Exhibit 10.6
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of August 30, 1996 by and between C-Grams Unlimited Inc., a New Hampshire
corporation, with offices at 00 Xxxxx Xxxxx 000, Xxxxxxxx, Xxx Xxxxxxxxx 00000
(the "Company") and Worldcomm Systems Inc., a Delaware corporation, with offices
at 000 Xxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000 ("Investor").
WITNESSETH:
WHEREAS, the authorized capital stock of the Company consists of Four
Million (4,000,000) shares of common stock, no par value per share (the "Common
Stock");
WHEREAS, there are Two Million Ten Thousand (2,010,000) shares of Common
Stock issued and outstanding as of the date hereof prior to giving effect to the
transactions contemplated hereby; and
WHEREAS, the Company desires to issue and sell to Investor One Hundred
Thirty-Two Thousand One Hundred Five (132,105) shares of the authorized but
unissued Common Stock of the Company, which share constitute exactly Five
Percent (5.0%) of the outstanding shares of the Company on an after acquired
basis (after giving effect to the issuance of all shares reserved for issuance
pursuant to the Equity Incentive Plan of the Company), and Investor desires to
purchase said shares upon the terms and conditions set forth herein;
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. AGREEMENT TO PURCHASE AND SELL STOCK.
1.1 Authorization. As of the Closing (as defined below) the Company
will have authorized the issuance of, pursuant to the terms and conditions of
this Agreement, One Hundred Thirty-Two Thousand One Hundred Five (132,105)
shares of the Company's Common Stock, no par value per share, having the rights,
preferences, privileges and restrictions set forth in the Articles of
Incorporation of the Company attached to this Agreement as Exhibit A (the
"Articles of Incorporation").
1.2 Agreement to Purchase and Sell. The Company agrees to sell to the
Investor at the Closing, and the Investor agrees to purchase from the Company at
the Closing, One Hundred Thirty-Two Thousand One Hundred Five (132,105) shares
of Common Stock, at a price of Three and 03/100 Dollars ($3.03) per share for an
aggregate purchase price of Four Hundred Thousand Two Hundred Seventy-Eight and
15/100 Dollars ($400,278.15). The shares of Common Stock purchased and sold
pursuant to this Agreement will be collectively hereinafter referred to as the
"Purchased Shares".
2. CLOSING.
2.1 The Closing. The purchase and sale of the Purchased Shares will
take place at the offices of Xxxx and Xxxx at 10:00 a.m. on August 30, 1996 or
such other time, place and date as the Company and Investor mutually agree upon,
such date to be no later than thirty
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(30) days after the date of this Agreement (which time, place and date are
referred to in this Agreement as the "Closing"). At the Closing and thereafter
as provided below, the Company will deliver to the Investor certificates
representing the number of Purchased Shares and the Investor will deliver to the
Company the Purchase Price therefore, paid by wire transfer of funds to the
Company, pursuant to the following schedule. The Company and Investor will also
deliver to each other a copy of their respective Board of Director resolutions
authorizing this Agreement and the transactions contemplated hereby in the form
annexed hereto as Exhibit B.
Payment Amount Date Shares
-------------- ----
$150,000.00 August 30, 1996 48,879
$100,000.00 September 13, 1996 33,026
$100,000.00 September 27, 1996 33,026
$ 50,278.15 October 11, 1996 17,174
----------- ---------------- -------
$400,278.15 TOTALS 132,105
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Investor that, except as set forth in the
Schedule of Exceptions ("Schedule of Exceptions") attached to this Agreement as
Exhibit C (which Schedule of Exceptions shall be deemed to be representations
and warranties to the Investor by the Company under this Section 3), the
statements in the following paragraphs of this Section 3 are all true, complete
and correct:
3.1 Organization. Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New Hampshire and has all requisite corporate power and
authority to own its properties and assets and to carry on its business as now
conducted and as presently proposed to be conducted. The Company is qualified to
do business as a foreign corporation in each jurisdiction where failure to be so
qualified would have a material adverse effect on its financial condition,
business, prospects or operations.
3.2 Capitalization. Immediately prior to the Closing the
capitalization of the Company will consist of the following:
(a) Outstanding Capital Stock and Ownership Thereof. Prior to the
Closing of the transactions contemplated hereby, a total of 4,000,000 shares of
Common Stock are authorized, of which 2,010,000 shares are issued and
outstanding and 500,000 shares are reserved for issuance pursuant to the Equity
Incentive Plan of the Company (of such 500,000 shares, options for 248,000
shares are currently outstanding). There are no other classes of stock
authorized or issued. The Purchased Shares will constitute exactly Five Percent
(5.0%) of the outstanding shares of the Company on an after acquired basis
(after giving effect to the issuance of all shares reserved for issuance
pursuant to the Equity Incentive Plan of the Company).
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(b) Options, Warrants Reserved Shares. Except for options to
purchase 248,000 shares of Common Stock, there are not outstanding any options,
warrants, rights (including conversion or preemptive rights) or agreements for
the purchase or acquisition from the Company of any shares of its capital stock
or any securities convertible into or ultimately exchangeable or exercisable for
any shares of the Company's capital stock. No shares of the Company's
outstanding capital stock, or stock issuable upon exercise or exchange of any
outstanding options, warrants or rights, or other stock issuable by the Company,
are subject to any rights of first refusal or other rights to purchase such
stock (whether in favor of the Company or any other person), pursuant to any
agreement or commitment of the Company.
3.3 Due Authorization. All corporate action on the part of the
Company, its officers, directors and shareholders necessary for the
authorization, execution, delivery, and the performance of all obligations of
the Company under this Agreement, and the authorization, issuance, reservation
for issuance and delivery of all of the Purchased Shares being sold under this
Agreement have been taken or will be taken prior to the Closing, and this
Agreement constitutes a valid and legally binding obligation of the Company,
enforceable in accordance with its terms, except as may be limited by (i)
applicable bankruptcy, insolvency, reorganization or others laws of general
application relating to or affecting the enforcement of creditors' rights
generally and (ii) the effect of rules of law governing the availability of
equitable remedies.
3.4 Valid Issuance of Stock. The Purchased Shares, when issued, sold
and delivered in accordance with the terms of this Agreement for the
consideration provided for herein, will be duly and validly issued, fully paid
and nonassessable.
3.5 Governmental Consents. No consent approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
U.S. federal, state or local governmental authority on the part of the Company
is required in connection with the consummation of the transactions contemplated
by this Agreement.
3.6 Litigation. There is no material action. suit, proceeding, claim,
arbitration or investigation ("Action") pending (or, to the best of the
Company's knowledge, currently threatened) against the Company, its activities,
properties or assets or, to the best of the Company's knowledge, against any
officer, director or employee of the Company in connection with such officer's,
director's or employee's relationship with, or actions taken on behalf of, the
Company. To the best of the Company's knowledge, there is no factual or legal
basis for any such Action that might result, individually or in the aggregate,
in any material adverse change in the business, properties, assets, financial
condition, affairs or prospects of the Company. The Company is not a party to or
subject to the provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality and there is no Action by the
Company currently pending or which the Company intends to initiate.
3.7 Status of Intellectual Property. Attached hereto as Exhibit D is a
true and correct schedule which describes all of the patents, patent
applications, registered trademarks, trademark applications, copyright
registrations and applications therefor and all licenses, franchises, permits,
authorizations, agreements and arrangements that concern any of the foregoing or
that concern like items owned by others and used by the Company. Except as
indicated on such Exhibit:
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(a) The patents and patent applications (collectively, "Patent
Rights") shown on Exhibit D are owned by the Company free and clear of all
mortgages, liens, charges or encumbrances whatsoever. No licenses have been
granted with respect to such Patent Rights (except for product licenses to
customers) and the Company has not received notice of any claim, nor is the
Company aware of any basis for such a claim, by a third party suggesting that
its practice of the inventions covered by such Patents Rights would infringe
upon the patent rights of any third party.
(b) The copyright registrations and pending applications shown on
Exhibit D are owned by the Company free and clear of all mortgages, liens,
charges or encumbrances whatsoever. Except for licenses granted to end users in
accordance with the Company's standard terms, no licenses have been granted with
respect to any of the Company's copyrighted material and the Company has not
received notice of any claim, nor is the Company aware of any basis for such a
claim, by a third party suggesting that any of its activities in the conduct of
its business as presently conducted infringe upon the copyrights of any third
party.
(c) The trademark registrations and pending applications shown on
Exhibit D are owned by the Company free and clear of all mortgages, liens,
charges or encumbrances whatsoever. No licenses have been granted with respect
to any of such trademarks or applications and the Company has not received
notice of any claim, nor is the Company aware of any basis for such a claim, by
a third party suggesting that any of its activities in the conduct of its
business as presently conducted infringe upon the trademarks, trade names or
trade dress of any third party.
(d) All technical information and know-how in possession of the
Company relating to the design or manufacture of products sold and services
performed by it, including without limitation methods of manufacture, lab
journals, manufacturing, engineering and other drawings, design and engineering
specifications and similar items recording or evidencing such information is
owned by the Company free and clear of all mortgages, liens, charges or
encumbrances whatsoever. The Company has no obligation to pay any royalty to any
third party with respect to such information. The Company has not granted any
license or other permission with respect to the use of such information and has
not received notice of any claim, nor is the Company aware of any basis for such
a claim, by a third party suggesting that the Company's use of such information
would infringe upon or misappropriate the rights of any third party.
3.8 Compliance with Law and Charter Documents. The Company is not in
violation or default of any provision of its Articles of Incorporation or
By-laws, both as amended, and to the best of the Company's knowledge, except for
any violations that individually and in the aggregate would have no material
adverse impact on the Company's business, properties, financial condition,
results of operations, affairs or prospects, the Company is in compliance with
all applicable statutes, laws (including tax laws), regulations and executive
orders of the United States of America and all states, foreign countries or
other governmental bodies and agencies having jurisdiction over the Company's
business or properties. The Company has not received any notice of any violation
of such statutes, laws, regulations or orders which has not been remedied prior
to the date hereof. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby
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or thereby will not result in any such violation or default, or be in conflict
with or constitute, with or without the passage of time or the giving of notice
or both, either a default under the Company's Articles of Incorporation or
By-laws, or any agreement or contract of the Company, or, to the best of the
Company's knowledge, a violation of any statutes, laws, regulations or orders,
or an event which results in the creation of any material lien, charge or
encumbrance upon any asset of the Company.
3.9 Material Agreements. The Company has not breached, nor does the
Company have any knowledge of any claim or threat that the Company has breached,
any term or condition of any agreement that, individually or in the aggregate,
would have a material adverse effect on the business, properties, financial
condition, results of operations, affairs or prospects of the Company. Annexed
hereto as Exhibit E is a list of all material agreements to which the Company is
a party.
3.10 Registration Rights. Except as provided for herein, the Company
has not granted or agreed to grant to any person or entity any rights (including
piggyback registration rights) to have any securities of the Company registered
with the United States Securities and Exchange Commission ("SEC") or any other
governmental authority.
3.11 Articles: By-laws. The Articles of Incorporation and the By-laws
of the Company are currently in the form provided to the Investor.
3.12 Title to Property and Assets. The Company owns its properties and
assets free and clear of all mortgages, deeds of trust, liens, encumbrances,
security interests and claims except for statutory liens for the payment of
current taxes that are not yet delinquent and liens, encumbrances and security
interests which arise in the ordinary course of business and which do not affect
material properties and assets of the Company. With respect to the property and
assets it leases, the Company is in compliance with such leases and, to the best
of the Company's knowledge, the Company holds valid leasehold interests in such
assets free of any liens, encumbrances, security interests or claims of any
party other than the lessors of such property and assets.
3.13 Financial Statements. Attached to this Agreement as Exhibit F is
an unaudited balance sheet of the Company as of May 31, 1995 and 1996 and
unaudited statements of operations and cash flows for the years ended May 31,
1994, 1995 and 1996 (all such financial statements being collectively referred
to herein as the "Financial Statements"). Financial statements for period ending
May 31, 1996 will be provided to Investor upon receipt from Ernst and Young.
Investor acknowledges that statements may be provided subsequent to the August
30, 1996 Closing. Such Financial Statements (i) are in accordance with the books
and records of the Company, (ii) present fairly in all material respects the
financial condition of the Company at the date or dates therein indicated and
the results of operations for the period or periods therein specified, and (iii)
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except that the unaudited Financial Statements do
not include footnotes and are subject to year-end audit adjustments). The
Company has good and marketable title to all assets set forth on the balance
sheet of the Financial Statements, except for such assets as have been spent,
sold or transferred in the ordinary course of business since their respective
dates.
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3.14 Disclosure. This Agreement and the Exhibits hereto (when read
together) do not contain any untrue statement of a material fact and do not omit
to state a material fact necessary to make the statements therein or herein not
misleading.
4. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF INVESTORS. The
Investor hereby represents and warrants to, and agrees with, the Company,
severally and not jointly, that:
4.1 Authorization. This Agreement constitutes Investor's valid and
legally binding obligation, enforceable in accordance with its terms except as
may be limited by (i) applicable bankruptcy, insolvency, reorganization or other
laws of general application relating to or affecting the enforcement of
creditors' rights generally, and (ii) the effect of rules of law governing the
availability of equitable remedies. Investor represents that Investor has full
corporate power and authority to enter into this Agreement.
4.2 Due Authorization. All corporate action on the part of the
Investor, its officers, directors and shareholders necessary for the
authorization, execution, delivery, and the performance of their obligations
under, this Agreement have been taken or will be taken prior to the Closing, and
this Agreement constitutes a valid and legally binding obligation of the
Investor enforceable in accordance with its terms, except as may be limited by
(i) applicable bankruptcy, insolvency, reorganization or others laws of general
application relating to or affecting the enforcement of creditors' rights
generally, and (ii) the effect of rules of law governing the availability of
equitable remedies.
4.3 Purchase for Own Account. The Purchased Shares to be purchased by
the Investor hereunder will be acquired for investment for the Investor's own
account, not as a nominee or agent, and not with a view to the public resale or
distribution thereof within the meaning of the Securities Act of 1933, as
amended (the "Act"), and the Investor has no present intention of selling,
granting any participation in, or otherwise distributing the same. Investor also
represents that Investor has not been formed for the specific purpose of
acquiring Purchased Shares.
4.4 Disclosure of Information. Investor has received or has had full
access to all the information it considers necessary or appropriate to make an
informed investment decision with respect to the Purchased Shares to be
purchased by Investor under this Agreement. Investor further has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the purchase and sale of the Purchased Shares and to
obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to Investor or to which Investor
had access. The foregoing, however, does not in any way limit or modify the
representations and warranties made by the Company in Section 3.
4.5 Investment Experience. Investor understands that the purchase of
the Purchased Shares involves substantial risk. Investor: (i) has experience as
an investor in securities of companies in the development stage and acknowledges
that Investor is able to fend for itself, can bear the economic risk of
Investor's investment in the Purchased Shares and has such knowledge and
experience in financial or business matters that Investor is capable of
evaluating the merits and risks of this investment in the Purchased Shares and
protecting its own
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interests in connection with this investment and/or (ii) has a preexisting
personal or business relationship with the Company and certain of its officers,
directors or controlling persons of a nature and duration that enables Investor
to be aware of the character, business acumen and financial circumstances of
such persons.
4.6 Accredited Investor Status. Unless otherwise expressly indicated
on this Agreement, Investor is an "accredited investor" within the meaning of
Regulation D promulgated under the Act.
4.7 Restricted Securities. Investor understands that the Purchased
Shares are characterized as "restricted securities" under the Act inasmuch as
they are being acquired from the Company in a transaction not involving a public
offering and that, under the Act and applicable regulations thereunder, such
securities may be resold without registration under the Act only in certain
limited circumstances. In this connection, Investor represents that Investor is
familiar with Rule 144 of the SEC, as presently in effect, and understands the
resale limitations imposed thereby and by the Act. Investor understands that the
Company is under no obligation to register any of the securities sold hereunder
except as provided herein. Investor understands that no public market now exists
for any of the Purchased Shares and that it is uncertain whether a public market
will ever exist for the Purchased Shares.
4.8 Legends. It is understood that the certificates evidencing the
Purchased Shares will bear the legends set forth below and any others as may be
required by law:
(a) THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS.
The legend set forth above shall be removed by the Company from any certificate
evidencing Purchased Shares upon delivery to the Company of an opinion by
counsel, reasonably satisfactory to the Company, that a registration statement
under the Act is at that time in effect with respect to the legended security or
that such security can be freely transferred in a public sale without such a
registration statement being in effect and that such transfer will not
jeopardize the exemption or exemptions from registration pursuant to which the
Company issued the Purchased Shares.
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5. CONDITIONS TO INVESTOR'S OBLIGATIONS AT CLOSING. The obligations of the
Investor under Section 1 and Section 2 of this Agreement are subject to the
fulfillment or waiver, on or before the Closing, of each of the following
conditions precedent or concurrent, the waiver of which shall not be effective
against Investor, unless given by written communication to the Company:
5.1 Representations and Warranties True. Each of the representations
and warranties of the Company contained in Section 3 shall be true, complete and
correct in all material respects on and as of the Closing with the same effect
as though such representations and warranties had been made on and as of the
date of the Closing.
5.2 Approval of Agreement. This Agreement shall have been duly adopted
by the Company by all necessary corporate action of its Board of Directors and
shareholders.
5.3 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Investor and to the Investor's legal counsel, and they shall have received all
such counterpart originals and certified or other copies of such documents as
they may reasonably request including but not limited to documents demonstrating
the payment of past due taxes.
6. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations of
the Company to the Investor under this Agreement are subject to the fulfillment
or waiver on or before the Closing of each of the following conditions:
6.1 Representations and Warranties. The representations and warranties
of Investor contained in Section 4 shall be true and correct in all material
respects on the date of the Closing with the same effect as though such
representations and warranties had been made on and as of the Closing.
6.2 Payment of Purchase Price. The Investor shall have delivered to
the Company the purchase price specified in accordance with the provisions of
Section 2.
6.3 Securities Exemptions. The offer and sale of the Purchased Shares
to the Investor pursuant to this Agreement shall be exempt from the registration
requirements of the Act and the registration and/or qualification requirements
of all applicable state securities laws.
7. OPTION TO PURCHASE SHARES
7.1 Grant of Option. The Company does hereby grant to Investor an
irrevocable option (the "Option") to purchase an additional Fifteen Percent
(15%) of the then issued and outstanding shares of the Company's Common Stock,
on an after acquired basis (the "Option Shares"), pursuant to the terms and
conditions of this Agreement. It being the intention of the parties that
investor shall have the right to acquire and maintain, should Investor so elect,
a Twenty Percent (20%) ownership interest in the Company.
7.2 Option Term. The Option term shall commence on the date hereof and
shall continue for a period of two (2) years from the date hereof (the "Option
Term").
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7.3 Option Exercise. (a) Investor may exercise the Option at any time
during the Option Term by giving written notice (the "Option Notice") of its
intention to do so to the Company. The date notice is given shall be referred to
as the "Exercise Date".
(b) Within thirty (30) days after the Option Notice has been
delivered by Investor to the Company, the Company shall issue, transfer and
deliver to Investor certificates representing Fifteen Percent (15%) of the then
issued and outstanding shares of Common Stock of the Company, on an after
acquired basis. The Option Shares shall be free and clear of all liens, security
interests and other encumbrances, and upon payment as provided in Section 7.4
below, such Option Shares shall be duly and validly issued, fully paid and
nonassessable. Such Option Shares shall be recorded on the books of the Company
in the name of Investor.
7.4 Purchase Price. (a) The purchase price for the Option shares shall
be based upon the Company's projected Fiscal Year 1998 net income of Three
Hundred Eighty Three Thousand Nine Hundred Ninety-Eight Dollars ($383,998) as
illustrated in Exhibit G. Such projected net income shall then be multiplied by
a price to earnings multiplier of twenty (20) times, which product shall be
multiplied by the percentage of the Company being acquired by Investor pursuant
to the Option, and which product will then be subject to a twenty percent (20%)
discount (the "Purchase Price"). This aforementioned purchase term applies to
shares purchased on or prior to August 30, 1997. The Purchase Price shall be
paid by Investor to the Company at the closing in cash or by certified check.
(b) Option shares acquired after August 30, 1997, but no later
than August 30, 1998, will be based upon the Company's then most recent
projected Fiscal Year 1999 net income, which in no case shall be less than the
Purchase Price set forth in Section 7.4(a) above or greater than One Million
Thirty Three Thousand Five Hundred Thirty Eight Dollars ($1,033,538), as
illustrated in Exhibit G. The net income projected in Exhibit G will serve as
the basis for the maximum possible purchase price. Such projected net income
shall then be multiplied by a price to earnings multiplier of twenty (20) times,
which product shall be multiplied by the percentage of the Company being
acquired by Investor pursuant to the Option, and which product will then be
subject to a twenty percent (20%) discount (the "Secondary Purchase Price"). The
Secondary Purchase Price shall be paid by Investor to the Company at the closing
in cash or by certified check.
7.5 Closing. The Option Notice shall specify a date (the "Closing
Date") not less than thirty (30) and not more than forty-five (45) days
subsequent to the date of the Option Notice for the closing (the "Closing");
provided that, if no Closing Date is specified in the Option Notice, the Closing
Date shall be the first business day that is at least forty-five (45) days after
the Exercise Date. The Closing shall occur at the offices of the Company at
10:00 a.m. or at such other time, place and date as may be agreed upon by the
Company and Investor.
7.6 Cooperation. At the Closing and thereafter, each party shall
execute and deliver to the other party such instruments and documents as are
reasonably required to accomplish and conclude the transactions contemplated
under this Section 7; and the Company shall also provide copies of any corporate
books and records reasonably requested by Investor on or prior to Closing.
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7.7 Conditions to Closing. Investor's obligation to close following
the exercise of the Option shall be subject to there having been no material
adverse change in the condition, value or prospects of the Company between the
Exercise Date and the Closing Date.
8. RIGHT OF FIRST REFUSAL.
8.1 General. Investor shall have the right of first refusal to
purchase its "Pro Rata Share" (as defined below), of all (or any part) of any
"New Securities" (as defined in Section 8.2) that the Company may from time to
time issue after the date of this Agreement. Investor's "Pro Rata Share" for
purposes of this right of first refusal is the ratio of (a) the number of shares
of Common Stock held by Investor to (b) the total number of shares of Common
Stock of the Company then outstanding prior to the issuance of the subject New
Securities.
8.2 New Securities. (a) "New Securities" shall mean any Common Stock
or preferred stock of the Company, whether now authorized or not and rights,
options or warrants to purchase such Common Stock or preferred stock, and
securities of any type whatsoever that are, or may become, convertible or
exchangeable into such Common Stock or preferred stock; provided however, that
the term "New Securities" does not include:
(i) shares of the Company's Common Stock issued in
connection with any stock split or stock dividend;
(ii) securities offered by the Company to the public
pursuant to a registration statement filed under the Act;
(iii) shares of common stock, or options exercisable
therefor, issuable to officers, directors, consultants and employees of the
Company or any subsidiary pursuant to any plan, agreement or arrangement
approved by a vote of not less than a majority of the Board of Directors of the
Company; and
(iv) securities issued solely in consideration for the
acquisition (whether by merger or otherwise) by the Company or any of its
subsidiaries of all or substantially all of the stock or assets of any other
entity.
(b) In the event securities of the Company are issued in the
manner contemplated by Section 8.2(a)(iii) (in excess of the 500,000 shares
reserved for issuance under the Equity Incentive Plan) or Section 8.2(a)(iv),
then in such event Investor shall have the right of first refusal to purchase
unissued shares of the Company's securities sufficient for Investor to maintain
its Pro Rata Share.
8.3 Procedures. In the event that the Company proposes to undertake an
issuance of New Securities or an issuance pursuant to Section 8.2(a)(iii) (in
excess of the 500,000 shares reserved for issuance under the Equity Incentive
Plan) or Section 8.2(a)(iv), it shall give to Investor written notice of its
intention to issue such securities (the "Notice"), describing the type of such
securities and the price and the general terms upon which the Company proposes
to issue such securities. Investor shall have thirty (30) days from the date of
mailing of any such Notice to agree in writing to purchase Investor's Pro Rata
Share of such securities for the price and upon the general terms specified in
the Notice (which shall be the
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same price and terms as are offered to third parties) by giving written notice
to the Company and stating therein the quantity of such securities to be
purchased (not to exceed Investor's Pro Rata Share). If Investor fails to so
agree in writing within such thirty (30) day period to purchase Investor's full
or partial Pro Rata Share of an offering of such securities, then Investor shall
forfeit the right hereunder to purchase that part of its Pro Rata Share of such
securities that it did not so agree to purchase.
8.4 Failure of Exercise. In the event that Investor fails to exercise
in full the right of first refusal within such thirty (30) day period, then the
Company shall have one hundred twenty (120) days thereafter to sell the New
Securities or the securities described in Section 8.2(a)(iii) or Section
8.2(a)(iv) with respect to which the Investor's rights of first refusal
hereunder were not exercised, at a price and upon general terms not more
favorable to the purchasers thereof than specified in the Company's Notice to
Investor. In the event that the Company has not issued and sold the New
Securities or the securities described in Section 8.2(a)(iii) or Section
8.2(a)(iv) within such one hundred twenty (120) day period, then the Company
shall not thereafter issue or sell any such securities without again first
offering such securities to Investor pursuant to this Section 8.
9. CERTAIN COVENANTS AND AGREEMENTS
9.1 Indemnification by the Company. The Company agrees to indemnify,
defend and hold Investor harmless, at any time after the Closing, from and
against all losses, costs, damages, liabilities, interest, penalties,
settlements, judgments or expenses, including, but not limited to, reasonable
attorney's fees and expenses, asserted against, resulting from, imposed upon or
incurred by Investor directly or indirectly, arising out of or in connection
with (i) the breach or inaccuracy of any of the representations or warranties of
the Company made in or pursuant to this Agreement; and/or (ii) any breach or
non-fulfillment of any covenant or agreement of the Company contained in this
Agreement.
9.2 Registration Rights. The Company has agreed that, in the event of
the Company's undertaking an initial public offering, it will permit Investor to
include in the registration statement filed by the Company in connection with
such initial public offering all of the Common Stock of the Company that
Investor holds and has requested be registered, subject to the right of the
Company to limit the number of such shares to be included in such registration
statement if the managing underwriter of such initial public offering reasonably
determines that the inclusion of such shares in such offering would materially
adversely affect the marketability of such offering by the Company.
10. MISCELLANEOUS.
10.1 Board Rights. Upon the written request of Investor, the Board of
Directors of the Company shall at all times thereafter include as a director
such person as Investor may from time to time designate, provide (i) for the
period from such written request to the date of the next annual shareholders'
meeting of the Company, Investor's nominee shall be appointed to the Board of
Directors by action of the Board of Directors, and (ii) thereafter, at each
annual shareholders' meeting, the Board of Directors of the Company shall
nominate the Investor's nominee and shall recommend the election of such nominee
to the shareholders of the
11
Company. The Company shall provide such representative with the same notice of
Board meetings and materials provided to members of the Company's Board of
Directors. This provision shall terminate upon the closing of the Company's
initial public offering of stock registered under the Act.
10.2 Survival of Warranties. The representations, warranties and
covenants of the Company and the Investor contained in, or made pursuant to,
this Agreement shall survive the execution and delivery of this Agreement and
the Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of Investor, its counsel or the Company, as
the case may be.
10.3 Successors and Assigns. 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.
10.4 Governing Law. This Agreement shall be governed by and construed
under the internal laws of the State of New York without reference to principles
of conflict of laws or choice of laws.
10.5 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.6 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party or at such other address as any party or the Company
may designate by giving ten (10) days advance written notice to all other
parties.
10.7 No Finder's Fees. Each party represents that it neither is nor
will be obligated for any finder's or broker's fee or commission in connection
with this transaction. The Investor agrees to indemnify and to hold harmless the
Company from any liability for any commission or compensation in the nature of a
finders' or broker's fee (and any asserted liability) for which the Investor or
any of its officers, directors, employees, or representatives is responsible.
The Company agrees to indemnify and hold harmless the Investor from any
liability for any commission or compensation in the nature of a finder's or
broker's fee (and any asserted liability) for which the Company or any of its
officers, directors, employees or representatives is responsible.
10.8 Attorneys' Fees. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
10.9 Costs Expenses. The Company shall pay in connection with the
preparation, execution and delivery of this Agreement and the issuance of the
Purchased Shares, the reasonable fees and out-of-pocket expenses of legal
counsel to the Investor, not to exceed Two Thousand Dollars ($2,000.00).
12
10.10 Amendments and Waivers. Except as specified in Section 2.2, any
term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and Investor. Any amendment or waiver effected in accordance with this Section
shall be binding upon the holder of any Purchased Shares at the time
outstanding, each future holder of such securities, and the Company.
10.11 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision(s) shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision(s) were so excluded and shall be enforceable in
accordance with its terms.
10.12 Entire Agreement. This Agreement, together with all exhibits and
schedules hereto, constitutes the entire agreement and understanding of the
parties with respect to the subject matter hereof and supersedes any and all
prior negotiations, correspondence, agreements, understandings, duties or
obligations between the parties with respect to the subject matter hereof.
10.13 Further Assurances. From and after the date of this Agreement,
upon the request of the Investor or the Company, the Company and the Investor
shall execute and deliver such instruments, documents or other writings as may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement.
10.14 Representation. This Agreement has been drafted on the basis of
mutual contribution of language, the parties each having been represented by
independent counsel of their own choosing, and is not to be construed against
any party as being the drafter or causing the same to be drafted.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
THE COMPANY: THE INVESTOR:
C-GRAM UNLIMITED, INC. WORLDCOMM SYSTEMS, INC.
By: /s/ Xxxxxx Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
------------------------------- ----------------------------------
Xxxxxx Xxxxxxxx, Vice President Xxxxxxx X. Xxxxxx, President
13
EXHIBIT A
State of New Hampshire
Department of State
CERTIFICATE OF AMENDMENT OF
C-GRAMS UNLIMITED, INC.
The undersigned, as Deputy Secretary of State of the State of New Hampshire,
hereby certifies that Articles of Amendment to the Articles of Incorporation of
C-GRAMS UNLIMITED, INC., duly signed pursuant to the provisions of the New
Hampshire Business Corporation Act, have been received in this office.
ACCORDINGLY, the undersigned, as such Deputy Secretary of State, and by virtue
of the authority vested in him by law, hereby issues this Certificate of
Amendment to the Articles of Incorporation of C-GRAMS UNLIMITED, INC. and
attaches hereto a copy of the Articles of Amendment.
IN TESTIMONY WHEREOF, I hereto set my
hand and cause to be affixed the Seal
of the State of New Hampshire, this
4th day of April A.D. 1995
[SEAL] /s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Deputy Secretary of State
STATE OF NEW HAMPSHIRE
Filing fee: $35.00 Form No. 14
Use black print or type. RSA 293-A:10.06
Leave 1" margins both sides
FILED
APR 04 1995
ARTICLES OF AMENDMENT XXXXXXX X. XXXXXXX
to the NEW HAMPSHIRE
ARTICLES OF INCORPORATION SECRETARY OF STATE
PURSUANT TO THE PROVISIONS OF THE NEW HAMPSHIRE BUSINESS CORPORATION ACT, THE
UNDERSIGNED CORPORATION ADOPTS THE FOLLOWING ARTICLES OF AMENDMENT TO ITS
ARTICLES OF INCORPORATION:
FIRST: The name of the corporation is C-GRAMS UNLIMITED INC.
--------------------------------------------------------------------------------
SECOND: The text of each amendment adopted is:
THAT THE ARTICLES OF INCORPORATION OF THE CORPORATION, AS AMENDED, BE
FURTHER AMENDED BY INCREASING THE NUMBER OF SHARES OF COMMON STOCK WHICH THE
CORPORATION SHALL HAVE AUTHORITY TO ISSUE TO 4,000,000 SHARES.
THIRD: If the amendment provides for an exchange, reclassification, or
cancellation of issued shares the provisions for implementing the amendment(s)
if not contained in the above amendment are:
FOURTH: The amendment(s) were adopted on (date) 2/28/95
[if more space is needed, attach additional sheet(s)].
page 1 of 3
MINUTES
AND
BY LAWS
OF
C-GRAMS UNLIMITED, INC.
INCORPORATED UNDER THE LAWS OF
STATE OF NEW HAMPSHIRE
BY-LAWS
OF
C-GRAMS UNLIMITED, INC.
ARTICLE I - OFFICES
The principal office of the corporation in the State of New Hampshire shall
be located in the Town of Sandown, County of Rockingham. The corporation may
have such other offices, either within or without the State of incorporation, as
the board of directors may designate or as the business of the corporation may
from time to time require.
ARTICLE II - STOCKHOLDERS
1. ANNUAL MEETING.
The annual meeting of the stockholders shall be held on the 1st Fri. of May
in each year, beginning with the year 1986 at the hour ten o'clock A.M., for the
purpose of electing directors and for the transaction of such other business as
may come before the meeting. If the day fixed for the annual meeting shall be a
legal holiday such meeting shall be held on the next succeeding business day.
2. SPECIAL MEETINGS.
Special meetings of the stockholders, for any purpose or purposes, unless
otherwise prescribed by statute, may be called by the president or by the
directors, and shall be called by the president at the request of the holders of
not less than two per cent of all the outstanding shares of the corporation
entitled to vote at the meeting.
3. PLACE OF MEETING.
The directors may designate any place, either within or without the State
unless otherwise prescribed by statute, as the place of meeting for any annual
meeting or for any special meeting called by the directors. A waiver of notice
signed by all stockholders entitled to vote at a meeting may designate
By-Laws 1
any place, either within or without the state unless otherwise prescribed by
statute, as the place for holding such meeting. If no designation is made, or if
a special meeting be otherwise called, the place of meeting shall be the
principal office of the corporation.
4. NOTICE OF MEETING.
Written or printed notice stating the place, day and hour of the meeting
and, in case of a special meeting, the purpose or purposes for which the meeting
is called, shall be delivered not less than seven nor more than thirty days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, or the secretary, or the officer or persons calling
the meeting, to each stockholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail, addressed to the stockholder at his address as it appears on the
stock transfer books of the corporation, with postage thereon prepaid.
5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.
For the purpose of determining stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, or stockholders
entitled to receive payment of any dividend, or in order to make a determination
of stockholders for any other proper purpose, the directors of the corporation
may provide that the stock transfer books shall be closed for a stated period
but not to exceed, in any case, thirty days. If the stock transfer books shall
be closed for the purpose of determining stockholders entitled to notice of or
to vote at a meeting of stockholders, such books shall be closed for at least
thirty days immediately preceding such meeting. In lieu of closing the stock
transfer books, the directors may fix in advance a date as the record date for
any such determination of stockholders, such date in any case to be not more
than thirty days and, in case of a meeting of stockholders, not less than thirty
days prior to the date on which the particular action requiring such
determination of stockholders is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of stockholders
entitled to notice of or to vote at a meeting of stockholders, or stockholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the directors declaring
such dividend is adopted, as the case may be, shall be the record date for such
determination of stockholders. When a determination of stockholders entitled to
vote at any meeting of stockholders
By-Laws 2
has been made as provided in this section, such determination shall apply to any
adjournment thereof.
6. VOTING LISTS.
The officer or agent having charge of the stock transfer books for shares
of the corporation shall make, at least two days before each meeting of
stockholders, a complete list of the stockholders entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list, for a period of
two days prior to such meeting, shall be kept on file at the principal office of
the corporation and shall be subject to inspection by any stockholder at any
time during usual business hours. Such list shall also be produced and kept open
at the time and place of the meeting and shall be subject to the inspection of
any stockholder during the whole time of the meeting. The original stock
transfer book shall be prima facie evidence as to who are the stockholders
entitled to examine such list or transfer books or to vote at the meeting of
stockholders.
7. QUORUM.
At any meeting of stockholders, 25% of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than said number of
the outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. The stockholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough stockholders to leave less than a quorum.
8. PROXIES.
At all meetings of stockholders, a stockholder may vote by proxy executed
in writing by the stockholder or by his duly authorized attorney in fact. Such
proxy shall be filed with the secretary of the corporation before or at the time
of the meeting.
9. VOTING.
Each stockholder entitled to vote in accordance with the terms and
provisions of the certificate of incorporation and these by-laws shall be
entitled to one vote, in person or by
By-Laws 3
proxy, for each share of stock entitled to vote held by such stockholders. Upon
the demand of any stockholder, the vote for directors and upon any question
before the meeting shall be by ballot. All elections for directors shall be
decided by plurality vote; all other questions shall be decided by majority vote
except as otherwise provided by the Certificate of Incorporation or the laws of
this State.
10. ORDER OF BUSINESS.
The order of business at all meetings of the stockholders, shall be as
follows:
1. Roll Call.
2. Proof of notice of meeting or waiver of notice.
3. Reading of minutes of preceding meeting.
4. Reports of Officers.
5. Reports of Committees.
6. Election of Directors.
7. Unfinished Business.
8. New Business.
11. INFORMAL ACTION BY STOCKHOLDERS.
Unless otherwise provided by law, any action required to be taken at a
meeting of the shareholders, or any other action which may be taken at a meeting
of the shareholders, may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by all of the shareholders
entitled to vote with respect to the subject matter thereof.
By-Laws 4
ARTICLE III - BOARD OF DIRECTORS
1. GENERAL POWERS.
The business and affairs of the corporation shall be managed by its board
of directors. The directors shall in all cases act as a board, and they may
adopt such rules and regulations for the conduct of their meetings and the
management of the corporation, as they may deem proper, not inconsistent with
these by-laws and the laws of this State.
2. NUMBER, TENURE AND QUALIFICATIONS.
The number of directors of the corporation shall be one __________________.
Each director shall hold office until the next annual meeting of stockholders
and until his successor shall have been elected and qualified.
3. REGULAR MEETINGS.
A regular meeting of the directors, shall be held without other notice than
this by-law immediately after, and at the same place as, the annual meeting of
stockholders. The directors may provide, by resolution, the time and place for
the holding of additional regular meetings without other notice than such
resolution.
4. SPECIAL MEETINGS.
Special meetings of the directors may be called by or at the request of the
president or any two directors. The person or persons authorized to call special
meetings of the directors may fix the place for holding any special meeting of
the directors called by them.
5. NOTICE.
Notice of any special meeting shall be given at least two days previously
thereto by written notice delivered personally, or by telegram or mailed to each
director at his business address. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail so addressed, with postage
thereon prepaid. If notice be given by telegram, such notice shall be deemed to
be delivered when the telegram is delivered to the telegraph company. The
attendance of a director at a meeting shall constitute a waiver of notice of
such meeting, except where a director attends a meeting for the express purpose
of objecting to the transaction of any business because the meeting is not
lawfully called or convened.
By-Laws 5
6. QUORUM.
At any meeting of the directors one shall constitute a quorum for the
transaction of business, but if less than said number is present at a meeting, a
majority of the directors present may adjourn the meeting from time to time
without further notice.
7. MANNER OF ACTING.
The act of the majority of the directors present at a meeting at which a
quorum is present shall be the act of the directors.
8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the board for any reason except the removal
of directors without cause may be filled by a vote of a majority of the
directors then in office, although less than a quorum exists. Vacancies
occurring by reason of the removal of the directors without cause shall be
filled by vote of the stockholders. A director elected to fill a vacancy caused
by resignation, death or removal shall be elected to hold office for the
unexpired term of his predecessor.
9. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause by vote of the
stockholders or by action of the board. Directors may be removed without cause
only by vote of the stockholders.
10. RESIGNATION.
A director may resign at any time by giving written notice to the board,
the president or the secretary of the corporation. Unless otherwise specified in
the notice, the resignation shall take effect upon receipt thereof by the board
or such officer, and the acceptance of the resignation shall not be necessary to
make it effective.
11. COMPENSATION.
No compensation shall be paid to directors, as such, for their services,
but by resolution of the board a fixed sum and expenses for actual attendance at
each regular or special meeting of the board may be authorized. Nothing herein
contained shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
By-Laws 6
12. PRESUMPTION OF ASSENT.
A director of the corporation who is present at a meeting of the directors
at which action on any corporate matter is taken shall be presumed to have
assented to the action taken unless his dissent shall be entered in the minutes
of the meeting or unless he shall file his written dissent to such action with
the person acting as the secretary of the meeting before the adjournment thereof
or shall forward such dissent by registered mail to the secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such action.
13. EXECUTIVE AND OTHER COMMITTEES.
The board, by resolution, may designate from among its members an executive
committee and other committees, each consisting of three or more directors. Each
such committee shall serve at the pleasure of the board.
By-Laws 7
ARTICLE IV - OFFICERS
1. NUMBER.
The officers of the corporation shall be a president, a vice-president, a
secretary and a treasurer, each of whom shall be elected by the directors. Such
other officers and assistant officers as may be deemed necessary may be elected
or appointed by the directors.
2. ELECTION AND TERM OF OFFICE.
The officers of the corporation to be elected by the directors shall be
elected annually at the first meeting of the directors held after each annual
meeting of the stockholders. Each officer shall hold office until his successor
shall have been duly elected and shall have qualified or until his death or
until he shall resign or shall have been removed in the manner hereinafter
provided.
3. REMOVAL.
Any officer or agent elected or appointed by the directors may be removed
by the directors whenever in their judgment the best interests of the
corporation would be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed.
4. VACANCIES.
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the directors for the unexpired
portion of the term.
5. PRESIDENT.
The president shall be the principal executive officer of the corporation
and, subject to the control of the directors, shall in general supervise and
control all of the business and affairs of the corporation. He shall, when
present, preside at all meetings of the stockholders and of the directors. He
may sign, with the secretary or any other proper officer of the corporation
thereunto authorized by the directors, certificates for shares of the
corporation, any deeds, mortgages, bonds, contracts, or other instruments which
the directors have authorized to be executed, except in cases where the signing
and execution thereof shall be expressly delegated by the directors or by these
by-laws to some other officer or agent of the corporation, or shall be required
by law to be otherwise signed or executed; and in general shall
By-Laws 8
perform all duties incident to the office of president and such other duties as
may be prescribed by the directors from time to time.
6. VICE-PRESIDENT.
In the absence of the president or in event of his death, inability or
refusal to act, the vice-president shall perform the duties of the president,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the president. The vice-president shall perform such other
duties as from time to time may be assigned to him by the President or by the
directors.
7. SECRETARY.
The secretary shall keep the minutes of the stockholders' and of the
directors' meetings in one or more books provided for that purpose, see that all
notices are duly given in accordance with the provisions of these by-laws or as
required, be custodian of the corporate records and of the seal of the
corporation and keep a register of the post office address of each stockholder
which shall be furnished to the secretary by such stockholder, have general
charge of the stock transfer books of the corporation and in general perform all
duties incident to the office of secretary and such other duties as from time to
time may be assigned to him by the president or by the directors.
8. TREASURER.
If required by the directors, the treasurer shall give a bond for the
faithful discharge of his duties in such sum and with such surety or sureties as
the directors shall determine. He shall have charge and custody of and be
responsible for all funds and securities of the corporation; receive and give
receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with these by-laws and in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him by the president or by the directors.
9. SALARIES.
The salaries of the officers shall be fixed from time to time by the
directors and no officer shall be prevented from receiving such salary by reason
of the fact that he is also a director of the corporation.
By-Laws 9
ARTICLE V - CONTRACTS, LOANS, CHECKS AND DEPOSITS
1. CONTRACTS.
The directors may authorize any officer or officers, agent or agents, to
enter into any contract or execute and deliver any instrument in the name of and
on behalf of the corporation, and any such authority may be general or confined
to specific instances.
2. LOANS.
No loans shall be contracted on behalf of the corporation and no evidences
of indebtedness shall be issued in its name unless authorized by a resolution of
the directors. Such authority may be general or confined to specific instances.
3. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for the payment of money, notes or other
evidences of indebtedness issued in the name of the corporation, shall be signed
by such officer or officers, agent or agents of the corporation and in such
manner as shall from time to time be determined by resolution of the directors.
4. DEPOSITS.
All funds of the corporation not otherwise employed shall be deposited from
time to time to the credit of the corporation in such banks, trust companies or
other depositaries as the directors may select.
ARTICLE VI - CERTIFICATES FOR SHARES AND THEIR TRANSFER
1. CERTIFICATES FOR SHARES.
Certificates representing shares of the corporation shall be in such form
as shall be determined by the directors. Such certificates shall be signed by
the president and by the secretary or by such other officers authorized by law
and by the directors. All certificates for shares shall be consecutively
numbered or otherwise identified. The name and address of the stockholders, the
number of shares and date of issue, shall be entered on the stock transfer books
of the corporation. All certificates surrendered to the corporation for transfer
shall be canceled and no new certificate shall be issued until the
By-Laws 10
former certificate for a like number of shares shall have been surrendered and
canceled, except that in case of a lost, destroyed or mutilated certificate a
new one may be issued therefor upon such terms and indemnity to the corporation
as the directors may prescribe.
2. TRANSFERS OF SHARES.
(a) Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate; every such transfer shall be entered on
the transfer book of the corporation which shall be kept at its principal
office.
(b) The corporation shall be entitled to treat the holder of record of any
share as the holder in fact thereof, and, accordingly, shall not be bound to
recognize any equipment or other claim to or interest in such share on the part
of any other person whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of this state.
ARTICLE VII - FISCAL YEAR
The fiscal year of the corporation shall begin on the first day of April __
in each year.
ARTICLE VIII - DIVIDENDS
The directors may from time to time declare, and the corporation may pay,
dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law.
ARTICLE IX - SEAL
The directors shall provide a corporate seal which shall be circular in
form and shall have inscribed thereon the name of the corporation, the state of
incorporation, year of incorporation and the words, "Corporate Seal".
By-Laws 11
ARTICLE X - WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to be
given to any stockholder or director of the corporation under the provisions of
these by-laws or under the provisions of the articles of incorporation, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
ARTICLE XI - AMENDMENTS
These by-laws may be altered, amended or repealed and new by-laws may be
adopted by a vote of the stockholders representing a majority of all the shares
issued and outstanding, at any annual stockholders' meeting or at any special
stockholders' meeting when the proposed amendment has been set out in the notice
of such meeting.
By-Laws 12
[LETTERHEAD OF C/GRAMS]
--------------------------------------------------------------------------------
Exhibit B
C-GRAMS UNLIMITED, INC.
Written Action of Directors
The undersigned, being all of the directors of C-Grams Unlimited, Inc., a
New Hampshire corporation (the "Company"), and acting pursuant to Section 8.21
of the New Hampshire Business Corporation Act, hereby consent to the following
resolutions:
RESOLVED: That the Company is hereby authorized to issue and sell
135,105 shares of its authorized, but unissued, common stock
to WorldComm Systems Inc., for a purchase price of $3.03 per
share; that, in connection therewith, the Company is hereby
authorized to enter into a Stock Purchase Agreement with
WorldComm Systems Inc. providing for such issuance and sale
and such other terms as the President of any Vice President of
the Company may approve (such approval to be conclusively
evidenced by his execution thereof); and that the President
and any Vice President of the Company is hereby authorized to
execute and deliver such Stock Purchase Agreement on behalf of
the Company.
FURTHER
RESOLVED: That the President and any Vice President of the Company are
each hereby authorized to execute and deliver any all
instruments, and to take any and all actions, as any of them
deem necessary of appropriate in connection with the
transaction contemplated by the foregoing resolution.
Executed as of this 27 day of August, 1996.
/s/ Xxxxxx Xxxx
----------------------------------
Xxxxxx Xxxx
/s/ Xxxxxx Xxxxxxxx
----------------------------------
Xxxxxx Xxxxxxxx
MEETING
OF THE BOARD OF DIRECTORS
OF
WORLDCOMM SYSTEMS, INC.
----------------------------
July 11, 1996
----------------------------
A regular meeting of the Board of Directors of Worldcomm Systems, Inc. (the
"Corporation") was held at 10:00 A.M. on Thursday, July 11, 1996, at the
Corporation's offices at 000 Xxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx. The following
Directors of the Corporation, constituting all of the Directors of the
Corporation, were present at the meeting:
Messrs: Xxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxxxx
Xxxxxx X. XxXxxxx
Xxxxxx X. Xxxxxxxx
Xxxxxx Xxxxxxx
Xxxxxx X. Xxxxxxx
Xxxxxxxx Xxxxx
Xxxxxx Xxxxxxxx
Xx. Xxxxxxxxx, Chairman of the Board of Directors of the Corporation, acted
as Chairman of the meeting and called the meeting to order at 10:10 A.M. Xx.
XxXxxxx, Secretary of the Corporation, acted as Secretary of the meeting and
recorded the minutes.
Xx. Xxxxxxxxx noted that an agenda for this meeting and the minutes of the
meeting held on May 23, 1996, had been distributed to the Directors prior to the
meeting.
A motion was made to accept the minutes of the meeting held on May 23,
1996, as amended, and to waive the reading of such minutes, which motion was
unanimously carried.
The Board then turned to a discussion of the Corporation's joint venture
opportunities. Xx. Xxxxxx gave a report on the proposed investment in C-Grams
Unlimited, Inc. ("C-Grams") and the preliminary investment agreement reached.
After discussion, Xx. Xxxxxxx recommended that the Board approve the
Corporation's investment in C-Grams, and, upon motion duly made and seconded,
the following resolutions were unanimously adopted:
RESOLVED, that the terms and provisions of that certain letter agreement by
and between this Corporation and C-Grams (the "Investment Letter"), dated July
10, 1996, be, and the same hereby is, in all respects approved; and be it
further
RESOLVED, that the CEO and President of the Corporation be, and they hereby
are, authorized, empowered and directed to negotiate, execute and deliver any
and all other documents and certificates required or desirable in connection
therewith, in the name and on behalf of this Corporation, as the CEO and
President of this Corporation deem necessary or advisable, for purposes of
formalizing and finalizing the Corporations Investment in C-Grams as
contemplated by the Investment Letter; and be it further
RESOLVED, that each of the Officers of the Corporation be, and each of them
acting along hereby is, authorized and directed to take all such further action
in the name and on behalf of the Corporation as shall be necessary or
appropriate to carry out the intent and purposes of the foregoing resolutions.
There being no further business to come before the meeting, it was, upon
motion duly made and seconded, unanimously adjourned.
-------------------------------------
Xxxxxx X. XxXxxxx, Secretary
C-Grams Unlimited/WorldComm Systems
Rules of Engagement
Agreement
Exhibit C
* Rights of first refusal agreement between C-Grams Principals, Xx. Xxxxxx
Xxxxxxxx and Mr. Xxxxxx Xxxx (individually a "Founder" and collectively the
"Founders", will take precedence for right of first refusal.
RIGHT OF FIRST REFUSAL AGREEMENT
Agreement dated as of February 28, 1995, by and among Xxxxxx Xxxx and
Xxxxxx Oustrouch (individually, a "Founder" and collectively, the "Founders").
Recitals
A. As used in this Agreement, the term "Shares" shall include all shares of
capital stock of C-Grams Unlimited, Inc., a New Hampshire corporation (the
"Company") held by the Founders, whether now owned or hereafter acquired.
B. The purpose of this Agreement is to provide for certain rights and
procedures upon sales of the Company's securities and to protect the management
and control of the Company from influence by any person not acceptable to the
Founders.
NOW, THEREFORE, for valuable consideration, it is agreed as follows:
1. Restrictions on Transfer.
1.1 Any sale or other disposition of any of the Shares by a Founder,
other than according to the terms of this Agreement, shall be void and transfer
no right, title, or interest in or to any of such Shares to the purported
transferee.
1.2 Each Founder agrees to present the certificates representing the
Shares presently owned or hereafter acquired by him to the Secretary of the
Company and cause the Secretary to stamp on the certificate in a prominent
manner the following legend:
"The sale or other disposition of any of the shares represented by this
certificate is restricted by a Right of First Refusal Agreement, dated as
of February 28, 1995, among certain of the shareholders of this
corporation."
2. Transfers Not Subject to Restrictions.
Subject to Section 7 of this Agreement, any Founder may sell, assign
or transfer Shares to his spouse or children or to a trust established for the
benefit of his spouse, children or himself, or dispose of them under his will,
without compliance with Sections 3 through 5 hereof.
3. Offer of Sale; Notice of Proposed Sale.
If any Founder desires to sell, transfer or otherwise dispose of any
of his Shares, or of any interest in such Shares, whether voluntarily or by
operation of law, in any transaction other than pursuant to Section 2 of this
Agreement, such Founder (the "Selling Founder") shall first deliver written
notice of his desire to do so (the "Notice") to the other Founder (the
"Purchaser"), in the manner prescribed in Section 8.3 of this Agreement. The
Notice must specify: (i) the number of Shares the Selling Founder proposes to
sell or otherwise dispose of (the "Offered Shares"), (ii) the consideration per
Share to be delivered to the Selling Founder for the proposed sale, transfer or
disposition, and (iii) all other material terms and conditions of the proposed
transaction.
4. Founder's Option to Purchase.
4.1 Subject to Section 5, the Purchaser shall have the first option to
purchase all or any part of the Offered Shares for the consideration per share
and on the terms and conditions specified in the Notice. The Purchaser must
exercise such option, no later than 45 days after such Notice is deemed under
Section 8.4 hereof to have been delivered to it, by written notice to the
Selling Founder.
4.2 In the event the Purchaser duly exercises his option to purchase
all or part of the Offered Shares, the closing of such purchase shall take place
at the offices of the Company on the date five days after the expiration of such
45-day period.
4.3 To the extend that the consideration proposed to be paid by the
Purchaser for the Offered Shares consists of property other than cash or a
promissory note, the consideration required to be paid by the Purchaser
exercising his option under Section 4 hereof may consist of cash equal to the
value of such property, as determined in good faith by agreement of the Selling
Founder and the Purchaser.
-2-
5. Failure to Fully Exercise Options.
If the Purchaser does not exercise his option to purchase all of the
Offered Shares within the period described in this Agreement (the "Option
Period"), then the option of the Purchaser to purchase the Offered Shares,
whether exercised or not, shall terminate.
6. Termination of Agreement.
6.1 This Agreement shall terminate upon the earliest of the following
events:
(a) The written agreement of both Founders to terminate the
Agreement;
(b) The sale of all or substantially all of the assets or
business of the Company, by merger, sale of assets or otherwise; or
(c) The closing of the Company's initial public offering of
shares of Common Stock pursuant to an effective registration statement
under the Securities Act of 1933, as amended (the "Act"), resulting in at
least $7,500,000 of gross proceeds to the Company.
6.2 The provisions of Sections 3 and 4 hereof shall not apply to any
sale of Shares pursuant to a transaction referred to in Sections 6.1(b) or
6.1(c) above.
7. Transfers of Rights.
This Agreement, and the rights and obligations of each Founder
hereunder, shall be assigned by such Founder to any person or entity to which
Shares are transferred by such Founder, and such transferee shall be deemed a
"Founder" for purposes of this Agreement. As a condition to such transfer, such
transferee shall deliver a written instrument to the other Founder agreeing to
be bound by the terms of this Agreement.
8. General.
8.1 Specific Performance. In addition to any and all other remedies
that may be available at law in the event of any breach of this Agreement, each
Founder shall be entitled to specific performance of the agreements and
obligations of the
-3-
Founders hereunder and to such other injunctive or other equitable relief as may
be granted by a court of competent jurisdiction.
8.2 Governing Law.This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of New Hampshire.
8.3 Notices. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be delivered by hand or
mailed by first class certified or registered mail, return receipt requested,
postage prepaid:
If to Xxxxxx Xxxx, at 0 Xxxxxxxx Xxxx, Xxxxxxx, X.X. 00000; or
If to Xxxxxx Ousrouch, at 000 Xxx Xxxxx Xxxx, Xxxxxxxx, X.X. 00000.
Notices provided in accordance with this Section 8.4 shall be deemed
delivered upon personal delivery or two business days after deposit in the mail.
8.4 Complete Agreement; Amendments. This Agreement constitutes the
full and complete agreement of the parties hereto with respect to the subject
matter hereof. No amendment, modification or termination of any provision of
this Agreement shall be valid unless in writing and signed by both Founders.
8.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute one Agreement binding on all the
parties hereto.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
above written.
FOUNDERS:
/s/ Xxxxxx X. Xxxx
-----------------------------------
Xxxxxx Xxxx
/s/ Xxxxxx Xxxxxxxx
-----------------------------------
Xxxxxx Xxxxxxxx
-4-
Stock Purchase Agreement
C-Grams Unlimited Inc. and Worldcomm Systems
Intellectual Property
Exhibit D
* Registered Product
* Interpretive Math and Logic with Reports and Recipes
* Early Warning System Alarm
* CimPix
* SQLACS
* Pending Copyrights
* Interpretive Math and Logic
* Front End Processor
* Front End Server
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b Xxxx Xxxxxx 1969
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c
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WORK WAS COMPLETED. This information b Complete this information Month 12 Day 01 Year 1991
a 1991 Year must be given ONLY if this work
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TX TXU
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that was" made for hire" check "Yes" in the space provided, give the
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that part, and save the space for dates of birth and death blank.
=====================================================================================================================
NAME OF AUTHOR DATES OF BIRTH AND DEATH
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b Xxxx Xxxxxx 1969
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work a "work made for hire"? Name of Country TO THE WORK If the answer to either
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Co-author of computer programming code.
=====================================================================================================================
NAME OF AUTHOR DATES OF BIRTH AND DEATH
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c
---------------------------------------------------------------------------------------------------------------------
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work a "work made for hire"? Name of Country TO THE WORK If the answer to either
|_| Yes Citizen of _____ Anonymous? |_| Yes |_| No of these questions is
|_| No OR Domiciled in _____ Pseudonymous? |_| Yes |_| No "Yes", see detailed
instructions.
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=====================================================================================================================
3. YEAR IN WHICH CREATION OF THIS DATE AND NATION OF FIRST PUBLICATION OF THIS PARTICULAR WORK
WORK WAS COMPLETED. This information b Complete this information Month 12 Day 01 Year 1991
a 1991 Year must be given ONLY if this work
in all cases. has been published. USA Nation
=====================================================================================================================
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is the same as the author given in space 2.
See instructions APPLICATION RECEIVED
before completing C-Grams Unlimited, Inc.
this space 00X Xxxxx 000 -------------------------
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TX TXU
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8 3 1995
/s/ Xxxxxxxx Xxxxxx ------------------------------
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OFFICIAL SEAL REGISTER OF COPYRIGHTS
United States of America
DO NOT WRITE ABOVE THIS LINE. IF YOU NEED MORE SPACE, USE A SEPARATE CONTINUATION SHEET.
============================================================================================================================
1. TITLE OF THIS WORK
Interpretive Math and Logic with Reports and Recipes (RRIML)
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Primary author of computer programming code.
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Early Warning System Alarm (EWSA)
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CimPiX
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CIM-PIX
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|_| No OR Domiciled in USA Pseudonymous? |_| Yes |X| No "Yes", see detailed
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Author of computer programming code.
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employer, not the employee (see instructions). For any part of this work
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SQLACS
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a C-Grams Unlimited, Inc. 1985
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Interpretive Math and Logic (IML)
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a C-Grams Unlimited, Inc. 1985
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NATURE OF AUTHORSHIP Briefly describe nature of material created by this author in which copyright is claimed.
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employer, not the employee (see instructions). For any part of this work
that was" made for hire" check "Yes" in the space provided, give the
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3. YEAR IN WHICH CREATION OF THIS DATE AND NATION OF FIRST PUBLICATION OF THIS PARTICULAR WORK
WORK WAS COMPLETED. This information b Complete this information Month 12 Day 01 Year 1991
a 1991 Year must be given ONLY if this work
in all cases. has been published. USA Nation
=====================================================================================================================
4. COPYRIGHT CLAIMANT(S) Name and address must be given even if the claimant DO NOT WRITE HERE OFFICE USE ONLY
is the same as the author given in space 2.
See instructions APPLICATION RECEIVED
before completing C-Grams Unlimited, Inc.
this space 00X Xxxxx 000 -------------------------
Xxxxxxxx, XX 00000 ONE DEPOSIT RECEIVED
-----------------------------------------------------------
TRANSFER If the claimant(s) named here in space 4 is (are) -------------------------
different from the author(s) named in space 2, give a brief TWO DEPOSITS RECEIVED
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C-Grams Unlimited/WorldComm Systems
Rules of Engagement
Agreement
Exhibit E
List of Material Agreements
* Alliance Agreement, Rules of Engagement between WorldComm Systems and
C-Grams Unlimited, Inc. dated, 8/31/95
C-Grams Unlimited/WorldComm Systems
Rules Of Engagement
Agreement
This Agreement is entered into this 31st day of August, 1995 between C-Grams
Unlimited Inc., 00 Xxxxxxx 000, Xxxxxxxx, X.X. 00000 and WorldComm Systems Inc.,
000 Xxxx Xxxxxx, Xxxxxxxxx, X.X. 00000-0000.
The following practices will serve as the basis for conducting business in the
Earth Station market and operating guidelines which will ensure a consistent
message to customers and prospective customers as well as to our respective
organizations and employees. These rules will serve as the reference point, and
decision maker in any matters which may create or be perceived to create market
channel conflicts in conducting business either independently or jointly.
1. WorldComm will be the prime contractor for any proposal activity which
results from WorldComm's introduction of C-Grams into the preparation of
specifications, and or proposals for any project. Further, WorldComm will
be the primary contractor for any resultant contract. C-Grams will act in
behalf of WorldComm Systems whether or not WorldComm Systems is present for
meetings, or other interactions with WorldComm's customers.
2. WorldComm will assign C-Gram's as it's sole source supplier under the
following conditions:
o C-Grams offers a competitive technical and price solution.
o The C-Grams' system is appropriate to the application
o The customer has not yet specified another system
3. WorldComm maintains the right to be prime contractor for all market
opportunities with it's customers who require only M&C systems or any
C-Gram's capability which WorldComm's may not possess an internaal
capability. WorldComm will assess market price and provide appropriate
xxxx-up or
4. WorldComm will elect C-Gram's to be the prime contractor based upon several
considerations outlined in Attachment 'A'. C-Grams may provide compensation
in the form of a pre-established commission structure if desired.
5. *
6. Based upon the results of either 3, 4, or 5 above, a Memorandum of
Understanding will be signed establishing prime contractors.
7. C-Grams reserves the right to (1) maintain its existent customers and (2)
solicit additional customers engaged in Earth Station Management Systems
who require M&C Systems.
* Confidential treatment requested of the redacted material pursuant to Rule
406 of the Securities Act of 1933, as amended.
8. Conflicts which may arise inadverently as a result of marketing activity
will be communicated immediatly between both companies. Resolutions will be
governed by the specific market condition, customer requirement/content and
the agreement here-in.
9. C-Grams reserves the right to also submit any solicited bid for M&C
capability which WorldComm may also be quoting. C-Gram's will submit the
exact price for the requirements at all times and in no way will attempt to
influence it's pricing. (This should not be an issue in light of the
'material' content of M&C to the total Earth Station.)
10. C-Grams and WorldComm will be responsible for their respective cost and
expenses associated with attaining market opportunities unless otherwise
agreed to share or apportion.
11. WorldComm will private label C-Grams M&C products sold to WorldComm
Systems.
12. WorldComm and C-Grams will establish it's individual sales channels
including distributors, sales representatives and other independent sales
units. In cases where their is an inadvertent conflict with the
representatives, both company's will exercise it's best effort to ensure
the respective representatives are compensated. These potential conditions
will be addressed as required.
13. C-Gram's and WorldComm will maintain in full force and effect it's
individual corporate existence, rights and franchises and all licenses and
other rights to use patents, processes, licenses, trademarks, tradenames or
copyrights owned by or by it and deemed by WorldComm and C-Grams to be
significant to the conduct of it's business. 14. Term of Agreement: The
term of this agreement will be two years from the first date shown above
with options to renew for an additional two years. Any changes to this
agreement will be mutually agreed to by both companies and be revised and
signed by a company officer.
IN WITNESS WHEREOF, the parties hereto execute this Agreement, effective as of
the date first shown above.
WorldComm Systems C-Grams Unlimited
By: Xxxxxxx X. Xxxxxx By: P. M. Xxxxx
---------------------------- -------------------------------
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxx X. Xxxxx
---------------------------- -------------------------------
Name: Name:
President V.P.CFO.
---------------------------- -------------------------------
Title Title
Prime & Sub-Contractor Determination
Considerations
The following is an outline of considerations when establishing prime &
sub-contractor roles. It's intent is that of a checklist in the decision
process, and does not attempt to substitute for good business practices,
relations and each company's mission statements.
o Technical expertise to satisfy the customer's requirements
o Largest content and value to the opportunity
o Market price sensitivity
o Purchase Order Agreements providing volume purchases discounts
o Equipment and Product Staging Facilities
o Company Financial Statements (Going Concern/Performance)
o Borrowing Capacity
o Influence in market place, and specifically personal relations established
(creditability)
o Customer's preference
o Resource Capacity
o Geography
o Investment & Capability
o Resources
C-Grams Unlimited/WorldComm Systems
Rules of Engagement
Agreement
Exhibit F
Financial Statements
o Period ending 5/31/94 including balance sheet, income statement, and
statement of cash flows. Independent review prepared by A.R. Xxxxxxxxxx and
company.
o Period ending 5/31/95 including balance sheet, income statement, and
statement of cash flows. Independent review prepared by A.R. Xxxxxxxxxx and
company.
o Period ending 5/31/96 including balance sheet, income statement, and
statement of cash flows. Prepared by Ernst and Young.
C-GRAMS REVIEW 94-95
FINANCIAL STATEMENTS
FOR THE PERIOD: 06/01/94 TO 05/31/95
*
* Confidential treatment requested pursuant to Rule 406 under the Securities
Act of 1933, as amended, for the proceeding pages of the exhibit to the Stock
Purchase Agreement, dated as of August 30, 1996, by and between C-Grams
Unlimited Inc. ("C-Grams") and WorldComm Systems Inc., such exhibit
constituting the financial statements of C-Grams.
C-GRAMS UNLIMITED INC.
FINANCIAL STATEMENTS
FOR THE PERIOD 6/01/93-5/31/94
** UNAUDITED **
for internal purposes only
*
* Confidential treatment requested pursuant to Rule 406 under the Securities
Act of 1933, as amended, for the proceeding pages of the exhibit to the Stock
Purchase Agreement, dated as of August 30, 1996, by and between C-Grams
Unlimited Inc. ("C-Grams") and WorldComm Systems Inc., such exhibit
constituting the financial statements of C-Grams.
C-GRAMS UNLIMITED INC.
PROJECTED NET INCOME STATEMENT
EXHIBIT G
*
* Confidential treatment requested of the redacted material pursuant to Rule
406 of the Securities Act of 1933, as amended.
