSINESS PRIOR TO CLOSING. Retix covenants and
agrees with Wireless Solutions that between the date hereof and the Closing
Date, except as specifically contemplated by this Agreement:
(a) CONDUCT OF BUSINESS. Retix will conduct the Transferred
Business consistent with past practices, including the payment of liabilities.
9
(b) ACCESS. Retix will permit Wireless Solutions and its
representatives to have reasonable access during normal business hours to the
personnel and facilities of the Transferred Business and the financial, tax,
contractual and organizational records of the Transferred Business. Wireless
Solutions shall treat all information received from Retix pursuant to this
Section 5.1(b) as confidential, except to the extent that any such information
is made available to Wireless Solutions from sources generally available to the
public, and except as required by law. In the event the Closing shall not
occur, Wireless Solutions will promptly return to Retix all documents,
instruments, work papers and other materials submitted by Retix to Wireless
Solutions.
5.2 EXECUTION OF DOCUMENTS AT THE CLOSING. Provided that the
conditions to Closing as specified in Section 6 and Section 7 of this Agreement
have been fulfilled, Retix and Wireless Solutions, respectively, agree to cause
the execution of each of the Other Agreements.
5.3 TRANSFER OF KEY EMPLOYEES. Retix agrees to use its reasonable
efforts to cause all key employees employed in the Transferred Business to
transfer their employment to Wireless Solutions.
5.4 CONSENTS AND APPROVALS. It is the intent of the parties to
consummate the transactions described in this Agreement and the Other Agreements
at the earliest practicable time and Retix agrees to use its reasonable efforts
to obtain, and Wireless Solutions shall cooperate with and assist Retix in
obtaining, all consents, waivers, amendments, modifications, approvals,
authorizations, Permits and licenses which are required to be obtained by Retix
to effectuate this Agreement and the Other Agreements and to transfer the
Transferred Business and the Transferred Assets to Wireless Solutions and to
permit Wireless Solutions to operate the Transferred Business. If any requisite
consent or amendment of a contract or other instrument shall not be obtained,
Retix agrees to cooperate with Wireless Solutions in any reasonable arrangement
designed to provide for Wireless Solutions the benefits under such contract or
other instrument, including enforcement of any and all rights of Retix against
the other party to such contract or instrument arising out of the breach or
cancellation thereof by such other party or otherwise. Retix shall use its
reasonable efforts to obtain all other necessary consents and approvals of other
persons and Governmental Entities in connection with the consummation of the
transactions contemplated under this Agreement and the Other Agreements;
provided, however, that Retix shall not be obligated to: (a) undertake any
additional material financial obligation, dispose of any property, or surrender
any rights, or (b) otherwise consent to any arrangement or undertake any
obligation that would have a material adverse effect on Retix.
5.5 VACATION PAY. The cost of vacation pay due (as of the Closing
Date) to any Retix employees who become employees of Wireless Solutions as of
the Closing shall be shared by Retix and Wireless Solutions equally. Retix
shall fund its portion of such liability by (i) making quarterly payments to
Wireless Solutions within 30 days of the close of each such quarter for such
accrued vacation taken during each of Wireless Solutions' first six fiscal
quarters, and (ii) promptly reimbursing Wireless Solutions for one-half of any
amounts paid by Wireless Solutions to such employees upon termination of their
employment with Wireless Solutions.
10
5.6 NO INCONSISTENT ACTS. Wireless Solutions covenants and agrees
with Retix that between the date hereof and the Closing Date, except as
contemplated by this Agreement, Wireless Solutions will not perform any act
inconsistent with the representations and warranties of Section 4.
5.7 EMPLOYMENT ELIGIBILITY VERIFICATION. Retix agrees to use its
reasonable efforts to obtain, on behalf of Wireless Solutions, Employment
Eligibility Verification forms (Form I-9) completed by each employee of Retix
who has agreed to become employed in the Transferred Business and copies of any
documentation obtained by Retix to verify the information therein.
5.8 EMPLOYEES.
(a) Retix and Wireless Solutions agree to use their reasonable
efforts to employ the current employees of the Transferred Business, subject to
continued acceptable performance by such employees and the general requirements
of the business.
(b) Retix will use its reasonable efforts, consistent with its
established personnel policies, to encourage employees designated to perform
work for the Transferred Business to transfer to Wireless Solutions.
(c) Wireless Solutions agrees to provide a package of
compensation and benefits to its employees substantially equivalent to such
compensation and benefits currently being offered to the employees of the
Transferred Business by Retix.
5.9 CONFIDENTIALITY. Neither Retix nor Wireless Solutions shall
disclose to any third party other than their lenders, accountants, attorneys or
other advisors or in any way make public the proposed transactions among the
parties which are the subject of this Agreement and the Other Agreements without
the prior written consent of Wireless Solutions or Retix, respectively.
5.10 ASSIGNMENTS. At the Closing, Retix will use its reasonable
efforts to deliver to Wireless Solutions, such other instruments of transfer or
assignment as the parties deem reasonably necessary or advisable so as to vest
title in the Transferred Assets more fully in Wireless Solutions.
5.11 SUBSEQUENT ACTIONS. At any time, and from time to time, after
the Closing Retix shall, promptly upon request by Wireless Solutions execute and
deliver such other instruments of sale, transfer, conveyance, assignment and
confirmation and take such action as Wireless Solutions may reasonably request
in order more effectively to transfer, convey and assign to Wireless Solutions,
or to confirm Wireless Solutions' title to, the Transferred Assets, to put
Wireless Solutions in possession and control thereof, to assist Wireless
Solutions in exercising all rights with respect thereto and otherwise complete
the transactions contemplated hereby. The parties agree to execute documents as
necessary to file with the United States Copyright Office, the United States
Patent Office with respect to, or otherwise to confirm Wireless Solutions' title
in, the Transferred Assets.
11
5.12 SUBSEQUENT ACCESS. Retix agree to provide access to and copies
of all necessary accounting records, work papers and other documents in
connection with or related to the Transferred Business, as reasonably requested
by Wireless Solutions or the independent auditors of Wireless Solutions. Retix
will consider any reasonable requests for customary representation letters in
connection with any audit.
5.13 COVENANTS REGARDING THE MANAGEMENT AND OPERATION OF WIRELESS
SOLUTIONS.
(a) CAPITALIZATION OF WIRELESS SOLUTIONS. As of the Closing,
Retix will own 17,000,000 shares of Wireless Solutions' Preferred Stock,
representing at least 80% of the outstanding capital stock of Wireless
Solutions. Retix and Wireless Solutions agree that there will be issued or
reserved for future issuance to Wireless Solutions directors, officers,
employees, consultants and other service providers (other than Retix or its
affiliates) an aggregate of fifteen percent (15%) of the aggregate capital stock
of Wireless Solutions on an as-converted basis. After the Closing, the Board of
Directors of Wireless Solutions shall determine those persons to whom shares of
Wireless Solutions' Common Stock (or options to purchase such shares) shall be
issued, whether pursuant to the Key Employee Option Agreements or otherwise,
which determination shall be final and binding.
(b) CORPORATE OBJECTIVES. Retix and Wireless Solutions hereby
acknowledge and agree that Wireless Solutions shall be operated as a for-profit
enterprise with the principal strategic objective of obtaining liquidity for
Wireless Solutions' shareholders through an Initial Public Offering, sale of
Wireless Solutions or other appropriate transaction. Wireless Solutions shall
initially operate on a strategic plan and financial model approved by Retix in
its discretion. After the Closing, Wireless Solutions shall operate on a
strategic plan and financial model approved by Wireless Solutions' Board of
Directors.
(c) TERMINATION. The provisions of this Section 5.13 shall
terminate and be of no further force or effect upon the earliest to occur of (i)
an Initial Public Offering, (ii) a Change of Control, or (iii) a Sale of
Wireless Solutions Stock.
5.14 SHARED ADMINISTRATIVE EXPENSES. Retix will provide certain
administrative and support services to Wireless Solutions for a period to be
mutually agreed upon in good faith. The foregoing services shall be provided by
Retix to Wireless Solutions in a similar manner as such services were provided
by Retix internally to support the Transferred Business prior to the Closing
Date. The foregoing services shall be provided by Retix to Wireless Solutions
at Retix's fully-loaded cost, defined as Retix's out-of-pocket costs of
providing such services (including reasonable allocations of (i) the salaries of
Retix personnel providing such services, and (ii) Retix's overhead costs
associated with providing such services). Any costs and expenses incurred by
one party pursuant to this Section 5.14 (including without limitation taxes,
license fees, insurance fees and costs of professional services), which are
payable in whole or in part by the other party pursuant to this Section 5.14,
will be allocated between the parties as mutually agreed in good faith.
12
5.15 SUPPORT AND DISCLOSURE. Wireless Solutions Management covenants
and agrees to fully support Retix in its efforts to divest its equity holdings
in Wireless Solutions to the public, a third party or to Wireless Solutions
Management, and to provide full disclosure of all material information requested
by any potential purchasers of such equity holdings, in each case as reasonably
requested by Retix and in compliance with all applicable securities laws.
6. CONDITIONS OF RETIX'S OBLIGATIONS. The obligation of Retix to
consummate and effect this Agreement and the Other Agreements and the
transactions contemplated hereby and thereby shall be subject to the
satisfaction at the Closing of all of the following conditions, any of which may
be waived, in writing, exclusively by Retix:
6.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties of Wireless Solutions contained in this Agreement shall be true in
all material respects at and as of the Closing Date, with the same effect as
though made as of such date.
6.2 COVENANTS. Wireless Solutions shall have complied with all
agreements and covenants contained herein to be complied with by Wireless
Solutions prior to or at the Closing Date.
6.3 CLOSING DOCUMENTS. Retix shall have received, in form and
substance satisfactory to Retix and its counsel, each and every closing
document required to be delivered to them by this Agreement and the Other
Agreements, including without limitation, a list of Transferred Contracts as
determined by the parties in good faith.
6.4 CONSENTS AND WAIVERS. Retix shall have obtained any and all
consents, permits, approvals and waivers necessary or appropriate for the
consummation of the transactions contemplated by this Agreement and the Other
Agreements.
6.5 OFFICER'S CERTIFICATE. Wireless Solutions shall have delivered
to Retix a certificate, dated as of the Closing Date and signed by an authorized
officer of Wireless Solutions, to the effect that the conditions specified in
Section 6.1 and Section 6.2 have been satisfied.
6.6 BOARD OF DIRECTORS. The Board of Directors of Wireless
Solutions shall consist of Xxx Xxxxxxx, Xxxxxxx Xxxxxx, Xxxx Xxxxx, Xxxxxxx X.
Xxxxxxxxxx and one vacancy.
7. CONDITIONS OF WIRELESS SOLUTIONS OBLIGATIONS. The obligation of
Wireless Solutions to consummate and effect this Agreement and the Other
Agreements and the transactions contemplated hereby and thereby shall be subject
to the satisfaction at the Closing of all of the following conditions, any of
which may be waived, in writing, exclusively by Wireless Solutions :
13
7.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties of Retix contained in this Agreement shall be true and correct at and
as of the Closing Date, with the same effect as though made as of such date,
except for changes in the ordinary course of business consistent with past
practices of Retix and other changes consistent with past practices of Retix
which in the aggregate do not have a material adverse effect on the Transferred
Assets, the Transferred Business or Wireless Solutions.
7.2 COVENANTS. Retix shall have complied with all agreements and
covenants contained herein to be complied with by Retix prior to or at the
Closing Date.
7.3 NO MATERIAL ADVERSE CHANGE. From the date of this Agreement,
there shall not have occurred any material adverse change in the business,
financial condition, operations or value of the Transferred Business or the
value of the Transferred Assets.
7.4 ASSET AND CONTRACT ASSIGNMENTS. Retix shall have taken or
agreed to take any and all steps necessary to effectuate the assignment and
transfer to Wireless Solutions of all Transferred Assets and Transferred
Contracts, including but not limited to obtaining any and all necessary consents
or waivers with respect thereto.
7.5 CLOSING DOCUMENTS. Wireless Solutions shall have received, in
form and substance satisfactory to Wireless Solutions and its counsel, each and
every other closing document required to be delivered to them by this Agreement
and the Other Agreements, including without limitation, a list of Transferred
Contracts as determined by the parties in good faith.
7.6 OFFICER'S CERTIFICATE. Retix shall have delivered to Wireless
Solutions a certificate, dated as of the Closing Date and signed by an
authorized officer of Retix, to the effect that the conditions specified in
Section 7.1 and Section 7.2 have been satisfied.
7.7 CONSENTS AND WAIVERS. Wireless Solutions shall have obtained
any and all consents, permits, approvals and waivers necessary or appropriate
for the consummation of the transactions contemplated by this Agreement and the
Other Agreements.
8. TERMINATION.
8.1 AGREEMENT TERMINATION. This Agreement may be terminated and the
transactions contemplated herein may be abandoned at any time prior to or at the
Closing Date upon ten (10) business days prior notice: (a) by Wireless
Solutions or Retix if there has been a material misrepresentation, breach of
warranty, or breach of covenant by the other in any of their representations,
warranties, or covenants set forth herein which the breaching party or parties
fail to cure within ten (10) business days after receipt of notice thereof; (b)
by Wireless Solutions if the conditions stated in Section 7 have not been
satisfied by the Closing Date; (c) by Retix if the conditions stated in Section
6 have not been satisfied by the Closing Date, or (d) by mutual written
agreement of Wireless Solutions and Retix.
14
8.2 EFFECT OF TERMINATION. If this Agreement shall be terminated as
provided in Section 8, all obligations of the parties hereunder and under the
Other Agreements shall terminate without liability of any party to any other
party, except that (i) the second and third sentences of Section 5.1(b) of this
Agreement and Section 5.9 of this Agreement shall survive any such termination.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties of the parties are material, shall be deemed to have been relied upon
by the parties receiving such representations and warranties and shall survive
the Closing. All such representations and warranties shall expire one year
after the Closing.
10. GENERAL PROVISIONS.
10.1 ASSIGNMENT. Except with respect to an assignment to a successor
of all or substantially all of a party's business or assets, this Agreement is
not transferable or assignable without the consent of each of the other party to
this Agreement, and neither party shall have the power or right to assign,
transfer or delegate any of its rights or obligations hereunder. Any assignment
in derogation of the foregoing shall be void.
10.2 AMENDMENTS AND WAIVERS. The waiver, amendment or modification
of any provision of this Agreement or any right, power or remedy hereunder,
whether by agreement of the parties or by custom, course of dealing or trade
practice, shall not be effective unless in writing and signed by the party
against whom enforcement of such waiver, amendment or modification is sought.
No failure or delay by either party in exercising any right, power or remedy
with respect to any of the provisions of this Agreement shall operate as a
waiver of such provisions with respect to such occurrences.
10.3 GOVERNING LAW. The legal relations between the parties shall be
governed by the laws of the State of California, regardless of the choice of law
provisions of California or any other jurisdiction.
10.4 SEVERABILITY. In the event any provision of this Agreement or
the application of any such provision shall be held to be prohibited or
unenforceable in any jurisdiction, such provision shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability. The remaining provisions of this Agreement shall remain in
full force and effect, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. The parties shall use their reasonable efforts to replace
the provision that is contrary to law with a legal one approximating to the
extent possible the original intent of, and the economic benefits accruing to,
the parties.
10.5 KNOWLEDGE. For purposes of this Agreement, to know or have
knowledge of, or to be aware of or believe, any matter shall mean to know or
have knowledge, be aware or believe, after due inquiry; provided such knowledge,
awareness or belief shall only be imputed to employees of a party at the level
of manager or above, together with such party's officers and directors.
15
10.6 BINDING. This Agreement shall be binding upon and inure to the
benefit of each of the parties and, to the extent permitted by Section 10.1,
their respective successors and assigns.
10.7 COMPLETE AGREEMENT. This Agreement and the Other Agreements and
any schedules, exhibits and documents referred to herein or therein or executed
contemporaneously herewith or therewith constitute the entire agreement among
the parties with respect to the subject matter hereof and thereof. This
Agreement and the Other Agreements supersede all prior written, and all prior
and contemporaneous oral, agreements, representations, warranties, statements,
promises and understandings with respect to the subject matter hereof and
thereof.
10.8 NO THIRD-PARTY BENEFICIARIES. Nothing contained in this
Agreement shall be construed to give any person other than Retix and Wireless
Solutions any legal or equitable right, remedy or claim under or with respect to
this Agreement, the Transferred Assets or the Transferred Business.
10.9 HEADINGS. Section headings are included solely for convenience,
are not to be considered a part of this Agreement, and are not intended to be
full and accurate descriptions of their contents.
10.10 NOTICES. All notices or other communications which shall
or may be given pursuant to this Agreement shall be in writing, shall be
effective upon receipt, and shall be delivered by Federal Express or a similar
courier, personal delivery, certified or registered mail, or by facsimile
transmission (with confirmation of transmission receipt), addressed as follows
(or as is provided in the future by written notice as provided herein):
If to Wireless Solutions : Wireless Solutions
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Attn: President
If to Retix: Retix
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Attn: President
10.11 COUNTERPARTS. This Agreement may be executed in any number
of copies, each of which shall be deemed an original and all of which together
shall constitute one and the same instrument.
16
10.12 LANGUAGE INTERPRETATION. In the interpretation of this
Agreement, unless the context otherwise requires, (a) words importing the
singular shall be deemed to import the plural and vice versa, (b) words denoting
gender shall include all genders, (c) references to persons shall include
corporations or other bodies and vice versa, and (d) references to parties,
sections, schedules, paragraphs and exhibits shall mean the parties, sections,
schedules, paragraphs and exhibits of and to this Agreement unless otherwise
indicated by the context.
10.13 DRAFTING. This Agreement shall not be construed against any
party by reason of the drafting or preparation thereof.
10.14 TRANSACTION COSTS. Except as otherwise provided herein,
each party shall be responsible for any costs, expenses and claims (including
attorneys' fees and professional and brokers' fees and commissions) arising out
of its negotiation, execution and performance of this Agreement and of the Other
Agreements.
10.15 ATTORNEYS' FEES AND OTHER COSTS. In the event of any
dispute or controversy arising out of this Agreement, the prevailing party shall
be entitled to reimbursement of its costs, including court and mediation,
dispute resolution and/or arbitration costs and attorneys' and expert witnesses'
fees and costs.
[SIGNATURE PAGE FOLLOWS]
17
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first set forth above.
WIRELESS SOLUTIONS RETIX
By: By:
------------------------- -------------------------
Title: Title:
---------------------- ----------------------
18
MASTER AGREEMENT EXHIBIT LIST
EXHIBIT A Form of Grant Back License Agreement
EXHIBIT B Form of Loan Agreement
EXHIBIT C Form of Key Employee Option Agreement
EXHIBIT D Wireless Solutions Disclosure Schedule
EXHIBIT E Form of Preferred Stock Purchase Agreement
EXHIBIT F List of Products
EXHIBIT G Retix Disclosure Schedule
EXHIBIT H Form of Rights Agreement
EXHIBIT I Form of Security Agreement
EXHIBIT J List of Transferred Assets
EXHIBIT K List of Transferred Liabilities
19
EXHIBIT A
GRANT-BACK LICENSE AGREEMENT
This Grant-Back License Agreement (the "AGREEMENT") is made as of May 31,
1996 (the "EFFECTIVE DATE") by and between Retix, a California corporation with
offices at 0000 Xxxxxxxx Xxxxxx, Xxxxx Xxxxxx, XX 00000 ("RETIX"), and Wireless
Solutions, a California corporation with offices at 0000 Xxxxxxxx Xxxxxx, Xxxxx
Xxxxxx, XX 00000 ("WIRELESS SOLUTIONS").
In consideration of the mutual covenants contained herein and for other
good and valuable consideration, receipt of which is hereby acknowledged,
Wireless Solutions and Retix hereby agree as follows:
1. DEFINITIONS.
"LICENSED MATERIALS" shall be each computer program whether in
software, firmware, physical or other form, as well as any other technology or
designs (whether hardware, software, firmware or other form thereof) which, as
of the Closing Date, was either owned by Wireless Solutions or permitted to be
licensed by Wireless Solutions to Retix on the terms provided for herein, in
each case after giving effect to the transfer of assets and other matters
contemplated in the Master Agreement. Such Licensed Materials shall include,
without limitation, those programs and other items specified in EXHIBIT A and
such other rights as the parties may from time to time agree to incorporate into
such Exhibit. The term "LICENSED MATERIAL" shall specifically include
documentation and related materials pertinent to such program, design or other
material and any updated version or portion thereof furnished to Retix by
Wireless Solutions for use in connection with or replacement of a Licensed
Material, and shall specifically exclude future additions, improvements or
modifications thereto unless approved in writing by Wireless Solutions and
Retix.
"MASTER AGREEMENT" shall mean the Master Agreement between Wireless
Solutions and Retix of even date herewith.
"OBJECT FORM" shall mean any machine translated version of the Source
Form suitable for execution by computer equipment, or any intermediate form
derived from Source Form which can be made executable by computer equipment.
"PRODUCTS" shall mean all hardware, software and other products
developed, marketed or sold by Retix or its subsidiaries or affiliates which
contain Licensed Materials and which also contain material added features or
other material distinguishing characteristics from the Licensed Materials
incorporated therein.
"SOURCE FORM" shall mean the source code form on any media of any
Licensed Material in the language as delivered by Wireless Solutions to Retix,
or any translation or modification of such Licensed Material which substantially
preserves its original identity.
20
2. LICENSE GRANT.
2.1 TECHNOLOGY LICENSE. Wireless Solutions hereby grants to Retix
and its authorized contractors a non-exclusive, non-transferable (except as
provided in Section 8.1) worldwide, perpetual, fully-paid license, with the
right to sublicense, to use, copy, have copied and distribute Licensed Materials
in conjunction with the operation, development, design, manufacture, marketing,
sale or other disposition of the Products.
2.2 USE OF SOURCE FORM FOR DEVELOPMENT. Wireless Solutions hereby
grants to Retix and its authorized contractors a non-exclusive, non-transferable
(except as provided in Section 8.1) worldwide, perpetual, fully-paid license
with the right to sublicense, to use, copy and have copied the Source Form of
Licensed Materials for the purpose of adapting or incorporating such Licensed
Materials for operation in connection with the Products.
2.3 USE OF OBJECT FORM IN PRODUCTS. Wireless Solutions hereby
grants to Retix and its authorized contractors a non-exclusive, non-transferable
(except as provided in Section 8.1), worldwide, perpetual, fully-paid license,
with rights to sublicense as described in Section 2.3, to use, copy, have
copied, and distribute the Object Form of Licensed Materials solely on and in
conjunction with the Products.
2.4 RIGHT TO GRANT SUBLICENSES.
(a) RIGHT TO GRANT OBJECT FORM OR SUBLICENSES.
(i) Wireless Solutions hereby grants Retix a non-exclusive,
non-transferable (except as provided in Section 8.1), worldwide, perpetual,
fully-paid right to grant and to grant to distributors, resellers and other
parties who distribute Products the right to grant sublicenses (not exceeding
the scope of the underlying license) to use, copy and have copied the Object
Form of Licensed Materials solely on and in conjunction with the Products,
provided that (i) such sublicensees agree to be bound by terms and conditions no
less restrictive than those set forth in the End User License Agreement attached
hereto as EXHIBIT B , and (ii) any distributors, resellers and other parties who
distribute Products, to which Retix grants the right to grant sublicenses as
provided above, agree in writing to be bound by all of the restrictions
contained in this Agreement applicable to Retix. Neither Retix nor its
distributors, resellers and other parties who distribute Products shall
distribute the Licensed Materials other than in connection with the marketing
and sale of Products.
(ii) If the Object Form is sublicensed on media or devices separately from
the Products, then Retix shall use appropriate means to provide for the
acceptance of said End User License Agreement by the end user sublicensee and
installation of the Object Form only on Products, which means may include a
customary written shrinkwrap or break-seal document specifying such provisions.
(iii) If the Object Form is sublicensed in the form of firmware in Read
Only Memory (ROM) attached directly to the Products, then said End User License
Agreement, or provisions containing at a minimum those of said End User License
Agreement,
21
will be made a part of a written agreement between Retix and any purchaser of
Products, or in lieu thereof a customary written shrink wrap or break-seal
document specifying such provisions.
(b) RIGHT TO GRANT SOURCE FORM SUBLICENSES. Wireless Solutions
hereby grants Retix a non-exclusive, non-transferable (except as provided in
Section 8.1), worldwide, perpetual, fully-paid right to grant sublicenses (not
exceeding the scope of the underlying license) to use, copy and have copied the
Source Form of Licensed Materials solely on specific items of Products under the
conditions specified below, provided that such sublicensees agree to be bound by
a source code license agreement permitting the use of the Source Form of
Licensed Materials solely for the purposes outlined below, and having terms no
less restrictive than those specified in Section 5 (Confidentiality):
(i) Source Form is required to be held in escrow by a government
sublicensee; or
(ii) Source Form for any or all of the Licensed Materials is required for
maintenance by a sublicensee.
In addition to those provisions outlined above, Retix agrees that its
Source Form sublicensees specified in clauses (i) and (ii) above shall be bound
by the following additional provisions:
(A) Such Source Form sublicenses shall be used for
maintenance purposes only with no rights to develop or distribute improvements,
adaptations, new versions or derivative works of the Licensed Materials.
(B) Except as expressly provided or permitted in this
Agreement, such Source Form sublicensees shall have no rights to distribute or
otherwise make available Source Form or Object Form to other legal entities
other than affiliates of such Source Form sublicensees.
(C) Such Source Form sublicensees shall use the Source
Form and any Object Form compiled therefrom solely in accordance with the
restrictions set forth on EXHIBIT B (in addition to the other restrictions set
forth herein).
2.5 SUBLICENSES TO GOVERNMENT AGENCIES. Wireless Solutions grants
to Retix a non-exclusive, non-assignable, restricted right to sublicense the
Object Form of Licensed Materials to Government units or agencies, with such
Government units or agencies acquiring only the most limited and restricted
rights, permitted under applicable law, in such Licensed Materials and related
proprietary technical information, data, documentation, and any other forms of
recording and communication. Wireless Solutions grants no subsequent rights to
sublicense such Licensed Materials. If the sublicensee is the United States
Government, the restrictions as set forth in DFARS 227.7202 for military
agencies, and FAR 12.212 for civilian agencies, apply. For purposes of such
regulations, the Contractor/Manufacturer shall be deemed to be Wireless
Solutions. Retix and Wireless Solutions expressly agree to follow all
procedures necessary to secure such limited and restricted rights.
22
2.6 SUBLICENSE ENFORCEMENT. Retix agrees, upon written request or
prior written approval of Wireless Solutions to perform the duties and enforce
the rights of Wireless Solutions with respect to any sublicense granted by Retix
under this Agreement, to the extent permitted under the terms of such
sublicense.
2.7 RIGHTS TO IMPROVEMENTS. Wireless Solutions agrees to notify
Retix promptly in writing of the existence of and the specifications for any
improvements, enhancements, modifications or amendments to the Licensed
Materials (the "IMPROVEMENTS") that Wireless Solutions does not market as new
products and of any versions to or new versions of the Licensed Materials that
Wireless Solutions markets or new products which it has developed and proposes
to make available to any third party (the "TECHNOLOGIES," and collectively with
the Improvements, the "NEW TECHNOLOGIES"). Until the consummation of Wireless
Solutions' Initial Public Offering (as defined in the Master Agreement),
Wireless Solutions shall make any such New Technologies available for use by
Retix on terms no less favorable than those provided by Wireless Solutions to
its most favored customer and at a rate equal to the greater of Wireless
Solutions' most favored customer discount or a 50% discount off the then-current
Wireless Solutions suggested end-user price for such New Technology, in each
case for Wireless Solutions customers contemporaneously purchasing the Licensed
Materials under similar terms. Following the consummation of Wireless
Solutions' Initial Public Offering, Wireless Solutions shall make any such New
Technologies available for use by Retix on terms no less favorable than those
provided by Wireless Solutions to Equivalent Purchasers (as defined below) of
similar Wireless Solutions products and services. As used in the foregoing
sentence, the term "EQUIVALENT PURCHASERS" shall mean purchasers of Wireless
Solutions products or services who (i) are not affiliated with Wireless
Solutions, and (ii) purchase such products or services on terms that are
substantially equivalent to those applicable to Retix.
2.8 THIRD-PARTY ROYALTIES. No royalties or similar payments are
payable by Retix to Wireless Solutions under this Agreement, except for payments
that may arise under Section 2.7 and except for royalties owed by Wireless
Solutions to third parties with respect to Retix' or Retix' sublicensees' use of
the Licensed Materials (collectively, "THIRD-PARTY ROYALTIES"). At the end of
each calendar quarter, Wireless Solutions shall prepare a quarterly statement
showing the Third Party Royalties actually paid by Wireless Solutions during
such quarter. Within 15 days of its receipt of such quarterly statement, Retix
shall reimburse Wireless Solutions for the Third Party Royalty payments actually
paid as indicated in such statement.
2.9 WARRANTY DISCLAIMER. WIRELESS SOLUTIONS MAKES NO WARRANTIES,
EXPRESS OR IMPLIED, WITH RESPECT TO THE LICENSED MATERIALS OR ANY OTHER
MATERIALS PROVIDED HEREUNDER AND EXPRESSLY DISCLAIMS THE IMPLIED WARRANTIES OR
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT.
23
3. DELIVERABLES. At the Closing pursuant to the Master Agreement
between Wireless Solutions and Retix of even date herewith, Wireless Solutions
shall provide Retix with a copy of all Licensed Materials, including copies of
all computer programs included in the Licensed Materials in Source Form and
Object Form (and including sufficient documentation for a complete technical
understanding of such programs) for Retix's use in accordance with the terms of
this Agreement. Thereafter, during the term of this Agreement, Wireless
Solutions shall provide Retix with prompt written notification of any additions,
improvements or modifications to the Licensed Materials, developed by or for
Wireless Solutions, and shall thereafter promptly deliver to Retix a copy of any
such additions, improvements or modifications which the parties agree should be
included in the Licensed Materials.
4. SUPPORT. Retix shall be solely responsible for supporting and
providing maintenance of all or any part of the Licensed Materials and
documentation as provided to Retix's customers. Wireless Solutions shall have
no obligation to provide any consultation or maintenance support to Retix's
customers with respect to all or any part of the Licensed Materials or other
subject matter of this Agreement.
5. CONFIDENTIALITY.
5.1 CONFIDENTIAL INFORMATION. As used in this Agreement, the term
"Confidential Information" shall mean any information disclosed by one party to
the other pursuant to this Agreement which is in written, graphic, machine
readable or other tangible form and is marked "Confidential", "Proprietary" or
in some other manner to indicate its confidential nature. Confidential
Information may also include oral information disclosed by one party to the
other pursuant to this Agreement, provided that such information is designated
as confidential at the time of disclosure and is reduced to writing by the
disclosing party within a reasonable time (not to exceed thirty (30) days) after
its oral disclosure, and such writing is marked in a manner to indicate its
confidential nature and delivered to the receiving party. Notwithstanding any
failure to so identify it, however, all Licensed Materials to be supplied by
Wireless Solutions hereunder shall constitute Wireless Solutions' Confidential
Information without need for further marking.
5.2 CONFIDENTIALITY. Each party shall treat as confidential all
Confidential Information of the other party, shall not use such Confidential
Information except as set forth herein, and shall use reasonable efforts not to
disclose such Confidential Information to any third party. Without limiting
the foregoing, each of the parties shall use at least the same degree of care
which it uses to prevent the disclosure of its own confidential information of
like importance to prevent the disclosure of Confidential Information disclosed
to it by the other party under this Agreement. Each party shall promptly notify
the other party of any actual or suspected misuse or unauthorized disclosure of
the other party's Confidential Information.
24
5.3 EXCEPTIONS. Notwithstanding the above, neither party shall have
liability to the other with regard to any Confidential Information of the other
which the receiving party can prove:
(i) was in the public domain at the time it was disclosed or has entered
the public domain through no fault of the receiving party;
(ii) was known to the receiving party, without restriction, at the time of
disclosure, as demonstrated by files in existence at the time of disclosure;
(iii) is disclosed with the prior written approval of the disclosing party;
(iv) was independently developed by the receiving party without any use of
the Confidential Information, as demonstrated by files created at the time of
such independent development;
(v) becomes known to the receiving party, without restriction, from a
source other than the disclosing party without breach of this Agreement by the
receiving party and otherwise not in violation of the disclosing party's rights;
(vi) is disclosed generally to third parties by the disclosing party
without restrictions similar to those contained in this Agreement; or
(vii) is disclosed pursuant to the order or requirement of a court,
administrative agency, or other governmental body; provided, however, that the
receiving party shall provide prompt notice thereof to the disclosing party to
enable the disclosing party to seek a protective order or otherwise prevent or
restrict such disclosure;
provided, that Sections 5.3(ii) and (iv) shall not apply to any Licensed
Materials originally developed by Retix prior to the Effective Date,
subsequently transferred to Wireless Solutions, and then licensed back to Retix
by Wireless Solutions pursuant to this Agreement.
5.4 REMEDIES. Any breach of the restrictions contained in this
Section 5 is a breach of this Agreement which may cause irreparable harm to the
nonbreaching party. Any such breach shall entitle the nonbreaching party to
injunctive relief in addition to all legal remedies.
5.5 PRESERVATION OF NOTICES. Wireless Solutions shall retain title
and copyrights to the Licensed Materials and related materials that are provided
by Wireless Solutions to Retix. Appropriate copyright notices shall be placed
on the materials supplied by Wireless Solutions (or as modified by Wireless
Solutions following the closing contemplated by the Master Agreement) and shall
be embedded in the Source Form and Object Form, of Licensed Materials, and such
notices shall be retained on full or partial copies made by Retix. Retix agrees
to reproduce and include all notices, including but not limited to, any
proprietary notices, copyright notices, and restricted rights legends, appearing
thereon.
25
6. EXPORT CONTROLS.
6.1 EXPORT CONTROLS IN GENERAL. In exercising its rights under this
Agreement, Retix agrees to comply strictly and fully with all export controls
imposed on the Licensed Materials by any country or organization of nations
within whose jurisdiction Retix operates or does business and with all
applicable international, national regional and local laws including all
relevant commodity control laws and regulations in any transactions involving
Licensed Materials.
6.2 COMPLIANCE WITH EXPORT CONTROLS.
(a) With respect to exportation or re-exportation of any part of
the Licensed Materials, Retix agrees not to export or permit exportation without
first (i) obtaining any required written permission to do so from the United
States Office of Export Administration and any other appropriate governmental
agencies of the United States, or (ii) complying fully and strictly with all
requirements of any general license exempting the exportation from the
requirement for that permission.
(b) Retix agrees to comply with the United States Export
Administration Act of 1979 as amended (the "ACT"), and with the Export
Administration Regulations ("EAR") promulgated from time to time thereunder by
the United States Department of Commerce ("DOC") in connection with the
exercise of its rights hereunder.
(c) Each party agrees to execute any documents reasonably
requested by the other party (including applications for export licenses and
written assurances of non-reexportation) for the purpose of complying with the
Act and EAR. Retix agrees to keep, at a minimum, the following records required
by DOC for all Licensed Materials incorporated within Products shipped under
this Agreement:
(i) Name and complete address of Retix's customer;
(ii) Customer's type of business and industry;
(iii) End use of Product sold; and
(iv) Serial numbers and dates of Product sold.
Retix understands and agrees that Licensed Materials may not be
exported, resold or reexported except in a manner which complies with this
Section and Wireless Solutions shall not under any circumstances be liable to
Retix for any damages whatsoever in the event such export licenses are not
obtained or if any shipment of the Licensed Materials is delayed because of
delays in obtaining such licenses.
26
7. INDEMNIFICATION AND LIMITATION OF LIABILITY.
(a) Wireless Solutions shall indemnify Retix and hold it harmless
from any loss, claim or damage (including attorney's fees) arising out of
Wireless Solutions' use or possession of the Licensed Materials or related
materials (including, but not limited to, infringement or claims of infringement
of any patents, trademarks, copyrights or other intellectual property rights).
(b) EXCEPT FOR ACTIONS PURSUANT TO SECTIONS 5.1, 5.2, 5.3 AND/OR 5.4,
IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT,
INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES (INCLUDING BUT NOT LIMITED TO LOST
PROFITS, LOSS OF USE OR LOST DATA) ARISING FROM OR BASED UPON THIS AGREEMENT OR
ANY BREACH HEREOF, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, WHETHER OR NOT
SUCH PARTY HAD BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
8. GENERAL PROVISIONS.
8.1 ASSIGNMENT. Except with respect to an assignment to a successor
in business or an acquiror of all or substantially all of a party's business or
assets, this Agreement is not transferable or assignable without the consent of
the other party to this Agreement. Any assignment in derogation of the
foregoing shall be void.
8.2 AMENDMENTS AND WAIVERS. The waiver, amendment or modification
of any provision of this Agreement or any right, power or remedy hereunder,
whether by agreement of the parties or by custom, course of dealing or trade
practice, shall not be effective unless in writing and signed by the party
against whom enforcement of such waiver, amendment or modification is sought.
No failure or delay by either party in exercising any right, power or remedy
with respect to any of the provisions of this Agreement shall operate as a
waiver of such provisions with respect to such occurrences.
8.3 GOVERNING LAW. The legal relations between the parties shall be
governed by the laws of the State of California, regardless of the choice of law
provisions of California or any other jurisdiction.
8.4 SEVERABILITY. In the event any provision of this Agreement or
the application of any such provision shall be held to be prohibited or
unenforceable in any jurisdiction, such provision shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability. The remaining provisions of this Agreement shall remain in
full force and effect, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. The parties shall use their best efforts to replace the
provision that is contrary to law with a legal one approximating to the extent
possible the original intent of, and the economic benefits accruing to, the
parties.
27
8.5 KNOWLEDGE. For purposes of this Agreement, to know or have
knowledge of, or to be aware of or believe, any matter shall mean to know or
have knowledge, be aware or believe, after due inquiry; provided such knowledge,
awareness or belief shall only be imputed to employees of a party at the level
of manager or above, together with such party's officers and directors.
8.6 BINDING. This Agreement shall be binding upon and inure to the
benefit of each of the parties and, to the extent permitted by Section 8.1,
their respective successors and assigns.
8.7 COMPLETE AGREEMENT. This Agreement and any schedules, exhibits
and documents referred to herein or executed contemporaneously herewith
constitute the entire agreement among the parties with respect to the subject
matter hereof. This Agreement supersedes all prior written, and all prior and
contemporaneous oral, agreements, representations, warranties, statements,
promises and understandings with respect to the subject matter hereof.
8.8 HEADINGS. Section headings are included solely for convenience,
are not to be considered a part of this Agreement, and are not intended to be
full and accurate descriptions of their contents.
8.9 NOTICES. All notices or other communications which shall or may
be given pursuant to this Agreement shall be in writing, shall be effective upon
receipt, and shall be delivered by Federal Express or a similar courier,
personal delivery, certified or registered mail, or by facsimile transmission
(with confirmation of transmission receipt), addressed as follows (or as is
provided in the future by written notice as provided herein):
If to Wireless Solutions: Wireless Solutions
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Attn: President
If to Retix: Retix
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Attn: President
8.10 COUNTERPARTS. This Agreement may be executed in any number of
copies, each of which shall be deemed an original and all of which together
shall constitute one and the same instrument.
8.11 LANGUAGE INTERPRETATION. In the interpretation of this
Agreement, unless the context otherwise requires, (a) words importing the
singular shall be deemed to import the plural and vice versa, (b) words denoting
gender shall include all genders, (c) references to persons shall include
corporations or other bodies and vice versa, and (d) references to parties,
sections, schedules, paragraphs and exhibits shall mean the parties, sections,
schedules, paragraphs and exhibits of and to this Agreement unless otherwise
indicated by the context.
28
8.12 DRAFTING. This Agreement shall not be construed against any
party by reason of the drafting or preparation thereof.
8.13 TRANSACTION COSTS. Except as otherwise provided herein, each
party shall be responsible for any costs, expenses and claims ( including
attorneys' fees and professional and brokers' fees and commissions) arising out
of its negotiation, execution and performance of this Agreement.
8.14 ATTORNEYS' FEES AND OTHER COSTS. In the event of any dispute or
controversy arising out of this Agreement, the prevailing party shall be
entitled to reimbursement of its costs, including court and mediation, dispute
resolution and/or arbitration costs and attorneys' and expert witnesses' fees
and costs.
[SIGNATURE PAGE FOLLOWS]
29
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first set forth above.
WIRELESS SOLUTIONS RETIX
By: By:
------------------------------ -------------------------
Title: Title:
--------------------------- -----------------------
30
EXHIBIT A
LICENSED MATERIALS
EXHIBIT B
FORM OF END USER LICENSE AGREEMENT
31
EXHIBIT B
LOAN AGREEMENT
This Loan Agreement (the "AGREEMENT") dated as of May 31, 1996, is by and
between Retix, a California corporation (the "LENDER") and Wireless Solutions,
a California corporation (the "BORROWER").
1. LOAN.
1.1 Subject to the terms and conditions of this Agreement and in
reliance on the representations and warranties of Borrower set forth herein,
Lender agrees to provide Borrower with a credit line of up to $1,000,000 (the
"CREDIT LINE") to be secured by all of Borrower's assets pursuant to the
Security Agreement between Lender and Borrower of even date herewith (the
"SECURITY AGREEMENT").
1.2 Advances under the Credit Line may be advanced to Borrower in a
single funding or in separate fundings (each such event, a "FUNDING EVENT," and
each date thereof, a "FUNDING DATE"). Borrower shall provide Lender at least
ten (10) business days prior notice of each requested Funding Event. Each
Funding Event shall be evidenced by a promissory note of Borrower in favor of
Lender substantially in the form of EXHIBIT A to this Agreement (each a "NOTE"
and together the "NOTES").
1.3 Subject to the terms and conditions of this Agreement, on or
before May 31, 1999, Borrower may re-borrow amounts repaid under the Credit
Line. Any amounts re-borrowed under the Credit Line shall be evidenced by a
Note, and shall be subject to the terms and conditions of this Agreement,
including the repayment terms set forth in the Note and in Section 3 below. No
loans shall be made to Borrower after May 31, 1999, and any notes outstanding as
of such date shall be repaid by Borrower in accordance with their respective
terms.
1.4 Amounts borrowed or re-borrowed under the Credit Line shall be
used solely and exclusively to fund the Borrower's ongoing operating expenses as
approved by the Borrower's Board of Directors.
2. CONDITIONS PRECEDENT TO FUNDING. The obligation of Lender to make
advances under the Credit Line to Borrower, or any funding thereof, is subject
to the following conditions:
2.1 That Lender shall have received, on or before each Funding Date,
including the first such Funding Date, each of the following, in form and
substance satisfactory to Lender and its counsel, if any: (a) a Note in the
principal amount of the respective funding duly executed by Borrower; and (b) a
certificate of an officer of Borrower that the representations and warranties
contained in this Agreement are true and correct on the Funding
32
Date and that there is no Event of Default under this Agreement and no event or
condition which, with lapse of time or giving of notice, would become such an
Event of Default;
2.2 That no Event of Default under this Agreement and no event or
condition which would, with the giving of notice or lapse of time or both,
become such an Event of Default under this Agreement shall have occurred and be
continuing on or before each Funding Date; and
2.3 That such Credit Line is, in aggregate amount as well as in the
timing of the respective Funding Event, consistent with Borrower's written
annual operating plan previously approved by its Board of Directors.
3. REPAYMENT OF LOAN.
3.1 REPAYMENT TERMS. Payments of interest must be made in on the
first day of each calendar quarter following the date of each Note. Payments of
principal must also be made on the first day of each calendar quarter following
the date of each Note out of any funds available to Borrower at such time.
Payments of both interest and principal shall also be due immediately upon the
occurrence of certain events as set forth below. Solely for purposes of
illustration, if on the first day of a calendar quarter,
(a) Borrower has (1) an outstanding promissory note in the
principal amount of $250,000 ("NOTE 1"), (2) quarterly interest due on Note 1
in the amount of $3,750, (3) a later dated outstanding promissory note in the
principal amount of $750,000 ("NOTE 2"), (3) quarterly interest due on Note 2
in the amount of $12,000 and (4) a cash balance in its accounts of $2,500,000,
then on such date Borrower must pay to Lender (1) the entire $15,750 in interest
due on Notes 1 and 2, then (2) the entire $250,000 principal balance due on Note
1, then (3) the entire $750,000 principal balance due on Note 2, and
(b) Borrower has (1) an outstanding promissory note in the
principal amount of $250,000 ("NOTE 1"), (2) quarterly interest due on Note 1
in the amount of $3,750, (3) a later dated outstanding promissory note in the
principal amount of $750,000 ("NOTE 2"), (3) quarterly interest due on Note 2
in the amount of $12,000 and (4) a cash balance in its accounts of $500,000,
then on such date Borrower must pay to Lender (1) the entire $15,750 in interest
due on Notes 1 and 2, then (2) the entire $250,000 principal balance due on Note
1, then (3) the entire remaining cash balance in Borrower' accounts ($234,250)
towards the reduction of the principal balance due on Note 2.
3.2 PREPAYMENT. Borrower may prepay the Credit Line, or any portion
thereof, at any time, without prepayment penalty.
3.3 LATE PAYMENT CHARGE. Payments of principal (and of interest to
the extent permitted by law) not made on the due date shall bear interest at a
rate per annum equal to the rate specified in each Note plus two percent (2%),
but not in excess of the maximum rate permitted by law until such unpaid amount
has been paid in full (whether before or after judgment). All interest provided
for in this Section 3.3 shall be payable on demand.
33
3.4 NON-BUSINESS DAYS. Whenever any payment required under this
Agreement falls due on a day that is not a business day, such payment shall be
made on the next succeeding business day.
3.5 ACCELERATION. At Lender's option, the entire principal amount
and interest due under the Notes shall become immediately due and payable, and
no further amounts may be borrowed or re-borrowed under the Credit Line: (i) if
Borrower sells all or substantially all of its assets, (ii) if Borrower
liquidates, dissolves or consummates any consolidation, merger or other
combination (except a merger, consolidation, sale of assets or other combination
in which the shareholders of Borrower immediately prior to the transaction hold
more than fifty percent (50%) of the outstanding voting securities of the
surviving or purchasing entity by virtue of voting equity securities of the
successor entity received in connection with such transaction in exchange for
shares or other securities of Borrower owned immediately prior to the closing of
such transaction), or (iii) upon the occurrence of any Event of Default (as
defined below). In addition, 50% of the entire principal amount and unpaid
accrued interest under the Notes shall become immediately due and payable, at
Lender's option, if the Borrower consummates any transaction as a result of
which Lender ceases to own at least 50% of the then outstanding capital stock of
Borrower on an as converted to Common Stock basis.
4. REPRESENTATIONS AND WARRANTIES. In order to induce Lender to enter
into this Agreement, Borrower makes the following representations and warranties
which shall survive the execution and delivery of this Agreement and the Notes:
4.1 CORPORATE EXISTENCE AND POWERS. Borrower (a) is a corporation
duly organized, validly existing and in good standing under the laws of State of
California, and (b) has all corporate power and authority to carry out this
Agreement and the transactions contemplated herein. Borrower is not qualified
or licensed to do business as a foreign corporation in any state. Borrower does
not own, directly or indirectly, any equity or other interest in any other
corporation, association, partnership or other business entity.
4.2 CORPORATE AUTHORIZATIONS; BINDING EFFECT. The execution,
delivery and performance by Borrower of this Agreement are within the corporate
authority of Borrower, have been duly authorized by all necessary corporate
proceedings and do not and will not, to the knowledge of Borrower, (i)
contravene, or constitute a default under, any provisions of applicable law or
regulations or of the Articles of Incorporation or Bylaws of Borrower or of any
presently existing material contract, agreement, judgment, order, decree or
other material instrument binding upon Borrower or (ii) result in or require the
creation or imposition of any lien upon or with respect to any material property
now or hereafter owned by Borrower under any presently existing material
contract, agreement or other material instrument binding upon it, other than
that specifically created under this Agreement. To the knowledge of Borrower,
this Agreement constitutes, as of its execution, a legal, valid and binding
agreement enforceable against Borrower in accordance with its terms.
34
4.3 GOVERNMENTAL AND OTHER CONSENTS NOT REQUIRED. To the knowledge
of Borrower, no license, authorization, consent or approval of any governmental
body, other body or agency is required to be obtained by Borrower in connection
with the execution and delivery of this Agreement, or in connection with the
carrying out by Borrower of its obligations under this Agreement.
4.4 LITIGATION. There is no action, suit or proceeding pending, or
to the knowledge of Borrower, threatened, against or affecting Borrower before
any court or arbitration tribunal or any other governmental department,
administrative agency or instrumentality which, if such action, suit or
proceeding would be determined against Borrower, would affect the ability of
Borrower to perform its obligations under this Agreement. To its knowledge,
Borrower is not in default in any material respect with respect to any law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award.
4.5 TITLE TO COLLATERAL. Borrower warrants that Borrower has
acquired good and merchantable title to the Collateral (as defined in the
Security Agreement between Borrower and Lender of even date with this Agreement)
at such time and in such manner as to create a first priority security interest
in the Collateral in favor of Lender (provided and on the condition that Lender
makes timely filings in the proper offices of all UCC-1 financing statements
furnished to it) free and clear of in each instance any other security
interests, liens, claims, encumbrances and rights of others except any lien
created by this Agreement, liens for taxes not yet due and payable and any
security interests which will be discharged at or before the funding
contemplated hereby.
4.6 DISCLOSURE. All information heretofore, herein or hereafter
supplied to Lender by or on behalf of Borrower with respect to the Collateral is
and will be accurate and complete in all material respects.
4.7 RECONFIRMATION OF REPRESENTATIONS AND WARRANTIES. Borrower
shall reconfirm as of each Funding Date that all the aforesaid representations
and warranties remain valid and in full force and effect.
5. COVENANTS OF BORROWER. Borrower covenants that until the payment in
full of the Credit Line and fulfillment of all its obligations under this
Agreement, Borrower shall comply with the following covenants:
5.1 NO SALE. As long as any amount due under this Agreement or
under any Note remains unpaid, Borrower will not sell, assign, transfer,
encumber, lease or otherwise dispose of all, or any part, of its right, title
and interest in any of the Collateral pledged as security for the Credit Line,
except for licenses granted or sales of products by Borrower in the ordinary
course of business, or as set forth in this Agreement.
5.2 MAINTENANCE OF COLLATERAL. Borrower will maintain the
Collateral, or cause the Collateral to be maintained, in good order and
condition, reasonable wear and tear excepted.
35
5.3 PAYMENT OF TAXES. Borrower will pay when due and before any
interest or penalty is assessed, all taxes, federal, state or local, and all
levies or charges assessed against the Collateral to the appropriate
authorities. Borrower will discharge, or cause to be discharged, all liens,
security interests and encumbrances affecting the Collateral arising therefrom.
5.4 CORPORATE EXISTENCE. Borrower shall preserve and maintain its
existence as a corporation under the laws of the state of its incorporation and
all of its rights, privileges and franchises necessary or desirable in the
normal course of its business.
5.5 FINANCIAL STATEMENTS.
(a) Borrower shall deliver to Lender:
(i) Within 90 days after the end of each fiscal year, an
audited balance sheet as of the end of such fiscal year, and a statement of
income and retained earnings for such fiscal year, and a statement of cash flows
for such fiscal year (each with the accompanying footnotes) all in reasonable
detail;
(ii) Within 45 days after the end of each of the first three
quarters of each fiscal year, Borrower shall provide copies of (A) the unaudited
balance sheet at the end of the interim period ending at the end of such
quarter, and (B) the related consolidated statement of income and changes in
financial position for the portion of the fiscal year ended at the end of such
period; each of the financial statements shall present fairly the consolidated
financial position of Borrower at the end of each such quarter, and the
consolidated results of operations and cash flows for the portion of the fiscal
year ended at the end of such period, all in conformity with generally accepted
accounting principles applied on a basis consistent with the financial
statements referred to in (i) above (except that such quarterly statements will
not contain footnotes);
5.6 NOTICES. Borrower shall give immediate notice to Lender of:
(a) the occurrence of any Event of Default (as defined below)
accompanied by a certificate specifying the nature of such Event of Default, the
circumstances thereof and the action that Borrower has taken or proposes to
take;
(b) any claim, litigation or judicial proceeding which may exist
at any time which, if determined adversely, could have a material adverse effect
on the ability of Borrower to perform its obligations under this Agreement;
(c) any event that materially adversely affects the value of the
Collateral, the ability of Borrower to dispose of any Collateral or the rights
and remedies of Lender in relation thereto, including the levy of any legal
process against any of the Collateral; and
(d) any material adverse change in the composition of the
Collateral.
36
5.7 NO CONFLICTS. Borrower shall not enter into any agreement that
would materially impair or conflict with Borrower's obligations hereunder
without Lender's prior written consent, which consent shall not be unreasonably
withheld. Borrower shall not permit the inclusion in any material contract to
which its becomes a party of any provisions that could or might in any way
prevent the creation of a security interest in Borrower's rights and interest in
any property included within the definition of the Collateral acquired under
such contracts, except that certain contracts may contain anti-assignment
provisions that could in effect prohibit the creation of a security interest in
such contracts.
6. EVENTS OF DEFAULT. Any of the following events shall constitute an
"EVENT OF DEFAULT" under this Agreement and under the Notes:
6.1 PAYMENTS. Borrower shall fail to make any payment due under
this Agreement or under any Note after the same shall become due and such
failure shall continue for ten days after Borrower receives notice of
non-payment;
6.2 LIENS. Borrower shall suffer the imposition upon the
Collateral or any part thereof of any claim, lien, security interest,
encumbrance or charge which is prior to or on a parity with the security
interest granted under this Agreement, except as contemplated by this
Agreement, and such imposition shall remain undischarged for a period of ten
days after Borrower has actual notice or actual knowledge thereof;
6.3 COVENANTS. Borrower shall fail to perform or observe any
material covenant, condition or agreement to be performed or observed by
Borrower in this Agreement, any Note or in any agreement or certificate of
Borrower furnished to Lender in connection herewith and such failure shall
continue unremedied after occurrence of such failure for a period of ten days
after the earlier of Borrower's actual knowledge of such failure or receipt
of written notice thereof;
6.4 INSOLVENCY. Borrower shall have become insolvent or bankrupt
or admit in writing its inability to pay any of its debts as they mature or
make an assignment for the benefit of creditors, or a receiver or trustee
shall have been appointed with respect to Borrower; PROVIDED , that an Event
of Default shall not have occurred under this Agreement if such action is
opposed by Borrower and is dismissed within sixty days; or
6.5 BANKRUPTCY. Bankruptcy, reorganization arrangement,
insolvency or liquidation proceedings for relief under Title XI of the United
States Code or any bankruptcy law or similar law now or hereafter in force
for the relief of debtors shall be instituted by or against Borrower and,
solely with respect to any proceedings instituted against Borrower by a third
party, Borrower shall fail to dismiss or to stay such proceedings within
sixty (60)days of such institution.
37
7. SURVIVAL OF REPRESENTATIONS. All representations and warranties made
in this Agreement or in any relevant documents furnished to Lender by Borrower
under this Agreement and executed by its authorized officer or agent shall
survive the execution and delivery of this Agreement and any such relevant
documents furnished to Lender by Borrower and executed by its authorized officer
or agent and shall continue so long as any obligations under this Agreement are
outstanding and unsatisfied.
8. MISCELLANEOUS.
8.1 ASSIGNMENT. Except with respect to an assignment to a successor
of all or substantially all of a party's business or assets, this Agreement is
not transferable or assignable without the consent of each of the other party to
this Agreement, and neither party shall have the power or right to assign,
transfer or delegate any of its rights or obligations hereunder. Any assignment
in derogation of the foregoing shall be void.
8.2 AMENDMENTS AND WAIVERS. The waiver, amendment or modification
of any provision of this Agreement or any right, power or remedy hereunder,
whether by agreement of the parties or by custom, course of dealing or trade
practice, shall not be effective unless in writing and signed by the party
against whom enforcement of such waiver, amendment or modification is sought.
No failure or delay by either party in exercising any right, power or remedy
with respect to any of the provisions of this Agreement shall operate as a
waiver of such provisions with respect to such occurrences.
8.3 GOVERNING LAW. The legal relations between the parties shall be
governed by the laws of the State of California, regardless of the choice of law
provisions of California or any other jurisdiction.
8.4 SEVERABILITY. In the event any provision of this Agreement or
the application of any such provision shall be held to be prohibited or
unenforceable in any jurisdiction, such provision shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability. The remaining provisions of this Agreement shall remain in
full force and effect, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. The parties shall use their best efforts to replace the
provision that is contrary to law with a legal one approximating to the extent
possible the original intent of, and the economic benefits accruing to, the
parties.
8.5 KNOWLEDGE. For purposes of this Agreement, to know or have
knowledge of, or to be aware of or believe, any matter shall mean to know or
have knowledge, be aware or believe, after due inquiry; provided such knowledge,
awareness or belief shall only be imputed to employees of a party at the level
of manager or above, together with such party's officers and directors.
8.6 BINDING. This Agreement shall be binding upon and inure to the
benefit of each of the parties and, to the extent permitted by Section 8.1,
their respective successors and assigns.
38
8.7 HEADINGS. Section headings are included solely for convenience,
are not to be considered a part of this Agreement, and are not intended to be
full and accurate descriptions of their contents.
8.8 NOTICES. All notices or other communications which shall or may
be given pursuant to this Agreement shall be in writing, shall be effective upon
receipt, and shall be delivered by Federal Express or a similar courier,
personal delivery, certified or registered mail, or by facsimile transmission
(with confirmation of transmission receipt), addressed as follows (or as is
provided in the future by written notice as provided herein):
If to Borrower: Wireless Solutions
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Attn: President
If to Lender: Retix
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Attn: President
8.9 COUNTERPARTS. This Agreement may be executed in any number of
copies, each of which shall be deemed an original and all of which together
shall constitute one and the same instrument.
8.10 LANGUAGE INTERPRETATION. In the interpretation of this
Agreement, unless the context otherwise requires, (a) words importing the
singular shall be deemed to import the plural and vice versa, (b) words denoting
gender shall include all genders, (c) references to persons shall include
corporations or other bodies and vice versa, and (d) references to parties,
sections, schedules, paragraphs and exhibits shall mean the parties, sections,
schedules, paragraphs and exhibits of and to this Agreement unless otherwise
indicated by the context.
8.11 DRAFTING. This Agreement shall not be construed against any
party by reason of the drafting or preparation thereof.
8.12 TRANSACTION COSTS. Except as otherwise provided herein, each
party shall be responsible for its costs, expenses and claims (including
attorneys' fees and professional and brokers' fees and commissions) arising out
of its negotiation, execution and performance of this Agreement and of the Other
Agreements.
8.13 ATTORNEYS' FEES AND OTHER COSTS. In the event of any dispute or
controversy arising out of this Agreement, the prevailing party shall be
entitled to reimbursement of its costs, including court and mediation, dispute
resolution and/or arbitration costs and attorneys' and expert witnesses' fees
and costs.
39
8.14 COMPLETE AGREEMENT. This Agreement, together with the exhibits
or schedules to this Agreement, the Notes, and the Security Agreement of even
date to this Agreement, is intended by the parties as a final expression of
their agreement and is intended as a complete statement of the terms and
conditions of the subject matter hereof and thereof.
[SIGNATURE PAGE FOLLOWS]
40
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed and delivered as of the date and year first above written.
"LENDER"
RETIX
By:
----------------------------
Title:
-------------------------
"BORROWER"
WIRELESS SOLUTIONS
By:
----------------------------
Title: -------------------------
41
EXHIBIT A
PROMISSORY NOTE
$ ____________ ___________, 199_
FOR VALUE RECEIVED, Wireless Solutions, a California corporation (the
"BORROWER"), hereby promises to pay to the order of Retix, a California
corporation (the "LENDER") the principal sum of ___________________
($___________), together with interest at the lesser of the prime rate as
announced from time to time by First Interstate Bank or the maximum rate
permitted by law per annum, on the unpaid amount owing under this Note for the
period commencing on the date hereof. Payments of interest shall be made in
immediately available funds on the first day of each calendar quarter following
the date of this Note. Payments of principal shall be made in immediately
available funds on the first day of each calendar quarter following the date of
this Note out of any funds available to Borrower at such time in accordance with
the terms of the Loan Agreement dated _____________, 1996 between Borrower and
Lender (the "LOAN AGREEMENT").
All interest and principal due under this Note shall also be due
immediately upon the occurrence of certain events as set forth in the Loan
Agreement. Capitalized terms used in this Note have the respective meanings
assigned to such terms in the Agreement.
Borrower may prepay amounts due under this Note, or any portion thereof, at
any time, without prepayment penalty.
All payments to be made to the Lender under this Note shall be made to
Lender at its principal offices at 0000 Xxxxxxxx Xxxxxx, Xxxxx Xxxxxx,
Xxxxxxxxxx 00000 or such other address as Lender may designate in writing.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW
OF THE STATE OF CALIFORNIA.
WIRELESS SOLUTIONS
a California corporation
By:
----------------------------------
Title:
-------------------------------
42
EXHIBIT C
WIRELESS SOLUTIONS
STOCK OPTION AGREEMENT
Wireless Solutions, a California corporation (the "COMPANY"), has granted
to OPTIONEE (the "OPTIONEE"), an option (the "OPTION") to purchase a total of
SHARES shares of Common Stock (the "SHARES"), at the price determined as
provided herein, and in all respects subject to the terms, definitions and
provisions of the 1996 Stock Option Plan (the "PLAN") adopted by the Company,
which is incorporated herein by reference. Unless otherwise defined herein, the
terms defined in the Plan shall have the same defined meanings herein.
1. NATURE OF THE OPTION. This Option is intended to qualify as an
Incentive Stock Option as defined in Section 422 of the Code.
2. EXERCISE PRICE. The exercise price is $0.25 for each share of Common
Stock, which price is not less than the fair market value per share of the
Common Stock on the date of grant.
3. EXERCISE OF OPTION. This Option shall be exercisable during its term
in accordance with the provisions of Section 9 of the Plan as follows:
(i) RIGHT TO EXERCISE.
(a) VESTING CALCULATIONS.
(1) Initially, this Option shall not be exercisable.
Subject to the other terms and conditions of this Option, on the date (the
"CLIFF VESTING DATE") that is one year after the Vesting Commencement Date (as
set forth on the signature page of this Agreement) this Option shall become
exercisable for a total of 1/3 of the Shares subject to the Option; thereafter,
this Option shall be exercisable cumulatively, to the extent of 1/36th of the
Shares subject to the Option at the end of each month after the Cliff Vesting
Date.
(2) Notwithstanding the foregoing Section 3(i)(a)(1), the
exercisability of this Option shall be accelerated as follows: Upon
consummation of any sale (a "THIRD PARTY SALE") by Retix, a California
corporation ("RETIX") of all of the Company's securities owned by Retix to any
third party other than (i) Wireless Solutions Management (as defined in the
Master Agreement between Retix and the Company dated May ____, 1996 (the "MASTER
AGREEMENT") or any Affiliates thereof (as defined below) or (ii) in the
Company's Initial Public Offering (as defined in the Master Agreement) or in
connection with a distribution of any of the Company's securities owned by Retix
to its shareholders, then in addition to any Shares that are already vested
hereunder, this Option shall become immediately exercisable for an additional
number of Shares equal to the total number of Shares which would otherwise have
become vested over a period of 12 months; PROVIDED, HOWEVER, that at least 1/3
of the Shares originally subject to the Option remain unvested as of the date of
closing of the Third Party Sale. In the
43
event that less than 1/3 of the Shares originally subject to the Option remain
unvested as of the date of closing of the Third Party Sale, then this Option
shall continue to vest in accordance with the terms of Section 3(i)(a)(1) above,
and the Option shall not be exercisable for any additional Shares as of such
closing date. As used herein, the term "AFFILIATE" shall have the meaning
given in the Securities Act of 1933 and Securities Exchange Act of 1934 and any
rules and regulations promulgated thereunder.
(b) This Option may not be exercised for a fraction of a share.
(c) In the event of Optionee's death, disability or other
termination of employment, the exercisability of the Option is governed by
Sections 7, 8 and 9 below, subject to the limitations contained in subsections
3(i)(d) and (e).
(d) In no event may this Option be exercised after the date of
expiration of the term of this Option as set forth in Section 11 below.
(e) In the event that this Option becomes exercisable at a time
or times which, when this Option is aggregated with all other incentive stock
options granted to Optionee by the Company or any Parent or Subsidiary, would
result in Shares having an aggregate fair market value (determined for each
Share as of the date of grant of the option covering such share) in excess of
$100,000 becoming first available for purchase upon exercise of one or more
incentive stock options during any calendar year, the amount in excess of
$100,000 shall be treated as a nonstatutory stock option, pursuant to Section 5
of the Plan.
(ii) METHOD OF EXERCISE. This Option shall be exercisable by
written notice which shall state the election to exercise the Option, the number
of Shares in respect of which the Option is being exercised, and such other
representations and agreements as to the holder's investment intent with respect
to such shares of Common Stock as may be required by the Company pursuant to the
provisions of the Plan. Such written notice shall be signed by the Optionee and
shall be delivered in person or by certified mail to the Secretary of the
Company. The written notice shall be accompanied by payment of the exercise
price. This Option shall be deemed to be exercised upon receipt by the Company
of such written notice accompanied by the exercise price.
No Shares will be issued pursuant to the exercise of an Option unless such
issuance and such exercise shall comply with all relevant provisions of law and
the requirements of any stock exchange upon which the Shares may then be listed.
Assuming such compliance, for income tax purposes the Shares shall be considered
transferred to the Optionee on the date on which the Option is exercised with
respect to such Shares.
4. OPTIONEE'S REPRESENTATIONS. In the event the Shares purchasable
pursuant to the exercise of this Option have not been registered under the
Securities Act of 1933, as amended, at the time this Option is exercised,
Optionee shall, concurrently with the exercise of all or any portion of this
Option, deliver to the Company his or her Investment Representation Statement in
the form attached as EXHIBIT A.
44
5. METHOD OF PAYMENT. Payment of the Exercise Price shall be by any of
the following, or a combination thereof, at the election of the Optionee:
(i) cash;
(ii) check;
(iii) surrender of other shares of Common Stock of the Company
which (A) either have been owned by the Optionee for more than six (6) months on
the date of surrender or were not acquired, directly or indirectly, from the
Company and (B) have a fair market value on the date of surrender equal to the
Exercise Price of the Shares as to which the Option is being exercised; or
(iv) delivery of a properly executed exercise notice together
with irrevocable instructions to a broker to promptly deliver to the Company the
amount of sale or loan proceeds required to pay the exercise price.
6. RESTRICTIONS ON EXERCISE. This Option may not be exercised until
such time as the Plan has been approved by the shareholders of the Company, or
if the issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations ("REGULATION G") as
promulgated by the Federal Reserve Board. As a condition to the exercise of
this Option, the Company may require Optionee to make any representation and
warranty to the Company as may be required by any applicable law or regulation.
7. TERMINATION OF STATUS AS AN EMPLOYEE. In the event of termination of
Optionee's Continuous Status as an Employee, he or she may, but only within two
(2) months after the date of such termination (but in no event later than the
date of expiration of the term of this Option as set forth in Section 11 below),
exercise this Option to the extent that he or she was entitled to exercise it at
the date of such termination. To the extent that he or she was not entitled to
exercise this Option at the date of such termination, or if he or she does not
exercise this Option within the time specified herein, the Option shall
terminate.
45
8. DISABILITY OF OPTIONEE.
(i) Notwithstanding the provisions of Section 7 above, in the
event of termination of Optionee's Continuous Status as an Employee as a result
of his or her total and permanent disability (as defined in Section 22(e)(3) of
the Code), Optionee may, but only within twelve (12) months from the date of
termination of employment (but in no event later than the date of expiration of
the term of this Option as set forth in Section 11 below), exercise this Option
to the extent he or she was entitled to exercise it at the date of such
termination. To the extent that Optionee was not entitled to exercise the
Option at the date of termination, or if Optionee does not exercise such Option
(which he or she was entitled to exercise) within the time specified herein, the
Option shall terminate.
(ii) Notwithstanding the provisions of Section 7 above, in the
event of termination of Optionee's Continuous Status as an Employee as a result
of any disability not constituting a total and permanent disability (as defined
in Section 22(e)(3) of the Code), Optionee may, but only within six (6) months
from the date of termination of employment (but in no event later than the date
of expiration of the term of this Option as set forth in Section 11 below),
exercise this Option to the extent he or she was entitled to exercise it at the
date of such termination; provided, however, that if this is an Incentive Stock
Option and Optionee fails to exercise this Incentive Stock Option within three
(3) months from the date of termination of employment, this Option will cease to
qualify as an Incentive Stock Option (as defined in Section 422 of the Code) and
Optionee will be treated for federal income tax purposes as having received
ordinary income at the time of such exercise in an amount generally measured by
the difference between the exercise price for the Shares and the fair market
value of the Shares on the date of exercise. To the extent that Optionee was
not entitled to exercise the Option at the date of termination, or if Optionee
does not exercise such Option (which he or she was entitled to exercise) within
the time specified herein, the Option shall terminate.
9. DEATH OF OPTIONEE. In the event of the death of Optionee:
(i) during the term of this Option and while an Employee of the
Company and having been in Continuous Status as an Employee since the date of
grant of the Option, the Option may be exercised, at any time within three (3)
months following the date of death (but in no event later than the date of
expiration of the term of this Option as set forth in Section 11 below), by
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent of the right to exercise that
would have accrued had the Optionee continued living and remained in Continuous
Status as an Employee twelve (12) months after the date of death, subject to the
limitations contained in Section 3(i)(e) above; or
(ii) within two (2) months after the termination of Optionee's
Continuous Status as an Employee, the Option may be exercised, at any time
within three (3) months following the date of death (but in no event later than
the date of expiration of the term of this Option as set forth in Section 11
below), by Optionee's estate or by a person who acquired the right to exercise
the Option by bequest or inheritance, but only to the extent of the right to
exercise that had accrued at the date of termination.
46
10. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution.
The designation of a beneficiary does not constitute a transfer. An Option may
be exercised during the lifetime of the Optionee only by the Optionee or a
transferee permitted by this Section. The terms of this Option shall be binding
upon the executors, administrators, heirs, successors and assigns of the
Optionee.
11. TERM OF OPTION. This Option may not be exercised more than ten (10)
years from the date of grant of this Option, and may be exercised during such
term only in accordance with the Plan and the terms of this Option.
12. EARLY DISPOSITION OF STOCK. Optionee understands that if he or she
disposes of any Shares received under this Option within two (2) years after the
date of this Agreement or within one (1) year after such Shares were transferred
to him or her, he or she will be treated for federal income tax purposes as
having received ordinary income at the time of such disposition in an amount
generally measured by the difference between the price paid for the Shares and
the lower of the fair market value of the Shares at the date of the exercise or
the fair market value of the Shares at the date of disposition. The amount of
such ordinary income may be measured differently if Optionee is an officer,
director or 10% shareholder of the Company, or if the Shares were subject to a
substantial risk of forfeiture at the time they were transferred to Optionee.
OPTIONEE HEREBY AGREES TO NOTIFY THE COMPANY IN WRITING WITHIN 30 DAYS AFTER THE
DATE OF ANY SUCH DISPOSITION. Optionee understands that if he disposes of such
Shares at any time after the expiration of such two-year and one-year holding
periods, any gain on such sale will be taxed as long-term capital gain.
13. MARKET STANDOFF AGREEMENT. In connection with the initial public
offering of the Company's securities and upon request of the Company or the
underwriters managing such offering, Optionee hereby agrees not to sell, make
any short sale of, loan, grant any option for the purchase of, or otherwise
dispose of any Shares or other securities of the Company (other than those
included in the registration) without the prior written consent of the Company
or such underwriters, as the case may be, for such period of time (not to exceed
180 days) from the effective date of such registration as may be requested by
the Company or such managing underwriters; PROVIDED, HOWEVER, that the
Optionee need not so agree unless a majority of the Company's officers and
directors and a majority of the holders of at least 5% of the Company's
outstanding securities also agree to be similarly bound.
[SIGNATURE PAGE FOLLOWS]
47
DATE OF GRANT: , 1996
-------------
WIRELESS SOLUTIONS
By:
----------------------------------
Title:
-------------------------------
Vesting Commencement Date: VESTINGDATE
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
SECTION 3 HEREOF IS EARNED ONLY BY CONTINUING EMPLOYMENT AT THE WILL OF THE
COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR
ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT
NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S STOCK OPTION PLAN WHICH IS
INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH
RESPECT TO CONTINUATION OF EMPLOYMENT BY THE COMPANY, NOR SHALL IT INTERFERE IN
ANY WAY WITH HIS OR HER RIGHT OR THE COMPANY'S RIGHT TO TERMINATE HIS OR HER
EMPLOYMENT AT ANY TIME, WITH OR WITHOUT CAUSE.
OPTIONEE ACKNOWLEDGES THAT THIS OPTION IS THE ONLY OPTION OR OTHER RIGHT TO
BE OFFERED, PROVIDED OR GRANTED TO THE OPTIONEE WITH RESPECT TO THE SECURITIES
OF THE COMPANY OR ANY AFFILIATED ENTITY AND THAT THIS OPTION SUPERSEDES ALL
PRIOR AGREEMENTS, UNDERSTANDINGS OR DISCUSSIONS, WRITTEN OR ORAL, WITH RESPECT
TO THE FOREGOING.
Optionee acknowledges receipt of a copy of the Plan and certain information
related thereto and represents that he or she is familiar with the terms and
provisions thereof, and hereby accepts this Option subject to all of the terms
and provisions thereof. Optionee has reviewed the Plan and this Option in their
entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Option and fully understands all provisions of the Option.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Board upon any questions arising under the Plan.
Dated:
------------------------- -------------------------------------
OPTIONEE, Optionee
48
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE: OPTIONEE
COMPANY:
SECURITY:
AMOUNT:
DATE:
In connection with the purchase of the above-listed Securities, the
undersigned Optionee represents to the Company the following:
(a) Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the securities. Optionee is
acquiring these securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution"
thereof within the meaning of the Securities Act of 1933, as amended (the
"SECURITIES ACT").
(b) Optionee acknowledges and understands that the securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this connection,
Optionee understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Optionee's representation was predicated solely upon a present intention to hold
these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Optionee further understands that the Securities must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Optionee further
acknowledges and understands that the Company is under no obligation to register
the securities. Optionee understands that the certificate evidencing the
securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel satisfactory to the Company and any other legend required
under applicable state securities laws.
(c) Optionee is familiar with the provisions of Rule 701 and Rule
144, each promulgated under the Securities Act, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of exercise of the Option by the Optionee,
such exercise will be exempt from registration under the Securities Act. In the
event the Company later becomes subject to the reporting requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter
the securities exempt under Rule 701 may be resold, subject to
49
the satisfaction of certain of the conditions specified by Rule 144, including
among other things: (1) the sale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934); and, in the case of
an affiliate, (2) the availability of certain public information about the
Company, and the amount of securities being sold during any three month period
not exceeding the limitations specified in Rule 144(e), if applicable.
In the event that the Company does not qualify under Rule 701 at the time
of exercise of the Option, then the securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires among other
things: (1) the resale occurring not less than two years after the party has
purchased, and made full payment for, within the meaning of Rule 144, the
securities to be sold; and, in the case of an affiliate, or of a non-affiliate
who has held the securities less than three years, (2) the availability of
certain public information about the Company, (3) the sale being made through a
broker in an unsolicited "broker's transaction" or in transactions directly with
a market maker (as said term is defined under the Securities Exchange Act of
1934), and (4) the amount of securities being sold during any three month period
not exceeding the specified limitations stated therein, if applicable.
(d) MARKET STANDOFF AGREEMENT. In connection with the initial
public offering of the Company's securities and upon request of the Company or
the underwriters managing such offering, Optionee hereby agrees not to sell,
make any short sale of, loan, grant any option for the purchase of, or otherwise
dispose of any of the Securities or any other securities of the Company (other
than those included in the registration) without the prior written consent of
the Company or such underwriters, as the case may be, for such period of time
(not to exceed 180 days) from the effective date of such registration as may be
requested by the Company or such managing underwriters; PROVIDED, HOWEVER,
that the Optionee need not so agree unless a majority of the Company's officers
and directors and a majority of the holders of at least 5% of the Company's
outstanding securities also agree to be similarly bound.
(e) Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration
under the Securities Act, compliance with Regulation A, or some other
registration exemption will be required; and that, notwithstanding the fact that
Rules 144 and 701 are not exclusive, the Staff of the Securities & Exchange
Commission has expressed its opinion that persons proposing to sell private
placement securities other than in a registered offering and otherwise than
pursuant to Rules 144 or 701 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk. Optionee understands that no
assurances can be given that any such other registration exemption will be
available in such event.
Signature of Optionee:
--------------------------------------
OPTIONEE
Date:
---------------------------------
50
EXHIBIT D
WIRELESS SOLUTIONS DISCLOSURE STATEMENT
This Disclosure Statement is made and given pursuant to Section 4 of the
Master Agreement (the "AGREEMENT") by and between Retix and Wireless Solutions.
The Section numbers in this Disclosure Statement correspond to the Section
numbers in the Agreement; however, any information disclosed herein under any
Section number shall be deemed to be disclosed and incorporated into any other
Section number under the Agreement where such disclosure would be appropriate.
Any terms used in this Disclosure Statement shall have the meanings defined for
them in the Agreement unless otherwise defined herein.
SECTION 3.11 - BINDING AGREEMENTS
Third party consents to the transactions contemplated by the Master
Agreement are required from certain vendors, distributors, resellers and other
contractors as indicated on lists provided or made available to Wireless
Solutions.
51
EXHIBIT E
PREFERRED STOCK PURCHASE AGREEMENT
This Agreement is made as of May 31, 1996 by and between Wireless
Solutions, a California corporation (the "COMPANY") and Retix, a California
corporation (the "PURCHASER").
1. AUTHORIZATION AND SALE OF PREFERRED STOCK.
1.1 AUTHORIZATION. The Company will authorize the sale and issuance
of up to 17,000,000 shares of its Preferred Stock, having the rights, privileges
and preferences as set forth in the Amended and Restated Articles of
Incorporation (the "RESTATED ARTICLES") in the form attached to this Agreement
as EXHIBIT A.
1.2 SALE OF PREFERRED. Subject to the terms and conditions of this
Agreement, in exchange for the transfer of the Transferred Assets (subject to
the Transferred Liabilities and Transferred Contracts) as provided in the Master
Agreement between the parties of even date herewith (the "MASTER AGREEMENT"),
the Purchaser agrees to purchase at the Closing (as defined below), and the
Company agrees to sell and issue to the Purchaser, 17,000,000 shares of the
Company's Preferred Stock (the "SHARES" or "PREFERRED") at a price of $1.75
per share.
2. CLOSING DATE; DELIVERY.
2.1 CLOSING DATE. The closing of the purchase and sale of the
Shares under this Agreement shall be held at the offices of Venture Law Group, A
Professional Corporation, 0000 Xxxx Xxxx Xxxx, Xxxxx Xxxx, Xxxxxxxxxx
simultaneous with the execution and delivery of this Agreement and the Master
Agreement (the "CLOSING") or at such other time and place upon which the
Company and the Purchaser shall agree (the date of the Closing is hereinafter
referred to as the "CLOSING DATE").
2.2 DELIVERY. At the Closing, the Company will deliver to the
Purchaser a certificate or certificates representing the number of Shares to be
purchased by the Purchaser at such Closing, against delivery to the Company by
the Purchaser of all necessary and appropriate instruments to effect the
transfer of the Transferred Assets, as provided in the Master Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set forth
on EXHIBIT B attached to this Agreement, the Company hereby represents and
warrants to the Purchaser as follows:
3.1 ORGANIZATION AND STANDING; ARTICLES AND BY-LAWS. The Company
(a) is a corporation duly organized, validly existing and in good standing under
the laws of State of California, and (b) has all corporate power and authority
to carry out this Agreement and the transactions contemplated herein. The
Company is not qualified or licensed to do business as a foreign corporation in
any state. The Company does not own, directly or indirectly, any equity or
other interest in any other corporation, association, partnership or other
business entity. The
52
Company has furnished Purchaser with copies of its Articles of Incorporation and
Bylaws. Said copies are true, correct and complete and contain all amendments
through the Closing Date.
3.2 CORPORATE POWER. The Company will have at the Closing Date all
requisite legal and corporate power to execute and deliver this Agreement, to
sell and issue the Shares hereunder, to issue the Common Stock issuable upon
conversion of the Shares and to carry out and perform its obligations under the
terms of this Agreement.
3.3 CAPITALIZATION. The authorized capital stock of the Company
consists or will, upon the filing of the Restated Articles, consist of:
20,000,000 shares of Common Stock, none of which are issued and outstanding; and
17,000,000 shares of Preferred Stock, none of which were issued and outstanding
prior to the Closing. All issued and outstanding shares have been duly
authorized and validly issued, and are fully paid and nonassessable. The
Company has reserved 17,000,000 shares of Preferred Stock for issuance
hereunder, 17,000,000 shares of Common Stock for issuance upon conversion of the
Preferred Stock, 2,800,000 shares for issuance pursuant to the Company's 1996
Stock Option Plan and 200,000 shares for issuance pursuant to the Company's 1996
Directors' Stock Option Plan. The Preferred Stock shall have the rights,
preferences, privileges and restrictions set forth in the Restated Articles.
All securities of the Company to be outstanding immediately following the
Closing will be issued in compliance with applicable federal and state
securities laws. Except as described above, there are no preemptive rights,
options or warrants or other conversion privileges or rights presently
outstanding to purchase any of the authorized but unissued stock of the Company.
The Company is not obligated to repurchase any shares of its capital stock or
any other securities.
3.4 AUTHORIZATION. All corporate action on the part of the Company,
its directors and shareholders (if any) necessary for the authorization,
execution, delivery and performance of this Agreement by the Company, the
authorization, sale, issuance and delivery of the Shares (and the Common Stock
issuable upon conversion of the Shares) and the performance of all of the
Company's obligations under this Agreement has been taken or will be taken prior
to the Closing. This Agreement, when executed and delivered by the Company,
shall constitute a valid and binding obligation of the Company enforceable in
accordance with its terms. The Shares, when issued in compliance with the
provisions of this Agreement, will be validly issued and will be fully paid and
nonassessable and will have the rights, preferences and privileges described in
the Restated Articles. The shares of Common Stock issuable upon conversion of
the Shares have been duly and validly reserved and, when issued in compliance
with the provisions of this Agreement and the Restated Articles will be validly
issued, fully paid and nonassessable, and the Shares and such Common Stock will
be free of any liens or encumbrances other than those created by or imposed upon
the holders thereof through no action of the Company; provided, however, that
the Shares (and the Common Stock issuable upon conversion thereof) may be
subject to restrictions on transfer under state and/or federal securities laws
as set forth herein. The Shares are not subject to any preemptive rights or
rights of first refusal, except as set forth in the Rights Agreement in the form
attached hereto as EXHIBIT C (the "RIGHTS AGREEMENT").
53
3.5 NO FINANCIAL STATEMENTS. The Company has not prepared any
balance sheet, income statement, statement of operations, statement of changes
in financial position and shareholders' equity or other financial statement.
3.6 PATENTS AND OTHER INTANGIBLE ASSETS. Without having conducted
any special infringement or patent search, the Company is unaware of any
infringement of or conflict with the rights of others with respect to any
patents, patent applications, inventions, processes, formulae or copyrights
necessary for the operation of the business of the Company as now conducted and
as proposed to be conducted.
3.7 COMPLIANCE WITH OTHER INSTRUMENTS, NONE BURDENSOME, ETC. The
Company is not in violation of any term of its Articles of Incorporation or
Bylaws, each as amended and in effect on and as of the Closing, or in any
material respect of any material term or provision of any material mortgage,
indebtedness, indenture, contract, agreement, instrument, judgment or decree,
order, statute, rule or regulation applicable to the Company. The execution,
delivery and performance of and compliance with this Agreement, and the issuance
of the Shares and the Common Stock issuable upon conversion of the Shares, have
not resulted and will not result in any material violation of, or conflict with,
or constitute a material default under, or result in the creation of, any
mortgage, pledge, lien, encumbrance or charge upon any of the properties or
assets of the Company; and there is no such violation or default which
materially and adversely affects the business of the Company as conducted or as
proposed to be conducted, or any of the Company's properties or assets.
3.8 LITIGATION, ETC. There are no actions, suits, proceedings or
investigations pending against the Company or its properties (nor, to the best
of the Company's knowledge, against officers of the Company) before any court or
governmental agency (nor, to the best of the Company's knowledge, is there any
threat thereof), which, either in any case or in the aggregate, might result in
any material adverse change in the business or financial condition of the
Company or any of its properties or assets, or in any material impairment of the
right or ability of the Company to carry on its business as now conducted or as
proposed to be conducted, or in any material liability on the part of the
Company, and none which questions the validity of this Agreement or any action
taken or to be taken in connection herewith.
3.9 EMPLOYEES. To the best of the Company's knowledge, after
reasonable investigation, no employee or consultant of the Company is in
violation of any term of any employment, employment contract, patent disclosure
agreement or any other contract or agreement relating to the relationship of any
such person with the Company or any other party because of the nature of the
business conducted or to be conducted by the Company. The Company does not have
any collective bargaining agreements covering any of its employees. The Company
has no employee benefit plans presently in force with respect to profit-sharing,
pensions, stock options, or other stock benefits. The Company is not aware of
any key employee of the Company who has any plans to terminate his or her
employment with the Company.
54
3.10 GOVERNMENTAL CONSENT, ETC. No consent, approval or
authorization of or designation, declaration or filing with any governmental
authority on the part of the Company is required in connection with the valid
execution and delivery of this Agreement, or the offer, sale or issuance of the
Shares (and the Common Stock issuable upon conversion of the Shares), or the
consummation of any other transaction contemplated by this Agreement, except for
filing of the Restated Articles in the office of the Secretary of State of the
State of California and filing of such notice as required by Section 25102(f) of
the California Corporate Securities Law of 1968, and the compliance with other
applicable blue sky laws.
3.11 OFFERING. Subject to the accuracy of the Purchaser's
representations in Section 5 of this Agreement and in written responses to the
Company's inquiries, the offer, sale and issuance of the Shares to be issued in
conformity with the terms of this Agreement and the issuance of the Common Stock
to be issued upon conversion of the Shares, constitute transactions exempt from
the registration requirements of Section 5 of the Securities Act of 1933, as
amended (the "SECURITIES ACT").
3.12 BROKERS OR FINDERS; OTHER OFFERS. The Company has not incurred,
and will not incur, directly or indirectly, as a result of any action taken by
the Company, any liability for brokerage or finders' fees or agents' commissions
or any similar charges in connection with this Agreement.
3.13 DISCLOSURE. To the best of the Company's knowledge, after
reasonable investigation, no representation or warranty of the Company contained
in this Agreement and the Exhibits attached hereto, or any certificate furnished
or to be furnished to the Purchaser at the Closing contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make
the statements contained herein or therein not misleading in light of the
circumstances under which they were made.
3.14 NO CONFLICT OF INTEREST. The Company is not indebted, directly
or indirectly, to any of its officers or directors or to their respective
spouses or children, in any amount whatsoever other than in connection with
expenses or advances of expenses incurred in the ordinary course of business or
relocation expenses of employees. To the best of the Company's knowledge, none
of said officers or directors, or any members of their immediate families, are
indebted to the Company (other than in connection with purchases of the
Company's stock) or have any direct or indirect ownership interest in any firm
or corporation with which the Company is affiliated or with which the Company
has a business relationship other than the Purchaser, or any firm or corporation
which competes with the Company except that officers, directors and/or
shareholders of the Company may own stock in publicly traded companies which may
compete with the Company. To the best of the Company's knowledge, no officer or
director or any member of their immediate families, is, directly or indirectly,
interested in any material contract with the Company. The Company is not a
guarantor or indemnity of any indebtedness of any other person, firm or
corporation.
55
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
4.1 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
hereby represents and warrants to the Company with respect to the purchase of
the Shares as follows:
(a) EXPERIENCE. Purchaser has substantial experience in
evaluating and investing in private placement transactions so that Purchaser is
capable of evaluating the merits and risks of Purchaser's investment in the
Company. Purchaser, by reason of its business or financial experience or the
business or financial experience of its professional advisors who are
unaffiliated with and who are not compensated by the Company or any affiliate or
selling agent of the Company, directly or indirectly, has the capacity to
protect its own interests in connection with the purchase of the Shares under
this Agreement.
(b) INVESTMENT. Purchaser is acquiring the Shares and the
underlying Common Stock for investment for Purchaser's own account, not as a
nominee or agent, and not with the view to, or for resale in connection with,
any distribution thereof. Purchaser understands that the Shares and the
underlying Common Stock have not been, and will not be, registered under the
Securities Act by reason of a specific exemption therefrom, and that any such
exemption would depend, among other things, upon the bona fide nature of the
investment intent and the accuracy of such Purchaser's representations as
expressed in this Agreement. Purchaser has not been formed for the specific
purpose of acquiring the Shares or the underlying Common Stock.
(c) RULE 144. Purchaser acknowledges that the Shares and the
underlying Common Stock must be held indefinitely unless subsequently registered
under the Securities Act or an exemption from such registration is available.
Purchaser is aware of the provisions of Rule 144 promulgated under the
Securities Act which permit limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things, the existence of a public market for the shares, the availability
of certain current public information about the Company, the resale occurring
not less than two years after a party has purchased and paid for the security to
be sold, the sale being effected through a "BROKER'S TRANSACTION" or in
transactions directly with a "MARKET MAKER" (as provided by Rule 144(f)) and
the number of shares being sold during any three-month period not exceeding
specified limitations.
(d) NO PUBLIC MARKET. Purchaser understands that no public
market now exists for any of the securities issued by the Company, that the
Company has made no assurances that a public market will ever exist for the
Shares or the underlying Common Stock and that, even if such a public market
exists at some future time, the Company may not then be satisfying the current
public information requirements of Rule 144.
(e) ACCESS TO DATA. Purchaser and its representatives have met
with representatives of the Company and thereby have had the opportunity to ask
questions of, and receive answers from, said representatives concerning the
Company and the terms and conditions of this transaction as well as to obtain
any information requested by Purchaser. Any questions
56
raised by Purchaser or its representatives concerning the transaction have been
answered to the satisfaction of Purchaser and its representatives. Purchaser's
decision to purchase the Shares is based in part on the answers to such
questions as Purchaser and its representatives have raised concerning the
transaction and on its own evaluation of the risks and merits of the purchase
and the Company's proposed business activities.
(f) AUTHORIZATION. This Agreement when executed and delivered
by the Purchaser will constitute a valid and legally binding obligation of the
Purchaser, enforceable in accordance with its terms, subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies.
(g) BROKERS OR FINDERS. The Company has not incurred, and will
not incur, directly or indirectly, as a result of any action taken by the
Purchaser any liability for brokerage or finders' fees or agents' commissions or
any similar charges in connection with this Agreement.
5. CONDITIONS TO CLOSING OF PURCHASER. The Purchaser's obligation to
purchase the Shares at the Closing is, at the option of the Purchaser, subject
to the fulfillment or waiver as of the Closing Date of the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 3 of this Agreement shall be true and
correct in all material respects when made, and shall be true and correct in all
material respects on the Closing Date with the same force and effect as if they
had been made on and as of said date.
5.2 COVENANTS. All covenants, agreements and conditions contained
in this Agreement to be performed by the Company on or prior to the Closing Date
shall have been performed or complied with in all material respects.
5.3 COMPLIANCE CERTIFICATE. The Company shall have delivered to the
Purchaser a certificate of the Company, executed by the President of the
Company, dated the Closing Date, and certifying, among other things, to the
fulfillment of the conditions specified in Sections 5.1 and 5.2 of this
Agreement.
5.4 BLUE SKY. The Company shall have obtained all necessary Blue
Sky law permits and qualifications, or secured exemptions therefrom, required by
any state for the offer and sale of the Shares and the Common Stock issuable
upon conversion of the Shares.
5.5 ARTICLES OF INCORPORATION. The Restated Articles shall have
been filed with the Secretary of State of the State of California.
5.6 RIGHTS AGREEMENT. The Company shall have entered into the
Rights Agreement.
57
5.7 SIMULTANEOUS CLOSING. The Closing under the Master Agreement
shall have also occurred simultaneously.
6. CONDITIONS TO CLOSING OF COMPANY. The Company's obligation to sell
and issue the Shares at the Closing is, at the option of the Company, subject to
the fulfillment or waiver of the following conditions:
6.1 REPRESENTATIONS. The representations made by the Purchaser in
Section 4 of this Agreement shall be true and correct when made, and shall be
true and correct on the Closing Date.
6.2 BLUE SKY. The Company shall have obtained all necessary Blue
Sky law permits and qualifications, or secured exemptions therefrom, required by
any state for the offer and sale of the Shares and the Common Stock issuable
upon conversion of the Shares.
6.3 ARTICLES OF INCORPORATION. The Restated Articles shall have
been filed with the Secretary of State of the State of California.
6.4 COVENANTS. All covenants, agreements and conditions contained
in this Agreement to be performed by the Purchaser on or prior to the Closing
Date shall have been performed or complied with in all material respects.
6.5 SIMULTANEOUS CLOSING. The Closing under the Master Agreement
shall have also occurred simultaneously.
7. AFFIRMATIVE COVENANTS OF THE COMPANY. The Company hereby covenants
and agrees as follows:
7.1 FINANCIAL INFORMATION. The Company will mail the following
reports to the Purchaser for so long as the Purchaser is a holder of any Shares
purchased by such person pursuant to this Agreement (or Common Stock issued upon
conversion of the Shares):
(a) As soon as practicable after the end of each fiscal year,
and in any event within ninety (90) days thereafter, consolidated balance sheets
of the Company and its subsidiaries, if any, as of the end of such fiscal year,
and consolidated statements of income and consolidated statements of changes in
financial position of the Company and its subsidiaries, if any, for such year,
prepared in accordance with generally accepted accounting principles and setting
forth in each case in comparative form the figures for the previous fiscal year,
all in reasonable detail and audited by independent public accountants of
national standing selected by the Company.
(b) Contemporaneously with delivery to holders of Common Stock,
a copy of each report of the Company delivered to holders of the Company's
Common Stock.
58
(c) For so long as the Purchaser is eligible to receive reports
under this Section 7.1, it shall also have the right, at its expense, to discuss
the affairs, finances and accounts of the Company with the Company's officers,
all at such reasonable times and as often as may be reasonably requested;
provided, however, that the Company shall not be obligated to provide any
information that it reasonably considers to be a trade secret or to contain
confidential information.
7.2 ADDITIONAL INFORMATION. As long as a Purchaser (together with
any affiliate of such Purchaser) holds not less than 500,000 Shares (or an
equivalent number of shares consisting of the Shares or Common Stock issued upon
conversion of the Shares), as adjusted for recapitalizations, stock splits,
stock dividends and the like, the Company will mail the following reports to
such Purchaser:
(a) As soon as practicable after the end of the first, second
and third quarterly accounting periods in each fiscal year of the Company and in
any event within forty-five (45) days thereafter, a consolidated balance sheet
of the Company and its subsidiaries, if any, as of the end of each such
quarterly period, and consolidated statements of income and consolidated
statements of cash flow of the Company and its subsidiaries for such period and
for the current fiscal year to date, prepared in accordance with generally
accepted accounting principles (other than for accompanying notes), all in
reasonable detail.
(b) As soon as practicable after the end of each fiscal month,
and in any event within thirty (30) days thereafter, an unaudited consolidated
balance sheet of the Company as at the end of such month, and unaudited
consolidated statements of income and unaudited consolidated statements of cash
flow for such month and for the current fiscal year to date. Such financial
statements shall be prepared in accordance with generally accepted accounting
principles consistently applied (other than accompanying notes), all in
reasonable detail.
(c) Within 30 days at the end of each fiscal year, an annual
budget, operating or similar plan for the upcoming fiscal year (the "PLAN").
(d) Any material amendments or changes to such Plan promptly
following any such amendments or changes, and in any event within 30 days of the
date thereof.
7.3 TRANSFER OF INFORMATION RIGHTS. The information rights set
forth in Sections 7.1 and 7.2 may be transferred in any nonpublic transfer of
Shares (or Shares of Common Stock issued upon conversion of the Shares),
provided that the Company is given written notice of such transfer, and provided
further that the right to receive the information set forth in Section 7.2 may
only be transferred to a holder of, or affiliated holders who in the aggregate
hold, at least 500,000 Shares (or an equivalent number of Shares consisting of
the Shares or Common Stock issued upon conversion of the Shares, as
appropriately adjusted for stock splits and the like). In the event that the
Company reasonably determines that provision of information to a transferee
pursuant to this Section 7.3 would materially adversely impact its proprietary
position, such information may be edited in the manner necessary to avoid such
impact.
59
7.4 TERMINATION OF COVENANTS. The covenants set forth in this
Section 7 shall terminate on and be of no further force or effect upon the
earlier of (i) the consummation of the Company's sale of its Common Stock in an
underwritten public offering pursuant to an effective registration statement
filed under the Securities Act, immediately subsequent to which the Company
shall be obligated to file annual and quarterly reports with the Commission
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the
"EXCHANGE ACT") or (ii) the registration by the Company of a class of its
equity securities under Section 12(b) or 12(g) of the Exchange Act.
8. MISCELLANEOUS.
8.1 GOVERNING LAW. This Agreement shall be governed in all respects
by the laws of the State of California.
8.2 SURVIVAL. The representations, warranties, covenants and
agreements made in this Agreement shall survive any investigation made by the
Purchaser and the closing of the transactions contemplated hereby.
8.3 SUCCESSORS AND ASSIGNS. Except as otherwise provided in this
Agreement, the provisions of this Agreement shall inure to the benefit of, and
be binding upon, the successors, assigns, heirs, executors and administrators of
the parties to this Agreement; provided, however, that the right of the
Purchaser to purchase the Shares shall not be assignable without the prior
written consent of the Company.
8.4 ENTIRE AGREEMENT, AMENDMENT. This Agreement, the Master
Agreement and the other documents delivered pursuant to this Agreement at the
Closing constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof, and supersede all prior
agreements, and no party shall be liable or bound to any other party in any
manner by any warranties, representations or covenants except as specifically
set forth herein or therein. Except as expressly provided in this Agreement,
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought;
provided, however, that holders of at least a majority of the Shares (or shares
of Common Stock issued upon conversion of the Shares) may, with the written
consent of the Company, waive, modify or amend on behalf of all holders, any
provisions hereof benefiting such holders, so long as the effect thereof will be
that all such holders will be treated equally.
8.5 NOTICES. All notices or other communications which shall or may
be given pursuant to this Agreement shall be in writing, shall be effective upon
receipt, and shall be delivered by Federal Express or a similar courier,
personal delivery, certified or registered mail, or by facsimile transmission
(with confirmation of transmission receipt), addressed as follows (or as is
provided in the future by written notice as provided herein):
60
If to Company: Wireless Solutions
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Attn: President
If to Purchaser: Retix
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Attn: President
8.6 DELAYS OR OMISSIONS. Except as expressly provided in this
Agreement, no delay or omission to exercise any right, power or remedy accruing
to any holder of any Shares, upon any breach or default of the Company under
this Agreement, shall impair any such right, power or remedy of such holder nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
holder of any breach or default under this Agreement, or any waiver on the part
of any holder of any provisions or conditions of this Agreement, must be in
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement or by law or otherwise
afforded to any holder, shall be cumulative and not alternative.
8.7 CALIFORNIA CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES
WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM THE QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.
8.8 EXPENSES. The Company and the Purchaser shall each bear its own
expenses incurred on its behalf with respect to this Agreement and the
transactions contemplated hereby.
8.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
8.10 SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
61
8.11 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement.
[SIGNATURE PAGE FOLLOWS]
62
The foregoing agreement is hereby executed as of the date first above
written.
"COMPANY" "PURCHASER"
SONOMA SYSTEMS, RETIX,
a California corporation a California corporation
By: /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
------------------------------------- --------------------------
Title: President & CEO Title: President and CEO
---------------------------------- -----------------------
63
EXHIBIT F
LIST OF PRODUCTS
WIRELESS DATA BUSINESS UNIT
PRODUCT LIST
US PRICE LIST - CELLULAR
DIGITAL PACKET DATA (CDPD)
PRODUCT NO. DESCRIPTION LIST PRICE PER ANNUM AVAILABILITY
----------- ----------- ---------- MAINTENANCE ------------
-----------
MD-IS SERVING APPLICATION
CD/SRVG-A1/1 MD-IS Serving Application for SUN $40,000 $10,000 30 days
SPARCstation Models 10 and 20 with
a single processor running Solaris 2.3
CD/SRVG-A1/4 MD-IS Serving Application for SUN $60,000 $15,000 30 days
SPARCstation Models 10 and 20 with
up to 4 processors running Solaris 2.3
CD/SRVG-A2/2 MD-IS Serving Application for SUN $70,000 $17,500 30 days
SPARCserver 1000 with up to 2
processors running Solaris 2.3
CD/SRVG-A2/8 MD-IS Serving Application for SUN $105,000 $26,250 30 days
SPARCserver 1000 with up to 8
processors running Solaris 2.3
CD/SRVG-A3/2 MD-IS Serving Application for SUN $125,000 $31,250 30 days
SPARCcenter 2000 with 2 processors
running Solaris 2.3
CD/SRVG-A3/8 MD-IS Serving Application for SUN $225,000 $56,250 30 days
SPARCcenter 2000 with up to 8
processors running Solaris 2.3
CD/SRVG-A3/16 MD-IS Serving Application for SUN $325,000 $81,250 30 days
SPARCcenter 2000 with up to 16
processors running Solaris 2.3
64
US PRICE LIST - CELLULAR
DIGITAL PACKET DATA (CDPD)
PRODUCT NO. DESCRIPTION LIST PRICE PER ANNUM AVAILABILITY
----------- ----------- ---------- MAINTENANCE ------------
-----------
MD-IS HOME APPLICATION
CD/HOME-A1/1 MD-IS Home Application for SUN $40,000 $10,000 30 days
SPARCstation Models 10 and 20 with
a single processor running Solaris 2.3
CD/HOME-A1/4 MD-IS Home Application for SUN $60,000 $15,000 30 days
SPARCstation Models 10 and 20 with
up to 4 processors running Solaris 2.3
CD/HOME-A2/2 MD-IS Home Application for SUN $70,000 $17,500 30 days
SPARCserver 1000 with up to 2
processors running Solaris 2.3
CD/HOME-A2/8 MD-IS Home Application for SUN $105,000 $26,250 30 days
SPARCserver 1000 with up to 8
processors running Solaris 2.3
CD/HOME-A3/2 MD-IS Home Application for SUN $125,000 $31,250 30 days
SPARCcenter 2000 with 2 processors
running Solaris 2.3
CD/HOME-A3/8 MD-IS Home Application for SUN $225,000 $56,250 30 days
SPARCcenter 2000 with up to 8
processors running Solaris 2.3
CD/HOME-A3/16 MD-IS Home Application for SUN $325,000 $81,250 30 days
SPARCcenter 2000 with up to 16
processors running Solaris 2.3
CD/HOME-E3/8 MD-IS Home Application for Sequent $225,000 $56,250 30 days
Symmetry 5000 Model SE60 with up
to 8 processors running DYNIX/ptx
MD-IS CO-LOCATED SERVING AND
HOME APPLICATION
CD/SVHM-A1/1 MD-IS Serving & Home Application $80,000 $20,000 30 days
for SUN SPARCstation Models 10
and 20 with a single processor
running Solaris 2.3
CD/SVHM-A1/4 MD-IS Serving & Home Application $120,000 $30,000 30 days
for SUN SPARCstation Models 10
and 20 with up to 4 processors
running Solaris 2.3
CD/SVHM-A2/2 MD-IS Serving & Home Application $140,000 $35,000 30 days
for SUN SPARCserver 1000 with up
to 2 processors running Solaris 2.3
CD/SVHM-A2/8 MD-IS Serving & Home Application $210,000 $52,500 30 days
for SUN SPARCserver 1000 with up
to 8 processors running Solaris 2.3
65
US PRICE LIST - CELLULAR
DIGITAL PACKET DATA (CDPD)
PRODUCT NO. DESCRIPTION LIST PRICE PER ANNUM AVAILABILITY
----------- ----------- ---------- MAINTENANCE ------------
-----------
CD/SVHM-A3/2 MD-IS Serving & Home Application $250,000 $62,500 30 days
for SUN SPARCcenter 2000 with 2
processors running Solaris 2.3
CD/SVHM-A3/8 MD-IS Serving & Home Application $450,000 $112,500 30 days
for SUN SPARCcenter 2000 with up
to 8 processors running Solaris 2.3
CD/SVHM-A3/16 MD-IS Serving & Home Application $650,000 $162,500 30 days
for SUN SPARCcenter 2000 with up
to 16 processors running Solaris 2.3
ACCOUNTING SERVER APPLICATION
CD/ACTS-A/S Accounting Server Application for a $97,500 $24,375 30 days
single SUN SPARC platform running
Solaris 2.3.
CD/ACTS-A/D Accounting Server Application for a $149,500 $37,375 30 days
single or dual SUN SPARC platform
running Solaris 2.3. Includes an
X.400 MTA.
CD/ACTS-A/M Accounting Server Application for $195,000 $48,750 TBA
multiple SUN SPARC platforms
running Solaris 2.3. Includes an
X.400 MTA.
CUSTOMER ACTIVATION SYSTEM
CD/CASA-A/S Customer Activation System $95,000 $23,750 60 days
Application for a single SUN SPARC
platform running Solaris 2.3.
66
US PRICE LIST - CELLULAR
DIGITAL PACKET DATA (CDPD)
PRODUCT NO. DESCRIPTION LIST PRICE PER ANNUM AVAILABILITY
----------- ----------- ---------- MAINTENANCE ------------
-----------
HIGH AVAILABILITY
SYSTEMS
MD-IS HIGH AVAILABILITY SERVING
APPLICATION
CD/SVGH-A1/1 MD-IS High Availability Serving $50,000 $12,500 30 days
Application for SUN SPARCstation
Models 10 and 20 with a single
processor running Solaris 2.3 in a
high availability configuration.
CD/SVGH-A1/4 MD-IS High Availability Serving $75,000 $18,750 30 days
Application for SUN SPARCstation
Models 10 and 20 with up to 4
processors running Solaris 2.3 in a
high availability configuration.
CD/SVGH-A2/2 MD-IS High Availability Serving $87,500 $21,875 30 days
Application for SUN SPARCserver
1000 with up to 2 processors running
Solaris 2.3 in a high availability
configuration.
CD/SVGH-A2/8 MD-IS High Availability Serving $131,250 $32,813 30 days
Application for SUN SPARCserver
1000 with up to 8 processors running
Solaris 2.3 in a high availability
configuration.
CD/SVGH-A3/2 MD-IS High Availability Serving $156,250 $39,063 30 days
Application for SUN SPARCcenter
2000 with 2 processors running
Solaris 2.3 in a high availability
configuration.
CD/SVGH-A3/8 MD-IS High Availability Serving $281,250 $70,313 30 days
Application for SUN SPARCcenter
2000 with up to 8 processors running
Solaris 2.3 in a high availability
configuration.
CD/SVGH-A3/16 MD-IS High Availability Serving $406,250 $101,563 30 days
Application for SUN SPARCcenter
2000 with up to 16 processors
running Solaris 2.3 in a high
availability configuration.
67
US PRICE LIST - CELLULAR
DIGITAL PACKET DATA (CDPD)
PRODUCT NO. DESCRIPTION LIST PRICE PER ANNUM AVAILABILITY
----------- ----------- ---------- MAINTENANCE ------------
-----------
MD-IS HIGH AVAILABILITY HOME
APPLICATION
CD/HOMH-A1/1 MD-IS High Availability Home $50,000 $12,500 30 days
Application for SUN SPARCstation
Models 10 and 20 with a single
processor running Solaris 2.3 in a
high availability configuration.
CD/HOMH-A1/4 MD-IS High Availability Home $75,000 $18,750 30 days
Application for SUN SPARCstation
Models 10 and 20 with up to 4
processors running Solaris 2.3 in a
high availability configuration.
CD/HOMH-A2/2 MD-IS High Availability Home $87,500 $21,875 30 days
Application for SUN SPARCserver
1000 with up to 2 processors running
Solaris 2.3 in a high availability
configuration.
CD/HOMH-A2/8 MD-IS High Availability Home $131,250 $32,813 30 days
Application for SUN SPARCserver
1000 with up to 8 processors running
Solaris 2.3 in a high availability
configuration.
CD/HOMH-A3/2 MD-IS High Availability Home $156,250 $39,063 30 days
Application for SUN SPARCcenter
2000 with 2 processors running
Solaris 2.3 in a high availability
configuration.
CD/HOMH-A3/8 MD-IS High Availability Home $281,250 $70,313 30 days
Application for SUN SPARCcenter
2000 with up to 8 processors running
Solaris 2.3 in a high availability
configuration.
CD/HOMH-A3/16 MD-IS High Availability Home $406,250 $101,563 30 days
Application for SUN SPARCcenter 2000
with up to 16 processors running
Solaris 2.3 in a high availability
configuration.
CD/HOMH-E3/8 MD-IS High Availability Home $281,250 $70,313 30 days
Application for Sequent Symmetry 5000
Model SE60 with up to 8 processors
running DYNIX/ptx in a clustered
configuration.
68
US PRICE LIST - CELLULAR
DIGITAL PACKET DATA (CDPD)
PRODUCT NO. DESCRIPTION LIST PRICE PER ANNUM AVAILABILITY
----------- ----------- ---------- MAINTENANCE ------------
-----------
MD-IS HIGH AVAILABILITY SERVING
AND HOME APPLICATION
CD/SAHH-A1/1 MD-IS High Availability Serving & $100,000 $25,000 30 days
Home Application for SUN
SPARCstation Models 10 and 20 with
a single processor running Solaris 2.3
in a high availability configuration.
CD/SAHH-A1/4 MD-IS High Availability Serving & $150,000 $37,500 30 days
Home Application for SUN
SPARCstation Models 10 and 20
with up to 4 processors running Solaris
2.3 in a high availability configuration.
CD/SAHH-A2/2 MD-IS High Availability Serving & $175,000 $43,750 30 days
Home Application for SUN
SPARCserver 1000 with up to 2
processors running Solaris 2.3 in a
high availability configuration.
CD/SAHH-A2/8 MD-IS High Availability Serving & $262,500 $65,625 30 days
Home Application for SUN
SPARCserver 1000 with up to 8
processors running Solaris 2.3 in a
high availability configuration.
CD/SAHH-A3/2 MD-IS High Availability Serving & $312,500 $78,125 30 days
Home Application for SUN
SPARCcenter 2000 with 2 processors
running Solaris 2.3 in a high
availability configuration.
CD/SAHH-A3/8 MD-IS High Availability Serving & $562,500 $140,625 30 days
Home Application for SUN
SPARCcenter 2000 with up to 8
processors running Solaris 2.3 in a
high availability configuration.
CD/SAHH-A3/16 MD-IS High Availability Serving & $812,500 $203,125 30 days
Home Application for SUN
SPARCcenter 2000 with up to 16
processors running Solaris 2.3 in a
high availability configuration.
69
US PRICE LIST - CELLULAR
DIGITAL PACKET DATA (CDPD)
PRODUCT NO. DESCRIPTION LIST PRICE PER ANNUM AVAILABILITY
----------- ----------- ---------- MAINTENANCE ------------
-----------
HIGH AVAILABILITY ACCOUNTING
SERVER APPLICATION
CD/ACTH-A/S High Availability Accounting Server $124,500 $31,125 30 days
Application for a single SUN SPARC
platform running Solaris 2.3 in a high
availability configuration.
CD/ACTH-A/D High Availability Accounting Server $186,500 $46,625 30 days
Application for a single or dual SUN
SPARC platforms running Solaris 2.3
in a high availability configuration.
Includes an X.400 MTA.
CD/ACTH-A/M High Availability Accounting Server $243,500 $60,875 TBA
Application for multiple SUN SPARC
platform running Solaris 2.3 in a high
availability configuration. Includes an
X.400 MTA.
CD/ACTH-E/D High Availability Accounting Server $186,500 $46,625 30 days
Application for a single or dual
SEQUENT SYMMETRY 5000
platform running DYNIX/ptx in a
clustered configuration. Includes an
X.400 MTA.
70
US PRICE LIST - CELLULAR
DIGITAL PACKET DATA (CDPD)
PRODUCT NO. DESCRIPTION LIST PRICE PER ANNUM AVAILABILITY
----------- ----------- ---------- MAINTENANCE ------------
-----------
HIGH AVAILABILTY CUSTOMER
ACTIVATION SYSTEM
CD/CASH-A/S High Availability Customer Activation $118,750 $29,688 60 days
System Application for a single SUN
SPARC platform running Solaris 2.3
in a high availability configuration.
M-ES PROTOCOL BUNDLE
CD/MESP- A bundling of the relevant CDPD M- $35,000 $5,250 30 days
SOURCE ES protocols (MDLP, SNDCP, MNLP
and MNRP) in portable source form.
Includes license for RSA encryption
software.
Per Unit Royalty
0 to 50,000 $5.00
50,001 to 100,000 $4.00
100,001 to 200,000 $3.20
200,001 to 500,000 $2.50
500,001 to 1,000,000 $1.75
1,000,000 plus $1.00
71
US PRICE LIST - CELLULAR
DIGITAL PACKET DATA (CDPD)
PRODUCT NO. DESCRIPTION LIST PRICE PER ANNUM AVAILABILITY
----------- ----------- ---------- MAINTENANCE ------------
-----------
MD-IS ROUTER HARDWARE
RX7550/SVG Five slot MD-IS Router Chassis for $11,500 $805 30 days
Mobile Serving Function CDPD
applications, with support for
redundant loadsharing power supply
option. Includes chassis and single
400W 110/230V power supply.
RX7550/HOME Five slot MD-IS Router Chassis for $11,500 $805 30 days
Mobile Home Function CDPD
applications, with support for
redundant loadsharing power supply
option. Includes chassis and single
400W 110/230V power supply.
PRX50-1 Redundant Power Supply $2,000 $219 30 days
RMP7705/2-8 Routing Management Processor $4,250 $298 30 days
FP7710/2-8 Forwarding Processor $3,250 $219 30 days
10B5-1 00XXXX0 Xxxxxxxx Interface Card $600 $53 30 days
10B2-1 00XXXX0 Xxxxxxxx Interface Card $600 $53 30 days
00XX-0 00XXXXX Xxxxxxxx Interface Card $600 $53 30 days
10BT-12 10BASET 12 Port Hub Interface Card $1,650 $115 30 days
FDDI7715 FDDI Interface Module $10,000 $875 30 days
V35-1 V.35 Interface Card $1,000 $88 30 days
X21-1 X.21 Interface Card $1,000 $88 30 days
RS232-1 RS(232 Interface Card) $1,000 $88 30 days
RX7500M Manual $150 - 30 days
RM7550 Rackmount Kit $150 - 30 days
72
EXHIBIT G
RETIX DISCLOSURE STATEMENT
This Disclosure Statement is made and given pursuant to Section 3 of the
Master Agreement (the "AGREEMENT") by and between Retix and Wireless Solutions.
The Section numbers in this Disclosure Statement correspond to the Section
numbers in the Agreement; however, any information disclosed herein under any
Section number shall be deemed to be disclosed and incorporated into any other
Section number under the Agreement where such disclosure would be appropriate.
Any terms used in this Disclosure Statement shall have the meanings defined for
them in the Agreement unless otherwise defined herein.
SECTION 3.11 - BINDING AGREEMENTS
Third party consents to the transactions contemplated by the Master
Agreement are required from certain vendors, distributors, resellers and other
contractors as indicated on lists provided or made available to Wireless
Solutions.
73
EXHIBIT H
RIGHTS AGREEMENT
This Rights Agreement (the "AGREEMENT") is entered into as of May 31,
1996, by and among Wireless Solutions, a California corporation (the "COMPANY")
and Retix, a California corporation, which is purchasing shares of Preferred
Stock of the Company pursuant to the Preferred Stock Purchase Agreement of even
date herewith (the "PURCHASE AGREEMENT").
In consideration of the mutual promises and covenants hereinafter set
forth, the parties agree as follows:
1. RESTRICTIONS ON TRANSFERABILITY; REGISTRATION RIGHTS.
1.1 CERTAIN DEFINITIONS. As used in this Agreement, the following
terms shall have the following respective meanings:
"REGISTRABLE SECURITIES" means (i) the Common Stock issuable
upon conversion of the Preferred Shares (the "CONVERSION SHARES") and (ii) any
Common Stock issued or issuable in respect of the Preferred Shares or Conversion
Shares or other securities issued or issuable with respect to the Preferred
Shares or Conversion Shares upon any stock split, stock dividend,
recapitalization or similar event or any Common Stock otherwise issued or
issuable with respect to the Preferred Shares or Conversion Shares; PROVIDED,
HOWEVER, that shares of Common Stock or other securities shall only be treated
as Registrable Securities (1) if and so long as they have not been (A) sold to
or through a broker or dealer or underwriter in a public distribution or a
public securities transaction, or (B) sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act under
Section 4(1) thereof so that all transfer restrictions and restrictive legends
with respect thereto are removed upon the consummation of such sale, or (2) if
with respect to any Holder all shares of the Company's capital stock then held
by Holder may not be sold in any single three month period without registration
pursuant to Rule 144 promulgated under the Securities Act.
"HOLDER" shall mean any person holding Registrable Securities
and any person holding Registrable Securities to whom the rights under this
Agreement have been transferred in accordance with Section 1.14 hereof.
"PREFERRED SHARES" shall mean an aggregate of 17,000,000 shares
of Preferred Stock issued pursuant to a Preferred Stock Purchase Agreement dated
of even date herewith between the Company and Retix.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
74
"REGISTRATION EXPENSES" shall mean all expenses incurred by the
Company in complying with Sections 1.5, 1.6 and 1.7 of this Agreement,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Company, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company).
"RESTRICTED SECURITIES" shall mean the securities of the Company
required to bear the legend set forth in Section 1.3 of this Agreement.
"RETIX" shall mean Retix, a California corporation, and any of
its successors, transferees or assigns.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"SELLING EXPENSES" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the securities
registered by the Holders and all fees and disbursements of counsel for the
Holders (except as provided by Section 1.9).
"INITIATING HOLDERS" shall mean Retix or any transferees of
Retix under Section 1.14 hereof who in the aggregate are Holders of not less
than fifty percent (50%) of the Registrable Securities.
1.2 RESTRICTIONS. The Preferred Shares and the Conversion Shares
shall not be sold, assigned, transferred or pledged except upon the conditions
specified in this Agreement, which conditions are intended to ensure compliance
with the provisions of the Securities Act. The Holders will cause any proposed
purchaser, assignee, transferee or pledgee of the Preferred Shares and the
Conversion Shares to agree to take and hold such securities subject to the
provisions and upon the conditions specified in this Agreement.
1.3 RESTRICTIVE LEGEND. Each certificate representing (i) the
Preferred Shares, (ii) the Conversion Shares and (iii) any other securities
issued in respect of the securities referenced in clauses (i) and (ii) upon any
stock split, stock dividend, recapitalization, merger, consolidation or similar
event, shall (unless otherwise permitted by the provisions of Section 1.4 below)
be stamped or otherwise imprinted with legends in the following form (in
addition to any legend required under applicable state securities laws):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. SUCH SHARES MAY NOT BE SOLD, TRANSFERRED OR PLEDGED IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS THE COMPANY RECEIVES AN OPINION
OF COUNSEL (WHICH MAY BE COUNSEL FOR THE COMPANY) REASONABLY
ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER
75
IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS
OF SAID ACT."
Each Holder consents to the Company making a notation on its records
and giving instructions to any transfer agent of the Restricted Securities in
order to implement the restrictions on transfer established in this Section 1.
1.4 NOTICE OF PROPOSED TRANSFERS. The holder of each certificate
representing Restricted Securities, by acceptance thereof, agrees to comply in
all respects with the provisions of this Section 1. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities, unless there is in
effect a registration statement under the Securities Act covering the proposed
transfer, the holder thereof shall give written notice to the Company of such
holder's intention to effect such transfer, sale, assignment or pledge. Each
such notice shall describe the manner and circumstances of the proposed
transfer, sale, assignment or pledge in sufficient detail, and shall be
accompanied at such holder's expense by either (i) an unqualified written
opinion of legal counsel who shall, and whose legal opinion shall be, reasonably
satisfactory to the Company, addressed to the Company, to the effect that the
proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act, or (ii) a "NO ACTION" letter from the
Commission to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the Commission
that action be taken with respect thereto, whereupon the holder of such
Restricted Securities shall be entitled to transfer such Restricted Securities
in accordance with the terms of the notice delivered by the holder to the
Company. The Company will not require such a legal opinion or "NO ACTION"
letter (a) in any transaction in compliance with Rule 144, (b) in any
transaction in which a Holder which is a corporation distributes Restricted
Securities after six (6) months after the purchase thereof solely to its
majority-owned subsidiaries or affiliates for no consideration, or (c) in any
transaction in which a Holder which is a partnership distributes Restricted
Securities after six (6) months after the purchase thereof solely to partners
thereof for no consideration, provided that each transferee agrees in writing to
be subject to the terms of this Section 1.4. Each certificate evidencing the
Restricted Securities transferred as above provided shall bear, except if such
transfer is made pursuant to Rule 144, the appropriate restrictive legend set
forth in Section 1.3 above, except that such certificate shall not bear such
restrictive legend if, in the opinion of counsel for such holder and the
Company, such legend is not required in order to establish compliance with any
provisions of the Securities Act.
1.5 REQUESTED REGISTRATION.
(a) REQUEST FOR REGISTRATION. In case the Company shall
receive from Initiating Holders a written request that the Company effect any
registration, qualification or compliance with respect to the Registrable
Securities, the anticipated aggregate offering price, net of underwriting
discounts and commissions, of which would exceed $10,000,000 and the offering
price to the public of which would be at least $5.00 per share, the Company
will:
(i) promptly give written notice of the proposed
registration, qualification or compliance to all other Holders; and
76
(ii) as soon as practicable, use its best efforts to effect
such registration, qualification or compliance (including, without limitation,
the execution of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the Securities
Act and any other governmental requirements or regulations) as may be so
requested and as would permit or facilitate the sale and distribution of all or
such portion of such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written request received
by the Company within thirty (30) days after receipt of such written notice from
the Company; PROVIDED, HOWEVER, that the Company shall not be obligated to
take any action to effect any such registration, qualification or compliance
pursuant to this Section 1.5:
(1) In any particular jurisdiction in which the
Company would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
(2) During the period starting with the date sixty
(60) days prior to the Company's estimated date of filing of, and ending on the
date six (6) months immediately following the effective date of, any
registration statement pertaining to securities of the Company (other than a
registration of securities in a Rule 145 transaction or with respect to an
employee benefit plan), provided that the Company is actively employing in good
faith all reasonable efforts to cause such registration statement to become
effective and that the Company's estimate of the date of filing such
registration statement is made in good faith;
(3) After the Company has effected two (2) such
registrations pursuant to this subparagraph 1.5(a) in any 12 month period, such
registration has been declared or ordered effective and the securities offered
pursuant to such registration have been sold; or
(4) If the Company shall furnish to such Holders a
certificate, signed by the President of the Company, stating that in the good
faith judgment of the Board of Directors it would be seriously detrimental to
the Company or its shareholders for a registration statement to be filed in the
near future, then the Company's obligation to use its best efforts to register,
qualify or comply under this Section 1.5 shall be deferred for a single period
not to exceed one hundred-twenty (120) days from the date of receipt of written
request from the Initiating Holders.
Subject to the foregoing clauses (1) through (5) and this paragraph, the
Company shall file a registration statement covering the Registrable Securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Initiating Holders. In the event that the Holders of
Registrable Securities wish to join in the request of the Initiating Holders
made pursuant to this Section 1.5(a), the provisions of Section 1.6 of this
Agreement shall govern the ability of such Holders to join in such request.
77
(b) UNDERWRITING. In the event that a registration pursuant to
Section 1.5 is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as part of the notice given pursuant to
Section 1.5(a)(i). The right of any Holder to registration pursuant to Section
1.5 shall be conditioned upon such Holder's participation in the underwriting
arrangements required by this Section 1.5 and the inclusion of such Holder's
Registrable Securities in the underwriting, to the extent requested, to the
extent provided in this Agreement.
The Company shall (together with all Holders proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with the managing underwriter selected for such underwriting by a
majority in interest of the Initiating Holders (which managing underwriter shall
be reasonably acceptable to the Company). Notwithstanding any other provision
of this Section 1.5, if the managing underwriter advises the Initiating Holders
in writing that marketing factors require a limitation of the number of shares
to be underwritten, then the Company shall so advise all Holders of Registrable
Securities and the number of shares of Registrable Securities that may be
included in the registration and underwriting shall be allocated among all
Initiating Holders in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities held by such Initiating Holders at the time of
filing the registration statement; the provisions of Section 1.6 shall govern
the ability of the Holders of Registrable Securities not held by the Initiating
Holders to participate. No Registrable Securities excluded from the
underwriting by reason of the underwriter's marketing limitation shall be
included in such registration. To facilitate the allocation of shares in
accordance with the above provisions, the Company or the underwriters may round
the number of shares allocated to any Holder to the nearest 100 shares.
If any Holder of Registrable Securities disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the managing underwriter and the Initiating Holders. The
Registrable Securities and/or other securities so withdrawn shall also be
withdrawn from registration, and such Registrable Securities shall not be
transferred in a public distribution prior to one hundred eighty (180) days
after the effective date of such registration.
1.6 COMPANY REGISTRATION.
(a) NOTICE OF REGISTRATION. If at any time or from time to
time, the Company shall determine to register any of its securities, either for
its own account or the account of a security holder or holders other than (i) a
registration relating solely to employee benefit plans, or (ii) a registration
relating solely to a Commission Rule 145 transaction, the Company will:
(i) promptly give to each Holder written notice thereof;
and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved in such registration, all the Registrable Securities specified in a
written request or requests made within thirty (30) days after receipt of such
written notice from the Company by any Holder, but only to the extent
78
that such inclusion will not diminish the number of securities included by the
Company or by holders of the Company's securities who have demanded such
registration.
(b) UNDERWRITING. If the registration of which the Company
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 1.6(a)(i). In such event, the right of any Holder to
registration pursuant to Section 1.6 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company and the other holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company (or by the
holders who have demanded such registration). Notwithstanding any other
provision of this Section 1.6, if the managing underwriter determines that
marketing factors require a limitation of the number of shares to be
underwritten, the managing underwriter may limit the Registrable Securities to
be included in such registration or exclude them entirely. The Company shall so
advise all Holders and the other holders distributing their securities through
such underwriting pursuant to piggyback registration rights similar to this
Section 1.6, and the number of shares of Registrable Securities and other
securities that may be included in the registration and underwriting shall be
allocated among all Holders and other holders in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities held by such
Holders and other securities held by other holders at the time of filing the
registration statement. To facilitate the allocation of shares in accordance
with the above provisions, the Company or the underwriters may round the number
of shares allocated to any Holder or other holder to the nearest 100 shares. If
any Holder or other holder disapproves of the terms of any such underwriting, he
or she may elect to withdraw therefrom by written notice to the Company and the
managing underwriter. Any securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration, and shall not be
transferred in a public distribution prior to one hundred eighty (180) days
after the effective date of the registration statement relating thereto.
(c) RIGHT TO TERMINATE REGISTRATION. The Company shall have
the right to terminate or withdraw any registration initiated by it under this
Section 1.6 prior to the effectiveness of such registration, whether or not any
Holder has elected to include securities in such registration.
1.7 REGISTRATION ON FORM S-3.
(a) If any Holder requests that the Company file a registration
statement on Form S-3 (or any successor form to Form S-3) for a public offering
of shares of the Registrable Securities, the reasonably anticipated aggregate
price to the public of which, net of underwriting discounts and commissions,
would exceed $500,000, and the Company is a registrant entitled to use Form S-3
to register the Registrable Securities for such an offering, the Company shall
use its best efforts to cause such Registrable Securities to be registered for
the offering on such form; PROVIDED, HOWEVER, that the Company shall not be
required to effect more than two registrations pursuant to this Section 1.7 in
any twelve (12) month period. The Com-
79
pany will (i) promptly give written notice of the proposed registration to all
other Holders, and (ii) as soon as practicable, use its best efforts to effect
such registration (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualification under
applicable blue sky or other state securities laws and appropriate compliance
with applicable regulations issued under the Securities Act and any other
governmental requirements or regulations) as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any Holder or Holders joining in
such request as are specified in a written request received by the Company
within thirty (30) days after receipt of such written notice from the Company.
The provisions of Section 1.5(b) shall be applicable to each registration
initiated under this Section 1.7.
(b) Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this Section 1.7: (i) in any
particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such registration,
qualification or compliance unless the Company is already subject to service in
such jurisdiction and except as may be required by the Securities Act, (ii)
during the period starting with the date sixty (60) days prior to the filing of,
and ending on a date six (6) months following the effective date of, a
registration statement (other than with respect to a registration statement
relating to a Rule 145 transaction, an offering solely to employees or any other
registration which is not appropriate for the registration of Registrable
Securities), provided that the Company is actively employing in good faith all
reasonable efforts to cause such registration statement to become effective, or
(iii) if the Company shall furnish to such Holder a certificate signed by the
president of the Company stating that, in the good faith judgment of the Board
of Directors, it would be seriously detrimental to the Company or its
shareholders for registration statements to be filed in the near future, then
the Company's obligation to use its best efforts to file a registration
statement shall be deferred for a single period not to exceed one hundred twenty
(120) days from the receipt of the request to file such registration by such
Holder or Holders.
1.8 SHELF REGISTRATION.
(a) Retix shall be entitled to demand, at any time, that the
Company secure the effectiveness of a "shelf" registration statement under Rule
415 under the Securities Act with the SEC, for the sale by Retix of all of the
Registrable Securities held thereby. Prior to demanding any such registration,
Retix shall first consult with the Company for a period of at least 30 days
otherwise, concerning the need for such registration in light of Retix's ability
to sell freely all of the shares of Common Stock issuable upon conversion of the
Securities in the United States public markets under Rule 144 or otherwise.
(b) Following such consultation, whether to demand such
Registration Statement shall be at the sole discretion of Retix, and the Company
shall take all action necessary to comply with such demand. The Company
represents and warrants that on the date the Registration Statement becomes
effective, the Registration Statement will comply in all material respects with
the applicable requirements of the Securities Act and the rules thereunder; on
the date of its effectiveness the Registration Statement (including any
documents incorporated by
80
reference therein) will 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 not misleading, provided, however, that no
representation is made by the Company with respect to written information
furnished to the Company by or on behalf of Retix specifically for inclusion in
the Registration Statement; and the final prospectus contained in the
Registration Statement, if not filed pursuant to Rule 424(b), will not, and on
the date of any filing pursuant to Rule 424(b), such final prospectus (together
with any supplement thereto) will not, include any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading, provided, however, that no representation is made by the Company
with respect to written information furnished to the Company by or on behalf of
the Retix specifically for inclusion in such prospectus. The Company will
promptly: (A) notify Retix when the Registration Statement is declared
effective; and (B) notify Retix of any stop-order or similar proceeding by the
SEC or any state securities authority.
(c) The Company hereby covenants and agrees that (A) no other
holder of the Company's securities (including convertible securities) other than
transferees of Retix is entitled to or shall be hereafter given the right to
participate in any registration under this Section 1.8 whether by the exercise
of a demand or "piggyback" registration right and (B) no other registration
statement covering any other holder's securities shall be declared effective or
maintained in effect during such time as the Registration Statement shall be
effective.
(d) The Company shall promptly prepare and file with the SEC
such amendments and supplements to the Registration Statement and the prospectus
used in connection therewith as may be necessary to comply with the provisions
of the Securities Act with respect to the disposition of all securities covered
by such Registration Statement and keep the Registration Statement effective
until all the Registrable Securities have been sold pursuant thereto or until
Retix is able to dispose of its entire remaining ownership interest in the
Registrable Securities in the United States public markets in a single
transaction under Rule 144 without invoking clause (e)(1)(ii) of Rule 144. The
Company shall provide a transfer agent, registrar and CUSIP number with respect
to all securities registered by such Registration Statement.
(e) The Company shall furnish to Retix with respect to the
Registrable Securities registered under the Registration Statement such number
of copies of prospectuses and preliminary prospectuses and supplements in
conformity with the requirements of the Securities Act and such other documents
as Retix may reasonably request, in order to facilitate the public sale or other
disposition of all or any of the Shares by Retix.
(f) The Company shall use its best efforts to register or
qualify the Registrable Securities covered by such Registration Statements under
such other securities or blue sky laws of such jurisdictions as Retix shall
reasonably request and do any and all other acts or things which may be
necessary or desirable to enable Retix to consummate the public sale or other
disposition in such jurisdictions, provided that the Company shall not be
required in
81
connection therewith or as a condition thereto to qualify to do business or file
a general consent to service of process in any such jurisdictions.
(g) In accordance with Section 1.10 below, the Company shall
bear all expenses in connection with the procedures set forth in this Section
1.8 and the registration of the Registrable Securities pursuant to the
Registration Statement, other than broker's commissions or discounts, transfer
taxes, and fees and expenses, if any, of counsel or other advisors to Retix.
1.9 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after
the date of this Agreement, the Company shall not enter into any agreement
granting any holder or prospective holder of any securities of the Company
registration rights with respect to such securities unless (i) such new
registration rights, including standoff obligations, are on a pari passu basis
with those rights of the Holders under this Agreement, or (ii) such new
registration rights, including standoff obligations, are subordinate to the
registration rights granted Holders under this Agreement.
1.10 EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with any registration pursuant to Sections 1.5, 1.6 and 1.8 and the
reasonable cost of one special legal counsel to represent all of the Holders
together in any such registration shall be borne by the Company, provided that
the Company shall not be required to pay the Registration Expenses of any
registration proceeding begun pursuant to Section 1.5, the request of which has
been subsequently withdrawn by the Initiating Holders. In such case, the
Holders of Registrable Securities to have been registered shall bear all such
Registration Expenses pro rata on the basis of the number of shares to have been
registered. Notwithstanding the foregoing, however, if at the time of the
withdrawal, the Holders have learned of a material adverse change in the
condition, business or prospects of the Company from that known to the Holders
at the time of their request, of which the Company had knowledge at the time of
the request, then the Holders shall not be required to pay any of said
Registration Expenses. Unless otherwise stated, all other Selling Expenses
relating to securities registered on behalf of the Holders and all Registration
Expenses incurred in connection with any registration pursuant to Section 1.7
shall be borne by the Holders of the registered securities included in such
registration pro rata on the basis of the number of shares so registered.
1.11 REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section 1,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(a) Prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for at least one hundred
twenty (120) days or until the distribution described in the registration
statement has been completed; and
82
(b) Furnish to the Holders participating in such registration
and to the underwriters of the securities being registered such reasonable
number of copies of the registration statement, preliminary prospectus, final
prospectus and such other documents as such underwriters may reasonably request
in order to facilitate the public offering of such securities.
1.12 INDEMNIFICATION.
(a) The Company will indemnify each Holder, each of its officers
and directors and partners, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Section 1, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages or liabilities (or actions in respect thereof), including any of
the foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any registration statement, prospectus, offering
circular or other document, or any amendment or supplement thereto, incident to
any such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, or any violation by the Company of any
rule or regulation promulgated under the Securities Act applicable to the
Company in connection with any such registration, qualification or compliance,
and the Company will reimburse each such Holder, each of its officers and
directors, and each person controlling such Holder, each such underwriter and
each person who controls any such underwriter, for any legal and any other
expenses reasonably incurred in connection with investigating, preparing or
defending any such claim, loss, damage, liability or action, provided that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any untrue
statement or omission or alleged untrue statement or omission, made in reliance
upon and in conformity with written information furnished to the Company by an
instrument duly executed by such Holder, controlling person or underwriter and
stated to be specifically for use therein. The indemnity provided under this
Section 1.12(a) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if the Company has defended such matter and
if such settlement is effected without the Company's consent, which consent
shall not be unreasonably withheld.
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Holder, each of its officers and directors
and each person controlling such Holder within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state
83
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company, such Holders,
such directors, officers, persons, underwriters or control persons for any legal
or any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company by an instrument
duly executed by such Holder and stated to be specifically for use therein.
(c) Each party entitled to indemnification under this Section
1.12 (the "INDEMNIFIED PARTY") shall give notice to the party required to
provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 1 unless the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each 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.
1.13 INFORMATION BY HOLDER. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held by
them and the distribution proposed by such Holder or Holders as the Company may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Section 1.
1.14 RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Restricted Securities to the public without
registration, after such time as a public market exists for the Common Stock of
the Company, the Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
after the effective date that the Company becomes subject to the reporting
requirements of the Securities Act or the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT");
(b) File with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements); and
84
(c) So long as a Holder owns any Restricted Securities, to
furnish to the Holder forthwith upon request a written statement by the Company
as to its compliance with the reporting requirements of said Rule 144 (at any
time after ninety (90) days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
of the Company and other information in the possession of or reasonably
obtainable by the Company as a Holder may reasonably request in availing itself
of any rule or regulation of the Commission allowing a Holder to sell any such
securities without registration.
1.15 TRANSFER OF REGISTRATION RIGHTS. The rights to cause the
Company to register securities granted Holders under Sections 1.5, 1.6, 1.7 and
1.8 may be assigned to a transferee or assignee reasonably acceptable to the
Company in connection with any transfer or assignment of Registrable Securities
by a Holder (together with any affiliate); PROVIDED, that (a) such transfer may
otherwise be effected in accordance with applicable securities laws, (b) notice
of such assignment is given to the Company, and (c) such transferee or assignee
(i) is a wholly-owned subsidiary, constituent partner (including limited
partners), shareholder, parent, child or spouse of such Holder or is Holder's
estate, or (ii) acquires from such Holder the lesser of (a) 50,000 or more
shares of Restricted Securities (as appropriately adjusted for stock splits and
the like) or (b) all of the Restricted Securities then owned by such Holder.
1.16 STANDOFF AGREEMENT. Each Holder agrees in connection with any
registration of the Company's securities that, upon request of the Company or
the underwriters managing any underwritten offering of the Company's securities,
not to sell, make any short sale of, loan, grant any option for the purchase of,
or otherwise dispose of any Registrable Securities (other than those included in
the registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not to exceed one
hundred eighty (180) days from the effective date of such registration) as may
be requested by the Company or such managing underwriters; PROVIDED, that the
officers and directors of the Company who own stock of the Company also agree to
such restrictions.
1.17 TERMINATION OF RIGHTS. The rights of any particular Holder to
cause the Company to register securities under Sections 1.5, 1.6, 1.7 and 1.8
shall terminate with respect to such Holder following a bona fide firm
underwritten public offering of shares of the Company's Common Stock registered
under the Securities Act (provided the aggregate offering price, net of
underwriting discounts and commissions, exceeds ten million dollars
($10,000,000)) at such time as such Holder is able to dispose of all its
Registrable Securities and other shares of capital stock of the Company then
held or then issuable upon exercise of options or warrants in one three-month
period pursuant to the provisions of Rule 144; PROVIDED, that such Holder holds
Registrable Securities and other shares of capital stock of the Company then
held or then issuable upon exercise of options or warrants constituting less
than 1% of the outstanding voting stock of the Company. The rights to cause the
Company to register securities under Section 1.5, 1.6, 1.7 and 1.8 shall
terminate in any event five (5) years after the closing of the foregoing public
offering.
85
2. MISCELLANEOUS.
2.1 ASSIGNMENT. Except as otherwise provided in this Agreement, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties to this
Agreement.
2.2 THIRD PARTIES. Nothing in this Agreement, express or implied,
is intended to confer upon any party, other than the parties to this Agreement,
and their respective successors and assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.
2.3 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of California in the United States of
America.
2.4 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
2.5 NOTICES. All notices or other communications which shall or may
be given pursuant to this Agreement shall be in writing, shall be effective upon
receipt, and shall be delivered by Federal Express or a similar courier,
personal delivery, certified or registered mail, or by facsimile transmission
(with confirmation of transmission receipt), addressed as follows (or as is
provided in the future by written notice as provided herein):
If to the Company: Wireless Solutions
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Attn: President
If to Retix: Retix
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Attn: President
2.6 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, portions of such provisions, or
such provisions in their entirety, to the extent necessary, shall be severed
from this Agreement, and the balance of this Agreement shall be enforceable in
accordance with its terms.
2.7 AMENDMENT AND WAIVER. Any provision of this Agreement may be
amended or waived with the written consent of the Company and the Holders of at
least a majority of the outstanding Registrable Securities. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
Holder of Registrable Securities and the Company. In addition, the Company may
waive performance of any obligation owing to it, as to some or all of the
Holders of Registrable Securities, or agree to accept alternatives to such
performance, without obtaining the consent of any Holder of Registrable
Securities. In the event
86
that an underwriting agreement is entered into between the Company and any
Holder, and such underwriting agreement contains terms differing from this
Agreement, as to any such Holder the terms of such underwriting agreement shall
govern.
2.8 EFFECT OF AMENDMENT OR WAIVER. The Holders and their successors
and assigns acknowledge that by the operation of Section 2.7 of this Agreement
the holders of a majority of the outstanding Registrable Securities, acting in
conjunction with the Company, will have the right and power to diminish or
eliminate any or all rights or increase any or all obligations pursuant to this
Agreement.
2.9 RIGHTS OF HOLDERS. Each Holder of Registrable Securities shall
have the absolute right to exercise or refrain from exercising any right or
rights that such Holder may have by reason of this Agreement, including, without
limitation, the right to consent to the waiver or modification of any obligation
under this Agreement, and such Holder shall not incur any liability to any other
holder of any securities of the Company as a result of exercising or refraining
from exercising any such right or rights.
2.10 DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power or remedy accruing to any party to this Agreement, upon any breach
or default of the other party, shall impair any such right, power or remedy of
such non-breaching party nor shall it be construed to be a waiver of any such
breach or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be made in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies,
either under this Agreement, or by law or otherwise afforded to any holder,
shall be cumulative and not alternative.
[SIGNATURE PAGE FOLLOWS]
87
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
"COMPANY"
WIRELESS SOLUTIONS
By:
------------------------------------
Title:
---------------------------------
HOLDERS:
RETIX
By:
------------------------------------
Title:
---------------------------------
88
EXHIBIT I
SECURITY AGREEMENT
This Security Agreement (the "AGREEMENT") is made as of May 31, 1996 by
and between Wireless Solutions, a California corporation (the "DEBTOR") in
favor of Retix, a California corporation (the "SECURED PARTY").
RECITALS
The Debtor and the Secured Party are parties to a Loan Agreement of even
date with this Agreement (the "LOAN AGREEMENT") pursuant to which the Secured
Party shall be making a Loan (as defined therein) to the Debtor. The parties
intend that the Debtor's obligations to repay the Loan to the Secured Party be
secured by all of the assets of the Debtor.
NOW, THEREFORE, in consideration of the Loan to be made by the Secured
Party to the Debtor and for other good and valuable consideration, the Debtor
hereby agrees with the Secured Party as follows:
1. DEFINED TERMS. The following terms shall have the following
meanings:
"CODE" means the Uniform Commercial Code as from time to time in
effect in the State of California.
"COLLATERAL" means the property described on EXHIBIT A to this
Agreement.
"EVENT OF DEFAULT" means Debtor's failure to pay or discharge the
Obligations in full in accordance with the terms of the Notes.
"OBLIGATIONS" means the unpaid principal amount of, and interest on,
the Notes and all other obligations and liabilities of the Debtor to the Secured
Party which may arise under the Notes.
"NOTES" means the Debtor's promissory notes issued pursuant to the
Loan Agreement.
2. GRANT OF SECURITY INTEREST. To secure the Debtor's prompt, punctual,
and faithful performance of all and each of the Debtor's Obligations to the
Secured Party, the Debtor hereby grants to the Secured Party a continuing
security interest in-and to the Collateral.
3. COVENANTS. The Debtor covenants and agrees with the Secured Party
that, from and after the date of this Agreement until the Obligations are paid
in full:
(a) OTHER LIENS. Except for the security interest granted hereby,
the Debtor is the owner of the Collateral and will be the owner of the
Collateral hereafter acquired free from any adverse lien, security interest or
encumbrance (other than purchase money security interests
89
that will be discharged upon Debtor's payment of the purchase price for the
applicable property), and the Debtor will defend the Collateral against the
claims and demands of all persons at any time claiming the same or any interest
therein. No financing statements covering any Collateral or any proceeds
thereof are on file in any public office.
(b) FURTHER DOCUMENTATION. At any time and from time to time, upon
the written request of the Secured Party, and at the sole expense of the Debtor,
the Debtor will promptly and duly execute and deliver such further instruments
and documents and take such further action as the Secured Party may reasonably
request for the purpose of obtaining or preserving the full benefits of this
Agreement and of the rights and powers herein granted, including, without
limitation, the filing of any financing or continuation statements under the
Uniform Commercial Code in effect in any jurisdiction with respect to the liens
created hereby. The Debtor also hereby authorizes the Secured Party to file any
such financing or continuation statement without the signature of the Debtor to
the extent permitted by applicable law. A reproduction of this Agreement shall
be sufficient as a financing statement for filing in any jurisdiction.
(c) INDEMNIFICATION. The Debtor agrees to pay, and to save the
Secured Party harmless from, any and all liabilities, costs and expenses
(including, without limitation, legal fees and expenses) (i) with respect to, or
resulting from, any delay in paying, any and all excise, sales or other taxes
which may be payable or determined to be payable with respect to any of the
Collateral, (ii) with respect to, or resulting from, any delay in complying with
any law, rule, regulation or order of any governmental authority applicable to
any of the Collateral or (iii) in connection with any of the transactions
contemplated by this Agreement.
(d) MAINTENANCE OF RECORDS. The Debtor will keep and maintain at
its own cost and expense satisfactory and complete records of the Collateral.
(e) RIGHT OF INSPECTION. The Secured Party shall at all times have
full and free access during normal business hours, and upon reasonable prior
notice, to all the books, correspondence and records of the Debtor relating to
the Collateral, and the Secured Party or its representatives may examine the
same, take extracts therefrom and make photocopies thereof, and the Debtor
agrees to render to the Secured Party, at the Debtor's cost and expense, such
clerical and other assistance as may be reasonably requested with regard
thereto.
(f) COMPLIANCE WITH LAWS, ETC. The Debtor will comply in all
material respects with all laws, rules, regulations and orders of any
governmental authority applicable to the Collateral or any part thereof or to
the operation of the Debtor's business; provided, however, that the Debtor may
contest any such law, rule, regulation or order in any reasonable manner which
shall not, in the reasonable opinion of the Secured Party, adversely affect the
Secured Party's rights or the priority of its liens on the Collateral.
(g) PAYMENT OF OBLIGATIONS. The Debtor will pay promptly when due
all taxes, assessments and governmental charges or levies imposed upon the
Collateral or in respect of its income or profits therefrom, as well as all
claims of any kind (including, without limitation, claims for labor, materials
and supplies) against or with respect to the Collateral, except that no
90
such charge need be paid if (i) the validity thereof is being contested in good
faith by appropriate proceedings, (ii) such proceedings do not involve any
material danger of the sale, forfeiture or loss of any of the Collateral or any
interest therein and (iii) such charge is adequately reserved against on the
Debtor's books in accordance with generally accepted accounting principles.
(h) LIMITATION ON LIENS ON COLLATERAL. The Debtor will not create,
incur or permit to exist, will defend the Collateral against, and will take such
other action as is necessary to remove, any lien or claim on or to the
Collateral, other than the security interest granted hereunder and the security
interests described in Section 3(a) above, and will defend the right, title and
interest of the Secured Party in and to any of the Collateral against the claims
and demands of all other persons.
(i) LIMITATIONS ON DISPOSITIONS OF COLLATERAL. The Debtor will not
sell, transfer, lease or otherwise dispose of any of the Collateral, or attempt,
offer or contract to do so, provided however that Debtor will be allowed to
grant licenses to its software products and related documentation in the
ordinary course of business and to establish or provide for source code escrows
in connection therewith, and to dispose of any tangible fixed assets of
individual net book value of less than $5,000.
(j) FURTHER IDENTIFICATION OF COLLATERAL. The Debtor will furnish
to the Secured Party from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Secured Party may reasonably request, all in
reasonable detail.
4. SECURED PARTY'S APPOINTMENT AS ATTORNEY-IN-FACT.
(a) POWERS. The Debtor hereby appoints the Secured Party and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of the Debtor and in the name of the Debtor or in its own name, from
time to time in the Secured Party's discretion so long as an Event of Default
has occurred and is continuing, for the purpose of carrying out the terms of
this Agreement, to take any and all appropriate action and to execute any and
all instruments which may be necessary or desirable to accomplish the purposes
of this Agreement, and, without limiting the generality of the foregoing, the
Debtor shall grant the Secured Party the power and right, on behalf of the
Debtor, without notice to or assent by the Debtor, to do the following, so long
as an Event of Default has occurred and is continuing:
(i) to pay or discharge taxes and liens levied or placed on
or threatened against the Collateral;
(ii) to direct any party liable for any payment under any of
the Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Secured Party or as the Secured Party shall direct;
91
(iii) to ask or demand for, collect, receive payment of and
receipt for, any and all moneys, claims and other amounts due or to become due
at any time in respect of or arising out of any Collateral;
(iv) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
enforce any right in respect of any Collateral;
(v) to defend any suit, action or proceeding brought
against the Debtor with respect to any Collateral;
(vi) to settle, compromise or adjust any suit, action or
proceeding described in subsection;
(v) above and, in connection therewith, to give such
discharges or releases as the Secured Party may deem appropriate;
(vii) to assign any patent right included in the Collateral
of Debtor (along with the goodwill of the business to which any such patent
right pertains), throughout the world for such term or terms, on such
conditions, and in such manner, as the Secured Party shall in its sole
discretion determine; and
(viii) generally, to sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any of the Collateral as fully
and completely as though the Secured Party were the absolute owner thereof for
all purposes, and to do, at the Secured Party's option and the Debtor's expense,
at any time, or from time to time, all acts and things which the Secured Party
deems necessary to protect, preserve or realize upon the Collateral and the
Secured Party's liens thereon and to effect the intent of this Agreement, all as
fully and effectively as the Debtor might do.
The Debtor hereby ratifies all that said attorneys shall lawfully do or cause to
be done by virtue hereof. This power of attorney shall be a power coupled with
an interest and shall be irrevocable.
(b) NO DUTY ON SECURED PARTY'S PART. The powers conferred on the
Secured Party hereunder are solely to protect the Secured Party's interests in
the Collateral and shall not impose any duty upon it to exercise any such
powers. The Secured Party shall be accountable only for amounts that it
actually receives as a result of the exercise of such powers, and neither it nor
any of its officers, directors, employees or agents shall be responsible to the
Debtor for any act or failure to act hereunder, except for its own willful
misconduct or gross negligence.
5. PERFORMANCE BY SECURED PARTY OF DEBTOR'S OBLIGATIONS. If the Debtor
fails to perform or comply with any of its agreements contained herein and the
Secured Party, as provided for by the terms of this Agreement shall itself
perform or comply, or otherwise cause performance or compliance, with such
agreement, the reasonable expenses of the Secured Party incurred in connection
with such performance or compliance shall be payable by the Debtor to the
Secured Party on demand and shall constitute Obligations secured hereby.
92
6. REMEDIES. If an Event of Default has occurred and is continuing, the
Secured Party may exercise, in addition to all other rights and remedies granted
to it in this Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a secured
party under the Code. Without limiting the generality of the foregoing, the
Secured Party, without demand of performance or other demand, presentment,
protest, advertisement or notice of any kind (except any notice required by law
referred to below) to or upon the Debtor or any other person (all and each of
which demands, defenses, advertisements and notices are hereby waived), may in
such circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at any exchange, broker's
board or office of the Secured Party or elsewhere upon such terms and conditions
as it may deem advisable and at such prices as it may deem best, for cash or on
credit or for future delivery without assumption of any credit risk. The
Secured Party shall have the right upon any such public sale or sales, and, to
the extent permitted by law, upon any such private sale or sales, to purchase
the whole or any part of the Collateral so sold, free of any right or equity of
redemption in the Debtor, which right or equity is hereby waived or released.
The Secured Party shall apply the net proceeds of any such collection, recovery,
receipt, appropriation, realization or sale, after deducting all reasonable
costs and expenses of every kind incurred therein or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral or
the rights of the Secured Party hereunder, including, without limitation,
reasonable attorneys' fees and disbursements, to the payment in whole or in part
of the Obligations, in such order as the Secured Party may elect, and only after
such application and after the payment by the Secured Party of any other amount
required by any provision of law, need the Secured Party account for the
surplus, if any, to the Debtor. To the extent permitted by applicable law, the
Debtor waives all claims, damages and demands it may acquire against the Secured
Party arising out of the exercise by the Secured Party of any of its rights
hereunder. If any notice of a proposed sale or other disposition of Collateral
shall be required by law, such notice shall be deemed reasonable and proper if
given at least 5 days before such sale or other disposition. The Debtor shall
remain liable for any deficiency if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay the Obligations and the
fees and disbursements of any attorneys employed by the Secured Party to collect
such deficiency.
7. LIMITATION ON DUTIES REGARDING PRESENTATION OF COLLATERAL. The
Secured Party's sole duty with respect to the custody, safekeeping and
preservation of the Collateral, under Section 9-207 of the Code or otherwise,
shall be to deal with it in the same manner as the Secured Party deals with
similar property for its own account. Neither the Secured Party nor any of its
directors, officers, employees or agents shall be liable for failure to demand,
collect or realize upon all or any part of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Debtor or otherwise.
8. POWERS COUPLED WITH AN INTEREST. All authorizations and agencies
herein contained with respect the Collateral are irrevocable and powers coupled
with an interest.
93
9. NO WAIVER; CUMULATIVE REMEDIES. The Secured Party shall not by any
act (except by a written instrument pursuant to Section 10(a) hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any default under the Notes or in any breach
of any of the terms and conditions hereof. No failure to exercise, nor any
delay in exercising, on the part of the Secured Party, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by the Secured Party of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which the
Secured Party would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any rights or remedies provided by law.
10. MISCELLANEOUS.
(a) WAIVERS AND AMENDMENTS; SUCCESSORS AND ASSIGNS. None of the
terms or provisions of this Agreement may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the Debtor and the
Secured Party, provided that any provision of this Agreement may be waived by
the Secured Party in a written letter or agreement executed by the Secured Party
or by telex or facsimile transmission from the Secured Party. This Agreement
shall be binding upon the successors and assigns of the Debtor and shall inure
to the benefit of the Secured Party and its successors and assigns.
(b) GOVERNING LAW. The legal relations between the parties shall be
governed by the laws of the State of California, regardless of the choice of law
provisions of California or any other jurisdiction.
(c) SEVERABILITY. In the event any provision of this Agreement or
the application of any such provision shall be held to be prohibited or
unenforceable in any jurisdiction, such provision shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability. The remaining provisions of this Agreement shall remain in
full force and effect, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. The parties shall use their best efforts to replace the
provision that is contrary to law with a legal one approximating to the extent
possible the original intent of, and the economic benefits accruing to, the
parties.
(d) KNOWLEDGE. For purposes of this Agreement, to know or have
knowledge of, or to be aware of or believe, any matter shall mean to know or
have knowledge, be aware or believe, after due inquiry; provided such knowledge,
awareness or belief shall only be imputed to employees of a party at the level
of manager or above, together with such party's officers and directors.
(e) BINDING. This Agreement shall be binding upon and inure to the
benefit of each of the parties and, to the extent permitted by Section 10(a),
their respective successors and assigns.
94
(f) HEADINGS. Section headings are included solely for convenience,
are not to be considered a part of this Agreement, and are not intended to be
full and accurate descriptions of their contents.
(g) NOTICES. All notices or other communications which shall or may
be given pursuant to this Agreement shall be in writing, shall be effective upon
receipt, and shall be delivered by Federal Express or a similar courier,
personal delivery, certified or registered mail, or by facsimile transmission
(with confirmation of transmission receipt), addressed as follows (or as is
provided in the future by written notice as provided herein):
If to Debtor: Wireless Solutions
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Attn: President
If to Secured Party: Retix
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Attn: President
(h) COUNTERPARTS. This Agreement may be executed in any number of
copies, each of which shall be deemed an original and all of which together
shall constitute one and the same instrument.
(i) LANGUAGE INTERPRETATION. In the interpretation of this
Agreement, unless the context otherwise requires, (a) words importing the
singular shall be deemed to import the plural and vice versa, (b) words denoting
gender shall include all genders, (c) references to persons shall include
corporations or other bodies and vice versa, and (d) references to parties,
sections, schedules, paragraphs and exhibits shall mean the parties, sections,
schedules, paragraphs and exhibits of and to this Agreement unless otherwise
indicated by the context.
(j) DRAFTING. This Agreement shall not be construed against any
party by reason of the drafting or preparation thereof.
[SIGNATURE PAGE FOLLOWS]
95
IN WITNESS WHEREOF, the Debtor and Secured Party have caused this Agreement
to be duly executed and delivered as of the date first above written.
"DEBTOR"
WIRELESS SOLUTIONS,
a California corporation
By:
---------------------------
Title:
-------------------------
"SECURED PARTY"
RETIX, a California corporation
By:
--------------------------
Title:
------------------------
96
EXHIBIT A
The Collateral shall consist of all right, title and interest of Debtor in
and to the following:
(a) All goods and equipment now owned or hereafter acquired, including
without limitation, all machinery, fixtures, vehicles (including motor vehicles
and trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;
(b) All inventory, now owned or hereafter acquired, including without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Debtor's custody or possession or in transit
and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above, and Debtor's
books relating to any of the foregoing;
(c) All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, trademarks, servicemarks,
trade styles, trade names, patents, patent applications, leases, license
agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;
(d) All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Debtor
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Debtor, whether or not earned by performance, and any
and all credit insurance, guaranties, and other security therefor, as well as
all merchandise returned to or reclaimed by Debtor and Debtor's Books relating
to any of the foregoing;
(e) All documents, cash, deposit accounts, securities, letters of credit,
certificates of deposit, instruments and chattel paper now owned or hereafter
acquired and Debtor's books relating to the foregoing;
(f) All copyrights, copyright applications, copyright registrations and
like protections in each work of authorship and derivative work thereof, whether
published or unpublished, now owned or hereafter acquired; all trade secret
rights, including all rights to unpatented inventions, know-how, operating
manuals, license rights and agreements and confidential information, now owned
or hereafter acquired; all mask work or similar rights available for the
protection of semiconductor devices, now owned or hereafter acquired; all claims
for damages by way of any past, present and future infringement of any of the
foregoing; and
(g) Any and all claims, rights and interests in any of the above and all
substitutions for, additions and accessions to and proceeds thereof.
97
EXHIBITS J AND K - TRANSFERRED ASSETS & LIABILITIES
WIRELESS SOLUTIONS, INC.
STATEMENT OF TRANSFERRED ASSETS AND LIABILITIES
AS OF 5/31/96
5/31/96
-------------
CASH $ --
ACCOUNTS RECEIVABLE, NET OF RESERVES (50,000.00)
OTHER RECEIVABLES --
INVENTORIES --
PREPAID EXPENSES AND OTHER CURRENT ASSETS 5,893.43
INTERCOMPANY RECEIVABLES --
TOTAL CURRENT ASSETS (44,106.57)
MACHINERY AND EQUIPMENT 224,019.63
FURNITURE AND FIXTURES --
BUILDINGS --
LEASEHOLD IMPROVEMENTS --
TOTAL PROPERTY AND EQUIPMENT 224,019.63
ACCUMULATED DEPRECIATION (93,621.75)
NET PROPERTY AND EQUIPMENT 130,397.88
OTHER ASSETS --
TOTAL ASSETS $ 86,291.31
ACCOUNTS PAYABLE $ 48,863.88
ACCRUED WAGES 57,386.00
DEFERRED REVENUE --
OTHER ACCRUED LIABILITIES 1,165.51
INCOME TAXES PAYABLE --
CURRENT PORTION-LTD --
TOTAL CURRENT LIABILITIES 107,415.39
LONG TERM DEBT --
DEFERRED RENT --
TOTAL LIABILITIES $ 107,415.39
98
The enclosed unaudited Statements of Transferred Assets and Liabilities of
Retix's wireless data business unit's U.S. operations include all of the
tangible and recorded intangible assets as well as known liabilities recorded as
of May 31, 1996, in all material respects, except as noted below. The enclosed
Statements of Transferred Assets and Liabilities have been prepared in
accordance with past accounting policies and practices of Retix consistently
applied, however, such statement does not contain any footnotes which may be
required to be in conformity with generally accepted accounting principles
("GAAP"). Subsidiary financial records and corresponding detail schedules are
on file at Retix's principal corporate offices and are available via written
communication with the chief accounting officer of Retix. Except as disclosed
below, the enclosed Statements of Transferred Assets and Liabilities reflect the
assets and liabilities transferred from Retix's wireless data business unit to
Wireless Solutions, Inc., as of May 31, 1996 as contemplated by the Master
Agreement:
ACCRUED VACATION - The enclosed Statements of Transferred Assets and
Liabilities excludes liabilities associated with vacation accruals of wireless
data business unit employees as of May 31, 1996 as contemplated by the Master
Agreement.
BONUSES/COMMISSIONS - Bonuses/commissions potentially due under certain
employment contracts and commission plans have been excluded from the enclosed
Statements of Transferred Assets and Liabilities as final determination of
eligibility by such wireless data business unit employees has not occurred as of
May 31, 1996. Any such amounts, if earned, are not expected to be significant.
UNDISCLOSED LIABILITIES - The enclosed Statements of Transferred Assets and
Liabilities reflect accrued and absolute liabilities of Retix's wireless data
business unit as of May 31, 1996. In addition, commitments and other
potentially contingent liabilities which relate to Retix's wireless data
business unit are contemplated to be transferred to Wireless Solutions, Inc., in
accordance with the Master Agreement, and may not be disclosed on the enclosed
Statements of Transferred Assets and Liabilities. Such undisclosed liabilities
include among other items:
OPERATING LEASE commitments for office facilities and equipment used in the
execution of Retix's wireless data business unit business. Such facilities
include approximately 12,000 square feet of the facility at 0000 Xxxxxxxxx
Xxx, Xxxxxx xxx Xxx, Xxxxxxxxxx. Operating leases commitments in
connection with equipment includes photocopiers, postage machines, test
equipment and certain computer equipment.
INTERCOMPANY ACCOUTS - Certain intercompany note and other interco operating
accounts require final reconciliation upon completion of the carve-out of
Retix's wireless data business unit from Retix's consolidated financial
statements and may require adjustments to the enclosed Statements of Transferred
Assets and Liabilities of Wireless Solutions, Inc., as of May 31, 1996.
(continued)
99
INTELLECTUAL PROPERTY , CONTRACTS AND OTHER INTANGIBLES - As contemplated by the
Master Agreement, all trademarks, trade names, copyrights, technology and other
intangible property as well as contracts (customer and vendor) and capitalized
software development costs that are used in the business of Retix's wireless
data business unit are to be transferred to Wireless Solutions, Inc., subject to
a Grant-Back License Agreement. Such items are not reflected on the enclosed
Statements of Transferred Assets and Liabilities of Retix's wireless data
business unit as of May 31, 1996 and the rights and obligations related to such
transfer to Wireless Solutions, Inc., is addressed elsewhere within the Master
Agreement.
CAPITALIZATION - Wireless Solutions, Inc., is capitalized through the issuance
of 17,000,000 shares of the Company's Preferred Stock at $1.75 per share to
Retix as contemplated by the Master Agreement.
STOCKHOLDER'S NET INVESTMENT - Certain cash and investment accounts require
final reconciliation upon completion of the carve-out of Retix's wireless data
business unit from Retix's consolidated financial statements. Such final
reconciliations may require adjustments to record Retix's investment in the
wireless data division to reflect the historical operating results of the
business unit.
100
